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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                 AMENDMENT NO.1

                                       TO

                                   FORM 10-KSB

[X]      Annual Report Under Section 13 or 15(d) of the Securities  Exchange Act
         of 1934

                   For the fiscal year ended December 31, 2005

[_]      Transition  Report  Pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934

         For the transition period from _____________ to _____________.

                         Commission file number 0-16075

                            PEOPLE'S LIBERATION, INC.

        (Exact Name of Small Business Issuer as Specified in its Charter)

          DELAWARE                                                86-0449546
(State or Other Jurisdiction of                               (I.R.S. Employer
Incorporation or Organization)                               Identification No.)

                          150 WEST JEFFERSON BOULEVARD
                              LOS ANGELES, CA 90007
                    (Address of Principal Executive Offices)

                                 (213) 745-2123
                (Issuer's Telephone Number, Including Area Code)

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

         Securities registered under Section 12(g) of the Exchange Act:
                     COMMON STOCK, PAR VALUE $.001 PER SHARE

      Check  whether  the issuer is not  required  to file  reports  pursuant to
Section 13 or 15(d) of the Exchange Act. |_|

      Check  whether  the issuer (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                            Yes |X|      No |_|

         Check if there is no  disclosure  of  delinquent  filers in response to
Item 405 of  Regulation  S-B contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. |X|

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

                            Yes |_|      No |X|

         Issuer's  Revenues  for the fiscal  year ended  December  31, 2005 were
$5,803,067.

         The aggregate  market value of the voting and non-voting  common equity
held by non-affiliates  computed by reference to the average bid and asked price
of such common equity, as of February 21, 2006, was $29,513,002.

         As of February 28,  2006,  the issuer had  34,370,100  shares of common
stock, par value $.001 per share, issued and outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE

         Transitional Small Business Disclosure Format (check one):

                            Yes |_|      No |X|

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<PAGE>


                                EXPLANATORY NOTE

         We are filing this Annual Report on Form 10-KSB/A (the "Amended  Annual
Report"),  to amend our Annual Report on Form 10-KSB for the year ended December
31, 2005 (the "Original  Annual  Report"),  which was originally  filed with the
Securities and Exchange  Commission (the "SEC") on March 7, 2006. The Company is
filing this Amended Annual Report in response to comments received from the SEC.
The following Items amend the Original Annual Report,  as permitted by the rules
and regulations of the SEC. Unless otherwise stated,  all information  contained
in this Amended Annual Report is as of March 7, 2006. All capitalized terms used
herein but not otherwise defined shall have the meanings ascribed to them in the
Original Annual Report.

ITEM 7.  FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                           PAGE
                                                                           ----

AUDITED FINANCIAL STATEMENTS:

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

   Consolidated Balance Sheet at December 31, 2005......................      3

   Consolidated Statements of Operations for the Years Ended
      December 31, 2005 and 2004........................................      4

   Consolidated Statements of Cash Flows for the Years Ended
      December 31, 2005 and 2004........................................      5

   Consolidated Statement of Changes in Stockholders' Equity from
      January 1, 2004 to December 31, 2005..............................      6

   Notes to the Consolidated Financial Statements.......................      7


                                       1
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors:
People's Liberation, Inc.

       We have audited the accompanying  consolidated  balance sheet of People's
Liberation,  Inc. and its wholly-owned  subsidiaries,  Versatile  Entertainment,
Inc. and Bella Rose, LLC,  (collectively  the "Company") as of December 31, 2005
and the related consolidated statements of operations,  stockholder's equity and
cash  flows for each of the  years  ended  December  31,  2005 and  2004.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

     We conducted our audits in accordance  with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits 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
controls over financial reporting. Our audits included consideration of internal
controls 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 controls 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 People's
Liberation,  Inc. and its wholly-owned  subsidiaries,  Versatile  Entertainment,
Inc.  and Bella  Rose,  LLC,  as of  December  31, 2005 and the results of their
operations and cash flows for each of the years ended December 31, 2005 and 2004
in conformity with accounting principles generally accepted in the United States
of America.

     As  described  in Note 19 to the  consolidated  financial  statements,  the
financial statements have been restated for a misstatement in the calculation of
earnings per share and conversion of preferred shares.


/s/ Grobstein, Horwath & Company LLP
------------------------------------
Grobstein, Horwath & Company LLP

Sherman Oaks, California
February 14, 2006, except for Note 19
as to which the date is April 11, 2006


                                       2
<PAGE>


                            PEOPLE'S LIBERATION, INC.


                           CONSOLIDATED BALANCE SHEET
                                  December 31,
                                                                        2005
                                                                    -----------
                             Assets
Current Assets:
   Cash and cash equivalents ..................................     $ 4,528,276
   Due from factor ............................................       1,994,249
   Accounts receivable ........................................          20,591
   Inventories ................................................       1,092,981
   Prepaid expenses and other current assets ..................         222,128
   Deferred tax asset .........................................           9,600
                                                                    -----------
     Total current assets .....................................       7,867,825

Property and equipment, net of accumulated depreciation .......         164,991
Trademarks ....................................................          44,336
Other assets ..................................................          46,970
                                                                    -----------
     Total Assets .............................................     $ 8,124,122
                                                                    ===========

               Liabilities and Stockholders' Equity
Current Liabilities:
   Accounts payable and accrued expenses ......................     $ 1,953,078
   Income taxes payable .......................................          15,997
                                                                    -----------
     Total current liabilities ................................       1,969,075

Deferred tax liability ........................................          41,000
                                                                    -----------
     Total Liabilities ........................................       2,010,075

Stockholders' Equity:
   Series A convertible preferred stock, $.001 par
     value; 3,500,000 shares authorized; 3,038,231
     shares issued and outstanding (2) ........................       6,672,738
   Common stock, $.001 per value; 150,000,000 shares
     authorized; 1,525,383 shares issued and
     outstanding (1)(2) .......................................           1,525
   Additional paid-in capital (2) .............................        (304,870)
   Accumulated deficit ........................................        (255,346)
                                                                    -----------
     Total Stockholders' Equity ...............................       6,114,047
                                                                    -----------
     Total Liabilities and Stockholders' Equity ...............     $ 8,124,122
                                                                    ===========

(1)      Reflects the reverse stock split of 1:9.25 and  subsequent  issuance of
         shares to preserve  round lot holders as of December  31,  2005,  which
         became effective on January 5, 2006.
(2)      As restated, see Note 19.


                 See Notes to Consolidated Financial Statements.


                                       3
<PAGE>



                            PEOPLE'S LIBERATION, INC.


                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                    Year Ended      Year Ended
                                                    December 31,    December 31,
                                                       2005            2004
                                                   ------------    ------------

Net sales ......................................   $  5,803,067    $    163,702
Cost of goods sold .............................      3,567,212         103,091
                                                   ------------    ------------
 Gross profit ..................................      2,235,855          60,611
                                                   ------------    ------------

Selling expenses ...............................        861,742          75,494
Design and production ..........................        891,985          81,638
General and administrative .....................        972,091         166,625
                                                   ------------    ------------

 Total operating expenses ......................      2,725,818         323,757
                                                   ------------    ------------

Loss from operations ...........................       (489,963)       (263,146)

Interest expense ...............................         28,637           1,189
Loss on disposal of fixed asset ................          1,567           6,786
                                                   ------------    ------------
 Total other expense ...........................         30,204           7,975
                                                   ------------    ------------

Loss before income taxes .......................       (520,167)       (271,121)
Provision for income taxes .....................         49,400             800
                                                   ------------    ------------

Net loss .......................................   $   (569,567)   $   (271,921)
                                                   ============    ============

Less preferred stock dividend (Note 8) .........      4,906,250            --
                                                   ------------    ------------

Net loss available to common shareholders ......   $ (5,475,817)   $   (271,921)
                                                   ============    ============

Basic and diluted weighted average loss per
   common share (1)(2) .........................   $     (33.60)   $       --
                                                   ============    ============

Basic and diluted weighted average common
   shares outstanding (1)(2) ...................        162,986            --
                                                   ============    ============

Pro forma income taxes and earnings per
share:
  Net loss .....................................   $   (569,567)   $   (271,921)
  Pro forma income tax benefit .................       (205,000)        (90,800)
  Pro forma net loss ...........................       (315,167)       (180,321)
  Pro forma net loss available to common
     shareholders (2) ..........................     (5,221,417)       (180,321)
  Pro forma basic and diluted loss per
     common share (2)(3) .......................          (0.23)          (0.02)

  Pro forma basic and diluted weighted
     average common shares outstanding (2)(3) ..     22,777,938      10,638,300

(1)      Reflects the reverse stock split of 1:9.25 and  subsequent  issuance of
         shares to  preserve  round lot  holders as of  January  1, 2004,  which
         became effective on January 5, 2006.
(2)      As restated, see Note 19.
(3)      Assumes retroactive conversion of Series A convertible preferred stock.


