10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 1, 2006
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TrueYou.Com Inc.
(Exact name of registrant as specified in its charter)

Delaware	000-51158	13-4024017
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
Building No. 501, Fifth Floor 7 Corporate Park, Norwalk, CT		06851
(Address of principal executive offices)		(Zip Code)

(203)295-2121
(Registrant’s telephone number, including area code)

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
(Title of Class)

Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o  No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o   No x

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 at least the past 90 days. Yes o   No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form l0-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  Large accelerated filer o Accelerated filer o Non-accelerated filer x

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

The aggregate market value of the registrant’s Common Stock held by non-affiliates based upon the closing sale price reported on the over counter market on the Pink Sheets as of January 16, 2007 was approximately $3.3 million. In determining this figure, registrant has assumed that all directors, executive officers and persons known to it to beneficially own ten percent or more of such Common Stock are affiliates. This assumption shall not be deemed conclusive for any other purpose. The number of shares of common stock, par value $0.001 per share, outstanding as of January 16, 2006 was 14,995,513.

DOCUMENTS INCORPORATED BY REFERENCE:

None

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	23
Item 2.	Properties	23
Item 3.	Legal Proceedings	25
Item 4.	Submission of Matters to a Vote of Security Holders	25
PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	26
Item 6.	Selected Financial Data	27
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	28
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 8.	Financial Statements and Supplementary Data	44
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	88
Item 9A.	Controls and Procedures	88
Item 9B.	Other Information	90
PART III
Item 10.	Directors and Executive Officers of the Registrant	91
Item 11.	Executive Compensation	97
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	100
Item 13.	Certain Relationships and Related Transactions	104
Item 14.	Principal Accountant Fees and Services	108
PART IV
Item 15.	Exhibits and Financial Statement Schedule	110

FORWARD LOOKING STATEMENTS AND INFORMATION

                    Certain of the statements set forth in this Form 10-K are “Forward Looking Statements.” Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and may contain the words “estimate,” “project,” “intend,” “forecast,” “anticipate,” “plan,” “planning,” “expect,” “believe,” “will,” “will likely,” “should,” “could,” “would,” “may” or words or expressions of similar meaning. Readers are cautioned that there also can be no assurance that the forward-looking statements included in this Form 10-K will prove to be accurate and results may differ materially. In light of the significant uncertainties inherent to the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation or warranty by us or any other person that our objectives and plans will be achieved in any specified time frame, if at all. Thus, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, except to the extent required by applicable laws or rules, we do not undertake any obligation to update any forward-looking statements or to announce revisions to any of the forward-looking statements after the date of this Form 10-K.

                    Unless otherwise indicated in this Report, references to “TrueYou” refer to TrueYou.Com Inc.; references to “KAAI” refer to Klinger Advanced Aesthetics, Inc. and its consolidated subsidiaries; references to the “we,” “our,” and “us” refer to TrueYou.Com Inc. and its consolidated subsidiaries (including KAAI), as applicable.

PART I

ITEM 1. BUSINESS

Overview

History of TrueYou.Com Inc.

                    TrueYou.Com Inc. (“TrueYou” or “Company”) was organized on September 9, 1998 under the laws of the State of Delaware by its former parent, United Network Technologies Corp. In January 1999, United Network Technologies transferred all 100 shares of its common stock in the Company to United Network Marketing Services, Inc., a wholly-owned subsidiary of United Network Technologies. In April 1999, TrueYou effected a 33,300-to-1 stock split and amended its certificate of incorporation to increase its authorized capital stock to 21,000,000 shares consisting of 20,000,000 common shares and 1,000,000 preferred shares. Immediately thereafter, United Network Marketing distributed all 3,330,000 shares of its common stock in TrueYou to its stockholders, rendering TrueYou a stand alone business.

                    Until December 20, 2005, TrueYou was a developer of Web-based, direct-to-direct personal potential and professional development programs designed for businesses. TrueYou’s product offerings, which consisted of sales productivity, work-life balance and employee retention programs were designed to be delivered via the Internet or corporate intranet in the form of three to five minute Best Steps Learning Modules. Such products were intended for sale principally to large and middle market companies. TrueYou’s Web site went “live” on the internet in October 1999.

                    On December 20, 2005, TrueYou signed a Share Exchange Agreement with Klinger Advanced Aesthetics, Inc. (“KAAI” or “Klinger”) and the securityholders of KAAI. The Company entered into the Share Exchange Agreement in order to enable the Company to exploit and develop the business of Klinger which is described below. Under the terms of the Share Exchange Agreement, TrueYou issued to the KAAI securityholders: (i) 27,858.9673 newly issued shares of its Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”), each of which is convertible into 10,000 shares of TrueYou Common Stock, par value $.001 per share (“Common Stock”), (ii) 8,452.0222 newly issued shares of its Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”), each of which is convertible into 10,000 shares of Common Stock and (iii) newly issued Warrants which terminate on September 21, 2010 and which have an exercise price of $2,112.54 per share of Series B Preferred Stock and which equates to an exercise price of $.211254 per share of TrueYou Common Stock to purchase 3,969.0363 shares of its Series B Preferred Stock (the “Warrants”).

                    On December 22, 2005, affiliates of North Sound Capital LLC (“North Sound”) and Valesco Capital Management LP invested $15.3 million in exchange for 1,530 newly issued shares of the Company’s Series D Convertible Preferred Stock, par value $0.001 per share (the “Series D Preferred Stock”), each of which is convertible into approximately 52,175 shares of Common Stock ($0.191662 per share), and Warrants exercisable until December 22, 2010 and which have an exercise price of $2,108.28 per share which equates to an exercise price of $.210828 per share of Common Stock, to purchase 2,394.8407 shares of Series B Preferred Stock (the “Series D Preferred Financing”). The shares of Series B Preferred Stock will automatically convert into Common Stock after the Company amends its certificate of incorporation in order to increase the number of shares of Common Stock it is authorized to issue as described in Item 5 of this Report (the “Authorized Share Increase”). Subject to certain restrictions, the shares of Series C Preferred Stock and Series D Preferred Stock will automatically convert into Common Stock upon the consummation of an underwritten public offering with gross proceeds to TrueYou of not less than $30,000,000; provided that at such time a registration statement is effective or such shares can be sold under Rule 144. As a result

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of the Share Exchange Agreement and the transactions contemplated thereby, KAAI became a subsidiary of TrueYou.

Financings Subsequent to Share Exchange Agreement

                    On May 9, 2006, TrueYou entered into a loan agreement with some of its existing shareholders, including North Sound, affiliates of Pequot Capital Management Inc. (“Pequot”) and other affiliates of the Company (see “Certain Relationships and Related Transactions”) pursuant to which the Company borrowed $4.8 million which was used by the Company for capital expenditures and general working capital. Pursuant to a Subordination Agreement dated May 9, 2006 with the lenders and Technology Investment Capital Corp (“TICC”), this loan was subordinated to the Company’s then existing senior indebtedness of $10.0 million to TICC under the Note and Warrant Purchase Agreement, dated March 31, 2004, as amended. The existing debt with TICC had been obtained to help finance the acquisition of KAAI operations (see “History of Klinger Advanced Aesthetics, Inc.” below for a discussion of financings completed by KAAI prior to the Share Exchange Agreement).

                    On July 6, 2006, TrueYou closed on a financing and issued to Laurus Master Fund, Ltd. (“Laurus”), a Secured Term Note in the principal amount of $25.0 million and issued to Laurus, series A warrants, series B warrants and series C warrants to purchase up to 37,351,824 shares, 6,839,394 shares and 6,693,875 shares, respectively, of Common Stock. The warrants have an exercise price of $.01 per share and may be exercised for a period of up to 10 years from issuance. If prior to the 14^th month anniversary of June 30, 2006, the Company’s obligations to Laurus under the Secured Term Note have been reduced to $12,500,000 or less, then warrants to purchase 6,839,394 shares of Common Stock will be automatically cancelled and terminated and if at such time the Company’s obligations have been reduced to zero, then warrants to purchase an additional 6,693,875 shares of Common Stock will also be cancelled.

                    On July 11, 2006, TrueYou entered into a loan agreement (the “Subordinated Loan Agreement”) with subordinated lenders including affiliates of TrueYou (see “Certain Relationships and Related Transactions”) for $5,200,000 (the “Subordinated Loan”) which was used by the Company for capital expenditures, general working capital and to pay all costs and expenses in connection with the Subordinated Loan. Pursuant to a subordination agreement dated July 11, 2006, between the Subordinated Lenders and Laurus, the Subordinated Loan is subordinated to the Company’s senior indebtedness to Laurus under the Secured Term Note. TrueYou also issued 7 year warrants to purchase a total of 32,947,771 shares of Common Stock with an exercise price of $.001 per share to such lenders.

                    On July 11, 2006, TrueYou also entered into an amended and restated loan agreement in order to amend and restate the provisions of the $4.8 million loan received on May 9, 2006 in order to conform its terms to the terms of the Subordinated Loan Agreement. Pursuant to a subordination agreement dated July 11, 2006, this amended subordinated loan is subordinated to our existing senior indebtedness to Laurus. Pursuant to the amended loan agreement, TrueYou issued to such lenders (including affiliates) (see “Certain Relationships and Related Transactions”) (the “Amended Subordinated Lenders”), warrants to purchase an aggregate of 30,658,597 shares of Common Stock. The warrants have an exercise price of $.001 per share and may be exercised for a period of 7 years from issue.

                    On December 22, 2006, TrueYou entered into a subordinated securities purchase agreement (the “Laurus Purchase Agreement”) with Laurus, pursuant to which TrueYou issued to Laurus (i) a senior subordinated secured term note in the principal amount of $1.0 million (the “Senior Subordinated Secured Note”); and (ii) warrants to purchase up to 10,000,000 shares of Common Stock. The warrants have an exercise price of $.001 per share and may be exercised for a period of 7 years. In the event the Senior Subordinated Secured Note is not repaid by April 30, 2007, TrueYou has agreed to issue Laurus warrants with like terms to purchase an additional 8,750,000 shares of Common Stock.

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                    On December 22, 2006, the Company also entered into a loan agreement (the “Senior Subordinated Loan Agreement”) with senior subordinated lenders, (including affiliates of the Company, see “Certain Relationships and Related Transactions”) pursuant to which the senior subordinated lenders loaned TrueYou $3.0 million (the “Senior Subordinated Loan”). Pursuant to a subordination agreement dated as of December 22, 2006, between such subordinated lenders, the Amended Subordinated Lenders and Laurus, the Senior Subordinated Loan is subordinated to the existing senior indebtedness held by Laurus and ranks senior to $4.8 Million and $5.2 Million of subordinated indebtedness previously incurred by the Company. Pursuant to the Senior Subordinated Loan Agreement, TrueYou issued to the senior subordinated lenders, 7 year warrants to purchase an aggregate of 15,384,615 shares of Common Stock with an exercise price of $.001 per share. In the event the Laurus Note is not paid by April 30, 2007, certain of the holders of such warrants have agreed to contribute 8,750,000 warrants back to TrueYou and TrueYou has agreed to issue an additional 8,750,000 Warrants to Laurus (see “Certain Relationships and Related Transactions”).

History of Klinger Advanced Aesthetics, Inc.

                    KAAI commenced business operations on June 29, 2003 as Advanced Aesthetics, Inc. when it purchased the capital stock of the Dischino Corporation for cash, shares of its series A convertible preferred stock and a secured subordinated promissory note. Dischino Corporation operated an established, well-known, beauty salon and spa in West Palm Beach, Florida. In connection with and as part of the financing of the Dischino acquisition, KAAI issued shares of its common stock and series B preferred stock to investors, including affiliates. See “Certain Relationships and Related Transactions”. All of the securities issued have been converted into shares of TrueYou under the Share Exchange Agreement.

                    In November 2003, KAAI acquired three additional facilities. The first was the acquisition of a Palm Beach Gardens spa and clinic facility for cash, shares of its series A convertible preferred stock and a subordinated promissory note. The second acquisition was of a similar facility in Boca Raton, Florida for cash, shares of KAAI’s series A convertible preferred stock and assumption of indebtedness and a third facility located at Boca Pointe in Boca Raton, Florida was acquired for cash and shares of KAAI’s series A convertible preferred stock. Concurrent with the three acquisitions, KAAI entered into an agreement with FCPR L Capital (“L Capital”), a private equity fund managed and represented by L Capital Management SAS, a subsidiary of LVMH by LVMH Moët Hennessy Louis Vuitton S.A. (“LVMH”), whereby L Capital acquired a subordinated convertible promissory note in the amount of $13,300,000 convertible into KAAI’s common stock. KAAI also entered into a Securityholders Agreement, Share Transfer Agreement and other Agreements relating to KAAI. See “Certain Relationships and Related Transactions”. Subsequently, L Capital also acquired $8,200,000 in KAAI’s series D preferred stock. All of the securities issued to L Capital have been converted into shares of TrueYou under the Share Exchange Agreement.

                    In April 2004, KAAI expanded its operations by acquiring nine locations of Georgette Klinger, Inc. for cash, assumption of indebtedness, the issuance of a promissory note and the issuance of series A preferred stock. Georgette Klinger is a well-established chain of high-end beauty salons and clinics. In conjunction with the transaction, KAAI borrowed $10 million from TICC and used a portion of such borrowings to help finance the acquisition of the Klinger operations.

                    On July 7, 2005, KAAI closed a $5,000,000 financing with affiliates of Pequot through the issuance of its series F preferred stock and warrants to purchase 600,000 shares of KAAI’s common stock with an exercise price of $3.00 per share. On September 1, 2005, such security holders exchanged their shares of series F preferred stock for new shares of KAAI’s series H preferred stock to conform the terms of this preferred stock to the Series G issued on September 1, 2005 described below. All of these securities have been converted into shares of TrueYou under the Share Exchange Agreement.

                    On September 1, 2005, KAAI closed a $10,775,000 private placement financing with affiliates of Pequot and others through the issuance of its series G preferred stock and warrants to purchase 1,431,000 shares of KAAI’s common stock with an exercise price of $2.70 per share. All of these securities have been converted into shares of TrueYou under the Share Exchange Agreement.

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                    As a result of the Share Exchange Agreement described above, on December 20, 2005 KAAI became a subsidiary of TrueYou.

                    On January 9, 2006, KAAI changed its name from Advanced Aesthetics, Inc. to Klinger Advanced Aesthetics, Inc.

The Company’s Mission

                    Our vision is to define the standard of care in the medical aesthetics arena through a commitment to credible clinical excellence based on measured outcomes.

                    We offer medical and non-medical appearance-improvement (“aesthetic”) software, products, services and retail concepts to aesthetic service and product suppliers. A brief summary of each of the our business lines is included below:

• Software - The Klinger 360° Best Practices Aesthetics System ™ (the “K360”) is to our knowledge the first comprehensive software and hardware practice management system that facilitates the delivery of evidenced based “best practices” aesthetic services.

• Products – We have designed an exclusive line that includes over the counter (“OTC”) skin care products (Cosmedicine TM or Cosmedicine) that have undergone scientific testing to assure accurate efficacy and safety claims.

• Services – We offer a branded line of protocol-driven aesthetic services (e.g., “The Klinger Cosmedicine Facial”) that is supported by the K360 system and “back bar” products that create measurable results in appearance improvement. Back bar products are those products (hair color, skin care products, etc.) used in providing the services to clients that are not sold, and become part of the cost of services.

• Retail Concepts & Flagship Locations – We operate two flagship stores that allow the marketplace to experience and validate the Company’s software, product, services, and retail design concepts.

KAAI was formed to respond to consumers desire for an aesthetics platform that delivers the following:

• Results – measurable benefits from a brand;

• Convenience – an end-to-end delivery system for aesthetic procedures;

• Products – line that includes OTC skin care products;

• Confidence – peace of mind about the quality and safety of services and products; and

• Quality – a facility that combines high quality procedures, professionals and client service and care.

                    We believe that consumers, while highly intrigued by aesthetic services and products, remain confused due to the highly fragmented nature of delivery platforms, conflicting information and absence of standardized metrics.

                    Our plan is fill this market gap, offering consumers a single, trusted brand and delivery system for accessing services and products that deliver predictable and measurable benefits.

Strategic Differentiation

                    Our market positioning and strategy is to bring measured outcomes and clinical excellence into the medical aesthetics market. Our brand is designed to stand for products and services which offer efficacy and

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reliability, for customers and consumers. We bring together four strategic assets and relationships that elevate our brand and enable strategic differentiation from our competitors. These assets and relationships include:

                    Johns Hopkins Medicine

                    Johns Hopkins Medicine, one of the nation’s most respected medical institutions (“Johns Hopkins”), has a relationship with us to review and assess our process for verifying the safety and clinical quality of our practitioners, protocols and facilities. We participate in the Johns Hopkins Cosmetic Safety Program in our locations where they have found us in compliance after visiting and reviewing the site. Johns Hopkins in consultation with KAAI and the testing companies consulted on how to design the clinical studies of the products and reviewed the results provide by the testing companies on Cosmedicine. Johns Hopkins approved the use of the Johns Hopkins Medicine name as part of the marketing of our facilities, intellectual property, and collateral materials. In return for its consulting services, Johns Hopkins receives fees from KAAI. See “Material Agreements-Agreements with Johns Hopkins” below.

                    Sephora USA, Inc.

                    Sephora USA (“Sephora”) is an upscale beauty retailer with 137 locations in the U.S. and over 450 locations abroad. We have entered into an exclusive agreement with Sephora that includes:

• sale and development of our Cosmedicine skin care line being distributed in Sephora stores, Sephora.com web site, Sephora “Stores-Within-a-Store” in JC Penny and as part of Sephora’s on-air strategic alliance with The Home Shopping Network; and

• development of the Skin Physical^TM system being used in 11 Sephora stores as part of a beta test. Klinger used its K360 technology to develop the Skin Physical^TM system that is jointly owned by Sephora and Klinger, which is a proprietary skin care diagnostic system that is also used to promote the Klinger name and credibility as a leader in clinical skin care.

                    Sephora paid us a performance deposit of $5 million in December 2004 for certain exclusive distribution rights. We are required to return 50% of the deposit to Sephora when the net revenues of Sephora relating to the sale of Cosmedicine products, plus certain Sephora capital expenditures, equal $30 million. We are required to return the remaining 50% when such revenues and capital expenditures equal $60 million. See “Material Agreements-Agreement with Sephora” and “Certain Relationships and Related Party Transactions – Sephora.”

                    Georgette Klinger

                    In 2004 KAAI acquired the nine locations of Georgette Klinger, a 62-year old venerable brand, which was an early innovator of “facials” that measurably improve the health and appearance of facial skin.

                    Medical Advisory Board

                    Our Medical Advisory Board includes leaders from several professional associations in the field of aesthetic medicine, including the American Society of Plastic Surgeons and the American Society of Aesthetic Plastic Surgeons. Johns Hopkins approves the medical protocols of our Medical Advisory Board.

                    Our Medical Advisory Board met once in fiscal 2006 and a representative from Johns Hopkins Medicine was present at the meeting. During Medical Advisory Board meetings, members review and discuss our clinical policies to ensure practices are in accordance with approved Johns Hopkins reviewed protocols. The Medical Advisory Board recommends changes where necessary.

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                    Johns Hopkins also reviews the process by which we approve clinical practitioners.

Business Strategy

                    We provide IP, technology, products, services and retail concepts focused on the consumer appearance market. As detailed in our marketing discussion below, this market was estimated by the Monitor Group to be more than $120 billion by 2007. Our mission is to deliver superior, measurable results to clients through the identification of best practices and utilization of superior technologies to define the standard of care within the field of medical aesthetics. We believe that medical aesthetics is currently an underserved market both in terms of unmet consumer demand and untapped provider opportunities. We currently provide opportunities for medical practitioners to provide aesthetic medical services in our Florida locations and in our flagship stores. Our future plans include solutions to enable a myriad of different providers (e.g., plastic surgeons, dermatologists, and Med Spas) to offer standardized, premium-quality aesthetic services and products to clients in a suitable setting. Our service protocols have been reviewed by our Medical Advisory Board and thought-leader medical institutions including Johns Hopkins Medicine and UT Southwestern Medical Center, both of which provide medical services in a Klinger flagship facility. Johns Hopkins Medicine consulted on the design and information analysis of tests performed on our Cosmedicine products. Our goal is to establish Klinger as the standard of care in the medical aesthetics industry. The implementation of this goal will center on the growth and development of the following distinct but complementary business lines.

Technology and Protocol Driven “Standard of Care” – The K360 System

                    We believe the K360 system is the first comprehensive software and hardware practice management system that facilitates the delivery of evidenced based “best practices” aesthetic services. It includes (i) science-based diagnostic tools that identify the appropriate services and products specific to the needs of each individual client, (ii) care delivery guidelines to insure accurate and repeatable results, and (iii) the ability to capture standardized “outcomes” data that drives quality, consistency and future data mining opportunities. Beginning in fiscal 2007, we began licensing the software to a small number of clients. Our goal is to begin generating a small amount of revenue on this software in 2007. We believe that licensing the software will serve as a catalyst for the sale of our products and services. The technology was developed by Klinger with the assistance of technical providers such as Avanade (a joint venture between Microsoft and Accenture) and tested for accuracy and safety by Johns Hopkins Medicine, whose name appears on screens in the software application. The system is web based, which supports inter-connectivity between the Company’s locations and licensees, including Johns Hopkins Medicine and UT Southwestern Medical Center.

Branded Aesthetic Services

                    Our Company develops branded protocol-driven aesthetic services, including The Klinger Cosmedicine Facial that are supported by the K360 system and back bar products that create measurable results in appearance improvement. Our flagship locations deliver these branded services and serve as the development and beta sites for testing and refining such services in a true retail environment.

Cosmedicine Products

                    Our Company formulates and distributes its own line of clinical skin care products that includes OTC skin care products that have undergone scientific testing to assure accurate efficacy and safety claims. Johns Hopkins Medicine assisted us with several aspects of the product development including testing design analysis. We

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currently market our products through Company stores, Sephora, and the internet. We are negotiating with pharma companies and we plan to broaden our Cosmedicine offering to feature “Cosmedicine Professional”, which we expect will include a line of RX grade products to support the Company’s MD and Med Spa channel strategy. We will seek to market our products through multiple high growth channels including our Company-owned stores, prestigious / high-end retail locations, Direct-To-Consumer television broadcasts, Med Spas and physician’s offices. We have also developed a line of professional back bar products that are designed to be used in conjunction with our proprietary protocol-driven services that utilize best practices data and diagnostic tools to address the specific needs of each client. We currently use these products in our own locations. We launched the Cosmedicine product line in February 2006 for exclusive distribution in Sephora and in our stores and also the back bar products that are used in our own facilities.

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Retail Concepts & Flagship Locations

                    We operate two flagship locations that allow the marketplace to experience and validate our software, product, services and retail design concepts. Our current flagships are located in Dallas, Texas and Chevy Chase, MD at which medical care is delivered by UT Southwestern Medical Center and Johns Hopkins Medicine, respectively. The Dallas location is also adjacent with Sephora and designed to allow internal customer traffic flow between both locations. We also have nine legacy locations operating throughout the country that offer our various products and services.

Operations

Stores / Locations

                    Our locations include the NorthPark flagship in Dallas, Texas, the Chevy Chase flagship in Chevy Chase, Maryland and nine other operating stores. Taken together, our operating presence is national in scope, with locations in key markets such as New York, Boca Raton, Palm Beach Gardens, West Palm Beach, Dallas, Chevy Chase, Chicago and Short Hills, among others. The complete listing of our store locations is as follows:

• Dallas, Texas

• Chevy Chase, Maryland

• Manhattan, New York,

• Manhasset Long Island, New York

• Beverly Hills, California (A)

• Costa Mesa, California

• Boca Raton, Florida

• Palm Beach, Florida (B)

• Chicago, Illinois

• Short Hills, New Jersey

          (A) – Currently closed for renovations
          (B)– There are currently three stores in Palm Beach

Revenue Base

Spa and Salon Services – Our salon offerings include services such as hair styling, coloring, texturizing, treatments, extensions, make-up artistry and manicure/pedicures. Our spa services include treatments such as facials, body treatments (exfoliation, wraps, cellulite treatments), waxing and massage therapy. Spa and salon service revenue represented 65%, 69% and 77% of our total operating revenues for the fiscal years ended July 1, 2006, June 30, 2005, and June 30, 2004, respectively.

Retail Product Sales – Include sales of third party products, our Georgette Klinger line, and our Cosmedicine products through our own locations and internet sites. Retail product sales revenue represented 19%, 22% and 16% of our total operating revenues for the fiscal years ended July 1, 2006, June 30, 2005, and June 30, 2004, respectively.

Wholesale Product Sales – Include sales of our Cosmedicine products at Sephora stores and Sephora’s internet site. These products were launched in fiscal 2006 and represented 8% of our total operating revenues for the fiscal year ended July 1, 2006.

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Cosmetic Medical Services – Our cosmetic medical offerings include injection services (Botox and Restylane), sclerotherapy (vein treatments), peels, microdermabrasion, permanent make-up, laser resurfacing and laser hair removal. Medical service revenue represented 8%, 9% and 7% of our total operating revenues for the fiscal years ended July 1, 2006, June 30, 2005, and June 30, 2004, respectively.

The Market

                    In 2002, prior to the formation of KAAI, The Monitor Group was engaged to do a market study of the aesthetics human appearance-improvement market. According to the study provided, the highly fragmented aesthetics market generated over $80 billion in domestic revenue in 2002. The study further projected the market would reach $120 billion by 2007.

                    The aesthetics market enjoys many favorable characteristics. The market, particularly the more “medically oriented” segments, are enjoying high growth. According to The Monitor Group study, nationally, cosmetic surgery, cosmetic dentistry and cosmetic dermatology were expected to grow at a combined five year CAGR of 11% from 2002 to 2007.

                    We believe this market growth is being driven by (i) aging demographics, (ii) increasing public acceptance of aesthetic interventions, (iii) the emergence of new, less invasive modalities, such as Botox, wrinkle fillers (e.g., Restylane) and lasers, (iv) the introduction of new over-the-counter active product ingredients (e.g., alphahydroxy acid) and (iv) heavy media interest and coverage of the industry. The category’s relative recession-resistance represents another one of the market’s attractive features. According to The Monitor Group, personal care services and products did not suffer price erosion in the previous recession during the early 1990s, and our target customers (primarily females, ages 35-50 with household income of more than $50,000) exhibited the most resiliency in spending and the strongest growth trajectory.

                    Despite the market’s considerable advantages, however, key market gaps remain. While time-pressured consumers find themselves increasingly curious about engaging in appearance improvement, management believes that consumers remain confused and concerned about which procedures to undergo, which products to use, what the results will be and which providers to trust. In large measure, we believe, and our business model assumes, that this is because the aesthetic market is highly fragmented and not configured to meet consumer needs.

                    The Monitor Group determined that approximately 90% of salons and spas are solo-operations. Furthermore, management believes that aesthetic service providers usually limit their services to their designated discipline (e.g. spa care, dentistry, dermatology). Thus, the consumer in search of holistic appearance improvement must research and maintain complex relationships with multiple providers, a dynamic which we believe has created dissatisfaction, inefficiency and confusion. While some providers have endeavored to deepen relationships with clients by supplementing their offerings, they have done so on a limited basis. With insufficient business training/acumen, the quality of these medical practitioners’ ancillary services can be sub-par, which we believe has only magnified consumer frustration.

                    Moreover, we believe most medical practitioners are not specifically trained to deliver aesthetic treatments. For example, dermatologists are schooled in how to remove pre-cancerous moles, not artfully inject wrinkle fillers. In addition, most providers make very limited use of diagnostics and outcomes tools and measurements, so at best, consumers may be left with only subjective assurances about the quality of the results for the treatments they undergo. These dynamics drive a wide variety in aesthetic outcomes (even from consumers visiting the same physician), which only amplifies consumer anxiety.

                    Research we conducted suggests that providers appreciate such consumer anxieties, and that they also wish to provide more objectively measurable results and partake in a more comprehensive offering. We conducted over eighty in-depth interviews with medical and dental practitioners and over 90% agreed that

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their fields were changing and that they were ill-equipped to respond effectively to meet consumers’ broadening needs. Our integrated model aims to address provider concerns about their clients’ needs.

                    In a series of customer focus groups commissioned by us as well as hundreds of in-person interviews conducted in the Boca Raton, Palm Beach, Miami, and Chicago markets, the vast majority of target consumers voiced a desire for a trusted single resource they could depend on for all their appearance improvement service and product needs. They expressed strong emotional investment in the category, but said the time pressures they faced coupled with the lack of trusted information and decision support deterred them from participating more deeply and frequently in the category. In a Harris Interactive national survey conducted on KAAI’s behalf prior to its launch, nine in ten consumers said the most critical catalyst for participating more heavily in the category was being able to trust the quality of the providers. Additionally, 70% rated a “concierge” that could serve as a trusted information source about aesthetic enhancement as extremely important. Nearly half noted that, given the brand promise, they would be predisposed to buy product from KAAI although we realize that the results of consumer focus groups or surveys do not ensure any actual purchases or results from these or other customers.

                    On the retail side, despite a flurry of “physician-brand” over-the-counter introductions (e.g., MD Skincare and N.V. Perricone M.D.), these products have not, in our belief captured significant market share. In other channels such as skin care, we believe that there are consumer needs that have not been fulfilled. We believe this creates an opportunity for our Cosmedicine skin care line.

Competition

                    In each type of product or service, (i) salons and spas (including medical), (ii) skin care products, and (iii) diagnostic technology, we are faced with competition. Numerous competitors currently compete with some sub-section of our product and services offerings and might pose an increasing challenge if they were to expand their menu of offerings.

                    MediSpas. An increasing number of companies are offering a limited combination of spa and dermatology services, as well as retail products. Some multi-site and/or regionally oriented competitors such as SkinKlinic and Lumity focus their offerings on a combination of invasive (e.g. Botox) and non-invasive (e.g., laser) dermatological aesthetic treatments and products.

                    Spas. Elizabeth Arden’s Red Door is our largest national competitor. Hotel chains and other regional and supra-regional players may deepen their current offerings. Furthermore Estee Lauder has now entered into our niche. Estee Lauder has made a foray into the beauty service arena through its Aveda Spas.

                    Salons. The Salon market is the most fragmented service line with over 250,000 businesses classifying themselves as beauty salons. The largest competitor, Regis Corporation, has an approximate market share of 2%. According to published reports, approximately 80% of salons have annual revenue of $0.5 million or less. Chain salons growth is increasing and many are attempting to offer spa oriented services.

                    Product Manufacturers. We currently face competition from numerous competitors including L’Oreal Group, which recently purchased La Roche Posay. La Roche Posay offers skin care products through various distribution channels including dermatologist offices. In addition, Valeant Pharmaceutical recently launched its Kinerase skin care products in Sephora stores, as well as dermatologist offices.

                    Furthermore, several independent “physician brand” professional over-the-counter skin care lines (e.g. Murad Skincare, N.V. Perricone, M.D., DDF Skincare) have achieved distribution on a national scale.

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                    Diagnostic software. We currently face competition from numerous competitors who perform some of the functions and attributes of our system such as NexTech, Inform solutions, Epic System, and Canfield Mirror System. We believe that we are the only provider, however, that combines the functionality of each of these niche providers into one integrated diagnostic solution. Our system adds the unique and proprietary delivery of care protocols based on industry best practices, decision support systems for product and service recommendations based on algorithms derived from clinical outcomes, and a centralized, dynamic outcomes database.

Certain Regulatory Matters

                    Although not exhaustive, the following is a summary of certain regulatory matters that may be applicable to the Company and its products and services.

                    FDA Regulations

                    Many products in our Cosmedicine skin care product line are subject to regulation by the United States, Department of Health and Human Services, Food and Drug Administration, the FDA. The Cosmedicine skin care product line consists of products that are regulated by the FDA as cosmetics and may also be regulated as over-the-counter drugs. The Food, Drug, and Cosmetic Act, (the FD&C Act), is the federal law that governs cosmetics and drugs, defines cosmetics by their intended use, as articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body for cleansing, beautifying, promoting attractiveness, or altering the appearance (i.e., skin moisturizers). Drugs are defined by their intended use, as articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease and articles (other than food) intended to affect the structure or any function of the body of man or other animals.

                    Intended use may be established in a number of ways. Among them are:

• Claims stated on the product labeling, in advertising, on the Internet, or in other promotional materials.

• Consumer perception, which may be established through the product’s reputation.

• Ingredients that may cause a product to be considered a drug because they have a well known (to the public and industry) therapeutic use.

                    Some of our Cosmedicine skin care products may meet the definition of both cosmetics and drugs. This may happen when a product has two intended uses, for example, moisturizers and makeup marketed with sun-protection claims. Such products must comply with the requirements for both cosmetics and drugs.

                    FDA Cosmetic Requirements

                    The two most important FDA laws pertaining to cosmetics marketed in the United States are the FD&C Act and the Fair Packaging and Labeling Act, (the FPLA). FDA’s legal authority over cosmetics is different from other products regulated by the agency, such as drugs, biologics, and medical devices. With the exception of color additives, cosmetic products and ingredients are not subject to FDA pre-market approval authority. The FD&C Act prohibits the marketing of adulterated or misbranded cosmetics in interstate commerce. Violations of the Act involving product composition – whether they result from ingredients, contaminants, processing, packaging, or shipping and handling – cause cosmetics to be adulterated and subject to regulatory action. Improperly labeled or deceptively packaged products are considered misbranded and subject to regulatory action. In addition,

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regulations prohibit or restrict the use of several ingredients in cosmetic products and may require warning statements on the labels of certain types of cosmetics. Under the authority of the FPLA, the Federal Trade Commission, (FTC) requires an ingredient declaration to enable consumers to make informed purchasing decisions. Cosmetics that fail to comply with the FPLA are considered misbranded under the FD&C Act.

                    Cosmetic firms are responsible for substantiating the safety of their products and ingredients before marketing. FDA may take regulatory action if it has information showing that a cosmetic is adulterated or misbranded. FDA can and does inspect cosmetic manufacturing facilities to assure cosmetic product safety and determine whether cosmetics are adulterated or misbranded under the FD&C Act or FPLA. The agency can pursue action through the Department of Justice to remove adulterated and misbranded cosmetics from the market. To prevent further shipment of an adulterated or misbranded product, the agency may request a federal district court to issue a restraining order against the manufacturer or distributor of the violative cosmetic. Violative cosmetics may be subject to seizure. FDA also may initiate criminal action against a person violating the law.

                    The FD&C Act does not set forth any regulations that require specific Good Manufacturing Practices (GMP) or registration requirements for cosmetics but does so for drug products. The FDA, however, does maintain the Voluntary Cosmetic Registration Program for cosmetic establishments and formulations that choose to register.

                    FTC Regulations

                    As described elsewhere in this Report, the packaging, labeling, marketing and promotion of our products are subject to regulation by the Federal Trade commission as well as various state governmental agencies. These regulations apply directly to our Cosmedicine line of products and could also be applied to other products and services we offer.

                    “Corporate Practice” Prohibitions

                    Many states, including California, Illinois, New Jersey, New York and Texas, have statutes that either expressly prohibit or have been interpreted to prohibit what is known as the “corporate practice of medicine.” These laws are designed to prevent interference in the medical decision-making process from anyone who is not a licensed physician. Most states that prohibit the corporate practice of medicine also have similar restrictions in connection with the practice of nursing, and other health professions. Application of these prohibitions varies from state to state. Some states allow a business to exercise significant management responsibilities over the day-to-day operation of a professional practice, while other states restrict or prohibit such activities.

                    In states with “corporate practice” prohibitions, we are unable to provide through the Company, any services that may only be performed by licensed persons, or to assert financial control of our allied professionals’ practices. Furthermore, in those states, we are unable to bill our clients directly for services performed by such professionals, and are unable to include revenues from the performance of such services in our own revenues. The existence of these laws has the effect of limiting the operations of the Company in states with corporate practice limitations.

                    Licensing

                    We are required to obtain licenses from various federal, state, and local agencies to provide our services. In addition, every state imposes licensing requirements on the individual medical, dental, and other healthcare providers with whom we may enter into arrangements. States also impose licensing and other requirements on many of the spa and salon services we offer.

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                    Federal Physician Self-Referral Law

                    Provisions of the Social Security Act commonly referred to as the “Stark Law” prohibit referrals by a physician of Medicare patients to providers for certain “designated health services” if the physician (or his or her immediate family member) has an ownership interest in, or other financial relationship with, the provider, unless an exception applies.

                    We have arrangements with medical professionals under which we compensate various physicians and other healthcare providers for services, which arrangements could constitute financial relationships under the Stark Law definition. We believe that all of our current provider relationships comply with this law.

                    State Fee-Splitting Laws

                    Many states have statutes and regulations that either expressly prohibit or have been interpreted to prohibit physicians and other healthcare providers from sharing or splitting fees with unlicensed entities, such as us. Other states have fee-splitting prohibitions that apply when professional fees are shared with a referral source or even an unaffiliated licensed professional.

                    Violations of any of these state laws may result in censure, fines, loss of a healthcare provider’s license, or even criminal penalties. These statutes and regulations vary from state to state and are often vague and subject to differing interpretations.

                    We have not yet opened any Integrated Flagship facilities in California, Illinois, New Jersey, or New York, but may do so. Because of the corporate practice of medicine, fee-splitting and self-referral prohibitions in those states, the Company intends to enter into management or facility fee arrangements with physicians (or professional entities owned by physicians) in which we will provide office space and management services in exchange for fees that are negotiated and determined in advance. The physician or entity will be responsible for employing or contracting with physicians, nurse practitioners and other healthcare professionals and will be solely responsible for all aspects of diagnostic, clinical and other medical services, including the selection, training, direction and supervision of licensed professionals. We intend to make clear to the public that our facilities do not provide medical services and that any medical service provided at our facilities is performed solely by or under the supervision of an independent medical professional or practice.

                    In Florida and Maryland, where we currently operate several facilities, there is no corporate practice of medicine prohibition and, accordingly, we are able to employ or contract with physicians, nurse practitioners and other medical professionals and to hold ourselves out to the public as providing medical services. Under our current Florida model, a portion of the total fees paid by the patient is retained by us as compensation for the management services and office space that we provide.

Material Agreements

                    Agreements with Johns Hopkins Medicine

                    On November 21, 2003 KAAI entered into a Consulting Services Agreement (“Consulting Agreement”) with Johns Hopkins Medicine (“Johns Hopkins”), acting through Johns Hopkins Health System Corporation, and the Johns Hopkins University. Under the Consulting Agreement, Johns Hopkins agreed to provide consulting services to KAAI consisting of: (i) review and assessment of our medical delivery protocol document and (ii) consultation on the development of outcomes studies methodologies. The Consulting Agreement also sets forth the conditions for the use of the Johns Hopkins mark. The term of the agreement is until November 21, 2008. The Consulting Agreement may be terminated by either party at any time with 120 days written notice.

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                    The consideration for the review and assessment services provided by Johns Hopkins was $5,000 per day. The consideration under this original Consulting Agreement for the limited use of the Johns Hopkins mark was $0.3 million per year, payable in quarterly installments, and 500 shares of KAAI’s series E preferred stock.

                    As of June 30, 2005, Johns Hopkins held a minority interest in KAAI constituting shares of Series E Preferred Stock. The Series E Preferred Stock represented Johns Hopkins’ equity interest in KAAI. On May 4, 2006, Johns Hopkins voluntarily forfeited all of its equity interest in KAAI shares of Series E Preferred Stock. The forfeited shares constituted all issued and outstanding shares of Series E Preferred Stock and as a result, as of July 1, 2006, no shares of Series E Preferred Stock of KAAI are issued and outstanding. As a result of the forfeited shares, the Company canceled these shares at the end if its fiscal year, ending July 1, 2006.

                    On March 23, 2005, KAAI signed an amendment to the Consulting Services Agreement (“Amendment” or “Amended Agreement”) with Johns Hopkins effective June 1, 2005. The purpose of this Amendment was to expand the oversight function that Johns Hopkins would perform for the Company to include increased medical protocol review, medical facility design and physician credentialing. In addition, the Amendment expanded use of the Johns Hopkins trade name by KAAI. For the increased oversight and review services provided by Johns Hopkins, KAAI agreed to increase the consideration paid to Johns Hopkins from $.3 million to $1.0 million in the first year of the contract, $1.5 million in the second year of the contract and $1.0 million annually thereafter until the term of the contract is reached. The term of the Amended Agreement is until June 1, 2010. The Amended Agreement may be terminated by either party at any time with 120 days of written notice.

                    In December 2004 KAAI entered into a Services and Licensing Agreement with Johns Hopkins, acting through Johns Hopkins Health System Corporation, and the Johns Hopkins University. Under the Services and Licensing Agreement, Johns Hopkins agreed to provide the following services to KAAI: (i) investigate current methods for skin care parameter testing at the point of sale; (ii) where existing protocols and equipment for skin care parameter testing do not exist or are not acceptable to Johns Hopkins, develop acceptable methods to measure the condition of clients’ skin; (iii) create a new testing methodology to validate skin care product efficacy; (iv) oversee the ongoing testing of skin care products using the Johns Hopkins testing standards; and (v) oversee the testing of 15 of our skin care products using the agreed upon testing standards. This Services and Licensing Agreement was subject to the satisfaction of certain conditions, which KAAI had to satisfy by October 31, 2005. The conditions include: (i) written agreement by Johns Hopkins and KAAI on: (A) the parameters for research and academic freedom as opposed to work for hire as noted in the agreement; (B) the amount of royalty fees, guaranteed annual fees and equity as noted the agreement; (C) the buyout or additional stock to be provided Johns Hopkins at the end of the term of the agreement; and (D) an appropriate scope of coverage for product and/or contractual liability insurance to be maintained by KAAI; (ii) final approval by internal Johns Hopkins committees for the Permitted Statement (as defined in the agreement); and (iii) documentation of the matters described in (i) and (ii) by an amendment to the agreement. On November 10, 2005, the period by which KAAI was required to satisfy the conditions was extended to December 31, 2005. On January 3, 2006, the parties extended such period until March 31, 2006. In March 2006, the parties extended such period to June 30, 2006. On June 21, 2006, the period was extended to September 30, 2006. The term of the servicing and licensing agreement was to be 5 years after the satisfaction of the conditions. KAAI and Johns Hopkins have not sought further extension of the time period to satisfy the conditions in the Services and Licensing Agreement and do not intend to continue that Agreement. Therefore, unless changed by current negotiations, we do not anticipate that there will be any reference to Johns Hopkins on our Cosmedicine products packaging after our existing packaging is used up. Packaging that has already been printed with the reference to Johns Hopkins will be used until existing inventories are depleted. Johns Hopkins is currently branded on our K360 software and we do expect that to continue in the future. In addition, the Johns Hopkins name is used in the marketing of our medical services as the name appears on the doors of our on-site medical facilities. Even though we do not

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intend to continue the Services and Licensing Agreement, the existing Consulting Services Agreement previously discussed, is still in full force and effect.

                    We have an alliance with John Hopkins, widely acknowledged to be among the most respected medical institutions in the US. John Hopkins has agreed to review and assess our process for verifying the safety and clinical quality of our practitioners, protocols and facilities; it also approves the medical protocols of our Medical Advisory Board and provides consulting on the scientific testing of our Cosmedicine product line. John Hopkins approved the use of the John Hopkins Medicine name as part of the marketing of our facilities, intellectual property and certain collateral materials as described in the Consulting Services Agreement and Amendment.

                    Johns Hopkins Medicine’s role with KAAI is to provide aesthetic-improvement clients with information regarding performance and safety claims. The relationship is designed to provide consulting services on aspects of our medical services business, and on the safety and performance of our skin care product line. KAAI’s goal is to help establish consistent, safe delivery of medical aesthetic services in its centers, to create objective testing of the effects of our skin care products, and to focus on measurable elements of skin health.

                    Agreement with Sephora USA

                    In December 2004 KAAI entered into a Retail Alliance Agreement with Sephora USA, LLC (“Sephora”). Pursuant to the agreement KAAI granted Sephora the rights to: (i) sell its Cosmedicine products in Sephora retails stores, through its website and any other retail channels, (ii) utilize certain of KAAI’s intellectual property and methods in order to operate the KAAI stores in Sephora stores, (iii) develop with KAAI the adjacent KAAI facilities and (iv) sublease retail space from us for the purpose of constructing and operating a Sephora store within KAAI centers. The term of the agreement is until December 31, 2010.

                    Upon execution of the agreement, Sephora deposited a performance deposit in an amount of $5.0 million with an escrow agent, which was subsequently paid to KAAI. If Sephora, pursuant to the terms of the agreement, terminates the agreement with KAAI it may have the right to recoup a portion of the $5.0 million performance deposit. Sephora will also have the right to earn back its performance deposit if the arrangement is successful. KAAI will be required to return to Sephora 50% of the performance deposit at such time that the “Net Revenues” of Sephora relating to the sale of Cosmedicine products plus Sephora “Capital Expenditures” (each as defined in the agreement) equals $30 million and the remaining performance deposit at such time that such “Net Revenues” plus “Capital Expenditures” equals $60 million. We have recorded $2.7 million in net revenues on a cumulative basis as of July 1, 2006. See “Certain Relationships and Related Party Transactions – Sephora.”

Agreements with Mark Potter and Atlantis Laboratories

                    On April 4, 2006, KAAI entered into a Consulting Agreement (the “Consulting Agreement”) with Mark Potter and Atlantis Laboratories, Inc. (“Atlantis” and together with Mr. Potter, the “Formulators”). The Formulators have developed, formulated and produced skin care products for our Cosmedicine product line. Under the Consulting Agreement, the Formulators agreed to use their best efforts to provide all services necessary to (i) expand the number of product types in our over-the-counter Cosmedicine line, (ii) formulate and develop an enhanced version of (a) Cosmedicine, (b) a foundation cosmetic line, (c) a hair care product line and (d) a cosmetics line, and (ii) have such products produced and shipped by Atlantis for sale at our spa and salon facilities and other outlets.

                    The Consulting Agreement also contains a non-competition clause that provides, among other things, that (i) the formulas developed by the Formulators for KAAI are proprietary and may not be used by the Formulators for any purpose other than on behalf of KAAI and may not be utilized in products sold to

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anyone other than KAAI and (ii) except for limited exceptions, the Formulators will not directly or indirectly acquire or own any interest in any entity engaged in the business conducted by KAAI. Mr. Potter is to be paid an annual consulting fee of $207,000 in equal monthly installments of $17,250. In addition, KAAI granted Mr. Potter on September 18, 2006, an option to purchase the TrueYou equivalent of 150,000 shares of KAAI common stock at an exercise price of $0.22 per share, vesting over a period of three years. Mr. Potter also received 100,000 options to purchase KAAI common stock on February 1, 2005, at an exercise price of $4.00 per share, vesting over four years. The initial term of the Consulting Agreement is five years.

                    In connection with the Consulting Agreement, on April 12, 2006, KAAI entered into a formula agreement with the Formulators and JPMorgan Chase Bank, N.A., as escrow agent. Pursuant to the formula agreement, the Formulators agreed that all existing and future formula, manufacturing procedures and specifications, along with specific details of all raw material suppliers and specifications for the raw materials relating to the products to be purchased by us from the Formulators are to be deposited with the escrow agent. In the event of certain specified events and/or contingencies, the escrow agent is required to deliver such formulas, manufacturing procedures and specifications to KAAI.

                    Pursuant to the Consulting Agreement, KAAI agreed to loan up to a total of $1,100,000 to Mr. Potter for the purchase of land in Conroe, Texas and construction of a laboratory and manufacturing facility to manufacture and supply the Cosmedicine line of products. On April 17, 2006, KAAI made a loan of $392,200 to the Formulators for the purchase of the property evidenced by a promissory note. Under the promissory note, the principal sum of $392,200 with interest at the rate of 6-1/2% per annum is payable in 120 monthly installments of principal and interest in the amount of $4,453.00 each with the first installment due on May 1, 2006. At July 1, 2006 the Company had a note receivable balance of $0.4 million from Mr. Potter which is included in other assets on the consolidated balance sheet.

                    In connection with the foregoing, KAAI also entered into a construction loan agreement dated April 4, 2006 with the Formulators pursuant to which the Formulators executed a $650,000 construction loan promissory note to KAAI for the development of a laboratory and manufacturing facility to be operated by Atlantis on the Property. Under the terms of the construction loan agreement, we are to make advances to the Formulators under the construction loan promissory note from time to time in connection with the construction on the property. The amount of each advance will be determined by KAAI. The unpaid principal balance on the construction loan promissory note bears interest at a rate of 6-1/2% per annum. Monthly installments of interest only on the outstanding principal balance will be due commencing on the first day of the month following the initial advance and continuing on the first day of each subsequent month up to and including April 1, 2007. Commencing May 1, 2007, and continuing through April 1, 2016, installment payments of principal and interest will be due in such amount as will be sufficient to pay in 108 equal payments all principal and accrued interest.

Intellectual Property

                    We consider trademark protection to be important to our business and we are the owners of numerous U.S. and foreign trademark applications/registrations. Significant trademarks include: KAAI, the KAAI logo, KAAI Signature Services, Klinger Advanced Aesthetics, Cosmedicine, Georgette Klinger, SkinState, Personal Aesthetics Blueprint, Aesthetic Concierge, Truth is Beauty, Nth (K Logo) Service Services and The Place of Possibilities.

                    We also consider patent protection to be important to our business and we are the owners of pending U.S. patent applications and related foreign applications covering systems and methods relating to aesthetic improvement. In March 2006, we filed a provisional patent application for the grant of a patent for our K360 system and filed permanent applications in June 2006.

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Employees

                    On January 15, 2006 and July 1, 2006, we had 542 and 535 employees, respectively. We consider our relations with our employees to be satisfactory. We believe our future will depend in large part on our ability to attract and retain highly skilled employees.

Available Information

                    All of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and all amendments to those reports, filed with or furnished to the Securities and Exchange Commission (the “SEC”), are available free of charge through our corporate internet website, www.klinger.com, as soon as reasonably practicable after we have electronically filed such material with, or furnished it to, the SEC.

                    The information on this website is not, and shall not be deemed to be, part of this Report or incorporated into any other filings we make with the SEC.

ITEM 1A. RISK FACTORS

                    You should carefully consider each of the following Risk Factors and all other information in this Report. These Risk Factors are not the only ones facing the Company. Our operations could also be impaired by additional risks and uncertainties. If any of the following risks and uncertainties develop into actual events, our business, financial condition and results of operations could be materially and adversely affected.

Risks Related to the Company

We have a history of large operating losses.

                    As of July 1, 2006 we had an accumulated net deficit of $214.3 million. These losses result, in part, from our high corporate expenses in connection with the establishment of the business, unrealized losses on convertible securities and the limited revenues we had during the same periods. We believe that our corporate expenses, as a percent of revenue, will decrease going forward as a result of revenue increases, however, there are no assurances that we will be able to significantly grow our revenue, reduce our corporate expenses or become profitable in the future. These factors raise doubt about our ability to continue as a going concern. Also, as a result of our losses, the opinion of our Independent Registered Public Accountants on our audited financial statements for fiscal year 2006 has included an explanatory paragraph relating to “going concern consideration.” A going concern consideration explanatory paragraph indicates that our auditors have substantial doubt about our ability to continue as a going concern for at least a reasonable period of time. Our ability to continue as a going concern ultimately depends on our ability to increase sales and reduce expenses to a level that will allow us to operate profitably and sustain positive operating cash flows, and raise additional capital. We have been unsuccessful to date in implementing a business plan which enables us to operate profitably.

We need additional capital to meet our working capital requirements and debt service and will be required to curtail our operations and / or our planned expansion if it is not available.

                    Our principal future uses of funds are for debt service, working capital requirements and capital spending to execute our strategy. It is expected that our net losses will continue at least through the end of fiscal year 2008. In addition, subject to our ability to raise additional capital, we expect to spend approximately $2.2 million during fiscal year 2007 to continue to develop an information technology infrastructure, and continue to develop our proprietary diagnostics products. Our need for additional capital to finance our operations and growth will be greater if, among other things, our revenue or expense estimates

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prove to be incorrect. We have had several recent financings (see Item I of this Report) with the most recent completed on December 22, 2006. These financing are not sufficient to enable the Company to continue its operations and additional capital is required and is currently being sought. We may not be able to obtain financing in which event we may be unable to continue our operations and/or implement our strategy.

Our Cosmedicine line of products may not be successful.

                    Our future success relies in part on the continued development and success of our Cosmedicine product line. At such time as our existing packaging is used, our Cosmedicine products will no longer include any reference to Johns Hopkins. There is no guarantee that we will be able to successfully penetrate the cosmetics market and profitably sell our Cosmedicine products. If we fail to do so our results of operations will be adversely affected.

We have only one supplier for our Cosmedicine products.

                    Atlantis is our only supplier of Cosmedicine and is the owner of all of the rights to the intellectual property developed in connection with such formulations. We have entered into a Formula Agreement with Atlantis under which all formulas, manufacturing procedures, and raw material suppliers and specifications for the raw materials were deposited with an Escrow Agent. In the event of certain specified events and/or contingencies, the Escrow Agent is required to deliver such formulas, manufacturing procedures and specifications to KAAI. If we were ever to default under the agreement, we would lose these rights. In addition, we cannot be certain that even if the Escrow Agent delivered such formulas to us that we would be able to successfully manufacture our Cosmedicine products. Loss of the formulations and/or problems with our supplier which impairs our ability to provide Cosmedicine products could adversely affect our financial results.

We are dependent on our relationships with Sephora and Johns Hopkins

                    Our agreements and relationship with both Sephora and Johns Hopkins provide us with key differentiation versus existing and potential competitors. Our agreements grant Sephora and Johns Hopkins, respectively, the right to terminate their agreement with us for a variety of reasons. The Sephora agreement provides that if Mr. Richard Rakowski, Chairman and Chief Executive Officer stops serving at any time prior to December 31, 2007, Sephora may terminate the agreement except that if it is a result of death or disability, such termination will not occur so long as KAAI designate a qualified replacement within 90 days. If Johns Hopkins terminates the Consulting Agreement, our medical services revenue can be negatively affected. Medical services revenue represented 8% of our operating revenues in fiscal 2006. If Sephora terminates their agreement with us in addition to a negative affect on our revenues, under certain circumstances we may have to reimburse a portion of the upfront $5 million performance deposit we received from them. In addition, the loss of either or both of these relationships could substantially decrease our differentiation from competitors and could materially adversely affect the Company.

The demand for our products and services may be adversely affected by changes in the economy.

                    Demand for our services and products is driven by consumers whose broad spending patterns are affected by the state of the general economy. Over recent years, the overall market for cosmetic medical procedures and spa services has grown, and demand for other services has not declined. However, we do not provide essential and basic services and negative changes to economic conditions could lessen the demand for our services and products.

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We depend on our senior management and key employees, the loss of which could adversely affect our operations.

                    Our success depends to a large degree upon the skills of our senior management team and current key employees, such as Richard Rakowski and Matthew Burris, and upon our ability to identify, hire, and retain additional sales, marketing, technical and financial personnel, including managers for each of our retail outlets. We may be unable to retain our existing key personnel or attract and retain additional key personnel. We do not maintain key person life insurance for any of our officers or key employees. Due to our reliance on our senior management and key employees, the loss of any of our key executives or the failure to attract, integrate, motivate, and retain additional key employees could have a material adverse effect on our business, operating results and financial condition. In addition, several members of our senior management have recently joined us and may need to spend a significant amount of time learning our business model and management system while performing their regular duties. The integration of new executives or any new personnel could disrupt our ongoing operations.

                    We also rely on the medical practitioners and aesthetics professionals who will deliver our services. These professionals are not subject to long-term employment contracts and a loss of these professionals would affect our ability to deliver our services and execute our business plan.

Government regulation may affect our ability to carry out our business plan and may change from time to time.

                    The U.S. healthcare industry, including aspects of our business, is highly regulated, and regulatory agencies are vested with broad discretion in interpreting applicable laws and regulations. The interpretation of these laws also varies from state to state. While we believe that our operations are conducted so as to comply in all material respects with the healthcare laws that apply to our operations in each state, our arrangements and current and proposed activities have not been examined by federal or state authorities for compliance with applicable laws and regulations, and no governmental opinions have been sought or received. Furthermore, there can be no assurance that the regulatory environment in which we operate will not change significantly in the future, requiring us to restructure our arrangements. Our revenues, and those of our allied professionals, could be adversely affected by unanticipated changes in applicable laws.

                    In addition, a current regulatory proposal by the FDA Center for Drug Evaluation and Research (“CDER”) relating to required labeling could raise barriers to both entry and remaining in the skin care market. Additionally legislation relating to cosmetics is sporadically proposed and new legislation could impact the marketability and profitability of some cosmetic ingredients and/or products, which may include our Cosmedicine line of products.

                    We are required to obtain licenses from various federal, state, and local authorities for our facilities and certain of the healthcare services that will be offered by or through us. In addition, every state imposes licensing requirements on the individual medical providers and other professionals with whom we have or intend to enter into contractual arrangements. If we and these individuals cannot obtain and maintain all required licenses, our operations may suffer.

We are subject to “corporate practice of medicine” prohibitions.

                    Many states, including California, Illinois, New Jersey, New York and Texas, have statutes that either expressly prohibit or have been interpreted to prohibit what is known as the “corporate practice of medicine.” These laws are designed to prevent interference in the medical decision-making process from anyone who is not a licensed physician. Most states that prohibit the corporate practice of medicine also have similar restrictions in connection with the practice of nursing, and other health professions. Application of these prohibitions varies from state to state. Some states may allow a business to exercise significant management responsibilities over the day-to-day operation of a professional practice, while other states restrict or prohibit such activities.

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                    In states with “corporate practice” prohibitions, we will be unable to provide through the Company any services that may only be performed by licensed persons, or to assert financial control of our allied professionals’ practices. Furthermore, in those states, we may be unable to bill our clients directly for services performed by such professionals, and will be unable to include revenues from the performance of such services in our own revenues. This is the case in our Maryland and Texas locations and our operations were developed accordingly. If a state in which we operate determines that we are engaged in the corporate practice of a profession, we might be required to restructure or cease such operations and be subject to penalties as well. The need to comply with “corporate practice” prohibitions may also increase our administrative costs or even make allied professionals in certain states unwilling to enter into contractual relationships with us.

We are subject to “fee-splitting” prohibitions.

                    Many states we have operations in, including California, Illinois, New Jersey, New York and Texas, have statutes and regulations that either expressly prohibit or have been interpreted to prohibit physicians and other healthcare providers from sharing or splitting fees with unlicensed entities, such as us. Other states have fee-splitting prohibitions that apply when professional fees are shared with a referral source, even an unaffiliated licensed professional. Violations of these state laws may result in censure, fines, loss of a healthcare provider’s license, or even criminal penalties. These statutes and regulations vary from state to state and are often vague and subject to differing interpretations. If a state in which we operate determines that our financial arrangements with allied professionals constitute fee-splitting, we might be required to restructure or cease such operations, and we and/or our allied professionals might be subject to penalties as well.

We are exposed to possible liability in excess of insurance coverage.

                    Each licensed professional with whom we establish a relationship is required to carry general liability and professional liability (malpractice) insurance to cover potential lawsuits and claims. As a result of our association with such professionals, we may be named as a co-defendant in any suit brought against them and, even if we are not ultimately subject to liability, we may incur significant costs in defending such a suit. While we do not practice a profession and thus cannot purchase malpractice insurance for ourselves, we require our allied professionals to name us as an “additional insured” under their own malpractice policies, if permitted by the insurance carriers. We also carry insurance coverage for our directors and officers, as well as general liability insurance, in amounts that we anticipate will adequately cover potential liability exposure. Still, large, unforeseen damage awards may exceed our coverage. It is also possible that coverage may not continue to be available to us on satisfactory terms. Successful claims against us or our allied professionals could have a material adverse impact on our business and financial condition.

We are subject to regulation by the FDA.

                    The Federal Food, Drug and Cosmetic Act, and the regulations promulgated thereunder, and other federal and state statutes govern, among other things, the testing, manufacture, safety, labeling, storage, recordkeeping, advertising and promotion of cosmetic products. Our Cosmedicine skin care product line will be regulated by the United States Department of Health and Human Services, or FDA. Our Cosmedicine skin care product line consists of products that are subject to regulation by the FDA as cosmetics and may also be regulated as over-the-counter drugs. If they will be regulated as over-the-counter drugs they may require additional approvals and testing. The process of obtaining and maintaining regulatory approvals for the manufacturing or marketing of our Cosmedicine products could be costly and time-consuming and is subject to unanticipated delays. Regulatory requirements ultimately imposed could also adversely affect our ability to test, manufacture or market products.

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We are subject to regulation by Federal Trade Commission.

                    The FTC, together with other governmental agencies have enacted regulations that prohibit the advertising, packaging, labeling, promotion and similar marketing of any cosmetic which include any false or misleading claim and that any representation with respect to the efficacy of such product must have a competent and reliable basis. We will make every effort to advertise, package, label, promote and otherwise market our products in compliance with applicable regulations of the FTC and applicable state laws. However, determination of compliance is subject to wide interpretation and we can make no assurance that a governmental agency will not challenge the manner and method by which we market our products.

Risks Related to Our Common Stock

Plans to increase the authorized number of shares and effect a reverse stock split could have an adverse effect on the market value of our Common Stock.

                    We have taken steps to increase the number of shares of Common Stock the Company is authorized to issue so that we would have sufficient shares of Common Stock available for the conversion of all outstanding shares of Preferred Stock and the exercise of all outstanding Series B Preferred Warrants and Common Stock Warrants into Common Stock. The shares reserved for issuance are currently greater than those authorized. Increasing the Authorized Shares would facilitate the conversion of the Preferred Stock, Series B Preferred Warrants and Common Stock Warrants issued in connection with the Share Exchange Agreement, Series D Preferred Financing, senior debt financing and subordinated debt financings. Such conversion into Common Stock will create dilution to existing Common Stock holders.

                    In addition, we have taken steps to initiate a reverse stock split. The effect of this reverse split when implemented will be to increase the price of the Common Stock (at least initially) and may also result in a reduced number of shareholders of the Common Stock. A higher stock price, if coupled with improved results in performance could make it easier for the Company to list its securities on a different trading market. The traditional effect of a reverse stock split, an increase in price, may be offset due to the substantial number of additional shares of Common Stock available in the market place as a result of the conversion described above.

Certain provisions of our charter documents and Delaware law could discourage potential acquisition proposals and could deter, delay or prevent a change in control of our company that our stockholders consider favorable and could depress the market value of our Common Stock.

                    Our certificate of incorporation grants our Board of Directors authority to issue additional shares of preferred stock. The preferred stock, if issued, could have liquidation, dividend and other rights superior to the rights of our Common Stock. Potential issuances of preferred stock may delay or prevent a change in control of our Company, discourage bids for the Common Stock, and adversely affect the market price and the voting and other rights of the holders of our Common Stock.

                    We are a Delaware corporation subject to the provisions of Section 203 of the Delaware General Corporation Law, an anti-takeover law. Generally, this statute prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which such person became an interested stockholder, unless the business combination is approved in a prescribed manner. A business combination includes a merger, asset sale or other transaction resulting in a financial benefit to the stockholder. We anticipate that the provisions of Section 203 may encourage parties interested in acquiring us to negotiate in advance with our board of directors because the stockholder approval requirement would be avoided if a majority of the directors then in office approve either the business combination or the transaction that results in the stockholder becoming an interested stockholder.

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Future sales of our Common Stock could depress our market price and diminish the value of your investment.

                    Future sales of shares of our Common Stock or securities that are convertible into Common Stock, could adversely affect the market price of our Common Stock. If our principal stockholders sell a large number of shares, or if we issue a large number of shares, the market price of our Common Stock could significantly decline. Moreover, the perception in the public market that our principal stockholders might sell shares of Common Stock could depress the market for our Common Stock.

Our Common Stock price could be volatile, which could result in substantial losses for investors.

                    Our Common Stock price could be subject to volatility. Fluctuations in the price of our Common Stock could be rapid and severe and could leave investors little time to react. Factors that could affect the market price of our Common Stock include:

• the limited amount of our Common Stock held by our non-affiliates;

• quarterly variations in our operating results;

• general conditions in our industry or in the securities market;

• changes in the market’s expectations about our earnings;

• changes in financial estimates and recommendations by securities analysts concerning our Company or the consumer products industry in general;

• operating and stock price performance of other companies that investors deem comparable to us;

• news reports relating to trends in our markets;

• changes in laws and regulations affecting our business;

• sales of substantial amounts of Common Stock by our directors, executive officers or principal stockholders or the perception that such sales could occur; and

• general economic and political conditions such as recessions and acts of war or terrorism.

                    Volatility in the price of our Common Stock could be exacerbated by the relatively small number of shares of our Common Stock that are publicly traded. Fluctuations in the price of our Common Stock could contribute to a loss of all or part of any investment in our Common Stock.

Because our shares are deemed “penny stocks,” you may have difficulty selling them in the secondary trading market.

                    The Commission has adopted regulations which generally define a “penny stock” to be any equity security that has a market price (as therein defined) less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. Additionally, if the equity security is not registered or authorized on a national securities exchange or NASDAQ, the equity security also would constitute a “penny stock.” As our Common Stock falls within the definition of penny stock, these regulations require the delivery, prior to any transaction involving our Common Stock, of a risk disclosure schedule explaining the penny stock market and the risks associated with it. Disclosure is also required to be made about compensation payable to both the broker-dealer and the registered representative and current quotations for the securities. In addition, monthly statements are required to be sent disclosing recent price information for

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the penny stocks. The ability of broker/dealers to sell our Common Stock and the ability of shareholders to sell our Common Stock in the secondary market would be limited. As a result, the market liquidity for our Common Stock would be severely and adversely affected. We can provide no assurance that trading in our Common Stock will not be subject to these or other regulations in the future, which would negatively affect the market for our Common Stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

N/A

ITEM 2. PROPERTIES

Corporate Headquarters

                    Our corporate headquarters are located in leased premises at Building No 501, Fifth Floor, 7 Corporate Park, Norwalk, CT 06851.

Integrated Flagships

                    Our locations include the NorthPark flagship in Dallas Texas, the Chevy Chase flagship in Chevy Chase, Maryland and nine other operating legacy stores. The flagship locations offer a variety of spa / salon services, skin care products, and cosmetic medical services provided by medical offices owned and operated by Johns Hopkins and UT Southwestern.

Other Locations

                    In addition to the two company flagship locations, we have nine other operating facilities, and one location, Beverly Hills, that has been closed for remodeling.

                    The following chart sets forth data regarding our facilities:

City	Address	Facility Size (sq/ft)	Lease Expiration Date
Costa Mesa (Spa Facility)	South Coast Plaza, Level 2 3333 Bristol Street Costa Mesa, CA	3,365	1/31/2008
Beverly Hills (Spa Facility)	131 South Rodeo Drive, Beverly Hills, CA	6,630	9/30/2015
Dallas-OLD (Spa Facility)	Inwood Village Shopping Center 5560 West Lovers Lane Suites 250 & 252, Dallas, TX	6,856	7/26/2006 (1)
Short Hills (Spa Facility)	The Mall at Short Hills 1200 Morris Turnpike, Suite A-139 Short Hills, NJ	3,475	8/31/2008
Manhasset (Spa Facility)	1950 Northern Blvd. Space A-2 Manhasset, NY	6,313	2/27/2007

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Chicago (Spa Facility)	Water Tower Place Level 3 835 North Michigan Avenue Chicago, IL	4,779	12/31/2012
Washington (Spa Facility)	Chevy Chase Pavilion 5335 Wisconsin Ave. N.W. Washington, DC	5,551	8/31/2006 (1)
Palm Beach (Spa Facility)	The Esplande Store No. 211 150 Worth Ave. Palm Beach, FL	2,739	5/31/2010
Hasbrouck Heights (Office)	500 Route 17, Suite 307 Hasbrouck Heights, NJ	2,260	9/30/2006 (1)
Palm Beach Gardens (Spa Facility)	5530-5540 PGA Blvd. PGA Commons, Suite 200 Palm Beach Gardens, FL	10,003	9/22/2008
West Palm Beach (Spa Facility)	2511 South Dixie Highway West Palm Beach, FL	10,732	6/30/2008
Boca Raton (Spa Facility)	Building H 6853 S.W. 18th Street Boca Raton, FL	3,455	1/31/2008
Boca Raton (Spa Facility)	Building H 6877 S.W. 18th Street Boca Raton, FL	7,923	2/29/2008
New York (Spa)	501 Madison Ave. New York, NY	13,800	4/30/2013
New York (office)	501 Madison Ave. New York, NY	3,800	4/30/2013
Connecticut (Corporate Headquarters)	Building 501 Merritt 7 Corporate Park Norwalk, CT	13,340	12/31/2015
Chevy Chase Collection (Spa Facility)	The Collection, Level 2 5481 Wisconsin Avenue Chevy Chase, MD	6475	5/31/2021
Dallas (Spa Facility)	NorthPark Center 8687 North Central Expwy, Suite 2R1-2236 Dallas, TX	5116	6/15/2016

(1) – Lease was terminated at expiration of the lease due to a move to a new location.

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ITEM 3. LEGAL PROCEEDINGS

UBS Lawsuit

                    UBS Securities, LLC commenced a lawsuit against KAAI in the Supreme Court of the State of New York, County of New York on September 18, 2006. The complaint alleges that UBS was engaged to provide investment banking services to KAAI and that UBS is owed a fee of $1,750,000 with respect to a private placement that was consummated in June, 2006. In the event we are unsuccessful in defending the lawsuit, it would have a material adverse effect on KAAI.

Other Contingencies

                    We are a party to a number of legal actions, proceedings or claims. While any action, proceeding or claim contains an element of uncertainty, management believes that the outcome of such actions, proceedings or claims will not have a material adverse effect on the business, financial condition or results of operations.

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

                    On March 22, 2006, the Company’s Board of Directors approved and recommended that the stockholders of the Company approve an amendment to our Certificate of Incorporation (the “Certificate of Amendment”) to (i) change the Company’s name from TrueYou.Com Inc. to Klinger Advanced Aesthetics, Inc., (ii) increase the number of authorized shares of Common Stock that we are authorized to issue from 20,000,000 to 60,000,000, and (iii) implement a reverse stock split whereby each twenty-five (25) shares of our issued and outstanding Common Stock will be combined into one (1) share of Common Stock.

                    On March 23, 2006 the Certificate of Amendment was approved by: (A) the holders of a majority of the Company’s outstanding stock entitled to vote with respect to an amendment of the Company’s certificate of incorporation, (B) the holders of more than 50% of the outstanding shares of Series C Preferred Stock, in accordance with the Certificate of Designation of the Series C Preferred Stock; and (C) the holders of more than 75% of the outstanding shares of Series D Preferred Stock, in accordance with the Certificate of Designation of the Series D Preferred Stock. On March 23, 2006 we filed with the Commission a preliminary Information Statement on Schedule 14C (the “Information Statement”) in connection with the proposed Amendment. On May 2, 2006, we received comments from the Commission with respect to the Information Statement. We reviewed the Commission’s comments and submitted a revised Information Statement in response to such comments on October 4, 2006. On November 1, 2006, we received additional comments from the Commission with respect to the Information Statement. We will revise our document accordingly and submit it to the Commission for further review. Upon completion of the Commission’s review, we will file a definitive Information Statement and mail it to our shareholders in accordance with the Exchange Act. The Certificate of Amendment may not be filed until at least 20 calendar days after the definitive Information Statement is mailed to the stockholders of the Company. Following the expiration of such 20-day period, the Company will file the Certificate of Amendment with the Delaware Secretary of State, which will become effective on the date of such filing.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

PRICE RANGE OF OUR COMMON STOCK AND DIVIDEND POLICY

                    The Company’s Common Stock has been traded under the symbol “TUYU.PK” on the Pink Sheets® since September 1, 2005. The table below sets forth the reported high and low closing sale prices of our Common Stock, as reported by the Pink Sheets® during the period indicated.

	High		Low
2007 Quarter Ended
First Quarter (July 2 – September 30, 2006)	$	0.35	$	0.12
Second Quarter (October 1 - December 30, 2006)	$	0.34	$	0.16
2006 Quarter Ended
First Quarter (September 1 – October 1, 2005)	$	0.04	$	0.04
Second Quarter (October 2 - December 31, 2005)	$	0.51	$	0.04
Third Quarter (January 1, 2006 through April 1, 2006)	$	1.15	$	0.20
Fourth Quarter (April 2, 2006 through July 1, 2006)	$	0.80	$	0.34

                    On January 16, 2007, the last reported sale price the Company’s Common Stock on the Pink Sheets® was $0.22 per share. On January 16, 2007, there were 302 record holders of our Common Stock, 27 record holders of our Series B Preferred Stock, 22 record holders of our Series C Preferred Stock and 5 record holders of our Series D Preferred Stock.

                    We are authorized to issue 20,000,000 shares of Common Stock, of which 14,995,513 shares are issued and outstanding. We are authorized to issue 1,000,000 shares of preferred stock, par value $0.001 per share, of which 27,858.7673 shares of Series B Preferred Stock, 8,452.0222 shares of Series C Preferred Stock and 1,530 shares of Series D Preferred Stock are issued and outstanding. In connection with the Share Exchange Agreement, we agreed with certain of our shareholders that we would amend our Certificate of Incorporation to increase the number of shares of authorized Common Stock so that all of the shares of our Series B Preferred Stock will convert automatically into Common Stock. In addition, we have agreed with the holders of our Series C and Series D Preferred Stock that we would amend our Certificate of Incorporation to increase the number of shares of authorized Common Stock so that we would have sufficient shares of Common Stock available to fully convert our Series C and Series D Preferred Stock.

                    On March 22, 2006, the Company’s Board of Directors approved and recommended that the stockholders of the Company approve an amendment to our Certificate of Incorporation (the “Certificate of Amendment”) to (i) change the Company’s name from TrueYou.Com Inc. to Klinger Advanced Aesthetics, Inc., (ii) increase the number of authorized shares of Common Stock that we are authorized to issue from 20,000,000 to 60,000,000, and (iii) implement a reverse stock split whereby each twenty-five (25) shares of our issued and outstanding Common Stock will be combined into one (1) share of Common Stock.

                    On March 23, 2006 the Certificate of Amendment was approved by: (A) the holders of a majority of the Company ‘s outstanding stock entitled to vote with respect to an amendment of the Company’s certificate of incorporation; (B) the holders of more than 50% of the outstanding shares of Series C Preferred Stock, in accordance with the Certificate of Designation of the Series C Preferred Stock; and (C) the holders of more than 75% of the outstanding shares of Series D Preferred Stock, in accordance with the Certificate of

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Designation of the Series D Preferred Stock. The Certificate of Amendment may not be filed until at least 20 calendar days after the definitive Information Statement is mailed to the stockholders of the Company. Following the expiration of such 20-day period, the Company will file the Certificate of Amendment with the Delaware Secretary of State, which will become effective on the date of such filing. The Certificate of Amendment will not be effective until the information statement is approved by the SEC.

Dividends

                    There have been no dividends declared on our capital stock since the Company was formed. Dividends at the rate of 4% per annum accrue on our shares of Series C Preferred Stock and Series D Preferred Stock. Under the credit agreement that existed with TICC, we were prohibited from paying any cash dividends without the consent of TICC. This restriction was eliminated with the new financing obtained after fiscal year-end but a similar restriction is contained in the Laurus $25 Million senior debt financing. These accrued dividends may also be converted into Common Stock. It is not anticipated that any dividends will be declared for the foreseeable future on our Common Stock.

ITEM 6. SELECTED FINANCIAL DATA

                     The table appearing below sets forth our selected financial data as of the end of and for each of the three fiscal years in the period ended June 30, 2006 which was derived from our audited financial statements. We have also presented unaudited financial data from our predecessor company, Dischino Corporation d/b/a Cosmo & Co., for the periods ended March 31, 2002 and 2003. This information should be read together with the discussion in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and notes to those statements included elsewhere herein.

	Predecessor				TrueYou.Com, Inc.
In thousands, except share and per share amounts	(unaudited) 2002		(unaudited) 2003		For the Period From June 29 [inception] to June 30, 2003			2004			2005			2006
Total revenue-net	$	2,754	$	3,304	$	—		$	13,309		$	32,933		$	33,052
Cost of revenue		1,413		1,696		—			7,608			16,601			18,535
Operating costs and expenses:
Selling, general and administrative expenses:		971		1,082		4,990			15,683			28,502			43,902
Depreciation and amortization		6		11		—			1,679			3,725			4,102
Total operating expenses:		977		1,093		4,990			17,362			32,227			48,004
Income (loss) from operations		364		515		(4,990	)		(11,661	)		(15,895	)		(33,487	)
Interest expense (income), net		—		—		—			2,173			4,026			3,988
Registration rights penalties		—		—		—			—			—			1,547
Unrealized loss on convertible securities		—		—		—			—			—			132,683
Income (loss) before income tax provision:		364		515		(4,990	)		(13,834	)		(19,921	)		(171,705	)
Income tax provision:		137		194		—			—			—			—
Net Income (loss):		227		321		(4,990	)		(13,834	)		(19,921	)		(171,705	)
Dividends on preferred stock:		—		—		—			488			1,400			1,125
Net Income (loss) applicable to common shareholders:	$	227	$	321	$	(4,990	)	$	(14,322	)	$	(21,321	)	$	(172,830	)
Basic and diluted income (loss) per common share:	$	0.01	$	0.02	$	(0.33	)	$	(0.96	)	$	(1.42	)	$	(11.53	)
Weighted average common shares outstanding, basic and diluted:		14,995,513		14,995,513		14,995,513			14,995,513			14,995,513			14,995,513

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                    Following is selected balance sheet data as of July 1, 2006 and June 30, 2005 for the TrueYou.Com, Inc.:

	2006			2005
Total assets	$	43,171		$	36,963
Working capital (deficiency)		(42,540	)		(19,222	)
Total liabilities		253,085			72,772
Shareholders’ deficit	$	(209,914	)	$	(35,809	)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

                    The following discussion should be read in conjunction with our Financial Statements and the Notes thereto.

                    Unless otherwise indicated in this Item 7, references to “TrueYou” refer to TrueYou.Com Inc.; references to “KAAI” refer to Klinger Advanced Aesthetics, Inc. and its consolidated subsidiaries; references to the “we,” “our,” and “us” refer to TrueYou.Com Inc. and its consolidated subsidiaries (including KAAI), as applicable.

Business Overview

                    We offer both medical and non-medical services and products to customers. We co-brand our trade name with the trade names of the salons and spas that we acquired. Our salons and spas share certain corporate resources such as senior management and administrative services. We had 542 employees as of January 15, 2006 and 535 employees on July 1, 2006, respectively.

                    KAAI commenced business operations on June 29, 2003 when it acquired Dischino Corporation. Dischino Corporation operated an established beauty salon and spa in West Palm Beach, Florida. In December 2003, KAAI acquired three additional facilities in the State of Florida. The first facility was a spa located in Palm Beach Gardens, the second and third facilities were spas located in Boca Raton. In April 2004, KAAI expanded operations by acquiring assets of the Georgette Klinger Corporation which owned and operated nine salons throughout the United States that offer spa and salon services.

                    In 2006, we opened our two new flagship locations, the NorthPark flagship in Dallas Texas, and the Chevy Chase flagship in Chevy Chase, Maryland. These locations are the models that showcase our business strategy and are used to advertise all our products and services. They have been developed as fully integrated properties, in a new format which offers cosmetic dermatology, spa and salon services, retail products, and the K360 system in a luxurious upscale setting (the “KAAI Model”). These locations are located in key markets.

                    These fully-integrated facilities feature cosmetic dermatology, skin care, cosmetic medical consultations, hair care, spa and salon services, and retail products on site, and cosmetic medical services provided by medical offices operated by Johns Hopkins and UT Southwestern. All of our medical treatments and providers are reviewed and approved by our Medical Advisory Board. We also participate in the Johns Hopkins Cosmetic Safety Program in locations where they have visited the site and confirmed that we are in compliance with their specifications. Johns Hopkins Medicine provides clinical and safety oversight for our

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medical services. We have rights to use the Johns Hopkins Medicine name in this regard and approved language is used in our facilities and diagnostic software.

                    We have developed an over-the-counter skin care line of products called Cosmedicine. Johns Hopkins consulted on the design and information analysis of tests performed on Cosmedicine products. In return for its consulting services, Johns Hopkins receives fees from KAAI. We launched the products in February 2006 for exclusive retail distribution at Sephora stores, KAAI locations and on our respective websites. All Cosmedicine products are being developed and formulated for us by Atlantis Laboratories. Atlantis Laboratories is an independent developer and manufacturer of bulk skin care products. We believe that going forward, revenues generated from sales of our Cosmedicine products will be a significant percentage of our aggregate revenues.

                    In addition, we have developed the K360 system, a practice management system for medical offices that perform aesthetic procedures. The K360 system has been designed to provide a series of unique tools that we believe will improve the quality, safety and predictability of aesthetic services performed in a medical setting. The K360 system has a series of functions, each of which is guided by standardized protocols to optimize standardization. Beginning in July 2006, we began licensing the software to a small number of clients. Our goal is to begin generating a small amount of revenue on this software in 2007.

                    Our financial statements have been prepared on the going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Since our inception, we have experienced substantial operating losses and negative cash flow from operations. As of July 1, 2006, we have an accumulated deficit of $214.3 million and a working capital deficit of $42.5 million. Included in our net deficit at July 1, 2006 is the remeasurement of convertible securities which resulted in an additional liability in the amount $132.7 million. These factors raise substantial doubt about our ability to continue as a going concern. Also, as a result of our losses, the opinion of our Independent Registered Public Accountants on our audited financial statements for fiscal year 2006 has included an explanatory paragraph relating to “going concern.” A going concern explanatory paragraph indicates that our auditors have substantial doubt about our ability to continue as a going concern for at least a reasonable period of time. Our ability to continue as a going concern ultimately depends on our ability to increase sales and reduce expenses to a level that will allow us to operate profitably and sustain positive operating cash flows and raise additional capital.

