**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**




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




For
      the
      quarterly period ended: June 30, 2007




or




o  TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      transition period from  to




**Commission
      File No. 333-120807**




**CHINA
      PREMIUM LIFESTYLE ENTERPRISE, INC.**


(Exact
      name of Registrant as specified in its charter)


**Nevada**
            
            **11-3718650**(State
                or other jurisdiction of incorporation or
            
            (IRS
                Employer Identificationorganization)
            
            No.)10/F,
                Wo Kee Hong Building585-609
                Castle Peak RoadKwai
                Chung, N.T. Hong Kong(Address
                of principal executive offices)(852)
                2514-4880(Registrant’s
                telephone number, including area code)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports) and (2) has been subject to such filing requirements
      for
      the past 90 days. Yes x No o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. (See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act):




Large Accelerated Filer  o
            Accelerated Filer  o
            Non-Accelerated
                Filerx






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




The
      number of shares of Common Stock outstanding as of July 31, 2007 was
      122,672,214.









**CHINA
      PREMIUM LIFESTYLE ENTERPRISE, INC.**


**FORM
      10-Q**




**FOR
      THE QUARTERLY PERIOD ENDED JUNE 30, 2007**




**TABLE
      OF CONTENTS**


PagePART
                  I:
                FINANCIAL
                  INFORMATION
                3Item
                    1.
                Condensed
                    Consolidated Financial Statements.
                3Condensed
                    Consolidated Balance Sheets as of June 30, 2007 (unaudited) and
                    December
                    31, 2006
                4Condensed
                    Consolidated Statements of Income (unaudited) for the three and
                    six months
                    ended
                  June
                    30, 2007 and 2006
                5Condensed
                    Consolidated Statements of Cash Flows (unaudited) for the six
                    months
                    ended
                  June
                    30, 2007 and 2006
                6Notes
                    to Condensed Consolidated Financial Statements (unaudited)
                7Item
                    2.
                Management’s
                    Discussion and Analysis of Financial Condition and Results of
                    Operations.
                13Item
                    3.
                Quantitative
                    and Qualitative Disclosures about Market Risk.
                20Item
                    4.
                Controls
                    and Procedures.
                20PART
                  II:
                OTHER
                  INFORMATION
                22Item
                    1.
                Legal
                    Proceedings.
                22Item
                    1A.
                Risk
                    Factors.
                22Item
                    2.
                Unregistered
                    Sales of Equity Securities and Use of Proceeds.
                22Item
                    3.
                Defaults
                    Upon Senior Securities.
                22Item
                    4.
                Submission
                    of Matters to a Vote of Security Holders.
                22Item
                    5.
                Other
                    Information.
                22Item
                    6.
                Exhibits.
                22**SIGNATURES**
                23**EXHIBITS**




2




**FINANCIAL
      INFORMATION**




**Item
      1.** **Condensed
      Consolidated Financial Statements.**





**CHINA
      PREMIUM LIFESTYLE ENTERPRISE, INC. AND SUBSIDIARIES**





**CONDENSED
      CONSOLIDATED FINANCIAL STATEMENTS**





**AS
      OF JUNE 30, 2007 AND**





**FOR
      THE SIX MONTHS ENDED JUNE 30, 2007**





**INDEX
      TO THE CONDENSED**  **CONSOLIDATED
      FINANCIAL STATEMENTS**





CONDENSED
                CONSOLIDATED BALANCE SHEETS (UNAUDITED)
            
            
            4CONDENSED
                CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
            
            
            5CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
            
            
            6NOTES
                TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
            
            
            7




3




**CHINA
      PREMIUM LIFESTYLE ENTERPRISE, INC. AND SUBSIDIARIES**




**CONDENSED
                CONSOLIDATED BALANCE
                SHEETS**





**June
                30,**
            
            **December
                31,****2007**
            
            **2006**$
            
            $**(unaudited)****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            
            446,615
            
            
            3,475,635Restricted
                cash
            
            
            383,808
            
            
            385,629Trade
                receivables, net of provision
            
            
            5,562,603
            
            
            11,246,621Inventory,
                net
            
            
            11,628,663
            
            
            6,815,863Prepayments
            
            
            1,483,453
            
            
            1,506,258Other
                current assets
            
            
            2,029,279
            
            
            1,503,626Amounts
                due from affiliates
            
            
            9,260,633
            
            
            4,503,367Amount
                due from an associate
            
            
            1,070,096
            
            
            457,267Total
                current assets
            
            
            31,865,150
            
            
            29,894,266Property
                and equipment, net
            
            
            2,109,353
            
            
            2,377,656Investment
                in an associate
            
            
            1,339,039
            
            
            1,355,530Deferred
                income taxes
            
            
            537,332
            
            
            539,880**TOTAL
                ASSETS**
            
            
            35,850,874
            
            
            34,167,332**LIABILITIES
                AND SHAREHOLDERS’ EQUITY**Current
                liabilities:Short-term
                borrowings
            
            
            7,507,587
            
            
            5,315,497Obligations
                due under finance lease - current portion
            
            
            166,317
            
            
            167,106Bills
                payable
            
            
            1,390,705
            
            
            4,412,575Trade
                payables
            
            
            1,725,927
            
            
            480,859Deposits
                received
            
            
            14,044,054
            
            
            8,607,049Other
                current liabilities
            
            
            2,558,027
            
            
            7,331,020Amounts
                due to affiliates
            
            
            11,637
            
            
            -Total
                current liabilities
            
            
            27,404,254
            
            
            26,314,106Long-term
                liabilities:Obligations
                due under finance lease - non-current portion
            
            
            27,720
            
            
            111,404**TOTAL
                LIABILITIES**
            
            
            27,431,974
            
            
            26,425,510Commitments
                and ContingenciesMinority
                interests
            
            
            3,774,635
            
            
            3,318,358Shareholders'
                equityPreferred
                stockAuthorized:
                100,000,000 preferred stock, par value $0.001
              Issued
                and outstanding: 495,791 shares as at June 30, 2007 (1,533,973 as
                at
              December
                31, 2006)
            
            
            496
            
            
            1,534Common
                stockAuthorized:
                400,000,000 common stock, par value $0.001
              Issued
                and outstanding: 122,672,214 shares as at June 30, 2007 (26,929,180
                as at
              December
                31, 2006)
            
            
            122,704
            
            
            26,961Additional
                paid-in-capital
            
            
            5,581,457
            
            
            5,676,162Accumulated
                other comprehensive income
            
            
            143,709
            
            
            51,507Accumulated
                deficits
            
            
            (1,204,101
            )
            
            (1,332,700
            )**TOTAL
                SHAREHOLDERS’ EQUITY**
            
            
            4,644,265
            
            
            4,423,464**TOTAL
                LIABILITIES AND SHAREHOLDERS’ EQUITY**
            
            
            35,850,874
            
            
            34,167,332





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




4


**CHINA
      PREMIUM LIFESTYLE ENTERPRISE, INC. AND SUBSIDIARIES**





**CONDENSED
                CONSOLIDATED STATEMENTS OF INCOME
                (UNAUDITED)**





**Three
                months ended**
              **June
                30,**
            
            **Six
                months ended**
              **June
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**$
            
            $
            
            $
            
            $Sales:New
                and used vehicles
            
            
            23,646,806
            
            
            14,266,960
            
            
            39,470,781
            
            
            22,532,503Parts
                and services
            
            
            1,469,599
            
            
            1,388,149
            
            
            2,656,267
            
            
            2,367,626**Net
                sales**
            
            
            25,116,405
            
            
            15,655,109
            
            
            42,127,048
            
            
            24,900,129Cost
                of sales:New
                and used vehicles
            
            
            (20,995,511
            )
            
            (11,982,884
            )
            
            (35,145,314
            )
            
            (19,407,466
            )Parts
                and services
            
            
            (426,763
            )
            
            (477,431
            )
            
            (768,862
            )
            
            (786,578
            )**Total
                cost of sales**
            
            
            (21,422,274
            )
            
            (12,460,315
            )
            
            (35,914,176
            )
            
            (20,194,044
            )Gross
                profit:New
                and used vehicles
            
            
            2,651,295
            
            
            2,284,076
            
            
            4,325,467
            
            
            3,125,037Parts
                and services
            
            
            1,042,836
            
            
            910,718
            
            
            1,887,405
            
            
            1,581,048**Total
                gross profit**
            
            
            3,694,131
            
            
            3,194,794
            
            
            6,212,872
            
            
            4,706,085Selling
                and marketing
            
            
            (249,157
            )
            
            (111,174
            )
            
            (391,205
            )
            
            (218,280
            )General
                and administrative expenses
            
            
            (2,728,503
            )
            
