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

FORM 10-KSB



|[ x ] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934    
|----- | ----------------------------------------------------------------------------------------
|      |                                                                                         
|      |                                                                                         
|[   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|      |                                                                                         

Commission file number 000-32089

NORTH AMERICAN NATURAL GAS, INC.(Name of small business issuer in its charter)



|Washington                                                     |  | 91-2023071                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or
organization) |  | (I.R.S. Employer Identification No.)
|                                                               |  |                                     



|580 Hornby Street, Suite 210             |  |           
|---------------------------------------- |  | ----------
|Vancouver, British Columbia, Canada      |  | V6C 3B6   
|(Address of principal executive offices) |  | (Zip Code)



|Issuer's telephone number (604) 687-6991
|----------------------------------------



|                                                                                |  |                                          
|------------------------------------------------------------------------------- |  | -----------------------------------------
|Securities registered pursuant to Section 12(b) of the Act:
Title of each class |  | Name of each exchange on which registered
|Nil                                                                             |  | Nil                                      
|                                                                                |  |                                          
|                                                                                |  |                                          
|Securities registered pursuant to Section 12(g) of the Act:Common Shares       
|(Title of class)                                                               
|                                                                               

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 [   ]



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Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not 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.   [   ]

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

State issuer's revenues for its most recent fiscal year:  $0.00

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days.  (See definition of affiliate in Rule 12b-2 of the Exchange Act.)

Note:  If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.

July 15, 2006 - There are approximately 7,500,000 shares of voting common stock of the Company held by non-affiliates.  The aggregate market value of the voting common stock held by non-affiliates on July 15, 2006,computed at the average bid and ask price of such common equity as of July, 2006, was $3,225,000 (7,500,000 shares at $0.43 per share), assuming solely for the purposes of this calculation that the directors and executive officers of the issuer are "affiliates".  This determination of affiliate status is not necessarily a conclusive determination for other purposes.

State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date:  July 15, 2006 - 19,812,500 shares of Common Stock

Transitional Small Business Disclosure Format  (Check one):       
YES [   ]   NO [X]



















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PART I

ITEM 1.     DESCRIPTION OF BUSINESS.

This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

As used in this annual report, the term "we", "us", "our", the "Company" means North American Natural Gas, Inc., unless otherwise indicated.

The Company

North American Natural Gas, Inc., formerly FAR Group Inc., was incorporated under the laws of the State of Washington on March 24, 2000.  To date, the Company's only activities have been organizational, directed at acquiring its principal asset, raising its initial capital and developing its business plan.  The Company has not commenced commercial operations.  The Company has no full time employees and owns no real estate.

During the fourth quarter of fiscal 2003, the Company changed its name to North American Natural Gas, Inc. as it had anticipated that it would undertake a new business purpose in the oil and gas exploration industry.  The Company entered into agreements to purchase interests in two oil and gas exploration opportunities subject to raising a minimum of US$11,000,000 in a private offering.  The Company was unsuccessful in its efforts to raise the minimum amount and all funds received were subsequently returned to the original subscribers.  All agreements were terminated.

In contemplation of the proposed new business purpose in the oil and gas exploration industry, on March 14, 2003, Jim Glavas, a director of the Company, acquired an aggregate 9,780,000 shares of common stock of the Company from 22 existing shareholders of the Company none of whom own greater than five percent of the common stock of the Company. Mr. Glavas now beneficially owns, directly and indirectly, 12,312,500  shares of common stock or 62.15% of voting securities of the Company.

As we were unsuccessful in our efforts to raise the required capital to change our business purpose, we had reverted back to our original business to determine the feasibility of marketing and selling Vitamineralherb.com products in various markets, and, if the products prove to be in demand, begin marketing and selling Vitamineralherb.com products.

Presently, the Company is seeking new business opportunities although we have not identified any new business opportunities and have no agreements related to such opportunities at this time.



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Background

On April 13, 2000, the Company acquired a License Agreement with Vitamineralherb.com from its sole director and President in consideration of the assumption of a note payable of $35,000.  The note was subsequently forgiven.  The License Agreement granted an exclusive right to distribute Vitamineralherb.com products to health and fitness professionals in Minnesota via the Internet.  The License was for an initial three-year period and was renewed in 2003 for an additional three-year term. The license was valid until April 2006 , but upon its expiration, the Company did not renew the license.

Vitmineralherb.com had agreed to provide certain business administrative services to the Company, including product development, store inventory, website creation and maintenance, establishment of banking liaisons, and development and maintenance of an order fulfillment system, thereby enabling the Company to focus strictly on marketing and sales.

The Company (and its customers) would have access to all products offered on the Vitamineralherb.com website, as well as the ability to order custom-formulated and custom-labeled products.  The website is maintained by Vitamineralherb.com, and each licensee has to pay an annual website maintenance fee of $500.  All financial transactions would be handled by Vitamineralherb.com's Internet clearing bank.

Available Information and Reports to Securities Holders

We are subject to the information and periodic reporting requirements of the Securities Exchange Act and, accordingly, will file periodic reports, proxy statements and other information with the Securities and Exchange Commission.  Such periodic reports, proxy statements and other information will be available for inspection and copying at the Commission's public reference room and the website of Commission's Public Reference Room located at 450 Fifth Street N.W., Washington D.C. 20549.  Please call the Commission at 1-800-SEC-0330 for further information about the public reference rooms.  The Company's filings with the Commission are also available to the public from the Commission's website at http://www.sec.gov.

ITEM 2.     DESCRIPTION OF PROPERTY.

We currently maintain limited office space occupied by Jim Glavas, the Company's President for which it pays nominal rent of $100 per month.   The address is Suite 210-580 Hornby Street, Vancouver, British Columbia, Canada.  We believe this space is sufficient at this time and we not need to obtain additional office space at any time in the foreseeable future until a business opportunity is identified and entered into. We do not have any material assets and, as such, we do not own any real or personal property.

ITEM 3.     LEGAL PROCEEDINGS.

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation.  There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.

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

None.



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PART II

ITEM 5.     MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

There is no "established trading market" for shares of the Company's common stock.  As of March 20, 2003, the Company's common stock was quoted over-the-counter on the Bulletin Board operated by the National Association of Securities Dealers, Inc., under the symbol "NAGA".  No assurance can be given that any "established trading market" for the Company's common stock will develop or be maintained.

The range of high and low closing trades for the Company's common stock during each quarter of the fiscal years ended April 30, 2006 and 2005 is shown below.  Prices are inter-dealer quotations, without retail mark-up, mark-down, or commissions and may not represent actual transactions.