                 See Notes to Consolidated Financial Statements.


                                       4
<PAGE>


<TABLE>
                            PEOPLE'S LIBERATION, INC.


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                              Year Ended December 31,
                                                               2005           2004
                                                           -----------    -----------
<S>                                                        <C>            <C>
Cash flows from operating activities:
  Net loss .............................................   $  (569,567)   $  (271,921)
  Adjustments to reconcile net loss to net cash used by
  operating activities:
     Depreciation and amortization .....................        18,778          2,305
     Loss on disposal of fixed asset ...................         1,567          6,786
     Deferred income taxes .............................        31,400           --
     Changes in operating assets and liabilities:
       Receivables .....................................    (2,037,295)       (22,978)
       Inventories .....................................    (1,056,224)       (36,757)
       Prepaid expenses and other current assets .......      (205,678)       (16,450)
       Accounts payable and accrued expenses ...........     1,846,605        131,473
       Income taxes payable ............................        15,997           --
                                                           -----------    -----------
         Net cash flows used in operating activities ...    (1,954,417)      (207,542)
                                                           -----------    -----------

Cash flows from investing activities:
  Acquisition of trademarks ............................       (41,525)        (5,883)
  Acquisition of property and equipment ................      (156,760)       (36,131)
                                                           -----------    -----------
     Net cash flows used in investing activities .......      (198,285)       (42,014)
                                                           -----------    -----------

Cash flows from financing activities:
  Net proceeds from private placement of preferred stock     6,672,737           --
  Proceeds from loan payable ...........................         6,011        293,988
  Repayment of advances from shareholder ...............          --          (42,822)
                                                           -----------    -----------
     Net cash flows provided by financing activities ...     6,678,748        251,166
                                                           -----------    -----------

Net increase in cash and cash equivalents ..............     4,526,046          1,610
Cash and cash equivalents, beginning of year ...........         2,230            620
                                                           -----------    -----------
Cash and cash equivalents, end of year .................   $ 4,528,276    $     2,230
                                                           ===========    ===========

Supplemental disclosures of cash flow information:
Cash paid during the year for:
  Interest .............................................   $    28,637    $     1,189
  Income taxes .........................................         2,803            800
   Non-cash financing transactions:
       Loan payable converted to common stock ..........       300,000           --
       Trade payable converted to equity ...............        25,000           --
       Beneficial conversion feature of preferred stock
       issued to investors .............................     4,906,250           --
       Exchange of common stock and members' equity for
       preferred stock:
         Common stock ..................................      (301,000)          --
         Members' equity ...............................       643,069           --
         S Corp earnings ...............................       (13,725)
         Preferred stock Series A ......................             1           --
</TABLE>

                 See Notes to Consolidated Financial Statements.


                                       5
<PAGE>


<TABLE>
                                             PEOPLE'S LIBERATION, INC.

                                       CONSOLIDATED STATEMENT OF CHANGES IN
                                               STOCKHOLDERS' EQUITY
<CAPTION>
                                                                       Preferred Stock Series A
                                               Common Stock (3)                   (3)
                                           -------------------------   -------------------------
                                              Shares       Amount         Shares       Amount
                                           -----------   -----------   -----------   -----------
<S>                                          <C>         <C>             <C>         <C>
Balance at January 1, 2004 (1) .........          --     $      --         984,042   $     1,000

Net loss ...............................          --            --            --            --
                                           -----------   -----------   -----------   -----------
Balance at December 31, 2004 (1) .......          --            --         984,042         1,000

Stock issued for assumption of debt (1)           --            --         984,043       300,000
Formation of Bella Rose (1) ............          --            --         442,819          --
Trade payable converted to members'
   equity (1) ..........................          --            --          49,202        25,000
Issuance of common stock to existing
   shareholders of People's Liberation,
   Inc. (2) ............................     1,525,383         1,525          --            --
Exchange transaction of Versatile
   common stock and Bella Rose members'
   equity ..............................          --            --            --        (325,999)
Members' deficit adjustment for
   operations prior to exchange
   transaction .........................          --            --            --            --
Stockholder's equity adjustment for
   operations prior to change in S
   Corporation tax status ..............          --            --            --            --
Private placement of preferred stock
   Series A, including intrinsic value
   of beneficial conversion feature ....          --            --         578,125     6,672,737
Net loss ...............................          --            --            --            --
                                           -----------   -----------   -----------   -----------
Balance at December 31, 2005 ...........     1,525,383   $     1,525     3,038,231   $ 6,672,738
                                           ===========   ===========   ===========   ===========


<CAPTION>
                                           Additional
                                            Paid-in       Accumulated
                                           Capital (3)     Deficit          Total
                                           -----------    -----------    -----------
<S>                                        <C>            <C>            <C>
Balance at January 1, 2004 (1) .........   $      --      $   (43,202)   $   (42,202)

Net loss ...............................          --         (271,921)      (271,921)
                                           -----------    -----------    -----------
Balance at December 31, 2004 (1) .......          --         (315,123)      (314,123)

Stock issued for assumption of debt (1)           --             --          300,000
Formation of Bella Rose (1) ............          --             --             --
Trade payable converted to members'
   equity (1) ..........................          --             --           25,000
Issuance of common stock to existing
   shareholders of People's Liberation,
   Inc. (2) ............................        (1,525)          --             --
Exchange transaction of Versatile
   common stock and Bella Rose members'
   equity ..............................       325,999           --             --
Members' deficit adjustment for
   operations prior to exchange
   transaction .........................      (643,069)       643,069           --
Stockholder's equity adjustment for
   operations prior to change in S
   Corporation tax status ..............        13,725        (13,725)          --
Private placement of preferred stock
   Series A, including intrinsic value
   of beneficial conversion feature ....          --             --        6,672,737
Net loss ...............................          --         (569,567)      (569,567)
                                           -----------    -----------    -----------
Balance at December 31, 2005 ...........   $  (304,870)   $  (255,346)   $ 6,114,047
                                           ===========    ===========    ===========
</TABLE>

(1)      Reflects the  equivalent  number of shares of Series A preferred  stock
         held by the  shareholders  of Versatile  and received by the members of
         Bella  Rose at the  time  of its  formation  on May 13,  2005 as if the
         exchange transaction occurred on January 1, 2004 (Note 8).
(2)      Reflects the reverse stock split of 1:9.25 and  subsequent  issuance of
         shares to preserve  round lot holders as of December  31,  2005,  which
         became effective on January 5, 2006.
(3)      As restated, see Note 19.


                 See Notes to Consolidated Financial Statements.


                                       6
<PAGE>


                            PEOPLE'S LIBERATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

ORGANIZATION

         People's Liberation, Inc. (the "Company") is the parent holding company
of Versatile Entertainment,  Inc. ("Versatile"),  a California corporation,  and
Bella Rose, LLC ("Bella Rose"), a California limited liability company,  both of
which  were   consolidated   on  November  22,  2005  and  became   wholly-owned
subsidiaries  of the Company on the  effective  date of the  Company's  exchange
transaction.

         People's Liberation,  Inc. was incorporated in the State of Delaware on
December 29, 1982 under the name Philco  Financial  Management Corp. The Company
had three wholly owned  subsidiaries,  Global  Medical  Technologies,  Inc.,  an
Arizona corporation, which was operating ("Global Medical"), and Century Pacific
Fidelity Corporation and Century Pacific Investment Management Corporation, both
of which were inactive and without assets or debts.

         On January  31,  2005,  the  Company  contributed  all of the shares of
common  stock  of  its  wholly-owned,  inactive  subsidiaries,  Century  Pacific
Fidelity Corp. and Century Pacific Investment Management Corporation,  to Global
Medical. In February 2005, the Company distributed all of the outstanding shares
of  common  stock of Global  Medical  on a pro rata  basis to its  stockholders.
Following  the  distribution,  Global  Medical  continued to operate its medical
equipment   reconditioning  business  as  an  independent  company.  After  this
distribution, the Company existed as a "shell company" under the name of Century
Pacific  Financial  Corporation  with nominal  assets whose sole business was to
identify, evaluate and investigate various companies to acquire or with which to
merge.

         On November  22,  2005,  the Company  acquired  all of the  outstanding
voting  securities  of  Bella  Rose and  Versatile,  each of  which  became  its
wholly-owned subsidiaries.  The Company issued to the Bella Rose members and the
Versatile  stockholders  an  aggregate  of  2,460,106.34  shares of its series A
convertible preferred stock, which subsequently converted into 26,595,751 shares
of common  stock on January 5, 2006 on a post  reverse  stock split  basis.  The
exchange  transaction  was accounted for as a reverse merger  (recapitalization)
with  Versatile  and Bella Rose deemed to be the  accounting  acquirer,  and the
Company the legal acquirer.

