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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

(Mark One)

[X]Quarterly Report Pursuant To Section 13 Or 15(d) Of
The Securities Exchange Act Of 1934

For the quarterly period ended September 30, 2006

[   ] Transition Report Under Section 13 Or 15(d) Of
The Securities Exchange Act Of 1934

For the transition period from _____ to _____

COMMISSION FILE NUMBER **000-27147**

NORPAC TECHNOLOGIES, INC.(Exact name of small business issuer as specified in its
charter)

|NEVADA                                                               | 95-4705831                       
|-------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (IRS Employer Identification No.)

698 Seymour Street, Suite 311 Vancouver, British
Columbia V6B 3K6(Address of principal executive offices)

(604) 662-3406Issuer's telephone number

NOT APPLICABLEFormer name, former address and
former fiscal year, if changed since last report

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 [   ]

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

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: As of
November 13, 2006, the Issuer had outstanding 35,165,390 shares of Common
Stock.

Transitional Small Business Disclosure Format (Check one): Yes
[   ] No [X]

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PART I - FINANCIAL INFORMATION

ITEM
1.               
FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-QSB and Item 310 (b) of
Regulation S-B, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders equity in conformity with accounting
principles generally accepted in the United States of America. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the
quarterly period ended September 30, 2006 are not necessarily indicative of the
results that can be expected for the year ending June 30, 2007.

As used in this Quarterly Report on Form 10-QSB, the terms
we, us, our, NorPac, and the Company mean NorPac Technologies, Inc.,
unless otherwise indicated. All dollar amounts in this Quarterly Report are in
U.S. dollars unless otherwise stated.

2

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NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

FINANCIAL STATEMENTS

(Unaudited)

SEPTEMBER 30, 2006



F-1

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NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

BALANCE SHEET 
  (unaudited)

|                                                                     |   | September 30, |  
|-------------------------------------------------------------------- | - | ------------- | -
|                                                                     |   | 2006          |  
|ASSETS                                                               |   |               |  
|                                                                     |   |               |  
|CURRENT ASSETS:                                                      |   |               |  
|Cash                                                                 | $ | 4,710         |  
|Available-for-sale
      securities (Note 4)                         |   | 3,150         |  
|                                                                     |   |               |  
|Total Current Assets                                                 |   | 7,860         |  
|                                                                     |   |               |  
|AVAILABLE-FOR-SALE SECURITIES (Note 4)                               |   | 385,000       |  
|                                                                     |   |               |  
|INTANGIBLE ASSETS, NET (Note 5)                                      |   | 6,600         |  
|                                                                     | $ | 399,460       |  
|                                                                     |   |               |  
|                                                                     |   |               |  
|                                                                     |   |               |  
|LIABILITIES
      AND STOCKHOLDERS EQUITY                           |   |               |  
|                                                                     |   |               |  
|CURRENT LIABILITIES:                                                 |   |               |  
|Accounts payable
      and accrued liabilities                       | $ | 80,082        |  
|                                                                     |   |               |  
|STOCKHOLDERS EQUITY (Note 7):                                       |   |               |  
|                                                                     |   |               |  
|Common stock, $0.001
      par value, 200,000,000 shares authorized, |   |               |  
|35,165,390
      shares issued and outstanding                       |   | 35,165        |  
|Additional paid-in
      capital                                     |   | 2,796,815     |  
|Deficit accumulated during the development
      stage               |   | (2,686,302    | )
|Accumulated other
      comprehensive income                         |   | 173,700       |  
|                                                                     |   | 319,378       |  
|                                                                     |   |               |  
|                                                                     | $ | 399,460       |  

The accompanying notes are an integral part of these financial
  statements.

F-2

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NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) 
  (unaudited)

|                                                              |   |               |   |   |               |   |   | Period From     |  
|------------------------------------------------------------- | - | ------------- | - | - | ------------- | - | - | --------------- | -
|                                                              |   |               |   |   |               |   |   | Inception       |  
|                                                              |   | Three Months  |   |   | Three Months  |   |   | (April 1, 1998) |  
|                                                              |   | Ended         |   |   | Ended         |   |   | Through         |  
|                                                              |   | September 30, |   |   | September 30, |   |   | September 30,   |  
|                                                              |   | 2006          |   |   | 2005          |   |   | 2006            |  
|                                                              |   |               |   |   |               |   |   |                 |  
|Revenues                                                      | $ | -             |   | $ | -             |   | $ | 288,000         |  
|                                                              |   |               |   |   |               |   |   |                 |  
|Administrative pre-opening and development
      expenses     |   | (34,129       | ) |   | (38,128       | ) |   | (1,608,436      | )
|Interest expense                                              |   | -             |   |   | -             |   |   | (679,541        | )
|Impairment of intangibles                                     |   | -             |   |   | -             |   |   | (20,000         | )
|Stock compensation expense                                    |   | -             |   |   | -             |   |   | (624,000        | )
|Realized loss on available-for-sale securities                |   | -             |   |   | -             |   |   | (42,325         | )
|                                                              |   |               |   |   |               |   |   |                 |  
|Net loss                                                      |   | (34,129       | ) |   | (38,128       | ) |   | (2,686,302      | )
|                                                              |   |               |   |   |               |   |   |                 |  
|Unrealized gain (loss) on available-for-sale
      securities |   | (166,350      | ) |   | 126,125       |   |   | 173,700         |  
|                                                              |   |               |   |   |               |   |   |                 |  
|Comprehensive income (loss)                                   | $ | (200,479      | ) | $ | 87,997        |   | $ | (2,512,602      | )
|                                                              |   |               |   |   |               |   |   |                 |  
|                                                              |   |               |   |   |               |   |   |                 |  
|                                                              |   |               |   |   |               |   |   |                 |  
|Basic net loss per common share                               | $ | (0.00         | ) | $ | (0.00         | ) |   |                 |  
|                                                              |   |               |   |   |               |   |   |                 |  
|Diluted net loss per common share                             | $ | (0.00         | ) | $ | (0.00         | ) |   |                 |  
|                                                              |   |               |   |   |               |   |   |                 |  
|Weighted average number of outstanding shares                 |   | 35,165,390    |   |   | 32,565,390    |   |   |                 |  

The accompanying notes are an integral part of these financial
  statements.

F-3

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NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

STATEMENTS OF CASH FLOWS(unaudited)

|                                                                                  |   |               |   |   |               |   |   | Period From     |  
|--------------------------------------------------------------------------------- | - | ------------- | - | - | ------------- | - | - | --------------- | -
|                                                                                  |   |               |   |   |               |   |   | Inception       |  
|                                                                                  |   | Three Months  |   |   | Three Months  |   |   | (April 1, 1998) |  
|                                                                                  |   | Ended         |   |   | Ended         |   |   | Through         |  
|                                                                                  |   | September 30, |   |   | September 30, |   |   | September 30,   |  
|                                                                                  |   | 2006          |   |   | 2005          |   |   | 2006            |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |   |               |   |   |               |   |   |                 |  
|Net loss                                                                          | $ | (34,129       | ) | $ | (38,128       | ) | $ | (2,686,302      | )
|Adjustments to
      reconcile net loss to net cash used in operating activities: |   |               |   |   |               |   |   |                 |  
|Amortization expense                                                              |   | 600           |   |   | 600           |   |   | 17,400          |  
|Compensation expense,
      options to nonemployees                               |   | -             |   |   | -             |   |   | 504,000         |  
|Receipt of available-for-sale securities                                          |   | -             |   |   | -             |   |   | (268,000        | )
|Fair value of common
      stock issued over carrying amount of debt              |   | -             |   |   | -             |   |   | 120,000         |  
|Realized loss on sales of available-for-sale
      securities                     |   | -             |   |   | -             |   |   | 42,325          |  
|Amortization of
      original issue discount                                     |   | -             |   |   | -             |   |   | 550,000         |  
|Impairment loss on intangibles                                                    |   | -             |   |   | -             |   |   | 20,000          |  
|Changes in operating
      assets and liabilities:                                |   |               |   |   |               |   |   |                 |  
|Increase in accounts payable and
      accrued liabilities                        |   | 21,852        |   |   | 7,037         |   |   | 159,863         |  
|Increase in accrued
      interest                                                |   | -             |   |   | -             |   |   | 127,380         |  
|Increase in accounts payable, stockholders                                        |   | -             |   |   | 15,000        |   |   | 369,346         |  
|Increase in due
      to stockholders                                             |   | -             |   |   | -             |   |   | 20,776          |  
|Net cash used in operating activities                                             |   | (11,677       | ) |   | (15,491       | ) |   | (1,023,212      | )
|                                                                                  |   |               |   |   |               |   |   |                 |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |   |               |   |   |               |   |   |                 |  
|Proceeds from sale
      of available-for-sale securities                         |   | -             |   |   | -             |   |   | 11,225          |  
|Purchase of intangibles                                                           |   | -             |   |   | -             |   |   | (44,000         | )
|Net cash used in
      investing activities                                       |   | -             |   |   | -             |   |   | (32,775         | )
|                                                                                  |   |               |   |   |               |   |   |                 |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             |   |               |   |   |               |   |   |                 |  
|Collection of subscription receivable                                             |   | -             |   |   | -             |   |   | 10,000          |  
|Issuance of common
      stock                                                    |   | -             |   |   | -             |   |   | 619,269         |  
|Net change in checks issued in
      excess of cash in bank                       |   | -             |   |   | 184           |   |   | -               |  
|Net proceeds from
      due to stockholders                                       |   | -             |   |   | -             |   |   | 348,928         |  
|Proceeds from (repayment of) loans
      payable                                  |   | (500          | ) |   | 15,000        |   |   | -               |  
|Issuance of convertible
      notes                                               |   | -             |   |   | -             |   |   | 82,500          |  
|Net cash provided by (used in) financing
      activities                         |   | (500          | ) |   | 15,184        |   |   | 1,060,697       |  
|                                                                                  |   |               |   |   |               |   |   |                 |  
|Increase (decrease) in cash                                                       |   | (12,177       | ) |   | (307          | ) |   | 4,710           |  
|Cash:                                                                             |   |               |   |   |               |   |   |                 |  
|Beginning                                                                         |   | 16,887        |   |   | 307           |   |   | -               |  
|                                                                                  |   |               |   |   |               |   |   |                 |  
|Ending                                                                            | $ | 4,710         |   | $ | -             |   | $ | 4,710           |  
|                                                                                  |   |               |   |   |               |   |   |                 |  
|SUPPLEMENTAL CASH FLOWS INFORMATION:                                              |   |               |   |   |               |   |   |                 |  
|                                                                                  |   |               |   |   |               |   |   |                 |  
|Cash paid for interest                                                            | $ | -             |   | $ | 24            |   | $ | 2,182           |  
|                                                                                  |   |               |   |   |               |   |   |                 |  
|NONCASH INVESTING AND FINANCING ACTIVITIES:                                       |   |               |   |   |               |   |   |                 |  
|                                                                                  |   |               |   |   |               |   |   |                 |  
|Stock issued for amount due to stockholders                                       | $ | -             |   | $ | -             |   | $ | 233,125         |  
|Stock issued for accounts
      payable                                           | $ | -             |   | $ | -             |   | $ | 10,000          |  
|Conversion of accounts payable, stockholders
      and due to stockholders        |   |               |   |   |               |   |   |                 |  
|and issuance
      of subscription receivable for convertible notes               | $ | -             |   | $ | -             |   | $ | 467,500         |  
|Stock issued for conversion
      of notes payable                                | $ | -             |   | $ | -             |   | $ | 550,000         |  
|Stock issued
      for accrued interest on notes payable                          | $ | -             |   | $ | -             |   | $ | 127,381         |  

