YBCC (YBAO) 10-Q 2008 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2008  or

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

For the transition period from _____________ to _____________

Commission file number 0-21384

KAIRE HOLDINGS INCORPORATED

(Exact Name of Registrant as Specified in its Charter)

Nevada	13-3367421
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

7700 Irvine Center Drive, Suite 870

Irvine, California

(Address of Principal Executive Offices)

92608

(Zip Code)

(949) 861-3560

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes       o No

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act).

o Yes      x No

The number of shares outstanding of the Issuer’s common stock as of May 14, 2008 was 900,000,000

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Kaire Holdings Incorporated

and Subsidiaries

Consolidated Financial Statements

for the Three Months Ended

March 31, 2008 and 2007

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Kaire Holdings Incorporated

and Subsidiaries

Consolidated Financial Statements

for the Three Months Ended

March 31, 2008 and 2007

C  O  N  T  E  N  T  S

Consolidated Balance Sheets	1
Consolidated Statements of Operations and Comprehensive Income	2
Consolidated Statements of Cash Flows	3
Notes to Consolidated Financial Statements	4 – 16

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Kaire Holdings Incorporated and Subsidiaries

Consolidated Balance Sheets

As of March 31, 2008, and December 31, 2007

					2008		2007
Current Assets					(unaudited)		(audited)
	Cash				$	190,413	$	210,082
	Short-term investments					252,231		252,231
	Accounts receivable (net of reserve for doubtful
		accounts of $0 and $0, respectively)				3,054,893		3,766,186
	Prepaid taxes					-		15,002
	Consignment inventory					25,000		25,000
		Total Current Assets				3,522,537		4,268,501
Property, Plant and Equipment (net of accumulated
	depreciation of $27,378 and $26,019, respectively)					10,626		11,985
Other Assets
	Deposits					6,496		6,496
	Deferred tax assets					197,029		197,029
		Total Other Assets				203,525		203,525
				Total Assets	$	3,736,688	$	4,484,011
Liabilities and Stockholders' Equity
	Current Liabilities
		Accounts payable and accrued expenses			$	2,274,239	$	3,136,626
		Income taxes payable				40,573		-
		Loans payable				250,000		250,000
		Accrued interest				21,667		16,667
		Accrued liabilities				237,045		237,045
			Total Current Liabilities			2,823,524		3,640,338
	Stockholders' Equity
		Convertible preferred shares: $0.001 par value, 10,000,000,000
			shares authorized, 173,333,333 issued and outstanding			173,333		173,333
		Common stock: $0.001 par value, 900,000,000 shares
			authorized, 900,000,000 issued and outstanding			900,000		900,000
		Additional paid-in capital				-		-
		Accumulated other comprehensive income				72,436		72,436
		Retained (deficit)/earnings				(232,605)		(302,096)
			Total Stockholders' Equity			913,164		843,673
				Total Liabilities and Stockholders' Equity	$	3,736,688	$	4,484,011

See accompanying notes.

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Kaire Holdings Incorporated and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

For the Three Months Ended March 31, 2008 and 2007

					2008		2007
					(unaudited)		(unaudited)
Revenues					$	4,386,406	$	2,956,750
Cost of goods sold						(3,922,932)		(2,631,121)
	Gross Profit					463,474		325,629
Operating Expenses
	Administrative expenses					165,220		112,615
	Rent					20,203		19,054
	Salaries and wages					148,499		112,244
		Total Operating Expenses				333,922		243,913
			Income from Operations			129,552		81,716
Other Income/(Expenses)
	Interest income					4,052		6,050
	Interest expense					(5,000)		-
		Total Other Income/(Expenses)				(948)		6,050
			Net Income before Income Taxes			128,604		87,766
Income tax expense						(59,113)		-
			Net Income			69,491		87,766
Other Comprehensive Income
	Unrealized gain on investments					-		27,270
				Comprehensive Income	$	69,491	$	115,036
Earnings per weighted average share of common stock - basic					$	0.00	$	0.00
Earnings per weighted average share of common stock - diluted					$	0.00	$	0.00
Weighted average shares outstanding – basic						900,000,000		783,000,000
Weighted average shares outstanding - diluted						1,073,333,333		783,000,000

See accompanying notes.