         Effective on January 5, 2006,  the Company  changed its corporate  name
from  Century  Pacific  Financial  Corporation  to  People's  Liberation,  Inc.,
completed a 1-for-9.25 reverse split of its common stock, adopted its 2005 Stock
Incentive  Plan,  and its series A convertible  preferred  stock  converted into
common  stock.  Following the  conversion of the Series A convertible  preferred
stock,  the reverse stock split on January 5, 2006, and the subsequent  issuance
of shares to preserve round lot holders,  34,371,134 shares of common stock were
outstanding.  All share and per share  information  included in the accompanying
consolidated  financial  statements  reflects  the effects of the reverse  stock
split.

         Versatile was organized as a California  corporation  under the laws of
the State of California on April 21, 2001.

         Bella Rose was  organized as a  California  limited  liability  company
under the laws of the State of California on May 13, 2005.


                                       7
<PAGE>


         Bella Rose was formed in 2005, and therefore,  the financial  statement
information  for the year ended  December  31,  2004  contains  the  balances of
Versatile only.  Prior to the exchange  transaction on November 22, 2005,  Bella
Rose and Versatile had common ownership and control. The consolidated  financial
statements  reflect the capital  structure  of People's  Liberation,  Inc.,  the
parent holding  company,  after giving effect to the exchange  transaction.  The
capital structure in the historical  combined financial  statements of Versatile
and Bella Rose prior to the exchange  transaction  are  different as they do not
affect reverse merger accounting.

NATURE OF OPERATIONS

         The Company  markets and sells high-end  casual apparel under the brand
names "People's Liberation" and "William Rast" through Versatile and Bella Rose,
its wholly owned  subsidiaries.  The majority of the  merchandise  the companies
offer consists of premium denim, knits, wovens, and outerwear for men and women.
In the United States,  Versatile and Bella Rose distribute their  merchandise to
better department stores and boutiques, such as Nordstrom, Bloomingdales, Neiman
Marcus,  Kitson,  Atrium, Fred Segal, and Intermix.  Internationally,  in select
countries,  products  are sold  directly  and  through  distributors  to  better
department  stores and  boutiques,  such as  Mitsukoshi,  TNT and Sears  (Mexico
City).

         Versatile was established in April 2001 and commenced operations of its
People's  Liberation  clothing  line  in July  2004.  Versatile  began  shipping
products under the People's Liberation brand name in the fourth quarter of 2004.
The People's  Liberation  clothing  line was  developed  internally by our Chief
Executive  Officer  and  President,  Daniel  Guez.  Prior to  January  1,  2005,
Versatile was considered to be a development  stage corporation as defined under
Statement of Financial  Accounting  Standards ("SFAS") No. 7. Activities through
December 31, 2004 included  design,  development  and marketing of its products.
Prior to  November  2004,  there  were no  revenues  from the sale of  products.
November and December 2004 revenues were derived from product sales to a limited
number of customers.

         Bella Rose was established in May 2005 and commenced  operations of its
William Rast clothing line in May 2005. Bella Rose began shipping products under
the  William  Rast brand name in the  fourth  quarter of 2005.  Under an apparel
brand  agreement with an entity owned in part by Justin  Timberlake,  Bella Rose
has the  exclusive  rights to  manufacture  clothing and  accessories  under the
William Rast tradename.  Mr. Timberlake's entity will receive the greater of 50%
of the net profits of the William Rast  apparel line or net profits  equal to 6%
of net sales of William Rast  apparel,  with Bella Rose to receive the remaining
profits. Under the terms of the agreement,  Bella Rose manages the business, and
is responsible for funding the costs of the business.

         The Company is headquartered in Los Angeles,  California, and maintains
two showrooms in New York and Los Angeles through its sales agent.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

         The accounts of  Versatile  and Bella Rose have been  consolidated  for
financial statement  presentation.  All significant  inter-company  accounts and
transactions have been eliminated in the consolidation.

USE OF ESTIMATES

         The preparation of consolidated financial statements in conformity with
accounting  principles  generally  accepted  in the  United  States of  America,
requires management to make estimates and


                                       8
<PAGE>


assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from these estimates.

REVENUE RECOGNITION

         The Company recognizes revenues in accordance with SEC Staff Accounting
Bulletin  (SAB) No. 101,  and as amended by SAB No. 104.  Revenue is  recognized
when merchandise is shipped to a customer, at which point title transfers to the
customer,  and when  collection is reasonably  assured.  Customers are not given
extended terms or dating or return rights  without  proper prior  authorization.
Revenue is recorded net of estimated  returns,  charge backs and markdowns based
upon management's estimates and historical experience.

COMPREHENSIVE INCOME

         The Company has adopted Statement of Financial Accounting Standards No.
130,  "Reporting  Comprehensive  Income"  ("SFAS  130").  SFAS  130  establishes
standards for reporting and display of  comprehensive  income and its components
in a full set of general-purpose  financial  statements.  There were no material
other comprehensive income items for the years ended December 31, 2005 and 2004.

SEGMENT REPORTING

         The Company has adopted Statement of Financial Accounting Standards No.
131,  "Disclosures  about  Segments of an  Enterprise  and Related  Information"
("SFAS 131"). SFAS 131 requires that public companies report certain information
about operating  segments,  products,  services and geographical  areas in which
they operate and their major  customers.  The Company  believes that it operates
within  one  segment  as there is not  enough  difference  between  the types of
products developed and distributed by the Company to justify segmented reporting
by product type.  Management decisions regarding the allocation of resources and
the  assessment  of  performance  are made on a  company-wide  basis and are not
specific to the type of product. See Note 14 for disclosure regarding geographic
regions.

ADVERTISING

         Advertising costs are expensed as of the first date the  advertisements
take  place.  Advertising  expenses  included in selling  expenses  approximated
$134,000   and  $1,895  for  the  years  ended   December  31,  2005  and  2004,
respectively.

INVENTORIES

         Inventories,  consisting of piece goods and trim,  work-in-process  and
finished goods, are stated at the lower of cost (first-in,  first-out method) or
market value.  Inventories are evaluated for obsolescence and slow-moving  items
based on management's  analysis of sales levels, sales projections and inventory
levels.

STOCK-BASED COMPENSATION

         Statement of Financial  Accounting  Standards No. 123,  "Accounting for
Stock-Based  Compensation"  ("SFAS  123"),  establishes  a fair value  method of
accounting for stock-based  compensation  plans and for  transactions in which a
company  acquires  goods or services from  non-employees  in exchange for equity
instruments.  SFAS 123 also gives the option to account for employee stock-based
compensation in accordance with Accounting Principles Board Opinion No. 25 ("APB
25"), "Accounting for Stock issued to Employees," or SFAS 123. In December 2004,
the Financial Accounting


                                       9
<PAGE>


Standards  Board (FASB) issued SFAS No. 123R,  which  eliminates  the ability to
account for  share-based  compensation  transactions  using the intrinsic  value
method under APB 25 and generally would require  instead that such  transactions
be accounted for using a fair-value-based  method. In April 2005, the Securities
Exchange  Commission  ("SEC") amended Rule 401(a) of Regulation S-X to delay the
effective date for compliance with SFAS No. 123R. Based on the amended rule, the
Company is required to adopt SFAS No. 123R  beginning  in fiscal year 2006.  The
Company adopted its 2005 Stock  Incentive Plan on January 5, 2006.  There was no
stock-based  compensation  issued  during the years ended  December 31, 2005 and
2004.

         PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost.  Maintenance and repairs are
charged to expense as incurred. Upon retirement or other disposition of property
and equipment, applicable cost and accumulated depreciation and amortization are
removed  from the  accounts  and any gains or losses are  included in results of
operations.

         Depreciation   of  property  and   equipment  is  computed   using  the
straight-line method based on estimated useful lives of the assets as follows:

         Furniture and fixtures            5 years

         Office equipment                  5 to 7 years

         Machinery and equipment           5 to 7 years

         Leasehold                         improvements Term of the lease or the
                                           estimated   life   of   the   related
                                           improvements, whichever is shorter.

         Computer Software                 5 years

TRADEMARKS

         Costs incurred  related to the Company's  trademarks are amortized on a
straight-line basis over an estimated useful life of fifteen years.

INCOME TAXES

         Through May 31, 2005,  Versatile was a Sub-Chapter S  Corporation.  The
taxes on the income of a Sub-Chapter S Corporation  are payable  individually by
each  shareholder.  As a  Sub-Chapter  S  Corporation,  Versatile was subject to
California  minimum  tax of $800 or  taxed  at the  rate of 1.5% of net  income,
whichever  was higher.  On June 1, 2005,  Versatile's  Sub-Chapter  S status was
terminated and Versatile elected to become a C-Corporation for tax purposes.

         Bella Rose is a limited  liability company and is subject to California
minimum tax of $800 and a fee based on total annual  revenue.  The earnings of a
limited liability company are reported individually by its members.