The accompanying notes are an integral part of these financial
  statements.

F-4

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NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|1. | History and Organization of the Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | NorPac Technologies, Inc. (the Company) was originally
        incorporated on April 1, 1998 in the state of Minnesota. On July 12, 2004
        the Company was reorganized and became a Nevada Corporation. The Company
        was formed to act as a holding company for manufacturing companies and
        since inception, has devoted its efforts to raising capital and pre-opening
        activities. The Company owns a patent for a self- chilling beverage container
        and related component parts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company is considered to be in the development stage
        and the accompanying financial statements represent those of a development
        stage enterprise and therefore, are subject to the usual business risks
        of development stage companies. The Company has had no significant revenue
        from operations. Research and development costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | These financial statements have been prepared in conformity
        with accounting principles generally accepted in the United States for
        interim financial information. The accompanying financial statements do
        not include all information and footnote disclosures required for a complete
        presentation prepared under accounting principles generally accepted in
        the United States. The interim period financial statements should be read
        together with the audited financial statements and the accompanying notes
        for the year ended June 30, 2006 included in the Company’s annual
        report on form 10-KSB. In the opinion of management, all adjustments (consisting
        solely of normal recurring accruals) considered necessary for a fair presentation
        of financial position, results of operations and cash flows as of September
        30, 2006 and for all periods presented, have been included. Interim results
        for the period ended September 30, 2006 are not necessarily indicative
        of the results that may be expected for the fiscal year as a whole.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The accompanying financial statements have been prepared
        in conformity with accounting principles generally accepted in the United
        States, which contemplate continuation of the Company as a going concern.
        However, the Company has sustained substantial losses and is still in
        the development stage. These financial statements do not include any adjustments
        that might result from this uncertainty.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Additional funding will be necessary to continue development
        and marketing of the self-chilling beverage container. The Company intends
        to arrange for the sale of additional shares of stock to obtain additional
        operating capital for at least the next twelve months. There can be no
        assurance the Company will be able to raise the necessary capital to continue
        in business.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The financial statements of the Company have been prepared
        in conformity with accounting principles generally accepted in the United
        States and are stated in US dollars. The significant accounting policies
        adopted by the Company are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (a) Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The preparation of financial statements in conformity
        with accounting principles generally accepted in the United States requires
        management to make estimates and assumptions that affect the reported
        amount of assets and liabilities and the disclosure of contingent assets
        and liabilities at the date of the financial statements and the reported
        amount of revenues and expenses during the reporting period. Actual results
        could differ from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

F-5

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NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|3. | Significant Accounting Policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The functional currency of the Company is
        the United States dollar. Monetary assets and liabilities denominated
        in a foreign currency are translated at the exchange rate in effect at
        the balance sheet date while non-monetary assets and liabilities are translated
        at historical rates. Revenue and expense items denominated in a foreign
        currency are translated at exchange rates prevailing when such items are
        recognized in the statement of operations. Exchange gains and losses arising
        on transactions denominated in foreign currency are included in the statement
        of operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company considers cash held at banks and
        all highly liquid investments with original maturities of three months
        or less to be cash and cash equivalents. As of September 30, 2006, cash
        and cash equivalents consists of cash only.                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Intangible assets are recorded at cost. Amortization
        is calculated using the straight-line method over 10 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company expenses advertising costs as
        incurred. There were no advertising expenses incurred by the Company for
        the periods ended September 30, 2006 and 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | (f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Deferred taxes are recorded using the liability
        method. A deferred tax asset or liability is recorded for all temporary
        differences between financial and tax reporting and net operating loss
        carryforwards. Deferred tax expenses (benefit) result from the net change
        during the period of deferred tax assets and liabilities.                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Deferred tax assets are reduced by a valuation
        allowance when, in the opinion of management, it is more likely than not
        that some portion or all of the deferred tax assets will not be realized.
        Deferred tax assets and liabilities are adjusted for the effects of changes
        in tax laws and rates on the date of enactment.                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | (g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company's financial instruments consist
        of cash, available-for-sale securities and accounts payable and accrued
        liabilities. It is management's opinion that the Company is not exposed
        to significant interest, currency or credit risks arising from these financial
        instruments. The fair value of these financial instruments, other than
        available-for-sale securities, approximates their carrying values because
        of the short-term nature of these financial instruments. Available-for-sale
        securities are recorded at their fair market values.                                             

F-6

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NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|3. | Significant Accounting Policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (h)        Stock-based
        compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Effective January 1, 2006, the Company adopted Statement
        of Financial Accounting Standards (SFAS) 123(R), "Share-Based
        Payment" ("SFAS 123(R)"), and related interpretations which superseded
        Accounting Principles Board (APB) Opinion 25 Accounting
        for Stock Issued to Employees. SFAS 123(R) requires that all stock-based
        compensation be recognized as an expense in the financial statements and
        that such cost be measured at the fair value of the award. This statement
        was adopted using the modified prospective method, which requires the
        Company to recognize compensation expense on a prospective basis. The
        fair value of stock-based compensation is determined using the Black-Scholes
        valuation model, which is consistent with the Companys valuation
        techniques previously utilized for stock- based awards in footnote disclosures
        required under SFAS 123, Accounting for Stock-Based Compensation.
        Prior to January 1, 2006, the Company accounted for share-based compensation
        under the recognition and measurement provisions of APB Opinion 25, as
        permitted by SFAS 123. Under APB Opinion 25, compensation expense was
        recorded using the intrinsic method where compensation expense under fixed
        term option plans was recorded at the date of grant only to the extent
        that the market value of the underlying stock at the date of grant exceeded
        the exercise price. As a result of adopting SFAS 123(R) on January 1,
        2006, the Companys net loss for the period ended September 30, 2006
        was no different than if it had continued to account for stock-based compensation
        under SFAS 123. Basic and diluted loss per share for the period ended
        September 30, 2006 was no different than if it had continued to account
        for share-based compensation under SFAS 123.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The following table shows the pro forma effect on 2005
        net loss and net loss per share, had compensation expense been determined
        based on the fair value at the award grant date, in accordance with SFAS
        123:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| |                                         |   |               |   |   | Period
      From   |  
| | --------------------------------------- | - | ------------- | - | - | ------------------- | -
| |                                         |   | Three         |   |   | Inception (April 1, |  
| |                                         |   | Months Ended  |   |   | 1998) Through       |  
| |                                         |   | September 30, |   |   | September 30,       |  
| |                                         |   | 2005          |   |   | 2006                |  
| |                                         |   |               |   |   |                     |  
| | Net loss                                | $ | (38,128       | ) | $ | (2,686,302          | )
| |                                         |   |               |   |   |                     |  
| | Pro forma net loss                      | $ | (38,128       | ) | $ | (2,734,302          | )
| |                                         |   |               |   |   |                     |  
| | Stock based compensation                |   |               |   |   |                     |  
| | As reported                             | $ | -             |   | $ | 504,000             |  
| | Proforma                                | $ | -             |   | $ | 552,000             |  
| |                                         |   |               |   |   |                     |  
| | Basic and diluted loss per common share |   |               |   |   |                     |  
| | As reported                             | $ | (0.00         | ) |   |                     |  
| | Pro forma                               | $ | (0.00         | ) |   |                     |  

There were no options granted or vested
  during the three months ended September 30, 2006 and 2005.

