UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549









FORM
10-Q/A


(Amendment
No. 1)







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




For
the quarterly period ended March 31, 2006




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




Commission
file number: 333-120807




CHINA PREMIUM LIFESTYLE
ENTERPRISE, INC.


(Name
of Registrant in Its Charter)







Nevada
                
                11-3718650(State
      or other jurisdiction of incorporation or
                
                (I.R.S.
      Employer Identification Number)organization)





10/F,
Wo Kee Hong Building


585-609
Castle Peak Road


Kwai Chung, N.T. Hong
Kong


(Address
of principal executive offices)(Zip Code)





(852)
2954-2469


Issuer’s
Telephone Number, Including Area Code)





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




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  Yes o No o




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




Large Accelerated Filer o
            
            Accelerated Filer o
            
            Non-Accelerated Filer o
            
            Smaller Reporting Company x(Do not check if a smaller reporting company.)





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 total
number of shares of the registrant’s common stock, par value $0.001 per share,
outstanding on May 15, 2006 was 13,576,021.





EXPLANATORY
NOTE




As used
in this Amendment No. 1 (the “Form 10-Q/A”) to our Quarterly Report on Form
10-QSB for the period ended March 31, 2006 (the “First Quarter 2006 Form 10-Q”),
the terms “we”, “us”, “our” and the “Company” mean China Premium Lifestyle
Enterprise, Inc., a Nevada corporation, and our consolidated subsidiaries, taken
together as a whole.




On April
20, 2010, our management initially concluded that our consolidated audited
financial statements for the years ended December 31, 2008, 2007 and 2006 and
our consolidated unaudited interim financial statements for the periods ended
March 31, 2006 through September 30, 2009 needed to be restated and should not
be relied upon.  Upon further analysis, on May 14, 2010, our
management concluded that reliance on our unaudited interim financial statements
for the period ended March 31, 2006 should not be withdrawn and that no
restatements should be made to our unaudited interim financial statements for
the period ended March 31, 2006.  However, our management concluded
that certain Notes to our unaudited interim financial statements included in the
First Quarter 2006 Form 10-Q needed to be amended.  In addition, our
management concluded that certain Notes to our audited financial statements
included in the annual report on Form 10-KSB for our former fiscal year ended
June 30, 2006 also needed to be amended.




This Form
10-Q/A to our First Quarter 2006 Form 10-Q is being filed with the Securities
and Exchange Commission (the “SEC”) to amend certain Notes to our unaudited
interim financial statements included in the First Quarter 2006 Form
10-Q.




In
addition, we will file Reports on Form 10-Q/A for prior periods to amend and
restate our consolidated audited financial statements for the annual periods in
fiscal years ended December 31, 2008, 2007 and 2006 and Reports on Form 10-Q/A
to amend and restate our consolidated unaudited financial statements for the
quarterly periods ended September 30, 2006 through September 30,
2009.  We will also file a Report on 10-K/A to amend certain Notes to
our audited financial statements for our former fiscal year ended June 30,
2006.




NOTE:  The
common stock numbers in the “Background” sections of this Explanatory Note give
effect to a one-for-five reverse stock split (the “Reverse Stock Split”) of our
common stock, par value $0.005 per share, effective on December 7,
2007.  However, unless otherwise indicated, the common stock numbers
in the balance of this Form 10-Q/A reflect our pre-Reverse Stock Split
capitalization, as in effect during the period covered by this Form
10-Q/A.




Background




In
September 2006, we closed the transactions contemplated by that certain Share
Exchange Agreement, dated July 15, 2006, by and among us, Fred De Luca, Corich
Enterprises, Inc., a British Virgin Islands corporation, Herbert Adamczyk and
Technorient Limited, a Hong Kong corporation (the “Share Exchange
Agreement”).   Pursuant to the terms of the Share Exchange Agreement,
we issued an aggregate of 972,728 shares (the “Exchange Shares”) of Series A
Convertible Preferred Stock in exchange for shares of the capital stock of
Technorient.




In
connection with the Share Exchange Agreement and prior to its closing, we
entered into a consulting agreement dated July 15, 2006 with Happy Emerald Ltd.
(“HEL”) pursuant to which we issued to HEL 561,245 shares (the “HEL Shares”) of
Series A Convertible Preferred Stock in exchange for certain future services to
be performed by HEL after the closing of the Share Exchange
Agreement.




In
January 2007, we authorized the delivery of 65,454 shares (the “Bern Noble
Shares”) of the HEL Shares to Bern Noble, Ltd. (“Bern Noble”) for consulting
services rendered by Bern Noble to us in connection with the Share Exchange
Agreement.  In March 2007, Bern Noble converted the Bern Noble Shares
into 1,210,631 shares of common stock.




The
following actions were also taken:




·
            on
      April 7, 2006, prior management filed an amendment to our Articles of
      Incorporation purporting to create a class of 100,000,000 shares of “blank
      check” preferred stock (the “Preferred Stock
  Amendment”);




i




·
            on
      August 16, 2006, prior management filed an amendment to our Articles of
      Incorporation purporting to designate 2,000,000 shares of the “blank
      check” preferred stock as “Series A Convertible Preferred Stock” (the
      “Certificate of Designation”); and




·
            on
      December 18, 2006, we filed an amendment to our Articles of Incorporation
      purporting to increase the number of shares of authorized common stock
      from 100,000,000 shares to 400,000,000 shares (the “Common Stock
      Amendment”).




On
December 19, 2008, we filed an action in the United States District Court for
the Central District of California (the “Federal Court Action”), for fraud,
breach of fiduciary duty, breach of contract and conversion against HEL, certain
members of our prior management, including Fred De Luca, Charles Miseroy, Robert
G. Pautsch and Federico Cabo, and certain other defendants.  In the
Federal Court Action, we alleged that:




·
            HEL
      had never performed any services under the consulting agreement;
      and




·
            the
      defendants, including the members of prior management, had (1)
      fraudulently obtained certificates for 495,596 shares of the Series A
      Convertible Preferred Stock, (2) improperly attempted to transfer the
      shares among themselves and their affiliates, (3) improperly converted
      247,798 of the shares into 4,569,619 shares of common stock, and (4)
      sought to have the restrictive legend removed from the resulting shares of
      common stock.




During
the pendency of the Federal Court Action, our legal advisors discovered that the
Preferred Stock Amendment, the Certificate of Designation and the Common Stock
Amendment had not been properly
authorized.  Specifically:




·
            each
      of the Preferred Stock Amendment and the Common Stock Amendment was
      approved only by the written consent of a majority of our
      then-stockholders, whereas our By-Laws required such written consent to be
      approved unanimously; and




·
            at
      the time of the filing of the Certificate of Designation with the Nevada
      Secretary of State, the Articles of Incorporation did not authorize the
      Board of Directors to designate the rights, preferences and privileges of
      any “blank check” preferred stock.




We were
advised that the Preferred Stock Amendment, the Certificate of Designation and
the Common Stock Amendment were invalid and of no force and
effect.  Further, we were advised that the Company was never
authorized to issue any shares of any class or series of preferred stock,
including the Exchange Shares, the Bern Noble Shares and the HEL Shares, and
that any shares of common stock underlying such shares would also not have been
authorized.  In addition, we were advised that the Company was never
authorized to issue any shares of common stock in excess of 100,000,000
shares.




