Edgar Filing: NATIONAL HEALTHCARE TECHNOLOGY INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2006

Commission File No. 001-28911

NATIONAL HEALTHCARE TECHNOLOGY, INC.
------------------------------------
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

Colorado 91-1869677
------------------------------ ------------------
(STATE OR JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

1660 Union Street, Suite 200, San
Diego, CA 92101
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

619/398-8470
(ISSUER'S TELEPHONE NUMBER)

Securities registered under Section 12(b) of the Exchange Act: None Securities
registered under Section 12(g) of the Exchange Act: Common Stock, $0.001 par
value

Check whether the issuer is not required to file reports pursuant to Section 13
or 15 (d) of the Exchange Act.|_|

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 |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |X|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 under the Exchange Act). Yes |X| No |_|

The issuer's revenues for its most recent fiscal year were $0.00

As of April 11, 2007, the aggregate market value of the common stock held by
non-affiliates based on the closing sale price of Common Stock was $7,328,787.
For the purposes of the foregoing calculation only, all directors, executive
officers, related parties and holders of more than 10% of the issued and
outstanding common stock of the registrant have been deemed affiliates.

As of April 11, 2007, the issuer had 81,517,759 shares of common stock
outstanding. Documents incorporated by reference: none Transitional Small
Business Disclosure Format (check one): Yes |_| No |X|

PART I

Item 1. Description of Business

Business Development

On July 19, 2005, National Healthcare Technology, Inc., a Colorado corporation,
(the "Company", "us" or "we") completed the acquisition of Special Stone
Surfaces, Es3, Inc., a Nevada corporation ("Es3") pursuant to the terms of an
Exchange Agreement (the "Exchange Agreement") by and among the Company, Crown
Partners, Inc., a Nevada corporation and at such time, the largest stockholder
of the Company ("Crown Partners"), Es3, and certain stockholders of Es3 (the
"Es3 Stockholders"). The transactions effected by the Exchange Agreement have
been accounted for as a reverse merger. As a result of the transactions
contemplated by the Exchange Agreement, we had one active operating subsidiary,
Es3. Es3 was formed on January 27, 2005 and began operations in March 2005.
Effective October 1, 2005, we transferred all of the capital stock of Es3 that
we acquired under the Exchange Agreement to Liquid Stone Partners ("Liquid
Stone") in exchange for Liquid Stone assuming all known and unknown liabilities
of Es3.

-2-

Business of Issuer

Upon the close of the acquisition of Es3 by the Company on July 19, 2005, we
intended to use the public markets to secure additional working capital and to
make acquisitions using either common stock or cash. A significant component of
the intermediate term growth strategy was the acquisition and integration of
companies in related building materials fields. However, with little or no
investor interest in Es3 and its products we were unable to secure necessary
working capital through the public market to develop a commercially viable
market for our products.

On April 3, 2006, our Board of Director's approved a change of direction for the
Company, from the business of manufacturing and distributing decorative stone
veneers and finishes, to the business of oil and gas exploration and production,
mineral lease purchasing and all activities associated with acquiring, operating
and maintaining the assets of such operations. Pursuant to an agreement
effective retroactively to October 1, 2005, we transferred all of the capital
stock of Es3 that we acquired under the Exchange Agreement to Liquid Stone
Partners ("Liquid Stone") in exchange for Liquid Stone assuming all known and
unknown liabilities of Es3.

In furtherance of this change of direction, we entered into consulting
agreements with third parties to provide business management services and advice
as it relates to our future. These services shall include the drafting and
preparation of business plans, operating budgets, cash flow projections and
other business management services as we move into the oil and gas business. As
an initial step into the oil and gas business, in April 2006, we executed an
assignment of an oil and gas lease under which we intend to exploit underlying
oil and gas reserves. We currently have two full time employees.

-3-

The Company is in the development stage as defined in Statement of Financial
Accounting Standards No. 7.

Item 2. Properties.

On March 1, 2005, the Company entered into a lease commitment for office and
warehouse space in San Diego, California which expires February 1, 2009. The
terms of the lease provide for monthly rental payments of $3,367 through January
2006 and increasing 3% each year beginning February 1, 2007. The lease
obligation was assumed by Liquid Stone in conjunction with the sale of Es3. The
Company currently has an office at 1660 Union Street, Suite 200, San Diego, CA
92101, which it maintains under arrangement with the landlord at no cost. The
Company also shares an office space with a shareholder at 9595 Wilshire Blvd.,
Suite 510, Beverly Hills, CA 90212 at no cost to the Company. As of December 31,
2006, the Company had no future rental commitments.

Item 3. Legal Proceedings.

We are not a party to any material pending legal proceeding and no such action
by or, to the best of our knowledge, against us have been threatened.

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

None.

PART II

Item 5. Market for Registrant's Common Equity and Related Shareholder Matters.
Market information: Our common stock is quoted on the over-the-counter market
and quoted on the National Association of Securities Dealers Electronic Bulletin
Board ("OTC Bulletin Board") under the symbol "NHCT". The high and low bid
prices for the common stock, as reported by the National Quotation Bureau, Inc.,
are indicated for the periods described below. Such prices are inter-dealer
prices without retail markups, markdowns or commissions, and may not necessarily
represent actual transactions.

-4-

Fiscal Year Ending December 2005 HIGH LOW
=========================================== ======= ======
Quarter Ending March 31, 2005 3.15 2.50
------------------------------------------- ------- ------
Quarter Ending June 30, 2005 3.00 1.50
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Quarter Ending September 30, 2005 2.50 2.05
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Quarter Ending December 31, 2006 2.25 1.50
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Fiscal Year Ending December 2006 HIGH LOW
=========================================== ======= ======
Quarter Ending March 31, 2006 3.00 2.35
------------------------------------------- ------- ------
Quarter Ending June 30, 2006 1.25 1.25
------------------------------------------- ------- ------
Quarter Ending September 30, 2006 0.28 0.28
------------------------------------------- ------- ------
Quarter Ending December 31, 2006 0.04 0.04
=========================================== ======= ======

Holders

As of December 31, 2006, there were approximately 142 shareholders of record (in
street name) of our common stock.

Dividends

We have not declared nor paid cash dividends or made distributions in the past,
and we do not anticipate that we will pay cash dividends or make distributions
in the foreseeable future. We currently intend to retain and reinvest future
earnings, if any, to finance and expand our operations.

Recent Sales of Unregistered Securities

During the fiscal year ended December 31, 2006, we issued securities using the
exemptions available under the Securities Act of 1933 including unregistered
sales made pursuant to Section 4(2) of the Securities Act of 1933: we issued
25,135,000 shares to employees, affiliates and consultants during 2006. We
issued 3,800,000 shares to officers and directors as part of employment
contracts, we issued 3,799,000 shares under the Company's 2006-1 Consultants and
Employees Services Plan for various consulting and services contracts, we issued
17,536,000 of shares to various consultants and affiliates for strategic,
management and oil and gas industry related consulting. See the Management
Discussuin and Analysis for a further breakdown of the share issuance.

-5-

Item 6. Management's Discussion and Analysis or Plan of Operation.

This report contains forward looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. When used in this Form 10-KSB, the words
"anticipate", "estimate", "expect", "project" and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
certain risks, uncertainties and assumptions including the possibility that the
Company's proposed plan of operation will fail to generate projected revenues.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected. The Company's actual results could
differ materially from those set forth on the forward looking statements as a
result of the risks set forth in the Company's filings with the Securities and
Exchange Commission, general economic conditions, and changes in the assumptions
used in making such forward looking statements.

General

On April 3, 2006, our Board of Directors approved a change of direction for the
Company, from the business of manufacturing and distributing decorative stone
veneers and finishes, to the business of oil and gas exploration and production,
mineral lease purchasing and all activities associated with acquiring, operating
and maintaining the assets of such operations. The Board of Directors believes
that by changing the direction to the oil and gas markets we have improved our
prospects for success due to both the current and expected future positive
market conditions. We expect to exploit these from our close association from
Summitt Oil and Gas, and other third party consultants.

Additionally, in April 2006 we executed an assignment of an oil and gas lease
under which we acquired the rights to drill and otherwise exploit certain
underlying oil and gas reserves which we acquired for 677,000 restricted shares
of our common stock and an agreement to pay a 3% royalty on the value of the oil
removed or produced and on net proceeds from all gas sold. To date no royalties
have bee accrued or paid.

Results for the year ended December 31, 2006 and the period January 27 to
December 31, 2005

For the year ended December 31, 2006, the Company had $0 revenue, vs. revenue of
$0 during the period January 27, to December 31, 2005.

For the year ended December 31, 2006, the Company had a net operating loss of
$38,201,584, vs. a net operating loss of $807,600 during the period January 27,
to December 31, 2005. The increase in the loss is attributable to the change in
the direction of the business and the fees incurred. Professional fees increased
$22,425,592 to $22,890,896 predominately related to oil and gas consulting
services. Other general and administrative expenses increased $15,076,620 to
$15,254,688 predominately due to compensation costs of recruiting and hiring
officers and directors. Of the expenses above $35,732,250 was paid through the
issuance of stock. The expense, admittedly high, is necessary as we are building
a new company. The price of entry into the oil and gas industry is not
inexpensive and accordingly we needed to retain known experts and consultants
that will assist us in reviewing and analyzing transactions and other industry
data.

For the year ended December 31, 2006, the Company had a net loss of $37,986,584
vs. $807,600 during the period January 27, to December 31, 2005. The change in
other income is $215,000 due to the settlement of debt.

Plan of Operation
In conjunction with our change of direction, in April 2006, we entered into a
consulting agreement with Summitt Oil and Gas, Inc. ("Summitt"), as well as
other third parties, to provide business management services, and advice as it
relates to the future of the company. This service shall include the drafting
and preparation of business plans, operating budgets, cash flow projections and
other business management services as we venture into the oil and gas business.
In April 2006 we executed an assignment of an oil and gas lease under which we
acquired 100% of the leasehold rights to drill and otherwise exploit 160 acres
of certain underlying oil and gas reserves located in the County of Custer,
Oklahoma, which we acquired from Summitt for 677,000 restricted shares of our
common stock and agreed to pay Summitt a royalty equal to 3% of the value of all
oil produced and removed under the lease and the net proceeds received by us
from the sale of all gas and casinghead gasoline produced and sold under the
lease. The leasehold interest is not developed and accordingly not currently
producing oil or gas. Upon receiving the necessary capitalization, we intend to
explore the development of this field. The shares were valued at $406,200. The
Company recorded the asset at the historical cost of $56,000 to the related
party and recorded $350,200 as a deemed dividend to the related party. As of
December 31, 2006 the Company impaired the balance of the lease of $46,667.

-6-

In April 2006, we entered into a consulting agreement with BlueFin, Inc.
("BlueFin"). BlueFin has been retained to provide business development, investor
relations services, and introductions to qualified funding sources,
introductions to oil and gas business prospects and introductions to accredited
investors. By leveraging BlueFin's resources the Company anticipates that it
will be able to find sources of capital to fund its operations in the oil and
gas business.

In April 2006, we also entered into an agreement with Monterosa Group Limited
("Monterosa"). Monterosa has been retained to provide services including
operation administration, transaction processing and management, systems
development, staff recruitment, acquisition transaction support services, and
other business management services as the Company moves into the oil and gas
business.

In April 2006, we also engaged Camden Holdings, Inc. ("Camden"), an entity
experienced in the energy sector that will assist the Company in locating oil
and gas opportunities for us. Camden's services include the drafting and
preparation of business plans, operating budgets, cash flow projections and
other business management services as we venture into the oil and gas business.
We have also been able to leverage our relationship with Camden to obtain
short-term financing as needed. Camden has also agreed to advance sums to the
Company to assist in funding its operations over the short-term. As of December
31, 2006, Camden has advanced the Company the sum of $613,400.

