SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-QSB





[X]
      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act
      of 1934


For
      the
      quarterly period ended September
      30, 2005





OR





[
      ]
      Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act
      of 1934


For
      the
      transition period from _______________ to _______________





Commission
      file number 0-21384





KAIRE
      HOLDINGS INCORPORATED


(Exact
      name of registrant as specified in its charter)








Delaware
            
            13-3367421(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                No.)








552
                Sespe Avenue, Suite D, Fillmore , CA
            93015(Address
                of principal executive offices)
            (Zip code)




Registrant's
      Telephone number, including area code: (805)
      524-0024


_________________________________________________________


(former
      name, address and former fiscal year, if changed since last report)





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





State
      the
      number of shares outstanding of each of the Registrant's classes of common
      stock, as of the latest practicable date.




Class
      of Common
      Stock     Outstanding
      at October 31, 2005


$.001
      par
      value       33,877,252 shares





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





Transitional
      Small Business Disclosure Format  Yes _  No X





FORM
      10-QSB


Securities
      and Exchange Commission


Washington,
      D.C. 20549





KAIRE
      HOLDINGS INCORPORATED





Index





PART
      I -
      FINANCIAL INFORMATION


Item
      1.
      Consolidated Financial Statements





Condensed
      Consolidated Balance Sheets at


December
      31, 2004 and September 30, 2005 (unaudited)





Condensed
      Consolidated Statements of Operations (Unaudited)


for the three months ended September 30, 2004 and 2005





Condensed
      Consolidated Statements of Operations (Unaudited)


for
      the
      nine months ended June 30, 2004 and 2005





Condensed
      Consolidated Statements of Cash Flows (Unaudited)


for the three months ended September 30, 2004 and 2005





Notes
      to
      Condensed Consolidated Financial Statements





Item
      2.
      Management's Discussion and Analysis of Financial Condition and


Results of Operations.





Item
      3.
      Controls and Procedures





PART
      II.
      - OTHER INFORMATION





Item
      1.
      Legal Proceedings





Item
      2  Changes
      in Securities and Use of Proceeds





Item
      3  Defaults
      Upon Senior Securities





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





Item
      5  Other
      Information





Item
      6.
      Exhibits and Reports on Form 8-K





SIGNATURES











































**Kaire
      Holdings Incorporated**


**and
      Subsidiaries**





**Consolidated
      Financial Statements**


**September
      30, 2005**










**Kaire
      Holdings Incorporated**


**and
      Subsidiaries**





**Consolidated
      Financial Statements**





**September
      30, 2005**














**C
      O N T E N T S**














Consolidated
      Balance Sheets 1
      -
      2





Consolidated
      Statements of Operations 3





Consolidated
      Statements of Cash
      Flows 4
      -
      5





Notes
      to
      Consolidated Financial Statements 6
      -
      22











**Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Consolidated
            Balance Sheets**
 **As
            of September 30, 2005 and December 31,
            2004**











ASSETSSeptember
                30, 2005
            
            December
                31, 2004Current
                Assets
            (unaudited)
            
            (audited)Cash
                and cash equivalents
            $
            -
            
            $
            -Accounts
                receivable, trade
            
            193,146
            
            
            132,761Inventory
            
            
            72,051
            
            
            149,939Employee
                advances
            
            1,140
            
            
            -Total
                Current Assets
            
            266,337
            
            
            282,700Other
                AssetsProperty
                and equipment, net of accumulated depreciation
            
            48,784
            
            
            69,785Total
                Other Assets
            
            48,784
            
            
            69,785Total
                Assets
            $
            315,121
            
            $
            352,485





























(continued)








See
            accompanying notes.
 -
            1
            -


**Kaire
      Holdings Incorporated**


**and
      Subsidiaries**


**Consolidated
      Balance Sheets (Continued)**


**As
      of September 30, 2005 and December 31, 2004**





LIABILITIES
                AND STOCKHOLDERS' DEFICITSeptember
                30, 2005
            
            December
                31, 2004Current
                Liabilities
            (unaudited)
            
            (audited)Bank
                overdraft
            $
            44,231
            
            $
            19,931Accounts
                payable and accrued expenses
            
            439,325
            
            
            449,782Income
                tax payable
            
            647
            
            
            647Loans
                payable
            
            -
            
            
            49,000Notes
                payable - related parties
            
            10,381
            
            
            13,281Advances
                from shareholders
            
            73,607
            
            
            73,607Liabilities
                of discontinued operations - Classic Care
            
            145,611
            
            
            145,611Accrued
                interest - convertible debt
            
            298,812
            
            
            207,304Convertible
                notes - current portion
            
            746,969
            
            
            566,158Total
                Current Liabilities
            
            1,759,583
            
            
            1,525,321Long
                Term LiabilitiesConvertible
                notes payable and debentures
            
            523,753
            
            
            385,880Total
                Long Term Liabilities
            
            523,753
            
            
            385,880Total
                Liabilities
            
            2,283,336
            
            
            1,911,201Stockholders'
                DeficitCommon
                stock, $0.001 par value900,000,000
                shares authorized; 33,877,252 and 30,877,252shares
                issued and outstanding in 2005 and 2004, respectively
            
            33,878
            
            
            30,878Additional
                paid in capital
            
            40,683,881
            
            
            40,275,501Accumulated
                deficit
            
            (42,685,974)
            
            
            (41,865,095)Total
                Stockholders' Deficit
            
            (1,968,215)
            
            
            (1,558,716)Total
                Liabilities and Stockholders' Deficit
            $
            315,121
            
            $
            352,485





See
            accompanying notes.
 -
            2
            -


**Kaire
      Holdings Incorporated**


**and
      Subsidiaries**


**Consolidated
      Statements of Operations**


**For
      the Three and Nine Months Ending September 30, 2005 and
      2004**





Three
                Months Ended September 30,
            
            Nine
                Months Ended September 30,2005
            
            2004
            
            2005
            
            2004(unaudited)
            
            (unaudited)
            
            (unaudited)
            
            (unaudited)Net
                revenues
            $
            271,695
            
            $
            641,103
            
            $
            976,446
            
            $
            1,738,475Cost
                of goods sold
            
            (187,339)
            
            
            (483,993)
            
            
            (679,886)
            
            
            (1,325,423)Gross
                Profit
            
            84,356
            
            
            157,110
            
            
            296,560
            
            
            413,052Operating
                ExpensesSalaries
            
            92,436
            
            
            129,392
            
            
            332,432
            
            
            381,031Depreciation
                and amortization
            
            7,317
            
            
            7,238
            
            
            21,952
            
            
            21,714General
                and administrative
            
            82,966
            
            
            164,623
            
            
            489,576
            
            
            1,027,481Selling
                expense
            
            369
            
            
            200
            
            
            1,329
            
            
            19,365Rent
            
            
            6,735
            
            
            4,560
            
            
            24,372
            
            
            32,770Total
                Operating Expenses
            
            189,823
            
            
            306,013
            
            
            869,661
            
            
            1,482,361Loss
                from operations
            
            (105,467)
            
            
            (148,903)
            
            
            (573,101)
            
            
            (1,069,309)Other
                Income (Expenses)Interest
                expense
            
            (71,932)
            
            
            (83,901)
            
            
            (247,778)
            
            
            (331,701)Miscellaneous
                income
            
            -
            
            
            104,192
            
            
            -
            
            
            121,335Miscellaneous
                expense
            
            -
            
            
            -
            
            
            -
            
            
            (80)Total
                Other Income (Expenses)
            
            (71,932)
            
            
            20,291
            
            
            (247,778)
            
            
            (210,446)Loss
                from continuing operations before income taxes
            
            (177,399)
            
            
            (128,612)
            
            
            (820,879)
            
            
            (1,279,755)Provision
                for income taxes
            
            -
            
            
            -
            
            
            -
            
            
            (3,404)Loss
                from continuing operations
            
            (177,399)
            
            
            (128,612)
            
            
            (820,879)
            
            
            (1,283,159)Discontinued
                operationsLoss
                from operations of discontinued segment (Entremetrix)
            
            -
            
            
            -
            
            
            -
            
            
            (55,287)Gain
                on sale discontinued segment (Entremetrix)
            
            -
            
            
            -
            
            
            -
            
            
            276,848Gain
                from Discontinued Operations
            
            -
            
            
            -
            
            
            -
            
            
            221,561Net
                Loss
            $
            (177,399)
            
            $
            (128,612)
            
            $
            (820,879)
            
            $
            (1,061,598)(Loss)
                earnings per weighted average share ofcommon
                stock outstanding - basic and dilutedFrom
                continuing operations
            $
            (0.01)
            
            $
            (0.00)
            
            $
            (0.02)
            
            $
            (0.05)From
                discontinued operations
            
            -
            
            
            -
            
            
            -
            
            
            0.01Total
                (loss) earnings per share - basic and diluted
            $
            (0.01)
            
            $
            (0.00)
            
            $
            (0.02)
            
            $
            (0.04)Weighted-average
                shares outstanding - basic and diluted
            
            33,877,252
            
            
            29,509,257
            
            
            33,503,626
            
            
            25,018,482





See
            accompanying notes.
 -
            3
            -


**Kaire
        Holdings Incorporated**
 **and
        Subsidiaries**
 **Consolidated
        Statements of Cash Flows**
 **For
        the Nine Months Ending September 30, 2005 and
        2004**




September
                30,
            
            September
                30,2005
            
            2004(unaudited)
            
            (unaudited)Increase
                (decrease) in cash and cash equivalentsNet
                loss
            $
            (820,879)
            
            $
            (1,061,598)Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            21,952
            