Upon
learning of the invalidity of the Preferred Stock Amendment, the Certificate of
Designation and the Common Stock Amendment:




·
            current
      management took action to correct any potential defect in the transactions
      contemplated to acquire the shares of Technorient under the Share Exchange
      Agreement.  On May 5, 2009, we entered into a reformation
      (“Reformation”) of the Share Exchange Agreement pursuant to which the
      parties agreed that the 17,937,977 shares of common stock (on a
      post-Reverse Stock Split basis) underlying the Exchange Shares were agreed
      to have been issued in lieu of the Exchange Shares
      themselves.  Pursuant to the Reformation, the parties agreed
      that an aggregate of 14,400,000 shares of our common stock (on a
      post-Reverse Stock Split basis) were deemed to have been issued on the
      closing date of the Share Exchange Agreement, and that upon the
      effectiveness of and giving effect to the Reverse Stock Split on December
      7, 2007, an aggregate of an additional 3,537,977 shares of common stock
      were deemed to have been issued;
and




·
            we
      amended our complaint in the Federal Court Action to allege that all of
      the disputed shares (the HEL Shares and, derivatively, the Bern Noble
      Shares), were void and subject to cancellation.  Because of the
      uncertainty of the outcome of the Federal Court Action, however, we
      determined not to make any changes with respect to such shares on our
      financial statements until the pending litigation was finally resolved
      through a judgment in or settlement of the Federal Court
      Action.




ii




On March
1, 2010, we settled the Federal Court Action.  Under the terms of the
settlement, the defendants agreed to return to us for cancellation all of the
disputed shares, including 247,798 shares of the Series A Convertible Preferred
Stock and 4,569,619 shares of common stock.




Further,
in connection with the settlement, Bern Noble agreed to return to us for
cancellation the 1,210,631 shares of common stock that had originally been
derived from the HEL Shares.  We also agreed to replace the Bern Noble
Shares with an equal number of new shares of common stock in consideration of
services rendered to us in 2006 in connection with the closing of the Share
Exchange Agreement.  We agreed to deliver the replacement shares in
nine monthly installments.




Scope of This Form
10-Q/A




This Form
10-Q/A sets forth the First Quarter 2006 Form 10-Q in its
entirety.  We have amended certain Notes to our unaudited interim
financial statements included in the First Quarter 2006 Form 10-Q, based on the
following:




·
            our
      determination that we were never authorized to issue any shares of any
      class or series of preferred stock, including the Exchange Shares, the
      Bern Noble Shares and the HEL
Shares;




·
            our
      determination that the Preferred Stock Amendment, the Certificate of
      Designation designating the Series A Convertible Preferred Stock and the
      Common Stock Amendment were invalid and of no force and
      effect;




·
            the
      issuance of shares of common stock in connection with the
      Reformation;




·
            the
      cancellation and reissuance of the shares of common stock converted from
      the Bern Noble Shares (including the recognition of the receipt of the
      services performed by Bern Noble in 2006);
and




·
            the
      settlement of the Federal Court
Action.




Specifically,
we have amended the following Notes:




·
            Note
      3, Description of Business; and




·
            Note
      12, Subsequent Events.




In
addition, the following Items contain amended disclosures relating to the
amendments:




·
            Part
      I, Item 3. Controls and Procedures;




·
            Part
      II, Item 4. Submission of Matters to a Vote of Security Holders;
      and




·
            Part
      III, Item 13. Exhibits and Financial Statements Schedules (to contain the
      currently-dated certifications from our principal executive officer and
      principal financial officer, as required by Sections 302 and 906 of the
      Sarbanes-Oxley Act of 2002).




Other than the amendments to the
disclosures in the Items listed above, no other material modifications or
updates have been made to the First Quarter 2006 Form
10-Q.  Information not affected by the Items listed above remains
unchanged and reflects the disclosures made at the time of, and as of the dates
described in, the First Quarter 2006 Form 10-Q.  Further, other than
the amendments to the disclosures in the Items listed above, this Form 10-Q/A
does not describe events occurring after the First Quarter 2006 Form 10-Q
(including with respect to exhibits), or modify or update disclosures (including
forward-looking statements) which may have been affected by events or changes in
facts occurring after the date of the First Quarter 2006 Form
10-Q.  Accordingly, this Form 10-Q/A should be read in its historical
context and in conjunction with our filings made with the SEC subsequent to the
filing of the First Quarter 2006 Form 10-Q, as information in such filings may
update or supersede certain information contained in this Form
10-Q/A.


iii




China
Premium Lifestyle Enterprise, Inc. (Formerly Xact Aid, Inc.)




Index
to Form 10-Q/A




PagePART
      I. FINANCIAL INFORMATION
                
                1ITEM
      1. FINANCIAL STATEMENTS
                
                1ITEM 2.
      MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
                
                10ITEM 3.
      CONTROLS AND PROCEDURES
                
                13PART
      II. OTHER INFORMATION
                
                16ITEM
      1. LEGAL PROCEEDINGS
                
                16ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
    PROCEEDS
                
                16ITEM
      3. DEFAULTS UPON SENIOR SECURITIES
                
                16ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                
                16ITEM
      5. OTHER INFORMATION
                
                16ITEM
      6. EXHIBITS
                
                16SIGNATURES
                
                17







PART
I. FINANCIAL INFORMATION




ITEM 1.FINANCIALSTATEMENTS




CHINA
PREMIUM LIFESTYLE ENTERPRISE, INC. (FORMERLY XACT AID, INC.)




BALANCE
SHEET  (UNAUDITED)




March 31, 2006ASSETSCurrent
      assets:Cash
                    
                    $
                    1,088Total
      current assets
                    
                    
                    1,088Deferred
      financing cost, net of accumulated amortization of $54,685
                    
                    
                    13,999Other
      assets
                    
                    
                    1,000Total
      assets
                    
                    $
                    16,087LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Notes
      payable -assignment of pending patent-current portion
                    
                    
                    200,000Total
      current liabilities
                    
                    
                    200,000Convertible
      notes payable, net of unamortized debt discount of
$336,302
                    
                    
                    663,698Note
      payable -assignment of pending patent
                    
                    
                    750,000Total
      liabilities
                    
                    
                    1,613,698Commitments
      and contingenciesStockholders'
      deficit: Common stock, $0.001 par value; 100,000,000 shares authorized;
      13,576,021 shares issued and outstanding as of March 31,
    2006Additional
      paid-in capital
                    
                    
                    13,576Accumulated
      deficit
                    
                    
                    1,324,416(2,935,603
                    )Total
      stockholders' deficit
                    
                    
                    (1,597,611
                    )$
                    16,087




See
accompanying notes to financial statements


1




CHINA
PREMIUM LIFESTYLE ENTERPRISE, INC. (FORMERLY XACT AID, INC.)




