UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-QSB




x QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      quarterly period ended December 31, 2005.





o TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





Commission
      File Number: 000-254888





RG
      GLOBAL LIFESTYLES, INC.


(Exact
      Name of small business issuer as specified in its charter)





California
            33-0230641(State
                or other jurisdiction of
            (I.R.S.
                Employer Identification No.)incorporation
                or organization)





30021
                Tomas, Ste 200, Rancho Santa Margarita, CA
            92688(Address
                of principal executive offices)
            (Zip
                Code)





Issuer’s
      telephone number: (949) 888-9500





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 issuer was required to file such reports), and (2) has been subject
      to
      such filing requirements for the past 90 days. Yes x No o





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





APPLICABLE
      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE
      YEARS





Check
      whether the registrant filed all documents and reports required to be filed
      by
      Section l2, 13 or 15(d) of the Exchange Act after the distribution of securities
      under a plan confirmed by a court. Yes x No o





APPLICABLE
      ONLY TO CORPORATE ISSUERS





The
      number of shares outstanding of the issuer’s Common Stock as of February 21,
      2006 was 17,650,000.





Transitional
      Small Business Disclosure Format (Check One): Yes o No x








**INDEX**





**Page****PART
                I - FINANCIAL INFORMATION**Item
                1.
            Financial
                Statements (Unaudited)Consolidated
                Balance Sheet -December 31, 2005Consolidated
                Statements of Operations -For
                the Three and Nine Months ended December 31, 2005 and 2004Consolidated
                Statements of Cash FlowsFor
                the Nine Months ended December 31, 2005 and 2004Notes
                to Financial StatementsItem
                2.
            Management’s
                Discussion and Analysis of Financial Condition andResults
                of OperationsItem
                3.
            Controls
                and Procedures**PART
                II - OTHER INFORMATION**Item
                1.
            Legal
                ProceedingsItem
                2.
            Unregistered
                Sales of Equity Securities and Use of ProceedsItem
                3.
            Defaults
                Upon Senior SecuritiesItem
                4.
            Submission
                of Matters to a Vote of Security HoldersItem
                5.
            Other
                InformationItem
                6.
            Exhibits
                and Reports on 8-KSIGNATURES








**PART
      I — FINANCIAL INFORMATION**





**Item
      1. Financial Statements**





**R.G.
      Global Lifestyles, Inc.**


**(formerly
      L.L. Knickerbocker Company, Inc.)**


**Consolidated
      Balance Sheet**


**(unaudited)**





December
                31,2005**Assets**Current
                assets:Cash
                and cash equivalents
            
            $
            395,576Accounts
                receivable
            
            
            900Inventory
            
            
            14,697Total
                current assets
            
            
            411,173Prepaid
                expenses
            
            
            95,357Deposits
                held
            
            
            186,990Total
                other assets
            
            
            282,347$
            693,520**Liabilities
                and Stockholder's Equity**Current
                liabilities:Accounts
                payable
            
            
            12,732Accrued
                liabilities
            
            
            22,484Total
                current liabilities
            
            
            35,216Long
                term liabilities:Notes
                payable-related party ($708,132 net of $335,839 discount)
            
            
            372,293Notes
                payable ($605,808 net of $273,701 discount)
            
            
            332,107Total
                long term liabilities
            
            
            704,400Total
                liabilities
            
            
            739,616Stockholders'
                equity:Preferred
                stock, $0.001, 10,000,000 sharesauthorized,
                no shares issued and outstanding
            
            
            -Common
                stock, $0.001 par value, 100,000,000 sharesauthorized,
                17,650,000 shares issuedand
                outstanding as of 12/31/2005
            
            
            17,650Additional
                paid-in capital
            
            
            1,106,027Prepaid
                compensation
            
            
            (52,247
            )Accumulated
                earnings
            
            
            (1,117,526
            )Total
                stockholders' equity
            
            
            (46,096
            )$
            693,520




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









**R.G.
      Global Lifestyles, Inc.**


**(formerly
      L.L. Knickerbocker Company, Inc.)**


**Consolidated
      Statements of Operations**


**(unaudited)**


For
                  the Three Months ended
              
              For
                  the Nine Months endedDecember
                  31,
              
              December
                  31,2005
              
              2004
              
              2005
              
              2004(Restated)
              
              
              
              (Restated)RevenueProduct
                  Sales
              
              $
              58,500
              
              $
              -
              
              $
              69,340
              
              $
              -Cost
                  of sales
              
              
              31,211
              
              
              -
              
              
              39,491
              
              
              -Gross
                  profit
              
              
              27,289
              
              
              -
              
              
              29,849
              
              
              -Expenses:Advertising
                  and marketing
              
              
              3,070
              
              
              -
              
              
              3,070
              
              
              1,831Commissions
              
              
              1,971
              
              
              -
              
              
              26,051
              
              
              -Consulting
                  services
              
              
              101,170
              
              
              -
              
              
              149,412
              
              
              31,871General
                  and administrative expenses
              
              
              86,402
              
              
              7,731
              
              
              144,504
              
              
              9,268Professional
                  fees
              
              
              45,367
              
              
              12,909
              
              
              133,871
              
              
              50,705Rent
                  - related party
              
              
              25,068
              
              
              -
              
              
              92,890
              
              
              18,000Stock
                  compensation - consulting services
              
              
              -
              
              
              46,000
              
              
              -
              
              
              46,000Stock
                  compensation - related party
              
              
              -
              
              
              104,000
              
              
              -
              
              
              104,000Total
                  expenses
              
              
              263,048
              
              
              170,640
              
              
              549,798
              
              
              261,675Operating
                  (loss)
              
              
              (235,759
              )
              
              (170,640
              )
              
              (519,949
              )
              
              (261,675
              )Other
                  income (expense)Sale
                  of asset (OLS)
              
              
              10,000
              
              
              -
              
              
              10,000
              
              
              -Interest
                  income
              
              
              -
              
              
              -
              
              
              283
              
              
              -Interest
                  and financing expense
              
              
              (96,489
              )
              
              -
              
              
              (108,623
              )
              
              -Total
                  other income (expense)
              
              
              (86,489
              )
              
              -
              
              
              (98,340
              )
              
              -Net
                  (loss) before income tax and discontinued operations
              
              
              (322,248
              )
              
              (170,640
              )
              
              (618,289
              )
              
              (261,675
              )Provision
                  for income taxesCurrent
                  federal
              
              
              (2,151
              )
              
              -
              
              
              (4,025
              )
              
              -Current
                  state
              
              
              -
              
              
              -
              
              
              (314
              )
              
              -Total
                  income taxes
              
              
              (2,151
              )
              
              -
              
              
              (4,339
              )
              
              -Net
                  (loss) from continuing operations
              
              
              (324,399
              )
              
              (170,640
              )
              
              (622,628
              )
              
              (261,675
              )Discontinued
                  operationsIncome
                  (loss) from discontinued operations, net of tax
              
              
              -
              
              
              (172,090
              )
              
              283,921
              
              
              925,631Loss
                  on distribution of discontinued operations, net of tax
              
              
              (7,805
              )
              
              -
              
              
              (1,168,099
              )
              
              -Net
                  income (loss) from discontinued operations
              
              
              (7,805
              )
              
              (172,090
              )
              
              (884,178
              )
              
              925,631Net
                  income (loss)
              
              $
              (332,204
              )
              $
              (342,730
              )
              $
              (1,506,806
              )
              $
              663,956Weighted
                  average number ofcommon
                  shares outstanding - basic and fully diluted
              
              
              17,650,000
              
              
              19,965,120
              
              
              17,650,000
              
              
              24,935,000Net
                  income (loss) per share - basic and fully dilutedContinuing
                  Operations
              
              $
              (0.018
              )
              $
              (0.009
              )
              $
              (0.035
              )
              $
              (0.010
              )Discontinued
                  Operations
              
              
              (0.000
              )
              
              (0.009
              )
              
              (0.050
              )
              
              0.037$
              (0.019
              )
              $
              (0.017
              )
              $
              (0.085
              )
              $
              0.027
  The
          accompanying notes are an integral part of these financial
          statements.







**R.G.
      Global Lifestyles, Inc.**


**(formerly
      L.L. Knickerbocker Company, Inc.)**


**Consolidated
      Statements of Cash Flows**


**(unaudited)**


For
                  the Nine Months EndedDecember
                  31,2005
              
              2004(Restated)**Cash
                  flows from operating activities**Net
                  income (loss)
              
              $
              (1,506,806
              )
              $
              663,956Adjustment
                  to reconcile net income (loss) to net cashprovided
                  (used) by operating activities:Stock
                  compensation - consulting services
              
              
              -
              
              
              46,000Stock
                  compensation - related party
              
              
              -
              
              
              104,000Options
                  issued for consulting services
              
              
              52,247
              
              
              -Warrants
                  issued with notes payable
              
              
              81,601
              
              
              -Loss
                  (income) from discontinued operations
              
              
              (283,921
              )
              
              (808,386
              )Loss
                  on distribution of discontinued operations
              
              
              1,168,099
              
              
              -Changes
                  in operating assets and liabilities(Increase)
                  decrease in account receivable
              
              
              503,393
              
              
              -(Increase)
                  decrease in inventory
              
              
              140,168
              
              
              -(Increase)
                  decrease in prepaid expenses
              
              
              (87,390
              )
              
              -Increase
                  (decrease) in accounts payable
              
              
              (244,072
              )
              
              -Increase
                  (decrease) in income tax payable
              
              
              11,239
              
              
              -Increase
                  (decrease) in accrued liabilities
              
              
              (233,209
              )
              
              -Net
                  cash provided (used) by operating activities
              
              
              (398,651
              )
              
              5,570**Cash
                  flows from investing activities**Purchase
                  of fixed assets
              
              
              -
              
              
              (350
              )Net
                  cash used from investing activities-loss on distribution of discontinued
                  ops.
              