         On November 22, 2005,  People's  Liberation  (formerly  Century Pacific
Financial  Corporation)  acquired all of the  outstanding  voting  securities of
Bella Rose and Versatile,  each of which became a wholly-owned subsidiary of the
Company.  As a result,  Bella Rose and Versatile are  consolidated and taxes are
reported  by  the  parent,  People's  Liberation.  Taxes  are  calculated  on  a
consolidated basis at C-Corporation tax rates.


                                       10
<PAGE>


         Deferred  income  taxes are  recognized  using the asset and  liability
method by applying income tax rates to cumulative temporary differences based on
when and how they are expected to affect the tax return. Deferred tax assets and
liabilities are adjusted for income tax rate changes.

         Income taxes are further described in Note 10.

IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLES

         Long-lived  assets  are  reviewed  for  impairment  whenever  events or
changes in  circumstances  indicate that the carrying amount of an asset may not
be  recoverable.  Recoverability  of assets to be held and used is measured by a
comparison of the carrying  amount of an asset to future  undiscounted  net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets. Assets to be
disposed of are reported at the lower of the carrying  amount or fair value less
costs to sell.

CONCENTRATION OF CREDIT RISK

         Financial   instruments,   which  potentially  expose  the  Company  to
concentration of credit risk,  consist  primarily of cash and cash  equivalents,
trade accounts receivable, and amounts due from factor.  Concentration of credit
risk with respect to trade accounts receivable is significantly mitigated by the
use of a factor, which effectively transfers a substantial amount of credit risk
to the factor. The Company and its factor perform on-going credit evaluations of
its customers and the Company  maintains an allowance for doubtful  accounts and
chargebacks.  The Company may extend  unsecured  credit to its  customers in the
normal course of business.

         The Company's cash balances on deposit with banks are guaranteed by the
Federal Deposit Insurance Corporation up to $100,000. The Company may be exposed
to risk for the  amounts  of funds  held in one bank in excess of the  insurance
limit. In assessing the risk, the Company's  policy is to maintain cash balances
with high quality financial institutions.

         The  Company's  products  are  primarily  sold  to  department  stores,
specialty retail stores and international  distributors.  These customers can be
significantly affected by changes in economic, competitive or other factors. The
Company makes substantial  sales to a relatively few, large customers.  In order
to  minimize  the risk of loss,  the Company  assigns  the  majority of domestic
accounts receivable to a factor without recourse.  For non-factored and recourse
receivables,  account-monitoring procedures are utilized to minimize the risk of
loss. Collateral is generally not required.

ACCOUNTS RECEIVABLE - ALLOWANCE FOR RETURNS, DISCOUNTS AND BAD DEBTS

         The Company  evaluates the  collectibility  of accounts  receivable and
charge backs  (disputes from the customer)  based upon a combination of factors.
In circumstances where the Company is aware of a specific  customer's  inability
to meet its financial  obligations (such as in the case of bankruptcy filings or
substantial  downgrading by credit sources),  a specific allowance for bad debts
is taken  against  amounts due to reduce the net  recognized  receivable  to the
amount reasonably expected to be collected. For all other customers, the Company
recognizes  an allowance for bad debts and  uncollectible  charge backs based on
its historical collection experience. If collection experience deteriorates (for
example,  due to an unexpected  material  adverse  change in a major  customer's
ability to meet its financial obligations to the Company),  the estimates of the
recoverability of amounts due could be reduced by a material amount.


                                       11
<PAGE>


SHIPPING AND HANDLING COSTS

         The Company records  shipping and handling costs billed to customers as
a component of revenue,  and shipping and handling costs incurred by the Company
for inbound and  outbound  freight are recorded as a component of cost of sales.
Total  shipping  and handling  costs  included as a component of revenue for the
years ended  December 31, 2005 and 2004  amounted to  approximately  $57,000 and
$2,000.  Total  shipping and handling  costs  included as a component of cost of
sales amounted to approximately $128,000 and $6,000 for the years ended December
31, 2005 and 2004.

CLASSIFICATION OF EXPENSES

         COST OF GOODS  SOLD - Cost of good  sold  includes  expenses  primarily
related  to  inventory  purchases  and  contract  labor,  freight  and  overhead
expenses. Overhead expenses primarily consist of warehouse salaries and expense.

         SELLING  EXPENSE  - Selling  expenses  primarily  include  commissions,
royalties,  tradeshow,  advertising,   marketing,  showroom  and  other  selling
expenses, including travel and entertainment.

         DESIGN  AND  PRODUCTION  EXPENSES  -  Design  and  production  expenses
primarily include design and production  salaries,  design fees and expenses and
samples.

         GENERAL  AND  ADMINISTRATIVE  EXPENSES  -  General  and  administrative
expenses  primarily  include  administrative  and  officer  salaries,   employee
benefits,  professional service fees, consulting, facility expenses, information
technology, travel and entertainment,  depreciation and amortization,  bad debts
and other general corporate expenses.

RECENTLY ISSUED ACCOUNTING STANDARDS

         In December 2004, the FASB issued SFAS No. 151,  "Inventory  Costs,  an
amendment of ARB No. 43, Chapter 4," which will become effective for the Company
beginning January 1, 2006. This standard clarifies that abnormal amounts of idle
facility expense, freight, handling costs and wasted material should be expensed
as incurred and not included in overhead.  In addition,  this standard  requires
that the allocation of fixed production  overhead costs to inventory be based on
the normal  capacity of the  production  facilities.  The  Company is  currently
evaluating the potential  impact of this standard on its financial  position and
results of  operations,  but does not  believe  the impact of the change will be
material.

         In May 2005, the FASB issued Statement No. 154, "Accounting Changes and
Error Corrections", a replacement of Accounting Principles Board Opinion No. 20,
"Accounting  Changes",  and Statement No. 3,  "Reporting  Accounting  Changes in
Interim  Financial  Statements"  ("SFAS 154"). SFAS 154 changes the requirements
for the  accounting  for, and reporting  of, a change in  accounting  principle.
Previously,  voluntary changes in accounting  principles were generally required
to be  recognized  by way of a cumulative  effect  adjustment  within net income
during the period of the change. SFAS 154 requires retrospective  application to
prior periods'  financial  statements,  unless it is  impracticable to determine
either the period of specific  effects or the  cumulative  effect of the change.
SFAS 154 is effective  for  accounting  changes  made in fiscal years  beginning
after December 15, 2005;  however,  the statement does not change the transition
provisions  of any  existing  accounting  pronouncements.  The Company  does not
believe  adoption  of SFAS 154 will  have a  material  effect  on its  financial
position, cash flows or results of operations.


                                       12
<PAGE>


FAIR VALUE OF FINANCIAL INFORMATION

         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.  ACCOUNTS  RECEIVABLE  AND DUE  FROM  FACTOR:  Due to the
short-term nature of the receivables,  the fair value  approximates the carrying
value.  ACCOUNTS PAYABLE AND ACCRUED  EXPENSES:  Due to the short-term nature of
the payables, the fair value approximates the carrying value.

NOTE 3  - EARNINGS PER SHARE

         The Company computes and presents earnings per share in accordance with
SFAS No. 128, "EARNINGS PER SHARE".  Basic earnings per share are computed based
upon the weighted average number of common shares outstanding during the period.
Warrants representing  3,125,000 shares of common stock and Series A convertible
preferred stock  representing  32,845,751 common shares on a post conversion and
reverse split basis were  outstanding as of December 31, 2005, but were excluded
from the average number of common shares outstanding in the calculation  because
the effect of inclusion would be anti-dilutive.  For the year ended December 31,
2004,  there were no stock  options,  warrants,  preferred  stock or other stock
rights outstanding.

         The following is a reconciliation of the numerators and denominators of
the basic and diluted loss per share computations:


YEAR ENDED DECEMBER 31, 2005:           LOSS (2)     SHARES (1,2)    PER SHARE
                                      (NUMERATOR)   (DENOMINATOR)    AMOUNT (2)
                                      -----------     ----------     ----------
Basic loss per share:
Net loss ........................     $  (569,567)       162,986     $    (3.50)
Preferred stock deemed dividend
   (Note 8) .....................      (4,906,250)          --           (30.10)

Effect of Dilutive Securities:
Options .........................           --              --             --
Warrants ........................           --              --             --
                                      -----------     ----------     ----------
Loss available to common
   stockholders (1) .............     $(5,475,817)       162,986     $   (33.60)
                                      ===========     ==========     ==========

YEAR ENDED DECEMBER 31, 2004:
Basic loss per share:
Loss available to common
   stockholders .................     $  (271,921)          --       $     --

Effect of Dilutive Securities:
Options .........................           --              --             --
Warrants ........................           --              --             --
                                      -----------      ----------    ----------
Loss available to common
   stockholders (1) .............     $  (271,921)          --       $     --
                                      ===========      ==========    ==========

(1)      Reflects the reverse stock split of 1:9.25 and  subsequent  issuance of
         shares to  preserve  round lot  holders as of  January  1, 2004,  which
         became effective on January 5, 2006.
(2)      As restated, see Note 19.