STATEMENTS
OF OPERATIONS  (UNAUDITED)




Three Months Ended
                                                        
                                                        
                                                        Nine Months EndedMarch
      31,
                                                        
                                                        
                                                        March
      31,2006
                                                        
                                                        
                                                        2005
                                                        
                                                        
                                                        2006
                                                        
                                                        
                                                        2005Revenue
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        —
                                                        
                                                        
                                                        $
                                                        —Costs
      and expenses:Cost
      of sales
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        —General
      and administrative
                                                        
                                                        
                                                        (208,120
                                                        )
                                                        
                                                        
                                                        144,022
                                                        
                                                        
                                                        
                                                        448,601
                                                        
                                                        
                                                        
                                                        497,911Profit
      (Loss) from operations
                                                        
                                                        
                                                        208,120
                                                        
                                                        
                                                        
                                                        (144,022
                                                        )
                                                        
                                                        
                                                        (448,601
                                                        )
                                                        
                                                        
                                                        (497,911
                                                        )Other
      expense:Interest
      expense
                                                        
                                                        
                                                        (99,477
                                                        )
                                                        
                                                        
                                                        (185,331
                                                        )
                                                        
                                                        
                                                        (347,676
                                                        )
                                                        
                                                        
                                                        (249,275
                                                        )Interest
      income
                                                        
                                                        
                                                        —
                                                        
                                                        
                                                        
                                                        2,250
                                                        
                                                        
                                                        
                                                        2,738
                                                        
                                                        
                                                        
                                                        2,510Other
      income (expense)
                                                        
                                                        
                                                        3,522
                                                        
                                                        
                                                        
                                                        2,353
                                                        
                                                        
                                                        
                                                        (942,054
                                                        )
                                                        
                                                        
                                                        2,358Total
      Other Income & (Expense)
                                                        
                                                        
                                                        (95,955
                                                        )
                                                        
                                                        
                                                        (180,728
                                                        )
                                                        
                                                        
                                                        (1,286,992
                                                        )
                                                        
                                                        
                                                        (244,407
                                                        )Net
      profit (loss)
                                                        
                                                        $
                                                        112,165
                                                        
                                                        
                                                        $
                                                        (324,750
                                                        )
                                                        
                                                        
                                                        (1,735,593
                                                        )
                                                        
                                                        
                                                        (742,318
                                                        )Basic
      and diluted net loss per common share
                                                        
                                                        $
                                                        0.01
                                                        
                                                        
                                                        $
                                                        (0.16
                                                        )
                                                        
                                                        $
                                                        (0.14
                                                        )
                                                        
                                                        $
                                                        (0.74
                                                        )Basic
      and diluted weighted average shares outstanding
                                                        
                                                        
                                                        12,004,908
                                                        
                                                        
                                                        
                                                        2,001,000
                                                        
                                                        
                                                        
                                                        12,004,908
                                                        
                                                        
                                                        
                                                        1,001,500




See
accompanying notes to financial statements


2




CHINA
PREMIUM LIFESTYLE ENTERPRISE, INC. (FORMERLY XACT AID, INC.)




STATEMENTS
OF CASH FLOWS  (UNAUDITED)




For the nine months ended
                    
                    
                    For the nine months endedMarch 31, 2006
                    
                    
                    March 31, 2005Cash
      flows from operating activities:Net
      loss
                    
                    $
                    (1,735,593
                    )
                    
                    $
                    (742,318
                    )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Stock
      issued for services
                    
                    
                    137,997
                    
                    
                    
                    —Interest
      income on advances to a related party
                    
                    
                    —
                    
                    
                    
                    (4,861
                    )Amortization
      of debt discount and non-cash interest expense
                    
                    
                    277,808
                    
                    
                    
                    164,231Changes
      in operating assets and liabilities Inventory
                    
                    
                    42,898
                    
                    
                    
                    (42,730
                    )Accounts
      receivable
                    
                    
                    —
                    
                    
                    
                    (15,160
                    )Note
      receivable from related party
                    
                    
                    166,049
                    
                    
                    
                    —Deferred
      costs
                    
                    
                    28,305
                    
                    
                    
                    (29,546
                    )Prepaid
      expenses
                    
                    
                    16,676
                    
                    
                    
                    (153,331
                    )Other
      assets
                    
                    
                    (615
                    )
                    
                    
                    —Accounts
      payable and accrued expenses
                    
                    
                    (88,555
                    )
                    
                    
                    113,804Net
      cash (used) in operating activities
                    
                    
                    (1,155,030
                    )
                    
                    
                    (709,911
                    )Net
      cash (used in) provided by investing activities
                    
                    
                    —
                    
                    
                    
                    —Cash
      flows from financing activities:Payments
      on notes payable to related parties
                    
                    
                    —
                    
                    
                    
                    (306,597
                    )Proceeds
      from note issuance
                    
                    
                    950,000
                    
                    
                    
                    700,000Proceeds
      from common stock
                    
                    
                    —
                    
                    
                    
                    2,000Proceeds
      from notes payable
                    
                    
                    146,298
                    
                    
                    
                    6,002Net
      cash (used) provided by financing activities
                    
                    
                    1,096,298
                    
                    
                    
                    401,405Net
      increase (decrease)in cash
                    
                    
                    (58,732
                    )
                    
                    
                    (308,506
                    )Cash,
      beginning of year
                    
                    
                    59,820
                    
                    
                    
                    308,911Cash,
      end of period
                    
                    $
                    1,088
                    
                    
                    $
                    405Supplemental
      disclosure of cash flow information:Cash
      paid during the year for:Interest
                    
                    $
                    —
                    
                    
                    $
                    22Schedule
      of Non-cash activitiesIssuance
      of equity instruments for services
                    
                    $
                    525,000
                    
                    
                    $
                    —Issuance
      of equity instruments in connection withDeferred
      finance costs
                    
                    $
                    13,176
                    
                    
                    $
                    —Amortization
      of deferred financing costs and debt discountAgainst
      additional paid-in capital upon conversion of notes
payable
                    
                    $
                    215,754
                    
                    
                    $
                    —




See
accompanying notes to financial statements


3




CHINA
PREMIUM LIFESTYLE ENTERPRISE, INC. (FORMERLY XACT AID, INC.)




NOTES
TO THE FINANCIAL STATEMENTS (UNAUDITED)


As
of March 31, 2006




NOTE 1 -
CONDENSED FINANCIAL STATEMENTS




The accompanying March 31, 2006
financial statements have been prepared by China Premium Lifestyle Enterprise,
Inc. (formerly Xact Aid, Inc.) (the “Company”) without audit. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows at March 31, 2006 and 2005 and for all periods presented have been
made. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It is
suggested that these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the Company’s June 30,
2005 audited financial statements. The results of operations for periods ended
March 31, 2006 and 2005 are not necessarily indicative of the operating results
for the full years.




NOTE 2 -
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




BACKGROUND
AND ORGANIZATION




The Company was formed in the State of
Nevada on April 19, 2004. On April 30, 2004, the Company issued 1,000 shares of
its 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 in the aggregate amount of $191,682. The Company repaid this
amount in November 2004 and December 2004. On August 30, 2004, the Company filed
a trademark application for “Xact Aid.” On October 15, 2004, the Company assumed
a $68,000 promissory note payable by Addison-Davis and secured by the assets of
Addison-Davis in order to facilitate the Company’s anticipated spin-off from
Addison-Davis.




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. The assets acquired were,
including all goodwill appurtenant thereto: (a) inventory; (b) confidential and
proprietary information relating to the Xact Aid products; (c) the seller’s
domain names including source codes, user name and passwords; (d) all designs
and copyrights in connection with Xact Aid’s trademark; and (e) all records and
materials relating to suppliers and customer list. In full consideration for all
the acquired assets, the Company agreed to: (i) repay funds advanced by
Addison-Davis for the Company’s operating expenses from inception to September
30, 2004, which were repaid in November 2004 and December 2004 in the aggregate
amount of $191,682; (ii) assume a promissory note issued to Xact Aid Investments
in the amount of approximately $15,700; and (iii) issue to Addison-Davis
2,000,000 shares of the Company’s common stock.