              
              (771,519
              )
              
              367,761Sale
                  of intangible assets
              
              
              20,000
              
              
              -Net
                  cash used from investing activities-continuing ops.
              
              
              (751,519
              )
              
              367,411**Cash
                  flows from financing activities**Proceeds
                  from note payable
              
              
              1,300,000
              
              
              -Payments
                  on notes payable-discontinued ops.
              
              
              -
              
              
              (40,000
              )Contributed
                  capital
              
              
              86,085
              
              
              171,669Net
                  cash provided by financing activities
              
              
              1,386,085
              
              
              131,669Net
                  increase (decrease) in cash
              
              
              235,915
              
              
              504,650Cash
                  - beginning
              
              
              159,661
              
              
              181,045Cash
                  - ending
              
              $
              395,576
              
              $
              685,695Supplemental
                  disclosures:Interest
                  paid
              
              $
              -
              
              $
              -Income
                  taxes paid
              
              $
              -
              
              $
              -Non-cash
                  investing and financing activities:Shares
                  issued for services provided
              
              $
              -
              
              $
              3,000,000Number
                  of shares issued for services
              
              $
              -
              
              $
              150,000




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







**R.G.
      Global Lifestyles, Inc.**


Notes
      to
      consolidated financial statements


(unaudited)




**Note
      1 - Basis of Presentation**





The
      financial statements included herein, presented in accordance with United States
      generally accepted accounting principles and stated in US dollars, have been
      prepared by the Company, without audit, pursuant to the rules and regulations
      of
      the Securities and Exchange Commission. Certain information and footnote
      disclosures normally included in financial statements prepared in accordance
      with generally accepted accounting principles have been condensed or omitted
      pursuant to such rules and regulations, although the Company believes that
      the
      disclosures are adequate to make the information presented not
      misleading.





These
      statements reflect all adjustments, consisting of normal recurring adjustments,
      which, in the opinion of management, are necessary for fair presentation of
      the
      information contained therein. It is suggested that these consolidated interim
      financial statements be read in conjunction with the financial statements and
      notes thereto of the Company for the year ended March 31, 2005 included in
      the
      Company’s 10-KSB annual report. The Company follows the same accounting policies
      in the preparation of interim reports.





**Note
      2 - Restatement of Prior Period Financial Statements due to change in Accounting
      Estimate**





The
      Company has restated its previously issued Consolidated Financial Statements
      as
      of December 31, 2004 for matters related to the following previously reported
      items: operating expenses, provision for income taxes and net income, retained
      earnings, additional paid in capital and income taxes payable. The change
      results from the following change in accounting estimate: on the financial
      statements for the three and nine months ended December 31, 2004, the Company
      had previously recorded stock-based consulting fees and related party
      stock-based compensation as an expense based upon management’s estimate of fair
      market value of $1.00 per share. The Company subsequently revised it estimate
      of
      fair market value for the common stock as of the date of the grant to $0.05
      per
      share. The accompanying financial statements have been restated to reflect
      the
      corrections.





For
      the
      nine months ended December 31, 2004, the expense recorded for stock-based
      compensation - consulting services and stock-based compensation - related party
      was originally $370,000 and $603,379, respectively. As a result of the revision
      of estimate of fair market value of the stock as of grant date, the expense
      recorded for stock compensation - consulting services and stock compensation
      -
      related party has been reduced to $46,000 and $104,000,
      respectively.





The
      Company made these changes to better reflect the fair value of the stock issued
      for compensation for the prior period and in order to make the current
      comparative statements not misleading. This change had the effect of reducing
      stock based compensation expense by $958,379, and increasing the provision
      for
      income taxes by $312,500 for the nine months ended December 31,
      2004.





The
      Company has not amended its previous period filings to reflect this change,
      as
      the Company’s common stock was not listed or trading on any exchange at that
      time. The Company’s common stock was reinstated for listing on the NASD Over the
      Counter-Bulletin Board effective January 15, 2005.





The
      following is a summary of the restatement for the nine months ending December
      31, 2004:





Reduction
                  in operating expenses
              
              $
              823,379Increase
                  in current liabilities
              
              
              (312,500
              )Decrease
                  in additional paid in capital
              
              
              (2,850,045
              )Decrease
                  in prepaid consulting
              
              
              533,333Decrease
                  in prepaid compensation
              
              
              1,493,333Increase
                  in accumulated earnings
              
              
              (510,879
              )Income
                  tax effect of restatement
              
              
              (312,500
              )Increase
                  in December 31, 2004 net income
              
              
              510,879


**Note
      2 - Restatement of Prior Period Financial Statements due to change in Accounting
      Estimate (continued)**





The
      effect on the Company’s previously issued December 31, 2004 consolidated
      financial statements are summarized as follows:





Balance
      Sheet as of December 31, 2004:





*Previously*
              *Reported*
            
            *Increase*
              *(Decrease)*
            
            *Restated*Total
                Assets
            
            $
            1,297,375
            
            $
            -
            
            $
            1,297,375Liabilities:Current
                liabilities
            
            
            256,531
            
            
            312,500
            
            
            569,031Total
                Liabilities
            
            
            256,531
            
            
            312,500
            
            
            569,031Stockholders’
                Equity:Common
                stock
            
            
            24,935
            
            
            -
            
            
            24,935Additional
                paid-in capital
            
            
            3,050,984
            
            
            (2,850,045
            )
            
            200,939Prepaid
                consulting
            
            
            (533,333
            )
            
            533,333
            
            
            -Prepaid
                compensation
            
            
            (1,493,333
            )
            
            1,493,333
            
            
            -Accumulated
                earnings (deficit)
            
            
            (8,408
            )
            
            510,879
            
            
            502,741Total
                Stockholders’ Equity
            
            
            1,040,845
            
            
            (312,500
            )
            
            728,345Total
                Liabilities and
              Stockholders’
                Equity
            
            $
            1,297,375
            
            
            -
            
            $
            1,297,375





Statement
      of Operations for the nine months ended December 31, 2004:





*Previously*
              *Reported*
            
            *Increase*
              *(Decrease)*
            
            *Restated*Stock
                compensation-consulting
            
            $
            370,000
            
            $
            (324,000
            )
            $
            46,000Stock
                compensation-related party
            
            
            603,379
            
            
            (499,379
            )
            
            104,000Income
                before taxes
            
            
            338,197
            
            
            823,379
            
            
            1,161,576Provision
                for income taxes
            
            
            185,119
            
            
            312,500
            
            
            497,619Net
                income
            
            
            153,077
            
            
            510,879
            
            
            663,956





**Note
      3 - Discontinued Operations**





During
      the third fiscal quarter, the Company entered into an agreement with a group
      of
      its shareholders to distribute its wholly-owned subsidiary Amerikal
      Nutraceutical Corp. (“Amerikal”), in exchange for 7,500,000 shares of the
      Company’s common stock. The effective date of this transaction was October 1,
      2005. The distribution of Amerikal qualified for treatment as discontinued
      operations in accordance with FASB Statement No. 144 (“SFAS No. 144”),
      Accounting for the Impairment or Disposal of Long-Lived Assets. Therefore,
      the
      operating results of Amerikal are not included in our results from continuing
      operations. In addition, all operating results of Amerikal previously reported
      in our consolidated financial statements are now reflected as “Discontinued
      Operations” for all periods prior to the effective date of the distribution.











**Note
      3 - Discontinued Operations (continued)**





The
      following is a summary of the net assets distributed as of the end of the period
      immediately prior to the effective date of the Distribution
      Agreement:





As
                of December 31,2005
            
            2004**Assets
                Distributed**Cash
                and cash equivalents
            
            $
            80,248
            
            $
            231,871Accounts
                receivable
            
            
            1,010,434
            
            
            614,223Inventory
            
            
            131,120
            
            
            76,108Property
                and equipment, net
            
            
            17,037
            
            
            7,724Other
                assets
            
            
            245,458
            
            
            318,370Total
                assets of discontinued operations
            
            
            1,484,297
            
            
            1,248,296**Liabilities
                Distributed**Accounts
                payable
            
            
            83,584
            
            
            186,580Accrued
                liabilities
            
            
            240,419
            
            
            66,765Total
                liabilities of discontinued operations
            
            
            324,003
            
            
            253,345Net
                assets of discontinued operations distributed
            
            $
            1,160,294
            
            $
            994,951





Net
      income (loss) from discontinued operations as reported on the consolidated
      statements of operations, including the (loss) on the distribution of
      discontinued operations, consists of the following:





As
                of December 31,2005
            
            2004**Summary
                of Income (Loss)**Revenues
            
            $
            1,923,877
            
            $
            4,294,260Cost
                of revenues
            
            
            786,964
            
            
            1,988,834Gross
                profit
            
            
            1,136,913
            
            
            2,305,426Total
                operating expenses
            
            
            637,877
            
            
            807,560Total
                other (income) expenses
            
            
            (441
            )
            
            74,615Provision
                for income tax
            
            
            215,115
            
            
            497,618Income
                from operations of Amerikal, net of tax
            
            $
            283,921
            
            $
            925,631**Summary
                of (Loss) on Distribution**Net
                assets distributed
            
            
            1,160,294Costs
                and expenses of distribution:Transfer
                agent fees
            
            
            630Legal
                and accounting costs
            
            
            7,175Total
                costs and expenses of sale
            
            
            7,805(Loss)
                on distribution of Amerikal, net of tax
            
            $
            (1,168,099
            )Net
                income (loss) from discontinued operations
            
            $
            (884,178
            )
            $
            925,631





As
      a
      result of the foregoing distribution of Amerikal, the Company recognized a
      loss
      from discontinued operations in the current quarter of ($884,178). There were
      no
      sales from the Amerikal subsidiary included in the current quarter ended
      December 31, 2005.








