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 September 30, 2007.





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 September 30,
      2007 was 28,769,302


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





**INDEX**





**Page****PART
                I - FINANCIAL INFORMATION**
            3Item
                1.
            Financial
                Statements (Unaudited)
            3Consolidated
                Balance Sheet – September 30, 2007
            3Consolidated
                Statements of Operations -For
                the Three and Six Months ended September 30, 2007 and 2006
            4Consolidated
                Statements of Cash FlowsFor
                the Six Months ended September 30, 2007 and 2006
            5Notes
                to Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results
                of Operations
            17Item
                3.
            Controls
                and Procedures
            27**PART
                II - OTHER INFORMATION**
            29Item
                1.
            Legal
                Proceedings
            29Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            29Item
                3.
            Defaults
                Upon Senior Securities
            29Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            29Item
                5.
            Other
                Information
            30Item
                6.
            Exhibits
            30SIGNATURES
            30




2


**PART
      I — FINANCIAL INFORMATION**





**Item
      1. Financial Statements**




**RG
          Global Lifestyles, Inc.**
 **Consolidated
          Balance Sheet**
 **September
          30, 2007**
 **(unaudited)**
 **Assets**Current
                      assets:Cash
                      and cash equivalents
                  
                  $
                  123,735Accounts
                      receivable
                  
                  
                  745,841Inventory
                      - finished goods
                  
                  
                  286,039Federal
                      income tax refund receivable
                  
                  
                  155,000Total
                      current assets
                  
                  
                  1,310,615Property
                      and equipment, net
                  
                  
                  99,195Construction
                      in progress
                  
                  
                  784,131Intangible
                      assets, net
                  
                  
                  4,605,039Other
                      assets
                  
                  
                  222,448**Total
                      Assets**
                  
                  $
                  7,021,428**Liabilities
                      and Stockholders' Deficit**Current
                      liabilities:Accounts
                      payable
                  
                  $
                  1,099,650Accrued
                      liabilities
                  
                  
                  500,732Deferred
                      revenues
                  
                  
                  617,755State
                      income taxes payable
                  
                  
                  96,681Secured
                      convertible notes payable
                  
                  
                  1,870,433Warrant
                      liability
                  
                  
                  2,198,128Conversion
                      feature liability
                  
                  
                  5,175,404Notes
                      payable (net of discount of $159,315)
                  
                  
                  690,685Total
                      current liabilities
                  
                  
                  12,249,468Minority
                      interest in subsidiary
                  
                  
                  25,318Stockholders'
                      deficit:Preferred
                      stock, $0.001 par value, 10,000,000 sharesauthorized,
                      no shares issued and outstanding
                  
                  
                  -Common
                      stock, $0.001 par value, 100,000,000 sharesauthorized,28,769,302shares issued and outstanding
                  
                  
                  28,769Additional
                      paid-in capital
                  
                  
                  20,516,685Subscription
                      receivable
                  
                  
                  (13,000
                  )Accumulated
                      deficit
                  
                  
                  (25,785,812
                  )Total
                      stockholders' deficit
                  
                  
                  (5,253,358
                  )**Total
                      Liabilities and Stockholders' Deficit**
                  
                  $
                  7,021,428
 
 The
          accompanying notes are an integral part of these financial
          statements.
  3
  **RG
          Global Lifestyles, Inc.**
 **Consolidated
          Statements of Operations**
 **(unaudited)**
 For
                      the Three Months Ended
                  
                  For
                      the Six Months EndedSeptember
                      30
                  
                  September
                      302007
                  
                  2006
                  
                  2007
                  
                  2006As
                      restated
                  
                  
                  
                  As
                      restatedRevenue:Product
                      sales
                  
                  $
                  68,595
                  
                  $
                  -
                  
                  $
                  146,643
                  
                  $
                  425Water
                      treatment related
                  
                  
                  469,049
                  
                  
                  -
                  
                  
                  678,208
                  
                  
                  -Total
                      revenues
                  
                  
                  537,644
                  
                  
                  -
                  
                  
                  824,851
                  
                  
                  425Cost
                      of revenues:Product
                      sales
                  
                  
                  55,498
                  
                  
                  58,600
                  
                  
                  120,854
                  
                  
                  64,528Water
                      treatment related
                  
                  
                  436,022
                  
                  
                  -
                  
                  
                  631,401
                  
                  
                  -Total
                      cost of revenue
                  
                  
                  491,520
                  
                  
                  58,600
                  
                  
                  752,255
                  
                  
                  64,528Gross
                      profit (loss)
                  
                  
                  46,124
                  
                  
                  (58,600
                  )
                  
                  72,596
                  
                  
                  (64,103
                  )Expenses:General
                      and administrative, includingstock-based
                      compensation of $763,718 and 1,586,124 (2007) and $417,679
                      and $616,038
                      (2006) respectively
                  
                  
                  1,244,507
                  
                  
                  528,760
                  
                  
                  2,588,308
                  
                  
                  1,730,047Selling
                      and marketing
                  
                  
                  56,655
                  
                  
                  36,714
                  
                  
                  91,739
                  
                  
                  40,058Total
                      expenses
                  
                  
                  1,301,162
                  
                  
                  565,474
                  
                  
                  2,680,047
                  
                  
                  1,770,105Operating
                      loss
                  
                  
                  (1,255,038
                  )
                  
                  (624,074
                  )
                  
                  (2,607,451
                  )
                  
                  (1,834,208
                  )Other
                      income (expense):Interest
                      income
                  
                  
                  591
                  
                  
                  -
                  
                  
                  3,609
                  
                  
                  -Interest
                      expense - related party
                  
                  
                  (22,891
                  )
                  
                  (133,665
                  )
                  
                  (25,643
                  )
                  
                  (261,810
                  )Interest
                      expense
                  
                  
                  (605,467
                  )
                  
                  (220,302
                  )
                  
                  (2,037,503
                  )
                  
                  (363,379
                  )Change
                      in fair value of derivative liabilities
                  
                  
                  3,588,421
                  
                  
                  (1,968,960
                  )
                  
                  4,530,506
                  
                  
                  (2,168,279
                  )Other
                      income (expense)
                  
                  
                  (4,119
                  )
                  
                  -
                  
                  
                  (4,091
                  )
                  
                  -Interest
                      and financing related to convertible notes
                  
                  
                  -
                  
                  
                  (470,258
                  )
                  
                  -
                  
                  
                  (4,629,440
                  )Total
                      other income (expense)
                  
                  
                  2,956,535
                  
                  
                  (2,793,185
                  )
                  
                  2,466,878
                  
                  
                  (7,422,908
                  )Net
                      income (loss) before provision for income taxes
                  
                  
                  1,701,497
                  
                  
                  (3,417,259
                  )
                  
                  (140,573
                  )
                  
                  (9,257,116
                  )Provision
                      for income taxes
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (800
                  )Net
                      income (loss) before minority interest
                  
                  
                  1,701,497
                  
                  
                  (3,417,259
                  )
                  
                  (140,573
                  )
                  
                  (9,257,916
                  )Minority
                      interest
                  
                  
                  18,585
                  
                  
                  -
                  
                  
                  18,585
                  
                  
                  -Net
                      income (loss)
                  
                  $
                  1,720,082
                  
                  $
                  (3,417,259
                  )
                  $
                  (121,988
                  )
                  $
                  (9,257,916
                  )Weighted
                      average number of common shares:Basic
                  
                  
                  28,769,302
                  
                  
                  17,650,000
                  
                  
                  27,572,656
                  
                  
                  17,650,000Diluted
                  
                  
                  45,461,968
                  
                  
                  17,650,000
                  
                  
                  27,572,656
                  
                  
                  17,650,000Net
                      income (loss) per share:Basic
                  
                  $
                  0.06
                  
                  $
                  (0.19
                  )
                  $
                  (0.00
                  )
                  $
                  (0.52
                  )Diluted
                  
                  $
                  0.04
                  
                  $
                  (0.19
                  )
                  $
                  (0.00
                  )
                  $
                  (0.52
                  )
   The
          accompanying notes are an integral part of these financial
          statements.
  4
  **RG
          Global Lifestyles, Inc.**
 **Consolidated
          Statements of Cash Flows**
 **(unaudited)**
 For
                      the Six Months EndedSeptember
                      302007
                  
                  2006**Cash
                      flows from operating activities:**
                  
                  
                  
                  As
                      restatedNet
                      loss
                  
                  $
                  (121,988
                  )
                  $
                  (9,257,916
                  )Adjustments
                      to reconcile net loss tonet
                      cash used in operating activities:Amortization
                      of debt discounts related to beneficialconversion
                      features and warrants
                  
                  
                  300,822
                  
                  
                  490,437Non
                      cash expenses associated with convertible debt
                  
                  
                  -
                  
                  
                  5,249,229Change
                      in fair value of derivative liabilities
                  
                  
                  (4,530,506
                  )
                  