            (2,029,981
            )
            
            (5,221,564
            )
            
            (3,955,736
            )**Operating
                earnings**
            
            
            716,471
            
            
            1,053,639
            
            
            600,103
            
            
            532,069Other
                income (expenses)Interest
                expenses
            
            
            (244,693
            )
            
            (113,626
            )
            
            (421,980
            )
            
            (179,234
            )Share
                of result of an associate
            
            
            (38,168
            )
            
            267,340
            
            
            (78,060
            )
            
            40,618Other
                income
            
            
            394,489
            
            
            10,448
            
            
            484,832
            
            
            118,412Total
                other income (expenses)
            
            
            111,628
            
            
            164,162
            
            
            (15,208
            )
            
            (20,204
            )**Earnings
                before minority interests and income taxes**
            
            
            828,099
            
            
            1,217,801
            
            
            584,895
            
            
            511,865Provision
                for income taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -**Earnings
                before minority interests**
            
            
            828,099
            
            
            1,217,801
            
            
            584,895
            
            
            511,865Minority
                interests
            
            
            (439,501
            )
            
            (620,339
            )
            
            (456,296
            )
            
            (259,965
            )**Net
                earnings**
            
            
            388,598
            
            
            597,462
            
            
            128,599
            
            
            251,900**Earnings****per
                share****Basic**
            
            
            0.0033
            
            
            N/A
            
            
            0.0017
            
            
            N/A**Diluted**
            
            
            0.0024
            
            
            0.0042
            
            
            0.0011
            
            
            0.0018Weighted
                average number of common stock outstandingBasic
            
            
            117,285,482
            
            
            N/A
            
            
            73,824,354
            
            
            N/ADiluted
            
            
            162,981,661
            
            
            141,439,213
            
            
            119,520,533
            
            
            141,439,213




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




5




**CHINA
      PREMIUM LIFESTYLE ENTERPRISE, INC. AND SUBSIDIARIES**





**CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                (UNAUDITED)**





**Six
                months ended**
              **June
                30,****2007**
            
            **2006**$
            
            $**Cash
                flows from operating activities:**Net
                earnings
            
            
            128,599
            
            
            251,900Adjustments
                to reconcile net earnings to net cash provided by operating
                activitiesMinority
                interests
            
            
            456,296
            
            
            259,965Depreciation
                and amortization
            
            
            348,183
            
            
            241,492Provision
                for bad debts and bad debts written off
            
            
            21,607
            
            
            38,606Provision
                for inventory written back
            
            
            (8,967
            )
            
            -Equity
                earnings of an associate
            
            
            78,060
            
            
            (40,618
            )Other
                non-cash items
            
            
            28,959
            
            
            41,866Changes
                in operating assets and liabilities:Trade
                receivables
            
            
            5,662,411
            
            
            3,394,098Other
                current assets and prepayments
            
            
            (502,848
            )
            
            733,338Inventory
            
            
            (4,803,833
            )
            
            (3,395,883
            )Trade
                payables
            
            
            1,245,068
            
            
            223,347Other
                current liabilities and deposits received
            
            
            664,012
            
            
            (991,893
            )Net
                cash provided by operating activities
            
            
            3,317,547
            
            
            756,218**Cash
                flows from investing activities:**Purchases
                of property and equipment
            
            
            (73,856
            )
            
            (38,773
            )Net
                cash used in investing activities
            
            
            (73,856
            )
            
            (38,773
            )**Cash
                flows from financing activities:**Advances
                to affiliates
            
            
            (4,745,629
            )
            
            (2,382,685
            )Advance
                to an associate
            
            
            (612,829
            )
            
            (458,923
            )(Decrease)
                increase in borrowings and bills payable
            
            
            (914,253
            )
            
            2,343,407Net
                cash used in financing activities
            
            
            (6,272,711
            )
            
            (498,201
            )(Decrease)
                increase in cash and cash equivalents
            
            
            (3,029,020
            )
            
            219,244Cash
                and cash equivalents at beginning of the period
            
            
            3,475,635
            
            
            452,754Cash
                and cash equivalents at end of the period
            
            
            446,615
            
            
            671,998**Supplemental
                disclosure of cash flow information:**Cash
                paid for:Interest
            
            
            421,980
            
            
            179,234





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




6


**CHINA
      PREMIUM LIFESTYLE ENTERPRISE, INC. AND SUBSIDIARIES**





**NOTES
                TO CONDENSED CONSOLIDATED FINANCIAL
                STATEMENTS**





**NOTE
      1. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES**





*Basis
      of presentation*





The
      condensed consolidated financial statements include the accounts of China
      Premium Lifestyle Enterprise, Inc. (the “Company”) and its subsidiaries. The
      condensed consolidated financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States. All
      significant intercompany transactions and balances have been eliminated.





The
      condensed consolidated financial statements are unaudited and, in our opinion,
      include all adjustments, consisting of normal recurring adjustments and accruals
      necessary for a fair representation of our condensed consolidated balance
      sheets, operating results, and cash flows for the periods presented. Operating
      results for the periods presented are not necessarily indicatives of the results
      that may be expected for 2007 due to seasonal and other factors. Certain
      information and footnote disclosures normally included in financial statements
      prepared in accordance with accounting principles generally accepted in the
      United States have been condensed or omitted in accordance with the rules and
      regulations of the Securities and Exchange Commission (the “SEC”). The condensed
      consolidated financial statements should be read in conjunction with the audited
      consolidated financial statements and accompany notes included in the 2006
      annual report on Form 10-K.





*Use
      of estimates*





The
      preparation of the condensed consolidated financial statements requires
      management to make 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 condensed consolidated financial statements, and the reported
      amounts of revenue and expenses during the reporting periods. Management makes
      it best estimate of the outcome for these items based on historical trends
      and
      other information available when the condensed consolidated financial statements
      are prepared. Changes in estimates are recognized in accordance with the
      accounting principles for the estimate, which is typically in the period when
      new information becomes available to management. Management believes the most
      significant estimates affecting the condensed consolidated financial statements
      include provision for bad debts, provision for inventory write-off, and
      accounting for income taxes. Actual results could differ from those
      estimates.





*Share-based
      compensation*





The
      Company elected to adopt SFAS No. 123(R), “Share-Based Payment,” as amended and
      interpreted, which was effective as of the beginning of the annual reporting
      period that began after June 15, 2005. The Company utilized the modified
      prospective method approach, pursuant to which the Company has recorded
      compensation for all awards granted after July 1, 2005 based on their fair
      value.




*Earnings
      per share*





Basic
      earnings per share is computed by dividing net operating results for the
      reporting period attributable to common shareholders by the weighted average
      number of common shares outstanding during the period. Diluted earnings per
      share is calculated by dividing net operating results for the reporting period
      attributable to common shareholders by the weighted average number of common
      shares outstanding and the dilutive effect of common stock equivalents. All
      per
      share information is adjusted retroactively to the earliest periods presented
      to
      reflect the effect of the recent recapitalization between the Company and
      Technorient Limited (See the Form 10-K of the Company filed to the SEC on April
      2, 2007 for details of the Company’s recent recapitalization).





*Reclassifications*





Certain
      financial statement line items have been reclassified to conform to the current
      period presentation and have no impact on the previously reported consolidated
      net sales, operating results, or net financial position.




7




**NOTE
      2. CONCENTRATION OF RISK**





*Concentration
      of supplier risk*





Our
      Company relies on supplies from numerous vendors. For the three months ended
      June 30, 2007 and 2006 and six months ended June 30, 2007 and 2006, the Company
      had two vendors that each accounted for more than 10% of total supply purchases.
      If any of the vendors terminate their relationships with our Company or if
      our
      Company’s supply from the vendors is interrupted or terminated for any reason,
      we may not have sufficient time to replace the supply of products from the
      remaining vendors. Any such interruption would negatively impact our ability
      to
      sell and distribute our products. However, the suppliers’ concentration of risk
      does not pose any effect to the concentration of risk with respect to trade
      payables as the Company made the purchases through facilities provided by banks
      and financial institutions.





*Concentration
      of risk due to geographic location*





Our
      business is currently focused on the sales of new and used vehicles, provision
      of vehicle maintenance and repair services, and sales of vehicle parts in Hong
      Kong and is currently expanding its operations to the People’s Republic of China
      (“PRC”), and accordingly, is affected to a significant degree by any economic,
      political and legal developments in Hong Kong and the PRC.