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Kaire Holdings Incorporated and Subsidiaries

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2008 and 2007

					2008		2007
Increase (decrease) in cash and cash equivalents:					(unaudited)		(unaudited)
	Net income				$	69,491	$	87,766
	Adjustments to reconcile net loss to net cash used
		in operating activities:
			Depreciation expense			1,359		1,193
	Changes in operating assets and liabilities:
		Decrease in accounts receivable				711,293		1,113,954
		Decrease in prepaid taxes				15,002		-
		Increase (decrease) in income taxes payable				40,573		(135,200)
		Decrease in accounts payable and accrued expenses				(857,387)		(1,001,633)
				Net cash provided by (used in) operating activities		(19,669)		66,080
Cash flow from investing activities:
				Net cash used in investing activities		-		-
Cash flow from financing activities:
				Net cash generated by financing activities		-		-
				Net increase (decrease) in cash and cash equivalents		(19,669)		66,080
				Cash and cash equivalents at beginning of year		210,082		589,995
				Cash and cash equivalents at end of period	$	190,413	$	656,075
Supplementary disclosures of cash flow information
	Cash paid during the year for
		Interest			$	-	$	-
		Taxes			$	3,358	$	135,200
	Unrealized gain on short-term investments				$	-	$	27,270

See accompanying notes.

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

1.           Summary of Significant Accounting Policies

Nature of Operations

On July 2, 2007, Kaire Holdings Incorporated (“Kaire” or “the Company”) through its wholly-owned subsidiary, YesRx.com (“YesRx”) acquired all the outstanding shares of H&H Glass, Inc. (“H&H Glass” or “H&H”), in exchange for 783,000,000 shares of its common stock in a reverse triangular merger (the “Merger”).  H&H Glass is a glass importer that supplies custom products such as perfume bottles and food condiment bottles, plus provides complementary services such as container design and mold making.  H&H Glass imports glass containers from Asia and distributes to North America.  H&H Glass acquires its products mainly from one supplier in China and Taiwan and sells its products through several distributors in the United States and Canada who service small to medium sized customers.  H&H imports in excess of 1,000 shipping containers of glass a year.  Depending on the size of the product, a container can contain anywhere from 3,000 to 300,000 pieces.

Organization and Line of Business

Kaire Holdings Incorporated, a Delaware corporation, was originally incorporated on June 2, 1986.

Effective February 3, 1998, Kaire changed its name to Kaire Holdings Incorporated from Interactive Medical Technologies, Ltd.

On January 23, 2007, Kaire Holdings Incorporated and its wholly-owned subsidiary, YesRx, executed a Letter of Intent whereby YesRx would acquire all of the outstanding stock of H&H Glass Corporation, an Illinois corporation.  H&H Glass was formed in 1989.  As part of this transaction, on February 4, 2007, Kaire Holdings discontinued its pharmacy business, and Effective Health, Inc., was voluntarily shut down.

Merger and Corporate Structure

On July 2, 2007, an Agreement and Plan of Merger was executed between Kaire Holdings Incorporated, its wholly-owned subsidiary YesRx.com, and H&H Glass, whereby YesRx.com acquired all of the outstanding stock of H&H Glass Corporation, an Illinois corporation in exchange for 783,000,000 shares of Kaire’s common stock representing 87% of Kaire’s outstanding stock.  As part of the merger agreement, 45,000,000 shares were issued to Naccarato and Associates related to assistance with the merger.

As a result of the Merger, there was a change in control of Kaire.  In accordance with SFAS No. 141, H&H Glass was defined as the accounting acquirer.  While the transaction is accounted for using the purchase method of accounting, in substance the transaction results in a reverse merger with a recapitalization of Kaire’s capital structure.

The historical financial statements presented herein are those of H&H Glass, as adjusted to give effect to the stock of Kaire (the legal acquirer) since the Merger.  The retained earnings of the accounting acquirer have been carried forward after the acquisition, and H&H Glass’s basis of its assets and liabilities were carried over in the recapitalization.  Operations prior to the business combination are those of H&H Glass.

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

1.           Summary of Significant Accounting Policies (continued)

Merger and Corporate Structure (continued)

The accompanying financial statements present the historical financial condition, results of operations and cash flows of H&H Glass prior to the Merger.

The significant acquired assets and liabilities are noted as follows:

Kaire Holdings, Inc., and subsidiaries
Summary Statement of Financial Position
At July 1, 2007
Assets
	Cash		$	53,918
		Total Assets	$	53,918
Liabilities
	Accounts payable and accrued expenses			120,661
	Loans payable			250,000
	Accrued liabilities			238,219
		Total Liabilities	$	608,880
Net liabilities assumed			$	554,962

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 H&H Glass, Effective Health, Inc., and YesRx.com.  Intercompany accounts and transactions have been eliminated upon consolidation.  The balance sheets as of March 31, 2008, and December 31, 2007, contain the balances of H&H Glass, Kaire and its other subsidiaries as of those dates.  The statements of operations for the three-month period ending March 31, 2008, contain three months’ results of operations of H&H Glass and three months of Kaire Holdings, Inc., and its other subsidiaries from January 1, 2008 through March 31, 2008.  The statements of operations for the three-month period ending March 31, 2007, contain the results of operations of only H&H Glass.