            
            21,714Amortization
                of warrant and beneficial conversion feature
            
            116,241
            
            
            185,514Amortization
                of issuance costs
            
            29,444
            
            
            -Common
                stock issued for professional services and compensation
            
            150,000
            
            
            648,785Gain
                on extinguishment of notes payable and related interest
            
            -
            
            
            (107,742)Gain
                on sale of discontinued operations - EntreMetrix
            
            -
            
            
            (276,848)(Income)
                loss from discontinued operations - EntreMetrix
            
            -
            
            
            55,287Change
                in net assets of discontinued operations - EntreMetrix
            
            -
            
            
            29,239Other
            
            -
            
            
            (25,983)Non-cash
                other income (expense)
            
            -
            
            
            (5,733)Total
                adjustments to net income
            $
            (503,242)
            
            $
            (537,365)Cash
                flow from operating activities:Changes
                in operating assets and liabilities:Increase
                in trade accounts receivable
            $
            (60,385)
            
            $
            (195,900)Increase
                in other receivables
            
            (1,140)
            
            
            (3,960)Decrease
                in bank overdraft
            
            24,300
            
            
            -Increase
                in advances to shareholders
            
            -
            
            
            39,930Prepaid
                expenses
            
            -
            
            
            226(Increase)
                decrease in inventory
            
            77,888
            
            
            (60,885)Decrease
                in income and sales tax payable
            
            (337)
            
            
            (15,507)Increase
                in accrued interest on convertible notes
            
            91,508
            
            
            84,673Decrease
                in accounts payable and accrued expenses
            
            (10,120)
            
            
            (97,195)Cash
                flow generated by (used in) operating activities
            $
            121,714
            
            $
            (248,618)Cash
                flow from investing activities:Purchase
                of property and equipment
            $
            (950)
            
            $
            (14,712)Net
                cash generated by (used in) investing activities
            $
            (950)
            
            $
            (14,712)Cash
                flow from financing activities:Proceeds
                from notes payable - related parties
            $
            -
            
            $
            1,325Payments
                on notes payable - related parties
            
            (2,900)
            
            
            (1,990)Proceed
                from notes payable - shareholders
            
            -
            
            
            208,622Payments
                on notes payable - shareholders
            
            -
            
            
            (120,000)Payments
                on loans
            
            (49,000)
            
            
            (68,384)Proceeds
                from convertible notes payable
            
            475,000
            
            
            650,000Deferred
                financing costs
            
            (40,622)
            
            
            -Proceeds
                from conversion of warrants
            
            -
            
            
            132,000Net
                cash generated by (used in) financing activities
            $
            382,478
            
            $
            801,573Net
                (decrease) increase in cash and cash equivalents
            $
            -
            
            $
            878Cash
                and cash equivalents at beginning of year
            
            -
            
            
            45,055Cash
                and cash equivalents at end of period
            $
            -
            
            $
            45,933





(continued)








See
            accompanying notes.
 -
            4
            -


**Kaire
        Holdings Incorporated**
 **and
        Subsidiaries**
 **Consolidated
        Statements of Cash Flows (Continued)**
 **For
        the Nine Months Ending September 30, 2005 and
        2004**





September
                30,
            
            September
                30,2005
            
            2004**Supplementary
                disclosures of cash flow information**
            (unaudited)
            
            (unaudited)Cash
                paid during the year forInterest
            $
            3,150
            
            $
            2,561Taxes
            $
            -
            
            $
            12,399**Supplemental
                schedule of non-cash investing and financing
                activities:****Non-cash
                investing and financing activities:**Common
                stock issued for services
            $
            150,000
            
            $
            648,785Common
                stock issued for conversion of notes payable
            $
            -
            
            $
            539,341Common
                stock issued for compensation
            $
            -
            
            $
            391,750Retired
                1,250,000 shares of common stock
            $
            -
            
            $
            250,000Sale
                of EntreMetrix- non-cash gain
            $
            -
            
            $
            276,848





During
      the nine months ended September 30, 2005, the Company entered into the following
      non-cash transactions:





Issued
      3,000,000 shares of common stock for professional services valued at
      $150,000








During
      the nine months ended September 30, 2004, the Company entered into the following
      non-cash transactions:





Recorded
      gain on extinguishment of notes payable and related accrued interest of
      $107,742





Issued
      3,955,000 shares of common stock for consulting services and compensation valued
      at $575,015





Issued
      18,631,518 shares of common stock for conversion of $671,341 of notes payable
      and interest





Issued
      2,197,727 shares of common stock to an officer for prior year compensation
      valued at $317,980 and current period compensation of $73,770





Retired
      1,250,000 shares of commons stock valued at $250,000.





The
      sale
      of entreMetrix resulted in a non-cash gain of $276,848.








See
            accompanying notes.
 -
            5
            -





**Kaire
        Holdings Incorporated**
 **and
        Subsidiaries**
 **Notes
        to Financial Statements**
 **September
        30, 2005**





**1.**  **Summary
      of Significant Accounting Policies**





Organization
      and Line of Business





Kaire
      Holdings Incorporated (“Kaire” or “the Company”), a Delaware corporation, was
      incorporated on June 2, 1986. Effective February 3, 1998, Kaire changed its
      name
      to Kaire Holdings Incorporated from Interactive Medical Technologies, Ltd.
      In
      November 2002, the Company, through its subsidiary Effective Health, Inc.,
      purchased certain assets of Sespe Pharmacy, a privately held company located
      in
      Fillmore, California. The asset acquisition was concluded on January 26,
      2003.








History





In
      1999,
      the Company formed YesRx.Com, Inc., an Internet drugstore focused on
      pharmaceuticals, health, wellness and beauty products. The Company focuses
      on
      selling drugs for chronic care as opposed to emergency needs and works mainly
      with the patient who has regular medication needs and requires multiple refills.





In
      May
      2000, the Company acquired Classic Care, Inc. (“Classic Care”), which was
      organized as a corporation in April 1997, under the Laws of the State of
      California. Classic Care operated as an agency distributor of pharmaceutical
      products, via a unique prescription packaging system for consumers at senior
      assisted living and retirement centers in the Los Angeles area. Classic Care
      purchased prescription drugs in bulk and filled prescriptions for individuals
      living in the aforementioned facilities. Primary sales were to individuals
      and
      consist of packaged prescription drugs in prescribed dosages. These packaged
      drug sales were primarily paid for by Medi-Cal, and the balances of the sales
      that are not covered by Medi-Cal were paid directly by individuals. Classic
      Care
      billed Medi-Cal and other third-party payors on behalf of the customer and
      receives payment directly from Medi-Cal.





On
      April
      17, 2002, Classic Care received notice from the State of California Department
      of Health Services (“DHS”) that they were suspending Classic Care Pharmacy’s
      Medi-Cal provider number and withholding 100% of Classic Care Pharmacy’s
      Medi-Cal payments, alleging Classic Care Pharmacy had submitted numerous
      patients’ claims without proper documentation.





As
      a
      result of the DHS claim, on May 20, 2002, the Company and the original Classic
      Care Shareholders reached an agreement to settle all amounts due them. This
      agreement resulted in the Company selling the long-term services business
      clients to the original Classic Care shareholders and relinquishing all rights
      in the long-term services business in return for a release from repaying the
      promissory notes and contingent payments resulting from the original
      acquisition. In December 2002, the Company was informed by the Department of
      Health Services (“DHS”) that the Medi-Cal Program was taking the following
      actions against Classic Care: 1) withholding 100 percent of payment to Classic
      Care; and 2) temporarily suspending and deactivating Classic Care’s Medi-Cal
      provider number. In January 2003, the Company’s management decided to start the
      process of a voluntary dissolution of Classic Care.








Principles
      of Consolidation




The
      consolidated financial statements include the accounts of Kaire and its wholly
      owned subsidiaries (collectively the “Company”). The Company’s subsidiaries
      include See/Shell Biotechnology, Inc.., EFFECTIVE Health, Inc. (dba Sespe
      Pharmacy), and YesRx.com. Intercompany accounts and transactions have been
      eliminated upon consolidation.


-
            6 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**1.**  **Summary
      of Significant Accounting Policies (continued)**





Basis
      of Presentation





The
      accompanying unaudited interim consolidated financial statements represent
      the
      financial activity of Kaire Holdings Incorporated and its subsidiaries. The
      consolidated financial statements for the nine months ended September 30, 2005,
      have been prepared in accordance with generally accepted accounting principles
      for interim financial information in the US and in accordance with the
      instructions to Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly,
      the
      financial statements do not include all of the information and footnotes
      required by generally accepted accounting principles for complete financial
      statements. In the opinion of management, all adjustments (consisting of normal
      recurring accruals) considered necessary for a fair presentation have been
      included. For further information, refer to consolidated financial statements
      and footnotes thereto for the fiscal quarter ended September 30, 2005, included
      herein. The consolidated financial statements include the accounts of the
      Company and its majority-owned subsidiaries. All inter-company transactions
      were
      eliminated. The Company’s fiscal year ends on December 31 each year. The
      financial statements and notes are representations of the management and the
      Board of Directors who are responsible for their integrity and
      objectivity.





The
      results of operations for such periods are not necessarily indicative of the
      results expected for the full fiscal year or for any future period. The
      financial statements should be read in conjunction with the consolidated
      financial statements and related notes included in the Company’s Annual Report
      on Form 10-KSB for the fiscal year ended December 31, 2004.