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




GOING
CONCERN




The Company’s financial statements are
prepared using generally accepted accounting principles applicable to a going
concern, which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The accompanying financial
statements do not include any adjustments relating to the recoverability and
classification of liabilities that might result from the outcome of this
uncertainty. It is management’s intention to seek additional operating funds
through operations and debt or equity offerings however, management has yet to
decide what types of offerings are available to the Company or how much capital
the Company will eventually raise. There is no guarantee that the Company will
be able to raise any capital through any type of offerings.


4




NOTE 3 -
DESCRIPTION OF BUSINESS




In November 2004, the Company acquired
the Xact Aid line of wound specific first aid products for minor injuries (see
Note 2).




In September 2005, the Company entered
into a License Agreement with Addison-Davis Diagnostics, Inc. (“License
Agreement”) under which the Company licensed the right, worldwide, to utilize
for commercial purposes under the Company’s brand name, a patent-pending F.D.A.
510(K) cleared device to be utilized with a provisional patent application
acquired through a Purchase Agreement with Edward W. Withrow, III (“Purchase
Agreement”). The licensed device was to be utilized along with the provisional
patent application product to develop a self-contained urine-based 3 panel
quick-test, which would simultaneously identify the presence of three widely
recognized and prevalent sexually transmitted diseases (“STD Alert”). The
Company commenced having protocols prepared and filed with the F.D.A. in order
to initiate the clearance process, and the Company had retained the services of
Stark-SMO, located in Mill Valley, California to manage all phases of clinical
trials for the STD Alert product. Stark-SMO is an innovative Site Management
Organization with extensive experience in all phases of clinical
trials.




On December 22, 2005 the Company
entered into a transaction divesting itself of certain assets for which the
Company, in management’s opinion, could not attract capital to successfully
exploit, in return for the assumption of certain liabilities, a guarantee to pay
another significant liability, and all of the common stock of a development
stage company. The Company acquired 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, which was
designed to generate revenue from advertising from pharmaceutical companies. In
accordance with the terms of the acquisition, the Company agreed to: (i) sell,
assign and transfer to Brooke Carlyle any and all of its rights title and
interests in connection with the License Agreement and the Patent Pending
Assignment; (ii) sell, assign and transfer the Xact Aid line of first aid
products for minor injuries, including all its related rights, titles and
inventory; (iii) transfer a rental security deposit receivable in the amount of
$225; and (iv) transfer certain notes receivable to Brooke Carlyle in the
aggregate amount of $20,000. In consideration, Brooke Carlyle: (i) assumed
various liabilities payable by the Company in the aggregate amount of $102,488;
(ii) guaranteed payment of the Company’s $950,000 promissory note payable in
connection with the Patent Pending Assignment; and (iii) issued to the Company
1,000,000 shares of Brooke Carlyle common stock.




For the period December 21, 2005 (date
of inception) to March 31, 2006, Brooke Carlyle had a net loss of $4,522, assets
in the amount of $103,488 and liabilities in the amount of
$107,010.




On March 3, 2006, the Company entered
into a non-binding letter of intent with a private corporation under which the
Company intends to acquire not less than 99.92% of the capital stock of the
private corporation in exchange for the issuance of shares of the Company’s
preferred stock which were authorized on April 6, 2006 (see Note 12) and which
will be convertible into 95% of the outstanding capital stock of the Company
(the “Share Exchange”). As discussed in the Explanatory Note at the beginning of
this Report and as previously disclosed in the Company’s Current Report on Form
8-K, as filed with the SEC on May 11, 2009, the Company later determined that it
was never authorized to issue any shares of preferred stock.  It is
contemplated that on or prior to the closing of the proposed Share Exchange, the
holders of the Company’s 10% Callable Secured Convertible Notes in the aggregate
amount of $1,000,000 will convert into approximately 44,060,282 shares of the
Company’s common stock and the holder of a certain note under the Company’s
assignment of pending patent in the aggregate principal amount of $950,000 will
convert such amount into an aggregate of approximately 16,600,000 restricted
shares of the Company’s common stock. On or prior to the completion of the Share
Exchange, the Company shall transfer all of its assets to a third party
reasonably acceptable to the private corporation. On May 18, 2006, final
definitive agreement to complete the Share Exchange was executed by the
Company.




The Company anticipates the full
execution and effectiveness of the Share Exchange to occur on or before May 26,
2006. Also, in order to satisfy the asset transfer provision in the Share
Exchange transaction, the Company abandoned its plan to spin-off and distribute
to its shareholders the 1,000 shares of Brooke Carlyle Life Sciences, Inc. stock
owned by the Company and sold the stock to a private corporation (see Note
12).


5




NOTE 4 -
NOTES PAYABLE - PENDING PATENT




In September 2005 the Company acquired
the right, title and interest to an application for provisional letters patent
assigned to the company by Edward W. Withrow, III (“Assignment of Pending
Patent”). The pending patent will be utilized along with a licensed device to
develop a self-contained urine-based 3 panel quick-test which will
simultaneously identify the presence of three widely recognized and prevalent
sexually transmitted diseases (“STD Alert”).




Consideration for the Assignment of
Pending Patent is $1 Million, payable by issuance of common stock of the Company
valued at $250,000 within five days after execution of the Assignment and a
promissory note in the amount of $750,000, due and payable in three annual
installments of $250,000 each commencing on the date upon which the Company
obtains financing of not less than $ 2 million and bearing interest at the rate
of 6.5% per annum which will accrue and be payable with each principal payment.
On November 4, 2005, in an Amendment To Agreement of Pending Patent
(“Amendment”), the Company and Withrow agreed that the Company shall pay Withrow
the sum of Twenty Five Thousand ($25,000) in cash in lieu of issuing common
stock of the Company valued at $50,000, thereby reducing the stock portion of
the Company indebtedness to Withrow to restricted common stock of the Company,
with piggyback rights, valued at $200,000. The Company paid Withrow $25,000 in
November 2005. The amount of $200,000 payable by issuance of common stock of the
Company is reflected as a current liability in the financial statements of the
Company as at March 31, 2006. Further, in accordance with the terms of the Share
Exchange, the holder of the note representing the Company’s obligation for the
Patent Assignment shall convert the debt to equity in the Company (see Note
12).




NOTE 5 -
CALLABLE CONVERTIBLE NOTES PAYABLE




On November 10, 2004, the Company
entered into a Securities Purchase Agreement with several accredited
institutional investors for the issuance of an aggregate of $1,000,000 principal
amount 10% Callable Secured Convertible Notes (“November 2004 Convertible
Notes”). As of September 30, 2005 the Company has issued $1,000,000 worth of
November 2004 Callable Notes and has received $1,000,000 in gross proceeds. The
November 2004 Convertible Notes are due two years from the date of issuance and
$66,667 have been retained by the accredited investors for interest payments due
for the initial eight months of the term. Prepayment of eight months of interest
is a requirement of the November 2004 Callable Convertible Note financing. Such
prepayment is required to be paid with the funding of each tranche. The total
prepayment of interest at the rate of 10% per annum for an eight month period on
the entire $1,000,000 financing equals $66,667. The November 2004 Callable Notes
are convertible at the option of the holders into shares of the Company’s common
stock. The conversion price is equal to the lesser of (i) $1.00 or (ii) the
average of the lowest three (3) intra-day trading prices during the twenty (20)
trading days immediately prior to the conversion date discounted by forty five
percent (45%).