STOCK QUOTATIONS

|Quarter ended:   | High Trade | Low Trade
|---------------- | ---------- | ---------
|July 31, 2004    | 1.07       | 1.05     
|October 31, 2004 | 1.07       | 1.05     
|January 31, 2005 | 1.07       | 1.05     
|April 30, 2005   | 1.75       | 1.47     
|July 31, 2005    | 1.88       | 1.01     
|October 31, 2005 | 1.19       | 0.67     
|January 31, 2006 | 0.60       | 0.35     
|April 30, 2006   | 0.35       | 0.35     
|                 |            |          

- The above represents the average high/low trade for the applicable quarter.

There are no plans, proposals, arrangements or understandings with any person with regards to the development of a trading market in any of our securities.

Holders

As at July 15, 2006 the shareholders' list of our common shares showed 30 registered shareholders and 19,812,500 shares outstanding.

There are no outstanding options or warrants to purchase, or securities convertible into our common shares.

Dividends

We have not declared any cash dividends with respect to our common stock since incorporation and we do not anticipate that we will do so in the foreseeable future.  Although there are no material restrictions limiting, or that are likely to limit our ability to pay dividends on our common stock, our intention is to retain future earnings for use in our operations and the expansion of our business.

Recent Sales of Unregistered Securities

There were no sales of unregistered securities during the year ended April 30, 2006.



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ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.

Cautionary Statement Regarding Forward-looking Statements

Some discussions in this report may contain forward-looking statements that involve risks and uncertainties.  A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us in this report.  Such factors include, those discussed in "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business", as well as those discussed elsewhere in this report.

Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events.

The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Financial Statements and accompanying notes and the other financial information appearing elsewhere in this Report.

Plan of Operation

North American Natural Gas, Inc. is in the development stage.  In a development stage company, management devotes most of its activities in developing a market for its products.  Planned principal activities have not yet begun.

During the period from March 24, 2000 through April 30, 2006, the Company has engaged in no significant operations other than organizational activities, acquisition of the rights to market Vitamineralherb.com, preparation for registration of its securities under the Securities Act of 1933, as amended, preparation of a supplementary business plan and completing a private placement to fund this secondary division. No revenues were received by the Company during this period.

During the fourth quarter of fiscal 2003, the Company changed its name to North American Natural Gas, Inc. as it had anticipated that it would undertake a new business purpose in the oil and gas exploration industry.  The Company entered into agreements to purchase interests in two oil and gas exploration opportunities subject to raising a minimum of US$11,000,000 in a private offering.  The Company was unsuccessful in its efforts to raise the minimum amount and all funds received were subsequently returned to the original subscribers.  All agreements were terminated.  The Company spent $85,683 during the year in connection with the failed financing efforts.

Subsequent to the end of 2003, after the Company was unsuccessful in its efforts to raise the required capital to change its business purpose, it had reverted back to the original business to determine the feasibility of marketing the Vitamineralherb.com products in various markets, and, if the products prove to be in demand, begin marketing and selling Vitamineralherb.com products.

During the fiscal year of 2003, the Company extended its license with Vitamineralherb.com for an additional three years to market vitamins, minerals, nutritional supplements and other health and fitness products in Minnesota through the Vitamineralherb.com web site.  The license was valid until April 2006, but upon its expiration, the Company did not renew the license.

In light of the numerous delays with the Vitamineralherb.com website and initial reaction to our preliminary market survey, the Company decided to no longer try to exploit the license to market and sell vitamins and other health related products and is seeking new business opportunities.  For the period just ended, much of the Company's efforts were directed at locating new business opportunities.  The Company intends to continue to explore other business opportunities although we have not identified any new business opportunities and have no agreements related to such opportunities at this time.



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Results of Operations

From Inception on March 24, 2000 to April 30, 2006

The Company remains in the development stage.  The balance sheet as of April 30, 2006 reflects cash of $5,381 against total liabilities of $17,029 for a working capital deficit of $11,648.  Subsequent to the end of the period, the Company's President advanced an additional $10,000 for general working capital.  We incurred a loss of $22,402 for the fiscal year ended April 30, 2006 and an accumulated loss of $324,648 from inception.

The Company spent $85,683 during the fiscal year ended April 30, 2003 in connection with the failed efforts to raise the $11,000,000 for the acquisition of the oil and gas properties.

We spent $11,713 in professional fees related to maintaining the Company's financial and corporate filings in fiscal 2006 as compared to $20,840 in 2005.  Transfer agent and filing fees were $2,297 as compared to $1,863 in 2005.

Liquidity and Capital Resources

As of the date of this report, the Company has yet to generate any revenues from its business operations.

We had cash on hand of $5,381 as at April 30, 2006 and a working capital deficit of $11,648 compared to cash on hand of $15,078 and working capital of $9,954 as at April 30, 2005.  We do not have sufficient funds to meet our administrative operating obligations for the next twelve months.

We will need additional capital to carry out all of our obligations and business strategies.  We intend to raise any additional capital required to fund our financing needs by issuance of debt and/or equity.  Management has been exploring a number of other options to meet the Company's obligations and future capital requirements, including the possibility of equity offering, debt financing, and a business combination.

To date, our President has loaned us $19,500 for additional working capital but there can be no assurance that he will continue to advance funds as required or that other methods of financing will be available or accessible on reasonable terms.  This loan will have to be paid upon demand.

We may engage in a combination with another business.  During fiscal 2003, we entered into agreements that would have changed our business to the oil and gas industry.  We were unsuccessful in raising the minimum capital required to complete the transaction and subsequently terminated all the agreements.  We have engaged in discussions concerning other potential business combinations, but have not entered into any agreement for such a combination.

Going Concern

The Company's failure to generate revenues and conduct operations since its inception raises substantial doubt about the Company's ability to continue as a going concern.  We will require substantial working capital and currently has inadequate capital to fund all of its business strategies, which could severely limit our operations.

We incurred a loss of $22,402 for the year ended April 30, 2006 and we have incurred an aggregate deficit since inception of $324,648.  As at April 30, 2006, we had cash of $5,381 and current liabilities of $17,029.  As we have yet to commence operations, we have not generated any revenues and there can be no assurance that we can generate significant revenues from operations.  We expect to incur administrative and professional charges associated with preparing, reviewing, auditing and filing our financial statements and our periodic and other disclosure documents.  For the 12 months ended April 30, 2007, we have budgeted $25,000 for professional fees for our periodic filing requirements and miscellaneous office and filing fees and expenses.   We cannot sustain our operations from existing working capital and operations over the next 12 months.



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We intend to raise additional capital required to fund our financing needs by issuance of debt and/or equity.  Management has been exploring a number of options to meet our obligations and future capital requirements, including the possibility of equity offering, debt financing, and business combination.