Estimates




The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and the disclosures of
      contingent assets and liabilities at the date of the financial statements,
      as
      well as the reported amounts of revenues and expenses during the reporting
      period. Actual results could differ from those estimates. Significant estimates
      include valuation of goodwill, allowance for doubtful accounts and third-party
      contractual agreements, and the net realizable value of assets of discontinued
      operations.








Cash
      and Cash Equivalents




For
      purpose of the statements of cash flows, cash equivalents include amounts
      invested in a money market account with a financial institution. The Company
      considers all highly liquid investments with an original maturity of three
      months or less to be cash equivalents. Cash equivalents are carried at cost,
      which approximates market.








Revenue
      Recognition




The
      Company recognizes revenue at the time the product is shipped to the customer
      or
      services are rendered. Outbound shipping and handling charges are included
      in
      net sales.


-
            7 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**1.**  **Summary
      of Significant Accounting Policies (continued)**





Revenue
      Recognition (continued)





*Net
      Client Revenue*





Net
      client revenue represents the estimated net realizable amounts from clients,
      third-party payors and others for sale of products or services rendered. For
      revenue recognition, revenue is recorded when the prescription is filled or
      when
      services are performed. A significant portion of revenue is from federal and
      state reimbursement programs.








*Third-Party
      Contractual Adjustments*





Contractual
      adjustments represent the difference between the pharmacy’s established billing
      rate for covered products and services and amounts reimbursed by third-party
      payors, pursuant to reimbursement agreements.





For
      the
      three months ended September 30, 2005, gross revenues were $429,268 less
      approximately $153,314 of contractual adjustments based on reimbursement
      contracts, resulting in net third-party contract revenues of approximately
      $275,954. For the nine months ended September 30, 2005, gross revenues were
      $1,305,564 less approximately $330,998 of contractual adjustments based on
      reimbursement contracts, resulting in net third-party contract revenues of
      approximately $975,566.








Net
      Loss per Share





Loss
      per
      common share is computed on the weighted average number of common shares
      outstanding during each year. Basic loss per share is computed as net loss
      applicable to common stockholders divided by the weighted average number of
      common shares outstanding for the period. Diluted loss per share reflects the
      potential dilution that could occur from common shares issuable through stock
      options, warrants and other convertible securities when the effect would be
      dilutive. The Company incurred a loss from operations. Thus, all common stock
      equivalents were deemed to be anti-dilutive.








Inventory





Inventory
      consists primarily of pharmaceuticals and health care products and is stated
      at
      the lower of cost or market on a first-in-first-out basis.








-
            8 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**1.**  **Summary
      of Significant Accounting Policies (continued)**





Income
      Taxes





The
      Company utilizes SFAS No. 109, “Accounting for Income Taxes,” which requires the
      recognition of deferred tax assets and liabilities for the expected future
      tax
      consequences of events that have been included in the financial statements
      or
      tax returns. Under this method, deferred income taxes are recognized for the
      tax
      consequences in future years of differences between the tax bases of assets
      and
      liabilities and their financial reporting amounts at each period end based
      on
      enacted tax laws and statutory tax rates applicable to the periods in which
      the
      differences are expected to affect taxable income. Valuation allowances are
      established, when necessary, to reduce deferred tax assets to the amount
      expected to be realized. The provision for income taxes represents the tax
      payable for the period and the change during the period in deferred tax assets
      and liabilities.








Fair
      Value of Financial Instruments





The
      Company measures its financial assets and liabilities in accordance with
      generally accepted accounting principles. SFAS No. 107, “Disclosure about Fair
      Value of Financial Instruments,” requires certain disclosures regarding the fair
      value of financial instruments. For certain of the Company’s financial
      instruments, including cash and cash equivalents and accounts payable and
      accrued liabilities, the carrying amounts approximate fair value due to their
      short maturities. The amounts shown for notes payable also approximate fair
      value because current interest rates offered to the Company for debt of similar
      maturities are substantially the same.








Stock-Based
      Compensation





The
      Company adopted the fair value based method of recording stock options
      consistent with Statement of Financial Accounting Standards (SFAS) No. 123,
      “Accounting for Stock-Based Compensation,” for all employee stock options
      granted subsequent to fiscal year end 2004. Specifically, the Company adopted
      SFAS No. 123 using the “prospective method” with guidance provided from SFAS No.
      148, “Accounting for Stock-Based Compensation - Transition and Disclosure.” All
      employee stock option grants made since the beginning of fiscal 2005 have or
      will be expensed over the related stock option vesting period based on the
      fair
      value at the date the options are granted. Prior to fiscal 2005, the Company
      applied Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock
      Issued to Employees,” and related interpretations in accounting for stock
      options.





SFAS
      No.
      123, “Accounting for Stock-Based Compensation,” establishes and encourages the
      use of the fair value based method of accounting for stock-based compensation
      arrangements under which compensation cost is determined using the fair value
      of
      stock-based compensation determined as of the date of grant and is recognized
      over the periods in which the related services are rendered.





The
      Company issued a warrant to purchase 12,000,000 shares of Kaire’s common stock
      to Steve Westlund during the nine months ended September 30, 2005. The warrant
      is a five year warrant with an exercise price of $0.05 per share. None were
      issued during the nine months ended September 30, 2004.





-
            9 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**1.**  **Summary
      of Significant Accounting Policies (continued)**





Comprehensive
      Income (Loss)





Statement
      of Financial Accounting Standards No. 130, “Reporting Comprehensive Income”
      (SFAS 130) established standards for reporting and display of comprehensive
      income (loss) and its components in a full set of general-purpose financial
      statements. Comprehensive income consists of net income and unrealized gains
      (losses) on available-for-sale securities; foreign currency translation
      adjustments; changes in market values of future contracts that qualify as a
      hedge; and negative equity adjustments recognized in accordance with SFAS No.
      87. The Company, however, does not have any components of comprehensive income
      (loss) as defined by SFAS 130 and therefore, for the nine months ended September
      30, 2005 and 2004, comprehensive loss is equivalent to the Company’s net
      loss.








Advertising
      Costs





The
      Company expenses advertising and marketing costs as they are incurred. There
      were no advertising and marketing costs for the nine-month period ended
      September 30, 2005. Advertising and marketing costs for the nine-month period
      ended September 30, 2004, were $817.








Segment
      and Geographic Information





The
      FASB
      issued SFAS No. 131 on “Disclosures about Segments of an Enterprise and Related
      Information” effective in 1998. SFAS 131 requires enterprises to report
      information about operating segments in annual financial statements and selected
      information about reportable segments in interim financial reports issued to
      shareholders, on the basis that is used internally for evaluating segment
      performance and deciding how to allocate resources to segments. It also
      established standards for related disclosures about products and services,
      geographic areas and major customers.








Recent
      Accounting Pronouncements





In
      March
      2004, the FASB approved the consensus reached on the Emerging Issues Task Force
      (EITF) Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its
      Application to Certain Investments.” The objective of this Issue is to provide
      guidance for identifying impaired investments. EITF 03-1 also provides new
      disclosure requirements for investments that are deemed to be temporarily
      impaired. In September 2004, the FASB issued a FASB Staff Position (FSP) EITF
      03-1-1 that delays the effective date of the measurement and recognition
      guidance in EITF 03-1 until after further deliberations by the FASB. The
      disclosure requirements are effective only for annual periods ending after
      June
      15, 2004. The Company has evaluated the impact of the adoption of the disclosure
      requirements of EITF 03-1 and does not believe it will have an impact to the
      Company’s overall consolidated results of operations or consolidated financial
      position. Once the FASB reaches a final decision on the measurement and
      recognition provisions, the Company will evaluate the impact of the adoption
      of
      EITF 03-1.


-
            10 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**1.**  **Summary
      of Significant Accounting Policies (continued)**





Recent
      Accounting Pronouncements (continued)





In
      September 2004, the EITF delayed the effective date for the recognition and
      measurement guidance previously discussed under EITF Issue No. 03-01, “The
      Meaning of Other-Than-Temporary Impairment and Its Application to Certain
      Investments” (“EITF 03-01”) as included in paragraphs 10-20 of the proposed
      statement. The proposed statement will clarify the meaning of
      other-than-temporary impairment and its application to investments in debt
      and
      equity securities, in particular investments within the scope of FASB Statement
      No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and
      investments accounted for under the cost method. The Company is currently
      evaluating the effect of this proposed statement on its financial position
      and
      results of operations.





In
      November 2004, the Financial Accounting Standards Board Statement issued SFAS
      No. 151, “Inventory Costs, an amendment of ARB No. 43, Chapter 4”, which
      clarifies the accounting for abnormal amounts of idle facility expense, freight,
      handling costs, and charges regardless of whether they meet the criterion of
“so
      abnormal” that was originally stated in Accounting Research Bulletin No. 43,
      chapter 4. In addition, SFAS No. 151 requires that the allocation of fixed
      production overheads to conversion costs be based on the normal capacity of
      the
      production facilities. SFAS No. 151 is effective for inventory costs incurred
      during fiscal years beginning after June 15, 2005. Management does not expect
      the implementation of this new standard to have a material impact on its
      financial position, results of operations and cash flows.





In
      December 2004, the FASB issued a revision to SFAS 123, “Share-Based Payment, an
      amendment of FASB Statements Nos. 123 and 95,” that addresses the accounting for
      share-based payment transactions in which a Company receives employee services
      in exchange for either equity instruments of the Company or liabilities that
      are
      based on the fair value of the Company’s equity instruments or that may be
      settled by the issuance of such equity instruments. This statement would
      eliminate the ability to account for share-based compensation transactions
      using
      the intrinsic method that the Company currently uses and generally would require
      that such transactions be accounted for using a fair-value-based method and
      recognized as expense in the consolidated statement of operations. The effective
      date of this standard is for periods beginning after December 15, 2005. The
      Company has determined that the adoption of SFAS 123R will result in the Company
      having to recognize additional compensation expense related to the options
      or
      warrants granted to employees, and it will have an impact on the Company’s net
      earnings in the future. This standard requires expensing the fair value of
      stock
      option grants and stock purchases under employee stock purchase plan. The
      Company has adopted this standard effective January 1, 2005.