                                       13
<PAGE>


NOTE 4  - DUE FROM FACTOR

         The Company uses a factor for working capital and credit administration
purposes.  Under the factoring  agreements,  the factor  purchases a substantial
portion of the trade accounts receivable and assumes credit risk with respect to
certain accounts.

         The factor agreements  provide that the Company can borrow an amount up
to 85% of the value of its  approved  factored  customer  invoices.  The  factor
commission is 0.8% of the customer  invoice amount for terms up to 60 days, plus
one quarter of one percent (.25%) for each additional thirty-day term.

         Receivables  sold in excess of maximums  established  by the factor are
subject to recourse in the event of nonpayment  by the customer.  The Company is
contingently  liable to the factor for merchandise  disputes and customer claims
on receivables sold to the factor.

         To the  extent  that  the  Company  draws  funds  prior  to the  deemed
collection  date of the  accounts  receivable  sold to the  factor,  interest is
charged at the factor's  prime lending rate plus 1% per annum.  Factor  advances
and ledger debt are  collateralized  by the  non-factored  accounts  receivable,
inventories and general intangibles. Ledger debt (payables to suppliers that use
the same factor as the Company)  amounted to approximately  $158,000 at December
31, 2005.

         Due from factor is summarized as follows:

                  Outstanding receivables:
                    Without recourse .........    $ 1,324,705
                    With Recourse ............        785,469
                                                  -----------
                                                    2,110,174
                  Advances ...................        (40,925)
                  Open credits ...............        (75,000)
                                                  -----------
                                                  $ 1,994,249
                                                  ===========

NOTE 5  - INVENTORIES

         Inventories are summarized as follows:

                  Piece goods and trim .......    $   255,564
                  Finished goods .............        837,417
                                                  -----------
                                                  $ 1,092,981
                                                  ===========

NOTE 6 - PROPERTY AND EQUIPMENT

         Property and equipment is summarized as follows:

                  Furniture and fixtures .....    $    11,244
                  Office equipment ...........         75,549
                  Machinery and equipment ....         48,438
                  Computer software ..........         48,160
                                                  -----------
                                                      183,391
                  Less accumulated
                     depreciation ............        (18,400)
                                                  -----------
                                                  $   164,991
                                                  ===========

                                       14
<PAGE>

         Depreciation expense amounted to $17,249 and $2,298 for the years ended
December 31, 2005 and 2004, respectively.

NOTE 7 - TRADEMARKS

         Trademarks are summarized as follows:

                  Trademarks, at cost ........    $    45,872
                  Less accumulated
                    amortization .............         (1,536)
                                                  -----------
                                                  $    44,336
                                                  ===========

         Future annual estimated amortization expense is summarized as follows:

                  YEARS ENDING DECEMBER 31,
                  2006 .......................    $     2,956
                  2007 .......................          2,956
                  2008 .......................          2,956
                  2009 .......................          2,956
                  2010 .......................          2,956
                  Thereafter .................         29,556
                                                  -----------
                                                  $    44,336
                                                  ===========

         Trademark  amortization expense amounted to $1,529 and $7 for the years
ended December 31, 2005 and 2004, respectively.

NOTE 8- STOCKHOLDERS' EQUITY

EXCHANGE AGREEMENT

         On November  22,  2005,  the Company  acquired  all of the  outstanding
voting securities of Bella Rose, LLC, a California limited liability company and
Versatile  Entertainment,  Inc., a California corporation,  each of which became
wholly-owned subsidiaries.  The Company issued to the Bella Rose members and the
Versatile   stockholders  an  aggregate  of  2,460,106.34  shares  of  series  A
convertible preferred stock, which subsequently converted into 26,595,751 shares
of common stock on a post reverse  stock split basis.  The exchange  transaction
was  accounted for as a reverse  merger  (recapitalization)  with  Versatile and
Bella Rose  deemed to be the  accounting  acquirer,  and the  Company  the legal
acquirer.

CAPITAL RAISE

         Immediately  following the acquisition of Versatile and Bella Rose, the
Company  received  gross  proceeds of  approximately  $7.8  million in a private
placement  transaction  with  institutional  investors  and other high net worth
individuals.  Pursuant  to  subscription  agreements  entered  into  with  these
investors,  the Company sold 578,125.58 shares of series A convertible preferred
stock at a price  per  share of  $13.5135,  which  subsequently  converted  into
6,250,000  shares of common  stock on a post  reverse  stock  split  basis.  The
Company  also  issued  to the  investors,  five-year  warrants  to  purchase  an
aggregate  of 2,500,000  shares of common stock with an exercise  price of $2.00
per share. After broker commissions and expenses and accounting, legal and other
expenses, the Company received net proceeds of approximately $6.7 million in the
capital  raise.  The warrants were valued at  approximately  $808,000  using the
Black Scholes  valuation  model.  The intrinsic value of the conversion  feature
related to the issuance of the Series A convertible preferred stock to investors
amounted to approximately  $4.9 million.  The effect of recording the beneficial
conversion feature on the December 31, 2005 financial statements


                                       15
<PAGE>


was an  increase  in the  additional  paid-in  capital  of $4.9  million  and an
offsetting decrease in additional paid-in capital of the same amount.

         Sanders Morris Harris Inc. acted as placement  agent in connection with
the capital  raise.  For their  services as  placement  agent,  the Company paid
Sanders Morris Harris a fee equal to 7%, or approximately $546,875, of the gross
proceeds  from the  financing.  The  Company  also  paid  for the  out-of-pocket
expenses  incurred by Sanders  Morris Harris and all purchasers in the amount of
$25,000.  In  addition,  the  Company  issued to Sanders  Morris  Harris and its
employees,  Dean Oakey and Jonah  Sulak,  warrants to purchase an  aggregate  of
625,000  shares of common  stock at an  exercise  price of $1.25 per share.  The
warrants are fully vested and have a term of 5 years.  The warrants  were valued
at approximately $310,000 using the Black Scholes valuation model.

         Following the exchange  transaction  and the capital raise,  the former
security  holders of Bella Rose and Versatile and the investors in the financing
owned  95.7%,  and  the  exisiting  stockholders   immediately  prior  to  these
transactions  owned  4.3% of the  Company's  outstanding  common  stock on an as
converted basis.

REVERSE SPLIT AND MANDATORY CONVERSION OF PREFERRED STOCK INTO COMMON STOCK

         On November 23, 2005,  the  Company's  Board of  Directors,  as well as
holders representing approximately 66.9% of the outstanding series A convertible
preferred stock,  holders  representing  approximately  77.1% of the outstanding
common stock, and holders  representing  approximately  67.3% of the outstanding
common  stock and series A  convertible  preferred  stock  voting  together as a
single class took action by written  consent to (i) change the corporate name to
People's  Liberation,  Inc.,  (ii) adopt a 1-for-9.25  reverse stock split,  and
(iii)  adopt  the  2005  Stock  Incentive  Plan.  Each of these  actions  became
effective on January 5, 2006.

         Concurrent  with the reverse split,  each share of series A convertible
preferred stock was immediately and automatically  converted into  approximately
10.81 shares of common  stock of the Company (100 for 1 conversion  of preferred
stock into common stock and 1 for 9.25 common share reverse split). Accordingly,
following the reverse split and the mandatory conversion,  the former holders of
3,038,231.92  shares of series A convertible  preferred stock, in the aggregate,
received  32,845,751 shares of common stock the Company,  representing  95.6% of
the outstanding  shares of common stock immediately  following the reverse split
and the mandatory conversion. The holders of the Company's common stock prior to
the mandatory conversion and reverse split, owned approximately 1,525,383 shares
of common stock,  representing  4.4% of the outstanding  shares of the Company's
common  stock  immediately   following  the  reverse  split  and  the  mandatory
conversion.


                                       16
<PAGE>


         The following Pro forma  statement of  operations  information  assumes
that the automatic conversion and reverse split, as discussed above, occurred as
of the beginning of the respective  accounting periods.  The pro forma provision
for  income  taxes as of  December  31,  2005 and 2004  assumes  that  Versatile
Entertainment,  Inc. was a  C-Corporation  as of the beginning of the accounting
period and Bella  Rose was  consolidated  under  People's  Liberation  as of the
beginning of the accounting period.

                                                       2005            2004
                                                   ------------    ------------
Net loss, as reported ...........................  $   (569,567)   $   (271,921)
Pro forma income tax benefit ....................      (205,000)        (90,800)
Pro forma net loss ..............................      (315,167)       (180,321)
Pro forma net loss available to common
   shareholders (1) .............................    (5,221,417)       (180,321)
Pro forma basic and diluted loss per common
   share (1) ....................................        (0.23)          (0.02)

Pro forma basic and diluted weighted average
   common shares outstanding (1) ................    22,777,938      10,638,300

(1)      As restated, Note 19.