As a result of the application of reverse takeover accounting, the consolidated financial statements are issued under the name of the legal parent (Kaire Holdings, Inc.) but are a continuation of the financial statements of the wholly-owned legal subsidiary (H&H Glass) and not of the legal parent.  The control of the assets and business of Kaire Holdings, Inc., is deemed acquired in consideration for the issue of additional capital by H&H Glass.

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.  Significant estimates include allowance for doubtful accounts.

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

1.           Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

For purposes 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 product revenue provided that (1) persuasive evidence of an arrangement exists, (2) delivery to the customer has occurred, (3) the selling price is fixed or determinable and (4) collection is reasonably assured.  Delivery is considered to have occurred when title and risk of loss have transferred to the customer.  The price is considered fixed or determinable when it is not subject to refund or adjustments.

Concentration of credit risk

The Company, at times, maintains cash balances in excess of the federally insured limit of $100,000 per institution.  The uninsured balance as of March 31, 2008, was $5,147.  The uninsured balance as of December 31, 2007, was $28,010.

The Company had unsecured short-term investments totaling $252,231 at both March 31, 2008 and at December 31, 2007.

Accounts receivable are typically unsecured.  The Company performs ongoing credit evaluations of its customers’ financial condition.  It generally requires no collateral and maintains reserves for potential credit losses on customer accounts, when necessary.  As of March 31, 2008, 86.0% of H&H Glass’s Accounts Receivable were attributable to five customers.  As of December 31, 2007, 92.5% of H&H Glass’s Accounts Receivable were attributable to five customers.

H&H Glass purchased 100% of its glass from one vendor in the three-month periods ending March 31, 2008 and 2007.  During the three-month period ending March 31, 2008 and 2007, H&H Glass purchased $3,169,576 and $2,169,979 of products from this vendor, respectively.  This concentration is due to the relatively small size of H&H Glass’s orders.  H&H Glass’s specialized short-run custom orders generally are not attractive to larger glass manufacturers.  As customer orders have been growing in size, H&H Glass has begun to seek and use additional suppliers.

Net Earnings per Share

Earnings per common share is computed on the weighted average number of common shares outstanding during each year.  Basic earnings 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 earnings 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.

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

1.           Summary of Significant Accounting Policies (continued)

Consignment Inventory

H&H Glass’s inventory at March 31, 2008, and December 31, 2007, consists of goods returned by a customer and is stated at the lower of cost or estimated net realizable value.

Property and Equipment

Property and equipment are stated at cost.  Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the assets.  The Company uses other depreciation methods (generally accelerated) for tax purposes.  Repairs and maintenance that do not extend the useful life of property and equipment are charged to expense as incurred.  When property and equipment are retired or otherwise disposed of, the asset and its accumulated depreciation are removed from the accounts, and the resulting profit or loss is reflected in income.

The estimated service lives of property and equipment are principally as follows:

Computers and equipment	3-5 years
Furniture & Fixtures	5-7 years

Income Taxes

The Company accounts for its income taxes using the Financial Accounting Standards Board Statements of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” which requires the establishment of a deferred tax asset or liability for the recognition of future deductible or taxable amounts and operating loss and tax credit carryforwards.  Deferred tax expense or benefit is recognized as a result of timing differences between the recognition of assets and liabilities for book and tax purposes during the year.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Deferred tax assets are recognized for deductible temporary differences and operating loss, and tax credit carryforwards.  A valuation allowance is established to reduce the deferred tax asset if it is “more likely than not” that the related tax benefits will not be realized.

In July 2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.”  The Interpretation requires that realization of an uncertain income tax position must be estimated as “more likely than not” (i.e., greater than 50% likelihood of receiving a benefit) before it can be recognized in the financial statements.  Further, the Interpretation requires the recognition of tax benefits recorded in the financial statements to be based on the amount most likely to be realized assuming a review by tax authorities having all relevant information.  The Interpretation also clarifies the financial statement classification of tax-related penalties and interest and sets forth new disclosures regarding unrecognized tax benefits.  The Company adopted the Interpretation in the first quarter 2007.  The Company had minimal impact from adoption of this Interpretation.

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

1.           Summary of Significant Accounting Policies (continued)

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, accounts receivable, accounts payable and accrued liabilities, the carrying amounts approximate fair value due to their short maturities.

Stock-Based Compensation

Effective January 1, 2006, the Company has adopted the fair-value-based method of accounting prescribed in Financial Accounting Standards Board Statement No. 123R (Accounting for Stock-Based Compensation) for its employee stock option plans.