In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards (SFAS) No. 153, “Exchanges of Nonmonetary Assets
      - an amendment of APB Opinion No. 29”, which amends Opinion 29 by eliminating
      the exception for nonmonetary exchanges of similar productive assets and
      replaces it with a general exception for exchanges of nonmonetary assets that
      do
      not have commercial substance. A nonmonetary exchange has commercial substance
      if the future cash flows of the entity are expected to change significantly
      as a
      result of the exchange. SFAS No. 151 is effective for a fiscal year beginning
      after June 15, 2005, and implementation is done prospectively. Management does
      not expect the implementation of this new standard to have a material impact
      on
      its financial position, results of operations and cash flows.


-
            11 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**1.**  **Summary
      of Significant Accounting Policies (continued)**





Recent
      Accounting Pronouncements (continued)





In
      March
      2005, the SEC released Staff Accounting Bulletin No. 107, “Share-Based Payment”
      (“SAB 107”), which provides interpretive guidance related to the interaction
      between SFAS 123(R) and certain SEC rules and regulations. It also provides
      the
      SEC staff’s views regarding valuation of share-based payment arrangements. In
      April 2005, the SEC amended the compliance dates for SFAS 123(R), to allow
      companies to implement the standard at the beginning of their next fiscal year,
      instead of the next reporting period beginning after June 15, 2005. Management
      has implemented the provisions of SFAS 123(R) effective January 1, 2005.





In
      May
      2005 the FASB issued Statement of Financial Accounting Standards (SFAS) No.
      154,
“Accounting Changes and Error Corrections, a replacement of APB Opinion No.
      20
      and FASB Statement No. 3.” SFAS 154 requires retrospective application to prior
      periods’ financial statements for changes in accounting principle, unless it is
      impracticable to determine either the period-specific effects or the cumulative
      effect of the change. SFAS 154 also requires that retrospective application
      of a
      change in accounting principle be limited to the direct effects of the change.
      Indirect effects of a change in accounting principle, such as a change in
      non-discretionary profit-sharing payments resulting from an accounting change,
      should be recognized in the period of the accounting change. SFAS 154 also
      requires that a change in depreciation, amortization or depletion method for
      long-lived, non-financial assets be accounted for as a change in accounting
      estimate affected by a change in accounting principle. SFAS 154 is effective
      for
      accounting changes and corrections of errors made in fiscal years beginning
      after December 15, 2005. Early adoption is permitted for accounting changes
      and
      corrections of errors made in fiscal years beginning after the date this
      Statement is issued. The Company is required to adopt the provisions of SFAS
      154, as applicable, beginning in fiscal 2007.











**2.**  **Going
      Concern**





The
      accompanying financial statements have been prepared in conformity with
      generally accepted accounting principles, which contemplate continuation of
      the
      Company as a going concern. However, the Company has experienced net losses
      of
      $820,879 and $1,061,598 for the nine-month periods ended September 30, 2005
      and
      2004, respectively. The Company also had a net working deficit of $1,493,246
      for
      the nine months ended September 30, 2005. Additionally, the Company must raise
      additional capital to meet its working capital needs. If the Company is unable
      to raise sufficient capital to fund its operations, it might be required to
      curtail or discontinue its pharmacy operations. These factors raise substantial
      doubt about the Company’s ability to continue as a going concern. In view of the
      matters described above, recoverability of a major portion of the recorded
      asset
      amounts shown in the accompanying balance sheet is dependent upon the Company’s
      ability to generate sufficient sales volume to cover its operating expenses
      and
      to raise sufficient capital to meet its payment obligations. The financial
      statements do not include any adjustments relating to the recoverability and
      classification of recorded asset amounts, or amounts and classification of
      liabilities that might be necessary should the Company be unable to continue
      in
      existence.


-
            12 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**2.**  **Going
      Concern (continued)**





Management
      has previously relied on equity financing sources and debt offerings to fund
      operations. The Company’s reliance on equity and debt financing will continue,
      and the Company will continue to seek to enter into strategic acquisitions.
      On
      March 29, 2005, Kaire issued a $125,000, 8% interest per annum, two year
      convertible note to the Longview Fund LP. On
      June
      22, 2005, Kaire issued three two year convertible notes for an aggregate of
      a
      $350,000, 8% interest per annum, to the following: 1) $100,000 to the Longview
      Fund LP., $175,000 to the Longview Equity Fund LP, and 3) $75,000 to the
      Longview International Equity Fund, LP.











**3.**  **Accounts
      Receivable - Trade**





For
      the
      nine-month periods ended September 30, 2005 and 2004, approximately 95% and
      94%
      of net revenues of continuing operations were derived under federal, state
      and
      third-party insurance reimbursement programs. For the three- and nine-month
      periods ending September 30, 2005 the breakout is as follows:





September
                30, 2005Three
                Months
            
            Nine
                MonthsMedi-Cal
            53.8%
            
            70.9%Medi-Care
            0.8%
            
            1.4%Private
                Party
            15.7%
            
            7.8%Other
                third-parties
            29.7%
            
            19.9%





These
      revenues are based, in part, on cost reimbursement principles and are subject
      to
      audit and retroactive adjustment by the respective third-party fiscal
      intermediaries. In the opinion of management, retroactive adjustments, if any
      would not be material to the financial position, results of operations or cash
      flows of the Company.





The
      Company provides an allowance for doubtful accounts based upon its estimation
      of
      uncollectible accounts. The Company bases this estimate on historical collection
      experience and a review of the current status of trade accounts receivable.
      The
      Company determined that no allowances for doubtful accounts as of September
      30,
      2005 and December 31, 2004 were necessary.











**4.**  **Common
      Stock Transactions**





The
      common stock transactions during the nine months ended September 30, 2005,
      were
      as follows:





|· | The
              Company issued 3,000,000 shares of its common stock with a fair market
              value of $150,000 for consulting services provided to the Company.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------




-
            13 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**4.**  **Common
      Stock Transactions (continued)**





The
      common stock transactions during the Nine months ended September 30, 2004 were
      as follows:





|· | The
              Company converted $539,341 in notes payable and related interest into
              16,431,518 shares of its common stock.
|- | --------------------------------------------------------------------------------------------------------------------------------------------




|· | The
              Company issued 3,955,000 shares of its common stock with a market value
              of
              $657,250 for consulting services provided to the
              Company.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|· | The
              Company converted warrants issued to note holders into 2,200,000 shares
              of
              its common stock for $132,000.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------




|· | The
              Company issued 2,197,727 shares of its common stock to its CEO for
              current
              and prior year compensation totaling
              $391,750.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




|· | The
              Company retired 1,250,000 shares of its common stock as result of the
              sale
              of entreMetrix, Inc. back to its original
              shareholder.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------










**5.**  **Related
      Party Transactions**





The
      following transactions occurred between the Company and certain related
      parties:





Source
      One Group





The
      Company’s chief financial officer also serves as the chief financial officer of
      Dalrada Financial Corporation (Dalrada). Dalrada through its subsidiary Source
      One Group (SOG) operates a professional employment organization. SOG provides
      services for the Company as its professional employment organization. The
      Company entered into an Employment Services Agreement with SOG pursuant to
      which
      SOG has agreed to render professional employment and related services to the
      Company for a fee. The Company paid fees to SOG totaling $9,417 for the nine
      months ended September 30, 2005. The fees charged by SOG to the Company are
      at
      the prevailing rate that SOG charges others.











-
            14 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**6.**  **Property
      and Equipment**





Property
      and equipment at September 30, 2005 and December 31, 2004 consisted of the
      following:





2005
            
            2004Furniture
                and fixtures
            $
            85,000
            
            $
            85,000Vehicles
            
            14,712
            
            
            14,712Computers
                and equipment
            
            22,094
            
            
            21,144121,806
            
            
            120,856Less
                accumulated depreciation and amortization
            
            (73,022)
            
            
            (51,071)Total
            $
            48,784
            
            $
            69,785





Depreciation
      and amortization expense was $21,952 and $21,714 for the nine months ended
      September 30, 2005 and 2004, respectively.











**7.**  **Accounts
      Payable and Accrued Expenses**





Accounts
      payable and accrued expenses at September 30, 2005 and December 31, 2004 of
      the
      following:





September
                30, 2005
            
            December
                31, 2004Accounts
                payable
            $
            318,172
            
            $
            356,969Accrued
                professional and related fees
            
            61,072
            
            
            90,000Accrued
                compensation and related payroll taxes
            
            22,836
            
            
            -Accrued
                interest payable
            
            -
            
            
            2,000Barnes
                settlement
            
            33,846
            
            
            -Other
                accrued expenses
            
            3,399
            
            
            813Total
            $
            439,325
            
            
            449,782





-
            15 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**8.**  **Convertible
      Notes Payable and Debentures**





Convertible
      debentures consist of the following at September 30, 2005 and December 31,
      2004:





September
                30, 2005
            
            December
                31, 20048%
                convertible subordinated debentures, originally due in October 2002
                and
                now on demand. Interest is payable quarterly.
            $
            38,547
            
            $
            38,5478%
                convertible subordinated debentures, originally due in January 2003
                and
                now on demand. Interest is payable quarterly.
            