In the event the Company breaches one
or more of the Company’s covenants, representations or warranties, the Company
may be obligated to pay liquidated damages as defined in the agreements. The
November 2004 Convertible Notes are callable by the Borrower by making a cash
payment ranging from 130% to 150% of the amounts borrowed plus accrued interest,
as defined. The November 2004 Convertible Notes are collateralized by
substantially all of the Company’s assets. The Company is required to register
shares of its common stock to cover 200% of the common shares issuable upon
conversion of all of the November 2004 Convertible Notes. In connection with the
November 2004 Convertible Notes, the Company incurred issuance costs of $50,000,
which was be recorded as deferred financing costs. The Company will amortize the
deferred financing cost to interest expense using the straight-line method and
record the remaining unamortized portion to additional paid-in capital when the
related debenture is converted into the Company’s common stock.




In connection with the November 2004
Convertible Notes, the Company also issued 3,000,000 warrants (“ The November
2004 Convertible Note Warrants”). The November 2004 Convertible Note Warrants
were issued at the first closing and are exercisable at an exercise price per
share equal to the closing price of the common stock on the date on which the
common stock is first traded on the OTCBB discounted by 45.0%. The November 2004
Convertible Note Warrants expire five years from the date of issuance. By
exercising the November 2004 Convertible Note Warrants, each holder of the
November 2004 Convertible Notes is entitled to purchase one share of common
stock per warrant. In connection with the issuance of detachable warrants and
the beneficial conversion feature of the November 2004 Convertible Notes, the
Company has provided and recorded a debt discount of $641,027 in connection with
the issuance of detachable warrants and the beneficial conversion feature of the
November 2004 Convertible Notes and is amortizing the discount using the
effective interest method through November 12, 2006. The Company is immediately
recording corresponding unamortized debt discount related to the beneficial
conversion feature as interest expense and related to the detachable warrants as
additional paid in capital when the related debenture is converted into common
stock.


6




Further, in accordance with the terms
of the Share Exchange, the holders of the November 2004 Convertible Notes shall
convert the entire aggregate debt to equity in the Company (see Note
12).




NOTE 6 -
NOTE PAYABLE - PENDING PATENT




In September 2005 the Company acquired
the right, title and interest to an application for provisional letters patent
assigned to the company by Edward W. Withrow, III (“Assignment of Pending
Patent”). The pending patent will be utilized along with a licensed device to
develop a self-contained urine-based 3 panel quick-test which will
simultaneously identify the presence of three widely recognized and prevalent
sexually transmitted diseases (“STD Alert”) (see Note 12 - Significant Events).
Consideration for the Assignment of Pending Patent is $1 Million, payable by
issuance of common stock of the Company valued at $250,000 within five days
after execution of the Assignment and a promissory note in the amount of
$750,000, due and payable in three annual installments of $250,000 each
commencing on the date upon which the Company obtains financing of not less than
$ 2 million and bearing interest at the rate of 6.5% per annum which will accrue
and be payable with each principal payment. On November 4, 2005, in an Amendment
To Agreement of Pending Patent (“Amendment”), the Company and Withrow agreed
that the Company shall pay Withrow the sum of Twenty Five Thousand ($25,000) in
cash in lieu of issuing common stock of the Company valued at $50,000, thereby
reducing the stock portion of the Company indebtedness to Withrow to restricted
common stock of the Company, with piggyback rights, valued at $200,000. The
Company paid Withrow $25,000 in November 2005. The $750,000 note, due and
payable in three annual installments of $250,000 each commencing on the date
upon which the Company obtains financing of not less than $ 2 million, is
reflected as a non-current liability in the financial statements of the Company
as at March 31, 2006. Further, in accordance with the terms of the Share
Exchange, the holder of the note representing the Company’s obligation for the
Patent Assignment shall convert the debt to equity in the Company (see Note
12).




NOTE 7 -
STOCKHOLDERS’ DEFICIT




COMMON
STOCK




During the three month period ended
March 31, 2006, shares of the Company’s common stock were issued as
follows:




In March 2006 the Company cancelled
500,000 shares of its common stock originally issued in October 2005 to a
consultant upon the termination of the consultant’s services and future services
to be rendered to the Company. The Company originally issued the stock in
October 2005, and the Company recorded the March 2006 cancellation as a
reduction of consulting fees for the current three month period in the amount of
$275,000, which amount represented the fair market value of the stock on the
date of original issue




In March 2006 the Company issued
1,000,000 shares of its common stock to a related party consultant in exchange
for services rendered and to be rendered valued at $60,000 in the aggregate
(representing the fair market value of the stock on the date of issue). These
securities were issued pursuant to an exemption from registration provided by
Section 4 (2) of the Securities Act of 1933.




In March 2006 the Company issued 62,500
shares of its common stock in exchange for EDGAR services rendered valued at
$3,750 in the aggregate (representing the fair market value of the stock on the
date of issue). These securities were issued pursuant to an exemption from
registration provided by Section 4 (2) of the Securities Act of
1933.


7


STOCK
OPTIONS




On May 20, 2005, the Company adopted an
incentive equity stock plan (the “2005 Plan”) that authorized the issuance of
options, right to purchase common stock and stock bonuses up to 2,500,000
shares. The purpose of the 2005 Plan is to provide incentives to attract, retain
and motivate eligible persons whose present and potential contributions are
important to the success of the Company by offering them an opportunity to
participate in the Company’s future performance through awards of options, the
right to purchase common stock and stock bonuses. The Plan allows for the
issuance of incentive stock options (which can only be granted to employees,
including officers and directors of the Company’s), non-qualified stock options,
stock awards, or stock bonuses pursuant to Section 422 of the Internal Revenue
Code. All other Awards may be granted to employees, officers, directors,
consultants, independent contractors, and advisors of the Company, provided such
consultants, independent contractors and advisors render bona-fide services not
in connection with the offer and sale of securities in a capital-raising
transaction or promotion of the Company’s securities.




The Plan is administered and
interpreted by a committee consisting of two or more members of the Company’s
Board of Directors. The 2005 Plan was filed with the Securities and Exchange
Commission on June 2, 2005 as an Exhibit to a Form S-8 Registration Statement.
There have been 1,702,500 shares of stock awarded to various consultants for
services rendered or to be rendered. No options or stock bonuses were granted
under the 2005 Plan, and the options, stock awards and stock bonuses available
for grant at March 31, 2006 was 797,500.




WARRANTS




During the three month period ended
March 31, 2006, no warrants to purchase shares of the Company’s common stock
were issued.




NOTE 8 -
COMMITMENTS AND CONTINGENCIES




LITIGATION




The Company received a notice of
conversion dated October 3, 2005 requesting that callable convertible notes in
the aggregate amount of $10,614 be converted to common shares of stock in the
Company (the “conversion shares”). The Company has not issued such conversion
shares and is in technical default to its callable convertible note holders.
However, in accordance with the terms of the Share Exchange, the holders of the
November 2004 Convertible Notes shall convert the entire aggregate debt to
equity in the Company (see Note 12).




INDEMNITIES
AND GUARANTEES




During the normal course of business,
the Company has made certain indemnities and guarantees under which it may be
required to make payments in relation to certain transactions. These indemnities
include certain agreements with the Company’s officers, under which the Company
may be required to indemnify such person for liabilities arising out of their
employment relationship. The duration of these indemnities and guarantees varies
and, in certain cases, is indefinite. The majority of these indemnities and
guarantees do not provide for any limitation of the maximum potential future
payments the Company could be obligated to make. Historically, the Company has
not been obligated to make significant payments for these obligations and no
liabilities have been recorded for these indemnities and guarantees in the
accompanying consolidated balance sheet.




NOTE 9 -
RELATED PARTY TRANSACTIONS




See Note 7 and Note 12 for a
description of any and all debt and or equity instruments issued to employees
and other related parties.