In April 2006, we also engaged Design, Inc. ("Design"), an entity experienced in
the energy sector that will assist the Company in financing the transactions
introduced by Camden and our other consultants.

In July, 2006, the Company entered into a Consulting Agreement with Catalyst
Consulting Partners, LLC to provide the Company with business consulting
services in exchange for the issuance of 518,000 shares of the Company's common
stock. These shares were issued during the quarter ended September 30, 2006.
In September, 2006, the Company entered into a Consulting Agreement with Summitt
Ventures Inc. ("SVI") for six months which required the Company to issue
2,70,000 of its common stock to SVI for services to be provided to the Company
including business management services and related services. These shares were
issued in September, 2006.

In September, 2006, the Company entered into a Services Agreement with Rhone
Alternative Marketing Partners ("RAMP) for marketing and public relations
services in exchange for the issuance of 1,000,000 shares of the Company's
common stock. These shares were issued during the quarter ended September 30,
2006.

During the quarter ended September 30, 2006, the Company compensated certain
third party individuals who provided services to the Company. In August and
September, 2006, 600,000 shares were issued for services. In September, 2006, an
additional 740,000 shares were issued to consultants for services under the
Company's 2006-1 Consultants and Employees Services Plan. This Plan was adopted
in September, 2006 and reserved 3,800,000 shares of the Company's common stock
to consultants and employees, which shares were registered in September, 2006.
During the quarter ended December 31, 2006, 3,799,000 shares were issued under
the Plan.

-7-

We believe that by changing our direction to the oil and gas markets we have
improved our prospects for success due to both the current and expected future
positive market conditions which we expect to exploit initially from the
valuable contacts, industry expertise and business opportunities we expect to
derive from Summitt, an industry experienced consulting resource, and other
third party consultants.

Additionally, we intend to reincorporate the Company to a Nevada corporation
("Reincorporation"). The business purpose of the Reincorporation is to allow us
to avail ourselves to Nevada corporate law. Nevada is a recognized leader in
adopting and implementing comprehensive, flexible corporate laws responsive to
the legal and business needs of corporations organized under its laws. The
Nevada Revised Statutes is an enabling statute that is frequently revised and
updated to accommodate changing business needs.

Additionally, consistent with the change of our direction into the oil and gas
business, we will also change the Company name to a name in line with a company
in the oil and gas business.

We anticipate that we will have to raise additional capital to fund operations
over the next 12 months. To the extent that we are required to raise additional
funds to acquire properties, and to cover costs of operations, we intend to do
so through additional public or private offerings of debt or equity securities,
including a drilling fund to raise $5,000,000. There are no commitments or
arrangements for other offerings in place, no guaranties that any such
financings would be forthcoming, or as to the terms of any such financings. Any
future financing may involve substantial dilution to existing investors. We have
also been relying on our common stock to pay third parties for services which
has resulted substantial dilution to existing investors.

Estimated Funding Required During the Next Twelve Months:

-------------------------------------- --------------- --- ---------------------
Prospect Development & Seismic $1,000,000 to $5,000,000
-------------------------------------- --------------- --- ---------------------
Drilling & Development $2,500,000 to $5,000,000
-------------------------------------- --------------- --- ---------------------
Offering Costs & Expenses $50,000 to $50,000
-------------------------------------- --------------- --- ---------------------
General Corporate Expenses $100,000 to $150,000
-------------------------------------- --------------- --- ---------------------
Working Capital $700,000 to $1,000,000
-------------------------------------- --------------- --- ---------------------
Total $4,350,000 to $11,200,000
-------------------------------------- --------------- --- ---------------------

-8-

The minimum expenditures noted above will allow us to commence with acquiring,
exploring and developing properties as well as commence drilling operations. In
the event that we are able to raise further funds, we will primarily expend such
funds on further prospect development and seismic studies and then to fund
further drilling operations Consistent with this change of our business,
effective October 1, 2005 we sold all of the capital stock of Es3 to Liquid
Stone Partners. A partner holding a minority interest in Liquid Stone
Partnerships is also a director of the Company. We currently have one full-time
employee. We will primarily rely on outside consultants and do not currently
foresee any significant changes in the number of our employees.

Risk Factors

Risks related to the Company

Need for additional financing.
--------------------------------------------------------------------------------

We currently do not have sufficient capital reserves to satisfy our obligations
and continue operations through the end of 2006, and therefore have an immediate
need for capital. While we are exploring various capital raising avenues, there
can be no assurance that we will be able to obtain the sufficient short-term
capital needed to sustain operations. The full and timely development and
implementation of our business plan and growth strategy will require significant
resources. We may not be able to obtain the working capital necessary to
implement our growth strategy. Furthermore, our growth strategy may not produce
material revenue even if successfully funded. Management intends to explore a
number of options to secure alternative sources of capital, including the
issuance of secured debt, volumetric production payments, subordinated debt, or
additional equity, including preferred equity securities or other equity
securities. We might not succeed, however, in raising additional equity capital
or in negotiating and obtaining additional and acceptable financing when we need
it. Our ability to obtain additional capital will also depend on market
conditions, national and global economies and other factors beyond our control.
Even if we are able to obtain the short-term capital necessary to sustain our
operations, if adequate capital is not available or is not available on
acceptable terms at a time when we needed it, our ability to close acquisitions,
execute our growth plans, develop or enhance our services or respond to
competitive pressures will be significantly impaired. There are no assurances
that we will be able to implement or capitalize on various financing
alternatives or otherwise obtain required working capital, the need for which is
substantial given our operating loss history.

We have a limited operating history.
--------------------------------------------------------------------------------

We are a development stage company with a limited operating history, and we
face all the risks common to companies in their early stages of development,
including undercapitalization and uncertainty of funding sources, high initial
expenditure levels and uncertain revenue streams, an unproven business model,
and difficulties in managing growth. Our prospects must be considered in light
of the risks, expenses, delays and difficulties frequently encountered in
establishing a new business. Any forward-looking statements in this report do
not reflect any adjustments that might result from the outcome of these types of
uncertainty. Since inception, we have incurred significant losses. No assurance
can be given that we will be successful.

-9-

We may incur unforeseen costs and we may need to raise capital in addition to
that required by our business plan.
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We are currently operating at a loss and intend to increase our operating
expenses significantly as we begin our acquisitions and oil and gas production.
Additionally, we may encounter unforeseen costs that could also require us to
seek additional capital. There can be no assurance that we will be able to raise
sufficient additional capital on acceptable terms, if at all. Any additional
financing may result in significant dilution to our existing stockholders.

Maintaining any reserves and revenue we may acquire in the future depends on
successful development and acquisitions.
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In general, the volume of production from oil and natural gas properties
declines as reserves are depleted, with the rate of decline depending on
reservoir characteristics. Except to the extent we acquire properties containing
proved reserves or conduct successful development activities, or both, our
proved reserves that we may acquire will decline. Our future oil and natural gas
production is, therefore, highly dependent upon our level of success in finding
or acquiring additional reserves.

We are subject to substantial operating risks
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The oil and natural gas business involves certain operating hazards such as
well blowouts, mechanical failures, explosions, uncontrollable flows of oil,
natural gas or well fluids, fires, formations with abnormal pressures,
hurricanes, pollution, releases of toxic gas and other environmental hazards and
risks. We could suffer substantial losses as a result of any of these events.
While we intend to carry general liability, control of well, and operator's
extra expense coverage typical in our industry, we will not be fully insured
against all risks incident to our business, such as acts of God.

We may not always be the operator of some of our wells. As a result, our
operating risks for those wells and our ability to influence the operations for
these wells will be less subject to our control. Operators of these wells may
act in ways that are not in our best interests.

We are dependent upon third party and related party consultants
--------------------------------------------------------------------------------

Our key personnel have experience in the business of renewable energy, but not
in the oil and gas industry. We are therefore highly dependent upon the industry
expertise and business opportunities we expect to derive from Summitt Oil and
Gas, Inc., an industry experienced consulting resource, as well as with other
industry experienced consulting resources. These consultants may act in ways
that are not in our best interests.

-10-

Our operations have significant capital requirements.
--------------------------------------------------------------------------------

We expect to experience substantial working capital needs as we begin our active
development and acquisition programs. Even if we are able to obtain the
short-term capital necessary to maintain our operations, additional financing
will be required in the future to fund our growth and operations. No assurances
can be given as to the availability or terms of any such additional financing
that may be required or that financing will continue to be available under new
credit facilities. In the event such capital resources are not available to us,
our drilling and other activities would be curtailed.

We may have difficulty managing future growth and the related demands on our
resources and may have difficulty in achieving future growth.

We expect to experience rapid growth through acquisitions and development
activity for the foreseeable future. Any future growth may place a significant
strain on our financial, technical, operational and administrative resources.
Our ability to grow will depend upon a number of factors, including our ability
to identify and acquire new development or acquisition prospects, our ability to
develop existing properties, our ability to continue to retain and attract
skilled personnel, hydrocarbon prices and access to capital. There can be no
assurance that we will be successful in achieving growth or any other aspect of
our business strategy.

We face strong competition from larger oil and natural gas companies.

Our competitors include major integrated oil and natural gas companies and
numerous independent oil and natural gas companies, individuals and drilling and
income programs. Many of our competitors are large, well-established companies
with substantially larger operating staffs and greater capital resources than
us. We may not be able to successfully conduct our operations, evaluate and
select suitable properties and consummate transactions in this highly
competitive environment. Specifically, these larger competitors may be able to
pay more for development projects and productive oil and natural gas properties
and may be able to define, evaluate, bid for and purchase a greater number of
properties and prospects than our financial or human resources permit. In
addition, such companies may be able to expend greater resources on the existing
and changing technologies that we believe are and will be increasingly important
to attaining success in the industry.

Our acquisition program may be unsuccessful, particularly in light of our recent
formation and limited history of acquisitions.
--------------------------------------------------------------------------------

Our personnel have had significant acquisition experience outside of the oil and
gas industry. However, we may not be in as good a position as our more
experienced competitors to execute a successful acquisition program or close
additional future transactions. The successful acquisition of producing
properties requires an assessment of recoverable reserves, future oil and
natural gas prices, operating costs, potential environmental and other
liabilities and other factors. Such assessments, even when performed by
experienced personnel, are necessarily inexact and their accuracy inherently
uncertain. Our review of subject properties, which generally includes on-site
inspections and the review of reports filed with various regulatory entities,
will not reveal all existing or potential problems, deficiencies and
capabilities. We may not always perform inspections on every well, and may not
be able to observe structural and environmental problems even when we undertake
an inspection. Even when problems are identified, the seller may be unwilling or
unable to provide effective contractual protection against all or part of such
problems. There can be no assurances that any acquisition of property interests
by us will be successful and, if unsuccessful, that such failure will not have
an adverse effect on our future results of operations and financial condition.

-11-

We cannot market our production without the assistance of third parties.

The marketability of our production depends upon the proximity of our reserves
to, and the capacity of, facilities and third party services, including oil and
natural gas gathering systems, pipelines, trucking or terminal facilities, and
processing facilities. The unavailability or lack of capacity of such services
and facilities could result in the shut-in of producing wells or the delay or
discontinuance of development plans for properties. A shut-in or delay or
discontinuance could adversely affect our financial condition. In addition,
federal and state regulation of oil and natural gas production and
transportation affect our ability to produce and market our oil and natural gas
on a profitable basis.

Risks Relating to the Oil and Gas Industry

Oil and Gas Drilling, re-completions and re-working are speculative activities
and involve numerous risks and substantial and uncertain costs.