**Note
      3 - Discontinued Operations (continued)**





During
      the quarter ending December 31, 2005, pursuant to its strategy to focus
      resources on its Aquair subsidiary, the Company sold its rights to
      www.onlinsurgery.com for $20,000, the sole asset related to its subsidiary
      On
      Line Surgery. The wholly-owned subsidiary On Line Surgery Inc. never commenced
      operations, and will be dissolved by the Company during the fourth fiscal
      quarter. The Consolidated Financial Statements include the accounts of the
      Company and its wholly owned subsidiaries after elimination of all material
      inter-company accounts, transactions and profits. The sale of the website asset
      results in net other income in the amount of $10,000, as a result of the
      Company’s recorded expense from issuance of shares of Company common stock
      valued at $10,000 at the time of acquisition of the asset.





**Note
      4 - Going concern**





The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. As shown in the accompanying financial statements,
      the Company has incurred a net loss from continuing operations of ($622,628)
      for
      the period December 31, 2005, and only had $69,340 in sales. These conditions
      raise substantial doubt about the Company's ability to continue as a going
      concern.





The
      future of the Company is dependent upon its ability to obtain equity and/or
      debt
      financing and upon future profitable operations from the development of its
      new
      business opportunities. There are no assurances that the Company will be
      successful and without sufficient financing it would be unlikely for the Company
      to continue as a going concern.





The
      financial statements do not include any adjustments relating to the
      recoverability and classification of recorded assets, or the amounts of and
      classification of liabilities, that might be necessary in the event the Company
      cannot continue in existence.





**Note
      5 - Deposits**





At
      December 31, 2005, the Company has a deposit with various vendors totaling
      $186,990 comprised of the following:




December
                31, 2005Refundable
                Deposit
            
            $
            14,990Legal
                Retainer Deposits
            
            
            12,000Deposit
                equipment purchase
            
            
            125,000Deposit
                with Fulfillment Center
            
            
            10,000Distributor
                Agreement
            
            
            25,000Total
            
            $
            186,990





**Note
      6 - Notes Payable**





On
      November 15, 2005, the Company began a private placement offering to accredited
      investors only under the terms and conditions of a Note and Warrant Agreement
      (“Offering”). The terms of the Offering are a non-convertible promissory note
      with an annual interest rate of 8%, with a maturity date of one year after
      loan
      (“Note”); and for each dollar loaned the Company via Note, the investor is
      granted a warrant to purchase one share of the Company’s common stock at an
      exercise price equal to the lowest closing price of the stock as reported by
      the
      OTC:BB for the year following the date of warrant grant (“Warrant”). These sales
      are exempt from registration under the Securities Act pursuant to Section 4(2)
      of the Securities Act of 1933, as amended (“Securities Act”), or Regulation D of
      the Securities Act.











**Note
      6 - Notes Payable (continued)**





As
      of
      December 31, 2005, the Company had entered into seven separate investments
      totaling $1,313,940 under the terms of the Offering, of which $613,940 was
      money
      already loaned to the Company and then converted into an investment in the
      Offering. Each of the seven transactions is described in detail below. In each
      instance, the Company allocated the proceeds between Notes and Warrants based
      upon their fair value, using the Black Scholes method of valuation. For purposes
      of determining the volatility factor in the Black Scholes valuation model,
      the
      company looked to the lowest price of the Company’s stock over the sixty days
      prior to the date of the Warrant grant.





On
      October 31, 2005 the Company issued a Note with Warrant attached to an officer
      and Director of the Company, a related party. The Note is in the amount received
      of $200,000. The Company allocated $104,800 to the Warrant, and $95,200 to
      the
      Note, and recorded a discount on the note payable in the amount attributed
      to
      the value of the Warrant. The discount on Note Payable is being amortized over
      the period of one year. On this Note, the Company expensed $17,467 of interest
      as finance charges attributable to the Warrant, and reduced the discount on
      note
      payable by a similar amount.





On
      October 31, 2005, the Company issued a Note with Warrant attached to an officer
      and director of the company, a related party, in the amount received of
      $150,000. The company allocated $78,600 to the Warrant and $71,400 to the Note,
      and recorded a discount on the Note payable in the amount attributed to the
      value of the Warrant. The discount on Note payable is being amortized over
      the
      period of one year. On this Note, the Company expensed $13,100 of interest
      as
      finance charges attributable to the Warrant, and reduced the discount on Note
      payable by a similar amount.





On
      November 15, 2005 the Company issued two Notes with Warrants attached to two
      shareholders who had previously advanced funds to the Company. The Notes were
      issued in the face amount of the prior debt plus accrued interest ($358,132
      and
      $255,808 respectively). On the first Note of $358,132, which was issued to
      an
      officer, director and shareholder of the Company, a related party, the Company
      allocated $209,149 to the Warrant, and $148,983 to the Note, and recorded a
      discount on Note payable in the amount attributed to the value of the Warrant.
      The discount on Note payable is being amortized over the period of one year.
      On
      this Note, the Company expensed $26,143 of interest expense attributable to
      the
      Warrant finance charges in the quarter ended December 31, 2005, and reduced
      the
      discount on Note payable by a similar amount.





On
      the
      second Note of $255,808, issued to a shareholder of the Company who was not
      a
“related party” for purposes Section 16 of the Securities Act, the Company
      allocated $149,392 to the Warrants, and $106,416 to the Note, and recorded
      a
      discount on the Note payable in the amount attributed to the value of the
      Warrant. The discount on Note payable is being amortized over the period of
      the
      Note, and in this fiscal quarter the Company expensed $18,674 as interest
      expense-finance charges attributable to the Warrant and reduced the discount
      on
      Note payable in a similar amount.





On
      December 15, 2005, the Company issued a Note with Warrant attached for $100,000
      to a less than 5% shareholder. The Company allocated $43,600 to the Warrant
      and
      $56,400 to the Note, and recorded a discount on Note payable in the amount
      attributed to the value of the Warrant. The discount on Note payable is being
      amortized over the period of one year. In the quarter ended December 31, 2005,
      the Company expensed $1,817 of interest expense-finance charges attributable
      to
      the Warrant, and reduced the discount on Note payable by a similar
      amount.





On
      December 15, 2005, the Company issued a Note with Warrant attached in the amount
      of $150,000 to an unrelated party. The money received was not deposited into
      the
      Company’s bank account until after the close of this quarter, and accordingly
      the company reflected the proceeds as a “cash equivalent” on the Balance Sheet
      at December 31, 2005. The Company allocated $65,400 to the Warrant and $84,600
      to the Note, and recorded a discount on Note payable in the amount attributed
      to
      the value of the Warrant. The discount on Note payable is being amortized over
      one year. In the third fiscal quarter, the Company expensed $2,725 as interest
      expense-finance charges attributable to the Warrant, and reduced the discount
      on
      Note payable by a similar amount.







**Note
      6 - Notes Payable (continued)**





On
      December 22, 2005 the Company issued a Note with Warrant attached to Henri
      Schkud, an unrelated party, in the amount received of $100,000. The Company
      allocated $40,200 to the Warrants and $59,800 to the Note, and recorded a
      discount on the Note payable in the amount attributed to the value of the
      Warrant. The discount on Note payable is being amortized over the period of
      one
      year. On this Note, the Company expensed $1,675 of interest expense-finance
      charges attributable to the Warrant, and reduced the discount on Note payable
      by
      a similar amount.





**Note
      7 - Stockholders’ Equity**





Common
      Stock





In
      the
      quarter ended September 30, 2005, the Company entered into a three-year
      agreement with a consultant. As a portion of the compensation due to consultant
      under the agreement, the Company issued options to purchase 100,000 shares
      of
      the Company’s common stock vesting at the rate of one-third at the end of each
      12 months under the agreement. The Company determined the fair market value
      of
      the options as of the date of the grant, using the Black Scholes valuation
      method. The Company has reflected the portion of the options ratably earned
      between the inception of the agreement and December 31, 2005 in the amount
      of
      $52,247, in a special equity account entitled “Prepaid Compensation.” In July
      2006, at the twelve-month anniversary date of the consulting agreement when
      the
      options are vested, the Company will reduce Prepaid Compensation and increase
      Commission expense.





During
      the quarter ended December 31, 2005, the Company received 7,500,000 shares
      of
      its common stock pursuant to the distribution agreement of Amerikal (See Note
      3
      - Discontinued Operations). On November 15, 2005, the board of directors
      resolved to cancel these shares.