                  2,168,280Fair
                      value of common stock in excess of notes payable forgiven
                  
                  
                  1,656,152
                  
                  
                  -Depreciation
                      and amortization
                  
                  
                  162,810
                  
                  
                  64,578Stock-based
                      compensation
                  
                  
                  1,499,793
                  
                  
                  189,410Minority
                      interest in subsidiary
                  
                  
                  (18,585
                  )
                  
                  -Changes
                      in operating assets and liabilities:Accounts
                      receivable
                  
                  
                  (745,478
                  )
                  
                  -Inventory
                  
                  
                  (32,185
                  )
                  
                  -Prepaid
                      expenses
                  
                  
                  25,676
                  
                  
                  10,044Other
                      assets
                  
                  
                  -
                  
                  
                  (481
                  )Accounts
                      payable
                  
                  
                  275,492
                  
                  
                  21,859Accrued
                      liabilities
                  
                  
                  393,416
                  
                  
                  92,771Deferred
                      revenues
                  
                  
                  501,792
                  
                  
                  -Income
                      taxes payable
                  
                  
                  1,681
                  
                  
                  -Net
                      cash used in operating activities
                  
                  
                  (631,108
                  )
                  
                  (971,789
                  )**Cash
                      flows from investing activities:**Purchase
                      of fixed assets
                  
                  
                  (31,874
                  )
                  
                  (5,608
                  )Construction
                      in progress
                  
                  
                  (41,629
                  )
                  
                  -Other
                      assets
                  
                  
                  13,568
                  
                  
                  -Purchase
                      of intangible assets
                  
                  
                  -
                  
                  
                  (200,000
                  )Net
                      cash used in investing activities
                  
                  
                  (59,935
                  )
                  
                  (205,608
                  )**Cash
                      flows from financing activities:**Proceeds
                      from notes payable
                  
                  
                  250,000
                  
                  
                  1,300,000Payment
                      of debt issuance costs
                  
                  
                  -
                  
                  
                  (148,970
                  )Proceeds
                      from exercise of stock options
                  
                  
                  62,500
                  
                  
                  -Net
                      cash provided by financing activities
                  
                  
                  312,500
                  
                  
                  1,151,030Net
                      increase (decrease) in cash
                  
                  
                  (378,543
                  )
                  
                  (26,367
                  )Cash
                      - beginning of period
                  
                  
                  502,278
                  
                  
                  346,661Cash
                      - ending of period
                  
                  $
                  123,735
                  
                  $
                  320,294SUPPLEMENTAL
                      DISCLOSURES OF CASH FLOW INFORMATIONCash
                      paid during the period for:Interest
                  
                  $
                  -
                  
                  $
                  -Income
                      taxes
                  
                  $
                  -
                  
                  $
                  800Non-cash
                      investing and financing activities:Issuance
                      of common stock in settlement of notes payableand
                      accrued interest
                  
                  $
                  331,095
                  
                  $
                  -Issuance
                      of common stock for tangible and intangible assets
                  
                  $
                  474,828
                  
                  $
                  -Issuance
                      of OC Energy, Inc.'s interests for tangible and intangible
                      assets
                  
                  $
                  43,903
                  
                  $
                  -Construction
                      in progress recorded in accounts payable
                  
                  $
                  742,502
                  
                  $
                  -
  The
          accompanying notes are an integral part of these financial
          statements.
  5




**RG
        Global Lifestyles, Inc.**
 Notes
        to
        consolidated financial statements
 (unaudited)
 
 **Note
        1 – Basis of Presentation and Significant Accounting
        Policies**
 
 The
        consolidated 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 consolidated financial
          statements and notes thereto of the Company for the year ended March 31,
          2007
          included in the Company’s Annual Report on Form 10-KSB. The Company follows the
          same accounting policies in the preparation of interim
          reports.
 
 Revenue
        Recognition
 
 Product
        sales - For revenue from product sales, the Company recognizes revenue in
        accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition”
(“SAB104”), which superseded Staff Accounting Bulletin No. 101, “Revenue
        Recognition in Financial Statements” (“SAB101”). SAB 101 requires that four
        basic criteria must be met before revenue can be recognized: (1) persuasive
        evidence of an arrangement exists; (2) delivery has occurred; (3) the selling
        price is fixed and determinable; and (4) collectibility is reasonably assured.
        Determination of criteria (3) and (4) are based on management's judgments
        regarding the fixed nature of the selling prices of the products delivered
        and
        the collectibility of those amounts. Provisions for discounts and rebates
        to
        customers, estimated returns and allowances, and other adjustments are provided
        for in the same period the related sales are recorded.
 
 Construction
        contracts - In accordance with Statement of Position 81-1 “Accounting for
        Performance of Construction-Type and Certain Production-Type Contracts”, the
        Company uses the percentage completion method for the recognition of revenue
        received in connection with it's engineering, equipment sale and installation
        contracts. In making the estimate of the percentage of revenue to recognize,
        the
        Company compares costs to the total projected cost of the contract. Accordingly,
        the Company recognizes that portion of the revenue and record the balance
        of the
        cash received as deferred revenues, which is included within accrued liabilities
        on the accompanying balance sheet.
 
 Minority Interest
 
 The
        Company’s percentage of controlling interest requires that operations be
        included in the consolidated financial statements. The percentage of equity
        interest that is not owned by the Company is shown as “Minority interest
        in subsidiary” in the consolidated balance sheets and consolidated statements of
        operations.
 
 6
 **RG
          Global Lifestyles, Inc.**
 Notes
          to
          consolidated financial statements
 (unaudited)
 Net
        Income or (Loss) Per Share
 
 Net
        income or (loss) per share is provided in accordance with Statement of Financial
        Accounting Standards (“SFAS”) No. 128 “Earnings Per Share” (“SFAS 128”). Basic
        income or (loss) per share is computed by dividing income or (losses) available
        to common stockholders by the weighted average number of common shares
        outstanding during the period, after giving effect to dilutive common stock
        equivalents, such as stock options, warrants and convertible debt. The following
        is a summary of outstanding securities which have been excluded from the
        calculation of diluted net loss per share because the effect would have been
        anti-dilutive for the six months ended September 30, 2007 and the three and
        six
        months ended September 30, 2006:
 
 2007
              
              2006Common
                  stock options
              
              
              8,294,430
              
              
              8,317,600Common
                  stock warrants
              
              
              11,378,940
              
              
              6,503,940Secured
                  convertible notes
              
              
              9,738,046
              
              
              2,736,842Totals
              
              
              29,411,416
              
              
              17,558,382
 
 The
        following is a summary of outstanding securities which have been included
        from
        the calculation of diluted net loss per share for the three months ended
        September 30, 2007:
 Basic
                
                
                28,769,302Common
                    stock options
                
                
                2,783,270Common
                    stock warrants
                
                
                4,171,350Secured
                    convertible notes
                
                
                9,738,04616,692,666Totals
                
                
                45,461,968
 
 Warrants
        exercisable into 4,025,000 shares of common stock were not included in the
        computation for the three months ended September 30, 2007 because the effect
        would have been anti-dilutive.
 
 **Note
        2 – Going Concern**
 The
          accompanying consolidated financial statements have been prepared assuming
          the
          Company will continue as a going concern. As shown in the accompanying
          consolidated financial statements, the Company has incurred an operating
          loss
          (loss before income taxes and other expenses) of $1,255,038 for the three
          months
          ended September 30, 2007, and current liabilities in excess of current
          assets of
          $10,938,853 at September 30, 2007. These conditions raise substantial doubt
          about the Company's ability to continue as a going concern.
 
 The
        future of the Company is dependent partly upon its ability to perform on
        contracts for wastewater treatment systems not yet completed, and upon its
        ability to realize profit on sales of its energy drinks, as well as upon
        its
        ability to obtain equity and/or debt financing. There can be no assurance
        that
        the Company will be able to achieve profitability in its operations, and
        it is
        possible that additional equity or debt financing may be required to continue
        as
        a going concern. Without such additional capital, there is substantial doubt
        as
        to whether the Company will continue as a going concern.
 
 7
 **RG
          Global Lifestyles, Inc.**
 Notes
          to
          consolidated financial statements
 (unaudited)
  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, which might be necessary in the event the
        Company
        cannot continue in existence.
 