NOTE 10-
OTHER EXPENSE




In accordance with the terms of the
acquisition of the common stock of Brooke Carlyle Life Sciences, Inc. (“Brooke
Carlyle”) (see Note 3), the Company received one million shares of Brooke
Carlyle common stock. The Company, in recording the Brooke Carlyle acquisition,
has reflected those one million shares in Other Assets at $1,000 on the Balance
Sheet as at March 31, 2006, or par value of the Brooke Carlyle stock and a
related Other Expense charge in the amount of $934,636 on the Income Statement
for the Nine Month Period Ended March 31, 2006 in order to properly reflect the
cost basis for the one million shares of Brooke Carlyle at Brooke Carlyle’s
$0.001 par value per share.


8




NOTE 11 -
CANCELLATION OF CONSULTING SHARES




In March 2006 the Company cancelled
500,000 shares of its common stock originally issued in October 2005 to a
consultant upon the termination of the consultant’s services and future services
to be rendered to the Company. The Company originally issued the stock in
October 2005, and the Company recorded the cancellation as a reduction of
consulting fees in the Company’s income statements for the three and nine month
periods ended March 31, 2006 in the amount of $275,000, which amount represented
the fair market value of the stock on the date of original issue




NOTE 12 -
SUBSEQUENT EVENTS




Share
Exchange




On May 18, 2006 the Company executed a
Share Exchange Agreement (“Agreement”) by and among the Company (“Company”),
Fred De Luca, a related party of the Company (“Shareholder”), Corich
Enterprises, Ltd. and Herbert Adamczyk (“Sellers”) and Technorient Limited
(“Technorient”), collectively referred to as the “Parties.”




The Company anticipates the full
execution and effectiveness of the Agreement to occur on or before May 26, 2006.
In accordance with the terms of the Agreement, the Company shall acquire not
less than 99.92% of the capital stock of Technorient in exchange for the
issuance of shares of the Company’s preferred stock which were authorized on
April 6, 2006 (see Note 12 - Subsequent Events - Authorization of Preferred
Stock) and which will be convertible into 95% of the outstanding capital stock
of the Company (the “Share Exchange”). As discussed in the Explanatory Note at
the beginning of this Report and as previously disclosed in the Company’s
Current Report on Form 8-K, as filed with the SEC on May 11, 2009, the Company
later determined that it was never authorized to issue any shares of preferred
stock.  It is understood in the Agreement that the intention of the
Company is to acquire the benefits of the business owned and operated by
Technorient. Conditions precedent to the closing of the Reverse Acquisition
include, among other things, (i) that the holders of the Company’s 10% Callable
Secured Convertible Notes in the aggregate amount of $1,000,000 will convert
into 45,264,032 shares of the Company’s common stock; (ii) that the holder, a
related party of the Company, of a certain note under the Company’s assignment
of pending patent in the aggregate principal amount of $950,000 will convert
such amount into an aggregate of 16,600,000 restricted shares of the Company’s
common stock; and (iii) the Company shall have no assets or liabilities, it
being understood that on or before the closing the Company shall transfer all of
its assets, including the shares of Brooke Carlyle Life Sciences, Inc. to a
third party or parties reasonably acceptable to Seller.




On May 4, 2006, in order to satisfy
certain provisions in the Agreement with Technorient, the Company entered into a
Stock Purchase Agreement with Nexgen Biogroup, Inc. (“Nexgen”), for the sale of
the 1,000,000 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 $0.001 per
share (the par value). 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




The business of Technorient, originally
founded in 1975, is to import, market and distribute Maserati and Ferrari cars
and to provide servicing and spare parts in the Hong Kong Special Administrative
Region of the People’s Republic of China and Macau. Technorient operates from
six locations in Hong Kong and China incorporating sales, spare parts, servicing
and body and paint shop facilities for Ferrari and Maserati. Revenues and net
earnings for the year 2005 were approximately $49 million and $1.4 million,
respectively.


9




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




Forward
Looking Statements




This report contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are based on our management’s beliefs as well as assumptions and
information currently available to us. When used in this report, the words
“believe”, “expect”, “anticipate”, “estimate” and similar expressions are
intended to identify forward-looking statements. These statements are subject to
risks, uncertainties and assumptions, including, without limitation, the risks
and uncertainties concerning our recent reorganization, our present financial
condition, the availability of additional capital as and when required, general
economic conditions and the risks and uncertainties discussed in the section
titled “Management’s Discussion and Analysis of Financial Condition and Results
of Operation.” Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, or projected. We caution you not
to place undue reliance on any forward-looking statements, all of which speak
only as of the date of this report. You should refer to and carefully review the
information in future documents we file with the Securities and Exchange
Commission.




GENERAL
OVERVIEW AND GOING CONCERN




The following discussion and analysis
of our financial condition and results of operations should be read in
conjunction with our unaudited consolidated balance sheet as of March 31, 2006
and the unaudited consolidated statements of operations and cash flows for the
three and nine month periods ended March 31, 2006 and 2005, respectively, and
the related notes thereto. These statements have been prepared in accordance
with accounting principles generally accepted in the United States of America.
These principles require management to make certain estimates, judgments and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. On an
on-going basis, we evaluate our estimates based on historical experience and
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.




The important facts and factors
described in this discussion and elsewhere in this document sometimes have
affected, and in the future could affect, our actual results, and could cause
our actual results to differ materially from those expressed in any
forward-looking statements made by us or on our behalf.




As reported in the Report of
Independent Registered Public Accounting Firm on our June 30, 2005 financial
statements, we have incurred losses from operations and we have not generated
significant net sales revenue that raised substantial doubt about our ability to
continue as a going concern. The accompanying condensed financial statements do
not include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of these uncertainties.




The Company’s new management team
believes that it is 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.




Management realizes that significant
time and effort has been expended in that endeavor, but management also believes
that the Company does not have the financial resources to successfully bring
those products to market. Management also recognizes the Company’s distressed
financial condition and the difficulty and uncertainty regarding its ability to
attract additional capital to utilize the patent assignment and license it had
acquired in September 2005 and to proceed with the development of a new product.
In an effort to bring revenues and profitable operations to the Company,
management seeks to effect a transaction which would attract a viable business
operation and liquidate its liabilities. In this regard, on May 18, 2006 the
Company executed a Share Exchange Agreement (see Note 12 - Notes To The
Financial Statements as of March 31, 2006).


10




Critical
Accounting Policies




In preparing our financial statements,
we make estimates, assumptions and judgments that can have a significant effect
on our revenues, income/loss from operations, and net income/net loss, as well
as on the value of certain assets on our balance sheet. We believe that there
are several accounting policies that are critical to an understanding of our
historical and future performance as these policies affect the reported amounts
of revenues, expenses, and significant estimates and judgments applied by
management. While there are a number of accounting policies, methods and
estimates affecting our financial statements, policies that are particularly
significant are stock-based compensation and revenue recognition. In addition,
please refer to Note 1 to the accompanying condensed financial statements for
further discussion of our significant accounting policies.




STOCK-BASED
COMPENSATION




The Company accounts for non-employee
stock-based compensation under Statement of Financial Accounting Standards
(“SFAS”) No. 123, “Accounting For Stock-Based Compensation.” SFAS No. 123
defines a fair value based method of accounting for stock-based compensation.
However, SFAS No. 123 allows an entity to continue to measure compensation cost
related to stock and stock options issued to employees using the intrinsic
method of accounting prescribed by Accounting Principles Board Opinion No. 25,
as amended (“APB 25”), “Accounting for Stock Issued to Employees.” Under APB 25,
compensation cost, if any, is recognized over the respective vesting period
based on the difference, on the date of grant, between the fair value of the
Company’s common stock and the grant price. Entities electing to remain with the
accounting method of APB 25 must make pro forma disclosures of net income and
earnings per share, as if the fair value method of accounting defined in SFAS
No. 123 had been applied. The Company has elected to account for its stock-based
compensation to employees under APB 25.