Current Trends and Outlook

                    We have had slower consolidated growth due to some facilities experiencing losses. We believe the reasons behind this trend include our facility in Boca Raton that has not fully recovered from hurricane damage that was sustained in October, 2005. This includes significant employee turnover at this facility as a result of the damage sustained. There is no clear indication if the facility will return to prior revenue levels without significant resources added. We have also closed our Beverly Hills facility for renovations and have not yet determined to reopen it. These losses were offset in fiscal 2006 with the launch of our Cosmedicine products. With our launch of Cosmedicine at exclusive retail distribution at Sephora stores, KAAI locations and on our respective websites, we believe that revenues generated from sales of our Cosmedicine products will be a significant percentage of our aggregate revenues going forward.

                    Our vision is to define the standard of care in the medical aesthetics arena through a commitment to clinical excellence based upon measured outcomes. Our strategy is to leverage the Company’s credible brand identity and technologies to establish Klinger as the standard of care in the medical aesthetics industry. The implementation of this strategy will center on the growth and development of opportunities relating to our complementary business offerings. These strategies include the following:

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• Optimize the K360 system. The plan is to license the software to clients for a modest fee and to have it serve as the catalyst for the sale of our products and licensed services.

• Continue the development of branded protocol-driven aesthetic services that are supported by the K360 system and back bar products that create measurable results in appearance improvement. Beginning in July 2006, we began licensing the software to clients for a fee. The Company’s flagship locations deliver these branded services and serve as the development and beta sites for testing and refining such services in a true retail environment.

• We are negotiating with pharma companies and we seek to broaden our Cosmedicine offering to feature “Cosmedicine Professional”, which we expect will include a line of RX grade products to support the Company’s MD and Med Spa channel strategy. In addition, to facilitate our Med Spa channel strategy, we entered into a letter of intent to acquire Nouvisage Corp. on September 12, 2006. Although the transaction is still being negotiated, and a definitive acquisition agreement has not yet been entered into, this combination of resources, if implemented, could provide another market for our Cosmedicine products.

Revenue Sources

We currently derive revenue from the following sources:

Spa and Salon Services – Our salon offerings include services such as hair styling, coloring, texturizing, treatments, extensions, make-up artistry and manicure/pedicures. Our spa services include treatments such as facials, body treatments (exfoliation, wraps, cellulite treatments), waxing and massage therapy. Spa and salon service revenue represented 65%, 69% and 77% of our total operating revenues for the fiscal years ended July 1, 2006, June 30, 2005, and June 30, 2004, respectively.

Spa and salon services are provided at all our operating stores.

Medical Services – Our medical offerings include injection services (Botox and Restylane), sclerotherapy (vein treatments), peels, microdermabrasion, permanent make-up, laser resurfacing and laser hair removal. Medical service revenue represented 8%, 9% and 7% of our total operating revenues for the fiscal years ended July 1, 2006, June 30, 2005, and June 30, 2004, respectively.

Historically we have offered on-site and off-site medical services. All dermatology related procedures are performed on-site. For the on-site procedures, medical providers utilize space in our stores, having been provided a separate medical area with its own entrance and medical accessories. Prior to August 2006, we also offered off-site medical services. These services consisted of cosmetic surgeries that were performed by the medical practitioners at a third party participating hospital. The on-site medical facility would provide the initial consultation, with the surgery performed off-site by the medical practitioner. We bill and collect all revenues and pay all expenses related to the medical services and pay the medical practitioners for their services. We no longer offer any off-site medical services as we have discontinued offering cosmetic surgeries.

To generate our revenues for our medical segment, we enter into medical practitioner fee contracts with our medical practitioners where they receive a percentage of the revenue generated from the performance of their services. Depending upon the medical provider and the type of service that is delivered, the percentage varies from 30-70% for medical revenues.

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In all cases, physicians are contracted as consultants and not as employees. In most cases, the nurse practitioners are hired as employees. In addition, we do not generate any revenues from referring individuals to medical providers.

A majority of our medical revenue is derived from our Florida facilities. As such, we have spent considerable legal and consulting costs to ensure that we comply with applicable state and federal regulations. Any location that provides medical services is planned to ensure it meets all state and federal regulations. This includes utilizing all physicians as third party consultants.

Retail Product Sales – Include sales of third party products and our Cosmedicine products through our own locations. Retail product sales revenue represented 19%, 22% and 16% of our total operating revenues for the fiscal years ended July 1, 2006, June 30, 2005, and June 30, 2004, respectively.

Our locations offer a variety of retail products including products for hair care, skin care, and make-up. Hair care product offerings include such brands as L’Oreal, Kerastase, and Bumble & Bumble. Skin care product offerings include such brands as DDF, Obagi, IS Clinical, MD Skincare, and La Therapie. Our make-up product offering consists of the brand NARS. Additionally many of our locations offer our private label skin care brands, Georgette Klinger and Cosmedicine. In general, different combinations of the products are offered at different locations. Our Cosmedicine products are sold at all our locations, however, and have become our largest retail brand in fiscal 2006.

Wholesale Product Sales – Include sales of our Cosmedicine products at Sephora stores and through the internet. These products were launched in fiscal 2006 and represented 8% of our total operating revenues for the fiscal year ended July 1, 2006. Sephora, with whom we have a strategic relationship, is a subsidiary of LVMH, SA and L Capital is a private equity fund sponsored by LVMH, SA and, as a result, Sephora and L Capital are affiliates. Net revenue recognized on sales to Sephora were $2.7 million and $0 for the years ended July 1, 2006 and June 30, 2005, respectively. Our decision to enter into a strategic alliance with Sephora was made independent of our relationship with L Capital.

                    We manage our business by evaluating net revenue, gross margin, and liquidity. There is a close review of performance by location in these key areas to determine if resources need to be added or shifted to improve performance. We benchmark the facilities against each other to utilize data from high performing locations to assist those that are under performing. Key personnel are often deployed to the locations that show negative trends in these statistics. A close review of the operations is also performed to determine current cash position and future capital needs. Capital is tightly managed and utilized in those operations that will provide the greatest return.

                    We encounter a variety of challenges that may affect our business. These factors include weather, including hurricanes which have adversely impacted our facilities in Florida, and our dependence on individuals to provide services to our clients who leave the Company and take clients with them.

                    Beginning in fiscal year 2006, we are following the standard fiscal year of the retail industry, which is a 52 or 53 week period, with the end of a period being the last Saturday of the month. Our most recent fiscal year started on July 1, 2005 and ended on July 1, 2006.Previously The Company’s fiscal year was the twelve month period ended June 30.

Critical Accounting Estimates

                    Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant

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judgments and uncertainties. For all of these estimates, we caution that future events rarely develop exactly as forecast, and the best estimates routinely require adjustment.

                    Revenue Recognition: We record revenue based on the following types of product and service offerings:

• Company run stores, medical, and internet sales - revenue is recognized for services rendered or product sold at the time when the service is performed or the item sold. When a gift card is purchased for a future service or product, the value of the card is recorded as a liability. In the past, we offered paper gift cards. For these paper cards, the entire liability remains on the balance sheet until the earlier of redemption or 36 months, for non-escheatable states. It is our’s and our predecessors’ historical experience that the likelihood of redemption after 36 months is remote. After 36 months, 80% of the remaining liability is relieved and recorded as other income. After 48 months, any remaining 10% of the liability is relieved and recorded as other income. After 60 months, the last 10% of the remaining liability is relieved and recorded as other income. For escheatable states, the liability remains on the books until escheatment. Currently the only type of gift cards offered are electronic cards. The recording of the sale is the same as paper gift cards. But for electronic cards, the entire liability remains on the books for the first year, less any redemptions. After the first year, the liability is reduced by five dollars per month as an inactivity fee and recorded to other income.

• Cosmedicine sales to Sephora – revenue is recognized as sales are made to Sephora. At the end of each quarter, an accrual is made for anticipated returns due to damages, store testers, and product with limited remaining code life.

                    Impairment of Goodwill: We review long-lived assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable. In addition, we review goodwill for impairment at least on an annual basis. Measurement of an impairment loss is based on the fair value of the asset compared to its carrying value.

                    Inventories: Inventories consist principally of hair care and skin care products held either for retail sale or for use in salon, spa and medical services. Inventories are stated at the lower of cost or market on a first-in, first-out basis. Further, on a quarterly basis, we estimate losses from shrinkage due to lost or stolen inventory based on historical experience and reduce the inventory value by that estimate.

                    Provisions for Inventory Obsolescence: We record provisions for estimated obsolescence of inventory. Our estimates consider the cost of inventory, forecasted demand, the shelf life of the inventory and our historical experience. If there are changes to these estimates, additional provisions for inventory obsolescence may be necessary.

                    Stock Based Compensation: We estimate the cost of stock based compensation using the Black-Scholes Option Pricing Model. Inherent in that model are assumptions including the volatility of our Common Stock, forfeiture rate, and the length of time which we expect an option to remain outstanding.

                    Deferred Income Taxes: We review our provision for income taxes at least quarterly and make a determination as to the likelihood of our ability to use the income tax benefit of our net operating losses. We then make a determination as to an appropriate allowance to reduce the value of this asset.

                    Convertible Securities: We remeasured our convertible securities in compliance with EITF 00-19, based on the fair value of our Common Stock into which they are convertible, since there are currently insufficient shares authorized to allow conversion. The fair value of the Common Stock is based in the price paid for a share of the stock closest to the measurement date. As of July 1, 2006 the closing price for our

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Common Stock was $0.39. Changes in the price paid for a share of our Common Stock can have a significant impact on the amount recorded for the convertible securities. For example, the movement up or down in the price of our Common Stock by $0.10 will cause the balance of convertible securities to fluctuate by approximately $51 million. This fluctuation would result in an impact to our net loss. As of January 16, 2007, the closing price of our Common Stock was $0.22. Convertible securities will convert back to equity when there are a sufficient number of shares of Common Stock authorized.

New Accounting Pronouncements

                    In June 2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections” (“FAS 154”). FAS 154 replaces APB Opinion No. 20, Accounting Changes and FAS No. 3, Reporting Accounting Changes in Interim Financial Statements. FAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle. FAS 154 also requires that a change in method of depreciating or amortizing a long-lived non-financial asset be accounted for prospectively as a change in estimate, and correction of errors in previously issued financial statements should be termed a restatement. FAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005.

                    In June 2005, the FASB’s Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 05-6, “Determining the Amortization Period for Leasehold Improvements Purchased after Lease Inception or Acquired in a Business Combination.” EITF 05-6 requires leasehold improvements purchased after the beginning of the initial lease term to be amortized over the shorter of the assets’ useful life or a term that includes the original lease term plus any renewals that are reasonably assured at the date the leasehold improvements are purchased. This guidance was effective for reporting periods beginning after June 29, 2005. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

                    In October 2005, the FASB issued FASB Staff Position (“FSP”) 13-1, “Accounting for Rental Costs Incurred during the Construction Period.” FSP 13-1 requires rental costs associated with ground or building operating leases that are incurred during a construction period be recognized as rental expense. FSP 13-1 becomes effective for the first reporting period beginning after December 15, 2005. We have evaluated the impact of the adoption of FSP 13-1, and determined there is no impact on the Company’s consolidated financial statements.

                    In June 2006, FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes” —an interpretation of FASB Statement No. 109. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This guidance is effective for fiscal years beginning after December 15, 2006. We believe the impact of the adoption of FIN 48 will not be significant to the Company’s consolidated financial statements.

                    In September 2006, the FASB issued SFAS 157, “Fair Value Measurements”. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This guidance becomes effective for the first reporting period beginning after November 15, 2007. We are assessing the impact of the adoption of SFAS 157 on the Company’s consolidated financial statements.

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                    In September 2006, the FASB issued SFAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. This guidance is effective as of the end of the fiscal year for years ending after December 15, 2006. We are assessing the impact of the adoption of SFAS 158 on the Company’s consolidated financial statements.

Results of Operations

                    The following discussion should be read in conjunction with our Financial Statements and the Notes thereto.

Years Ended July 1, 2006 and June 30, 2005

                    The following table sets forth our income statement data as a percentage of net sales for the periods indicated below:

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	Year ended
In thousands	July 1, 2006					June 30, 2005
Revenues
Service	$	23,978		73	%	$	25,731		78	%
Retail and wholesale		9,074		27	%		7,202		22	%
Total Revenue		33,052		100	%		32,933		100	%
Cost of Revenue
Service	$	13,987		42	%	$	13,715		41	%
Retail and wholesale		4,548		14	%		2,886		9	%
Total Cost of Revenue:		18,535		56	%		16,601		50	%
Gross Margin
Service	$	9,991		30	%	$	12,016		37	%
Retail and wholesale		4,526		14	%		4,316		13	%
Total Gross Margin		14,517		44	%		16,332		50	%
Selling, general and administrative expenses		43,902		133	%		28,502		87	%
Depreciation and amortization		4,102		12	%		3,725		11	%
Total operating Expenses		48,004		145	%		32,227		98	%
Operating loss		(33,487	)	(101	)%		(15,895	)	(48	)%
Interest expense, net		3,988		12	%		4,026		12	%
Registration rights penalties		1,547		5	%		—		—
Unrealized loss on convertible securities		132,683		401	%		—		—
Net loss		(171,705	)	(519	)%		(19,921	)	(61	)%
Dividends on preferred stock		1,125		3	%		1,400		4	%
Net loss applicable to common shareholders	$	(172,830	)	(523	)%	$	(21,321	)	(65	)%

Revenue

                    The results of such sources for the years ended July 1, 2006 and June 30, 2005 are as follows:

	Year Ended
In thousands	July 1, 2006				June 30, 2005
Revenues
Spa and Salon Services	$	21,460	65	%	$	22,845	69	%
Retail Products		6,396	19	%		7,187	22	%
Wholesale Products		2,678	8	%		—	—
Medical Services		2,518	8	%		2,901	9	%
Total Revenue	$	33,052	100	%	$	32,933	100	%

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                    Revenue for the year ended July 1, 2006 was $33.1 million compared to $32.9 million for the year ended June 30, 2005, an increase of $0.2 million. All revenues during the two years were derived from the U.S. The slight increase in revenue was primarily due to the retail and wholesale product sales increase of $1.9 million, totaling $9.1 million for the year ended July 1, 2006, compared to $7.2 million for the year ended June 30, 2005, from the launch of our Cosmedicine product line in our salons and facilities and Sephora stores. This was mostly offset by a $1.7 million decrease in service revenue, comprised of spa and salon services and medical services totaling $24.0 million and $25.7 million for the years ended July 1, 2006 and June 30, 2005, respectively. The decrease was primarily due to the remodeling and damages sustained in the Boca Raton location from the major hurricane which hit in October 2005. We have also experienced significant employee turnover in the Boca Raton, FL facility due to damage sustained by the hurricane at this facility. The combination of damages and employee turnover led to a significant loss of the pre-existing customer base. The decrease in spa and service revenue was $1.6 million for this location. In addition, the closing of the Beverly Hills location for remodeling caused a reduction in spa and service revenue of $0.2 million.

Cost of Revenue

                    Cost of revenue increased to $18.5 million for the year ended July 1, 2006 from $16.6 million for the year ended June 30, 2005, an increase of $1.9 million. A significant portion of the increase was the direct costs of Cosmedicine product sold to Sephora, with cost of revenue of $1.1 million for the year ended July 1, 2006. Payroll costs, including commissions also increased by $1.1 million in fiscal 2006. The commission compensation plans in place in the nine original Georgette Klinger facilities were raised to levels similar with the balance of our facilities at the end of the third quarter in 2005. These commissions are incentives to employees and are included in cost of revenue.

Gross Margin

                    Gross margin was 44% for the year ended July 1, 2006 compared to 50% for the year ended June 30, 2005. The decline in gross margins was due to higher payroll and commission structures which were partially offset by the launch of our Cosmedicine product line.

Selling General and Administrative Expenses

                    Selling, general and administrative expenses (“SG&A”) was $43.9 million for the year ended July 1, 2006 compared to $28.5 million for the year ended June 30, 2005, an increase of $15.4 million. The increase of 54.0% was primarily due to an increase of $6.9 million in professional fees for accounting, legal, information technology, inventory management services, software development, and public relations; a $2.9 million increase in payroll due to the addition of several senior management level officers and severance expenses; $1.2 million increase in occupancy expenses, and $1.2 million in travel and entertainment.

                    SG&A expenses represented 133% of total revenue for the year ended July 1, 2006 compared to 87% for the year ended June 30, 2005. While this expense is very high as a percentage of sales, we believe this level of spending is necessary to develop and implement our business plan. In addition, a significant portion of the legal and accounting expense increases were due to the high turnover in management and the accounting staff, resulting in high utilization of third party resources.

Depreciation and Amortization

                    Depreciation and amortization was $4.1 million for the year ended July 1, 2006 compared to $3.7 million for the year ended June 30, 2005. This increase is due primarily to increased amortization expense in fiscal 2006 associated with the Johns Hopkins Consulting Services Agreement.

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Operating Loss

                    Our operating loss was $33.5 million for the year ended July 1, 2006 compared to $15.9 million for the year ended June 30, 2005. The increase in the operating loss is primarily due to the increase in SG&A expense for the year ended July 1, 2006 compared to the year ended June 30, 2005, without a corresponding increase in revenues

Interest Expense

                    Interest expense was $4.0 million for the year ended July 1, 2006 compared to $4.0 million for the year ended June 30, 2005. Net Interest was flat from year to year. There were increases in interest expense due to the accelerated amortization of the debt discount on senior subordinated debt, which was converted into KAAI’s common stock and subsequently exchanged for Series B Preferred Stock, of $1.0 million coupled with imputed interest expense on the Johns Hopkins Consulting Services Agreement. This was offset by increases in interest income due to the investment of available cash balances.

Registration Rights Penalties

                    The Company incurred penalties of $1.5 million for the year ended July 1, 2006. The penalties are due to failure to meet conditions included in registration rights agreements with various stockholders

Unrealized Loss on Convertible Securities

                    On December 20, 2005, as a result of the Share Exchange Agreement, the Company recorded the convertible securities at $65 million, which represented the carrying amount of the convertible securities issued under the arrangement. Since the securities issued are convertible into common shares and the Company did not have sufficient authorized shares to allow for that conversion, under EITF 00-19 the Company was required to reclassify these amounts as liabilities and remeasure them to fair value at each reporting period end. The Company remeasured the convertible securities during the year as of December 31, 2006, April 1, 2006 and July 1, 2006 based on the share price of the Trueyou Common Stock closest to the period end. The share price was multiplied by the number of common shares into which the convertible securities are convertible, which was 506,576,690 as of each of those dates. The per share trading value as of July 1, 2006 was $0.39, which resulted in an estimated fair value of the convertible securities of $197.6 million as of that date. The Company recorded an unrealized loss of approximately $132.7 million for the fiscal year ended July 1, 2006.

Net Loss

                    Our net loss increased to $171.7 million from $19.9 million for the fiscal years ended July 1, 2006 and June 30, 2005, respectively. This increase in our net loss primarily resulted from revaluing our convertible securities which resulted in an unrealized loss of approximately $132.7 million for year ended July 1, 2006. Also included is a $1.5 million accrual for registration rights penalties and the increase of $15.4 million in SG&A expenses that are part of our $33.5 operating loss.

Dividends Accrued on Preferred Stock

                    Dividends accrued on preferred stock were $1.1 million for the year ended July 1, 2006 as compared to $1.4 million for the year ended June 30, 2005. The decrease was due to the forfeiture of dividends accrued on preferred stock which was converted into KAAI’s common stock and subsequently exchanged for our Series B Preferred Stock.

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Net Loss Applicable to Common Stockholders

                    Our net loss applicable to common stockholders for the year ended July 1, 2006 was $172.8 million compared to $21.3 million for the year ended June 30, 2005. Included is a $33.5 million operating loss, $4.0 million in interest expense, $1.5 million in registration rights penalties and a $132.7 million unrealized loss on convertible securities.

Results of Operations

Fiscal year 2005 compared to fiscal year 2004

                    The following table sets forth our income statement data as a percentage of net sales for the periods indicated below:

	Year ended
In thousands, except share and per share amounts	June 30, 2005					June 30, 2004
Revenues
Service	$	25,731		78	%	$	11,185		84	%
Retail		7,202		22	%		2,124		16	%
Total Revenue		32,933		100	%		13,309		100	%
Cost of Revenue
Service	$	13,715		41	%	$	6,372		48	%
Retail		2,886		9	%		1,236		9	%
Total Cost of Revenue:		16,601		50	%		7,608		57	%
Gross Margin
Service	$	12,016		37	%	$	4,813		36	%
Retail		4,316		13	%		888		7	%
Total Gross Margin		16,332		50	%		5,701		43	%
Selling, general and administrative expenses		28,502		87	%		15,683		118	%
Depreciation and amortization		3,725		11	%		1,679		13	%
Total operating Expenses		32,227		98	%		17,362		131	%
Operating loss		(15,895	)	(48	)%		(11,661	)	(88	)%
Interest expense, net		4,026		12	%		2,173		16	%
Net loss		(19,921	)	(61	)%		(13,834	)	(104	)%
Dividends on preferred stock		1,400		4	%		488		4	%
Net loss applicable to common shareholders	$	(21,321	)	(65	)%	$	(14,322	)	(108	)%

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Revenue

                    The results of such sources for the years ended June 30, 2005 and June 30, 2004 are as follows:

	Year Ended
In thousands	June 30, 2005				June 30, 2004
Revenues
Spa and Salon Services	$	22,845	69	%	$	10,265	77	%
Retail Products		7,187	22	%		2,127	16	%
Medical Services		2,901	9	%		917	7	%
Total Revenue	$	32,933	100	%	$	13,309	100	%

                    Revenue for fiscal year 2005 was $32.9 million compared to $13.3 million for fiscal year 2004, an increase of 147%. The increase was due primarily to a full year of operations during fiscal year 2005 after acquisitions at various dates during fiscal year 2004. Fiscal year 2004 included only seven months of revenue from the Anushka and Wild Hare Salon, Inc. (“Wild Hare”) facilities and two months of revenue from the Georgette Klinger facilities. In addition, revenue from medical services increased 200% to $2.9 million for fiscal year 2005 from $0.9 million for fiscal year 2004. This increase was a result of management’s execution of its strategy to expand these services. West Palm Beach and Palm Beach Gardens Florida facilities offered a full range of medical services for fiscal year 2005. The Boca Raton facility offered dermatology services for fiscal year 2005. For fiscal year 2005, management had not expanded medical services into the Georgette Klinger locations. Retail sales increased 265% for fiscal year 2005 over fiscal year 2004 to $7.2 million from $2.1 million for fiscal years 2005 and 2004 respectively. This increase was due to a full year of sales at our Anushka, Wild Hare and Georgette Klinger facilities. The increase in revenue was partially offset by prolonged and unusual hurricane activity in the Florida area in addition to the defection of several high-producing stylists following the installation of new unit managers.

Cost of Revenue

                    Cost of revenue increased to $16.6 million for fiscal year 2005 from $7.6 million for fiscal year 2004. The increase was primarily due to a full year of operations for the acquired facilities for the fiscal year ended June 30, 2005 compared to a partial year for the fiscal year ended June 30, 2004. Cost of revenue decreased as a percentage of net sales due to a full year of the Georgette Klinger operations which had a lower cost of revenue than the other facilities which was partially offset by higher cost of revenue in the Florida facilities due to higher commission structures for new service providers.

Gross Margin

                    Gross margins for fiscal years 2005 and 2004 were $16.3 million and $5.7 million, respectively. The gross margin as a percentage of net sales was 50% for fiscal year 2005 compared to 43% for fiscal year 2004. This increase was due to the full year of the Georgette Klinger facility acquisition which was partially offset by gross margin losses in the Florida facilities due to higher commission structures for new service providers. The retail gross margin increased to 63% for fiscal year 2005 over 60% for fiscal year 2004 as a result of management’s focus on selling a higher priced assortment of merchandise.

Selling, General and Administrative Expenses

                    For fiscal year 2005, SG&A increased to $28.5 million from $15.7 million in fiscal year 2004, an increase of 82%. This increase was due primarily to us having a full year of expenses for fiscal year 2005 for acquired businesses coupled with the addition of several senior management level officers. While this expense is high as a percentage of sales at 87%, we believe this level of spending is necessary to develop and implement our business plan. In addition, we incurred expenses associated with the development of Cosmedicine.

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                    For fiscal year 2005, SG&A expenses are represented as payroll, 36%; professional fees, 15%; rent and occupancy, 17%; insurance, 9%; advertising, 5% with the remainder of expenses representing leases, travel and entertainment, office expenses and other expenses incurred in the normal course of business.

Depreciation and Amortization Expense

                    For fiscal years 2005 and 2004, depreciation and amortization expense was $3.7 million and $1.7 million, respectively. This increase is due primarily to a full year of depreciation on acquired assets in fiscal year 2005 as opposed to the partial year in fiscal year 2004. In addition, a full year of amortization expense in fiscal year 2005 was associated with the Johns Hopkins trademark agreement.

Operating Loss

                    The operating loss for the Company for fiscal years 2005 and 2004 was $15.9 million and $11.7 million, respectively. The operating loss increased primarily as higher gross profit was offset by significantly higher SG&A expenses.

Interest Expense, Net

                    Interest expense increased to $4.0 million for fiscal year 2005 from $2.2 million for fiscal year 2004, an increase of $1.8 million. This increase was due primarily to a full year of interest expense on the TICC note versus only two months for fiscal year 2004.

Dividends Accrued on Preferred Stock

                    Dividends accrued on Preferred Stock were $1.4 million and $0.5 million for fiscal years 2005 and 2004, respectively, an increase of 187%. The increase was primarily due to a full year of dividends accrued on KAAI’s series D preferred stock in fiscal year 2005, compared to only three months that such series D preferred stock was outstanding during fiscal year 2004.

Seasonality

                    Our operations have historically been seasonal, with higher revenues generally generated in the first half of our fiscal year (July through December) as a result of increased demand for our services and products during the holiday season from the end of November through the end of December. Furthermore, we have historically discounted certain of our products during the month of August, which has further skewed revenues into the first half of the fiscal year. The products are not discounted below cost.

Financial Condition, Liquidity and Capital Resources

                    Net cash used in operating activities was $22.3 million and $11.0 million for the fiscal years ended July 1, 2006 and June 30, 2005, respectively. This deterioration of cash flows resulted primarily from an operating loss of $33.5 million for the year ended July 1, 2006. We were able to partially mitigate the cash used in operating activities by paying vendors on longer terms. Vendors are now on terms that cannot be further extended.

                    Net cash used in investing activities was $8.5 million and $1.2 million for the fiscal years ended July 1, 2006 and June 30, 2005, respectively. The increase is primarily due to facility renovations, information technology and accounting systems for our facilities.

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                    Cash flows provided by financing activities were $30.8 million and $5.7 million for the fiscal years ended July 1, 2006 and June 30, 2005, respectively. For the year ended July 1, 2006, cash flows from financing activities were primarily the result of the issuance of our Series D Preferred Stock in the amount of $15.0 million gross, $10.1 million gross from the issuance of KAAI Series G Preferred Stock and $4.8 million gross from issuance of KAAI Series F Preferred Stock.

                    On February 21, 2006, we entered into an amendment and consent with TICC, which provided for amendments to the following financial covenants to which we were subject through the end of fiscal year 2007, pursuant to the note and warrant Purchase Agreement dated March 31, 2004, as amended: Minimum Consolidated EBITDA, Consolidated Total Debt to Consolidated EBITDA, Consolidated Senior Debt Ratio, Minimum Unit EBITDAR, Minimum Unit Fixed Charge Ratio, and Minimum Unrestricted Cash Balance. The new covenants were substantially lower than the covenants set forth in our prior agreement with TICC. In consideration for the new covenants, we increased our escrow account for TICC interest payments by $1.0 million to cover interest through the end of fiscal year 2007. As of July 1, 2006 approximately $1.6 million has been deposited in the TICC escrow account.

                    In addition, on June 30, 2006, the Company obtained a covenant compliance waiver and amendment under the senior debt agreement with TICC. The Company obtained a waiver for the Consolidated Senior Debt to Consolidated EBITDA ratio covenant test for all periods July 1, 2006 through March 31, 2007. In addition, the Company obtained amended covenants for the Unit EBITDAR, Unit Fixed Coverage Ratio and minimum cash required covenant tests. As discussed below, we received additional financing in July 2006 that allowed us to repay this debt and eliminate all the related covenants.

Future Liquidity and Capital Needs

                    Since its inception, the Company has experienced operating losses and negative cash flow from operations. As of July 1, 2006, we had a cumulative deficit of $214.3 million and a working capital deficiency of $42.5 million. Included in our net deficit at July 1, 2006 is the remeasurement of convertible securities which resulted in an additional liability in the amount $132.7 million. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is ultimately dependent on our ability to increase sales and reduce expenses to a level that will allow us to operate profitably and sustain positive operating cash flows and raise additional capital. The financial statements do not include any adjustments to reflect the outcome of this uncertainty. We have had several recent financings as described in this Report, with the most recent completed on December 22, 2006. But these financings are not sufficient and we are currently seeking to raise additional capital. However, there can be no assurance we will be able to obtain sufficient capital to enable us to achieve our operational objectives. We need to obtain capital to continue to invest in the core growth assets. Failure to raise such capital will severely limit our ability to grow and service our ongoing debt obligations and may result in our inability to continue our operations as presently conducted.

                    Our principal future uses of funds are for debt service, working capital requirements, and capital spending to execute our strategy. It is expected that our net losses will continue at least through the end of fiscal year 2008. In addition, subject to our raising sufficient additional capital, we expect to spend approximately $2.2 million during fiscal year 2007 to refurbish our facilities, develop an information technology infrastructure, and develop our proprietary diagnostics products.

Financings Subsequent to Year End

                    On July 6, 2006, TrueYou closed on a financing and issued to Laurus Master Fund, Ltd. a Secured Term Note in the aggregate principal amount of $25.0 million. We also placed $2.5 million in a restricted account to be utilized to prefund interest for the first year of the Note. The balance of the $25.0 million was to be used for Laurus’s closing payment of $900,000, Laurus’s due diligence and structuring expenses of $40,000 and escrow agent fees of

41

$4,000. In addition, this capital will be utilized for the purposes: (i) to fund our operating losses until the end of fiscal year 2007; (ii) for the above mentioned capital spending purposes; and (iii) the repayment of our TICC debt.

                    Our Senior Debt, represents our TICC commitment in the amount $9.1 million, net of discount, as of July 1, 2006. We repaid this debt with the additional financing received on July 7, 2006. Therefore, we have reclassified this debt from a long-term liability to a short-term liability on our Consolidated Balance Sheet.

                    On July 11, 2006, we entered into a Subordinated Loan Agreement with subordinated lenders for $5.2 Million to be used for capital expenditures, general working capital and to pay all costs and expenses in connection with the Subordinated Loan.

                    On July 11, 2006, we entered into an amended and restated loan agreement with Amended Subordinated Lenders in order to amend and restate the provisions of the $4.8 million loan that we received on May 9, 2006 in order to conform its terms to the terms of the Subordinated Loan Agreement. The proceeds of the loan were used for capital expenditures, general working capital and to pay all costs and expenses in connection with the Loan.

                    On December 22, 2006, we entered into the Laurus Purchase Agreement with Laurus, pursuant to which we issued to Laurus a senior subordinated secured term note in the principal amount of $1.0 million.

                    On December 22, 2006, we entered into a Senior Subordinated Loan Agreement with senior subordinated lenders, pursuant to which the senior subordinated lenders loaned us $3.0 million.

Contractual Obligations

                    As of July 1, 2006, our contractual obligations were as follows:

	Payments Due by Period
	Total	Less than 1 Year	1-3 Years	3-5 Years	More than 5 Years
Operating leases	$ 29,469	$   4,137	$ 10,637	$ 8,761	$ 5,934
Capitalized leases	414	207	207	—	—
Long-term debt (1)	15,839	15,839	—	—	—
Consulting obligation (2)	1,176	348	621	207	—
Totals	$ 46,898	$ 20,531	$ 11,465	$ 8,968	$ 5,934

(1)	Does not include letters of credit securing lease obligations.
(2)	Includes contracted services with our Formulator for Cosmedicine, and consulting agreements with accounting and IT consultants.

Off Balance Sheet Arrangements

                    We do not have any off balance sheet arrangements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                    Market risk represents the risk of loss that may impact our consolidated financial position, results of operations or cash flows. We are exposed to market risk associated with changes in interest rates. Our cash resources earned interest at variable rates and, therefore, our return on these funds is affected by fluctuations in interest rates. There have been no changes in interest rates that would have a material impact on our consolidated financial position, results of operations or cash flows for the year ended July 1, 2006.

                    Convertible Securities: We remeasured our convertible securities in compliance with EITF 00-19, based on the fair value of our Common Stock into which they are convertible, since there are currently insufficient shares authorized to allow conversion. The fair value of the Common Stock is based on the price paid for a share of the stock closest to the measurement date. As of July 1, 2006 the closing price for our Common Stock was $0.39. Changes in the price paid for a share of our Common Stock can have a significant impact on the amount recorded for the convertible securities. For example, the movement up or down in the price of our Common Stock by $0.10 will cause the balance of convertible securities to fluctuate by approximately $51 million. This fluctuation would result in an impact to our net loss. As of January 16, 2007, the closing price of our Common Stock was $0.22. Convertible securities will convert back to equity when there are a sufficient number of shares of Common Stock authorized.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm	45
Consolidated Balance Sheets as of July 1, 2006 and June 30, 2005	46
Consolidated Statements of Operations for the years ended July 1, 2006, June 30, 2005 and June 30, 2004	48
Consolidated Statements of Cash Flows for the year ended July 1, 2006, June 30, 2005 and June 30, 2004	49
Consolidated Statements of Stockholders’ Deficit for the year ended July 1, 2006, June 30, 2005 and June 30, 2004	50
Notes to Consolidated Financial Statements	51

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
TrueYou.Com Inc.

We have audited the consolidated balance sheets of TrueYou.Com Inc. and subsidiaries as of July 1, 2006 and June 30, 2005, and the related consolidated statements of operations, shareholders’ deficit and cash flows for the years ended July 1, 2006, June 30, 2005 and June 30, 2004. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of TrueYou.Com Inc. and subsidiaries as of July 1, 2006 and June 30, 2005 and the results of their operations and their cash flows for the years ended July 1, 2006, June 30, 2005 and June 30, 2004 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred operating losses and negative cash flows from operations since inception, and has a working capital deficiency, which raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with respect to this uncertainty are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Amper, Politziner & Mattia, P.C.

Edison, New Jersey
January 25, 2007

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TrueYou.Com Inc.
Consolidated Balance Sheets

	As of
	July 1,		June 30,
In thousands, except share and per share amounts	2006		2005
Assets:
Current assets:
Cash and cash equivalents	$	189	$	173
Restricted cash, current portion		1,602		1,228
Accounts receivable, net		137		244
Inventories, net		2,214		1,977
Other current assets		1,009		501
Total current assets		5,151		4,123
Property and equipment, net		12,981		6,561
Other assets		855		392
Deferred financing costs, net		242		330
Restricted cash, non-current portion		845		369
Goodwill		18,072		18,072
Other intangibles, net		5,025		7,116
Total assets	$	43,171	$	36,963
Liabilities and Shareholders’ deficit:
Liabilities:
Current liabilities:
Cash overdraft	$	—	$	163
Accounts payable		7,984		3,641
Accrued expenses and other current liabilities		16,449		9,915
Deferred revenue		8,273		8,882
Current portion of long term debt		5,839		744
Senior Debt Current (net of debt discount of $0.854 million as of July 1, 2006)		9,146		—
Total current liabilities		47,691		23,345
Senior debt (net of debt discount of $1.164 million as of June 30, 2005)		—		8,836
Senior subordinated debt (net of debt discount $1.234 million as of June 30, 2005)		—		12,066
Other long term debt (net of current portion)		—		7,061
Convertible securities		197,565		11,684
Other long term liabilities		7,829		9,780
Total liabilities		253,085		72,772
Minority Interest in KAAI		—		135
Commitments and contingencies
Shareholders’ deficit:
Common stock, par value $0.001, authorized 20,000,000; issued and outstanding 14,995,513		15		15
Additional paid-in capital		4,347		3,782

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	As of
	July 1,			June 30,
In thousands, except share and per share amounts	2006			2005
Accumulated deficit		(214,276	)		(39,741	)
Total shareholders’ deficit		(209,914	)		(35,809	)
Total liabilities and shareholders’ deficit	$	43,171		$	36,963

The accompanying notes are an integral part of the condensed consolidated financial statements

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TrueYou.Com Inc.
Consolidated Statements of Operations

				Year Ended
	July 1,			June 30,			June 30,
In thousands, except share and per share amounts	2006			2005			2004
Revenues:
Service	$	23,978		$	25,731		$	11,185
Retail and wholesale products		9,074			7,202			2,124
Total Revenue		33,052			32,933			13,309
Cost of Revenue:
Service		13,987			13,715			6,372
Retail and wholesale products		4,548			2,886			1,236
Total Cost of Revenue		18,535			16,601			7,608
Gross margin		14,517			16,332			5,701
Selling, general and administrative expenses		43,902			28,502			15,683
Depreciation and amortization		4,102			3,725			1,679
Total operating expenses		48,004			32,227			17,362
Operating loss		(33,487	)		(15,895	)		(11,661	)
Interest expense, net		3,988			4,026			2,173
Registration rights penalties		1,547			—			—
Unrealized loss on convertible securities		132,683			—			—
Loss before income tax provision		(171,705	)		(19,921	)		(13,834	)
Income tax provision (benefit)		—			—			—
Net loss		(171,705	)		(19,921	)		(13,834	)
Dividends on preferred stock		1,125			1,400			488
Net loss applicable to common shareholders	$	(172,830	)	$	(21,321	)	$	(14,322	)
Basic and diluted loss per common share:	$	(11.53	)	$	(1.42	)	$	(0.96	)
Weighted average common shares outstanding, basic and diluted		14,995,513			14,995,513			14,995,513

See accompanying Notes to Consolidated Financial Statements.

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TrueYou.Com Inc.
Consolidated Statements of Cash Flows

	Year Ended
	July 1,			June 30,			June 30,
In thousands	2006			2005			2004
Cash flows from operating activities:
Net loss	$	(171,705	)	$	(19,921	)	$	(13,834	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		4,102			3,725			1,679
Loss on disposal		112			—			—
Amortization of deferred financing costs		88			—			—
Stock based compensation expense		795			236			253
Non-cash interest expense		1,544			542			229
Unrealized Loss on Convertible Securities		132,683			—			—
Changes in operating assets and liabilities:
Inventories		(237	)		(375	)		236
Accounts receivable		107			—			—
Other current assets		(508	)		(196	)		(267	)
Other assets		(463	)		(117	)		86
Accounts payable		4,343			2,715			(20	)
Accrued expenses and other current liabilities		7,471			3,550			3,852
Deferred revenue		(609	)		(1,143	)		242
Net cash used in operating activities		(22,277	)		(10,984	)		(7,544	)
Cash flows from investing activities:
Capital expenditures		(8,416	)		(1,197	)		(3,944	)
Purchase of intangible asset		(127	)		(43	)
Business acquisition, net of cash acquired		—			—			(11,064	)
Net cash used in investing activities		(8,543	)		(1,240	)		(15,008	)
Cash flows provided by financing activities:
Cash overdraft		(163	)		163			—
Restricted cash		(850	)		1,115			(2,712	)
Proceeds of Issuance of long term debt net of deferred financing costs		4,839			—			22,860
Redemption of long term debt		—			—			(800	)
Other long-term liabilities		(1,951	)		4,484			(264	)
Proceeds of issuance of TrueYou Series D Preferred Stock		15,049			(54	)		8,200
Proceeds of issuance of KAAI Series G Preferred stock		10,058			—			—
Proceeds of issuance of KAAI Series E Preferred stock		—			—			135
Repayment of Sellers’ Note		(900	)		—			—
Proceeds of issuance of KAAI Series F Preferred stock		4,754			—			—
Redemption of series B Preferred stock		—			—			(825	)
Net cash provided by financing activities		30,836			5,708			26,594
Net increase (decrease) in cash and cash equivalents		16			(6,516	)		4,042
Cash and cash equivalents - beginning of year		173			6,689			2,647
Cash and cash equivalents - end of year	$	189		$	173		$	6,689
Supplemental cash flow information
Non-cash financing activities:
Issuance of preferred stock and debt for acquisition of businesses	$	—		$	—		$	5,180
Other business acquisitions		—			—			2,416
Preferred stock dividends, net of preferred stock forfeitures		1,125			1,400			488
Reclassification of preferred stock into convertible securities		28,166			—			—
Beneficial conversion feature on preferred stock		2,830			—			996
Write-off of minority interest - Series E Preferred		135			—			—
Exchange of KAAI accrued dividends for TrueYou Series B Preferred Stock		464			—			—
Exchange of KAAI long term debt for TrueYou Series B Preferred Stock		19,205			—			—
Exchange of KAAI accrued interest for TrueYou Series B Preferred Stock		1,598			—			—
Classification of KAAI warrants issued with KAAI Preferred stock as liabilities		935			—			—
Purchase of property and equipment – capital leases		—			—			286
Deferred licensing fees and related liability in connection with licensing agreements with John Hopkins		—			3,805			1,498

See accompanying Notes to Consolidated Financial Statements.

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TrueYou.Com Inc.
Consolidated Statements of Stockholders’ Deficit

				Common Stock
In thousands, except share amounts	Minority Interest			Shares		Amount		Additional Paid In Capital			Accumulated Deficit			Total
Balance at June 30, 2003	$	135			14,995,513	$	15	$	959		$	(4,990	)	$	(3,881	)
Issuance of warrants attached to Senior Debt		—			—		—		1,553			—			1,553
Stock based compensation expense		—			—		—		253			—			253
Issuances of stock options for intangible assets		—			—		—		57			—			57
Beneficial conversion associated with senior subordinated debt		—			—		—		1,616			—			1,616
Beneficial conversion associated with series D preferred stock		—			—		—		996			(996	)		—
Dividends on preferred stock		—			—		—		(488	)		—			(488	)
Net loss		—			—		—		—			(13,834	)		(13,834	)
Balance at June 30, 2004	$	135			14,995,513	$	15	$	4,946		$	(19,820	)	$	(14,724	)
Stock based compensation expense		—			—		—		236			—			236
Dividends on preferred stock		—			—		—		(1,400	)		—			(1,400	)
Net loss		—			—		—		—			(19,921	)		(19,921	)
Balance at June 30, 2005 (As restated)	$	135			14,995,513	$	15	$	3,782		$	(39,741	)	$	(35,809	)
Write-minority interest		(135	)		—		—		135			—			—
Dividends on preferred stock		—			—		—		(1,125	)		—			(1,125	)
Issuance costs related to KAAI series G preferred stock		—			—		—		(717	)		—			(717	)
Issuance costs related to KAAI series H preferred stock		—			—		—		(246	)		—			(246	)
Beneficial conversion associated with KAAI series G preferred stock		—			—		—		1,073			(1,073	)		—
Beneficial conversion associated with KAAI series H preferred stock		—			—		—		462			(462	)		—
Beneficial conversion associated with TrueYou Series D Preferred Stock		—			—		—		1,295			(1,295	)		—
Issuance costs related to TrueYou Series D Preferred Stock		—			—		—		(172	)		—			(172	)
Classification of KAAI series B warrants as liabilities		—			—		—		(935	)		—			(935	)
Stock based compensation expense		—			—		—		795			—			795
Net loss		—			—		—		—			(171,705	)		(171,705	)
Balance at July 1, 2006	$	0			14,995,513	$	15	$	4,347		$	(214,276	)	$	(209,914	)

See accompanying Notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    Unless otherwise indicated: references in these Notes to “TrueYou” refer to TrueYou.Com Inc.; references to “KAAI” refer to Klinger Advanced Aesthetics, Inc. and its consolidated subsidiaries; references to the “Company,” refer to TrueYou.Com Inc. and its consolidated subsidiaries (including KAAI).

1. Basis of Presentation

                    The consolidated financial statements presented herein pertain to the Company and its subsidiaries (including KAAI) on a consolidated basis. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company considers that it operates in one segment for spa and salon domestic operations. In fiscal 2006, the Company completed a reverse merger that was treated as a capital transaction, which requires. Equity to be restated to reflect the merger as of the earliest period presented. As a result, transactions in the Company’s Preferred Stock have been reflected in Convertible Securities as of the earliest period-end presented. (see Notes 14 and 17).

                    Beginning in fiscal year 2006, the Company is following the standard fiscal year of the retail industry, which is a 52 or 53 week period, with the end of a period being the last Saturday of a month. The Company’s most recent fiscal year started on July 1, 2005 and ended on July 1, 2006. Previously The Company’s fiscal year was the twelve month period ended June 30.

                    Going Concern Disclosure: The accompanying financial statements have been prepared on the going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has experienced operating losses and negative cash flow from operations. As of July 1, 2006, the Company has an accumulated deficit of $214.3 million and a working capital deficiency of $42.5 million. Included in the Company’s net deficit at July 1, 2006 is the remeasurement of convertible securities which resulted in an additional liability in the amount $132.7 million. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is ultimately dependent on its ability to increase sales and reduce expenses to a level that will allow it to operate profitably and sustain positive operating cash flows and raise additional capital. There have been no adjustments to the financial statements to reflect the outcome of this uncertainty. The Company has had several recent financings, with the most recent being completed on December 22, 2006. But these financings were not sufficient and additional capital will be required. Management plans include raising additional capital, and executing the expansion plans per the business plan. However, there can be no assurance that these sources will provide sufficient cash inflows to enable the Company to achieve its operational objectives.

2. Background

                    KAAI was formed under the name Advanced Aesthetics, Inc. (“AAI”) in 2003 by principals of Kidd & Company, LLC (“KCO”), a Greenwich, Connecticut based principal investment firm. On January 9, 2006, Advanced Aesthetics, Inc. changed its name to Klinger Advanced Aesthetics, Inc.

                    The Company offers both cosmetic services and medical procedures to customers under one delivery system and brings cosmetic surgery, cosmetic dentistry (discontinued in June 2005) and dermatology, and salon and spa services together under a single brand, giving clients access to top service providers, unique treatments and predictable results in a state of the art environment. The Company has developed a skin care line of products called Cosmedicine (Cosmedicine™ or Cosmedicine) which is being distributed through Sephora USA, Inc. stores and the Company’s own facilities. The Company is the owner of the Cosmedicine trademark. The Company co-brands its trade name with the trade names of the salons and spas that it has

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acquired. The Company’s salons and spas share certain corporate resources such as senior management and administrative services. As of January 15, 2007 and July 1, 2006, the Company had 542 and 535 employees, respectively.

                    KAAI commenced business operations on June 29, 2003 when it acquired Dischino Corporation. Dischino operated an established, well-known, beauty salon and spa in West Palm Beach, Florida. In November 2003, AAI acquired three additional facilities. The first was the acquisition of a Palm Beach Gardens spa and a similar facility in Boca Raton (Anushka acquisitions), and a third facility located at Boca Pointe in Boca Raton, Florida. In April 2004, AAI expanded operations by acquiring nine locations of Georgette Klinger, Inc., a well-established chain of high-end spas and beauty salons.

                    KAAI’s operating presence is national in scope, with locations in key markets such as New York (NY), Costa Mesa (CA), Boca Raton (FL), Palm Beach Gardens (FL), West Palm Beach (FL), Dallas (TX), Chicago (IL), and Short Hills (NJ). Its original flagship facilities in West Palm Beach and Palm Beach Gardens in Florida feature cosmetic dermatology, spa services, salon care and retail products on-site and cosmetic surgery and dentistry (discontinued in June 2005) which are performed off-site. In 2006, the Company opened two new stores; NorthPark in Dallas Texas and Chevy Chase in Chevy Chase, Maryland. These two new locations are now considered the flagships of the Company.

                    On December 20, 2005, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”) with KAAI and securityholders of KAAI (the “KAAI Securityholders”) pursuant to which KAAI Securityholders received newly issued preferred securities of TrueYou in exchange for their securities of KAAI.

                    The share exchange of a private operating company, KAAI, into a non-operating public shell corporation, TrueYou, with nominal net assets or liabilities resulted in the shareholders of KAAI having actual operating control of the combined company after the transaction, and the shareholders of TrueYou continuing only as passive investors.

                    The transaction is considered to be a capital transaction in substance, rather than a business combination. That is, the transaction is equivalent to the issuance of stock by the private company for the net monetary assets of the shell corporation, accompanied by a recapitalization. Accordingly, the outstanding shares of KAAI have been restated in the balance sheet and the statement of stockholders’ deficit to give effect to the Share Exchange Agreement. The restated shares have been used in the computation for loss per share. The historical balance sheet as of June 30, 2005 is that of KAAI.

3. Summary of Significant Accounting Policies

Use of Estimates

                    In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. The more significant management estimates are the valuation of goodwill and other intangibles, useful lives of property and equipment and intangible assets, fair value of assets acquired in business combinations, provisions for inventory obsolescence, deferred revenue expirations and various contingencies. Actual results could differ from those estimates. Changes in facts and circumstances may result in revised estimates, which are recorded in the period in which they become known.

Revenue Recognition

                    The Company records revenue based on the following types of product and service offerings:

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• Company run stores, medical, and internet sales - revenue is recognized for services rendered or product sold at the time when the service is performed or the item sold. When a gift card is purchased for a future service or product, the value of the card is recorded as a liability. In the past, we offered paper gift cards. For these paper cards, the entire liability remains on the balance sheet until the earlier of redemption or 36 months, for non-escheatable states. It is our’s and our predecessors’ historical experience that the likelihood of redemption after 36 months is remote. After 36 months, 80% of the remaining liability is relieved and recorded as other income. After 48 months, any remaining 10% of the liability is relieved and recorded as other income. After 60 months, the last 10% of the remaining liability is relieved and recorded as other income. For escheatable states, the liability remains on the books until escheatment. Currently the only type of gift cards offered are electronic cards. The recording of revenue is the same as paper gift cards. But for electronic cards, the entire liability remains on the books for the first year, less any redemptions. After the first year, the liability is reduced by five dollars per month as an inactivity fee and recorded to other income.

• Cosmedicine sales to Sephora – revenue is recognized as sales are made to Sephora. At the end of each quarter, an accrual is made for anticipated returns due to damages, store testers, and product with limited remaining code life.

Comprehensive Income

                    The Company has no significant other comprehensive income items. Therefore the net income of the Company is equal to comprehensive income.

Cash and Cash Equivalents

                    Cash and cash equivalents consist of cash and investments with maturities of ninety days or less.

Restricted Cash

                    Restricted cash represents an escrow account for prefunded interest on senior debt and certificates of deposit to collateralize leases.

Inventories

                    Inventories consist principally of hair care and skin care products held either for retail sale or for use in salon, spa and medical services. Inventories are stated at the lower of cost or market on a first-in, first-out basis.

Provisions for Inventory Obsolescence

                    The Company records provisions for estimated obsolescence of inventory. The Company’s estimates consider the cost of inventory, forecasted demand, the shelf life of the inventory and our historical experience. If there are changes to these estimates, additional provisions for inventory obsolescence may be necessary.

Property and Equipment

                    Property and equipment are carried at cost, less accumulated depreciation and amortization. Property, equipment and improvements to leased premises are depreciated using the straight-line method

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over the estimated useful lives of the assets or when applicable, the term of the lease, whichever is shorter. Estimated useful lives generally range from 5 to 15 years for leasehold improvements and 3 to 7 years for fixtures and equipment. Repair and maintenance expenses, which do not improve or extend the life of the respective assets, are charged directly to expense as incurred. The Company capitalizes all property and equipment purchases in excess of $1,000. The assets and related depreciation and amortization accounts are adjusted for property retirements and disposals with the resulting gain or loss included in the Company’s Consolidated Statements of Operations. Fully depreciated assets remain in the accounts until retired from service.

Goodwill

                    Goodwill is tested for impairment annually or more frequently in accordance with the provisions of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” Fair values are estimated based on the Company’s best estimate of the expected present value of future cash flows and compared with the corresponding carrying value of the reporting unit, including goodwill. The Company considers its consolidated operations to be a single reporting unit when it tests for goodwill impairment due to the similar customer base and use of the Klinger name for its products and services, and the way in which management reviews the operations and allocates its resources. The Company tested for goodwill at July 1, 2006 and determined that the estimated fair value of the reporting unit exceeded its carrying amount, indicating no impairment of goodwill. A similar review will be conducted annually in June, or more frequently if indicators of potential impairment exist.

                    The Company’s impairment review process is based on a discounted future cash flow approach that uses estimates of revenues, driven by assumed growth rates, estimated future gross margin and expense rates, as well as acquisition integration and maturation, and appropriate discount rates. These estimates are consistent with the plans and estimates that are used to manage the underlying business. Charges for impairment of goodwill may be incurred in the future if the Company fails to achieve its assumed revenue growth rates or assumed gross margin, or if interest rates increase significantly.

Intangible Assets

                    Certain intangible asset amounts are based on purchase price allocations associated with acquisitions and are based upon valuations conducted by independent appraisers.

                    All intangible assets, other than goodwill, have been assigned an estimated finite useful life, and are amortized on a straight line basis over the number of years that approximate their respective useful lives (ranging from two to six years).

Debt Issue Costs

                    Debt costs and transaction fees, which are directly associated with the issuance of senior notes, are recorded on the balance sheet as deferred financing costs and amortized (charged to interest expense) using the straight line method over the term of the related notes. Senior notes must be repaid before subordinated notes receive any principal payments. If the senior notes are redeemed, the unamortized debt issuance costs and transaction fees related to the senior notes being redeemed will be charged to expense in that period.

Income Taxes

                    The Company provides for federal and state income taxes currently payable, as well as for those deferred due to temporary differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the carrying amount of assets and liabilities for financial

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reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. Realization of deferred tax assets is ultimately dependent upon future taxable income. The effect of a change in tax rates is recognized as income or expense in the period of the change.

Stock-Based Compensation

                    In December 2004, the FASB issued SFAS No. 123(R), Share Based Payment. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services. It focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions (employee stock options). The statement requires the measurement of the cost of employee services received in exchange for an award of equity instruments (such as employee stock options) at fair value on the grant date. That cost will be recognized over the period during which an employee is required to provide services in exchange for the award (the requisite service period). The Company adopted FAS 123R, “Share-Based payment”, effective for its year ended June 30, 2004, applying the modified retrospective method. Inherent in that model are assumptions including the volatility of our Common Stock, forfeiture rate, and the length of time which we expect an option to remain outstanding

Loss Per Share

                    Basic loss per share represents the net loss applicable to Common Shareholders divided by the weighted average number of common shares outstanding during the measurement period. Diluted loss per share represents the net loss applicable to Common Shareholders divided by the weighted average number of common shares outstanding during the measurement period while also giving effect to all potentially dilutive common shares that were outstanding during the period. Potentially dilutive common securities consist of stock options of 1.9 million, 2.5 million and 0.8 million outstanding, for the year ended July 1, 2006 and for the years ended June 30, 2005 and June 30, 2004, respectively and warrants of 63.6 million, 13.6 million and 13.6 million outstanding, for the year ended July 1, 2006 and for the years ended June 30, 2005 and June 30, 2004, respectively. The impact of these options and warrants would be anti-dilutive due to either losses incurred during the period or out-of-the-money options and are not included in the diluted loss per share calculation.

Software Development Costs

                    The Company incurs costs for the development of its K360 software that is to be sold, leased, or licensed to third parties in the future. All software development costs have been appropriately accounted for in accordance with SFAS 86 Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed. All costs are expensed as incurred as technological feasibility has not yet been established.

Disclosures about Fair Value of Financial Instruments

                    The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and short-term investments

For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

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Convertible Securities

The company remeasures its convertible securities in compliance with EITF 00-19, based on the fair value of its Common Stock into which they are convertible, since there are currently insufficient shares authorized to allow conversion. The fair value of the Common Stock is based on the price paid for a share of the stock closest to the measurement date

Recently Issued Accounting Standards

                    In June 2005, the Financial Accounting Standards Board (“FASB”) issued SFAS 154,” Accounting Changes and Error Corrections”. (“FAS 154”). FAS 154 replaces APB Opinion No. 20, Accounting Changes and FAS No. 3, Reporting Accounting Changes in Interim Financial Statements. FAS 154 requires that a voluntary change in accounting principle be applied retrospectively with all prior period financial statements presented on the new accounting principle. FAS 154 also requires that a change in method of depreciating or amortizing a long-lived non-financial asset be accounted for prospectively as a change in estimate, and correction of errors in previously issued financial statements should be termed a restatement. FAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005.

                    In June 2005, the FASB’s Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 05-6, “Determining the Amortization Period for Leasehold Improvements Purchased after Lease Inception or Acquired in a Business Combination.” EITF 05-6 requires leasehold improvements purchased after the beginning of the initial lease term to be amortized over the shorter of the assets’ useful life or a term that includes the original lease term plus any renewals that are reasonably assured at the date the leasehold improvements are purchased. This guidance was effective for reporting periods beginning after June 29, 2005. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

                    In October 2005, the FASB issued FASB Staff Position (“FSP”) 13-1, “Accounting for Rental Costs Incurred during the Construction Period.” FSP 13-1 requires rental costs associated with ground or building operating leases that are incurred during a construction period be recognized as rental expense. FSP 13-1 becomes effective for the first reporting period beginning after December 15, 2005. We have evaluated the impact of the adoption of FSP 13-1, and determined there is no impact on the Company’s consolidated financial statements.

                    In June 2006, FASB issued FIN 48, “Accounting for Uncertainty in Income Taxes” an interpretation of FASB Statement No. 109. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This guidance is effective for fiscal years beginning after December 15, 2006. KAAI believes the impact of the adoption of FIN 48 will not be significant to the Company’s consolidated financial statements.

                    In September 2006, the FASB issued SFAS 157, “Fair Value Measurements”. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This guidance becomes effective for the first reporting period beginning after November 15, 2007. The Company is assessing the impact of the adoption of SFAS 157 on the Company’s consolidated financial statements.

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                    In September 2006, the FASB issued SFAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. This guidance is effective as of the end of the fiscal year for years ending after December 15, 2006. The Company is assessing the impact of the adoption of SFAS 158 on the Company’s consolidated financial statements.

4. Restricted Cash

                    Following are the components of restricted cash included in the Consolidated Balance Sheets as of July 1, 2006 and June 30, 2005:

(Dollars in thousands)	2006		2005
Escrow account for prefunded interest on senior debt	$	1,602	$	1,228
Restricted certificate of deposit for Manhasset facility to collateralize lease		—		200
Initial restricted certificate of deposit for Beverly Hills facility to collateralize lease		72		72
Secondary restricted certificate of deposit for Beverly Hills facility to collateralize lease		78		78
Restricted certificate of deposit for Boca Raton facility to collateralize lease		—		19
Restricted certificate of deposit for Norwalk office to collateralize lease		695		—
Total restricted cash		2,447		1,597
Less current portion		1,602		1,228
Total non-current restricted cash	$	845	$	369

                    As of June 30, 2005, the Company’s CEO and Chairman of the Board, Richard Rakowski, had personally guaranteed the letter of credit and restricted certificate of deposit for the Manhasset facility in the amount of $.2 million. As of July 1, 2006, the certificate of deposit was no longer required to collateralize the lease, as it had been released by the lessor. The letter of credit was still required along with the related guarantee.

5. Inventories

                    Following are the components of inventory included in the Consolidated Balance Sheets as of July 1, 2006 and June 30, 2005:

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(Dollars in thousands)	2006			2005
Back bar supplies	$	508		$	271
Components		596			485
Finished goods		1,556			1,400
Total inventory		2,660			2,156
Inventory reserves		(446	)		(179	)
Total inventories (net)	$	2,214		$	1,977

6. Property and Equipment, net

                    Following are the components of property and equipment included in the Consolidated Balance Sheets as of July 1, 2006 and June 30, 2005:

(Dollars in thousands)	2006			2005
Furniture and fixtures	$	2,337		$	1,489
Machinery and equipment		3,078			1,666
Leasehold improvements		11,261			5,628
Capital lease assets		439			286
Total property and equipment		17,115			9,069
Accumulated depreciation and amortization		(4,134	)		(2,508	)
Total property and equipment, net	$	12,981		$	6,561

                    Depreciation expense for the years ended July 1, 2006, June 30, 2005, and 2004 was $1.9, $1.9 million, and $0.6 million, respectively.

7. Intangible Assets

                    All intangible assets, other than goodwill, have been assigned an estimated finite useful life, and are amortized on a straight line basis over the number of years that approximate their respective useful lives (ranging from two to six years). Total amortization expense related to amortizable intangible assets for the years ended July 1, 2006, June 30, 2005, and 2004 was $2.2, $1.8 million, $1.0 million respectively. The following table provides additional information concerning intangible assets as of July 1, 2006 and June 30, 2005:

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	Gross Cost		Gross Cost		Accumulated Amortization				Net Cost				Estimated Useful Life
(Dollars in thousands)	2006		2005		2006		2005		2006		2005
Non-compete agreements	$	1,687	$	1,687	$	1,591	$	1,115	$	96	$	572		2-3 years
Trademark / trade name		1,144		1,110		947		577		197		533		3 years
Customer relationships		1,764		1,764		917		564		847		1,200		5 years
Licensing agreements		5,247		5,247		1,476		513		3,771		4,734		5 years
Domain Name		50		50		9		13		41		37		2-5 years
Patent		43		—		—		—		43		—		20 years
Sephora		43		43		13		4		30		39		6 years
Total	$	9,978	$	9,901	$	4,953	$	2,786	$	5,025	$	7,115

The following table provides the amortization expense to be incurred over the next five years:

(Dollars in thousands)		For the Years Ended,
	2007	$	1,602
	2008		1,343
	2009		1,132
	2010		906
	2011		10
	Thereafter		32
		$	5,025

8. Accrued Expenses and Other Current Liabilities

                    The table below consists of the Company’s accrued expenses and other current liabilities as of July, 1 2006 and June 30, 2005.

(Amounts in thousands)	July 1, 2006		June 30, 2005
Accrued interest	$	2,735	$	3,654
Accrued dividends		2,474		1,853
Accrued management Fees		1,714		1,305
Due to John Hopkins – consulting fees		1,300		—
Accrued registration penalties (a)		1,547		—
Payroll, Benefits and Other		6,679		3,103
Total Accrued Expenses and Other Current Liabilities	$	16,449	$	9,915

(a) – Registration Rights Penalties

                    On September 1, 2005, KAAI entered into an agreement with various stockholders regarding the registration of the shares of common stock underlying the securities they had acquired from KAAI. The agreement, which was assumed by the Company in connection with the Share Exchange Agreement, included an obligation to file a resale registration statement covering the shares by February 18, 2006, which was 60 days after the closing date of the Share Exchange Agreement (the “Filing Date”). The Company did meet this requirement as it filed an S-1 on

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January 24, 2006. In addition, the agreement required that the registration statement be declared effective by June 3, 2006 (105 days after the Filing Date). Failure under either of the obligations under the original agreement required a cash payment. On December 20, 2006, an amendment to the agreement was signed which required the payment of damages through the issuance of warrants to purchase shares of Common stock, at an exercise price of $0.001 per share. The number of Common Stock warrants to be issued for each period is calculated by dividing the liquidated damages of 1% of the aggregate purchase price paid by such stockholder for each 30-day period or pro rata portion to the holders, by the higher of (A) the average closing trading price of the Common Stock during the 30-day period immediately before the last day of the relevant period and (B) $0.211254. The shareholders may also elect to receive a portion of the damages in cash.

                    On December 22, 2005, the Company entered into an agreement with certain stockholders regarding the registration of the shares of common stock underlying the securities they had acquired from the Company. The agreement included an obligation to file a resale registration statement covering the shares by January 21, 2006 which was 30 days after the December 22, 2005 closing date of the sale of securities to such stockholders. Due to the fact that the Company did not meet this requirement, it is subject to a one-time filing penalty of 3% of the aggregate purchase price paid by such stockholder. In addition, the agreement required the Company to effect the Authorized share Increase described in this Report by May 1, 2006 which was 130 days after the closing date of the sale of securities to such stockholders. Due to the fact that the Company did not meet this requirement it may be subject to a one time penalty of 3% of the aggregate purchase price paid by such stockholder and ongoing monthly charges of 1.5% of the aggregate purchase price paid by such stockholder for each 30-day period or pro rata portion. Failure under either of the obligations requires a cash payment.

                    Due to the fact that the Company did not meet the effective date requirement by June 3, 2006 or the authorized share increase requirement, a non-operating charge has been recorded for the combined estimated penalties of $1.5 million during the fourth quarter of the year ended July 1, 2006. This includes one time charges of $0.9 million and monthly charges of $0.4 per month. There is no maximum included in the agreement and penalties will continue to accrue for each agreement until the Company is able to achieve compliance. The obligation of $1.5 million represents the registration penalties through July 1, 2006 and is included in Accrued expenses and other current liabilities on the Consolidated Balance Sheet. In addition, the Company has estimated that additional penalties to be incurred subsequent to July 1, 2006, until the event is cured to be $4.7 million.

9. Long-Term Debt and Other Long Term Liabilities

                    The Company’s long-term debt and other long-term liabilities as of July 1, 2006 and June 30, 2005 consist of the following:

			Amounts Outstanding
	Maturity
(Dollars in thousands)	Dates	Interest Rate %	2006		2005
Senior debt (a)	3/31/2009	12%	$	9,146	$	8,836
Senior subordinated debt (b)	11/4/2010	10%		—		12,066
Other long term debt
Note payable (c)	Varies	5% - 15%		5,839		7,805
Other long term liabilities
Long term consulting obligation	12/1/2008	6%		3,818		4,555
Deferred construction allowance				130		170
Capital lease obligations	Varies	6%		393		55
Deferred Liability
Sephora	12/31/2010			5,000		5,000
Convertible Securities				197,565		11,684
Total				221,891		50,171
Less current portion and amount included in other current liabilities				16,497		744
Long-term portion			$	205,394	$	49,427

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(a) - Senior Debt

                    On April 1, 2004, the Company borrowed $10.0 million from TICC under a 12% senior note due on March 31, 2009. The proceeds were used to finance the Georgette Klinger acquisition and for general working capital purposes. As part of the agreement, $2.4 million of interest expense was pre-funded and placed into an escrow account for the purpose of paying the first two years of interest expense on the note. In addition, 618,789 warrants with an exercise price of $.01 were issued in conjunction with the note. These warrants contain anti-dilution provisions in the event that the Company issues more equity in the future below a specified price. As of July 1, 2006 and June 30, 2005, this note carried a debt discount of $0.9 million and $1.2 million respectively. The debt discount was attributable to the value associated with the detachable warrants issued in conjunction with the Senior Debt. The debt discount is amortized to interest expense and recorded over the term of the note. For the years ended July 1, 2006 and June 30, 2005, the Company recorded interest expense of $0.3 million related to the amortization of the debt discount.

                    The senior note agreement contained covenants, including limitations on incurrence of debt, granting of liens, capital expenditures, mergers and consolidations. In addition, the Company could not exceed specified fixed charge coverage, total debt-to-profit, senior debt-to-profit and debt-to-equity ratios. These covenants applied in some cases to the unit level operations and in other cases to the consolidated operations, all effective for periods subsequent to June 30, 2004. On June 30, 2006, the Company obtained a covenant compliance waiver and amendment under the senior debt agreement with TICC. The Company obtained a waiver for the Consolidated Senior Debt to Consolidated EBITDA ratio covenant test for all periods through March 31, 2007. In addition, the Company obtained amended covenants for the Unit EBITDAR, Unit Fixed Coverage Ratio and minimum cash required covenant tests.

                    The senior note was collateralized by the assets as outlined in the Pledge and Security agreement dated April 1, 2004. The collateral for this note included financial instruments, goods (inventory, equipment, fixtures, etc.), deposit accounts, letter of credit rights, investment securities and general intangible assets.

                    Subsequent to year-end, the Company repaid the senior debt with proceeds from a financing it completed on July 6, 2006 (see subsequent events Note 19). As a result, the senior subordinated debt was reclassed to current liabilities as of July 1, 2006. All covenants were eliminated as a result of the payment of the debt. The unamortized discount was recorded as interest expense upon repayment.

(b) - Senior Subordinated Debt

                    On November 4, 2003, the Company borrowed $13.3 million from L Capital under a subordinated convertible promissory note due on November 4, 2010. This note was subordinated to the senior debt borrowed from TICC. The proceeds from this note were utilized for three purposes: 1) to purchase three salon and spa facilities in the Florida market, 2) complete renovation and expansion of two salon and spa facilities and 3) general working capital needs of the Company. The three salon and spa facilities acquired

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were 1) Wild Hare Salon in Boca Raton, FL, 2) Anushka Boca Spa in Boca Raton, FL and 3) Anushka Spa and Sanctuary in Palm Beach Gardens, FL.

                    The Company was obligated to pay interest at a rate of 10% per annum with a minimum of $66,500 payable quarterly in cash. The remainder of the interest could be deferred at the option of the Company until either the maturity of the note or the conversion of the note to common stock. On December 20, 2005, the note was converted to equity as part of the Share Exchange Agreement. The interest continues to accrue on the accrued interest portion that was not converted, at a rate of 7.5%. As of July 1, 2006 and June 30, 2005, the Company had $2.6 million and $1.9 million, respectively, of accrued interest on the Consolidated Balance Sheet related to this note. Accumulated but unpaid interest shall only be paid to the extent necessary, upon the occurrence of an exit event, to increase the internal rate of return of the investor to a 25% annual return with respect to its investment in the Company. The note and any unpaid interest were previously convertible into 5,966,444 shares of KAAI common stock at the option of the note holder.

                    The Company originally recognized a debt discount in the amount of $1.6 million due to beneficial conversion features associated with this note. The discount remaining as of December 20, 2005 was written off upon conversion. As of June 30, 2005, this note carried a debt discount of $1.2 million. The debt discount is amortized to interest expense and recorded over the term of the note. The Company recorded interest expense of $1.2 million and $0.2 million for each of the years ended July 1, 2006 and June 30, 2005, respectively, related to the combined write-off and amortization of the debt discount.

(c) - Other Long Term Debt

                    On June 29, 2003, the Company executed a promissory note for $5.9 million to KCO due on July 1, 2010. KCO paid expenses and deposits for acquisitions on behalf of AAI in connection with the formation and capitalization of the Company. The Company was obligated for 6% interest for the first year and 12% thereafter, compounded annually, through the term of the note. The Company utilized the effective interest method to calculate interest expense for this loan. The interest can be accrued or paid at the option of the Company. The Company had chosen to accrue the interest until such time that the cash flow from operations could support payment of the interest to the note holder. On December 20, 2005, the note and related interest of $1.6 million was converted to equity as part of the Share Exchange Agreement. As a result of the use of this method, $0.4 million and $0.7 million of non-cash interest expense related to this note was recorded for each of the years ending July 1, 2006 and June 30, 2005, respectively.

                    On June 29, 2003, the Company executed a secured note for $1.3 million to Cosmo Dischino due on June 30, 2006. The note was issued to Cosmo Dischino as part of the acquisition consideration to purchase the Dischino Corporation. The Company was obligated for 5% interest for the first year, 10% interest for the second year and 15% interest thereafter through the term of the note. The Company utilized the effective interest method to calculate interest expense for this loan. All interest was compounded annually and payable quarterly. This note payable was secured and collateralized by the fixed assets of the West Palm Beach facility as outlined in Schedule A of the Security Agreement dated July 1, 2003. On December 1, 2003 the Company pre-paid $0.8 million in principal back to the note holder. In July 2005, the Company repaid the remaining balance of the secured note issued in the amount of $0.5 million. As of July 1, 2006 and June 30, 2005, the principal balance of $0 and $0.5 million remained outstanding, respectively. As a result of this repayment, $0 and $0.1 million of non-cash interest expense related to this note was recorded in each of the years ended July 1, 2006 and June 30, 2005, respectively.

                    On November 26, 2003, the Company executed a note to the shareholders of Anushka Palm Beach Gardens for $0.4 million due on May 25, 2005. The note was issued to the shareholders of Anushka Palm Beach Gardens as part of the acquisition consideration to purchase the Anushka Spa and Sanctuary in Palm Beach Gardens, FL. The Company was obligated for 5% interest annually through the term of the note. All interest is compounded annually and payable quarterly. In July 2005, the Company redeemed the balance of

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the note payable issued to the shareholders of Anushka Palm Beach Gardens in the amount of $0.4 million. As of July 1, 2006 and June 30, 2005, the principal balance of $0 and $0.4 million remained outstanding, respectively.

                    On April 23, 2004, the Company executed a note to the Pyle Group for $1.0 million due on April 23, 2007. The note was issued to the Pyle Group as part of the acquisition consideration to purchase Georgette Klinger Inc. The Company is obligated for 5% interest annually through the term of the note. All interest is compounded annually and payable quarterly. As of June 30, 2005, the note was reissued to Judith Pyle in the amount $.5 million and Thomas Pyle in the amount $.5 million, individually under the same terms.

Bridge Financings:

                    On May 9, 2006, we entered into a Loan Agreement with some of our existing shareholders, pursuant to which the Lenders loaned the Company $4,838,710 to be used by the Company for capital expenditures and general working capital. Unamortized closing costs relating to this loan were $0.3 million as of July 1, 2006, and are included in Other current assets on the Consolidated Balance Sheet. Pursuant to a Subordination Agreement dated May 9, 2006 with the Lenders and TICC, the Loan was subordinated to the Company’s then existing senior indebtedness to TICC under the Note and Warrant Purchase Agreement, dated March 31, 2004, as amended. Subsequent to year end, the senior debt to TICC was repaid (see subsequent events Note 19).

Accrued Interest and Maturities of Other Long Term Debt

                    Accrued interest of $2.7 and $3.6 million is included in accrued expenses as of July1, 2006 and June 30, 2005, respectively.

                    Aggregate maturities of debt, gross of debt discounts for the next five years, are as follows:

(Dollars in thousands)	For the Years Ended June 30,
2007	$	15,839
2008		—
2009		—
2010		—
2011		—

10. Commitments and Contingencies

Litigation

UBS Lawsuit

                    UBS Securities, LLC commenced a lawsuit against the Company in the Supreme Court of the State of New York, County of New York on September 18, 2006. The complaint alleges that UBS was engaged to provide investment banking services to the Company and that UBS is owed a fee of $1,750,000 with respect to a private placement that was consummated in June, 2006. In the event the Company was unsuccessful in defending the lawsuit, it would have a material adverse effect on the Company. The Company does not believe a loss from an unfavorable outcome will exceed the amount accrued.

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Other Contingencies

                    The Company is a party to a number of legal actions, proceedings or claims. While any action, proceeding or claim contains an element of uncertainty, management believes that the outcome of such actions, proceedings or claims will not have a material adverse effect on the business, financial condition or results of operations.

Employment Agreements

                    The Company has entered into employment agreements with certain former owners of companies which were acquired in the year ended June 30, 2004. Under the terms of the agreements these employees and certain senior executives are entitled to severance benefits should their employment be involuntarily terminated. The obligation under these contracts for severance benefits is approximately $0.5 million and $1.4 million for the years ended July 1, 2006 and June 30, 2005, respectively. Further, the Company entered into an agreement with another former owner of an acquired company whereby the employee is entitled to a guaranteed salary until such time as a note for $1.3 million is repaid by the Company to the employee. In addition, should the note not be repaid within 18 months of its execution, the employee is entitled to a minimum salary of twice his guaranteed salary until such time as the note is repaid in full. The note was repaid in July, 2005 and no liability remains as of July 1, 2006.

Capital Leases

                    The Company is committed under a non-cancelable capital lease for medical equipment at four of the twelve operating facilities. The term of the lease is two years and expires in April 2008. The lease has a bargain purchase options that the Company expects to exercise at the termination of the lease. Capital lease assets totaled $0.4 million and $0.3 million as of July 1, 2006 and June 30, 2005, respectively, net of depreciation, and capital lease obligations totaled $0.4 million and $0.1 million, respectively.

Operating Leases

                    The Company is committed under non-cancelable operating leases for all twelve of its store facilities and two corporate office locations. The original terms of the leases range from one to fifteen years with many leases renewable for an additional three to five year term at the option of the Company. Certain leases contain escalation provisions and percentage rent provisions.

                    Total rent expense, including real estate taxes, utilities, and other expenses in the Consolidated Statement of Operations for the years ended July 1, 2006 and June 30, 2005 was $6.0 million and $4.7 million, respectively.

                    As of July 1, 2006 future minimum lease payments (excluding percentage rents based upon revenues) due under existing non-cancelable leases with remaining terms of greater than one year are as follows:

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	(Dollars in thousands)
Fiscal year	Operating lease payments		Capital lease payments		Total lease payments
2007	$	4,137	$	207	$	4,344
2008		4,086		207		4,293
2009		3,292		—		3,292
2010		3,259		—		3,259
2011		3,203		—		3,203
Thereafter		11,492		—		11,492
Total minimum lease payments	$	29,469		414	$	29,883
Less: Imputed interest				22
Present value of capital lease obligations			$	392

11. Related Party Transactions

General

                    In connection with the formation and capitalization of KAAI, KCO advanced an aggregate of approximately $5.9 million to KAAI. In addition, affiliates of KCO, including Seapine Investments, LLC (“Seapine”), trusts for the benefit of the children of William and Carla Kidd (“Kidd Trusts”), Richard Rakowski, a director and Chief Executive Officer of the Company and Andrew D. Lipman, a director of the Company (all of the foregoing herein collectively “KCO Affiliates”) and other unrelated parties, invested an aggregate of $2 million to capital KAAI and received 2,725 shares of KAAI’s series B preferred stock, 9,288,609 shares of common stock and warrants to acquire 376,384 shares of common stock of KAAI at an exercise price of $.01 per share. All of these securities were exchanged for TrueYou securities in the Share Exchange Agreement. See also “Loans by Klinger Investments” below which describes transactions with such entity, which entity is solely owned by William J. Kidd. See also “Loans by Richard Rakowski” and “Loans by Andrew Lipman” below.

                    In November 2003, in connection with the transactions involving KAAI and L Capital, KCO received a note from KAAI in the sum of $5,905,085 (which represented the amount originally advanced plus interest) and agreed that payment of such note would be based on future performance of KAAI. On December 20, 2005 and in connection with the Share Exchange Agreement, the $7,346,195.53 of principal and interest outstanding under the KCO note was converted into 2,938,478 shares of KAAI common stock ($2.25 per share), which was subsequently converted into 3,571.1976 shares of our Series B Preferred Stock upon the closing of the Share Exchange Agreement.

                    In November 2003, L Capital invested $13,300,000 and received a subordinated convertible promissory note (convertible into 5,966,444 shares of the common stock of KAAI) and entered into a Securityholders Agreement and Registration Rights Agreement with KAAI and KCO. The agreements provide that the KCO Investors and L Capital vote their shares for specified nominees as directors of KAAI and for certain approval rights for specified transactions of KAAI (e.g., significant acquisitions, capital expenditures, material contracts, specified borrowings and others), as well as rights to cause the sale of KAAI. L Capital also entered into a Share Transfer Agreement with the KCO Affiliates and other affiliates of KCO (collectively the “KCO Investors”) whereby certain of the shares of common stock of KAAI owned

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by the KCO Investors is required to be delivered to L Capital if L Capital does not, upon the sale or liquidation of KAAI, a change of control of KAAI, a public offering of at least $25,000,000 and other events, receive an investment rate of return of 25% on its investment in KAAI (the “L Capital IRR test”).

                    In June 2004, L Capital invested an additional $8.2 million and acquired shares of the series D convertible preferred stock of KAAI and concurrently entered into an amendment to the Share Transfer Agreement with the KCO Investors which increased the number of shares of the common stock of KAAI owned by the KCO Investors which could be delivered to L Capital. Under the revised Share Transfer Agreement described below, an aggregate of 40,853,733 shares of Common Stock of the Company may be delivered to L Capital in the event the L Capital IRR test is not met. The subordinated convertible promissory note and the series D convertible preferred stock were converted into KAAI common stock (at $2.25 per share), which were subsequently converted into 11,322.6643 shares of our Series B Preferred Stock upon the closing of the Share Exchange Agreement on December 20, 2005.

                    Under the Securityholders Agreement, the parties also agreed on restrictions on the transfer of their securities, rights of first offer, tag-along rights as well as preemptive rights. Under the Securityholders Agreement, the KCO Investors have the right, until November 2008, to cause the sale of KAAI, provided that the L Capital IRR test is met; and if not, after November 2008, L Capital has the right to cause the sale of KAAI.

                    On December 20, 2005, the parties amended the Share Transfer Agreement and the Securityholders Agreement. The amended agreements provide that the KCO Investors and L Capital vote their shares for specified nominees as directors of the Company and for certain approval rights for specified transactions of the Company (e.g., significant acquisitions, capital expenditures, material contracts, specified borrowings and others), as well as rights to cause the sale of the Company. On December 20, 2005, L Capital converted its promissory note and its shares of KAAI’s series D preferred stock into shares of common stock of KAAI (at $2.25 per share), which were subsequently converted into 11,322.6643 shares of our Series B Preferred Stock upon the closing of the Share Exchange Agreement. Unpaid and accrued interest on the L Capital note and accrued and unpaid dividends on the shares of KAAI’s series D preferred stock were not paid or converted and remain as outstanding obligations of the Company and bear interest at a rate of 7.5% per annum. To the extent necessary, upon the occurrence of certain events (such as a sale or liquidation of the Company or other event as referred to above), if L Capital does not realize the L Capital IRR test, we might be required to pay a portion or all of such unpaid and accrued interest and dividends to L Capital. The KCO Investors have also agreed with L Capital, that they will not sell any of their shares of the Company ‘s Series B Preferred Stock and the Company’s Common Stock into which the Series B Preferred Stock are convertible, until such time as L Capital has realized the L Capital IRR test.

L Capital Consulting Services Agreement

                    On November 25, 2003 KAAI entered into a Consulting Services Agreement with L Capital pursuant to which L Capital performed consulting services for KAAI. Under the Agreement, KAAI was required to pay L Capital an annual consulting fee, payable in quarterly installments in arrears, equal to the higher of (a) $445,000 and (b) 1% of our gross revenues plus $20,000 for such year. As of July 1, 2006 and December 20, 2005, there were accrued and unpaid consulting fees to L Capital of approximately $876,841.