            196,103
            
            
            196,1038%
                convertible subordinated debentures, originally due in August 2003
                and now
                on demand. Interest is payable quarterly.
            
            121,926
            
            
            121,9268%
                convertible subordinated debentures, due in December 2005. Interest
                is
                payable quarterly, and principal is due at maturity.
            
            320,000
            
            
            320,0008%
                convertible subordinated debentures, due in April 2006. Interest
                is
                payable quarterly, and principal is due at maturity.
            
            650,000
            
            
            650,0008%
                convertible subordinated debenture, due on March 29, 2006. Interest
                is
                payable quarterly, and principal is due at maturity.
            
            125,000
            
            
            -8%
                convertible subordinated debentures, due in June 2007. Interest is
                payable
                quarterly, and principal is due at maturity.
            
            350,000
            
            
            -1,801,576
            
            
            1,326,576Less:
                Unamortized Bond Discount and Unamortized Debt Issuance
                Costs
            
            (530,854)
            
            
            (374,538)Total
                debt
            
            1,242,769
            
            
            952,038Less:
                current portion
            
            (746,970)
            
            
            (566,158)Convertible
                debentures, less current portion
            $
            495,799
            
            $
            385,880








8%
      Convertible Debentures





During
      2000, the Company issued convertible notes that were due in October 2002. The
      notes have a stated interest rate of 8% per annum, and interest is payable
      quarterly and the principal balance is due at maturity. In 2004, the noteholders
      converted $327,094 of the outstanding principal into the Company’s common stock.
      $38,547 of these notes was still outstanding as of December 31, 2004 and
      September 30, 2005, respectively.





The
      8%
      convertible debentures issued in 2000 and 2001 have a conversion price that
      is
      the lesser of (1) 80% of the average of the three lowest closing prices out
      of
      the thirty closing prices prior to the closing date and (2) 80% of the lowest
      three closing prices during the sixty trading days, as reported on the NASD
      OTC
      Bulletin Board, immediately preceding the purchase date. Thus, the debentures
      will be converted at prices below the current market price on the conversion
      date. If conversions of the debentures occur, shareholders may be subject to
      an
      immediate dilution in their per share net tangible book value. The current
      convertible debentures may be converted into common stock at any time. The
      value
      allocated to the note warrants and the beneficial conversion feature was
      amortized to interest expense over the term of the note.






-
      16 -







**Kaire
        Holdings Incorporated**
 **and
        Subsidiaries**
 **Notes
        to Financial Statements**
 **September
        30, 2005**




**8.**  **Convertible
      Notes Payable and Debentures (continued)**





8%
      Convertible Debentures (continued)





During
      January 2001, the Company issued convertible notes aggregating to $500,000,
      which were due in January 2003. The notes have a stated interest rate of 8%
      per
      annum, and interest is payable quarterly and the principal balance is due at
      maturity. As of December 31, 2003, the Company had converted $196,650 into
      its
      common stock. In 2004, the Company converted an additional $87,247 into common
      stock. The Company has an outstanding principal balance of $196,103 on these
      notes as of December 31, 2004 and September 30, 2005, respectively.





During
      August 2001, the Company issued a convertible notes aggregating to $300,000,
      which is due in August 2002. The note has a stated interest rate of 8% per
      annum, and interest is payable quarterly and the principal balance is due at
      maturity. In 2003, 2002 and 2001, the noteholders converted $1,776, $31,651
      and
      $144,647, respectively, into the Company’s common stock, and the principal
      balance of $121,926 on this note was still outstanding as of December 31, 2004
      and June 30, 2005.





In
      November 2003, the Company obtained debt financing of $370,000 through the
      issuance of convertible notes payable. The Company also issued warrants to
      purchase 2,200,000 shares of the Company’s common stock to various parties as
      part of these financing agreements. The principal balance of $320,000 was still
      outstanding as of December 31, 2004 and September 30, 2005.





Total
      funds received of $370,000 were allocated $83,829 to the 8% convertible notes,
      $127,600 to the note warrants and $158,571 to the beneficial conversion feature.
      The value allocated to the note warrants and the beneficial conversion feature
      is being amortized to interest expense over the term of the notes.





The
      8%
      convertible debentures issued in November 2003 have a conversion price that
      is
      the lesser of (1) 70% of the average of the three lowest closing prices out
      of
      the thirty closing prices prior to the closing date and (2) 80% of the lowest
      three closing prices during the sixty trading days, as reported on the NASD
      OTC
      Bulletin Board, immediately preceding the purchase date. Thus, the debentures
      will be converted at prices below the current market price on the conversion
      date. If conversions of the debentures occur, shareholders may be subject to
      an
      immediate dilution in their per share net tangible book value. The current
      convertible debentures may be converted into common stock at any time.





The
      warrants issued are convertible into 2,200,000 shares common stock at an
      exercise price of $0.06 per share, which is based upon the lowest closing price
      for the five days preceding the date of grant. The exercise price can be
      adjusted down by the Company, and the Company did not reprice any warrants
      in
      2004. In February and March 2004, the warrant holders exercised all the
      outstanding warrants.





In
      May
      2004, the Company concluded debt financing for $650,000, whereby the following
      8% convertible debentures were issued: $350,000 to Alpha Capital
      Aktiengesellschaft; $200,000 to Gamma Opportunity Capital Partners, LP; and
      $100,000 to Longview Fund, LP. Additionally, in conjunction with these
      convertible debentures, the Company issued detachable warrants to purchase
      4,444,444 shares of common stock in conjunction with the convertible notes.
      The
      exercise price of the warrants is $0.17 per share, and the warrants mature
      in
      five years.





-
            17 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**8.**  **Convertible
      Notes Payable and Debentures (continued)**





8%
      Convertible Debentures (continued)





The
      conversion price per share of the above debentures shall be equal to the lesser
      of (i) $.09 or (ii) eighty-five (85%) of the average of the closing bid prices
      for the fifteen (15) trading days prior to but not including the Conversion
      Date
      for the Common Stock. Closing bid price shall mean the last closing bid price
      as
      reported by Bloomberg LP. The Conversion Price shall be $.09 per share unless
      at
      any time after the closing price of the Common Stock as reported by Bloomberg
      LP
      for the Principal Market is less than $0.09 per share for fifteen (15)
      consecutive trading days.





Total
      funds received of $650,000 were allocated $312,108 to the 8% convertible notes,
      $240,834 to the note warrants and $97,059 to the beneficial conversion feature.
      The value allocated to the note warrants and the beneficial conversion feature
      is being amortized to interest expense over the term of the notes.





On
      March
      29, 2005, Kaire issued a $125,000, 8% interest per annum, two year convertible
      note to the Longview Fund LP. The Conversion Price per share shall be the lesser
      of (i) $.04 or (ii) eighty-five (85%) of the average of the closing bid prices
      for the fifteen (15) trading days prior to but not including the conversion
      date
      for the common stock. In addition Longview was issued a class A warrant for
      the
      purchase of 694,444 shares of the common stock at a per share purchase price
      of
      $0.042, and a class B warrant for the purchase of 3,000,000 shares of the common
      stock at a per share purchase price of $0.04. Total funds received of $125,000
      were allocated $105,750 to the note warrant and $19,250 to the beneficial
      conversion feature. The value allocated to the note warrants and the beneficial
      conversion feature is amortized to interest expense over the term of the
      note.





Total
      funds received of $125,000 were allocated $13,496 to the 8% convertible notes,
      $89,445 to the note warrants and $22,059 to the beneficial conversion feature.
      The value allocated to the note warrants and the beneficial conversion feature
      is being amortized to interest expense over the term of the notes.





On
      June
      23, 2005, the Company issued three two-year convertible notes for an aggregate
      of a $350,000, 8% interest per annum, to the following: 1) $100,000 to the
      Longview Fund LP., $175,000 to the Longview Equity Fund LP, and 3) $75,000
      to
      the Longview International Equity Fund, LP. The
      Conversion Price per share shall be the lesser of (i) $.03 or (ii) eighty (80%)
      of the average of the closing bid prices for the twenty (20) trading days prior
      to but not including the conversion date for the common stock. The proceeds
      from
      this convertible note were used for working capital needs. In addition, 5 year
      warrants for an aggregate of 5,833,333 shares with an exercise price of $.03
      per
      share were issued to the following: 1) 1,666,666 shares to the Longview Fund
      LP,
      2) 2,916,666 shares to the Longview
      Equity Fund LP, and 3) 1,250,000 shares to the Longview International Equity
      Fund, LP.





Total
      funds received of $350,000 were allocated $213,621 to the 8% convertible notes,
      $48,879 to the note warrants and $87,500 to the beneficial conversion feature.
      The value allocated to the note warrants and the beneficial conversion feature
      is being amortized to interest expense over the term of the notes.











-
            18 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**9.**  **Commitments
      and Contingencies**





Litigation





*Department
      of Health Services*





The
      Company is a provider of services under California’s Medicaid program
      (“Medi-Cal”), which is administered by the Department of Health Services
      (“DHS”). DHS served notice to the Company that the Company received overpayment
      of claims submitted by the Company for certain drugs, based on alleged
      violations of the California Code of Regulations. The Company has provided
      documentary evidence to contest and rebut DHS’s allegations and received an
      extension to provide evidence to the contrary. In December 2002, DHS informed
      the Company that it was suspending Classic Care’s Medi-Cal license, and that it
      was withholding all further payments until its investigation is complete.
      Classic Care could not successfully operate without a Medi-Cal license. Thus,
      the Company has decided to cease operations of Classic Care. Management has
      fully reserved the accounts receivable balance regarding these
      allegations.