         The following Pro forma balance sheet information assumes the automatic
conversion and reverse stock split, as discussed above,  occurred as of December
31, 2005.

                                                       2005
                                                   ------------
Series A convertible preferred stock ...........          --
Common stock (34,371,134 shares outstanding) ...         34,371
Additional paid-in capital .....................      6,335,022
Accumulated deficit ............................       (255,346)
                                                   ------------
Total stockholders' equity .....................   $  6,114,047
                                                   ============

NOTE 9 - STOCK INCENTIVE PLAN, OPTIONS AND WARRANTS

         On January 5, 2006, the Company  adopted its 2005 Stock  Incentive Plan
(the  "Plan"),  which  authorized  the  granting  of a  variety  of  stock-based
incentive  awards.  The Plan is  administered  by the Board of  Directors,  or a
committee  appointed by the Board of Directors,  which determines the recipients
and terms of the awards  granted.  The Plan  provides  for a total of  3,500,000
shares of common stock to be reserved for issuance under the Plan. There were no
options granted during the year ended December 31, 2005.

         Additional   information   relating  to  stock   options  and  warrants
outstanding and  exercisable at December 31, 2005,  summarized by exercise price
is as follows:

<TABLE>
<CAPTION>
                                                                                   Exercisable
                                     Outstanding Weighted Average               Weighted Average
                               -----------------------------------------   ---------------------------
                                                Life         Exercise                      Exercise
  Exercise Price Per Share       Shares       (years)         Price          Shares         Price
----------------------------   -----------   -----------   -------------   -----------   -------------
    <S>                         <C>             <C>           <C>           <C>             <C>
    $ 1.25 (warrants)             625,000       4.9           $ 1.25          625,000       $ 1.25
    $ 2.00 (warrants)           2,500,000       4.9           $ 2.00        2,500,000       $ 2.00
                               -----------                                 -----------

                                3,125,000       4.9           $ 1.85        3,125,000       $ 1.85
                               ===========                                 ===========
</TABLE>


                                       17
<PAGE>


NOTE 10- INCOME TAXES

         On June 1, 2005, Versatile's  Sub-Chapter S election was terminated and
Versatile became a C-Corporation for income tax purposes.

         On November 22, 2005,  People's  Liberation  (formally  Century Pacific
Financial  Corporation)  acquired all of the  outstanding  voting  securities of
Bella Rose and Versatile,  each of which became a wholly-owned subsidiary of the
Company.  As a result,  Bella Rose and Versatile are  consolidated and taxes are
reported  by  the  parent,  People's  Liberation.  Taxes  are  calculated  on  a
consolidated basis at C-Corporation tax rates.

         Deferred income taxes arise  principally from temporary  differences in
the method of  depreciating  property  and  equipment  for income tax  reporting
purposes and the use of  inventory  capitalization  requirements  for income tax
reporting  purposes.  A valuation  account has not been  provided  for  deferred
income tax assets as the Company  believes  that it is more likely than not that
it will realize the future income tax benefits.

         The  provision  for income  taxes for the year ended  December 31, 2005
consists of the following:

         Federal:
           Current provision ........................           $15,300
           Deferred provision .......................            26,700
                                                                -------
                                                                 42,000

         State:
           Current provision ........................             2,700
           Deferred provision .......................             4,700
                                                                -------
                                                                  7,400
                                                                -------
                                                                $49,400
                                                                =======

         The difference  between the provision for income taxes and the expected
income tax  provision  determined  by applying the  statutory  federal and state
income tax rates to pre-tax  accounting  income for the years ended December 31,
2005 and 2004 are as follows:


                                                         2005       2004
                                                        ------     ------

         Federal statutory rate ...................      (34.0)%     --   %
         State taxes net of Federal benefit .......       (6.0)       0.3
         S Corp status through May 31, 2005 .......       (1.1)      --
         LLC status through November 22, 2005 .....       49.4       --
         Other ....................................        1.2       --
                                                        ------     ------

                                                           9.5 %      0.3 %
                                                        ======     ======


                                       18
<PAGE>


         The  components  of the  Company's  consolidated  deferred  income  tax
balances as of December 31, 2005 are as follows:

         Deferred income tax asset - current:

              Inventories                               $   9,600
                                                        =========

         Deferred income tax liability - non current

              Property and equipment                    $  41,000
                                                        =========

NOTE 11 - APPAREL BRAND AGREEMENT

         Bella Rose has an agreement  with William Rast  Enterprises,  an entity
owned by Justin Timberlake.  Versatile owns the William Rast tradename and under
the brand agreement, Bella Rose has the exclusive rights to manufacture clothing
and accessories under the William Rast tradename. The agreement provides for the
payment to William Rast  Enterprises of the greater of 50% of the net profits of
the William Rast apparel line or net profits equal to 6% of net sales of William
Rast apparel.  The agreement has an indefinite term. Included in selling expense
for the year ended  December 31,  2005,  is  approximately  $32,000 of royalties
related to this agreement.

NOTE 12 - RELATED PARTY TRANSACTIONS

         Paul Guez, Daniel Guez's father, loaned Versatile  Entertainment,  Inc.
$75,000  in May 2005  pursuant  to a note  payable  which  was  unsecured,  bore
interest at 5% and was due on demand.  The note and accrued  interest was repaid
in November 2005.

         During 2004,  Tag-It  Pacific,  Inc. loaned an aggregate of $293,989 to
Versatile  Entertainment,  Inc., which loan was unsecured, and due on demand. On
May 16, 2005, the then  outstanding  balance of $300,000 due to Tag-It  Pacific,
Inc. was repaid with borrowings from an unrelated entity. On May 16, 2005, Colin
Dyne,  CEO of  Tag-It  Pacific,  Inc.,  assumed  Versatile's  obligation  to the
unrelated entity in exchange for the issuance of 45 shares of Versatile's common
stock.  After  giving  9.546  shares of his  Versatile  common  stock to various
parties,  the  remaining  35.454  shares of common  stock held by Mr.  Dyne were
exchanged for 775,294.3  shares of our series A convertible  preferred  stock on
November 22, 2005, the closing date of the exchange  transaction  with Versatile
Entertainment and Bella Rose.

         During the years ended December 31, 2005 and 2004,  Versatile purchased
trim products from Tag-it  Pacific,  Inc., a related  entity as of May 16, 2005,
amounting to $74,960 and $10,480,  respectively.  During the year ended December
31, 2005, the Company incurred approximately $35,000 for services provided by an
employee of Tag-it Pacific, Inc.

         On July 15, 2005,  accounts payable resulting from consulting  services
provided to Bella Rose were converted to a 10% member interest in Bella Rose.

         The Company paid $10,000 in  consulting  fees to a  stockholder  of the
Company during the year ended December 31. 2005.

NOTE 13 - LEASES

         The  Company  leases  its  office  and  warehouse  space  under a lease
agreement  commencing in October 2005 and expiring in December 2008. The Company
also leased its showrooms on a month-to-


                                       19
<PAGE>


month basis through December 2005.  Beginning January 2006, rental costs related
to the  two  showrooms  are  incurred  by our  sales  agent  under  our  service
agreement.  The Company  accounts for its leases in accordance with SFAS No. 13,
whereby step provisions,  escalation  clauses,  tenant  improvement  allowances,
increases  based on an existing index or rate, and other lease  concessions  are
accounted  for in the  minimum  lease  payments  and are  charged  to the income
statement  on a straight  line basis over the  related  lease  term.  Total rent
expense  for the years ended  December  31,  2005 and 2004  totaled  $85,250 and
$23,900, respectively.

         Future annual minimum payments due under the office and warehouse lease
are summarized as follows:

          YEARS ENDING DECEMBER 31,
          -------------------------
          2006..........................................  $281,820
          2007..........................................   281,820
          2008..........................................   281,820
                                                          --------
                                                          $845,460

NOTE 14--GEOGRAPHIC INFORMATION

         The Company  designs,  markets and sells high-end  casual apparel under
the People's  Liberation  and William  Rast brand  names.  The types of products
developed and sold by the Company are not sufficiently  different to account for
these products separately or to justify segmented reporting by product type.