                    On December 20, 2005, we terminated the Consulting Agreement with L Capital, and in accordance with this Agreement were obligated to pay all accrued and unpaid consulting fees within one year of termination. On December 19, 2006 a new agreement was signed which deferred this payment until (a) the $25.0 million in principal, along with the related interest of our senior debt issued on July 6, 2006 to Laurus Master Fund Ltd. has been paid, (b) the $10.0 million in principal, along with the related interest of our subordinated debt issued on July 11, 2006 has been paid and (c) the $4.0 million in principal, along with the

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related interest of senior subordinated debt issued on December 22, 2006. Upon the occurrence of all of the preceding, all accrued management fees will be due and payable.

KCO Advisory Services Agreement

                    On November 25, 2003 KAAI entered into an Advisory Services Agreement with KCO pursuant to which KCO performed advisory services for the Company. Under the Agreement KAAI was required to pay KCO an annual advisory fee, payable in quarterly installments in arrears, equal to the higher of (a) $425,000 and (b) 1% of our gross revenues for such year. As of December 20, 2005, there were accrued and unpaid consulting fees to KCO of approximately $837,433.

                    On December 20, 2005 we terminated the Advisory Agreement with KCO and in accordance with this Agreement were obligated to pay all accrued and unpaid advisory fees within one year of termination. On December 19, 2006 a new agreement was signed which deferred this payment until (a) the $25.0 million in principal, along with the related interest of our senior debt issued on July 6, 2006 to Laurus Master Fund Ltd. has been paid, (b) the $10.0 million in principal, along with the related interest of our subordinated debt issued on July 11, 2006 has been paid and (c) the $4.0 million in principal, along with the related interest of senior subordinated debt issued on December 22, 2006. Upon the occurrence of all of the preceding, all accrued management fees will be due and payable.

Loans by Affiliates of Pequot

                    Affiliates of Pequot, holders of more than 5% of the Common Stock of the Company, hold 7 year warrants with an exercise price of $.01 per share, to purchase an aggregate of 14,654,807 shares of the Common Stock of the Company which warrants were received in connection with the $5.2 million Subordinated Debt financing on July 11, 2006 and the $4.8 Million Subordinated Debt financing on May 9, 2006 in which such affiliates loaned the Company an aggregate of $2,312,903. Such affiliates also loaned monies to and received securities of KAAI as described in Item 1 of this Report. All of such securities have been converted into securities of TrueYou under the Share Exchange Agreement.

Loans by Klinger Investments

                    Klinger Investments, LLC, an entity owned by William J. Kidd, the spouse of Carla G. Kidd, the sole Manager of Seapine Investments, LLC, a holder of more than 5% of the Common Stock of the Company and a 50% owner of Kidd & Company, LLC, loaned the Company $2,275,269 as part of the July 11, 2006 $5.2 Million Subordinated Debt financing and May 9, 2006 $4.8 Million Subordinated Debt financing and $650,000 in the $4 Million December 22, 2006 Senior Subordinated financing and received 10 year warrants with an exercise price of $.001 per share to purchase an aggregate of 14,416,354 shares of Common Stock and 7 year warrants to purchase an aggregate of 2,904,762 shares of Common Stock. In the event the Laurus $1 Million Senior Subordinated Loan is not repaid by April 22, 2007, warrants to purchase 2,708,374 shares will be returned by Klinger Investments to the Company for cancellation.

Loans by Laurus Master Fund Ltd.

                    Laurus has loaned the Company $25,000,000 as Senior Secured Debt and $1 Million as Senior Subordinated Secured Debt as described in this Report and received 10 year warrants with an exercise price of $.01 per share to purchase a total of 50,885,093 shares of Common Stock and 7 year warrants with an exercise price of $.01 per share to purchase a total of 10,000,000 shares of Common Stock. In addition Laurus is entitled to receive warrants to purchase an additional 8,750,000 shares of Common Stock if the $1,000,000 Senior Subordinated Secured Debt is not repaid by April 22, 2007. If prior to the 14^th month anniversary of June 30, 2006, the Company’s obligations to Laurus under the Senior Secured Debt have been reduced to $12,500,000 or less, then warrants to purchase 6,839,394 shares of Common Stock will be

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automatically cancelled and terminated and if at such time the Company’s obligations have been reduced to zero, then warrants to purchase an additional 6,693,875 shares of Common Stock will also be cancelled.

Loan by Richard Rakowski

                    Richard Rakowski, a Director and Chief Executive Officer of the Company, loaned the Company $850,000 as part of the Senior Subordinated financing on December 22, 2006 and received 7 year warrants with an exercise price of $.001 per share to purchase 3,798,534 shares of Common Stock. In the event the Laurus $1 Million Senior Subordinated Secured Loan is not repaid by April 22, 2007, warrants to purchase 3,541,666 shares of Common Stock will be returned to the Company for cancellation by Mr. Rakowski. Mr. Rakowski has also personally guaranteed certain obligations of the Company.

Loans by Andrew Lipman

                    Andrew D. Lipman, a Director, loaned the Company $150,000 in the July 11, 2006 $5.2 Million Subordinated Debt Financing and received 10 year warrants with an exercise price of $.001 per share to purchase 950,416 shares of Common Stock and loaned the Company $200,000 in the December 22, 2006 Senior Subordinated financing and received 7 year warrants with an exercise price of $.001 per share to purchase 893,773 shares of Common Stock. In the event the Laurus $1 Million Senior Subordinated Secured Loan is not repaid by April 22, 2007, warrants to purchase 833,334 shares of Common Stock will be returned to the Company for cancellation by Mr. Lipman.

Sephora

                    Sephora, with whom the Company has a strategic relationship, is a subsidiary of LVMH. L Capital Management SAS, which manages and represents L Capital, is also a subsidiary of LVMH, and as a result L Capital Management SAS and sephora are affiliates. The Company’s decision to enter into a contract with Sephora was made independent of its relationship with L Capital. The company has recorded $2.7 million in net revenues on a cumulative basis as of July 1, 2006. (see Note 12)

Alan Gelband

                    On June 1, 1999, the Company entered into a consulting agreement with Alan Gelband, a former director of the Company. Pursuant to the agreement, Mr. Gelband provides the Company with general management services for a fee of $10,000 per month. This agreement terminated on February 28, 2003. In July 2004, Mr. Gelband converted the $415,000 consulting fee due him into 4,150,000 shares of the Company’s Common Stock.

                    The Company owed the Alan Gelband Company Defined Contribution Pension Plan & Trust an amount of $250,266. This consisted of a $220,000 loan made to the Company on February 14, 2003 and accrued interest through July 2004 of $30,266. In July 2004 the Company converted this debt into 1,000,000 shares of Common Stock.

                    During 2004, Alan Gelband individually made three separate loans to the Company. These loans, together with interest accrued thereon, were in the aggregate amount of $5,870 as of July 2004. Alan Gelband converted this debt into 58,700 shares of the Company’s Common Stock in July 2004.

                    An amount equal to $41,487.00 in consulting fees was paid to the Alan Gelband Company on November 29, 2005 for consulting services provided by the Alan Gelband Company prior to the Closing of the Share Exchange Agreement and for the establishment of a reserve to pay down certain accounts payable and other miscellaneous expenses of the Company that accrued prior to the closing of the Share Exchange Agreement.

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                    Also in July 2004, the Alan Gelband Company Defined Contribution Pension Plan and Trust purchased 1,000 shares of the Company’s Series A Preferred Stock. On December 20, 2005, the 1,000 shares of Series A Preferred Stock was converted into 2,000,000 shares of Common Stock.

The Company’s office, until December 20, 2005, located at 750 Third Avenue, Suite 1600, New York, New York 10017 was provided free of charge by Alan Gelband Co., Inc., an investment banking firm controlled by Mr.Gelband.

Pyle Group

                    On April 23, 2004, the Company executed a note to the Pyle Group for $1.0 million due on April 23, 2007. The note was issued to the Pyle Group as part of the acquisition consideration to purchase Georgette Klinger Inc. The Company is obligated for 5% interest annually through the term of the note. All interest is compounded annually and payable quarterly. As of June 30, 2005, the note was reissued to Judith Pyle in the amount $.5 million and Thomas Pyle in the amount $.5 million, individually under the same terms.

                    The Company has an existing application service provider contract with the Pyle Group. Services include troubleshooting of the Company’s Millennium software program used to record revenue and inventory activity. Fees under the contact are $0.2 million per year.

West Palm Beach Facility Lease

                    The Company leases its West Palm Beach facility from Christal Inc. The majority owner of Christal Inc. was an employee at the West Palm Beach facility. Total rent expense to this related party amounted to $0.3 million for the years ended July 1, 2006 and June 30, 2005.

12. Material Agreements

Agreements with Johns Hopkins Medicine

                    On November 21, 2003 AAI entered into a Consulting Services Agreement (“Consulting Agreement”) with Johns Hopkins Medicine (“Johns Hopkins”), acting through Johns Hopkins Health System Corporation, and the Johns Hopkins University. Under the Consulting Agreement, Johns Hopkins agreed to provide consulting services to AAI consisting of: (i) review and assessment of its medical delivery protocol document and (ii) consultation on the development of outcomes studies methodologies. The Consulting Agreement also sets forth the conditions for the use of the Johns Hopkins Trademark. The term of the agreement is until November 21, 2008. The Consulting Agreement may be terminated by either party at any time with 120 days of written notice.

                    The consideration for the review and assessment services provided by Johns Hopkins is $5,000 per day. The consideration under this original Consulting Agreement for the limited use of the Johns Hopkins mark was $0.3 million per year payable in quarterly installments and 500 shares of the Company’s series E preferred Stock.

                    As of June 30, 2005, Johns Hopkins held a minority interest in KAAI constituting shares of Series E Preferred Stock. The Series E Preferred Stock represented Johns Hopkins’ equity interest in KAAI. On May 4, 2006, Johns Hopkins voluntarily forfeited all of its equity interest in KAAI shares of Series E Preferred Stock. The forfeited shares constituted all issued and outstanding shares of Series E Preferred Stock and as a result, as of July 1, 2006, no shares of Series E Preferred Stock of KAAI are issued and outstanding. As a result of the forfeited shares, the Company canceled these shares at the end if its fiscal year, ending July 1, 2006.

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                    On March 23, 2005, AAI signed an amendment to the Consulting Services Agreement (“Amendment” or “Amended Agreement”) with Johns Hopkins, effective June 1, 2005. The purpose of this Amendment was to expand the oversight function that Johns Hopkins would perform for the Company to include increased medical protocol review, medical facility design and physician credentialing. In addition, the Amendment expanded the use by the Company of the Johns Hopkins trade name. For the increased oversight and review services provided by Johns Hopkins, the Company agreed to increase the consideration paid to Johns Hopkins from $.3 million to $1.0 million in the first year of the contract, $1.5 million in the second year of the contract and $1.0 million annually thereafter until the term of the contract is reached. The term of the Amended Agreement is until June 1, 2010. The Amended Agreement may be terminated by either party at any time with 120 days of written notice. The Johns Hopkins Amended Agreement is carried on the balance sheet at the present value of all future payments to Johns Hopkins and amortized over the term of the agreement. The carrying value of this asset was $3.8 million as of July 1, 2006 and $4.7 million as of June 30, 2005. The amount is reported as a component of Intangible Assets.

                    In December 2004 KAAI entered into a Services and Licensing Agreement with Johns Hopkins, acting through Johns Hopkins Health System Corporation, and the Johns Hopkins University (the “Johns Hopkins Agreement”). Under the Services and Licensing Agreement, Johns Hopkins agreed to provide the following services to KAAI: (i) investigate current methods for skin care parameter testing at the point of sale; (ii) where existing protocols and equipment for skin care parameter testing do not exist or are not acceptable to Johns Hopkins, develop acceptable methods to measure the condition of clients’ skin; (iii) create a new testing methodology to validate skin care product efficacy; (iv) oversee the ongoing testing of skin care products using the Johns Hopkins testing standards; and (v) oversee the testing of 15 of KAAI’s skin care products using the agreed upon testing standards. This Services and Licensing Agreement was subject to the satisfaction of certain conditions, which KAAI had to satisfy by October 31, 2005. The conditions include: (i) written agreement by Johns Hopkins and KAAI on: (A) the parameters for research and academic freedom as opposed to work for hire as noted in the agreement; (B) the amount of royalty fees, guaranteed annual fees and equity as noted the agreement; (C) the buyout or additional stock to be provided Johns Hopkins at the end of the term of the agreement; and (D) an appropriate scope of coverage for product and/or contractual liability insurance to be maintained by KAAI; (ii) final approval by internal Johns Hopkins committees for the Permitted Statement (as defined in the agreement); and (iii) documentation of the matters described in the (i) and (ii) by an amendment to the agreement. The date by which conditions need to be met were extended due to negotiations on use of the John Hopkins name. On November 10, 2005, the period by which KAAI was required to satisfy the conditions was extended to December 31, 2005. On January 3, 2006, the parties extended such period until March 31, 2006. In March 2006, the parties extended such period to June 30, 2006. On June 21, 2006, the period by which KAAI was required to satisfy the conditions was extended to September 30, 2006. The term of the Services and Licensing agreement was to be 5 years after the satisfaction of the conditions. KAAI and Johns Hopkins have not sought further extension of the time period to satisfy the conditions in the Services and Licensing Agreement and do not intend to continue that Agreement. Therefore, unless changed by current negotiations, we do not anticipate that there will be any reference to Johns Hopkins on our Cosmedicine products packaging after our existing packaging is used up. Packaging that has already been printed with the reference to Johns Hopkins will be used until existing inventories are depleted. Johns Hopkins is currently branded on our K360 software and we do expect that to continue in the future. In addition, the Johns Hopkins name is used in the marketing of our medical services as the name appears on the doors of our on-site medical facilities. Even though we do not intend to continue the Services and Licensing Agreement, the existing Consulting Services Agreement previously discussed, is still in full force and effect.

                    We have an alliance with John Hopkins, widely acknowledged to be among the most respected medical institutions in the US. John Hopkins has agreed to review and assess our process for verifying the safety and clinical quality of our practitioners, protocols and facilities; it also approves the medical protocols of our Medical Advisory Board and provides consulting on the scientific testing of our Cosmedicine product line. John Hopkins approved the use of the John Hopkins Medicine name as part of the marketing of our

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facilities, intellectual property and certain collateral materials as described in the Consulting Services Agreement and Amendment.

                    Johns Hopkins Medicine’s role with KAAI is to provide aesthetic-improvement clients with information regarding performance and safety claims. The relationship is designed to provide consulting services on aspects of our medical services business, and on the safety and performance of our skin care product line. KAAI’s goal is to help establish consistent, safe delivery of medical aesthetic services in its centers, to create objective testing of the effects of our skin care products, and to focus on measurable elements of skin health.

Agreement with Sephora USA

                    In December 2004, the Company entered into a Retail Alliance Agreement with Sephora USA, LLC. (“Sephora). Pursuant to the agreement the Company granted Sephora the rights to: (i) sell its Cosmedicine products in the Sephora retails stores, through its website and any other retail channels, (ii) to utilize certain of its intellectual property and methods in order to operate the AAI stores within the Sephora stores, (iii) develop with the Company the adjacent AAI facilities and (iv) sublease retails space from the Company for the purpose of constructing and operating a Sephora store within the Company’s centers. The term of the agreement is until December 31, 2010.

                    Upon execution of the agreement, Sephora deposited a performance deposit in an amount of $5 million with an escrow agent, which was subsequently paid to the Company. If Sephora, pursuant to the terms of the agreement, terminates the agreement with the Company it may have the right to recover a portion of the $5 million performance deposit. Sephora will also have the right to earn back its performance deposit if the arrangement is successful. The Company will be required to return to Sephora 50% of the performance deposit at such time that the “Net Revenues” of Sephora relating to the sale of Cosmedicine products plus Sephora “Capital Expenditures” (each as defined in the agreement) equals $30 million and the remaining performance deposit at such time that such “Net Revenues” plus “Capital Expenditures” equals $60 million. The Company has recorded $5 million as other long term liabilities on the Consolidated Balance Sheet as of July 1, 2006 and June 30, 2005. The Company has recorded $2.7 million in net revenues on a cumulative basis as of July 1, 2006 (see Note 11).

Agreements with Mark Potter and Atlantis Laboratories

                    On April 4, 2006, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Mark Potter and Atlantis Laboratories, Inc. (“Atlantis” and together with Mr. Potter, the “Formulators”). The Formulators have developed, formulated and produced skin care products for the Company’s Cosmedicine product line. Under the Consulting Agreement, the Formulators agreed to use their best efforts to provide all services necessary to (i) expand the number of product types in the Company’s over-the-counter Cosmedicine line, (ii) formulate and develop an enhanced version of (a) Cosmedicine, (b) a foundation cosmetic line, (c) a hair care product line and (d) a cosmetics line, and (ii) have such products produced and shipped by Atlantis for sale at the Company’s spa and salon facilities and other outlets.

                    The Consulting Agreement also contains a non-competition clause that provides, among other things, that (i) the formulas developed by the Formulators for the Company are proprietary and may not be used by the Formulators for any purpose other than on behalf of the Company and may not be utilized in products sold to anyone other than the Company and (ii) except for limited exceptions, the Formulators will not directly or indirectly acquire or own any interest in any entity engaged in the business conducted by the Company. Mr. Potter is to be paid an annual consulting fee of $207,000 in equal monthly installments of $17,250. In addition, the Company granted Mr. Potter on September 18, 2006 an option to purchase the TrueYou equivalent of 150,000 shares of KAAI common stock at an exercise price of $0.22 per share, vesting over a period of three years. Mr. Potter also received 100,000 options to purchase KAAI common

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stock on February 1, 2005, at an exercise price of $4.00 per share, vesting over four years. The Company has calculated compensation expense using variable accounting under FAS 123R, and has recorded cummulative expense of $131,129 as of July 1, 2006. The initial term of the Consulting Agreement is five years.

                    In connection with the Consulting Agreement, on April 12, 2006, the Company entered into a Formula Agreement (the “Formula Agreement”) with the Formulators and JPMorgan Chase Bank, N.A., as Escrow Agent (the “Escrow Agent”). Pursuant to the Formula Agreement, the Formulators agreed that all existing and future formula, manufacturing procedures and specifications, along with specific details of all raw material suppliers and specifications for the raw materials relating to the products to be purchased by the Company from the Formulators are to be deposited with the Escrow Agent. In the event of certain specified events and/or contingencies, the Escrow Agent is required to deliver such formulas, manufacturing procedures and specifications to the Company.

                    Pursuant to the Consulting Agreement, the Company agreed to loan up to a total of $1,100,000 to Mr. Potter for the purchase of land in Conroe, Texas (“Property”) and construction of a laboratory and manufacturing facility to manufacture and supply the Cosmedicine line of products. On April 17, 2006, KAAI made a loan of $392,200 to the Formulators for the purchase of the Property evidenced by a Promissory Note (the “Promissory Note”). Under the Promissory Note, the principal sum of $392,200 with interest at the rate of 6-1/2% per annum is payable in 120 monthly installments of principal and interest in the amount of $4,453.00 each with the first installment due on May 1, 2006. At July 1, 2006 the Company had a note receivable balance of $0.4 million from Mr. Potter which is included in other assets on the consolidated balance sheet.

                    In connection with the foregoing, the Company also entered into a Construction Loan Agreement dated April 4, 2006 with the Formulators (the “Construction Loan Agreement”) pursuant to which the Formulators executed a $650,000 Construction Loan Promissory Note (“Construction Loan Promissory Note”) to the Company for the development of a laboratory and manufacturing facility to be operated by Atlantis on the Property. Under the terms of the Construction Loan Agreement, the Company is to make advances to the Formulators under the Construction Loan Promissory Loan from time to time in connection with the construction on the Property. The amount of each advance will be determined by the Company. The unpaid principal balance on the Construction Loan Promissory Note bears interest at a rate of 6-1/2% per annum. Monthly installments of interest only on the outstanding principal balance will be due commencing on the first day of the month following the initial advance and continuing on the first day of each subsequent month up to and including April 1, 2007. Commencing May 1, 2007, and continuing through April 1, 2016, installment payments of principal and interest will be due in such amount as will be sufficient to pay in 108 equal payments all principal and accrued interest.

13. Income Taxes

                    The components of the deferred tax assets as of July 1, 2006 and June 30, 2005 are as follows (in thousands):

	2006			2005
Net operating losses	$	23,921		$	10,648
Accrued liabilities and reserves		1,163			1,136
Deferred revenue - gift cards		3,365			3,629
Accrued interest		1,709			941
Accrued management fees		697			533
Stock based compensation		521			199
Property and equipment		623			295
Amortization of goodwill and intangibles		515			289
Total deferred tax assets		32,514			17,670
Valuation allowance		(32,514	)		(17,670	)
Net deferred tax assets	$	—		$	—

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                    The Company’s ability to utilize the cumulative Federal and State net operating loss carryforwards of approximately $59.0 million at July 1, 2006 against future income will expire on June 30, 2023, and may be subject to certain limitations upon a “change in control” as defined by section 382 of the Internal Revenue Code of 1986.

                    The provision for income taxes differs from the amount of income tax determined by applying the applicable statutory rate to the loss before income taxes. This difference, as shown in the following table, is due to a full reserve of our benefit for the utilization of net operating losses since utilization can not be determined to be more likely than not.

	2006			2005			2004
Statutory income tax benefit rate		(35.0	)%		(35.0	)%		(35.0	)%
Unrealizd loss on convertible securities		31.8	%		—			—
State income tax (net of federal benefit)		(5.7	)%		(6.0	)%		(6.0	)%
Subtotal		(8.9	)%		(41.0	)%		(41.0	)%
Valuation allowance		8.9	%		41.0	%		41.0	%
Total effective tax rate		0.0	%		0.0	%		0.0	%

14. Common and Preferred Stock

General

                    The Company’s certificate of incorporation authorizes 20,000,000 shares of Common Stock, $.001 par value per share, and 1,000,000 shares of Preferred Stock $0.001, par value per share.

                    On March 22, 2006, the Company’s Board of Directors approved and recommended that the stockholders of the Company approve an amendment to the Company’s Certificate of Incorporation (the “Certificate of Amendment”) to (i) change the Company’s name from TrueYou.Com Inc. to Klinger Advanced Aesthetics, Inc., (ii) increase the number of authorized shares of Common Stock that the Company is authorized to issue from 20,000,000 to 60,000,000 and (iii) implement a reverse stock split whereby each twenty-five (25) shares of our issued and outstanding Common Stock will be combined into one (1) share of Common Stock.

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                    On March 23, 2006 the Certificate of Amendment was approved by: (A) the holders of a majority of the Company’s outstanding stock entitled to vote with respect to an amendment of the Company’s certificate of incorporation; (B) the holders of more than 50% of the outstanding shares of Series C Preferred Stock, in accordance with the Certificate of Designation of the Series C Preferred Stock; and (C) the holders of more than 75% of the outstanding shares of Series D Preferred Stock, in accordance with the Certificate of Designation of the Series D Preferred Stock. On March 23, 2006 the Company filed with the Commission a preliminary Information Statement in connection with the proposed Amendment.

Common Stock

                    Prior to the closing of the Share Exchange Agreement, KAAI had 12,995,513 shares of common stock issued and outstanding. In connection with the closing of the Share Exchange Agreement, 2,000 of the Company’s shares of Series A Preferred Stock were converted into 2,000,000 shares of Common Stock. Subsequently, upon the closing of the Share Exchange Agreement on December 20, 2005 and as of March 21, 2006, the Company had 14,995,513 shares of Common Stock issued and outstanding. In connection with the Share Exchange Agreement, the Company agreed with certain of our shareholders that the Company would amend our Certificate of Incorporation to increase the number of shares of authorized Common Stock so that all of the shares of our Series B Preferred Stock will convert automatically into Common Stock. In addition, the Company has agreed with the holders of our Series C Preferred Stock and Series D Preferred Stock that it would amend its Certificate of Incorporation to increase the number of shares of authorized Common Stock so that the Company would have sufficient shares of Common Stock available to fully convert our Series C and Series D Preferred Stock.

                    The holders of Common Stock are entitled to one vote per share on all matters to be voted upon by the stockholders. The holders of Common Stock are entitled to receive ratably any dividends that may be declared on the Common Stock from time to time by the board of directors in its discretion out of funds legally available for that purpose. In the event of the Company’s liquidation, dissolution or winding up, the holders of Common Stock are entitled to share ratably in all assets remaining after payment in full of liabilities and preferential payments, if any, to holders of Preferred Stock. The Common Stock has no preemptive or conversion rights. There are no conversion or redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Common Stock are fully paid and nonassessable.

Preferred Stock

                    Subject to the approval rights of the holders of currently outstanding shares of Series C Preferred Stock and Series D Preferred Stock, the Company’s board of directors has the authority, without further action by the stockholders, to issue up to 1,000,000 shares of Preferred Stock, par value $0.001 per shares, in one or more series and to fix the designations, powers, preferences, privileges, rights, qualifications, limitations and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the Common Stock. The Company’s board of directors, without approval of the holders of Common Stock, can issue Preferred Stock with voting, conversion or other rights that could adversely affect the voting power and other rights of the holders of Common Stock. Preferred Stock could thus be issued quickly with terms calculated to delay or prevent a change of control or make removal of management more difficult. The issuance of Preferred Stock may have the effect of decreasing the market price of the Common Stock, and may adversely affect the voting and other rights of the holders of Common Stock.

Series A Convertible Preferred Stock

                    Prior to the closing of the Share Exchange Agreement, KAAI had 2,000 shares of Series A Preferred Stock issued and outstanding, which were converted, in connection with the closing of the Share Exchange

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Agreement, into 2,000,000 shares of TrueYou Common Stock. There are no shares of Series A Preferred Stock presently issued and outstanding.

Dividends. Only dividends that are declared by our Board of Directors shall accrue and be paid with respect to the Series A Preferred Stock.

Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up, the holders of Series A Preferred Stock are entitled to receive $50 with respect to each share and upon receipt of such liquidation preference the holders of Series A Preferred Stock shall not be entitled to any further participation in any distribution of assets of the Company with respect to the Series A Preferred Stock held by them.

Conversion. The holders of Series A Preferred Stock have the right to convert their shares into 1,000 shares of our Common Stock, subject to adjustment for stock split and other events.

Voting Rights. The Series A Preferred Stock votes with the Common Stock on an as converted Common Stock basis.

Series B Convertible Preferred Stock

General. As of December 20, 2005, following the closing of the Share Exchange Agreement, and as of March 21, 2006 the Company had 27,858.9673 shares of Series B Preferred Stock issued and outstanding.

Dividends. In the event that the Company declares or pays dividends to the holders of Common Stock, the Company also has to declare or pay to the holders of the Series B Preferred Stock at the same time, the dividends which would have been declared and paid with respect to the Common Stock issuable upon conversion of the Series B Preferred Stock had all of the outstanding Series B Preferred Stock been converted immediately prior to the record date for such dividend.

Liquidation. In the event of the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, after any payments shall be made or any assets shall be distributed to the holders of the Series C Preferred Stock and Series D Preferred Stock, the assets of the Company legally available for distribution shall be distributed ratably to the holders of the Common Stock and the Series B Preferred Stock on an as-converted to Common Stock basis.

Conversion. Upon the amendment of our Certificate of Incorporation to increase the number of shares of the Company’s Common Stock (the “Authorized Shares Increase”), each share of Series B Preferred Stock will convert into 10,000 shares of Common Stock, subject to adjustment for stock split and other events.

Voting Rights. The Series B Preferred Stock votes with the Common Stock on an as-converted to Common Stock basis.

Series C Convertible Preferred Stock

General. As of December 20, 2005, following the closing of the Share Exchange Agreement, and as of March 21, 2006 the Company had 8,452.0222 shares of Series C Preferred Stock issued and outstanding.

Dividends. Dividends on the Series C Preferred Stock accrue and are cumulative from December 20, 2005 and be compounded annually at a rate of 4% per annum until paid. Upon conversion of any share of Series C Preferred Stock into Common Stock, the holder of the Series C Preferred Stock shall be entitled to receive payment of all accrued and unpaid dividends in the form of such number of additional shares of Common

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Stock equal to (i) the amount of such accrued and unpaid dividends, divided by (ii) the then applicable conversion price of the Series C preferred Stock.

Liquidation Preference. In the event of a liquidation or dissolution, the holders of Series C Preferred Stock are entitled, to receive $1,916.62 with respect to each share (subject to adjustment for stock split or other events) plus all accumulated but unpaid dividends whether or not declared and shall thereafter share in any remaining amounts on an as-converted basis with the holders of the Common Stock and the other series of Preferred Stock (other than the Series B Preferred Stock).

Conversion. Each share of Series C Preferred Stock is convertible at the option of the holder thereof, at such time as the Company shall have effected the Authorized Share Increase, into 10,000 shares of Common Stock, subject to adjustment for stock split and other events. At such time as (i) the Company shall have effected the Authorized Share Increase, (ii) the shares of Common Stock issuable upon conversion of the Series C Preferred Stock are registered for resale on Form S-1 or other applicable registration statement with the Commission which registration statement shall have been declared effective by the SEC or such shares may be sold without restrictions pursuant to Rule 144(k) promulgated by the SEC, and (iii) the Company shall have closed a sale of Common Stock by the Company in an underwritten public offering in which the aggregate gross proceeds of the offering to the Company are at least $30,000,000, each outstanding share of Series C Preferred Stock shall automatically convert into shares of Common Stock.

Voting Rights. The Series C Preferred Stock votes with the Common Stock as a class on an as-converted to Common Stock basis. Consent of the holders of a majority of the outstanding Series C Preferred Stock is required for the Company to take certain actions which could adversely affect the rights of the holders of the Series C Preferred Stock.

Redemption. Each holder of Series C Preferred Stock shall have the right, but not the obligation, to require the Company to redeem any or all of such holder’s Series C Preferred Stock upon the earliest to occur of: (i) the sale of all or substantially all of the assets of the Company, (ii) a merger, consolidation or other business combination and (iii) a change of control of the Company.

Series D Convertible Preferred Stock

General. As of December 22, 2005, following the closing of the Series D Preferred Financing with North Sound described in Item 1 of this Report, and as of March 21, 2006 the Company had 1,530 shares of Series D Preferred Stock issued and outstanding.

Dividends. Dividends on the Series D Preferred Stock accrue from December 22, 2005 at a rate of 4% per annum. Until paid, the right to receive dividends on the Series D Preferred Stock shall accumulate and shall be payable semi-annually in arrears in cash or in Common Stock (at the Company’s option) which Common Stock shall be valued based upon the average closing price of the underlying Common Stock for a period of 5 consecutive trading days ending on the business day prior to the date of such dividend, or, if there is no such trading price, fair market value as determined by the Board.

Liquidation Preference. In the event of a liquidation or dissolution, the holders of Series D Preferred Stock are entitled to receive $10,000 with respect to each share (subject to adjustment for stock split or other events) plus all accumulated but unpaid dividends whether or not declared and shall thereafter share in any remaining amounts on an as-converted basis with the holders of the Common Stock and other series of Preferred Stock (other than the Series B Preferred Stock).

Conversion. Each share of Series D Preferred Stock is convertible at the option of the holder thereof, at any time following such time as the Company shall have effected the Authorized Share Increase, into

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approximately 52,175 shares of Common Stock, subject to adjustment for stock split and other events. At such time as (i) the Company shall have effected the Authorized Share Increase, (ii) the shares of Common Stock issuable upon conversion of the Series D Preferred Stock are registered for resale on Form S-1 or other applicable registration statement with the Commission which registration statement shall have been declared effective by the SEC or such shares may be sold without restrictions pursuant to Rule 144(k) promulgated by the SEC, and (iii) the Company shall have closed a sale of Common Stock in an underwritten public offering in which the aggregate gross proceeds of the offering to the Company are at least $30,000,000, each outstanding share of Series D Preferred Stock shall automatically convert into shares of Common Stock.

Voting Rights. The Series D Preferred Stock votes with the Common Stock as a class on an as-converted to Common Stock basis. The number of shares of our Series D Preferred Stock that shall be entitled to such voting rights is limited to the extent necessary to ensure that, following such conversion, the number of shares of our Common Stock then beneficially owned by each holder and any holder and any other persons or entities whose beneficial ownership of common stock would be aggregated with the holder’s for purposes of the Securities and Exchange Act of 1934, as amended, does not exceed 4.99% of the total number of shares of our common stock then outstanding. Consent of the holders of at least 75% of the outstanding Series D Preferred Stock is required for the Company to take certain actions which could adversely affect the rights of the holders of the Series D Preferred Stock.

Redemption. Each holder of Series D Preferred Stock shall have the right, but not the obligation, to require the Company to redeem any or all of such holder’s Series D Preferred Stock upon the earliest to occur of: (i) the sale of all or substantially all of the assets of the Company, (ii) a merger, consolidation or other business combination and (iii) a change of control of the Company.

15. Stock-Based Compensation Plan and Warrants

Stock Options

                    In December 2004, the FASB issued SFAS No. 123(R), Share Based Payment. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods and services. It focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions (employee stock options). The statement requires the measurement of the cost of employee services received in exchange for an award of equity instruments (such as employee stock options) at fair value on the grant date. That cost will be recognized over the period during which an employee is required to provide services in exchange for the award (the requisite service period). The Company adopted FAS 123R, “Share-Based payment”, applying the modified retrospective method.

                    All existing stock options as of July 1, 2006 have been issued under the subsidiary (KAAI) 2003 stock option plan. Management has developed a new stock option plan for the Company that was approved by the Board of Directors of the Company in the first quarter of fiscal year 2007. At that time, the Board of Directors also approved the exchanging of KAAI options for TrueYou options under the new stock incentive plan. The Plan must be submitted to the stockholders of the Company for their approval within twelve months.

                    The Company recognized approximately $0.8 million, $0.2 million, and $0.3 million for the years ended July 1, 2006 and June 30, 2005, and June 30, 2004, respectively for stock options granted. In addition, as of July 1, 2006, there was approximately $0.3 million in unrecognized stock based compensation expense related to non-vested stock options which is expected to be recorded in future periods over a weighted average period of two years.

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                    Stock options are granted at an exercise price of not less than fair market value, which was determined as of the grant date utilizing the Black-Scholes Option Pricing Model for any options granted though June 30, 2005. There were no options granted during the year ended July 1, 2006. A total of 107,150 options remained available for future grants as of July 1, 2006

                    The weighted average fair value of the employee options granted during the years ended June 30, 2005 and June 30, 2004 was $0.59 and $0.52, respectively. The fair value was estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

Assumptions	2006	2005	2004
Expected dividend yield	N/A	None	None
Risk-free interest rate	N/A	4.10%	3.91%
Expected life of option grants	N/A	6 years	6 years
Forfeiture rate	N/A	2.5%	2.5%
Expected volatility	N/A	30%	30%

                    The Company also provides stock options to some of its outside contractors. These options are subject to variable accounting and were revalued as of July 1, 2006. As of July 1, 2006 the weighted average fair value was $1.61, the weighted average interest rate was 5.1%, the forfeiture rate was 2.5%, and weighted average remaining life was 1.6 years for these stock options.

                    A summary of the Company’s share option activity and related information during the years ended July 1, 2006 and June 30, 2005 are as follows:

	Options Outstanding
	Shares			Weighted Average Exercise Price
Outstanding, June 30, 2003		—		$	—
Granted		1,700,900			4.00
Cancelled		(917,000	)		4.00
Exercised		—			—
Outstanding, June 30, 2004		783,900			4.00
Granted		1,851,850			4.00
Cancelled		(166,800	)		4.00
Exercised		—			—
Outstanding, June 30, 2005		2,468,950			4.00
Granted		—			—
Cancelled		(576,100	)		4.00
Exercised		—			—
Outstanding, July 1, 2006		1,892,850		$	4.00

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                    As of July 1, 2006, the weighted average exercise prices and remaining contractual lives of stock options are as follows:

	Options outstanding			Options exercisable
Range of exercise prices	Number of options outstanding as of 7/1/06	Weighted average remaining contractual life (in years)	Weighted average exercise price	Number exercisable as of 7/1/06	Weighted average price
Stock options issued @$4.00	1,892,850	7.97	$ 4.00	1,144,586	$ 4.00

Warrants

                    The Company issued 50,019,026 warrants during the year ended July 1, 2006 which were valued using the Black-Scholes option pricing model using the following weighted average assumptions: risk-free rate of return – 4.11%; term – 5 years; volatility – 30%; dividend yield – 0.0%. The warrants were recorded as a discount to preferred stock.

Warrants outstanding as of year end are as follows:

	Warrants Outstanding
	Shares		Weighted Average Exercise Price
Outstanding, June 30, 2003		—	$	—
Granted		13,619,743		0.001
Cancelled		—		—
Exercised		—		—
Outstanding, June 30, 2004		13,619,743		0.001
Granted		—		—
Cancelled		—		—
Exercised		—		—
Outstanding, June 30, 2005		13,619,743		0.001
Granted		50,019,026		0.212
Cancelled		—		—
Exercised		—		—
Outstanding, July 1, 2006		63,638,769	$	0.166

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                    At July 1, 2006, the exercise prices and remaining contractual lives of warrants are as follows:

	Warrants outstanding						Warrants exercisable
Range of exercise prices	Number of warrants outstanding as of 7/1/06		Weighted average remaining contractual life (in years)		Weighted average exercise price		Number exercisable as of 7/1/06		Weighted average price
Warrants issued @ $.001 to $.230		63,638,769		4.8		varies		63,638,769		varies

16. Retirement Plan

401(k) Plan

                    Participants in the KAAI 401(k) Plan may contribute up to 50% of their annual compensation to their 401(k) Plan on a pre-tax basis, subject to aggregate limits under the Code. The Company provides on behalf of participants of the KAAI Plan, who make elective compensation deferrals, a matching contribution at the rate of 50% of employee contributions up to 2% of participant pretax compensation. Employee contributions in the KAAI 401(k) Plan are vested at all times and the Company’s matching contributions are subject to a five-year vesting provision. The Company recognized compensation expense associated with the KAAI 401(K) Plan for matching contributions of $0.008 million for the year ended July 1, 2006, and $0.029 million and $0.003 million for the years ended June 30, 2005 and June 30, 2004, respectively.

17. Share Exchange Agreement

                    On December 20, 2005, the Company entered into the Share Exchange Agreement (the “Share Exchange Agreement”) with KAAI and KAAI securityholders, pursuant to which KAAI Securityholders received newly issued preferred securities of the Company in exchange for their securities of KAAI.

                    The transaction is considered to be a capital transaction in substance, rather than a business combination. That is, the transaction is equivalent to the issuance of stock by the private company for the net monetary assets of the shell corporation, accompanied by a recapitalization.

                    Accordingly, the outstanding shares of KAAI have been restated on the balance sheet and the statement of stockholders’ deficit to give effect to the Share Exchange Agreement as of June 30, 2005. The restated shares have been used in the computation for loss per share to preserve comparability of those figures. The historical financial statements prior to the December 20, 2005 Share Exchange Agreement are those of KAAI.

                    The following table shows the effect of reclassifying the Common Stock and Preferred Stock as if the Share Exchange Agreement took place on June 30, 2005:

(Amounts in thousands)
KAAI Common Stock	$	93
KAAI Series A Preferred Stock		2,130
KAAI Series B Preferred Stock		965
KAAI Series C Preferred Stock		350
KAAI Series D Preferred Stock		8,146
Amount reclassified to convertible securities in the liabilities section of the balance sheet	$	11,684

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                    A note payable of $5,905 (long term portion $5,161, short term $744), classified under seller notes payable, along with accrued interest thereon of $1,598, was converted into KAAI’s common stock, which was subsequently exchanged for Series B Preferred Stock of the Company. In addition, the senior subordinated note payable for $12,066 along with accrued debt discount thereon of $1,234, was converted into KAAI’s common stock and subsequently exchanged for Series B Preferred Stock.

                    As of December 20, 2005, under the terms of the Share Exchange Agreement, shares of series A preferred stock, series B preferred stock, series C preferred stock and series D preferred stock of KAAI, the outstanding senior subordinated debt, other long term debt, accrued interest on the other long term debt and certain accrued dividends, which immediately prior to the consummation of the Share Exchange Agreement were converted into KAAI’s common stock, were exchanged for Series B Preferred Stock of the Company. The outstanding shares of Series G Preferred Stock and Series H Preferred Stock of KAAI were exchanged for Series C Preferred Stock of the Company.

                    The following table reflects the amounts of KAAI securities that were converted into common stock of KAAI and subsequently exchanged for securities of the Company under the Share Exchange Agreement:

(Amounts in thousands)
Securities exchanged for Series B Convertible Preferred Stock of the Company
Note payable, Kidd & Company	$	5,905
Accrued Interest on note payable		1,598
Senior subordinated debt (gross)		13,300
KAAI common stock		93
KAAI series A convertible preferred stock		2,130
KAAI series B convertible preferred stock		965
KAAI series C convertible preferred stock		350
KAAI series D convertible preferred stock		8,146
Accrued preferred dividends on KAAI preferred stock		464
Subtotal of securities exchanged for Series B Preferred Stock of the Company	$	32,951
Securities exchanged for Series C Preferred Stock of the Company
KAAI series G redeemable convertible preferred stock	$	9,702
KAAI series H redeemable convertible preferred stock		4,538
Total securities exchanged for Series C Preferred Stock of the Company	$	14,240

                    On December 22, 2005, affiliates of North Sound and Valesco Capital Management, LP invested $15.3 million in exchange for 1,530 newly issued shares of our Series D Preferred Stock together with the Series B Preferred Stock and the Series C Preferred Stock, the “Preferred Stock”). Issuance costs associated with the round of financing amounted to approximately $0.4 million. The Company also issued warrants to purchase 2,395 shares of Series B Preferred Stock with the Series D Preferred stock, which were valued using the Black-Scholes option pricing model using the following assumptions: risk-free rate of return – 4.36%; term – 5 years; volatility – 30%; dividend yield – 0.0%. The value ascribed to the warrant was $1.3 million. As a result of the value being allocated to the warrants, a beneficial conversion feature resulted on the Series D Preferred Stock. The total beneficial conversion feature was approximately $30 million but was recorded only to the extent of the carrying value of the Preferred Stock, in the amount $13.9 million. The value ascribed to the warrant in the amount $1.3 million was accreted as a dividend and recorded immediately as an increase in additional paid in capital and an increase in accumulated deficit.

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                    The shares of Series B Preferred Stock will automatically convert into Common Stock after the Company amends its Certificate of Incorporation in order to increase the number of shares of Common Stock it is authorized to issue. Subject to certain restrictions, the shares of Series C Preferred Stock and Series D Preferred Stock will automatically convert into Common Stock upon the consummation of an underwritten public offering with gross proceeds to us of not less than $30 million.

                    Since the Company does not have sufficient number of authorized shares of Common Stock to allow for the conversion of the Preferred Stock into Common Stock or the exercise of warrants for Series B Preferred Stock that may ultimately be converted into Common Stock, in accordance with EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”, the Company has reclassified these instruments to liabilities.

                    The following table shows the effect of reclassifying the Preferred Stock and warrants:

(Amounts in thousands)
Series B Preferred Stock of the Company	$	32,951
Series C Preferred Stock of the Company		14,240
Series D Preferred Stock of the Company (as restated)		13,926
Warrants to purchase Series B Preferred Stock issued to the holders of Series B Preferred Stock		935
Warrants to purchase Series B Preferred Stock issued to the holders of Series C Preferred Stock		1,535
Warrants to purchase Series B Preferred Stock issued to the holders of Series D Preferred Stock (as restated)		1,295
Amount reclassified to convertible securities in the liabilities section of the balance sheet	$	64,882

18. Convertible Securities

                    Under EITF 00-19, the Company is required to remeasure the convertible securities at each reporting period end based on fair value. The Company determines the fair value of the convertible securities based on the number of shares common stock into which they are convertible and the current fair value of the common stock on the remeasurement date. Fair value of the Common Stock is determined based on actual amounts paid for a share of Common Stock in a transaction closest to the remeasurement date. The fair values of the Common Stock as of July 1, 2006 was $0.39. The number of common shares into which the convertible securities are convertible was 506,576,690 as of July 1, 2006. As of July 1, 2006, the Company remeasured the convertible securities based on an estimated fair value of approximately $198 million and recorded an unrealized loss of approximately $133 million for the year ended July 1, 2006.

19. Subsequent Events

Laurus Senior Debt Financing:

                    On July 6, 2006, TrueYou closed on a financing and issued to Laurus Master Fund, Ltd. (“Laurus”) a Secured Term Note in the aggregate principal amount of $25.0 million (the “Laurus Note”) and issued to Laurus series A warrants, series B warrants and series C warrants to purchase up to 37,351,824 shares, 6,839,394 shares and 6,693,875 shares, respectively, of our common stock.

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                    The Company also placed $2.5 million (the “Interest Amount”) in a restricted account to be utilized to pre-fund interest for the first year of the Laurus Note. Closing costs of $0.9 million were incurred by the Company relating to this debt. These costs were recorded as deferred financing costs and will be amortized to interest expense over the term of the note using straight-line amortization. The balance of $21.6 was placed into a restricted cash account which was released on July 11, 2006 when the Company satisfied the conditions associated with the Laurus Note. The Company used $8.3 to pay off the existing senior debt held by Technology Investments Capital Corporation (“TICC”), and an additional $0.1 million representing unpaid interest and other costs owed to TICC. The remaining $1.7 million of principal outstanding on the senior debt to TICC was loaned to the Company as a part of the $5.2 million subordinated loan discussed below. In conjunction with the payoff of the senior debt, the Company charged $0.2 of the net remaining deferred financing costs and unamortized debt discount of $0.9 to interest expense. Also in conjunction with the payoff of the senior debt and all related interest and fees was the release of $1.6 million of restricted cash previously held for interest payments.

                    The Laurus Note matures on June 30, 2010 and interest accrues at a rate per annum equal to the “prime rate,” plus two percent (2%) per annum, payable monthly, in arrears, commencing on August 1, 2006. Commencing on August 1, 2007, the Company will make monthly payments to Laurus in an amount equal to $416,666.67 together with any accrued and unpaid interest on such portion of the outstanding principal amount plus any and all other unpaid amounts which are then owing under the Note. The Company’s payment obligations are guaranteed by the Company’s subsidiaries and are secured by all of the Company’s and such subsidiaries’ assets.

                    The Company calculated a debt discount attributable to the value of these warrants of $10.3 million, which will be amortized over the term of the note using the effective interest method. The warrants have a 10-year term and an exercise price equal to $0.01 per share, or in certain circumstances, may be exercised on a cashless basis. If, prior to the fourteenth month anniversary of June 30, 2006, (i) the Company’s obligations under the Note have been reduced to $12.5 million or less, then the series B warrants will automatically be cancelled and terminated; and (ii) the Company’s obligations under the Note have been reduced to zero, then the series C warrants will automatically be cancelled and terminated. The Company is obligated to file a registration statement with the Securities and Exchange Commission covering the resale of the shares underlying the warrants.

                    The Company has also agreed to use its best efforts to amend its certificate of incorporation to increase the number of authorized shares of our Common Stock to such number as shall be sufficient to permit the exercise in full of the warrants. If Laurus notifies the Company at any time prior to the effective date of such amendment that it desires to exercise the warrants prior to such effective date, the Company will promptly issue, in exchange for the warrants, substitute warrants exercisable to purchase that number of shares of its series B convertible preferred stock that are, upon authorization of the Share Amount, immediately convertible into the number of shares of our Common Stock that would then have been issuable upon exercise of the warrants in full if its certificate of incorporation had then provided for sufficient authorized shares of its Common Stock to satisfy such exercise, and otherwise containing substantially the same terms and provisions as the warrants.

$5.2 Million Subordinated Loan:

                    On July 11, 2006, the Company entered into a loan agreement (the “Subordinated Loan Agreement”) with subordinated lenders for $5.2 million (the “Subordinated Loan”) to be used by the Company for capital expenditures, general working capital and to pay all costs and expenses in connection with the Subordinated Loan. Pursuant to a subordination agreement dated July 11, 2006, between the Subordinated Lenders and Laurus, the Subordinated Loan is subordinated to the Company’s existing senior indebtedness to Laurus.

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                    The Subordinated Loan bears interest at 12% per annum compounded annually; provided, however, the interest rate will increase to 14% per annum upon: (i) the Company’s failure to pay in full, on or prior to July 1, 2010, the principal amount of the Subordinated Loan, plus all accrued interest, and (ii) certain other specified events that would be considered an event of default under the Subordinated Promissory Note. The principal balance and accrued interest on the Subordinated Promissory Note is due on the earliest of (i) July 1, 2010, and (ii) the first date on which any mandatory prepayment is payable under the Subordinated Loan Agreement or the occurrence of any sale of all or substantially all of the assets of the Company or its subsidiaries, or merger, consolidation or other business combination involving the Company or its subsidiaries if all senior indebtedness is first paid in full in cash in connection with any such transaction (the “Maturity Date”).

                    Subject to prior payment in full of all senior indebtedness, the Subordinated Loan is subject to voluntary prepayment at any time and mandatory prepayment upon the occurrence of a change in control of the Company.

                    In the event that the Company consummates an equity financing at any time prior to the Maturity Date, each Subordinated Lender may elect to convert the entire principal amount due to such Subordinated Lender under the Promissory Note (along with accrued interest thereon and all other amounts then due thereunder) into such number of securities issued in the equity financing (in the event any warrants or other property or rights are issued or granted in the financing, together with the proportionate number of such warrants and other property or rights) that is equal to (i) the principal amount of the Subordinated Promissory Note (along with accrued interest thereon and all other amounts then due) being converted divided by (ii) the lowest price per share of the securities to be issued in the financing. However, if the securities and the related warrants, if any, to be issued in the financing do not contain provisions prohibiting the aggregate ownership percentage by the holder thereof from exceeding 4.99% of the total number of shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”) then issued and outstanding, then any Subordinated Lender may elect to receive securities that are otherwise identical in all respects to those purchased in the financing but that contain the foregoing restriction on aggregate ownership.

                    Additionally, the Company agreed that if it consummated one or more equity financings or indebtedness junior to the Company’s senior indebtedness after the date of such financing with proceeds in excess of $10.0 million in the aggregate, then two-thirds of all proceeds in excess of $10.0 shall be proportionately applied to prepay pari passu, the Subordinated Loan and the obligations of the Company under the Amended Subordinated Loan (as defined in (b) below). This provision has been amended so that no such prepayment can be made until the Senior Debt issued to Laurus on July 11, 2006 as well as the $4 Million of Senior Subordinated Debt issued on December 22, 2006 (including interest and all other obligations due) have been paid.

                    The obligations of the Company under the Subordinated Loan Agreement and Subordinated Promissory Note are guaranteed by each of the Company’s subsidiaries.

                    The Subordinated Promissory Note ranks pari passu with the Amended Subordinated Promissory Note.

                    Pursuant to the Subordinated Loan Agreement, the Company issued to the Subordinated Lenders warrants to purchase an aggregate of 32,947,771 shares of Common Stock at an exercise price of $0.001 per share, subject to certain adjustments set forth therein. The warrants expire on June 30, 2013. The Subordinated Lenders are not entitled to received shares of Common Stock upon exercise of the warrants if such receipt would cause such Subordinated Lender to be deemed to beneficially own in excess of 4.99% of the outstanding shares of Common Stock on the date of issuance of such shares. Such provision may by waived by any Subordinated Lender upon 61 days prior written notice to the Company. The Company recorded a debt discount in the amount of $3.6 million which is attributable to the value of the warrants issued. The debt discount will be amortized over the term of the loan using the effec tive interest method.

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                    The Company granted each Subordinated Lender piggyback registration rights with respect to the shares of Common Stock issuable upon exercise of the warrants, in accordance with the terms of a registration rights agreement. The Company has agreed to use its best efforts to cause its certificate of incorporation to be amended to increase the number of authorized shares of Common Stock to such number as shall be sufficient to permit the exercise in full of the warrants. If any Subordinated Lender notifies the Company at any time prior to the effective date of such amendment that it desires to exercise its warrants prior to such effective date, the Company will promptly issue to such Subordinated Lender, in exchange for its warrants, substitute warrants exercisable to purchase that number of shares of its Series B Convertible Preferred Stock that are, upon authorization of the number as shall be sufficient to permit the exercise in full of the warrants, immediately convertible into the number of shares of Common Stock that would then have been issuable upon exercise of the warrants in full if the certificate of incorporation of the Company had then provided for sufficient authorized shares of Common Stock to satisfy such exercise, and otherwise containing substantially the same terms and provisions as the warrants.

Amended and Restated $4.8 Million Subordinated Loan:

                    On July 11, 2006, the Company entered into a amended and restated loan agreement (the “Amended Subordinated Loan Agreement”) with Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited -Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd. and Klinger Investments LLC (collectively, the “Amended Subordinated Lenders”) in order to amend and restate the provisions of the $4.8 million loan (the “Amended Subordinated Loan”) that the Company received from the Amended Subordinated Lenders on May 9, 2006 in order to conform its terms to the terms of the Subordinated Loan Agreement. Pursuant to a subordination agreement dated July 11, 2006, the Amended Subordinated Loan is subordinated to the Company’s existing senior indebtedness to Laurus under the Securities Purchase Agreement and the Related Agreements

                    The Amended Subordinated Loan is evidenced by an amended and restated subordinated promissory note dated July 11, 2006 (the “Amended Subordinated Promissory Note”). The terms of the Amended Subordinated Promissory Note are identical to the terms of the Subordinated Promissory Note except that interest on the Amended Subordinated Promissory Note accrues from May 9, 2006.

                    The Amended Subordinated Promissory Note ranks pari passu with the Subordinated Promissory Note.

                    Pursuant to the Amended Subordinated Loan Agreement, the Company issued to the Amended Subordinated Lenders warrants to purchase an aggregate of 30,658,597 shares of Common Stock. These warrants have the same terms and rights, including piggyback registration rights, as the warrants that were issued pursuant to the Subordinated Loan Agreement described above.

$4.0 Million Senior Subordinated Loans:

(a) $1.0 Million Senior Subordinated Secured Loan

                    The Company entered into a Subordinated Securities Purchase Agreement (the “Laurus Purchase Agreement”) with Laurus dated as of December 22, 2006, pursuant to which the Company issued to Laurus (i) a Subordinated Secured Term Note in the principal amount of $1.0 million (the “Subordinated Secured Note”); and (ii) warrants (the “Laurus Warrants”) to purchase up to 10,000,000 shares (the “Warrant

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Shares”), of the Company’ common stock, par value $0.001 per share (the “Common Stock”). In the event the Subordinated Secured Note is not repaid by April 30, 2007, the Company has agreed to issue Laurus warrants with like terms to purchase an additional 8,750,000 shares of Common Stock.

                    The Senior Subordinated Secured Note matures on December 22, 2009 or earlier upon a change of control or other specified events. Interest will accrue on the unpaid principal amount of the Note at a rate per annum equal to twelve percent (12%) per annum. Interest in the amount of six percent (6 %) per annum shall accrue and subject to the provisions of that certain Subordination Agreement among the Company, Laurus and Subordinated Lenders to the Company dated December 22, 2006 (“Subordination Agreement”), shall be payable monthly, in arrears, commencing on February 1, 2007 and on the first day of each consecutive calendar month thereafter. Interest in the amount of six percent (6 %) per annum shall accrue but not be payable during the period commencing on the date of issuance and ending on the maturity date of the Note (unless accelerated under certain circumstances). The interest rate may be increased by 2% per annum in the event that sufficient shares of the Common Stock are not authorized to allow Laurus to exercise all of the Laurus Warrants by the six-month anniversary of the date of the Laurus Purchase Agreement, and shall remain at such higher rate until such time as a sufficient number of such shares are authorized.

                    The Laurus Warrants have a 7-year term and an exercise price equal to $0.01 per share. The Laurus Warrants also provide that if the fair market value of one share of Common Stock is greater than the exercise price Laurus may choose to exercise the warrant on a cashless exercise basis resulting in an issuance of net shares with no cash payment.

(b) $3.0 Million Senior Subordinated Loan

                    The Company entered into a loan agreement dated as of December 22, 2006 (the “Senior Subordinated Loan Agreement”) with Senior Subordinated Lenders, pursuant to which the Senior Subordinated Lenders loaned the Company $3.0 million (the “Senior Subordinated Loan”). Pursuant to a Subordination Agreement dated as of December 22, 2006, between such Subordinated Lenders, previous subordinated lenders to the Company and Laurus, the Senior Subordinated Loan is subordinated to the Company’s existing senior indebtedness to Laurus under the Securities Purchase Agreement dated June 30, 2006 (the “Securities Purchase Agreement”), and the Related Agreements referred to in the Securities Purchase Agreement and ranks senior to the Company’s $10.0 million of existing subordinated indebtedness.

                    The Senior Subordinated Loan is evidenced by a senior subordinated promissory note dated December 22, 2006 (the “Senior Subordinated Note”) and bears interest at annual rate equal to twelve percent (12%) per annum of which 6% shall be paid in cash monthly, commencing 30 days from the closing (subject to the provisions of the Subordination Agreement) and the balance of 6% paid in kind and paid on the maturity date. The principal balance and accrued interest on the Senior Subordinated Note is due on December 31, 2009

                    In the event that the Company consummates an equity financing at any time prior to the maturity date of the Senior Subordinated Note, each Senior Subordinated Lender may elect to convert the entire principal amount and accrued interest due to such Senior Subordinated Lender under the Senior Subordinated Note into equity on the same basis as in the equity offering.

                    Pursuant to the Senior Subordinated Loan Agreement, the Company issued to the Senior Subordinated Lenders warrants to purchase an aggregate of 15,384,615 shares of Common Stock at an exercise price of $0.001 per share. The warrants expire on December 31, 2013. In the event the Laurus Note is not paid by April 30, 2007, certain holders of such Warrants have agreed to contribute 8,750,000 Warrants back to the Company and the Company has agreed to issue an additional 8,750,000 Warrants to Laurus. (See “Certain Relationships and Related Transactions”).

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Acquisition of Nouvisage Corp:

                    On September 12, 2006, the Company entered into a letter of intent to acquire Nouvisage Corp. (“Nouvisage”). Pursuant to the letter of intent, the transaction will be structured as an acquisition of all of the capital stock of Nouvisage in exchange for newly issued shares of Series B Preferred Stock of the Company, par value $0.001 per share (the “Shares”), each of which is convertible into 10,000 shares of Common Stock of the Company, par value $0.001 per share The acquisition is intended to qualify as a tax-free exchange under the Internal Revenue Code of 1986.

                    The purchase price for the Shares will be $6.5 million, subject to adjustment (the “Purchase Price”) and will be paid in Shares pro rata to the stockholders of Nouvisage (the “Sellers”) at the closing of the acquisition (the “Closing”).

                    The letter of intent may be terminated by either party if the acquisition did not close by January 10, 2007 (the “Termination Date”). Pursuant to the letter of intent, the Sellers and Nouvisage had agreed not to solicit, initiate, or encourage submission of or receive proposals or offers from another party until the Termination Date. The board of directors of both the Company and Nouvisage have agreed to extend the Termination Date until March 1, 2007.

                    The obligations of the parties to close the acquisition are subject to certain closing conditions, including (i) the satisfactory completion by the Company of its legal and financial due diligence, (ii) the approval by the board of directors of the Company, (iii) the closing of a financing of at least $19.0 million in gross proceeds to the Company, (iv) the execution of an employment agreement between the Company and John Buckingham, the Chief Executive Officer of Nouvisage (the “Employment Agreement”), and (v) the completion of an audit of the financial statements of Nouvisage for the three years ended June 30, 2006 and a review of any interim financial statements. Pursuant to the letter of intent, the parties agreed to negotiate in good faith a stock purchase agreement, a registration rights agreement, the Employment Agreement and such other agreements as may be appropriate or desirable to the parties. The parties also agreed to negotiate a Strategic Alliance Agreement.

                    Upon the signing of the letter of intent, the Company agreed to advance $75,000 to Nouvisage and agreed to advance an additional $225,000 prior to the Closing, which amounts were to be paid in four installments based on the occurrence of certain specified events. In accordance with this agreement, as of January 15, 2007 the Company has advanced $300,000 to Nouvisage. If the Company does acquire Nouvisage, this advance will be applied to the purchase price. In addition, Nouvisage agreed to provide security of its obligations through the issuance of promissory notes which will allow the holder to convert such promissory notes into an aggregate of 17% of Nouvisage’s common ownership if not repaid. Pursuant to the letter of intent, if the acquisition does not close, Nouvisage has agreed to refund to the Company all amounts paid to Nouvisage, except for documented transaction costs of up to $75,000, in six equal monthly installments.

20. Selected Quarterly Financial Information (unaudited)

                    The following tables summarize the fiscal 2006 and 2005 quarterly results:

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2006	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Total Operating Revenues	$	7,765		$	7,553		$	10,483		$	7,251
Operating loss		(5,492	)		(8,084	)		(6,553	)		(13,358	)
Net income (loss)	$	(6,593	)	$	(147,852	)	$	(153,901	)	$	136,641
Income (loss) per share:
Basic and diluted	$	(0.47	)	$	(9.85	)	$	(10.29	)	$	9.08

2005	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Total Operating Revenues	$	7,707		$	8,330		$	8,802		$	8,094
Operating loss		(3,425	)		(4,572	)		(3,134	)		(4,764	)
Net loss	$	(4,352	)		(5,555	)	$	(4,198	)	$	(5,816	)
Loss per share:
Basic and diluted	$	(0.31	)	$	(0.40	)	$	(0.31	)	$	(0.40	)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

          None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Internal Controls

                    Our management, with the participation of our principal executive officer and principal financial officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are not effective for the reasons specified below.

Material Weaknesses

                    On January 25, 2007, our independent registered public accounting firm, Amper, Politziner, and Mattia, P.C. (“Amper”) noted in a letter to management, a copy of which was presented to our Board, certain matters involving internal controls that they consider to be material weaknesses and significant deficiencies. However, Amper was not engaged to perform an audit of our internal controls over financial reporting. Accordingly, Amper has not expressed an opinion on the effectiveness of our internal controls over financial reporting.

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                    The material weaknesses identified by Amper were (A) inadequate resources in the accounting functions; (B) inadequate controls over cash management; (C) inadequate controls over computer information; and (D) inadequate anti-fraud program. More specifically, Amper identified among other things, material weaknesses in the processes and procedures associated with our preparation and review of account reconciliations, monitoring of financial results, application of accounting principles, control over cash management, communication between departments, inventory management and valuation, vendor management and segregation of duties, and anti-fraud program. Examples of the issues identified include, among many others, inadequate segregation of duties, insufficient staffing in the accounting department, failure to reconcile or analyze accounts, lack of effective review of the reconciliations and analysis that are prepared and, in some instances, poor design of controls and poor compliance with existing policies and procedures, and no whistle blower hotline.

Previous Restatement of Financial Statements:

                    During the fiscal year ended July 1, 2006, we became aware of certain transactions that should have been recorded in earlier quarters during the current fiscal year. After review of the transactions, management decided to make adjustments to record these transactions in the proper period and included those restatements in a footnote of the April 1, 2006 quarterly financial statement.

                    On February 13, 2006, our Board of Directors, upon the recommendation of our management, concluded that the audited financial statements of KAAI for the fiscal year ended June 30, 2005 should no longer be relied upon and should be restated. Our Board’s conclusion was based on a finding by our management of an error in accounting causing an under accrual of accrued expenses relating to management fees and to accrued bonuses payable.

                    In addition, as a result of the errors that led to the conclusion that our 2005 Audited Financial Statements cannot be relied upon, our management concluded that our unaudited financial statements for the quarter ended October 1, 2005 should no longer be relied upon and should be restated. On February 20, 2006, our Board met and discussed the foregoing with management and our independent registered public accounting firm, Amper, Politziner & Mattia, P.C. Our Board of Directors concurred with the recommendation of management.

                    As a result of the above, the consolidated balance sheets as of June 30, 2005, October 1, 2005, and December 31, 2005 and the related consolidated statements of operations, cash flows and stockholders’ equity were restated and filed on February 27, 2006.

Previous Management Letter from our Independent Registered Public Accountants:

                    Independently, on January 12, 2006, we received a letter from Amper indicating that KAAI had material weaknesses in the design and operation of its internal control over financial reporting with respect to the process of preparing and reviewing annual and interim financial statements, and related timely account analysis and reconciliations. Weaknesses identified resulted from inadequate resources in the financial reporting area and lack of appropriate technical training of such resources relating to the preparation of financial statements and disclosures and the accounting for significant transactions.

Remediation of Material Weaknesses

                    In order to remediate these weaknesses, we have retained another accounting firm in which members of that firm’s accounting staff have worked under the supervision of our Chief Financial Officer. The Company has also retained an information technology firm to upgrade operating, financial and accounting systems which is expected to further improve the control environment. In addition, On May 1, 2006, we appointed a new Chief Financial Officer and in August 2006 we hired a Controller. We are also working to

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integrate our inventory system to improve our controls over inventory and related areas. The above remedial actions have not been in place long enough to have been tested and will be assessed for their adequacy on a continuous basis.

                    Except as described above, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) since the beginning of the fiscal year ended July 1, 2006 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                    The following table sets forth the names and ages of each of our executive officers and directors as of December 31, 2006.

Name	Age	Position
Richard Rakowski	54	Chairman and Chief Executive Officer
Matthew Burris	44	Chief Financial Officer and Chief Operating Officer
Jane Terker	54	Executive Vice President, Chief Marketing Officer and Director
Carolyn Aversano	37	Executive Vice President of Marketing, Merchandising and Education (1)
Andrew D. Lipman	39	Director
Stephen H. Coltrin	61	Director
Daniel Piette	61	Director (2)
Philippe Franchet	41	Director (2)
James O’ Crowley III	53	Director (3)
Alan Panzer	46	Director (3)
Alastair J. Clemow	55	Director (3)

(1) - Resigned, effective January 12, 2007

(2) - Resigned, effective December 28, 2006

(3) - Elected, effective December 29, 2006

Richard Rakowski – Chairman and Chief Executive Officer

                    Richard Rakowski has been Chairman and Chief Executive Officer of KAAI since its formation in July 2003. He is also a Principal of KCO since March 2002. Prior to joining KCO as a Principal in March 2002, Richard Rakowski’s diverse 26-year career spanned manufacturing, consulting, business development, marketing, entrepreneurship and the Presidency of American Healthways, Inc. (NASDAQ: AMHC) from June 2001 to March 2002. From 1992 until 2001, Mr. Rakowski was a founder of New Paradigm Ventures, a consulting and investment firm in the health-care and food industry market. He was also a partner at Marketing Corporation of America. Mr. Rakowski’s background also includes process control consulting work for Fortune 500 Companies in the U.S. and abroad. He holds a BA from City University of New York.

Matthew Burris – Chief Financial Officer and Chief Operating Officer

                    Matthew Burris joined KAAI in May 2006. From December 2002 to April 2006, Mr. Burris served as Vice President and Group Finance Director for the Non-Apparel reporting segment of Liz Claiborne, Inc., a wholesaler and retailer of branded apparel and accessories products (“Liz Claiborne”).

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During his tenure at Liz Claiborne, Mr. Burris held the additional positions of Vice President, Group Operations Director for the Accessories division and Vice President, Group Finance Director for DKNY; the Donna Karan licensed apparel division. From August 2001 through December 2002, Mr. Burris served as Vice President and Chief Financial Officer for Standard Automotive Corporation, a manufacturer of precision parts for the aerospace, nuclear, and defense industries and truck trailers and truck bodies. From October 1999 through August 2001, Mr. Burris served as Vice President, Chief Financial Officer and Director of Creative Solutions Group, Inc., a manufacturer of point of purchase display units. Mr. Burris holds a BS, magna cum laude, in finance and international management from Georgetown University School of Business and an MBA from New York University, Stern School of Business.

Jane Terker – Executive Vice President, Chief Marketing Officer and Director

                    Jane Terker has over 30 years experience as a management executive and business builder. Immediately prior to joining KAAI, Ms. Terker co-founded and served from December 2001 to July 2004 as President and Chief Operating Officer of Cradle Holdings, Inc., a company created to acquire and reposition prestige beauty brands for maximum growth and profitability. From May 1992 to March 1998 Ms. Terker also founded, developed and served as President of the Donna Karan Beauty Company. Ms. Terker also founded and ran JTP Associates from March 1998 to November 2001, which was a product consulting company with clients including J Crew, MD Skincare, Linda Cantello Beauty, CCSI inshop.com and Kiss My Face. Earlier in her career, Ms. Terker held various marketing and retail executive roles at Esmark, L’Oreal and Glemby International. She holds a BA, magna cum laude, from New York University and also attended Columbia University’s Executive Education Program.

Carolyn Aversano – Executive Vice President of Marketing, Merchandising and Education [Resigned effective, January 12, 2007]

                    Carolyn Aversano joined KAAI in June 2005. Prior to joining KAAI, Ms. Aversano worked for Sephora as a Strategic Development Consultant from July 2004 to June 2005. From July 1999 to April 2003, Ms. Aversano was a member of the startup team for beauty retailer Gloss.com, which was acquired by the Estee Lauder Companies in 2000. At Estee Lauder Companies she oversaw the e-commerce businesses of the various Estee Lauder Companies’ brands including Estee Lauder, Origins, Prescriptives, Stila, La Mer, Jo Malone and Kate Spade. Ms. Aversano holds a BS degree in marketing from New York University.

Andrew D. Lipman – Director

                    Andrew Lipman was Vice President and one of the founding principals of KCO. Prior to co-founding KCO in 1996, Mr. Lipman served as a Vice President of the firm’s predecessor, Kidd, Kamm & Company. Earlier in his career, Mr. Lipman was a management and strategic consultant with The George Group and Andersen Consulting. He holds a BS in Electrical Engineering from Union College.

Stephen H. Coltrin – Director

                    Stephen H. Coltrin founded Coltrin & Associates, Inc. in 1982. In addition to serving as a member of our Board of Directors, Mr. Coltrin also currently serves as a Vice Chairman on the Board of Directors for the International Radio and Television Society Foundation, on the National Advisory Board of America’s Freedom Festival at Provo, and on the Advisory and Advancement Council of the Utah State University Journalism & Communication Department. Mr. Coltrin received a BS in psychology from Brigham Young University.

Daniel Piette – Director [Resigned effective, December 28, 2006]

                    Daniel Piette co-founded L Capital in June 2001 and serves both as the President of L Capital Management and as a member of the Supervisory Committee of the L Capital fund. Additionally, he is a member of Moët Hennessy Louis Vuitton LVMH Group’s Executive Committee. He is also co-founder,

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Chairman and CEO of LV Capital. Mr. Piette joined LVMH in 1990 as Group Executive Vice President. Mr. Piette started his career focus in the fashion luxury sector as the Brand Operating Officer for the DMC Group. Earlier in his career, Mr. Piette held the post of Executive Vice President of Manurhin. He was also a manager at the Bosch Company and a consultant at Arthur D. Little. Mr. Piette graduated from ESSEC in Paris and also holds an MBA from Columbia Business School.

Philippe Franchet – Director[Resigned effective, December 28, 2006]

                    Philippe Franchet joined L Capital in September 2001 as a director of L Capital Management. Prior to L Capital, Mr. Franchet was from June 2000 until June 2001 the Senior Vice President, leading investments for Europatweb, an Internet investment group formed by Bernard Arnault. Prior to Europatweb, Mr. Franchet was from January 1998 until June 2000 the Head of Private Equity Investments for the Lazard Group’s two public investment holding companies, Azeo and Eurafrance (now Eurazeo). While at the Lazard Group, Mr. Franchet and his team invested approximately FF 500 million in over 15 transactions across a variety of sectors in countries including France, the UK, the US and Japan. Earlier in his career, Mr. Franchet was a consultant with McKinsey & Co. and a financial derivatives market trader with Credit Lyonnais. Mr. Franchet holds an MSEE from ENST in Paris and an MBA from Harvard Business School.

James O’Crowley III – President

                    From April 2002 to December 2006, Mr. O’Crowley organized and led an equity-backed team seeking to acquire technology-oriented divisions from Motorola and also was a consultant to select companies. From March 2001 to February 2002 Mr. O’Crowley served as President, Chief Executive officer and Director of Standard Automotive Corporation, an AMEX listed company. Mr. O’Crowley received an MBA degree from Harvard Business School in 1978 and a BS degree in accounting and administration from the University of Kansas in 1976.

Alan Panzer – Director

                    Since August 2000, Mr. Panzer has been serving as the President of United States Surgical Corporation and from April 2003 to October 2006, he served as the President of Valleylab, both units of Tyco Healthcare. Mr. Panzer received a BS degree from St. John’s University in 1984.

Alastair J. Clemow – Director

                    Since July 2004, Mr. Clemow has been serving as President and Chief Executive officer of Nexgen Spine Inc., a medical device company. From October 2002 to March 2004 he served as President and Chief Executive Officer of Gelifex Inc., a medical device company. Since July, 2000, Mr. Clemow has also been serving as a principal of Tanton Technologies. Dr. Clemow served in numerous positions with Johnson & Johnson from 1981 to 2000, including Vice President of Worldwide Business Development for Ethicon Endo-Surgery Inc., Vice President of New Business Development for Johnson & Johnson Professional Inc., and Director of Research and Development of Johnson & Johnson Orthopedics. Mr. Clemow received an MBA degree from Columbia University in 1991 and a PhD degree in Metallurgy from the University of Surrey, Guildford in 1978.

Other Key Employees

The following employees who are not our executive officers are instrumental to our business:

Wade Haddad – Senior Vice President of Real Estate and Legal

                    Wade Haddad, age 39, has been responsible for overseeing KAAI’s legal affairs and the site selection, lease negotiation, store design and construction of KAAI’s locations since July 2005. Prior to joining KAAI, Mr. Haddad worked for Bieri Company, a specialty retail real estate consulting firm, as the

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Director of Leasing, where he managed real estate strategies on behalf of landlord and tenant clients for Bieri Company from March 2002 to July 2005. From May 1999 to February 2002, Mr. Haddad worked with The Taubman Company, a national developer of regional shopping centers, as a Leasing Agent, where he represented the landlord in lease negotiations with retail tenants on behalf of The Taubman Company. Mr. Haddad holds a BA in Political Economy from Princeton University and a JD, magna cum laude, from the University of Detroit School of Law.

Michael S. Rodriguez– Senior Vice President, Business Development

                    Michael Rodriguez, age 37, serves as the Senior Vice President of Business Development of KAAI since September 2003. Prior to joining KAAI, Mr. Rodriquez founded and ran three business consulting companies in the healthcare and financial service sectors, Three Realms, LLC, Impact Partners, LLC, and Broadband Digital, Inc. from April 2000 to September 2003. From May 1995 to April 2000, Mr. Rodriquez worked with Visa USA where he was employed in senior management roles in operations, marketing, and business development. From June 1991 to May 1995, Mr. Rodriquez worked with GE Capital. Mr. Rodriguez holds a BA in Finance and Economics from Southern Methodist University and is also a graduate of the GE Capital Management Development Program.

Medical Advisory Board

                    We have a Medical Advisory Board that includes leaders in the medical aesthetics industry. In addition to Johns Hopkins approval of medical protocols, the Medical Advisory Board includes the following members effective as of January 15, 2007:

Dr. Kaveh Alizadeh – Medical Director and member of the Medical Advisory Board

                    Dr. Alizadeh is currently a partner and vice president of Long Island Plastic Surgical Group,the largest and oldest continuously running practice in North America. He is also the Vice Chairman of Plastic Surgery and Director of Microsurgery at Winthrop University Hospital, and the curriculum director for the Nassau University Plastic Surgery Residency Program. Prior to joining Long Island Plastic Surgical Group, Dr. Alizadeh pursued a year of training in cancer reconstruction and cosmetic surgery at the Memorial Sloan Kettering Cancer Center in 1999. Between 1993 and 1999, he carried out specialty training in surgery and subspecialty training in Plastic and Reconstructive Surgery at the University of Chicago Hospitals. Dr. Alizadeh earned his medical degree from Cornell University Medical College.

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Dr. Rod Rohrich – Chairman of Medical Advisory Board

                    Dr. Rod Rohrich is Professor and Chairman, Department of Plastic Surgery, Crystal Charity Ball Distinguished Chair in Plastic Surgery and Warren and Betty Woodward Chair in Plastic and Reconstructive Surgery at the University of Texas Southwestern Medical Center in Dallas, Texas. Dr. Rohrich earned his medical degree from Baylor College of Medicine in Houston, TX. He completed residencies in General Surgery and Plastic and Reconstructive Surgery at the University of Michigan Medical Center in Ann Arbor, MI. Dr. Rohrich also completed a Fellowship in Hand and Microsurgery at Massachusetts General Hospital in Boston, MA and a Pediatric Fellowship at Oxford University in Oxford, England. Dr. Rohrich is board certified in plastic surgery. He has served as President of the American Society of Plastic Surgery and has served on the Board of Directors of the American Society of Plastic Surgery, the Plastic Surgery Educational Foundation, and the American Society for Aesthetic Plastic Surgery. He serves on the Board of the Aesthetic Society Education and Research Foundation. He is a member of numerous other professional societies. Dr. Rohrich is the editor-in-chief of Plastic and Reconstructive Surgery, the most prestigious scientific journal in the world in plastic surgery. He is the author or co-author of more than 400 articles and book chapters, five books and has made more than 1500 presentations nationally and internationally.

Dr. Victor Martel

                    Dr. Victor Martel has a private cosmetic dental practice in Palm Beach, Florida. He lectures nationally on the topics of Aesthetic Dentistry and Occlusion. Dr. Martel received his dental degree at the University of Medicine and Dentistry of New Jersey. Dr. Martel serves on the Board of Directors for the Atlantic Coast Dental Research Clinic, the Florida Academy of Cosmetic Dentistry, and is a faculty member of The Dawson Center for Advanced Dental Studies.

Dr. Jeffrey Kenkel

                    Dr. Kenkel is an Associate Professor and Vice Chairman of the Department of Plastic Surgery at the University of Texas Southwestern Medical Center, one of only three departments in plastic surgery in the United States. Dr. Kenkel is also Chief of Plastic Surgery at the Dallas VA Medical Center. He is also published in various medical journals and texts and has presented at many national and local meetings. Dr. Kenkel’s special interests include aesthetic and reconstructive breast surgery, aesthetic surgery of the face, traditional and ultrasound-assisted liposuction/body contouring, burn reconstruction, and skin care, including chemical peels and microdermabrasion.

Dr. Craig Vander Kolk

                    Craig A. Vander Kolk, M.D., has twenty years of experience at Johns Hopkins including a position as Professor of Plastic Surgery. Recently Dr. Vander Kolk relocated his practice to Mercy Medical Center. He has been appointed Associate Director of the Center for Plastic and Reconstructive Surgery in the Weinberg Center for Women’s Health and Medicine at Mercy. His expertise includes; facial surgery (including cosmetic surgery), reconstruction of cleft lip and palate, and general cosmetic procedures such as breast augmentation, tummy tuck and liposuction. An established speaker and author of numerous medical papers and textbooks, Dr. Vander Kolk is internationally recognized for research and developments in craniofacial and aesthetic plastic surgery.

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Board of Directors

                    Our directors are elected by our stockholders or by the Board of Directors to fill a vacancy. They serve until the next meeting of our stockholders or until their successors have been duly elected and qualified or until their earlier resignation or removal.

                    We presently do not have an audit committee, compensation committee, or nominating committee. We do not have a an audit committee charter or a charter governing the nominating process as our management believes that until this point it has been premature at the early stage of our management and business development to form an audit, compensation, or nominating committee. However, the new management plans to form an audit, compensation, and nominating committee in the near future. Until these committees are established, these decisions will continue to be made by the Board of Directors. Although the Board of Directors has not established any minimum qualifications for director candidates, when considering potential director candidates, the Board considers the candidate’s character, judgment, skills and experience in the context of the needs of the Company and the Board of Directors.

Director Compensation

                    All directors, except for directors of L Capital are reimbursed for out-of-pocket expenses in connection with attendance at meetings of the Board of Directors.

Board Meetings

                    The Board of Directors met four times in fiscal 2006. Each Director attended at least 75% of the aggregate of the total number of meetings of the Board (held during the period for which he has been a director).

Section 16(a) Beneficial Ownership Reporting Compliance

                    Section 16(a) of the Exchange Act requires certain of the Company’s executive officers, as well as the Company’s directors and persons who own more than ten percent (10%) of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. Based solely on the Company’s review of the copies of such reports received by the Company, the Company believes that during the fiscal year ended July 1, 2006 all executive officers, directors and ten percentage beneficial owners of the Company’s equity securities complied with their filing requirements under Section 16(a) for all reportable transactions during the last fiscal year, except that (i) Stephen H. Coltrin failed to file, and both Daniel Piette and Philippe Franchet did not timely file their initial Form 3 stating their initial ownership of equity securities of the Company at the time of the Share Exchange of KAAI and TrueYou and (ii) Matthew Burris did not timely file his initial Form 3 stating his beneficial ownership of equity securities in the Company at the time he joined the Company as an executive officer.

Code of Conduct

                    We have adopted a code of conduct that applies to all of our Directors, officers (including our Chief Executive Officer and Chief Financial Officer) and employees. The code of conduct was filed as Exhibit to our Form 10-SB dated February 10, 2005 and is incorporated herein by reference. Any person who wishes to obtain a copy of the code of conduct may do so by writing to c/o the Secretary, Klinger Advanced Aesthetics, Inc., 501 Merritt 7 Norwalk, CT 06851.

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ITEM 11. EXECUTIVE COMPENSATION

                    The following table sets forth all cash compensation earned in the most recent three years by our Chief Executive Officer and each of our other four most highly compensated executive officers serving as of the last day of the past fiscal year (the “Named Executive Officers”). The compensation arrangements for each of these officers that are currently in effect are described under the caption “Employment Arrangements, Termination of Employment Arrangements and Change in Control Arrangements” below.

			Annual Compensation				Long-Term Compensation
Name and Principal Position							No. of Common Stock Underlying Options
	Year		Salary		Bonus		TrueYou		KAAI (1)
Richard Rakowski Chairman of the Board and Chief Executive Officer		2006 2005 2004	$	— 199,583 373,846	$	— — —		— — —		— — —
Jane Terker Executive Vice President and Chief Marketing Officer		2006 2005 2004	$	450,000 216,345 N/A	$	350,000 N/A N/A		— N/A N/A		— 150,000 N/A
Wade Haddad Senior Vice President of Real Estate and Legal		2006 2005 2004	$	185,000 N/A N/A	$	50,000 N/A N/A		— N/A N/A		— N/A N/A
Carolyn Aversano Executive Vice President of Marketing, Merchandising, and Education		2006 2005 2004	$	196,154 — N/A	$	15,000 — N/A		— — N/A		— 50,000 N/A
Dave Jordan Former Chief Financial Officer		2006 2005 2004	$	185,146 144,500 200,000	$	12,000 8,000 42,313		— N/A N/A		— — 75,000

(1) Shares subject to options granted under KAAI 2003 Stock Option Plan.