Our growth will be materially dependent upon the success of our future drilling
and development program. Drilling for oil and gas and re-working existing wells
involve numerous risks, including the risk that no commercially productive oil
or natural gas reservoirs will be encountered. The cost of drilling, completing
and operating wells is substantial and uncertain, and drilling operations may be
curtailed, delayed or cancelled as a result of a variety of factors beyond our
control, including unexpected drilling conditions, pressure or irregularities in
formations, equipment failures or accidents, adverse weather conditions,
compliance with governmental requirements and shortages or delays in the
availability of drilling rigs or crews and the delivery of equipment. Although
we believe that our focus on re-developing existing oil and gas field and
advanced drilling technology should increase the probability of success of our
wells and should reduce average finding costs through elimination of prospects
that might otherwise be drilled using other traditional methods, drilling or
reworking remains a speculative activity. Even when fully utilized, lateral
drilling does not predetermine if hydrocarbons will in fact be present in such
structures if they are drilled. Our future drilling activities may not be
successful and, if unsuccessful, such failure will have an adverse effect on our
future results of operations and financial condition. There can be no assurance
that our overall drilling success rate or our drilling success rate for activity
within a particular geographic area will not decline. Although we may discuss
drilling prospects that we have identified or budgeted for, we may ultimately

not lease or drill these prospects within the expected time frame, or at all. We
may identify and develop prospects through a number of methods, some of which do
not include horizontal drilling. The drilling and results for these prospects
may be particularly uncertain Our drilling schedule may vary from our capital
budget. The final determination with respect to the drilling of any scheduled or
budgeted wells will be dependent on a number of factors, including, but not
limited to: (i) the results of previous development efforts and the acquisition,
review and analysis of data; (ii) the availability of sufficient capital
resources to us and the other participants for the drilling of the prospects;
(iii) the approval of the prospects by other participants after additional data
has been compiled; (iv) economic and industry conditions at the time of
drilling, including prevailing and anticipated prices for oil and natural gas
and the availability of drilling rigs and crews; (v) our financial resources and
results; (vi) the availability of leases and permits on reasonable terms for the
prospects; and (vii) the success of our drilling technology. There can be no
assurance that these projects can be successfully developed or that the wells
discussed will, if drilled, encounter reservoirs of commercially productive oil
or natural gas. There are numerous uncertainties in estimating quantities of
proved reserves, including many factors beyond our control.

-12-

Reliance on technological development and possible technological obsolescence.

Our business is dependent upon utilization of changing technology. As a result,
our ability to adapt to evolving technologies, obtain new technology and
maintain technological advantages will be important to our future success. We
believe that our ability to utilize state of the art technologies will give us
an advantage over many of our competitors. This advantage, however, is based in
part upon technologies developed by others, and we may not be able to maintain
this advantage. As new technologies develop, we may be placed at a competitive
disadvantage, and competitive pressures may force us to implement such new
technologies at substantial cost. There can be no assurance that we will be able
to successfully utilize, or expend the financial resources necessary to acquire,
new technology, or that others will not either achieve technological expertise
comparable to or exceeding that of our Company or that others will not implement
new technologies before us. One or more of the technologies we end up adopting
or implementing may, in the future, become obsolete. In such case, our business,
financial condition and results of operations could be materially adversely
affected. If we are unable to utilize the most advanced commercially available
technology, our business, financial condition and results of operations could be
materially and adversely affected.

Oil and natural gas prices are highly volatile in general and low prices
negatively affect our financial results.
--------------------------------------------------------------------------------

Our revenue, profitability, cash flow, future growth and ability to borrow funds
or obtain additional capital, as well as the carrying value of our properties,
are substantially dependent upon prevailing prices of oil and natural gas. Lower
oil and natural gas prices also may reduce the amount of oil and natural gas
that we can produce economically. Historically, the markets for oil and natural
gas have been volatile, and such markets are likely to continue to be volatile
in the future. Prices for oil and natural gas are subject to wide fluctuation in
response to relatively minor changes in the supply of and demand for oil and
natural gas, market uncertainty and a variety of additional factors that are
beyond our control. These factors include the level of consumer product demand,
weather conditions, domestic and foreign governmental regulations, the price and
availability of alternative fuels, political conditions, the foreign supply of
oil and natural gas, the price of foreign imports and overall economic
conditions It is impossible to predict future oil and natural gas price
movements with certainty. Declines in oil and natural gas prices may materially
adversely affect our financial condition, liquidity, ability to finance planned
capital expenditures and results of operations.

-13-

Government regulation and liability for environmental matters may adversely
affect our business and results of operations.
--------------------------------------------------------------------------------

Oil and natural gas operations are subject to extensive federal, state and local
government regulations, which may be changed from time to time. Matters subject
to regulation include discharge permits for drilling operations, drilling bonds,
reports concerning operations, the spacing of wells, unitization and pooling of
properties and taxation. From time to time, regulatory agencies have imposed
price controls and limitations on production by restricting the rate of flow of
oil and natural gas wells below actual production capacity in order to conserve
supplies of oil and natural gas. There are federal, state and local laws and
regulations primarily relating to protection of human health and the environment
applicable to the development, production, handling, storage, transportation and
disposal of oil and natural gas, by-products thereof and other substances and
materials produced or used in connection with oil and natural gas operations. In
addition, we may be liable for environmental damages caused by previous owners
of property we purchase or lease As a result, we may incur substantial
liabilities to third parties or governmental entities. We are also subject to
changing and extensive tax laws, the effects of which cannot be predicted. The
implementation of new, or the modification of existing, laws or regulations
could have a material adverse effect on us.

Risks Associated with Our Stock

Our stock price has been and may continue to be very volatile.

Our common stock is thinly traded and the market price has been, and is likely
to continue to be, highly volatile. During the 12 months prior to December 31,
2006, our stock price as traded on the OTC Bulletin Board has ranged from $3.05
to $0.03. The variance in our share price makes it extremely difficult to
forecast with any certainty the stock price at which you may be able to buy or
sell shares of our common stock. The market price for our common stock could be
subject to wide fluctuations due to factors beyond our control, such as: actual
or anticipated variations in our results of operations, naked short selling of
our common stock and stock price manipulation, changes or fluctuations in the
commodity prices of oil and natural gas, general conditions and trends in the
oil and gas industry, general economic, political and market conditions.

Use of our common stock to pay for third party services could dilute current
investors.
--------------------------------------------------------------------------------

We are highly dependent upon the industry expertise and business opportunities
we expect to derive from industry experienced consulting resources. In the past
we have used our common stock to pay for the services of these third party
consultants. As of April 11, 2006, we have issued 33,335,000 shares of our
common stock to said consultants. Further issuances in exchange for such
services will dilute current investors. Future sales of our common stock in the
public market could adversely affect the price of our common stock.

-14-

Sales of substantial amounts of common stock in the public market that are not
currently freely tradable, or even the potential for these sales, could have an
adverse effect on the market price for the shares of our common stock. These
shares include approximately 28.2 million shares held by founders, investors and
service providers, and 1,800,000 warrants at April 11, 2006. Unregistered shares
may not be sold except in compliance with Rule 144 promulgated by the SEC, or
some other exemption from registration. Rule 144 does not prohibit the sale of
these shares but does place conditions and restrictions on their resale, which
must be complied with before they can be resold.

A summary of the warrant activity for the period ended December 31, 2006 is as
follows:

-------------------------------------- ----------------------- ----------------------- ----------------------
Warrants Outstanding Weighted Average Aggregate Intrinsic
Exercise Price Value
-------------------------------------- ----------------------- ----------------------- ----------------------

Outstanding, December 31, 2005 1,800,000 $0.67 $-
Granted 600,000 2.63 -
Forfeited / Canceled 600,000 2.63 -
Exercised - - -
Outstanding, December 31, 2006 1,800,000 $0.67 $-
-------------------------------------- ----------------------- ----------------------- ----------------------

The weighted average remaining contractual life of warrants outstanding is 3.10
years at December 31, 2006.

-------------------------------------------------------------------------------------------------------------
Outstanding Warrants Exercisable Warrants
----------------------- --------------------- -------------------- --------------------- --------------------
Range of Exercise Number Average Remaining Average Exercise Number
Price Contractual Life Price

$0.67 1,800,000 3.10 $0.67 1,800,000
----------------------- --------------------- -------------------- --------------------- --------------------

The Company estimated the fair value of each stock warrant at the grant date by
using the Black-Scholes option-pricing mode.

The weighted-average assumptions used in estimating the fair value of warrants
granted during the year ended December 31, 2006, and the period ended December
31, 2005 along with the weighted-average grant date fair values, were as
follows.

------------------------------------- ----------------------------------- -----------------------------------
2006 2005
------------------------------------- ----------------------------------- -----------------------------------

Expected volatility 80.0% 0.1%
Expected life in years 5 years 5 years
Risk free interest rate 5.07% 3.38%
Dividend yield 0% 0%
------------------------------------- ----------------------------------- -----------------------------------

During the period ended December 31, 2006, the Company granted two warrants
which expire five years from date of grant and are convertible into 300,000
shares of common stock at an exercise price of $2.63 per share to each of Brian
Harcourt and Ross-Lyndon James in accordance with their respective Management
Employment Agreements executed by and between them and the Company,
respectively. The warrants were granted on April 5, 2006 and vest 6 months after
grant. Both Mr. Harcourt and Mr. James resigned in July 24, 2006 and their
warrants were forfeited.

Future sales of our common stock in the public market could limit our ability to
raise capital.
--------------------------------------------------------------------------------

Sales of substantial amounts of our common stock pursuant to Rule 144, upon
exercise or conversion of derivative securities or otherwise, or even the
potential of these sales, could also affect our ability to raise capital through
the sale of equity securities.

The Company has never paid cash dividends on its common stock and does not
intend to do so in the foreseeable future.
--------------------------------------------------------------------------------

Present management and directors may control the election of our directors and
all other matters submitted to the stockholders for approval.

Our executive officers and directors, in the aggregate, beneficially own
approximately 0.0% of our outstanding common stock. Summitt Oil & Gas, Inc. is
our single largest shareholder owning 52.94% of our common stock. Boston
Equities Corporation holds 10.68% of our common stock and is our second largest
shareholder. Accordingly, this concentration of ownership may have the effect of
delaying, deferring or preventing a change in control of the Company, impede a
merger, consolidation, takeover or other business combination involving the
Company or discourage a potential acquirer from making a tender offer or
otherwise attempting to obtain control of the Company, which in turn could have
an adverse effect on the market price of our common stock.

-15-

"Penny stock" regulations may impose certain restrictions on marketability of
securities.
--------------------------------------------------------------------------------

The SEC adopted regulations, which generally define "penny stock" to be an
equity security that has a market price of less than $5.00 per share. Our common
stock may be subject to rules that impose additional sales practice requirements
on broker-dealers who sell these securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000, or annual incomes exceeding $200,000 or $300,000 together with their
spouse). For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of these securities and have
received the purchaser's prior written consent to the transaction.

Additionally, for any transaction, other than exempt transactions, involving a
penny stock, the rules require the delivery, prior to the transaction, of a risk
disclosure document mandated by the SEC relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell our common stock and may affect
the ability to sell our common stock in the secondary market.