 **Note
        3 – Formation of Subsidiary and Asset Purchase**
 On
          June
          16, 2007, the Company changed the name of its wholly-owned subsidiary On
          Line
          Surgery, Inc. to OC Energy Drink, Inc. On September 1, 2007, the Company
          entered
          into a definitive agreement (the “OCE Agreement”) with three individuals to
          acquire certain tangible and intangible assets related to the energy drink
          segment. The assets acquired did not constitute a business as no operations
          or
          revenues existed prior to the acquisition date. Pursuant to the OCE Agreement,
          the Company issued 654,935 shares of its common stock valued at $474,828
          (using
          the average value of three days prior and subsequent to date of issuance
          of
          approximately $0.73 per share), assumed liabilities of $80,000, and issued
          24%
          of the issued and outstanding shares of the OC Energy Drink, Inc. subsidiary.
          The Company valued the 24% interest in OC Energy Drink, Inc. at $43,903.
          The
          valuation was determined through using the future discounted cash flow
          method
          using projected results of operations of the new subsidiary for a five
          (5) year
          period, reduced to present value as of the date of the transaction, at
          a
          discount of 5.25%. In accordance with the requirements of SFAS 94 “Consolidation
          of All Majority-Owned Subsidiaries an amendment of ARB No. 51, with related
          amendments of APB Opinion No. 18 and ARB No. 43, chapter 12”, the Company
          recorded the value of the minority interest of the subsidiary on the date
          of
          issuance as $43,903 as a long-term liability. The purchase price of the
          assets
          was allocated as follows: $53,912 to the tangible assets consisting of
          bottling
          equipment, $80,000 to accrued liabilities and $464,819 to the intangible
          assets.
          Intangible assets consisted of tooling design and engineering drawings
          for
          bottling equipment, bottle designs, labels, logos, and artwork. The tangible
          assets are being depreciated over their estimated useful life of five years.
          The
          estimated useful life of the intangibles is subject to adjustment as further
          research will be required to more accurately establish the estimated life
          of
          these intangibles; preliminary research indicates that the range of estimated
          useful life for these certain intangibles will likely be between three
          and seven
          years.
  At
        September 30, 2007, the Company recorded as other income-Minority Interest
        on
        the consolidated statements of operations, the change in value of the subsidiary
        based upon 24% of the subsidiary’s net loss from operations in the period then
        ended, and correspondingly reduced the long-term liability.
 
 8
  **RG
          Global Lifestyles, Inc.**
 Notes
          to
          consolidated financial statements
 (unaudited)
 **Note
        4 – Notes Payable**
 
 As
        of
        September 30, 2007, the Company had the following notes payable and accrued
        interest:
  Notes
                  Payable
                
                Accrued
                  Interest2008
                    Notes Payable, interest at 8%, per annum, due ondemand
                
                $
                250,000
                
                $
                4162007
                    Notes Payable, interest at 8%, due onDecember
                    26, 2007 and January 17, 2008,face
                    value of $600,000
                
                
                440,685
                
                
                59,264Secured
                    Convertible Notes, interest at 6%, per annumsee
                    below
                
                
                1,870,433
                
                
                77,174Totals
                
                $
                2,561,118
                
                $
                136,854
 
 *2008
        Notes Payable*
 In
        September 2007, the Company issued $250,000 in promissory notes to two
        investors. The notes incur interest at 8% per annum and are due on demand.
        The
        proceeds were used in operations and for construction projects.
 
 *$2,000,000
        Secured Convertible Notes*
 On
        June
        6, 2006, the Company entered into a definitive securities purchase agreement
        and
        ancillary agreements with accredited investors for a private placement of
        $2,000,000 of 6% callable secured convertible notes due June 6, 2009 (the
        “Secured Notes”) and stock purchase warrants to purchase 4,000,000 shares of the
        Company’s common stock, vesting immediately and exercisable before June 6, 2013,
        with an exercise price of $1.10 subject to adjustment upon certain events.
        The
        Secured Notes are convertible at the option of the holder at any time prior
        to
        maturity into shares of the Company’s common stock at a conversion price based
        upon the average of the three lowest trading prices of the Company’s common
        stock for the previous 20 trading days, and are secured by a security interest
        in substantially all of the assets of the Company.
 In
          connection with the issuance of the Secured Notes, the Company evaluated
          the
          terms and features of the conversion feature and the warrants and determined
          that the instruments embodied certain derivative features that were not
          clearly
          and closely related to the debt instrument. Thus, the conversion feature
          and
          warrants did not meet the established criteria for equity classification
          under
          EITF 00-19 "Accounting for Derivative Financial Instruments Indexed to,
          and
          Potentially Settled in, a Company's Own Stock". On the dates of issuance,
          the
          Company allocated the proceeds between the Secured Notes, warrants and
          conversion feature. Accordingly, the Company accounts for the embedded
          conversion feature and warrants as derivatives under SFAS No. 133 "Accounting
          for Derivative Instruments". Thus the conversion feature and warrants are
          being
          carried at their respective fair values with changes in their values recorded
          in
          the statements of operations.
 
 9
  **RG
          Global Lifestyles, Inc.**
 Notes
          to
          consolidated financial statements
 (unaudited)
  As
          of
          September 30, 2007, the fair value of the conversion-feature liability
          related
          to Secured Notes was $5,175,404. The Company valued the beneficial conversion
          feature at September 30, 2007, using the Black Scholes method of valuation
          with
          the following variables; a risk free interest rate of 5.25%, an exercise
          price
          of $0.20, a volatility of 284%, a remaining life of 1.75 years and no dividends.
          For the three and six months ended September 30, 2007, the change in fair
          value
          of the derivative liability was $509,718 and $132,534,
          respectively.
  At
          September 30, 2007, the Company valued the warrants at $2,198,128 based
          upon the
          Black Scholes method of valuation using the following variables; risk free
          interest rate of 5.25%, an exercise price of $1.10, a volatility of 284%,
          an
          estimated remaining life of 5.7 years and no dividends.  For the three and
          six months ended September 30, 2007, the change in fair value of the warrants
          was $3,078,703 and $4,397,972, respectively.
  In
          January 2007, a dispute arose between the Company and the holders of the
          Secured
          Notes, see Note 7 for additional information.  The Company carries the
          Secured Notes at their face value and as a current liability due to the
          dispute.  In addition, the Company has not recorded any potential penalty
          provision under the Secured Notes attributable to the allegations of default
          based upon the Company’s belief that the holders of the Secured Notes violated
          the terms of the agreement and in reliance upon the analysis of legal counsel
          to
          the Company regarding its obligations under the Secured Notes.  The change
          in fair value of the derivative liabilities will continue to be valued
          and
          recorded at the end of future periods, which will have an effect upon future
          operations until the Secured Notes have been satisfied in
          full.
 *2007
        Notes Payable*
 During
        the three and six months ended September 30, 2007, the Company amortized
        $151,233 and $300,822, respectively, of the discount resulting from the warrants
        and beneficial conversion feature to interest expense. At September 30, 2007,
        the remaining discount relating to these notes was $159,315.
 
 *2006
        Notes Payable*
 In
        April
        2007, the Company entered into a series of conversion agreements with a group
        of
        individuals who had received an assignment of a $300,000 note and accrued
        interest of $24,000 which was due on March 31, 2007. On April 19, 2007, the
        Company issued 875,000 shares of common stock valued at $1,417,500 based
        on the
        closing market price of the Company’s common stock on the date of the
        transaction to certain note holders in satisfaction of $162,037 of principal
        and
        $12,963 of accrued interest on the assigned note. At the time of issuance,
        the
        Company recorded the excess in fair value of the common stock over the
        liabilities satisfied of $1,242,500 as additional interest expense.
 
 On
        September 4, 2007, a director of the Company holding the remaining portion
        of
        the assigned note agreed to receive shares of the Company’s common stock at
        $0.20 per share in satisfaction of the note and accrued interest. The Company
        issued 780,475 shares of common stock valued at $569,747 based on the closing
        market price of the Company’s common stock on the date of the transaction to the
        director in settlement of $137,963 in principal and $18,132 in accrued interest.
        At the time of issuance, the Company recorded the excess in fair value of
        the
        common stock over the liabilities satisfied of $413,652 as additional interest
        expense.
 
 10
 **RG
          Global Lifestyles, Inc.**
 Notes
          to
          consolidated financial statements
 (unaudited)
 **Note
        5 – Stockholders’ Equity**
 
 See
        Notes
        3, 4, 6 and 10 for discussion of shares of common stock issued during the
        three
        and six months ended September 30, 2007 and subsequent. There were no issuances
        of common stock by the Company during the six months ended September 30,
        2006.
 
 **Note
        6 – Options and Warrants**
 
 **Options**
 
 *Stock
        Option Plans*
 
 On
        May 3,
        2006, the Company’s Board of Directors adopted the 2006 Incentive and
        Non-statutory Stock Option Plan (“2006 Plan”) for issuance of stock options to
        employees and others. Under the 2006 Plan, the Company reserved 10,000,000
        shares for issuance. As of September 30, 2007, there were 42,400 options
        available for issuance under the 2006 Plan.
 