Employment Arrangements, Termination of Employment Arrangements and Change in Control Arrangements

                    KAAI entered into an Employment Agreement with Jane Terker, effective January 1, 2005, pursuant to which KAAI employed Ms. Terker as the President of our Cosmedicine division. KAAI agreed to pay Ms. Terker a base salary of $450,000 per year. In addition, KAAI agreed to pay Ms. Terker bonuses in the aggregate maximum amount of $550,000 based on achieving certain performance measures. KAAI also granted Ms. Terker an option to purchase 150,000 shares of KAAI’s common stock at an exercise price of $4.00 per share, vesting daily over a period of four years. On September 18, 2006, these options have been converted into options to acquire 1,760,912 shares of TrueYou Common Stock with an exercise price per share of $0.22. In addition, on September 18, 2006, the Company granted Ms. Terker an option to purchase 2,347,882 shares of TrueYou Common Stock at an exercise price per share of $0.22. 586,970 of the options vested on the date of grant. The remaining 1,760,912 options vest over a period of three years. KAAI also

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agreed that based on the EBITDA contributed by the sale of the Cosmedicine products, it will grant Ms. Terker additional options to purchase up to 160,000 shares of KAAI’s common stock. If Ms. Terker is terminated without “cause”, or if Ms. Terker terminates the agreement for “good reason” (each as defined in the agreement) we will be required to pay Ms. Terker her accrued and unpaid base salary plus six months’ salary. In addition, a portion of her unvested options will vest.

                    On January 9, 2005, KAAI entered into a letter agreement with John Higgins, former president of TrueYou pursuant to which Mr. Higgins agreed to serve as KAAI’s President and a member of our Board of Directors commencing on January 17, 2005. Pursuant to the agreement, Mr. Higgins was paid a base salary of $250,000 per year and will be eligible for a bonus of up to 60% of his base salary. KAAI also agreed to grant Mr. Higgins an option to purchase 400,000 shares of its common stock vesting monthly over a three year period. If Mr. Higgins’ employment is terminated other than for “cause” within the first year of his employment he will be entitled to 6 months of severance; thereafter, he will be entitled to 9 months of severance. Effective January 1, 2006, Mr. Higgins’ base salary was increased to $330,000 per year and his severance was increased to 12 months.

                    On June 1, 2006, TrueYou entered into a Separation Agreement and Mutual Release with John Higgins pursuant to which Mr. Higgins resigned as an officer and director of the TrueYou and its subsidiaries effective June 30, 2006. The Separation Agreement provides, among other things, that (i) TrueYou will pay Mr. Higgins his base salary for a period of twelve months following June 30, 2006 with such payments to be reduced by any compensation he receives from any subsequent employer, (ii) Mr. Higgins will retain 200,000 options to purchase the common stock of KAAI, such options to be exercised within three years from June 30, 2006 or two years after such options are exchanged into options of TrueYou, whichever is later.

                    On June 1, 2005 KAAI entered into a letter agreement with Carolyn Aversano, pursuant to which Ms. Aversano agreed to serve as its Executive Vice President of Marketing, Merchandising and Education commencing on June 20, 2005. Pursuant to the agreement, Ms. Aversano is paid a base salary of $200,000 per year and will be eligible for a bonus of up to 30% of her base salary. KAAI also agreed to grant Ms. Aversano an option to purchase 50,000 shares of its common stock vesting over a four year period. On September 18, 2006, these options have been converted into options to acquire 586,971 shares of TrueYou Common Stock with an exercise price per share of $0.34. Ms. Aversano has recently resigned from the Company, effective January 12, 2007.

                    On April 24, 2006, TrueYou entered into an Employment Agreement with Matthew Burris to serve as Executive Vice President, Chief Financial Officer and Chief Operating Officer of TrueYou and each of its subsidiaries. Pursuant to the Employment Agreement, Mr. Burris is entitled to receive a base salary of $350,000 per year with annual review for increase. In addition, Mr. Burris is eligible to receive an annual incentive bonus, which is targeted at 60% of his Base Salary, provided, however, that Mr. Burris will receive a minimum annual bonus payment of $60,000 per year, payable at the beginning of July of each calendar year during the employment term. The minimum annual bonus payment due on July 1, 2006 will be payable on the later of July 1, 2006 or the date on which the Company consummates a financing transaction of no less than $20,000,000. In addition, the Company will, on an annual basis, commencing with the fiscal year beginning July 1, 2006, review Mr. Burris’ performance, and in the sole and absolute discretion of the Company, pay Mr. Burris a bonus of up to $150,000. In connection with his employment, Mr. Burris, in accordance with the terms and conditions of the stock incentive plan adopted by TrueYou, was granted options on September 18, 2006 to purchase 2,641,368 shares of Common Stock of TrueYou, at an exercise price of $0.22 per share, of which options to purchase 293,485 shares of Common Stock are immediately exercisable upon such grant and the remainder of which vest quarterly over the 3 year period following such grant.

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                    In the event of termination of employment by Mr. Burris for Good Reason (as defined in the Employment Agreement) or in the event of a Change of Control (as defined in the Employment Agreement), all stock options held by Mr. Burris will automatically and immediately become fully vested and fully exercisable and remain exercisable for their full term. If TrueYou terminates Mr. Burris’ employment without Cause or if Mr. Burris terminates his employment for Good Reason, he is entitled to receive a lump-sum cash payment from TrueYou in an amount equal to his Base Salary and the Minimum Annual Bonus no later than 7 days following such termination provided, however, that TrueYou may elect, in its sole discretion, to make such payments ratably over a 12 month period after the date of such termination in the event that TrueYou has a cash balance equal to or greater than $5,000,000 on the date of such termination; provided further, however, that if such payments are subject to Section 409A of the Internal Revenue Code (the “Code”), the immediately preceding proviso will not apply; provided further, that upon the occurrence of such cash balance falling below $5,000,000 at any time after the date of such termination, then all such payments shall be made in a lump-sum no later than 7 days after such occurrence. During the 12 month period immediately following such termination, Mr. Burris will receive (i) continuation of all employee benefits and fringe benefits (“Continued Benefits”) and (ii) at TrueYou’s expense, reasonable executive outplacement services and administrative support. In addition, Mr. Burris will receive: (a) payment of unpaid Base Salary through the date of such termination; (b) accrued but unused vacation days; (c) any unpaid or minimum bonuses earned through the date of termination; (d) any compensation previously deferred (to the extent allowed under the Plan through which it is deferred); (e) reimbursement for any unreimbursed fees or expenses; and (f) all other payments, benefits and rights under any benefit, compensation, incentive, equity or fringe benefit plan, program or arrangement or grant, (collectively referred to herein as “Rights”). In addition, the Employment Agreement provides that Mr. Burris will not compete with TrueYou during the term of his employment and for 12 months thereafter.

                    On December 29, 2006, our board of directors elected Mr. O’Crowley to serve as a member of the board of directors and Mr. O’Crowley was then elected by the board of directors as President of TrueYou. TrueYou has discussed financial arrangements with Mr. O’Crowley for his service as President as follows: Mr. O’Crowley would receive a base salary of $375,000 a year and options to purchase 4,000,000 shares of TrueYou Common Stock at fair market value under our 2006 option plan and transition expenses in connection with his relocation to Norwalk, Connecticut. The foregoing proposed compensation arrangement has not yet been approved by our board of directors.

Option/SAR Grants in Last Fiscal Year

                    KAAI granted stock options to its executive officers under KAAI’s 2003 Stock Option Plan. As of July 1, 2006, options to purchase a total of 1,892,850 shares were outstanding under KAAI’s 2003 Stock Option Plan, and a total of 107,150 shares remained available for grant under KAAI’s 2003 Stock Option Plan.

                    There were no options granted in the year ended July 1, 2006.

Aggregated Option/SAR Exercises in the Last Fiscal Year and Fiscal Year-End Option/SAR Values

                    During fiscal year 2006, no options were exercised by our named executive officers. The following table sets forth the number of shares of KAAI’s common stock underlying unexercised stock options granted to each of our Named Executive Officers and the number and value of unexercised options held by each of the Named Executive Officers at July 1, 2006:

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Name	Shares Acquired on Exercise	Value Realized			Number of Shares of Common Stock Underlying Unexercised Options/SARs at July 1, 2006 Exercisable Unexercisable			Value of Unexercised In-The-Money Options/SARS at July 1, 2006(1) Exercisable Unexercisable
Richard Rakowski	0		$	0		—	—		$	—	$	—
Wade Haddad	0			0		—	—			—		—
Jane Terker	0			0		56,198	93,802			—		—
Carolyn Aversano	0			0		12,500	37,500			—		—
Dave Jordan	0			0		75,000	—			—		—

(1) Represents aggregate excess of market value of the shares under options as of July 1, 2006 over the exercise price of the options.

Stock-Based Incentive Plans

Stock Options

                    On July 1, 2003, the shareholders of KAAI adopted the KAAI 2003 Stock Option Plan which allows KAAI to grant nonqualified stock options to employees, vendors and contractors that have affiliations with the company.

                    Under the KAAI 2003 Stock Option Plan, KAAI is authorized to issue options to acquire 2,000,000 shares of common stock of KAAI for a term not to exceed ten years from the date of grant.

                    The KAAI 2003 Stock Option Plan contains restrictions on transferability, time of exercise, exercise price and on disposition of any shares acquired through exercise of the options. Stock options are granted at not less than fair market value, which is determined as of the grant date utilizing the Black-Scholes Option Pricing Model. The Board of Directors determines the KAAI 2003 Stock Option Plan participants and establishes the terms and conditions of each option.

                    Subsequent to year-end, the Company adopted a new 2006 TrueYou stock option plan as an alternative to the KAAI 2003 Stock Option Plan and the exchange of the existing KAAI options with new TrueYou options to purchase Common Stock of the Company.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

                    The following table sets forth certain information with respect to the beneficial ownership of the equity of TrueYou (herein sometimes called “Company”) as of December 31, 2006:

• each securityholder known by TrueYou to be the beneficial owner of more than 5% of the Company’s outstanding securities;

• each of our directors and Named Executive Officers; and

• all directors and Named Executive Officers as a group.

                    Unless otherwise specified, the address of each of the persons set forth below is in care of Klinger Advanced Aesthetics, Inc., Building No 501, Fifth Floor, 7 Corporate Park, Norwalk, CT 06851.

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                    Beneficial ownership is calculated in accordance with Rule 13d-3 under the Securities Exchange Act of 1934. For purposes of this table except as otherwise specified in the footnotes: (i) shares subject to stock options, warrants or convertible securities are considered beneficially owned only to the extent currently exercisable or exercisable within 60 days after December 31, 2006, (ii) all outstanding shares of Series B Preferred Stock (as the substantial equivalent of Common Stock) are assumed to have been converted into Common Stock and (iii) the outstanding shares of Series B Preferred Stock (as the substantive equivalent of Common Stock) are deemed to be outstanding for the purpose of computing the percentage of the underlying shares of Common Stock by all holders listed below.

Name and Address of Beneficial Owner	Amount and Nature Beneficial Ownership		Percent of Common Stock
5% Beneficial Owners
Affiliates of Pequot Capital Management Inc. 500 Nayala Farm Road Westport, CT 06880	90,487,165	(1)	85.8	% (1)
FCPR L Capital c/o L Capital Management SAS 22, avenue Montaigne 75008 Paris, France	113,226,643	(2)	38.57	%
Seapine Investments, LLC c/o Kidd & Company, LLC 10 Glenville Street Greenwich, CT 06831	91,075,998	(3)(4)	30.68	%
Kidd & Company, LLC 10 Glenville Street Greenwich, CT 06831	38,473,906	(5)	13.10	%
Laurus Master Fund, Ltd. 152 West 57th Street New York, NY 10019	1,498,051	(6)	9.99	% (6)
Directors & Named Executive Officers
Richard Rakowski	27,074,149	(7)	8.49	%
Andrew Lipman	8,754,554	(8)	3.0	%
Jane Terker	1,540,798	(9)	0.5	%*
Matthew Burris	489,142	(10)		*
Stephen H. Coltrin	0		0	%
James O’Crowley	0		0	%
Alastair Clemons	0		0	%

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Name and Address of Beneficial Owner	Amount and Nature Beneficial Ownership		Percent of Common Stock
Alan Panzer	0		0	%
Carolyn Aversano	293,486	(11)		*
Wade Haddad	117,394	(12)		*
All Directors and Executive Officers as a group (10 persons)	41,036,325		12.87	%

*	Less than 1%
(1)	Based on a Schedule 13G filed by the securityholders on January 10, 2006. Consists of (i) 6,443.9891 shares of Series C Preferred Stock issued and outstanding, which are convertible into 64,439,891 shares of Common Stock, (ii) 1,878.3056 shares of Series B Preferred Stock into which Series B Preferred Warrants which mature on September 21, 2010 and which are concurrently exercisable at an exercise price of $2,112.54 per share of Series B Preferred Stock and which equates to an exercise price of $21.1254 per share of TrueYou Common Stock and (iii) 726.4218 shares of Series B Preferred Stock into which a Common Stock Warrants which can be exercised until March 31, 2011 at an exercise of $.001 per share and which are currently exercisable. Does not include 14,654,807 shares of Common Stock underlying a 7 year warrant with an exercise price of $.001 per share issued in connection with a subordinated debt financing on June 11, 2006 (the “Subordinated Debt Financing Warrant”). The Subordinated Debt Financing Warrant contains an issuance limitation prohibiting the securityholder from exercising those securities to the extent that such exercise would result in beneficial ownership by the securityholder of more than 4.99% of the shares of Common Stock then issued and outstanding unless the holders provide notice to the Company of not less than 61 days (the “4.99% Issuance Limitation”).
(2)	Consists of 11,322.6643 shares of Series B Preferred Stock issued and outstanding, which are convertible into 113,226,643 shares of Common Stock.
(3)	Consists of (i) 8,784.6111 shares of Series B Preferred Stock issued and outstanding, which are convertible into 87,846,111 shares of Common Stock, and (ii) 322.9887 shares of Series B Preferred Stock into which a Series B Preferred Warrant which may be exercised until September 21, 2010 and which is currently exercisable. The Series B Warrant has an exercise price of $.001 per share. Carla Kidd, as the sole Manager of Seapine Investments, LLC, has voting power with respect to these shares. Carla Kidd and William J. Kidd, her spouse, are the owners of Kidd & Company, LLC (“KCO”). Does not include shares of Series B Preferred Stock held in trusts for the benefit of the children of Carla and William Kidd. Does not include 14,416,354 shares of Common Stock underlying a Subordinated Debt Financing Warrant that contains the 4.99% Issuance Limitation and 2,904,762 shares of Common Stock underlying 7 year warrants with an exercise price of $.001 per share issued on December 22, 2006 (the “December 2006 Warrants”) that contain the 4.99% Issuance Limitation issued to Klinger Investments, LLC, which Mr. Kidd, as sole Manager of Klinger Investments, LLC, has sole voting power. Pursuant to a Letter Agreement dated December 22, 2006 between Laurus Master Fund Ltd. (“Laurus”) and certain securityholders (the “Laurus Letter Agreement”), if a $1,000,000 Senior Subordinated loan made by Laurus to the Company is not repaid by April 22, 2007, then the securityholder will contribute back to the Company, December 2006 Warrants to purchase 2,708,334 shares of Common Stock.

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(4)	2,957.9390 shares of Series B Preferred Stock beneficially owned by the securityholder are subject to certain rights in favor of FCPRL Capital (“L Capital”), pursuant to an Amended and Restated Share Transfer Agreement, dated December 20, 2005, among the Company, L Capital and certain other stockholders signatory thereto (the “Share Transfer Agreement”). Pursuant to the Share Transfer Agreement, if certain specified events such as a liquidation, sale of substantially all of the assets of the Company or a public offering result in L Capital achieving an internal rate of return on its investment of less than 25% with respect to its investment in the Company, then a number of these shares shall be delivered to L Capital such that when combined with the value of other shares of capital stock of the Company owned by L Capital would provide L Capital with an internal rate of return on its investment of 25%.
(5)	Consists of 3,847.3906 shares of Series B Preferred Stock issued and outstanding, which are convertible into 38,473,906 shares of Common Stock. Mr. William Kidd owns 50% of KCO. Does not include 14,416,354 shares of Common Stock underlying a Subordinated Debt Financing Warrant and 2,904,762 shares of Common Stock underlying December 2006 Warrants that are subject to the 4.99% Issuance Limitation issued to Klinger Investments, LLC, which Mr. Kidd, as sole Manager of Klinger Investments, LLC, has sole voting power. Pursuant to the Laurus Letter Agreement, if a $1,000,000 Senior Subordinated loan made by Laurus to the Company is not repaid by April 22, 2007, then the securityholder will contribute back to the Company December 2006 Warrants to purchase 2,708,334 shares of Common Stock.
(6)	Based solely on a Schedule 13G filed by the securityholder on December 29, 2006. To the Company’s knowledge, the securityholder beneficially owns (i) 37,351,824 shares of Common Stock underlying a warrant issued to the securityholder on June 30, 2006 (the “June 2006 Warrant”) which is subject to the 4.99% Issuance Limitation and (ii) 10,000,000 shares of Common Stock underlying a December 2006 Warrant. The December 2006 Warrant contains an issuance limitation prohibiting the securityholder from exercising those securities to the extent that such exercise would result in beneficial ownership by the securityholder of more than 9.99% of the shares of Common Stock then issued and outstanding unless the securityholder provides notice to the Company of not less than 61 days.
(7)	Consists of (i) 200.059 shares of Series B Preferred Stock issued and outstanding, which are convertible into 2,000,590 shares of Common Stock, (ii) 7.3559 shares of Series B Preferred Stock into which a Series B Preferred Warrant is currently exercisable. 67.3631 shares of Series B Preferred Stock beneficially owned by the securityholder are subject to certain rights in favor of L Capital as described below and (iii) Options to purchase 25,000,000 shares of Common Stock, which are currently exercisable, subject to the Authorized Shares Increase. Does not include 3,798,534 shares of Common Stock underlying December 2006 Warrants that contain the 4.99% Issuance Limitation. Pursuant to the Laurus Letter Agreement, if a $1,000,000 Senior Subordinated loan made by Laurus to the Company is not repaid by April 22, 2007, then the securityholder will contribute back to the Company, December 2006 Warrants to purchase 3,541,666 shares of Common Stock. Pursuant to the Share Transfer Agreement, if certain specified events such as a liquidation, sale of substantially all of the assets of the Company or a public offering result in L Capital achieving an internal rate of return on its investment of less than 25% with respect to its investment in the Company, then a number of these shares shall be delivered to L Capital such that when combined with the value of other shares of the capital stock of the Company owned by L Capital would provide L Capital with an internal rate of return on its investment of 25%.
(8)	Consists of (i) 597.5113 shares of Series B Preferred Stock owned by the Lipman Family Limited Partnership, which are convertible into 5,975,113 shares of Common Stock, (ii) 69.0191 shares of Series B Preferred Stock owned by Andrew Lipman, which are convertible into 690,191 shares of Common Stock, (iii) 24.506 shares of Series B Preferred Stock into which a Series B Preferred

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	Warrant is currently exercisable (iv) 950,416 shares of Common Stock underlying a Subordinated Debt Financing Warrant and (v) 893,773 shares of Common Stock underlying December 2006 Warrants that are subject to the 4.99% Issuance Limitation. 224.4340 shares of Series B Preferred Stock beneficially owned by the securityholder are subject to certain rights in favor of L Capital as described below. Pursuant to the Laurus Letter Agreement, if a $1,000,000 Senior Subordinated loan made by Laurus to the Company is not repaid by April 22, 2007, then the securityholder will contribute back to the Company, December 2006 Warrants to purchase 833,334 shares of Common Stock. Pursuant to the Share Transfer Agreement, if certain specified events such as a liquidation, sale of substantially all of the assets of the Company or a public offering result in L Capital achieving an internal rate of return on its investment of less than 25% with respect to its investment in the Company, then a number of these shares shall be delivered to L Capital such that when combined with the value of other shares of the capital stock of the Company owned by L Capital would provide L Capital with an internal rate of return on its investment of 25%.
(9)	Consists of Options to purchase 4,108,794 shares of Common Stock, of which 1,540,798 options are currently exercisable, subject to the Authorized Shares Increase, and the remaining 2,567,996 options are unvested.
(10)	Consists of Options to purchase 2,641,368 shares of Common Stock, of which 489,142 options are currently exercisable, subject to the Authorized Shares Increase, and the remaining 2,152,226 options are unvested.
(11)	Consists of Options to purchase 1,173,942 shares of Common Stock, of which 293,486 options are currently exercisable, subject to the Authorized Shares Increase, and the remaining 880,457 options are unvested.
(12)	Consists of Options to purchase 469,577 shares of Common Stock, of which 117,394 options are currently exercisable, subject to the Authorized Shares Increase, and the remaining 352,183 options are unvested.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                    Except as set forth below, none of the Company’s directors or officers, nor any person who beneficially owns, directly or indirectly, 5% of the voting securities of the Company, nor any of the Company’s promoters, nor any relative or spouse of any of the foregoing persons has any material interest, direct or indirect, in any transaction since July 1, 2004 or in any presently proposed transaction which, in either case, has affected, or will materially affect the Company. None of the Company’s directors or officers is indebted to the Company.

General

                    In connection with the formation and capitalization of KAAI, KCO advanced an aggregate of approximately $5.9 million to KAAI. In addition, affiliates of KCO, including Seapine Investments, LLC (“Seapine”), trusts for the benefit of the children of William and Carla Kidd (“Kidd Trusts”), Richard Rakowski, a director and Chief Executive Officer of the Company and Andrew D. Lipman, a director of the Company (all of the foregoing herein collectively “KCO Affiliates”) and other unrelated parties, invested an aggregate of $2.0 million in capital of KAAI and received 2,725 shares of KAAI’s series B preferred stock, 9,288,609 shares of common stock and warrants to acquire 376,384 shares of common stock of KAAI at an exercise price of $.01 per share. All of these securities were exchanged for TrueYou securities in the Share Exchange Agreement. See also “Loans by Klinger Investments” below which describes transactions with

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such entity, which entity is solely owned by William J. Kidd. See also “Loans by Richard Rakowski” and “Loans by Andrew Lipman” below.

                    In November 2003, in connection with the transactions involving KAAI and L Capital, KCO received a note from KAAI in the sum of $5,905,085 (which represented the amount originally advanced plus interest) and agreed that payment of such note would be based on future performance of KAAI. On December 20, 2005 and in connection with the Share Exchange Agreement, the $7,346,195.53 of principal and interest outstanding under the KCO note was converted into 2,938,478 shares of KAAI common stock ($2.25 per share), which was subsequently converted into 3,571.1976 shares of our Series B Preferred Stock upon the closing of the Share Exchange Agreement.

                    In November 2003, L Capital invested $13,300,000 and received a subordinated convertible promissory note (convertible into 5,966,444 shares of the common stock of KAAI) and entered into a Securityholders Agreement and Registration Rights Agreement with KAAI and KCO. The agreements provide that the KCO Investors and L Capital vote their shares for specified nominees as directors of KAAI and for certain approval rights for specified transactions of KAAI (e.g., significant acquisitions, capital expenditures, material contracts, specified borrowings and others), as well as rights to cause the sale of KAAI. L Capital also entered into a Share Transfer Agreement with the KCO Affiliates and other affiliates of KCO (collectively the “KCO Investors”) whereby certain of the shares of common stock of KAAI owned by the KCO Investors is required to be delivered to L Capital if L Capital does not, upon the sale or liquidation of KAAI, a change of control of KAAI, a public offering of at least $25,000,000 and other events, receive an investment rate of return of 25% on its investment in KAAI (the “L Capital IRR test”).

                    In June 2004, L Capital invested an additional $8.2 million and acquired shares of the series D convertible preferred stock of KAAI and concurrently entered into an amendment to the Share Transfer Agreement with the KCO Investors which increased the number of shares of the common stock of KAAI owned by the KCO Investors which could be delivered to L Capital. Under the revised Share Transfer Agreement described below, an aggregate of 40,853,733 shares of Common Stock of the Company may be delivered to L Capital in the event the L Capital IRR test is not met. The subordinated convertible promissory note and the series D convertible preferred stock were converted into KAAI common stock (at $2.25 per share), which were subsequently converted into 11,322.6643 shares of our Series B Preferred Stock upon the closing of the Share Exchange Agreement on December 20, 2005.

                    Under the Securityholders Agreement, the parties also agreed on restrictions on the transfer of their securities, rights of first offer, tag-along rights as well as preemptive rights. Under the Securityholders Agreement, the KCO Investors have the right, until November 2008, to cause the sale of KAAI, provided that the L Capital IRR test is met; and if not, after November 2008, L Capital has the right to cause the sale of KAAI.

                    On December 20, 2005, the parties amended the Share Transfer Agreement and the Securityholders Agreement. The amended agreements provide that the KCO Investors and L Capital vote their shares for specified nominees as directors of the Company and for certain approval rights for specified transactions of the Company (e.g., significant acquisitions, capital expenditures, material contracts, specified borrowings and others), as well as rights to cause the sale of the Company. On December 20, 2005, L Capital converted its promissory note and its shares of KAAI’s series D preferred stock into shares of common stock of KAAI (at $2.25 per share), which were subsequently converted into 11,322.6643 shares of our Series B Preferred Stock upon the closing of the Share Exchange Agreement. Unpaid and accrued interest on the L Capital note and accrued and unpaid dividends on the shares of KAAI’s series D preferred stock were not paid or converted and remain as outstanding obligations of the Company and bear interest at a rate of 7.5% per annum. To the extent necessary, upon the occurrence of certain events (such as a sale or liquidation of the Company or other event as referred to above), if L Capital does not realize the L Capital IRR test, we might be required to pay a portion or all of such unpaid and accrued interest and dividends to L Capital. The KCO

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Investors have also agreed with L Capital, that they will not sell any of their shares of the Company ‘s Series B Preferred Stock and the Company’s Common Stock into which the Series B Preferred Stock are convertible, until such time as L Capital has realized the L Capital IRR test.

L Capital Consulting Services Agreement

                    On November 25, 2003 KAAI entered into a Consulting Services Agreement with L Capital pursuant to which L Capital performed consulting services for KAAI. Under the Agreement, KAAI was required to pay L Capital an annual consulting fee, payable in quarterly installments in arrears, equal to the higher of (a) $445,000 and (b) 1% of our gross revenues plus $20,000 for such year. As of July 1, 2006 and December 20, 2005, there were accrued and unpaid consulting fees to L Capital of approximately $876,841.

                    On December 20, 2005, we terminated the Consulting Agreement with L Capital, and in accordance with this Agreement were obligated to pay all accrued and unpaid consulting fees within one year of termination. On December 19, 2006 a new agreement was signed which deferred this payment until (a) the $25.0 million in principal, along with the related interest of our senior debt issued on July 6, 2006 to Laurus Master Fund Ltd. has been paid, (b) the $10.0 million in principal, along with the related interest of our subordinated debt issued on July 11, 2006 has been paid and (c) the $4.0 million in principal, along with the related interest of senior subordinated debt issued on December 22, 2006. Upon the occurrence of all of the preceding, all accrued management fees will be due and payable.

KCO Advisory Services Agreement

                    On November 25, 2003 KAAI entered into an Advisory Services Agreement with KCO pursuant to which KCO performed advisory services for the Company. Under the Agreement KAAI was required to pay KCO an annual advisory fee, payable in quarterly installments in arrears, equal to the higher of (a) $425,000 and (b) 1% of our gross revenues for such year. As of December 20, 2005, there were accrued and unpaid consulting fees to KCO of approximately $837,433.

                    On December 20, 2005 we terminated the Advisory Agreement with KCO and in accordance with this Agreement were obligated to pay all accrued and unpaid advisory fees within one year of termination. On December 19, 2006 a new agreement was signed which deferred this payment until (a) the $25.0 million in principal, along with the related interest of our senior debt issued on July 6, 2006 to Laurus Master Fund Ltd. has been paid, (b) the $10.0 million in principal, along with the related interest of our subordinated debt issued on July 11, 2006 has been paid and (c) the $4.0 million in principal, along with the related interest of senior subordinated debt issued on December 22, 2006. Upon the occurrence of all of the preceding, all accrued management fees will be due and payable.

Loans by Affiliates of Pequot

                    Affiliates of Pequot, holders of more than 5% of the Common Stock of the Company, hold 7 year warrants with an exercise price of $.01 per share, to purchase an aggregate of 14,654,807 shares of the Common Stock of the Company which warrants were received in connection with the $5,000,000 Subordinated Debt financing on July 11, 2006 and the $4.8 Million Subordinated Debt financing on May 9, 2006 in which such affiliates loaned the Company an aggregate of $2,312,903. Such affiliates also loaned monies to and received securities of KAAI as described in Item 1 of this Report. All of such securities have been converted into securities of TrueYou under the Share Exchange Agreement.

Loans by Klinger Investments

                    Klinger Investments, LLC, an entity owned by William J. Kidd, the spouse of Carla G. Kidd, the sole Manager of Seapine Investments, LLC, a holder of more than 5% of the Common Stock of the Company and a 50% owner of Kidd & Company, LLC, loaned the Company $2,275,269 as part of the July 11, 2006 $5.0

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Million Subordinated Debt financing and May 9, 2006 $4.8 Million Subordinated Debt financing and $650,000 in the $4 Million December 22, 2006 Senior Subordinated financing and received 10 year warrants with an exercise price of $.001 per share to purchase an aggregate of 14,416,354 shares of Common Stock and 7 year warrants to purchase an aggregate of 2,904,762 shares of Common Stock. In the event the Laurus $1 Million Senior Subordinated Loan is not repaid by April 22, 2007, warrants to purchase 2,708,374 shares will be returned by Klinger Investments to the Company for cancellation.

Loans by Laurus Master Fund Ltd.

                    Laurus has loaned the Company $25,000,000 as Senior Secured Debt and $1 Million as Senior Subordinated Secured Debt as described in this Report and received 10 year warrants with an exercise price of $.01 per share to purchase a total of 50,885,093 shares of Common Stock and 7 year warrants with an exercise price of $.01 per share to purchase a total of 10,000,000 shares of Common Stock. In addition Laurus is entitled to receive warrants to purchase an additional 8,750,000 shares of Common Stock if the $1,000,000 Senior Subordinated Secured Debt is not repaid by April 22, 2007. If prior to the 14^th month anniversary of June 30, 2006, the Company’s obligations to Laurus under the Senior Secured Debt have been reduced to $12,500,000 or less, then warrants to purchase 6,839,394 shares of Common Stock will be automatically cancelled and terminated and if at such time the Company’s obligations have been reduced to zero, then warrants to purchase an additional 6,693,875 shares of Common Stock will also be cancelled.

Loan by Richard Rakowski

                    Richard Rakowski, a Director and Chief Executive Officer of the Company, loaned the Company $850,000 as part of the Senior Subordinated financing on December 22, 2006 and received 7 year warrants with an exercise price of $.001 per share to purchase 3,798,534 shares of Common Stock. In the event the Laurus $1 Million Senior Subordinated Secured Loan is not repaid by April 22, 2007, warrants to purchase 3,541,666 shares of Common Stock will be returned to the Company for cancellation by Mr. Rakowski. Mr. Rakowski has also personally guaranteed certain obligations of the Company.

Loans by Andrew Lipman

                    Andrew D. Lipman, a Director, loaned the Company $150,000 in the July 11, 2006 $5 Million Subordinated Debt Financing and received 10 year warrants with an exercise price of $.001 per share to purchase 950,416 shares of Common Stock and loaned the Company $200,000 in the December 22, 2006 Senior Subordinated financing and received 7 year warrants with an exercise price of $.001 per share to purchase 893,773 shares of Common Stock. In the event the Laurus $1 Million Senior Subordinated Secured Loan is not repaid by April 22, 2007, warrants to purchase 833,334 shares of Common Stock will be returned to the Company for cancellation by Mr. Lipman.

Sephora

                    Sephora, with whom the Company has a strategic relationship, is a subsidiary of LVMH and L Capital. L Capital Management SAS, which manages and represents L Capital, is also a subsidiary of LVMH, and as a result L Capital Management SAS and Sephora are affiliates. The Company’s decision to enter into a contract with Sephora was made independent of its relationship with L Capital. We have recorded $2.7 million in net revenues on a cumulative basis as of July 1, 2006.

Alan Gelband

                    On June 1, 1999, the Company entered into a consulting agreement with Alan Gelband, a former director of the Company. Pursuant to the agreement, Mr. Gelband provides the Company with general management services for a fee of $10,000 per month. This agreement terminated on February 28, 2003. In

107

July 2004, Mr. Gelband converted the $415,000 consulting fee due him into 4,150,000 shares of the Company’s Common Stock.

                    The Company owed the Alan Gelband Company Defined Contribution Pension Plan & Trust an amount of $250,266. This consisted of a $220,000 loan made to the Company on February 14, 2003 and accrued interest through July 2004 of $30,266. In July 2004 the Company converted this debt into 1,000,000 shares of Common Stock.

                    During 2004, Alan Gelband individually made three separate loans to the Company. These loans, together with interest accrued thereon, were in the aggregate amount of $5,870 as of July 2004. Alan Gelband converted this debt into 58,700 shares of the Company’s Common Stock in July 2004.

                    An amount equal to $41,487.00 in consulting fees was paid to the Alan Gelband Company on November 29, 2005 for consulting services provided by the Alan Gelband Company prior to the Closing of the Share Exchange Agreement and for the establishment of a reserve to pay down certain accounts payable and other miscellaneous expenses of the Company that accrued prior to the closing of the Share Exchange Agreement.

                    Also in July 2004, the Alan Gelband Company Defined Contribution Pension Plan and Trust purchased 1,000 shares of the Company’s Series A Preferred Stock. On December 20, 2005, the 1,000 shares of Series A Preferred Stock was converted into 2,000,000 shares of Common Stock.

The Company’s office, until December 20, 2005, located at 750 Third Avenue, Suite 1600, New York, New York 10017 was provided free of charge by Alan Gelband Co., Inc., an investment banking firm controlled by Mr. Gelband.

Pyle Group

                    On April 23, 2004, the Company executed a note to the Pyle Group for $1.0 million due on April 23, 2007. The note was issued to the Pyle Group as part of the acquisition consideration to purchase Georgette Klinger Inc. The Company is obligated for 5% interest annually through the term of the note. All interest is compounded annually and payable quarterly. As of June 30, 2005, the note was reissued to Judith Pyle in the amount $.5 million and Thomas Pyle in the amount $.5 million, individually under the same terms.

                    The Company has an existing application service provider contract with the Pyle Group. Services include troubleshooting of the Company’s Millennium software program used to record revenue and inventory activity. Fees under the contact are $0.2 million per year.

West Palm Beach Facility Lease

                    The Company leases its West Palm Beach facility from Christal Inc. The majority owner of Christal Inc. was an employee at the West Palm Beach facility. Total rent expense to this related party amounted to $0.3 million for the years ended July 1, 2006 and June 30, 2005.

Other

                    Reference is also made to the agreements and transactions with the management of the Company described in Item 11 of this Report and the compensatory arrangements referred to therein and the information contained in Item 12 of this Report.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

108

Principal Accountant Fees and Services

                    Our independent public accounting firm for the fiscal years ended July 1, 2006 and June 30, 2005 was Amper, Politziner & Mattia, P.C. (“Amper”). Services provided to us by Amper for each of the fiscal years are described below (dollars in thousands).

	2006		2005
Audit fees	$	775	$	483
Audit-Related fees		151		—
Tax fees		—		—
All other fees		—		—
Total	$	926	$	483

                    Audit related fees in 2006 include fees related to the restatement and filing of the Form S-1.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1.	Financial Statement Schedule:
	All schedules have been omitted because they are not applicable, not required or the information is included elsewhere in the Consolidated Financial Statements or Notes thereto.
2.	Exhibits: (see accompanying Exhibit Index included after the signature page of this Report for a list of exhibits filed or furnished with or incorporated by reference in this Report).

110

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, thereunto duly authorized on February 5, 2007.

	TRUEYOU.COM INC.
Date: February 5, 2007	By:	/S/ Matthew Burris
		Matthew Burris
		Chief Financial Officer

                    Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on February 5, 2007 on behalf of the Registrant and in the capacities indicated.

99

Signature	Title	Date
/s/ Richard Rakowski	Chairman, Chief Executive Officer	February 5, 2007
Richard Rakowski
/s/ Matthew Burris	Chief Financial Officer	February 5, 2007
Matthew Burris
/s/ Jane Terker	Executive Vice President, Chief Marketing Officer and Director	February 5, 2007
Jane Terker
/s/ Andrew D. Lipman	Director	February 5, 2007
Andrew D. Lipman
/s/ Stephen H. Coltrin	Director	February 5, 2007
Stephen H. Coltrin
	President	February 5, 2007
James O’ Crowley III
	Director	February 5, 2007
Alan Panzer
	Director	February 5, 2007
Alastair J. Clemow

111

EXHIBIT INDEX

Exhibit No.	Description
2.1	Share Exchange Agreement, dated December 20, 2005 by and among the Company and certain shareholders of KAAI. (1)
3.1	Certificate of Incorporation of the Company. (2)
3.2	Certificate of Amendment to Certificate of Incorporation of the Company, dated April 7, 1999. (2)
3.3	Certificate of Designation of Series A Preferred Stock, dated July 13, 2004. (2)
3.4	Certificate of Designation of Series B Preferred Stock, dated December 20, 2005. (1)
3.5	Certificate of Designation of Series C Preferred Stock, dated December 20, 2005. (1)
3.6	Certificate of Designation of Series D Preferred Stock, dated December 20, 2005. (1)
3.7	By-Laws of the Company (2).
10.1	Form of Subscription Agreement among the holders of KAAI Series G Preferred Stock and KAAI. (1)
10.2	Form of Registration Rights Agreement among KAAI and the holders of KAAI Series G Preferred Stock and the KAAI’s Series H Preferred Stock. (1)
10.3	Form of Common Stock Purchase Warrant among the holders of KAAI Series G Preferred Stock and KAAI Series H Preferred Stock and KAAI. (1)
10.4	Securities Purchase Agreement, dated November 4, 2003, between L Capital and KAAI. (1)
10.5	Amended and Restated Escrow Agreement, dated December 20, 2005, among KAAI, Troutman Sanders LLP and certain shareholders of KAAI. (1)
10.6	Amended and Restated Securityholders Agreement, dated December 20, 2005, among KAAI, L Capital and certain shareholders of KAAI. (1)
10.7	Registration Rights Agreement, dated November 25, 2003, between L Capital and KAAI. (1)
10.8	Subordinated Convertible Promissory Note, dated November 26, 2003, issued by KAAI in favor of L Capital in the principal amount of $13,300,000. (1)
10.9	Consulting Services Agreement, dated November 21, 2003, between KAAI and Johns Hopkins Medicine, acting through Johns Hopkins Health System Corporation and The Johns Hopkins University. (1)
10.10	First Amendment to Consulting Services Agreement, dated March 23, 2005, between KAAI and Johns Hopkins Medicine, acting through Johns Hopkins Health System Corporation and The Johns Hopkins University. (1)

EXHIBIT INDEX

Exhibit No.	Description
10.11	Services and Licensing Agreement, dated December 2004, between KAAI and Johns Hopkins Medicine, acting through Johns Hopkins Health System Corporation and The Johns Hopkins University. (1)
10.12	Retail Alliance Agreement, dated December 2004, between KAAI and Sephora USA, LLC. (1)
10.13	Registration Rights Agreement, dated November 25, 2003, between KAAI and Lord & Foursight, LLC. (1)
10.14	Registration Rights Agreement, dated November 25, 2003, between KAAI and The Robert and Catherine Amoroso Irrevocable Trust. (1)
10.15	Registration Rights Agreement, dated November 25, 2003, between KAAI and Forele Ltd, Inc. (1)
10.16	Asset Purchase Agreement, dated April 23, 2004, among KAAI, Advanced K, LLC, Georgette Klinger, Inc., Thomas F. Pyle, Jr. and Judith D. Pyle. (1)
10.17	Registration Rights Agreement, dated April 23, 2003, between KAAI and Georgette Klinger, Inc. (1)
10.18	Note and Warrant Purchase Agreement, dated March 31, 2004, among KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation, Advanced K, LLC and Technology Investment Capital Corp. (1)
10.19	Promissory Note in the principal amount of $10,000,000, dated March 31, 2004, delivered by KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation and Advanced K, LLC in connection with the Note and Warrant Purchase Agreement dated March 31, 2004 among KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation, Advanced K, LLC and Technology Investment Capital Corp. (1)
10.20	Pledge and Security Agreement, dated March 31, 2004, among Technology Capital Investment Corp., KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation and Advanced K, LLC, et al. (1)
10.21	Guaranty Agreement, dated March 31, 2004, among Technology Capital Investment Corp., KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation and Advanced K, LLC, et al. (1)
10.22	Securityholders Agreement, dated March 31, 2004, between KAAI and Technology Investment Capital Corp. (1)
10.23	Common Stock Purchase Warrant, dated December 20, 2005, between the Company and Technology Investment Capital Corp. (1)
10.24	Registration Rights Agreement, dated March 31, 2004, between KAAI and Technology Investment Capital Corp. (1)

EXHIBIT INDEX

Exhibit No.	Description
10.25	Letter Agreement, dated July 11, 2005, among KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation, Advanced K, LLC and Technology Investment Capital Corp. (1)
10.26	Form of Warrant to Purchase Common Stock of the Company issued to certain stockholders of KAAI. (1)
10.27	Registration Rights Agreement, dated June 30, 2003, between KAAI and each of Jon Lauck, John O’Neil, Steve Kenny, John True and Marissa A. Timm Revocable Trust U/A/D May 20, 1997. (1)
10.28	Registration Rights Agreement, dated June 30, 2003, between KAAI and Cosmo Dischino Living Trust Dated January 9, 2002. (1)
10.29	Employment Agreement, dated January, 1, 2005, between KAAI and Jane Terker. (1)
10.30	Letter Agreement, dated January 9, 2005, between KAAI and John Higgins. (1)
10.31	Letter Agreement, dated June 1, 2005, between KAAI and Carolyn Aversano. (1)
10.32	Limited Waiver and Amendment, dated October 26, 2005, among KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation, Advanced K, LLC and Technology Investment Capital Corp. (1)
10.33	Amendment to Note and Warrant Purchase Agreement, dated November 29, 2005, among KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation, Advanced K, LLC and Technology Investment Capital Corp. (1)
10.34	Limited Waiver and Amendment, dated December 20, 2005, among KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation, Advanced K, LLC and Technology Investment Capital Corp. (1)
10.35	Side Tax Letter, dated December 20, 2005, between KAAI and L Capital. (1)
10.36	Form of Exchange Agreement among the holders of KAAI Series F Preferred Stock and KAAI Series H Preferred Stock. (1)
10.37	Amended and Restated Share Transfer Agreement, dated December 20, 2005, among KAAI and certain shareholders of KAAI. (1)
10.38	Consulting Services Agreement, dated November 25, 2003, between L Capital and KAAI. (1)
10.39	Amendment to Consulting Services Agreement, dated December 20, 2005, between L Capital and KAAI. (1)
10.40	Advisory Services Agreement, dated November 25, 2003, between Kidd & Company, LLC and KAAI. (1)

EXHIBIT INDEX

Exhibit No.	Description
10.41	Amendment to Advisory Services Agreement, dated December 20, 2005, between Kidd & Company, LLC and KAAI. (1)
10.42	Tie-In Letter Agreement, dated December 16, 2005, among KAAI, L Capital and Kidd & Company, LLC. (1)
10.43	Preferred Stock and Warrant Purchase Agreement, dated December 22, 2005, among the Company and the Purchasers signatory thereto. (1)
10.44	Investor Rights Agreement, dated December 22, 2005, among the Company and the Investors signatory thereto. (1)
10.45	Form of Stock Purchase Warrant of the Company. (1)
10.46	Amendment and Consent, dated February 21, 2006, among the Company, KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation, Advanced K, LLC and Technology Investment Capital Corp. (3)
10.47	Consulting Agreement, dated April 4, 2006 between Klinger Advanced Aesthetics, Inc., Mark Potter and Atlantis Laboratories, Inc. (4)
10.48	Formula Agreement, dated April 4, 2006 between Klinger Advanced Aesthetics, Inc., Mark Potter, Atlantis Laboratories, Inc. and JPMorgan Chase Bank, N.A., as Escrow Agent. (4)
10.49	Promissory Note, dated April 4, 2006, issued by Mark Potter and Atlantis Laboratories, Inc. to Klinger Advanced Aesthetics, Inc. (4)
10.50	Deed of Trust, Assignment of Rents and Security Agreement, dated April 4, 2006, between Mark Potter and Donald O. Walsh, as Trustee. (4)
10.51	Construction Loan Agreement, dated April 4, 2006, between Klinger Advanced Aesthetics, Inc., Mark Potter and Atlantis Laboratories, Inc. (4)
10.52	Construction Loan Promissory Note, dated April 4, 2006, issued by Mark Potter and Atlantis Laboratories, Inc. to Klinger Advanced Aesthetics, Inc. (4)
10.53	Construction Deed of Trust, Security Agreement, Assignment of Leases and Rents, and Fixture Filing, dated April 4, 2006, between Mark Potter and Donald O. Walsh, as Trustee. (4)
10.54	Employment Agreement dated April 24, 2006 between the Company and Mathew Burris. (5)
10.55	Loan Agreement dated May 9, 2006 between the Company and Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited - Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd. and Klinger Investments LLC. (6)

EXHIBIT INDEX

Exhibit No.	Description
10.56	Subordinated Promissory Note dated May 9, 2006 issued by the Company to Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited - Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd. and Klinger Investments LLC. (6)
10.57	Consent and Amendment dated May 9, 2006 between the Company, Klinger Advanced Aesthetics, Inc., Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, DiSchino Corporation, and Technology Investment Capital Corp. (6)
10.58	Subordination Agreement dated May 9, 2006 between the Company, Klinger Advanced Aesthetics, Inc., Advanced Aesthetics Sub, Inc., Advanced Aesthetics, LLC, Klinger Advanced Aesthetics, LLC, Anushka PBG, LLC, Anushka Boca, LLC, Wild Hare, LLC, DiSchino Corporation, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited – Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd., Klinger Investments LLC and Technology Investment Capital Corp. (6)
10.59	Separation Agreement and Mutual Release dated June 1, 2006 between the Company and John Higgins. (7)
10.60	Securities Purchase Agreement dated as of June 30, 2006, by and between the Company and Laurus Master Fund, Ltd. (8)
10.61	Secured Term Note dated as of June 30, 2006, issued by the Company to Laurus Master Fund, Ltd. (8)
10.62	The Company and Certain of its Subsidiaries Master Security Agreement dated June 30, 2006 in favor of Laurus Master Fund, Ltd. (8)
10.63	Stock Pledge Agreement dated as of June 30, 2006, among Laurus Master Fund, Ltd., the Company, Klinger Advanced Aesthetics, Inc., Advanced Aesthetics Sub, Inc., Advanced Aesthetics, LLC, Anushka PBG, LLC, Anushka Boca, LLC and Wild Hare, LLC. (8)
10.64	Intellectual Property Security Agreement dated as of June 30, 2006, by the Company, Klinger Advanced Aesthetics, Inc., Klinger Advanced Aesthetics, Inc., Klinger Advanced Aesthetics, LLC and Advanced Aesthetics, LLC, in favor of Laurus Master Fund, Ltd. (8)
10.65	Subsidiary Guarantee dated June 30, 2006, by Klinger Advanced Aesthetics, Inc., Advanced Aesthetics Sub, Inc., Advanced Aesthetics, LLC, Klinger Advanced Aesthetics, LLC, Anushka PBG, LLC, Anushka Boca, LLC, Wild Hare, LLC, Dischino Corporation, Anushka PGA Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC and Wild Hare Acquisition Sub, LLC in favor of Laurus Master Fund, Ltd. (8)

EXHIBIT INDEX

Exhibit No.	Description
10.66	Registration Rights Agreement dated as of June 30, 2006, by and between the Company and Laurus Master Fund, Ltd. (8)
10.67	Common Stock Purchase Warrant issued by the Company to Laurus Master Fund, Ltd. (8)
10.68	Common Stock Purchase Warrant issued by the Company to Laurus Master Fund, Ltd. (8)
10.69	Common Stock Purchase Warrant issued by the Company to Laurus Master Fund, Ltd. (8)
10.70	Letter Agreement dated June 30, 2006, between the Company and Laurus Master Fund Ltd in connection with the Warrants. (8)
10.71	Amended and Restated Loan Agreement dated as of July 11, 2006, by and among TrueYou.Com, Inc. and Klinger Investments LLC, Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited — Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, and North Sound Legacy International Ltd. (10)
10.72	Loan Agreement dated as of July 11, 2006, by and among TrueYou.Com, Inc. and Klinger Investments LLC, Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited - Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd., Technology Investment Capital Corp., Andrew D. Lipman and Jon Lauck. (10)
10.73	Amended and Restated Subordinated Promissory Note dated July 11, 2006, issued by TrueYou.Com, Inc. to Klinger Investments LLC, Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited - Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC and North Sound Legacy International Ltd. (10)
10.74	Subordinated Promissory Note dated July 11, 2006, issued by TrueYou.Com, Inc. to and Klinger Investments LLC, Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited - Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd., Technology Investment Capital Corp., Andrew D. Lipman and Jon Lauck. (10)
10.75	Subordination Agreement dated as of July 11, 2006, by and among Klinger Investments LLC, Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited - Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd., Technology Investment Capital Corp., Andrew D. Lipman and Jon Lauck and Laurus Master Fund, Ltd, and acknowledged and agreed to by TrueYou.Com, Inc. (10)

EXHIBIT INDEX

Exhibit No.	Description
10.76	Form of Common Stock Purchase Warrant issued by TrueYou.Com, Inc to each of Klinger Investments LLC, Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited - Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd., Technology Investment Capital Corp., Andrew D. Lipman and Jon Lauck. (10)
10.77	Form of Letter Agreement between TrueYou.Com, Inc. and Klinger Investments LLC, Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited - Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd., Technology Investment Capital Corp., Andrew D. Lipman and Jon Lauck, in connection with the warrants. (10)
10.78	Letter of Intent dated September 12, 2006, between the Company and Nouvisage Corp. (11)
10.79	The TrueYou.Com Inc. 2006 Stock Incentive Plan. (12)
10.80	Subordinated Securities Purchase Agreement dated December 22, 2006 between the Company and Laurus Master Fund, Ltd. (14)
10.81	Subordination Agreement dated December 22, 2006, by and among Klinger Investments LLC, Pequot Healthcare Fund, L.P., Pequot Healthcare Offshore Fund, Inc., Premium Series PCC Limited - Cell 32, Pequot Diversified Master Fund, Ltd., Pequot Healthcare Institutional Fund, L.P., North Sound Legacy Institutional Fund LLC, North Sound Legacy International Ltd., Technology Investment Capital Corp., Jon Lauck, Vicis Capital Master Fund LLC, Klinger Investments LLC, Andrew D. Lipman, Richard Rakowski, Gerard DeBiasi, James Benedict, Dan Richardson, Amal Devani, CSFN I LLC, John Brugmann and Laurus Master Fund, Ltd. (14)
10.82	Subordinated Secured Term Note dated December 22, 2006 issued by the Company to Laurus Master Fund, Ltd. (14)
10.83	Reaffirmation, Ratification and Amendment Agreement dated December 22, 2006 by and between the Company, Klinger Advanced Aesthetics, Inc., Advanced Aesthetics Sub, Inc., Advanced Aesthetics, LLC, Klinger Advanced Aesthetics, LLC, Anushka PBG, LLC, Anushka Boca LLC, Wild Hare LLC, Dischino Corporation, Anushka PBG Acquisition Sub, LLC, Anushka Boca Sub, LLC, Wild Hare Acquisition Sub LLC and Laurus Master Fund, Ltd. (14)
10.84	Amended and Restated Registration Rights Agreement dated December 22, 2006, by and between TrueYou.com Inc. and Laurus Master Fund, Ltd. (14)
10.85	Letter Agreement dated December 22, 2006 between the Company and Laurus Master Fund, Ltd. (14)
10.86	Common Stock Purchase Warrant dated December 22, 2006 issued by TrueYou.com Inc. to Laurus Master Fund, Ltd. (14)

EXHIBIT INDEX

Exhibit No.	Description
10.87	Loan Agreement dated December 22, 2006 among the Company and Vicis Capital Master Fund LLC, Klinger Investments LLC, Andrew D. Lipman, Richard Rakowski, Gerard DeBiasi, James Benedict, Dan Richardson, Amal Devani, CSFN I LLC and John Brugmann. (14)
10.88	Registration Rights Agreement dated December 22, 2006 among the Company and Vicis Capital Master Fund LLC, Klinger Investments LLC, Andrew D. Lipman, Richard Rakowski, Gerard DeBiasi, James Benedict, Dan Richardson, Amal Devani, CSFN I LLC and John Brugmann. (14)
10.89	Senior Subordinated Lenders Side Warrant Letter dated December 22, 2006 among the Company, Klinger Investments LLC, Vicis Capital Master Fund LLC, Andrew D. Lipman, Richard Rakowski, Gerard DeBiasi, James Benedict, Dan Richardson, Amal Devani, CSFN I LLC and John Brugmann. (14)
10.90	Senior Subordinated Promissory Note dated December 22, 2006 issued by the Company to Vicis Capital Master Fund LLC, Klinger Investments LLC, Andrew D. Lipman, Richard Rakowski, Gerard DeBiasi, James Benedict, Dan Richardson, Amal Devani, CSFN I LLC and John Brugmann. (14)
10.91	Form of Common Stock Purchase Warrant dated December 22, 2006 issued by TrueYou.Com, Inc to each of Vicis Capital Master Fund LLC, Klinger Investments LLC, Andrew D. Lipman, Richard Rakowski, Gerard DeBiasi, James Benedict, Dan Richardson, Amal Devani. and John Brugmann. (14)
10.92	Amendment and Consent, dated February 21, 2006, among the Company, KAAI, Anushka PBG Acquisition Sub, LLC, Anushka Boca Acquisition Sub, LLC, Wild Hare Acquisition Sub, LLC, Dischino Corporation, Advanced K, LLC and Technology Investment Capital Corp. (3)
10.93	Senior Subordinated Security Agreement dated as of December 22, 2006 issued by the Company and each of its subsidiaries to Vicis Capital Master Fund LLC, Klinger Investments LLC, Andrew D. Lipman, Richard Rakowski, Gerard DeBiasi, James Benedict, Dan Richardson, Amal Devani, CSFN I LLC and John Brugmann (14)
10.94	Letter Agreement dated December 20, 2006 with Pequoi Master Fund LP and affiliates re Amendment of Registration Rights Agreement (14)
14	Code of Ethics. (2)
16.01	Letter from Livingston, Wachtell & Co., LLP dated February 16, 2006. (13)
21	List of subsidiaries of the Company. (1)
31.1	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a). (14)
31.2	Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a). (14)
32.1	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(b) and 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. (14)
32.1	Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(b) and 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code. (14)

(1) Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the Commission on December 23, 2005.

(2)	Incorporated by reference to the Company’s initial filing of Form 10-SB, filed with the Commission on February 10, 2005.
(3)	Incorporated by reference to the Company’s Quarterly Report with the Commission on Form 10-Q filed on February 21, 2006.
(4)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 21, 2006.
(5)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on April 27, 2006.
(6)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on May 15, 2006.
(7)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on June 6, 2006.
(8)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on July 6, 2006.
(9)	Incorporated by reference to the Company’s Quarterly Report on Form 10-Q filed with the Commission on July 12, 2006.
(10)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on July 17, 2006.
(12)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on September 21, 2006.
(13)	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the Commission on February 21, 2006.
(14)	Filed herewith.

EX-10.80

                   SUBORDINATED SECURITIES PURCHASE AGREEMENT
                   ------------------------------------------


                            LAURUS MASTER FUND, LTD.

                                       AND

                                TRUEYOU.COM INC.


                            DATED: DECEMBER 22, 2006



                                LIST OF EXHIBITS

Subordinated Secured Term Note.........................................Exhibit A


Warrant................................................................Exhibit B


Escrow Agreement ......................................................Exhibit C



                   SUBORDINATED SECURITIES PURCHASE AGREEMENT



         THIS SUBORDINATED SECURITIES PURCHASE AGREEMENT (as amended,  modified,
restated and/or  supplemented  from time to time, this  "Agreement") is made and
entered  into as of December  22,  2006,  by and  between  TRUEYOU.COM  Inc.,  a
Delaware  corporation  (the  "Company"),  and LAURUS MASTER FUND, LTD., a Cayman
Islands company (the "Purchaser").

                                    RECITALS

         WHEREAS,  the Company has  authorized  the sale to the  Purchaser  of a
Subordinated  Secured Term Note in the aggregate principal amount of One Million
Dollars  ($1,000,000)  in the form of  Exhibit A hereto (as  amended,  modified,
restated and/or supplemented from time to time, the "Note");

         WHEREAS,  the Company wishes to issue to the Purchaser  warrants in the
form of Exhibits B hereto (as amended,  modified,  restated and/or  supplemented
from time to time,  "Warrant A"), (the  "Warrants") to purchase up to 10,000,000
shares of the  Company's  Common Stock (upon the terms and subject to adjustment
as set forth therein) in connection with the Purchaser's purchase of the Note;

         WHEREAS, the Purchaser desires to purchase the Note and the Warrants on
the terms and conditions set forth herein; and

         WHEREAS, the Company desires to issue and sell the Note and Warrants to
the Purchaser on the terms and conditions set forth herein.

                                    AGREEMENT

         NOW,  THEREFORE,  in  consideration  of the foregoing  recitals and the
mutual  promises,  representations,  warranties  and covenants  hereinafter  set
forth,  and  for  other  good  and  valuable  consideration,   the  receipt  and
sufficiency  of which are  hereby  acknowledged,  the  parties  hereto  agree as
follows:

         1.       AGREEMENT  TO SELL AND  PURCHASE.  Pursuant  to the  terms and
conditions  set forth in this  Agreement,  on the  Closing  Date (as  defined in
Section 3), the Company shall sell to the  Purchaser,  and the  Purchaser  shall
purchase  from the Company,  the Note.  The sale of the Note on the Closing Date
shall be known as the "Offering".  The Note will mature on the Maturity Date (as
defined in the Note).  Collectively,  the Note and  Warrants,  together with the
Warrant Shares (as hereinafter defined), are referred to as the "Securities".

         2.       FEES AND WARRANTS. On the Closing Date:

                  (a)      The Company  will issue and deliver to the  Purchaser
         the  Warrants to purchase up to  10,000,000  of shares of Common  Stock
         (subject to adjustment as set forth



         therein and in the Warrant  Side  Letter,  as  hereinafter  defined) in
         connection with and in consideration of the Purchaser's purchase of the
         Note pursuant to Section 1 hereof.  The shares of the Company's  Common
         Stock (as  defined in Section  4.3(a)  below)  issued  upon the due and
         timely  exercise of the  Warrants  will be referred to as the  "Warrant
         Shares".  Subject  to Section  11.4  hereof,  all the  representations,
         covenants,  warranties,  undertakings,  and indemnification,  and other
         rights  made or granted to or for the benefit of the  Purchaser  by the
         Company  are  hereby  also  made and  granted  for the  benefit  of the
         Purchaser as holder of the Warrants.

                  (b)      Subject  to the  terms of  Section  2(d)  below,  the
         Company shall pay to Laurus Capital Management, LLC, the manager of the
         Purchaser,  a closing  payment in an amount equal to three and one-half
         percent  (3.50%) of the  aggregate  principal  amount of the Note.  The
         foregoing fee is referred to herein as the "Closing Payment."

                  (c)      The Company  shall  reimburse  the  Purchaser for its
         reasonable  expenses  (including  legal fees and expenses)  incurred in
         connection  with the  preparation and negotiation of this Agreement and
         the Related Agreements (as hereinafter defined),  and expenses incurred
         in connection with the Purchaser's due diligence  review of the Company
         and its  Subsidiaries  (as  defined  in  Section  4.2) and all  related
         matters.  Amounts  required to be paid under this  Section 2(c) will be
         paid on the  Closing  Date and  shall  be  $20,000  for  such  expenses
         referred to in this Section 2(c).

                  (d)      The Closing  Payment and the expenses  referred to in
         the  preceding  clause  (c)  (net of  deposits  previously  paid by the
         Company)  shall be paid at closing  out of funds held  pursuant  to the
         Escrow  Agreement  (as defined  below) and a  disbursement  letter (the
         "Disbursement Letter").

         3.       CLOSING, DELIVERY AND PAYMENT.

                  3.1      CLOSING.  Subject to the terms and conditions herein,
the closing of the transactions contemplated hereby (the "Closing"),  shall take
place on the date hereof, at such time or place as the Company and the Purchaser
may mutually agree (such date is hereinafter referred to as the "Closing Date").

                  3.2      DELIVERY.  Pursuant to the Escrow  Agreement,  at the
Closing on the Closing Date,  the Company will deliver to the  Purchaser,  among
other things,  the Note and the Warrants and the  Purchaser  will deliver to the
Company, among other things, the amounts set forth in the Disbursement Letter by
certified  funds or wire TRANSFER.  The Company hereby  acknowledges  and agrees
that Purchaser's obligation to purchase the Note from the Company on the Closing
Date shall be contingent  upon the  satisfaction  (or waiver by the Purchaser in
its sole discretion) of the items and matters set forth in the closing checklist
provided by the Purchaser to the Company on or prior to the Closing Date.


                                       2


         4.       REPRESENTATIONS  AND  WARRANTIES  OF THE COMPANY.  The Company
hereby represents and warrants to the Purchaser as follows as of the date hereof
(unless an earlier  date is  indicated):

                  4.1      ORGANIZATION,  GOOD STANDING AND QUALIFICATION.  Each
of the Company and each of its  Subsidiaries  is a  corporation,  partnership or
limited liability company, as the case may be, duly organized,  validly existing
and in good standing under the laws of its jurisdiction of organization. Each of
the Company and each of its  Subsidiaries has the corporate,  limited  liability
company  or  partnership,  as the case may be,  power and  authority  to own and
operate  its  properties  and assets  and,  insofar as it is or shall be a party
thereto,  to (1) execute and deliver (i) this  Agreement,  (ii) the Note and the
Warrants  to  be  issued  in   connection   with  this   Agreement,   (iii)  the
Reaffirmation,  Ratification and Amendment Agreement dated as of the date hereof
between the Company,  certain  Subsidiaries of the Company and the Purchaser (as
amended,  modified  and/or  supplemented  from time to time, the  "Reaffirmation
Agreement")  (iv) the Funds Escrow  Agreement  dated as of the date hereof among
the  Company,   the  Purchaser  and  the  escrow  agent   referred  to  therein,
substantially  in the form of Exhibit C hereto (as amended,  modified,  restated
and/or  supplemented  from  time  to  time,  the  "Escrow  Agreement"),  (v) the
Warrants;  (vi) the letter  agreement  dated as of the date  hereof  between the
Purchaser and the Company  respecting the securities  issueable  pursuant to the
Warrants (as amended, modified,  restated and/or supplemented from time to time,
the  "Warrant  Side  Letter";  and (vii) all other  documents,  instruments  and
agreements  entered  into on or after  the date  hereof in  connection  with the
transactions  contemplated  hereby and  thereby,  as executed by the  applicable
parties and thereafter amended, modified, restated and/or supplemented from time
to time (the preceding  clauses (ii) through (vii),  collectively,  the "Related
Agreements");  (2) issue and sell the Note;  (3) issue and sell the Warrants and
Warrant  Shares;  and (4) carry out the  provisions  of this  Agreement  and the
Related Agreements and to carry on its business as presently conducted.  Each of
the Company and each of its  Subsidiaries is duly qualified and is authorized to
do business and is in good  standing as a foreign  corporation,  partnership  or
limited liability company, as the case may be, in all jurisdictions in which the
nature or  location  of its  activities  and of its  properties  (both owned and
leased) makes such qualification  necessary,  except for those  jurisdictions in
which  failure to do so has not,  or could not  reasonably  be expected to have,
individually  or in the  aggregate,  a material  adverse effect on the business,
assets, liabilities,  condition (financial or otherwise), properties, operations
and prospects of the Company and its Subsidiaries, taken as a whole (a "Material
Adverse Effect").

                  4.2      SUBSIDIARIES.  Each direct and indirect Subsidiary of
the Company,  the direct owner of such  Subsidiary and its percentage  ownership
thereof,  is set forth on Schedule  4.2.  For the purpose of this  Agreement,  a
"Subsidiary"  of any person or entity  means (i) a  corporation  or other entity
whose shares of stock or other ownership  interests having ordinary voting power
(other than stock or other ownership  interests having such power only by reason
of the happening of a contingency)  to elect a majority of the directors of such
corporation,  or other persons or entities performing similar functions for such
person or entity, are owned, directly or indirectly, by such person or entity or
(ii) a corporation or other entity in which such person or entity owns, directly
or indirectly, more than 50% of the equity interests at such time.

                  4.3      Capitalization; Voting Rights.


                                       3


                  (a)      The  authorized  capital stock of the Company,  as of
         the date hereof consists of 21,000,000  shares, of which 20,000,000 are
         authorized as shares of common  stock,  par value $0.001 per share (the
         "Common Stock"),  and 14,995,513  shares of Common Stock are issued and
         outstanding  , and  1,000,000  are  authorized  as shares of  preferred
         stock,  par  value  $0.001  per  share  (the  "Preferred  Stock"),  and
         37,840.7895  shares of Preferred Stock are issued and outstanding.  The
         authorized,  issued and outstanding capital stock of each Subsidiary of
         the Company is set forth on Schedule 4.3.

                  (b)      Except (i) as  disclosed  on Schedule  4.3,  (ii) the
         shares  reserved  for  issuance  under  the stock  option  plans of the
         Company and its  Subsidiaries,  and (iii)  warrants,  rights and shares
         granted  pursuant to this Agreement and the Related  Agreements,  there
         are no outstanding options,  warrants,  rights (including conversion or
         preemptive  rights and rights of first  refusal),  proxy or stockholder
         agreements,  or arrangements or agreements of any kind for the purchase
         or acquisition from the Company of any of its equity securities. Except
         as disclosed on Schedule  4.3,  neither the offer,  issuance or sale of
         any of the Note or the Warrants, nor the issuance of any of the Warrant
         Shares,  nor the consummation of any transaction  contemplated  hereby,
         will result in a change in the price or number of any equity securities
         of  the  Company  outstanding  under  anti-dilution  or  other  similar
         provisions contained in or affecting any such equity securities.

                  (c)      All issued and  outstanding  shares of the  Company's
         Common Stock and Preferred  Stock:  (i) have been duly  authorized  and
         validly  issued  and are fully  paid and  nonassessable;  and (ii) were
         issued  in  compliance  with all  applicable  state  and  federal  laws
         concerning the issuance of securities.

                  (d)      The rights, preferences,  privileges and restrictions
         of the  shares of the  Common  Stock  are as  stated  in the  Company's
         Certificate of Incorporation  (the "Charter").  The Warrant Shares have
         been duly and validly reserved for issuance.  When issued in compliance
         with the provisions of this Agreement,  the Related  Agreements and the
         Company's  Charter,  the Securities will be validly issued,  fully paid
         and  nonassessable,  and  will be free of any  liens  or  encumbrances;
         provided, however, that the Securities are subject to the provisions of
         this Agreement, the Related Agreements and applicable law other than to
         the extent  effectively  waived  hereunder  or  thereunder  (including,
         without  limitation,  the  Uniform  Commercial  Code in the case of the
         Note) and may be subject to restrictions on transfer under state and/or
         federal securities laws as set forth herein or as otherwise required by
         such laws at the time a transfer is proposed.

                  4.4      AUTHORIZATION;  BINDING  OBLIGATIONS.  All corporate,
partnership or limited liability company, as the case may be, action on the part
of the Company and each of its Subsidiaries (including their respective officers
and directors) necessary for the authorization of this Agreement and the Related
Agreements,   the  performance  of  all  obligations  of  the  Company  and  its
Subsidiaries  hereunder  and under the other  Related  Agreements at the Closing
and, the authorization, sale, issuance and delivery of the Note and Warrants has
been taken or will be taken prior to the Closing. This Agreement and the Related
Agreements, when executed and delivered and to the extent it is a party thereto,
will be valid and  binding  obligations  of each of


                                       4


the Company and each of its Subsidiaries,  enforceable  against each such person
or entity in accordance with their terms, except:

                  (a)      as  limited  by  applicable  bankruptcy,  insolvency,
         reorganization,   moratorium  or  other  laws  of  general  application
         affecting enforcement of creditors' rights; and

                  (b)      general   principles  of  equity  that  restrict  the
         availability of equitable or legal remedies.

The sale of the Note is not and will not be subject to any preemptive  rights or
rights of first refusal that have not been properly waived or complied with. The
issuance of the Warrants and the subsequent exercise of the Warrants for Warrant
Shares  are not and will not be subject  to any  preemptive  rights or rights of
first refusal that have not been properly waived or complied with.

                  4.5      LIABILITIES.  Neither  the  Company  nor  any  of its
Subsidiaries has any liabilities that should have been but were not disclosed in
any of the Company's filings under the Securities Act or Securities Exchange Act
of  1934  ("Exchange  Act")  made on or  prior  to the  date of this  Agreement,
including  (without   limitation)  the  SEC  Reports,   as  hereinafter  defined
(collectively, the "Securities Filings"), except for (i) liabilities incurred in
the ordinary course of business,  and (ii) liabilities under documents governing
Permitted  Indebtedness  and  Permitted  Guarantees,  copies of which  governing
documents have been provided to the Purchaser and (iii) liabilities set forth in
the Schedules.

                  4.6      AGREEMENTS;  ACTION.  Except as set forth on Schedule
4.6 or as disclosed in any Securities Filings:

                  (a)      There are no agreements, understandings, instruments,
         contracts,  proposed transactions,  judgments, orders, writs or decrees
         to which the Company or any of its  Subsidiaries is a party or by which
         it is bound  containing any: (i) obligations  (contingent or otherwise)
         of, or payments to, the Company or any of its Subsidiaries in excess of
         $50,000 (other than (A)  obligations of, or payments to, the Company or
         any of its Subsidiaries  arising from purchase,  lease, license or sale
         agreements  entered  into  in the  ordinary  course  of  business,  (B)
         Permitted  Indebtedness and Permitted Guarantees (as defined in Section
         6.12(e)  hereof),  and (C) the matters  disclosed in Schedule  4.7); or
         (ii)  transfer or license of any  patent,  copyright,  trade  secret or
         other  proprietary  right  to  or  from  the  Company  or  any  of  its
         Subsidiaries (other than licenses arising from the purchase of "off the
         shelf" or other standard products); or (iii) provisions restricting the
         development, manufacture or distribution of the Company's or any of its
         Subsidiaries  products  or  services;  or (iv)  indemnification  by the
         Company or any of its  Subsidiaries  with respect to  infringements  of
         proprietary rights (other than  indemnification  provisions  protecting
         the  licensor of licenses  arising from the purchase of "off the shelf"
         or other standard products).

                  (b)      Since  July  1,  2006  (the  "Balance  Sheet  Date"),
         neither the Company nor any of its  Subsidiaries  has:  (i) declared or
         paid any dividends, or authorized or made any distribution upon or with
         respect to any class or series of its capital stock;  (ii) incurred


                                       5


         any  indebtedness  for money borrowed or any other  liabilities  (other
         than ordinary course obligations) individually in excess of $50,000 or,
         in the case of indebtedness  and/or liabilities  individually less than
         $50,000,  in excess of $100,000 in the aggregate,  other than Permitted
         Indebtedness and Permitted Guarantees; (iii) made any loans or advances
         to  any  person  or  entity  not  in  excess,  individually  or in  the
         aggregate, of $100,000,  other than ordinary course advances for travel
         expenses,  and other than  intercompany  loans and  advances  among the
         Company and its  Subsidiaries  SET FORTH ON SCHEDULE 4.6; or (iv) sold,
         exchanged or otherwise  disposed of any of its assets or rights,  other
         than the sale of its inventory in the ordinary course of business.

                  (c)      For the  purposes of  subsections  (a) and (b) above,
         all  such  indebtedness,   liabilities,   agreements,   understandings,
         instruments,  contracts  or proposed  transactions  involving  the same
         person or entity  (including  persons or  entities  the  Company or any
         Subsidiary  of  the  Company  has  reason  to  believe  are  affiliated
         therewith)   shall  be  aggregated  for  the  purpose  of  meeting  the
         individual minimum dollar amounts of such subsections.

                  (d)      The Company  maintains  all  disclosure  controls and
         procedures  required  under  applicable  law  ("Disclosure   Controls")
         designed to ensure that  information  required to be  disclosed  by the
         Company in the reports that it files or submits  under the Exchange Act
         is recorded, processed, summarized, and reported in accordance with and
         within  the  time  periods  specified  in the  rules  and  forms of the
         Securities and Exchange Commission ("SEC").

                  (e)      The  Company  makes  and  keep  books,  records,  and
         accounts, that, in reasonable detail, accurately and fairly reflect the
         transactions  and  dispositions  of the Company's  assets.  The Company
         maintains  internal  control  over  financial   reporting   ("Financial
         Reporting  Controls")  designed  by, or under the  supervision  of, the
         Company's principal  executive and principal  financial  officers,  and
         effected by the  Company's  board of directors,  management,  and other
         personnel, to provide reasonable assurance regarding the reliability of
         financial  reporting and the  preparation  of financial  statements for
         external  purposes in accordance  with  generally  accepted  accounting
         principles ("GAAP"), including that:

                           (i)      material   transactions   are   executed  in
                  accordance with management's general or specific authorization
                  or material deviations are timely detected;

                           (ii)     unauthorized     acquisition,     use,    or
                  disposition of the Company's assets that could have a material
                  effect on the  financial  statements  are  prevented or timely
                  detected;

                           (iii)    transactions  are  recorded as  necessary to
                  permit preparation of financial  statements in accordance with
                  GAAP,  and that the Company's  receipts and  expenditures  are
                  being made only in  accordance  with the  general or  specific
                  authorizations of, or policies and procedures  established by,
                  the Company's management and/or board of directors;


                                       6


                           (iv)     transactions  are  recorded as  necessary to
                  maintain  accountability  for all material assets; and (v) the
                  recorded  accountability  for  assets  is  compared  with  the
                  existing  assets  at  reasonable  intervals,  and  appropriate
                  action is taken with respect to any differences.

                  (f)      There  is  no  weakness  in  any  of  the   Company's
         Disclosure Controls or Financial Reporting Controls that is required to
         be disclosed in any of the Securities Filings, except as so disclosed.

                  4.7      OBLIGATIONS TO RELATED  PARTIES.  Except as set forth
on Schedule 4.7 or in the  Securities  Filings,  there are no obligations of the
Company or any of its  Subsidiaries  to  officers,  directors,  stockholders  or
employees of the Company or of any of its Subsidiaries other than:

                  (a)      for payment of salary for  services  rendered and for
         bonus payments;

                  (b)      reimbursement  for  reasonable  expenses  incurred on
         behalf of the Company and its Subsidiaries;

                  (c)      for other standard  employee  benefits made generally
         available  to  all  employees   (including   stock  option   agreements
         outstanding  under  any  stock  option  plan  approved  by the Board of
         Directors  of the  Company  and  each  Subsidiary  of the  Company,  as
         applicable); and

                  (d)      obligations  listed in the  Company's and each of its
         Subsidiary's  financial statements or disclosed in any of the Company's
         Securities Filings.

Except as described  above,  in the Securities  Filings or set forth on Schedule
4.6 or 4.7: (i) none of the officers, directors or, to the best of the Company's
knowledge,  key  employees  or  stockholders  of  the  Company  or  any  of  its
Subsidiaries  or any members of their  immediate  families,  are indebted to the
Company or any of its Subsidiaries,  individually or in the aggregate, in excess
of $50,000  or have any direct or  indirect  ownership  interest  in any firm or
corporation  with which the Company or any of its  Subsidiaries is affiliated or
with which the Company or any of its Subsidiaries  has a business  relationship,
or any  firm or  corporation  which  competes  with  the  Company  or any of its
Subsidiaries,  other than  passive  investments  in  publicly  traded  companies
(representing less than one percent (1%) of such company) which may compete with
the Company or any of its Subsidiaries; (ii) no officer, director or stockholder
of the  Company or any of its  Subsidiaries,  or any  member of their  immediate
families,  is, directly or indirectly,  interested in any material contract with
the Company or any of its  Subsidiaries  and no  agreements,  understandings  or
proposed  transactions  are  contemplated  between  the  Company  or  any of its
Subsidiaries  and any such person;  and (iii) neither the Company nor any of its
Subsidiaries  is a guarantor  or  indemnitor  of any  indebtedness  of any other
person or entity other than pursuant to any of the Permitted Guarantees.


                                       7


                  4.8      CHANGES.  Since the  Balance  Sheet  Date,  except as
disclosed in any  Securities  Filing or in any Schedule to this  Agreement or to
any of the  Related  Agreements,  there  has not  been:

                  (a)      any  change  in the  business,  assets,  liabilities,
         condition (financial or otherwise), properties, operations or prospects
         of the Company or any of its Subsidiaries, which individually or in the
         aggregate   has  had,  or  could   reasonably   be  expected  to  have,
         individually or in the aggregate, a Material Adverse Effect;

                  (b)      any  resignation or  termination of any officer,  key
         employee  or  group  of   employees  of  the  Company  or  any  of  its
         Subsidiaries;

                  (c)      any material change, except in the ordinary course of
         business,  in the  contingent  obligations of the Company or any of its
         Subsidiaries by way of guaranty,  endorsement,  indemnity,  warranty or
         otherwise,  other  than (A) any  Permitted  Guarantees,  or (B) any new
         licenses arising from the purchase of "off the shelf" or other standard
         products containing  indemnification provisions protecting the licensor
         thereof;

                  (d)      any  damage,  destruction  or  loss,  whether  or not
         covered by insurance, which has had, or could reasonably be expected to
         have, individually or in the aggregate, a Material Adverse Effect;

                  (e)      any waiver by the Company or any of its  Subsidiaries
         of a valuable right or of a material debt owed to it;

                  (f)      any direct or  indirect  loans made by the Company or
         any of  its  Subsidiaries  to any  stockholder,  employee,  officer  or
         director of the Company or any of its Subsidiaries, other than advances
         made in the ordinary course of business;

                  (g)      any material change in any  compensation  arrangement
         or agreement with any employee, officer, director or stockholder of the
         Company or any of its Subsidiaries;

                  (h)      any  declaration  or payment of any dividend or other
         distribution  of the assets of the  Company or any of its  Subsidiaries
         (for the sake of clarity, advances and repayments of intercompany loans
         and  advances  among  the  Company  and its  Subsidiaries  are not such
         distributions);

                  (i)      any  labor  organization   activity  related  to  the
         Company or any of its Subsidiaries;

                  (j)      any debt,  obligation or liability incurred,  assumed
         or guaranteed by the Company or any of its  Subsidiaries,  except those
         for  immaterial  amounts,  for  current  liabilities  incurred  in  the
         ordinary  course  of  business,  and  for  Permitted  Indebtedness  and
         Permitted Guarantees;

                  (k)      any sale,  assignment  or  transfer  of any  patents,
         trademarks,  copyrights, trade secrets or other intangible assets owned
         by the Company or any of its Subsidiaries;


                                       8


                  (l)      any  change in any  material  agreement  to which the
         Company or any of its  Subsidiaries  is a party or by which  either the
         Company or any of its  Subsidiaries is bound which either  individually
         or in the aggregate  has had, or could  reasonably be expected to have,
         individually or in the aggregate, a Material Adverse Effect;

                  (m)      any other event or condition of any  character  that,
         either  individually or in the aggregate,  has had, or could reasonably
         be  expected  to have,  individually  or in the  aggregate,  a Material
         Adverse Effect; or

                  (n)      any  arrangement  or commitment by the Company or any
         of its  Subsidiaries  to do any of the acts described in subsection (a)
         through (m) above.

                  4.9      TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. Except as
set forth on Schedule 4.9, each of the Company and each of its  Subsidiaries has
good and marketable  title to its  properties and assets,  and good title to its
leasehold interests,  in each case subject to no mortgage,  pledge, lien, lease,
encumbrance   or  charge,   other  than  the   following   (each  a   "Permitted
Encumbrance"):

                  (a)      those  resulting from taxes which have not yet become
         delinquent or are being contested as permitted by Section 6.7;

                  (b)      statutory  liens  incurred or imposed in the ordinary
         course (i) of mechanics,  carriers, warehouses,  processors,  suppliers
         and  laborers,  (ii)  respecting  worker's  compensation,  unemployment
         insurance, or social security, or (iii) as a condition precedent to the
         operation  of  business or the  exercise of any of any  authorizations,
         licenses or privileges, in each case to the extent and only for so long
         as  the  underlying   obligations  are  not  delinquent  or  are  being
         diligently contested in good faith;

                  (c)      liens  incurred  in respect of  judgments  and awards
         discharged  within 30 days from the  making  thereof;

                  (d)      in the case of real estate, easements, rights-of-way,
         restrictions,  covenants  and  other  agreements  of  record  and other
         similar charges or encumbrances that (i) do not secure  indebtedness or
         guarantees, and (ii) do not interfere with the use of or conduct of any
         business of the Company or any of its Subsidiaries thereon;

                  (e)      any  cash  deposits  made  or  bonds  posted  in  the
         ordinary course to secure  performance under any contract or applicable
         law;

                  (f)      in the case of any account,  intangible,  instrument,
         lease, agreement or document, any contractual right, power,  privilege,
         remedy, interest, defect,  restriction,  covenant, claim, counterclaim,
         right of recoupment,  abatement, reduction or setoff, or defense of any
         account  debtor  or  other  party  thereto,  whether  now  existing  or
         hereafter arising,  and whether pursuant to the applicable  contractual
         provisions or applicable law;

                  (g)      the  security  interests or liens  (including  leases
         treated as security interests or liens) encumbering  Equipment or other
         assets purchased or leased with Permitted  Indebtedness so long as they
         respectively  secure only the corresponding  Permitted


                                       9


         Indebtedness  or capitalized  lease  obligations  and encumber only the
         assets so purchased  or leased (and the products and proceeds  thereof,
         insurance  therefor  and  warranty and other  contract  rights  related
         thereto) and no other assets of the Company or any of its Subsidiaries;

                  (h)      each  currently  existing lien  described in Schedule
         4.9 hereto, or any continuation, restatement, or replacement thereof on
         terms no less favorable in all material  respects to the Purchaser than
         the lien being continued, restated or replaced;

                  (i)      minor liens and encumbrances  which do not materially
         detract from the value of the property  subject  thereto or  materially
         impair the  operations  of the Company or any of its  Subsidiaries,  so
         long as in each such case, such liens and  encumbrances  have no effect
         on the lien priority of the Purchaser in such property; and

                  (j)      those  that have  otherwise  arisen  in the  ordinary
         course of business, so long as they have no effect on the lien priority
         of the Purchaser therein.