The market for our Company's securities is limited and may not provide adequate
liquidity.
--------------------------------------------------------------------------------

Our common stock is currently traded on the OTC Bulletin Board ("OTCBB"), a
regulated quotation service that displays real-time quotes, last-sale prices,
and volume information in over-the-counter equity securities. As a result, an
investor may find it more difficult to dispose of, or obtain accurate quotations
as to the price of, our securities than if the securities were traded on the
Nasdaq Stock market, or another national exchange. There are a limited number of
active market makers of our common stock. In order to trade shares of our common
stock you must use one of these market makers unless you trade your shares in a
private transaction. In the twelve months prior to December 31, 2006 , the
actual trading volume ranged from a low of no shares of common stock to a high
of 1,000,000 shares of common stock. On most days, this trading volume means
there is limited liquidity in our shares of common stock. Selling our shares is
more difficult because smaller quantities of shares are bought and sold and news
media coverage about us is limited. These factors result in a limited trading
market for our common stock and therefore holders of our Company's stock may be
unable to sell shares purchased should they desire to do so.

Item 7. Financial Statements.

The report of independent auditors and financial statements are set forth in
this report beginning on Page F-1.

-16-

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

There were no disagreements with accountants on accounting and financial
disclosure during the relevant period.

Item 8A. Controls and Procedures

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 ended December 31, 2006 (the
"Evaluation Date"). During the course of the audit for our year ended December
31, 2005 in May, 2006, our auditor discovered numerous errors in our financial
statements in our financial statements in our quarterly report for the period
ended September 30, 2005 as disclosed in our Form 8-K/A filed on June 14, 2006.
As a result of these errors, and others, we restated our Form 10-QSB for the
quarter ended September 30, 2005, and will restate the financial statements for
the period ended June 30, 2005, in our Form 8-K/A filed on January 24, 2006. Our
conclusion to restate our Form 10-QSB for the quarter ended September 30, 2005
and Form 8-K/A filed on January 24, 2006, resulted in the Company recognizing
that its controls and procedures were not effective as of the period ended
December 31, 2006 and constituted material weaknesses which began after the
close of the Exchange Agreement on or about July 16, 2005. The material
weaknesses were primarily the result of our having no controller and no
qualified personnel and as a result, transactions were omitted, recorded
incorrectly, or recorded without support.

Limitations on the Effectiveness of Internal Controls

Disclosure controls and procedures are designed to provide reasonable assurance
of any entity achieving its disclosure objectives. Our chief executive officer
and chief financial officer have concluded that our disclosure controls and
procedures were not effective as the fiscal year ended December 31, 2006 and the
Company has since implemented disclosure controls and procedures to ensure that
the Company has the proper disclosure controls and procedures to keep this from
happening again. 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.

In May, 2006, we remediated the material weakness in internal control over
financial reporting by having our Chief Executive Officer and Chief Financial
Officer review in detail all adjustments affecting the issuances of our
securities and we retained an outside consultant to make accounting entries.

-17-

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act. Identification of Directors and
Executive Officers of the Company Our current officers and directors consist of
the following persons:

NAME AGE OFFICE SINCE

-------------------- ------ ------------------- -----
Linda Contreras 26 Director 2007

The Director named above will serve until the next annual meeting of our
shareholders. Thereafter, Directors will be elected for one-year terms at the
annual shareholders' meeting. Officers will hold their positions at the pleasure
of the Board of Directors. There is no arrangement or understanding between the
Directors and Officers of the Company and any other person pursuant to which any
Director or Officer was or is to be selected as a Director or Officer of the
Company.

There is no family relationship between or among any Officer and Director.

We have no audit committee. We have a compensation committee that administers
our 2006 Employee Stock Option Plan that we adopted in April 2006. The following
is a brief account of the business experience during at the least the last five
years of the directors and executive officers, indicating their principal
occupations and employment during that period, and the names and principal
businesses of the organizations in which such occupations and employment were
carried out. Linda Contreras was appointed our sole Director on April 12, 2007.
She has been working for the past year as the Research & Acquisitions Officer
for Summitt Oil & Gas in Beverly Hills, California. She has led the acquisitions
team in the evaluation of offerings in oil and gas development programs, and
provides economic analysis of all proposed acquisitions, divestitures, and
drilling activities. Ms. Contreras received her Bachelor of Arts in Political
Science from the University of California at Berkeley in 2003.

Sam Plunkett was our sole Director from March 14, 2007 to April 12, 2007, when
he resigned. Since 2003 he has been working in Beverly Hills as a solo
practitioner handling all aspects of general practice, including family law and
civil court trials. From 2002 to 2003 he worked as a legal clerk for a sole
practitioner in Santa Monica from 2002 to 2003.

On or about March 1, 2006, in the U.S. Bankruptcy Court for the Southern
District of California, an involuntary petition for bankruptcy under chapter 7
under the United States Bankruptcy Code was filed against Boston Equities
Corporation, our largest shareholder holding approximately 25.90% of our issued
and outstanding common stock. After such filing, Boston Equities Corporation
converted the case from chapter 7 to chapter 11.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than 10% shareholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.

To our knowledge, based solely on its review of the copies of such reports
furnished to the company and written representations that no other reports were
required during the fiscal year ended December 31, 2006 , all Section 16(a)
filing requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with.

-19-

Code of Ethics

Code of Ethics for the Chief Executive Officer and the Principal Financial
Officer

Our Board of Directors has adopted the Code of Ethical and Professional
Standards of National Healthcare Technology, Inc. and Affiliated Entities Code
of Business Conduct and Ethics that applies to its officers and employees
effective on April 11, 2007, a copy of which is filed as an exhibit hereto. We
will provide any person without charge, a copy of our code of ethics, upon
receiving a written request in writing addressed to the Company at the Company's
address, attention: Secretary.

Item 10. Executive Compensation.

During fiscal 2006 we paid a total of $12,716,173- in executive compensation of
which $256,173 was regular compensation and $12,460,000, was through stock
issuances (a total of 8,800,000 shares). The table below shows the compensation
split:

------------------------- ----------------------- ----------------------- -----------------------
Cash compensation Stock issuances Total Compensation
------------------------- ----------------------- ----------------------- -----------------------

Ross Lyndon James $91,250 $6,190,000 $6,281,250
------------------------- ----------------------- ----------------------- -----------------------
Brian Harcourt 96,250 6,190,000 6,281,250
------------------------- ----------------------- ----------------------- -----------------------
Sam Petrossian 68,673 80,000 148,673
------------------------- ----------------------- ----------------------- -----------------------
$256,173 $12,460,000 $12,716,173
------------------------- ----------------------- ----------------------- -----------------------

Employment Agreements
The following transaction took place between the Company and Ross-Lyndon James,
the Company's Chief Executive Officer and Director: On April 3, 2006, the
Company entered into an employment agreement with Ross Lyndon James who has been
serving as the Company's President without compensation and written agreement
since being appointed to such office by the Board of Directors of the Company in
June 2005. Mr. Lyndon James had also served without compensation as a director
of the Company. Under the terms of the agreement, Mr. Lyndon James received
compensation equal to twenty five thousand dollars ($25,000) per month payable
monthly in advance. He was also granted one million eight hundred thousand
(1,800,000) restricted shares of common stock upon execution of the employment
agreement as a signing bonus, as well as a termination grant of two million
(2,000,000) shares of restricted common stock. All shares have piggy-back
registration rights. Additionally, the Company agreed to grant him a warrant to
acquire three hundred thousand (300,000) restricted shares of the Company's
common stock. The exercise price is to be based on the bid price of the stock on
the date of the agreement. The warrants expire five years after the date of
grant. Additionally, Mr. Lyndon James will be entitled to participate in any
stock option program offered by the Company to its employees. In July 24, 2006,
Mr. Lyndon James resigned as the Company's Chief Executive Officer and Director.
On the resignation of the Director, the Company forfeited the warrants. The
Company recorded shares to be issued of $2,500,000 for the termination shares

On April 3, 2006, the Company entered into an employment agreement with Brian
Harcourt who has been serving as an officer of the Company without compensation
and written agreement since being appointed to such office by the Board of
Directors of the Company in June 2005. Mr. Harcourt has also served without
compensation as a director of the Company. Under the terms of the agreement, Mr.
Harcourt will receive compensation equal to twenty five thousand dollars
($25,000) per month payable monthly in advance. He was also granted one million
eight hundred thousand (1,800,000) restricted shares of common stock upon
execution of the employment agreement as a signing bonus, as well as a
termination grant of two million (2,000,000) restricted shares of the common
stock. All shares have piggy back registration rights. Additionally, the Company
agreed to grant him a warrant to acquire three hundred thousand (300,000)
restricted shares of the Company's common stock. The exercise price is to be
based on the bid price of the stock on the date of the agreement. The warrants
expire five years after the date of grant. Additionally, Mr. Harcourt will be
entitled to participate in any stock option program offered by the Company to
its employees. In July 24, 2006, Mr. Harcourt resigned as the Company's Chief
Financial Officer and Director. On the resignation of the Director, the Company
forfeited the warrants. The Company recorded shares to be issued of $2,500,000
for the termination shares.

-20-

Stock Option Plan

The Company adopted an Incentive Stock Option Plan for non-employee directors on
October 1, 1998. We have not awarded any options under this Plan. No director
receives or accrues any compensation for his services as a director, including
committee participation and/or special assignments.

On April 3, 2006, our Board of Directors authorized and approved the adoption of
the 2006 Stock Option Plan effective April 3, 2006 (the "2006 Stock Option
Plan").

The 2006 Stock Option Plan is administered by the duly appointed compensation
committee. Our compensation committed consists of Rosamaria DeSimone, a
consultant to the Company, and Brian Harcourt. The 2006 Stock Option Plan
provides authorization to grant stock options of up to 2,500,000 shares. At the
time a stock option is granted under the Stock Option Plan, the compensation
committee shall fix and determine the exercise price at which shares of common
stock of the Company may be acquired and vesting period thereof.

In the event an optionee ceases to be employed by or to provide services to the
Company for reasons other than cause, retirement, disability or death, any stock
option that is vested and held by such optionee generally may be exercisable
within up to ninety (90) calendar days after the effective date that his
position ceases, and after such 90-day period any unexercised stock option shall
expire. In the event an optionee ceases to be employed by or to provide services
to the Company for reasons of retirement, disability or death, any stock option
that is vested and held by such optionee generally may be exercisable within up
to one-year after the effective date that his position ceases, and after such
one-year period any unexercised stock option shall expire.

No stock options granted under the 2006 Stock Option Plan will be transferable
by the optionee, and each stock option will be exercisable during the lifetime
of the optionee subject to the option period of ten (10) years or limitations
described above. Any stock option held by an optionee at the time of his death
may be exercised by his estate within one (1) year of his death or such longer
period as the compensation committee may determine.

Upon exercise of the options, the optionee will deliver consideration in the
amount of the exercise price multiplied by the number of shares to be issued as
a result of the exercise; provided, however, the compensation committee
reserves, at any and all times, the right, in its sole and absolute discretion,
to establish, decline to approve or terminate any program or procedures for the
exercise of stock options by means of a cashless exercise.

-21-

Compensation of Directors

Directors are entitled to reimbursement for reasonable travel and other
out-of-pocket expenses incurred in connection with attendance at meeting of the
Board of Directors.

We have no written employment agreements with our directors.

Item 11. Security Ownership of Certain Beneficial Owners and Management

There were 81,517,759 shares of our common stock issued and outstanding on April
11, 2007. The following tabulates holdings of shares of the Company by each
person who, subject to the above, at the date of this Report, holds of record or
is known by Management to own beneficially more than five percent (5%) of our
common stock and, in addition, by all of our directors and officers individually
and as a group.