 On
        December 26, 2006, the Board of Directors authorized the issuance of up to
        6,000,000 options under its 2007 Incentive and Non-statutory Stock Option
        Plan
        (“2007 Plan”). The 2007 Plan was approved by a vote of the shareholders of the
        Company at the annual meeting of shareholders on October 12, 2007. As of
        September 30, 2007, there were 745,200 options available for issuance under
        the
        2007 Plan.
  Compensation
          expense recorded during the three and six months ended September 30, 2007
          was
          $655,042 and $1,431,072, respectively. At September 30, 2007, the options
          were
          valued based upon the Black Scholes valuation model using the following
          estimates: 5.25% risk free rate, 284% volatility, an expected life of
          approximately five years and no dividends.
 
 The
        following is a summary of activity of outstanding stock options:
  Numberof
                      SharesBalance,
                      March 31, 2007
                  
                  
                  13,851,230Options
                      granted
                  
                  
                  -Options
                      exercised
                  
                  
                  (436,300
                  )Options
                      cancelled or forfeited
                  
                  
                  (5,120,500
                  )Balance,
                      September 30, 2007
                  
                  
                  8,294,430
  11
 **RG
          Global Lifestyles, Inc.**
 Notes
          to
          consolidated financial statements
 (unaudited)
 *Exercises
        and Significant Cancellations of Stock Options*
 
 On
        August
        13, 2007, an officer and director paid the balance of the exercise price
        for his
        previous exercise of 312,500 options vested under the 2006 Plan, at which
        time
        the Company reduced subscriptions receivable in the amount of the $35,755
        payment received from the officer.
 
 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.
 
 **Warrants**
 On
          October 11, 2006, the Company issued 300,000 warrants at an exercise price
          of
          $0.47 to a consultant for services. One third of the warrants were vested
          upon
          issuance, the remaining 200,000 warrants vest at annual intervals over
          the
          period of two years. During the six months ended September 30, 2007, the
          Company
          recorded compensation expense of $17,700 under this agreement. The Company
          did
          not expense any additional amounts during the three months ended September
          30,
          2007 as the amount previously expensed was in excess of the vested fair
          value of
          the warrants. The Company accounts for this agreement under EITF 96-18
          and
          revalues these warrants at each quarter end. At September 30, 2007, the
          warrants
          were valued based upon the Black Scholes valuation model using the following
          estimates: 5.25 % risk free rate, 284% volatility, an expected life of
          five
          years and no dividends.
 
 The
        following is a summary of activity of outstanding common stock warrants for
        the
        six months ended September 30, 2007:
 
 NumberOf
                  SharesBalance,
                  March 31, 2007
              
              
              15,403,940Warrants
                  granted
              
              
              -Warrants
                  exercised
              
              
              -Balance,
                  September 30, 2007
              
              
              15,403,940
 
 **Note
        7 – Commitments and Contingencies**
 
 **Legal
        Proceedings**
 
 On
        July
        3, 2007, the Company and its subsidiary Aquair entered into a settlement
        agreement with plaintiff Atmospheric Water Technologies, Inc. in the Orange
        County Superior Court Case No. 05CC09548. Pursuant to the settlement, this
        case
        has now been dismissed with prejudice. Under the terms of the settlement,
        (i)all
        parties were released from liability, (ii) the Company and Aquair, as well
        as
        the Company's late Chairman and CEO Louis Knickerbocker, were dismissed with
        prejudice from the lawsuit, (iii) plaintiff issued a press release announcing
        the dismissal of the case, and (iv) the Company, through its insurer, paid
        $15,000 to plaintiff.
 
 12
 **RG
          Global Lifestyles, Inc.**
 Notes
          to
          consolidated financial statements
 (unaudited)
 The
        Company's ongoing litigation with it previous investors the NIR Group has
        been
        remanded back to the New York Supreme Court, from the federal district court,
        and is now titled AJW Partners LLC, AJW Offshore Ltd, AJW Qualified Partners
        LLC, and New Millenium Capital Partners II LLC v. RG Global Lifestyles, Inc.
        and
        Louis Knickerbocker, and is Case No. 600323/07. In July 2007, the plaintiffs
        agreed to voluntarily dismiss Louis Knickerbocker without prejudice, as a
        result
        of which the caption will change upon the next round of pleadings. The parties
        are currently abiding by the informal stay of proceedings pending resolution
        of
        the Company's claim for $3 million in insurance proceeds from its "key man"
        life
        insurance policy with AIG American General it owned and of which it is the
        beneficiary. At September 30, 2007, the Company cannot reasonably estimate
        the
        liability attributable to this pending litigation, and accordingly has not
        recorded a reserve for liability on the accompanying consolidated financial
        statements.
 
 **Water
        Treatment Contracts**
 
 In
        August
        2007, the Company invoiced a customer for the third progress payment of $730,000
        in connection with its pending engineering, equipment sale and installation
        contract with the customer. In accordance with the Company’s revenue recognition
        policy, the Company has recorded the revenue on the basis of a percentage
        completion of the pending contract. In the three and six months ended September
        30, 2007 the Company recognized $469,049 and $678,208 of revenue under this
        contract, respectively. As of September 30, 2007, payments received and invoiced
        in excess of revenues recorded (deferred revenue) under this contract were
        $617,755.
 
 On
        June
        25, 2007, the Company entered into contract with Yates Petroleum Corporation
        (“YPC”) to engineer, design, and install a water treatment system (“System”) of
        Coal Bed Methane (“CBM”) produced water provided by YPC. The Company will own
        and operate the System and regeneration waste pond. The Company will receive
        a
        base rate under the contract of $0.125 (12.50 cents) per barrel (42 US gallons)
        of water discharged by the System. The term of the contract is for 60 months
        from the start of the first billing cycle. The Company received an initial
        deposit of $25,000 which was recorded as a reduction of costs incurred in
        the
        construction of the System. In the quarter ended September 30, 2007, the
        Company
        incurred capitalized costs in the construction of the System in the amount
        of
        $784,131, which are reflected as construction in progress on the accompanying
        consolidated balance sheet. YPC is responsible for constructing the inflow
        pond
        and will receive a credit from the Company of $50,000 each month for the
        first
        three months of operation. In addition, YPC will receive credits on current
        billings for future repairs and maintenance to the inflow pond. As of September
        30, 2007, YPC had not earned any credits.
 
 **OC
        Energy Drink, Inc. Distribution Contracts**
 
 The
        Company’s majority owned subsidiary OC Energy Drink, Inc. has entered into
        various agreements with distributors for the distribution of its OC Energy
        Drink
        products. Some of these agreements include clauses where by the distributor
        has
        the exclusive right to distribute the Company’s products for a particular
        geographical area.
 
 13
 **RG
          Global Lifestyles, Inc.**
 Notes
          to
          consolidated financial statements
 (unaudited)
 **Note
        8 – Segment Reporting and Concentrations**
 
 Currently
        the Company generates all of its revenues, and incurred all of its expenses
        from
        the sale of OC Energy products and from construction projects related to
        water
        treatment technology. A summary of revenues generated by segment for the
        three
        and six months ended September 30, 2007, is as follows:
 Three
                    Months Ended
                
                Six
                    Months EndedSeptember
                    30, 2007
                
                September
                    30, 2007Water
                    treatment segment
                
                $
                469,049
                
                $
                678,208OC
                    energy drink segment
                
                
                68,595
                
                
                146,643Total
                
                $
                537,644
                
                $
                824,851
  A
        summary
        of operating income or (loss) by segment for the three and six months ended
        September 30, 2007, is as follows:
 Three
                    Months Ended
                
                Six
                    Months EndedSeptember
                    30, 2007
                
                September
                    30, 2007Water
                    treatment segment
                
                $
                24,750
                
                $
                (136,369
                )OC
                    energy drink segment
                
                
                (92,929
                )
                
                (184,996
                )Corporate
                    segment
                
                
                (1,186,859
                )
                
                (2,286,086
                )Total
                
                $
                (1,255,038
                )
                $
                (2,607,451
                )
  During
        the quarter ended September 30, 2007, sales to a single customer were 100%
        and
        58.1% of total sales for revenues related to water-treatment technology and
        revenues related to OC energy drink product sales, respectively.
 
 As
        of
        September 30, 2007, all assets of the Company’s operating segments are sourced
        to the United States of America. A summary of the net assets related to the
        water treatment segment and to the OC Energy drink segment, after eliminating
        all inter-company assets, are as follows:
 Water
                    treatment segment
                
                $
                6,113,536OC
                    energy drink segment
                
                
                689,204Corporate
                    segment
                
                
                218,688Total
                
                $
                7,021,428
  14
 **RG
          Global Lifestyles, Inc.**
 Notes
          to
          consolidated financial statements
 (unaudited)
 **Note
        9 – Related Party Transactions**
 
 Effective
        April 1, 2006, the Company entered into an agreement with a company wholly
        owned
        by the former Chief Executive Officer of the Company for the subleasing of
        office space and administrative support services. During the six months ended
        September 30, 2007 and 2006, payments to this related party for these services
        were $0 and $51,915, respectively. The agreement was cancelled effective
        June 1,
        2007.
 