All facilities,  machinery,  equipment,  fixtures, vehicles and other properties
owned,  leased or used by the Company and its Subsidiaries are in good operating
condition  and repair and are  reasonably  fit and usable for the  purposes  for
which they are being used.  Except as set forth on Schedule 4.9, the Company and
its  Subsidiaries  are in  compliance  with all material  terms of each lease to
which it is a party or is otherwise bound.

                  4.10     Intellectual Property.

                  (a)      Each of the Company and each of its Subsidiaries owns
         or  possesses  sufficient  legal  rights  to all  patents,  trademarks,
         service  marks,  trade  names,  copyrights,  trade  secrets,  licenses,
         information and other  proprietary  rights and processes  necessary for
         its  business as now  conducted  and, to the  Company's  knowledge,  as
         presently  proposed  to be  conducted  (the  "Intellectual  Property"),
         without any known  infringement  of the rights of others.  There are no
         outstanding options, licenses or agreements of any kind relating to the
         foregoing  proprietary  rights,  nor  is  the  Company  or  any  of its
         Subsidiaries bound by or a party to any options, licenses or agreements
         of any kind with respect to the  patents,  trademarks,  service  marks,
         trade names, copyrights, trade secrets, licenses, information and other
         proprietary  rights and  processes  of any other person or entity other
         than such licenses or agreements  arising from the purchase of "off the
         shelf" or standard products.

                  (b)      Neither the Company nor any of its  Subsidiaries  has
         received  any  communications  alleging  that the Company or any of its
         Subsidiaries  has  violated  any of the  patents,  trademarks,  service
         marks,  trade names,  copyrights or trade secrets or other  proprietary
         rights of any other person or entity,  nor is the Company or any of its
         Subsidiaries aware of any basis therefor.

                  (c)      The  Company  does  not  believe  it  is or  will  be
         necessary  to utilize  any  inventions,  trade  secrets or  proprietary
         information of any of its employees  made prior to their  employment by
         the Company or any of its  Subsidiaries,  except for inventions,  trade


                                       10


         secrets or proprietary  information that have been rightfully  assigned
         to the Company or any of its Subsidiaries.

                  4.11     COMPLIANCE  WITH  OTHER   INSTRUMENTS.   Neither  the
Company nor any of its  Subsidiaries  is in violation or default of (x) any term
of  its  Charter  or  Bylaws,  or (y)  any  indebtedness,  mortgage,  indenture,
contract,  agreement or  instrument to which it is party or by which it is bound
or of any judgment,  decree,  order or writ, which violation or default,  in the
case of this  clause  (y),  has had,  or could  reasonably  be expected to have,
either  individually  or in  the  aggregate,  a  Material  Adverse  Effect.  The
execution,  delivery and  performance of and compliance  with this Agreement and
the Related  Agreements to which it is a party, and the issuance and sale of the
Note by the Company and the other Securities by the Company each pursuant hereto
and thereto,  will not, with or without the passage of time or giving of notice,
result in (i) any such  violation or default,  or be in conflict in any material
respect with, any such indebtedness, mortgage, indenture, contract, agreement or
instrument,  (ii)  result  in  the  creation  of  any  mortgage,  pledge,  lien,
encumbrance  or charge  thereunder  upon any of the  properties or assets of the
Company  or  any  of its  Subsidiaries,  or  (iii)  result  in  the  suspension,
revocation,  impairment,  forfeiture  or  nonrenewal  of  any  material  permit,
license,  authorization or approval  applicable to the Company,  its business or
operations or any of its assets or properties.

                  4.12     LITIGATION.  Except  as set  forth on  Schedule  4.12
hereto, there is no action, suit, proceeding or investigation pending or, to the
Company's  knowledge,  currently  threatened  against  the Company or any of its
Subsidiaries,  and neither the Company nor any of its Subsidiaries is a party to
or subject to the provisions of any order, writ, injunction,  judgment or decree
of any court or  government  agency or  instrumentality,  that (a)  prevents the
Company or any of its  Subsidiaries (i) from entering into this Agreement or the
other  Related   Agreements,   or  (ii)  from   consummating   the  transactions
contemplated hereby or thereby, or (b) has had, or if adversely determined could
reasonably  be expected to have,  either  individually  or in the  aggregate,  a
Material  Adverse  Effect or any change in the current  equity  ownership of the
Company or any of its  Subsidiaries;  and the  Company has no  knowledge  of any
reasonable basis to assert any of the foregoing. Except as set forth on Schedule
4.12  hereto,  there is no action,  suit,  proceeding  or  investigation  by the
Company or any of its  Subsidiaries  (as  plaintiff or  investigator)  currently
pending or which the  Company  or any of its  Subsidiaries  intends to  initiate
other than collection and similar matters in the normal course.

                  4.13     TAX  RETURNS  AND  PAYMENTS.  Except  as set forth on
Schedule 4.13 hereto:  (i) each of the Company and each of its  Subsidiaries has
timely filed all tax returns (federal,  state and local) required to be filed by
it;  and (ii)  all  taxes  shown  to be due and  payable  on such  returns,  any
assessments  imposed,  and all other taxes due and payable by the Company or any
of its  Subsidiaries  on or before the  Closing,  have been paid or will be paid
prior to the time they  become  delinquent  other  than those  being  diligently
contested  in good  faith.  Except as set forth on  Schedule  4.13,  neither the
Company  nor any of its  Subsidiaries  has  been  advised:

                  (a)      that any of its  returns,  federal,  state or  other,
         have been or are being audited as of the date hereof; or

                  (b)      of any  adjustment,  deficiency,  assessment or court
         decision in respect of its federal, state or other taxes.


                                       11


Except as set forth on  Schedule  4.13,  the  Company  has no  knowledge  of any
liability for any tax to be imposed upon its properties or assets as of the date
of this Agreement that is not adequately  provided for.

                  4.14     EMPLOYEES.   Neither  the  Company  nor  any  of  its
Subsidiaries has any collective bargaining agreements with any of its employees.
There is no  labor  union  organizing  activity  pending  or,  to the  Company's
knowledge,  threatened  with respect to the Company or any of its  Subsidiaries.
Except as disclosed in the Securities  Filings or on Schedule 4.14,  neither the
Company  nor any of its  Subsidiaries  is a party to or  bound by any  currently
effective employment contract,  deferred compensation  arrangement,  bonus plan,
incentive  plan,  profit  sharing plan,  retirement  agreement or other employee
compensation plan or agreement.  To the Company's knowledge:  no employee of the
Company or any of its Subsidiaries,  nor any consultant with whom the Company or
any of its  Subsidiaries  has  contracted,  is in  violation  of any term of any
material employment  contract,  proprietary  information  agreement or any other
agreement  relating to the right of any such individual to be employed by, or to
contract with, the Company or any of its  Subsidiaries  because of the nature of
the business to be conducted by the Company or any of its  Subsidiaries;  and to
the  Company's  knowledge  the  continued  employment  by the  Company  and  its
Subsidiaries  of their present  employees,  and the performance of the Company's
and its  Subsidiaries'  contracts  with its  independent  contractors,  will not
result in any such  violation.  To the Company's  knowledge,  no employee of the
Company or any of its  Subsidiaries  is obligated  under any  material  contract
(including licenses, covenants or commitments of any nature) or other agreement,
or  subject  to any  judgment,  decree or order of any  court or  administrative
agency  that  would  interfere  with their  duties to the  Company or any of its
Subsidiaries.  To the  Company's  knowledge,  neither the Company nor any of its
Subsidiaries  has  received  any notice  alleging  that any such  violation  has
occurred.  Except  for  employees  who have a current  effective  employment  or
severance  agreement with the Company or any of its  Subsidiaries and any rights
that may be available under applicable law, and except for the general severance
policies of the Company and its Subsidiaries,  no employee of the Company or any
of its  Subsidiaries  has been granted the right to continued  employment by the
Company or any of its  Subsidiaries  or to any material  compensation  following
termination of employment with the Company or any of its Subsidiaries. Except as
set forth on Schedule  4.14,  to the knowledge of the Company,  no officer,  key
employee or group of employees intends to terminate his, her or their employment
with the Company or any of its Subsidiaries,  nor does the Company or any of its
Subsidiaries  have a  present  intention  to  terminate  the  employment  of any
officer, key employee or group of employees.

                  4.15     REGISTRATION RIGHTS AND VOTING RIGHTS.  Except as set
forth on Schedule 4.15, and except as disclosed in Securities  Filings,  neither
the Company nor any of its  Subsidiaries is presently under any obligation,  and
neither  the  Company nor any of its  Subsidiaries  has  granted any rights,  to
register  any  of  the  Company's  or its  Subsidiaries'  presently  outstanding
securities or any of its securities that may hereafter be issued.  Except as set
forth on Schedule  4.15 and except as disclosed in  Securities  Filings,  to the
Company's  knowledge,  no stockholder of the Company or any of its  Subsidiaries
has entered into any agreement  with respect to the voting of equity  securities
of the Company or any of its Subsidiaries.


                                       12


                  4.16     COMPLIANCE  WITH LAWS;  PERMITS.  Neither the Company
nor  any  of  its   Subsidiaries  is  in  violation  of  any  provision  of  the
Sarbanes-Oxley  Act of  2002  or  any  SEC  related  regulation,  or  any  other
applicable statute,  rule,  regulation,  order or restriction of any domestic or
foreign  government or any  instrumentality  or agency thereof in respect of the
conduct of its  business or the  ownership of its  properties,  that has had, or
could reasonably be expected to have, either individually or in the aggregate, a
Material  Adverse  Effect.  No  governmental  orders,   permissions,   consents,
approvals or authorizations  are required to be obtained and no registrations or
declarations  are  required to be filed in  connection  with the  execution  and
delivery of this  Agreement or any other  Related  Agreement and the issuance of
any of the  Securities,  except such as have been duly and  validly  obtained or
filed,  or with respect to any filings  that must be made after the Closing,  as
will be filed by or on  behalf  of the  Company  in a timely  manner or by or on
behalf  of the  Purchaser.  Each of the  Company  and its  Subsidiaries  has all
material franchises,  permits,  licenses and any similar authority necessary for
the  conduct of its  business  as now being  conducted  by it, the lack of which
could, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

                  4.17     ENVIRONMENTAL  AND SAFETY  LAWS.  Neither the Company
nor any of its  Subsidiaries is in violation of any applicable  statute,  law or
regulation relating to the environment or occupational health and safety, and to
its  knowledge,  no  material  expenditures  are or will be required in order to
comply with any such existing statute, law or regulation. Except as set forth on
Schedule  4.17, no Hazardous  Materials (as defined below) are used or have been
used,  stored,  or disposed of by the Company or any of its  Subsidiaries or, to
the Company's  knowledge,  by any other person or entity on any property  owned,
leased or used by the  Company  or any of its  Subsidiaries,  other  than in the
normal course in accordance with such applicable statutes,  laws or regulations.
For the purposes of the preceding sentence, "Hazardous Materials" shall mean:

                  (a)      materials  which are listed or  otherwise  defined as
         "hazardous"  or "toxic"  under any  applicable  local,  state,  federal
         and/or foreign laws and  regulations  that govern the existence  and/or
         remedy of contamination on property,  the protection of the environment
         from   contamination,   the  control  of  hazardous  wastes,  or  other
         activities   involving   hazardous   substances,   including   building
         materials; or

                  (b)      any petroleum products or nuclear materials.

                  4.18     VALID   OFFERING.   Assuming   the  accuracy  of  the
representations and warranties of the Purchaser contained in this Agreement, the
offer,  sale and issuance of the Securities will be exempt from the registration
requirements of the Securities Act of 1933, as amended (the  "Securities  Act"),
and will have been registered or qualified (or are exempt from  registration and
qualification) under the registration,  permit or qualification  requirements of
all applicable state securities laws.

                  4.19     FULL DISCLOSURE.  Each of the Company and each of its
Subsidiaries  has  provided  to  the  Purchaser  or  its   representatives   all
information  requested  by the  Purchaser  in  connection  with its  decision to
purchase the Note and Warrants,  including all  information  the Company and its
Subsidiaries  believe is reasonably  necessary to make such investment decision.
Neither this  Agreement,  the Related  Agreements,  the  exhibits and  schedules
hereto and thereto


                                       13


nor any other document  delivered by the Company or any of its  Subsidiaries  to
Purchaser or its attorneys or agents in connection herewith or therewith or with
the transactions contemplated hereby or thereby, contain any untrue statement of
a material fact nor omit to state a material fact necessary in order to make the
statements  contained herein or therein,  in light of the circumstances in which
they are made, not  misleading.  Any financial  projections  and other estimates
provided to the Purchaser by the Company or any of its  Subsidiaries  were based
on the  Company's  and  its  Subsidiaries'  experience  in the  industry  and on
assumptions  of fact and opinion as to future events which the Company or any of
its Subsidiaries,  at the date of the issuance of such projections or estimates,
believed to be reasonable.

                  4.20     INSURANCE.  Each  of  the  Company  and  each  of its
Subsidiaries  has  general  commercial,  product  liability,  fire and  casualty
insurance  policies with coverages  that the Company  believes are customary for
companies  similarly situated to the Company and its Subsidiaries in the same or
similar business.

                  4.21     SEC  REPORTS.  Except as set forth on Schedule  4.21,
the Company has filed all proxy statements, reports and other documents required
to be filed by it under the  Securities  Exchange  Act  1934,  as  amended  (the
"Exchange  Act").  The Company has furnished  the  Purchaser  copies of: (i) its
Annual Reports on Form 10-KSB for its fiscal years ended June 30, 2005; and (ii)
its Quarterly  Reports on Form 10-Q for its fiscal  quarter  ended  December 31,
2005and on Form 10-QSB for its fiscal quarter ended  September 30, 2005, and its
12B-25 filed May 16, 2006, and the Form 8-K filings which it has made since June
30, 2005,  to date  (collectively,  the "SEC  Reports").  Except as set forth on
Schedule 4.21 or subsequent SEC Reports set forth in this Section 4.21, each SEC
Report  was,  at the time of its  filing,  in  substantial  compliance  with the
requirements  of its  respective  form  and  none  of the SEC  Reports,  nor the
financial  statements (and the notes thereto) included in the SEC Reports, as of
their respective filing dates, contained any untrue statement of a material fact
or omitted to state a material fact  required to be stated  therein or necessary
to make the statements  therein,  in light of the circumstances under which they
were made, not misleading.

                  4.22     LISTING.  The Company's Common Stock is quoted on the
Pink  Sheets(R)  under the  symbol  "TUYO.PK"  and is not  listed or quoted on a
Principal  Market  (as  hereafter  defined).   For  purposes  hereof,  the  term
"Principal  Market"  means  the NASD Over The  Counter  Bulletin  Board,  NASDAQ
Capital  Market,  NASDAQ Global Select Market,  NASDAQ Global  Market,  American
Stock Exchange or New York Stock Exchange  (whichever of the foregoing,  if any,
is at the time the principal trading exchange or market for the Common Stock).

                  4.23     NO INTEGRATED OFFERING.  Neither the Company, nor any
of its Subsidiaries or affiliates, nor any person acting on its or their behalf,
has directly or indirectly made any offers or sales of any security or solicited
any offers to buy any security under circumstances that would cause the offering
of the Securities pursuant to this Agreement or any of the Related Agreements to
be integrated with prior offerings by the Company for purposes of the Securities
Act that would prevent the Company from selling the Securities  pursuant to Rule
506 under the  Securities  Act, or any applicable  exchange-related  stockholder
approval  provisions,  nor  will  the  Company  or  any  of  its  affiliates  or
Subsidiaries  take any  action or steps  that would  cause the  offering  of the
Securities to be integrated with other offerings.


                                       14


                  4.24     STOP   TRANSFER.   The   Securities   are  restricted
securities as of the date of this Agreement.  Neither the Company nor any of its
Subsidiaries will issue any stop transfer order or other order impeding the sale
and delivery of any of the Warrant Shares at such time as the Warrant Shares are
registered  for public sale or an  exemption  from  registration  is  available,
except as required by state and federal securities laws.

                  4.25     DILUTION. The Company specifically  acknowledges that
its obligation to issue the shares of Common Stock upon exercise of the Warrants
is binding upon the Company and  enforceable  regardless  of the  dilution  such
issuance  may  have on the  ownership  interests  of other  shareholders  of the
Company.

                  4.26     PATRIOT ACT.   (a) The Company certifies that, to the
best of Company's knowledge, neither the Company nor any of its Subsidiaries has
been  designated,  nor is or  shall  be owned  or  controlled,  by a  "suspected
terrorist" as defined in U.S. Federal  Executive Order 13224. The Company hereby
acknowledges  that the  Purchaser  seeks to  comply  with  all  applicable  laws
concerning  money  laundering  and related  activities.  In furtherance of those
efforts, the Company hereby represents, warrants and covenants that: (i) none of
the cash or  property  that the Company or any of its  Subsidiaries  will pay or
will  contribute  to the Purchaser has been or shall be derived from, or related
to, any activity  that is deemed  criminal  under United States law; and (ii) no
contribution  or  payment  by the  Company  or any  of its  Subsidiaries  to the
Purchaser,  to the  extent  that  they  are  within  the  Company's  and/or  its
Subsidiaries'  control,  shall cause the  Purchaser  to be in  violation  of the
United States Bank Secrecy Act, the United States International Money Laundering
Control  Act of  1986  or  the  United  States  International  Money  Laundering
Abatement and  Anti-Terrorist  Financing Act of 2001. The Company shall promptly
notify the  Purchaser if any of these  representations,  warranties or covenants
ceases to be true and accurate regarding the Company or any of its Subsidiaries.
The Company shall provide the Purchaser all additional information regarding the
Company  or any of its  Subsidiaries  that  the  Purchaser  deems  necessary  or
convenient  to ensure  compliance  with all  applicable  laws  concerning  money
laundering and similar activities. The Company understands and agrees that if at
any time it is discovered that any of the foregoing representations,  warranties
or covenants  are  incorrect,  or if  otherwise  required by  applicable  law or
regulation related to money laundering or similar activities,  the Purchaser may
undertake  appropriate  actions  to ensure  compliance  with  applicable  law or
regulation,  including but not limited to segregation  and/or  redemption of the
Purchaser's  investment in the Company. The Company further understands that the
Purchaser  may  release  confidential  information  about  the  Company  and its
Subsidiaries  and, if applicable,  any underlying  beneficial  owners, to proper
authorities if the Purchaser,  in its sole discretion,  determines that it is in
the best interests of the Purchaser in light of relevant  rules and  regulations
under the laws set forth in subsection (ii) above.

         (b)      The  Purchaser  certifies  that,  to the  best of  Purchaser's
knowledge,   neither  the  Purchaser  nor  any  of  its  Subsidiaries  has  been
designated,  nor is or shall be owned or controlled,  by a "suspected terrorist"
as  defined  in  U.S.  Federal  Executive  Order  13224.  The  Purchaser  hereby
acknowledges  that  the  Company  seeks  to  comply  with  all  applicable  laws
concerning  money  laundering  and related  activities.  In furtherance of those
efforts, the Purchaser hereby represents,  warrants and covenants that: (i) none
of the cash or property that the Purchaser or any of its  Subsidiaries  will pay
or will  contribute to the Company has been or shall be derived from, or related
to, any activity  that is deemed  criminal  under United States law; and (ii) no


                                       15


contribution  or  payment by the  Purchaser  or any of its  Subsidiaries  to the
Company,  to the  extent  that  they  are  within  the  Purchaser's  and/or  its
Subsidiaries'  control, shall cause the Company to be in violation of the United
States Bank  Secrecy  Act,  the United  States  International  Money  Laundering
Control  Act of  1986  or  the  United  States  International  Money  Laundering
Abatement and Anti-Terrorist Financing Act of 2001. The Purchaser shall promptly
notify the  Company if any of these  representations,  warranties  or  covenants
ceases  to  be  true  and  accurate  regarding  the  Purchaser  or  any  of  its
Subsidiaries. The Purchaser shall provide the Company all additional information
regarding  the  Purchaser  or any of its  Subsidiaries  that the  Company  deems
necessary or convenient to ensure compliance with all applicable laws concerning
money laundering and similar  activities.  The Purchaser  understands and agrees
that if at any time it is discovered that any of the foregoing  representations,
warranties or covenants are  incorrect,  or if otherwise  required by applicable
law or regulation related to money laundering or similar activities, the Company
may undertake  appropriate  actions to ensure  compliance with applicable law or
regulation,  including but not limited to segregation  and/or  redemption of the
Company's  investment in the Purchaser.  The Purchaser further  understands that
the Company may release  confidential  information  about the  Purchaser and its
Subsidiaries  and, if applicable,  any underlying  beneficial  owners, to proper
authorities if the Company, in its sole discretion, determines that it is in the
best interests of the Company in light of relevant rules and  regulations  under
the laws set forth in subsection (ii) above.

                  4.27     ERISA.  To  the  extent  the  Company  or  any of its
Subsidiaries  has any benefit  plan subject to the  Employee  Retirement  Income
Security   Act  of  1974   ("ERISA"),   and  the   regulations   and   published
interpretations  thereunder: (i) neither the Company nor any of its Subsidiaries
has engaged in any Prohibited  Transactions  (as defined in Section 406 of ERISA
and Section 4975 of the Internal Revenue Code of 1986, as amended (the "CODE"));
(ii) each of the Company  and each of its  Subsidiaries  has met all  applicable
minimum funding requirements under Section 302 of ERISA in respect of its plans;
(iii) neither the Company nor any of its  Subsidiaries  has any knowledge of any
event or occurrence which would cause the Pension Benefit  Guaranty  Corporation
to  institute  proceedings  under Title IV of ERISA to  terminate  any  employee
benefit  plan(s);  (iv) neither the Company nor any of its  Subsidiaries has any
fiduciary  responsibility  for investments with respect to any plan existing for
the benefit of persons other than the Company's or such Subsidiary's  employees;
and  (v)  neither  the  Company  nor  any of  its  Subsidiaries  has  withdrawn,
completely or  partially,  from any  multi-employer  pension plan so as to incur
liability under the Multiemployer Pension Plan Amendments Act of 1980.

         5.       REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby  represents and warrants to and covenants and agrees with (as applicable)
the  Company as  follows  (it being  understood  that such  representations  and
warranties do not lessen or obviate the  representations  and  warranties of the
Company set forth in this Agreement):

                  5.1      NO SHORTING.  The Purchaser or any of its  affiliates
and  investment  partners  has not,  will not and will not cause  any  person or
entity to,  directly or  beneficially  engage in "short  sales" of the Company's
Common  Stock or  Preferred  Stock as long as the  Note  and  Warrants  shall be
outstanding.

                  5.2      REQUISITE POWER AND AUTHORITY. The Purchaser has full
all necessary  power and authority  under all  applicable  provisions of law, to
execute and deliver this


                                       16


Agreement  and the Related  Agreements  and to carry out their  provisions.  All
corporate  action on the Purchaser's  part required for the lawful execution and
delivery  of this  Agreement  and the  Related  Agreements  have been or will be
effectively taken prior to the Closing. Upon their execution and delivery,  this
Agreement and the Related  Agreements  will be valid and binding  obligations of
the Purchaser, enforceable in accordance with their terms, except:

                  (a)      as  limited  by  applicable  bankruptcy,  insolvency,
         reorganization,   moratorium  or  other  laws  of  general  application
         affecting enforcement of creditors' rights; and

                  (b)      as  limited  by  general  principles  of equity  that
         restrict the availability of equitable and legal remedies.

                  5.3      INVESTMENT REPRESENTATIONS. The Purchaser understands
that the  Securities  are being offered and sold  pursuant to an exemption  from
registration  contained in the Securities Act based in part upon the Purchaser's
representations contained in this Agreement,  including, without limitation, the
Purchaser's  representation (in Section 5,7) that it is an "accredited investor"
within the meaning of Regulation D under the  Securities Act of 1933, as amended
(the "Securities  Act"). The Purchaser  confirms that it has received or has had
full access to all the information it considers necessary or appropriate to make
an informed  investment decision with respect to the Note and the Warrants to be
purchased by it under this Agreement and the Warrant Shares  acquired by it upon
the exercise of the Warrants,  respectively. The Purchaser further confirms that
it has had the opportunity to ask questions and receive answers from the Company
regarding the Company's and its Subsidiaries' business, management and financial
affairs and the terms and conditions of the Offering, the Note, the Warrants and
the  Securities  and obtain  additional  information  (to the extent the Company
possessed such  information or could acquire it without  unreasonable  effort or
expense)  necessary to verify any  information  furnished to the Purchaser or to
which the Purchaser had access.

                  5.4      THE PURCHASER  BEARS ECONOMIC RISK. The Purchaser has
substantial   experience  in  evaluating  and  investing  in  private  placement
transactions  of  securities  in companies  similar to the Company so that it is
capable of evaluating  the merits and risks of its investment in the Company and
has the  capacity  to protect its own  interests.  The  Purchaser  must bear the
economic risk of this investment  until the Securities are sold pursuant to: (i)
an  effective  registration  statement  under  the  Securities  Act;  or (ii) an
exemption from registration that is available with respect to such sale.

                  5.5      ACQUISITION   FOR  OWN  ACCOUNT.   The  Purchaser  is
acquiring the Note and Warrants and the Warrant Shares for the  Purchaser's  own
account for  investment  only, and not as a nominee or agent and not with a view
towards or for resale in connection with their distribution.

                  5.6      THE PURCHASER CAN PROTECT ITS INTEREST. The Purchaser
represents that by reason of its, or of its management's, business and financial
experience,  the  Purchaser has the capacity to evaluate the merits and risks of
its  investment in the Note,  the Warrants and the Securities and to protect its
own interests in connection with the transactions contemplated in this Agreement
and the Related Agreements.  Further, the Purchaser is aware of no advertisement
or


                                       17


other  publication  in  connection  with the  transactions  contemplated  in the
Agreement or the Related Agreements.

                  5.7      ACCREDITED INVESTOR. The Purchaser represents that it
is an  accredited  investor  within  the  meaning  of  Regulation  D  under  the
Securities Act.

                  5.8      Legends.

                  (a)      The Warrant Shares,  if not issued by DWAC system (as
         hereinafter   defined),   shall  bear  a  legend   which  shall  be  in
         substantially  the  following  form until such shares are covered by an
         effective registration statement filed with the SEC:

                  "THE  SHARES  REPRESENTED  BY THIS  CERTIFICATE  HAVE NOT BEEN
                  REGISTERED  UNDER THE SECURITIES  ACT OF 1933, AS AMENDED,  OR
                  ANY APPLICABLE  STATE SECURITIES LAWS. THESE SHARES MAY NOT BE
                  SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
                  OF AN EFFECTIVE  REGISTRATION  STATEMENT UNDER SUCH SECURITIES
                  ACT  AND  APPLICABLE  STATE  LAWS  OR AN  OPINION  OF  COUNSEL
                  REASONABLY   SATISFACTORY  TO  [TRUEYOU.COM   INC.  THAT  SUCH
                  REGISTRATION IS NOT REQUIRED."

                  (b)      The Warrants shall bear  substantially  the following
         legend:

                  "THIS WARRANT AND THE COMMON SHARES  ISSUABLE UPON EXERCISE OF
                  THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
                  OF 1933, AS AMENDED,  OR ANY APPLICABLE STATE SECURITIES LAWS.
                  THIS WARRANT AND THE COMMON  SHARES  ISSUABLE UPON EXERCISE OF
                  THIS  WARRANT MAY NOT BE SOLD,  OFFERED  FOR SALE,  PLEDGED OR
                  HYPOTHECATED  IN  THE  ABSENCE  OF AN  EFFECTIVE  REGISTRATION
                  STATEMENT  AS TO THIS  WARRANT  OR THE  UNDERLYING  SHARES  OF
                  COMMON STOCK UNDER SAID ACT AND  APPLICABLE  STATE  SECURITIES
                  LAWS OR AN  OPINION  OF  COUNSEL  REASONABLY  SATISFACTORY  TO
                  TRUEYOU.COM INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

                  (c)      The  Note  shall  bear  substantially  the  following
         legend:

                  "THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
                  1933, AS AMENDED,  OR ANY APPLICABLE  STATE  SECURITIES  LAWS.
                  THIS  NOTE MAY NOT BE  SOLD,  OFFERED  FOR  SALE,  PLEDGED  OR
                  HYPOTHECATED  IN  THE  ABSENCE  OF AN  EFFECTIVE  REGISTRATION
                  STATEMENT UNDER SAID ACT AND APPLICABLE  STATE SECURITIES LAWS
                  OR  AN   OPINION  OF  COUNSEL   REASONABLY   SATISFACTORY   TO
                  TRUEYOU.COM INC. THAT SUCH REGISTRATION IS NOT REQUIRED."


                                       18


         6.       COVENANTS OF THE COMPANY.  The Company  covenants  and agrees,
with the  Purchaser  that,  until such time as the Note  Amounts have been fully
paid,  unless  the  Purchaser  in its sole  discretion  consents  otherwise  (as
provided in Section 11.4 and 11.6):

                  6.1      STOP-ORDERS.  The Company will advise the  Purchaser,
promptly after it receives  notice of issuance by the SEC, any state  securities
commission or any other regulatory authority, of such issuance of any stop order
or other order  preventing or suspending  any offering of any  securities of the
Company,  or of the suspension of the  qualification  of the Common Stock of the
Company  for  offering or sale in any  jurisdiction,  or the  initiation  of any
proceeding for any such purpose.

                  6.2      LISTING.  The Company shall, within six (6) months of
the date hereof, secure the listing or quotation,  as applicable,  of the shares
of its Common Stock including,  without  limitation,  those shares issuable upon
the exercise of the Warrants,  on a Principal Market (subject to official notice
of issuance) and shall  maintain such listing or quotation,  as  applicable,  so
long as any other  shares  of Common  Stock  shall be so  listed or  quoted,  as
applicable.  The Company will maintain the listing or quotation,  as applicable,
of its Common Stock on the  Principal  Market,  and will comploy in all material
respects with the Company's  reporting,  filing and other  obligations under the
bylaws or rules of the National  Association of Securities  Dealers ("NASD") and
such exchanges, as applicable.

                  6.3      AUTHORIZATION  OF COMMON  STOCK.  The Company  shall,
within three (3) months of the date hereof, have sufficient authorized shares of
Common Stock for the exercise of the Warrants. In the event that the Company has
not complied  with this Section 6.3 by the  nine-month  anniversary  of the date
hereof,  the Company  shall pay interest to the  Purchaser at a rate that is two
percent  (2%) above the  Contract  Rate until such time as such shares have been
authorized.

                  6.4      MARKET REGULATIONS.  The Company shall notify the SEC
and applicable state authorities, in accordance with their requirements,  of the
transactions  contemplated by this Agreement, and shall take all other necessary
action and  proceedings as may be required and permitted by applicable law, rule
and  regulation,  for the legal  and valid  issuance  of the  Securities  to the
Purchaser and promptly  provide copies  thereof to the Purchaser.

                  6.5      REPORTING REQUIREMENTS.  The Company will deliver, or
cause to be delivered, to the Purchaser each of the following, which shall be in
form and detail acceptable to the Purchaser:

                  (a)      As soon as  available  after  the end of each  fiscal
         year of the  Company,  and in any  event  by no later  than  the  first
         business  day  after  the  expiration  of  the  period  (including  any
         extensions)  required for filing of its annual report on Form 10-K with
         the SEC under the Exchange Act, a copy of such annual report, including
         the consolidated  audited  financial  statements of the Company and its
         Subsidiaries  together with a report of  independent  certified  public
         accountants  of  recognized   standing  selected  by  the  Company  and
         reasonably acceptable to the Purchaser (the "ACCOUNTANTS") (the current
         accountants being acceptable),  which annual financial statements shall
         include each of the  consolidated  balance sheet of the Company and its
         Subsidiaries  as at  the  end of  such


                                       19


         fiscal year and the related consolidated statements of income, retained
         earnings  and cash flows of the  Company and its  Subsidiaries  for the
         fiscal  year then  ended,  all in  reasonable  detail and  prepared  in
         accordance with GAAP,  together with (i) if and when available,  copies
         of any  management  letters  prepared  by the  Accountants;  and (ii) a
         certificate  of the Company's  President,  Chief  Executive  Officer or
         Chief  Financial  Officer  stating that such financial  statements have
         been prepared to his  knowledge in accordance  with GAAP and whether or
         not such officer has knowledge of the occurrence and/or  continuance of
         any Event of Default (as  defined in the Note) and,  if so,  stating in
         reasonable detail the facts with respect thereto;

                  (b)      As soon as  available  after  the end of each  fiscal
         quarter  of the  Company,  and in any event by no later  than the first
         business  day  after  the  expiration  of  the  period  (including  any
         extensions)  required for filing of its  quarterly  report on Form 10-Q
         with the SEC under the Exchange Act, a copy of such  quarterly  report,
         including an unaudited  consolidated  balance  sheet and  statements of
         income,  retained  earnings  and  cash  flows  of the  Company  and its
         Subsidiaries  as at the end of and for such quarter and for the year to
         date period then ended, in reasonable detail and prepared in accordance
         with  GAAP,  subject  to  year-end  adjustments  and  accompanied  by a
         certificate  of the Company's  President,  Chief  Executive  Officer or
         Chief  Financial  Officer,  stating (i) that such financial  statements
         have been prepared in accordance with GAAP to his knowledge, subject to
         year-end  audit  adjustments,  and (ii) whether or not such officer has
         knowledge of the occurrence and/or  continuance of any Event of Default
         (as defined in the Note) not theretofore  reported and remedied and, if
         so, stating in reasonable detail the facts with respect thereto;

                  (c)      As soon as available and in any event within  fifteen
         (15) days after the end of each calendar month, a copy of the Company's
         regularly   prepared   internal   unaudited    consolidated   financial
         statements,  including (without limitation) balance sheets,  statements
         of income,  retained  earnings and cash flows, and in reasonable detail
         and stating in comparative form the figures for the corresponding  date
         and periods in the previous year, all prepared in accordance  with past
         practice,   subject  to  year-end  adjustments  and  accompanied  by  a
         certificate  of the Company's  President,  Chief  Executive  Officer or
         Chief  Financial  Officer,  stating (i) that such financial  statements
         have been  prepared  in  accordance  with  past  practice,  subject  to
         year-end  audit  adjustments;  and (ii) whether or not such officer has
         knowledge of the  occurrence fo any Event of Default (as defined in the
         Note) not  theretofore  reported  and remedied  and, if so,  stating in
         reasonable detail the facts with respect thereto;

                  (d)      Promptly after (i) the filing thereof,  copies of the
         Company's most recent  registration  statements and annual,  quarterly,
         monthly  or other  regular  reports  which the  Company  files with the
         Securities and Exchange  Commission (the "SEC"),  and (ii) the issuance
         thereof,  copies  of  such  financial  statements,  reports  and  proxy
         statements as the Company shall send to its stockholders; and

                  (e)      Promptly  following  request  such other  information
         respecting  the Company and its  Subsidiaries  as the  Purchaser  shall
         reasonably request.


                                       20


The Company  shall  timely  file with the SEC all  reports  required to be filed
pursuant to the  Exchange  Act and  refrain  from  terminating  its status as an
issuer  required by the  Exchange  Act to file  reports  thereunder  even if the
Exchange  Act  or  the  rules  or  regulations   thereunder  would  permit  such
termination.

                  6.6      USE OF FUNDS.  The Company  shall use the proceeds of
the sale of the Note and the Warrants to fund the Company's  operating  expenses
and  finance  further  research  and  development  of the  Company's  technology
platform.

                  6.7      ACCESS TO FACILITIES. Each of the Company and each of
its Subsidiaries will permit any representatives designated by the Purchaser (or
any  successor  of the  Purchaser),  upon  reasonable  notice and during  normal
business hours, at such person's expense and accompanied by a representative  of
the  Company or any  Subsidiary  (provided  that no such prior  notice  shall be
required to be given and no such representative of the Company or any Subsidiary
shall be required to accompany the Purchaser in the event the Purchaser believes
such access is  necessary to preserve or protect the  Collateral  (as defined in
the Master  Security  Agreement)  or  following  the  occurrence  and during the
continuance of an Event of Default (as defined in the Note)), to:

                  (a)      visit  and  inspect  any  of  the  properties  of the
         Company or any of its Subsidiaries;

                  (b)      examine the corporate  and  financial  records of the
         Company or any of its  Subsidiaries  (unless  such  examination  is not
         permitted  by  federal,  state or local  law or by  contract)  and make
         copies thereof or extracts therefrom; and

                  (c)      discuss the  affairs,  finances  and  accounts of the
         Company or any of its  Subsidiaries  with the  directors,  officers and
         independent accountants of the Company or any of its Subsidiaries.

Notwithstanding  the foregoing,  neither the Company nor any of its Subsidiaries
will provide any material,  non-public  information to the Purchaser  unless the
Purchaser  signs  a  confidentiality   agreement  and  otherwise  complies  with
Regulation FD and other applicable federal securities laws.

                  6.8      TAXES.   Each  of  the   Company   and  each  of  its
Subsidiaries  will  promptly  pay  and  discharge,  or  cause  to  be  paid  and
discharged,  when due and  payable,  all  taxes,  assessments  and  governmental
charges or levies imposed upon the income, profits,  property or business of the
Company and its Subsidiaries;  provided, however, that any such tax, assessment,
charge or levy need not be paid  currently  if (i) the  validity  thereof  shall
currently and diligently be contested in good faith by appropriate  proceedings,
(ii)  such tax,  assessment,  charge  or levy  shall  have no effect on the lien
priority  of the  Purchaser's  liens (if any) on the  affected  property  of the
Company or any of its Subsidiaries, and (iii) the Company and/or such Subsidiary
shall have set aside on its books  adequate  reserves  with  respect  thereto in
accordance  with  GAAP;  and  provided,   further,  that  the  Company  and  its
Subsidiaries will pay all such taxes,  assessments,  charges or levies forthwith
upon the  commencement  of  proceedings  to  foreclose  any lien  which may have
attached as security therefor.


                                       21


                  6.9      INSURANCE.  Each of the Company and its  Subsidiaries
will keep its assets which are of an insurable  character insured by financially
sound and reputable insurers against loss or damage by fire, explosion and other
risks  customarily  insured against by companies in similar  business  similarly
situated  as  the  Company  and  its  Subsidiaries;  and  the  Company  and  its
Subsidiaries  will  maintain,  with  financially  sound and reputable  insurers,
insurance  against other hazards and risks and liability to persons and property
to the  extent  and in the  manner  which the  Company  reasonably  believes  is
customary for companies in similar  business  similarly  situated as the Company
and its  Subsidiaries  and to the extent  available on  commercially  reasonable
terms.  The Company,  and each of its  Subsidiaries,  will jointly and severally
bear the full risk of loss from any loss of any nature  whatsoever  with respect
to their  respective  assets  pledged to the  Purchaser  as  security  for their
respective  obligations  hereunder  and under  the  Related  Agreements.  At the
Company's  and each of its  Subsidiaries'  joint and several cost and expense in
amounts and with carriers  reasonably  acceptable to the Purchaser,  each of the
Company and each of its Subsidiaries shall (i) keep all its insurable properties
and its insurable  interests in  properties in which it has an interest  insured
against the hazards of fire, flood,  sprinkler leakage, those hazards covered by
extended  coverage  insurance and such other  hazards,  and for such amounts and
with such  deductibles,  as is reasonable and customary in the case of companies
engaged in businesses  similar to the Company's or the respective  Subsidiary's;
(ii)  maintain a bond in such  amounts as is  customary in the case of companies
engaged in businesses  similar to the Company's or the  respective  Subsidiary's
insuring against  larceny,  embezzlement or other criminal  misappropriation  of
insured's officers and employees who may either singly or jointly with others at
any time  have  access  to the  assets  or funds  of the  Company  or any of its
Subsidiaries either directly or through governmental authority to draw upon such
funds or to direct  generally the  disposition  of such assets;  (iii)  maintain
public and product liability insurance against claims for personal injury, death
or  property  damage  suffered  by  others;  (iv)  maintain  all  such  worker's
compensation or similar insurance as may be required under the laws of any state
or jurisdiction in which the Company or the respective  Subsidiary is engaged in
business;  and (v) furnish the  Purchaser  with (x) copies of all  policies  and
evidence of the  maintenance  of such  policies at least thirty (30) days before
any  expiration  date,  (y)  excepting the Company's  fidelity  bonds,  workers'
compensation  policy,  D&O Policies,  and insurance  that is part of a Permitted
Encumbrance,  endorsements to such policies naming the Purchaser as "co-insured"
or "additional  insured" and in the case of casualty losses to tangible personal
property pledged to the Purchaser appropriate loss payable endorsements, in form
and substance satisfactory to the Purchaser, naming the Purchaser as loss payee,
and (z) evidence that as to the Purchaser  the insurance  coverage  shall not be
impaired or  invalidated  by any act or neglect of the Company or any Subsidiary
and the insurer will provide the Purchaser with at least thirty (30) days notice
prior to  cancellation.  The  Company and each  Subsidiary  shall  instruct  the
insurance  carriers that in the event of any casualty loss  thereunder for which
the Purchaser is the applicable loss payee,  the carriers shall make payment for
such loss to the Company and/or the Subsidiary and the Purchaser jointly. In the
event that as of the date of receipt of each such  casualty  loss  recovery upon
any such  insurance,  the  Purchaser  has not  declared  an Event of Default (as
defined in the Note), then the Company and/or such Subsidiary shall be permitted
to direct the application of such loss recovery  proceeds  toward  investment in
property,  plant and equipment that would comprise  "Collateral"  secured by the
Purchaser's  security interest  pursuant to the Master Security  Agreement or if
not  applicable,  such other  security  agreement  as shall be  required  by the
Purchaser,  with  any  surplus  funds  to  be  applied  toward  payment  of  the


                                       22


obligations of the Company to the Purchaser as a permitted voluntary  prepayment
without  premium  or  penalty.  In the event  that the  Purchaser  has  properly
declared an Event of Default, then all such casualty loss recoveries received by
the  Purchaser  upon  any  such  insurance  thereafter  may  be  applied  to the
obligations of the Company hereunder and under the Related  Agreements,  in such
order as the Purchaser may determine. Any surplus (following satisfaction of all
of the Company's outstanding  obligations to the Purchaser) shall be paid by the
Purchaser  to the Company or applied as may be  otherwise  required by law.  Any
deficiency  thereon  shall  be  paid  by  the  Company  or  the  Subsidiary,  as
applicable, to the Purchaser, on demand.

                  6.10     INTELLECTUAL  PROPERTY.  Each of the Company and each
of its  Subsidiaries  shall  maintain  in full force and  effect its  existence,
rights and  franchises  and all licenses  and other  rights to use  Intellectual
Property  owned or licensed by it and  reasonably  deemed to be necessary and of
continued value to the conduct of its business.

                  6.11     PROPERTIES.  Each  of the  Company  and  each  of its
Subsidiaries will keep its equipment and real properties in good repair, working
order and condition,  reasonable wear and tear and retirement excepted, and from
time to time  make all  needful  and  proper  repairs,  renewals,  replacements,
additions  and  improvements  thereto;  and each of the  Company and each of its
Subsidiaries will at all times comply with each provision of all leases to which
it is a party  or  under  which  it  occupies  property  if the  breach  of such
provision could, either individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

                  6.12     CONFIDENTIALITY.  The Company  will not, and will not
permit any of its Subsidiaries to, disclose,  and will not include in any public
announcement,  the name of the  Purchaser,  unless  expressly  agreed  to by the
Purchaser or unless and until such  disclosure  is required by law or applicable
regulation, and then only to the extent of such requirement. Notwithstanding the
foregoing,  the Company may disclose the  Purchaser's  identity and the terms of
this Agreement to its current and prospective debt and equity financing sources.
The Purchaser  acknowledges  that,  promptly  following  execution and delivery,
conformed copies of this Agreement and the Related Agreements and all amendments
thereto may  (notwithstanding the foregoing) be filed by the Company as material
agreements with the SEC.

                  6.13     REQUIRED  APPROVALS.  (I) For so long as  twenty-five
percent (25%) of the principal  amount of the Note is outstanding,  the Company,
without the prior  written  consent of the  Purchaser,  shall not, and shall not
permit any of its Subsidiaries to:

                  (a)      (i)  directly or  indirectly  declare or pay any cash
         dividends,  other than cash dividends paid to the Company or any of its
         wholly-owned  Subsidiaries,  (ii) issue any Preferred  Stock that has a
         scheduled  mandatory  redemption date prior to the one year anniversary
         of the  Maturity  Date (as defined in the Note) or (iii)  redeem any of
         its Preferred Stock or other equity interests;

                  (b)      liquidate,    dissolve    or   effect   a    material
         reorganization  (it being understood that in no event shall the Company
         or any of its Subsidiaries dissolve,  liquidate or merge with any other
         person or entity  (unless,  in the case of such a merger  involving the
         Company, the Company is the surviving entity, or, in the case of merger
         not involving the


                                       23


         Company,  any  Subsidiary or any entity  acquired by the Company or any
         Subsidiary, as applicable, is the surviving entity);

                  (c)      become subject to (including,  without limitation, by
         way of amendment to or  modification  of) any  agreement or  instrument
         that by its terms would (under any circumstances) restrict the right of
         the Company or any of its  Subsidiaries  to perform the  provisions  of
         this  Agreement,  any Related  Agreement  or any of the  currently  and
         expressly agreements contemplated hereby or thereby;

                  (d)      materially  alter or change the scope of the business
         of the Company and its Subsidiaries taken as a whole; or

                  (e)      (i)  create,  incur,  assume  or  suffer to exist any
         indebtedness  (exclusive  of  Permitted  Indebtedness,  as  hereinafter
         defined)  whether  secured or  unsecured,  other than (A) the Company's
         indebtedness  owed under this Agreement or any Related  Agreement,  (B)
         the  subordinated  debt  aggregating  $10,000,000  listed  in  Schedule
         6.12(e) hereto and made a part hereof,  and the other  indebtedness (if
         any) set forth on  Schedule  6.12(e)  attached  hereto  and made a part
         hereof,  and any refinancings or replacements  thereof on terms no less
         favorable  as a whole  to the  Purchaser  than the  indebtedness  being
         refinanced  or  replaced,  as  determined  by  Purchaser  in  its  sole
         discretion,  (C) any  indebtedness  incurred to finance the purchase of
         equipment  not in excess of five  percent (5%) of the fair market value
         of the Company's and its  Subsidiaries'  assets,  and any  indebtedness
         incurred  in  connection  with  the  purchase  of  assets  (other  than
         equipment),  or any restatements,  refinancings or replacements thereof
         on  terms  no less  favorable  as a whole  to the  Purchaser  than  the
         indebtedness being restated,  refinanced or replaced,  as determined by
         Purchaser in its sole discretion,  so long as any lien relating thereto
         shall only  encumber  the fixed  assets so purchased or leased (and the
         products  and  proceeds  thereof,  insurance  therefor and warranty and
         other  contract  rights  related  thereto)  and no other  assets of the
         Company or any of its Subsidiaries,  (D) intercompany loans and advance
         among the Company and its subsidiaries,  (E) short-term unsecured trade
         obligations  for the  purchase  of goods or  services  in the  ordinary
         course,  and (F)  additional  subordinated  debt in such amounts and on
         such  subordination  and other terms as the  Purchaser may approve from
         time to time, and any refinancings or replacements  thereof on terms no
         less favorable as a whole to the Purchaser than the indebtedness  being
         refinanced  or  replaced,  as  determined  by  Purchaser  in  its  sole
         discretion,  (the  indebtedness  permitted  by clauses  (A) through (F)
         being  referred  to  as  "Permitted  Indebtedness");  (ii)  cancel  any
         indebtedness  owing to it in excess of $50,000 in the aggregate  during
         any 12 month  period,  excluding  the  settlement of any account in the
         ordinary  course  and any  intercompany  loans and  advances  among the
         Company  and its  Subsidiaries;  (iii)  assume,  guarantee,  endorse or
         otherwise become directly or contingently liable in connection with any
         obligations  of  any  other  person  or  entity,  except  for  (A)  the
         endorsement of negotiable  instruments by the Company or any Subsidiary
         thereof  for  deposit  or  collection  or similar  transactions  in the
         ordinary  course of business,  (B) any guarantees and  indemnifications
         respecting  indebtedness otherwise permitted to be outstanding pursuant
         to this clause (e), (C)  guarantees by the Company or any Subsidiary of
         any  obligation  of any  Subsidiary or the Company that could have been
         incurred  directly by the guarantor without violating this Agreement or
         any Related


                                       24


         Agreement, and (D) any guarantees of indebtedness set forth on Schedule
         6.12(e)  attached  hereto  and  made  a  part  hereof  (the  guarantees
         permitted  by clauses (A) through (F) being  referred to as  "Permitted
         Guarantees"); and

         (II) The Company,  without the prior written  consent of the Purchaser,
shall not, and shall not permit any of its  Subsidiaries  to,  create or acquire
any  Subsidiary   after  the  date  hereof  unless  (i)  such  Subsidiary  is  a
wholly-owned  Subsidiary of the Company and (ii) such Subsidiary becomes a party
to the Master Security Agreement,  the Stock Pledge Agreement and the Subsidiary
Guaranty (either by executing a counterpart  thereof or an assumption or joinder
agreement  in respect  thereof)  and, to the extent  required by the  Purchaser,
satisfies each condition of this Agreement and the Related Agreements as if such
Subsidiary were a Subsidiary on the Closing Date.

                  6.14     REISSUANCE  OF  SECURITIES.  The  Company  agrees  to
reissue  certificates  representing  the Warrant  Shares without the legends set
forth in Section 5.8 above at such time as:

                  (a)      the holder  thereof is  permitted  to dispose of such
         Warrant Shares pursuant to Rule 144(k) under the Securities Act; or

                  (b)      upon  resale  subject  to an  effective  registration
         statement after such Warrant Shares are registered under the Securities
         Act.

The Company  agrees to  cooperate  with the  Purchaser  in  connection  with all
resales  pursuant  to Rule 144(d) and Rule  144(k) and  provide  legal  opinions
necessary  to allow such resales  provided  the Company and its counsel  receive
reasonably  requested  representations  from the Purchaser  and broker,  if any,
including (without limitation) the representations required by applicable law.

                  6.15     OPINION.  On  the  Closing  Date,  the  Company  will
deliver  to the  Purchaser  an  opinion  acceptable  to the  Purchaser  from the
Company's  external  legal counsel.  The Company will provide,  at the Company's
expense,  such other  legal  opinions  in the  future as are  deemed  reasonably
necessary by the Purchaser (and  acceptable to the Purchaser) in connection with
the exercise of the Warrants.

                  6.16     MARGIN STOCK.  The Company will not permit any of the
proceeds  of the Note or the  Warrants  to be used  directly  or  indirectly  to
"purchase"  or  "carry"  "margin  stock" or to repay  indebtedness  incurred  to
"purchase" or "carry"  "margin stock" within the respective  meanings of each of
the quoted  terms under  Regulation  U of the Board of  Governors of the Federal
Reserve System as now and from time to time hereafter in effect.

                  6.17     NO RESTRICTION ON FUTURE INVESTMENT BY PURCHASER. The
Company will not, and will not permit its  Subsidiaries  to, agree,  directly or
indirectly, to any restriction with any person or entity limiting the ability of
the  Purchaser  to provide any  additional  funds and/or he sale or issuance any
equity interests of the Company or any of its  Subsidiaries  with the Company or
any of its Subsidiaries.

                  6.18     AUTHORIZATION  AND  RESERVATION OF SHARES.  Following
the  increase in the  authorized  shares of Common  Stock  required  pursuant to
Section 6.3 hereof,  the Company shall


                                       25


at all times  have  authorized  and  reserved a  sufficient  number of shares of
Common Stock to provide for the exercise of the Warrants.

         7.       COVENANTS OF THE PURCHASER. The Purchaser covenants and agrees
with the Company as follows:

                  7.1      CONFIDENTIALITY. The Purchaser will not disclose, and
will not include in any public  announcement,  the name of the  Company,  unless
expressly  agreed to by the  Company  or unless  and until  such  disclosure  is
required by law or  applicable  regulation,  and then only to the extent of such
requirement.

                  7.2      NON-PUBLIC INFORMATION. The Purchaser will not effect
any sales in the shares of the  Company's  Common Stock while in  possession  of
material,  non-public  information  regarding  the  Company if such sales  would
violate applicable securities law.

                  7.3      LIMITATION  ON  ACQUISITION  OF  COMMON  STOCK OF THE
COMPANY.  Notwithstanding  anything to the contrary contained in this Agreement,
any Related  Agreement or any document,  instrument or agreement entered into in
connection  with any other  transactions  between the Purchaser and the Company,
the  Purchaser  may  not  acquire  stock  in  the  Company  (including,  without
limitation,  pursuant  to a contract to  purchase,  by  exercising  an option or
warrant,  by  converting  any other  security or  instrument,  by  acquiring  or
exercising  any  other  right to  acquire,  shares  of  stock or other  security
convertible  into  shares  of  stock  in the  Company,  or  otherwise,  and such
contracts,   options,  warrants,   conversion  or  other  rights  shall  not  be
enforceable or exercisable)to  the extent such stock acquisition would cause any
interest  (including any original issue discount)  payable by the Company to the
Purchaser not to qualify as "portfolio  interest"  within the meaning of Section
881(c)(2) of the Code, by reason of Section  881(c)(3) of the Code,  taking into
account the constructive  ownership rules under Section 871(h)(3)(C) of the Code
(the "Stock  Acquisition  Limitation").  The Stock Acquisition  Limitation shall
automatically  become null and void  without any notice to the Company  upon the
earlier to occur of either (a) the  Company's  delivery  to the  Purchaser  of a
Notice of  Redemption  (as defined in the Note) or (b) the existence of an Event
of Default (as defined in the Note) at a time when the average  closing price of
the  Company's  Common  Stock as reported by Pink  Sheets(R)  or any  applicable
Principal Market for the immediately preceding five trading days is greater than
or equal to $1.00 per share.

         8.       COVENANTS   OF  THE  COMPANY  AND  THE   PURCHASER   REGARDING
INDEMNIFICATION.

                  8.1      COMPANY   INDEMNIFICATION.   The  Company  agrees  to
indemnify,  hold  harmless,  reimburse  and  defend the  Purchaser,  each of the
Purchaser's  officers,  directors,  agents,  affiliates,  control  persons,  and
principal  shareholders,  against  all  claims,  costs,  expenses,  liabilities,
obligations,  losses or damages (including  reasonable legal fees) of any nature
("Purchaser  Losses"),  incurred by or imposed upon the  Purchaser  that result,
arise out of or are based upon: (i) any  misrepresentation by the Company or any
of its  Subsidiaries  or breach of any  warranty  by the  Company  or any of its
Subsidiaries  in this  Agreement,  any Related  Agreement  or in any exhibits or
schedules  attached  hereto  or  thereto;  or (ii)  any  breach  or  default  in
performance by Company or any of its Subsidiaries of any covenant or undertaking
to be  performed  by Company  or any of its  Subsidiaries  hereunder,  under any
Related  Agreement  or


                                       26


under  any  other  agreement  entered  into  by the  Company  and/or  any of its
Subsidiaries  and the  Purchaser  relating  hereto  or  thereto;  IN  EACH  CASE
excluding all Purchaser Losses to the extent occasioned by the gross negligence,
willful  misconduct  or bad  faith of any such  indemnified  person  as  finally
determined pursuant to applicable law.

                  8.2      PURCHASER'S INDEMNIFICATION.  The Purchaser agrees to
indemnify,  hold  harmless,  reimburse  and defend the  Company  and each of the
Company's officers, directors, agents, affiliates, control persons and principal
shareholders,  at all times against any claims,  costs,  expenses,  liabilities,
obligations,  losses or damages (including  reasonable legal fees) of any nature
("Company Losses"),  incurred by or imposed upon the Company that result,  arise
out of or are based upon: (i) any  misrepresentation  by the Purchaser or breach
of any warranty by the Purchaser in this  Agreement or any Related  Agreement or
in any exhibits or schedules  attached hereto or thereto;  or (ii) any breach or
default in  performance  by the Purchaser of any covenant or  undertaking  to be
performed by the Purchaser  hereunder,  under any Related Agreement or under any
other agreement entered into by the Company and the Purchaser relating hereto or
thereto;  IN EACH CASE excluding all Company Losses to the extent  occasioned by
the gross  negligence,  willful  misconduct or bad faith of any such indemnified
person as finally determined pursuant to applicable law.

         9.       EXERCISE OF THE WARRANTS.

                  9.1      Mechanics of Exercise.

                  (a)      Provided  the  Purchaser  has notified the Company of
         the Purchaser's intention to sell the Warrant Shares in accordance with
         the  Warrants  and the  Warrant  Shares are  included  in an  effective
         registration statement or are otherwise exempt from registration in the
         amount  to be sold:  (i)  upon the  exercise  of the  Warrants  or part
         thereof,  the  Company  shall,  at its own cost and  expense,  take all
         necessary  action  (including  the  issuance  of an  opinion of counsel
         reasonably  acceptable  to the  Purchaser  following  a request  by the
         Purchaser)  to assure  that the  Company's  transfer  agent shall issue
         shares of the  Company's  Common Stock in the name of the Purchaser (or
         its nominee) or such other  persons as  designated  by the Purchaser in
         accordance with Section 9.1(b) hereof and in such  denominations  to be
         specified  representing the number of Warrant Shares issuable upon such
         exercise; and (ii) the Company warrants that no instructions other than
         these  instructions  have been or will be given by the  Company  to the
         transfer  agent  of the  Company's  Common  Stock  and that  after  the
         Effectiveness  Date (as defined in the Registration  Rights  Agreement)
         the  registered  Warrant  Shares  issued  will be  freely  transferable
         subject to the prospectus  delivery  requirements of the Securities Act
         and the  provisions  of this  Agreement,  and will not contain a legend
         restricting  the resale or  transferability  of the registered  Warrant
         Shares.

                  (b)      The  Purchaser  will give  notice of its  decision to
         exercise  its  right  to  exercise  the  Warrants  or part  thereof  by
         telecopying or otherwise delivering an executed and completed notice of
         the  number of shares to be  subscribed  to the  Company  (the "Form of
         Subscription").  The  Purchaser  will not be required to surrender  the
         Warrants  until the  Purchaser  receives a credit to the account of the
         Purchaser's  prime broker  through the DWAC system (as defined  below),
         representing  the Warrant  Shares or until


                                       27


         the Warrants  have been fully  exercised.  Each date on which a Form of
         Subscription  is  telecopied  or delivered to the Company in accordance
         with the provisions  hereof shall be deemed a "Exercise Date." Pursuant
         to the  terms of the  Form of  Subscription,  the  Company  will  issue
         instructions to the transfer agent accompanied by an opinion of counsel
         within  three  (3)  business  days of the date of the  delivery  to the
         Company  of the duly and  timely  completed  Form of  Subscription  and
         payment  therefore  (the  "Instruction  Date")  and  shall use its best
         efforts  to  cause  the  transfer   agent  to  promptly   transmit  the
         certificates   representing   the  Warrant  Shares  set  forth  in  the
         applicable  Form of Subscription to the Holder by crediting the account
         of the  Purchaser's  prime  broker with the  Depository  Trust  Company
         ("DTC") through its Deposit Withdrawal Agent Commission ("DWAC") system
         within  three  (3)  business  days  after  the  Instruction  Date  (the
         "Delivery Date").

                  (c)      The Company  understands that a delay in the delivery
         of the Warrant Shares in the form required pursuant to Section 9 hereof
         beyond  the  Delivery  Date  could  result  in  economic  loss  to  the
         Purchaser.  In the event that the Company  fails to direct its transfer
         agent to  deliver  the  Warrant  Shares to the  Purchaser  via the DWAC
         system within the time frame set forth in Section  9.1(b) above and the
         Warrant Shares are not delivered to the Purchaser by the Delivery Date,
         as  compensation  to the Purchaser for such loss, the Company agrees to
         pay late  payments to the  Purchaser  for late  issuance of the Warrant
         Shares in the form required  pursuant to Section 9 hereof upon exercise
         of the  Warrants  in the amount  equal to the  greater of: (i) $500 per
         business day after the Delivery  Date; or (ii) the  Purchaser's  actual
         damages from such delayed delivery.  The Company shall pay any payments
         incurred under this Section in immediately  available funds upon demand
         and,  in  the  case  of  actual  damages,   accompanied  by  reasonable
         documentation of the amount of such damages.  Such documentation  shall
         show the number of shares of Common  Stock (if any) that the  Purchaser
         was  forced  to  purchase  (in an open  market  transaction)  which the
         Purchaser  anticipated  receiving  upon  such  exercise,  and  shall be
         calculated as the amount by which (A) the  Purchaser's  total  purchase
         price  (including  customary  brokerage  commissions,  if any)  for the
         shares of Common Stock so purchased exceeds (B) the aggregate amount of
         the  Exercise   Price  for  the  Warrants,   for  which  such  Form  of
         Subscription was not timely honored.

         10.      REGISTRATION RIGHTS.

                  10.1     REGISTRATION  RIGHTS  GRANTED.   The  Company  hereby
grants  registration rights to the Purchaser pursuant to the Registration Rights
Agreement.

                  10.2     OFFERING RESTRICTIONS. Except as previously disclosed
in the SEC  Reports  or in the  Securities  Filings,  or stock or stock  options
granted to  employees or  directors  of the Company or its  Subsidiaries  (these
exceptions  hereinafter  referred to as the "Excepted  Issuances"),  neither the
Company nor any of its  Subsidiaries  will,  prior to the full  repayment of the
Note (together with all accrued and unpaid  interest and fees related  thereto),
(x) enter into any equity line of credit  agreement or similar  agreement or (y)
issue,   or  enter  into  any  agreement  to  issue,   any  securities   with  a
variable/floating  conversion  and/or  pricing  feature that are or could be (by
conversion or registration)  free-trading securities (i.e., common stock subject
to a registration statement).


                                       28


         11.      MISCELLANEOUS.

                  11.1     Governing Law, Jurisdiction and Waiver of Jury Trial.

                  (a)      THIS  AGREEMENT AND THE RELATED  AGREEMENTS  SHALL BE
         GOVERNED  BY  AND  CONSTRUED  AND  ENFORCED  IN  ACCORDANCE   WITH  THE
         APPLICABLE  LAWS OF THE STATE OF NEW YORK  APPLICABLE TO CONTRACTS MADE
         AND PERFORMED IN SUCH STATE,  WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
         OF  LAWS;  PROVIDED,  HOWEVER,  THAT  THE  CREATION,   PERFECTION,  AND
         ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT TO THE
         RELATED  AGREEMENTS  SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
         ACCORDANCE  WITH THE  APPLICABLE  LAWS OF (A) THE  STATE  IN WHICH  THE
         APPLICABLE  COMPANY OR  SUBSIDIARY IS ORGANIZED IN THE CASE OF TYPES OF
         COLLATERAL IN WHICH  SECURITY  INTERESTS CAN BE PERFECTED BY THE FILING
         OF UCC FINANCING STATEMENTS IN THAT STATE OR (B) IN ALL OTHER CASES THE
         STATE IN WHICH THE  APPLICABLE  ASSET OR  PROPERTY IS LOCATED OR DEEMED
         LOCATED.

                  (b)      THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE
         OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK,  STATE OF NEW YORK
         SHALL HAVE EXCLUSIVE  JURISDICTION  TO HEAR AND DETERMINE ANY CLAIMS OR
         DISPUTES  BETWEEN THE COMPANY,  ON THE ONE HAND, AND THE PURCHASER,  ON
         THE OTHER  HAND,  PERTAINING  TO THIS  AGREEMENT  OR ANY OF THE RELATED
         AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT
         OR ANY OF THE OTHER RELATED  AGREEMENTS;  PROVIDED,  THAT THE PURCHASER
         AND THE COMPANY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
         TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY OF NEW YORK, STATE
         OF NEW YORK;  AND FURTHER  PROVIDED,  THAT,  NOTHING IN THIS  AGREEMENT
         SHALL BE DEEMED OR OPERATE TO PRECLUDE THE PURCHASER FROM BRINGING SUIT
         OR TAKING OTHER LEGAL ACTION IN ANY OTHER  JURISDICTION  TO COLLECT THE
         OBLIGATIONS,  TO REALIZE ON THE  COLLATERAL  (AS  DEFINED IN THE MASTER
         SECURITY  AGREEMENT)  OR ANY OTHER  SECURITY  FOR THE  OBLIGATIONS  (AS
         DEFINED IN THE MASTER SECURITY AGREEMENT),  OR TO ENFORCE A JUDGMENT OR
         OTHER COURT  ORDER IN FAVOR OF THE  PURCHASER.  THE  COMPANY  EXPRESSLY
         SUBMITS AND CONSENTS IN ADVANCE TO SUCH  JURISDICTION  IN ANY ACTION OR
         SUIT  COMMENCED IN ANY SUCH COURT,  AND THE COMPANY  HEREBY  WAIVES ANY
         OBJECTION  THAT IT MAY HAVE BASED UPON LACK OF  PERSONAL  JURISDICTION,
         IMPROPER  VENUE OR FORUM NON  CONVENIENS.  THE  COMPANY  HEREBY  WAIVES
         PERSONAL SERVICE OF THE SUMMONS,  COMPLAINT AND OTHER PROCESS ISSUED IN
         ANY SUCH  ACTION  OR SUIT AND  AGREES  THAT  SERVICE  OF SUCH  SUMMONS,
         COMPLAINT  AND  OTHER  PROCESS  MAY  BE  MADE  BY  FEDERAL  EXPRESS  OR
         REGISTERED  OR CERTIFIED  MAIL  DELIVERED TO THE COMPANY AT THE ADDRESS
         SET


                                       29


         FORTH IN  SECTION  11.9  AND  THAT  SERVICE  SO MADE  SHALL  BE  DEEMED
         COMPLETED  UPON  THE  COMPANY'S  ACTUAL  RECEIPT  THEREOF  OR FOUR  (4)
         BUSINESS DAYS AFTER DEPOSIT IN THE U.S. MAILS FOR DELIVERY BY SUCH MAIL
         AND PROPER POSTAGE PREPAID.

                  (c)      THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY
         A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE,  TO ACHIEVE THE BEST
         COMBINATION OF THE BENEFITS OF THE JUDICIAL  SYSTEM AND OF ARBITRATION,
         THE  PARTIES  HERETO  WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY  ACTION,
         SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,  WHETHER ARISING IN
         CONTRACT,  TORT, OR OTHERWISE  BETWEEN THE PURCHASER AND/OR THE COMPANY
         ARISING  OUT  OF,   CONNECTED  WITH,   RELATED  OR  INCIDENTAL  TO  THE
         RELATIONSHIP   ESTABLISHED   BETWEEN  THEM  IN  CONNECTION   WITH  THIS
         AGREEMENT,  ANY RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
         THERETO.

                  11.2     SEVERABILITY.  Wherever  possible  each  provision of
this Agreement and the Related Agreements shall be interpreted in such manner as
to be effective  and valid under  applicable  law, but if any  provision of this
Agreement or any Related  Agreement shall be prohibited by or invalid or illegal
under  applicable law such provision  shall be ineffective to the extent of such
prohibition or invalidity or illegality,  without  invalidating the remainder of
such provision or the remaining provisions thereof which shall not in any way be
affected or impaired thereby.

                  11.3     SURVIVAL. The representations,  warranties, covenants
and agreements of the parties made herein shall survive any  investigation  made
by the parties and the closing of the  transactions  contemplated  hereby to the
extent provided  therein.  All statements as to factual matters contained in any
certificate  or  other  instrument  delivered  by or on  behalf  of the  Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be  representations  and warranties by the Company hereunder solely as
of the date of such certificate or instrument.  All indemnities set forth herein
shall survive the execution,  delivery and termination of this Agreement and the
Note, and the making and repayment of the obligations  arising hereunder,  under
the Note and under the other Related Agreements.

                  11.4     SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided  herein,  this Agreement and the Related  Agreements shall inure to the
benefit  of, and be binding  upon and  enforceable  by, the  successors,  heirs,
executors,  administrators  and  permitted  assigns of the parties  hereto.  The
Purchaser  shall not be permitted to assign this Agreement or Related  Agreement
or any of its rights  hereunder or  thereunder  to a  competitor  of the Company
unless  an Event of  Default  (as  defined  in the  Note)  has  occurred  and is
continuing.  Notwithstanding  anything to the contrary in this  Agreement or any
Related  Agreement,  and  irrespective  of  any  permitted  assignment  of  this
Agreement  or any  Related  Agreement  (in  whole or in  part):  until the first
anniversary of the date hereof:  (a) the Company and its  Subsidiaries  shall be
entitled at all times to deal  exclusively  with the Purchaser  respecting  this
Agreement and the Related Agreements,  the administration hereof and thereof and
its performance hereunder and thereunder, including (without limitation) (i) any
supplement to,  modification,  amendment,


                                       30


restatement  or  waiver  of or  departure  from this  Agreement  or any  Related
Agreement  or any  release  of  Collateral  (each a  "Modification"),  (ii)  the
delivery of any notice,  report,  other document or further assurance,  or (iii)
any payment or collateral administration;  (b) the Purchaser shall not assign or
delegate  (in whole or in part) to any other person in its sole  discretion  its
right or power to review, approve or sign any Modification or to administer this
Agreement or any Related Agreement; and (c) no permitted assignee shall have any
right or power  whatsoever  to review,  approve or sign any  Modification  or to
administer  this  Agreement  or  any  Related  Agreement,  irrespective  of  its
agreements and understandings with the Purchaser.

                  11.5     ENTIRE AGREEMENT;  MAXIMUM  INTEREST.  This Agreement
and  the  exhibits  and  schedules   hereto   constitute  the  full  and  entire
understanding  and  agreement  between the parties  with regard to the  subjects
hereof,  and supersede and completely replace any and all (and no party shall be
liable  or  bound  to  any  other  in  any   manner  by  any)   prior  or  other
representations, warranties, covenants, promises, assurances or other agreements
or understandings  (whether written,  oral, express,  implied or otherwise) with
regard to the subjects hereof except as specifically  set forth herein.  Nothing
contained in this Agreement,  any Related  Agreement or in any document referred
to herein or delivered in  connection  herewith  shall be deemed to establish or
require  the  payment of a rate of  interest  or other  charges in excess of the
maximum rate permitted by applicable law. In the event that the rate of interest
or dividends  required to be paid or other charges  hereunder exceed the maximum
rate  permitted by such law,  any  payments in excess of such  maximum  shall be
credited  against  principal  amounts owed by the Company to the Purchaser (as a
permitted  prepayment  without  premium or  penalty)  and thus  refunded  to the
Company.

                  11.6     AMENDMENT AND WAIVER. Subject to Section 11.4 hereof:

                  (a)      Except as otherwise provided in subsection (b) or (c)
         of  this  Section  with  respect  to  waivers,  this  Agreement  may be
         restated, supplemented, amended or modified only in a written agreement
         between the Company and the Purchaser.

                  (b)      The  obligations of the Company and the rights of the
         Purchaser  under this  Agreement  may be waived  only with the  written
         consent of the Purchaser.

                  (c)      The  obligations  of the  Purchaser and the rights of
         the Company  under this  Agreement  may be waived only with the written
         consent of the Company.

                  11.7     DELAYS OR  OMISSIONS.  It is agreed  that no delay or
omission to exercise any right,  power or remedy accruing to any party, upon any
breach,  default or  noncompliance  by another party under this Agreement or the
Related  Agreements,  shall impair any such right, power or remedy, nor shall it
be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence  therein, or of or in any similar breach,  default or noncompliance
thereafter occurring.  All remedies,  either under this Agreement or the Related
Agreements,  by law or otherwise  afforded to any party, shall be cumulative and
not alternative.

                  11.8     NOTICES.  All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given:

                  (a)      upon personal delivery to the party to be notified;


                                       31


                  (b)      when  sent by  confirmed  facsimile  if  sent  during
         normal  business hours of the  recipient,  and if not, then on the next
         business day;

                  (c)      four (4)  business  days  after  having  been sent by
         registered  or  certified  mail,  return  receipt  requested,   postage
         prepaid; or

                  (d)      one (1) business day after  deposit on a business day
         in  time  for  that  evening's  pickup  with  a  nationally  recognized
         overnight   courier,   specifying  next  day  delivery,   with  written
         verification of receipt.

All communications shall be sent as follows:

                                TRUEYOU.COM INC.
         IF TO THE COMPANY, TO:     501 Merritt 7, 5th Floor
                                    Norwalk, Connecticut 06851
                                    Attention:   Chief Financial Officer

                           Attention:   Chief Financial Officer
                           Facsimile:   Facsimile:   203-295-2102

                           WITH A COPY TO:

                                    Troutman Sanders LLP
                                    405 Lexington Avenue
                                    New York, New York 10174



                           Attention:   Edward R. Mandell
                           Facsimile:   212-704-6160

         IF TO THE PURCHASER, TO:   Laurus Master Fund, Ltd.
                                    c/o M&C Corporate Services Limited
                                    P.O. Box 309 GT
                                    Ugland House
                                    George Town
                                    South Church Street
                                    Grand Cayman, Cayman Islands
                                    Facsimile:   345-949-8080

                                    WITH A COPY TO:

                                    John E.  Tucker, Esq.
                                    825 Third Avenue 14th Floor
                                    New York, NY 10022
                                    Facsimile:   212-541-4434


                                       32


or at such  other  address as the  Company or the  Purchaser  may  designate  by
written  notice to the other parties hereto given in accordance  herewith.

                  11.9     ATTORNEYS' FEES. In the event that any suit or action
is  instituted  to  enforce  any  provision  in this  Agreement  or any  Related
Agreement,  the  prevailing  party in such dispute  shall be entitled to recover
from the losing party all fees,  costs and  expenses of  enforcing  any right of
such  prevailing  party  under or with  respect to this  Agreement  and/or  such
Related  Agreement,  including,  without  limitation,  such  reasonable fees and
expenses of attorneys and accountants,  which shall include, without limitation,
all fees, costs and expenses of appeals.

                  11.10    TITLES AND SUBTITLES.  The titles of the sections and
subsections of this Agreement and the Related  Agreements are for convenience of
reference only and are not to be considered in construing  this Agreement or any
Related Agreement.

                  11.11    FACSIMILE SIGNATURES; COUNTERPARTS. This Agreement or
any Related Agreement may be executed by facsimile  signatures and in any number
of  counterparts  of any such  document or any of its signature  pages,  each of
which shall be an original,  but all of which  together for such document  shall
constitute one agreement.

                  11.12    BROKER'S FEES.  Except as set forth on Schedule 11.12
hereof,  each  party  hereto  represents  and  warrants  that no agent,  broker,
investment banker,  person or firm acting on behalf of or under the authority of
such party  hereto is or will be entitled to any broker's or finder's fee or any
other  commission  directly or indirectly in  connection  with the  transactions
contemplated  herein.  Each party hereto  further agrees to indemnify each other
party for any  claims,  losses or  expenses  incurred  by such other  party as a
result of the representation in this Section 11.12 being untrue.

                  11.13    CONSTRUCTION.  Each party acknowledges that its legal
counsel  participated  in the  preparation  of this  Agreement  and the  Related
Agreements  and,  therefore,  stipulates  that  the  rule of  construction  that
ambiguities  are to be resolved  against the drafting party shall not be applied
in the  interpretation  of this Agreement or any Related  Agreement to favor any
party against the other.

                  11.14

             [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK


                                       33


IN WITNESS  WHEREOF,  the parties hereto have executed the  SECURITIES  PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.


COMPANY:                                    PURCHASER:

TRUEYOU.COM INC.                            LAURUS MASTER FUND, LTD.


By:                                         By:
   ---------------------------------           ---------------------------------

Name:                                       Name:
     -------------------------------             -------------------------------

Title:                                      Title:
      ------------------------------              ------------------------------


                                       34


                                    EXHIBIT A

                                SECURED TERM NOTE





                                      A-1


                                    EXHIBIT B

                                     WARRANT





                                      B-1


                                    EXHIBIT C

                                ESCROW AGREEMENT





                                      D-1

EX-10.81

                                                                       EXECUTION


                             SUBORDINATION AGREEMENT



         This  Subordination  Agreement (as amended,  modified  restated  and/or
supplemented from time to time in the manner provided herein,  this "Agreement")
is  entered  into  as of the  day  of  December,  2006,  by  and  among  Klinger
Investments LLC, Pequot Healthcare Fund, L.P., Pequot Healthcare  Offshore Fund,
Inc.,  Premium  Series PCC Limited - Cell 32,  Pequot  Diversified  Master Fund,
Ltd.,   Pequot   Healthcare   Institutional   Fund,  L.P.,  North  Sound  Legacy
Institutional  Fund LLC,  North  Sound  Legacy  International  Ltd.,  Technology
Investment  Capital  Corp.,  Andrew D.  Lipman  and Jon Lauck who have  advanced
monies  to  TrueYou.Com  Inc.  ("Company")  in  accordance  with  the  documents
described  in  Schedule  A  hereto  (the  "Subordinated  Lenders"  and  each,  a
"Subordinated  Lender" and the monies advanced  pursuant to such documents being
the  "Subordinated  Liabilities"),  and Laurus  Master Fund Ltd.,  Vicis Capital
Master Fund LLC, Klinger  Investments LLC, Andrew D. Lipman,  Richard  Rakowski,
Gerard DeBiasi, James Benedict, Dan Richardson, Amal Devani, CSFN I LLC and John
Brugmann  who are  advancing  monies  to the  Company  in  accordance  with  the
documents described in Schedule B hereto (the "Senior Subordinated  Lenders" and
each a "Senior  Subordinated  Lender" and the monies  advanced  pursuant to such
documents  (not to exceed $4 Million in aggregate  principal  amount)  being the
"Senior  Subordinated  Liabilities")  and Laurus Master Fund,  Ltd. (the "Senior
Lender").  Unless otherwise defined herein,  capitalized terms used herein shall
have the  meaning  provided  such terms in the  Purchase  Agreement  referred to
below.

                                   BACKGROUND

         WHEREAS, it is a condition to the Senior Lender's continuing its senior
secured  loan to the  Company,  pursuant to, and in  accordance  with,  (i) that
certain  Securities  Purchase  Agreement  dated July 11, 2006 by and between the
Company and Laurus (as amended, restated,  modified or supplemented from time to
time, the "Purchase Agreement") and (ii) the Related Agreements referred to (and
as defined) in the Purchase Agreement (collectively, the "Senior Documents").

         WHEREAS,  the  Subordinated  Lenders  have  made  loans to the  Company
pursuant to the Subordinated Documents (as hereinafter defined).

         WHEREAS,  the Senior Subordinated  Lenders have agreed to make loans to
the  Company  pursuant  to the Senior  Subordinated  Documents  (as  hereinafter
defined).

         NOW,  THEREFORE,  each Subordinated  Lender,  each Senior  Subordinated
Lender and the Senior Lender agree as follows:



                                      TERMS

         1.       All obligations of each of the Company and/or any of its
Subsidiaries to the Senior Lender pursuant to the Senior Documents or other
written agreements relating to indebtedness, howsoever created, arising or
evidenced by such Senior Documents or other written agreements relating to
indebtedness, whether direct or indirect, absolute or contingent or now or
hereafter existing, or due or to become due are referred to as "Senior
Liabilities". It is expressly understood and agreed that the term "Senior
Liabilities", as used in this Agreement, shall include, without limitation, any
and all prepayment charges in the Senior Documents, any interest and fees
payable under the Senior Documents, including, without limitation, interest,
fees and penalties accruing on any of the Senior Liabilities after the
commencement of any proceedings referred to in paragraph 4 of this Agreement,
notwithstanding any provision or rule of law which might restrict the rights of
the Senior Lender, as against the Company, its Subsidiaries or anyone else, to
collect such interest, fees or penalties, as the case may be and all costs,
expenses (including, without limitation, attorneys' fees and disbursements),
charges, indemnities and other amounts now or hereafter payable under any of the
Senior Documents as in effect on the date hereof. "Senior Liens" shall mean the
security interests and liens granted to the Senior Lender to secure the Senior
Liabilities under the Senior Documents and any other security given to the
Senior Lender by the Company.

         Any and all loans made by the Subordinated Lenders to the Company
and/or any of its Subsidiaries pursuant to the Subordinated Documents, and all
loans by the Senior Subordinated Lenders to the Company and/or any of its
Subsidiaries pursuant to the Senior Subordinated Documents together with all
other obligations of the Company and/or any of its Subsidiaries to any
Subordinated Lender under the Subordinated Documents or any Senior Subordinated
Lender under the Senior Subordinated Documents (in each case, including any
interest, fees or penalties related thereto), howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent or now or
hereafter existing, or due or to become due are referred to as "Junior
Liabilities". For purposes of this Agreement, "Subordinated Documents" shall
mean the instruments, agreements and documents listed in Schedule A hereto, and
all waivers, consents, agreements, reports, statements, certificates, schedules
and other documents executed by the requisite person(s) pursuant to or in
connection with any of those listed items, IN EACH CASE if, as and to the extent
each may have been and hereafter may be executed, supplemented, renewed,
extended, modified, amended, restated or replaced from time to time in the
manner provided therein, whether before, on, as of or after the date of this
Agreement and "Senior Subordinated Documents" shall mean the instruments,
agreements and documents listed in Schedule B hereto, and all waivers, consents,
agreements, reports, statements, certificates, schedules and other documents
executed by the requisite person(s) pursuant to or in connection with any of
those listed items, IN EACH CASE if, as and to the extent each may have been and
hereafter may be executed, supplemented, renewed, extended, modified, amended,
restated or replaced from time to time in the manner provided for therein,
whether before, on, as of or after the date of this Agreement.