---------------------------------------- -------------------- ------------------
NAME AND ADDRESS NUMBER OF SHARES PERCENT
OWNED BENEFICIALLY OF SHARES OWNED
---------------------------------------- -------------------- ------------------
Boston Equities Corporation(2)(2) 9,007,503 10.68%
1660 Union Street
San Diego, CA 90802
---------------------------------------- -------------------- -----------------
Summitt Oil & Gas(1) 41,833,721 52.94%
9595 Wilshire Boulevard Suite 510
Beverly Hills, CA 90212
---------------------------------------- --------------------------------------
ALL DIRECTORS AND EXECUTIVE OFFICERS 0 0.00%

AS A GROUP (THREE PERSONS)(5)

(*) Denotes Officer or Director;
(1) Boston Equities Corporation and Summitt Oil & Gas are related parties;
(2) Does not include 1,200,000 shares vested under warrants held by Liquid Stone
Manufacturing, Inc. and Stone Mountain Finishes, Inc., related parties to Boston
Equities Corporation and William Courtney.

Changes in Control

There are no arrangements known by us, including any pledge by any person of
securities of the Company, the operation of which may at a subsequent date
result in a change of control of the Company.

-21-

Item 12. Certain Relationships and Related Transactions.

During the year the following transactions occurred between the Company and
certain related parties:

A. Ross-Lyndon James

The following transaction took place between the Company and Ross-Lyndon James,
the Company's Chief Executive Officer and Director: On April 3, 2006, the
Company entered into an employment agreement with Ross Lyndon James who has been
serving as the Company's President without compensation and written agreement
since being appointed to such office by the Board of Directors of the Company in
June 2005. Mr. Lyndon James had also served without compensation as a director
of the Company. Under the terms of the agreement, Mr. Lyndon James received
compensation equal to twenty five thousand dollars ($25,000) per month payable
monthly in advance. He was also granted one million eight hundred thousand
(1,800,000) restricted shares of common stock upon execution of the employment
agreement as a signing bonus, as well as a termination grant of two million
(2,000,000) shares of restricted common stock. All shares have piggy-back
registration rights. Additionally, the Company agreed to grant him a warrant to
acquire three hundred thousand (300,000) restricted shares of the Company's
common stock. The exercise price is to be based on the bid price of the stock on
the date of the agreement. The warrants expire five years after the date of
grant. Additionally, Mr. Lyndon James will be entitled to participate in any
stock option program offered by the Company to its employees. In July 24, 2006,
Mr. Lyndon James resigned as the Company's Chief Executive Officer and Director.
On the resignation of the Director, the Company forfeited the warrants. The
Company recorded shares to be issued of $2,500,000 for the termination shares.

B. Brian Harcourt

The following transaction took place between the Company and Brian Harcourt, the
Company's Chief Financial Officer and Director and parties related to Brian
Harcourt:

On April 5, 2006, the Company entered into a consulting agreement with First
Credit Holding Ltd ("First Credit") to provide business management services and
advice as it relates to the Company's future. Under the terms of the agreement,
the Company agreed to pay First Credit a fee of three million five hundred
thousand (3,500,000) restricted shares of common stock. The fee is
non-refundable and considered earned when the shares are delivered. The company
is amortizing the expense over the period of the services. Brian Harcourt, one
of our directors, is the controlling shareholder of First Credit. The shares of
stock were issued in April 2006.

C. Boston Equities Corporation

The following transaction took place between the Company and parties sharing
common ownership or control with Boston Equities Corporation, a shareholder,
which owns approximately 25% of the Company's outstanding and issued common
stock:

On April 3, 2006, the Company entered into a consulting agreement with Summitt
Oil and Gas, Inc. ("Summit") to provide business management services and advice
as it relates to the future of the company. Under the terms of the Agreement,
the Company shall pay Summitt a fee of two hundred and fifty thousand dollars
($250,000) in cash plus one million eight hundred thousand (1,800,000)
restricted of the Company's common stock. The fee is non-refundable and
considered earned when the shares are delivered. The agreement is for six months
expiring in October, 2006. The Company has fully amortized the expense for the
cash and shares paid for the period ended December 31, 2006.

-22-

On April 4, 2006, the Company entered into an assignment of an oil and gas lease
with Summitt. Under the agreement in exchange for the leasehold rights in 160
acres in the County of Custer, Oklahoma, the Company has agreed to pay Summitt
consideration of seventy-seven thousand (677,000) restricted shares of the
Company's common stock. The shares of stock have been issued on August 22, 2006.
Additionally, there is excepted from the assignment and conveyance and reserved
and retained in Summitt an overriding royalty equal to 3% of the value of all
oil produced and removed under the lease and the net proceeds received by
Assignee from the sale of all gas and casing head gasoline produced and sold
under the lease.

On April 25, 2006, the Company entered into a short term bridge financing in the
form of a promissory note to Camden Holdings, Inc. in the amount of three
hundred and fifty thousand dollars ($350,000) to be used as working capital. The
Note was due on August 25, 2006. No interest is payable on the note. On June 8,
2006, the Company entered into a short term bridge financing in the form of a
promissory note to Camden Holdings, Inc. in the amount of one hundred and fifty
thousand dollars ($150,000) to be used as working capital. The Note was due on
December 31, 2006 and has been extended to December 31, 2007. No interest is
payable on the note. At December 31, 2006, the advances outstanding were
$613,400.

Item 13. Exhibits and Reports on Form 8-K

Exhibits

---- ----- --------------------------------------------------------------------
10.4 Consulting Agreement dated April 3, 2006 by and between Summitt Oil
and Gas, Inc. and Company (previously filed as an exhibit to our
Form 8K, file no. 00128911, on April 5, 2006, and incorporated
herein by reference).
---- ----- --------------------------------------------------------------------
10.5 Management Employment Agreement dated April 3, 2006 by and between
Ross Lyndon James and the Company (previously filed as an exhibit to
our Form 8K, file no. 00128911, on April 5, 2006, and incorporated
herein by reference).
---- ----- --------------------------------------------------------------------
10.6 Management Employment Agreement dated April 3, 2006 by and between
Brian Harcourt and the Company (previously filed as an exhibit to
our Form 8K, file no. 00128911, on April 5, 2006, and incorporated
herein by reference).
---- ----- --------------------------------------------------------------------
10.7 2006 Employee Stock Option Plan (previously filed as an exhibit to
the Company's Form 8K, file no. 00128911, on April 5, 2006, and
incorporated herein by reference).
---- ----- --------------------------------------------------------------------
10.8 Consulting Agreement by and between us and Camden Holdings, Inc.
dated January 8, 2006 (previously filed as an exhibit to our Form
10KSB/A, file no. 00128911, on June 8, 2006, and incorporated herein
by reference).
---- ----- --------------------------------------------------------------------
10.9 Consulting Agreement by and between us and Design, Inc. dated
January 8, 2006 (previously filed as an exhibit to our Form 10KSB/A,
file no. 00128911, on June 8, 2006, and incorporated herein by
reference).
---- ----- --------------------------------------------------------------------
10.10 Stock Purchase Agreement between us and Liquid Stone Partners dated
April 4, 2006 (previously filed as an exhibit to our Form 10KSB/A,
file no. 00128911, on June 8, 2006, and incorporated herein by
reference).
---- ----- --------------------------------------------------------------------
10.11 Amended Assignment of leasehold rights between us and Summitt
Holdings, Inc. dated April 4, 2006 (previously filed as an exhibit
to our Form 10KSB/A, file no. 00128911, on June 8, 2006, and
incorporated herein by reference).
---- ----- --------------------------------------------------------------------
10.12 Consulting Agreement between us and Credit First Holdings, Inc.
dated April 5, 2006(previously filed as an exhibit to our Form
10KSB/A, file no. 00128911, on June 8, 2006, and incorporated herein
by reference).

-23-

---- ----- --------------------------------------------------------------------
10.13 Promissory note executed by us to repay Camden Holdings, Inc. dated
April 25, 2006 (previously filed as an exhibit to our Form 10KSB/A,
file no. 00128911, on June 8, 2006, and incorporated herein by
reference).
---- ----- --------------------------------------------------------------------
10.14 Promissory note executed by us to repay Camden Holdings, Inc. dated
June 8, 2006 (previously filed and incorporated herein by reference)
---- ----- --------------------------------------------------------------------
10.16 Consolidated note and security agreement with Camden Holdings, Inc.
dated January 5, 2007 (previously filed as an exhibit to our form
8K, file no. 0128911 and incorporated herein by reference)
---- ----- --------------------------------------------------------------------
10.17 Consulting agreement with Camden Holdings,Inc. dated January 5, 2007
(previously filed as an exhibit to our form 8K, file no. 0128911 and
incorporated herein by reference)
---- ----- --------------------------------------------------------------------
10.18 Consolidated note and security agreement with Summitt Oil & Gas,
Inc., Inc. dated January 5, 2007 (previously filed as an exhibit to
our form 8K, file no. 0128911 and incorporated herein by reference)
---- ----- --------------------------------------------------------------------
10.18 Consulting agreement with Summitt Oil & Gas, Inc., Inc. dated
January 5, 2007 (previously filed as an exhibit to our form 8K, file
no. 0128911 and incorporated herein by reference)
---- ----- --------------------------------------------------------------------
31 31.1 Certification by Sam Plunkett, Chief Executive Officer, as required
under Section 302 of SarbannesOxley Act of 2002, attached hereto.
---- ----- --------------------------------------------------------------------
31.2 Certification by Sam Plunkett, Chief Financial Officer, as required
under Section 302 of the SarbannesOxley Act of 2002, attached
hereto.
---- ----- --------------------------------------------------------------------
32 32.1 Certification as required under Section 906 of SarbannesOxley Act of
2002, attached hereto.

(b) Reports on Form 8-K:

Item 14. Principal Accountant Fees and Services.

Audit Fees: The aggregate fees billed for the last fiscal year for services
rendered by our principal accountant for the audit of our financial statements
and review of financial statements included in our form 10QSB's for the fiscal
years ended December 31, 2006 and 2005 were $29,500 and $39,560 respectively.

Audit Related Fees: $ -0-

Tax Fees: $ -0-

All Other Fees: $ -0-

-24-

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

National Healthcare Technology, Inc.

By: /s/ Linda Contreeras
-------------------------------
Linda Contreras,
Chief Executive Officer

Dated: August 17, 2007

In accordance with the Exchange Act, this report has been duly signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.

/s/ Linda Contreras

Linda Contreras,
CEO, CFO, Director

-25-

NATIONAL HEALTHCARE TECHNOLOGY, INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006

F-1

NATIONAL HEALTHCARE TECHNOLOGY, INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2006

CONTENTS

Report of Independent Registered Public Accounting Firm F-3

Consolidated Balance Sheet (restated) F-4

Consolidated Statement of Operations (restated) F-5

Consolidated Statement of Changes in Shareholders' Deficit (restated) F-6

Consolidated Statement of Cash Flows (restated) F-7

Notes to Consolidated Financial Statements (restated) F-8 - F-19

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
National Healthcare Technology, Inc.

We have audited the accompanying balance sheets of National Healthcare
Technology, Inc. as of December 31, 2006, and the related statements of
operations, stockholders' deficit, and cash flows for the year ended December
31, 2006. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards required that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December 31,
2006, and the results of its operations and its cash flows for the year ended
December 31, 2006, in conformity with accounting principles generally accepted
in the United States of America .

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company had incurred cumulative losses of $38,064,384
and net losses of $36,906,584 for the year ended December 31, 2006. These
factors raise substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are also described in Note
2. The accompanying consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

As stated in Note 10, the Financial Statements for the year ended December 31,
2006 have been restated.