Specifically, the Company adopted SFAS No. 123R using the “prospective method.”  This statement replaced FAS-123, Accounting for Stock-Based Compensation, supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FAS-95, Statement of Cash Flows.  FAS-123R requires companies to apply a fair-value-based measurement method in accounting for shared-based payment transactions with employees and to record compensation cost for all stock awards granted after the required effective date and for awards modified, repurchased or cancelled after that date.  The scope of FAS-123R encompasses a wide range of share-based compensation arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.  All employee stock option grants made since the beginning of fiscal 2005 have been 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.  The Company did not have any unvested employee stock options or warrants outstanding at March 31, 2008 or December 31, 2007.

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.  The Company does not incur currency translation adjustments because all transactions with foreign companies are denominated in US Dollars.  The Statement requires only additional disclosures in the consolidated financial statements and does not affect the Company’s financial position or results of operations.

Reclassifications

Certain amounts in the 2007 financial statements have been reclassified to conform to the 2008 presentations.  These reclassifications had no effect on previously reported results of operations or retained earnings.

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

1.           Summary of Significant Accounting Policies (continued)

Advertising Costs

The Company expenses advertising and marketing costs as they are incurred.  There were no advertising and marketing costs for the three-month period ending March 31, 2008 and 2007.

Long–Lived Assets

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” the Company periodically evaluates the carrying value of long-lived assets to be held and used, including intangible assets, when events and circumstances warrant such a review.  The carrying value of a long-lived asset is considered impaired when the anticipated discounted cash flow from such asset is separately identifiable and is less than its carrying value.  In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset.  Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved.  Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose.

Recent Accounting Pronouncements

In September 2006, the FASB issued FAS No. 157, “Fair Value Measurements” (“FAS 157”) which provides guidance for using fair value to measure assets and liabilities.  It also responds to investors’ requests for expanded information about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings.  FAS 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances.  FAS 157, as originally issued, was effective for fiscal years beginning after November 15, 2007.  In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”), to partially defer FASB Statement No. 157, “Fair Value Measurements” (“FAS 157”).  FSP 157-2 defers the effective date of FAS 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), to fiscal years, and interim periods within those fiscal years, beginning after November 15, 2008.  The Company adopted FAS 157 effective January 1, 2008, and the adoption of FAS 157 had no material impact to its consolidated financial position or results of operations.

In February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115” (“FAS 159”).  FAS 159 expands the use of fair value accounting but does not affect existing standards, which require assets or liabilities to be carried at fair value.  Under FAS 159, a company may elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees and issued debt.  Other eligible items include firm commitments for financial instruments that otherwise would not be recognized at inception and non-cash warranty obligations where a warrantor is permitted to pay a third party to provide the warranty goods or services.  If the use of fair value is elected, any upfront costs and fees related to the item must be recognized in earnings and cannot be deferred, e.g., debt issue costs.  The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if

1.           Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

a company has similar instruments that it elects not to measure based on fair value.  At the adoption date, unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings.  Subsequent to the adoption of FAS 159, changes in fair value are recognized in earnings.  FAS 159 is effective for fiscal years beginning after November 15, 2007.  The Company adopted FAS 159 effective January 1, 2008, and the adoption of FAS 159 had no material impact to its consolidated financial position, results of operations or cash flows.

In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“FAS 161”).  FAS 161 requires entities to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”) and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.  FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008, and early adoption is permitted.  The Company is in the process of reviewing the potential impact of FAS 161.

In April 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 142-3, “Determination of the Useful Life of Intangible Assets,” (“FSP No. 142-3”).  The intent of this FSP is to improve consistency between the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), and the period of expected cash flows used to measure the fair value of the intangible asset under SFAS No. 141R.  FSP No. 142-3 will require that the determination of the useful life of intangible assets acquired after the effective date of this FSP shall include assumptions regarding renewal or extension, regardless of whether such arrangements have explicit renewal or extension provisions, based on an entity’s historical experience in renewing or extending such arrangements.  In addition, FSP No. 142-3 requires expanded disclosures regarding intangible assets existing as of each reporting period.  FSP 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those years.  Early adoption is prohibited.  The Company is currently evaluating the impact that FSP No. 142-3 will have on its financial statements.

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

2.           Preferred Stock Transactions

The agreement with the former holders of Kaire’s convertible debt states that all debt and related convertible interest would be converted into fixed rate convertible preferred shares at an exercise price fixed on a post-reverse split basis of $3 per share, and that 866,667 shares would have to be issued in order to retire the debt.  The agreement states that the shares will be issued after the Company completes a reverse stock split in early fiscal 2008 and changes its state of domicile from Delaware to Nevada.

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

2.           Preferred Stock Transactions (continued)

The Company has deemed these shares to have been issued concurrent with the merger.  The Company has recorded 173,333,333 shares at $0.001 par value to retire debt and interest totaling $2,624,170.  Preferred shares are convertible into common shares on a 1:1 ratio at a fixed rate of $3 per share (post reverse split).  Preferred shares have no voting rights and earn no dividends.