         Notwithstanding the foregoing, in no event will Senior Liabilities
include any:

         (i)      increases in the aggregate principal amount of all such Senior
Liabilities in excess of 115% of the maximum amount provided for in the Senior
Documents as of the date hereof;


                                       2


         (ii)     increases aggregating more than 2% per annum in the applicable
interest rate that accrues with respect to any Senior Liabilities in excess of
the rate provided for in the Senior Documents (but nothing herein shall be
construed to prevent the accrual of interest at a greater rate per annum upon
the occurrence and during the continuance of a default under the Senior
Documents as now provided therein).

         Nothing herein shall be construed to prevent the Senior Lender from
charging additional fees in connection with any amendment, modification or
supplement to or restatement of any of the Senior Documents, any waiver or
consent given in respect of any provisions thereof, or any workout or
restructuring of the Senior Liabilities.

         2.       Except as expressly otherwise provided in this Agreement, or
as the Senior Lender may otherwise expressly consent in writing, the payment of
the Subordinated Liabilities and Senior Subordinated Liabilities shall be
postponed and subordinated in right of payment and priority to the payment in
full of all Senior Liabilities. Furthermore, except as expressly otherwise
provided in this Agreement, from the date hereof until the payment in full of
all Senior Liabilities or defeasance under the Purchase Agreement, whichever
occurs first (the "Subordination Period"), whether directly or indirectly, no
payments or other distributions whatsoever in respect of any Junior Liabilities
shall be made (whether at stated maturity, by acceleration or otherwise), nor
shall any property or assets of the Company or any of its Subsidiaries be
applied to the purchase or other acquisition or retirement of any Junior
Liability. Except as expressly otherwise provided in this Agreement, or as the
Senior Subordinated Lenders may otherwise expressly consent in writing, the
payment of the Subordinated Liabilities shall be postponed and subordinated in
right of payment and priority to the payment in full of all Senior Subordinated
Liabilities. Furthermore, except as expressly otherwise provided in this
Agreement, from the date hereof until the payment in full of all Senior
Subordinated Liabilities or defeasance in a manner acceptable to the Senior
Subordinated Lenders, whichever occurs first (the "Senior Subordinated
Subordination Period"), whether directly or indirectly, no payments or other
distributions whatsoever in respect of any Subordinated Liabilities shall be
made (whether at stated maturity, by acceleration or otherwise), nor shall any
property or assets of the Company or any of its Subsidiaries be applied to the
purchase or other acquisition or retirement of any Subordinated Liabilities.

         3.       Each Subordinated Lender and Senior Subordinated Lender hereby
subordinates, during the Subordination Period, all claims and security interests
it may have against, or with respect to, any of the assets of the Company and/or
any of its Subsidiaries, to the Senior Liens and each Subordinated Lender hereby
subordinates, during the Senior Subordinated Subordination Period, all claims
and security interests it may have against, or with respect to, any of the
assets of the Company and/or any of its Subsidiaries, to the Senior Subordinated
Liens.

         4.       In the event during the Subordination Period of any
dissolution, winding up, liquidation, readjustment, reorganization or other
similar proceedings relating to the Company and/or any of its Subsidiaries or to
its creditors, as such, or to its property (whether voluntary or involuntary,
partial or complete, and whether in bankruptcy, insolvency or receivership, or
upon an assignment for the benefit of creditors, or any other marshalling of the
assets and liabilities of the Company and/or any of its Subsidiaries, or any
sale of all or substantially all of the assets of the Company and/or any of its
Subsidiaries, or otherwise):


                                       3


         (i)      the Senior Liabilities shall first be paid in full before any
Subordinated Lender or Senior Subordinated Lender shall be entitled to receive
and to retain any payment or distribution in respect of any Junior Liability;

         (ii)     Thereafter and before the Subordinated Lenders shall be
entitled to receive and retain any payment or distribution in respect of any
Subordinated Liability, each Senior Subordinated Lender shall be paid, pro rata
in accordance with amounts originally incurred under the Senior Subordinated
Liabilities due and owing to each of the Senior Subordinated Lenders;

         (iii)    Thereafter, the Subordinated Lenders shall be entitled to
receive and to retain, pro rata in accordance with the amounts originally
incurred under the Subordinated Liabilities, any payment or distribution in
respect of any Subordinated Liability.

         5.       Each Subordinated Lender and Senior Subordinated Lender will
mark his and its books and records so as to clearly indicate that their
respective Junior Liabilities are subordinated in accordance with the terms of
this Agreement. Each Subordinated Lender and Senior Subordinated Lender will
execute such further documents or instruments and take such further action as
the Senior Lender and Senior Subordinated Lenders may reasonably request from
time to time request to carry out the express intent of this Agreement.

         6.       Each Subordinated Lender hereby waives all diligence in
collection or protection of or realization upon the Senior Subordinated
Liabilities and the Senior Liabilities or any security for the Senior
Subordinated Liabilities and the Senior Liabilities and each Subordinated Lender
hereby waives all diligence in collection or protection of or realization upon
the Senior Subordinated Liabilities and the Senior Liabilities or any security
for the Senior Subordinated Liabilities and the Senior Liabilities. Each Senior
Subordinated Lender hereby waives all diligence in collection or protection of
or realization upon the Senior Liabilities or any security for the Senior
Liabilities and each Senior Subordinated Lender hereby waives all diligence in
collection or protection of or realization upon the Senior Liabilities or any
security for the Senior Liabilities.

         7.       Except as otherwise permitted pursuant to this Agreement and
prior to July 1, 2010, the due date of the obligations to the Subordinated
Lenders, no Subordinated Lender or Senior Subordinated Lender will without the
prior written consent of the Senior Lender: (a) attempt to enforce or collect
any Junior Liability or any rights in respect of any Junior Liability; or (b)
commence, or join with any other creditor in commencing, any bankruptcy,
reorganization or insolvency proceedings with respect to the Company and/or any
of its Subsidiaries. However, notwithstanding anything to the contrary in this
Agreement or in any subordinate document, the Subordinated Lenders and/or Senior
Subordinated Lenders may (i) renew or extend their respective Subordinated
Documents or Senior Subordinated Documents or waive any Event of Default defined
in such Subordinated Documents or Senior Subordinated Documents (which may take
the form of an amendment, consent or waiver to or restatement or replacement of
such Subordinated Documents or Senior Subordinated Documents by the Company or
its Subsidiaries), (ii) declare an Event of Default under the Subordinated
Documents or Senior Subordinated Documents and give notice thereof, (iii) accrue
interest at the default rate, and (iv) accelerate the obligations of the Company
or its Subsidiaries under the Subordinated Documents and/or Senior Subordinated
Documents and give notice thereof, except that in no event may the


                                       4


Subordinated Lenders or Senior Subordinated Lender challenge the Senior
Liabilities, the Senior Liens or the priority of any thereof or accept any
payment of any kind inconsistent with this subordination and until all of the
Senior Liabilities have been paid. For the avoidance of doubt prior to July 1,
2010, the due date of the obligations to the Subordinated Lenders, nothing
herein shall enable any Subordinated Lender or Senior Subordinated Lender to
take any action set forth in clause (a) and (b) of this Section 7 unless and
until all Senior Liabilities have been paid in full or with the prior written
consent of the Senior Lender and nothing herein shall enable any Subordinated
Lender to take any action set forth in clause (a) and (b) of this Section 7
unless and until all Senior Subordinated Liabilities have been paid in full or
with the prior written consent of the Senior Subordinated Lenders.

         8.       The Senior Lender may, from time to time, at its sole
discretion and without notice to any Subordinated Lender or Senior Subordinated
Lender, take any or all of the following actions: (a) retain or obtain a
security interest in any property to secure any of the Senior Liabilities; (b)
retain or obtain the primary or secondary obligation of any other obligor or
obligors with respect to any of the Senior Liabilities; (c) extend or renew for
one or more periods (whether or not longer than the original period), alter,
increase or exchange any of the Senior Liabilities, or release or compromise any
obligation of any nature of any obligor with respect to any of the Senior
Liabilities; and (d) release their security interest in, or surrender, release
or permit any substitution or exchange for, all or any part of any property
securing any of the Senior Liabilities, or extend or renew for one or more
periods (whether or not longer than the original period) or release, compromise,
alter or exchange any obligations of any nature of any obligor with respect to
any such property. The Senior Subordinated Lenders may, from time to time, with
notice to and consent of the Senior Lender, at their sole discretion and without
notice to any Subordinated Lender, take any or all of the following actions: (a)
retain or obtain a security interest in any property to secure any of the Senior
Subordinated Liabilities; (b) retain or obtain the primary or secondary
obligation of any other obligor or obligors with respect to any of the Senior
Subordinated Liabilities; (c) extend or renew for one or more periods (whether
or not longer than the original period), alter, increase or exchange any of the
Senior Subordinated Liabilities, or release or compromise any obligation of any
nature of any obligor with respect to any of the Senior Subordinated
Liabilities; and (d) release their security interest in, or surrender, release
or permit any substitution or exchange for, all or any part of any property
securing any of the Senior Subordinated Liabilities, or extend or renew for one
or more periods (whether or not longer than the original period) or release,
compromise, alter or exchange any obligations of any nature of any obligor with
respect to any such property.

         9.       The Senior Lender may, from time to time, whether before or
after any discontinuance of this Agreement, without notice to any Subordinated
Lender or Senior Subordinated Lender, assign or transfer any or all of the
Senior Liabilities or any interest in the Senior Liabilities; and,
notwithstanding any such assignment or transfer or any subsequent assignment or
transfer of the Senior Liabilities, such Senior Liabilities shall be and remain
Senior Liabilities for the purposes of this Agreement, and every immediate and
successive assignee or transferee of any of the Senior Liabilities or of any
interest in the Senior Liabilities shall, to the extent of the interest of such
assignee or transferee in the Senior Liabilities, be entitled to the benefits of
this Agreement to the same extent as if such assignee or transferee were the
Senior Lender, as applicable; provided, however, that, unless the Senior Lender
shall otherwise consent in writing, the Senior Lender shall have an unimpaired
right, prior and


                                       5


superior to that of any such assignee or transferee, to enforce this Agreement,
for the benefit of the Senior Lender, as to those of the Senior Liabilities
which the Senior Lender has not assigned or transferred. The Senior Subordinated
Lenders may, from time to time, whether before or after any discontinuance of
this Agreement, with notice to and consent of the Senior Lender, without notice
to any Subordinated Lender, assign or transfer any or all of the Senior
Subordinated Liabilities or any interest in the Senior Subordinated Liabilities;
and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer of the Senior Subordinated Liabilities, such Senior
Subordinated Liabilities shall be and remain Senior Subordinated Liabilities for
the purposes of this Agreement, and every immediate and successive assignee or
transferee of any of the Senior Subordinated Liabilities or of any interest in
the Senior Subordinated Liabilities shall, to the extent of the interest of such
assignee or transferee in the Senior Subordinated Liabilities, be entitled to
the benefits of this Agreement to the same extent as if such assignee or
transferee were the Senior Subordinated Lenders, as applicable; provided,
however, that, unless the Senior Subordinated Lenders shall otherwise consent in
writing, the Senior Subordinated Lenders shall have an unimpaired right, prior
and superior to that of any such assignee or transferee, other than the Senior
Lender, to enforce this Agreement, for the benefit of the Senior Subordinated
Lenders, as to those of the Senior Subordinated Liabilities which the Senior
Subordinated Lenders have not assigned or transferred.

         10.      The Senior Lender shall not be prejudiced in its rights under
this Agreement by any act or failure to act of any Subordinated Lender or Senior
Subordinated Lender, or any noncompliance of any Subordinated Lender or Senior
Subordinated Lender with any agreement or obligation, regardless of any
knowledge thereof which the Senior Lender may have or with which the Senior
Lender may be charged; and no action of the Senior Lender permitted under this
Agreement shall in any way affect or impair the rights of the Senior Lender and
the obligations of any Subordinated Lender or Senior Subordinated Lender under
this Agreement. The Senior Subordinated Lenders shall not be prejudiced in their
rights under this Agreement by any act or failure to act of any Subordinated
Lender, or any noncompliance of any Subordinated Lender with any agreement or
obligation, regardless of any knowledge thereof which the Senior Subordinated
Lenders may have or with which the Senior Subordinated Lenders may be charged;
and no action of the Senior Subordinated Lenders permitted under this Agreement
shall in any way affect or impair the rights of the Senior Subordinated Lenders
and the obligations of any Subordinated Lender under this Agreement.

         11.      No delay on the part of the Senior Lender in the exercise of
any right or remedy shall operate as a waiver of such right or remedy, and no
single or partial exercise by the Senior Lender of any right or remedy shall
preclude other or further exercise of such right or remedy or the exercise of
any other right or remedy; nor shall any modification or waiver of any of the
provisions of this Agreement be binding upon the Senior Lender except as
expressly set forth in a writing duly signed and delivered on behalf of the
Senior Lender. For the purposes of this Agreement, Senior Liabilities shall have
the meaning set forth in Section 1 above, notwithstanding any right or power of
any Subordinated Lender or Senior Subordinated Lender or anyone else to assert
any claim or defense as to the invalidity or unenforceability of any such
obligation, and no such claim or defense shall affect or impair the agreements
and obligations of any Subordinated Lender or Senior Subordinated Lender under
this Agreement. No delay on the part of the Senior Subordinated Lenders in the
exercise of any right or remedy shall operate as a waiver of such right or
remedy, and no single or partial exercise by the Senior Subordinated


                                       6


Lenders of any right or remedy shall preclude other or further exercise of such
right or remedy or the exercise of any other right or remedy; nor shall any
modification or waiver of any of the provisions of this Agreement be binding
upon the Senior Subordinated Lenders except as expressly set forth in a writing
duly signed and delivered on behalf of the Senior Subordinated Lenders. For the
purposes of this Agreement, Senior Subordinated Liabilities shall have the
meaning set forth in Section 1 above, notwithstanding any right or power of any
Subordinated Lender or anyone else to assert any claim or defense as to the
invalidity or unenforceability of any such obligation, and no such claim or
defense shall affect or impair the agreements and obligations of any
Subordinated Lender under this Agreement.

         12.      This Agreement shall be binding upon each Senior Lender,
Subordinated Lender and Senior Subordinated Lender and upon their respective
heirs, legal representatives, successors and assigns.

         13.      This Agreement may not be supplemented, modified, amended,
restated, waived, extended, discharged or terminated orally. This Agreement may
only be (i) supplemented, modified, amended or restated in a writing signed by
the parties hereto, and (ii) waived, extended, discharged or terminated in a
writing signed by the , as the case may be, as the party against whom
enforcement of any such waiver, extension, discharge or termination is sought.

         14.      All notices, requests and demands to or upon the undersigned,
shall be in writing and shall be deemed to have been duly given or made (a) when
delivered, if by hand, (b) four (4) days after being sent, postage prepaid, if
by registered or certified mail, (c) when confirmed electronically, if sent by
facsimile during normal business hours of the recipient, and if not, then on the
next business day, or (d) when delivered, if by a recognized overnight delivery
service in each event, to the numbers and/or address set forth beneath the
signature of the undersigned.

         15.      This Agreement shall be construed in accordance with and
governed by the laws of New York without regard to conflict of laws provisions.
Wherever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.

         16.      This Agreement may be executed in one or more counterparts of
the entire document or of the signature pages hereto, each of which shall be
deemed an original and all of which when taken together shall constitute one and
the same agreement. Any signature delivered by a party by facsimile transmission
shall be deemed an original signature hereto.

         17.      This Agreement and the exhibits and schedules hereto and
thereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof, and supersede and
completely replace any and all (and no party shall be liable or bound to any
other in any manner by any) prior or other representations, warranties,
covenants, promises, assurances or other agreements or understandings (whether
written, oral, express, implied or otherwise) including, without limitation, the
Subordination Agreement entered into by the Senior Lender and Subordinated
Lenders dated July 11, 2006, Section 7(b) of the $5,200,000 Subordinated
Promissory Note of the Debtor dated July 11, 2006 and Section 7(b) of the
$4,838,710 Amended and Restated Subordinated Promissory Note of the Debtor dated
July 11, 2006.

                            [signature pages follow]


                                       7


         IN WITNESS WHEREOF, this Agreement has been made and delivered this
day of December, 2006.

                                    SUBORDINATED LENDERS:
                                    ---------------------

                                    KLINGER INVESTMENTS LLC

                                    By:
                                       -----------------------------------------
                                    Name:
                                    Title:


                                    PEQUOT HEALTHCARE FUND, L.P.
                                    By:  Pequot Capital Management, Inc.
                                         Investment Advisor

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                    PEQUOT HEALTHCARE OFFSHORE FUND, INC.
                                    By:  Pequot Capital Management, Inc.
                                         Investment Advisor

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                    PEQUOT DIVERSIFIED MASTER FUND, L.P.
                                    By:  Pequot Capital Management, Inc.
                                         Investment Advisor

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                    PEQUOT HEALTHCARE INSTITUTIONAL FUND, L.P.
                                    By:  Pequot Capital Management, Inc.
                                         Investment Advisor

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                       8


                                    PREMIUM SERIES PCC LIMITED - CELL 32
                                    By:  Pequot Capital Management, Inc.
                                         Investment Advisor

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:

                                    NORTH SOUND LEGACY INSTITUTIONAL FUND LLC

                                    By:  North Sound Capital LLC; Manager

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:

                                    NORTH SOUND LEGACY INTERNATIONAL LTD.
                                    By:  North Sound Capital LLC;
                                         Investment Advisor

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:

                                    TECHNOLOGY INVESTMENT CAPITAL CORP.

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                    -----------------------------------------
                                    ANDREW D. LIPMAN


                                    -----------------------------------------
                                    JON LAUCK


                                    LAURUS MASTER FUND, LTD.

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                       9


                                    SENIOR SUBORDINATED LENDERS
                                    ---------------------------

                                    LAURUS MASTER FUND, LTD.

                                    By:
                                         ---------------------------------------

                                    KLINGER INVESTMENTS LLC

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                    VICIS CAPITAL MASTER FUND LLC

                                    By:
                                         ---------------------------------------

                                    --------------------------------------------
                                             Andrew D. Lipman

                                    --------------------------------------------
                                             Richard Rakowski

                                    --------------------------------------------
                                             Gerard DeBiasi

                                    --------------------------------------------
                                             James Benedict

                                    --------------------------------------------
                                             Dan Richardson

                                    --------------------------------------------
                                             Amal Devani

                                    --------------------------------------------
                                             John Brugmann

                                    CSFN I LLC


                                    By
                                      ------------------------------------------


                                       10


         Acknowledged and Agreed to by:

         TRUEYOU.COM INC.

         By:
            -----------------------------
         Name:
         Title:

         Address: 501 Merritt 7, 5th Floor
                   Norwalk, CT 06851


                                       11


                                   SCHEDULE A




         1.       $4,838,710 Amended and Restated Subordinated Note dated July
11, 2006 of TrueYou.Com Inc. to the Subordinated Lenders a party thereto.

         2.       $4,838,710 Amended and Restated Subordinated Loan Agreement of
TrueYou.Com Inc. dated July 11, 2006 to the Subordinated Lenders a party
thereto.

         3.       $5,200,000 Subordinated Note dated July 11, 2006 of
TrueYou.Com Inc. to the Subordinated Lenders a party thereto.

         4.       $5,200,000 Subordinated Loan Agreement dated July 11, 2006 of
TrueYou.Com Inc. to the Subordinated Lenders a party thereto.

         5.       Unconditional Guaranty dated July 11, 2006 for each of Anushka
Boca Acquisition Sub, LLC, Anushka PBG Acquisition Sub, LLC, Dischino
Corporation, Wild Hare, LLC, Anushka Boca, LLC, Wild Hare Acquisition Sub, LLC,
Anushka PBG, LLC, Klinger Advanced Aesthetics, Inc., Advanced Aesthetics Sub,
Inc., Advanced Aesthetics, LLC and Klinger Advanced Aesthetics, LLC under $5.2
Million Subordinated Note.

         6.       Amended and Restated Unconditional Guaranty dated July 11,
2006 for each of Anushka Boca Acquisition Sub, LLC, Anushka PBG Acquisition Sub,
LLC, Dischino Corporation, Wild Hare, LLC, Anushka Boca, LLC, Wild Hare
Acquisition Sub, LLC, Anushka PBG, LLC, Klinger Advanced Aesthetics, Inc.,
Advanced Aesthetics Sub, Inc., Advanced Aesthetics, LLC and Klinger Advanced
Aesthetics, LLC under $4,838,710 Subordinated Note.




                                   SCHEDULE B




         1.       One or more Senior Subordinated Notes each dated December   ,
2006 of TrueYou.Com Inc. to the Senior Subordinated Lenders a party thereto.

         2.       $4 Million Senior Subordinated Loan Agreements of TrueYou.Com
Inc. dated December , 2006 to the Senior Subordinated Lenders a party thereto.

         3.       Unconditional Guaranty dated December , 2006 for each of
Anushka Boca Acquisition Sub, LLC, Anushka PBG Acquisition Sub, LLC, Dischino
Corporation, Wild Hare, LLC, Anushka Boca, LLC, Wild Hare Acquisition Sub, LLC,
Anushka PBG, LLC, Klinger Advanced Aesthetics, Inc., Advanced Aesthetics Sub,
Inc., Advanced Aesthetics, LLC and Klinger Advanced Aesthetics, LLC under $4
Million Senior Subordinated Notes.

EX-10.82

                                            SUBORDINATED SECURED TERM NOTE NO. 2

"THIS  SECURED TERM NOTE HAS NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF
1933, AS AMENDED,  OR ANY APPLICABLE  STATE  SECURITIES  LAWS. THIS SECURED TERM
NOTE MAY NOT BE SOLD,  OFFERED FOR SALE,  PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE  REGISTRATION  STATEMENT AS TO THIS SECURED TERM NOTE UNDER SAID
ACT AND APPLICABLE  STATE  SECURITIES  LAWS OR AN OPINION OF COUNSEL  REASONABLY
SATISFACTORY TO TRUEYOU.COM INC. THAT SUCH REGISTRATION IS NOT REQUIRED."

                                                              New York, New York
$1,000,000.00                                          (as of) December 22, 2006

                         SUBORDINATED SECURED TERM NOTE
                         ------------------------------

                  FOR VALUE RECEIVED,  TRUEYOU.COM INC., a Delaware  corporation
the "COMPANY"),  promises to pay to LAURUS MASTER FUND,  LTD., c/o M&C Corporate
Services  Limited,  P.O. Box 309 GT, Ugland House,  South Church Street,  George
Town, Grand Cayman,  Cayman Islands,  Fax: 345-949-8080 (the "Purchaser") or its
registered  permitted  assigns or  successors  in  interest  (together  with the
Purchaser, the "Holder"), the sum of One Million Dollars ($1,000,000),  together
with any accrued and unpaid interest hereon,  on the "Maturity Date" (as defined
herein) if not sooner paid.

                  Capitalized  terms used herein without  definition  shall have
the  meanings  ascribed  to such  terms  in  that  certain  Securities  Purchase
Agreement  dated  as of the date  hereof  by and  between  the  Company  and the
Purchaser (as amended,  modified restated and/or supplemented from time to time,
the "PURCHASE AGREEMENT").

                  The following  terms shall apply to this Secured Term Note (as
amended, modified, restated and/or supplemented from time to time, this "NOTE"):

                                   ARTICLE I
                         CONTRACT RATE AND AMORTIZATION

                  1.1      CONTRACT  RATE.  Subject to Sections 3.2 and 4.10 and
in all cases of this  Article I subject to the  Subordination  Agreement  of the
parties and others  dated as of December 22, 2006  ("Subordination  Agreement"),
interest  payable  on  the  outstanding  principal  amount  of  this  Note  (the
"PRINCIPAL  AMOUNT")  shall  accrue at a rate per annum equal to twelve  percent
(12.0%)  per annum  (such sum being  referred  to as the  "CONTRACT  RATE"),  as
follows:

                  (a)      Interest in the amount of six percent (6 %) per annum
(the "First Interest  Tranche") shall accrue during the period commencing on the
date hereof and shall be payable monthly, in arrears,  commencing on February 1,
2007 and on the first day of each consecutive calendar month thereafter (each, a
"PAYMENT  DATE") and on the Maturity Date,  whether by acceleration or otherwise
or,  in the  event of the  redemption  of all or any  portion  of the  Principal
Amount,  accrued interest on the amount so redeemed shall be paid on the date of
redemption.



                  (b)      Interest  in the amount of six percent per annum (the
"Second  Interest  Tranche")  shall accrue but not be payable  during the period
commencing  on the date  hereof  and  ending on the  Maturity  Date.  The Second
Interest Tranche shall be payable monthly, in arrears, commencing on February 1,
2007 and on each Payment Date and on the Maturity Date,  whether by acceleration
or  otherwise  or, in the event of the  redemption  of all or any portion of the
Principal  Amount,  accrued  interest on the amount so redeemed shall be paid on
the date of redemption.  Notwithstanding the foregoing,  the Borrower may elect,
in lieu of paying the Second  Interest  Tranche on a given  Payment Date, to add
the amount of the Second  Interest  Tranche  that is due on such Payment Date to
the Principal Amount (such added amount, the "Second Interest  Amount").  If the
Borrower  elects  to add the  Second  Interest  Amount to the  Principal  Amount
outstanding on a given Payment Date, then the Borrower shall give written notice
to the Holder of such election,  which notice shall be received by the Holder no
later than three (3) business days prior to such Payment Date.

                  (c)      Interest  shall be (i)  calculated  on the basis of a
360 day year on the unpaid Principal Amount outstanding from time to time during
the applicable period.

                  1.2      MATURITY DATE. "MATURITY DATE" shall mean the earlier
to occur of (i) December 22, 2009; (ii) the consummation of a private  placement
of equity  securities of the Company resulting in net proceeds to the Company of
at least  $15,000,000;  or (iii) A Change of Control  (as defined  below)  shall
occur with respect to the Company,  unless Holder shall have expressly consented
to such Change of Control in writing. A "CHANGE OF CONTROL" shall mean any event
or  circumstance as a result of which (i) any "Person" or "group" (as such terms
are defined in Sections 13(d) and 14(d) of the Exchange Act, as in effect on the
date hereof),  other than the Holder,  is or becomes the "beneficial  owner" (as
defined in Rules  13(d)-3  and  13(d)-5  under the  Exchange  Act),  directly or
indirectly,  of 50% or more on a fully  diluted  basis of the  then  outstanding
voting  equity  interest  of the  Company,  (ii) the Board of  Directors  of the
Company shall cease to consist of a majority of the Company's board of directors
on the date  hereof  (or  directors  appointed  by a  majority  of the  board of
directors in effect  immediately  prior to such appointment) or (iii) except for
mergers,  consolidations  and sales permitted  under the Purchase  Agreement and
other  Related  Agreements,  the  Company or any of its  Subsidiaries  merges or
consolidates with, or sells all or substantially all of its assets to, any other
person or entity.

                  1.3      PRINCIPAL PAYMENTS. Any outstanding Principal Amount,
together  with any  accrued  and unpaid  interest  and any and all other  unpaid
amounts  which are then owing by the Company to the Holder under this Note,  the
Purchase Agreement and/or any other Related Agreement,  shall be due and payable
on the Maturity Date.

                                   ARTICLE II
                                   REDEMPTION

                  2.1      OPTIONAL   REDEMPTION   IN  CASH.   Subject   to  the
provisions  of the  Subordination  Agreement,  the  Company may prepay this Note
("Optional Redemption") by paying to the Holder a sum of money equal to: (i) one
hundred percent (100%) of the Principal Amount outstanding at such time together
with accrued but unpaid interest thereon and any and all other sums due, accrued
or payable to the Holder arising under this Note, the Purchase


                                       2


Agreement  or any other  Related  Agreement.  The Company  shall  deliver to the
Holder a written notice of redemption  (the "Notice of  Redemption")  specifying
the date for such Optional  Redemption (the  "Redemption  Payment Date"),  which
date shall be seven (7) business days after the date of the Notice of Redemption
(the  "Redemption   Period").  On  the  Redemption  Payment  Date,  the  Initial
Redemption Amount or the Redemption  Amount, as applicable,  must be paid to the
Holder in good funds (i.e. wire transfer in immediately  available  funds,  bank
cashier's  check, or United States Federal Reserve check) to the Holder.  In the
event the Company fails to pay the Initial  Redemption  Amount or the Redemption
Amount on the Redemption Payment Date as set forth herein,  then such Redemption
Notice will be null and void and of no further force and effect and such failure
to pay shall not constitute an Event of Default hereunder.

                                  ARTICLE III
                                EVENTS OF DEFAULT

                  3.1      EVENTS  OF  DEFAULT.  The  occurrence  of  any of the
following  events set forth in this  Section  3.1 shall  constitute  an event of
default ("EVENT OF DEFAULT") hereunder:

                  (a)      FAILURE TO PAY. The Company fails to pay when due any
installment of principal,  interest or other fees hereon in accordance herewith,
or the Company fails to pay any of the other  Obligations  (under and as defined
in the Master Security  Agreement) when due, and, in any such case, such failure
shall  continue for a period of three (3) business days  following the date upon
which any such  payment  was due (it being  understood  that no Event of Default
shall occur for  non-payment if required by the provisions of the  Subordination
Agreement).

                  (b)      BREACH  OF  COVENANT.  The  Company  or  any  of  its
Subsidiaries  breaches  any covenant or any other term or condition of this Note
in any material  respect and such breach,  if subject to cure,  continues  for a
period of fifteen (15) business days after the occurrence thereof; provided that
prior to the  expiration of such fifteen (15)  business day period,  the Company
may send a notice to the Holder notifying the Holder of such default,  outlining
its plan to take sufficient actions reasonably likely to cure it, and requesting
that the Holder forbear from taking action on such default for a period of sixty
(60) days (a "Default  Request  Notice").  Upon  receipt of the Default  Request
Notice, the Holder may, in its sole discretion,  deny such request;  however, in
the event that the Holder either (i)  expressly  grants such request or (ii) has
not  responded to such request  within three (3) business days of receipt of the
Default  Request  Notice,  the Holder shall  forbear from  declaring an Event of
Default for such sixty-day period; PROVIDED, HOWEVER, that during such sixty-day
period,  the Company shall  commence to cure such default  within such period in
accordance with such plan and shall proceed  continuously in good faith and with
due diligence to cure such default in accordance with such plan.

                  (c)      BREACH  OF   REPRESENTATIONS   AND  WARRANTIES.   Any
representation,  warranty or similar factual  statement made or furnished by the
Company or any of its  Subsidiaries in this Note, the Purchase  Agreement or any
other  Related  Agreement  shall have been false or  misleading  in any material
respect on the date as of which made or deemed made.


                                       3


                  (d)      DEFAULT UNDER OTHER AGREEMENTS. The occurrence of any
default  (or  similar  term)  in the  observance  or  performance  of any  other
agreement or condition  (i) relating to any  indebtedness  in excess of $500,000
owed, or any  guarantees or other credit  support of  indebtedness  in excess of
$500,000 provided, by the Company or any of its Subsidiaries (including, without
limitation, the Permitted Indebtedness junior to this Note), or (ii) relating to
any  contingent  obligation  in excess of  $500,000  owed or  guaranteed  by the
Company or any of its  Subsidiaries,  in each case which shall continue  without
waiver beyond all applicable  grace periods,  and the effect of which default is
to cause,  or reasonably  permit the holder or holders of such  indebtedness  or
beneficiary  or  beneficiaries  of such  contingent  obligation  to cause,  such
indebtedness  to become  due prior to its  stated  maturity  or such  contingent
obligation to become payable;

                  (e)      MATERIAL ADVERSE EFFECT. Any change or the occurrence
of any event which  could  reasonably  be  expected  to have a Material  Adverse
Effect;

                  (f)      BANKRUPTCY.  The  Company or any of its  Subsidiaries
shall (i) apply for,  consent to or suffer to exist the  appointment  of, or the
taking of possession by, a receiver,  custodian, trustee or liquidator of itself
or of all or a substantial part of its property,  (ii) make a general assignment
for the benefit of creditors,  (iii) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect),  (iv) be adjudicated a bankrupt
or  insolvent,  (v) file a petition  seeking to take  advantage of any other law
providing for the relief of debtors, (vi) acquiesce to, without challenge within
ten (10)  business  days of  receipt of the  notice of the  filing  thereof,  or
failure to have  dismissed  or  effectively  stayed to the  satisfaction  of the
Holder in its sole  discretion,  within  sixty (60)  days,  any  petition  filed
against it in any involuntary case under such bankruptcy laws, or (vii) take any
action for the purpose of effecting any of the foregoing;

                  (g)      JUDGMENTS.   Attachments   or  levies  in  excess  of
$500,000 in the aggregate  are made upon the Company or any of its  Subsidiary's
assets or a judgment is  rendered  against the  Company's  property  involving a
liability of more than $500,000  which shall not have been vacated,  discharged,
stayed or bonded within thirty (30) business days from the entry thereof;

                  (h)      INSOLVENCY.  The  Company or any of its  Subsidiaries
shall admit in writing its inability,  or be generally  unable, to pay its debts
as they become due or to continue operations of its present business;

                  (i)      CHANGE OF  CONTROL.  A Change of Control  (as defined
below)  shall  occur  with  respect to the  Company,  unless  Holder  shall have
expressly  consented to such Change of Control in writing. A "Change of Control"
shall mean any event or  circumstance  as a result of which (i) any  "Person" or
"group" (as such terms are defined in Sections  13(d) and 14(d) of the  Exchange
Act, as in effect on the date hereof),  other than the Holder, is or becomes the
"beneficial  owner" (as defined in Rules  13(d)-3 and 13(d)-5 under the Exchange
Act),  directly or  indirectly,  of 50% or more on a fully  diluted basis of the
then  outstanding  voting  equity  interest  of the  Company,  (ii) the Board of
Directors of the Company  shall cease to consist of a majority of the  Company's
board of directors on the date hereof (or  directors  appointed by a majority of
the board of directors in effect immediately prior to such appointment) or (iii)
except for


                                       4


mergers,  consolidations  and sales permitted  under the Purchase  Agreement and
other  Related  Agreements,  the  Company or any of its  Subsidiaries  merges or
consolidates with, or sells all or substantially all of its assets to, any other
person or entity;

                  (j)      INDICTMENT PROCEEDINGS. The indictment of the Company
or any of its Subsidiaries or any executive officer of the Company or any of its
Subsidiaries under any criminal statute, or commencement of criminal proceedings
against the Company or any of its  Subsidiaries or any executive  officer of the
Company or any of its  Subsidiaries,  pursuant  to which  statute or  proceeding
penalties  or remedies  sought or  available  include  forfeiture  of any of the
property of the Company or any of its Subsidiaries;

                  (k)      THE PURCHASE AGREEMENT AND RELATED AGREEMENTS.

                           (A)      An Event of Default shall occur under and as
and if defined in the Purchase Agreement or any other Related Agreement.

                           (B)      The Company or any of its Subsidiaries shall
breach any term or  provision of the  Purchase  Agreement  or any other  Related
Agreement in any material respect and such breach, if capable of cure, continues
unremedied  for a period of fifteen (15) business  days;  provided that prior to
the expiration of such fifteen (15) business day period,  the Company may send a
Default Request Notice.  Upon receipt of the Default Request Notice,  the Holder
may, in its sole discretion,  deny such request;  however, in the event that the
Holder either (i) expressly  grants such request or (ii) has not respond to such
request within three (3) business days of receipt of the Default Request Notice,
the Holder shall forbear from  declaring an Event of Default for such  sixty-day
period; PROVIDED,  HOWEVER, that during such sixty-day period, the Company shall
commence to cure such default  within such period in  accordance  with such plan
and shall proceed continuously in good faith and with due diligence to cure such
default in accordance with such plan.

                           (C)      The  Company  or  any  of  its  Subsidiaries
attempts to terminate,  challenges the validity of, or its liability  under, the
Purchase Agreement or any Related Agreement.

                           (D)      Any  proceeding  shall  be  brought  by  the
Company or any of its Subsidiaries to challenge the validity,  binding effect of
the Purchase Agreement or any Related Agreement.

                           (E)      The   Purchase   Agreement  or  any  Related
Agreement  ceases  to be a valid,  binding  and  enforceable  obligation  of the
Company or any of its Subsidiaries (to the extent such persons or entities are a
party thereto).

                  (l)      STOP TRADE.  If at any time  following  the increased
authorization  of Common  Stock  contemplated  by Section  6.3 of the  Purchaser
Agreement,  any SEC stop trade order or, once the Company has become listed on a
Principal  Market,  a Principal  Market trading  suspension of the Common Stock,
shall be in effect for five (5)  consecutive  business days or five (5) business
days during a period of ten (10)  consecutive  business  days,  excluding in all
cases a  suspension  of all trading on a  Principal  Market,  provided  that the
Company shall not have been able to cure such trading  suspension  within thirty
(30)  business  days of the notice  thereof or list


                                       5


the Common Stock on another  Principal Market within sixty (60) business days of
such notice; or

                           (m)      FAILURE  TO  DELIVER   COMMON   STOCK.   The
Company's  failure to deliver the  instructions  to the transfer  agent within 1
business day and to use its best efforts to cause the transfer  agent to deliver
Common Stock to the Holder  within three  business  days  pursuant to and in the
form required by the Warrant as required  under  Section  9.1(b) of the Purchase
Agreement.

                  3.2      DEFAULT INTEREST. Following the occurrence and during
the  continuance  of an Event of Default  but subject to the  provisions  of the
Subordination  Agreement, the Company shall pay additional interest on this Note
(i.e.,  in  addition  to the  Contract  Rate) in an amount  equal to two percent
(2.0%) per month, and all outstanding  obligations under this Note, the Purchase
Agreement and each other Related  Agreement,  including unpaid  interest,  shall
continue to accrue interest at the Contract Rate plus such  additional  interest
rate from the date of such Event of Default until the date such Event of Default
is cured or waived.

                  3.3      DEFAULT PAYMENT.  Following the occurrence and during
the  continuance  of an Event of Default  but subject to the  provisions  of the
Subordination Agreement, the Holder, at its option, may demand repayment in full
of all  obligations  and  liabilities  owing by Company to the Holder under this
Note,  the Purchase  Agreement  and/or any other Related  Agreement,  including,
without limitation, all outstanding principal,  accrued but unpaid interest, all
other fees then  remaining  unpaid and all other amounts  payable  hereunder and
under the Purchase Agreement and the other Related Agreements, and/or may elect,
in  addition  to all  rights  and  remedies  of the  Holder  under the  Purchase
Agreement and the other Related  Agreements and all  obligations and liabilities
of the Company under the Purchase Agreement and the other Related Agreements, to
accelerate  the  obligations  and  require  the  Company  to make a Default  and
Acceleration Payment ("ACCELERATION PAYMENT"). The Acceleration Payment shall be
equal to 15% of the outstanding  principal  amount of the Note. The Acceleration
Payment  shall  be  applied  first to any fees  due and  payable  to the  Holder
pursuant  to  this  Note,  the  Purchase  Agreement  and/or  the  other  Related
Agreements, then to accrued and unpaid interest due on this Note and then to the
outstanding  principal  balance of this Note. The Acceleration  Payment shall be
due and payable immediately on the date that the Holder has exercised its rights
pursuant to this Section 3.3.

                                   ARTICLE IV
                                  MISCELLANEOUS

                  4.1      CUMULATIVE  REMEDIES.  The  remedies  under this Note
shall be cumulative.

                  4.2      FAILURE OR INDULGENCE NOT WAIVER. No failure or delay
on the  part of the  Holder  hereof  in the  exercise  of any  power,  right  or
privilege  hereunder shall operate as a waiver thereof,  nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise  thereof  or of any other  right,  power or  privilege.  All rights and
remedies existing  hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.


                                       6


                  4.3      NOTICES.  Any notice herein  required or permitted to
be given shall be in writing  and shall be deemed  effectively  given:  (a) upon
personal  delivery to the party  notified,  (b) when sent by confirmed  telex or
facsimile if sent during normal  business  hours of the  recipient,  and if not,
then on the next business day, (c) four (4) business days after having been sent
by registered or certified mail, return receipt requested,  postage prepaid,  or
(d) one business day after deposit on a business day in time for that  evening's
pickup with a nationally recognized overnight courier, with the cost of delivery
prepaid or for the account of the sender,  specifying  next day  delivery,  with
written verification of receipt. All communications shall be sent to the Company
at the  address  provided  in the  Purchase  Agreement  executed  in  connection
herewith,  and to the Holder at the address  provided in the Purchase  Agreement
for such Holder,  with a copy to John E. Tucker,  Esq.,  825 Third Avenue,  14th
Floor,  New York, New York 10022,  facsimile  number (212) 541-4434,  or at such
other address as the Company or the Holder may designate by ten (10 days advance
written notice to the other parties hereto.

                  4.4      AMENDMENT   PROVISION.   The  term   "Note"  and  all
references  thereto,  as  used  throughout  this  instrument,  shall  mean  this
instrument as  originally  executed,  or if later  amended,  modified,  restated
and/or  supplemented from time to time, then as so amended,  modified,  restated
and/or  supplemented,  and any successor instrument as such successor instrument
may be amended,  modified,  restated and/or  supplemented.  This Note may not be
supplemented,  modified,  amended,  restated,  waived,  extended,  discharged or
terminated orally. This Note may only be (i) supplemented,  modified, amended or
restated in a writing signed by the Company and the Purchaser (or in the case of
a restated  or  replacement  note,  consented  to in a  separate  writing by the
Purchaser  if the  Purchaser  elects  not to sign such  note)  and (ii)  waived,
extended,  discharged or  terminated in a writing  signed by the Company and the
Purchaser.

                  4.5      ASSIGNABILITY.  This Note shall be  binding  upon the
Company and its  successors  and assigns,  and shall inure to the benefit of the
Holder and its  successors and assigns,  and may be assigned by the Holder,  all
solely in accordance with the Purchase Agreement. The Company may not assign any
of its  obligations  under this Note  without the prior  written  consent of the
Holder, any such purported assignment without such consent being null and void.

                  4.6      COST OF  COLLECTION.  In case of any Event of Default
under  this  Note,  the  Company  shall  pay  the  Holder  reasonable  costs  of
collection, including reasonable attorneys' fees.

                  4.7      GOVERNING LAW, JURISDICTION AND WAIVER OF JURY TRIAL.

                           (a)      THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE  WITH THE  APPLICABLE  LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

                           (b)      THE COMPANY HEREBY  CONSENTS AND AGREES THAT
THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK
SHALL HAVE EXCLUSIVE  JURISDICTION  TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN  THE  COMPANY,  ON THE ONE HAND,  AND THE  HOLDER,  ON THE  OTHER  HAND,
PERTAINING TO THIS NOTE OR ANY OF THE OTHER RELATED  AGREEMENTS OR TO ANY MATTER
ARISING  OUT


                                       7


OF OR RELATED TO THIS NOTE OR ANY OF THE RELATED AGREEMENTS;  PROVIDED, THAT THE
COMPANY  ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY
A COURT  LOCATED  OUTSIDE  OF THE  COUNTY  OF NEW YORK,  STATE OF NEW YORK;  AND
FURTHER  PROVIDED,  THAT  NOTHING  IN THIS NOTE  SHALL BE DEEMED OR  OPERATE  TO
PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION  TO COLLECT THE  OBLIGATIONS,  TO REALIZE ON THE  COLLATERAL OR ANY
OTHER  SECURITY  FOR THE  OBLIGATIONS,  OR TO ENFORCE A JUDGMENT  OR OTHER COURT
ORDER IN FAVOR OF THE HOLDER.  THE  COMPANY  EXPRESSLY  SUBMITS AND  CONSENTS IN
ADVANCE TO SUCH  JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND THE COMPANY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL  JURISDICTION,  IMPROPER  VENUE OR FORUM NON  CONVENIENS.  THE  COMPANY
HEREBY  WAIVES  PERSONAL  SERVICE OF THE SUMMONS,  COMPLAINT  AND OTHER  PROCESS
ISSUED IN ANY SUCH  ACTION OR SUIT AND  AGREES  THAT  SERVICE  OF SUCH  SUMMONS,
COMPLAINT  AND OTHER  PROCESS MAY BE MADE BY FEDERAL  EXPRESS OR  REGISTERED  OR
CERTIFIED MAIL ADDRESSED TO THE COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
THE COMPANY'S  ACTUAL RECEIPT THEREOF OR FOUR (4) BUSINESS DAYS AFTER DEPOSIT IN
THE U.S. MAILS FOR DELIVERY BY SUCH MAIL AND PROPER POSTAGE PREPAID.

                           (c)      THE  COMPANY  DESIRES  THAT ITS  DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH  APPLICABLE  LAWS.  THEREFORE,  TO ACHIEVE THE
BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,  THE
COMPANY  HERETO  WAIVES  ALL  RIGHTS TO TRIAL BY JURY IN ANY  ACTION,  SUIT,  OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR
OTHERWISE  BETWEEN THE HOLDER AND THE COMPANY  ARISING OUT OF,  CONNECTED  WITH,
RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS NOTE, ANY OTHER RELATED  AGREEMENT OR THE TRANSACTIONS  RELATED HERETO
OR THERETO.

                  4.8      SEVERABILITY. In the event that any provision of this
Note is finally  determined to be invalid or unenforceable  under any applicable
statute or rule of law, then such provision  shall be deemed  inoperative to the
extent that it may conflict  therewith  and shall be deemed  modified to conform
with such statute or rule of law. Any such provision  which may prove invalid or
unenforceable  under any law shall not affect the validity or  enforceability of
any other provision of this Note.

                  4.9      MAXIMUM  PAYMENTS.  Nothing contained herein shall be
deemed to  establish  or  require  the  payment of a rate of  interest  or other
charges in excess of the maximum  permitted by applicable law. In the event that
the rate of interest  required to be paid or other charges  hereunder exceed the
maximum rate  permitted by such law, any payments in excess of such maximum rate
shall be  credited  against  amounts  owed by the Company to the Holder and thus
refunded to the Company.


                                       8


                  4.10     SECURITY  INTEREST  AND  GUARANTEE.  Subject  to  the
provisions  of the  Subordination  Agreement,  the  Purchaser has been granted a
security  interest (i) in certain assets of the Company and its  Subsidiaries as
more fully described in the Master Security Agreement dated as of June 30, 2006,
(ii) in the equity  interests  of the  Companies'  Subsidiaries  pursuant to the
Stock  Pledge  Agreement  dated  as of June  30,  2006;  and  (iii)  in  certain
intellectual  property  of the  Company  and  its  Subsidiaries  as  more  fully
described in the Intellectual  Property Security  Agreement dated as of June 30,
2006 as  supplemented  by that certain  Reaffirmation  Agreement  dated December
,2006.  The  obligations  of the Company  under this Note are  guaranteed to the
Purchaser  by certain  Subsidiaries  of the Company  pursuant to the  Subsidiary
Guaranty dated as of the date hereof, subject, however, to the provisions of the
Subordination Agreement.

                  4.11     CONSTRUCTION.  Each party acknowledges that its legal
counsel participated in the preparation of this Note and, therefore,  stipulates
that the rule of construction  that  ambiguities are to be resolved  against the
drafting party shall not be applied in the  interpretation of this Note to favor
any party against the other.

                  4.12     REGISTERED OBLIGATION.  This Note is intended to be a
registered   obligation  within  the  meaning  of  Treasury  Regulation  Section
1.871-14(c)(1)(i)  and the Company (or its agent) shall  register this Note (and
thereafter shall maintain such registration) as to both principal and any stated
interest. Notwithstanding any document, instrument or agreement relating to this
Note to the  contrary,  transfer  of this Note (or the right to any  payments of
principal or stated  interest  thereunder) may only be effected by (i) surrender
of this Note and either the  reissuance  by the  Company of this Note to the new
holder or the issuance by the Company of a new instrument to the new holder,  or
(ii)  transfer  through a book entry  system  maintained  by the Company (or its
agent), within the meaning of Treasury Regulation Section 1.871-14(c)(1)(i)(B).

                  4.13     PROVISIONS  OF THE PURCHASE  AGREEMENT.  This Note is
the Note referred to in the Purchase Agreement and other Related Agreements.

                  4.14     ENTIRE AGREEMENT.  This Note constitutes the full and
entire  understanding  and  agreement  between  the  parties  with regard to the
subjects  hereof,  and supersedes  and  completely  replaces any and all (and no
party shall be liable or bound to any other in any manner by any) prior or other
representations, warranties, covenants, promises, assurances or other agreements
or understandings  (whether written,  oral, express,  implied or otherwise) with
regard to the subjects hereof except as specifically set forth herein.

       [Balance of page intentionally left blank; signature page follows]


                                       9


                  IN WITNESS  WHEREOF,  the Company has caused this Secured Term
Note to be signed in its name effective as of this 30th day of June, 2006.


                                           TRUEYOU.COM INC.


                                           By:
                                              ----------------------------------
                                              Name:
                                              Title:

SIGNATURE WITNESS:
(NOT AN ENDORSEMENT, ACCOMMODATION
OR SIGNATURE GUARANTY)





- ----------------------------------


                                       10

EX-10.83

               REAFFIRMATION, RATIFICATION AND AMENDMENT AGREEMENT
               ---------------------------------------------------


                                             December 22, 2006

Laurus Master Fund, Ltd.
c/o Laurus Capital Management, LLC
825 Third Avenue
New York, New York 10022

Ladies and Gentlemen:

Reference is made to the (a) Securities Purchase Agreement, dated as of June 30,
2006 between TrueYou.com,  Inc., a Delaware corporation (the "Company") in favor
of Laurus Master Fund,  Ltd., a Cayman Islands  company  ("Laurus") (as amended,
modified  or  supplemented   from  time  to  time,  the   "Securities   Purchase
Agreement"),  (b) the  Subsidiary  Guaranty,  dated as of June 30,  2006 made by
Klinger Advanced  Aesthetics,  Inc., a Delaware  corporation  ("KAA"),  Advanced
Aesthetics Sub, Inc. a Delaware corporation ("AAI"), Advanced Aesthetics, LLC, a
Delaware limited liability company ("AAL"), Klinger Advanced Aesthetics,  LLC, a
Delaware limited  liability company  ("Klinger  Advanced"),  Anushka PBG, LLC, a
Delaware limited liability company ("Anushka PBG"), Anushka Boca LLC, a Delaware
limited liability  company ("Anushka Boca"),  Wild Hare, LLC, a Delaware limited
liability company ("Wild Hare"),  Dischino  Corporation,  a Florida  corporation
("Dischino"),  Anushka PBG Acquisition  Sub, LLC, a Delaware  limited  liability
company  ("Anushka  Acquisition"),  Anushka  Boca Sub,  LLC, a Delaware  limited
liability  company ("Boca  Acquisition")  and Wild Hare  Acquisition Sub, LLC, a
Delaware limited  liability  company ("Wild Hare  Acquisition" and together with
KAA, AAI, AAL, Klinger Advanced, Anushka PBG, Anushka Boca, Wild Hare, Dischino,
Anushka Acquisition and Boca Acquisition, the "Subsidiaries") in favor of Laurus
Master Fund, Ltd., a Cayman Islands company ("Laurus") (as amended,  modified or
supplemented from time to time, the "Subsidiary Guaranty"),  (c) Master Security
Agreement dated as of June 30, 2006, made by the Company and the Subsidiaries in
favor of Laurus (as amended,  modified or  supplemented  from time to time,  the
"Master  Security  Agreement")  (d) Stock Pledge  Agreement dated as of June 30,
2006,  made by the  Company,  KAA,  Anushka  PGB,  Anushka  Boca,  Wild Hare and
Dischino in favor of Laurus (as amended,  modified or supplemented  from time to
time, the "Stock Pledge  Agreement");  (e) the  Intellectual  Property  Security
Agreement dated as of June 30, 2006, made by the Company,  KAA, Klinger Advanced
and AAL in favor of Laurus (as amended,  modified or  supplemented  from time to
time,  the "IP  Security  Agreement);  and (f) the Secured Term Note dated as of
June 30, 2006, issued by the Company to the Purchaser in the original  principal
amount of $25,000,000 (as amended,  modified or supplemented  from time to time,
the "Existing Note", and together with the Securities  Purchase  Agreement,  the
Subsidiary Guaranty,  the Master Security Agreement,  the Stock Pledge Agreement
and the IP Security Agreement, collectively, the "Existing Agreements").

         To induce Laurus to provide additional financial  accommodations to the
Company evidenced by (i) that certain  Subordinated Secured Term Note, dated the
date  hereof,  made by the Company in favor of Laurus (as  amended,  modified or
supplemented  from  time  to  time,  the




"New Laurus Term Note"),  (ii) the Subordinated  Securities  Purchase  Agreement
referred to in the New Laurus Term Note (as  amended,  modified or  supplemented
from time to time,  the "New  Laurus  Purchase  Agreement"),  (iii) the  Related
Agreements  referred to in, and defined  in, the New Laurus  Purchase  Agreement
(the agreements set forth in the preceding clauses (i) through (iii), inclusive,
collectively,  the  "New  Laurus  Agreements"),  each of the  Company  and  each
Subsidiary  hereby:

         (a)      represents  and  warrants to Laurus that it has  reviewed  and
approved the terms and  provisions of each of the New Laurus  Agreements and the
documents, instruments and agreements entered into in connection therewith;

         (b)      acknowledges,  ratifies  and  confirms  that all  indebtedness
incurred by, and all other  obligations  and liabilities of, each of the Company
and  each  Subsidiary   under  each  of  the  New  Laurus   Agreements  are  (i)
"Obligations"   under,  and  as  defined  in  the  Subsidiary   Guaranty,   (ii)
"Obligations"  under,  and as defined in, the Master Security  Agreement;  (iii)
"Indebtedness"  under, and as defined in, the Stock Pledge  Agreement;  and (iv)
"Obligations" under, and as defined in, the IP Security Agreement;

         (c)      acknowledges,  ratifies  and  confirms  that  each  of the New
Laurus  Agreements  are  "Documents"  under,  and as  defined  in,  each  of the
Subsidiary  Guaranty,  the  Master  Security  Agreement  and  the  Stock  Pledge
Agreement;

         (d)      acknowledges,  ratifies  and  confirms  that all of the terms,
conditions,  representations and covenants contained in the Existing Agreements,
as modified herein,  are in full force and effect and shall remain in full force
and effect after giving effect to the execution and effectiveness of each of the
New  Laurus  Agreements  and  this  Reaffirmation,  Ratification  and  Amendment
Agreement;

         (e)      represents  and  warrants  that no offsets,  counterclaims  or
defenses  exist as of the date hereof with  respect to any of the  undersigned's
obligations under any Existing Agreement;

         (f)      acknowledges,  ratifies  and confirms the grant by each of the
Company and each  Subsidiary  to Laurus of a security  interest in the assets of
(including  the  equity  interests  owned  by)  each  of the  Company  and  each
Subsidiary respectively, as more specifically set forth in the Existing Security
and Guaranty Agreements; and

         (g)      agree s with Laurus that the  Existing  Agreements  are hereby
amended as follows:

      (i)      that  Section 1 of the  Securities  Purchase  Agreement is hereby
               amended and restated to state as follows:

                           1.       AGREEMENT TO SELL AND PURCHASE.  Pursuant to
               the terms and  conditions  set  forth in this  Agreement,  on the
               Closing Date (as defined in Section 3), the Company shall sell to
               the Purchaser, and the Purchaser shall purchase from the Company,
               the Note. The sale of the Note on the Closing Date shall be known
               as the "Offering".  The Note will mature on the Maturity Date (as
               defined  in the  Note).  Collectively,  the  Note  and  Warrants,
               together with the Warrant Shares (as


                                       2


               hereinafter defined),  are referred to as the "Securities".  Upon
               repayment in full of the unpaid  principal due under the Note and
               the New  Laurus  Term  Note (as  defined  in the  Reaffirmation),
               together with accrued and unpaid  interest  thereon and all other
               accrued and unpaid  amounts  due  thereunder  (collectively,  the
               "Note  Amounts"),  the  Master  Security  Agreement,   Subsidiary
               Guaranty,  Stock Pledge  Agreement and IP Security  Agreement and
               the security  interests in the Collateral pledged thereunder (and
               as defined  therein) shall  automatically  terminate and be of no
               further force or effect. Capitalized terms used and not otherwise
               defined herein shall have the meanings  respectively  assigned to
               them in the  applicable  Related  Agreement,  including  (without
               limitation)  the   Reaffirmation,   Ratification   and  Amendment
               Agreement among the Company,  the  Subsidiaries and the Purchaser
               dated on, about or as of December 21, 2006 (the "Reaffirmation").

      (ii)     As certain of the Schedules to the New Laurus Purchase  Agreement
               provide updated  information,  to the extent each Schedule to the
               Securities  Purchase  Agreement  (an "Existing  Schedule")  has a
               counterpart  annexed to the New Laurus Purchase Agreement (a "New
               Schedule), the Securities Purchase Agreement is hereby amended by
               deleting  each  Existing  Schedule  and  replacing  it  with  its
               counterpart New Schedule.

      (iii)    Section  3.1  of the  Existing  Note  is  hereby  amended  by the
               addition of the following new paragraph immediately following the
               final subsection thereof

               Notwithstanding  anything to the contrary in this Section 3.1, it
               shall  not be an Event  of  Default  or  Default  hereunder  if a
               payment default occurs under the New Laurus Term Note (as defined
               in the  Reaffirmation)  as a result of the  Company's  compliance
               with the applicable terms of any subordination agreement to which
               the Company and Laurus are both parties.

            [The remainder of this page is intentionally left blank]


                                       3


         This letter  agreement shall be governed by and construed in accordance
with the laws of the State of New York.

                                              Very truly yours,

                                              TRUEYOU.COM, INC.


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:

                                              KLINGER ADVANCED AESTHETICS, INC.


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:

                                              ADVANCED AESTHETICS SUB, INC.


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:

                                              ADVANCED AESTHETICS, LLC


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:

                                              KLINGER ADVANCED AESTHETICS, LLC


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:


                                       4


                                              ANUSHKA PBG, LLC


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:

                                              ANUSHKA BOCA LLC


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:

                                              WILD HARE, LLC


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:

                                              DISCHINO CORPORATION


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:

                                              ANUSHKA PBG ACQUISITION SUB, LLC


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:

                                              ANUSHKA BOCA SUB, LLC


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:


                                       5


                                              WILD HARE ACQUISITION SUB, LLC


                                              BY:
                                                 -------------------------------
                                              NAME:
                                              TITLE:
                                              ADDRESS:


ACKNOWLEDGED AND AGREED TO BY:

LAURUS MASTER FUND, LTD.

BY:
   ---------------------------
   NAME:
   TITLE:


                                       6

EX-10.84

               AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

                  This Amended and Restated  Registration  Rights  Agreement (as
amended,  modified,  restated  and/or  supplemented  from  time  to  time,  this
"Agreement")  is made and entered into as of December  22, 2006,  by and between
TrueYou.com Inc., a Delaware (the "Company"),  and Laurus Master Fund, Ltd. (the
"Purchaser").

                  This Agreement is made (i) pursuant to the Securities Purchase
Agreement, dated as of June 30, 2006, by and among the Purchaser and the Company
(as amended, modified, restated or supplemented from time to time, the "Purchase
Agreement"),  and pursuant to the Warrants referred to (and as defined) therein,
(ii) pursuant to the Securities  Purchase Agreement dated as of the date hereof,
by and among the  Purchaser and the Company (as amended,  modified,  restated or
supplemented from time to time, the "Second Purchase Agreement") and pursuant to
the Warrants  referred to (and as defined)  therein;  and (iii) pursuant to that
certain Letter  Agreement  dated December 22, 2006 (the "Letter  Agreement") and
pursuant to the Warrants referred to (and as defined) therein.

                  The Company and the Purchaser hereby agree as follows:

         1.       DEFINITIONS.  Capitalized terms used and not otherwise defined
         herein  that are  defined  in the  Purchase  Agreement  shall  have the
         meanings  given such terms in the Purchase  Agreement.  As used in this
         Agreement, the following terms shall have the following meanings:

                  "COMMISSION" means the Securities and Exchange Commission.

                  "COMMON STOCK" means shares of the Company's common stock, par
value $0.001 per share.

                  "EFFECTIVENESS   DATE"   means,   (i)  with   respect  to  the
Registration  Statement required to be filed in connection with the Common Stock
underlying  Warrants issued on the date hereof, a date no later than two hundred
seventy (270) days following such date, subject to the provisions of the Warrant
Side Letter,  and (ii) with respect to each  additional  Registration  Statement
required to be filed  hereunder  (if any), a date no later than thirty (30) days
following  the  applicable  Filing  Date  (provided  that if  such  registration
statement is reviewed by Commission, such period shall be extended to 270 days).

                  "EFFECTIVENESS  PERIOD"  has the  meaning set forth in Section
2(a).

                  "EXCHANGE ACT" means the  Securities  Exchange Act of 1934, as
amended, and any successor statute.

                  "FILING  DATE"  means,  with  respect to (1) the  Registration
Statement  required to be filed in  connection  with the shares of Common  Stock
issuable to the Holder upon due and timely exercise of a Warrant, the date which
is one hundred twenty (120) days after the issuance of such Warrant, and (2) the
Registration  Statement  required to be filed in  connection  with the



shares of Common Stock  issuable to the Holder as a result of adjustments to the
Exercise  Price made pursuant to Section 4 of the Warrant or  otherwise,  thirty
(30) days after the  occurrence  of such event or the date of the  adjustment of
the Exercise Price.

                  "HOLDER"  or  "HOLDERS"  means  the  Purchaser  or  any of its
affiliates or transferees to the extent any of them hold Registrable Securities,
other then those purchasing Registrable Securities in a market transaction.

                  "INDEMNIFIED PARTY" has the meaning set forth in Section 5(c).

                  "INDEMNIFYING  PARTY"  has the  meaning  set forth in  Section
5(c).

                  "LETTER  AGREEMENT"  has the meaning set forth in the preamble
hereto.

                  "PROCEEDING" means an action,  claim,  suit,  investigation or
proceeding   (including,   without  limitation,   an  investigation  or  partial
proceeding, such as a deposition), whether commenced or threatened.

                  "PROSPECTUS"  means the prospectus  included in a Registration
Statement  (including,  without  limitation,  a  prospectus  that  includes  any
information  previously  omitted from a prospectus filed as part of an effective
registration  statement  in  reliance  upon  Rule  430A  promulgated  under  the
Securities Act), as amended or supplemented by any prospectus  supplement,  with
respect  to  the  terms  of  the  offering  of any  portion  of the  Registrable
Securities covered by such Registration Statement,  and all other amendments and
supplements to the  Prospectus,  including  post-effective  amendments,  and all
material  incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

                  "PURCHASE AGREEMENT" has the meaning set forth in the preamble
hereto.

                  "REGISTRABLE  SECURITIES"  means the  shares  of Common  Stock
issuable upon the exercise of the  Warrants;  PROVIDED THAT upon the sale of any
such shares in the market such shares shall no longer be Registrable Securities.

                  "REGISTRATION  STATEMENT"  means each  registration  statement
required to be filed hereunder, including the Prospectus therein, amendments and
supplements to such  registration  statement or  Prospectus,  including pre- and
post-effective  amendments,  all exhibits thereto, and all material incorporated
by reference  or deemed to be  incorporated  by  reference in such  registration
statement.

                  "RULE  144"  means  Rule  144  promulgated  by the  Commission
pursuant to the  Securities  Act, as such Rule may be amended from time to time,
or any similar rule or regulation  hereafter  adopted by the  Commission  having
substantially the same effect as such Rule.

                  "RULE  415"  means  Rule  415  promulgated  by the  Commission
pursuant to the  Securities  Act, as such Rule may be amended from time to time,
or any similar rule or regulation  hereafter  adopted by the  Commission  having
substantially the same effect as such Rule.

                  "SECOND  PURCHASE  AGREEMENT" has the meaning set forth in the
preamble hereto.

                                       2


                  "SECURITIES ACT" means the Securities Act of 1933, as amended,
and any successor statute.

                  "TRADING  MARKET"  means  any of the  NASD  Over  The  Counter
Bulletin Board,  NASDAQ Capital Market, the NASDAQ National Market, the American
Stock Exchange or the New York Stock Exchange

                  "WARRANTS" means (i) Warrant A, Warrant B and Warrant C issued
in  connection  with the  Purchase  Agreement,  as such terms are defined in the
Purchase  Agreement,  whether  on the  date  thereof  or  thereafter;  (ii)  the
"Warrants"  as such term is defined  in the  Purchase  Agreement;  and (iii) the
"Warrants" as such term is defined in the Letter Agreement.

         2.       REGISTRATION.

                  (a) On or prior to each Filing Date, the Company shall prepare
and file with the Commission a Registration  Statement  covering the Registrable
Securities for a selling  stockholder resale offering to be made on a continuous
basis  pursuant to Rule 415. Each  Registration  Statement  shall be on Form S-3
(except  if the  Company  is not  then  eligible  to  register  for  resale  the
Registrable  Securities on Form S-3, in which case such registration shall be on
another  appropriate form in accordance  herewith,  subject to the provisions of
Section 2(b))..  The Company shall cause each  Registration  Statement to become
effective  and remain  effective as provided  herein.  The Company shall use its
best efforts to cause each Registration Statement to be declared effective under
the Securities Act as promptly as possible after the filing thereof,  but in any
event no later than the Effectiveness Date. The Company shall use its reasonable
commercial efforts to keep each Registration  Statement  continuously  effective
under the  Securities  Act until the date which is the earlier  date of when (i)
all Registrable Securities covered by such Registration Statement have been sold
or (ii) all Registrable Securities covered by such Registration Statement may be
sold  immediately  without  registration  under the  Securities  Act and without
volume restrictions pursuant to Rule 144(k), as determined by the counsel to the
Company  pursuant to a written  opinion  letter to such  effect,  addressed  and
acceptable to the Company's  transfer agent and the affected  Holders (each,  an
"Effectiveness Period").

                  (b) In the  event  that  Form  S-3 is not  available  for  the
registration of the resale of the Registrable Securities hereunder,  the Company
shall  (i)  register  the  resale  of  the  Registrable  Securities  on  another
appropriate  form  reasonably  acceptable  to the  Purchaser  and  undertake  to
register  the  Registrable  Securities  on Form  S-3 as  soon  as  such  form is
available,  provided that the Company shall  maintain the  effectiveness  of the
Registration  Statement  then  in  effect  until  such  time  as a  Registration
Statement on Form S-3  covering the  Registrable  Securities  has been  declared
effective by the Commission.

                  (c)  Within  three  business  days of the  date on  which  the
Commission  declares  effective any  Registration  Statement,  the Company shall
cause its  counsel  to issue a blanket  opinion in the form  attached  hereto as
Exhibit A, to the transfer agent stating that the Registrable Securities subject
to  such  Registration  Statement  are  subject  to  an  effective  registration
statement and can be reissued free of  restrictive  legend upon notice of a sale
by the Purchaser and confirmation by the Purchaser that it has complied with the
prospectus delivery requirements,

                                       3


provided  that the  Company  has not advised  the  transfer  agent  orally or in
writing  that the opinion  has been  withdrawn.  Copies of the  blanket  opinion
required by this Section 2(c) shall be  delivered  to the  Purchaser  within the
time frame set forth above.

         3.       REGISTRATION  PROCEDURES.  If  and  whenever  the  Company  is
required by the provisions  hereof to effect the registration of any Registrable
Securities  under the  Securities  Act, the Company  will, as  expeditiously  as
possible:

                  (a)  prepare  and file  with  the  Commission  a  Registration
Statement with respect to such  Registrable  Securities,  respond as promptly as
possible to any comments received from the Commission,  and use its best efforts
to cause such  Registration  Statement  to become and remain  effective  for the
Effectiveness Period with respect thereto, and promptly provide to the Purchaser
copies of all filings and Commission letters of comment relating thereto;

                  (b) prepare and file with the Commission  such  amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary to comply with the  provisions  of the  Securities
Act with respect to the  disposition of all  Registrable  Securities  covered by
such Registration  Statement and to keep such Registration  Statement  effective
until the expiration of the Effectiveness Period applicable to such Registration
Statement;

                  (c)  furnish  to the  Purchaser  such  number of copies of the
Registration  Statement and the  Prospectus  included  therein  (including  each
preliminary  Prospectus)  as the Purchaser  reasonably may request to facilitate
the public sale or disposition  of the  Registrable  Securities  covered by such
Registration Statement;

                  (d)  use  its  best   efforts  to   register  or  qualify  the
Purchaser's  Registrable Securities covered by such Registration Statement under
the securities or "blue sky" laws of such jurisdictions within the United States
as the Purchaser may reasonably  request,  provided,  however,  that the Company
shall not for any such  purpose be  required  to qualify  generally  to transact
business  as a  foreign  corporation  in  any  jurisdiction  where  it is not so
qualified or to consent to general service of process in any such jurisdiction;

                  (e)  list  the   Registrable   Securities   covered   by  such
Registration Statement with any securities exchange on which the Common Stock of
the Company is then listed;

                  (f)  immediately  notify  the  Purchaser  at any  time  when a
Prospectus  relating  thereto is required to be delivered  under the  Securities
Act,  of the  happening  of any event of which the Company  has  knowledge  as a
result of which the Prospectus contained in such Registration Statement, as then
in effect,  includes an untrue  statement of a material fact or omits to state a
material fact required to be stated  therein or necessary to make the statements
therein not misleading in light of the circumstances then existing; and

                  (g) make  available  for  inspection  by the Purchaser and any
attorney,  accountant  or other agent  retained by the  Purchaser,  all publicly
available,  non-confidential  financial and other records,  pertinent  corporate
documents  and  properties  of the Company,  and cause the  Company's  officers,
directors  and  employees  to supply all  publicly  available,  non-

                                       4


confidential  information  reasonably  requested by the attorney,  accountant or
agent of the Purchaser.

         4.       REGISTRATION  EXPENSES. All expenses relating to the Company's
compliance  with Sections 2 and 3 hereof,  including,  without  limitation,  all
registration  and filing fees,  printing  expenses,  fees and  disbursements  of
counsel and independent  public  accountants for the Company,  fees and expenses
(including  reasonable  counsel fees) incurred in connection with complying with
state securities or "blue sky" laws, fees of the NASD,  transfer taxes,  fees of
transfer  agents and  registrars,  fees of, and  disbursements  incurred by, one
counsel  for  the  Holders  are  called  "Registration  Expenses".  All  selling
commissions applicable to the sale of Registrable Securities, including any fees
and disbursements of any special counsel to the Holders beyond those included in
Registration  Expenses, are called "Selling Expenses." The Company shall only be
responsible for all Registration Expenses.

         5.       INDEMNIFICATION.

                  (a)  In  the  event  of  a  registration  of  any  Registrable
Securities under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless  each Holder,  and its officers,  directors and each
other  person,  if any,  who  controls  such  Holder  within the  meaning of the
Securities  Act,  against  any  losses,  claims,  damages,  expenses  (including
reasonable legal fees) or liabilities, joint or several, to which such Holder or
such  persons  may  become   subject  under  the  Securities  Act  or  otherwise
(collectively,  "Holder  Losses"),  insofar as such Holder Losses (or actions in
respect  thereof) arise out of or are based upon any untrue statement or alleged
untrue  statement of any material fact contained in any  Registration  Statement
under which such Registrable Securities were registered under the Securities Act
pursuant to this  Agreement,  any  preliminary  Prospectus  or final  Prospectus
contained therein,  or any amendment or supplement  thereof,  or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated  therein or necessary to make the  statements  therein not
misleading,  and will  reimburse  such  Holder,  and each  such  person  for any
reasonable  legal  or  other  expenses  incurred  by  them  in  connection  with
investigating or defending any such loss,  claim,  damage,  liability or action;
PROVIDED,  HOWEVER,  that the Company will not be liable in any such case if and
to the  extent  that any  Holder  Losses  (a)  arises out of or is based upon an
untrue  statement or alleged untrue statement or omission or alleged omission so
made in conformity with  information  furnished by or on behalf of the Purchaser
or any such person in writing,  or (b) are  occasioned by the gross  negligence,
willful  misconduct  or bad  faith of any such  indemnified  person  as  finally
determined pursuant to applicable law.

                  (b)  In  the  event  of  a  registration  of  the  Registrable
Securities  under the Securities Act pursuant to this  Agreement,  the Purchaser
will  indemnify and hold harmless the Company,  and its officers,  directors and
each other  person,  if any, who controls the Company  within the meaning of the
Securities  Act,  against  all  losses,  claims,  damages,  expenses  (including
reasonable legal fees) or liabilities, joint or several, to which the Company or
such  persons  may  become   subject  under  the  Securities  Act  or  otherwise
(collectively,  "Company Losses"), insofar as such Company Losses (or actions in
respect  thereof) arise out of or are based upon any untrue statement or alleged
untrue  statement  of any  material  fact which was  furnished in writing by the
Purchaser to the Company expressly for use in (and such information is contained
in) the  Registration  Statement  under which such  Registrable  Securities were
registered under the

                                       5


Securities Act pursuant to this Agreement,  any preliminary  Prospectus or final
Prospectus  contained therein,  or any amendment or supplement thereof, or arise
out of or are based upon the  omission or alleged  omission  to state  therein a
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  and will reimburse the Company and each such person for
any  reasonable  legal or other  expenses  incurred by them in  connection  with
investigating or defending any such loss,  claim,  damage,  liability or action,
PROVIDED,  HOWEVER,  that the  Purchaser  will be liable in any such case if and
only to the extent  that any such  Company  Losses (a) arises out of or is based
upon an untrue  statement  or alleged  untrue  statement  or omission or alleged
omission so made in  conformity  with  information  furnished  in writing to the
Company  by or on  behalf  of the  Purchaser  specifically  for use in any  such
document or (b) are occasioned by the gross  negligence,  willful  misconduct or
bad faith of any such  indemnified  person as  finally  determined  pursuant  to
applicable law.  Notwithstanding the provisions of this paragraph, the Purchaser
shall not be required to indemnify  any person or entity in excess of the amount
of  the  aggregate  net  proceeds  received  by  the  Purchaser  in  respect  of
Registrable  Securities  in  connection  with any such  registration  under  the
Securities Act.

                  (c)  Promptly  after  receipt  by a party  entitled  to  claim
indemnification hereunder (an "Indemnified Party") of notice of the commencement
of any action,  such Indemnified Party shall, if a claim for  indemnification in
respect thereof is to be made against a party hereto obligated to indemnify such
Indemnified Party (an "Indemnifying  Party"),  notify the Indemnifying  Party in
writing thereof,  but the omission so to notify the Indemnifying Party shall not
relieve it from any liability which it may have to such Indemnified  Party other
than under this Section 5(c) and shall only relieve it from any liability  which
it may have to such  Indemnified  Party  under this  Section  5(c) if and to the
extent the Indemnifying  Party is prejudiced by such omission.  In case any such
action shall be brought  against any  Indemnified  Party and it shall notify the
Indemnifying Party of the commencement  thereof, the Indemnifying Party shall be
entitled  to  participate  in and,  to the extent it shall  wish,  to assume and
undertake  the defense  thereof with counsel  satisfactory  to such  Indemnified
Party,  and, after notice from the Indemnifying  Party to such Indemnified Party
of its election so to assume and undertake the defense thereof, the Indemnifying
Party shall not be liable to such Indemnified  Party under this Section 5(c) for
any legal expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof; if the Indemnified Party retains its own counsel, then
the  Indemnified  Party shall pay all fees,  costs and expenses of such counsel,
PROVIDED,  HOWEVER,  that, if the defendants in any such action include both the
Indemnified  Party and the  Indemnifying  Party and the Indemnified  Party shall
have reasonably  concluded that there may be reasonable defenses available to it
which are different  from or additional to those  available to the  Indemnifying
Party or if the interests of the Indemnified  Party  reasonably may be deemed to
conflict with the interests of the  Indemnifying  Party,  the Indemnified  Party
shall have the right to select one  separate  counsel  and to assume  such legal
defenses and otherwise to  participate  in the defense of such action,  with the
reasonable expenses and fees of such separate counsel and other expenses related
to such participation to be reimbursed by the Indemnifying Party as incurred.

                  (d) In order to provide for just and equitable contribution in
the  event of joint  liability  under  the  Securities  Act in any case in which
either (i) the Purchaser, or any officer,  director or controlling person of the
Purchaser,  makes a claim for indemnification  pursuant to this Section 5 but it
is judicially  determined (by the entry of a final judgment or decree by a court
of competent  jurisdiction and the expiration of time to appeal or the denial of
the last right of

                                       6


appeal)   that  such   indemnification   may  not  be   enforced  in  such  case
notwithstanding  the fact that this  Section 5 provides for  indemnification  in
such case, or (ii) contribution  under the Securities Act may be required on the
part of the Purchaser or such  officer,  director or  controlling  person of the
Purchaser in  circumstances  for which  indemnification  is provided  under this
Section 5; then,  and in each such case,  the  Company  and the  Purchaser  will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after  contribution  from others) in such proportion so that the
Purchaser is responsible only for the portion represented by the percentage that
the  public  offering  price  of its  securities  offered  by  the  Registration
Statement bears to the public  offering price of all securities  offered by such
Registration  Statement,  PROVIDED,  HOWEVER,  that,  in any such case,  (A) the
Purchaser  will not be required to contribute any amount in excess of the public
offering  price  of  all  such  securities   offered  by  it  pursuant  to  such
Registration  Statement;  and (B) no  person  or  entity  guilty  of  fraudulent
misrepresentation  (within  the  meaning  of  Section  10(f) of the Act) will be
entitled  to  contribution  from any person or entity who was not guilty of such
fraudulent  misrepresentation.

         6.       REPRESENTATIONS AND WARRANTIES.  The Company hereby represents
and  warrants  to the  Purchaser  as  follows as of the date  hereof  (unless an
earlier date is indicated):

                  (a) The Common Stock is  registered  pursuant to Section 12(b)
or 12(g) of the Exchange Act and,  except with respect to certain  matters which
the Company has  disclosed  to the  Purchaser  on SCHEDULE  4.21 to the Purchase
Agreement or SCHEDULE  4.21 to the Second  Purchase  Agreement,  the Company has
timely filed all proxy statements,  reports,  schedules,  forms,  statements and
other  documents  required to be filed by it under the Exchange Act. The Company
has filed (i) its Annual  Report on Form 10-K for the fiscal year ended June 30,
2005 and (ii) its Quarterly  Report on Form 10-Q for the fiscal  quarters  ended
December 30, 2005,  (collectively,  the "SEC Reports").  Each SEC Report was, at
the time of its filing,  in substantial  compliance with the requirements of its
respective form and none of the SEC Reports,  nor the financial  statements (and
the notes thereto)  included in the SEC Reports,  as of their respective  filing
dates,  contained any untrue  statement of a material fact or omitted to state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  The financial statements of the Company included in the SEC Reports
comply  as  to  form  in  all  material  respects  with  applicable   accounting
requirements  and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted  accounting  principles
("GAAP")  applied on a consistent  basis during the periods involved (except (i)
as may be otherwise indicated in such financial  statements or the notes thereto
or (ii) in the case of unaudited interim statements,  to the extent they may not
include  footnotes  or may be  condensed)  and fairly  present  in all  material
respects the financial  condition,  the results of operations and the cash flows
of the Company and its  subsidiaries,  on a consolidated  basis, as of, and for,
the periods  presented  in each such SEC Report.  The Common  Stock is currently
quoted for trading on the Pink Sheets, but shall, pursuant to Section 6.2 of the
Purchase Agreement and Section 6.2 of the Second Purchase  Agreement,  be quoted
for trading on a Trading  Market  within  twelve (12) months of the date hereof.
After such date, the Company shall do all things  necessary for the continuation
of such listing.

                                       7


                  (b) Neither the Company,  nor any of its  affiliates,  nor any
person acting on its or their behalf, has directly or indirectly made any offers
or sales of any security or solicited any offers to buy any security (other than
as set forth on SCHEDULE 6(B) hereto) under  circumstances  that would cause the
offering  of the  Securities  pursuant  to the  Purchase  Agreement,  the Second
Purchase Agreement or the Letter Agreement to be integrated with prior offerings
by the  Company  for  purposes of the  Securities  Act which  would  prevent the
Company from selling the Common Stock  pursuant to Rule 506 under the Securities
Act, or any applicable  exchange-related  stockholder approval  provisions,  nor
will the Company or any of its  affiliates  or  subsidiaries  take any action or
steps that would cause the  offering of the Common Stock to be  integrated  with
other offerings (other than such concurrent offering to the Purchaser).

                  (c) The  Warrants  and the  shares  of Common  Stock  that the
Purchaser  may acquire  pursuant to the Warrants are all  restricted  securities
under the Securities Act as of the date of this Agreement.  The Company will not
issue any stop transfer  order or other order  impeding the sale and delivery of
any of the Registrable Securities after such time as such Registrable Securities
are registered for public sale or an exemption from  registration  is available,
except as required by federal or state securities laws.

                  (d) The  Company  understands  the  nature of the  Registrable
Securities  issuable upon the exercise of each Warrant and  recognizes  that the
issuance of such  Registrable  Securities may have a potential  dilutive effect.
The  Company  specifically   acknowledges  that  its  obligation  to  issue  the
Registrable Securities is binding upon the Company and enforceable regardless of
the  dilution  such  issuance  may  have on the  ownership  interests  of  other
shareholders of the Company.

                  (e)  Except  for  agreements  made in the  ordinary  course of
business or as  disclosed  in the  schedules  to the  Purchase  Agreement or the
Second  Purchase  Agreement,  there is no agreement that has not been filed with
the Commission as an exhibit to a  registration  statement or to a form required
to be filed by the Company  under the  Exchange  Act,  the breach of which could
reasonably be expected to have a material and adverse  effect on the Company and
its subsidiaries,  or would prohibit or otherwise  interfere with the ability of
the  Company  to enter  into  and  perform  any of its  obligations  under  this
Agreement in any material respect.