Additionally,
      DHS has alleged that Classic Care was overpaid in 1998, 1999 and 2000, and
      has
      requested a refund. The Company believes that all reimbursements received were
      appropriate, and management believes that it does not have a liability to the
      DHS.





Except
      as
      otherwise specifically indicated above, management believes that the Company
      does not have any material liability for any lawsuits, settlements, judgments,
      or fees of defense counsel which have not been paid or accrued as of December
      31, 2004. However, there can be no assurance that the Company will prevail
      in
      the above proceedings. In addition, the Company may be required to continue
      to
      defend it resulting in substantial additional expense. In the event the Company
      is unable to pay the defense costs associated with the foregoing, an unfavorable
      settlement or judgment could be awarded against the Company, which might have
      a
      material adverse effect upon the Company.





Kaire
      believes that it does not have any liability in this matter and has not provided
      any reserve for this matter. The basis for this belief is the following: 1)
      the
      California Department of Health Services (“DHS”) claim is directed to Classic
      Care Pharmacy which was owned by Classic Care, Inc. 2) Classic Care Inc. is
      a
      separate legal entity and was operated by the prior owners, whom Kaire believes
      perpetrated the actions leading to the alleged claims, 3) Kaire was not involved
      nor was Kaire aware of the alleged overpayment to Classic Care Inc., 4) the
      alleged claim includes a period of time before Kaire was involved with Classic
      Care, Inc. thus precluding Kaire any claim in that time period and 5) Kaire
      did
      not benefit in any way from the alleged overpayment.





The
      DHS
      estimates the claim at around $1,566,396. An estimate of how much the claim
      would relate to Classic Care, Inc. cannot be made since the alleged claim
      includes a time period that begins over a year prior to Kaire’s involvement with
      Classic Care, Inc. and that information is not available to Kaire.


-
            19 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**9.**  **Commitments
      and Contingencies (continued)**





Litigation
      (continued)





*Company
      Is in Dispute with a Vendor*





On
      April
      2, 2003, H.D. Smith filed a complaint against Classic Care, Inc., Kaire
      Holdings, Inc., Sarit Rubenstein, Steven Oscherowitz and Larisa Vernik for
      various causes of action relating amounts owed for certain drugs that were
      delivered to Classic Care. H.D. Smith is seeking $430,205 plus interest. On
      December 30, 2004 a settlement was reached where Kaire is obligated to pay
      the
      plaintiff $50,000. Kaire’s payment began with the court approval of the
      settlement, with $10,000 paid July 8, 2005 and the balance paid based on 12
      monthly installments of $3,077 (which includes interest of 7.50%) to commence
      shortly thereafter. The balance owned as of September 30, 2005 was $33,845.





*McKesson
      Medical - Surgical Inc. v. Effective Health*





On
      January 20, 2005, McKesson Medical-Surgical, Inc. (“Plaintiff”) filed a
      complaint against Effective Health, Inc., a subsidiary of Kaire, for failure
      to
      pay the principal sum of $17,467 for goods and/or services. The Company has
      expressly denied any liability. The Company’s attorney is completing a full
      analysis of the Plaintiff’s claims, as this is in the early stage of the
      litigation.








Employment
      Agreements





*Chief
      Executive Officer Compensation*





On
      April
      5, 2005, the Company agreed to a new three year agreement with Mr. Westlund.
      The
      agreement calls for a monthly salary of $8,333 per month, with annual increases
      equaling 15% of the base salary.





During
      2004 Mr. Westlund received 2,000,000 shares of the Company’s common stock in
      lieu of $370,000 of accrued and current compensation due him under the above
      compensation agreement. The Company had no accrued compensation due to Mr.
      Westlund as of December 31, 2004.





-
            20 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**10.**  **Stock
      Options and Warrants**





The
      following summarizes the Company’s stock option and warrants
      activity:








Warrants
              And
              Stock
                Options
              Outstanding
            
            Weighted
              Average
              Exercise
              PriceOutstanding
                December 31, 2004
            4,444,444
            
            $
            0.17Granted
                March 29, 2005
            3,694,444
            
            $
            0.04Granted
                June 22, 2005
            5,833,333
            
            $
            0.03Exercised
            -
            
            $Expired/Cancelled
            -
            
            $Outstanding
                September 30, 2005
            13,972,221
            
            $
            0.08





The
      Company has 13,972,221 warrants outstanding as of September 30, 2005 and
      4,444,444 as of December 31, 2004. The weighted average exercise price of the
      outstanding warrants as of September 30, 2005 is $0.08. The outstanding warrants
      have a clause that causes the exercise price to be adjusted down by the Company
      upon certain Company actions by the warrant holders. The warrants expire 5
      years
      from the original date of grant. The Company has not repriced any warrants
      as of
      September 30, 2005.











**11.**  **Earnings
      per Share**





Earnings
      per share have been calculated using the weighted average number of shares
      outstanding during each period. As of September 30, 2005, potentially dilutive
      securities consist of convertible debentures convertible into 83,406,296 common
      shares and warrants convertible into 13,972,221 shares. Earnings per
      share-dilutive does not include the effect of potentially dilutive securities
      for the nine months ended September 30, 2005 and 2004 respectively. The loss
      from operations and the net loss for the nine months ended September 30, 2005
      and 2004 make these securities anti-dilutive.











**12.**  **Discontinued
      Operations - Classic Care, Inc.**





In
      January 2003, after a failed effort to rebuild Classic Care Pharmacy, all
      operations at Classic Care Pharmacy ceased and Classic Care, Inc was dissolved.
      Additionally, the logistical issues created by moving the pharmacy operations
      to
      Fillmore, California, made it difficult to provide the level of personal
      attention required to service individual HIV clients in the Health Advocate
      HIV
      program. The combination of a declining HIV client base due to the logistical
      problems of providing the level of personal attention required to service each
      HIV client (i.e. clients were transferring their business to a more conveniently
      located pharmacy) lead to the decision to phase out the Health Advocate HIV
      program.


-
            21 -
 
 **Kaire
            Holdings Incorporated**
 **and
            Subsidiaries**
 **Notes
            to Financial Statements**
 **September
            30, 2005**


**12.**  **Discontinued
      Operations - Classic Care, Inc. (continued)**





The
      net
      assets (liabilities) of the discontinued operations have been recorded at their
      estimated net realizable value under the caption “Net assets (liabilities) of
      discontinued operations - Classic Care” in the accompanying Balance Sheets at
      September 30, 2005 and December 31, 2004 consist of the following:








September
                30,
              2005
            
            December
                31, 2004Non-trade
                receivable
            
            -
            
            
            -Total
                Assets
            $
            -
            
            $
            -Accounts
                payable
            
            (131,845)
            
            
            (131,845)Accrued
                liabilities
            
            (13,766)
            
            
            (13,766)Total
                liabilities
            
            (145,611)
            
            
            (145,611)Net
                assets (liabilities) of discontinued operations
            $
            (145,611)
            
            $
            (145,611)





There
      were no revenues or expenses for the discontinued operations of Classic Care
      for
      the nine-month periods ended June 30, 2005 and 2004.











**13.**  **Subsequent
      Events**





The
      Company is in default of the registration requirement of the June 23, 2005
      notes, which required that a registration statement for the underlying shares
      be
      filed within 45 days of the closing day of the funding (i.e. August 8, 2005).
      The Company is in the process of remedying this default.





In
      October 2005, the Company’s Chief Executive Officer received a 5 year option to
      purchase 12 million shares of the Company’s common stock at an option price of
      $0.05 per share.











-
            22 -


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





Plan
      of Operation





General





Our
      general operating plan focuses on delivering specialized programs and services
      targeted areas within the senior and chronic health care market. We believe
      this
      approach will help differentiate us from our competitors and establish us as
      a
      senior and chronic health care specialist. We also believe that the size of
      the
      aging baby boomer generation will create the need for numerous additional
      programs and services required to properly care for this group. We will continue
      to position ourselves to take advantage of future market opportunities by
      continuing to develop and market products, programs and services that help
      patients comply with increasingly complex medication therapies including
      programs that help educate patients about their chronic conditions as well
      as
      programs that increase pharmacy operating efficiencies including the processing
      of state and private insurance claims.





Short
      Term Goals





Our
      main
      short term goal is to increase sales revenue and achieve profitability on an
      operational cash flow basis. We hoped to have reached that goal this quarter,
      however the combination of the loss of two large facilities during the first
      and
      second quarter plus the being notified on October 17, 2005 that Medi-Cal denied
      our pharmacy’s Med-Cal Provider Application has resulted in an overall longer
      than anticipated ramp up of sales and has delayed that projection to sometime
      into 2006. Once achieved, we will be able to reduce or eliminate the need to
      raise additional working capital to sustain operations. Achieving this goal
      would include accomplishing the following:





·  Increase
      the number of retail and long term care private pay and third party pay patients
      by focusing more of our resources on targeted sales and marketing programs.


·  Develop
      revenue channels with higher gross profit margins such as durable medical
      equipment such as wheel chairs, beds and walkers, and equipment
      rentals.


·  Enhancing
      operational efficiencies during this expansion mode such as by installing
      procedures for routine functions and reassign employee functions that fit their
      individual strengths.


·  Relocate
      the pharmacy to an area that can more efficiently service Los Angeles Hospital
      patients.





Long
      Term Goals





Our
      long
      term goals would be to expand on our short term goals, (i.e. expand our service
      coverage area) to increase sales and to introduce service programs that would
      be
      custom tailored to meet the needs of our clients as those needs arise.





Our
      work
      force is expected to stay flat in the immediate future.