**NOTE
      3. RECENT ACCOUNTING PRONOUNCEMENTS**




In
      February 2006, the FASB issued SFAS 155, *Accounting
      for Certain Hybrid Financial Instruments - an amendment of FASB Statements
      133
      and 140* ,
      (“SFAS
      155”), which was effective for the Company beginning January 1, 2007. The
      statement permits interests in hybrid financial instruments that contain an
      embedded derivative that would otherwise require bifurcation, to be accounted
      for as a single financial instrument at fair value, with changes in fair value
      recognized in earnings. This election is permitted on an
      instrument-by-instrument basis for all hybrid financial instruments held,
      obtained, or issued as of the adoption date. The
      Company considers the adoption of this standard to have no significant impact
      on
      its consolidated financial position, cash flows and results of operations.




In
      June
      2006, the FASB issued Interpretation 48, *Accounting
      for Uncertainty in Income Taxes — an Interpretation of FASB Statement
      No. 109* (“FIN
      48”), which clarifies the accounting for uncertainty in tax positions. This
      Interpretation requires that the Company recognize in its financial statements
      the impact of a tax position if that position is more likely than not of being
      sustained on audit, based on the technical merits of the position. The
      provisions of FIN 48 became effective for the Company on January 1, 2007,
      with the cumulative effect of the change in accounting principle, if any,
      recorded as an adjustment to opening retained earnings. The Company considers the
      adoption of FIN 48  to have no
      significant impact
      on its consolidated financial position, cash flows and results of operations.




In
      September 2006, the FASB issued SFAS 157, *Fair
      Value Measurements* (“SFAS
      157”), which provides guidance about how to measure assets and liabilities that
      use fair value. SFAS 157 will apply whenever another US GAAP standard requires
      (or permits) assets or liabilities to be measured at fair value but does not
      expand the use of fair value to any new circumstances. This standard also will
      require additional disclosures in both annual and quarterly reports. SFAS 157
      will be effective for financial statements issued for fiscal years beginning
      after November 15, 2007, and will be adopted by us beginning in the first
      quarter of 2008. The
      Company does not expect there to be any significant impact of adopting this
      standard on its consolidated financial position, cash flows and results of
      operations.




In
      September 2006, the SEC staff issued Staff Accounting Bulletin (“SAB”) 108, *Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements* (“SAB
      108”). SAB 108 was issued to eliminate the diversity of practice in how public
      companies quantify misstatements of financial statements, including
      misstatements that were not material to prior years’ financial statements. The
      Company began to apply the provisions of SAB 108 to its annual financial
      statements for the year ending December 31, 2006. The impact of the application
      of this guidance has not had a material effect on the Company’s consolidated
      financial position, cash flows and results of operations.




In
      February 2007, the FASB issued SFAS 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities - Including
      an
      amendment of FASB Statement No. 115* (“SFAS
      159”), which will be effective for the Company beginning January 1, 2008. This
      standard permits entities to choose to measure many financial instruments and
      certain other items at fair value and consequently report unrealized gains
      and
      losses on such items in earnings. The
      Company does not expect there to be any significant impact of adopting this
      standard on its consolidated financial position, cash flows and results of
      operations.




8





Other
      recent accounting pronouncements issued by the FASB (including its Emerging
      Issues Task Force (“EITF”)), the American Institute of Certified Public
      Accountants (“AICPA”), and the SEC did not or are not believed by management to
      have a material impact on the Company's present or future financial
      statements.





**NOTE
      4. EARNINGS PER SHARE**





The
      computation of basic and diluted earnings per share are as follows for the
      three
      months and six months ended June 30:




**Three
                months ended**
              **June
                30,**
            
            **Six
                months ended**
              **June
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**$
            
            $
            
            $
            
            $**Numerator:**Net
                earnings available to common shareholders
            
            
            388,598
            
            
            597,462
            
            
            128,599
            
            
            251,900**Denominator:**Weighted
                average common stock outstanding
            
            
            117,285,482
            
            
            N/A
            
            
            73,824,354
            
            
            N/AEffect
                of dilutive preferred stock
            
            
            45,696,179
            
            
            141,439,213
            
            
            45,696,179
            
            
            141,439,213Weighted
                average common stock and dilutive potential common stock
            
            
            162,981,661
            
            
            141,439,213
            
            
            119,520,533
            
            
            141,439,213Basic
                net earnings per share
            
            
            0.0033
            
            
            N/A
            
            
            0.0017
            
            
            N/ADiluted
                net earnings per share
            
            
            0.0024
            
            
            0.0042
            
            
            0.0011
            
            
            0.0018





The
      weighted average common stock outstanding for the three months and six months
      ended June 30, 2006, were adjusted to reflect the recent recapitalization
      between the Company and Technorient Limited. The computation of the net earnings
      per share for the three months and six months ended June 30, 2006, are
      computed by dividing the net earnings attributable to the common shareholders’
by the number of shares issued in the reverse takeover transaction.





As
      no
      mandatory dividend is attached to the Series A convertible preferred stock
      (“Series A Preferred Stock”), no adjustments were made to the basic earnings per
      share to take into consideration the Series A Preferred Stock.





**NOTE
      5. INVENTORY, NET**





Inventory
      by major categories are summarized as follows:





**June
                30,**
            
            **December
                31,****2007**
            
            **2006**$
            
            $New
                vehicles
            
            
            6,487,839
            
            
            2,310,112Used
                vehicles
            
            
            3,442,041
            
            
            3,183,658Parts,
                accessories and other
            
            
            1,698,783
            
            
            1,322,09311,628,663
            
            
            6,815,863





Vehicles
      included in inventory valued at approximately $2,190,000 and $1,710,000 were
      pledged to secure the stocking loan outstanding as of June 30, 2007 and December
      31, 2006, respectively (See Note 8).




9




**NOTE
      6. PREPAYMENTS**





Prepayments
      are summarized as follows:





**June
                30,**
            
            **December
                31,****2007**
            
            **2006**$
            
            $Share-based
                payment receivable - related party
            
            
            1,468,930
            
            
            1,468,930Prepaid
                expenses
            
            
            14,523
            
            
            37,3281,483,453
            
            
            1,506,258





**NOTE
      7. INVESTMENT IN AN ASSOCIATE**





In
      2004,
      a subsidiary of the Company entered into a strategic alliance with Ferrari
      S.p.A. (“Ferrari”) and Poly Technologies, Inc. (“Poly Technologies”), a
      subsidiary of Poly Group, to set up an Equity Joint Venture (“EJV”) company,
      Ferrari Maserati Cars International Trading (Shanghai) Co., Limited, in Mainland
      China. The EJV is the sole importer of “Ferrari” and “Maserati” cars in China,
      responsible for the import, marketing, dealer sales, spare parts and accessories
      supply, and after-sale technical supports for these unique global brands. The
      Company, Ferrari and Poly Technologies own 30%, 40% and 30%, respectively in
      the
      EJV. The registered capital of the EJV was $3 million and was contributed by
      the
      partners to the EJV in proportion to their respective equity interest. In August
      2004, the EJV was formally set up, with the business license issued by the
      relevant PRC authority.





On
      December 30, 2005, a subsidiary of the Company and Ferrari entered into the
      Equity Interest Transfer Agreement relating to the transfer of 29% equity
      interest in the EJV (“Equity Interest Transfer”), for consideration of $870,000.
      As of June 30, 2007, the disposal has been approved by the relevant authorities
      in the PRC and is waiting for the completion of local formalities. Due to the
      undeterminable timeline in finalizing the Equity Interest Transfer, the
      investment in EJV continues to be accounted for as “Investment In An Associate”
under equity method of accounting.





**NOTE
      8. BORROWINGS**





The
      Company's borrowings at are summarized as follows:





**June
                30,**
            
            **December
                31,****2007**
            
            **2006**$
            
            $Bank
                borrowings
            
            
            5,731,693
            
            
            3,985,579Stocking
                loans
            
            
            1,775,894
            
            
            1,329,918Obligations
                due under finance lease
            
            
            194,037
            
            
            278,5107,701,624
            
            
            5,594,007Borrowings
                due after one year - obligations under finance lease
            
            
            27,720
            
            
            111,404Short-term
                borrowings
            
            
            7,673,904
            
            
            5,482,603





Vehicles
      included in inventory of approximately $2,190,000 and $1,710,000 were pledged
      to
      secure the stocking loan outstanding as of June 30, 2007 and December 31, 2006,
      respectively. The current portion together with the non-current portion of
      finance lease was secured by motor vehicle included in property and equipment
      with a carrying value of approximately $285,000 on June 30, 2007 and
      approximately $330,000 on December 31, 2006.





The
      bank
      borrowings, which are mainly used to finance the purchase of vehicles, are
      secured by cross guarantee with affiliates and by pledge of certain affiliates’
properties. The borrowings are interest-bearing with settlement date within
      twelve months from the corresponding balance sheet dates. The interest rates
      are
      generally based on the bank's best lending rate plus a certain percentage and
      the credit lines are normally subject to periodic review. The range of effective
      interest rates (which are also equal to contracted interest rates) on the
      Company’s borrowings as of June 30, 2007 was 8.50% to 10.50% per annum and as of
      December 31, 2006 the effective interest rates ranged from 8.50% to 9.25% per
      annum.