The financial statements included in this annual report have been prepared on the going-concern basis, which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business.  Accordingly the audited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

In order to continue as a going concern, we require additional financing.  There can be no assurance that additional financial will be available to us when needed, or, if available, that it can be obtained on commercially reasonable terms.

Due to the uncertainty of our ability to meet our current operating and capital expenses, in the audited financial statements for the fiscal year ended April 30, 2006, our auditors had issued a going concern opinion.  This means that the auditors believed there is substantial doubt that we can continue as an on-going business unless we obtain additional capital to maintain its existence and to commence its operations.

Recently Issued Accounting Standards

In 2006, the Financial Accounting Standards Board ("FASB") has issued SFAS No. 155 "Accounting for Certain Hybrid Financial Instruments- an amendment of FASB Statements No. 133 and 140" and No. 156 "Accounting for Servicing of Financial Assets- an amendment of FASB Statement No. 140", but they will not have a material effect in the Company's results of operations or financial position.  Therefore, a description and its impact for each on the Company's operations and financial position have not been disclosed.

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections - A Replacement of APB Opinion No. 20 and SFAS No. 3". SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 requires retrospective application to prior periods' financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change.  The provisions of SFAS No. 154 are effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005.  The adoption of this standard is not expected to have a material effect on the Company's results of operations or financial position.

In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123 (Revised 2004) ("SFAS No. 123R"), "Share-Based Payment." SFAS No. 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. SFAS No. 123R represents the culmination of a two-year effort to respond to requests from investors and many others that the FASB improve the accounting for share-based payment arrangements with employees. The scope of SFAS No. 123R includes a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. SFAS No. 123R replaces SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees".SFAS No.123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, that statement permitted entities the option of continuing to apply the guidance in APB Opinion No. 25, as long as the footnotes to the financial statements disclosed what net income would have been had the preferable fair-value-based method been used.



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Although those disclosures helped to mitigate the problems associated with accounting under APB Opinion No. 25, many investors and other users of financial statements believed that the failure to include employee compensation costs in the income statement impaired the transparency, comparability, and credibility of financial statements. Public entities that file as small business issuers will be required to apply Statement 123R in the first interim or annual reporting period that begins after December 15, 2005. The adoption of this standard did not have a material impact on the Company's results of operations or financial position.

In December 2004, the FASB issued SFAS No. 153,"Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29". SFAS No. 153 is the result of a broader effort by the FASB to improve financial reporting by eliminating differences between GAAP in the United States and GAAP developed by the International Accounting Standards Board (IASB). As part of this effort, the FASB and the IASB identified opportunities to improve financial reporting by eliminating certain narrow differences between their existing accounting standards. SFAS No. 153 amends APB Opinion No. 29, "Accounting for Nonmonetary Transactions",that was issued in 1973. The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have "commercial substance." Previously, APB Opinion No. 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. The provisions in SFAS No.153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Early application is permitted and companies must apply the standard prospectively. The effect of adoption of this standard is not expected to have a material impact on the Company's results of operations or financial position.

Critical Accounting Policies

The Company's discussions and analysis of its financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon the Company's financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  Actual results could differ from those estimates.

The financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its obligations in the normal course of business.  If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the financial statements.  The Company will require additional capital to fund any future plan of operations.  There can be no assurance that the Company will be able to raise additional capital, and if the Company is unable to raise additional capital, it will unlikely be able to continue as a going concern.

ITEM 7.     FINANCIAL STATEMENTS.

Our financial statements are stated in United States Dollars (US$).  The Report of our Independent Registered Public Accounting Firm, Manning Elliott LLP, Chartered Accountants for the audited financial statements as of April 30, 2006 and 2005 and for the years then ended and accumulated for the period from March 24, 2000 to April 30, 2006, is included herein immediately preceding the audited financial statements.



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North American Natural Gas, Inc.(A Development Stage Company)

April 30, 2006







|Report of Independent Registered Public Accounting Firm...................................................................F-1                       
|----------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                    
|Balance Sheets...................................................................................................................................F-2
|                                                                                                                                                    
|Statements of Operations...................................................................................................................F-3      
|                                                                                                                                                    
|Statements of Cash Flows..................................................................................................................F-4       
|                                                                                                                                                    
|Statement of Stockholders' Equity (Deficit).........................................................................................F-5             
|                                                                                                                                                    
|Notes to the Financial Statements.......................................................................................................F-6         























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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
of North American Natural Gas Inc.
(A Development Stage Company)

We have audited the accompanying balance sheets of North American Natural Gas Inc. (A Development Stage Company) as of April 30, 2006 and 2005 and the related statements of operations, cash flows and stockholders' equity (deficit) for the years then ended and accumulated for the period  from March 24, 2000 (Date of Inception) to April 30, 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 audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require 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 audits provide 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 North American Natural Gas Inc. (A Development Stage Company), as of April 30, 2006 and 2005, and the results of its operations and its cash flows for the years then ended and accumulated for the period from March 24, 2000 (Date of Inception) to April 30, 2006,  in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has not generated any revenues and has accumulated losses since inception. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



MANNING ELLIOTT LLP

CHARTERED ACCOUNTANTS

Vancouver, Canada

July 11, 2006



F-1

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North American Natural Gas, Inc.
(A Development Stage Company)
Balance Sheets
(Expressed in U.S. dollars)



|                                                                                                                | April 30,
2006
$ |   |  | April 30,
2005
$ |  
|--------------------------------------------------------------------------------------------------------------- | ---------------- | - |  | ---------------- | -
|Assets                                                                                                          |                  |   |  |                  |  
|                                                                                                                |                  |   |  |                  |  
|Current Assets                                                                                                  |                  |   |  |                  |  
|                                                                                                                |                  |   |  |                  |  
|Cash                                                                                                            | 5,381            |   |  | 15,078           |  
|                                                                                                                |                  |   |  |                  |  
|Total Assets                                                                                                    | 5,381            |   |  | 15,078           |  
|                                                                                                                |                  |   |  |                  |  
|Liabilities and Stockholders' Equity (Deficit)                                                                  |                  |   |  |                  |  
|                                                                                                                |                  |   |  |                  |  
|Current Liabilities                                                                                             |                  |   |  |                  |  
|                                                                                                                |                  |   |  |                  |  
|Accounts payable                                                                                                | 7,164            |   |  | 651              |  
|Accrued liabilities                                                                                             | 365              |   |  | 4,473            |  
|Due to a related party (Note 5)                                                                                 | 9,500            |   |  | -                |  
|                                                                                                                |                  |   |  |                  |  
|Total Liabilities                                                                                               | 17,029           |   |  | 5,124            |  
|                                                                                                                |                  |   |  |                  |  
|Contingency (Note 1)                                                                                            |                  |   |  |                  |  
|                                                                                                                |                  |   |  |                  |  
|Stockholders' Equity (Deficit)                                                                                  |                  |   |  |                  |  
|                                                                                                                |                  |   |  |                  |  
|Preferred Stock: $.0001 par value; authorized 20,000,000
preferred shares; none issued (Note 4)                 | -                |   |  | -                |  
|                                                                                                                |                  |   |  |                  |  
|Common Stock: $0.0001 par value; authorized 100,000,000 common
shares; 19,812,500 shares issued and outstanding | 1,981            |   |  | 1,981            |  
|                                                                                                                |                  |   |  |                  |  
|Additional Paid-in Capital                                                                                      | 309,019          |   |  | 309,019          |  
|                                                                                                                |                  |   |  |                  |  
|Donated Capital (Note 5)                                                                                        | 2,000            |   |  | 1,200            |  
|                                                                                                                |                  |   |  |                  |  
|Deficit Accumulated During the Development Stage                                                                | (324,648         | ) |  | (302,246         | )
|Total Stockholders' Equity (Deficit)                                                                            | (11,648          | ) |  | 9,954            |  
|Total Liabilities and Stockholders' Equity (Deficit)                                                            | 5,381            |   |  | 15,078           |  