There
      have been no other issuances of shares by the Company in the fiscal quarter
      ended December 31, 2005.





Common
      Stock Equivalents: Warrants





During
      the quarter ended December 31, 2005, the Board of Directors approved the
      issuance of warrants to purchase an aggregate of 1,313,940 shares of the
      Company’s common stock (See Note 6 - Notes Payable). Such warrants are
      exercisable at exercise prices equal to the lowest closing price of the common
      stock, as reported by the OTC:BB, during one year following the date of grant
      of
      the warrants. The warrants were issued at various dates between November 15,
      2005 and December 31, 2005. The warrants vest over one year, and expire at
      various dates ending five (5) years from the date of grant of the warrants.
      During the quarter ended December 31, 2005, no shareholders exercised warrants
      held by them. Included among the warrants issued during the quarter were
      warrants to purchase an aggregate of 642,632 shares of common stock of the
      Company issued to directors and officers of the Company.





The
      issuance of the warrants was accounted for in accordance with Financial
      Accounting Standards Board Statements using the Black-Scholes option pricing
      model (with the same assumptions as those used for the option), which resulted
      in the recording of discounts to Notes Payable issued in conjunction with the
      warrant grants, in the amounts equal to the portion of the note proceeds
      allocated between the debt and the fair value of the warrants.





A
      summary
      of the warrant activity for the period ended December 31, 2005 is as
      follows:





*Number
                of*
              *Warrants*
            
            *Weighted-*
              *Average*
              *Exercise*
              *Price*
            
            *Warrants*
              *Exercisable*
            
            *Weighted-*
              *Average*
              *Exercise*
              *Price*Granted
                as of period ended December 31, 2005
            
            
            1,313,940
            
            $
            1.15
            
            
            1,313,940
            
            $
            1.15







**Note
      7 - Stockholders’ Equity (continued)**





At
      December 31, 2005, the range of warrant prices for shares under warrants and
      the
      weighted-average remaining contractual life is as follows:





*Warrants
                Outstanding*
            
            *Warrants
                Exercisable**Range
                of*
              *Warrant*
              *Exercise
                Prices*
            
            *Number
                of*
              *Warrants*
            
            *Weighted-*
              *Average*
              *Exercise*
              *Price*
            
            *Weighted-*
              *Average*
              *Remaining*
              *Contractual*
              *Life*
            
            *Number*
              *Of*
              *Warrants*
            
            *Weighted-*
              *Average*
              *Exercise*
              *Price*$
                1.15
            
            
            1,313,940
            
            $
            1.15
            
            
            4.89
                yrs
            
            
            1,313,940
            
            $
            1.15





**Note
      8 - Related Party Transactions**





During
      the fiscal year ended March 31, 2005, the Company entered into an agreement
      with
      a company wholly owned by an officer and director of the Company. The agreement
      provides for office space as well as administrative services at a fair market
      rate of $6,000 per month. The agreement is not binding and may be cancelled
      by
      either party at any time. During the quarter ended December 31, 2005, the
      Company expensed $24,177 under this agreement.





As
      described in detail in Note 6 above, during the quarter ended December 31,
      2005,
      the Company also entered into three transactions with related parties whereby
      the Company issued Notes with Warrants to officers and directors of the
      Company.




**Note
      9 - Litigation**





On
      August
      30, 2005, the Company was served with a lawsuit filed as Case No. 05CC09548
      in
      Orange County, California Superior Court. In the complaint, Universal
      Communications Systems, Inc. and its subsidiary Atmospheric Water Technologies,
      Inc. allege defamation, interference with prospective economic advantage, and
      false advertising, and seek compensatory and punitive damages, and costs against
      the Company. The Board of Directors believes these claims to be without merit,
      and has engaged legal counsel to strongly defend these claims. Through our
      legal
      counsel, the Company has caused the appropriate legal pleadings to be filed
      to
      dismiss the Complaint in this case. The Company believes that any liability
      it
      may incur in connection with this case will not have a material adverse effect
      upon its financial condition or its results of operations.





**Note
      10 - Segment Reporting**





Up
      until
      the end of the second fiscal quarter, the Company operated in a business segment
      that included the manufacture and sale of natural supplements, health and beauty
      aid products for the nutraceutical industry. Effective as of October 1, 2005,
      the Company completed the distribution of its subsidiary Amerikal, and in the
      third fiscal quarter has concentrated solely upon the Aquair subsidiary for
      its
      revenue activity. The Company is therefore again operating in a single business
      segment for the sales of its water generators. During the nine months ended
      December 31, 2005, the Company generated revenues of $69,340 from sales of
      water
      generators under its Aquair subsidiary to customers in the United States and
      Asia. The Company has no long lived assets attributable to this activity.











**Note
      10 - Segment Reporting (continued)**





A
      summary
      of revenues generated by geographical location is as follows:




For
                the nine months ended December 31,2005
            
            2004Revenues
                of continuing operations:United
                States
            
            $
            10,840
            
            $
            -Viet
                Nam
            
            
            58,500
            
            
            -Total
            
            $
            69,340
            
            $
            -Revenues
                of discontinued operations:United
                States
            
            $
            90,846
            
            $
            -Singapore
            
            
            1,124,810
            
            
            3,649,045Other
                foreign countries
            
            
            708,221
            
            
            645,215Total
            
            $
            1,923,877
            
            $
            4,294,260





Geographic
      data is based upon product shipment destination. Export sales as a percentage
      of
      revenues were 94.9% and 100% for the nine months ended December 31, 2005 and
      2004, respectively. During the nine months ended December 31, 2005 and 2004,
      sales to a single customer were 56.4% and 85.0% of total sales respectively.
      After the distribution of its Amerikal subsidiary, the Company has focused
      upon
      the sale of water generator equipment in the United States and Asia. The Company
      contracts for the manufacture of its water generator equipment in the United
      States and Korea.





Prior
      to
      the distribution of Amerikal, the Company’s business included the manufacture of
      nutraceutical products in the United States. Most of the Company’s revenues were
      previously derived from shipments of products to Singapore, Indonesia, Thailand
      and other countries in South East Asia. The Company continues to export its
      water generator equipment to Viet Nam and other countries in South East Asia.
      These areas have, in the past, experienced varying degrees of illiquidity,
      volatile currency exchange rates, reduced economic activity and in some
      instances, war, revolution or insurrection. The Company may be adversely
      affected by economic conditions in these regions for the foreseeable future,
      although it is not possible to determine the nature or value of such possible
      future events.





**Note
      11 - Reclassification**





Certain
      reclassifications have been made to the prior year’s financial statements to
      conform to the current year presentation. These reclassifications had no effect
      on previously reported results of operations or retained earnings.











FORWARD-LOOKINGSTATEMENTS





This
      document contains “forward-looking statements” within the meaning of the Private
      Securities Litigation Reform Act of 1995. All statements other than statements
      of historical fact are “forward-looking statements” for purposes of federal and
      state securities laws, including, but not limited to, any projections of
      earnings, revenue or other financial items; any statements of the plans,
      strategies and objections of management for future operations; any statements
      concerning proposed new services or developments; any statements regarding
      future economic conditions or performance; any statements or belief; and any
      statements of assumptions underlying any of the foregoing.





Forward-looking
      statements may include the words "may," "could," "estimate," "intend,"
      "continue," "believe," "optimistic," "plan," "aim," "will," "likely," "expect"
      or "anticipate" or other similar words. These forward-looking statements present
      our estimates and assumptions only as of the date of this report. Readers are
      cautioned not to place undue reliance on these forward-looking statements,
      which
      speak only as of the date on which they are made. Except for our ongoing
      securities laws, we do not intend, and undertake no obligation, to update any
      forward-looking statement.





Although
      we believe that the expectations reflected in any of our forward-looking
      statements are reasonable, actual results could differ materially from those
      projected or assumed in any of our forward-looking statements. Our future
      financial condition and results of operations, as well as any forward-looking
      statements, are subject to change and inherent risks and uncertainties. The
      factors impacting these risks and uncertainties include, but are not limited
      to:




·
            Increased
                competitive pressures from existing competitors and new
                entrants;·
            Deterioration
                in general or regional economic conditions;·
            Adverse
                state or federal legislation or regulation that increases the costs
                of
                compliance, or adverse findings by a regulator with respect to existing
                operations;·
            Ability
                to grow business in its Aquair subsidiary and meet or exceed its
                return on
                shareholders’ equity target, which will depend on the Company’s ability to
                manage its capital needs and the effect of business and/or
                acquisitions;·
            Ability
                to successfully replace revenues of its distributed subsidiary
                Amerikal;Any
                unforeseen liabilities in value beyond the escrowed reserve resulting
                from
                the Amerikal distribution;·
            If
                acquisitions are made, the costs and successful integration of
                acquisitions;·
            Barriers
                in trade with foreign countries or tariff regulations and other United
                States and foreign laws;·
            Political
                and economic instability and changes in monetary policy of the foreign
                countries we currently do business in;·
            Loss
                of customers or sales weakness;·
            Inability
                to achieve future sales levels or other operating
                results;·
            Ability
                to produce or retain licensing rights to new products;·
            The
                continuation of favorable trends, including the drop in affordable
                potable
                water globally;·
            Outcomes
                and costs associated with litigation and potential compliance
                matters;·
            Inadequacies
                in the Company’s internal control over financial reporting, which could
                result in inaccurate or incomplete financial reporting;·
            Key
                management or other unanticipated personnel changes;·
            The
                unavailability of funds for capital expenditures; and·
            Operational
                inefficiencies in distribution or other
                systems.