F-7

---

NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|3. | Significant Accounting Policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Basic net loss per share is computed by dividing
        the net loss for the period by the weighted average number of shares of
        common stock outstanding during the period. Diluted earnings per share
        takes into consideration shares of common stock outstanding (computed
        under basic earnings per share) and potentially dilutive securities. As
        of September 30, 2006 and 2005, there were no potentially dilutive securities
        outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (j)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company has adopted SFAS 130, Reporting
        Comprehensive Income, which establishes guidelines for the reporting
        and display of comprehensive income (loss) and its components in financial
        statements. Comprehensive loss consists of the Companys net loss
        and unrealized gain (loss) on available-for-sale securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (k)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company is a development stage company
        as defined in SFAS 7, Accounting and Reporting by Development
        Stage Enterprises,as it is devoting substantially all of its
        efforts to establish a new business and planned principal operations have
        not yet commenced.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (l)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | In June 2005, the FASB issued SFAS 154, Accounting
        Changes and Error Corrections,which replaces APB Opinion 20,
        Account Changes,and SFAS 3, Reporting Accounting
        Changes in Interim Financial Statements.SFAS 154 changes the
        requirements for the accounting and reporting of a change in accounting
        principle. APB Opinion 20 previously required that most voluntary changes
        in accounting principles be recognized by including the cumulative effect
        of the new accounting principle in net income of the period of change.
        SFAS 154 now requires retrospective application of changes in accounting
        principle to prior period financial statements, unless it is impractical
        to determine either the period-specific effects or the cumulative effect
        of the change. The statement is effective for fiscal years beginning after
        December 15, 2005. The Company does not expect that this Statement will
        have a material impact on their financial position, results of operations
        or cash flows.                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | In February 2006, the FASB issued SFAS155,
        Accounting for Certain Hybrid Financial Instruments  an
        amendment of SFAS 133 and 140. SFAS 155 permits fair value remeasurement
        for any hybrid financial instrument that contains an embedded derivative
        that otherwise would require bifurcation, clarifies which interest-only
        strips and principal-only strips are not subject to the requirements of
        SFAS 133, and establishes a requirement to evaluate interests in securitized
        financial assets to identify interests that are freestanding derivatives
        or that are hybrid financial instruments that contain an embedded derivative
        requiring bifurcation. In addition, SFAS 155 clarifies that concentrations
        of credit risk in the form of subordination are not embedded derivatives
        and amends SFAS 140 to eliminate the prohibition on a qualifying special
        purpose entity from holding a derivative financial instrument that pertains
        to a beneficial interest other than another derivative financial instrument.
        SFAS 155 is effective for all financial instruments acquired or issued
        after the beginning of an entitys first fiscal year that begins
        after September 15, 2006. The Company does not expect that this Statement
        will have a material impact on their financial position, results of operations
        or cash flows.

F-8

---

NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|3. | Significant Accounting Policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (l)        Recent
        accounting pronouncements (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In March 2006, the FASB issued SFAS 156, Accounting
        for Servicing of Financial Assetsan amendment of SFAS 140.
        SFAS 156 requires that an entity separately recognize a servicing asset
        or a servicing liability when it undertakes an obligation to service a
        financial asset under a servicing contract in certain situations. Such
        servicing assets or servicing liabilities are required to be initially
        measured at fair value, if practicable. SFAS 156 also allows an entity
        to choose either the amortization method or the fair value measurement
        method to account for servicing assets and servicing liabilities within
        the scope of this Statement. SFAS 156 is effective after the beginning
        of an entitys first fiscal year that begins after September 15,
        2006. The Company does not expect that this Statement will have a material
        impact on their financial position, results of operations or cash flows.                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In April 2006, the FASB issued FASB Staff Position (FSP)
        FIN 46R-6, Determining the Variability to Be Considered in Applying
        FASB Interpretation No. (FIN) 46(R).FIN 46R-6 addresses certain
        implementation issues related to FIN 46R (revised December 2003), Consolidation
        of Variable Interest Entities. Specifically, FIN 46R-6 addresses
        how a reporting enterprise should determine the variability to be considered
        in applying FIN 46R. The variability that is considered in applying FIN
        46R affects the determination of (a) whether an entity is a variable interest
        entity (VIE), (b) which interests are variable interests in
        the entity, and (c) which party, if any, is the primary beneficiary of
        the VIE. That variability affects any calculation of expected losses and
        expected residual returns, if such a calculation is necessary. The Company
        is required to apply the guidance in FIN 46R-6 prospectively to all entities
        (including newly created entities) and to all entities previously required
        to be analyzed under FIN 46R when a reconsideration event
        has occurred, beginning July 1, 2006. The Company will evaluate the impact
        of this FSP at the time any such reconsideration event occurs
        and for any new entities created.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In July 2006,the FASB issued FIN 48, Accounting
        for Uncertainty in Income Taxes-an interpretation of SFAS 109.This
        Interpretation provides guidance for recognizing and measuring uncertain
        tax positions, as defined in SFAS 109, Accounting for Income
        Taxes.FIN 48 prescribes a threshold condition that a tax position
        must meet for any of the benefit of an uncertain tax position to be recognized
        in the financial statements. Guidance is also provided regarding derecognition,
        classification and disclosure of uncertain tax positions. FIN 48 is effective
        for fiscal years beginning after December 15, 2006. The Company does not
        expect that this Interpretation will have a material impact on their financial
        position, results of operations or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4. | Available-for-sale Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Investments held by the Company are classified as available-for-sale
        securities. Available-for-sale securities are reported at fair value with
        all unrealized gains or losses included in other comprehensive income
        (loss). The fair value of the securities was determined by quoted market
        prices of the underlying security. For purposes of determining gross realized
        gains or losses, the cost of available- for-sale securities is based on
        specific identification.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

F-9

---

NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|4. | Available-for-sale Securities (continued)
|-- | -----------------------------------------

| |                                        |   |                  |  |   | Gross      |  |   | Gross      |  |   |         | 
| | -------------------------------------- | - | ---------------- |  | - | ---------- |  | - | ---------- |  | - | ------- | 
| |                                        |   | Aggregate        |  |   | unrealized |  |   | unrealized |  |   |         | 
| |                                        |   | fair
      value |  |   | gains      |  |   | losses     |  |   | Cost    | 
| |                                        |   |                  |  |   |            |  |   |            |  |   |         | 
| | Equity securities - September 30, 2006 | $ | 388,150          |  | $ | 173,700    |  | $ | -          |  | $ | 214,450 | 

|   | In November 2002, the Company received securities valued
        at $63,000. Pursuant to the license agreement described in Note 11, the
        Company received additional securities valued at $175,000 in November
        2003, and securities valued at $30,000 in January 2006. There were no
        sales of available-for- sale securities during the three months ended
        September 30, 2006 and 2005.                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Companys net unrealized holding gain (loss)
        was ($166,350) and $126,125 for the periods ended September 30, 2006 and
        2005, respectively. The reclassification adjustment was $0 and $0 for
        the three months ended September 30, 2006 and 2005, respectively and $40,800
        for the period from inception through September 30, 2006. On an ongoing
        basis, the Company evaluates its investment in available-for- sale securities
        if a decline in fair value is other than temporary. There have been no
        other-than-temporary declines in fair value through September 30, 2006.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | At September 30, 2006, the Company held 5,545,000 common
        shares of Balsam Ventures, Inc. for an ownership percentage of 21.3%.
        This investment in Balsam was not accounted for under the equity method
        in accordance with APB Opinion 18, The Equity Method of Accounting
        for Investments in Common Stock,because the Company is unable
        to exercise significant influence over the operating and financial policies
        of the investee.                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|5. | Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | A United States patent for a self-chilling beverage
        container and related component parts was obtained by a founding stockholder
        on March 11, 1997. During 1998, the patent and patent holder rights thereunder
        were sold to the Company for $1. Subsequent costs in June 1999 of $24,000
        to file foreign patent applications have been similarly capitalized. Estimated
        amortization expense is $2,400 for each of the next two years and $1,800
        in the third year.                                                                                                                     

| |                          |   | September 30, |  
| | ------------------------ | - | ------------- | -
| |                          |   | 2006          |  
| |                          |   |               |  
| | Patent                   | $ | 24,000        |  
| | Accumulated amortization |   | (17,400       | )
| |                          |   |               |  
| | Net book value           | $ | 6,600         |  