The Accompanying Notes are an Integral Part of These Financial Statements

F-2

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North American Natural Gas, Inc.  (A Development Stage Company)
Statements of Operations
(Expressed in U.S. dollars)



|                                              | Accumulated From March 24, 2000 |   | Year Ended       |  
|--------------------------------------------- | ------------------------------- | - | ---------------- | -
|                                              | (Inception)
to April 30, 2006
$ |   | April 30, 2006
$ |  
|Revenue                                       | -                               |   | -                |  
|                                              |                                 |   |                  |  
|Expenses                                      |                                 |   |                  |  
|                                              |                                 |   |                  |  
|Business development                          | 24,475                          |   | -                |  
|Consulting fees                               | 25,000                          |   | -                |  
|Director's fees                               | 23,000                          |   | 6,000            |  
|Finance Costs                                 | 75,975                          |   | -                |  
|License written off                           | 35,000                          |   | -                |  
|Professional fees                             | 113,416                         |   | 11,713           |  
|Office and rent (Note 5 (a))                  | 12,317                          |   | 1,529            |  
|Transfer agent and filing fees                | 16,447                          |   | 2,297            |  
|Travel                                        | 863                             |   | 863              |  
|                                              |                                 |   |                  |  
|Total Expenses                                | 326,493                         |   | 22,402           |  
|                                              |                                 |   |                  |  
|Net Loss Before Other Income                  | (326,493                        | ) | (22,402          | )
|                                              |                                 |   |                  |  
|Other Income                                  |                                 |   |                  |  
|                                              |                                 |   |                  |  
|Interest                                      | 1,845                           |   | -                |  
|                                              |                                 |   |                  |  
|Net Loss for the Period                       | (324,648                        | ) | (22,402          | )
|                                              |                                 |   |                  |  
|Net Loss Per Share - Basic and Diluted        | -                               |   | -                |  
|                                              |                                 |   |                  |  
|Weighted Average Number of Shares Outstanding |                                 |   | 19,812,000       |  
|                                              |                                 |   |                  |  









The Accompanying Notes are an Integral Part of These Financial Statements

F-3

- 14 -

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North American Natural Gas, Inc. 
(A Development Stage Company)
Statements of Cash Flows
(Expressed in U.S. dollars)



|                                                                                                                                                      | Accumulated From
March 24, 2000
(Date of Inception)
To April 30, 2006 |   |            |   |        
|----------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | - | ---------- | - | -------
|                                                                                                                                                      | Year Ended                                                            |   | Year Ended |  
|                                                                                                                                                      | April 30                                                              |   | April 30   |  
|                                                                                                                                                      | 2006                                                                  |   | 2005       |  
|                                                                                                                                                      | $                                                                     |   | $          |   | $      
|                                                                                                                                                      |                                                                       |   |            |   |        
|Operating Activities                                                                                                                                  |                                                                       |   |            |   |        
|                                                                                                                                                      |                                                                       |   |            |   |        
|Net Loss                                                                                                                                              | (324,648                                                              | ) | (22,402    | ) | (30,203
|                                                                                                                                                      |                                                                       |   |            |   |        
|Adjustments to reconcile net loss to cash used in      operating activities                                                                           |                                                                       |   |            |   |        
|                                                                                                                                                      |                                                                       |   |            |   |        
|Donated Rent                                                                                                                                          | 2,000                                                                 |   | 800        |   | 1,200  
|Licence written off                                                                                                                                   | 35,000                                                                |   | -          |   | -      
|Shares issued for legal and organizational costs                                                                                                      | 16,000                                                                |   | -          |   | -      
|                                                                                                                                                      |                                                                       |   |            |   |        
|Change in operating assets and liabilities                                                                                                            |                                                                       |   |            |   |        
|                                                                                                                                                      |                                                                       |   |            |   |        
|Accounts payable and accrued liabilities                                                                                                              | 7,529                                                                 |   | 2,405      |   | (155   
|                                                                                                                                                      |                                                                       |   |            |   |        
|Net Cash Used in Operating Activities                                                                                                                 | (264,119                                                              | ) | (19,197    | ) | (29,158
|                                                                                                                                                      |                                                                       |   |            |   |        
|Financing Activities                                                                                                                                  |                                                                       |   |            |   |        
|                                                                                                                                                      |                                                                       |   |            |   |        
|Advances from related party                                                                                                                           | 9,500                                                                 |   | 9,500      |   | -      
|Proceeds from issuance of common stock                                                                                                                | 260,000                                                               |   | -          |   | -      
|                                                                                                                                                      |                                                                       |   |            |   |        
|Net Cash Provided By Financing Activities                                                                                                             | 260,500                                                               |   | 9,500      |   | -      
|                                                                                                                                                      |                                                                       |   |            |   |        
|Increase (Decrease) In Cash                                                                                                                           | 5,381                                                                 |   | (9,697     | ) | (29,158
|                                                                                                                                                      |                                                                       |   |            |   |        
|Cash - Beginning of Period                                                                                                                            | -                                                                     |   | 15,078     |   | 44,236 
|                                                                                                                                                      |                                                                       |   |            |   |        
|Cash - End of Period                                                                                                                                  | 5,381                                                                 |   | 5,381      |   | 15,078 
|                                                                                                                                                      |                                                                       |   |            |   |        
|Non - Cash Investing and Financing Activities                                                                                                         |                                                                       |   |            |   |        
|                                                                                                                                                      |                                                                       |   |            |   |        
|A total of 1,600,000 shares were issued to a 
    director at a fair market value of $ 0.01 per share for 
    legal and organizational expenses paid | 16,000                                                                |   | -          |   | -      
|                                                                                                                                                      |                                                                       |   |            |   |        
|A note payable was assumed by the Company 
    for the acquisition of a license from a former director                                                | 35,000                                                                |   | -          |   | -      
|                                                                                                                                                      |                                                                       |   |            |   |        
|Supplemental Disclosures                                                                                                                              |                                                                       |   |            |   |        
|                                                                                                                                                      |                                                                       |   |            |   |        
|Interest paid                                                                                                                                         | -                                                                     |   | -          |   | -      
|Income taxes paid                                                                                                                                     | -                                                                     |   | -          |   | -      