The
      following discussion should be read in conjunction with the historical financial
      statements of R.G. Global Lifestyles, Inc., including Form 10-KSB as of March
      31, 2005, and Form 10-QSBs for the quarterly periods ending June 30, 2005 and
      September 30, 2005, and those of its predecessor, the L.L. Knickerbocker
      Company, Inc., and notes thereto.







**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**





**Overview
      and Outlook**





R.G.
      Global Lifestyles, Inc. (the “Company”) was originally incorporated in
      California on July 12, 1985 as International Beauty Supply Ltd. The name of
      the
      corporation was changed on May 28, 1993 to L.L. Knickerbocker Co., Inc., and
      thereafter, on January 9, 2003, to R.G. Global Lifestyles, Inc.





***Operating
      Subsidiary***





***Aquair,
      Inc*** .





In
      October, 2004 the Company formed Aquair, Inc. as a wholly owned subsidiary,
      a
      California corporation (“Aquair”). Aquair was formed to fulfill the Company’s
      mission to distribute licensed environmentally friendly water generating
      equipment in the United States and Asia that creates purified drinking water
      from air for residential and commercial uses, and distribute licensed
      anti-microbial and anti-scaling technology worldwide as a complement to its
      licensed clean water generation products.





As
      of
      December 31, 2005, Aquair has acquired the rights to market and distribute
      a
      water generator that precipitates drinking water from air. The water generating
      machine has been tested in various locations. As of December 31, 2005, the
      Company has sold units to customers in the U.S. and Asia, and anticipates
      further sales.





During
      June 2005, Aquair entered into an agreement with Munters, Inc., a Swedish
      manufacturer of water generating equipment. Pursuant to the agreement, Aquair
      has the right to distribute and sell Munters water generating equipment products
      to the commercial residential building industry, government agencies, shipping
      industry and oil and gas industry. This agreement also grants Aquair the right
      to bottle water generated by Munters new patented technology. This agreement
      is
      effective worldwide, with the exclusion of Thailand, Indonesia, Singapore and
      Malaysia. In connection with this agreement, a related party, Louis L.
      Knickerbocker, Chairman and CEO, advanced the good faith deposit of $50,000
      toward the required purchase of equipment under the agreement. The Company
      reflected this deposit as an asset and recorded the note payable to the related
      party as a liability of the same amount. During the quarter ended September
      30,
      2005, the Company repaid the advance from the related party and increased its
      deposit with Munters Corporation to $125,000 in accordance with the terms of
      the
      agreement.





On
      August
      30, 2005, Aquair executed a Distribution Agreement with Locke Media, which
      provides for Locke to be the exclusive distributor in Vietnam for the Company’s
      home/office model of atmospheric water generators. Locke issued purchase orders
      for 90 units for delivery as soon as possible. Under the terms of the agreement,
      Locke is obligated to make minimum purchases of $2 million of the product during
      the first year and an additional purchase of $2.5 million during the second
      year. There is a one year extension of the agreement which would allow for
      a
      final 10% increase in required purchase amount.





In
      November 2005, Aquair executed an agreement with Entech Sales and Service
      headquartered in Dallas, Texas to work in conjunction with Munters Corporation
      in the engineering, design and bidding on sales of total water solutions using
      Aquair products and technology.





In
      December 2005, Aquair began negotiations to partner with Roam Chemie, a
      privately-held industrial chemical company located in Belgium, with the goal
      of
      entering into a definitive agreement to distribute and market a select group
      of
      their proprietary chemical compounds and unique water treatment products
      worldwide. Dr. Dirk Vanden Berghe, an expert in the development and application
      of pharmaceutical science as it is applied to water treatment, and Apcan
      Distributors, a privately held Nevada distribution company, are also parties
      to
      the Letter of Intent.











***Discontinued
      Operations***





***Amerikal
      Nutraceutical Corp*** .





On
      July
      28, 2004 the Company entered into an agreement with Amerikal International
      Holding, Inc. (“AIH”) whereby the Company acquired all of the issued and
      outstanding common stock of AIH in exchange for 1,900,000 voting common shares
      of the Company’s common stock. The acquisition closed and the shares were
      exchanged on July 28, 2004. At the close of the transaction, the former
      shareholders of AIH controlled a majority of the Company’s common stock. The
      common stock issued in the course of the reverse merger transaction was recorded
      at the net book value of the Company’s assets on the acquisition date. As
      allowed under SFAS 141, “Business Combinations,” we treated this acquisition as
      a recapitalization for accounting purposes, in a manner similar to reverse
      acquisition accounting.





As
      a
      result of the merger, the Company owned and operated Amerikal Nutraceutical
      Corp., a California corporation, (“Amerikal”) as a wholly-owned subsidiary.
      Amerikal’s business is to manufacture, sell and distribute dietary supplements,
      health and beauty aid products. The primary geographic markets for the Company’s
      products are in South East Asia and Asia, including Singapore, Indonesia,
      Malaysia, Thailand, Taiwan, Hong Kong and Japan.





On
      November 15, 2005 the Company executed an agreement with an effective date
      of
      October 1, 2005, between the Company and a group of founding shareholders,
      pursuant to which the Company distributed its wholly owned subsidiary Amerikal
      to such shareholders in exchange for approximately 7,500,000 million shares
      of
      common stock of the Company. The distribution reduced the outstanding shares
      of
      the Company at that time from approximately 25 million to approximately 17
      million, and allowed management to concentrate its efforts on implementing
      and
      executing its Aquair business plan. As part of the distribution, the purchasing
      shareholders set aside 315,561 shares of Company common stock into an escrow
      account as a reserve against any unforeseen liabilities arising from the
      distribution. The Company’s legal and accounting advisors indicated that the
      proposed transaction will qualify as a tax-free distribution of a controlled
      corporation and exchange of equity under applicable provisions of the Internal
      Revenue Code, and accordingly the Company does not anticipate recognition of
      gain or loss as a result of the proposed agreement. As a result of the foregoing
      distribution of Amerikal, the company recognized a net loss from discontinued
      operations in the current quarter of ($884,178). There were no sales from the
      Amerikal subsidiary included in the current fiscal quarter ended December 31,
      2005.





***On
      Line Surgery, Inc*** .





In
      addition to the foregoing, in January 2005 the Company issued 200,000 shares
      of
      its restricted common stock to acquire rights to an Internet portal known as
      On
      Line Surgery. Subsequently, in the quarter ended June 30, 2005, the Company
      formed On Line Surgery, Inc. as a wholly owned subsidiary, a California
      Corporation (“On Line Surgery”), to develop the advertising potential of this
      web portal for the Company’s existing and future nutraceutical products, as well
      as to generate advertising revenue from physicians and other potential
      customers.





During
      the quarter ending December 31, 2005, the Company sold its rights to the url
      www.onlinesurgery.com, the sole asset related to its subsidiary On Line Surgery,
      for $20,000. On Line Surgery Inc. never commenced operations, and will be
      dissolved by the Company during the fourth fiscal quarter.











**Results
      of Operations for the Three and Nine Months Ended December 31, 2005 and
      2004.**





Three
                Months Ended December 31
            
            Nine
                Months Ended December 312005
            
            2004
              (Restated)
            
            2005
            
            2004
              (Restated)Product
                Sales
            
            $
            58,500
            
            $
            0
            
            $
            69,340
            
            $
            0Cost
                of sales
            
            $
            31,211
            
            $
            0
            
            $
            39,491
            
            $
            0Gross
                Profit
            
            $
            27,289
            
            $
            0
            
            $
            29,849
            
            $
            0General
                and Administrative expenses
            
            $
            86,402
            
            $
            7,731
            
            $
            144,504
            
            $
            9,268Consulting
                services
            
            $
            101,170
            
            $
            0
            
            $
            149,412
            
            $
            31,871Depreciation
                and
              Amortization
            
            $
            0
            
            $
            0
            
            $
            0
            
            $
            0Total
                Expenses
            
            $
            263,048
            
            $
            170,640
            
            $
            549,798
            
            $
            261,675Net
                Income
            
            $
            (235,759
            )
            $
            (170,640
            )
            $
            (519,949
            )
            $
            (261,675
            )





**Revenues
      and Cost of Sales** .





**Increase/(decrease)**2005
            
            2004
            
            $
            
            %For
                the three months ended December 31Gross
                Profit
            
            $
            27,289
            
            $
            0
            
            $
            27,289
            
            
            100
            %





During
      the three months ending December 31, 2005, the Company generated gross profit
      of
      $27,289 on net product sales of $58,500 and cost of sales totaling $31,211,
      compared to $0 of gross profit on net product sales of $0 and costs of sales
      of
      $0 in the three months ending December 31, 2004. This resulted in an increase
      in
      gross profits of $27,289, or 100%, from the same period one year ago. The
      primary reason for the increase in revenues was because of the Company’s sales
      in its Aquair subsidiary.