Statement of Financial Accounting Standards No. 150: Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (FAS 150) establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.

A mandatorily redeemable financial instrument shall be classified as a liability unless the redemption is required to occur only upon the liquidation or termination of the reporting entity.  A financial instrument issued in the form of shares is mandatorily redeemable if it embodies an unconditional obligation requiring the issuer to redeem the instrument by transferring its assets at a specified or determinable date (or dates) or upon an event certain to occur.  A financial instrument that embodies a conditional obligation to redeem the instrument by transferring assets upon an event not certain to occur becomes mandatorily redeemable—and, therefore, becomes a liability—if that event occurs, the condition is resolved, or the event becomes certain to occur.

Based on the assessment of FAS 150, the Company determined that the preferred shares are not mandatorily redeemable and are properly classified as equity in the accompanying financial statements.

3.           Common Stock Transactions

Common stock transactions during the three months ending March 31, 2008:

None

Common stock transactions during the three months ending March 31, 2007:

None

4.           Related Party Transactions

Allen Lin

The Company paid Mr. Allen Lin, President of H&H Glass and a member of the board of directors of the Company, salary of $50,001 and $45,000 for the three-month periods ended March 31, 2008 and 2007, respectively.  Mr. Lin also received $1,500 in director’s fees for the three-month period ending March 31, 2008.

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

4.           Related Party Transactions (continued)

Josephine Lin

Josephine Lin, Mr. Lin’s wife, is employed by the Company and was paid salary of $12,600 and $12,000 for the three-month periods ended March 31, 2008 and 2007, respectively.

5.           Accounts Receivable

The Company recognizes product revenue provided that (1) persuasive evidence of an arrangement exists, (2) delivery to the customer has occurred, (3) the selling price is fixed or determinable and (4) collection is reasonably assured.  Delivery is considered to have occurred when title and risk of loss have transferred to the customer.  The price is considered fixed or determinable when it is not subject to refund or adjustments.

Outbound shipping and handling charges are included in net sales.  H&H Glass assumes responsibility for all glass shipments until they are received by and approved by their customers.  Accounts receivable are unsecured.  The Company performs ongoing credit evaluations of its customers’ financial condition.  It generally requires no collateral and maintains reserves for potential credit losses on customer accounts, when necessary.  At March 31, 2008 and December 31, 2007, H&H Glass had no reserves for doubtful accounts, as the Company believes that all of its accounts receivable are fully collectible.

Accounts receivable as of March 31, 2008 and December 31, 2007, were $3,054,893 and $3,776,186, respectively.  At March 31, 2008, five customers accounted for 86.0% of all accounts receivable.  At December 31, 2007, these five customers accounted for 92.5% of all accounts receivable.

6.           Property and Equipment

H&H Glass’s property and equipment at March 31, 2008 and December 31, 2007, consisted of the following:

		2007		2006
Furniture and fixtures		$	14,552	$	14,552
Computers and equipment			23,452		23,452
			38,004		38,004
Less accumulated depreciation			(27,378)		(26,019)
	Total	$	10,626	$	11,985

H&H Glass recorded depreciation expense for the three-month period ending March 31, 2008 and 2006, of $1,359 and $1,193, respectively.

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

7.           Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at March 31, 2007 and December 31, 2007, consisted of the following:

		2008		2007
Accounts payable		$	2,173,824	$	3,017,709
Accrued professional and related fees			74,725		93,225
Accrued settlements			25,692		25,692
	Total	$	2,274,241	$	3,136,626

8.           Notes Payable

In February 2007, Kaire issued two promissory notes for an aggregate of $250,000, with interest on the unpaid principal balance at eight percent (8%) per annum.  The notes were originally due October 1, 2007, but were extended to June 30, 2008.  Interest accrued on these notes at March 31, 2008 and December 31, 2007, is $21,667 and $16,667, respectively.

These two notes and their accrued interest were included in the liabilities assumed by H&H Glass in the reverse merger.

9.           Commitments and Contingencies

Litigation

The Company is periodically involved in legal actions and claims that arise as a result of events that occur in the normal course of operations.  The Company is not currently aware of any formal legal proceedings or claims that the Company believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position or results of operations.

Leases

Operating leases

H&H Glass rents 2,887 square feet of office space at 7700 Irvine Center Drive in Irvine, California.  The lease began on January 1, 2005, and expires on August 31, 2008.  As of March 31, 2008, total monthly base rent is $6,496.  Until a new lease is negotiated, future minimum lease payments are as follows:

Year ended December 31,
2008	$	32,480
Thereafter		-
	$	32,480

9.           Commitments and Contingencies (continued)

Leases (continued)

Operating leases (continued)

H&H Glass recorded rent expense for the three months ending March 31, 2008 and 2007, of $20,203 and $19,054, respectively.