F-10

---

NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|5. | Intangible Assets (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In April 2001, the Company acquired a patent pending
        from certain stockholders which expands on the above patent. The acquisition
        agreement required the payment by the Company to the stockholders of $20,000.
        In addition, the Company was to issue to the stockholders: (i) 7,500 shares
        of the Companys common stock upon the grant of a patent in connection
        with the acquired patent pending; and (ii) an additional 4,500 shares
        for each country in respect of which the Company grants a license of the
        acquired technology, for the first ten countries, and 3,000 shares for
        each additional country, to a maximum of 75,000 shares under the acquisition
        agreement. The Company was to also pay an ongoing royalty to the stockholders
        based on sales of products incorporating the technology as follows: (i)
        4.5% of gross profits achieved by the Company on products incorporating
        the technology; and (ii) 15% of any licensing revenues or royalty payments
        earned by the Company on licenses of the acquired technology. The Company
        had agreed to use its best efforts to commercialize the acquired technology
        and to apply to the United States Patent Office for a grant of a patent
        relating to the patent pending. The agreement was cancelled due to the
        Companys default under the agreement on June 14, 2003 and as such,
        an impairment loss of $20,000 was recorded for the year ended June 30,
        2003.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In the event that facts and circumstances indicate that
        the carrying amount of an asset may not be recoverable and an estimate
        of future undiscounted cash flows is less than the carrying amount of
        the asset, an impairment loss will be recognized. Management's estimates
        of revenues, operating expenses, and operating capital are subject to
        certain risks and uncertainties which may affect the recoverability of
        the Company's investments in its assets. Although management has made
        its best estimate of these factors based on current conditions, it is
        possible that changes could occur which could adversely affect management's
        estimate of the net cash flow expected to be generated from its operations.
        At September 30, 2006, the Company believes that no significant impairment
        of the remaining intangibles has occurred and that no reduction of the
        estimated useful lives of such assets is warranted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|6. | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Consulting fees paid to an officer and director totaled
        $3,000 and $0 for the three months ended September 30, 2006 and 2005,
        respectively. Consulting fees paid to an officer and director from inception
        through September 30, 2006 totaled $5,500.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Consulting fees paid to a former officer and director
        totaled $0 and $15,000 for the three months ended September 30, 2006 and
        2005, respectively. Consulting fees paid to a former officer and director
        from inception through September 30, 2006 totaled $588,000. During the
        period of inception through September 30, 2006, a former officer and director
        settled accounts payable of $146,330 in exchange for 187,500 common shares
        of the Company with a fair value of $28,125. The difference between the
        carrying amount of the accounts payable and the fair value of the common
        shares issued of $118,205 was recorded as an increase to additional paid
        in capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | At September 30, 2006, included in accounts payable
        was $47, owed to a former officer and director of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

F-11

---

NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|7. | Stockholders Equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Board of Directors have the power and authority
        to fix by resolution any designation, class, series, voting power, preference,
        right, qualification, limitation, restriction, dividend, time and place
        of redemption, and conversion right with respect to any stock of the Company.                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|8. | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company adopted a Stock Option Plan on June 21,
        2000 which authorizes an initial 3,600,000 shares for issuance of incentive
        and non-qualified stock options to non-employees. The maximum aggregate
        number of shares that may be optioned and sold under the Plan may increase
        each quarter upon conditions outlined in the Plan. Options expire as determined
        by the Company but in no event later than ten years after the date the
        options are granted.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Information relating to stock options is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |                                                           |  | Number
      of |   |   | Weighted | 
| | --------------------------------------------------------- |  | --------------- | - | - | -------- | 
| |                                                           |  | Shares          |   |   | Average  | 
| |                                                           |  |                 |   |   | Exercise | 
| | Under option, June 30, 2001                               |  | 177,500         |   | $ | 7.50     | 
| | Granted                                                   |  | 30,000          |   |   | .50      | 
| | Exercised  conversion of
      debt and accounts payable |  | (55,000         | ) |   | 1.50     | 
| | Cancelled                                                 |  | (27,500         | ) |   | 3.00     | 
| | Under option, June 30, 2002                               |  | 125,000         |   |   | 2.65     | 
| | Expired                                                   |  | (100,000        | ) |   | 2.20     | 
| | Cancelled                                                 |  | (25,000         | ) |   | 3.00     | 
| | Under option, June 30, 2003                               |  | -               |   |   | -        | 
| | Granted                                                   |  | -               |   |   | -        | 
| | Expired                                                   |  | -               |   |   | -        | 
| | Cancelled                                                 |  | -               |   |   | -        | 
| | Under option, June 30, 2004                               |  | -               |   |   | -        | 
| | Granted                                                   |  | -               |   |   | -        | 
| | Expired                                                   |  | -               |   |   | -        | 
| | Cancelled                                                 |  | -               |   |   | -        | 
| | Under option, June 30, 2005                               |  | -               |   |   | -        | 
| | Granted                                                   |  | -               |   |   | -        | 
| | Expired                                                   |  | -               |   |   | -        | 
| | Cancelled                                                 |  | -               |   |   | -        | 
| | Under option, June 30, 2006                               |  | -               |   |   | -        | 
| | Granted                                                   |  | -               |   |   | -        | 
| | Expired                                                   |  | -               |   |   | -        | 
| | Cancelled                                                 |  | -               |   |   | -        | 
| | Under option, September 30, 2006                          |  | -               |   |   | -        | 
| |                                                           |  |                 |   |   |          | 

During the year ended June 30, 2002,
  based on the decrease in the market price of the Companys common stock,
  the Company re-priced its stock options. There was no accounting consequence
  or compensation for the options repriced. All outstanding options were cancelled
  or expired during the year ended June 30, 2003.

F-12

---

NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|9.  | Segment Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Companys business is considered as operating
        in one segment based upon the Companys organization structure, the
        way in which the operation is managed and evaluated, the availability
        of separate financial results and materiality considerations.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | For income tax purposes, pre-opening costs are generally
        deferred and amortized to expense in future tax returns. Accordingly,
        the Company has no significant tax loss carryforwards. For financial reporting
        purposes, realization of the value of book versus tax temporary differences
        is dependent upon the Company generating sufficient taxable income in
        future years. Because of the development stage nature of the Company,
        lack of operating history and potential future stock sales (which may
        limit the value of loss carryforwards) management has eliminated the deferred
        tax value of pre-opening costs with a valuation allowance.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The benefit for income taxes differs from the amount
        computed by applying the U.S. federal income tax rate to loss before income
        taxes for the 3 months ended September 30 as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| |                                                          |   | 2006    |   |   | 2005    |  
| | -------------------------------------------------------- | - | ------- | - | - | ------- | -
| |                                                          |   |         |   |   |         |  
| | Expected tax liability (benefit) at statutory
      rate | $ | (11,604 | ) | $ | (12,964 | )
| | State tax effects                                        |   | (2,048  | ) |   | (2,288  | )
| | Increase in valuation allowance                          |   | 13,652  |   |   | 15,252  |  
| |                                                          |   |         |   |   |         |  
| |                                                          | $ | -       |   | $ | -       |  

Tax law provides for limitation on the
  use of future loss carryovers should significant ownership changes occur.

The following is a summary of deferred
  taxes:

| |                      |   | 2006       |   |   | 2005       |  
| | -------------------- | - | ---------- | - | - | ---------- | -
| |                      |   |            |   |   |            |  
| | Deferred tax assets: |   |            |   |   |            |  
| | Net operating loss   | $ | (1,103,777 | ) | $ | (1,087,943 | )
| | Valuation allowance  |   | 1,103,777  |   |   | 1,087,943  |  
| |                      |   |            |   |   |            |  
| |                      | $ | -          |   | $ | -          |  

F-13

---

NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|11. | License Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Company has entered into an exclusive
        licensing agreement (the "Agreement") with Balsam Ventures, Inc. ("Balsam"),
        dated for reference November 30, 2003, granting Balsam the exclusive right
        and license (the License), for a period of 40 years, to use,
        commercialize and exploit the Companys proprietary trademarks, patents,
        process information, technical information, designs and drawings associated
        with the Companys self-chilling beverage container technology (the
        "Technology") including the right to manufacture, use and sell apparatus
        and products embodying the Technology within the countries comprising
        the European Union and the Republic of China. Balsam also has the right
        to sub-license the right to manufacture, use and sell products embodying
        the Technology.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The consideration for the Agreement was as
        follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | On January 14, 2006, the Company entered into
        an agreement (the “Extension Agreement”) with Balsam, to amend
        the terms of the Agreement dated November 30, 2003. Under the Extension
        Agreement, the Company agreed to extend the date on which Balsam is required
        to commence paying the minimum royalty payments to January 15, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The consideration for the Extension Agreement
        was as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | 2.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | The Technology and the Company patents and
        trademarks included in the Technology remain the property of the Company
        subject to the terms of the License granted under the Agreement. However,
        Balsam has a right of first refusal to acquire the intellectual property
        subject to the Agreement should the Company seek to dispose of the Technology
        during the currency of the Agreement. The Agreement supersedes all prior
        arrangements and agreements between the Company and Balsam in respect
        of the Technology.                                                                                                                                                                                                                                                                                                                   