The
      Company has financed a motor vehicle with a carrying value of approximately
      $285,000. On December 31, 2006, the carrying value was $330,000.




10




**NOTE
      9. OTHER CURRENT LIABILITIES**





Other
      current liabilities by major categories are summarized as
      follows:





**June
                30,**
            
            **December
                31,****2007**
            
            **2006**$
            
            $Accruals
            
            
            235,940
            
            
            443,434Other
                payables
            
            
            2,322,087
            
            
            6,887,5862,558,027
            
            
            7,331,020





Other
      payables mainly consist of first registration tax on motor vehicles sold. First
      registration tax is applicable to new motor vehicles sold in Hong Kong and
      is
      computed on a progressive rate based on the gross selling price of the new
      motor
      vehicles.





**NOTE
      10. CAPITAL STOCK**





*General*





The
      Company’s total authorized capital at June 30, 2007, is 500,000,000 shares of
      which 400,000,000 shares are common stock of par value $0.001 and 100,000,000
      shares are preferred stock of par value $0.001. At June 30, 2007, 122,672,214
      shares of common stock and 495,791 shares of preferred stock, respectively,
      were
      issued and outstanding.





*Common
      stock*





During
      the six months ended June 30, 2007, the Company’s Series A Preferred Stock’s
      holders, Happy Emerald Limited, Mr. Herbert Adamczyk, Corich Enterprises Inc.
      and Orient Financial Services Limited made applications to the Company to
      convert 65,454 shares, 167,273 shares, 727,273 shares and 78,182 shares of
      Series A Preferred Stock, respectively, into the 6,053,153 shares, 15,423,323
      shares, 67,057,843 shares and 7,208,715 shares, respectively, of the Company’s
      restricted common stock at a conversion ratio of 1 Series A Preferred Stock
      to
      92.2045 shares of common stock. On March 29, 2007 and June 8, 2007, 88,534,319
      shares and 7,208,715 shares of restricted common stock were issued upon the
      conversion of the aforesaid Series A Preferred Stock.





*Preferred
      stock*





During
      the six months ended June 30, 2007, the Company’s Series A Preferred Stock’s
      holders, Happy Emerald Limited, Mr. Herbert Adamczyk, Corich Enterprises Inc.
      and Orient Financial Services Limited made applications to the Company to
      convert 65,454 shares, 167,273 shares, 727,273 shares and 78,182 shares of
      Series A Preferred Stock, respectively, into the Company’s restricted common
      stock. As a result of such Series A Preferred Stock conversion, the Company’s
      outstanding preferred stock decreased by 1,038,182 shares from 1,533,973 shares
      at December 31, 2006 to 495,791 shares at June 30, 2007.





**NOTE
      11. COMPREHENSIVE INCOME**





The
      Company’s comprehensive income is comprised of net operating results and
      translation adjustments. Comprehensive income for the three months and six
      months ended June 30 are as follows:





**Three
                months ended**
              **June
                30,**
            
            **Six
                months ended**
              **June
                30,****2007**
            
            **2006**
            
            **2007**
            
            **2006**$
            
            $
            
            $
            
            $Comprehensive
                income:Net
                earnings
            
            
            388,598
            
            
            597,462
            
            
            128,599
            
            
            251,900Translation
                adjustments
            
            
            94,849
            
            
            30,870
            
            
            92,202
            
            
            18,332Total
                comprehensive income, net of taxes
            
            
            483,447
            
            
            628,332
            
            
            220,801
            
            
            270,232





11


**NOTE
      12. COMMITMENTS AND CONTINGENT LIABILITIES**





*Litigation,
      Claims and Assessments*





From
      time
      to time the Company may be involved in various disputes and litigation matters
      arising in the normal course of business. It
      is the
      Company's belief that the resolution of these matters will not have a material
      adverse effect on its financial position or results of operations. However,
      management cannot provide assurance that damages that result in a material
      adverse effect on its financial position or results of operations will not
      be
      imposed in these matters. The Company accounts for contingent liabilities when
      it is probable that future expenditures will be made and such expenditures
      can
      be reasonably estimated.





*Operating
      Lease Commitments*





The
      Company leases its dealership facilities, service center facilities and office
      space under non-cancellable operating leases in Hong Kong and PRC. Minimum
      future rental payments required under non-cancellable operating leases in effect
      as of June 30, 2007 are as follows:





2007
            
            $
            449,6912008
            
            
            78,173$
            527,864





Rent
      expenses for the three months ended June 30, 2007 and 2006 and six months ended
      June 30, 2007 and 2006 were $311,984, $268,286, $598,663 and $566,296,
      respectively.





*Employment
      Agreements*





The
      Company maintains employment agreements with its executives which extend through
      2007 to 2008. The agreements provide for a base salary, annual bonus to be
      determined by the Board of Directors, termination payments, and other terms
      and
      conditions of employment. In addition, the Company maintains employment
      agreements with other key employees with similar terms and conditions. As of
      June 30, 2007, committed compensation to the executives and other key employees
      totaling approximately $475,000 remain in effect.







**NOTE
      13. RELATED PARTY TRANSACTIONS**





The
      following is a summary of significant transactions among certain related parties
      and the Company during the three months ended June 30, 2007 and 2006 and six
      months ended June 30, 2007 and 2006:





**Three
                months ended**
              **June
                30,**
            
            **Six
                months ended**
              **June
                30,**Note
            
            **2007**
            
            **2006**
            
            **2007**
            
            **2006**$
            
            $
            
            $
            
            $Sales
                to:-
                Affiliates
            
            
            (a)
            
            
            5,075
            
            
            1,582
            
            
            8,910
            
            
            162,938-
                An associate
            
            
            (a)
            
            
            -
            
            
            -
            
            
            -
            
            
            70,733-
                A
                related company
            
            
            (b)
            
            
            394,847
            
            
            -
            
            
            394,847
            
            
            -Purchases
                from:-
                Affiliates
            
            
            (a)
            
            
            -
            
            
            5,918
            
            
            5,559
            
            
            7,273-
                An associate
            
            
            (a)
            
            
            798,272
            
            
            311,303
            
            
            2,226,432
            
            
            311,303-
                A
                director of Technorient
            
            
            (a)
            
            
            172,926
            
            
            -
            
            
            172,926
            
            
            -Interest
                received from:-
                Affiliates
            
            
            (c)
            
            
            264,347
            
            
            4,711
            
            
            275,394
            
            
            4,711Management
                fee received from:-
                Affiliates
            
            
            (d)
            
            
            76,856
            
            
            -
            
            
            76,856
            
            
            -Management
                fee paid to:-
                Affiliates
            
            
            (d)
            
            
            -
            
            
            76,923
            
            
            -
            
            
            154,213Service
                fee from:-
                An associate
            
            
            (d)
            
            
            127,352
            
            
            146,889
            
            
            260,324
            
            
            268,515





Notes:
            (a)  
                The transactions were carried out at market price or, where no market
                price was available, at cost plus a percentage
              profit mark-up.




12


(b)
                The
                    transaction with a related company, which was under common management
                    by a
                    common director of Technorient, was carried out at market price
                    or, where
                    no market price was available, at cost plus a percentage profit
                    mark-up.




(c)
            Advances
                to affiliates are unsecured, bear interest at 8.50% per annum and
                are
                repayable on demand.




(d)
            The
                transactions were carried out at terms agreed between both parties.




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




In
      addition to historical information, the matters discussed in this Form 10-Q
      contain forward-looking statements that involve risks or uncertainties.
      Generally, the words “believes,” “anticipates,” “may,” “will,” “should,”
“expect,” “intend,” “estimate,” “continue,” and similar expressions or the
      negative thereof or comparable terminology are intended to identify
      forward-looking statements. Such statements are subject to certain risks and
      uncertainties, including the matters set forth in this report or other reports
      or documents we file with the Securities and Exchange Commission from time
      to
      time, which could cause actual results or outcomes to differ materially from
      those projected. Undue reliance should not be placed on these forward-looking
      statements, which speak only as of the date hereof. We undertake no obligation
      to update these forward-looking statements. Readers should carefully review
      the
      risks described in other documents we file from time to time with the Securities
      and Exchange Commission, including the Annual Report on Form 10-K for the fiscal
      year ended December 31, 2006, the Quarterly Reports on Form 10-Q or 10-QSB
      filed
      by the Company and Current Reports on Form 8-K (including any amendments to
      such
      reports). References in this filing to the “Company”, “Group”, “we”, “us”, and
“our” refer to China Premium Lifestyle Enterprise, Inc. and its
      subsidiaries.