10.           Earnings per Share

Earnings per share have been calculated using the weighted average number of shares outstanding during each period.  The Company’s Convertible Preferred Shares constituted potentially dilutive securities as of March 31, 2008.  Earnings per share at March 31, 2007, is calculated using the number of common shares issued to effect the business combination as being outstanding during the entire period.

Earnings (loss) per share of common stock are calculated as follows:

		For the Three Months Ended March 31,
		2008		2007
BASIC EARNINGS PER SHARE OF COMMON STOCK:
Net earnings available to common stockholders		$	69,491	$	87,766
Weighted average common shares outstanding			900,000,000		783,000,000
Basic earnings per share of common stock		$	0.00	$	0.00
DILUTED EARNINGS PER SHARE OF COMMON STOCK:
Net earnings available to common stockholders		$	69,491	$	87,766
Weighted average common shares outstanding			900,000,000		783,000,000
Effect of dilutive securities:
	Options		-		-
	Convertible preferred stock		173,333,333		-
Weighted average common shares outstanding after effect of dilutive securities			1,073,333,333		783,000,000
Diluted earnings per share of common stock		$	0.00	$	0.00

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

11.           Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” (SFAS 157), which is effective for fiscal years beginning after November 15, 2007 and for interim periods within those years.  This statement defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements.  The statement indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability based upon an exit price model.

In accordance with SFAS 157, the following table represents the Company’s fair value hierarchy for its financial assets (cash, cash equivalents and short-term investments) measured at fair value on a recurring basis as of March 31, 2008:

Securities Owned	Level 1		Level 2		Level 3		Total
Short-term investments	$	252,231	$	-	$	-	$	252,231
Total	$	252,231	$	-	$	-	$	252,231

12.           Merger with H&H Glass, Inc.

On July 2, 2007, Kaire completed the merger with H&H Glass, Inc., a privately held company.  The acquisition has been accounted for as a reverse merger (recapitalization), with H&H Glass deemed to be the accounting acquirer.  Accordingly, the historical financial statements presented herein are those of H&H Glass, as adjusted to give effect to the stock of Kaire (the legal acquirer) since the Merger.

The following unaudited pro forma consolidated results of operations have been prepared as if the merger had occurred at January 1, 2007:

	March 31, 2007
Sales	$	2,956,750
Cost of goods sold		(2,631,121)
Operating expenses		(284,042)
Net other income		6,050
Net income		47,637
Unrealized gain on investments		27,270
Comprehensive income	$	74,907
Net income per share – basic and diluted	$	0.00

The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the merger been consummated as of that time, nor is it intended to be a projection of future results.

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Kaire Holdings Incorporated and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2008

13.           Subsequent Events

The following two actions were taken by written consent by the majority shareholders of Kaire Holdings, Inc. dated January 7, 2008.  The proxy was mailed on February 26, 2008.

First the Company filed Amendments (the “Certificate Amendment”) to the Company’s certificate of incorporation, as amended (the “Certificate of Incorporation”) to effect the following: a) to effect a reverse stock split of issued and outstanding common stock at a ratio of at least 1-for-100 and up to 1-for-200, the exact ratio subject to the definitive action of the Board of Directors (the “Board of Directors”) within 120 days after the date of the stockholder approval, and retain the current number of authorized shares and the par value of common stock reflected in the Company’s Certificate of Incorporation, b) to change the Company’s name to “International Packaging and Logistics Corporation”, and c) to authorize 50,000,000 shares of blank-check preferred stock.  The Certificate of Amendment was certified by the state of Nevada on April 28, 2008.  NASDAQ is still processing the paperwork; therefore, an effective date has not yet been determined.

The second action changed the state of incorporation from Delaware to Nevada, effective April 17, 2008.

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Kaire Holdings Incorporated

and Subsidiaries

March 31, 2008

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

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS’

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  In some cases, forward-looking statements are identified by terms such as “may”, “will”, “should”, “could”, “would”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “projects”, “predicts”, “potential”, and similar expressions intended to identify forward-looking statements. Such statements include, without limitation, statements regarding:

• fluctuations in, oil or gas production or in oil or gas prices

• estimates of required capital expenditures

• fluctuations in the cost of drilling, completion and oil production or other costs of production and operations

• our inability to meet growth projections

• our plans and expectations with respect to future acquisitions of oil and gas rights leases

• the expected benefits and results from our geophysical research and development efforts;

• our belief that we will have sufficient liquidity to finance operations into early 2009;

• the amount of cash necessary to operate our business;

• our ability to raise additional capital when needed;

• general economic conditions; and

• the anticipated future financial performance and business operations of our company.