Concerning
      working capital, historically our revenues have been insufficient to cover
      operations. For the first nine month period ending September 30, 2005 our
      operations have been generating an average monthly positive cash flow from
      operations of $13,500. However this is quickly used up and the Company has
      relied in part on private placements of common stock securities, bank debt,
      loans from private investors and the exercise of common stock warrants to meet
      most non-operational needs. In addition, with revenue grow being delayed till
      sometime in the second or third quarter of 2006, we believe that over the next
      twelve months there will be a need for additional working capital to meet our
      non-operational needs. This evaluation is based on the need to cover the costs
      of the large addition burdens put on the company due to reporting regulation
      changes plus the desire to relocate our pharmacy to an area that allows for
      better servicing of clients. In the event that we are unable to obtain
      additional funding over the next several months, we will need to reduce non
      operational programs to a point where cash outflow will not exceed cash inflow.





Historically,
      we have been successful in our efforts to secure working capital from private
      placements of common stock securities, bank debt, loans from private investors
      and the exercise of warrants for common stock. However, there can be no
      assurances that private or other capital will continue to be available, to
      meet
      our cash needs, or that a sufficient amount of our common stock or other
      securities can or will be sold or that any common stock purchase
      options/warrants will be exercised to fund the non operational needs of the
      Company. Management raised an additional $125,000 in March 2005 and $350,000
      in
      June 2005 thought the issuance of convertible notes.





Results
      of Operations





Three
      and Nine Months Ended September 30, 2005 Compared to September 30,
      2004





Revenues


For
      the
      three months ended September 30, 2005, revenues were approximately $271,695
      and
      $976,446 respectively, for a decrease of $369,408 and $762,029 (57.62% and
      43.83%) respectively for the same periods in 2004. The decrease in revenue
      is a
      result of the discontinued servicing of two related 100 bed skilled nursing
      facilities, one of which was very costly to service due to its distant location
      and service requirements. In addition on October 17, 2005, Medi-Cal denied
      our
      Pharmacy’s Medi-Cal provider application which means that some time in the near
      future our Medi-Cal provider number will be turned off and we will be unable
      to
      service our Medi-Cal clients. We have been focusing on signing up non Medi-Cal
      clients and as of 3 rd quarter
      have reduced our Medi-Cal revenue to approximately 53% of our total revenue.
      It
      is anticipated that by the end of the 4 th quarter
      we will have completely replaced our Med-Cal revenue. The main vehicle that
      has
      been offsetting the lost sales has been though the five year agreements we
      signed to provide full pharmacy services to over 100,000 Commercial, Senior
      and
      Medi-Cal patient enrollees for two geographically distinct Independent Physician
      Associations (IPA’s) in San Bernardino, Riverside and Los Angeles counties.
      However the increase in sales from this arrangement is anticipated to be phased
      in over several years.










Cost
      of
      Goods Sold





Cost
      of
      goods sold for the three and nine-month period ending September 30, 2005 was
      $187,339 and $679,886 respectively, for a decrease of $296,654 and $645,537
      (61.29% and 48.70%), respectively, over the same periods in 2004. This decrease
      is a direct result of the fall in sales.





Gross
      Profit





Gross
      profit for products and services was $84,356 and $296,560 for the three and
      nine
      months ended September 30, 2005, a decrease of $72,754 (46.31%) for the same
      three-month period in 2004 and a decrease of $116,492 (28.20%) for the same
      nine-month period in 2004. The gross profit margin for the three and nine months
      ended September 30, 2005 was 31.0% and 30.4% respectively. The decrease in
      gross
      profit was due to the decrease in gross revenues.





Operating
      Expenses





Operating
      expenses for the three and nine month period ended September 30, 2005 were
      $189,823 and $869,661 respectively for a decrease of $116,190 (37.97%) and
      $612,700 (41.33%) respectively from the same periods in 2004. The $612,700
      decrease in expenses is mainly attributable to 1) $683,318 decrease in
      consulting services, 2) decrease of $48,599 in salaries and related expenses
      due
      to headcount reduction, 3) $27,968 decrease in marketing, $12,557 in outside
      services, $21,384 in auto, $18,039 decrease in selling expense, and $1,806
      in
      net miscellaneous items all due to the decrease in facilities serviced, 4)
      $8,398 decrease in rent, offset by 5) $66,615 increase in legal fees and 6)
      $142,754 increase in accounting fees.





Interest
      Expense





Interest
      expense for the three and nine months period ended September 30, 2005 was
      $71,932 and $247,778 respectively which was a decrease of $11,969 and $83,923
      (14.27% and 25.30%) from the comparable three and nine months period from the
      prior year. The decrease in interest expense is a result of a combination of
      a
      decrease in amortization of the value attributed to the warrants and beneficial
      conversion feature associated with the convertible debt issued in April of
      2004,
      the pay down of certain notes payable. However, this decrease was offset by
      new
      issuance of convertible notes during the 2nd quarter of 2005.





Federal
      Income Tax





No
      provision was made for Federal income tax since the Company has incurred
      significant net operating losses from inception. Through September 30, 2005,
      the
      Company incurred a net operating loss for tax purposes of approximately
      $820,879. The net operating loss carry forward may be used to reduce taxable
      income through the year 2014. The Company's tax returns have not been audited
      by
      the Internal Revenue Service. The carry forward amounts may therefore be subject
      to audit and adjustment. As a result of the Tax Reform Act, the availability
      of
      net operating loss carry forwards can be deferred, reduced or eliminated under
      certain circumstances. Net operating losses in the State of California were
      not
      available for use during 1992 and the carry forward period has generally been
      reduced from fifteen years to five years.












Liquidity
      and Capital Resources





Net
      cash
      loss (net loss less non-cash items affecting net loss) for the nine month period
      ending September 30, 2005 amounted to $503,242, which mainly consisted of the
      net loss for the nine months ending September 30, 2005 of ($820,879) offset
      by
      the following: 1) depreciation and amortization of $21,952, 2) amortization
      of
      warrant and beneficial conversion feature of $116,241, 3) common stock issued
      for professional services and compensation of $150,000, and 4) amortization
      of
      debt issuance costs of $29,444.





Net
      cash
      generated by operating activities for the nine month period ending September
      30,
      2005 amounted to $121,714, consisting of a decrease in inventory of $77,888,
      an
      increase in accrued interest on convertible notes of $91,508 and an increase
      in
      bank overdraft of $24,300. These changes were offset by increases in trade
      accounts receivable and other receivables of $61,525, an increase in accounts
      payable and accrued expenses of $10,120 and an increase in sales tax payable
      of
      $337. We continue to rely on debt financing to meet our working capital needs.





Net
      cash
      used in investing activities for the nine month period ending September 30,
      2005
      was $950 which was attributable to the Company’s purchase of computer
      equipment.





Net
      cash
      generated from financing activities for the nine month period ending September
      30, 2005 was $382,478 which consisted of payment on notes payable to related
      parties of $2,900, payments on loans of $49,000 and deferred financing costs
      of
      $40,622 offset by proceeds from the issuance of a convertible note of $475,000.





On
      September 30, 2005 the Company had total assets of $315,121 compared to $352,485
      on December 31, 2004, a decrease of


$37,364
      or 10.60%. The Company had a total stockholder's deficit of $1,968,215 on
      September 30, 2005, compared to a stockholders deficit of $1,558,716 on December
      31, 2004, an increase of $409,499 or 26.27%. As of September 30, 2005 the
      Company's working capital position decreased by $250,625 (20.17%) from a working
      capital deficit of $1,242,621 at December 31, 2004 to a working capital deficit
      of $1,493,246 at September 30, 2005. This result was attributed primarily to
      increases in 1) convertible notes - current portion of $180,812, 2) accrued
      interest on the current portion of the accrued notes of $91,508 3) an increase
      in bank overdrafts of $24,300 plus a decrease in inventory of $77,888 offset
      by
      increases in 1) accounts receivable trade of $60,385 and 2) employee advances
      of
      $1,140, offset by decreases in 1) accounts payable and accrued expenses of
      $10,457, 2) loans payable of $49,000, and 3) notes payable related parties
      of
      $2,900.





Over
      the
      next twelve months, management is of the opinion that sufficient working capital
      will be obtained from operations and external financing to meet our operating
      needs however it is unlikely that there will be sufficient capital to meet
      our
      non operational needs. The following is a discussion of future cash
      requirements.










Estimated
      future cash requirements





Our
      estimate of net cash requirements for overhead for the next twelve months
      subsequent to September 2005 is approximately $59,000 a month for a twelve-month
      total of $708,000. The estimate of net cash inflow from operations for that
      time
      period is estimated to be no less than $561,000. This results in a total
      shortfall of approximately $147,000 or some $12,250 a month. This shortfall
      has
      been offset by certain legal, accounting and management deferring there salary
      and fees. The deferral of these charges will most likely continue until sales
      ramp up to a sufficient level.





We
      have
      generally financed our operational and non-operational costs through the sale
      of
      its common stock. With non-operational costs certain to increase in the near
      term, it is anticipated that we will need an additional infusion of funds of
      approximately $300,000 from outside sources. In June 2005, we received some
      of
      the needed funds of $350,000 in funds pursuant to a subscription agreement
      and
      will need an additional $300,000 over the next several months. If we are unable
      to gain access to such funding, we will be forced to curtail operations or
      possible go private to defray is even increasing burden of being a public
      company.