The Accompanying Notes are an Integral Part of These Financial Statements

F-4

- 15 -

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North American Natural Gas, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
For the period from March 24, 2000 (Date of Inception) to April 30, 2006
(Expressed in U.S. dollars)



|                                                                                          |               |            |                 |                 | Deficit           |          
|----------------------------------------------------------------------------------------- | ------------- | ---------- | --------------- | --------------- | ----------------- | ---------
|                                                                                          |               |            |                 |                 | Accumulated       |          
|                                                                                          | Common Shares | Additional |                 | During the      |                  
|                                                                                          | Number        | Par Value  | Paid-In Capital | Donated
Capital | Development Stage | Total    
|                                                                                          | #             | $          | $               | $               | $                 | $        
|                                                                                          |               |            |                 |                 |                   |          
|Balance - March 24, 2000 (Date of Inception)                                              | -             | -          | -               | -               | -                 | -        
|Stock issued for legal and organizational expenses at fair market value of 0.01 per share | 12,000,000    | 1,200      | 14,800          | -               | -                 | 16,000   
|                                                                                          |               |            |                 |                 |                   |          
|Net loss for the period                                                                   | -             | -          | -               | -               | (51,000)          | (51,000) 
|                                                                                          |               |            |                 |                 |                   |          
|Balance-April 30, 2000                                                                    | 12,000,000    | 1,200      | 14,800          | -               | (51,000)          | (35,000) 
|                                                                                          |               |            |                 |                 |                   |          
|Stock issued for cash at $0.01 per share                                                  | 7,500,000     | 750        | 9,250           | -               | -                 | 10,000   
|                                                                                          |               |            |                 |                 |                   |          
|Net loss for the year                                                                     | -             | -          | -               | -               | (12,588)          | (12,588) 
|Balance - April 30, 2001                                                                  | 19,500,000    | 1,950      | 24,050          | -               | (63,588)          | (37,588) 
|                                                                                          |               |            |                 |                 |                   |          
|Net loss for the year                                                                     | -             | -          | -               | -               | (27,067)          | (27,067) 
|Balance - April 30, 2002                                                                  | 19,500,000    | 1,950      | 24,050          | -               | (90,655)          | (64,655) 
|Stock issued for cash at $1.00 per share                                                  | 312,500       | 31         | 249,969         | -               | -                 | 250,000  
|Extinguishment of note payable                                                            | -             | -          | 35,000          | -               | -                 | 35,000   
|                                                                                          |               |            |                 |                 |                   |          
|Net loss for the year                                                                     | -             | -          | -               | -               | (135,183)         | (135,183)
|                                                                                          |               |            |                 |                 |                   |          
|Balance - April 30, 2003                                                                  | 19,812,500    | 1,981      | 309,019         | -               | (225,838)         | 85,162   
|                                                                                          |               |            |                 |                 |                   |          
|Net loss for the year                                                                     | -             | -          | -               | -               | (46,205)          | (46,205) 
|                                                                                          |               |            |                 |                 |                   |          
|Balance - April 30, 2004                                                                  | 19,812,500    | 1,981      | 309,019         | -               | (272,043)         | 38,957   
|                                                                                          |               |            |                 |                 |                   |          
|Donated rent                                                                              | -             | -          | -               | 1,200           | -                 | 1,200    
|                                                                                          |               |            |                 |                 |                   |          
|Net loss for the year                                                                     | -             | -          | -               | -               | (30,203)          | (30,203) 
|Balance - April 30, 2005                                                                  | 19,812,500    | 1,981      | 309,019         | 1,200           | (302,246)         | 9,954    
|                                                                                          |               |            |                 |                 |                   |          
|Donated rent                                                                              | -             | -          | -               | 800             | -                 | 800      
|                                                                                          |               |            |                 |                 |                   |          
|Net loss for the year                                                                     | -             | -          | -               | -               | (22,402)          | (22,402) 
|Balance - April 30, 2006                                                                  | 19,812,500    | 1,981      | 309,019         | 2,000           | (324,648)         | (11,648) 









The accompanying notes are an integral part of these financial statements

F-5

- 16 -

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North American Natural Gas, Inc.
(A Development Stage Company)
Notes To The Financial Statements
April 30, 2006
(Expressed in U.S. dollars)

North American Natural Gas, Inc. herein (the "Company") was incorporated in the State of Washington, U.S.A. on March 24, 2000. The Company acquired a license to market and distribute vitamins, minerals, nutritional supplements, and other health and fitness products in which the grantor of the license offers these products for sale from various suppliers on their Web Site. The Company was also developing a marketing strategy to offer personal care products through a kiosk-based ordering system.

During fiscal 2003 the Company changed its name from FAR Group, Inc. to North American Natural Gas, Inc. as it had anticipated that it would undertake a new business purpose in the oil and gas exploration industry. The Company was unsuccessful in its efforts to raise the required capital to acquire the oil and gas properties contemplated and reverted back to its original business to exploit the license to market and sell vitamins and other health and fitness products. The Company is currently exploring new business opportunities after not renewing the license to market health and fitness products as described in Note 3.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, confirmation of the Company's interests in the underlying properties, and the attainment of profitable operations. As at April 30, 2006, the Company has never generated any revenues, has a working capital deficit of $11,648 and has accumulated losses of $324,648 since inception. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2.     Summary of Significant Accounting Policies

(a)     Basis of Accounting

These financial statements are prepared in conformity with accounting principles generally accepted in the United States and are presented in United States dollars.

(b)     Year end

The Company's fiscal year end is April 30.

(c)     Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods. Actual results could differ from those estimates.



F-6

- 17 -

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North American Natural Gas, Inc.
(A Development Stage Company)
Notes To The Financial Statements
April 30, 2006
(Expressed in U.S. dollars)

2.     Summary of Significant Accounting Policies (continued)

(d)     Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

(e)     Financial Instruments

The fair values of cash, accounts payable, accrued liabilities, and due to a related party were estimated to approximate their carrying values due to the immediate short-term maturity of these financial instruments.  As the Company operates in Canada, virtually all of its assets and liabilities are giving rise to significant exposure to market risks from changes in foreign currency rates.  The financial risk is the risk to the Company's operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates.  Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.  Management does not believe the Company is exposed to significant credit or interest rate risks.