 **Note
        10 – Subsequent Event**
 
 On
        September 1, 2007, the Board of Directors determined that it is in the best
        interest of the Company to raise money through equity investment from accredited
        investors, and authorized the commencement of a private offering, exempt
        from
        registration for up to 3,000,000 shares of common stock at $0.30 per share
        coupled with warrants based upon one share per dollar invested with an exercise
        price of $0.30 per share. The Board of Directors authorized the issuance
        of up
        to 3,000,000 warrants in connection with the private offering. In October
        2007,
        the Company received an aggregate of $600,000 from three accredited investors
        under the terms of the above offering.
  15




FORWARD-LOOKING
      STATEMENTS





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:




o
            Increased
                competitive pressures from existing competitors and new
                entrants;o
            Deterioration
                in general or regional economic conditions;o
            Adverse
                state or federal legislation or regulation that increases the costs
                of
                compliance, or adverse findings by a regulator with respect to existing
                operations;o
            Ability
                to grow business in its relatively new OC Energy Drink product lines
                and
                CFS products and services 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;o
            If
                acquisitions are made, the costs and successful integration of
                acquisitions;o
            Barriers
                in trade with foreign countries or tariff regulations and other United
                States and foreign laws;o
            Loss
                of customers or sales weakness;o
            Effect
                of environmental regulations in the filed of wastewater treatment
                associated with coal bed methane mining;o
            Inability
                to achieve future sales levels or other operating
                results;o
            Ability
                to locate suitable new products for distribution within our business
                sector, and retain licensing rights to such new products on acceptable
                terms;o
            The
                continuation of favorable trends, including the drop in affordable
                potable
                water globally;o
            Outcomes
                and costs associated with litigation and potential compliance
                matters;




16




o
            Inadequacies
                in the Company’s internal control over financial reporting, which could
                result in inaccurate or incomplete financial reporting;o
            Dilution
                to Shareholders from convertible debt or equity
                financings;o
            Loss
                of key management or other unanticipated personnel
                changes;o
            The
                unavailability of funds for capital expenditures; ando
            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, 2007, 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**





You
      should read the following discussion and analysis of our financial condition
      and
      results of operations together with "Selected Financial Data" and our financial
      statements and related notes appearing elsewhere in this quarterly report.
      This
      discussion and analysis contains forward-looking statements that involve risks,
      uncertainties, and assumptions. The actual results may differ materially from
      those anticipated in these forward-looking statements as a result of certain
      factors, including, but not limited to, those presented under "Risk Factors"
      in
      our prior SEC filings and elsewhere in this quarterly report.





OVERVIEW





OC
      ENERGY DRINKS


The
      Company has launched its line of "OC ENERGY" caffeinated energy drinks and
      oxygenated water fashioned for the Orange County lifestyle. Presently there
      are
      three Energy Drinks and one Highly Oxygenated Water. The Energy Drinks consist
      of a 2-oz high-powered "shot" energy drink ("Insane"), a 10-oz energy drink
      ("KIK-IT") and a 10-oz diet energy drink ("KIK-IT Diet") in addition to a 17-oz
      ("O2") bottle of 100% pure oxygenated structured water. Befitting the OC
      lifestyle, the energy drinks are low in natural sugar and high in vitamins
      and
      minerals. The bottles are custom-designed. Sales of the products have commenced
      in the first quarter of the fiscal year ending March 30, 2008.





On
      June
      16, 2007 the Company changed the name of its wholly owned subsidiary On Line
      Surgery, Inc. to OC Energy Drink, Inc. and commenced operation of this
      subsidiary on July 1, 2007. On September 1, 2007, the Company entered into
      a
      definitive agreement (the “OCE Agreement”) with three individuals to acquire
      certain tangible and intangible assets. Pursuant to the OCE Agreement, the
      Company issued 654,935 shares of its common stock valued at $474,828 (using
      the
      average value of three days prior and subsequent to date of issuance of
      approximately $0.73 per share), assumed liabilities of $80,000, and issued
      474
      shares of common stock of the new OC Energy Drink, Inc. subsidiary (24% of
      the
      resulting 1,974 issued and outstanding shares) valued at $43,903 to the three
      individuals in exchange for these assets. The valuation of the 24% attributed
      to
      the subsidiary shares issued was determined by use of the discounted future
      cash
      flow method using projected results of operations of the new subsidiary for
      a
      five (5) year period, reduced to present value as of the date of the
      transaction, at a discount of 5.25%. The purchase price of the assets was
      allocated as follows: $53,912 to the tangible assets, $80,000 to accrued
      liabilities assumed and $464,819 to the intangible assets. The tangible assets
      are being depreciated over their estimated useful life of five years, and the
      intangible assets are being amortized over their estimated useful life of 15
      years. The estimated useful life of the intangibles is subject to adjustment
      as
      further research will be required to more accurately establish the estimated
      life of these intangibles; preliminary research indicates that the range of
      estimated useful life for these certain intangibles will likely be between
      3 and
      7 years. During the quarter ended September 30, 2007, the Company recorded
      $1,027 of depreciation and $2,547 of amortization expense attributable to these
      assets.




17





At
      September 30, 2007 the Company recorded as other income-Minority Interest on
      the
      consolidated statements of operations, the change in value of the subsidiary
      based upon 24% of the subsidiary's net loss from operations in the period then
      ended, and correspondingly reduced the long term liability.




The
      Company operated OC Energy Drink, Inc. as a wholly owned subsidiary for the
      months of July and August 2007, and as a majority owned subsidiary for the
      month
      of September, 2007. The results of operations of this subsidiary are included
      in
      the consolidated statements of operations of the Company at September 30, 2007.
      The Company’s percentage of controlling interest requires that operations be
      included in the consolidated financial statements. The percentage of equity
      interest that is not owned by the Company is shown as “Minority interest
      in subsidiary” in the consolidated balance sheets and consolidated statements of
      operations. The change in value of the minority interest in subsidiary is
      reflected as other income in the attached consolidated statements of
      operations.





CFS
      TECHNOLOGY





The
      Company operates CFS as a division. CFS sells and/or leases, and provides
      professional support of its proprietary wastewater treatment technology ("CFS
      Technology") for the reclamation of wastewater associated with the production
      of
      methane in coal bed applications. The technology removes sodium and other
      pollutants from such wastewater allowing it to be returned to the environment
      within compliance regulations. The successful removal of the treated wastewater
      in turn allows energy companies to harvest and sell methane associated with
      coal
      beds.





In
      March
      2007, the Company entered into an agreement for the construction, sale and
      support of a plant utilizing its CFS Technology with Black Diamond
      Energy.





On
      June
      22, 2007, the Company entered into an agreement with Yates Petroleum Corporation
      on a "build, own, operate" model whereby CFS will construct, own and operate
      a
      plant using the CFS Technology and charge a royalty on a per barrel basis of
      reclaimed water. During the second fiscal quarter of 2008, the Company incurred
      $784,131 of capitalized costs in connection with the construction of the
      processing plant in Wyoming.




18


CFS
      is
      currently pursuing additional energy companies in Wyoming, and other locations,
      for the lease or sale, construction, use and/or support of the CFS Technology
      and anticipates executing definitive agreements.





ATMOSPHERIC
      PURE WATER GENERATORS




Through
      its subsidiary Aquair, the Company pursues its plans to distribute licensed
      environmentally-friendly water generating equipment that creates purified
      drinking water from air for residential and commercial uses, and converts
      brackish, polluted, or grey water to purified water.





Aquair
      has acquired the rights to market and distribute water generators that
      precipitate drinking water from air. The various water generating machines
      have
      been tested in various locations. As of April 2007, the Company has sold limited
      amounts of units to customers in the U.S. and Asia, and anticipates further
      sales to those regions and Australia. However the Company is currently
      dedicating less resources towards the sales of atmospheric water generators
      than
      in the past, as it is focusing on sales and marketing OC Energy Drinks and
      CFS
      Technology projects.





MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





RESULTS
      OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2007 AND 2006.





The
      following discussion compares results of continuing operations of the Company
      only during the periods described.


ThreeMonthsEndedSeptember3020062007
              
              (As
                  restated)INCOME
                  STATEMENT DATARevenue
              
              $
              537,644
              
              $
              -Gross
                  profit (loss)
              
              $
              46,124
              
              $
              (58,600
              )Loss
                  from operations
              
              $
              (1,255,038
              )
              $
              (624,074
              )Net
                  Income ( loss)
              
              $
              1
                  ,720,082
              
              $
              (3,417,259
              )Net
                  income (loss) per weighted average common share
              
              $
              0.06
              
              $
              (0.19
              )




19




BALANCE
      SHEET DATA




Total
                  assets
              
              $
              7,021,428
              
              $
              1,550,254Total
                  liabilities
              
              $
              12,274,786
              
              $
              9,736,690Stockholders'
                  deficit
              
              $
              (5,253,358
              )
              $
              (8,186,436
              )





REVENUES


For
                  the quarter ended September 30
              
              
              
              
              
              Increase/(decrease)2007
              
              2006
              
              $
              
              %Revenues
              
              $
              537,644
              
              $
              -
              
              $
              537,644
              
              
              100.0
              %


During
      the quarter ended September 30, 2007, the Company's primary source of revenues
      was sales of its water treatment technology which accounted for $469,049 of
      total revenues. Sales of OC energy drink products represented $68,595 of total
      revenues. During the quarter ended September 30, 2006 (as restated), the Company
      had no revenues. The increase in revenues related to the continuation of sales
      of water treatment technology and the commencement of sales of the Company’s
      energy drink products.