REVENUE
RECOGNITION




We recognize revenue at the time of
shipment of our products to customers. We have not generated any revenue to
date.




RESULTS
OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2006 AND
2005




During the three-month periods ended
March 31, 2006 and 2005, we had no revenues and no cost of sales. Our general
and administrative expenses decreased from $144,022 for the three month period
ended March 31, 2005 to a negative $208,120 for the three month period ended
March 31, 2006, or a decrease of $352,142. The decrease in general and
administrative expense for the three month period ended March 31, 2006 included
the Company’s recording the cancellation of a consulting fee, originally paid
and recorded in a previous quarter, as a reduction of consulting fees in the
Company’s general and administrative expense for the three month period ended
March 31, 2006 in the amount of $275,000. If this adjustment were not included
in the current quarter, general and administrative expenses would have been
$66,180 and the decrease in general and administrative expense for the
three-month period March 31, 2005 to March 31, 2006 would have been $77,842.
That decrease was due to a net combination of the following:




An increase in consulting fees of
approximately $9,230, decreases in selling and marketing expenses of
approximately $31,737, a decrease in executive salaries of approximately
$15,000, a decrease in office and administrative support charges of
approximately $31,684 and a decrease in sundry other expenses in the amount of
$8,651.




Other income (expense) for the three
month periods ended March 31, 2006 and March 31, 2005 were made up of net
interest expense, amortization of debt discount and financing costs in the
amount of $99,477 and $182,978, respectively. The increase in interest, debt
discount and financing costs were in connection with our November 2004
convertible note financing.




As a result of the above, we incurred a
net profit of $112,165 for the three-month period ended March 31, 2006 as
compared to a net loss of $324,750 for the three-month period ended March 31,
2005. Exclusive of the adjustment for cancellation of the consultant’s fee as
described above, we would have incurred a net loss for the three-month period
ended March 31, 2006 in the amount of $162,835.


11




During the nine-month periods ended
March 31, 2006 and 2005, we had no revenues and no cost of sales. Our general
and administrative expenses decreased from $497,911 for the nine month period
ended March 31, 2005 to $448,,601 for the nine month period ended March 31,
2006, or a decrease of $49,310. The decrease in general and administrative
expense for the nine month period ended March 31, 2006 was due primarily to a
combination of the following:




Increase in consulting services of
approximately $192,491, however included in the total of $387,577 for the
period, $307,000 was paid through issuance of the Company’s common stock in lieu
of cash, increase in stock transfer agent fees of approximately $8,324; offset
by a decrease in selling and marketing expenses of approximately $97,585,
decrease in office expenses of approximately $5,205, decrease in executive
compensation of approximately $30,000, a decrease in office and administrative
charges of approximately $110,776 and a decrease in other sundry expenses of
approximately $6,559.




Other expense (net) for the nine month
periods ended March 31, 2006 and March 31, 2005 included primarily interest
expense, other expenses (including $934,636 in the current period in connection
with the acquisition of Brooke Carlyle Life Sciences, Inc.), amortization of
debt discount and financing costs in the amount of $1,293,252 and $246,922,
respectively. The increase in interest, debt discount and financing costs were
in connection with our November 2004 convertible note financing.




As a result of the above, we incurred a
net loss of $1,735,593 for the nine-month period ended March 31, 2006 as
compared to a net loss of $742,318 for the nine-month period ended March 31,
2005.




LIQUIDITY
AND CAPITAL RESOURCES




In November 2004, management
successfully obtained additional capital through sales and issuance of
convertible notes from which we received gross proceeds of $1,000,000. We
utilized this financing in connection with marketing for and development of then
current and future products. However, the proceeds received from the sale and
issuance of convertible notes will not provide all the additional capital
necessary for us to become profitable. If we fail to earn revenues in an amount
sufficient to fund our operations, we will have to raise capital through an
additional offering of our securities or from additional loans. We cannot
guarantee that financing will be available to us, on acceptable terms or at all.
If we do not earn revenues sufficient to support our business and we fail to
obtain other financing, either through an offering of our securities or by
obtaining additional loans, we may be unable to maintain our
operations.




As of March 31, 2006, our current
assets were comprised of $1,088 in cash. Other assets included unamortized
deferred financing costs in connection with our convertible financing in the
amount of $13,999 and $1,000 in connection with the acquisition of Brooke
Carlyle Life Sciences, Inc. Our current liabilities as at March 31, 2006
included an amount payable in connection with pending patent (current portion)
of $200,000. Other liabilities included convertible notes payable of $663,698,
net of unamortized debt discount of $336,302 and notes payable in connection
with pending patent in the amount of $750,000.




Net cash used in operating activities
was $1,155,030 for the nine-month period ended March 31, 2006. The primary use
of cash for the nine-month period ended March 31, 2006 was to fund our net loss,
offset by $277,808 for amortization of debt discount and non-cash interest
expense. If we cannot generate sufficient funds to operate our business from
product sales, we may be required to sell additional debt or equity securities
or borrow funds from related parties. We cannot be certain that we will be
successful in obtaining financing if we need it.




There were no cash flows from investing
activities for the nine month periods ended March 31, 2006 and
2005.




Our wound specific first aid kits
product has not generated revenue, and divestiture of that product line may or
may not result in revenue to us. It is the opinion of management that, based
upon difficulty in obtaining additional capital, development of new products
will be curtailed for the foreseeable future.


12




ITEM
3.CONTROLS
AND PROCEDURES




NOTE: This Item 3. Controls and
Procedures has been updated to reflect the restatement of our audited financial
statements for the years ended December 31, 2008, 2007 and 2006, the restatement
of our unaudited interim financial statements for the periods ended September
30, 2006 through September 30, 2009, the amendment of certain Notes to our
audited financial statements for our former fiscal year ended June 30, 2006
and the amendment of certain Notes to our unaudited interim financial statements
for the period ended March 31, 2006, as discussed above in the Explanatory Note
at the beginning of this Report.




Reevaluation
of Effectiveness of Internal Control over Financial Reporting and Disclosure
Controls and Procedures




This Form 10-Q/A presents amendments of
certain Notes to our unaudited interim financial statements for the quarter
ended March 31, 2006.  In connection with this Form 10-Q/A, our
management reevaluated the effectiveness of our internal control over financial
reporting and our disclosure controls and procedures, as defined in Rule
13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), as of March 31, 2006.  In assessing whether our internal
control over financial reporting and disclosure controls and procedures were
effective as of such date, our management considered the impact of the
amendments to our financial statements for our former fiscal year ended March
31, 2006.  In connection with our reevaluation, we discovered material
weaknesses in our internal control over financial reporting and determined that
our disclosure controls and procedures were not adequate as of the end of the
period covered by this report.