(f)     Concentration of Credit Risk

Financial instruments that potentially subject the company to credit risk consist principally of cash.  Cash is deposited with a high quality credit institution.

(g)     Long-lived Assets

In accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal Of Long-Lived Assets", the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment.  The Company recognizes an impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset.  Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

(h)     Foreign Currency Translation

The Company's functional currency is the United States dollar. Occasional transactions occur in Canadian currency, and management has adopted SFAS No. 52, "Foreign Currency Translation". Monetary assets and liabilities denominated in foreign currencies are translated into United States dollars at rates of exchange in effect at the balance sheet date. Non-monetary assets, liabilities and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction.

(i)     Income Taxes

Potential benefits of income tax losses are not recognized ion the accounts until realization is more likely than not.  The Company has adopted SFAS No. 109 "Accounting for Income Taxes" as of its inception.  Pursuant to SFAS No. 109, the Company is required to compute tax asset benefits for net operating losses carried forward.  The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.



F-7

- 18 -

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North American Natural Gas, Inc.
(A Development Stage Company)
Notes To The Financial Statements
April 30, 2006
(Expressed in U.S. dollars)

2.       Summary of Significant Accounting Policies (continued)

(j)     Revenue Recognition

The Company will receive, from the Grantor of the license, commissions of one-half of all the profit on all sales made through the Grantor's Web Site. The commission revenue will be recognized in the period the sales have occurred. The Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial Statements."  Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collectibility is reasonably assured. The Company will report the commission revenue on a net basis as the Company is acting as an Agent for the Grantor and does not assume any risks or rewards of the ownership of the products. This policy is prospective in nature, as the Company has not yet generated any revenue.

(k)     Comprehensive Loss

SFAS No. 130, "Reporting Comprehensive Income," establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at April 30, 2006 and 2005, the Company has no items that represent comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.

(l)     Basic and Diluted Net Income (Loss) per Share

The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share" (SFAS 128).  SFAS 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. Loss per share information does not include the effect of any potential common shares, as their effect would be anti-dilutive.

(m)     Recent Accounting Pronouncements

In 2006, the Financial Accounting Standards Board ("FASB") has issued SFAS No. 155 "Accounting for Certain Hybrid Financial Instruments- an amendment of FASB Statements No. 133 and 140" and No. 156 "Accounting for Servicing of Financial Assets- an amendment of FASB Statement No. 140", but they will not have a material effect in the Company's results of operations or financial position.  Therefore, a description and its impact for each on the Company's operations and financial position have not been disclosed.



F-8

- 19 -

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North American Natural Gas, Inc.
(A Development Stage Company)
Notes To The Financial Statements
April 30, 2006
(Expressed in U.S. dollars)

2.       Summary of Significant Accounting Policies (continued)

(m)     Recent Accounting Pronouncements (continued)

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections - A Replacement of APB Opinion No. 20 and SFAS No. 3". SFAS No. 154 changes the requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS No. 154 requires retrospective application to prior periods' financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change.  The provisions of SFAS No. 154 are effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005.  The adoption of this standard is not expected to have a material effect on the Company's results of operations or financial position.

In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123 (Revised 2004) ("SFAS No. 123R"), "Share-Based Payment." SFAS No. 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. SFAS No. 123R represents the culmination of a two-year effort to respond to requests from investors and many others that the FASB improve the accounting for share-based payment arrangements with employees. The scope of SFAS No. 123R includes a wide range of share-based compensation arrangements including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans. SFAS No. 123R replaces SFAS No. 123, "Accounting for Stock-Based Compensation", and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees".SFAS No.123, as originally issued in 1995, established as preferable a fair-value-based method of accounting for share-based payment transactions with employees. However, that statement permitted entities the option of continuing to apply the guidance in APB Opinion No. 25, as long as the footnotes to the financial statements disclosed what net income would have been had the preferable fair-value-based method been used. Although those disclosures helped to mitigate the problems associated with accounting under APB Opinion No. 25, many investors and other users of financial statements believed that the failure to include employee compensation costs in the income statement impaired the transparency, comparability, and credibility of financial statements. Public entities that file as small business issuers will be required to apply Statement 123R in the first interim or annual reporting period that begins after December 15, 2005. The adoption of this standard did not have a material impact on the Company's results of operations or financial position.

In December 2004, the FASB issued SFAS No. 153,"Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29". SFAS No. 153 is the result of a broader effort by the FASB to improve financial reporting by eliminating differences between GAAP in the United States and GAAP developed by the International Accounting Standards Board (IASB). As part of this effort, the FASB and the IASB identified opportunities to improve financial reporting by eliminating certain narrow differences between their existing accounting standards. SFAS No. 153 amends APB Opinion No. 29, "Accounting for Nonmonetary Transactions",that was issued in 1973. The amendments made by SFAS No. 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for nonmonetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have "commercial substance."



F-9

- 20 -

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North American Natural Gas, Inc.
(A Development Stage Company)
Notes To The Financial Statements
April 30, 2006
(Expressed in U.S. dollars)

2.       Summary of Significant Accounting Policies (continued)

(m)     Recent Accounting Pronouncements (continued)

Previously, APB Opinion No. 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. The provisions in SFAS No.153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. Early application is permitted and companies must apply the standard prospectively. The effect of adoption of this standard is not expected to have a material impact on the Company's results of operations or financial position.

3.       License

In 2000, the Company acquired a License Agreement with Vitamineralherb.com to  market vitamins, minerals, nutritional supplements and other health and fitness products through the Grantor's Web Site. The License Agreement granted an exclusive right to distribute Vitamineralherb.com products to medical practitioners, alternative health professionals, martial arts studios and instructors, sports and fitness trainers, other health and fitness practitioners, school and other fund raising programs and other similar types of customers in Minnesota. The license was acquired on April 13, 2000 and renewed on August 15, 2003 for a term of three years.  The Company was required to pay an annual fee of $500 for maintenance of the Grantor's Web Site commencing with the year ended April13, 2002.  The annual fees for 2003 to 2006 were waived by the Grantor.

The Company paid total consideration of $35,000 for the license with a note payable of $35,000. The $35,000 note payable to the former President of the Company was unsecured, non-interest bearing and was repayable by December 31, 2010.  On July 12, 2002, the former President of the Company forgave the note payable and released the Company from all obligations.  The license was written-off to operations in fiscal 2000 due to the lack of historical cash flow and lack of a market to resell the license.