**COMPANY
      OVERVIEW AND HISTORY**




China
      Premium Lifestyle Enterprise, Inc. is in the business of distributing and
      selling premium brand luxury products in the Hong Kong Special Administrative
      Region (“Hong Kong”), the Macau Special Administrative Region (“Macau”) and in
      the People’s Republic of China (for the purpose of this report excludes Hong
      Kong and Macau and hereinafter “China”). Currently, the Company’s main business
      is its ownership interest in Technorient Group Limited, a Hong Kong corporation
      whose business consists mainly of import, distribution, and after-sale service
      of Italian “Ferrari” and “Maserati” branded cars and spare parts in Hong Kong,
      Macau and China. The Company is also planning to import, distribute and sell
      premium brand apparel and other luxury brand products in Hong Kong, Macau,
      China
      and Taiwan.




The
      Company was originally formed in the State of Nevada on April 19, 2004 under
      its
      predecessor name, Xact Aid, Inc. On April 30, 2004, the Company issued 1,000
      shares of our common stock (representing all of its issued and outstanding
      shares) to Addison-Davis Diagnostics, Inc. (F/K/A QT5, Inc.), a Delaware
      corporation (“Addison-Davis”), in consideration of Addison-Davis advancing
      start-up and operating capital. On November 15, 2004, the Company acquired
      the
      Xact Aid line of first aid products for minor injuries from Addison-Davis in
      accordance with an Agreement of Sale and Transfer of Assets entered into between
      the Company and Addison-Davis.




From
      the
      Company’s inception to May 9, 2005, Addison-Davis was the Company’s sole
      stockholder and as such the Company was a wholly-owned subsidiary of
      Addison-Davis and it was included in the consolidated financial statements
      filed
      by Addison-Davis with the Securities and Exchange Commission. (the
“SEC”).




On
      December 22, 2005, the Company acquired one hundred percent (100%) of the issued
      and outstanding shares of Brooke Carlyle Life Sciences, Inc., a Nevada
      corporation (“Brooke Carlyle”), a development stage company with a business plan
      to develop an online Internet portal containing information on sexually
      transmitted diseases, generating revenue from advertising from pharmaceutical
      companies.




The
      Company’s management team then determined that it was no longer in the best
      interests of the Company and its shareholders to continue pursuing sales and
      marketing efforts for the wound-specific first aid kit line of products. In
      an
      effort to bring revenues and profitable operations to the Company, management
      sought to effect a transaction that would attract a viable business operation
      and liquidate its liabilities. As a result of such decisions, on March 3, 2006,
      the Company entered into a non-binding letter of intent (“LOI”) with
      Technorient, Limited, a Hong Kong corporation (“Technorient”) for a proposed
      acquisition of an interest in Technorient via a share exchange by and among
      the
      Company and Technorient and Technorient’s shareholders. On May 4, 2006, in order
      to satisfy certain provisions in the Share Exchange Agreement described below
      with Technorient, the Company entered into a Stock Purchase Agreement (the
      “Agreement”) with Nexgen Biogroup, Inc. (“Nexgen”), for the sale of the
      1,000,000 shares (the “Shares”) of the common stock of Brooke Carlyle held by
      the Company, which at that time represented all or substantially all of the
      assets of the Company, for $1,000 cash, representing a consideration of $.001
      per share of Brooke Carlyle, Brooke Carlyle’s par value per share (the “Sale”).
      In accordance with the terms of the Agreement, the Company agreed to: (i) sell,
      assign and transfer to Nexgen any and all of its rights, title and interests
      in
      Brooke Carlyle; and (ii) transfer to Nexgen 1,000,000 shares of Brooke Carlyle
      common stock. Further, on April 7, 2006, in order to satisfy certain provisions
      of the Share Exchange Agreement described below, the Company amended its
      Articles of Incorporation to provide for the authorization of 100,000,000 shares
      of preferred stock.




13




On
      June
      9, 2006, the Company entered into a share exchange agreement (the “Exchange
      Agreement”) with Technorient, Fred De Luca, a director of the Company (“De
      Luca”), Corich Enterprises Inc., a British Virgin Islands corporation
      (“Corich”), and Herbert Adamczyk (“Adamczyk”) (collectively the “parties”).
      Subsequently, on July 15, 2006, the parties entered into an amended share
      exchange agreement (the “Amended Exchange Agreement”), which agreement replaced
      in its entirety and superseded the Exchange Agreement. Pursuant to the terms
      of
      the Amended Exchange Agreement, the Company agreed to acquire from Corich and
      Adamczyk (the “Sellers”) 49% of the outstanding capital stock of Technorient in
      exchange for the Company issuing to the Sellers and Orient Financial Services
      Ltd. (“OFS”) 972,728 shares of Series A Convertible Preferred Stock (the “Series
      A Preferred Shares”) (this share exchange transaction is hereinafter referred to
      as the “Exchange”). The 972,728 Series A Preferred Shares are convertible into
      approximately 89,689,881 shares, which on an as-converted basis represented
      53.5% of the outstanding Common Stock of the Company on a fully diluted basis,
      taking into account the Exchange.




On
      September 5, 2006, pursuant to the Amended Exchange Agreement and after all
      of
      the conditions precedent to closing were satisfied, Corich and Adamczyk, as
      shareholders of Technorient, transferred 49% of the outstanding capital stock
      of
      Technorient on a fully diluted basis to the Company in exchange for 972,728
      shares of the Company’s Series A Preferred Shares. Pursuant to the terms of the
      Amended Exchange Agreement, there were approximately 167,644,553 shares of
      common stock issued and outstanding after giving effect to (a) the Exchange,
      (b)
      the share cancellations, debt conversions and the issuance of the consulting
      shares pursuant to the Amended Exchange Agreement, and (c) assuming the full
      conversion of the Series A Preferred Shares. As a result of this Exchange,
      the
      Company became a 49% shareholder of Technorient. Additionally, as a condition
      to
      the Exchange, the Company completed the sale of all the capital stock of Brooke
      Carlyle, which prior to the Exchange constituted all of the Company’s assets for
      $1,000 cash, to Nexgen.




In
      connection with the Exchange, the Company issued (i) to Corich and Adamczyk
      an
      aggregate of 972,728 shares of the Series A Preferred Shares in exchange for
      49%
      of the issued and outstanding shares of Technorient, (ii) 561,245 shares of
      Series A Preferred Shares to Happy Emerald Limited, a British Virgin Islands
      company (“Happy Emerald”), for consulting services to be provided to Technorient
      after the Exchange, and (iii) an aggregate of 21,629,337 shares of Common Stock
      in connection with the certain conversions of outstanding debt. As a result,
      after giving effect to the Exchange, the debt conversions, the issuance of
      shares to Happy Emerald, the issued and outstanding shares of the Company’s
      common stock on a fully diluted, as converted basis was 167,644,553
      shares.




After
      the
      closing of the Exchange, the Company’s main business is its 49% ownership
      interest in Technorient.




On
      April
      3, 2007, the Company established a wholly owned subsidiary named CPMM (Asia)
      Limited (f/k/a Leader Mount Limited), a limited liability company organized
      under Hong Kong Law (“CPMM Asia”). CPMM Asia is principally engaged in the
      distribution of luxury brand apparel.




**TECHNORIENT
      OVERVIEW**




Technorient
      is a private limited liability company incorporated in Hong Kong on March 8,
      1983. Technorient is the parent company of Auto Italia Limited (“Auto Italia”),
      German Motors Limited (“German Motors”), Italian Motors (Sales & Service)
      (“Italian Motors”), and Italian Motors (Sales & Service) Limited (“IML”).
      Collectively, Auto Italia, Italian Motors, IML and German Motors are hereafter
      referred to as the “Technorient Group”. Originally founded in 1974 by Adamczyk
      as German Motors, Technorient was formed as the holding company for Auto Italia,
      IML and German Motors in 1985. IML was appointed sole Ferrari importer and
      distributor for Hong Kong and Macau in 1992 (and exclusive importer for China
      between 1994 and 2004), and Auto Italia was appointed importer and distributor
      for Maserati in 1996, having been a dealer for the brand since 1994. In 2003,
      IML transferred its entire car trading business to Auto Italia, which in turn
      set up a new subdivision, Italian Motors, to continue the business.