         The Company distributes its products  internationally and has reporting
requirements based on geographic regions. All of the Company's long-lived assets
are located in the United  States.  Sales are  attributed to countries  based on
customer delivery locations, as follows:

                                                      Year Ended December 31,
                                                  ------------------------------
                                                     2005                2004
                                                  ----------          ----------
Sales:
     United States .....................          $5,513,100          $  163,072
     Japan .............................             248,291                --
     Canada ............................              21,871                --
     United Kingdom ....................              12,219                --
     Other .............................               7,586                --
                                                  ----------          ----------
                                                  $5,803,067          $  163,072
                                                  ==========          ==========

NOTE 15 - CUSTOMER CONCENTRATION

         During  the year ended  December  31,  2005,  two  customers  comprised
greater than 10% of the Company's  sales.  Sales to these customers  amounted to
16.4% and 15.3% of net sales for the year ended  December 31,  2005.  During the
year ended  December 31, 2004,  one customer  comprised  greater than 10% of the
Company's sales.  Sales to this customer  amounted to 18.7% of net sales for the
year ended  December 31, 2004.  At December 31, 2005 and 2004,  receivables  due
from these customers are included in due from factor.


                                       20
<PAGE>


NOTE 16 - SUPPLIER CONCENTRATION

         During the year ended  December 31,  2005,  three  suppliers  comprised
greater than 10% of the  Company's  purchases.  Purchases  from these  suppliers
amounted to 45.7%,  22.0% and 16.8% for the year ended  December  31,  2005.  At
December 31, 2005,  accounts payable and accrued expenses  included an aggregate
of approximately $1,095,000 due to these vendors. During the year ended December
31, 2004, one supplier  comprised  greater than 10% of the Company's  purchases.
Purchases  from this supplier  amounted to 70.3% for the year ended December 31,
2004.  At December  31, 2004,  accounts  payable and accrued  expenses  included
$19,233 due to this vendor.

NOTE 17 - OFF-BALANCE SHEET RISK AND CONTINGENCIES

         Financial   instruments  that   potentially   subject  the  Company  to
off-balance sheet risk consist of factored accounts receivable.  As described in
Note 3, the Company  sells the majority of its trade  accounts  receivable  to a
factor and is  contingently  liable to the factor for  merchandise  disputes and
other  customer  claims.   At  December  31,  2005,  total  factor   receivables
approximated $2,110,000.

         The  Company  may be subject to certain  legal  proceedings  and claims
arising in connection with its business. In the opinion of management, there are
currently no claims that will have a material  adverse  effect on the  Company's
consolidated financial position, results of operations or cash flows.

         In  accordance  with the bylaws of the Company,  officers and directors
are  indemnified  for certain events or  occurrences  arising as a result of the
officer or director's serving in such capacity.  The term of the indemnification
period is for the  lifetime of the officer or  director.  The maximum  potential
amount of future  payments  the  Company  could be  required  to make  under the
indemnification provisions of its bylaws is unlimited. At this time, the Company
believes  the  estimated  fair value of the  indemnification  provisions  of its
bylaws is minimal  and  therefore,  the  Company  has not  recorded  any related
liabilities.

         In  addition  to  the  indemnification  required  in  our  articles  of
incorporation and bylaws, we have entered into indemnity agreements with each of
our  current  officers  and  directors.   These   agreements   provide  for  the
indemnification  of our directors and officers for all  reasonable  expenses and
liabilities incurred in connection with any action or proceeding brought against
them by reason of the fact that they are or were our  agents.  We believe  these
indemnification  provisions  and  agreements are necessary to attract and retain
qualified directors and officers.

         The Company enters into indemnification provisions under its agreements
in  the  normal  course  of  business,  typically  with  suppliers,   customers,
distributors  and  landlords.  Under these  provisions,  the  Company  generally
indemnifies  and holds  harmless the  indemnified  party for losses  suffered or
incurred by the indemnified party as a result of the Company's activities or, in
some  cases,  as a  result  of the  indemnified  party's  activities  under  the
agreement.  These  indemnification  provisions  often  include  indemnifications
relating  to  representations  made by the Company  with regard to  intellectual
property rights. These indemnification  provisions generally survive termination
of the underlying agreement. The maximum potential amount of future payments the
Company  could be  required to make under these  indemnification  provisions  is
unlimited.  The Company has not incurred  material  costs to defend  lawsuits or
settle claims  related to these  indemnification  agreements.  As a result,  the
Company  believes  the  estimated  fair value of these  agreements  is  minimal.
Accordingly, the Company has not recorded any related liabilities.


                                       21
<PAGE>


NOTE 18 - SUBSEQUENT EVENTS

         On January 3, 2006,  the Company  entered into an Employment  Agreement
with Darryn Barber  pursuant to which he serves as our Chief  Financial  Officer
and Chief Operating  Officer.  The agreement is for a term of 2 years commencing
as of November 22, 2005 and  terminating  on November 21, 2007.  For a period of
six months,  Mr.  Barber is permitted to perform  transition  services for other
entities up to approximately  one business day per week. Mr. Barber will receive
an annual salary of $172,000 during the initial  six-month  period.  Thereafter,
Mr. Barber will receive a base salary of $212,000 up to the first anniversary of
his  appointment,  and  $232,000  during the  second  year of his  contract.  In
addition to his base salary, Mr. Barber will receive an annual bonus of not less
than $25,000 and no more than  $100,000  based on  objectives  determined by our
Board of Directors. Mr. Barber will also be granted a non-qualified stock option
to purchase up to 300,000  shares of our common stock at an exercise price equal
to the "fair market  value" of such shares on the date the option is approved by
our Board of Directors. In the event Mr. Barber is terminated without cause, the
Company  shall  continue to pay Mr.  Barber's  then  current base salary for the
remaining term of the agreement,  without regard to any employment of Mr. Barber
by a third party.

         On January 5, 2006,  the Company  entered into a  consulting  agreement
with MK Sportswear. Under the terms of the agreement, MK Sportswear will provide
sales and customer  services  functions on behalf of the Company.  The agreement
provides for  commissions  at an agreed upon  percentage  of net sales and has a
term of two years that  expires on December  31, 2007.  In  accordance  with the
agreement,  the Company will issue 150,000  options to purchase  common stock at
the market price of the Company's  stock on the date of approval by the Board of
Directors and when the Plan is qualified  under the  regulations of the State of
California.

NOTE 19 - RESTATEMENT OF FINANCIAL STATEMENTS

         As a result  of a review  by the  Securities  and  Exchange  Commission
("SEC") in  connection  with our  filing of a  registration  statement,  we have
reviewed the  accounting  treatment of our  November  2005 private  placement of
convertible  preferred  stock and  exchange  transaction.  As a result,  we have
revised our accounting  treatment for these  transactions to record a beneficial
conversion  feature of  approximately  $4.9 million in accordance  with Emerging
Issues  Task  Force  ("EITF")  No.  98-5 and to change our  presentation  of the
convertible preferred stock. As first reported, our financial statements for the
fiscal  years  ended  December  31,  2004 and  2005  reflected  the  retroactive
conversion of Series A  convertible  preferred  stock into common  stock,  which
became effective on January 5, 2006. The restated  financial  statements for the
fiscal years ended December 31, 2005 and 2004 reflect:

     o    the beneficial conversion feature, relating to the issuance of 578,125
          shares of Series A convertible preferred stock issued to investors, in
          the calculation of earning per share;

     o    the  convertible  preferred  stock  outstanding  that  was  previously
          presented as if it were  retroactively  converted into common stock as
          of December 31, 2005; and

     o    the  equivalent  number of Series A preferred  shares of certain items
          included within shareholders' equity beginning January 1, 2004 through
          December 31, 2005.

         These  changes  resulted  in an  increase  in loss per  share to common
shareholders for the year ended December 31, 2005 to $(33.60) per share from the
previously  reported  $(0.03) per share and a decrease  in the  weighted-average
shares  outstanding  for the year ended December 31, 2005, and a decrease to our
loss per  share  and  weighted-average  shares  outstanding  for the year  ended
December 31, 2004. The effect of recording the beneficial  conversion feature on
the December 31, 2005  financial  statements  was an increase in the  additional
paid-in capital of $4.9 million and an offsetting decrease in additional paid-in
capital  of the same  amount.  The  restatement  has no impact on total  assets,
liabilities, total shareholders' equity, net loss or cash flows. The restatement
will not have any effect on reported  earnings for future periods.  A summary of
the effects of the  restatement  as of and for the years ended December 31, 2005
and 2004 are as follows:


                                       22
<PAGE>


                                                   As Previously        As
                                                     Reported        Restated
                                                   ------------    ------------
2005
----
Basic and diluted loss per common share ........   $      (0.03)   $     (33.60)
Basic and diluted weighted-average common
shares outstanding .............................     21,415,431         162,986
Pro forma basic and diluted loss per common
share ..........................................   $      (0.01)   $      (0.23)
Pro forma basic and diluted weighted-average
common shares outstanding ......................     34,370,100      22,777,938
Net loss available to common  shareholders
                                                   $   (569,567)   $ (5,475,817)
Pro forma net loss available to common
shareholders ...................................   $   (315,167)   $ (5,221,417)

2004
----
Basic and diluted loss per common share ........   $      (0.03)   $       --
Basic and diluted weighted-average common
shares outstanding .............................     10,638,300            --