F-14

---

NORPAC TECHNOLOGIES, INC.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS 
  (unaudited)

|12. | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On November 7, 2006, the Company entered into an Agreement
        and Plan of Merger (Merger Agreement) for a merger with Nextdigital
        Corp. (Nextdigital), a Nevada company engaged in the provision
        of smart card solutions to the international marketplace. Under the terms
        of the Merger Agreement, the Company will merge with Nextdigital and change
        its name to Nextdigital Corporation. The Merger Agreement also provides
        that the Company will issue one share of the Companys common stock
        in exchange for each outstanding share of common stock of Nextdigital.
        Nextdigital currently has 21,421,600 shares of common stock outstanding.
        Closing of the Merger is subject to certain conditions, including delivery
        of required financial statements by Nextdigital and completion of due
        diligence by the Company and Nextdigital.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On November 7, 2006, the Company entered into a loan
        agreement to lend $100,000 to Nextdigital. The loan bears interest at
        8% per annum, calculated and compounded annually, is unsecured and is
        due on or before November 7, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On November 2, 2006, the Company approved a private
        placement offering of 2,000,000 shares of common stock at a price of $0.25
        per share for total proceeds of up to $500,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

F-15

---

ITEM
2.              
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Managements Discussion
and Analysis or Plan of Operation and other sections of this quarterly report
constitute forward-looking statements. These statements, identified by words
such as plan, anticipate, believe, estimate, should, expect and
similar expressions include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. We advise you
to carefully review the reports and documents we file from time to time with the
Securities and Exchange Commission (the SEC), particularly our Annual Reports
on Form-10KSB, our Quarterly Reports on Form 10-QSB and our Current Reports on
Form 8-K.

INTRODUCTION

We are in the business of developing and marketing a patented
unique proprietary technology for a self-chilling beverage container (the Cool
Can Technology). We are currently in the development stage of our business. We
are in the process of taking our planned product from the conceptual stage of
development to the production of a prototype of a self-chilling beverage
container that we can use for testing purposes. We have not completed the
development of a commercially viable self-chilling beverage container to date,
nor have we achieved any revenues to date.

On November 7, 2006 we entered into an agreement and plan of
merger with Nextdigital Corp., a Nevada Corporation (Nextdigital), pursuant to
which Nextdigital will merge with our wholly owned subsidiary created for the
purpose of completing the merger and we will merge with the surviving entity
(the Merger). Upon completion of the proposed Merger we intend to pursue the
business of Nextdigital. Nextdigital is a private company operating in the field
of smart card systems integration acting as a total systems solutions provider
to the international marketplace by integrating leading-edge smart card hardware
and software applications into full-function value-add client solutions. Closing
of the merger is subject to a number of conditions including the delivery of
financial statements by Nextdigital, approval of the Merger by the stockholders
of Nextdigital and the satisfactory completion of due diligence by the parties.
There is no assurance that the proposed Merger with Nextdigital will close.

Our ability to pursue our plan of operation, as discussed
below, is contingent upon us achieving substantial financing, of which there is
no assurance. If we are not able to obtain additional financing on acceptable
terms, our business may fail.

Recent Corporate Developments

Since the completion of our fiscal year ended June 30, 2006, we
have experienced the following corporate developments:

|1. | On November 7, 2006, we entered into an Agreement and
      Plan of Merger (the Merger Agreement) with Nextdigital Corp.
      (Nextdigital), a Nevada corporation, and our wholly- owned subsidiary,
      Nextdigital Acquisition Corp. (Subco). Under the terms of the Merger
      Agreement, Subco will merge with Nextdigital and immediately thereafter we
      will merge with
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

---

|   | Subco and change our name to Nextdigital Corporation.
      The Merger Agreement is subject to certain closing conditions described
      below under the heading Merger Agreement There is no assurance that the
      Merger will be completed.                                                                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | Also on November 7, 2006, we entered into a loan
      agreement with Nextdigital pursuant to which we loaned $100,000 to
      Nextdigital. The loan to Nextdigital is for a term of two years, maturing
      on November 7, 2008, and accrues interest at the rate of 8% per annum. The
      loan is unsecured and evidenced by a promissory note.                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | On November 2, 2006, our board of directors approved a
      private placement offering of up to 2,000,000 shares of our common stock
      at a price of $0.25 per share for gross proceeds of up to $500,000. The
      offering will be made on a best efforts private placement basis in
      reliance of exemptions from applicable securities laws. There is no
      assurance that this offering or any part of it will be
completed.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | On September 7, 2006, we engaged Peterson Sullivan PLLC
      of 601 Union Street, Suite 2300, Seattle, WA, 98101 (Peterson Sullivan)
      as our new independent registered public accounting firm to audit our
      financial statements. The decision to engage Peterson Sullivan was
      approved by our board of directors.                                                                                                        

Merger Agreement

Pursuant to the terms of the Merger Agreement with Nextdigital,
we agreed to issue one share of our common stock in exchange for each
outstanding share of common stock of Nextdigital. Nextdigital presently has
21,421,600 shares of common stock outstanding. As at the date of this Quarterly
Report there are 35,165,390 shares of our common stock issued and outstanding.
Following the completion of the Merger, stockholders of Nextdigital will hold
21,421,600 or 37.8% of our issued and outstanding shares of common stock.

Closing of the Merger is subject to a number of conditions,
including:

| | (a) | Delivery of the financial statements by Nextdigital
        required under applicable securities laws;                                                                                                                                                                                       
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                              
| | (b) | Nextdigital obtaining the approval of the Merger by
        the stockholders of Nextdigital pursuant to a stockholder meeting or written
        consent of the stockholders of Nextdigital in lieu of a meeting;                                                                            
| |     |                                                                                                                                                                                                                                                                                              
| | (c) | That no more than two (2%) percent of the holders of
        the issued and outstanding shares of Nextdigital will have exercised appraisal
        rights under Nevada Law as dissenting stockholders in respect of the Merger;
        and                                                 
| |     |                                                                                                                                                                                                                                                                                              
| | (d) | Norpac will have received evidence satisfactory to Norpac
        that all shares of Norpac common stock issuable pursuant to the Merger
        will be issuable without registration pursuant to the Securities Act of
        1933 in reliance on applicable exemptions from registration.

The Merger Agreement terminates at any time prior to closing:
(i) pursuant to the mutual agreement of the parties; (ii) upon a material breach
by either party of any material warranty, representation or covenant in the
Merger Agreement; or (iii) after December 31, 2006 if the Merger Agreement is
not closed by that date. The Merger Agreement may be amended at any time with
the consent of the

4

---

parties thereto and is governed under the laws of the State of
Nevada. There is no assurance that the Merger will be completed on the above
terms or at all.

About Nextdigital Corp.

Nextdigital Corp. is a privately held Nevada corporation
founded in June 2005 to pursue business opportunities in the smart card systems
integration field acting as a total systems solutions provider to the
international marketplace by integrating leading-edge smart card hardware and
software applications into full-function value-add client solutions.
Nextdigitals business model consists of bundling of smart card industry
specific components into end-user products that match diverse client
requirements. Nextdigital has developed a unique Membership Card platform
utilizing smart card technology which it intends to initially rollout in Panama
during the first quarter of 2007. Components are expected to be outsourced from
third party suppliers or developed by Nextdigital depending on what is optimal.
Most of the software development and client implementation/servicing will be
completed by Nextdigital.

Cool Can Technology

Our initial business plan is to produce a product referred to
by us as the Cool Can product and consists of a module for insertion in an
aluminum beverage container that incorporates a cartridge of liquid carbon
dioxide (CO2) that is held in place by a cartridge holder. The module consists
of proprietary technology for which we have been granted patent protection. The
module would be inserted in an aluminum beverage container during an automated
canning process. Containers incorporating the Cool Can product would be
identified and sold as self-chilling beverage containers. To start the chilling
process, a consumer would pull the tab off the container as with a regular
non-chilling beverage container. When the tab on the lid of the beverage
container is pulled by the consumer, a valve mechanism within the container
releases the compressed liquid CO2. The escaping CO2 forms into small particles
of frozen snow at extremely cold temperatures and rapidly imparts a chilling
action to the beverage, which simultaneously carbonates the beverage. The
targeted result is that the consumer may purchase a beverage at room temperature
and enjoy it cold without having to purchase it from a cooler or purchase ice to
cool the beverage.

License Agreement with Balsam Ventures, Inc.

In November, 2003, we entered into a license agreement (the
License Agreement) with Balsam Ventures, Inc. (Balsam), pursuant to which we
granted Balsam an exclusive license (the License) for a term of 40 years to
manufacture, use, and sell our proprietary technology within the countries
comprising the European Union and China (the Exclusive Region). We also
granted Balsam a right of first refusal (the Right of First Refusal) to
purchase our proprietary technology and to license that technology for countries
that are not a party to the North American Free Trade Agreement and are outside
of the Exclusive Region. The License Agreement supersedes the original licensing
agreement that we had with Balsam dated June 5, 2002.