The license was valid until April 2006, but upon its expiration, the Company did not renew the license.

4.       Preferred Stock

On March 13, 2003 the Company authorized 3,500,000 of the existing authorized preferred stock to be designated as Class "A" Convertible Preferred Shares having a par value of $10.00 per share. None have been issued. When issued, holders will be entitled to receive a 6% cash dividend of $0.60 per share payable quarterly. These shares also carry conversion features of 1 preferred share for 8 common shares.

5.     Related Party Transactions

(a)     During the year, the President of the Company donated office rent of $800 (2005 - $1,200). This amount has been charged to operations. Effective

(b)     The balance of $9,500 due to the President of the Company for cash advanced to the Company is non-interest bearing, unsecured and due



F-10

- 21 -

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North American Natural Gas, Inc.
(A Development Stage Company)
Notes To The Financial Statements
April 30, 2006
(Expressed in U.S. dollars)

6.       Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has net operating losses of $307,000, which commence expiring in 2020. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefit of net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. For the years ended April 30, 2006 and 2005, the valuation allowance established against the deferred tax assets increased by $7,700 and $26,250, respectively.

The components of the net deferred tax asset at April 30, 2006 and 2005 and the statutory tax rate, the effective tax rate and the elected amount of the valuation allowance are scheduled below:



|                                | 2006
$   |   | 2005
$  |  
|------------------------------- | -------- | - | ------- | -
|                                |          |   |         |  
|Cumulative Net Operating Losses | 307,000  |   | 285,000 |  
|Statutory Tax Rate              | 35%      |   | 35%     |  
|Effective Tax Rate              | -        |   | -       |  
|Deferred Tax Asset              | 107,450  |   | 99,750  |  
|Valuation Allowance             | (107,450 | ) | (99,750 | )
|                                |          |   |         |  
|Net Deferred Tax Asset          | -        |   | -       |  

















F-11

- 22 -

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ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

There have been no disagreements on accounting and financial disclosures from the inception of the Company through the date of this Form 10-KSB.

ITEM 8A.     CONTROLS AND PROCEDURES.

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by the annual report, being April 30, 2006, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures.  This evaluation was carried out under the supervision and with the participation of our company's management, including our company's president and our company's chief financial officer.  Based upon that evaluation, our company's president and our company's chief financial officer concluded that our company's disclosure controls and procedures are effective as at the end of the period covered by this report.  There have been no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management including our president and secretary as appropriate, to allow timely decisions regarding required disclosure.

ITEM 8B.     OTHER INFORMATION

None.

PART III

ITEM 9.       DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) 
                     OF THE EXCHANGE ACT.

The following table sets forth the name, age and position of each director and executive officer of North American Natural Gas, Inc:



|Name                      | Age   | Positions                                                                                           | Date First Elected or Appointed
|------------------------- | ----- | --------------------------------------------------------------------------------------------------- | -------------------------------
|Jim Glavas
Richard Achron | 43
63 | Chief Executive Officer, President, Director
Chief Financial Officer, Treasurer/Secretary, Director | May 22, 2003
May 22, 2003      







- 23 -

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Background of Officers and Directors

Jim Glavas graduated from the Financial Management program at the British Columbia Institute of Technology in Vancouver, Canada in 1984.  From there, he spent several years in the banking industry as a leasing administrator with First City Trust.  In 1990 he changed career direction to become the General Sales Manager for Western Canada for Contour Distributors, a leading supplier and distributor of "top-of-the-line" appliances and high-end solid surface products.

In April 1996, Mr. Glavas purchased the exclusive Avonite solid surface countertops distribution rights for Western Canada and formed DG Pacific Distribution Ltd.  As President and owner of DG Pacific, he was solely responsible for its strong year after year growth increasing its customer base over 350% in three years and further multiplying its sales over the last two years.  In January 2001, DG Pacific Distribution Ltd. acquired the national distribution rights for two prominent product lines in the countertop industry.  Mr. Glavas sold DG Pacific Distribution Ltd. in December 2002 and currently works as an independent consultant in development and market penetration for the counter top industry.

Richard Achron is a self-employed businessman with over 40 years experience in the retail/wholesale and manufacturing industry.  He spent a number of years working for major Canadian corporations in sales, sales management and as a branch manager.  These corporations included Philips Electronics, White-Westinghouse, Canadian Admiral Corporation and Sanyo Electronics. Since February 1989 he has been President and sole shareholder of Kingman Industries Ltd., a manufacturing business located in Vancouver, Canada.  Kingman Industries Ltd. distributes products for usage in the food industry.  His customer base includes major food chains such as Canada Safeway, Overwaitea Food Group and Superstore/Loblaws.

Mr. Achron was the President and Director of Oban Mining Inc. a Company listed for trading on the OTC.BB from September 2001.  He resigned as President of Oban Mining Inc. in November 2003 and as a Director in January 2004.

Involvement in Certain Legal Proceedings

To our knowledge, during the past five years, our officers and directors: (1) have not filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or present of such a person, or any partnership in which he was a general partner at or within two yeas before the time of such filing, or any corporation or business association of which he was an executive officer within two years before the time of such filing; (2) were not convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) were the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting the following activities: (i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director of any investment company, or engaging in or continuing any conduct or practice in connection with such activity; (ii) engaging in any type of business practice; (iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodity laws; (4) were not the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal



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or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activity; (5) were not found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law and the judgment in subsequently reversed, suspended or vacate; (6) were not found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities on Forms 3,4, and 5 respectively.  Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file.

To the best knowledge of the Company, all directors, officers and persons who beneficially owned more than ten percent of the Company's common stock filed timely reports in compliance with Section 16(a).

Audit Committee

We do not have an audit committee or an audit committee charter.

Audit Committee Financial Expert

Our Board of Directors has determined that it does not have an audit committee financial expert as defined in Item 401(e) of Regulation S-B, and is independent as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934 as amended.  We believe that the members of our Board of Directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for disclosure and for financial reporting.  In addition, we believe that retaining an independent director who would qualify as an audit committee financial expert would be overly costly and burdensome and not warranted in our circumstances given the early stages of our development and the fact that we have not generated any revenues to date.

Code of Ethics

The Company has adopted a code of business conduct and ethics for directors, officers and employees.

Family Relationships

There are no family relationships amongst or between the directors and executive officers.

ITEM 10.     EXECUTIVE COMPENSATION.

The following table sets forth information with respect to compensation paid by the Company to the Chief Executive Officer and the other highest paid executive officers (the Named Executive Officer) during the three most recent fiscal years.