                                       23
<PAGE>


ITEM 8A. CONTROLS AND PROCEDURES

     EVALUATION OF CONTROLS AND PROCEDURES

         Members of the  company's  management,  including  our Chief  Executive
Officer and Chief Financial  Officer,  have evaluated the  effectiveness  of our
disclosure controls and procedures,  as defined by paragraph (e) of Exchange Act
Rules 13a-15 or 15d-15,  as of December 31, 2005,  the end of the period covered
by this  report.  Members  of the  company's  management,  including  our  Chief
Executive Officer and Chief Financial  Officer,  also conducted an evaluation of
our internal control over financial  reporting to determine  whether any changes
occurred during the fourth quarter of 2005 that have materially affected, or are
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

         As was initially reported, management was satisfied that its disclosure
controls and procedures  were  effective and that no significant  changes in its
internal  control over  financial  reporting  had  occurred.  Subsequent to such
evaluations,  as a result of a review by the Securities and Exchange  Commission
in  connection  with our filing of a  registration  statement,  we reviewed  the
accounting  treatment  of our  November  2005  private  placement  of  Series  A
convertible  preferred  stock.  We  initially  concluded  that  the  convertible
preferred  stock  issued did not contain a  beneficial  conversion  feature that
should be recognized and measured separately.  After our review,  management and
the Board of Directors  determined to revise our accounting treatment to reflect
the beneficial  conversion  feature of the  convertible  preferred  stock and to
restate our financial  statements  for the fiscal years ended  December 31, 2004
and 2005.

         In  addition,  our  financial  statements  for the fiscal  years  ended
December  31,  2004 and  2005,  as first  reported,  reflected  the  retroactive
conversion of Series A convertible  preferred  stock,  which became effective on
January  5,  2006.  After our  review,  management  and the  Board of  Directors
determined  to revise our  accounting  treatment  to eliminate  the  retroactive
conversion of Series A preferred stock, and to restate our financial  statements
for the fiscal years ended December 31, 2004 and 2005.

         In  light of the  restatement,  management  and  Grobstein,  Horwath  &
Company,  LLP, our independent  accountants,  concluded that a material weakness
existed  in  our  internal  control  over  financial  reporting.  As  a  result,
management has now concluded that our  disclosure  controls and procedures  were
not effective as of the end of the period covered by this Report.  Subsequent to
December 31, 2005, we remedied  this material  weakness by changing our policies
and  procedures  for  accounting  for  instruments  with  convertible  features.
Specifically,  our Chief Financial Officer,  who was hired in the fourth quarter
of 2005,  will review and approve the  appropriate  accounting  for  convertible
instruments and determine whether any embedded beneficial  conversion feature is
required to be recognized and measured separately.

     CHANGES IN CONTROLS AND PROCEDURES

         During the fourth quarter of 2005, there were no significant changes in
our internal  controls or in other factors known to the Chief Executive  Officer
or the Chief  Financial  Officer that  materially  affected,  or are  reasonably
likely to materially  effect,  our internal  control over  financial  reporting.
Subsequent to December 31, 2005, in response to the material weakness  discussed
above,  we changed our policies and procedures  for  accounting for  instruments
with convertible features.


                                       24
<PAGE>


ITEM 13.  EXHIBITS

         The following exhibits are filed herewith:

EXHIBIT
NUMBER                                EXHIBIT TITLE
-------  -----------------------------------------------------------------------

2.1      Exchange Agreement by and among Century Pacific Financial  Corporation,
         Versatile  Entertainment,  Inc., the  stockholders of Versatile,  Bella
         Rose, LLC, and the members of Bella Rose (the "Members"), dated October
         28, 2005 (1)

3.1      Restated  Certificate of Century Pacific  Corporation filed January 13,
         1986. (2)

3.2      Certificate of Amendment filed August 22, 1986 (2)

3.3      Certificate of Amendment filed June 14, 1989 (2)

3.4      Certificate for Renewal and Revival of Charter filed January 31, 1995
         (2)

3.5      Certificate of Amendment of Certificate of Incorporation filed April 6,
         1995 (2)

3.6      Certificate  of Amendment of Certificate  of  Incorporation  of Century
         Pacific Financial Corporation filed December 2, 1996 (2)

3.7      Certificate for Renewal and Revival of Charter filed May 18, 2004 (2)

3.8      Certificate  of Amendment of Certificate  of  Incorporation  of Century
         Pacific Financial Corporation dated June 28, 2005 (4)

3.9      Certificate of Amendment of Certificate of Incorporation  filed January
         5, 2006 (2)

3.10     Bylaws of People's Liberation, Inc. (2)

4.1      2005 People's Liberation, Inc. Option Plan (2)

4.2      Certificate of  Designations,  Preferences,  Rights and  Limitations of
         Series A  Convertible  Preferred  Stock of  Century  Pacific  Financial
         Corporation (3)

10.1     Financial  Advisory  Agreement dated November 22, 2005, between Century
         Pacific Financial Corporation and Keating Securities, LLC (3)

10.2     Lease  Agreement  entered into by and between Ofer and Eitan  Kashanian
         and Versatile Entertainment, Inc. dated October 11, 2005 (3)

10.3     Factor  Agreement  entered  into on  October  14,  2004 by and  between
         Versatile and FTC Commercial Corp. (3)

10.4     Amendment  No.  1 To  Factoring  Agreement  between  Versatile  and FTC
         Commercial Corp. dated September 30, 2005 (3)

10.5     Factoring  Agreement  entered  into by and  between  Bella Rose and FTC
         Commercial Corp. dated October 12, 2005 (3)

10.6     Assignment, Assumption and Novation Agreement by and between Versatile,
         Colin Dyne, and Venture Group, LLC dated May 16, 2005 (3)

10.7     Form of Subscription  Agreement between the Registrant and the Investor
         to be identified therein (3)


                                       25
<PAGE>


10.8     Registration  Rights  Agreement  dated  November  23,  2005  among  the
         Registrant and Sanders Morris Harris Inc. as agent and attorney-in-fact
         for the Investors identified therein (3)

10.9     Placement   Agent   Agreement  dated  November  23,  2005  between  the
         Registrant and Sanders Morris Harris Inc. (3)

10.10    Form of Common Stock Purchase Warrant (3)

10.11    Employment Agreement of Darryn Barber dated January 3, 2005 (2)

10.12    Form of Indemnity Agreement (2)

14.1     People's Liberation, Inc. Code of Ethical Conduct. (5)

21.1     Subsidiaries of People's Liberation, Inc. (2)

31.1     Certification  of Principal  Executive  Officer  pursuant to Securities
         Exchange  Act Rules  13a-14(a)  and  15d-14(a)  as adopted  pursuant to
         section 302 of the Sarbanes-Oxley Act of 2002.

31.2     Certification  of Principal  Financial  Officer  pursuant to Securities
         Exchange  Act Rules  13a-14(a)  and  15d-14(a)  as adopted  pursuant to
         section 302 of the Sarbanes-Oxley Act of 2002.

32.1     Certification of Principal  Executive  Officer and Principal  Financial
         Officer  pursuant to 18 U.S.C.  Section  1350,  as adopted  pursuant to
         section 906 of the Sarbanes-Oxley Act of 2002.
----------
(1)  Incorporated  by reference to our Current Report on Form 8-K (dated October
     28, 2005) filed November 1, 2005.
(2)  Incorporated by reference to our Registration  Statement on Form SB-2 (File
     No. 333-130930) filed on January 9, 2006.
(3)  Incorporated by reference to our Current Report on Form 8-K (dated November
     22, 2005), filed November 25, 2005.
(4)  Incorporated by reference to our Current Report on Form 8-K (dated June 28,
     2005), filed July 1, 2005.
(5)  Incorporated  by reference to our Current Report on Form 10-KSB filed March
     7, 2006.


                                       26
<PAGE>


                                   SIGNATURES

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

                                      PEOPLE'S LIBERATION, INC.


Date: April 11, 2006                        /S/ DARRYN BARBER
                                      ------------------------------------------
                                      By:   Darryn Barber
                                      Its:  Chief Financial Officer
                                            (Principal Financial and
                                            Accounting Officer)

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

           NAME                             TITLE                      DATE
           ----                             -----                      ----

   /S/ DANIEL S. GUEZ           President and Chief Executive     April 11, 2006
---------------------------     Officer, Secretary, and
       Daniel Guez              Director (Principal Executive
                                Officer)

    /S/ DARRYN BARBER           Chief Financial Officer and       April 11, 2006
---------------------------     Chief Operating Officer
      Darryn Barber             (Principal Financial and
                                Accounting Officer)

            *                   Director                          April 11, 2006
---------------------------
      Kevin Keating

            *                   Director                          April 11, 2006
---------------------------
       Dean Oakey

* BY: /S/ DANIEL GUEZ
   Daniel Guez
   As Attorney-In-Fact


                                       27