GROSS
      PROFIT (LOSS)


For
                  the quarter ended September 30
              
              
              
              
              
              Increase/(decrease)2007
              
              2006
              
              $
              
              %Gross
                  profit (loss)
              
              $
              46,124
              
              $
              (58,600
              )
              $
              104,724
              
              
              178.7.
              %


During
      the quarter ended September 30 2007, a significant portion of the cost of
      revenues related to sales of water treatment technology and production costs
      related to the cost of equipment that is being acquired for installation in
      Wyoming in connection with a contract with a customer in Wyoming. During the
      quarter ended September 30, 2006, the Company's cost revenues consisted of
      costs
      related to purchase costs for water treatment chemicals.





TOTAL
      OPERATING EXPENSES


For
                  the quarter ended September 30
              
              
              
              
              
              Increase/(decrease)2007
              
              2006
              
              $
              
              %Total
                  Operating Expenses
              
              $
              1,301,162
              
              $
              565,474
              
              $
              735,688
              
              
              130.1
              %


Our
      total
      operating expenses include personnel costs, product marketing and sales costs,
      the costs of corporate functions, accounting, transaction costs, legal, public
      company, information systems and non-cash stock-based compensation. For both
      periods, we incurred expenses for general management, and legal and accounting
      fees related to continuing operations. For the quarter ended September 30,
      2007,
      the Company expended $0 in rent paid to a then-related party, and paid $270,005
      in legal and accounting fees, compared to $51,915 and $134,362 respectively
      for
      these expenses in the quarter ended September 30, 2006.




20


OTHER
      INCOME (EXPENSE)


For
                  the quarter ended September 30
              
              
              
              
              
              Increase/(decrease)2007
              
              2006
              
              $
              
              %Other
                  Income (Expense)
              
              $
              2,956,535
              
              $
              (2,793,185
              )
              $
              5,749,720
              
              
              205.8
              %


The
      increase in other income during the quarter ended September 30, 2007 was
      directly attributed to a change in the fair value of warrants issued in
      connection with convertible notes and the fair value of the beneficial
      conversion feature of the secured convertible notes. During the quarters ended
      September 30, 2007 and 2006, change in the fair value of derivative liabilities
      were a gain of $3,588,421 and a loss of $1,968,960, respectively.




RESULTS
      OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER
      30, 2007 AND 2006.




During
      the six months ended September 30, 2007, the
      Company's primary source of revenues was sales of its water treatment technology
      which accounted for $678,208 of total revenues. Sales of OC energy drink
      products represented $146,643 of total revenues. During the six months ended
      September 30, 2006, the Company had only $425 in revenues. The increase in
      revenues related to the continuation of sales of water treatment technology
      and
      the commencement of sales of the Company's energy drink products.




GROSS
      PROFIT (LOSS)




During
      the six months ended September 30, 2007, $631,401
      of cost of revenues related to sales of water treatment technology and
      production costs related to the cost of equipment that is being acquired for
      installation in Wyoming in connection with a contract with a customer in
      Wyoming. Cost of revenues related to sales of energy drink products amounted
      to
      $120,854. During the six months ended September 30, 2006, the Company's cost
      revenues consisted of costs related to $64,528 of purchase costs for water
      treatment chemicals.


TOTAL
        OPERATING EXPENSES
 
 During
        the six months ended September 30, 2006, our total operating expenses of
        $2,680,047 include personnel costs, product marketing and sales costs, the
        costs
        of corporate functions, accounting, transaction costs, legal, public company,
        information systems and non-cash stock-based compensation. Total operating
        costs
        for the six months ended September 30, 2006 were $1,770,105. For both periods,
        we incurred expenses for general management, and legal and accounting fees
        related to continuing operations.
 
 OTHER
        INCOME (EXPENSE)
 
 For
        the
        six months ended September 30, 2007, the Company reported $2,466,878 of other
        income, compared to a total of other expense of $7,422,908 in the six months
        ended September 30, 2006. The increase in other income during the six months
        ended September 30, 2007 was directly attributed to a change in the fair
        value
        of warrants issued in connection with convertible notes and the fair value
        of
        the beneficial conversion feature of the secured convertible notes. During
        the
        six months ended September 30, 2007 and 2006, change in the fair value of
        derivative liabilities were a gain of $4,530,506 and loss of $2,168,279
        respectively.
 
 LIQUIDITY
        AND CAPITAL RESOURCES
 
 The
        accompanying consolidated financial statements have been prepared on a
        going-concern basis, which contemplates the realization of assets and
        satisfaction of liabilities and other commitments in the normal course of
        business. The report of our independent auditors contains an explanatory
        paragraph expressing substantial doubt about our ability to continue as a
        going
        concern as a result of recurring losses and negative cash flows. The financial
        statements do not include any adjustments relating to the recoverability
        and
        classification of recorded asset amounts or the amounts and classification
        of
        liabilities that may be necessary if we are unable to continue as a going
        concern.
 
 Our
        principal sources of liquidity consist of cash and cash equivalents, cash
        generated from product sales and construction contracts, and the issuance
        of
        equity and/or debt securities. In addition to funding operations, our principal
        short-term and long-term liquidity needs have been, and are expected to be,
        the
        debt service requirements of our notes payable, capital expenditures and
        general
        corporate expenses. In addition, as our sales and operations ramp up, we
        anticipate significant purchases of equipment for the construction of plants
        utilizing the CFS Technology. As of September 30, 2007, we had cash and cash
        equivalents of $123,735 and notes payable outstanding of
        $2,561,118.
 
 We
        believe that our existing sources of liquidity, along with cash expected
        to be
        generated from product sales and construction contracts and cash generated
        from
        the issuance of debt and equity securities, will be sufficient to fund our
        operations, anticipated capital expenditures, working capital and other
        financing requirements through December 2007. We will need to continue a
        focused
        program of capital expenditures to effectuate our CFS Technology project
        constructions and OC Energy drink production capacity expansion. In order
        to
        fund capital expenditures or increase our working capital above our current
        plan, or complete any acquisitions, we may seek to obtain additional debt
        or
        equity financing. We may also need to seek to obtain additional debt or equity
        financing if we experience downturns or cyclical fluctuations in our business
        that are more severe or longer than anticipated, or if we fail to achieve
        anticipated revenue, experience significant increases in the costs associated
        with products sales, or if we engage in additional strategic transactions.
        However, we cannot assure you that such financing will be available to us
        on
        favorable terms, or at all. If, after utilizing the existing sources of capital
        available to the Company, further capital needs are identified and the Company
        is not successful in obtaining the financing, it may be forced to curtail
        its
        existing or planned future operations.




21


During
      the quarter ended September 30, 2007, we funded operations through existing
      cash
      on hand, cash receipts related to sales of our water treatment technology,
      sales
      of our energy drink products and through short term notes issued to qualified
      investors in the amount of $250,000.





OPERATING
      ACTIVITIES





Operating
      cash flows used during the six months ended September 30, 2007, reflect our
      net
      loss of ($121,988) and increased working capital requirements, partially offset
      by non-cash charges (depreciation, amortization of intangible assets,
      stock-based compensation, non-cash interest expense including the amortization
      of debt discounts, changes in operating assets and liabilities, and the change
      in the fair value of derivative instruments) of approximately $509,121.





Operating
      cash flows used during the quarter ended September 30, 2006, reflect our net
      loss of ($9,257,916) and increased working capital requirements, partially
      offset by non-cash charges related to the changes in operating assets and
      liabilities and amortization of debt discounts of approximately $8,286,127.





INVESTING
      ACTIVITIES





Investing
      cash flows using during the quarter ended September 30, 2007, reflect $41,629
      of
      cash used for capitalized costs, net of amounts in accounts payable, incurred
      in
      connection with the construction of a water treatment system for a customer
      in
      Wyoming, and $31,874 of cash used for the purchase of fixed assets for both
      the
      Company and its subsidiary.





FINANCING
      ACTIVITIES





Financing
      cash flows provided during the quarter ended September 30, 2007, reflect
      proceeds from notes payable in the amount of $250,000, and $62,500 in proceeds
      from the exercise of stock options by employees and consultants. Financing
      cash flows for the quarter ended September 30, 2006 included $1,300,000 of
      proceeds from notes payable, partially offset by $148,970 of debt issuance
      costs.