                  (f) As of the nine-month  anniversary of the date hereof,  the
Company will at all times have  authorized  and reserved a sufficient  number of
shares of Common Stock for the full exercise of the Warrants.

         7.       MISCELLANEOUS.

                  (a) REMEDIES.  In the event of a breach by the Company or by a
Holder, of any of their respective obligations under this Agreement, each Holder
or the  Company,  as the case may be, in addition to being  entitled to exercise
all rights  granted  by law and under  this  Agreement,  including  recovery  of
damages,  will be  entitled  to specific  performance  of its rights  under this
Agreement.

                  (b) NO PIGGYBACK ON REGISTRATIONS. Except as and to the extent
set forth in on Schedule  7(b) hereto or in any  Securities  Filings filed as of
the date hereof, neither the

                                       8


Company nor any of its security holders (other than the Holders in such capacity
pursuant  hereto) may  include  securities  of the  Company in any  Registration
Statement other than the Registrable Securities, and the Company shall not after
the date hereof enter into any agreement  providing any such right for inclusion
of shares in the Registration  Statement to any of its security holders.  Except
and as to the extent  specified  in Schedule  7(b)  hereto or in any  Securities
Filings filed as of the date hereof, the Company has not previously entered into
any  agreement  granting  any  registration  rights  with  respect to any of its
securities to any Person that have not been fully satisfied.

                  (c) COMPLIANCE.  Each Holder covenants and agrees that it will
comply  with the  prospectus  delivery  requirements  of the  Securities  Act as
applicable to it in connection with sales of Registrable  Securities pursuant to
any Registration Statement.

                  (d)  DISCONTINUED  DISPOSITION.  Each  Holder  agrees  by  its
acquisition of such  Registrable  Securities that, upon receipt of a notice from
the Company of the  occurrence of a  Discontinuation  Event (as defined  below),
such  Holder  will  forthwith   discontinue   disposition  of  such  Registrable
Securities  under the  applicable  Registration  Statement  until such  Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement or until it is advised in writing  (the  "Advice") by the Company that
the use of the applicable  Prospectus  may be resumed,  and, in either case, has
received copies of any additional or supplemental  filings that are incorporated
or deemed to be  incorporated  by reference in such  Prospectus or  Registration
Statement.  The  Company  may  provide  appropriate  stop  orders to enforce the
provisions of this paragraph. For purposes of this Agreement, a "Discontinuation
Event" shall mean (i) when the  Commission  notifies the Company  whether  there
will be a "review" of such  Registration  Statement and whenever the  Commission
comments in writing on such  Registration  Statement  (the Company shall provide
true and complete  copies thereof and all written  responses  thereto to each of
the Holders);  (ii) any request by the  Commission or any other Federal or state
governmental  authority  for  amendments  or  supplements  to such  Registration
Statement or Prospectus or for additional information; (iii) the issuance by the
Commission of any stop order suspending the  effectiveness of such  Registration
Statement covering any or all of the Registrable Securities or the initiation of
any  Proceedings  for that  purpose;  (iv) the  receipt  by the  Company  of any
notification  with respect to the suspension of the  qualification  or exemption
from  qualification  of  any of  the  Registrable  Securities  for  sale  in any
jurisdiction,  or the  initiation  or  threatening  of any  Proceeding  for such
purpose;  and/or (v) the  occurrence  of any event or passage of time that makes
the financial statements included in such Registration  Statement ineligible for
inclusion  therein  or any  statement  made in such  Registration  Statement  or
Prospectus or any document  incorporated or deemed to be incorporated therein by
reference  untrue in any material respect or that requires any revisions to such
Registration  Statement,  Prospectus or other  documents so that, in the case of
such  Registration  Statement  or  Prospectus,  as the case may be,  it will not
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated therein or necessary to make the statements  therein,
in light of the circumstances under which they were made, not misleading.

                  (e)  PIGGY-BACK  REGISTRATIONS.  If at any time after the date
hereof  there is not an  effective  Registration  Statement  covering all of the
Registrable  Securities  required to be covered  hereunder and the Company shall
determine to prepare and file with the Commission a

                                       9


registration  statement  relating  to an  offering  for its own  account  or the
account of others  under the  Securities  Act of any of its  equity  securities,
other  than on Form S-4 or Form S-8 (each as  promulgated  under the  Securities
Act) or their then equivalents relating to equity securities to be issued solely
in  connection  with  any  acquisition  of any  entity  or  business  or  equity
securities  issuable in connection  with stock option or other employee  benefit
plans,  then the  Company  shall  send to each  Holder  written  notice  of such
determination and, if within fifteen (15) days after receipt of such notice, any
such Holder  shall so request in  writing,  the  Company  shall  include in such
registration  statement  all or any  part of such  Registrable  Securities  such
Holder  requests to be  registered,  to the extent the Company may do so without
violating  registration  rights  of  others  which  exist as of the date of this
Agreement,  subject to customary  underwriter cutbacks applicable to all holders
of  registration  rights and subject to obtaining  any  required  consent of any
selling stockholder(s) to such inclusion under such registration statement.

                  (f) AMENDMENTS AND WAIVERS.  The provisions of this Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given,  unless the same shall be in writing and signed by the Company
and the Holders of the majority of the then outstanding  Registrable Securities.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof  with  respect  to a matter  that  relates  exclusively  to the rights of
certain  Holders and that does not directly or  indirectly  affect the rights of
other Holders may be given by Holders of at least a majority of the  Registrable
Securities to which such waiver or consent relates; PROVIDED,  HOWEVER, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the immediately preceding sentence.

                  (g) NOTICES.  Any notice or request  hereunder may be given to
the Company or the Purchaser at the  respective  addresses set forth below or as
may  hereafter be specified in a notice  designated as a change of address under
this Section 7(g). Any notice or request  hereunder shall be given by registered
or certified  mail,  return receipt  requested,  hand delivery,  overnight mail,
Federal  Express or other  national  overnight  next day carrier  (collectively,
"Courier") or telecopy  (confirmed by mail).  Notices and requests  shall be, in
the case of those by hand delivery,  deemed to have been given when delivered to
any  party to whom it is  addressed,  in the case of those by mail or  overnight
mail,  deemed to have been  given  three (3)  business  days after the date when
deposited  in the  mail or with the  overnight  mail  carrier,  in the case of a
Courier, the next business day following timely delivery of the package with the
Courier,  and, in the case of a telecopy,  when confirmed.  The address for such
notices and communications shall be as follows:

                  IF TO THE COMPANY:         TrueYou.com, Inc.
                                             501 Merritt 7, 5th Floor
                                             Norwalk, Connecticut 06851
                                             Attention:  Chief Financial Officer
                                             Facsimile:  203-295-2102

                                             WITH A COPY TO:

                                       10


                                             Troutman Sanders LLP
                                             405 Lexington Avenue
                                             New York, New York 10174
                                             Attention:  Edward R. Mandell
                                             Facsimile:  212-704-6160

                  IF TO A PURCHASER:         To the address set forth under such
                                             Purchaser name on the signature
                                             pages hereto.

                  IF TO ANY OTHER PERSON
                  WHO IS THEN THE REGISTERED
                  HOLDER:                    To the address of such Holder as it
                                             appears in the stock transfer books
                                             of the Company

or such other address as may be  designated  in writing  hereafter in accordance
with this Section 7(g) by such Person.

                  (h) SUCCESSORS AND ASSIGNS.  This Agreement shall inure to the
benefit of and be binding upon the successors  and permitted  assigns of each of
the parties and shall inure to the benefit of each  Holder.  The Company may not
assign its rights or obligations  hereunder without the prior written consent of
each Holder.  Each Holder may assign their  respective  rights  hereunder in the
manner and to the Persons as  permitted  under the  Purchase  Agreement  and the
Second Purchase Agreement.

                  (i) EXECUTION AND COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and, all of which taken  together  shall  constitute  one and the
same  agreement.  In the event that any  signature  is  delivered  by  facsimile
transmission,  such  signature  shall create a valid  binding  obligation of the
party  executing  (or on whose behalf such  signature is executed) the same with
the same  force and  effect as if such  facsimile  signature  were the  original
thereof.

                  (j) GOVERNING LAW, JURISDICTION AND WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE,  WITHOUT  REGARD TO  PRINCIPLES  OF CONFLICTS OF LAW. The Company  hereby
consents  and agrees that the state or federal  courts  located in the County of
New York,  State of New York shall have  non-exclusion  jurisdiction to hear and
determine  any  Proceeding  between  the  Company,  on the  one  hand,  and  the
Purchaser,  on the other hand,  pertaining  to this  Agreement  or to any matter
arising out of or related to this  Agreement;  PROVIDED,  that the Purchaser and
the Company  acknowledge that any appeals from those courts may have to be heard
by a court  located  outside of the County of New York,  State of New York,  and
FURTHER  PROVIDED,  that nothing in this Agreement shall be deemed or operate to
preclude the Purchaser from bringing a Proceeding in any other  jurisdiction  to
collect the obligations,  to realize on the Collateral or any other security for
the  obligations,  or to enforce a judgment or other court order in favor of the
Purchaser.  The  Company  expressly  submits  and  consents  in  advance to such
jurisdiction  in any  Proceeding  commenced  in any such court,  and the Company
hereby  waives  any  objection  which it may have  based  upon lack of  personal
jurisdiction,  improper venue or FORUM NON CONVENIENS. The Company hereby waives
personal service of the summons,  complaint and other process issued in any such
Proceeding and

                                       11


agrees that service of such summons, complaint and other process may be made via
Federal  Express or by registered or certified  mail addressed to the Company at
the address set forth in Section  7(g) and that  service so made shall be deemed
completed upon the earlier of the Company's  actual receipt  thereof or four (4)
days after deposit in the U.S. mails,  proper postage prepaid in accordance with
the Purchase  Agreement and the Second  Purchase  Agreement.  The parties hereto
desire that their disputes be resolved by a judge applying such applicable laws.
Therefore,  to achieve the best  combination  of the  benefits  of the  judicial
system and of arbitration,  the parties hereto waive all rights to trial by jury
in any Proceeding  brought to resolve any dispute,  whether arising in contract,
tort,  or otherwise  between the  Purchaser  and/or the Company  arising out of,
connected with,  related or incidental to the relationship  established  between
then in connection with this Agreement.  If either party hereto shall commence a
Proceeding to enforce any provisions of this Agreement,  the Purchase Agreement,
the Second Purchase  Agreement or any Related Agreement (as such term is defined
in the Purchase Agreement or the Second Purchase Agreement), then the prevailing
party  in such  Proceeding  shall  be  reimbursed  by the  other  party  for its
reasonable  attorneys'  fees and other  costs  and  expenses  incurred  with the
investigation, preparation and prosecution of such Proceeding.

                  (k)  CUMULATIVE  REMEDIES.  The remedies  provided  herein are
cumulative and not exclusive of any remedies  provided by law.

                  (l)  SEVERABILITY.   If  any  term,  provision,   covenant  or
restriction  of this  Agreement  is finally  determined  by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms,  provisions,  covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected,  impaired or invalidated,
and the parties hereto shall use their reasonable  efforts to find and employ an
alternative  means to achieve the same or substantially  the same result as that
contemplated  by such term,  provision,  covenant or  restriction.  It is hereby
stipulated  and declared to be the intention of the parties that they would have
executed the remaining terms,  provisions,  covenants and  restrictions  without
including any of such that may be hereafter declared invalid,  illegal,  void or
unenforceable.

                  (m)  HEADINGS.   The  headings  in  this   Agreement  are  for
convenience  of  reference  only and  shall not limit or  otherwise  affect  the
meaning  hereof.

                  (n) ENTIRE  AGREEMENT.  This  Agreement,  and the exhibits and
schedules  hereto  constitute  the full and entire  understanding  and agreement
between  the  parties  with  regard to the  subjects  hereof  and  thereof,  and
supersede  and  completely  replace any and all (and no party shall be liable or
bound  to any  other in any  manner  by any)  prior  or  other  representations,
warranties,   covenants,   promises,   assurances   or   other   agreements   or
understandings (whether written, oral, express,  implied or otherwise) except as
specifically set forth herein and therein.

       [Balance of page intentionally left blank; signature page follows]


                                       12


                                    EXHIBIT A

                              ____________, 200___

[Transfer Agent]
Two Broadway
New York, New York  10004
Attn:  William Seegraber]

                  Re:   TRUEYOU.COM, INC. REGISTRATION STATEMENT ON FORM [S-3]

Ladies and Gentlemen:

         As counsel to TrueYou.com, Inc. , a _____________ (the "Company"), we
have been requested to render our opinion to you in connection with the resale
by the individuals or entitles listed on SCHEDULE A attached hereto (the
"Selling Stockholders"), of an aggregate of __________ shares (the "Shares") of
the Company's Common Stock.

         A Registration Statement on Form [S-3] under the Securities Act of
1933, as amended (the "Act"), with respect to the resale of the Shares was
declared effective by the Securities and Exchange Commission on [date]. Enclosed
is the Prospectus dated [date]. We understand that the Shares are to be offered
and sold in the manner described in the Prospectus.

         Based upon the foregoing, upon request by the Selling Stockholders at
any time while the registration statement remains effective, it is our opinion
that the Shares have been registered for resale under the Act and new
certificates evidencing the Shares upon their transfer or re-registration by the
Selling Stockholders may be issued without restrictive legend. We will advise
you if the registration statement is not available or effective at any point in
the future.

                                          Very truly yours,

                                          [Company counsel]



                             SCHEDULE A TO EXHIBIT A

                                                                   Shares
          Selling Stockholder                R/N/O              Being Offered
          -------------------                -----              -------------








                  IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Registration Rights Agreement as of the date first written above.

                                         TRUEYOU.COM


                                         By:
                                            -------------------------------
                                         Name:
                                              -----------------------------
                                         Title:
                                               ----------------------------


                                         LAURUS MASTER FUND, LTD.


                                         By:
                                            -------------------------------
                                         Name:
                                              -----------------------------
                                         Title:
                                               ----------------------------

                                         Address for Notices:

                                         825 Third Avenue, 14th Floor
                                         New York, New York 10022
                                         Attention:  Eugene Grin
                                         Facsimile:  212-541-4434

EX-10.85

                                TrueYou.Com Inc.
                            501 Merritt 7, 5th Floor
                           Norwalk, Connecticut 06851


                                                       December 22, 2006

Laurus Master Fund Ltd.
c/o M&C Corporate Services Limited
P.O.  Box 309 GT
Ugland House
George Town
South Church Street
Grand Cayman, Cayman Islands

Gentlemen:

         Reference is made to that certain Securities  Purchase Agreement by and
between TrueYou.com,  Inc. ("we", "us" or the "Company") and Laurus Master Fund,
Ltd.  ("you" or "Laurus")  dated as of the date hereof (as amended,  modified or
supplemented,  the "SPA") and the Related Agreements (as such term is defined in
the SPA). Terms not otherwise defined herein shall have the definition  assigned
thereto in the SPA.

         This  letter is to confirm our mutual  understanding  that in the event
that all  principal,  interest  and fees  outstanding  on the Note have not been
indefeasibly  paid in full as of April 30,  2007,  the  Company  shall  issue to
Laurus  8,750,000  warrants  (the  "Additional  Warrants")  pursuant to the form
attached  hereto as EXHIBIT A in addition to the  10,000,000  Warrants that have
been issued to Laurus  concurrently  herewith  pursuant to the terms of the SPA.
The Company and Laurus  hereby agree that all  representations,  warranties  and
covenants in the SPA  regarding  the Warrants  shall hereby be deemed to be made
with respect to the Additional Warrants at such time.

         In addition,  as soon as  practicable  after the date  hereof,  TrueYou
shall use its best  efforts  to cause its  Certificate  of  Incorporation  to be
amended to increase the number of authorized  shares of TrueYou  Common Stock to
such  number  as shall be  sufficient  to  permit  the  exercise  in full of the
Warrants and the Additional Warrants (such amount, the "Share Amount") and shall
thereupon  reserve for issuance upon exercise of the Warrants and the Additional
Warrants,  that number of authorized  shares of TrueYou Common Stock which shall
be required for such purpose.  In the event that Laurus shall notify  TrueYou at
any time  prior to the  effective  date of such  amendment  that it  desires  to
exercise the Warrants  and/or the  Additional  Warrants  prior to such effective
date,  TrueYou shall  thereupon  promptly  issue to Laurus,  in exchange for the
Warrants and/or the Additional  Warrants (as  applicable),  substitute  warrants
exercisable  to  purchase  that  number of shares  of its  Series B  Convertible
Preferred Stock that are, upon  authorization  of the Share Amount,  immediately
convertible  into the number of shares of TrueYou  Common  Stock that would then
have  been  issuable  upon  exercise  of  the  Warrants  and/or



the  Additional   Warrants(as   applicable)  in  full  if  the   Certificate  of
Incorporation of TrueYou had then provided for sufficient  authorized  shares of
TrueYou  Common  Stock  to  satisfy  such  exercise,  and  otherwise  containing
substantially  the  same  terms  and  provisions  as  the  Warrants  and/or  the
Additional Warrants (as applicable).

         Please confirm our agreements below.

                                                   Very truly yours,

                                                   TrueYou.Com Inc.

                                                   By:
                                                      -------------------------
Laurus Master Fund Ltd.

By:
   ---------------------------

EX-10.86

     THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE  UPON EXERCISE OF
     THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
     AS AMENDED,  OR ANY STATE  SECURITIES LAWS. THIS WARRANT AND THE COMMON
     STOCK  ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,  OFFERED
     FOR SALE,  PLEDGED  OR  HYPOTHECATED  IN THE  ABSENCE  OF AN  EFFECTIVE
     REGISTRATION  STATEMENT  AS TO  THIS  WARRANT  UNDER  SAID  ACT AND ANY
     APPLICABLE  STATE  SECURITIES LAWS OR AN OPINION OF COUNSEL  REASONABLY
     SATISFACTORY  TO  TRUEYOU.COM,  INC.  THAT  SUCH  REGISTRATION  IS  NOT
     REQUIRED.

          Right to Purchase up to 10,000,000 Shares of Common Stock of
                                TrueYou.com, Inc.
                   (subject to adjustment as provided herein)

                          COMMON STOCK PURCHASE WARRANT

No. W-74                                          Issue Date:  December 22, 2006

         TrueYou.com,  Inc., a corporation organized under the laws of the State
of Delaware (the "Company"),  hereby certifies that, for value received,  LAURUS
MASTER FUND, LTD. (the  "Purchaser"),  or permitted  assigns  (together with the
Purchaser, the "Holder"), is entitled,  subject to the terms set forth below and
the provisions of the Purchase  Agreement and Warrant Side Letter (as such terms
are defined  below)),  to purchase from the Company (as defined herein) from and
after the Issue Date of this Warrant and at any time or from time to time before
5:00 p.m., New York time,  through the close of business  December 22, 2013 (the
"Expiration  Date"),  up to 10,000,000  fully paid and  nonassessable  shares of
Common  Stock (as  hereinafter  defined),  $0.001  par value per  share,  at the
applicable Exercise Price per share (as defined below). The number and character
of such shares of Common Stock and the  applicable  Exercise Price per share are
subject to  adjustment  as  provided  in this  warrant  (as  amended,  modified,
restated and/or supplemented from time to time, this "Warrant").

         As used  herein  the  following  terms,  unless the  context  otherwise
requires,  have the following respective meanings:

                  (a) The term "Company" shall include TrueYou.com, Inc. and any
         person or entity which shall  succeed,  or assume the  obligations  of,
         TrueYou.com, Inc. hereunder.

                  (b) The term "Common Stock" includes (i) the Company's  Common
         Stock,  par value $0.001 per share;  and (ii) any other securities into
         which or for which any of the  securities  described  in the  preceding
         clause  (i)  may be  converted  or  exchanged  pursuant  to a  plan  of
         recapitalization, reorganization, merger, sale of assets or otherwise.

                  (c) The term  "Other  Securities"  refers to any stock  (other
         than  Common  Stock) and other  securities  of the Company or any other
         person  (corporate or otherwise)



         which the  holder  of the  Warrant  at any time  shall be  entitled  to
         receive,  or shall have  received,  on the exercise of the Warrant,  in
         lieu of or in addition to Common  Stock,  or which at any time shall be
         issuable or shall have been issued in exchange for or in replacement of
         Common Stock or Other Securities pursuant to Section 4 or otherwise.

                  (d) The "Exercise  Price"  applicable under this Warrant shall
         be $0.01 per share.

                  (e)  Capitalized  terms used herein without  definition  shall
         have the meanings  ascribed to such terms in that certain  Subordinated
         Securities  Purchase  Agreement  dated as of  December  22, 2006 by and
         between the Company and the Purchaser (as amended,  modified,  restated
         and/or supplemented from time to time, the "PURCHASE  AGREEMENT") or in
         any Related Agreement (as defined in the Purchase Agreement).

         1. EXERCISE OF WARRANT.

                  1.1 NUMBER OF SHARES  ISSUABLE UPON  EXERCISE.  From and after
the date hereof through and including the  Expiration  Date, the Holder shall be
entitled  to receive,  upon  exercise  of this  Warrant in whole or in part,  by
delivery of an original or fax copy of an exercise  notice in the form  attached
hereto  as  Exhibit A (the  "Exercise  Notice"),  shares of Common  Stock of the
Company, subject to adjustment pursuant to Section 4.

                  1.2 FAIR MARKET VALUE. For purposes  hereof,  the "Fair Market
Value" of a share of Common  Stock as of a particular  date (the  "Determination
Date") shall mean:

                  (a) If the  Company's  Common  Stock is traded on the American
         Stock  Exchange  or  another  national  exchange  or is  quoted  on the
         National or Capital Market of The Nasdaq Stock Market, Inc. ("Nasdaq"),
         then the closing or last sale  price,  respectively,  reported  for the
         last business day immediately preceding the Determination Date.

                  (b)  If the  Company's  Common  Stock  is  not  traded  on the
         American Stock Exchange or another  national  exchange or on the Nasdaq
         but is traded on the NASD Over The  Counter  Bulletin  Board,  then the
         mean of the average of the closing bid and asked  prices  reported  for
         the last business day immediately preceding the Determination Date.

                  (c) Except as provided in clause (d) below,  if the  Company's
         Common Stock is not publicly traded, then as the Holder and the Company
         agree or in the absence of agreement by arbitration in accordance  with
         the  rules  then in  effect of the  American  Arbitration  Association,
         before  a  single  arbitrator  to be  chosen  from a panel  of  persons
         qualified  by  education  and  training  to  pass on the  matter  to be
         decided.

                  (d) If the  Determination  Date is the date of a  liquidation,
         dissolution  or winding  up, or any event  deemed to be a  liquidation,
         dissolution or winding up pursuant to the Company's  charter,  then all
         amounts to be payable per share to holders of the Common

                                       2


         Stock  pursuant  to the  charter  in the  event  of  such  liquidation,
         dissolution  or winding  up,  plus all other  amounts to be payable per
         share in respect of the Common Stock in liquidation  under the charter,
         assuming  for the purposes of this clause (d) that all of the shares of
         Common Stock then issuable upon exercise of the Warrant are outstanding
         at the Determination Date.

                  1.3 COMPANY  ACKNOWLEDGMENT.  The Company will, at the time of
the exercise of this Warrant,  upon the request of the holder hereof acknowledge
in writing  its  continuing  obligation  to afford to such  holder any rights to
which  such  holder  shall  continue  to be  entitled  after  such  exercise  in
accordance with the provisions of this Warrant. If the holder shall fail to make
any such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.

                  1.4 TRUSTEE FOR WARRANT  HOLDERS.  In the event that a bank or
trust  company  shall have been  appointed  as trustee  for the  holders of this
Warrant  pursuant to  Subsection  3.2, such bank or trust company shall have all
the powers and duties of a warrant agent (as  hereinafter  described)  and shall
accept,  in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor,  as the case may be, on  exercise  of this  Warrant  pursuant to this
Section 1.

         2. PROCEDURE FOR EXERCISE.

                  2.1 DELIVERY OF STOCK  CERTIFICATES,  ETC.,  ON EXERCISE.  The
Company  agrees that the shares of Common Stock  purchased upon exercise of this
Warrant  shall be deemed to be issued to the Holder as the record  owner of such
shares as of the close of business on the date on which this Warrant  shall have
been  surrendered  and payment made for such shares in accordance  herewith.  As
soon as  practicable  after the exercise of this Warrant in full or in part, and
in any event  within  three (3)  business  days  thereafter,  the Company at its
expense  (including the payment by it of any applicable  issue taxes) will cause
to be issued in the name of and delivered to the Holder, or as such Holder (upon
payment  by  such  Holder  of any  applicable  transfer  taxes)  may  direct  in
compliance with applicable  securities  laws, a certificate or certificates  for
the number of duly and validly issued,  fully paid and  nonassessable  shares of
Common  Stock (or Other  Securities)  to which such Holder  shall be entitled on
such exercise,  plus, in lieu of any fractional share to which such holder would
otherwise be entitled,  cash equal to such fraction  multiplied by the then Fair
Market  Value  of one  full  share,  together  with  any  other  stock  or other
securities and property  (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

                  2.2 EXERCISE.

                  (a)  Payment  may be made  either  (i) in cash of  immediately
         available  funds or by certified or official  bank check payable to the
         order of the Company equal to the applicable  aggregate Exercise Price,
         (ii) by  delivery of this  Warrant,  or shares of Common  Stock  and/or
         Common Stock  receivable  upon  exercise of this Warrant in  accordance
         with the  formula  set forth in  subsection  (b)  below,  or (iii) by a
         combination of any of the foregoing  methods,  for the number of Common
         Shares specified in such Exercise Notice (as such exercise number shall
         be adjusted to reflect any  adjustment in the total number of shares of
         Common Stock  issuable to the Holder per the terms of this

                                       3


         Warrant)  and the Holder  shall  thereupon  be  entitled to receive the
         number   of   duly   authorized,   validly   issued,   fully-paid   and
         non-assessable shares of Common Stock (or Other Securities)  determined
         as provided herein.

                  (b) Notwithstanding any provisions herein to the contrary,  if
         the Fair Market  Value of one share of Common Stock is greater than the
         Exercise Price (at the date of calculation as set forth below), in lieu
         of  exercising  this Warrant for cash,  the Holder may elect to receive
         shares equal to the value (as determined below) of this Warrant (or the
         portion  thereof  being  exercised) by surrender of this Warrant at the
         principal  office of the Company  together  with the properly  endorsed
         Exercise  Notice in which event the Company shall issue to the Holder a
         number of shares of Common Stock computed using the following formula:

         X=             Y(A-B)
                       -------
                           A

         Where X =     the number of shares of Common Stock to be issued to the
                       Holder

         Y =           the  number of shares of Common Stock purchasable under
                       this Warrant or, if only a portion of this Warrant is
                       being exercised, the portion of this Warrant being
                       exercised (at the date of such calculation)

         A =           the Fair Market  Value of one share of the  Company's
                       Common Stock (at the date of such calculation)

         B =           the Exercise Price per share (as adjusted to the date of
                       such calculation)

         3. EFFECT OF REORGANIZATION, ETC.; ADJUSTMENT OF EXERCISE PRICE.

                  3.1 REORGANIZATION, CONSOLIDATION, MERGER, ETC. In case at any
time or from time to time,  the Company shall (a) effect a  reorganization,  (b)
consolidate  with or  merge  into  any  other  person,  or (c)  transfer  all or
substantially all of its properties or assets to any other person under any plan
or arrangement  contemplating the dissolution of the Company, then, in each such
case,  as a condition  to the  consummation  of such a  transaction,  proper and
adequate  provision  shall be made by the Company  whereby  the  Holder,  on the
exercise  hereof as provided in Section 1 at any time after the  consummation of
such  reorganization,  consolidation  or  merger or the  effective  date of such
dissolution,  as the case may be, shall receive, in lieu of the Common Stock (or
Other  Securities)  issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property  (including cash) to
which  such  Holder  would  have  been  entitled  upon such  consummation  or in
connection  with such  dissolution,  as the case may be, if such  Holder  had so
exercised  this  Warrant,  immediately  prior  thereto,  all  subject to further
adjustment thereafter as provided in Section 4.

                  3.2  DISSOLUTION.  In  the  event  of any  dissolution  of the
Company  following the transfer of all or substantially all of its properties or
assets, the Company,  concurrently with any distributions made to holders of its
Common  Stock,  shall at its  expense  deliver or cause to be  delivered  to the
Holder  the stock and other  securities  and  property  (including  cash,  where

                                       4


applicable)  receivable by the Holder pursuant to Section 3.1, or, if the Holder
shall so instruct  the  Company,  to a bank or trust  company  specified  by the
Holder and  having  its  principal  office in New York,  NY as  trustee  for the
Holder.

                  3.3   CONTINUATION   OF   TERMS.   Upon  any   reorganization,
consolidation,  merger or transfer (and any dissolution  following any transfer)
referred to in this  Section 3, this  Warrant  shall  continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and other
securities  and property  receivable  on the exercise of this Warrant  after the
consummation of such  reorganization,  consolidation  or merger or the effective
date of dissolution  following any such transfer,  as the case may be, and shall
be binding upon the issuer of any such stock or other securities,  including, in
the case of any such transfer,  the person acquiring all or substantially all of
the  properties or assets of the Company,  whether or not such person shall have
expressly  assumed  the terms of this  Warrant as  provided in Section 4. In the
event  this  Warrant  does not  continue  in full  force  and  effect  after the
consummation of the transactions described in this Section 3, then the Company's
securities and property  (including  cash, where  applicable)  receivable by the
Holder will be delivered to the Holder or the Trustee as contemplated by Section
3.2.

         4.  EXTRAORDINARY  EVENTS REGARDING COMMON STOCK. In the event that the
Company shall (a) issue  additional  shares of the Common Stock as a dividend or
other  distribution on outstanding Common Stock or any preferred stock issued by
the Company,  (b) subdivide its outstanding  shares of Common Stock, (c) combine
its  outstanding  shares of the Common Stock into a smaller  number of shares of
the  Common  Stock,  then,  in  each  such  event,  the  Exercise  Price  shall,
simultaneously  with the happening of such event, be adjusted by multiplying the
then Exercise Price by a fraction, the numerator of which shall be the number of
shares of  Common  Stock  outstanding  immediately  prior to such  event and the
denominator  of which shall be the number of shares of Common Stock  outstanding
immediately  after such event,  and the product so obtained shall  thereafter be
the Exercise Price then in effect. The Exercise Price, as so adjusted,  shall be
readjusted  in the same manner upon the  happening  of any  successive  event or
events  described herein in this Section 4. The number of shares of Common Stock
that the holder shall thereafter,  on the exercise hereof as provided in Section
1,  be  entitled  to  receive  shall  be  adjusted  to a  number  determined  by
multiplying  the number of shares of Common Stock that would  otherwise (but for
the  provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the Exercise Price that would  otherwise (but for the
provisions  of this  Section 4) be in  effect,  and (b) the  denominator  is the
Exercise  Price in effect on the date of such exercise  (taking into account the
provisions of this Section 4). Notwithstanding the foregoing,  in no event shall
the Exercise Price be less than the par value of the Common Stock.

         5.  CERTIFICATE  AS TO  ADJUSTMENTS.  In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of this  Warrant,  the Company at its expense will  promptly  cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or  readjustment  in  accordance  with the terms of this  Warrant  and prepare a
certificate  setting forth such adjustment or readjustment and showing in detail
the facts upon which such  adjustment  or  readjustment  is based,  including  a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common

                                       5


Stock (or  Other  Securities)  issued  or sold or deemed to have been  issued or
sold, (b) the number of shares of Common Stock (or Other Securities) outstanding
or deemed to be outstanding, and (c) the Exercise Price and the number of shares
of  Common  Stock to be  received  upon  exercise  of this  Warrant,  in  effect
immediately  prior  to  such  adjustment  or  readjustment  and as  adjusted  or
readjusted as provided in this Warrant.  The Company will  forthwith mail a copy
of each such  certificate  to the holder and any  warrant  agent of the  Company
(appointed pursuant to Section 11 hereof).

         6. RESERVATION OF STOCK,  ETC.,  ISSUABLE ON EXERCISE OF WARRANT.  From
and after the date that the  Certificate  of  Incorporation  for the  Company is
amended to increase the authorized Common Stock of the Company, the Company will
at all times reserve and keep available, solely for issuance and delivery on the
exercise of this Warrant, shares of Common Stock (or Other Securities) from time
to time issuable on the exercise of this Warrant.

         7.  ASSIGNMENT;   EXCHANGE  OF  WARRANT.  Subject  to  compliance  with
applicable  securities laws, this Warrant,  and the rights evidenced hereby, may
be transferred by any registered  holder hereof (a  "Transferor") in whole or in
part.  On the  surrender  for exchange of this  Warrant,  with the  Transferor's
endorsement  in  the  form  of  Exhibit  B  attached  hereto  (the   "Transferor
Endorsement  Form") and together with evidence  reasonably  satisfactory  to the
Company  demonstrating  compliance with applicable  securities laws, which shall
include,  without limitation,  a legal opinion from the Transferor's counsel (at
the  Company's  expense)  that such  transfer  is exempt  from the  registration
requirements of applicable securities laws, the Company at its expense (but with
payment by the  Transferor  of any  applicable  transfer  taxes)  will issue and
deliver  to or on the  order of the  Transferor  thereof a new  Warrant  of like
tenor, in the name of the Transferor and/or the transferee(s)  specified in such
Transferor  Endorsement Form (each a "Transferee"),  calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the  face  or  faces  of  the  Warrant  so  surrendered  by the  Transferor.

         8.   REPLACEMENT  OF  WARRANT.   On  receipt  of  evidence   reasonably
satisfactory  to the Company of the loss,  theft,  destruction  or mutilation of
this Warrant  and, in the case of any such loss,  theft or  destruction  of this
Warrant,   on  delivery  of  an  indemnity   agreement  or  security  reasonably
satisfactory  in form and  amount  to the  Company  or,  in the case of any such
mutilation,  on surrender and  cancellation of this Warrant,  the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

         9.   REGISTRATION   RIGHTS.   The  Holder  has  been  granted   certain
registration rights by the Company. These registration rights are set forth in a
Registration Rights Agreement entered into by the Company and Holder dated as of
the date hereof, as the same may be amended,  modified and/or  supplemented from
time to time.

         10. MAXIMUM EXERCISE.  Notwithstanding anything herein to the contrary,
in no event shall the Holder be entitled to exercise any portion of this Warrant
in excess of that portion of this Warrant upon  exercise of which the sum of (1)
the number of shares of Common  Stock  beneficially  owned by the Holder and its
Affiliates  (other than shares of Common Stock which may be deemed  beneficially
owned  through the  ownership of the  unexercised  portion of the

                                       6


Warrant or the  unexercised or unconverted  portion of any other security of the
Holder  subject to a  limitation  on  conversion  analogous  to the  limitations
contained herein) and (2) the number of shares of Common Stock issuable upon the
exercise of the portion of this Warrant with respect to which the  determination
of this  proviso is being made,  would  result in  beneficial  ownership  by the
Holder  and  its  Affiliates  of any  amount  greater  than  9.99%  of the  then
outstanding  shares  of  Common  Stock  (whether  or  not,  at the  time of such
exercise, the Holder and its Affiliates  beneficially own more than 9.99% of the
then outstanding  shares of Common Stock). As used herein,  the term "Affiliate"
means any person or entity  that,  directly  or  indirectly  through one or more
intermediaries,  controls or is controlled by or is under common  control with a
person or entity,  as such terms are used in and construed  under Rule 144 under
the  Securities  Act.  For  purposes  of the  proviso  to the  second  preceding
sentence,  beneficial  ownership  shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended,  and Regulations 13D-G
thereunder,  except as  otherwise  provided in clause (1) of such  proviso.  The
limitations  set forth herein (x) may be waived by the Holder upon  provision of
no less than  sixty-one  (61) days  prior  notice to the  Company  and (y) shall
automatically  become null and void  following  notice to the  Company  upon the
occurrence and during the  continuance of an Event of Default (as defined in the
Purchase Agreement).

         11.  WARRANT  AGENT.  The Company  may,  by written  notice to the each
Holder of the Warrant,  appoint an agent for the purpose of issuing Common Stock
(or Other  Securities)  on the exercise of this  Warrant  pursuant to Section 1,
exchanging  this  Warrant  pursuant  to Section 7, and  replacing  this  Warrant
pursuant  to  Section  8,  or any of the  foregoing,  and  thereafter  any  such
issuance,  exchange or  replacement,  as the case may be,  shall be made at such
office by such agent.

         12. TRANSFER ON THE COMPANY'S BOOKS.  Until this Warrant is transferred
on the books of the Company,  the Company may treat the registered holder hereof
as the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

         13. NOTICES, ETC. All notices and other communications from the Company
to the Holder  shall be mailed by first  class  registered  or  certified  mail,
postage  prepaid,  at such address as may have been  furnished to the Company in
writing by such  Holder or,  until any such Holder  furnishes  to the Company an
address, then to, and at the address of, the last Holder who has so furnished an
address to the Company.

         14.  MISCELLANEOUS.  This  Warrant  and any term hereof may be changed,
waived,  discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought.  THIS WARRANT SHALL BE GOVERNED BY AND  CONSTRUED IN ACCORDANCE  WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT  REGARD TO  PRINCIPLES OF CONFLICTS OF
LAWS.  ANY ACTION  BROUGHT  CONCERNING  THE  TRANSACTIONS  CONTEMPLATED  BY THIS
WARRANT  SHALL BE  BROUGHT  ONLY IN STATE  COURTS OF NEW YORK OR IN THE  FEDERAL
COURTS LOCATED IN THE STATE OF NEW YORK; PROVIDED,  HOWEVER, THAT THE HOLDER MAY
CHOOSE TO WAIVE  THIS  PROVISION  AND BRING AN ACTION  OUTSIDE  THE STATE OF NEW
YORK. The  individuals  executing this Warrant on behalf of the Company agree to
submit  to the  jurisdiction

                                       7


of such courts and waive trial by jury. The  prevailing  party shall be entitled
to recover from the other party its reasonable attorneys' fees and costs. In the
event that any provision of this Warrant is invalid or  unenforceable  under any
applicable  statute  or  rule  of law,  then  such  provision  shall  be  deemed
inoperative  to the extent that it may  conflict  therewith  and shall be deemed
modified to conform with such statute or rule of law. Any such  provision  which
may prove invalid or  unenforceable  under any law shall not affect the validity
or enforceability  of any other provision of this Warrant.  The headings in this
Warrant are for  purposes of  reference  only,  and shall not limit or otherwise
affect  any of the terms  hereof.  The  invalidity  or  unenforceability  of any
provision  hereof shall in no way affect the validity or  enforceability  of any
other provision hereof. The Company acknowledges that legal counsel participated
in the preparation of this Warrant and,  therefore,  stipulates that the rule of
construction  that  ambiguities  are to be resolved  against the drafting  party
shall not be applied in the  interpretation  of this  Warrant to favor any party
against the other party.


                   [BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
                             SIGNATURE PAGE FOLLOWS]




                                       8


         IN WITNESS  WHEREOF,  the Company has  executed  this Warrant as of the
date first written above.

                                           TRUEYOU.COM, INC.

WITNESS:

                                           By:
                                              ------------------------------
                                           Name:
                                                 ---------------------------
                                           Title:
- ----------------------------------               ---------------------------




                                       9


                                    EXHIBIT A

                              FORM OF SUBSCRIPTION
                   (To Be Signed Only On Exercise Of Warrant)

TO:      TrueYou.com, Inc.

         -----------------------

         -----------------------

         Attention:   Chief Financial Officer

         The  undersigned,  pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):

________    ________ shares of the common stock covered by such warrant; or

________    the maximum number of shares of common stock covered by such warrant
            pursuant to the cashless exercise procedure set forth in Section 2.

         The  undersigned  herewith makes payment of the full Exercise Price for
such  shares  at the  price per share  provided  for in such  Warrant,  which is
$___________. Such payment takes the form of (check applicable box or boxes):

________    $__________ in lawful money of the United States; and/or

________    the  cancellation  of such  portion  of the  attached  Warrant as is
            exercisable  for a total of _______  shares of Common Stock (using a
            Fair  Market  Value of  $_______  per  share  for  purposes  of this
            calculation); and/or

________    the  cancellation  of such  number of  shares of Common  Stock as is
            necessary,  in accordance with the formula set forth in Section 2.2,
            to exercise  this  Warrant  with  respect to the  maximum  number of
            shares of Common Stock purchasable pursuant to the cashless exercise
            procedure set forth in Section 2.

         The  undersigned  requests  that the  certificates  for such  shares be
issued in the name of, and  delivered  to  _____________________________________
whose address is ____________________________________________________________.

         The  undersigned  represents  and warrants that all offers and sales by
the  undersigned of the securities  issuable upon exercise of the within Warrant
shall be made pursuant to  registration of the Common Stock under the Securities
Act of 1933, as amended (the "Securities  Act") or pursuant to an exemption from
registration under the Securities Act.

Dated:
      --------------------------        ----------------------------------------
                                        (Signature  must conform to name of
                                        holder as specified on the face of the
                                        Warrant)
                                        Address:
                                                --------------------------------

                                                --------------------------------

                                       10


                                    EXHIBIT B

                         FORM OF TRANSFEROR ENDORSEMENT
                   (To Be Signed Only On Transfer Of Warrant)

         For  value  received,   the  undersigned  hereby  sells,  assigns,  and
transfers  unto the person(s)  named below under the heading  "Transferees"  the
right represented by the within Warrant to purchase the percentage and number of
shares of Common  Stock of  TrueYou.com,  Inc.  into  which the  within  Warrant
relates  specified  under the  headings  "Percentage  Transferred"  and  "Number
Transferred," respectively,  opposite the name(s) of such person(s) and appoints
each such  person  Attorney  to transfer  its  respective  right on the books of
TrueYou.com, Inc. with full power of substitution in the premises.

                                          Percentage               Number
Transferees          Address              Transferred            Transferred
- -----------          -------              -----------            -----------





Dated:
      --------------------------        ----------------------------------------
                                        (Signature  must conform to name of
                                        holder as specified on the face of the
                                        Warrant)
                                        Address:
                                                --------------------------------

                                                --------------------------------

                                        SIGNED IN THE PRESENCE OF:

                                        ----------------------------------------
                                                        (Name)

ACCEPTED AND AGREED:
[TRANSFEREE]


- ----------------------------------
              (Name)


                                       11


                                IRREVOCABLE PROXY

                  For  good  and  valuable  consideration,  receipt  of which is
hereby  acknowledged,  Laurus  Master Fund,  Ltd.  ("Laurus"),  hereby  appoints
___________________  (the  "Proxy  Holder"  or the  "Company"),  with a  mailing
address  at  ___________________________,  with full power of  substitution,  as
proxy,  to vote all shares of Common Stock of the Company,  now or in the future
owned by Laurus to the extent such shares are issued to Laurus upon its exercise
of (a) the Common Stock Purchase Warrant (the "Warrant"),  issued by the Company
to Laurus as of the date hereof and (b) all other warrants and/or options issued
by the Company in favor of Laurus  with an exercise  price equal to or less than
the greater of $0.01 and the par value of the Company's common stock (the "Other
Options and Warrants") (collectively, the "Shares").

                  This proxy is irrevocable  and coupled with an interest.  Upon
the sale or other transfer of the Shares, in whole or in part, or the assignment
of the  Warrant or any of the Other  Options  and  Warrants,  this  proxy  shall
automatically  terminate (x) with respect to such sold or transferred  Shares at
the time of such sale and/or  transfer,  and (y) in the case of an assignment of
the Warrant and/or Other Options and Warrants, at the time of such assignment in
respect of the Shares  issuable upon exercise of such  assigned  Warrant  and/or
Other Options and Warrants, in each case, without any further action required by
any person.

                  Laurus  shall use its best  efforts to forward to Proxy Holder
within two (2) business days following  Laurus' receipt thereof,  at the address
for Proxy Holder set forth  above,  copies of all  materials  received by Laurus
relating,  in each case, to the  solicitation of the vote of shareholders of the
Company.

                  This proxy shall  remain in effect with  respect to the Shares
of the Company  during the period  commencing on the date hereof and  continuing
until  the  payment  in full of all  obligations  and  liabilities  owing by the
Company to Laurus (as the same may be  amended,  restated,  extended or modified
from time to time).

                  IN  WITNESS   WHEREOF,   the  undersigned  has  executed  this
irrevocable proxy as of the __ day of _________ 200_.


                                           LAURUS MASTER FUND, LTD.


                                           By:
                                              ----------------------------------
                                               Name:
                                               Title:


                                       12

EX-10.87

                                 LOAN AGREEMENT

         THIS LOAN  AGREEMENT (the  "Agreement")  is made as of this 22nd day of
December,  2006 (the  "Closing  Date"),  by and  between  TRUEYOU.COM,  INC.,  a
Delaware  corporation (the  "Borrower"),  Vicis Capital Master Fund LLC, Klinger
Investments  LLC, Andrew D. Lipman,  Richard  Rakowski,  Gerard  DeBiasi,  James
Benedict,  Dan  Richardson,  Amal Devani,  CSFN I LLC and John Brugmann  (each a
"Lender" and collectively, the "Senior Subordinated Lenders").

                                    RECITALS

         A. The Borrower has asked the Senior Subordinated  Lenders for a senior
subordinated  term loan (the "Loan") in the  principal  amount of Three  Million
Dollars  ($3,000,000)  to be  used by the  Borrower  for  capital  expenditures,
general working capital and to pay all costs and expenses in connection with the
Loan. The Loan is evidenced by certain Senior  Subordinated  Promissory Notes of
even date herewith from the Borrower in favor of the Senior Subordinated Lenders
(each a "Note" and collectively the "Notes").

         B. The holders of the Borrower's $10,038,710 aggregate principal amount
of Subordinated Debt issued pursuant to (i) an Amended  Subordinated  Promissory
Note in the sum of $4,838,710  and (ii) a  Subordinated  Promissory  Note in the
principal sum of $5,200,000,  each dated July 11, 2006  ("Existing  Subordinated
Lenders")  have agreed that the Loan shall be senior to the  obligations  of the
Borrower to the Existing  Subordinated Lenders under the aforesaid  subordinated
promissory notes ("Existing Subordinated Debt").

         C. The Senior Subordinated  Lenders are willing to make the Loan to the
Borrower upon the terms and subject to the conditions hereinafter set forth.

                                   AGREEMENTS

         NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein  contained,  and other good and valuable  consideration,  the receipt and
sufficiency  of which are  hereby  acknowledged,  the  Borrower  and the  Senior
Subordinated Lenders hereby agree as follows:

I.       BORROWING; ISSUANCE OF WARRANTS

         Section 1.1 THE LOAN. The Senior Subordinated  Lenders agree to lend to
the  Borrower  and the  Borrower  agrees to borrow from the Senior  Subordinated
Lenders, the principal sum of Three Million Dollars ($3,000,000) allocated among
the Senior  Subordinated  Lenders as set forth in EXHIBIT A. The Loan shall bear
interest  and shall be repaid by the Borrower in the manner and at the times set
in the Notes.



         Section 1.2 USE OF PROCEEDS.  The proceeds of the Loan shall be used by
the Borrower for the  purposes set forth in Recital A above,  and,  unless prior
written consent of the Senior  Subordinated  Lenders holding at least a majority
in outstanding  principal amount of the Senior Subordinated Loans (the "Majority
Lenders") is obtained, for no other purpose.

         Section 1.3 VOLUNTARY PREPAYMENT.  Subject to the terms of that certain
Subordination  Agreement  dated as of the  date  hereof  (as  from  time to time
amended in accordance with its terms, the "Subordination Agreement"),  among the
Borrower,  the  guarantors  named  therein,  Laurus Master Fund,  Ltd.  ("Senior
Lender"), the Existing Subordinated Lenders and the Senior Subordinated Lenders,
the Loan may be prepaid  at any time,  in whole or in part,  without  penalty or
premium, on three (3) days prior written notice.

         Section 1.4 MANDATORY PREPAYMENTS.

                  (a) Subject to the terms of the Subordination Agreement,  upon
the  occurrence  of a Change of Control  (as  hereinafter  defined),  the Senior
Subordinated Lenders shall have the right to require Borrower to prepay the Loan
including,  without limitation,  (i) the outstanding principal balance, (ii) all
accrued and unpaid interest (if any), and (iii) all other amounts then due under
the Note. For purposes of this  Agreement,  "Change of Control"  means:  (i) any
"person"  (including  any group of  persons),  as such term is used in  Sections
13(d)  and  14(d) of the  Securities  Exchange  Act of  1934,  as  amended  (the
"Exchange  Act") (other than any trustee or other fiduciary  holding  securities
under an employee  benefit plan of the Borrower),  is or becomes the "beneficial
owner"  (as  defined  in  Rule  13d-3  under  the  Exchange  Act),  directly  or
indirectly,  after the date hereof,  of securities of the Borrower  representing
more than fifty  percent  (50%) of the combined  voting power of the  Borrower's
then outstanding securities; (ii) individuals who at the Closing Date constitute
the Board,  and any new  director  (other than a director  (x)  designated  by a
person  who has  entered  into an  agreement  with  the  Borrower  to  effect  a
transaction described in clause (i), (iii) or (iv) of this subparagraph,  or (y)
whose initial assumption of office occurs as a result of an actual or threatened
election  contest  with respect to the election or removal of directors or other
actual or  threatened  solicitation  of proxies or consents by or on behalf of a
"person" (as  hereinabove  defined)  other than the Board) whose election by the
Board or nomination for election by the Borrower's  shareholders was approved by
a vote of at least  two-thirds of the directors  then still in office who either
were  directors at the  beginning of the period or whose  election or nomination
for election was  previously so approved,  cease for any reason to constitute at
least a majority  thereof;  (iii) the  shareholders  of the  Borrower  approve a
merger,  reorganization  or consolidation of the Borrower,  other than a merger,
reorganization or consolidation  which would result in (A) the beneficial owners
(as hereinabove  defined) of the voting  securities of the Borrower  outstanding
immediately prior thereto  continuing to beneficially own voting securities that
represent  (either by remaining  outstanding  or by being  converted into voting
securities of the surviving  entity) more than 50% of the combined  voting power
of the voting  securities of the Borrower or such surviving  entity  outstanding
immediately after such merger,  reorganization  on or consolidation,  and (B) no
"person" (as hereinabove defined) acquiring more than fifty percent (50%) of the
combined voting power of the Borrower's then  outstanding  securities;  (iv) the
shareholders of the Borrower approve an agreement for the sale or disposition by
the Borrower of all or substantially all of the Borrower's assets or business to
an unaffiliated  third party; or (v) the  shareholders of the Borrower approve a
liquidation or dissolution of the Borrower.

                                       2


                  (b) If the  Borrower  should  consummate  one or  more  equity
financings after the date hereof with gross proceeds of no less than $15,000,000
(the "Threshold"),  then subject to the terms of the Subordination Agreement and
the rights of the Senior Subordinated Lenders under (c) below, all principal and
accrued  interest  on the Loan shall be due and  payable at the  closing of such
financing (a "Threshold financing").

                  (c) Upon the occurrence of a Threshold financing,  each Senior
Subordinated Lender shall have the right, but not the obligation, to convert all
of the then  principal  and accrued  interest  due to such  Senior  Subordinated
Lender into shares of the equity securities sold in the Threshold transaction at
the lowest price per share paid in such  financing and  otherwise  upon the same
terms and conditions as the Threshold  financing.  The Borrower  agrees to fully
inform the Senior  Subordinated  Lenders with respect to any proposed  Threshold
transaction  and to take all  appropriate  and  necessary  action to enable  the
Senior Subordinated Lenders to convert the Loan as herein provided.

         Section 1.5 ISSUANCE OF WARRANTS.

                  (a) Subject to the terms and conditions of this Agreement, the
Borrower hereby agrees to issue to each Senior  Subordinated  Lender, as part of
its  inducement  to make the Loan,  a  warrant  in the form  attached  hereto as
EXHIBIT B entitling such Senior  Subordinated  Lender to purchase such number of
shares  of  the  Borrower's   Common  Stock   specified   opposite  such  Senior
Subordinated  Lender's  name on  EXHIBIT A at an  exercise  price of $0.001  per
Common Share (collectively, the "Warrants").

                  (b) Each Lender shall be granted piggyback registration rights
with  respect  to the  shares of Common  Stock  issuable  upon  exercise  of the
Warrants, in accordance with the terms of the Registration Rights Agreement, the
form of which is attached hereto as EXHIBIT C.

II.      THE FINANCING DOCUMENTS; OBLIGATIONS

         This Agreement,  the Note, the Guaranty (as hereinafter  defined),  and
any other  instrument,  agreement  or  document  previously,  simultaneously  or
hereafter  executed  and  delivered  by the  Borrower  and/or any other  person,
singularly or jointly with any other Person, evidencing,  securing in connection
with the Obligations (as hereinafter defined), this Agreement,  the Note and the
Guaranty  are  sometimes  referred  to  herein  collectively  as the  "Financing
Documents". "Obligations" as used in this Agreement means all of the obligations
for payment  evidenced by the Financing  Documents and all of the obligations to
perform and comply with all of the turns, covenant, conditions, stipulations and
agreements contained in the Financing Documents and all other obligations of the
Borrower to the Senior Subordinated  Lenders,  whether now existing or hereafter
created, whether direct or contingent.

III.     UNCONDITIONAL OBLIGATIONS

         The payment and performance by the Borrower of the Obligations shall be
absolute  and  unconditional,  irrespective  of any  defense  or any  rights  of
set-off,  recoupment or  counterclaim it might otherwise have against the Senior
Subordinated  Lenders  and the  Borrower  shall  pay  absolutely  net all of the
Obligations, free of any deductions and without abatement, diminution or set-of;
and until payment in full of all of the Obligations,  the Borrower: (a) will not
suspend

                                       3


or  discontinue  any payments  provided for in the Note and (b) will perform and
observe  all of its other  agreements  contained  in this  Agreement,  including
(without limitation) all payments required to be made to the Senior Subordinated
Lenders.

IV.      REPRESENTATIONS AND WARRANTIES

         To induce  the Lender to make the Loan,  the  Borrower  represents  and
warrants to the Senior Subordinated Lenders that:

         Section 4.1 SUBSIDIARIES. The Borrower has only the Subsidiaries listed
on Exhibit D attached hereto.

         Section 4.2 GOOD STANDING.  Borrower is a  corporation,  duly organized
and existing  under the laws of the State of Delaware and is duly  authorized to
do business and in good  standing  wherever the ownership of its property or the
conduct of its business requires such authorization.

         Section 4.3 DUE AUTHORITY, COMPLIANCE WITH LAWS. Borrower has the right
and power and is duly  authorized  and empowered to enter into execute,  deliver
and perform this Agreement,  the Note and the other Financing Documents and this
Agreement  and the other  Financing  Documents  are valid and  binding  upon and
enforceable against Borrower in accordance with their respective terms. Borrower
has  taken  all  action  required  to  authorize  the  execution,  delivery  and
performance  of  this  Agreement  and  the  other  Financing  Documents  and the
transactions  contemplated  hereby and  thereby.  The  execution,  delivery  and
performance of this  Agreement and the other  Financing  Documents  executed and
delivered by Borrower and the consummation of the  transactions  contemplated by
this Agreement  will not conflict with,  violate or be prevented by any existing
mortgage  indenture,  contract or agreement binding on Borrower or affecting its
property or any laws.

         Section  4.4 NO DEFAULT.  There is no Event of Default (as  hereinafter
defined) and no event has occurred and no condition exists which with the giving
of notice or the  passage  of time would  constitute  an Event of  Default.  The
Borrower is not in default in any material  respect under the terms of any other
agreement  or  instrument  to which  it  maybe a party  or by  which  any of its
properties may be bound or subject.

         Section  4.5  CAPITALIZATION.  The  authorized  capital  stock  of  the
Borrower  consists of (i)  20,000,000  shares of Common  Stock,  (ii)  1,000,000
shares of Preferred Stock, par value $0.001 per share, of which 5,000 shares are
designated as Series A Preferred Stock,  100,000 shares are designated as shares
of Series B Preferred Stock,  50,000 shares are designated as shares of Series C
Preferred Stock, and 1,530 shares are designated as shares of Series B Preferred
Stock.  As of the date hereof  14,995,513  shares of Common Stock,  no shares of
Series  A  Preferred  Stock,  27,858.9673  shares  of Sales B  Preferred  Stock,
8,452.0222  shares of Series C  Preferred  Stock,  and 1,530  shares of Series D
Preferred Stock are issued and outstanding.  All shares of the Borrower's issued
and outstanding capital stock have been duly authorized,  are validly issued and
outstanding, and are fully paid and nonassessable.

         Section 4.6 TITLE TO PROPERTIES. Borrower has good and marketable title
to all of its properties.

                                       4


         Section 4.7 FINANCIAL STATEMENTS. The consolidated financial statements
of  Borrower  included  in its  Current  Report on Form  8-K/A as filed with the
Securities and Exchange Commission on February 21, 2006 are complete and correct
and fairly  present the  financial  position of Borrower  and the results of its
operations as of the dates and for the periods referred to therein and have been
prepared in accordance with generally accepted accounting  principles applied on
a consistent basis during the periods involved. Such financial statements comply
in all material respects with applicable  accounting  requirements and the rules
and  regulations of the Commission with respect thereto as in effect at the time
of filing.

         Section  4.8  DISCLOSURE.   All  disclosure   provided  to  the  Senior
Subordinated  Lenders  regarding the Borrower and its  subsidiaries  is true and
correct and does not contain, any untrue statement of material fact or state any
material fact necessary in order to make the statements made therein in light of
the circumstances under which they are made, not misleading.

         Section 4.9 INCORPORATION OF  REPRESENTATIONS  AND WARRANTIES.  Each of
the  representations  and  warranties  set forth in  Section  4 of that  certain
Subordinated  Securities  Purchase  Agreement  between  Senior  Lender  and  the
Borrower  dated  December  22, 2006 (as amended  from time to time,  the "Laurus
Subordinated  Securities  Purchase  Agreement") are hereby  incorporated in this
Agreement by reference and shall be deemed to be representations  and warranties
made by the  Borrower  to the  Senior  Subordinated  Lenders  as if set forth at
length herein.

         Section 4.10 SEC REPORTS.  The Borrower has filed all reports (the "SEC
Reports") required to be filed by it with the Securities and Exchange Commission
(the  "Commission")  under the Securities Act of 1933 (the "Securities Act") and
the Exchange Act,  including  pursuant to Section 13(a) or 15(d)  thereof,  on a
timely  basis or has timely  filed a valid  extension of such time of filing and
has filed any such SEC Reports  prior to the  expiration  of any such  extension
except that  Borrower  has not yet filed its Annual  Report on Form 10-K for the
fiscal  year  ended July 1, 2006 and its  Quarterly  Report on Form 10-Q for the
fiscal  quarter  ended  November  1,  2006.  The SEC  Reports,  along  with  the
Borrower's  registration  statement  filed with the Commission on Form S-1 (File
No.333-131254),  and  subsequently  withdrawn by the Borrower and the  Company's
Revised Preliminary Information Statement on Schedule 14C and filed with the SEC
on October  4, 2006 are herein  referred  to as the "SEC  Filings."  As of their
respective  dates, the SEC filings complied as to form in all material  respects
with (i) the  requirements  of the  Securities  Act and the Exchange Act and the
rules and regulations of the Commission  promulgated thereunder and (ii) any SEC
comments  received or  otherwise  conveyed to the  Company  with  respect to any
previously  filed SEC Filing  except that the Borrower has not yet  responded to
(x) the letter  received from the SEC on May 2, 2006  commenting on the Form S-1
filed with the SEC and (g) the letter  received from the SEC on November 1, 2006
relating to the Company's filing of its Revised Schedule 14C. In addition,  none
of the SEC Filings, as of their respective dates, contained any untrue statement
of a material  fact or omitted to state a material  fact  required  to be stated
therein or necessary in order to make the  statements  therein,  in light of the
circumstances under which they were mad; not misleading.

                                       5


V.       CONDITIONS OF LENDING

         The  obligation  of the  Senior  Subordinated  Lenders to make the Loan
hereunder is subject to the following conditions precedent:

         Section 5.1  APPROVAL OF COUNSEL FOR THE SENIOR  SUBORDINATED  LENDERS.
All  legal  matters  incident  to the Loan and all  documents  necessary  in the
opinion  of  the  Senior  Subordinated   Lenders  to  make  the  Loan  shall  be
satisfactory  in all  material  respects  to  respective  counsel for the Senior
Subordinated Lenders.

         Section 5.2 SUPPORTING DOCUMENTS. The Senior Subordinated Lenders shall
receive on the date hereof:  (a) a certificate of the Secretary of the Borrower,
certifying  that  attached  thereto  is a true,  complete  and  correct  copy of
resolutions  adopted by the Board of Directors of the Borrower  authorizing  the
execution  and  delivery  of this  Agreement,  the Note and the other  Financing
Documents,  and the  Obligations  and (b) such  other  documents  as the  Senior
Subordinated Lenders may reasonably require the Borrower to execute; in form and
substance acceptable to the Senior Subordinated Lenders.

         Section  5.3  FINANCING  DOCUMENTS.  All  of  the  Financing  Documents
required by the Senior Subordinated Lenders shall be executed,  delivered at the
sole expense of the Borrower.  Borrower shall pay all reasonable expenses of the
Senior Subordinated Lenders including but not limited to, legal counsel fees and
costs, travel expenses, accounting and other due diligence costs.

         Section 5.4 SUBORDINATION  AGREEMENT.  The Senior Subordinated  Lenders
and  Existing  Subordinated  Lenders  shall have  entered  into a  subordination
agreement in form and substance satisfactory to the Senior Subordinated Lenders.

         Section  5.5  GUARANTY.  The  Senior  Subordinated  Lenders  shall have
received an  unconditional  guaranty in form and substance  satisfactory  to the
Senior  Subordinated  Lenders  (the  "Guaranty")  from each of the  Subsidiaries
listed on EXHIBIT D.

         Section  5.6  WARRANTS.  Each Lender  shall have  received a Warrant in
accordance  with the  terms  of  Section  1.5(a),  and the  Registration  Rights
Agreement  shall have been  executed and delivered by the Borrower in accordance
with the terms of Section 1.5(b).

VI.      COVENANTS OF BORROWER

         Until  payment in full and the  performance  of all of the  Obligations
hereunder:

         Section 6.1  INCORPORATION  OF  COVENANTS.  The  covenants set forth in
Section 6 (other than Section 6.5,  Section 6.8 and Section  6.14) of the Laurus
Subordinated  Securities  Purchase  Agreement  are hereby  incorporated  in this
Agreement by reference  and shall be deemed to be covenants  made by Borrower to
the Senior Subordinated Lenders as if set forth at length herein.

         Section 6.2 BOOKS AND  RECORDS.  The  Borrower  shall permit the Senior
Subordinated  Lenders,  or any  Person  authorized  by the  Senior  Subordinated
Lenders,  to inspect and examine  Borrower's  records and books  (regardless  of
where  maintained) and. all supporting  vouchers and

                                       6


data and to make copies and extracts  therefrom at all  reasonable  times and as
often as may be requested by the Senior Subordinated  Lenders. In addition,  the
Borrower  will  furnish  or cause to be  furnished  to the  Senior  Subordinated
Lenders internally prepared financial statements of the Borrower as of the close
of each fiscal quarter and fiscal year, in a form  reasonably  acceptable to the
Senior Subordinated Lenders.

         Section 6.3 PRESERVATION OF CORPORATE EXISTENCE. Borrower will preserve
and maintain its cot existence and good standing in each state where it conducts
business.  Borrower shall not merge or consolidate with or into any other person
or entity (a  "Person") or liquidate or wind down its business or enter into any
agreement with respect thereto.

         Section  6.4 PAYMENT OF TAXES AND  CLAIMS.  Borrower  will duly pay and
discharge when due and payable,  all taxes,  assessments  and  governmental  and
other charges, levies or claims levied or imposed, which are, or which if unpaid
might become, a lien or charge upon the properties, assets, franchises, earnings
or  business  Borrower;  PROVIDED,  HOWEVER,  that  nothing  contained  in  this
paragraph shall require  Borrower to pay and discharge,  or cause to be paid and
discharged, any such tax, assessment,  charge, levy or claim so long as Borrower
in good faith shall contest the validity thereof by appropriate  proceedings and
shall  set  aside  on its  books  adequate  reserves  with  respect  thereto  in
accordance  with such  accounting  practices and otherwise  satisfactory  to the
Senior Subordinated Lenders.

         Section 6.5 CONDUCT OF BUSINESS. Borrower shall conduct and operate its
business in all material  respects in accordance  with all  applicable  material
local, state and federal ordinances, resolutions and laws.

         Section 6.6 INSURANCE.  Borrower shall maintain insurance in an amount,
nature  and  with  carriers  covering  property  damage  to  any  of  Borrower's
properties business interruption insurance, public liability insurance including
coverage for contractual liability, product liability and workers' compensation,
and any other insurance which is usual for Borrower's business.

         Section 6.7 ADDITIONAL  SUBSIDIARIES.  If any additional  Subsidiary of
the Borrower is formed or acquired after the Closing Date as permitted  pursuant
to the terms hereof;  the Borrower  will,  within three business days after such
formation  or  acquisition  cause such  Borrower  to execute  and deliver to the
Senior  Subordinated  Lenders  an  additional  Guaranty  in form  and  substance
reasonably acceptable to the Senior Subordinated Lenders.

VII.     EVENTS OF DEFAULT

         The occurrence of one or more of the following  events shall be "Events
of Default" under this Agreement,  and the terms "Event of Default" or "default"
shall mean,  whenever they are used in this Agreement,  the events  specified in
the definition of "Event of Default" specified in the Note or any one or more of
the  following  events,  provided  that the  rights of the  Senior  Subordinated
Lenders upon the occurrence of an Event of Default shall be limited as set forth
in Section 7 of the Subordination Agreement.

         Section  7.1 BREACH OF  REPRESENTATION  AND  WARRANTIES.  Any  material
representation  or warranty made herein or in any report,  certificate,  opinion
(including  any opinion of counsel for the  Borrower),  financial  statement  or
other  instrument  furnished  in  connection  with the

                                       7


Obligations  or  with  the  execution  and  delivery  of any  of  the  Financing
Documents,  shall  prove to have  been  false  or  misleading  when  made in any
material respect.

         Section 7.2 OTHER  DEFAULTS.  Default  shall be made by the Borrower in
the due  observance  or  performance  of any other term,  covenant or  agreement
herein contained,  which default shall remain unremedied for ten (10) days after
written  notice  thereof to the  Borrower  by the Senior  Subordinated  Lenders;
unless the nature of the failure is such that (a) it cannot be cured  within the
ten (10) day period,  (b) the Borrower  institutes  corrective action within the
ten (10) day period,  and (c) the Borrower completes the cure within a period of
an additional thirty (30) days.

         Section  7.3  DEFAULT  UNDER  OTHER  FINANCING  DOCUMENTS.  An Event of
Default shall occur under any of the other Financing Documents and such Event of
Default is not cured within any applicable grace period provided therein.

         Section 7.4 BANKRUPTCY. The Borrower or any Guarantor shall voluntarily
commence any proceeding under any  reorganization,  bankruptcy or similar law or
consent  to or fail to  contest  or  have  dismissed  within  60 days  any  such
proceeding or apply for a receiver or similar  official or make an assignment to
the benefit of creditors or otherwise take any similar action.

VIII.    RIGHTS AND REMEDIES UPON DEFAULT

         Section  8.1  GENERALLY.  Upon the  occurrence  of an Event of  Default
subject to the terms of the  Subordination  Agreement  the  Senior  Subordinated
Lenders shall have the rights and remedies set forth in the Note.

IX.      MISCELLANEOUS

         Section 9.1  NOTICES.  All notices  requests and demands to or upon the
parties to this  Agreement  shall be in writing and shall be deemed to have been
given or made when  delivered  by hand on a business  day, or two (2) days after
the date when deposited in the mail,  postage prepaid by registered or certified
mail,  return  receipt  requested,  or when  sent by  overnight  courier  on the
business  day next  following  the day on which the notice is  delivered to such
overnight courier addressed as follows:

         Borrower:         TRUEYOU.COM, INC.
                           501 Merritt 7, 5th Floor
                           Norwalk, Connecticut 06851

         Lenders:          Vicis Capital Master Fund LLC
                           570 Lexington Avenue
                           New York, New York 10022
                           Telephone No.: 212-980-9400

                           Klinger Investments LLC
                           10 Glenville Street
                           Greenwich, Connecticut  06831
                           Telephone No.: 203-661-0070

                                       8


                           Andrew D. Lipman
                           c/o Kidd & Company, LLC
                           10 Glenville Street
                           Greenwich, Connecticut  06831
                           Telephone No.: 203-661-0070

                           Richard Rakowski
                           c/o Kidd & Company, LLC
                           10 Glenville Street
                           Greenwich, Connecticut  06831
                           Telephone No.: 203-661-0070

                           Gerard DeBiasi
                           c/o Kidd & Company, LLC
                           10 Glenville Street
                           Greenwich, Connecticut  06831
                           Telephone No.: 203-661-0070

                           James Benedict
                           c/o Kidd & Company, LLC
                           10 Glenville Street
                           Greenwich, Connecticut  06831
                           Telephone No.: 203-661-0070

                           Dan Richardson
                           c/o Kidd & Company, LLC
                           10 Glenville Street
                           Greenwich, Connecticut  06831
                           Telephone No.: 203-661-0070

                           Amal Devani
                           c/o Kidd & Company, LLC
                           10 Glenville Street
                           Greenwich, Connecticut  06831
                           Telephone No.: 203-661-0070

                           CSFN I LLC

                           c/o North Sound Capital
                           20 Horseneck Lane
                           Greenwich, Connecticut 06830

                           John Brugmann
                           PO Box 1561
                           Pearl River, NY 10965
                           Telephone No. 845-735-8200

                                       9


         By written  notice each party to this  Agreement may change the address
to which notice is given to that party.

         Section 9.2 ENTIRE AGREEMENT.  The Financing Documents shall completely
and fully  supersede all other  agreements,  both written and oral,  between the
Senior  Subordinated  Lenders  and the  Borrower  relating  to the  Obligations.
Neither the Senior  Subordinated  Lenders nor the Borrower shall  hereafter have
any rights under such prior  agreements  but shall look solely to the  Financing
Documents for definition and  determination of all of their  respective  rights,
liabilities and responsibilities relating to the Obligations.

         Section  9.3  SURVIVAL  OF  AGREEMENT;   SUCCESSORS  AND  ASSIGNS.  All
covenants,  agreements,  representations  and  warranties  made by the  Borrower
herein  and in any  certificate  in the  Financing  Documents  and in any  other
instruments or documents  delivered  pursuant hereto shall survive the making by
the Senior  Subordinated  Lenders of the Loan and the  execution and delivery of
the Note and are made irrespective of any due diligence  conducted by the Senior
Subordinated Lenders, and shall continue in full force and effect so long as any
of the Obligations are outstanding and unpaid. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
successors of such party;  and all  covenants,  promises and agreements by or on
behalf of the Borrower which are contained in this Agreement  shall inure to the
benefit of the successors of the Senior Subordinated Lenders, and all covenants,
promises and agreed by or on behalf of the Senior Subordinated Lenders which are
contained  in  this  Agreement  shall  inure  to the  benefit  of the  permitted
successors of the Borrower. This Agreement may not be assigned by the Borrower.

         Section 9.4 COUNTERPARTS.  This Agreement may be executed in any number
of counterparts all of which together shall constitute a single instrument.

Section 9.5  MODIFICATIONS.  No  modification or waiver of any provision of this
         Agreement  or of any other  Financing  Documents,  nor  consent  to any
departure by
the Borrower therefrom, shall in any event be effective unless the same shell be
in writing signed by the Majority Lenders; and then such waiver or consent shall
be effective only in the specific  instance and for the purpose for which given.
No notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in the same similar or other circumstance.

         Section  9.6  HEADINGS.   The  headings  in  this   Agreement  are  for
convenience  only and  shall  not  limit or  otherwise  affect  any of the terms
hereof.

         Section 9.7 GOVERNING LAW. THIS AGREEMENT  SHALL BE DEEMED TO HAVE BEEN
DELIVERED AT AND SHALL BE  INTERPRETED,  AND THE RIGHTS AND  LIABILITIES  OF THE
PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         Section 9.8 VENUE.  BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION
OR PROCEEDING AGAINST IT UNDER, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS
AGREEMENT,  THE NOTE OR THE OTHER  FINANCING

                                       10


DOCUMENTS,  MAY BE BROUGHT IN ANY COURT OF THE STATE OF NEW YORK  LOCATED IN NEW
YORK, NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN  DISTRICT
OF NEW  YORK.  BORROWER,  BY THE  EXECUTION  AND  DELIVERY  OF  THIS  AGREEMENT,
EXPRESSLY AND  IRREVOCABLY  ASSENTS AND SUBMITS TO THE PERSONAL  JURISDICTION OF
ANY OF SUCH COURTS IN ANY SUCH  ACTION OR  PROCEEDING,  AND FURTHER  IRREVOCABLY
CONSENTS  TO THE  SERVICE OF ANY  COMPLAINT,  SUMMONS,  NOTICE OR OTHER  PROCESS
RELATING TO SUCH ACTION OR  PROCEEDING  BY DELIVERY  THEREOF TO IT BY HAND OR BY
MAIL IN THE MANNER PROVIDED FOR IN THIS AGREEMENT. BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY  WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING  BASED
ON ANY  ALLEGED  LACK OF  PERSONAL  JURISDICTION,  IMPROPER  VENUE OR FORUM  NON
CONVENIENS  OR ANY  SIMILAR  BASIS.  BORROWER  SHALL NOT BE ENTITLED IN ANY SUCH
ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GWEN OR ALLOWED UNDER THE LAWS OF ANY
STATE  OTHER  THAN THE STATE OF NEW YORK  UNLESS  SUCH  DEFENSE IS ALSO GIVEN OR
ALLOWED  BY THE LAWS OF THE STATE OF NEW YORK  NOTHING IN THIS  AGREEMENT  SHALL
AFFECT  OR  IMPAIR  IN ANY  MANNER  OR TO ANY  EXTENT  THE  RIGHT OF THE  SENIOR
SUBORDINATED  LENDERS TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
BORROWER IN ANY JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

         Section 9.9 WAIVER OF JURY TRIAL.  BORROWER  HEREBY WAIVES ANY RIGHT TO
TRIAL  BY JURY  WITH  RESPECT  TO ANY  ACTION  OR  PROCEEDING  RELATING  TO THIS
AGREEMENT OR ANY  AGREEMENT,  INSTRUMENT  OR DOCUMENT  EXECUTED AND DELIVERED IN
CONNECTION HEREWITH OR THEREWITH, INCLUDING THE FINANCING DOCUMENTS.

         Section 9.10  INDEMNIFICATION.  Borrower  agrees to indemnify  and hold
harmless,  the Senior Subordinated  Lenders,  the Senior  Subordinated  Lenders'
officers,  directors,  employees  and agents (each an  "Indemnified  Party," and
collectively,  the  "Indemnified  Parties"  from and against any and all claims,
liabilities,   losses,   damages,  costs  and  expenses  (whether  or  not  such
Indemnified Party is a party to any litigation),  including without  limitation,
reasonable  attorney  fees  and  costs  and  costs  of  investigation,  document
production,  attendance  at  depositions  or other  discovery,  incurred  by any
Indemnified  Party with respect to,  arising out of or as a  consequence  of (a)
this  Agreement  or any of  the  other  Financing  Documents  including  without
limitation,   any  failure  of  Borrower  to  pay  when  due  (at  maturity,  by
acceleration  or otherwise) any principal,  interest fee or any other amount due
under this  Agreement or the other  Financing  Documents,  or any other Event of
Default,  or any  breach or alleged  bitch of any  representation,  warranty  or
covenant contained in this Agreement or any other Financing Document (b) the use
by Borrower of any proceeds advanced hereunder (c) the transactions contemplated
hereunder or (d) any claim,  demand,  action or cause of action  being  asserted
against  (i)  Borrower by any other  Person,  or (ii) any  indemnified  Party by
Borrower  in   connection   with  the   transactions   contemplated   hereunder.
Notwithstanding anything herein or elsewhere to the contrary; Borrower shall not
be  obligated  to indemnify  or hold  harmless  any  Indemnified  Party from any
liability loss or damage resulting from the gross negligence, willful misconduct
or unlawful actions of such Indemnified Party.

                                       11


         IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above written.

                                           Borrower:

                                           TRUEYOU.COM, INC.

                                           By:
                                              ---------------------------------
                                               Name:
                                               Title:

                                           Lenders:

                                           KLINGER INVESTMENTS LLC

                                           By:
                                              ---------------------------------
                                               Name:
                                               Title:


                                           VICIS CAPITAL MASTER FUND LLC

                                           By:
                                              ---------------------------------


                                           ------------------------------------
                                                    Andrew D. Lipman


                                           ------------------------------------
                                                    Richard Rakowski


                                           ------------------------------------
                                                    Gerard DeBiasi


                                           ------------------------------------
                                                    James Benedict


                                           ------------------------------------
                                                    Dan Richardson


                                           ------------------------------------
                                                    Amal Devani


                                           ------------------------------------
                                                    CSFN I LLC


                                           ------------------------------------
                                                    John Brugmann

                                       12


                                    EXHIBIT A



- --------------------------------- ------------------------- -----------------------------
LENDER                            ALLOCATION OF LOAN        NUMBER OF SHARES OF
                                                            COMMON STOCK ISSUABLE
                                                            UPON EXERCISE OF WARRANT

- --------------------------------- ------------------------- -----------------------------
                                                                         
Vicis Capital Master Fund LLC                     $500,000                     5,000,000
- --------------------------------- ------------------------- -----------------------------
Klinger Investments LLC                           $650,000                     2,904,762
- --------------------------------- ------------------------- -----------------------------
Andrew D. Lipman                                  $200,000                       893,773
- --------------------------------- ------------------------- -----------------------------
Richard Rakowski                                  $850,000                     3,798,534
- --------------------------------- ------------------------- -----------------------------
Gerard DeBiasi                                    $100,000                       446,886
- --------------------------------- ------------------------- -----------------------------
James Benedict                                     $75,000                       335,165
- --------------------------------- ------------------------- -----------------------------
Dan Richardson                                     $75,000                       335,165
- --------------------------------- ------------------------- -----------------------------
Amal Devani                                       $150,000                       670,330
- --------------------------------- ------------------------- -----------------------------
CSFN I LLC                                        $300,000                           -0-
- --------------------------------- ------------------------- -----------------------------
John Brugmann                                     $100,000                     1,000,000
- --------------------------------- ------------------------- -----------------------------




                                    EXHIBIT B

                                 Form of Warrant
                                 (See Attached)








                                    EXHIBIT C

                      Form of Registration Rights Agreement
                                 (See Attached)












                                    EXHIBIT D

                                  SUBSIDIARIES

KLINGER ADVANCED AESTHETICS, INC.
ADVANCED AESTHETICS SUB, INC.
ADVANCED AESTHETICS, LLC
KLINGER ADVANCED AESTHETICS, LLC
ANUSHKA PBG, LLC
ANUSHKA BOCA, LLC
WILD HARE, LLC
DISCHINO CORPORATION
ANUSHKA PBG ACQUISITION SUB, LLC
ANUSHKA BOCA ACQUISITION SUB, LLC
WILD HARE ACQUISITION SUB, LLC

EX-10.88

                                TRUEYOU.COM INC.
                          REGISTRATION RIGHTS AGREEMENT

                               DECEMBER 22, 2006


                  The parties to this agreement are TRUEYOU.COM Inc., a Delaware
corporation   (the  "Company")  and  Vicis  Capital  Master  Fund  LLC,  Klinger
Investments  LLC, Andrew D. Lipman,  Richard  Rakowski,  Gerard  DeBiasi,  James
Benedict,  Dan  Richardson,  Amal  Devani,  CSFN I LLC and  John  Brugmann  (the
"Investors").

                  The Investors own warrants  ("Warrants") to purchase shares of
Common Stock, $0.001 par value per share, of the Company ("Common Stock").

                  The shares of Common Stock that the  Investors  may  hereafter
acquire upon exercise of their Warrants are entitled to the rights and benefits,
and subject to the terms and conditions, of this agreement, and are collectively
referred to as, the "Registrable Shares."

                  The Company  desires to provide  the  Investors  with  certain
rights  regarding  the  registration  of the  Shares,  all  upon the  terms  and
conditions set forth below.

                  The parties agree as follows:

                  1. PIGGYBACK REGISTRATIONS.

                  1.1 RIGHT TO INCLUDE  REGISTRABLE  SECURITIES.  If at any time
following  the date hereof,  the Company shall propose to register any shares of
its Common Stock by means of a registration  statement filed by the Company with
the Securities and Exchange Commission ("SEC") for sale in a public offering for
its own account,  or for the account of any other Person by registration on Form
SB-2,  S-1,  S-2 or S-3 (but not Form S-4 or S-8) or any  successor  or  similar
forms (except for any  registrations  in connection with (x) an employee benefit
plan or dividend reinvestment plan or a merger,  consolidation or other business
combination or (y) debt securities that are not convertible  into Common Stock),
it shall give written  notice to the  Investors of its intention to do so and of
the Investors'  rights under this Section 1 at least 15 days prior to the filing
of a registration statement with respect to such registration with the SEC. Upon
the written  request of the  Investors  made within 10 days after the receipt of
that notice, which request shall specify the Registrable  Securities intended to
be registered  and disposed of by the Investors,  the Company shall,  subject to
the  provisions  hereof  and the  prior  rights  of  Laurus  Master  Fund,  Ltd.
("Laurus")  pursuant to the  Registration  Rights  Agreement  of the Company and
Laurus dated July 11, 2006, use its commercially  reasonable  efforts to include
in such registration  statement all Registrable  Securities that the Company has
been so requested to register by the Investors.