IML
      is a
      30% equity holder in Ferrari Maserati Cars International Trading (Shanghai)
      Co.
      Ltd., (the “Shanghai JV”) an equity joint venture company created with Ferrari
      S.p.A. and the Beijing-based Poly Investment Group in 2004 to handle sales,
      marketing and distribution of Maserati and Ferrari in China. As the structure
      of
      Shanghai JV precludes direct ownership by the shareholders of a licensed dealer
      in China and in view of Technorient’s strategy to develop a luxury brand
      platform amongst its high net worth clients, Technorient’s management
      subsequently approached Ferrari S.p.A. to dispose of Shanghai JV’s interest so
      that it could acquire an independent dealer network and, inter alia, maintain
      its direct customer relationships. As part of this arrangement, Technorient
      would apply for and receive a number of dealer licenses in key markets in China
      such as Dalian (already awarded) and would, in conjunction with Ferrari and
      Maserati, continue to build its dealer network to capitalize on its client
      base
      in China and pursue its luxury brand platform.




14




Pursuant
      to the above, IML entered into an agreement with the Shanghai JV parties to
      dispose of 29% equity interest in Shanghai JV in July 2006. As of the date
      hereof, the disposal has been approved by the relevant authorities and is
      waiting for the completion of local formalities. Upon completion of the
      disposal, however, IML will continue to hold a 1% equity interest in Shanghai
      JV. Beginning in 2006, the Technorient Group was able to act as an authorized
      dealer of Ferrari and Maserati cars in certain cities in China that were
      allocated in accordance with the Shanghai JV. In January 2006, IML formed Dalian
      Auto Italia in China to engage in the distribution of Ferrari and Maserati
      cars
      in Dalian, China. IML currently owns a 95% equity interest in Dalian Auto
      Italia. On August 3, 2007, IML entered into an agreement to acquire the
      remaining 5% of equity interest in Dalian Auto Italia. Consummation of the
      acquisition is conditioned on the approval by the local Chinese government.




Auto
      Italia and Italian Motors operate from six locations in Hong Kong and China,
      incorporating sales, spare parts, service and body and paint shop facilities
      for
      Ferrari and Maserati.




**EMPLOYEES**




As
      of
      June 30, 2007, we employed approximately 151 persons on a full-time basis in
      Hong Kong and China. We believe we have good relationships with our employees
      and no major disputes or work stoppages have occurred since our
      inception.




**CURRENCY
      CONVERSION AND EXCHANGE**




The
      value
      of Renminbi (“RMB”), Hong Kong Dollar and the Macau Pataca against the U.S.
      dollar and other currencies may fluctuate and is affected by, among other
      things, changes in political and economic conditions. Since 1994, the conversion
      of RMB into foreign currencies, including Hong Kong and U.S. dollars, has been
      based on rates set by the People’s Bank of China, or PBOC, which are set daily
      based on the previous day’s PRC interbank foreign exchange market rate and
      current exchange rates on the world financial markets. Since 1994, the official
      exchange rate for the conversion of RMB to U.S. dollars has generally been
      stable.




On
      July 21, 2005, however, PBOC announced a reform of its exchange rate
      system. Under the reform, RMB is no longer effectively linked to US dollars
      but
      instead is allowed to trade in a tight band against a basket of foreign
      currencies. If the RMB were to increase in value against the U.S. dollar, for
      example, mainland Chinese consumers would experience a reduction in the relative
      prices of goods and services, which may translate into a positive increase
      in
      sales. On the other hand, a decrease in the value of the RMB against the dollar
      would have the opposite effect and may adversely affect our results of
      operations. Any significant revaluation of RMB may materially and adversely
      affect our cash flows, revenues, earnings and financial position, and the value
      of, and any dividends payments. For example, an appreciation of RMB against
      the
      U.S. dollar or Hong Kong dollars would make any new RMB denominated investments
      or expenditures more costly to us, to the extent that we need to convert U.S.
      dollars or Hong Kong dollars into RMB for such purposes. In addition, a
      strengthening of the U.S. dollar against the Hong Kong Dollar or the Macau
      Pataca, if it occurred, would adversely affect the value of your
      investment.




**CRITICAL
      ACCOUNTING POLICIES**




See
      Note
      1 of the Notes to Condensed Consolidated Financial Statements (unaudited)
      included as Item 1 of Part I herein.




**RECENT
      ACCOUNTING PRONOUNCEMENTS**




In
      February 2006, the FASB issued SFAS 155, *Accounting
      for Certain Hybrid Financial Instruments - an amendment of FASB Statements
      133
      and 140* ,
      (“SFAS
      155”), which was effective for the Company beginning January 1, 2007. The
      statement permits interests in hybrid financial instruments that contain an
      embedded derivative that would otherwise require bifurcation, to be accounted
      for as a single financial instrument at fair value, with changes in fair value
      recognized in earnings. This election is permitted on an
      instrument-by-instrument basis for all hybrid financial instruments held,
      obtained, or issued as of the adoption date. The
      Company considers the adoption of this standard to have no significant impact
      on
      its consolidated financial position, cash flows and results of operations.




In
      June
      2006, the FASB issued Interpretation 48, *Accounting
      for Uncertainty in Income Taxes — an Interpretation of FASB Statement
      No. 109* (“FIN
      48”), which clarifies the accounting for uncertainty in tax positions. This
      Interpretation requires that the Company recognize in its financial statements
      the impact of a tax position if that position is more likely than not of being
      sustained on audit, based on the technical merits of the position. The
      provisions of FIN 48 became effective for the Company on January 1, 2007,
      with the cumulative effect of the change in accounting principle, if any,
      recorded as an adjustment to opening retained earnings. The Company considers  the
      adoption of FIN 48 to have no
      significant impact
      on its consolidated financial position, cash flows and results of operations.





15




In
      September 2006, the FASB issued SFAS 157, *Fair
      Value Measurements* (“SFAS
      157”), which provides guidance about how to measure assets and liabilities that
      use fair value. SFAS 157 will apply whenever another US GAAP standard requires
      (or permits) assets or liabilities to be measured at fair value but does not
      expand the use of fair value to any new circumstances. This standard also will
      require additional disclosures in both annual and quarterly reports. SFAS 157
      will be effective for financial statements issued for fiscal years beginning
      after November 15, 2007, and will be adopted by us beginning in the first
      quarter of 2008. The
      Company does not expect there to be any significant impact of adopting this
      standard on its consolidated financial position, cash flows and results of
      operations.




In
      September 2006, the SEC staff issued Staff Accounting Bulletin (“SAB”) 108, *Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements* (“SAB
      108”). SAB 108 was issued to eliminate the diversity of practice in how public
      companies quantify misstatements of financial statements, including
      misstatements that were not material to prior years’ financial statements. The
      Company began to apply the provisions of SAB 108 to its annual financial
      statements for the year ending December 31, 2006. The impact of the application
      of this guidance has not had a material effect on the Company’s consolidated
      financial position, cash flows and results of operations.




In
      February 2007, the FASB issued SFAS 159, *The
      Fair Value Option for Financial Assets and Financial Liabilities - Including
      an
      amendment of FASB Statement No. 115* (“SFAS
      159”), which will be effective for the Company beginning January 1, 2008. This
      standard permits entities to choose to measure many financial instruments and
      certain other items at fair value and consequently report unrealized gains
      and
      losses on such items in earnings. The
      Company does not expect there to be any significant impact of adopting this
      standard on its consolidated financial position, cash flows and results of
      operations.




Other
      recent accounting pronouncements issued by the FASB (including its Emerging
      Issues Task Force (“EITF”)), the American Institute of Certified Public
      Accountants (“AICPA”), and the SEC did not or are not believed by management to
      have a material impact on the Company’s present or future financial
      statements.





**RECENT
      DEVELOPMENTS**





On
      July
      10, 2007, we entered into a Non-binding Letter of Intent with Keyforce (BVI)
      Limited (“Keyforce (BVI)”), a subsidiary of Wo Kee Hong Group of Hong Kong, to
      begin negotiations to acquire from Keyforce (BVI) its luxury yacht distribution
      business. Keyforce (BVI) is the sole shareholder of Keyforce Holdings Limited
      (“Keyforce Holdings”) and Noble Brand Investments Limited (“Noble Brand”).
      Keyforce Holdings is engaged in the distribution of luxurious Italian “Ferretti”
motor yachts in south China while Noble Brand distributes Taiwanese produced
      “Horizon” motor yachts in China, Hong Kong and Macau. If consummated, the
      acquisition would enable us to add the distribution of these vessels in the
      regions to our portfolio of luxury brands.