/s/ Kabani & Company, Inc.
--------------------------

Los Angeles, California

February 15, 2007 except for Note 10 which is as of August 11, 2007

F-3

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2006
(RESTATED)
ASSETS
Assets 0

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current assets:

Cash $ 61
------------

Total Assets $ 61
============

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:

Accounts payable $ 328,730
Accrued expenses 1,319,525
Shares to be issued 5,000,000
Notes payable to affiliate 613,400
------------
Total Current Liabilities 7,261,655

Stockholders' Deficit
Common Stock, $.001 par value, 100,000,000 shares authorized,
41,517,759 issued and outstanding as of December 31, 2006 41,518
Additional paid in capital 38,395,022
Prepaid consulting (7,633,750)
Accumulated deficit (38,064,384)
------------
Total stockholders' deficit (7,261,594)
------------

Total liabilities and stockholders' deficit $ 61
============

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

F-4

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND FROM JANUARY 27, 2005
(INCEPTION) TO DECEMBER 31, 2006 AND THE CUMMULATIVE PERIOD
FROM JANUARY 27, 2005 (INCEPTION) TO DECEMBER 31, 2006,

Period from
Period from January January 27, 2005
Year Ended 27, 2005 (inception) to
December 31, 2006 (inception) to December 31, 2006
(RESTATED) December 31, 2005 (RESTATED)

NET REVENUE $ -- $ -- $ --
------------ ------------ ------------

OPERATING EXPENSES

Professional fees 21,810,896 465,304 22,276,200

Technology license royalties -- 160,417 160,417

Depreciation, amortization and impairment 56,000 3,811 59,811

Other general and administrative 15,254,688 178,068 15,432,756
------------ ------------ ------------
Total operating expenses
37,121,584 807,600 37,929,184
------------ ------------ ------------

NET OPERATING LOSS (37,121,584) (807,600) (37,929,184)

Gain on settlement of debt 215,000 -- 215,000
------------ ------------ ------------

NET LOSS $(36,906,584) $ (807,600) $(37,714,181)
============ ============ ============

LOSS PER SHARE - BASIC & DILUTED $ (1.13) $ (0.06) $ (1.63)
============ ============ ============

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC & DILUTED 32,695,891 14,579,683 23,124,816
============ ============ ============

Weighted average number of dilutive securities has not been taken since the
effect of dilutive securities would be anti-dilutive.

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

F-5

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE CUMULATIVE PERIOD FROM JANUARY 27, 2005 (INCEPTION) TO DECEMBER 31, 2006
(RESTATED)

Shares Common stock Additional Prepaid Deficit Total
amount paid in consulting accumulated stockholder's
capital during the equity/(deficit)
development
stage

Balance, January 27, 2005 (inception) $ -- $ -- $ -- $ -- $ -- $ --

Founder's stock issued 8,380,000 8,380 (8,380) -- -- --
Stock issued for debt 800,000 800 399,200 -- -- 400,000
Shares issued for license agreement 8,618,750 8,619 (8,619) -- -- --
Effect of reverse merger 1,384,009 1,384 (201,384) -- -- (200,000)
Divestiture of subsidiary to related party -- -- 544,340 -- -- 544,340
Net loss for the year -- -- -- -- (807,600) (807,600)

Balance, December 31, 2005 19,182,759 19,183 725,157 -- (807,600) (63,260)

Shares issued for employment 4,550,000 4,550 8,482,950 -- -- 8,487,500
Shares issued for services 17,108,000 17,108 28,781,392 (7,633,750) -- 21,164,750
Shares issued for lease agreement 677,000 677 405,523 -- (350,200) 56,000
Net loss for the year -- -- -- -- (36,846,584) (36,906,584)

Balance, December 31, 2006 41,517,759 $ 41,518 $ 38,395,022 $ (7,633,750) $(38,004,384) $ (7,261,594)

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

F-6

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2006 AND
THE PERIODS FROM JANUARY 27, 2005 (INCEPTION) TO
DECEMBER 31, 2005 AND THE CUMMULATIVE PERIOD
FROM JANUARY 27, 2005 (INCEPTION) TO DECEMBER 31, 2006

Year Ended Period from Period from
December 31, January 27, January 27,
2006 2005 2005
(inception) (inception)
through through
December 31, December 31,
2005 2006
CASH FLOWS FROM OPERATING ACTIVITIES (RESTATED) (RESTATED)

Net loss (36,906,584) (807,600) (37,714,184)

Adjustments to reconcile net loss to cash used by operating activities:
Depreciation
-- 3,811 3,811
Amortization on investment in custer leasehold 9,333 -- 9,333
Impairment on investment in custer leasehold 46,667 -- 46,667
Stock issued for services 29,652,250 -- 29,652,250
Shares to be issued 5,000,000 -- 5,000,000
Changes in certain assets and liabilities, net of divestiture
Increase in Inventory -- (29,102) (29,102)
Increase in Other assets -- (2,087) (2,087)
Increase in Accrued expenses 1,319,525 -- 1,319,525
Increase in Accounts payable and accrued expenses 265,470 144,990 410,460
CASH FLOWS USED IN OPERATING ACTIVITIES: (613,339) (689,988) (1,303,327)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -- (38,952) (38,952)
CASH FLOWS USED IN INVESTING ACTIVITIES $ -- $ (38,952) $ (38,952)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from convertible note - related party -- 400,000 400,000
Related party advances 613,400 328,940 942,340
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES $ 613,400 $ 728,940 $ 1,342,340

NET INCREASE IN CASH &CASH EQUIVALENTS $ 61 $ -- $ 61
CASH &CASH EQUIVALENTS, BEGINNING OF PERIOD $ -- $ -- $ --
CASH &CASH EQUIVALENTS, END OF PERIOD $ 61 $ -- $ 61

SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ -- $ -- $ --
Income taxes paid $ -- $ -- $ --
Net liabilities assumed with recapitalization $ -- $ -- $ 200,000
Divestiture of subsidiary to related party $ -- $ -- $ 544,340
Common stock issued for debt $ -- $ -- $ 400,000
Common stock issued for acquiring Custer Leasehold (677,000
shares issued) $ 406,200 $ -- $ 406,200

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

F-7

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

1. Summary of Significant Accounting Policies

A. Organization and General Description of Business

National Healthcare Technology, Inc. ("We" or "the Company") was incorporated
under the laws of the State of Colorado, on July 6, 2005. On July 19, 2005, the
Company, completed the acquisition of Special Stone Surfaces, Es3, Inc., a
Nevada Corporation ("Es3") pursuant to the terms of an Exchange Agreement (the
"Exchange Agreement") by and among the Company, Crown Partners, Inc., a Nevada
corporation and at such time, the largest stockholder of the Company ("Crown
Partners"), Es3, and certain stockholders of Es3 (the "Es3 Stockholders"). Under
the terms of the Exchange Agreement, the Company acquired all of the outstanding
capital stock of Es3 in exchange for the issuance of 19,182,759 shares of the
Company's common stock to the Es3 Stockholders, Crown Partners and certain
consultants The transactions effected by the Exchange Agreement have been
accounted for as a reverse merger. This reverse merger transaction has been
accounted for as a recapitalization of Es3, as Es3 is the accounting acquirer,
effective July 19, 2005. As a result, the historical equity of the Company has
been restated on a basis consistent with the recapitalization. In addition, the
Company changed its accounting year-end from September 30 to December 31, which
is Es3's accounting year-end.

Accordingly the financial statements contained in report include the operations
of the Company in its new line of business. As a result of the transactions
contemplated by the Exchange Agreement, the Company had one active operating
subsidiary--Es3. Es3 was formed in January 2005 and began operations in March
2005 in the business of manufacturing and distributing a range of decorative
stone veneers and finishes based on proprietary Liquid Stone Coatings(TM) and
Authentic Stone Veneers(TM). Effective October 1, 2005, the Company sold all of
its shares in Es3.

On April 3, 2006 the Board of Directors approved a change of direction for the
Company, from the business of Manufacturing and distributing decorative stone
veneers and finishes, to the business of oil and gas exploration and production,
mineral lease purchasing and all activities associated with acquiring, operating
and maintaining the assets of such operations.

B. Basis of Presentation and Organization

The consolidated financial statements of the Company for the periods January 1,
2006 to December 31, 2006 and from January 27, 2005 (Inception) through December
31, 2006 have been prepared in accordance with generally accepted accounting
principles. The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, Es3, through October 1, 2005 (the
effective date of disposition). All inter-company transactions have been
eliminated.

C. Use of 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 disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Estimates and assumptions are
reviewed periodically and the effects of revisions are reflected in the
financial statements in the period they are determined.

F-8

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

D. Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits,
certificates of deposit and all highly liquid debt instruments with original
maturities of three months or less.

E. Long-Lived Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operations for a Disposal of a Segment of a
Business." The Company periodically evaluates the carrying value of long-lived
assets to be held and used in accordance with SFAS 144. SFAS 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amounts. In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal. Based on its
review, the Company believes that, as of December 31, 2006, the investment in
Custer oil & well lease of $56,000 was impaired and recorded an impairment loss
of $46,667.

F. Fair Value of Financial Instruments

Statement of financial accounting standard No. 107, Disclosures about fair value
of financial instruments, requires that the Company disclose estimated fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.

G. Technology License and Royalties

The Company's former principal business activity focused on the
commercialization of distributing decorative coatings that can be used to
resemble stone, which the Company licensed from related parties. Minimum annual
royalties for these arrangements were accrued in 2005 on the Company's balance
sheet till disposal of the subsidiary.

The Company's current principal activity focuses on oil and gas exploration.
During 2006 the Company acquired the rights to drill and otherwise exploit
certain underlying reserves and agreed to pay a 3% royalty on the value of the
oil removed or produced and on the net proceeds from all gas sold. To date there
are no applicable accruals on the Company's balance sheet as there has been no
production or proceeds related to the acquired rights.

H. Stock-Based Compensation

The Company adopted SFAS No. 123 (Revised 2004), Share Based Payment ("SFAS No.
123R"), under the modified-prospective transition method on January 1, 2006.
SFAS No. 123R requires companies to measure and recognize the cost of employee
services received in exchange for an award of equity instruments based on the
grant-date fair- value. Share-based compensation recognized under the
modified-prospective transition method of SFAS No. 123R includes share-based
compensation based on the grant-date fair value determined in accordance with
the original provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, for all share-based payments granted prior to and not yet vested
as of January 1, 2006 and share-based compensation based on the grant-date
fair-value determined in accordance with SFAS No. 123R for all share-based
payments granted after January 1, 2006. SFAS No. 123R eliminates the ability to
account for the award of these instruments under the intrinsic value method
prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, and allowed under the original provisions of SFAS No.
123. Prior to the adoption of SFAS No. 123R, the Company accounted for stock
option plans using the intrinsic value method in accordance with the provisions
of APB Opinion No. 25 and related interpretations.

F-9

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

I. 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 carry forwards. 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 carry forwards. A valuation allowance is established to reduce that
deferred tax asset if it is "more likely than not" that the related tax benefits
will not be realized.

J. Basic and Diluted Net Earnings (loss) per Share

The Company adopted the provisions of SFAS No. 128, "Earnings Per Share"
("EPS"). SFAS No. 128 provides for the calculation of basic and diluted earnings
per share. Basic EPS includes no dilution and is computed by dividing income or
loss available to common shareholders by the weighted average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution
of securities that could share in the earnings or losses of the entity. For the
periods January 1, 2006 to December 31, 2006 and from inception through December
31, 2006 , basic and diluted loss per share are the same since the calculation
of diluted per share amounts would result in an anti-dilutive calculation.

K. Recent Accounting Pronouncements

In February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments". SFAS No. 155 amends SFAS No 133, "Accounting for
Derivative Instruments and Hedging Activities", and SFAF No. 140, "Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". SFAS No. 155, permits fair value re- measurement for any hybrid
financial instrument that contains an embedded derivative that otherwise would
require bifurcation, clarifies which interest-only strips and principal-only
strips are not subject to the requirements of SFAS No. 133, establishes a
requirement to evaluate interest in securitized financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation, clarifies
that concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends SFAS No. 140 to eliminate the prohibition on the
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This statement is effective for all financial instruments acquired
or issued after the beginning of the Company' s first fiscal year that begins
after September 15, 2006.