In consideration of the grant of the License and the Right of
First Refusal, Balsam agreed to:

|(1) | issue 5,000,000 restricted shares of its common stock to
      us; and
|--- | ----------------------------------------------------------------------
|    |                                                                       
|(2) | pay us the following royalties:                                       
|    |                                                                       
|    | (a)                                                                   

5

---

| | (b) | a license royalty equal to 5% of revenues received by
      Balsam from sub-licensing our proprietary
technology.
| | --- | -----------------------------------------------------------------------------------------------------------------

Pursuant to the terms of the License Agreement, we were to
receive minimum royalty payments of $5,000 per month under the License
Agreement, commencing on January 15, 2006 (the Minimum Royalty Payments). We
entered into an extension agreement with Balsam on January 14, 2006, pursuant to
which we agreed to amend the terms of the License Agreement to extend the date
on which Balsam is required to commence paying the Minimum Royalty Payments to
January 15, 2007 in exchange for the following consideration:

| | (a) | 500,000 restricted shares of Balsams common stock;
      and
| | --- | -------------------------------------------------------------
| |     |                                                              
| | (b) | $20,000.                                                     

We received the payment of $20,000 and the 500,000 shares of
Balsams common stock during our previous fiscal year ended June 30, 2006.

PLAN OF OPERATION

We are presently a development stage company in the business of
developing and marketing a patented unique proprietary technology for a
self-chilling beverage container. We are in the process of taking our planned
product from the conceptual stage of development to the production of a
prototype of a self-chilling beverage container that we can use for testing
purposes. We have not completed the development of a commercially viable
self-chilling beverage container to date, nor have we achieved any revenues to
date.

Our plan of operation is to complete the proposed merger with
Nextdigital and pursue the business of Nextdigital. Until we complete the Merger
with Nextdigital for the next twelve months, subject to our receiving the
necessary additional financing, we intend to continue pursuing our initial
business plan which includes the following components:

|1. | The first phase will be divided into two parts and
      involves engaging LNE Engineering Co., a third party contractor, to
      proceed with prototype development and production of samples of our
      self-chilling beverage container modules. This phase will include the
      following elements:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Phase
        1 Prototype Development | Timeline                                                                               
|------------------------------------- | ---------------------------------------------------------------------------------------
|Part
        1                        | •                                                                                      
|•                                     | Development of coils and suppliers for the associated
        parts.                   
|•                                     | Development of trigger/valve mechanism.                                                
|•                                     | Development of charging and canning system.                                            
|•                                     | Fabrication
        of six engineering prototype samples.                              
|•                                     | Plan, cost and
        schedule for production of 2,000 industry demonstration samples.
|Part 2                                |                                                                                        

6

---

|2. | The second phase of our plan of operation involves
      consultation and feedback with all parties involved in the production and
      handling of our planned self-chilling beverage container. This phase would
      be undertaken upon completion of Phase 1, as outlined above. Consultation
      would include meeting and discussing our progress to date with aluminum
      can manufacturers, filler manufacturers, beverage canners and recycling
      entities. The focus of the consultation would be to determine what
      auxiliary equipment will be required for production of our planned
      self-chilling beverage containers and to develop blueprints and estimated
      costs for full-scale production.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3. | The third phase of our plan of operation is to market and
      pursue licensing of the Cool Can Technology. This phase is anticipated to
      include presentation of product-ready samples to the beverage industry. We
      would seek out qualified candidates for licensing of the product in
      various countries and/or territories. We plan to approach beverage
      manufacturers for joint venture opportunities in order to drive consumer
      trials and to sample the finished product in the
market.                                                                                                                                                                                                             

We anticipate spending approximately $690,000 on our plan of
operation over the next twelve months, of which $380,000 is anticipated to be
spent over the next six months, subject to our receiving the necessary financing
to enable us to pursue our plan of operation. We will not be able to proceed
with our plan of operation unless we obtain significant additional
financing.

We have cash of $4,710 and a working capital deficit of $72,222
as of September 30, 2006. Accordingly, we will require additional financing in
order to proceed with our plan of operation, see Liquidity and Financial
Condition below. Our board of directors has approved a private placement
financing of up to 2,000,000 shares of our common stock at a price of $0.25 for
gross proceeds of up to $500,000. There is no assurance that we will complete
the financing. If we obtain financing that is less than that required to pursue
our stated plan of operation, then we will scale back our plan of operation to
concentrate solely on the product development phase of our plan of operation. In
this event, we will pursue product development to the extent of our financial
resources.

RESULTS OF OPERATIONS

Summary of First Quarter Results

|         | Three Months Ended September 30,
|-------- | --------------------------------
|         |                                 
|         | 2006                            
|Revenue  | $-                              
|Expenses | (34,129)                        
|Net Loss | $(34,129)                       

Revenues

Our revenues to date have consisted of licensing fees received
by us from the licensing of our Cool Can product. We have not earned any
revenues from sales of our products to date and have incurred total losses in
the amount of $2,686,302 since our inception. We are presently in the
development stage of our business and we can provide no assurance that we will
be able to complete commercial development or successfully sell or license
products incorporating our Cool Can Technology once the development is complete.

7

---

Operating Expenses

Our operating expenses for the interim periods ended September
30, 2006 and 2005 consisted of the following:

|                                     |           | First Quarter Ended September 30
|------------------------------------ | --------- | --------------------------------
|                                     |           |                                 
|                                     | 2006      | 2005                            
|Administrative Pre-Opening
      and | $(34,129) | $(38,128)                       
|Development Expenses                 |           |                                 
|Interest Expense                     | --        | --                              
|Realized Loss on Available-For-      | --        | --                              
|Sale Securities                      |           |                                 
|Total Operating Expenses             | $(34,129) | $(38,128)                       

The decreases in our total expenses for the first quarter ended
September 30, 2006 when compared to our total expenses for the first quarter
ended September 30, 2005, were primarily attributable to a decrease in
professional fees relating to the preparation of our periodic reports under the
Exchange Act and reduced management fees.

We anticipate that our operating expenses will increase
significantly if we are able to complete the proposed Merger with Nextdigital
and pursue the business of Nextdigital.

Net Loss

In November 2002, we received restricted securities valued at
$63,000. Pursuant to the license agreement with Balsam, we received additional
securities valued at $175,000 in November 2003, and securities valued at $30,000
in January 2006. Proceeds of $0 and $11,225 were received and a loss on sale for
available-for-sale securities of $0 and $42,325 was included in net loss for the
years ended June 30, 2006 and 2005, respectively. Our net unrealized holding
gain (loss) was ($166,350) and $126,125 for the periods ended September 30, 2006
and 2005, respectively. At September 30, 2006, we held 5,545,000 common shares
of Balsam Ventures, Inc. for an ownership percentage of 21.3% . The decrease in
our net loss for the three months ended September 30, 2006 as compared to the
three months ended September 30, 2005 is primarily due to a decrease in our
administrative expenses.

LIQUIDITY AND FINANCIAL CONDITION

|Working Capital           |                             |                        |                      
|------------------------- | --------------------------- | ---------------------- | ---------------------
|                          |                             |                        | Percentage           
|                          | At
      September 30, 2006 | At
      June 30, 2006 | Increase / (Decrease)
|Current Assets            | $7,860                      | $21,387                | 63.2%                
|Current Liabilities       | (80,082)                    | (58,730)               | 36.3%                
|Working Capital (Deficit) | $(72,222)                   | $(37,343)              | 93.4%                

8

---

|Cash Flows                                           |                                 |          
|---------------------------------------------------- | ------------------------------- | ---------
|                                                     | Three Months Ended September 30
|                                                     | 2006                            | 2005     
|Cash Flows (Used In)
      Operating Activities      | $(11,677)                       | $(15,491)
|Cash Flows From (Used In) Investing
      Activities | -                               | -        
|Cash Flows From Financing
      Activities           | (500)                           | 15,184   
|Net Increase (Decrease) In Cash During Period        | $(12,177)                       | $(307)   

The increase in our working capital deficit for the three
months ended September 30, 2006 is primarily attributable to a 36.3% increase in
our current liabilities which increased during the three months ended September
30, 2006 due to accounts payable incurred in connection with our operating and
business development activities. On November 7, 2006, we entered into a loan
agreement with Nextdigital pursuant to which we loaned $100,000 to Nextdigital.
The loan to Nextdigital is for a term of two years, maturing on November 7,
2008, and accrues interest at the rate of 8% per annum. The loan is unsecured
and evidenced by a promissory note.

Our current monthly cash requirements are approximately $20,000
per month. Our current cash reserves are not sufficient to enable us to operate
even on a short term basis. Further, we require approximately $690,000 in order
to carry out our plan of operation over the next twelve months. We also expect
our operating costs to increase if we complete the Merger with Nextdigital. Our
board of directors has approved a private placement financing of up to 2,000,000
shares of our common stock at a price of $0.25 for gross proceeds of up to
$500,000. There is no assurance that we will complete the financing.