**Increase/(decrease)**2005
            
            2004
            
            $
            
            %For
                the nine months ended December 31:Gross
                Profit
            
            $
            29,849
            
            $
            0
            
            $
            29,849
            
            
            100
            %





During
      the nine months ending December 31, 2005, the Company generated gross profit
      of
      $29,849 on net product sales of $69,340 and cost of sales totaling $39,491,
      compared to $0 of gross profit on net product sales of $0 and costs of sales
      of
      $0 in the nine months ending December 31, 2004. This resulted in an increase
      in
      gross profits of $29,849, or 100%, from the same period one year ago. The
      increase in revenues was a result of sales in its Aquair subsidiary.











**General
      and Administrative Expenses**





**Increase/(decrease)**2005
            
            2004
            
            $
            
            %For
                the three months ended December 31General
                & administrative Expenses
            
            $
            86,402
            
            $
            7,731
            
            $
            78,671
            
            
            1002
            %





General
      and administrative expenses were $86,402 for the three months ended December
      31,
      2005 versus $7,731 for the three months ended December 31, 2004, which resulted
      in an increase of $78,671. General and administrative expenses increased
      comparatively for the three months ended December 31, 2005 to the comparative
      period in 2004 as a result of costs associated with new financing, and expenses
      attributable to discontinued operations.





**Increase/(decrease)**2005
            
            2004
            
            $
            
            %For
                the nine months ended December 31General
                & administrative Expenses
            
            $
            144,504
            
            $
            9,268
            
            $
            135,236
            
            
            1459
            %





General
      and administrative expenses were $144,504 for the nine months ended December
      31,
      2005 versus $9,268 for the nine months ended December 31, 2004, which resulted
      in an increase of $135,236, or 1459%. The increase in general and administrative
      expenses was due to costs associated with new financing and costs and expenses
      attributable to the distribution of the discontinued operation.





**Total
      Operating Expenses**





**Increase/(decrease)**2005
            
            2004
            
            $
            
            %For
                the three months ended December 31Total
                Operating Expenses
            
            $
            263,048
            
            $
            170,640
            
            $
            92,408
            
            
            54.2
            %





Our
      operating expenses for the three months ended December 31, 2005 were $263,048
      compared to $170,640 for the three months ended December 31, 2004. For both
      periods, we incurred expenses for general management and legal fees related
      to
      continuing operations. For the three months ended December 31, 2005, the Company
      expended $25,068 in rent and interest paid to a related party, and paid $45,367
      in legal and accounting fees. During the three months ended December 31, 2005,
      the company incurred total general and administrative expenses of $86,402,
      compared to $7,731 of similar expenses in the same period last year.




**Increase/(decrease)**2005
            
            2004
            
            $
            
            %For
                the nine months ended December 31Total
                Operating Expenses
            
            $
            549,798
            
            $
            261,675
            
            $
            288,123
            
            
            110.1
            %





Our
      operating expenses for the nine months ended December 31,, 2005 were $549,798
      compared to $261,675 for the nine months ended December 31, 2004. For both
      periods, we incurred expenses for general management and legal fees related
      to
      continuing operations. The increase in total operating expenses was attributable
      to establishing new target markets and the diversification of new product lines,
      costs of new financing, and expenses attributable to the distribution of
      discontinued operations.











**Net
      Income**





**Increase/(decrease)**2005
            
            2004
            
            $
            
            %For
                the three months ended December 31Net
                income
            
            $
            (322,248
            )
            $
            (170,640
            )
            $
            (151,608
            )
            
            88.8
            %





The
      net
      loss from operations for the three months ended December 31, 2005 was $
      (322,248), versus a net loss of $(170,640) for the three months ended December
      30, 2004, an increase in net loss of $(151,608) or 88.8%. The increase in net
      loss as compared to the same period in 2004 was due to costs associated with
      new
      financing, and expenses attributable to the discontinued operation.




**Increase/(decrease)**2005
            
            2004
            
            $
            
            $%For
                the nine months ended December 31Net
                income
            
            $
            (618,289
            )
            $
            (261,675
            )
            $
            (356,614
            )
            
            136.3
            %





The
      net
      loss for the nine months ended December 31, 2005 was $(618,289), versus a net
      loss of $(261,675) for the nine months ended December 31, 2004, an increase
      in
      net loss of $(356,614). The reason for the increase in net loss was due to
      costs
      associated with new financing, increased sales activity in its Aquair
      subsidiary, and costs and expenses attributable to the distribution of its
      Amerikal subsidiary.





**Liquidity
      and Capital Resources**





We
      had
      cash and cash equivalents of $395,576 at December 31, 2005. We also had $900
      of
      accounts receivable, prepaid expenses of $95,357, and $14,697 in inventory,
      making our total current assets at December 31, 2005 equal to $506,530. We
      also
      had the following long-term assets: $186,990 of cash deposits held by others.
      Our total assets at December 31, 2005 were $693,520.





Our
      total
      current liabilities were $35,216 as of December 31, 2005. This total consisted
      of $12,732 of accounts payable, and $22,484 of accrued expenses. The company
      also had Long Term liabilities in the amount of $704,400, consisting of Notes
      Payable to related parties of $372,293 ($708,132 less discounts of $335,839)
      and
      notes payable to others of $332,107 ($605,808 less discounts of $273,701).
      The
      total liabilities as of December 31, 2005 were $739,616.





Prior
      to
      the current fiscal quarter, the Company had financed its operations through
      cash
      generated from sales of product through its wholly owned subsidiary Amerikal.
      During the fiscal quarter, the Company distributed its Amerikal subsidiary
      to a
      group of shareholders, and as a result recognized a loss of ($884,178). During
      the three months ending December 31, 2005, the Company had sales revenues of
      $69,340 in its Aquair subsidiary, of which the Company used $39,491 to pay
      direct costs of operations, resulting in gross profit of $29,849. The Company
      incurred other expenses of $549,798, resulting in a net loss from operations
      of
      $(519,949). The company also sold the rights to its url asset attributable
      to
      its On Line Surgery subsidiary, resulting in other income of $10,000. The
      Company financed its operations through new financing in the form of notes
      payable to related parties and others. During the fiscal quarter, the Company
      received proceeds from its offering of Notes with warrants, as described in
      detail in the notes to financial statements. At the end of the fiscal quarter,
      the Company had cash and cash equivalents of $395,576. After taking into account
      other income and the provision for income taxes, the financial net loss for
      the
      nine months ended December 31 2005 was ($622,628).





For
      the
      nine month period ended December 31, 2004, as restated to give effect to the
      accounting estimate change described in the footnotes to the attached financial
      statements, the Company had experienced a net loss from continuing operations
      of
      ($261,675) and income from discontinued operations of $925,631, based upon
      total
      revenues of $4,294,260, for a combined net income of $663,956 after taking
      into
      account other income and the provision for income taxes.. The primary reason
      for
      the reduced revenues in the current period is that the Company made the decision
      to focus upon the development of its Aquair subsidiary, as a result of which
      the
      Company distributed its Amerikal subsidiary to a group of shareholders in
      exchange for stock in the Company.







**PLAN
      OF OPERATION FOR THE NEXT TWELVE MONTHS.**





Over
      the
      next twelve months, the Board of Directors has determined to focus the Company
      on the development of business under its Aquair subsidiary. The Company has
      distributed its Amerikal subsidiary to a group of founding shareholders, and
      has
      sold the rights to the sole asset in its On Line Surgery subsidiary.





Through
      Aquair, the Company plans to distribute licensed environmentally friendly water
      generating equipment in the United States and Asia that creates purified
      drinking water from air for residential and commercial uses. Aquair additionally
      plans to distribute licensed anti-microbial and anti-scaling technology
      worldwide as a complement to its licensed clean water generation products.
      Aquair will be able to provide: (1) pure drinking water from the air, (2) pure
      drinking water from brackish, polluted, or grey water (3) pure drinking water
      in
      places without a direct source of purified water, (4) hassle-free removal of
      scale and water softening without salt, and (5) a safe, bio-degradable broad
      based disinfectant that kills bacteria and viruses.





The
      Company further plans to increase its sales, marketing, and investor relations
      efforts for the Aquair brand and product line by adding personnel and/or
      consultants. The fundamental thrust of our marketing strategy will consist
      of
      reaching home shoppers, health related businesses, large business accounts,
      the
      government, and maritime industry through direct response, direct sales, and
      strategic partnerships with manufacturers and distributors. The Company also
      plans to utilize celebrity spokespersons to help establish the Aquair brand
      and
      sell its products.





As
      of
      December 31, 2005 we had cash and cash equivalents of $395,576, and accounts
      receivable in the amount of $900. In light of the Company’s distribution of its
      Amerikal subsidiary and its corresponding revenue, in order to fully execute
      its
      business plan for the next twelve months the Company may need to raise
      additional funds for the marketing and distribution of its Aquair products.
      The
      Company has not yet decided upon the specific method of raising additional
      working capital that may be required to meet its objectives. Additional working
      capital funds may be obtained through various means, including the future sale
      of the Company’s equity securities in private or public offerings, debt
      financing, hybrid financing, trade financing, receivables financing, factoring
      or any combination of credit, equity and/or debt which the Company can obtain
      on
      terms deemed favorable to the Company by the Board of Directors.





The
      Company has continued its research and testing related to Aquair products and
      continues to evaluate new products for potential licensing, sale and
      distribution. The Company may need to purchase additional plant and equipment
      over the next twelve months, but such purchases and the amounts are contingent
      upon its business success and overall market conditions. Similarly, the Company
      may need to increase its workforce to respond to potentially growing business
      needs, but the amounts and timing cannot be ascertained with certainty at this
      time.