In March 2006 FASB issued SFAS 156 `Accounting for Servicing of Financial
Assets' this Statement amends FASB Statement No. 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, with
respect to the accounting for separately recognized servicing assets and
servicing liabilities. This Statement:

1. Requires an entity to recognize a servicing asset or servicing liability
each time it undertakes an obligation to service a financial asset by
entering into a servicing contract.

2. Requires all separately recognized servicing assets and servicing
liabilities to be initially measured at fair value, if practicable.

3. Permits an entity to choose `Amortization method' or Fair value
measurement method' for each class of separately recognized servicing
assets and servicing liabilities:

4. At its initial adoption, permits a one-time reclassification of
available-for-sale securities to trading securities by entities with
recognized servicing rights, without calling into question the treatment
of other available-for-sale securities under Statement 115, provided that
the available-for-sale securities are identified in some manner as
offsetting the entity' s exposure to changes in fair value of servicing
assets or servicing liabilities that a service elects to subsequently
measure at fair value.

5. Requires separate presentation of servicing assets and servicing
liabilities subsequently measured at fair value in the statement of
financial position and additional disclosures for all separately
recognized servicing assets and servicing liabilities.

F-10

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

This Statement is effective as of the beginning of the Company' s first fiscal
year that begins after September 15, 2006. Management believes that this
statement will not have a significant impact on the consolidated financial
statements.

In September 2006, FASB issued SFAS 157 `Fair Value Measurements'. This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practice. This Statement is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The management is currently
evaluating the effect of this pronouncement on financial statements.

In September 2006, FASB issued SFAS 158 `Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans--an amendment of FASB Statements
No. 87, 88, 106, and 132(R)' This Statement improves financial reporting by
requiring an employer to recognize the over-funded or under-funded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This Statement also improves financial
reporting by requiring an employer to measure the funded status of a plan as of
the date of its year-end statement of financial position, with limited
exceptions. An employer with publicly traded equity securities is required to
initially recognize the funded status of a defined benefit postretirement plan
and to provide the required disclosures as of the end of the fiscal year ending
after December 15, 2006. An employer without publicly traded equity securities
is required to recognize the funded status of a defined benefit postretirement
plan and to provide the required disclosures as of the end of the fiscal year
ending after June 15, 2007. However, an employer without publicly traded equity
securities is required to disclose the following information in the notes to
financial statements for a fiscal year ending after December 15, 2006, but
before June 16, 2007, unless it has applied the recognition provisions of this
Statement in preparing those financial statements. The requirement to measure
plan assets and benefit obligations as of the date of the employer' s fiscal
year-end statement of financial position is effective for fiscal years ending
after December 15, 2008. The management is currently evaluating the effect of
this pronouncement on financial statements.

In February 2007, FASB issued FASB Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. FAS 159 is effective for fiscal
years beginning after November 15, 2007. Early adoption is permitted subject to
specific requirements outlined in the new Statement. Therefore, calendar-year
companies may be able to adopt FAS 159 for their first quarter 2007 financial
statements.

The new Statement allows entities to choose, at specified election dates, to
measure eligible financial assets and liabilities at fair value that are not
otherwise required to be measured at fair value. If a company elects the fair
value option for an eligible item, changes in that item's fair value in
subsequent reporting periods must be recognized in current earnings. FAS 159
also establishes presentation and disclosure requirements designed to draw
comparison between entities that elect different measurement attributes for
similar assets and liabilities.

F-11

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

L. Reclassifications

Certain 2005 amounts have been reclassified to conform to the 2006 presentation.

2. Going Concern

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate the continuation of
the Company as a going concern. The Company reported a cumulative net loss of
$38,064,384 and had a stockholder's deficit of $7,261,594 at December 31, 2006.

In view of the matters described, there is substantial doubt as to the
Company's ability to continue as a going concern without a significant infusion
of capital. The Company acquired all of the outstanding capital stock of Es3 in
July 2005 and subsequently divested its ownership effective October 1, 2005. At
December 31, 2006, the Company had no operations. In view of the matters
described, there is substantial doubt as to the Company's ability to continue as
a going concern without a significant infusion of capital. There can be no
assurance that management will be successful in implementing its plans. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

We anticipate that we will have to raise additional capital to fund operations
over the next 12 months. To the extent that we are required to raise additional
funds to acquire properties, and to cover costs of operations, we intend to do
so through additional public or private offerings of debt or equity securities.
There are no commitments or arrangements for other offerings in place, no
guaranties that any such financings would be forthcoming, or as to the terms of
any such financings. Any future financing may involve substantial dilution to
existing investors We have also been relying on our common stock to pay third
parties for services which has resulted substantial dilution to existing
investors.

3. Income Taxes
Deferred income taxes are reported using the liability method. Deferred tax
assets are recognized for deductible temporary differences and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment. Current year and accumulated deferred tax
benefit at the effective Federal income tax rate of 34% is $12,548,239,and
$274,584 respectively and a valuation allowance has been set up for the full
amount because of the unlikelihood that the accumulated deferred tax benefit
will be realized in the future.

At December 31, 2006, the Company had available federal and state net operating
loss carryforwards amounting to approximately $38,064,384 that are available to
offset future federal and state taxable income and that expire in various
periods through 2026 for federal tax purposes and 2013 for state tax purposes.
No benefit has been recorded for the loss carryforwards, and utilization in
future years may be limited under Sections 382 and 383 of the Internal Revenue
Code if significant ownership changes have occurred or from future tax
legislation changes

INCOME TAX

Net deferred tax asset $ 12,548,239
Less valuation allowance (12,548,239)
-------------------
Net deferred tax asset $ -
===================

F-12

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

The following is a reconciliation of the provision for income taxes at the U.S.
federal income tax rate to the income taxes reflected in the Consolidated
Statements of Operations:

December 31 December 31
2006 2005
------------------
Tax expense (credit) at statutory rate-federal (34)% (34)%
State tax expense net of federal tax (6) (6)
Valuation allowance 40 40
------------------
Tax expense at actual rate - -
==================

4. Disposition of Es3

Effective October 1, 2005, the Company conveyed at no cost all of the capital
stock of Es3 to Liquid Stone Partners under an agreement by which Liquid Stone
Partners agreed to assume all of the known and unknown liabilities of Es3. One
of the directors of the Company is an owner of Liquid Stone partners. The
transaction was accounted for as a conveyance to a related party and therefore
the Company recorded the excess of Es3's liabilities over its assets at the date
of the disposition in the amount of $544,340 to additional paid in capital.
There are no assets or liabilities related to Es3 on the balance sheet of the
Company as of December 31, 2006 or 2005.

5. Accrued Expenses

As of December 31, 2006, the accrued expenses comprise of the following:

Accrued payroll taxes $ 1,277,025
Accrued dispute settlement 13,000
Accrued audit fee 29,500
--------------
$ 1,319,525

6. Equity Transactions

The Company is authorized to issue 100,000,000 shares of common shares with a
par value of $.001 per share. These shares have full voting rights. There were
41,517,759 issued and outstanding as of December 31, 2006.

A. Issuance of Common Stock

In February 2005, the Company issued 8,380,000 shares of unregistered common
stock at par value of $0.001 to founding stockholders without consideration,
including 6,250,000 shares to Boston Equities Corporation (a related party).

F-13

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

In June 2005, the Company issued 800,000 shares of unregistered common stock at
par value of $0.001 in exchange for the debt arising out of monies advanced to
the Company in the amount of $400,000 by Boston Equities Corporation pursuant to
a convertible debt agreement dated March 1, 2005. The terms of the convertible
debt agreement allowed Boston Equities Corporation to convert its debt to shares
of common stock at $.50 per share.

In June 2005, the Company's issued an aggregate of 8,618,750 shares of
unregistered common at par value of $0.001 stock to the shareholders of Aronite
Industries, Inc. ("Aronite") in connection with the license of certain
trademarks from Aronite. Certain officers, directors and shareholders of the
Company are former or current officers, directors and shareholders of Aronite.
Aronite and the Company are under common control and, therefore, the transaction
was recorded at Aronite's basis, which was zero.

In July 2005, in accordance with the terms of the Exchange Agreement, the
Company issued 400,000 shares of registered common stock to two consultants,
d.b.a. WB International, Inc. in accordance with the terms of the Exchange
Agreement.

In July 2005, the Company issued for no consideration 78,571 shares of its
unregistered common stock at par value of $0.001 to the former shareholders of
National Healthcare Technologies, Inc. and an additional 905,438 shares of its
unregistered common stock at par value of $0.001 to Crown Partners, a former
major shareholder of National Healthcare Technologies, Inc. in accordance with
the terms of the Exchange Agreement.

In April 2006, the Company issued 1,800,000 shares of its unregistered common
stock to its Chief Executive Officer and Director, Ross-Lyndon James, in
accordance with the terms of the Management Employment Agreement. The shares,
which vested upon issuance, were recorded at the fair market value of $3,690,000
on the date of issuance.

In April 2006, the Company issued 1,800,000 shares of its unregistered common
stock to its Chief Financial Officer and Director, Brian Harcourt, in accordance
with the terms of the Management Employment Agreement. The shares, which vested
upon issuance, were recorded at the fair market value of $3,690,000 on the date
of issuance.

In April 2006, in accordance with the terms of a Consulting Agreement, the
Company issued 3,500,000 shares of the Company's common stock to Credit First
Holding Limited, a related party, for consulting services. The Company recorded
the shares at the fair market value of $7,175,000. The expense is being
amortized over the period of the consulting agreement as the services are being
performed. During the year ended December 31, 2006 the Company amortized
$1,793,750 as consulting expense.

In April 2006, in accordance with the terms of a Consulting Agreement, the
Company issued 700,000 shares of the Company's common stock to Monterosa Group
Limited for consulting services. The Company recorded the shares at the fair
market value of $1,435,000. The expense is being amortized over the period of
the consulting agreement as the services are being performed. During the year
ended December 31, 2006 the Company amortized $358,750 as consulting expense In
April 2006, in accordance with the terms of a Consulting Agreement, the Company
issued 2,800,000 shares of the Company's common stock to Design, Inc., a related
party, for consulting services. The Company recorded the expense at the fair
market value of shares of $6,440,000.

In April 2006, in accordance with the terms of a Consulting Agreement, the
Company issued 2,500,000 shares of the Company's common stock to Camden
Holdings, Inc., a related party, for consulting services. The Company recorded
the expense at the fair market value of shares of $5,750,000.

In April 2006, in accordance with the terms of a Consulting Agreement, the
Company issued 1,800,000 shares of the Company's common stock to Summit Oil &
Gas, a related party, for consulting services The Company recorded the expense
at the fair market value of shares of $3,690,000

In April 2006, in accordance with the terms of a Consulting Agreement, the
Company issued 700,000 shares of the Company's common stock to Bluefin, LLC for
consulting services. The Company recorded the shares at the fair market value of
$1,435,000. The expense is being amortized over the period of the consulting
agreement as the services are being performed. During the year ended December
31, 2006 the Company amortized $358,750 as consulting expense

On June 16, 2006, we issued 375,000 shares each to John McDermit and John E.
Havens, who served on our advisory board. The shares, which vested upon
issuance, were recorded at the fair market value on the date of issuance, for a
total of $1,027,500.