We anticipate that we will continue to incur losses for the
foreseeable future as we expect to incur substantial product development,
marketing and operating expenses in implementing our plan of operation. Our
future financial results are uncertain due to a number of factors, many of which
are outside of our control. These factors include, but are not limited to:

| | (a) | Our ability to complete the Merger with Nextdigital and
      successfully pursue the business of Nextdigital;                         
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                        
| | (b) | our ability to develop a commercially marketable Cool Can
      product;                                                               
| |     |                                                                                                                                        
| | (c) | the success of our planned license agreements for the
      Cool Can Technology that we develop;                                       
| |     |                                                                                                                                        
| | (d) | our ability to raise additional capital necessary to
      implement our business strategy and plan of operation;                      
| |     |                                                                                                                                        
| | (e) | our ability to compete with other chilled beverage
      container technology; and                                                     
| |     |                                                                                                                                        
| | (f) | the success of any marketing and promotional campaign
      which we conduct for our Cool Can product once development is
    complete.

9

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Financing Requirements

We require additional financing if we are to continue as a
going concern and to finance our business operations and the completion of the
proposed merger with Nextdigital. We anticipate that any additional financing
would be through the sales of our common stock or other equity-based securities.
We are presently in the process of negotiating private placements of securities
to raise working capital to finance our operations. However, we do not have any
arrangements in place for the sale of any of our securities and there is no
assurance that we will be able to raise the additional capital that we require
to continue operations. In the event that we are unable to raise additional
financing on acceptable terms, we intend to reduce our product development
efforts and may implement additional actions to reduce expenditures.

The financial statements accompanying this Quarterly Report
contemplate our continuation as a going concern. However, we have sustained
substantial losses and are still in the development stage. Additional funding
will be necessary to continue development and marketing of our product. We
intend to arrange for the sale of additional shares of our common stock to
obtain additional operating capital for the next twelve months. However, there
can be no assurance that we will be able to raise the necessary capital to
continue our business.

OFF-BALANCE SHEET ARRANGEMENTS

None.

CRITICAL ACCOUNTING POLICIES

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations.

Use of Estimates

The preparation of financial statements in conformity with
United States generally accepted accounting principles requires our management
to make estimates and assumptions that affect the reported amount 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 those estimates.

Fair Value of Financial Instruments

Our financial instruments consist of cash, available-for-sale
securities and accounts payable and accrued liabilities. It is management's
opinion that we are not exposed to significant interest, currency or credit
risks arising from these financial instruments. The fair value of these
financial instruments, other than available-for-sale securities, approximates
their carrying values because of the short-term nature of these financial
instruments. Available-for-sale securities are recorded at their fair market
values.

Intangibles

Intangible assets are amortized using the straight-line method
over 10 years. In accordance with Statement of Financial Accounting Standards
(SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
as circumstances dictate, we evaluate whether changes have

10

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occurred that would require revision of the remaining estimated
lives of recorded long-lived assets, including intangibles, or render those
assets not recoverable. If such circumstances arise, recoverability is
determined by comparing the undiscounted net cash flows of long-lived assets to
their respective carrying values. The amount of impairment, if any, is measured
based on the projected discounted cash flows using an appropriate discount rate.
At this time, we believe that no significant impairment of the remaining
intangibles has occurred and that no reduction of the estimated useful lives of
such assets is warranted.

Comprehensive Loss

We have adopted SFAS 130, Reporting Comprehensive Income,
which establishes guidelines for the reporting and display of comprehensive
income (loss) and its components in financial statements. Comprehensive loss
consists of our net income (loss) and unrealized gain (loss) on
available-for-sale securities.

RISKS AND UNCERTAINTIES

We may not be able to continue our business as a going
concern.

We have had cumulative net losses of $2,686,302 from inception
to September 30, 2006. These conditions raise substantial doubt about our
ability to continue as a going concern. Furthermore, since we do not expect to
generate any significant revenues for the foreseeable future, our ability to
continue as a going concern depends, in large part, on our ability to raise
additional capital through equity or debt financing transactions. If we are
unable to raise additional capital, we may be forced to discontinue our
business. We are currently in the process of identifying sources of additional
financing, negotiating changes to our debt structure and evaluating our
strategic options. However, there are no assurances that these plans can be
accomplished on satisfactory terms, or at all, or that they will provide
sufficient cash to fund our operations, pay the principal of, and interest on,
our indebtedness, fund our other liquidity needs or permit us to refinance our
indebtedness. Further, our inability to obtain additional financing may result
in our securityholders losing all or a material portion of their investment in
our securities.

We require additional financing to continue our plan of
operation.

Our plan of operation calls for significant expenses in
connection with the development of our Cool Can product. Our current operating
funds are insufficient to complete our plan of operation which will require an
estimated $690,000 to be spent over the next 12 months developing and marketing
a prototype of our Cool Can product in order to accomplish our goals. As of
September 30, 2006, we had cash in the amount of $4,710 and a working capital
deficit of $72,222. Therefore, we will need to obtain additional financing in
order to complete our prototype development. We will also require additional
financing if the costs of our Cool Can product development are greater than
anticipated. There is no assurance that actual cash requirements will not exceed
our estimates. In particular, additional capital may be required in the event
that:

|1. | We complete the Merger with Nextdigital and operate the
      business of Nextdigital;                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                  
|2. | we incur unexpected costs in completing the development
      of our prototype or encounter any unexpected technical or other
      difficulties;
|   |                                                                                                                                                  
|3. | we incur delays and additional expenses as a result of
      technology failure;                                                                 

11

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|4. | we are unable to create a substantial market for our
      products; or
|-- | -----------------------------------------------------------------------
|   |                                                                        
|5. | we incur any significant unanticipated
  expenses.                     

The occurrence of any of the aforementioned events could
adversely affect our ability to meet our plan of operation. If we are unable to
obtain additional financing in the amounts and on terms deemed acceptable to us,
our business and future success may be adversely affected.

We may experience delays in the construction of our
prototype.

If we are able to obtain sufficient financing, of which there
are no assurances, we expect to begin construction of a prototype of the Cool
Can product within the next twelve months. Development and testing of the
prototype is expected to take approximately six months to complete. However,
development projects of this type often experience delays and technical
difficulties. Our ability to complete the development on schedule is dependent
on many circumstances, some of which may be outside of our control. These
factors may include, but are not limited to, factors such as the availability of
outside contractors, materials and equipment. In addition, although we believe
that the principles underlying the design of our Cool Can Technology are sound,
problems can arise when attempting to manufacture an actual product from the
prototype. Even if we are able to complete development of the prototype as
scheduled, there are no assurances that the prototype will perform as expected.

Our product development program may not be successful.

Once we complete our prototype development there is no
assurance that our prototype will work as expected. In the event we successfully
develop a prototype, there is no assurance that we will be able to manufacture
the prototype at a reasonable cost. Even if we are able to manufacture the
prototype at a reasonable cost, there is no assurance that the price of our Cool
Can product will not be excessive, precluding the product from generating
sufficient consumer or market acceptance.

Our operations may be subject to extensive government
regulations.

We expect that the self-chilling beverage technology will be
subject to a number of government regulations, including strict safety and
environmental guidelines. All of the currently projected uses for our
self-chilling beverage container fall under the authority of the United States
Food and Drug Administration (the FDA).The FDA regulates the material content
of all beverage containers and packages. Our Cool Can Technology also falls
under the purview of the Environmental Protection Agency, which has a mandate to
protect the stratospheric ozone. As we are still in the process of developing
the Cool Can products, the full extent to which these regulations will affect
our future business prospects is not yet fully known and there can be no
assurance that we can successfully comply with all present or future government
regulations.

Asserting and defending intellectual property rights may
impact results of operations.

The success of our business may depend on our ability to
protect our proprietary process and technology from competitors. A number of
international patent applications have been filed with respect to the Cool Can
Technology. However, there is no assurance that a final patent will be granted
for any of the patent pending technologies underlying our proposed products. If
we are not able to obtain a patent for our technology, we will only be able to
protect our products and technological processes by maintaining the secrecy of
those products and processes.

12

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Even if we are able to obtain patents for the Cool Can
Technology, we may be required to defend our intellectual property rights
through litigation. The financial cost of such litigation could have a material
impact on our financial condition even if we are successful in developing and
marketing products and in defending any of our intellectual property rights, of
which there is no assurance. Furthermore, an adverse outcome in any litigation
or interference proceeding could subject us to significant liabilities to third
parties and require us to cease using the technology that is at issue or to
license the technology from third parties. In addition, a finding that any of
our intellectual property rights are invalid could allow competitors to more
easily and cost-effectively compete. Thus, an unfavorable outcome in any patent
litigation or interference proceeding could have a material adverse effect on
our business, financial condition and results of operations.

If we are unable to achieve market acceptance for our
products, we will be unable to build our business.