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|Summary Compensation Table 
|---------------------------
|                           
|Annual Compensation        
|                           
|(a)                        
|                           
|Name and Principal
Position
|                           
|Jim Glavas                 
|CEO, President, & Director 

There are no stock option, retirement, pension, or profit sharing plans for the benefit of our officers and directors.

Option/SAR Grants

No individual grants of stock options, whether or not in tandem with stock appreciation rights ("SARs") and freestanding SARs have been made to any executive officers or any directors since our inception, accordingly, no stock options have been exercised by officers or directors in fiscal 2006.

Long-Term Incentive Plan Awards

The Company does not have any long-term incentive plans that provide compensation intended to serve as incentive for performance to occur over a period longer than one fiscal year, whether such performance is measured by reference to our financial performance, our stock price, or any other measure.

Compensation of Directors

A director was paid $6,000 for fees in fiscal 2006. There are no standard arrangements pursuant to which the Company's directors are compensated for services provided as director.

Employment Contracts and Termination of Employment and Change-in-Control Arrangements

None.

Report on Repricing of Options/SAR

The Company did not reprice any options or SARS during the year ended April 30, 2006.



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Indemnification

Pursuant to the articles of incorporation and bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. In certain cases, we may advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits in any such proceeding as to which such person is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the state Washington.

Regarding indemnification for liabilities arising under the Securities Act of 1933 which may be permitted to directors or officers pursuant to the foregoing provisions, we are informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, as expressed in the Act and is, therefore unenforceable.

ITEM 11.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND  MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners

The following table sets forth, as of June 21, 2006, the beneficial shareholdings of persons or entities holding five percent or more of our common stock, our directors and executive officers individually, and our directors and officers as a group. Each person has sole voting and investment power with respect to the shares of common stock shown, and all ownership is of record and beneficial.



|Name of Beneficial Owner    | Amount and Nature of
Beneficial Owner (1) | Percent of Class
|--------------------------- | ----------------------------------------- | ----------------
|                            |                                           |                 
|Jim Glavas                  | 12,312,500                                | 62.15%          
|2366 West 12th Avenue       |                                           |                 
|Vancouver, British Columbia |                                           |                 
|Canada  V6K 2N9             |                                           |                 
|CEO, President and Director |                                           |                 
|                            |                                           |                 
|Richard Achron              | 0                                         | 0.00%           
|11960 Hammersmith Way, #155 |                                           |                 
|Richmond, British Columbia  |                                           |                 
|Canada V7A 5C9              |                                           |                 
|CFO and Director            |                                           |                 

All directors and executive officers as a group hold 12,312,500 common shares representing 62.15% (2 persons).

Changes in Control

To the knowledge of management, there are no present arrangements or pledges of the Company's securities that may result in a change in control of the Company.



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Securities Authorized for Issuance Under Compensatory Plans

The Company has no compensation plans (including individual compensation arrangements) under which securities are authorized for issuance.

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

No director, executive officer or nominee for election as a director of North American Natural Gas, Inc., and no owner of five percent or more of the Company's outstanding shares or any member of their immediate family has entered into or proposed any transaction in which the amount involved exceeds $60,000.

ITEM 13.  EXHIBITS, AND REPORTS ON FORM 8-K.

(a)     Exhibits

31.1     Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer

31.2     Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer

32.1     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer

32.2     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer

Index to Exhibits Incorporated by Reference

3.1      Articles of Incorporation (1)

3.2      Certificate of Amendment to Certificate of Incorporation (2)

3.3      Bylaws (3)

10.1     License Agreement dated April 13, 2000 between the Registrant and Vitamineralherb.com Corp. (4)

10.2     Assignment of License Agreement dated April 13, 2000 between Frank Roberts and Registrant. (5)

10.3     Promissory Note dated April 13, 2000 between Registrant and Vitamineralherb.com Corp. (6)

14.1     Code of Ethics (7)

Exhibits Incorporated by Reference

(1)     Filed as an exhibit to Registrant's SB2 Registration Statement on June 2, 2000 and incorporated herein by reference.

(2)     Filed as an exhibit to Registrant's Form 8K on March 25, 2003 and incorporated herein by reference.

(3)     Filed as an exhibit to Registrant's SB2 Registration Statement on June 2, 2000 and incorporated herein by reference.

(4)     Filed as an exhibit to Registrant's SB2 Registration Statement on June 2, 2000 and incorporated herein by reference.

(5)     Filed as an exhibit to Registrant's SB2 Registration Statement on June 2, 2000 and incorporated herein by reference.

(6)     Filed as an exhibit to Registrant's SB2 Registration Statement on June 2, 2000 and incorporated herein by reference.

(7)     Filed as an exhibit to Registrant's 10-KSB on July 21, 2005 and incorporated herein by reference.



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(b) Reports on Form 8-K

None.

ITEM 14.     PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table sets forth fees for services Manning Elliott, Chartered Accountants provided during fiscal years 2006 and 2005:



|                       | 2006    | 2005   
|---------------------- | ------- | -------
|Audit Fees (1)         | $ 6,750 | $ 4,515
|Audit-related fees (2) | 0       | 0      
|Tax fees (3)           | $ 550   | $ 550  
|All other fees (4)     | 0       | 0      
|                       |         |        
|Total                  | $ 7,300 | $ 5,065

(1)     Represents fees for professional services provided in connection with the audit of the Company's annual financial statements and review of the Company's          quarterly financial statements, advice on accounting matters that arose during the audit and audit services.

(2)     During fiscal 2006 and 2005, the Company did not incur fees for assurance and related services that are reasonably related to the performance of the          auditor or review of financial statements and are not reported elsewhere.

(3)     Represents fees for services and advice provided in connection with the preparation of the Company's federal and state tax returns.

(4)     During fiscal 2006 and 2005 the Company did not incur any other fees related to the Company's financial statements and other services provided.

The Company's Board of Directors has determined that the provision of non-audit services by Manning Elliott, LLP Chartered Accountants, is compatible with maintaining Manning Elliott's independence, and none of such services were pre-approved pursuant to the de minimis exception provided in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934.

The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full time, permanent employees was 0%.















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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 27th day of July, 2006.



| | NORTH AMERICAN NATURAL GAS, INC.(Registrant)
| | --------------------------------------------



| | BY: | JIM GLAVAS 
Jim Glavas, President, Chief Executive Officer and member of the Board of Directors
| | --- | -----------------------------------------------------------------------------------------------
| |     |                                                                                                

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the Registrant and in the capacities.



|Signatures                   | Title                                                                                       | Date     
|---------------------------- | ------------------------------------------------------------------------------------------- | ---------
|RICHARD ACHRONRichard Achron | Chief Financial Officer, Principal Accounting Officer and member of 
the Board of Directors | 7/27/2006

























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