22


CRITICAL
      ACCOUNTING POLICIES





We
      prepare our consolidated financial statements in accordance with accounting
      principles generally accepted in the United States of America. The preparation
      of these financial statements requires the use of estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and the disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amount of revenues and expenses during the reporting period. Our
      management periodically evaluates the estimates and judgments made. Management
      bases its estimates and judgments on historical experience and on various
      factors that are believed to be reasonable under the circumstances. Actual
      results may differ from these estimates as a result of different assumptions
      or
      conditions.





The
      methods, estimates, and judgment we use in applying our most critical accounting
      policies have a significant impact on the results we report in our financial
      statements. The SEC has defined "critical accounting policies" as those
      accounting policies that are most important to the portrayal of our financial
      condition and results, and require us to make our most difficult and subjective
      judgments, often as a result of the need to make estimates of matters that
      are
      inherently uncertain. Based upon this definition, our most critical estimates
      are described below under the heading "Revenue Recognition." We also have other
      key accounting estimates and policies, but we believe that these other policies
      either do not generally require us to make estimates and judgments that are
      as
      difficult or as subjective, or it is less likely that they would have a material
      impact on our reported results of operations for a given period. For additional
      information see Note 1, "Summary of Organization and Significant Accounting
      Policies" in the notes to our audited financial statements appearing elsewhere
      in this report. Although we believe that our estimates and assumptions are
      reasonable, they are based upon information presently available, and actual
      results may differ significantly from these estimates.





IMPAIRMENT
      OF LONG-LIVED AND INTANGIBLE ASSETS





The
      Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
      144
      ("SFAS 144"). The Statement requires that long-lived assets and certain
      identifiable intangibles held and used by the Company be reviewed for impairment
      whenever events or changes in circumstances indicate that the carrying amount
      of
      an asset may not be recoverable. Events relating to recoverability may include
      significant unfavorable changes in business conditions, recurring losses, or
      a
      forecasted inability to achieve break-even operating results over an extended
      period. The Company evaluates the recoverability of long-lived assets based
      upon
      forecasted undercounted cash flows. Should impairment in value be indicated,
      the
      carrying value of intangible assets will be adjusted, based on estimates of
      future discounted cash flows resulting from the use and ultimate disposition
      of
      the asset. SFAS No. 144 also requires assets to be disposed of be reported
      at
      the lower of the carrying amount or the fair value less costs to
      sell.




23


REVENUE
      RECOGNITION





Product
      sales - For revenue from product sales, the Company recognizes revenue in
      accordance with Staff Accounting Bulletin No. 104, Revenue Recognition
      ("SAB104"), which superseded Staff Accounting Bulletin No. 101, Revenue
      Recognition in Financial Statements ("SAB101"). SAB 101 requires that four
      basic
      criteria must be met before revenue can be recognized: (1) persuasive evidence
      of an arrangement exists; (2) delivery has occurred; (3) the selling price
      is
      fixed and determinable; and (4) collectibility is reasonably assured.
      Determination of criteria (3) and (4) are based on management's judgments
      regarding the fixed nature of the selling prices of the products delivered
      and
      the collectibility of those amounts. Provisions for discounts and rebates to
      customers, estimated returns and allowances, and other adjustments are provided
      for in the same period the related sales are recorded.





Construction
      contracts - In accordance with Statement of Position 81-1 "Accounting for
      Performance of Construction-Type and Certain Production-Type Contracts", the
      Company uses the percentage completion method for the recognition of revenue
      received in connection with it's engineering, equipment sale and installation
      contracts. In making the estimate of the percentage of revenue to recognize,
      the
      Company compares costs to the total projected cost of the contract. Accordingly,
      the Company recognizes that portion of the revenue and record the balance of
      the
      cash received as deferred revenues, which is included within accrued liabilities
      on the accompanying balance sheet.





STOCK-BASED
      COMPENSATION





On
      December 16, 2004, the FASB published Statement of Financial Accounting
      Standards No. 123 (Revised 2004), "Share-Based Payment" ("SFAS 123R"). SFAS
      123R
      requires that compensation cost related to share-based payment transactions
      be
      recognized in the financial statements. Share-based payment transactions within
      the scope of SFAS 123R include stock options, restricted stock plans,
      performance-based awards, stock appreciation rights, and employee share purchase
      plans. The provisions of SFAS 123R were effective as of the first interim period
      that begins after December 15, 2005.




24




The
      Company has adopted SFAS 123R, which requires disclosure of the fair value
      and
      other characteristics of stock options, and SFAS 148 "Accounting for Stock-Based
      Compensation — Transition and Disclosure," which requires more prominent
      disclosure about the effects of an entity's accounting policy decisions with
      respect to stock-based compensation on reported net loss. The Company has
      reflected the expense of such stock based compensation based on the fair value
      at the grant date for awards consistent with the provisions of SFAS No. 123R.
      There were no options issued to employees as of March 31, 2006, all other
      options and warrants had been accounted for at fair value using the Black
      Scholes valuation model. Thus, the impact of adopting SFAS 123R was immaterial
      to the Company's financial statements.





In
      connection with the adoption of SFAS 123R, we estimate the fair value of our
      share-based compensation utilizing the Black-Scholes pricing model. The fair
      value of the options granted is amortized as compensation expense on a straight
      line basis over the requisite service period of the award, which is generally
      the vesting period. The fair value calculations involve significant judgments,
      assumptions, estimates and complexities that impact the amount of compensation
      expense to be recorded in current and future periods. The factors include:
      (1)
      The time period our stock-based compensation awards are expected to remain
      outstanding based upon the average of the original award period and the
      remaining vesting period in accordance with SEC Staff Accounting Bulletin 107
      simplified method. Our Company's stock trading history has been relatively
      short
      (since January 2005). Our expected term assumption for awards issued during
      the
      year ended March 31, 2007 was five years. As additional evidence develops from
      our stock's trading history, the expected term assumption will be refined to
      capture the relevant trends. (2) The future volatility of our stock has been
      estimated based upon our entire trading history from inception to the reporting
      date. (3) A dividend yield of zero has been assumed for awards issued during
      the
      quarter ended September 30, 2007 based upon our actual past experience and
      the
      fact that we do not anticipate paying a dividend on our shares in the near
      future. (4) We have based our risk-free interest rate assumption for awards
      issued during the quarter September 30, 2007 based upon the weighted-average
      yield of 5.25% available on US Treasury debt instruments with an equivalent
      expected term. (5) Forfeiture rates for awards issued during these periods
      have
      not yet been estimated as the Company has only recently issued share based
      awards and no forfeiture data has been available to the Company as a
      result.





The
      Company's accounting policy for equity instruments issued to consultants and
      vendors in exchange for goods and services follows the provisions of Emerging
      Issues Task Force ("EITF") 96-18, "Accounting for Equity Instruments That are
      Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
      Goods or Services". The measurement date for the fair value of the equity
      instruments issued is determined at the earlier of (i) the date at which a
      commitment for performance by the consultant or vendor is reached or (ii) the
      date at which the consultant or vendor's performance is complete. In the case of
      equity instruments issued to consultants, the fair value of the equity
      instrument is recognized over the term of the consulting agreement.




25


RECENT
      ACCOUNTING PRONOUNCEMENTS





In
      June
      2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in
      Income Taxes, an interpretation of FASB Statement 109" ("FIN 48"). FIN 48
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. FIN 48 is effective for fiscal years beginning in years
      beginning after December 15, 2006. The adoption of FIN 48 did not have a
      significant impact on the consolidated financial statements.





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS
      157"). SFAS 157 provides accounting guidance on the definition of fair value
      and
      establishes a framework for measuring fair value and requires expanded
      disclosures about fair value measurements. SFAS 157 is effective for financial
      statements issued for fiscal years beginning after November 15, 2007. We plan
      to
      adopt the provisions of SFAS 157 on April 1, 2008 and we are currently assessing
      the impact of the adoption of SFAS 157 on our results of operations and
      financial condition.





In
      February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities—Including an amendment of FASB
      Statement No. 115" ("SFAS 159"). SFAS 159 permits entities to choose to measure
      financial instruments and certain other items at fair value. The objective
      is to
      improve financial reporting by providing entities with the opportunity to
      mitigate volatility in reported earnings caused by measuring related assets
      and
      liabilities differently without having to apply complex hedge accounting
      provisions. SFAS 159 is effective for financial statements issued for fiscal
      year beginning after November 15, 2007. We are currently assessing the impact
      of
      adopting SFAS 159 on our results of operations and financial
      condition.





OFF-BALANCE
      SHEET ARRANGEMENTS





The
      Company does not have any off-balance sheet arrangements that have or are
      reasonably likely to have a current or future effect on the Company's financial
      condition, changes in financial condition, revenues or expenses, results of
      operations, liquidity, capital expenditures or capital resources that are
      material to investors.