**RESULTS
      OF OPERATIONS**




**Results
      of operations comparison of six months ended June 30, 2007 to six months ended
      June 30, 2006**




**SALES**




**Six
                months ended**
            
            **Six
                months ended****June
                30, 2007**
            
            **June
                30, 2006****Total**
              **Sales**
            
            **%
                of Total Sales**
            
            **Total**
              **Sales**
            
            **%
                of Total Sales**New
                and Used Vehicles
            
            $
            39,471,000
            
            
            93.7%
            
            $
            22,533,000
            
            
            90.5%Parts
                and Services
            
            $
            2,656,000
            
            
            6.3%
            
            $
            2,367,000
            
            
            9.5%Total
            
            $
            42,127,000
            
            
            100%
            
            $
            24,900,000
            
            
            100%




Total
      sales consists of sales of new and used vehicles, sale of parts, and services
      rendered for vehicle maintenance and repair.




Net
      total
      sales for six months ended June 30, 2007 increased by approximately $17,227,000
      or 69% compared to approximately $42,127,000, compared with the same period
      of
      2006. The increase was attributable to the increased sales from our new and
      used
      vehicles trading segment. The increase was due to an increase of deliveries
      of
      the “Ferrari” 8-cylinder sports car, F430 and Spider and the launch of the new
“Ferrari” 12-cylinder 2-seater sports car, F599 GTB Fiorano in the last quarter
      of 2006. The slight increase in parts and service sales was mainly attributed
      to
      the increase of deliveries of Ferrari and Maserati cars to customers during
      the
      last few years, for which our parts and services were used to
      maintain.




16




**COST
      OF SALES**




Cost
      of
      sales for the six months ended June 30, 2007 increased to $35,914,000 from
      $20,194,000 for the six months ended June 30, 2006, a $15,720,000 or 78%
      increase was in line with the increase in Company’s revenues during this
      period.




**GROSS
      PROFIT**




Gross
      profit margin for six months ended June 30, 2007 fell by 4.1% to 14.8% from
      18.9% for the same period of 2006 while the gross profit increased by
      approximately $1,507,000 to approximately $6,213,000 for the six months ended
      June 30, 2007. This increase is mainly attributed to the new and used vehicles
      trading segment. The decrease in gross profit margin was mainly due to increase
      in used car sales which had lower gross profit margins.




**SELLING
      AND MARKETING EXPENSES**




Selling
      and marketing expenses for the six months ended June 30, 2007 were approximately
      $391,000, compared to approximately $218,000 for the same period of 2006. The
      increase in selling and marketing expenses was primarily due to the increased
      exhibition expenses incurred during this period, which increased from
      approximately $39,000 in the first six months of 2006 to approximately $297,000
      in the first six months of 2007. This was mainly due to expenditures relating
      to
      an event held in Hong Kong during February 2007 for the celebration of Ferrari’s
      60 th anniversary along with several other promotion events held in the second quarter
      of 2007, including the new Maserati car test drive day.




**GENERAL
      AND ADMINISTRATIVE EXPENSES**




General
      and administrative (“G&A”) expenses include salaries and related staffing
      expenses, facilities rent, rate and building management fees, legal,
      professional services and general corporate expenses.




G&A
      expenses for the six months ended June 30, 2007 were approximately $5,222,000
      or
      12.4% of net sales compared to approximately $3,956,000 or 15.9% of net sales
      for the same period of 2006. The approximately $1,266,000 increase in G&A
      expenses was primarily due to the growth of our revenues and business expansion
      which required an increase in staffing and legal and professional services.
      The
      staffing expenses increased from approximately $1,638,000 for the six months
      ended June 30, 2006 to approximately $2,314,000 for the same period of 2007.
      The
      aggregate of audit fees, legal and professional fees and other related fees
      increased from approximately $95,000 for the six months ended June 30, 2006
      to
      approximately $393,000 for the same period of 2007.




**OTHER
      EXPENSES**




Other
      expenses decreased to approximately $15,000 compared with approximately $20,000
      in the first six months of 2006, a decrease of $5,000. The decrease was
      primarily due to the combined effect of increased interest income charged to
      affiliate companies and increased interest expenses. The interest income charged
      to affiliate companies increased from approximately $5,000 for the six months
      ended June 30, 2006 to approximately $275,000 for the same period of 2007.
      The
      interest expenses increased from approximately $179,000 in the first six months
      of 2006 to approximately $422,000 for the same period of 2007. The funds from
      which our increased interest expenses were incurred were used for working
      capital purposes.




**MINORITY
      INTERESTS**




Minority
      interests for the periods presented represent outside ownership interests in
      subsidiaries that are consolidated with the parent for financial reporting
      purposes.




17




**Results
      of operations comparison of three months ended June 30, 2007 to three months
      ended June 30, 2006**




**SALES**




**Three
                months ended**
            
            **Three
                months ended****June
                30, 2007**
            
            **June
                30, 2006****Total**
              **Sales**
            
            **%
                of Total Sales**
            
            **Total**
              **Sales**
            
            **%
                of Total Sales**New
                and Used Vehicles
            
            $
            23,646,000
            
            
            94.1%
            
            $
            14,267,000
            
            
            91.1%Parts
                and Services
            
            $
            1,470,000
            
            
            5.9%
            
            $
            1,388,000
            
            
            8.9%Total
            
            $
            25,116,000
            
            
            100%
            
            $
            15,655,000
            
            
            100%




Total
      sales consists of new and used vehicles, sale of parts, and services rendered
      for vehicle maintenance and repair.




Net
      total
      sales for three months ended June 30, 2007 increased by approximately $9,461,000
      or 60% compared to approximately $25,116,000, compared with the same period
      of
      2006. The increase was attributable to the increased sales from our new and
      used
      vehicles trading segment. The increase was due to deliveries of the “Ferrari”
12-cylinder 2-seater sports car, F599 GTB Fiorano which was launched in the
      last
      quarter of 2006 and sales of certain high value limited edition used cars
      included “Ferrari” F40, Superamerica and “Maserati” MC12.




**COST
      OF SALES**




Cost
      of
      sales for the three months ended June 30, 2007 increased to $21,422,000 from
      $12,460,000 for the three months ended June 30, 2006, a $8,962,000 or 72%
      increase was in line with the increase in Company’s revenues during this
      period.




**GROSS
      PROFIT**




Gross
      profit margin for three months ended June 30, 2007 fell by 5.7% to 14.7% from
      20.4% for the same period of 2006 while the gross profit increased by
      approximately $499,000 to approximately $3,694,000 for the three months ended
      June 30, 2007. This increase is mainly attributed to the new and used vehicles
      trading segment. Gross profit margin decrease in the second quarter of 2007
      was
      mainly due to increase in used car sales which had lower gross profit margins,
      in addition to sale of six limited edition Ferrari 430 Challenge which were
      recognized in the second quarter of 2006.




**SELLING
      AND MARKETING EXPENSES**




Selling
      and marketing expenses for the three months ended June 30, 2007 were
      approximately $249,000, compared to approximately $111,000 for the same period
      of 2006. The increase in selling and marketing expenses was primarily due to
      the
      increased exhibition expenses incurred during this period.




**GENERAL
      AND ADMINISTRATIVE EXPENSES**




G&A
      expenses include salaries and related staffing expenses, facilities rent, rate
      and building management fees, legal, professional services and general corporate
      expenses.




G&A
      expenses for the three months ended June 30, 2007 were approximately $2,729,000
      or 10.9% of net sales compared to approximately $2,030,000 or 13% of net sales
      for the same period of 2006. The approximately $699,000 increase in G&A
      expenses was primarily due to the growth of our revenues and business expansion
      which required an increase in staffing and legal and professional services.
      The
      staffing expenses increased from approximately $903,000 for the three months
      ended June 30, 2006 to approximately $1,294,000 for the same period of 2007.
      The
      aggregate of audit fees, legal and professional fees and other related fees
      increased from approximately $38,000 for the three months ended June 30, 2006
      to
      approximately $243,000 for the same period of 2007.




**OTHER
      INCOME**




Other
      income decreased to approximately $112,000 compared with approximately $164,000
      in the second quarter of 2006, a decrease of $52,000. The decrease was primarily
      due to the combined effect of increased share of loss from the result of an
      associate and increased interest income charged to affiliate companies. The
      share of result of an associate changed from a share of profit of approximately
      $267,000 in the second quarter of 2006 to a share of loss of approximately
      $38,000 for the same period of 2007. The interest income charge to affiliate
      companies increased from approximately $5,000 for the three months ended June
      30, 2006 to approximately $264,000 for the same period of 2007.




18




**MINORITY
      INTERESTS**




Minority
      interests for the periods presented represent outside ownership interests in
      subsidiaries that are consolidated with the parent for financial reporting
      purposes.