These forward-looking statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this Report.  Except as otherwise required by law, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this Report to reflect any change in our expectations or any change in events, conditions, or circumstances on which any of our forward-looking statements are based or to conform to actual results.  We qualify all of our forward-looking statements by these cautionary statements.

You should read this section in combination with the section entitled Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2007 included in our Annual Report on Form 10-KSB for the year ended December 31, 2007.

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Overview

We import glass containers from Asia and distribute to the North American market including Canada. This was a result of Kaire Holdings, Inc. (“Kaire”) acquiring H&H Glass in January of 2007.  Kaire closed its pharmacy business in February 2007.

H&H Glass is a small to mid size glass importer that supplies custom products such as perfume bottles to food condiment bottles, plus provides complementary services such as product design and the making of product molds.  H&H Glass acquires its products from 3 to 5 suppliers in China and Taiwan and sells its products through several distributors in the United States and Canada, whose services small to medium sized customers.    H&H imports in excess of 1,000 containers of glass a year.  Depending on the size of the product a containers can contain anywhere from 3,000 to 300,000 pieces.

Plan of Operation

Our general operating plan up is as follows:

Short Term

·Continue growing revenue and profits through the existing business;

·To meet the challenge of the declining US currency while maintaining revenue and profitability - our goal will be to  focus closely on product mix and improve our gross margin;

·To expand the supply network for our products;

·Expand our current business model to include other areas that fall within our distribution expertise such as packaging that uses plastic and acrylic material.

Long Term

·To expand our service into other areas such as Europe and Australia through the same supplier channel.  Our existing business model copies to other markets naturally.

Results of Operations

Three months ending March 31, 2008 and 2007

Revenue:

For the three months ending March 31, 2008 and 2007, revenues were approximately $4,386,406 and $2,956,750 respectively, for an increase of $1,429,656 (48.4%) over the same period in 2007. The increase in revenue is a mainly due to price increase of 5% as well as increased general activities with existing customers.

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Cost of Goods Sold:

Cost of goods sold for the three months ending March 31, 2008 and 2007 were $3,922,932 and $2,631,121 respectively, for an increase of $1,291,811 (49.1%) over the same period in 2007. This increase is a direct result of the increase in sales.  The increase is mainly a result of an increase in ocean freight of $166,650 (42.5%) over the same period in the prior year due to the increased cost of shipping (such as fuel costs), plus an increase in the cost of product of $1,119,097 (51.7%) over the prior period due mainly to a shortage of materials. 

Gross Profit:

Gross profit was $463,474 and $325,629 for the three months ending March 31, 2008 and 2007, an increase of $137,845 (42.3%) over the same period in 2007.   The gross profit margin as a percent of sales for the three months ending March 31, 2008 and 2007 was 10.6% and 11.0 % respectively or a decrease of .4%.  The decrease in gross profit percentage was mainly attributable to an increase in the cost of product which accounted for 1.0% of the overall decrease, offset by ocean freight which accounted for a 0.3% decrease in Gross profit.

Operating Expenses:

Operating expenses for the three month period ending March 31, 2008 and 2007 were $333,922 and $243,913 respectively for an increase of $90,009 (36.9%).  The $90,009 increase in operating expenses was attributable to increases in the following:

OPERATING EXPENSES
	3/31/2007	3/31/2008	$ VAR	% VAR
Salaries and Related Expense	98,244	148,499	50,255	51.2%	Increases to base salaries
Bonuses	14,000	-	(14,000)	(100.0%)	Discretionary expense – not incurred in 2008
Rent	19,054	20,203	1,149	6.0%	Increase per terms of lease
Insurance Expense	24,409	33,553	9,144	37.5%	Increase in rates
Accounting	-	10,000	10,000	100.0%	Quarter one accounting review expenses
Travel Expense	57,946	72,856	14,910	25.7%	Cost of Traveling is higher than last year
Outside Services	-	8,059	8,059	100.0%	Proxy printing cost, tax footnote fee
All others	30,260	40,752	10,492	34.7%
	243,913	333,922	90,009	36.9%

Other Income (Expenses):

Interest income for the three months ending March 31, 2008 and 2007 was $4,052 and $6,050 respectively for a decrease of $1,998 (33.0%) as a result of a smaller sum of money being left in the bank to earn interest.  Interest expense of $5,000 for the three months ending March 31, 2008 is the interest on two promissory notes issued in February 2007 that total $250,000 in the aggregate.  There was no equivalent expense in the previous year.

Federal Income Tax

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

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Liquidity and Capital Resources

Cash flow used in operations for the three months ending March 31, 2008 amounted to $19,669, which mainly consisted the income for the three months ending March 31, 2008 of $69,491 plus the following; 1) depreciation expense of $1,359, 2) increase in account receivable of $711,293, 3) an increase in accrued expenses of $144,977 offset by a decrease in accounts payable of $1,002,364, 4) decrease in prepaid taxes of $15,002, and 5) increase in taxes payable of $40,573.