RISK
      FACTORS





Information
      on risk factors can be found in our Annual Report on Form 10-KSB for the year
      ended March 30, 2007 filed with the SEC on July 13, 2007, and our Registration
      Statement on Form SB-2 dated August 6, 2007, as amended. There have been no
      material changes to our risk factors during the quarter ended September 30,
      2007, other than discussed below.




26


*SHARES
      OF OUR TOTAL OUTSTANDING COMMON STOCK THAT ARE RESTRICTED FROM IMMEDIATE RESALE
      BUT MAY BE SOLD INTO THE MARKET IN THE FUTURE COULD CAUSE THE MARKET PRICE
      OF
      OUR COMMON STOCK TO DROP SIGNIFICANTLY, EVEN IF OUR BUSINESS IS DOING
      WELL.*





As
      of
      September 30, 2007, we had 28,769,302 shares of Common Stock issued and
      outstanding of which approximately 14,389,485 shares are restricted shares.
      Rule
      144 provides, in essence, that a person holding "restricted securities" for
      a
      period of one year may sell only an amount every three months equal to the
      greater of (a) one percent of a company's issued and outstanding shares, or
      (b)
      the average weekly volume of sales during the four calendar weeks preceding
      the
      sale.





The
      amount of "restricted securities" which a person who is not an affiliate of
      our
      company may sell is not so limited, since non-affiliates may sell without volume
      limitation their shares held for two years if there is adequate current public
      information available concerning our company. In such an event, "restricted
      securities" would be eligible for sale to the public at an earlier date. The
      sale in the public market of such shares of Common Stock may adversely affect
      prevailing market prices of our Common Stock.





**Item
      3. Controls and Procedures**





As
      required by SEC rules, the Company regularly evaluates the effectiveness of
      disclosure controls and procedures and report its conclusions about the
      effectiveness of the disclosure controls quarterly on our Forms 10-QSB and
      annually on our Forms 10-KSB.





In
      the
      course of the previous fiscal quarter ended June 30, 2007, our chief executive
      officer and chief financial officer concluded that our disclosure controls
      and
      procedures were not effective in ensuring that material information relating
      to
      the Company required to be disclosed by the Company in reports that it files
      or
      submits under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in the SEC's rules and forms and that such
      information is accumulated and communicated to management, including the chief
      executive officer and the chief financial officer, as appropriate, to allow
      timely decisions regarding required disclosure.





The
      Company's management has concluded that the consolidated financial statements
      included in this report on Form 10-QSB for the quarter ended September 30,
      2007
      fairly state, in all material respects, the Company's financial condition,
      results of operations and cash flows for the periods presented in conformity
      with generally accepted accounting principles. The reason for this conclusion
      is
      that the Company ascertained the errors associated with the presentation of
      the
      financial information in the course of the review of its consolidated financial
      statements for the quarter ended June 30, 2007.




27


PLAN
      FOR
      REMEDIATION OF MATERIAL WEAKNESSES





The
      Company's Audit Committee has met, reviewed the internal controls over financial
      reporting and has made certain recommendations regarding the use of qualified
      independent accounting consultants to assist in the review of financial
      statements and the calculation and presentation of complex financial
      transactions.





CHANGES
      IN INTERNAL CONTROLS





Changes
      in our internal controls are currently being designed and reviewed and will
      be
      implemented on an ongoing basis.





LIMITATIONS
      ON THE EFFECTIVENESS OF CONTROLS





Our
      management, including our chief executive officer and chief financial officer,
      does not expect that our disclosure controls and internal controls will prevent
      all error and all fraud. A control system, no matter how well conceived and
      operated, can provide only reasonable, and not absolute assurance that the
      objectives of the control system are met. Further, the design of a control
      system must reflect the fact that there are resource constraints, and the
      benefits of controls must be considered relative to their costs. Due to the
      inherent limitations in all control systems, no evaluation of controls can
      provide absolute assurance that all control issues and instances of fraud,
      if
      any, within the Company have been detected. These inherent limitations include
      the realities that judgments in decision making can be faulty, and that
      breakdowns can occur because of simple error or mistake. Additionally, controls
      can be circumvented by the individual acts of some persons, by collusion of
      two
      or more people, or by management override of the control.





The
      design of any system of controls is also based in part upon certain assumptions
      about the likelihood of future events occurring. There can be no assurance
      that
      any design will succeed in achieving its stated goals under all potential future
      conditions; over time, a control may become inadequate because of changes in
      conditions, or the degree of compliance with the policies or procedures may
      deteriorate. Due to the inherent limitations in a cost-effective control system,
      misstatements due to error or fraud may occur and not be detected. Management
      of
      the Company is committed to continually review and redesign its internal
      controls to ensure compliance by the Company with all applicable rules and
      standards regarding disclosures and financial reporting.




28




**PART
      II — OTHER INFORMATION**





**Item
      1. Legal Proceedings**





On
      July
      3, 2007, the Company and its subsidiary Aquair entered into a settlement
      agreement with plaintiff Atmospheric Water Technologies, Inc. in the Orange
      County Superior Court Case No. 05CC09548. Under the terms of the settlement,
      (i)
      all parties wer released from liability, (ii) the Company and Aquair, as well
      as
      the Company's late Chairman and CEO Louis Knickerbocker, were dismissed with
      prejudice from the lawsuit, (iii) plaintiff issued a press release announcing
      the dismissal of the case, and (iv) the Company, through its insurer, paid
      $15,000 to plaintiff. The case has now been dismissed with
      prejudice.





The
      Company's ongoing litigation with it previous investors the NIR Group has been
      remanded back to the New York Supreme Court, from the federal district court,
      and is now titled AJW Partners LLC, AJW Offshore Ltd, AJW Qualified Partners
      LLC, and New Millenium Capital Partners II LLC v. RG Global Lifestyles, Inc.
      and
      is Case No. 600323/07. Plaintiffs voluntarily dismissed Louis Knickerbocker
      without prejudice (therefore the caption has now changed). The causes of action
      pleaded are for several breach of contract claims, while the Company has
      asserted defenses and counterclaimed for several claims based on market
      manipulations and securities law violations. The parties recently unsuccessfully
      attempted to settle the lawsuit via mediation. The lawsuit now has entered
      into
      the discovery phase. The Company cannot reasonably estimate the liability
      attributable to this pending litigation, and accordingly has not recorded a
      reserve for liability on the consolidated financial statements of the Company
      as
      of September 30, 2007.





Other
      than the foregoing lawsuits, the Company is not aware of any litigation, either
      pending or threatened.





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





In
      September 2007, the Company entered into a conversion and subscription agreement
      with one individual (a related party Director and accredited investor) who
      had
      been assigned an aggregate of $156,095 of principal and interest on the
      remaining portion of a $300,000 promissory note which was due to be paid by
      the
      Company on March 31, 2007 to a third party. In furtherance of this agreement,
      on
      September 4, 2007, the related party assignee of the note agreed to cancel
      his
      assigned note, and in lieu of repayment, receive an aggregate of 780,475 shares
      of the Company’s restricted common stock, which represents a sale of restricted
      common stock at $0.20 per share. The securities were sold to this Related Party
      investor in reliance on Section 4(2) under the Securities Act of 1933, as
      amended.





**Item
      3. Defaults Upon Senior Securities**





None.





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





The
      company’s Annual Meeting of Shareholders was held pursuant to notice on October
      12, 2007. Five proposals were submitted to a vote of the shareholders of the
      Company:




29


1.
      To
      elect five (5) directors to hold office for a one year ter and until each of
      their successors are elected and qualified;





2.
      To
      ratify the appointment of McKennon Wilson & Morgan LLP as independent
      auditor for the Company;





3.
      To
      authorize the Company’s 2007 Incentive and Nonstatutory Stock Option
      Plan;





4.
      To
      amend the Company’s Articles of Incorporation to change (shorten) the Company’s
      name to RG Global; and





5.
      To act
      upon other business as may properly come before the meeting.





A
      quorum
      was declared to be present, and upon motion duly made, seconded and voted upon,
      the five proposals were approved by the requisite vote of a majority of the
      security holders of the Company. There was no further proposal submitted for
      a
      vote by the security holders and the meeting was adjourned.





**Item
      5. Other Information**





None.





**Item
      6. Exhibits** .





The
      following Exhibits are filed or incorporated by reference as part of this
      Quarterly Report on Form 10-QSB:





ExhibitNumber
            
            Description of Document31.1
            
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act31.2
            
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act32.1
            
            Certification
                pursuant to Section 906 of the Sarbanes-Oxley Act32.2
            
            Certification
                pursuant to Section 906 of the Sarbanes-Oxley
                Act


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
            
            DateGrant
                King
            
            Chief
                Executive Officer
            
            November
                15, 2007William
                C. Hitchcock
            
            Chief
                Financial Officer
            
            November
                15, 2007




30