**Off-Balance
      Sheet Arrangements.**





None.





**Going
      Concern**





The
      accompanying unaudited consolidated financial statements have been prepared
      in
      conformity with accounting principles generally accepted in the United States
      of
      America, which contemplate that the Company will continue in business as a
      going
      concern. The Company showed a net loss from continuing operations in the most
      recent fiscal quarter in the amount of $($332,204). The net loss for the nine
      months ended December 31, 2005, after taking into account the provision for
      income tax, and loss from discontinued operations (as discussed in the notes
      to
      financial statements attached) is ($1,506,806). The Company financed its
      operations during the quarter ended December 31, 2005 through the issuance
      of
      Notes with warrants issued to various parties, including related parties, in
      the
      total amount of $1,313,940. At the end of the fiscal quarter, the Company had
      cash and cash equivalents of $395,576 available to fund continuing operations.
      The Company is actively pursuing sources of new financing to fund continuing
      operations and to achieve its business plan. However, there can be no certainty
      as to the success of these financing efforts.







The
      Company can no longer rely on revenues from its distributed subsidiary Amerikal.
      Therefore, the Company will be developing revenues through its Aquair
      subsidiary. Aquair has commenced sales and anticipate future sales and revenues
      from its licensed and patented water generator and the distribution of
      water-generating equipment under the recently-concluded agreement with Munters
      Corporation, and potential sales of licensed anti-microbial and anti-scaling
      products. To date $69,340 of sales have been generated from these product-lines,
      as selling activity began late in the fiscal quarter ended June 30, 2005 and
      now
      has become the focus of the Company.





The
      consolidated financial statements do not include any adjustments that might
      result from the outcome of any uncertainty as to the Company’s ability to
      continue as a going concern. The consolidated financial statements also do
      not
      include any adjustments relating to the recoverability and classification of
      recorded asset amounts, or amounts and classifications of liabilities that
      might
      be necessary should the Company be unable to continue as a going
      concern.





**Critical
      Accounting Policy and Estimates**





This
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations section discusses the Company’s consolidated financial statements,
      which have been prepared in accordance with accounting principles generally
      accepted in the United States of America. The preparation of these consolidated
      financial statements requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities at the date of the
      consolidated financial statements, and the reported amounts of revenues and
      expenses during the reporting period. On an ongoing basis, management evaluates
      its estimates and judgments, including those related to revenue recognition,
      accrued expenses, financing operations, and contingencies. Management bases
      its
      estimates and judgments on historical experience and on various other factors
      that are believed to be reasonable under the circumstances, the results of
      which
      form the basis for making judgments about the carrying value of assets and
      liabilities that are not readily apparent from other sources. Actual results
      may
      differ from these estimates under different assumptions or conditions. The
      most
      significant accounting estimates inherent in the preparation of the Company’s
      consolidated financial statements include estimates as to the appropriate
      carrying value of certain assets and liabilities which are not readily apparent
      from other sources, primarily stock-based compensation. The methods, estimates
      and judgments the Company uses in applying these most critical accounting
      policies have a significant impact on the results it reports in its consolidated
      financial statements.





**Equity
      - Based Compensation**





In
      the
      presentation of the consolidated financial statements, the Company has restated
      and reclassified certain aspects of the prior period statements of financial
      operations due to a change in accounting estimate. The changes are described
      in
      the notes to the financial statements attached and incorporated in this filing.
      The purpose of the change was to more accurately reflect the fair market value
      of the expense for stock-based compensation for shares issued in the previous
      accounting period.





The
      Company records stock-based compensation to its officers, directors, and outside
      consultants at the fair market value of the services in general and
      administrative expense. In 2004, prior to being approved for quotation of its
      stock on the OTCBB, the Company recorded the expenses of stock based
      compensation issued to related parties (officers and directors), as well as
      stock based compensation issued to consultants, at $0.05 per share based upon
      a
      valuation study conducted at the request of the Board of Directors. Subsequent
      to the listing of the Company’s common stock on the OTCBB, it issued shares of
      unregistered common stock to two attorneys in exchange for legal services.
      As of
      the date of this share issuance in March 2005, the Company’s common stock was
      trading at approximately $1.51 per share, and it therefore recorded the stock
      issuance as of that date as an expense at the fair market value of the stock
      issued.








The
      Company recently granted stock options pursuant to a consulting agreement dated
      July 18, 2005 among the Company, Aquair, Inc. and General Steve Ritchie. In
      exchange for sales and marketing services to be rendered for Aquair, Inc. and
      as
      partial compensation for services, General Ritchie was granted an option to
      purchase 100,000 shares of the Company’s common stock, vesting over a three-year
      period with one third vesting at twelve months from date of execution of the
      Agreement, one third at twenty-four months, and the final third at thirty six
      months. As of the date of this agreement, the Company’s common stock was trading
      at approximately $3.00 per share. Based upon the Black Scholes method of
      calculation, the Company determined that the fair value of the options granted
      would be $313,480 over the life of the Agreement. In this quarter, the Company
      recorded the grant of the options as prepaid compensation in the amount of
      $26,124 based upon the fair value of that proportion of options vesting in
      this
      fiscal quarter. The Company will expense the options as compensation upon the
      vesting of the options at the end of each year under the agreement.





The
      Company has not yet adopted a plan for issuance of stock options to employees
      or
      others. Although management believes its estimate regarding the fair value
      of
      the services to be reasonable, there can be no assurance that all of the
      subjective assumptions will remain constant, and therefore the valuation of
      the
      services may not be a reliable measure of the fair value of stock compensation
      or stock based payments for consulting services.





**FACTORS
      THAT MAY AFFECT OUR RESULTS OF OPERATIONS**





RISKS
      RELATING WITH OUR BUSINESS AND MARKETPLACE





***The
      Company is a relatively young company with a minimal operating history since
      being reorganized in 2003.***





Since
      the
      Company’s reorganization in 2003 we have generated revenue from operations.
      However, our future operating results will depend on many factors, including
      the
      ability to generate sustained and increased demand and acceptance of our
      products, the level of our competition, and our ability to attract and maintain
      key management and employees. While management believes its estimates of
      projected occurrences and events are within the timetable of its business plan,
      there can be no guarantees or assurances that the results anticipated will
      occur.





***The
      Company has redirected its business plan and is focusing on its Aquair
      subsidiary.***





Since
      the
      Company has distributed its subsidiary Amerikal and sold the rights to the
      sole
      asset within its subsidiary On Line Surgery, it has redirected its focus on
      to
      its subsidiary Aquair. There can be no assurance that we will be able to replace
      revenues generated from the Amerikal subsidiary. While management believes
      the
      potential for revenue growth remains better in its Aquair business plan, there
      can be no guarantees that the anticipated results will occur.





***If
      we are unable to obtain additional funding, our business plan may be slowed
      and
      if we do obtain additional financing our then existing shareholders may suffer
      dilution.***





We
      will
      require additional funds to expand our sales and marketing activities, to
      support operations, implement our business strategy, and to replace future
      revenues lost from the distribution of our Amerikal subsidiary. There can be
      no
      assurance that financing will be available in amounts or on terms acceptable
      to
      us, if at all. The inability to obtain additional capital will restrict our
      ability to grow and may reduce our ability to conduct business operations.
      If we
      are unable to obtain additional financing, we will likely be required to curtail
      our business plan. Any additional equity financing may involve dilution to
      our
      then existing shareholders.








***If
      we acquire additional companies or products in the future, they could prove
      difficult to integrate, disrupt our business, dilute stockholder value or
      adversely affect our operating results.***





We
      anticipate that we will make other investments in complementary companies or
      products. We may not realize the anticipated benefits of any such acquisition
      or
      investment. The success of our acquisition program will depend on our ability
      to
      overcome substantial obstacles, such as the availability of acquisition
      candidates, our ability to compete successfully with other acquirers seeking
      similar acquisition candidates, the availability of funds to finance
      acquisitions and the availability of management resources to oversee the
      operation of acquired businesses. Furthermore, we may have to incur debt or
      issue equity securities to pay for future acquisitions or investments, the
      issuance of which could be dilutive to us or our existing shareholders. In
      addition, our profitability may suffer because of acquisition-related costs
      or
      future impairment costs for acquired goodwill and other intangible assets.





***We
      may be unable to retain the services of key personnel, and we may be unable
      to
      successfully recruit qualified personnel.***





Our
      success depends to an extent upon the continued service of key personnel; loss
      of the services of such personnel could have an adverse effect on our growth,
      revenues, and prospective business. In addition, in order to successfully
      implement and manage our business plan, we will be dependent upon, among other
      things, successfully recruiting qualified managerial and sales personnel having
      experience in business. Competition for qualified individuals is intense. There
      can be no assurance that we will be able to find, attract and retain existing
      employees or that we will be able to find, attract and retain qualified
      personnel on acceptable terms.





***If
      we cannot effectively manage our growth, we may incur
      losses.***





Any
      dramatic growth in our business could place a substantial burden on our
      production capacity and administrative resources. Businesses, which grow
      rapidly, often have difficulty managing their growth. Our management may not
      be
      able to manage our growth effectively or successfully. Rapid growth can often
      put a strain on management, financial, and operational resources of a company.
      In addition, we would likely need to enhance our operational systems and
      personnel procedures. Our failure to meet these challenges could cause our
      efforts to expand operations to prove unsuccessful and cause us to incur
      operating losses.