The decrease in accounts receivable is a result of more timely receipt of payments in 2008..  The decrease in accounts payable and accrued expenses consists of a decrease in accounts payable for products of $843,885,  and a decrease in  accrued  professional fees of $18,500.

On March 31, 2008 the Company had total assets of $3,736,688 compared to $4,484,011 on December 31, 2007, a decrease of $747,323or 16.7%.  The Company had a total stockholder's equity of $913,162 on March 31, 2008, compared to a stockholder’s equity of $843,673 on December 31, 2007, an increase of $69,489 (8.2%).  As of March 31, 2008 the Company's working capital position increased by $70,848 (11.3%) from working capital of $628,163 at December 31, 2007 to working capital of $699,011 at March 31, 2008.  This increase is a result of a decrease in accounts receivables offset by a larger decrease in accounts payable and accrued expenses.

Capital Resources

Over the next twelve months, management is of the opinion that sufficient working capital will be obtained from operations.

Subsequent Events:

The following two actions were taken by written consent by the majority shareholders of Kaire Holdings, Inc. dated January 7, 2008.  (The proxy was mailed on February 26, 2008).

First the Company filed Amendments (the “Certificate Amendment”) to the Company’s certificate of incorporation, as amended (the “Certificate of Incorporation”) to effect the following: a) to effect a reverse stock split of issued and outstanding common stock at a ratio of at least 1-for-100 and up to 1-for-200, the exact ratio subject to the definitive action of the Board of Directors (the “Board of Directors”) within 120 days after the date of the stockholder approval, and retain the current number of authorized shares and the par value of common stock reflected in the Company’s Certificate of Incorporation, b) to change the Company’s name to “International Packaging and Logistics Corporation”, and c) to authorize 50,000,000 shares of blank-check preferred stock.  The Certificate of Amendment was certified by the state of Nevada on April 28, 2008.   NASDAQ is still processing the paperwork , therefore, an effective date has not yet been determined

The second action changed the state of incorporation from Delaware to Nevada via conversion.  This took effect on April 17, 2008

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ITEM 4T. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

     As of March 31, 2008, under the supervision and with the participation of the Company's Chief Executive Officer and the Chief Financial Officer, management has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2008.

Changes in Internal Control over Financial Reporting

     There were no changes in internal control over financial reporting that occurred during the last fiscal quarter covered by this report that have materially affected, or are reasonably likely to affect, the Company's

internal control over financial reporting.

Management's Report on Internal Control over Financial Reporting

     Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Our Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO Framework").

     Based on this evaluation, management has concluded that our internal control over financial reporting was not effective as of March 31, 2008.  Our principal Chief Executive Officer and Chief Financial Officer concluded we have a material weakness due to lack of segregation of duties. Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal control system. There is one person involved in processing of transactions. Therefore, it is difficult to effectively segregate accounting duties.  

     As a result of this material weakness we had implemented remediation procedures whereby in December 2007 we have hired an additional administrative person and will retain an outside professional firm to assist in the separation of duties on an ongoing basis.  We will continue to monitor and assess the costs and benefits of additional staffing.

     This quarterly report does not include an attestation report of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to

attestation by the Company's independent registered public accounting firm pursuant to temporary rules of the SEC that permit the company to provide only management's report on internal control in this annual report.

 CONTROLS AND PROCEDURES

After evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), were unable to conclude that as of the Evaluation Date, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. We believe that we will have effective internal controls to meet this requirement prior to the filing of our annual report for the year ended December 31, 2008.

(b) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control 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.

-22-

Kaire Holdings Incorporated

and Subsidiaries

March 31, 2008

PART II.  OTHER INFORMATION

Item 1.                      Legal Proceedings

Litigation

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

 On December 30, 2004 a settlement was reached where Kaire was obligated to pay the plaintiff $50,000 on behalf of its subsidiary, Classic Care Pharmacy.  The balance owed as of March 31, 2008 was $25,692, and Kaire is in breach of this settlement

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 March 31, 2008.

ITEM 2                             Unregistered Sales of Equity Securities and Use of Proceeds

None

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

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)

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

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

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

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

-23-

Kaire Holdings Incorporated

and Subsidiaries

March 31, 2008

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:  May 19, 2008                                                       By: /s/ Steven  R.Westlund

                                          Steven Westlund

                                                                         Chief Executive Officer

                                     Principal Financial Officer and Director

                                                                                        By: /s/ Allen Lin

                                            Allen Lin, Director

                                                                            President H&H Glass

                                          By: /s/ William Gresher

                                             William Gresher, Director

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