                  1.2 RIGHT TO  ABANDON OR DELAY  REGISTRATION.  If, at any time
after  giving  written  notice to the  Investors  pursuant to Section 1.1 of its
intention  to register any  securities  and prior to the  effective  date of the
registration  statement filed in connection with such registration,  the Company
shall determine for any reason not to register or to delay  registration of such
securities,  the  Company  may, at its  election,  give  written  notice of such
determination to the Investors and upon giving that notice: (a) in the case of a
determination  not to register,  the Company shall be relieved of its obligation
to register any  Registrable  Securities  in connection  with such  registration
without prejudice;  and (b) in the case of a determination to delay registering,
the Company shall be permitted to delay  registering any Registrable  Securities
for the same period as the delay in registering such other securities.

                  1.3 "REGISTRABLE  SECURITIES" means  Registrable  Shares that:
(a) have not been  previously  registered  and sold  pursuant to a  registration
statement that shall have become  effective under the Securities Act of 1933, as
amended ("Securities Act"); and (b) may not be sold without restriction pursuant
to Rule 144(k) (or successor provisions) under the Securities Act, together with
any additional shares of Common Stock issued in a stock split or stock dividend.

                  2. REGISTRATION PROCEDURES; LISTINg.

                  2.1  OBLIGATIONS  OF  THE  COMPANY.  In  connection  with  the
registration of any Registrable  Securities under the Securities Act pursuant to
the  provisions  of this  agreement,  the Company  shall,  as  expeditiously  as
possible:

                  (a) prepare and file with the SEC the  requisite  registration
statement  to effect  such  registration  and  thereafter  use its  commercially
reasonable  efforts to cause such  registration  statement  to become and remain
effective (subject to Section 1.2 and clause (b) below); PROVIDED, HOWEVER, that
the Company may  discontinue  any  registration  of its securities  that are not
Registrable  Securities  at  any  time  prior  to  the  effective  date  of  the
registration statement relating thereto;

                  (b) use its  commercially  reasonable  efforts to prepare  and
file with the SEC such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep such
registration  statement  effective  and to  comply  with the  provisions  of the
Securities  Act with respect to the  disposition of all  Registrable  Securities
covered by such registration  statement for such period as shall be required for
the disposition of all of such Registrable Securities;

                  (c) furnish to the Investors  such number of conformed  copies
of such registration statement and of each such amendment and supplement thereto
(in each case including all  exhibits),  such number of copies of the prospectus
contained in such registration  statement (including each preliminary prospectus
and any summary  prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity  with the  requirements of the Securities Act,
and such other  documents,  as the Investors may reasonably  request in order to
facilitate the public sale or other disposition of the Registrable  Shares owned
by the Investors;


                                      -2-


                  (d) use its commercially reasonable efforts (x) to register or
qualify  all  Registrable  Securities  and  other  securities  covered  by  such
registration  statement  under  such other  securities  or blue sky laws of such
states of the United  States of America  where an exemption is not available and
as the Investors  shall  reasonably  request,  (y) to keep such  registration or
qualification in effect for so long as such  registration  statement  remains in
effect,  and (z) to take any other  action that may  reasonably  be necessary or
advisable  to enable  the  Investors  to  consummate  the  public  sale or other
disposition in such jurisdictions of the Registrable Shares owned and to be sold
by the  Investors,  except  that the Company  shall not for any such  purpose be
required to qualify  generally  to do business as a foreign  corporation  in any
jurisdiction  wherein it would not,  but for the  requirements  of this  Section
2.1(d),  be obligated to be so qualified or to so consent to general  service of
process in any such jurisdiction;

                  (e) notify the Investors when a prospectus relating thereto is
required to be delivered  under the Securities Act, upon discovery that, or upon
the happening of any event as a result of which, the prospectus included in such
registration  statement,  as then in effect,  includes an untrue  statement of a
material fact or omits to state any material fact required to be stated  therein
or necessary to make the statements therein not misleading,  in the light of the
circumstances  under which they were made,  and at the request of the  Investors
promptly  prepare  and  furnish  to them a  reasonable  number  of  copies  of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus shall
not include an untrue  statement of a material  fact or omit to state a material
fact required to be stated therein or necessary to make the  statements  therein
not misleading in the light of the circumstances under which they were made;

                  (f) pay all expenses incident to the Company's  performance of
or compliance with its obligations hereunder, including, without limitation, all
listing fees, all printing  expenses,  the fees,  expenses and  disbursements of
counsel for the Company and of its independent  public accountants and all fees,
expenses and  disbursements  of one outside counsel to the Investors;  PROVIDED,
HOWEVER,  that the foregoing  obligation of the Company shall  exclude,  and the
Investors  shall  pay,   underwriters   fees  and  underwriting   discounts  and
commissions in respect of the Registrable  Securities being registered hereunder
as well as any fees and  expenses  of any  second  or other  additional  outside
counsel to the Investors hereunder;

                  (g) in connection with any registration of Registrable Shares,
the Company shall enter into all customary  agreements  (including in connection
with an underwritten  offering,  an  underwriting  agreement) and shall take all
other  reasonable  actions  requested  by the managing  underwriter  in order to
expedite or facilitate the disposition of Registrable  Shares,  including making
presentations at any "road shows" or analyst presentations (which are reasonable
in scope and  duration  and  consistent  with  market  practice  for  comparable
offerings),  providing  reasonable access to the Company, its books and records,
and its personnel and advisers and furnishing  information to the  stockholders,
the  underwriter(s)  and their  agents  and  representatives  to enable  them to
undertake due diligence and  furnishing to them such opinions,  comfort  letters
and the like as are  customary in  connection  with the  applicable  offering of
securities; and

                  (h)  cause  the   Registrable   Securities   covered  by  such
registration  statement to be listed on a national securities exchange or on the
Nasdaq Stock Market, as applicable.

                                      -3-


                  2.2 OBLIGATIONS OF THE INVESTORS.

                  (a) The  Company  may require  the  Investors,  after  receipt
thereby of a written  request  from the  Investors  pursuant to Section  1.1, to
furnish  the  Company  such   information   regarding   the  Investors  and  the
distribution  of the Investors'  Registrable  Securities as the Company may from
time to time  reasonably  request  in  writing,  based on its  belief  that such
information is required to be disclosed in the relevant  registration  statement
pursuant to the Securities Act and applicable state securities laws.

                  (b)  Upon  receipt  of any  notice  from  the  Company  of the
happening of an event of the kind  described in Section  2.1(e),  the  Investors
shall forthwith discontinue their disposition of Registrable Securities pursuant
to the registration  statement relating to such Registrable Securities until the
Investors'  receipt of the  copies of the  supplemented  or  amended  prospectus
contemplated by Section 2.1(e) and, if so directed by the Company, the Investors
shall deliver to the Company all copies, then in the Investors'  possession,  of
the prospectus  relating to such Registrable  Securities  current at the time of
receipt of such notice.

                  3. CUTBACKS.

                  3.1  GENERALLY.  If in the good faith judgment of the Company,
it shall determine after  consultation  with the managing  underwriter  that the
registration  of the  number of  Registrable  Securities  to be  included  in an
offering that is registered pursuant to Section 1 would materially and adversely
affect  such  public  offering,  then the  Company  may  reduce  the  number  of
Registrable  Shares to be included in the  offering to the extent  necessary  to
alleviate such adverse effect.  If, in accordance  with the preceding  sentence,
the  number of shares  to be  included  in the  underwriting  (pursuant  to this
agreement  or  otherwise)  is less  than the total  number  of shares  that such
holders  have  requested  to be  included,  the holders of other shares who have
requested to include such shares shall  participate on a PRO RATA basis based on
the  relative  aggregate  holdings  of the  holders  who  seek  to  have  shares
registered under such registration  statement (or in any other proportion as may
be agreed upon by all stockholders seeking to exercise such rights).

                  3.2 UNDERWRITING AGREEMENT. The Investors shall become a party
to  any  underwriting   agreement   negotiated   between  the  Company  and  the
underwriters in any  underwritten  public offering  hereunder  (which  agreement
shall be in a form and contain  provisions  that are normal and  customary)  and
shall  make all  representations  and  warranties  to and shall  enter  into all
agreements with the Company and the  underwriters and shall deliver all opinions
of counsel and other  documents  as shall be  reasonably  requested  of them and
shall make all representations and warranties required by law, customarily given
or  reasonably  requested  of  selling  shareholders  by  an  underwriter  in an
underwritten public offering.

                  4. INDEMNIFICATION.

                  4.1  INDEMNIFICATION  BY  THE  COMPANY.  In the  event  of any
registration  statement  filed  pursuant to this  Agreement,  the Company  shall
indemnify and hold harmless the Investors,  each underwriter of such Registrable
Shares and their  respective  directors,  officers and affiliates and each other
individual or entity, if any, who controls (within the meaning of the

                                      -4-


Securities  Act) the Investors (each of the foregoing,  a "Holder  Indemnitee"),
against  any  losses,  claims,  damages,  or  liabilities,  joint or several (or
actions or proceedings,  whether  commenced or threatened,  in respect  thereof)
("Losses")  to a Holder  Indemnitee  arise out of or are based  upon any  untrue
statement or alleged untrue statement of any material fact contained in any such
registration statement, any preliminary prospectus, final prospectus, or summary
prospectus  contained therein,  or any amendment or supplement  thereto,  or any
omission or alleged  omission to state  therein a material  fact  required to be
stated  therein  or  necessary  to make the  statements  therein in light of the
circumstances  in which they were made not  misleading,  and the  Company  shall
reimburse  each Holder  Indemnitee  for any legal or any other  fees,  costs and
expenses  reasonably  incurred  by  them in  connection  with  investigating  or
defending  any such  loss,  claim,  damage,  liability,  action  or  proceeding;
PROVIDED,  HOWEVER, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage,  liability (or action or proceeding in
respect  thereof) or expense arises out of or is based upon an untrue  statement
or omission made in reliance upon and in conformity with information relating to
the  Investors  furnished  to the  Company  in  writing  by or on  behalf of the
Investors or such  underwriter,  as the case may be, for use in the  preparation
thereof; and PROVIDED, FURTHER, HOWEVER, that the Company shall not be liable to
any Holder  Indemnitee in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final prospectus,  as
the same may be then supplemented or amended,  to the Person asserting an untrue
statement  or alleged  untrue  statement  or omission or alleged  omission at or
prior to the written confirmation of the sale of Registrable  Securities to such
Person if such  statement or omission was corrected in such final  prospectus so
long as such final prospectus,  and any amendments or supplements thereto,  have
been furnished to such underwriter or the Investors, as applicable.

                  4.2  INDEMNIFICATION  BY THE  INVESTORS.  If  any  Registrable
Securities  are  included  in any  registration  statement,  each seller of such
Registrable Securities so registered shall, severally and not jointly, indemnify
and hold  harmless the Company and each  director,  officer and affiliate of the
Company,  and each other individual or entity,  if any, who controls (within the
meaning of the Securities  Act) the Company (each of the  foregoing,  a "Company
Indemnitee") insofar as Losses to a Company Indemnitee arise out of or are based
upon any  untrue  statement  or alleged  untrue  statement  of a  material  fact
contained in such  registration  statement,  any preliminary  prospectus,  final
prospectus  or  summary  prospectus  contained  therein,  or  any  amendment  or
supplement  thereto,  or an  omission  or alleged  omission  to state  therein a
material fact required to be stated  therein or necessary to make the statements
therein in light of the  circumstances  in which there were made not misleading,
if such statement or alleged  statement or omission or alleged omission was made
in reliance upon and in conformity  with written  information  pertaining to the
Investors and furnished to the Company by the Investors  specifically for use in
the preparation of such registration statement,  preliminary  prospectus,  final
prospectus, summary prospectus, amendment or supplement, PROVIDED, HOWEVER, that
the Investors  shall have no liability  under this Section 4.2 for any amount in
excess of the net proceeds  actually  received by the Investors from the sale of
the Registrable Securities included in such registration statement.

                                      -5-


                  4.3 NOTICE OF CLAIMS, ETC.

                  (a) Promptly after receipt by an  indemnified  party of notice
of the commencement of any action or proceeding involving a claim referred to in
Sections 4.1 or 4.2, such indemnified  party will, if a claim in respect thereof
is to be made against an indemnifying party,  immediately give written notice to
the latter of the  commencement  of such  action;  PROVIDED,  HOWEVER,  that the
failure of any  indemnified  party to give notice as provided  herein  shall not
relieve  the  indemnifying  party of its  indemnity  obligations,  except to the
extent that the  indemnifying  party is actually  prejudiced  by such failure to
give notice.  In case any such action is brought  against an indemnified  party,
unless in the  reasonable  judgment of counsel  for such  indemnified  party,  a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim (in which case the indemnified  party shall be entitled
to retain separate counsel as provided below),  the indemnifying  party shall be
entitled to participate in and to assume the defense  thereof,  jointly with any
other  indemnifying  party similarly notified to the extent that it may wish and
at any time, with counsel reasonably satisfactory to such indemnified party, and
after  notice  from  the  indemnifying  party to such  indemnified  party of its
election so to assume the defense thereof,  the indemnifying  party shall not be
liable to such  indemnified  party for any legal or other expenses  subsequently
incurred by the  indemnified  party in connection with the defense thereof other
than reasonable  costs related to the indemnified  party's  cooperation with the
indemnifying party;  PROVIDED,  HOWEVER,  that the indemnified party may, at its
own expense, retain separate counsel to participate in such defense.

                  (b) No  indemnifying  party shall be liable for any settlement
of any action or proceeding effected without its written consent,  which consent
shall not be unreasonably  withheld.  No indemnifying  party shall,  without the
consent of the indemnified party, consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the  claimant or plaintiff  to such  indemnified  party of a release from all
liability in respect to such claim or litigation.

                  4.4 CONTRIBUTION.  If indemnification  shall for any reason be
held by a court to be  unavailable  to an  indemnified  party in  respect of any
loss,  claim,  damage or liability,  or any action in respect thereof,  then, in
lieu of the  amount  paid or  payable  under  Section  4.1 or  Section  4.2,  as
applicable, the indemnified party and the indemnifying party shall contribute to
the aggregate losses,  claims, damages and liabilities (including legal or other
expenses  reasonably incurred in connection with investigating the same), (a) in
such  proportion as is  appropriate to reflect the relative fault of the Company
on the one hand and the  Investors on the other hand that resulted in such loss,
claim,  damage or liability,  or action in respect thereof,  with respect to the
statements or omissions that resulted in such loss, claim,  damage or liability,
or  action  in  respect  thereof,  as  well  as  any  other  relevant  equitable
considerations  or (b) if the  allocation  provided  by item  (a)  above  is not
permitted by  applicable  law, in such  proportion  as shall be  appropriate  to
reflect the  relative  benefits  received by the Company on the one hand and the
Investors on the other, as determined by a court of competent  jurisdiction.  No
individual or entity guilty of fraudulent  misrepresentation (within the meaning
of the Securities Act) shall be entitled to contribution  from any individual or
entity who was not guilty of such fraudulent misrepresentation.  In addition, no
individual or entity shall be obligated to  contribute  hereunder any amounts in
payment  for any  settlement  of any  action or  claim,  effected  without  such
individual  or  entity's  consent,  which  consent  shall  not  be  unreasonably
withheld.

                                      -6-


                  5. INFORMATION BY THE INVESTORS.  If any information  relating
to the Investors is included in any registration statement,  the Investors shall
furnish to the Company such  information  regarding the Investors and the method
of distribution  proposed by the Investors as the Company may request in writing
and as shall be required in connection with any  registration,  qualification or
compliance referred to in Section 1.

                  6. RULE 144 REQUIREMENTS. The Company agrees that it will: (a)
use its best  efforts to make and keep public  information  available,  as those
terms are understood  and defined in Rule 144 under the Securities  Act; (b) use
its best  efforts to file with the SEC in a timely  manner all reports and other
documents required of the Company under the Exchange Act; and (c) furnish to any
holder of Registrable  Shares upon request a written statement by the Company as
to its compliance with the information requirements of said Rule 144, and of the
reporting  requirements of the Exchange Act, a copy of the most recent annual or
quarterly  report of the Company,  and such other  reports and  documents of the
Company as such  holder may  reasonably  request to avail  itself of any similar
rule or  regulation of the SEC allowing it to sell any such  securities  without
registration.

                  7.  CERTAIN  RIGHTS.  The  rights  granted  to  the  Investors
hereunder may not be transferred  except with the written consent of the Company
or as otherwise set forth in Section 8.6 hereof.

                  8. MISCELLANEOUS.

                  8.1  NOTICES,  ETC.  All  notices,   consents,   instructions,
requests and other  communications  required or permitted  hereunder  must be in
writing  and  shall  be  deemed  to have  been  duly  given  only  if  delivered
personally,  by facsimile  transmission,  by first-class mail (postage  prepaid,
return receipt requested),  or by delivery by a recognized international courier
service  (all costs  prepaid)  to the  parties  at the  following  addresses  or
facsimile numbers (or as amended in accordance with this Section 8.1):

If to the Company, to:

TRUEYOU.COM, INC.
501 Merritt 7, 5th Floor
Norwalk, Connecticut 06851

and a copy to:

Troutman Sanders LLP
405 Lexington Avenue
New York, New York  10174

Telecopier No.:  (212) 704-6160
Attention:  Edward R. Mandell

                  If to the  Investors,  to the address or telecopier  number of
the Investors set forth on the signature page below.

                                      -7-


                  8.2 NO WAIVER.  No failure or delay by any party in exercising
any right,  power or privilege  hereunder  shall operate as a waiver thereof nor
shall any  single or  partial  exercise  thereof  preclude  any other or further
exercise  thereof or the exercise of any other right,  power or  privilege.  The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.

                  8.3 ENTIRE  AGREEMENT.  This  agreement  supersedes  all prior
and/or contemporaneous negotiations,  understandings, discussions and agreements
(written or oral) between the parties with respect to the subject  matter hereof
(all of which are merged  herein and  therein)  and contains the sole and entire
agreement among the parties hereto with respect to the subject matter hereof.

                  8.4  GOVERNING  LAW.  This   agreement   shall  be  construed,
interpreted and enforced in accordance  with, and shall be governed by, the laws
of the state of New York without regard to principles of conflicts of laws.

                  8.5  JURISDICTION;  VENUE.  Each of the parties  hereto hereby
irrevocably  consents and submits to the  exclusive  jurisdiction  of the United
States  District Court for the Southern  District of New York in connection with
any dispute  arising out of or relating to this  agreement  or the  transactions
contemplated hereby, waives any objection to venue in such District (unless such
court lacks  jurisdiction  with respect to such dispute,  in which case, each of
the parties hereto irrevocably consents to the jurisdiction of the courts of the
State of New York located in New York County in connection with such dispute and
waives  any  objection  to venue in the County of New  York),  and  agrees  that
service of any  summons,  complaint,  notice or other  process  relating to such
dispute may be effected in the manner provided by Section 9.1.

                  8.6 ASSIGNMENT; BINDING EFFECT. The Investors shall not assign
their  rights  or  duties  hereunder  to any  party  other  than  (i) an  entity
controlled by, under common control with, or  controlling,  the Investors,  (ii)
any person or entity to which an Investor  transfers  its Warrant in  accordance
with Section 7 thereof.  This  agreement  shall be binding  upon and,  except as
otherwise provided herein,  shall inure to the benefit of the parties hereto and
their permitted successors and assigns.

                  8.7  AMENDMENT  AND  WAIVER.  No  term  or  provision  of this
agreement may be amended,  waived,  altered,  modified,  rescinded or terminated
except by a written  instrument  signed  by the party  against  whom the same is
sought to be enforced.

                  8.8 NO THIRD PARTY  BENEFICIARIES.  Nothing  contained in this
agreement,  whether  express or implied,  is  intended,  or shall be deemed,  to
create or confer any right,  interest or remedy for the benefit of any person or
entity other than as otherwise provided in this agreement.

                  8.9 SEVERABILITY.  If any provision of this agreement is found
to be void or unenforceable by a court of competent jurisdiction,  the remaining
provisions of this agreement shall nevertheless be binding upon the parties with
the same  force and  effect as though  the void or  unenforceable  part had been
severed and deleted.

                                      -8-


                  8.10 SPECIFIC PERFORMANCE.  The parties agree that irreparable
damage will result in the event that this agreement is not specifically enforced
and the parties  hereto agree that any damages  available at law for a breach of
this agreement would not be an adequate remedy. Therefore, the provisions hereof
and the obligations of the parties  hereunder shall be enforceable in a court of
equity,  or  other  tribunal  having  jurisdiction,  by  a  decree  of  specific
performance, and appropriate injunctive relief may be applied for and granted in
connection therewith.

                  8.11  COUNTERPARTS;   EFFECTIVENESS.  This  agreement  may  be
executed in one or more  counterparts  (including  signature  pages delivered by
facsimile  transmission),  each of which shall be deemed an original  but all of
which together will constitute one and the same agreement.  This agreement shall
become effective when each party hereto shall have received  counterparts hereof
signed by all of the other parties hereto.

                  The parties have  executed  and  delivered  this  Registration
Rights Agreement as of the date first written above.


                                          TRUEYOU.COM, INC.

                                          By:
                                             ---------------------------------
                                               Name:
                                               Title:



                                          KLINGER INVESTMENTS LLC

                                          By:
                                             ---------------------------------
                                               Name:
                                               Title:


                                          VICIS CAPITAL MASTER FUND LLC

                                          By:
                                             ---------------------------------


                                          ------------------------------------
                                                   Andrew D. Lipman


                                          ------------------------------------
                                                   Richard Rakowski


                                      -9-



                                          ------------------------------------
                                                   Gerard DeBiasi


                                          ------------------------------------
                                                   James Benedict


                                          ------------------------------------
                                                   Dan Richardson


                                          ------------------------------------
                                                   Amal Devani


                                          ------------------------------------
                                                   CSFN I LLC


                                          ------------------------------------
                                                   John Brugmann



                                      -10-

EX-10.89

                                TrueYou.Com Inc.
                            501 Merritt 7, 5th Floor
                           Norwalk, Connecticut 06851

                                                        December 22, 2006

Senior Subordinated Lenders of TrueYou.Com Inc.
set forth below

Gentlemen:

         Concurrently  herewith we are issuing to you warrants (the  "Warrants")
to purchase the Common Stock of TrueYou.Com Inc.

         As soon as  practicable  after the date hereof,  TrueYou  shall use its
best efforts to cause its Certificate of Incorporation to be amended to increase
the number of authorized  shares of TrueYou Common Stock to such number as shall
be sufficient to permit the exercise in full of the Warrants  (such amount,  the
"Share  Amount") and shall  thereupon  reserve for issuance upon exercise of the
Warrants,  that number of authorized  shares of TrueYou Common Stock which shall
be required for such purpose.  In the event that any of you shall notify TrueYou
at any time prior to the  effective  date of such  amendment  that you desire to
exercise the Warrants  prior to such  effective  date,  TrueYou shall  thereupon
promptly  issue  to you,  in  exchange  for the  Warrants,  substitute  warrants
exercisable  to  purchase  that  number of shares  of its  Series B  Convertible
Preferred Stock that are , upon  authorization of the Share Amount,  immediately
convertible  into the number of shares of TrueYou  Common  Stock that would then
have been issuable upon exercise of the Warrants in full if the  Certificate  of
Incorporation of TrueYou had then provided for sufficient  authorized  shares of
TrueYou  Common  Stock  to  satisfy  such  exercise,  and  otherwise  containing
substantially the same terms and provisions as the Warrants.

         Please confirm our agreements below.

                                                Very truly yours,

                                                TrueYou.Com Inc.

                                                By:
                                                   -----------------------------
Subordinated Lenders

KLINGER INVESTMENTS LLC

By:
   ---------------------------------
     Name:
     Title:



VICIS CAPITAL MASTER FUND LLC

By:
   ---------------------------------


- ------------------------------------
         Andrew D. Lipman


- ------------------------------------
         Richard Rakowski


- ------------------------------------
         Gerard DeBiasi


- ------------------------------------
         James Benedict


- ------------------------------------
         Dan Richardson


- ------------------------------------
         Amal Devani


- ------------------------------------
         Tom McCauley


- ------------------------------------
         John Brugmann


                                        2

EX-10.90

         NEITHER THIS  SECURITY NOR THE  SECURITIES  INTO WHICH THIS SECURITY IS
CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE  COMMISSION OR
THE  SECURITIES  COMMISSION  OF ANY STATE IN  RELIANCE  UPON AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
TRUEYOU.COM INC.

         THIS INSTRUMENT IS SUBJECT TO THE  SUBORDINATION  AGREEMENT DATED AS OF
DECEMBER 22, 2006, AMONG VICIS CAPITAL MASTER FUND LLC, KLINGER INVESTMENTS LLC,
ANDREW  D.  LIPMAN,  RICHARD  RAKOWSKI,  GERARD  DEBIASI,  JAMES  BENEDICT,  DAN
RICHARDSON,  AMAL DEVANI, CSFN I LLC AND JOHN BRUGMANN (THE "SENIOR SUBORDINATED
LENDERS"),  WHICH,  AMONG OTHER THINGS,  CONTAINS  PROVISIONS  SUBORDINATING THE
OBLIGATIONS OF THE MAKER OF THIS  INSTRUMENT TO THE PAYEE HEREOF TO SUCH MAKER'S
OBLIGATIONS  TO THE  SENIOR  LENDER,  TO WHICH  PROVISIONS  EACH  HOLDER OF THIS
INSTRUMENT, BY ACCEPTANCE HEREOF, AGREES.

                       SENIOR SUBORDINATED PROMISSORY NOTE

$3,000,000                                                     December 22, 2006



         FOR VALUE  RECEIVED,  the  undersigned,  TRUEYOU.COM  INC.,  a Delaware
corporation (the "DEBTOR"), hereby promises to pay to the order of Vicis Capital
Master Fund LLC, Klinger  Investments LLC, Andrew D. Lipman,  Richard  Rakowski,
Gerard DeBiasi, James Benedict, Dan Richardson, Amal Devani, CSFN I LLC and John
Brugmann   (collectively,   "HOLDERS"),   the  sum  of  THREE  MILLION   DOLLARS
($3,000,000) as set forth on EXHIBIT A hereto (such principal  amount,  together
with all accrued but unpaid  interest and any other amounts due  hereunder,  the
"DEBT"),  all as  provided  in this  senior  subordinated  promissory  note (the
"NOTE").  Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement (as defined below).

         1. INTEREST;  PRINCIPAL  AMOUNT AND PAYMENT;  FEES. The Debt shall bear
interest on the unpaid principal  balance thereof  outstanding from time to time
and until such  principal  balance is repaid in full, at an annual rate equal to
twelve  percent  (12%)  per  annum of  which  6% shall be paid in cash  monthly,
commencing 30 days from the closing and the balance of 6% paid in kind and shall
be compounded annually and paid on the Maturity Date; PROVIDED, HOWEVER, that in
the



event that an Event of Default shall have  occurred and be continuing  (or would
have occurred and been  continuing  but for the proviso to the definition of the
term "Event of Default" set forth in Section 5 hereof),  the cash  interest rate
to be paid shall be increased to 8% per annum. For the purposes hereof, the term
"Maturity  Date" shall mean the earliest of (i) December 31, 2009,  and (ii) the
first date on which any mandatory prepayment is payable under Section 1.4 of the
Loan Agreement (as hereinafter defined).

         Under no  circumstances  shall  the  Debtor  be  charged  more than the
highest rate of interest that lawfully may be charged by the Holders and paid by
the Debtor on the Debt. It is, therefore, agreed that if at any time interest on
the Debt would  otherwise  exceed the highest  lawful  rate,  only such  highest
lawful rate will be paid by the Debtor.  Should any amount be paid by the Debtor
in excess of such  highest  lawful  amount,  such excess shall be deemed to have
been paid in reduction of the principal sum due hereunder.

         In the event that the holders of Senior  Liabilities  shall receive any
fee or charge (not  constituting  a part of the  principal  amount of the Senior
Liabilities or interest  accrued  thereon) in connection with any waiver by such
holders of any Event of Default (as defined in the Purchase  Agreement  referred
to in the Subordination  Agreement referred to below), then the Holders shall be
entitled to receive (pro rata in accordance  with their  respective  percentages
set forth in Exhibit A hereto) an amount  equal in the  aggregate to the product
of the amount of such fee or charge  multiplied by a fraction,  the numerator of
which  is  equal  to the  outstanding  principal  amount  of this  Note  and the
denominator of which is equal to the then  outstanding  principal  amount of the
Senior Liabilities, provided, that, in the event that such payment shall be made
in cash (rather than in the form of equity securities or instruments convertible
into or exchangeable for equity  securities) such amount shall not be paid until
the Maturity Date.

         2.  CONVERSION.  In the event that the Debtor  agrees to  consummate  a
Threshold  financing (as defined in the Loan Agreement) at any time prior to the
Maturity  Date,  each Holder may elect (but shall have no  obligation  unless it
does so elect),  to convert the entire principal amount due to such Holder under
this Note (along with accrued  interest  thereon and all other  amounts then due
hereunder),  into shares of the equity  securities issued in such transaction at
the lowest price per share paid in such  financing and  otherwise  upon the same
terms and conditions of the Threshold financing.

         3.  PREPAYMENTS.  The Debt may be prepaid  at any time,  in whole or in
part,  without  penalty  or  premium,  on three (3) days prior  written  notice,
subject in all cases to the  Subordination  Agreement (as hereinafter  defined).
The Debt (or a portion  thereof,  as the case may be),  is subject to  mandatory
prepayment under Section 1.4(b) of the Loan Agreement. All payments on this Note
shall be allocated among the Holders in their  respective  portions of this Note
as set forth in EXHIBIT A hereto or as otherwise agreed by the Holders.

         4. LOAN  AGREEMENT.  This Note is issued pursuant to and is governed by
the terms of that  certain  Loan  Agreement  of even date  herewith  between the
Holders and the Debtor (as amended from time to time, the "LOAN AGREEMENT").

                                       2


         5. DEFAULTS.  Each of the following  events shall  constitute a default
under this Note (each,  an "EVENT OF DEFAULT"),  PROVIDED that the rights of the
Lenders upon the occurrence of an Event of Default shall be limited as set forth
in Section 7 of the Subordination Agreement.

                  (a) any  default  (whether in whole or in part) shall occur in
the payment of any amount payable under this Note;

                  (b) the  occurrence  of any  Event of  Default  under the Loan
Agreement;

                  (c) the Debtor or any  Guarantor  shall  become  unable,  fail
generally or admit in writing its inability to pay its debts as they become due;

                  (d) the Debtor or any Guarantor shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency,  receivership
or similar law now or hereafter in effect,  (ii) consent to the  institution of,
or fail to  contest  in a timely  and  appropriate  manner,  any  proceeding  or
petition  described  in clause (e) of this Section 5, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator,  conservator
or similar  official for the Debtor or any Guarantor or for all or a substantial
part of its assets, (iv) file an answer admitting the material  allegations of a
petition filed against it in any such proceeding,  (v) make a general assignment
for the  benefit  of  creditors  or (vi)  take any  action  for the  purpose  of
effecting any of the foregoing;

                  (e)  an  involuntary  proceeding  shall  be  commenced  or  an
involuntary  petition shall be filed seeking (i) liquidation,  reorganization or
other relief in respect of the Debtor or any  Guarantor or its debts,  or of all
or a  substantial  part of its  assets,  under  any  Federal,  state or  foreign
bankruptcy,  insolvency,  receivership or similar law now or hereafter in effect
or  (ii)  the  appointment  of a  receiver,  trustee,  custodian,  sequestrator,
conservator or similar  official for the Debtor or any Guarantor or for all or a
substantial  part of its  assets,  and,  in any such case,  such  proceeding  or
petition shall continue  undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;

                  (f)  the  Debtor  or  any  Guarantor  dissolves,   liquidates,
winds-up,  or sells or  otherwise  disposes of all or  substantially  all of its
business or assets;

                  (g) any event or  condition  shall  occur that  results in any
Indebtedness of the Debtor or any Guarantor  exceeding in the aggregate $500,000
becoming due prior to its scheduled maturity or that enables or permits (with or
without  the giving of notice,  the lapse of time or both) the holder or holders
of any such Indebtedness or any trustee or agent on its or their behalf to cause
any such  Indebtedness to become due, or to require the prepayment,  repurchase,
redemption or defeasance thereof, prior to its scheduled maturity;

                  (h) one or more  judgments  for the  payment  of  money  in an
aggregate  amount in excess of $500,000 shall be rendered  against the Debtor or
any Guarantor, or any combination thereof and the same shall remain undischarged
for a  period  of 30  consecutive  days  during  which  execution  shall  not be
effectively  stayed, or any action shall be legally taken by a judgment creditor
to attach or levy upon any assets of the Debtor or any  Guarantor to enforce any
such judgment; or

                                       3


                  (i) any Guaranty of a Guarantor ceases to be in full force and
effect or any  Guarantee  of a  Guarantor  is  declared  to be null and void and
unenforceable  or any  Guarantee  of a  Guarantor  is found to be invalid or any
Guarantor denies its liability under its Guarantee.

         6. REMEDIES UPON AN EVENT OF DEFAULT.

                  (a) If any Event of Default  described  in clause (d),  (e) or
(f) of Section 5 shall have  occurred  (taking into account all grace  periods),
the  principal on and under this Note then  outstanding,  together  with accrued
interest  thereon  and all fees and  other  obligations  of the  Debtor  accrued
hereunder and under the other Financing  Documents,  shall automatically  become
due and payable,  without  presentment,  demand,  protest or other notice of any
kind, all of which are hereby waived by the Debtor.

                  (b) If any other Event of Default described in Section 5 shall
have  occurred  (which,  for  clarity,  is after  taking into  account all grace
periods  set  forth  in  Section  5),  and at any  time  thereafter  during  the
continuance of such Event of Default, the Majority Lenders may, by notice to the
Debtor,  declare the  principal  on and under this Note to be due and payable in
whole, and thereupon the principal on and under this Note, together with accrued
interest  thereon  and all fees and  other  obligations  of the  Debtor  accrued
hereunder and under the other Financing Documents,  shall become due and payable
immediately,  without presentment,  demand, protest or other notice of any kind,
all of which are hereby waived by the Debtor and the Guarantors.

                  (c) No  course  of  dealing  and no  delay  on the part of any
Holder in  exercising  any  right,  power or remedy  shall  operate  as a waiver
thereof or otherwise  prejudice  such Holder's  rights,  powers or remedies.  No
right, power or remedy conferred by this Note or by any other Financing Document
upon any Holder shall be exclusive of any other right,  power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise

                  (d) The Debtor will deliver  written  notice of the occurrence
of any Event of Default under this Note or any other  Financing  Document within
three (3) business days following the occurrence of such Event of Default.

         7. SUBORDINATION OF PRINCIPAL AND INTEREST.

                  (a) Notwithstanding anything to the contrary contained in this
Note, the Debtor and the Holders agree that the  indebtedness  evidenced by this
Note and all payments of  principal,  interest  and all other  amounts due under
this Note are expressly  subordinated  and junior in right of payment in full of
all  indebtedness  in favor of  Laurus  Master  Fund,  Ltd.  upon the  terms and
conditions set forth in the Subordination Agreement dated the date hereof by and
among  Laurus  Master  Fund,  Ltd.,  the  Holders,  the Debtor  and others  (the
"Subordination Agreement"), and all rights and remedies of the Holders hereunder
or under the other  Financing  Documents or at law or in equity shall be subject
in all  respects to the  provisions  of the  Subordination  Agreement  until all
Senior  Liabilities (as therein  defined) shall have been  indefeasibly  paid in
full in cash.

         8. OBLIGATIONS ABSOLUTE. The Debtor acknowledges that this Note and the
Debtor's  obligations  under this Note are and shall at all times continue to be
absolute and unconditional in

                                       4


all respects,  and shall at all times be valid and  enforceable  irrespective of
any other  agreement  or  circumstances  of any  nature  whatsoever  that  might
otherwise  constitute  a defense  to this Note or the  obligation  of the Debtor
under this Note. This Note sets forth the entire agreement and  understanding of
the Holders  and the  Debtor,  and the Debtor  absolutely,  unconditionally  and
irrevocably waives any and all right to assert any defense, setoff, counterclaim
or  crossclaim  of any  nature  whatsoever  with  respect  to  this  Note or the
obligations of the Debtor under this Note in any action or proceeding brought by
the  Holders  to collect  the  indebtedness  evidenced  hereby,  or any  portion
thereof.

         9. NOTICES.  All notices or other  communications to be given hereunder
shall be in writing and sent in accordance with the Loan Agreement.

         10.  COSTS AND  EXPENSES.  The Debtor  shall be  responsible  to pay or
reimburse any and all reasonable  costs and expenses  incurred by the Holders in
connection  with the enforcement and collection of this Note. Such payment shall
be due and payable on the Maturity Date or on any date that the Debtor satisfies
its payment obligations hereunder.

         11.  AMENDMENT.  No  provision  of this Note may be changed,  modified,
waived or  released,  unless it is in  writing  and signed by the Debtor and the
Holders.

         12. WAIVERS.  Presentment for payment, notice of dishonor,  protest and
notice of protest  are hereby each  waived by the  Debtor.  Any other  waiver or
consent respecting this Note shall be effective only if in writing and signed by
the Holders and then only in the specific  instance and for the specific purpose
for which given. No such other waiver or consent shall be deemed,  regardless of
frequency given, to be a further or continuing waiver or consent. The failure or
delay of the  Holders  at any time or times to  require  performance  of,  or to
exercise  its rights with  respect to, any term or  provision of this Note in no
manner  shall  affect  its  right at a later  time to  enforce  any such term or
provision.  No notice to or demand on the Debtor in any case shall  entitle such
party to any other or further notice or demand. All rights, powers,  privileges,
remedies and other  interests of the Holders under this Note and  applicable law
are cumulative and not alternatives.

         13.  VENUE.  DEBTOR  IRREVOCABLY  CONSENTS  THAT ANY  LEGAL  ACTION  OR
PROCEEDING  AGAINST IT UNDER,  ARISING OUT OF OR IN ANY MANNER  RELATING TO THIS
NOTE OR THE OTHER FINANCING DOCUMENTS,  MAY BE BROUGHT IN ANY COURT OF THE STATE
OF NEW YORK LOCATED IN NEW YORK, NEW YORK OR IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK.  DEBTOR, BY THE EXECUTION AND DELIVERY OF
THIS NOTE,  EXPRESSLY  AND  IRREVOCABLY  ASSENTS  AND  SUBMITS  TO THE  PERSONAL
JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING, AND FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT,  SUMMONS,  NOTICE OR OTHER
PROCESS  RELATING TO SUCH ACTION OR PROCEEDING BY DELIVERY THEREOF TO IT BY HAND
OR BY MAIL IN THE MANNER PROVIDED FOR IN THIS NOTE.  DEBTOR HEREBY EXPRESSLY AND
IRREVOCABLY  WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING  BASED
ON ANY  ALLEGED  LACK OF  PERSONAL  JURISDICTION,  IMPROPER  VENUE OR FORUM  NON
CONVENIENS OR ANY SIMILAR

                                       5


BASIS.  DEBTOR SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR  PROCEEDING TO ASSERT
ANY DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF
NEW YORK UNLESS  SUCH  DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE
OF NEW YORK. NOTHING IN THIS NOTE SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY
EXTENT THE RIGHT OF HOLDERS TO COMMENCE LEGAL  PROCEEDINGS OR OTHERWISE  PROCEED
AGAINST DEBTOR IN ANY  JURISDICTION OR TO SERVE PROCESS IN ANY MANNER  PERMITTED
BY LAW.

         14. GOVERNING LAW. This Note has been executed,  delivered and accepted
in the State of New York and shall be construed in accordance  with and governed
by the internal laws of the State of New York.

         IN WITNESS  WHEREOF,  the Debtor has executed and delivered this Senior
Subordinated Promissory Note as of the date first written above.

                                       TRUEYOU.COM INC.



                                       By:
                                            ------------------------------------
                                              Name:

                                              Title:


                                       6


                                    EXHIBIT A

- ---------------------------------- --------------------- -----------------------
Vicis Capital Master Fund LLC                  $500,000               5,000,000
- ---------------------------------- --------------------- -----------------------
Klinger Investments LLC                        $650,000               2,904,762
- ---------------------------------- --------------------- -----------------------
Andrew D. Lipman                               $200,000                 893,773
- ---------------------------------- --------------------- -----------------------
Richard Rakowski                               $850,000               3,798,534
- ---------------------------------- --------------------- -----------------------
Gerard DeBiasi                                 $100,000                 446,886
- ---------------------------------- --------------------- -----------------------
James Benedict                                  $75,000                 335,165
- ---------------------------------- --------------------- -----------------------
Dan Richardson                                  $75,000                 335,165
- ---------------------------------- --------------------- -----------------------
Amal Devani                                    $150,000                 670,330
- ---------------------------------- --------------------- -----------------------
CSFN I LLC                                     $300,000                     -0-
- ---------------------------------- --------------------- -----------------------
John Brugmann                                  $100,000               1,000,000
- ---------------------------------- --------------------- -----------------------

EX-10.91

THIS  WARRANT  AND THE SHARES OF COMMON  STOCK  ISSUABLE  UPON  EXERCISE OF THIS
WARRANT HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE  SECURITIES  LAWS.  THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON
EXERCISE  OF  THIS  WARRANT  MAY  NOT  BE  SOLD,  OFFERED  FOR  SALE,   PLEDGED,
HYPOTHECATED,   ASSIGNED  OR   TRANSFERRED   IN  THE  ABSENCE  OF  AN  EFFECTIVE
REGISTRATION  STATEMENT  AS TO THIS  WARRANT  UNDER SAID ACT AND ANY  APPLICABLE
STATE  SECURITIES  LAWS OR AN  OPINION  OF COUNSEL  REASONABLY  SATISFACTORY  TO
TRUEYOU.COM INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

                                     Right to Purchase Shares of Common Stock of
T                                    TRUEYOU.COM INC.


                          COMMON STOCK PURCHASE WARRANT


No. W-84                                           Issue Date: December 22, 2006



                  TRUEYOU.COM  INC., a Delaware  corporation,  hereby  certifies
that, for value received,                      ,  or his permitted  assigns (the
"Holder"),  is entitled,  subject to the terms set forth below, to purchase from
the Company (as defined  herein) from and after the date hereof and, at any time
or from time to time  before  5:00  p.m.,  New York time,  through  the close of
business  (New York time) on December 31, 2013 (the  "Expiration  Date"),  up to
            fully paid and nonassessable  shares of Common Stock of the Company,
par value $0.001 per share  ("Common  Stock") at an exercise price of $0.001 per
share,  subject to adjustment  hereunder  (such exercise price, as adjusted from
time to time, the "Exercise Price").

                  As  used  herein  the  following  terms,  unless  the  context
otherwise requires, have the following respective meanings:

         (a)      The term  "Company"  shall  include  TRUEYOU.COM  INC. and any
corporation which shall succeed,  or assume the obligations of, TRUEYOU.COM INC.
hereunder.

         (b)      The term  "Common  Stock"  includes (a) the  Company's  Common
Stock,  par value $0.001 per share,  and (b) any other  securities into which or
for which any of the  securities  described in (a) may be converted or exchanged
pursuant to a plan of recapitalization,  reorganization,  merger, sale of assets
or otherwise.

         (c)      The term  "Warrant  Price" means an amount equal to the number
of shares  of  Common  Stock  being  purchased  upon  exercise  of this  Warrant
multiplied by Exercise Price.

         1.       EXERCISE  OF WARRANT.  From and after the date hereof  through
and including the Expiration Date, the Holder shall be entitled to receive, upon
exercise of this Warrant in whole or in part,  by delivery of an original or fax
copy of an  exercise  notice  in the form  attached  hereto  as




Exhibit A (the "Exercise Notice"), up to 1,000,000 shares of Common Stock of the
Company,  subject to adjustment  pursuant to Section 4 (such number of shares of
Common Stock, as adjusted from time to time, the "Warrant Shares Number").

         2.       PROCEDURE FOR EXERCISE.

                  2.1      DELIVERY OF STOCK CERTIFICATES, ETC. ON EXERCISE. The
Company  agrees that the shares of Common Stock  purchased upon exercise of this
Warrant  shall be deemed to be issued to the Holder as the record  owner of such
shares as of the close of business on the date on which this Warrant  shall have
been  surrendered  and payment made for such shares in accordance  herewith.  As
soon as  practicable  after the exercise of this Warrant in full or in part, and
in any event  within  three (3)  business  days  thereafter,  the Company at its
expense  (including the payment by it of any applicable  issue taxes) will cause
to be issued in the name of and  delivered to the Holder  (upon  payment by such
Holder of any applicable  transfer taxes), a certificate or certificates for the
number of duly and validly issued, fully paid and nonassessable shares of Common
Stock to which such Holder shall be entitled on such exercise.

                  2.2      EXERCISE. Payment of the Warrant Price may be made at
the option of the Holder by: (i) certified or official bank check payable to the
order of the Company,  (ii) wire transfer of immediately  available funds to the
account of the Company or (iii) the surrender and  cancellation  of a portion of
shares Common Stock issuable upon such exercise of this Warrant,  which shall be
valued and  credited  toward the total  Warrant  Price due the  Company  for the
exercise of the Warrant based upon the Fair Market Value thereof.  All shares of
Common Stock  issuable  upon the exercise of this Warrant  pursuant to the terms
hereof shall be validly issued and, upon payment of the Warrant Price,  shall be
fully paid and  nonassessable  shares of Common  Stock  determined  as  provided
herein.  For purposes hereof, the "Fair Market Value" of a share of Common Stock
as of a particular date (the "Determination Date") shall mean:

                           (a)      If the  Company's  Common Stock is traded on
         the American Stock Exchange or another  national  exchange or is quoted
         on the  Global  Select,  Global or Capital  Market of The Nasdaq  Stock
         Market, Inc.  ("Nasdaq"),  then the average closing or last sale price,
         respectively,  reported  for the  last  20  business  days  immediately
         preceding the Determination Date.

                           (b)      If the Company's  Common Stock is not traded
         on the American Stock Exchange or another  national  exchange or on the
         Nasdaq but is traded on the NASD Over the Counter Bulletin Board or the
         Pink  Sheets(R),  then the average of the closing bid and asked  prices
         reported  for the  last 20  business  days  immediately  preceding  the
         Determination Date.

                           (c)      Except as provided  in clause (d) below,  if
         the Company's Common Stock is not publicly  traded,  then as the Holder
         and the Company agree or in the absence of agreement by  arbitration in
         accordance  with the rules then in effect of the  American  Arbitration
         Association,  before a single  arbitrator  to be chosen from a panel of
         persons qualified by education and training to pass on the matter to be
         decided.


                                      -2-


                           (d)      If the  Determination  Date is the date of a
         liquidation,  dissolution  or winding  up, or any event  deemed to be a
         liquidation,  dissolution  or  winding  up  pursuant  to the  Company's
         charter,  then all  amounts to be  payable  per share to holders of the
         Common Stock pursuant to the charter in the event of such  liquidation,
         dissolution  or winding  up,  plus all other  amounts to be payable per
         share in respect of the Common Stock in liquidation  under the charter,
         assuming  for the purposes of this clause (d) that all of the shares of
         Common Stock then issuable upon exercise of the Warrant are outstanding
         at the Determination Date.

         The Company shall not be required to issue a fractional share of Common
Stock upon  exercise  of any  Warrant.  As to any  fraction of a share which the
Holder of one or more Warrants, the rights under which are exercised in the same
transaction,  would  otherwise be entitled to purchase upon such  exercise,  the
Company  shall pay an amount in cash equal to the Fair Market Value per share of
Common Stock on the date of exercise multiplied by such fraction.

                  2.3      RESTRICTIONS  ON EXERCISE  AMOUNT.  Unless the Holder
delivers to the Company irrevocable written notice prior to the date of issuance
hereof or sixty-one  (61) days prior to the  effective  date of such notice that
this  Section  2.3 shall not apply to the  Holder,  the Holder may not acquire a
number of shares of Common Stock to the extent  that,  upon such  exercise,  the
number of shares of Common Stock then  beneficially  owned by the Holder and his
affiliates  and any other  persons or entities  whose  beneficial  ownership  of
Common Stock would be aggregated with the Holder's for purposes of Section 13(d)
of the  Securities  Exchange  Act of  1934,  as  amended  (the  "Exchange  Act")
(including  shares  held by any  "group"  of which the  holder is a member,  but
excluding shares  beneficially owned by virtue of the ownership of securities or
rights to acquire  securities  that have  limitations  on the right to  convert,
exercise or purchase  similar to the limitation set forth herein)  exceeds 4.99%
of the total  number of shares of Common  Stock of the  Company  then issued and
outstanding.  For purposes hereof,  "group" has the meaning set forth in Section
13(d) of the Exchange  Act and  applicable  regulations  of the  Securities  and
Exchange  Commission (the  "Commission"),  and the percentage held by the Holder
shall be determined in a manner  consistent with the provisions of Section 13(d)
of the  Exchange  Act.  Each  delivery  of a notice of exercise by a Holder will
constitute a representation  by such Holder that it has evaluated the limitation
set forth in this  paragraph  and  determined,  based on the most recent  public
filings by the Company with the Commission, that the issuance of the full number
of shares of Common  Stock  requested  in such notice of  exercise is  permitted
under this paragraph.

         3.       EFFECT OF REORGANIZATION, ETC.; ADJUSTMENT OF EXERCISE PRICE.

                  3.1      REORGANIZATION,  CONSOLIDATION,  MERGER, ETC. In case
that at any time or from time to time,  the  Company  shall (a) effect a capital
reorganization,  recapitalization,  subdivision  or  reclassification  of Common
Stock (other than a subdivision or combination of the outstanding  Common Stock,
or a change in par value, or from par value to no par value or from no par value
to par value),  (b) effect an exchange or  conversion of the Common Stock for or
into  securities  of  another   corporation  or  other  entity,   (c)  effect  a
consolidation or merger of the Company with or into any other person (other than
a merger that does not result in any reclassification,  conversion,  exchange or
cancellation of outstanding shares of Common Stock),


                                      -3-


or (d) effect a sale, lease or other  conveyance of all or substantially  all of
the assets of the Company,  in any such case in a way that upon such transaction
holders of Common  Stock would be entitled to receive  stock,  securities,  cash
and/or other  property with respect to or in exchange for their shares of Common
Stock, then, in each such case: (x) as a condition to the consummation of such a
transaction,  provision  shall be made by the Company whereby the Holder of this
Warrant,  on the exercise  hereof as provided in Section 1 at any time after the
consummation  of such  transaction,  shall receive,  in lieu of the Common Stock
issuable  hereunder,  the stock and/or other securities and property  (including
cash) to which  such  Holder  would  have been  entitled  upon such  transaction
("Transaction  Consideration"),  if such Holder had so exercised  this  Warrant,
immediately  prior  thereto,  all subject to further  adjustment  thereafter  as
provided  in  Sections  4 and 5 and (y)  from  and  after  the  closing  of such
transaction, the holder of this Warrant shall only have the right to receive the
Transaction  Consideration  upon exercise of this Warrant in accordance with its
terms.

                  3.2      DISSOLUTION.  In the event of any  dissolution of the
Company  following the transfer of all or substantially all of its properties or
assets, the Company,  concurrently with any distributions made to holders of its
Common  Stock,  shall at its  expense  deliver or cause to be  delivered  to the
Holder  the stock and other  securities  and  property  (including  cash,  where
applicable) receivable by the Holder of the Warrant pursuant to Section 3.1.

                  3.3      CONTINUATION  OF  TERMS.  Upon  any   reorganization,
consolidation,  merger or transfer (and any dissolution  following any transfer)
referred to in this  Section 3, this  Warrant  shall  continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and other
securities  and property  receivable  on the exercise of this Warrant  after the
consummation of such  reorganization,  consolidation  or merger or the effective
date of dissolution  following any such transfer,  as the case may be, and shall
be binding upon the issuer of any such stock or other securities,  including, in
the case of any such transfer,  the person acquiring all or substantially all of
the  properties or assets of the Company,  whether or not such person shall have
expressly assumed the terms of this Warrant.  In the event this Warrant does not
continue in full force and effect  after the  consummation  of the  transactions
described  in this  Section  3,  then  the  Company's  securities  and  property
(including cash, where  applicable)  receivable by Holder of the Warrant will be
delivered to Holder.

         4.       EXTRAORDINARY  EVENTS  REGARDING  COMMON STOCK. If the Company
shall,  while this Warrant is outstanding,  (a) issue  additional  shares of the
Common Stock as a dividend or other  distribution  on outstanding  Common Stock,
(b)  subdivide  its  outstanding  shares of Common  Stock,  or (c)  combine  its
outstanding  shares of the Common  Stock into a smaller  number of shares of the
Common Stock,  then in each such case, the Exercise Price shall,  simultaneously
with the happening of such event,  be adjusted by multiplying the then effective
Exercise  Price,  by a fraction,  the  numerator of which shall be the number of
shares of  Common  Stock  outstanding  immediately  prior to such  event and the
denominator  of which shall be the number of shares of Common Stock  outstanding
immediately  after such event,  and the product so obtained shall  thereafter be
the Exercise Price then in effect. The Exercise Price, as so adjusted,  shall be
readjusted  in the same manner upon the  happening  of any  successive  event or
events  described herein in this Section 4. In the event that the Exercise Price
is adjusted  pursuant  to this  Section 4, the Warrant  Shares  Number  shall be
increased or  decreased  to a number  determined  by  multiplying  the number of
shares of Common  Stock that would  otherwise  (but for


                                      -4-


the  provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the Exercise Price that would  otherwise (but for the
provisions  of this  Section 4) be in  effect,  and (b) the  denominator  is the
Exercise Price as so adjusted pursuant to this Section 4.

         5.       CERTIFICATE AS TO ADJUSTMENTS.  In each case of any adjustment
or  readjustment  in the shares of Common Stock  issuable on the exercise of the
Warrant,  the Company at its expense  will  promptly  cause its Chief  Financial
Officer or other appropriate designee to compute such adjustment or readjustment
in accordance  with the terms of the Warrant and prepare a  certificate  setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Company will forthwith mail a copy
of each such  certificate  to the Holder of the Warrant and any Warrant agent of
the Company (appointed pursuant to Section 9 hereof).

         6.       RESERVATION  OF STOCK,  ETC.  ISSUABLE ON EXERCISE OF WARRANT.
The Company will at all times  reserve and keep  available,  solely for issuance
and delivery on the exercise of the Warrant, shares of Common Stock from time to
time issuable on the exercise of the Warrant.

         7.       ASSIGNMENT;  EXCHANGE OF WARRANT.  Subject to compliance  with
applicable  securities laws, this Warrant,  and the rights evidenced hereby, may
be transferred by any registered  holder hereof (a  "Transferor") in whole or in
part.  On the  surrender  for exchange of this  Warrant,  with the  Transferor's
endorsement  in  the  form  of  Exhibit  B  attached  hereto  (the   "Transferor
Endorsement  Form") and together with evidence  reasonably  satisfactory  to the
Company  demonstrating  compliance with applicable  securities laws, which shall
include,  without  limitation,  the  provision  of  a  legal  opinion  from  the
Transferor's  counsel (at the  Company's  expense)  that such transfer is exempt
from the registration requirements of applicable securities laws, the Company at
its expense  (but with  payment by the  Transferor  of any  applicable  transfer
taxes) will issue and deliver to or on the order of the Transferor thereof a new
Warrant of like tenor,  in the name of the Transferor  and/or the  transferee(s)
specified in such Transferor  Endorsement Form,  calling in the aggregate on the
face or faces thereof for the number of shares of Common Stock called for on the
face or faces of the Warrant so surrendered by the Transferor.

         8.       REPLACEMENT  OF  WARRANT.  On receipt of  evidence  reasonably
satisfactory  to the Company of the loss,  theft,  destruction  or mutilation of
this Warrant  and, in the case of any such loss,  theft or  destruction  of this
Warrant,   on  delivery  of  an  indemnity   agreement  or  security  reasonably
satisfactory  in form and  amount  to the  Company  or,  in the case of any such
mutilation,  on surrender and  cancellation of this Warrant,  the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

         9.       WARRANT  AGENT.  The  Company  may,  by written  notice to the
Holder of the Warrant,  appoint an agent for the purpose of issuing Common Stock
on the exercise of this Warrant  pursuant to Section 1,  exchanging this Warrant
pursuant to Section 7, and replacing this Warrant  pursuant to Section 8, or any
of the foregoing, and thereafter any such issuance,  exchange or replacement, as
the case may be, shall be made at such office by such agent.


                                      -5-


         10.      TRANSFER  ON  THE  COMPANY'S  BOOKS.  Until  this  Warrant  is
transferred  on the books of the Company,  the Company may treat the  registered
holder hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.

         11.      REGISTRATION  RIGHTS. The resale of any Common Stock issued or
issuable upon  exercise of this Warrant  shall be registered in accordance  with
the terms and conditions contained in that certain Registration Rights Agreement
dated of even date hereof,  among the Holder,  the Company and the other parties
named therein (the "Registration Rights Agreement"). The Company agrees that any
permitted transferee of this Warrant and the rights evidenced hereby pursuant to
Section 7 will be entitled to the rights of an "Investor" under the Registration
Rights Agreement on the terms and conditions set forth therein.

         12.      NOTICES,  ETC. All notices and other  communications  from the
Company to the Holder of this Warrant shall be mailed by first class  registered
or certified mail,  postage prepaid,  at such address as may have been furnished
to the Company in writing by such Holder or, until any such Holder  furnishes to
the Company an address,  then to, and at the address of, the last Holder of this
Warrant who has so furnished an address to the Company.

         13.      MISCELLANEOUS.  This  Warrant  and  any  term  hereof  may  be
changed,  waived,  discharged  or  terminated  only by an  instrument in writing
signed by the party against which enforcement of such change, waiver,  discharge
or  termination  is sought.  This Warrant  shall be governed by and construed in
accordance  with the laws of State of New York without  regard to  principles of
conflicts of laws. In the event that any provision of this Warrant is invalid or
unenforceable  under any applicable  statute or rule of law, then such provision
shall be deemed  inoperative  to the extent that it may conflict  therewith  and
shall be deemed  modified to conform  with such statute or rule of law. Any such
provision  which  may prove  invalid  or  unenforceable  under any law shall not
affect the validity or  enforceability  of any other  provision of this Warrant.
The headings in this Warrant are for purposes of reference  only,  and shall not
limit  or  otherwise  affect  any  of  the  terms  hereof.   The  invalidity  or
unenforceability  of any provision hereof shall in no way affect the validity or
enforceability of any other provision.

                           [Signature page to follow]


                                      -6-


                  IN WITNESS  WHEREOF,  the Company and the Holder have executed
this Warrant as of the date first written above.

The Company:                            TRUEYOU.COM INC.


                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:


The Holder:



                                        ------------------------------


                                      -7-


                                                                       EXHIBIT A

                              FORM OF SUBSCRIPTION

                   (To be signed only on exercise of Warrant)

TO:      TRUEYOU.COM INC.

         Attention:  ____________________

The  undersigned,  pursuant to the provisions set forth in the attached  Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):

___  ________  shares of the Common Stock  covered by such  Warrant  (subject to
reduction,  if  necessary  and  applicable,  to utilize  the  cashless  exercise
procedure set forth in the Warrant).

The  undersigned  herewith  makes  payment of the full  Exercise  Price for such
shares  at  the  price  per  share  provided  for  in  such  Warrant,  which  is
$___________. Such payment takes the form of (check applicable box):

___ $__________ in lawful money of the United States; or

___ the cancellation of such number of shares of Common Stock as is necessary to
exercise this Warrant pursuant to the cashless  exercise  procedure set forth in
the Warrant.

         The  undersigned  requests  that the  certificates  for such  shares be
issued in the name of,  and  delivered  to  ____________________________________
whose address is ______________________________________________________________.

         The  undersigned  represents  and warrants that all offers and sales by
the  undersigned of the securities  issuable upon exercise of the within Warrant
shall be made pursuant to  registration of the Common Stock under the Securities
Act of 1933, as amended (the "Securities  Act") or pursuant to an exemption from
registration under the Securities Act.


Dated:
      -------------------              -----------------------------------------
                                       (Signature must conform to name of holder
                                       as specified on the face of the Warrant)


                                       ----------------------------------------
                                       (Address)



                                                                       EXHIBIT B

                         FORM OF TRANSFEROR ENDORSEMENT
                   (To be signed only on transfer of Warrant)

                  For value received, the undersigned hereby sells, assigns, and
transfers  unto the person(s)  named below under the heading  "Transferees"  the
right represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of  TRUEYOU.COM  INC.  which the within  Warrant  relates
specified under the headings "Percentage  Transferred" and "Number Transferred,"
respectively,  opposite the name(s) of such  person(s)  and  appoints  each such
person  Attorney to transfer its  respective  right on the books of  TRUEYOU.COM
INC. with full power of substitution in the premises.



- ---------------------------- ---------------------------- ---------------------------- ----------------------------
Transferees                  Address                      Percentage Transferred       Number Transferred
- ---------------------------- ---------------------------- ---------------------------- ----------------------------
                                                                              

- ---------------------------- ---------------------------- ---------------------------- ----------------------------

- ---------------------------- ---------------------------- ---------------------------- ----------------------------

- ---------------------------- ---------------------------- ---------------------------- ----------------------------

- ---------------------------- ---------------------------- ---------------------------- ----------------------------



Dated:
      -------------------              -----------------------------------------
                                       (Signature must conform to name of holder
                                       as specified on the face of the Warrant)

Signed in the presence of:

- --------------------------------------    --------------------------------------
                (Name)                                   (address)

ACCEPTED AND AGREED:
                                          --------------------------------------
[TRANSFEREE]                                             (address)

- -----------------------------
           (Name)

EX-10.93

                                                          Exhibit 10.93


                 SENIOR SUBORDINATED SECURITY AGREEMENT

         THIS SENIOR  SUBORDINATED  SECURITY  AGREEMENT dated as of December 22,
2006 (as the same may be supplemented,  modified,  amended, restated or replaced
from  time  to time in the  manner  provided  herein,  this  "AGREEMENT")  is by
TRUEYOU.COM  INC.,  a Delaware  corporation  (the  "PARENT"),  KLINGER  ADVANCED
AESTHETICS,  INC., a Delaware corporation ("KAA"), ADVANCED AESTHETICS SUB, INC.
a Delaware  corporation ("AAI"),  ADVANCED  AESTHETICS,  LLC, a Delaware limited
liability company ("AAL"), KLINGER ADVANCED AESTHETICS,  LLC, a Delaware limited
liability  company  ("KLINGER  ADVANCED"),  ANUSHKA PBG, LLC, a Delaware limited
liability  company  ("ANUSHKA  PBG"),  ANUSHKA  BOCA,  LLC, a  Delaware  limited
liability company ("ANUSHKA BOCA"), WILD HARE, LLC, a Delaware limited liability
company ("WILD HARE"), DISCHINO CORPORATION, a Florida corporation ("DISCHINO"),
ANUSHKA PBG ACQUISITION SUB, LLC, a Delaware limited liability company ("ANUSHKA
ACQUISITION"),  ANUSHKA BOCA ACQUISITION SUB, LLC, a Delaware limited  liability
company  ("BOCA  ACQUISITION")  and WILD HARE  ACQUISITION  SUB, LLC, a Delaware
limited liability company ("WILD HARE ACQUISITION",  and together with KAA, AAI,
AAL, Klinger Advanced,  Anushka PBG, Anushka Boca, Wild Hare, Dischino,  Anushka
Acquisition and Boca Acquisition,  the  "SUBSIDIARIES" and together with Parent,
each a "PLEDGOR" and  collectively,  the  "PLEDGORS") in favor of and with VICIS
CAPITAL MASTER FUND LLC,  KLINGER  INVESTMENTS  LLC,  ANDREW D. LIPMAN,  RICHARD
RAKOWSKI,  GERARD DEBIASI, JAMES BENEDICT,  DAN RICHARDSON,  AMAL DEVANI, CSFN I
LLC and JOHN BRUGMANN (each a "SENIOR SUBORDINATED LENDER" and collectively, the
"SENIOR SUBORDINATED LENDERS").

                  The Parent and the Senior Subordinated  Lenders are each party
to that  certain Loan  Agreement  dated as of December 22, 2006 (as the same may
have been and  hereafter may be  supplemented,  modified,  amended,  restated or
replaced  from  time  to  time  in the  manner  provided  therein,  the  "SENIOR
SUBORDINATED LOAN AGREEMENT"), pursuant to which the Senior Subordinated Lenders
have made a senior  subordinated term loan (the "SENIOR  SUBORDINATED  LOAN") in
the  principal  amount  of  Three  Million  Dollars   ($3,000,000)  for  capital
expenditures,  general working capital and all costs and expenses connected with
the Senior  Subordinated Loan. The Senior  Subordinated Loan is evidenced by the
Senior Subordinated Promissory Note issued to the Senior Subordinated Lenders by
the Parent and dated as of December 22, 2006 (the "SENIOR  SUBORDINATED  NOTE").
The Obligations under (and as defined in) the Senior Subordinated Loan Agreement
and Senior Subordinated Note are guarantied pursuant to a separate Unconditional
Guaranty made by each Subsidiary in favor of the Senior Subordinated Lenders and
dated as of December  22, 2006 (as the same may have been and  hereafter  may be
supplemented,  modified,  amended, restated or replaced from time to time in the
manner provided therein, each a "SENIOR SUBORDINATED  SUBSIDIARY GUARANTY",  and
collectively, the "SENIOR SUBORDINATED SUBSIDIARY GUARANTIES").

                  The Parent also is a party to that certain Securities Purchase
Agreement dated as of June 30, 2006 (as the same may have been and hereafter may
be supplemented,  modified,  amended,  restated or replaced from time to time in
the manner  provided  therein,  the "SENIOR  PURCHASE  AGREEMENT"),  with Laurus
Master Fund, Ltd. ("LAURUS"),  pursuant to which Laurus purchased a Secured Term
Note in the principal amount of Twenty-Five Million Dollars ($25,000,000.00) and
dated  July  11,  2006  (as  the  same  may  have  been  and  hereafter  may  be




supplemented,  modified,  amended, restated or replaced from time to time in the
manner provided  therein,  the "SENIOR NOTE").  The obligations of the Parent to
Laurus under the Senior Purchase Agreement and Senior Note are guarantied by the
Subsidiaries  pursuant to their Subsidiary Guaranty with Laurus dated as of July
11, 2006 (as the same may have been and hereafter may be supplemented, modified,
amended,  restated or replaced from time to time in the manner provided therein,
the  "SENIOR  SUBSIDIARY  GUARANTY"),  and  secured  by  the  "Collateral"  (the
"COLLATERAL")  as defined in and as granted under that certain  Master  Security
Agreement  by and among the  Parent  and the  Subsidiaries  dated as of July 11,
2006, and attached  hereto as Exhibit A (as the same may have been and hereafter
may be supplemented,  modified,  amended, restated or replaced from time to time
in the manner provided therein, the "SENIOR SECURITY AGREEMENT").

                  The  Parent  and  Laurus  also  are  parties  to that  certain
subordinated Securities Purchase Agreement dated as of December 22, 2006 (as the
same may  have  been  and  hereafter  may be  supplemented,  modified,  amended,
restated  or  replaced  from time to time in the manner  provided  therein,  the
"SENIOR SUBORDINATED PURCHASE AGREEMENT"),  pursuant to which Laurus purchased a
subordinated  Secured Term Note in the principal  amount of One Million  Dollars
($1,000,000.00)  and  dated  December  22,  2006 (as the same may have  been and
hereafter may be supplemented, modified, amended, restated or replaced from time
to time in the manner provided therein,  the "SENIOR SUBORDINATED LAURUS NOTE").
Pursuant to the  Reaffirmation,  Ratification and Amendment  Agreement among the
Parent,  the  Subsidiaries  and Laurus dated  December 22, 2006 (as the same may
have been and  hereafter may be  supplemented,  modified,  amended,  restated or
replaced  from  time  to  time  in the  manner  provided  therein,  the  "SENIOR
REAFFIRMATION"),  the subordinated obligations of the Parent to Laurus under the
Senior  Subordinated  Purchase Agreement and Senior Subordinated Laurus Note are
guarantied by the Subsidiaries  pursuant to their Senior Subsidiary Guaranty and
secured by the Collateral granted under the Senior Security Agreement.

                  The Parent,  Laurus, the Senior Subordinated  Lenders and each
Subordinated   Lender  (as  defined   therein)   are  parties  to  that  certain
Subordination Agreement dated as of December 22, 2006 (as the same may have been
and hereafter may be supplemented,  modified, amended, restated or replaced from
time to time in the manner provided  therein,  the  "SUBORDINATION  AGREEMENT"),
pursuant to which (among other things) the obligations owed and liens granted by
the  Pledgors  to  the  Senior  Subordinated  Lenders  are  subordinated  to the
obligations  owed and liens granted to Laurus,  and the obligations owed and any
liens granted to the  Subordinated  Lenders are  subordinated to the obligations
owed and liens granted to both Laurus and the Senior Subordinated Lenders.

                  Section 1. CERTAIN DEFINED TERMS.  Capitalized  terms used and
not otherwise  defined shall have the meanings set forth in the Senior  Purchase
Agreement,  the Senior Security Agreement,  the Senior Subsidiary Guaranty,  the
Senior Reaffirmation, the Senior Subordinated Loan Agreement, and/or each Senior
Subordinated Subsidiary Guaranty.

                  Section 2. GRANT OF  SECURITY  INTEREST.  Subject to the terms
and provisions of the  Subordination  Agreement,  as security for the timely and
full payment and satisfaction of any and all of the "Obligations"  under (and as
defined in) the Senior  Subordinated Loan Agreement and Senior Subordinated Note
(the "PARENT'S  OBLIGATIONS")  and the  obligations of each of the  Subsidiaries
under its respective Senior  Subordinated  Subsidiary Guaranty (the "GUARANTORS'


                                       2



OBLIGATIONS",  and  together  with  the  Parent's  Obligations,  the  "PLEDGORS'
OBLIGATIONS"),  each Pledgor hereby absolutely,  unconditionally and irrevocably
pledges,  assigns,  conveys,  mortgages,  transfers  and  delivers to the Senior
Subordinated Lenders, and grants to the Senior Subordinated Lenders a continuing
security  interest in and to, the "Collateral" as defined in the Master Security
Agreement  (including,  without limitation,  any and all accounts,  instruments,
chattel  paper,  documents of title and trust  receipts  (and the goods  covered
thereby,   wherever  located),   letter  of  credit  rights,  financial  assets,
investment property, securities,  securities accounts and security entitlements,
deposit  accounts,  contract rights,  inventory,  equipment,  fixtures and other
goods, warranties,  casualty and other insurance policies and rights, commercial
tort  claims and other  litigation  claims  and  rights,  tradenames,  software,
payment intangibles,  and other general intangibles of such Pledgor, and any and
all computer  programming data and other books and records of such Pledgor),  IN
EACH CASE  whether now or hereafter  existing,  acquired or created and wherever
located,  whether  any  of  the  foregoing  items  is  now  or  hereafter  owned
beneficially  or of record and  whether  now or  hereafter  owned  individually,
jointly or  otherwise,  together  with the products and  proceeds  thereof,  all
collections,  payments and other  distributions  and  realizations  with respect
thereto, any and all other rights, powers, privileges, remedies and interests of
each  Pledgor  therein,  thereto  or  thereunder,  and  any  and  all  renewals,
substitutions,  modifications  and extensions of any and all of the items in the
foregoing subsections.

                  Section 3.  CONSTRUCTION.  This  Agreement is delivered at the
request of the Senior  Subordinated  Lenders  pursuant to and in accordance with
the Senior Subordinated Loan Agreement.  This Agreement shall be governed by and
construed  in  accordance  with  Sections 3 through  13 of the  Master  Security
Agreement,  and the Lenders  shall have (in addition to those granted by the UCC
and other applicable law) all of the rights,  powers,  privileges,  remedies and
interests  granted to "Laurus" as the secured party  thereunder,  which Sections
are hereby  incorporated by reference as if fully set forth herein, IN EACH CASE
as if (a) each Pledgor were an "Assignor",  (b) the Senior Subordinated  Lenders
collectively  were  "Laurus",  (c)  this  Agreement  were the  "Master  Security
Agreement",  (d) the Senior  Subordinated  Note were the "Note",  (e) the Senior
Subordinated  Loan Agreement was the "Securities  Purchase  Agreement",  (f) the
Financing Documents were the "Related Agreements", (g) the Pledgors' Obligations
were the "Obligations" referred to in those Sections, and (h) the Collateral was
the "Collateral"  referred to in those Sections.  To the extent not inconsistent
with the  preceding,  this  Agreement also shall be governed by and construed in
accordance  with the  provisions of the Senior  Subordinated  Guaranties,  which
provisions are hereby incorporated by reference as if fully set forth herein, IN
EACH  CASE as if (a)  each  Pledgor  were a  "Guarantor",  and (b)  each  Senior
Subordinated  Lender were a "Lender".  In the event of any conflict  between the
terms of the Senior Subordinated Loan Agreement and the terms of this Agreement,
the terms of the Subordinated Loan Agreement shall prevail.

                  Section 4.  ACCEPTANCE;  FINANCING  STATEMENTS;  COUNTERPARTS.
Each Pledgor  hereby  absolutely,  unconditionally,  irrevocably  and  expressly
waives forever  acceptance and notice of any acceptance of this Agreement or any
other Financing Document. By accepting this Agreement,  each Senior Subordinated
Lender  agrees  to be  bound  by all of  the  agreements  and  other  terms  and
provisions  applicable  to the  Senior  Subordinated  Lenders  contained  herein
(whether as a Senior  Subordinated  Lender or a "party")  and  acknowledges  and
agrees that it is a party  hereto for such  contractual  purposes  (but  without
making any Senior  Subordinated  Lender


                                       3



in any way liable or  responsible  for any of the  Obligations  of any Pledgor).
Each Pledgor hereby acknowledges and agrees that, prior to the execution of this
Agreement, each Pledgor reviewed the initial UCC financing statements respecting
the Collateral  prepared by the Senior  Subordinated  Lenders and authorized the
Senior Subordinated Lenders to file them (I.E., "prefile") in such jurisdictions
as the Senior  Subordinated  Lenders  deemed  necessary or  desirable,  and each
Pledgor  hereby  confirms and ratifies the authority of the Senior  Subordinated
Lenders to make each such filing.  This Agreement may be executed in two or more
counterpart copies of the entire document or of signature pages to the document,
each of which may be executed  by one or more of the  parties  hereto or thereto
and each of which may be sent by telecopy,  email or other electronic means, but
all of which,  when taken together,  shall constitute a single agreement binding
upon all of the parties hereto.

                  Section 5. ENTIRE  AGREEMENT.  Except as  otherwise  expressly
provided in Section 3 above,  this Agreement  contains the entire  agreement and
understanding  of the parties and supersedes  and completely  replaces all prior
and other representations, warranties, promises, assurances and other agreements
and understandings (whether written, oral, express,  implied or otherwise) among
the parties with respect to the matters contained in this Agreement.

PLEDGORS:

                            TrueYou.Com Inc.


                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:

                            Klinger Advanced Aesthetics, Inc.


                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:

                            Advanced Aesthetics Sub, Inc.


                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:


                                       4





                            Advanced Aesthetics, LLC

                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:

                            Klinger Advanced Aesthetics, LLC


                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:

                            Anushka PBG, LLC

                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:

                            Anushka Boca, LLC

                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:

                            Wild Hare, LLC

                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:


                                       5




                            DISCHINO CORPORATION


                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:

                            Anushka PBG Acquisition Sub, LLC


                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:

                            Anushka Boca Acquisition Sub, LLC


                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:

                            Wild Hare Acquisition Sub, LLC


                            By:
                               -------------------------------------------------
                            Name:
                            Title:
                            Address:


                                       6

EX-10.94

                                December 20, 2006



TrueYou.Com Inc.
501 Merritt 7, 5th Floor
Norwalk, CT 06851

                Re:   AMENDMENT OF REGISTRATION RIGHTS AGREEMENT

Gentlemen:

                  Reference  is  made  to  that  certain   Registration   Rights
Agreement, dated September 1, 2005 (the "Registration Rights Agreement"),  among
Klinger  Advanced  Aesthetics,  Inc.  and  the  investors  listed  therein  (the
"Stockholders")  which  agreement  has been  assumed by  TrueYou.Com  Inc.  (the
"Company").  Unless otherwise defined herein, capitalized terms used herein have
the respective meanings assigned to them in the Registration Rights Agreement.

                  The  Company and the  undersigned  investors,  constituting  a
majority of the  Stockholders,  hereby amend the Registration  Rights Agreement,
pursuant to Section 4.6  thereto,  by deleting  Section 1.2 of the  Registration
Rights Agreement in its entirety and replacing it with the following:

                  "1.2  LIQUIDATED  DAMAGES.  If: (i) the  Registration
         Statement  is not filed on or prior to the Filing  Date,  (ii)
         the  Registration  Statement  filed  or  required  to be filed
         hereunder is not declared  effective by the  Commission by the
         Effectiveness Date, or (iii) during the Effectiveness  Period,
         the  Registration  Statement  ceases  for any reason to remain
         continuously  effective as to all  Registrable  Securities for
         which it is  required  to be  effective  (any such  failure or
         breach,  an  "EVENT"  and the date of the  occurrence  of such
         Event,   the  "EVENT  DATE"),   then  the  Company  shall  pay
         liquidated  damages and not as damages for such  failure in an
         amount  equal to 1% of the  aggregate  purchase  price paid by
         such Holder for any  Registrable  Securities then held by such
         Stockholder  for  each  30-day  period,  or pro  rata  for any
         portion thereof, following such Event Date that the applicable
         Event shall remain  uncured.  The liquidated  damages  payable
         hereunder  shall be paid to the  Holders  by the  issuance  of
         warrants to purchase  shares of Common  Stock,  at an exercise
         price of  $0.001  per share  ("COMMON  STOCK  WARRANTS").  The
         number of shares of Common Stock  underlying  the Common Stock
         Warrants to be issued for each period shall be  calculated  by
         dividing the  liquidated  damages due to the  Holders,  by the
         higher of (A) the average  closing trading price of the Common
         Stock during the 30-day period immediately before the last day
         of any relevant period and (B) $0.211254.  Notwithstanding the
         foregoing,  with  respect to any  liquidated  damages  payable
         hereunder  accruing for periods  after  September  30, 2006, a
         Holder may elect to



         receive  such  Holder's  Periodic  Amount  in  cash in lieu of
         Common  Stock  Warrants;  PROVIDED,  that  such  Holder  shall
         provide  the  Company  with  written  notice of such  election
         within  10  days  following  the  end  of  each  period.   Any
         liquidated  damages  payable under this Section 1.2,  shall be
         paid monthly, on the last day of the calendar month subsequent
         to the month  during  which such  liquidated  damages  accrued
         (commencing  on January  31,  2007) and is in  addition to any
         remedies  available to the Stockholders at law or in equity by
         reason of any breach of this Agreement by the Company."

                  It is hereby  agreed  that,  except as  specifically  provided
herein,  this  Amendment  does  not in any  way  affect  or  impair  the  terms,
conditions and other  provisions of the  Registration  Rights  Agreement and all
terms,  conditions and other  provisions of the  Registration  Rights  Agreement
shall remain in full force and effect except to the extent specifically amended,
modified or waived pursuant to the provisions of this Amendment.


                                   2


                  This  Amendment  may be executed in two or more  counterparts,
each of which  shall be  deemed an  original,  but all of which  together  shall
constitute one and the same document.

                                       Very truly yours,

                                       PEQUOT MARINER MASTER FUND, L.P.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                       PREMIUM SERIES PPC LIMITED-CELL 32

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                       PEQUOT HEALTHCARE FUND, L.P.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                       PEQUOT HEALTHCARE OFFSHORE FUND, INC.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                       PEQUOT SCOUT FUND, L.P.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                   3


                                      PEQUOT NAVIGATOR OFFSHORE FUND, INC.

                                      By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                      PEQUOT DIVERSIFIED MASTER FUND, LTD.

                                      By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                      PEQUOT HEALTHCARE INSTITUTIONAL FUND, L.P.

                                      By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                      PREMIUM SERIES PCC LIMITED-CELL 33

                                      By:
                                         ---------------------------------------
                                         Name:
                                         Title:


                                      GRUBER AND MCBAINE INTERNATIONAL

                                      By:
                                         ---------------------------------------
                                         Name:
                                         Title:




                                      ------------------------------------------
                                      J. PATTERSON MCBAINE


                                   4


                                       LAGUNITAS PARTNERS, L.P.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                       FIREFLY PARTNERS

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                       JON D. AND LINDA W. GRUBER TRUST

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                       VFT SPECIAL VENTURES, LTD.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                       BALLYSHANNON FAMILY PARTNERSHIP, L.P.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                       BALLYSHANNON PARTNERS, L.P.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                   5


                                       CABERNET PARTNERS, L.P.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                       NORTHWOOD CAPITAL PARTNERS, L.P.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:



                                       -----------------------------------------
                                       REGINA PITARO



                                       -----------------------------------------
                                       JAY SEID


                                       GGCP, INC.

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:



Agreed:

TRUEYOU.COM INC.

By:
   ------------------------------------
   Name:
   Title:


                                   6

EX-31.1

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer

          I, Richard Rakowski, President and Chief Executive Officer of TrueYou.com Inc., certify that:

1.	I have reviewed this Annual Report on Form 10-K of TrueYou.com Inc.;
2.	Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3.	Based on my knowledge, the Financial Statements and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this Report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
	(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
	(c)	Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Richard Rakowski

Richard Rakowski

Chief Executive Officer

Dated: February 5, 2007

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer

I, Matthew Burris, Chief Financial Officer and Chief Operating Officer of TrueYou.com Inc., certify that:

1.	I have reviewed this Annual Report on Form 10-K of TrueYou.com Inc.;
2.	Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;
3.	Based on my knowledge, the Financial Statements and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of and for, the periods presented in this Report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;
	(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and
	(c)	Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Matthew Burris

Matthew Burris

Chief Financial Officer

Dated February 5, 2007

EX-32.1

Exhibit 32.1

Section 1350 Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

          Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of TrueYou.com Inc. (the “Company”) does hereby certify, to such officer’s knowledge, that: The Annual Report on Form 10-K for the fiscal year ended July 1, 2006 (the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 5, 2007

/s/ Richard Rakowski

Richard Rakowski

Chief Executive Officer

/s/ Matthew Burris

Matthew Burris

Chief Financial Officer