**LIQUIDITY
      AND CAPITAL RESOURCES**




CASH
      FLOWS FROM OPERATING ACTIVITIES




Our
      operations generated cash resources of approximately $3,318,000 for the six
      months ended June 30, 2007, compared to generating cash resources of
      approximately $756,000 for the six months ended June 30, 2006, primarily as
      a
      net result of the following:




·
            For
                thesix
                months ended June 30, 2007,
                cash flow provided by sales net of operating expenses increased by
                approximately $260,000 to $1,053,000. The increase was primarily
                as a
                result of the increase in sales.




·
            For
                the six months ended June 30, 2007, account receivables decreased
                by
                approximately $5,662,000, primarily due to the collection of account
                receivable in regarding to the remarkable sales recognized in the
                fourth
                quarter of 2006 and first quarter of
                2007.




·
            For
                the six months ended June 30, 2007, our inventory increased by
                approximately $4,804,000. The increase was consistent with our business
                growth especially in the car trading
                segment.




·
            For
                the six months ended June 30, 2007, the increase or decrease of various
                current operating assets and liabilities, included in the aforementioned
                items, resulted in an aggregate increase of cash inflow from operations
                of
                approximately $2,265,000.




CASH
      FLOWS FROM INVESTING ACTIVITIES




For
      the
      six months ended June 30, 2007 we expended
      net cash of approximately $74,000 in
      investing activities, mainly for the acquisition
      of property, plant and equipment to support the growth of our business. For
      the
      six months ended June 30, 2006, we utilized approximately $39,000 in
      investing activities ,
      mainly
      for acquisition of property and equipment .




CASH FLOWS FROM FINANCING ACTIVITIES




During
      the six months ended June 30, 2007, we repaid approximately $914,000 of our
      obligations owed on outstanding debt. For the six months ended June 30, 2006,
      we
      made new net drawdown amounting to approximately $2,343,000 from banks.




For
      the
      six months ended June 30, 2007, we provided approximately $4,746,000 and
      $613,000 advances to affiliates and associate, respectively. For the six months
      ended June 30, 2006, we provided approximately $2,383,000 and $459,000 advances
      to affiliates and associate, respectively. The advances to affiliates were
      made
      to entities that are under common management, where Mr. Richard Man Fai Lee,
      the
      Company’s Chief Executive Officer, is the common director of the Company and the
      affiliates. These advances included interest bearing and non interest bearing
      portion depending on the nature of the advances.




WORKING
      CAPITAL REQUIREMENTS




Current
      assets exceeded current liabilities at June 30, 2007 by approximately $4,461,000
      an increase of $881,000 from December 31, 2006. The ratio of our current assets
      to our current liabilities was 1.16 to 1 at June 30, 2007 and it was 1.14 to
      1
      at December 31, 2006. At June 30, 2007, our current assets of approximately
      $31,865,000 included approximately $11,629,000 in inventory that was funded
      by the operating cash flow and trade finance facilities. Our current liabilities
      of approximately $27,404,000 included customer deposits.  Given the
      exclusive nature and extremely limited production of Ferrari cars, our customers
      are willing to place material deposits in advance to the Company in order to
      secure their new car orders. This resulted in customer deposits
      of approximately $14,044,000.




19




**SEASONALITY**




Our
      business is modestly seasonal overall. Our operations generally experience
      higher volumes of vehicle sales in the fourth quarter of each year due in part
      to manufacturers’ production and delivery patterns.




**EFFECT
      OF FLUCTUATION IN FOREIGN EXCHANGE RATES**




Information
      regarding the effects of the fluctuation in foreign exchange rates on our
      Company is included in Item 3 below.




**OFF-BALANCE
      SHEET ARRANGEMENTS**




We
      do not
      have any off-balance sheet arrangements that have or are reasonably likely
      to
      have a material current or future effect on our financial condition, changes
      in
      financial condition, revenues or expenses, results of operations, liquidity,
      capital expenditures or capital resources.




**Item
      3. Quantitative and Qualitative Disclosures about Market
      Risk.**




We
      currently do not hold or use any derivative or other financial instruments
      that
      expose us to substantial market risk and we have no foreign exchange contracts.
      Our financial instruments consist of cash and cash equivalents, trade
      receivables **** and
      payables, bills payable, other current assets, other current liabilities, and
      bank borrowings. We consider investments in highly liquid instruments purchased
      with a remaining maturity of 90 days or less at the date of purchase to be
      cash
      equivalents. However, in order to manage the foreign exchange risks, we may
      engage in hedging activities to manage our financial exposure related to
      currency exchange fluctuation. In these hedging activities, we might use
      fixed-price, forward and option contracts when feasible.




*Interest
      Rates* .
      Our
      exposure to market risk for changes in interest rates relates primarily to
      our
      short-term obligations; thus, fluctuations in interest rates would not have
      a
      material impact on the fair value of the Company’s securities. At June 30, 2007,
      we had approximately $447,000 in cash and cash equivalents. A hypothetical
      10%
      increase or decrease in interest rates would not have a material impact on
      our
      earnings or loss, or the fair market value or cash flows of these
      instruments.




*Foreign
      Exchange Rates* .
      While
      our reporting currency is the U.S. dollar, to date virtually all of our revenues
      and costs are denominated in Hong Kong Dollars and a significant portion of
      our
      assets and liabilities is denominated in Hong Kong Dollars. As a result, we
      are
      exposed to foreign exchange risk as our revenues and results of operations
      may
      be impacted by fluctuations in the exchange rate between U.S. Dollars and Hong
      Kong Dollars. If the Hong Kong Dollar depreciates against the U.S. Dollar,
      the
      value of our Hong Kong Dollar revenues and assets as expressed in our U.S.
      Dollar financial statements will decline. Thus, our revenues and operating
      results may be impacted by exchange rate fluctuations of the Hong Kong Dollar.
      While we may choose to do so in the future, the availability and effectiveness
      of any hedging transactions may be limited and we may not be able to
      successfully hedge our exchange rate risks. Accordingly, we may experience
      economic losses and negative impacts on earnings and equity as a result of
      foreign exchange rate fluctuations. The effect of foreign exchange rate
      fluctuation for the six
      months ended June 30, 2007 was
      not
      material to us.




**Item
      4. Controls and Procedures.**




***Disclosure
      Controls and Procedures***




Under
      the
      supervision and with the participation of our management, including our chief
      executive officer and the chief financial officer, we conducted an evaluation
      of
      the effectiveness of the design and operation of our disclosure controls and
      procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934, as of June 30, 2007, the end of the period covered by
      this
      report (the “Evaluation Date”). Based on this evaluation, our chief executive
      officer and chief financial officer concluded as of the Evaluation Date that
      our
      disclosure controls and procedures were effective such that the material
      information required to be included in our Securities and Exchange Commission
      (“SEC”) reports is recorded, processed, summarized and reported within the time
      periods specified in SEC rules and forms relating to us and our consolidated
      subsidiaries, and was made known to others within those entities, particularly
      during the period when this report was being prepared.




20




***Changes
      in internal controls over financial reporting***




There
      were no significant changes in our internal controls over financial reporting
      (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange
      Act
      of 1934) during the six months ended June 30, 2007 that have materially
      affected, or are reasonably likely to materially affect, the Company’s internal
      control over financial reporting.




21




**OTHER
      INFORMATION**




**Item
      1. Legal Proceedings.**




None.




**Item
      1A. Risk Factors**




There
      have been no material changes in our business, operations or prospects that
      would require a change to the Risk Factor disclosure included in our most recent
      Annual Report on Form 10-K that have not already been disclosed.




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




None.




**Item
      3. Defaults Upon Senior Securities.**




None.




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




None.




**Item
      5.** **Other
      Information.**




There
      have been no material changes to the procedures by which security holders may
      recommend nominees to the Company’s board of directors.




**Item
      6. Exhibits.**


ExhibitNumber
            
            Description31.1
            
            Certification
                of Chief Executive Officer pursuant to Rules 13A-14(A)/15D-15(E)
                of the
                Securities Exchange Act of 1934, as adopted pursuant to Section 302
                of the
                Sarbanes-Oxley Act of 2002, filed herewith.31.2
            
            Certification
                of the Chief Financial Officer pursuant to Rules 13A-14(A)/15D-15(E)
                of
                the Securities Exchange Act of 1934, as adopted pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002, filed herewith.32.1
            
            Certification
                of Chief Executive Officer and Chief Financial Officer Pursuant to
                18
                U.S.C. 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), filed
                herewith.




22




**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.


**CHINA
                PREMIUM LIFESTYLE ENTERPRISE, INC.**
              (Registrant)Date:
                August 13, 2007
            By:
            /s/ Richard
              Man Fai LeeRichard
                Man Fai Lee
                Chief
                  Executive Officer


Date:
                August 13, 2007
            By:
            /s/ Joseph
              Tik Tung WongJoseph
                Tik Tung Wong
                Chief
                  Financial Officer




23