Our management is responsible for
establishing and maintaining an adequate system of internal control over
financial reporting as required by Section 404A of the Sarbanes-Oxley Act of
2002 (“SOX”).  Our system of internal control over financial reporting
is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America (“GAAP”).  Our internal control over
financial reporting includes those policies and procedures that:




·
            pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect our transactions and dispositions of our
      assets;




·
            provide
      reasonable assurance that our transactions are recorded as necessary to
      permit preparation of our financial statements in accordance with GAAP,
      and that our receipts and expenditures are being made only in accordance
      with authorizations of our management and our directors;
    and




·
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use, or disposition of our assets that could
      have a material effect on the financial
  statements.




Because of its inherent limitations, a
system of internal control over financial reporting can provide only reasonable
assurance and may not prevent or detect misstatements.  Further,
because of changes in conditions, effectiveness of internal controls over
financial reporting may vary over time.  Our system contains self
monitoring mechanisms, and actions are taken to correct deficiencies as they are
identified.




During the pendency of the Federal
Court Action and preparing for our 2009 year end evaluation of effectiveness of
our system of internal control over financial reporting based on the framework
in Internal Control-Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) and SEC guidance on conducting such assessments, our
management concluded that our system of internal control over financial
reporting was not effective as of the period ended March 31, 2006 through the
period ended September 30, 2009, which resulted in restatements described in the
Explanatory Note at the beginning of this Report and Note 14 of the Notes to the
consolidated financial statements included in this Report.




Our management has identified internal
control deficiencies which resulted in the material restatements described above
and which, in our management’s judgment, represented a material weakness in
internal control over financial reporting.  The control deficiencies
related to controls over the accounting and disclosure for certain transactions
to ensure that such transactions were recorded as necessary to permit
preparation of financial statements and disclosure in accordance with
GAAP.


13




Specifically, the control deficiencies
related to:




·
            the
      invalid adoption of certain purported amendments to our Articles of
      Incorporation;




·
            the
      unauthorized issuance by prior management of shares of our capital stock;
      and




·
            the
      lack of recognition of the receipt of services from certain third party
      consultants on our financial
statements.




A material weakness in internal
controls is a significant deficiency, or combination of significant
deficiencies, that results in more than a remote likelihood that a material
misstatement of the financial statements would not be prevented or detected on a
timely basis by us.




In the course of our revised assessment
of internal controls over financial reporting, we also re-assessed our
disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange
Act.  Our management is responsible for establishing and maintaining
an adequate system of disclosure controls and procedures designed to provide
reasonable assurance that the information required to be disclosed by us in
reports that we file and submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and
forms.  Disclosure controls also are designed to reasonably assure
that such information is accumulated and communicated to management, including
the Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosures.  Disclosure
controls include components of internal control over financial reporting, which
consists of control processes designated to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements in accordance with United States generally accepted
accounting principles.




We have determined that our material
weakness in internal controls over financial reporting was also a weakness in
our disclosure controls and procedures, since such weakness related to the
disclosure controls which provide us with reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles.




In designing and evaluating the
disclosure controls and procedures, our management recognized that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives and in reaching
a reasonable level of assurance our management necessarily was required to apply
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures.




Based on its assessment, including
consideration of the aforementioned material weaknesses, and the criteria
discussed above, management has restated its conclusion relative to the
effectiveness of our internal control over financial reporting and disclosure
controls and procedures as of March 31, 2006.  Accordingly, our
management has concluded that our internal control over financial reporting and
our disclosure controls and procedures were not effective as of March 31, 2006
to provide reasonable assurance that information required to be disclosed by us
in the reports that we file under the Exchange Act is recorded, processed, and
summarized within the appropriate periods.




Our management is responsible for
establishing and maintaining an adequate system of disclosure controls and
procedures designed to provide reasonable assurance that the information
required to be disclosed by us in reports that we file and submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms.  Disclosure controls
also are designed to reasonably assure that such information is accumulated and
communicated to management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosures.  Disclosure controls include components of internal
control over financial reporting, which consists of control processes designated
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements in accordance with
GAAP.


14




We have determined that our material
weakness in internal controls over financial reporting was also a weakness in
our disclosure controls and procedures, since such weakness related to the
disclosure controls which provide us with reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with GAAP.




In designing and evaluating the
disclosure controls and procedures, our management recognized that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives and in reaching
a reasonable level of assurance our management necessarily was required to apply
its judgment in evaluating the cost-benefit relationship of possible controls
and procedures.




Based on its assessment, including
consideration of the above-mentioned material weakness, and the criteria
discussed above, management has restated its conclusion relative to the
effectiveness of our internal control over financial reporting and disclosure
controls and procedures as of March 31, 2006.  Accordingly, our
management has concluded that our internal control over financial reporting and
that our disclosure controls and procedures were not effective as of March 31,
2006 to provide reasonable assurance that information required to be disclosed
by us in the reports that we file under the Exchange Act is recorded, processed,
and summarized within the appropriate periods.




Management will continue to evaluate
the effectiveness of our internal controls over financial reporting and our
disclosure controls and procedures on an ongoing basis, and has taken action and
implemented improvements as necessary.




Changes
in Internal Controls over Financial Reporting




No changes to our internal control over
financial reporting or disclosure controls and procedures were made to rectify
the material weakness during the period covered by this Form 10-Q/A because such
weakness was not known at that time.  However, subsequent to the
period, we remediated this weakness by:




·
            retaining
      new advisors to advise us and adopting a policy to consult with such
      advisors (or other outside experts) regarding complex legal and accounting
      issues;




·
            completing
      a review and updated risk assessment of all of our financial controls and
      procedures; and




·
            reviewing
      and instituting controls for each
weakness.




15




PART
II. OTHER INFORMATION




ITEM
1.LEGALPROCEEDINGS




None.




ITEM 2.UNREGISTEREDSALESOF EQUITY SECURITIES AND USE OF
PROCEEDS




None.




ITEM 3.DEFAULTS UPONSENIORSECURITIES




The Company received a notice of
conversion dated October 3, 2005 requesting that callable convertible notes in
the aggregate amount of $10,614 be converted to common shares of stock in the
Company (the “conversion shares”). The Company has not issued such conversion
shares and is in technical default to its callable convertible note holders.
However, in accordance with the terms of the Reverse Acquisition, the holders of
the November 2004 Convertible Notes shall convert the entire aggregate debt to
equity in the Company (see Note 12 - Notes To Financial Statements as of March
31, 2006).




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




On April 7, 2006, we filed an amendment
to our Articles of Incorporation purporting to create a class of 100,000,000
shares of “blank check” preferred stock (the “Preferred Stock
Amendment”).  As discussed in the Explanatory Note at the beginning of
this Report, we later determined that the Preferred Stock Amendment was approved
only by the written consent of a majority of our then-stockholders, whereas our
By-Laws required such written consent to be approved unanimously.  We
were advised that the Preferred Stock Amendment was invalid and of no force and
effect and that we were never authorized to issue any shares of any class or
series of preferred stock.  For a more detailed discussion, please
refer to the Explanatory Note at the beginning of this Report.




ITEM
5.OTHERINFORMATION




None.




ITEM
6.EXHIBITS




(a)  Exhibits




Exhibit
              Number
            Description




31.1
            Certification
      by Chief Executive Officer pursuant to Sarbanes Oxley Section
      302




31.2
            Certification
      by Chief Financial Officer pursuant to Sarbanes Oxley Section
      302




32.1
            Certification
      by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.
      C. Section 1350


16


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.




Date: May
      28, 2010
                  CHINA
      PREMIUM LIFESTYLE ENTERPRISE, INC.
                    (FORMERLY
      XACT AID, INC.)(Registrant)By:
                  /s/ Richard Man Fai LEERichard
      Man Fai LEEChief
      Executive Officer




17