To date, we have entered into only one licensing agreement with
respect to our Cool Can Technology. Our success will depend on the acceptance of
our Cool Can Technology by the beverage industry, as well as by related
businesses and the general public. Achieving such acceptance will require
significant research and development investment. Our technology generally, and
our proposed Cool Can product specifically, may not achieve widespread
acceptance by businesses in general, or by major beverage suppliers, beverage
manufacturers or agents thereof, which could limit our ability to develop and
expand our business. The market for self-chilling beverages is relatively new
and is evolving. Our ability to generate revenue in the future depends on the
acceptance by both our customers and beverage manufacturers in general. The
adoption of our Cool Can product could be hindered by the perceived costs of
this new technology to consumers and beverage brand owners. Accordingly, in
order to achieve commercial acceptance, we will have to educate prospective
customers, including large, established beverage manufacturers, about the uses
and benefits of our Cool Can Technology. If these efforts fail, or if our Cool
Can product does not achieve commercial acceptance, our business could be
harmed.

We have a limited operating history.

We have a relatively short operating history and we are
involved in a rapidly evolving and unpredictable industry. As of September,
2006, we had a working capital deficit of $72,222. We will need to generate
significant revenues to achieve profitability, which may not occur. We expect
operating expenses to increase as a result of the further implementation of our
business plan. Even if we achieve profitability, we may be unable to sustain or
increase profitability on a quarterly or annual basis in the future. It is
possible that we will never achieve profitability.

We are dependent on key personnel.

Our success will largely depend on the performance of our
management. We are currently dependent upon a limited number of employees and
consultants. As such, our success will also depend on our ability to attract and
retain highly skilled technical, research, management, regulatory compliance,
sales and marketing personnel. Competition for such personnel is intense. The
loss of the services of such personnel or the inability to attract and retain
other key personnel could impair the development of our business, operating
results and financial condition.

Because our sole executive officer has only agreed to
provide his services on a part-time basis, he may not be able or willing to
devote a sufficient amount of time to our business operations, which may cause
our business to fail.

13

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Our executive officer is employed on a full time basis by other
companies. Because we are in the early stages of our business, Mr. John P.
Thornton will not be spending a significant amount of time on our business. Mr.
Thornton expects to expend approximately 5 hours per week on our business. If
the demands of our business require the full business time of Mr. Thornton, he
is prepared to adjust his timetable to devote more time to our business.
However, Mr. Thornton may not be able to devote sufficient time to the
management of our business, as and when needed. It is possible that the demands
of Mr. Thorntons other interests will increase with the result that he would no
longer be able to devote sufficient time to the management of our business.
Competing demands on his time may lead to a divergence between his interests and
the interests of other shareholders.

We may conduct further offerings in the future in which case
your shareholdings will be diluted.

Since our inception, we have relied on equity sales of our
common stock to fund our operations. We may conduct further equity offerings in
the future to finance our current projects or to finance subsequent projects
that we decide to undertake. If common stock is issued in return for additional
funds, the price per share could be lower than that paid by our current
stockholders. We anticipate continuing to rely on equity sales of our common
stock in order to fund our business operations. If we issue additional stock,
your percentage interest in us will be lower. This condition is often referred
to as dilution. The result of this could reduce the value of your stock.

Because our stock is a penny stock, stockholders will be
more limited in their ability to sell their stock.

The United States Securities and Exchange Commission (the
SEC) has adopted rules that regulate broker-dealer practices in connection
with transactions in penny stocks. Penny stocks are generally equity securities
with a price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on the Nasdaq system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or quotation system.

Because our securities constitute penny stocks within the
meaning of the rules, the rules apply to us and to our securities. The rules may
further affect the ability of owners of shares to sell our securities in any
market that might develop for them. As long as the trading price of our common
stock is less than $5.00 per share, the common stock will be subject to Rule
15g-9 under the Exchange Act. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock, to deliver a standardized risk
disclosure document prepared by the SEC, that:

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|2. | contains a description of the brokers or dealers duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             

14

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|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that, prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchasers written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock.

ITEM
3.              
CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
we have evaluated the effectiveness of our disclosure controls and procedures as
required by Exchange Act Rule 13a-15(b) as of the end of the period covered by
this report. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer has concluded that these disclosure controls and procedures
are effective.

There were no changes in our internal control over financial
reporting during the quarter ended September 30, 2006 that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

15

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PART II - OTHER INFORMATION

ITEM
1.              
LEGAL PROCEEDINGS.

None.

ITEM
2.              
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM
3.              
DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM
5.              
OTHER INFORMATION.

None.

16

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ITEM
6.              
EXHIBITS.

The following exhibits are either provided with this Quarterly
Report or are incorporated herein by reference:

|Exhibit |  |                                                                                                                                                                          
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                   
|        |  |                                                                                                                                                                          
|3.1     |  | Articles of
        Incorporation and Bylaws.(1)                                                                                                                         
|        |  |                                                                                                                                                                          
|3.2     |  | Articles of
        Merger.(6)                                                                                                                                           
|        |  |                                                                                                                                                                          
|3.3     |  | Bylaws as amended.(6)                                                                                                                                                    
|        |  |                                                                                                                                                                          
|10.1    |  | Sale of Patent
        Agreement dated as of June 15, 1998 between Cool Can Technologies, Inc.
        and Edward Halimi.(1)                                             
|        |  |                                                                                                                                                                          
|10.2    |  | Patent and Technology
        Transfer Agreement dated April 18, 2001 among Cool Can Technologies, Inc.,
        David St. James, Melanie St. James and Edward Halimi.(2)
|        |  |                                                                                                                                                                          
|10.3    |  | Exclusive License
        Agreement dated June 5, 2002 between Balsam Ventures, Inc., and Cool Can
        Technologies Inc.(3)                                          
|        |  |                                                                                                                                                                          
|10.4    |  | Form of Convertible
        Note.(5)                                                                                                                                     
|        |  |                                                                                                                                                                          
|10.5    |  | Form of Subscription
        Agreement between Cool Can Technologies, Inc. and the Convertible Noteholders.(5)                                                           
|        |  |                                                                                                                                                                          
|10.6    |  | Exclusive License
        Agreement dated for reference November 30, 2003 between Balsam Ventures,
        Inc., and Cool Can Technologies Inc.(4)                       
|        |  |                                                                                                                                                                          
|10.7    |  | Agreement and
        Plan of Merger Agreement dated effective May 21, 2004 among Cool Can Technologies,
        Inc. and NorPac Technologies, Inc.(7)                   
|        |  |                                                                                                                                                                          
|10.8    |  | Extension Agreement
        dated as of January 14, 2006 between NorPac Technologies, Inc. and Balsam
        Ventures, Inc.(8)                                          
|        |  |                                                                                                                                                                          
|10.9    |  | Agreement and
        Plan of Merger dated November 7, 2006 among Norpac Technologies, Inc.,
        Nextdigital Corp. and Nextdigital Acquisition Corp.(9)              
|        |  |                                                                                                                                                                          
|10.10   |  | Loan Agreement
        dated November 7, 2006 between Norpac Technologies, Inc. and Nextdigital
        Corp.(9)                                                         
|        |  |                                                                                                                                                                          
|10.11   |  | Promissory Note
        executed by Nextdigital Corp in favor of Norpac Technologies, Inc.(9)                                                                            
|        |  |                                                                                                                                                                          
|31.1    |  | Certification
        of Chief Executive Officer and Chief Financial Officer as adopted pursuant
        to Section 302 of the Sarbanes-Oxley Act of 2002.               
|        |  |                                                                                                                                                                          
|32.1    |  | Certification
        of Chief Executive Officer and Chief Financial Officer as adopted pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002.               

|(1) | Filed with the SEC as an exhibit to our registration
      statement on Form 10SB originally filed on August 26, 1999, as
    amended.
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|(2) | Filed with the SEC as an exhibit to our annual report on
      Form 10-KSB for the year ended June 30, 2001.                          
|(3) | Filed with the SEC on June 20, 2002 as an exhibit to our
      current report on Form 8-K.                                            
|(4) | Filed with the SEC on January 9, 2004 as an exhibit to
      our current report on Form 8-K.                                          
|(5) | Filed with the SEC as an exhibit to our annual report on
      Form 10-KSB for the year ended June 30, 2002.                          
|(6) | Filed with the SEC as an exhibit to our quarterly report
      on Form 10-QSB for the fiscal period ended September 30, 2003.         
|(7) | Filed with the SEC on July 8, 2004 as an exhibit to our
      current report on Form 8-K.                                             
|(8) | Filed with the SEC as an exhibit to our current report on
      Form 8-K filed January 19, 2006.                                      
|(9) | Filed with the SEC as an exhibit to our current report on
      Form 8-K filed November 13, 2006.                                     

17

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SIGNATURES

In accordance with the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

|      |                   |     | NORPAC TECHNOLOGIES, INC.                                
|----- | ----------------- | --- | ---------------------------------------------------------
|      |                   |     |                                                          
|      |                   |     |                                                          
|Date: | November 20, 2006 | By: | /s/ John P. Thornton                                     
|      |                   |     | JOHN P. THORNTON                                         
|      |                   |     | Chief Executive Officer and Chief
      Financial Officer
|      |                   |     | (Principal Executive Officer,
      Principal Financial  
|      |                   |     | Officer and Principal Accounting
      Officer)          

---