In August, 2006, in accordance with an agreement between the parties, the
Company issued 677,000 shares of the Company's common stock to Summitt Oil & Gas
to acquire certain lease rights. The shares were valued at $406,200. The Company
recorded the asset at the historical cost of $56,000 to the related party and
recorded $350,200 as a deemed dividend to the related party.

F-14

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

In September, 2006, pursuant to the terms of a Consulting Agreement, the Company
issued 2,700,000 shares of its common stock to Summitt Ventures, under the
Company's 2006-1 Consultant and Employee Services Plan. The Company recorded the
expense at the fair market value of shares of $1,680,000.

In August, 2006, in accordance with the terms of a Consulting Agreement, the
Company issued 209,000 shares of its common stock to Catalyst Consulting, Inc.
In September, 2006, pursuant to the terms of a Consulting Agreement, the Company
issued an additional 209,000 shares of its common stock to Catalyst Consulting,
Inc., under the Company's 2006-1 Consultant and Employee Services Plan. These
shares issuances represent prepaid consulting services for the period of July 1,
2006 through December 31, 2006. The Company recorded the expense at the fair
market value of shares of $209,000.

On August 17, 2006, in accordance with the terms of a Consulting Agreement, the
Company issued 500,000 shares of its common stock to Ramp International, Inc. In
September, 2006, pursuant to the terms of a Consulting Agreement, the Company
issued 500,000 shares of its common stock to Ramp International, Inc., under the
Company's 2006-1 Consultant and Employee Services Plan. This share issuance
represents prepaid consulting expense for the period from September 2, 2006
through February 2, 2007 with this expense to be amortized over 18 months. The
agreement was based on fair market value totaling $500,000 of which $400,000 was
amortized during the year ended December 31, 2006. The Company also owed Ramp a
cash payment of $215,000 which was waived off by Ramp as of December 31, 2006,
so this amount has been recorded as a gain on settlement of debt.

On August 17, 2006, in accordance with the terms of a Consulting Agreement, the
Company issued 100,000 shares of its common stock to Jon Konheim. The Company
recorded the expense at the fair market value of shares of $60,000.

In August 2006 in accordance with the terms of a Consulting Agreement, the
Company issued 100,000 shares of its common stock to Linda Contreras. The
Company recorded the expense at the fair market value of shares of $120,000

The Company issued 200,000 shares of its common stock to its former president,
Samuel Petrossian, in September, 2006 as compensation for services, pursuant to
an employment agreement. Mr. Petrossian resigned in November, 2006. The Company
recorded the expense at the fair market value of shares of $80,000.

In September, 2006, the Company adopted the 2006-1 Consultant and Employee
Services Plan wherein the Company registered 3,800,000 shares of its common
stock for issuance to consultants and employees of the Company.

In September, 2006, pursuant to the terms of a Consulting Agreement, the Company
issued 190,000 shares of its common stock to Frank Layton under the Company's
2006-1 Consultant and Employee Services Plan. The Company recorded the expense
at the fair market value of shares of $76,000.

In September, 2006, pursuant to the terms of a Consulting Agreement, the Company
issued 150,000 shares, of its common stock to Linda Contreras under the
Company's 2006-1 Consultant and Employee Services Plan.The Company recorded the
expense at the fair market value of shares of $60,000.

In September, 2006, pursuant to the terms of a Consulting Agreement, the Company
issued 400,000 shares of its common stock to Raymond Robinson under the
Company's 2006-1 Consultant and Employee Services Plan. The Company recorded the
expense at the fair market value of shares of $160,000.

In October, 2006, pursuant to the terms of a Consulting Agreement, the Company
issued 50,000 shares of its common stock to Claudia J. Zaman, attorney., under
the Company's 2006-1 Consultant and Employee Services Plan. The Company recorded
the expense at the fair market value of shares of $8,500.

B. Warrants

In February 2005, the Company issued a warrant to acquire up to 600,000 shares
of unregistered common stock at an exercise price of $0.60 per share to W.B.
International, Inc., in exchange for consulting services. All shares vested upon
grant. The warrant expires 5 years from the date of issuance.

In June 2005, the Company issued a warrant to acquire up to 600,000 shares of
unregistered common stock at an exercise price of $0.70 per share to each of
Liquid Stone Manufacturing, Inc. and Stone Mountain Finishes, Inc. in
consideration of certain license agreements. All shares vested upon grant. The
warrants expire 5 years from the date of issuance.

In June 2005, the Company issued a warrant to an employee to purchase up to
100,000 shares of the company's restricted common stock at an exercise price of
$0.70 per share The shares vested monthly over three years and have a 10 year
option period. The employee was terminated in February 2006 and the warrants
were forfeited.

F-15

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

A summary of the warrant activity for the period ended December 31, 2006 is as
follows:

Outstanding, December 31, 2006 1,800,000 $0.67 $-
Granted 600,000 2.63 -
Forfeited / Canceled 600,000 2.63 -
Exercised - - -
Outstanding, December 31, 2006 1,800,000 $0.67 $-
-------------------------------------- ----------------------- ----------------------- ----------------------

The weighted average remaining contractual life of warrants outstanding is 3.10
years at December 31, 2006.

--------------------------------------------- -------------------- ------------------------------------------
Outstanding Warrants Exercisable Warrants
----------------------- --------------------- -------------------- --------------------- --------------------
Range of Exercise Number Average Remaining Average Exercise Number
Price Contractual Life Price

$0.67 1,800,000 310 $0.67 1,800,000
----------------------- --------------------- -------------------- --------------------- --------------------

The Company estimated the fair value of each stock warrant at the grant date by
using the Black-Scholes option-pricing mode.

The weighted-average assumptions used in estimating the fair value of warrants
granted during the year ended December 31, 2006, and the period ended December
31, 2006 along with the weighted-average grant date fair values, were as
follows.

C. Employee Options

On April 3, 2006, the Board of Directors of the Company authorized and approved
the adoption of the 2006 Stock Option Plan effective April 3, 2006 (the "Plan").
The Plan is administered by the duly appointed compensation committee. The Plan
is authorized to grant stock options of up to 2,500,000 shares of the Company's
common stock. At the time a stock option is granted under the Plan, the
compensation committee shall fix and determine the exercise price and vesting
schedules at which such shares of c ommon stock of the Company may be acquired.
As of December 31 , 2006, no options to purchase the Company's common stock have
been granted under the Plan.

There were no options outstanding at December 31, 2006.

In September, 2006, the Board of Directors of the Company authorized and
approved the adoption of the 2006-1 Consultants and Employees Service Plan
effective September 7, 2006 (the "Consultants Plan"). The Plan is administered
by the duly appointed compensation committee. The Plan is authorized to grant
stock options and make stock awards of up to 3,800,000 shares of the Company's
common stock. At the time a stock option is granted under the Plan, the
compensation committee shall fix and determine the exercise price and vesting
schedules at which such shares of common stock of the Company may be acquired.
The Consultants Plan was registered on September 15, 2006 and as of December 31,
2006 a total of 3,799,000 shares had been issued and granted under the
Consultants Plan.

F-16

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

7. Related Party Transactions

During the year the following transactions occurred between the Company and
certain related parties:

A. Ross-Lyndon James

B. Brian Harcourt

The following transaction took place between the Company and Brian Harcourt, the
Company's Chief Financial Officer and Director and parties related to Brian
Harcourt:

C. Boston Equities Corporation

F-17

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

8. Commitments and Contingencies

A. Legal

On December 19, 2006, Empire Relations Group Inc. ("Empire") filed an
arbitration claim against the Company in connection with a consulting agreement
entered into by and between the Company and Empire on September 28, 2006. An
arbitration award in the amount of $13,000 was issued against the Company on
March 9, 2007, which also provided for interest at the rate of nine percent per
annum, commencing 30 days after the date of the award and continuing until paid
in full. The amount has been accrued in the accompanying financials..

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 other 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.

B. Operating Leases

On March 1, 2005, the Company' entered into a lease commitment for office and
warehouse space in San Diego, California which expires February 1, 2009. This
lease was disposed of with the sale of Es3 in 2005 and therefore there are no
future lease obligations. Rent expense for the periods ended December 31, 2006
and 2005 were $0 and $26,078 respectively.

9. Subsequent Events (Unaudited)

A. Officer and Directors

On March 14, 2007 the Company appointed Sam Plunkett as the sole Officer and
Director. On April 12, 2007, he resigned as Officer and Director. He served in
the position without compensation.

On April 12, 2007 the Company appointed Linda Contreras as the sole officer and
Director. She is serving in the position without compensation.

B. Summitt Oil

On January 11, 2007, the Company entered into a Consolidated Note and Security
Agreement with Summitt Oil & Gas, Inc. ("Summitt"), also an affiliate of the
Company, wherein the Company memorialized its obligation to pay Summitt $350,000
by December 31, 2007 for monies owed to Summitt. The Company also gave Summitt
the right to convert all or part of this debt into shares of the Company's
common stock at $.01 per share, which right Summitt has exercised. As a result
of this conversion, S ummitt is being issued 35,000,000 shares of the Company's
common stock, in restricted form, and the Company has extinguished the debt of
$350,000 owed to Summitt. Additionally, the Company entered into a consulting
agreement with Summitt wherein the Company agreed to pay Summitt $450,000 and
issue Summitt five million shares of the Company's common stock, in restricted
form, in consideration for Summitt's services through December 31, 2007.

In March, 2007, the Company issued 40,000,000 restricted shares of its common
stock to Summitt Oil and Gas, an affiliate of the Company in exchange for
$350,000 of debt and the consulting services agreement entered into between the
Company & Summitt Oil & Gas.

F-18

NATIONAL HEALTHCARE TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006

C. Camden Holdings

On January 11, 2007, the Company entered into certain agreements with an
affiliate of the Company, Camden Holdings, Inc. ("Camden"). The first agreement
was a Consolidated Note and Security Agreement wherein the Company and Camden
memorialized the terms of their agreement regarding monies advanced by Camden to
the Company. Pursuant to this Agreement, the Company agreed to repay Camden the
sum of $650,000 plus interest at ten percent (10%) per annum by December 31,
2007. Additionally, Camden has the right to convert all or part of this debt
into shares of the Company's common stock at $.01 per share. The Company also
entered into a consulting agreement with Camden wherein the Company agreed to
pay Camden the sum of $450,000 for its services to the Company until December
31, 2007.

10. Restatement

Subsequent to the issuance of the Company's financial statements for
the year ended December 31, 2006, the Company determined that certain
transactions and presentation in the financial statements had not been
accounted for properly in the Company's financial statements.
Specifically, the issuance of shares pursuant to a consulting agreement
was recorded twice and expensed due to wrong certification by the stock
transfer agent. The company has restated its financial statements as of
December 31, 2006 for that correction.

The Company has restated its financial statements for these adjustments as of
December 31, 2006.

The effect of the correction of the error is as follows:

AS
PREVIOUSLY AS
REPORTED RESTATED
-------------- --------------

BALANCE SHEET
As of December 31, 2006
---------------------------------
Stockholder's Equity:
Additional paid-in capital $ 39,472,222 $ 38,395,022
Accumulated deficit $(39,144,384) $(38,064,384)

STATEMENT OF OPERATIONS:

For the period from inception to
December 31, 2006
---------------------------------
Professional fee $ 23,356,200 $ 22,276,200
Total operating expenses $ 39,009,184 $ 37,929,184

Net operating loss $ 39,009,184 $ 37,929,184
Net loss $ 38,794,184 $ 37,714,184

STATEMENT OF CASH FLOWS:
For the period from inception to
December 31, 2006
---------------------------------
NET LOSS $ 38,794,184 $ 37,714,184
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile net loss to
cash used by operating activities:
Stock issued for services $ 30,732,250 $ 29,652,250

F-19