RISKS
      FACTORS RELATING TO OUR COMMON STOCK





***Our
      common stock is subject to SEC “Penny Stock” rules.***





Since
      our
      common stock is a penny stock, as defined in Rule 3a51-1 under the Securities
      Exchange Act, it will be more difficult for investors to liquidate their
      investment of our common stock. Until the trading price of the common stock
      rises above $5.00 per share, if ever, trading in the common stock is subject
      to
      the penny stock rules of the Securities Exchange Act specified in rules 15g-1
      through 15g-10. Those rules require broker-dealers, before effecting
      transactions in any penny stock, to:





·
            Deliver
                to the customer, and obtain a written receipt for, a disclosure
                document;·
            Disclose
                certain price information about the stock;·
            Disclose
                the amount of compensation received by the broker-dealer or any associated
                person of the broker-dealer;·
            Send
                monthly statements to customers with market and price information
                about
                the penny stock; and·
            In
                some circumstances, approve the purchaser’s account under certain
                standards and deliver written statements to the customer with information
                specified in the rules.








Consequently,
      the penny stock rules may restrict the ability or willingness of broker-dealers
      to sell the common stock and may affect the ability of holders to sell their
      common stock in the secondary market and the price at which such holders can
      sell any such securities. These additional procedures could also limit our
      ability to raise additional capital in the future.





***Since
      our shares are trading on the OTC Bulletin Board, trading volumes and prices
      may
      be sporadic because it is not an exchange.***





Our
      common shares are currently listed for public trading on the Over-the-Counter
      Bulletin Board. The trading price of our common shares has been subject to
      wide
      fluctuations. Trading prices of our common shares may fluctuate in response
      to a
      number of factors, many of which will be beyond our control. The stock market
      has generally experienced extreme price and volume fluctuations that have often
      been unrelated or disproportionate to the operating performance of companies
      with limited business operations. There can be no assurance that trading prices
      and price earnings ratios previously experienced by our common shares will
      be
      matched or maintained. Broad market and industry factors may adversely affect
      the market price of our common shares, regardless of our operating
      performance.





In
      the
      past, following periods of volatility in the market price of a company’s
      securities, securities class-action litigation has often been instituted. Such
      litigation, if instituted, could result in substantial costs for us and a
      diversion of management’s attention and resources.





***We
      are subject to SEC regulations and changing laws, regulations and standards
      relating to corporate governance and public disclosure, including the
      Sarbanes-Oxley Act of 2002, new SEC regulations and other trading market rules,
      are creating uncertainty for public companies.***





We
      are
      committed to maintaining high standards of corporate governance and public
      disclosure. As a result, we intend to invest appropriate resources to comply
      with evolving standards, and this investment may result in increased general
      and
      administrative expenses and a diversion of management time and attention from
      revenue-generating activities to compliance activities.





**Item
      3. Controls and Procedures**





As
      required by SEC rules, we have evaluated the effectiveness of the design and
      operation of our disclosure controls and procedures at the end of the period
      covered by this report. The evaluation was carried out by our Audit Committee
      under the supervision of and with the participation of our management, including
      our Chief Executive Officer and Chief Financial Officer (the “Certifying
      Officers”). Based upon this evaluation, the Certifying Officers have concluded
      that the design and operation of our disclosure controls and procedures are
      effective. Such disclosure controls and procedures are designed to ensure that
      material information is made known to the Certifying Officers, particularly
      during the period in which this report was prepared. The Certifying Officers
      have evaluated the effectiveness of our disclosure controls and procedures
      as of
      the end of the period covered by this report and believe that our disclosure
      controls and procedures are effective based on the required evaluation. During
      the period covered by this report, there were no changes in internal controls
      that materially affected, or are reasonably likely to materially affect, our
      internal control over financial reporting.





**PART
      II — OTHER INFORMATION**





**Item
      1. Legal Proceedings**





On
      August
      30, 2005 the Company was served with a lawsuit filed as Case No. 05CC09548
      in
      Orange County, California Superior Court. In the complaint, Universal
      Communications Systems, Inc. and its subsidiary Atmospheric Water Technologies,
      Inc. allege defamation, interference with prospective economic advantage, and
      false advertising, and seek compensatory and punitive damages, and costs against
      the Company. The Board of Directors believes these claims to be without merit,
      and has engaged legal counsel to strongly defend these claims. Through our
      legal
      counsel, the Company has caused the appropriate legal pleadings to be filed
      to
      dismiss the Complaint in this case. The Company believes that any liability
      it
      may incur in connection with this case will not have a material adverse effect
      upon its financial condition or its results of operations.








Other
      than the foregoing incident or occurrence, the Company is not aware of any
      litigation, either pending or threatened, and has not been the defendant or
      plaintiff in any litigation, since the discharge from bankruptcy attributable
      to
      its predecessor L.L. Knickerbocker Company, Inc.





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**





On
      November 15, 2005, the Company began a private placement offering to accredited
      investors only under the terms and conditions a Note and Warrant Agreement
      (“Offering”). The terms of the Offering are a promissory note with an annual
      interest rate of 8%, with a maturity date of one year after loan. For each
      dollar loaned the Company via promissory note, the investor is granted a warrant
      to purchase one share of the Company’s common stock at an exercise price equal
      to the lowest closing price of the stock as reported by the OTC:BB for the
      year
      following the date of warrant grant. These sales are exempt from registration
      under the Securities Act pursuant to Section 4(2) of the Securities Act of
      1933,
      as amended (the "Securities Act"), or Regulation D under the Securities
      Act.





As
      of
      December 31, 2005, the Company had entered into seven separate investments
      with
      accredited investors totaling $1,313,940 under the terms of the Offering, of
      which $613,940 was money already loaned to the Company and then converted into
      an investment in the Offering. The Company has issued warrants for a total
      of
      1,313,940 shares of the Company’s stock pursuant to the Offering.





**Item
      3. Defaults Upon Senior Securities**





None.





**Item
      4. Submission of Matters to a Vote of Security Holders**





None.





**Item
      5. Other Information**





None.





**Item
      6. Exhibits.**





3.1
            Articles
                of Incorporation of International Beauty Supply Ltd. (“IBS”) filed July
                12, 1985. (1)3.2
            Amendment
                to Articles of Incorporation of IBS filed May 28, 1993.
                (2)


3.3
            Certificate
                of Amendment to Articles of Incorporation of the L.L. Knickerbocker
                Company Inc. (“LLK”) filed June 27, 1994. (2)3.4
            Certificate
                of Amendment to Articles of Incorporation of LLK filed September
                29, 1994.
                (2)


3.5
            Certificate
                of Amendment of the Articles of Incorporation of LLK, filed September
                1,
                1995. (3)3.6
            Certificate
                of Amendment of the Articles of Incorporation of LLK, filed June
                19, 1996.
                (3)


3.7
            Certificate
                of Amendment to the Articles of Incorporation of LLK filed April
                22, 1999.
                (2)







3.8
            Certificate
                of Amendment to the Articles of Incorporation of the L.L. Knickerbocker
                Company Inc. filed January 9, 2003.(3)


3.9
            Bylaws
                of the L.L. Knickerbocker Company Inc. (4)4.1
            Form
                of Note and Warrant Agreement, filed herewith.10.1
            Consulting
                Agreement between Aquair, Inc. and Brig. General Steve Ritchie dated
                July
                18, 2005, filed November 14, 2005.
                (5)


10.2
            Master
                Separation and Distribution Agreement dated November 15, 2005, filed
                November 16, 2005 (6)10.3
            Distribution
                Agreement entered into between Aquair, Inc. and Locke Media dated
                August
                30, 2005 filed November 14, 2005. (5)10.4
            Agreement
                entered into between Aquair and Entech Sales dated November __, 2005,
                filed herewith.


31.1
            Certification
                of Chief Executive Officer Pursuant to the Securities Exchange Act
                of
                1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002, filed
                herewith.


31.2
            Certification
                of Chief Financial Officer Pursuant to the Securities Exchange Act
                of
                1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002, filed herewith.32
            Certification
                pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes Oxley Act of 2002, filed
                herewith.





1  Incorporated by reference to the L.L. Knickerbocker Co., Inc. Form SB-2
      Registration Statement No. 33-85230-LA as filed on October 13,
      1994.


2  Incorporated by reference to L.L. Knickerbocker Co., Inc. Form 10-K as filed
      on
      April 14, 2000.


3  Incorporated by reference to the Company’s Form 10-KSB, as filed on June 29,
      2005.


4  Incorporated by reference to the L.L. Knickerbocker Co., Inc. Annual Report
      on
      Form 10-KSB as filed on March 29, 1995.


5
      Incorporated by reference to the Company’s Form 10-QSB, as filed on November 14,
      2005


6
      Incorporated by reference to the Company’s Form 8-K, as filed on November 16,
      2005





SIGNATURES





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





R
      G
      Global Lifestyles, Inc.





Signature
            
            Title
            
            DateLouis
                L. Knickerbocker
            
            Chairman
                of the Board, CEO
            
            February
                21, 2006William
                C. Hitchcock
            
            Chief
                Financial Officer
            
            February
                21, 2006