Going
      Concern





The
      accompanying financial statements have been prepared in conformity with
      generally accepted accounting principles, which contemplate continuation of
      the
      Company as a going concern. However, we have experienced net losses of
      $820,879and $1,061,598 for the nine months ended September 30, 2005 and 2004,
      respectively. We also have a net working deficit of $1,493,227 for the nine
      months ended September 30, 2005. Additionally, we must raise additional capital
      to meet our working capital needs. If we are unable to raise sufficient capital
      to fund our operations, we might be required to curtail or discontinue our
      pharmacy operations. These factors raise substantial doubt about our ability
      to
      continue as a going concern. In view of the matters described above,
      recoverability of a major portion of the recorded asset amounts shown in the
      accompanying balance sheet is dependent upon the our ability to generate
      sufficient sales volume to cover our operating expenses and to raise sufficient
      capital to meet its payment obligations. The financial statements do not include
      any adjustments relating to the recoverability and classification of recorded
      asset amounts, or amounts and classification of liabilities that might be
      necessary should we be unable to continue in existence.





On
      June
      23, 2005, we issued three convertible notes for an aggregate of $350,000, 8%
      interest per annum. These notes mature in two years. T he
      Conversion Price per share shall be the lesser of (i) $.03 or (ii) eighty (80%)
      of the average of the closing bid prices for the five (5) trading days prior
      to
      but not including the conversion date for the common stock. In addition we
      to
      the investors warrants to purchase 5,833,332 shares of the common stock at
      a per
      share purchase price of $0.04. The proceeds from this convertible note were
      used
      for working capital needs













ITEM 3.
      CONTROLS AND PROCEDURES




(a)       
      Our Chief Executive Officer and Chief Financial Officer have evaluated the
      effectiveness of our disclosure controls and procedures (as such term is defined
      in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as amended
      (the “Exchange Act”)) as of the end of the period covered by this quarterly
      report (the “Evaluation Date”). Based on such evaluation, such officers have
      concluded that, as of the Evaluation Date, our disclosure controls and
      procedures are effective in alerting them on a timely basis to material
      information relating to our Company (including our consolidated subsidiaries)
      required to be included in our reports filed or submitted under the Exchange
      Act.





(b)        Changes in Internal
      Controls over
      Financial Reporting. During the most recent fiscal quarter, there have not
      been
      any changes in our internal controls over financial reporting or in other
      factors that have materially affected, or are reasonably likely to materially
      affect, our internal controls over financial reporting.





Limitations
      on the Effectiveness of Internal Controls





Disclosure
      controls and procedures, no matter how well designed and implemented, can
      provide only reasonable assurance of achieving an entity's disclosure
      objectives. The likelihood of achieving such objectives is affected by
      limitations inherent in disclosure controls and procedures. These include the
      fact that human judgment in decision-making can be faulty and that breakdowns
      in
      internal control can occur because of human failures such as simple errors
      or
      mistakes or intentional circumvention of the established process.














PART
      II.
      OTHER INFORMATION







**Item
      1.**  **Legal
      Proceedings**





Department
      of Health Services - Medi-Cal Action Against Classic Care
      Pharmacy





On
      April
      17, 2002 the Department of Health Services (“DHS”) notified the management of
      Classic Care Pharmacy that the Medi-Cal Program intended to withhold 100% of
      payments and temporarily suspend and deactivate the Classic Care Pharmacy
      Medi-Cal provider number.





The
      Department of Health Services ("DHS") took this action after having reviewed
      the
      prescriptions on record at Classic Care Pharmacy. The DHS stated that they
      had
      reviewed thirty-two prescriptions, and that two of the ten prescribing
      physicians had denied treating the patients and writing the prescriptions.
      The
      DHS cited Classic Care Pharmacy for violations of CCR, Title 22, Sec.51476.1,
      (a) and 51476.1(a)(2), which states that written prescriptions must contain
      the
      name of the prescribing physician and their provider number. Based on its
      findings the DHS and the Medical Program concluded that Classic Care Pharmacy
      might have intentionally committed fraud.





Classic
      Care management retained outside counsel shortly after receiving the DHS notice
      to review the Department of Health Services findings. After reviewing the
      supporting DHS material, outside counsel informed Classic Care management that
      it believed the facts presented by the DHS were inaccurate and that its position
      was unfounded. Classic Care management and its principle shareholders obtained
      written affidavits from most of the physicians whose prescriptions had been
      reviewed by the DHS confirming that they had treated the patients and did
      prescribe the medications.





On
      April
      29, 2002, outside counsel contacted the DHS to discuss its findings and present
      the documentation supporting their position. DHS informed outside counsel that
      they would have to follow the standard appeal process, which normally requires
      two or more months to complete. Classic Care Pharmacy instructed outside counsel
      to seek an ex parte temporary restraining order against the DHS for their
      failure to show cause regarding their actions. On May 8, 2002, in the Superior
      Court for the state of California, the Court granted Classic Care’s ex parte
      request issuing a preliminary injunction against the DHS and reinstated Classic
      Care Pharmacy’s medical provider number. The Court set May 24, 2002 as the date
      for the DHS to show cause. On May 24, 2002, the DHS was still not prepared
      to
      show cause. The court granted a 30-day extension.





Classic
      Care, Inc. and Classic Care Pharmacy administrative appeal failed. Once the
      appeal took place the Superior court could no longer uphold our lack for due
      process claim and the DHS canceled Classic Care Pharmacy’s medical provider
      number. The justice department has not taken any further action against Classic
      Care Pharmacy. Subsequently we dissolved Classic Care, Inc. and Classic Care
      Pharmacy.












Kaire
      believes that it does not have any liability in this matter and has not provided
      any reserve for this matter. The basis for this belief is the following: 1)
      the
      California Department of Health Services (“DHS”) claim is directed to Classic
      Care Pharmacy which was owned by Classic Care, Inc. 2) Classic Care Inc. is
      a
      separate legal entity and was operated by the prior owners, whom Kaire believes
      perpetrated the actions leading to the alleged claims, 3) Kaire was not involved
      nor was Kaire aware of the alleged overpayment to Classic Care Inc., 4) the
      alleged claim includes a period of time before Kaire was involved with Classic
      Care, Inc., thus precluding Kaire of any claim in that time period and 5) Kaire
      did not benefit in any way from the alleged overpayment.





H.D.
      Smith Wholesale Drug Company - Action for breach of contact and other various
      causes of action





On
      April
      2, 2003, H.D. Smith filed a complaint against Classic Care, Inc., Kaire
      Holdings, Inc., Sarit Rubenstein, Steven Oscherowitz and Larisa Vernik for
      various causes of action relating amounts owed for certain drugs that were
      delivered to Classic Care. H.D. Barnes is seeking $430,205 plus interest. On
      December 30, 2004 a settlement was reached where Kaire is obligated to pay
      the
      plaintiff $50,000. Kaire’s payment began with the court approval of the
      settlement, with $10,000 paid July 8, 2005 and the balance paid based on 12
      monthly installments of $3,077 (which includes interest of 7.50%) to commence
      shortly thereafter. The balance owned as of September 30, 2005 was $33,845.





McKesson
      Medical - Surgical Inc. v. Effective Health





On
      January 20, 2005, McKesson Medical-Surgical, Inc. (“Plaintiff”) filed a
      complaint against Effective Health, Inc., a subsidiary of Kaire, for failure
      to
      pay the principal sum of $17,466 for goods and/or services. A settlement was
      reached in October 2005 calling for Effective Health to pay $2,000 upon
      execution and $1,300 a month until the balance is paid off.








Except
      as
      otherwise specifically indicated above, we believe that we do not have any
      material liability for any lawsuits, settlements, judgments, or fees of defense
      counsel which have not been paid or accrued as of December 31, 2004





ITEM
      2.  Changes
      in Securities and Use of Proceeds





On
      June
      23, 2005, we issued three convertible notes for and aggregate of $350,000,
      8%
      interest per annum. These notes mature in two years. T he
      Conversion Price per share shall be the lesser of (i) $.03 or (ii) eighty (80%)
      of the average of the closing bid prices for the five (5) trading days prior
      to
      but not including the conversion date for the common stock. In addition we
      to
      the investors warrants to purchase 5,833,332 shares of the common stock at
      a per
      share purchase price of $0.04. The proceeds from this convertible note were
      used
      for working capital needs







ITEM
      3.  Defaults
      Upon Senior Securities





None












ITEM
      4.  Submission
      of Matters of a Vote to Security Holders





None





ITEM
      5.  Other
      Information





None





ITEM
      6.  Exhibits
      and Reports on Form 8-K:








a)
      Exhibits





31.1  Certification of the Chief Executive Officer pursuant to Rule
      13a-14(a)


(
      Section
      302 of the Sarbanes-Oxley Act of 2002)





31.2  Certification of the Chief Financial Officer pursuant to Rule
      13a-14(a)


(
      Section
      302 of the Sarbanes-Oxley Act of 2002)





32.1  Certification
      of the Chief Executive Officer pursuant to 18 U.S.C.ss.1350


(Section
      906 of the Sarbanes-Oxley Act of 2002)





32.2  Certification
      of the Chief Financial Officer pursuant to 18 U.S.C.ss.1350


(Section
      906 of the Sarbanes-Oxley Act of 2002)





(b)  Reports
      on Form 8-K:





None
































SIGNATURES











Pursuant
      to the requirements of Section 13 or 15(d) 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.








KAIRE
      HOLDINGS INCORPORATED.


(Registrant)











Dated:
      November 21, 2005  By: /s/ Steven
      R.Westlund


Steven
      Westlund


Chief
      Executive Officer, Chairman








Dated: November 21, 2005    
      By: /s/
      Randy Jones


Randy
      Jones


Chief
      Financial Officer