UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION



                            WASHINGTON, D.C. 20549

                                 FORM 10-KSB
                                  (Mark One)

 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                                   EXCHANGE
                                 ACT OF 1934

                  For the fiscal year ended December 31, 2006

                                      OR

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

For the transition period _________________  to  _________________

                        Commission file number 0-5474

          NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION
	  ---------------------------------------------------
             (Name of small business issuer in its charter)

                  Delaware                       75-2571032
       -------------------------------	     -------------------
       (State or other jurisdiction of        (I.R.S. Employer
       incorporation or organization)        Identification No.)

	3300 Oak Lawn Avenue, Suite 410 Dallas, Texas  75219
	-----------------------------------------------------
  	(Address of principal executive offices)   (Zip Code)


        Issuer's telephone number, including area code: (972) 671-1133

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

Securities  registered  pursuant to Section 12(g) of the Act: Common Stock, par
value $.01 per share

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. Yes [ ]  No [X]

Check whether the issuer  (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities  Exchange  Act  of 1934 during the past 12 months
(or for such shorter period that the issuer was required to file such reports),
and (2) has been subject to such filing requirements  for the past 90 days. YES
[X] NO [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K contained herein, and none will be contained,  to  the  best  of
registrant's   knowledge,   in   definitive  proxy  or  information  statements
incorporated by reference in Part  III  of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

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

The issuer's revenues for its most recent fiscal year were:  $-0-.


The aggregate market value of the voting common stock held by non-affiliates of
the  issuer,  based on the average bid and  asked  price  of  such  stock,  was
$316,666 at December 31, 2006.

At April 2, 2007, the registrant had outstanding 24,216,058 shares of par value
$.01 common stock

..DOCUMENTS INCORPORATED BY REFERENCE:  None

Transitional Small Business Disclosure Format (check one):  Yes ______  No   X




TABLE OF CONTENTS

ITEM 1. DESCRIPTION OF BUSINESS                                    3
ITEM 2. DESCRIPTION OF PROPERTY                                    5
ITEM 3. LEGAL PROCEEDINGS                                          5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
	OF SECURITY HOLDERS                                        6

PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
	STOCKHOLDER MATTERS                                        7
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
	OR PLAN OF OPERATION                                       8
ITEM 7. FINANCIAL STATEMENTS                                       9
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH
	ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE         10
ITEM 8a.CONTROLS AND PROCEDURES                                    10
ITEM 8b.OTHER                                                      10

PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
	CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a)
	OF THE EXCHANGE ACT 11
ITEM 10.EXECUTIVE COMPENSATION                                     12
ITEM 11.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
	OWNERS AND MANAGEMENT                                      13
ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS             13
ITEM 13.EXHIBITS AND REPORTS ON FORM 8-K                           15
ITEM 14.PRINCIPAL ACCOUNTANTS' FEES AND SERVICES                   16



<PAGE>
             NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION

                                    PART I

ITEM 1.    DESCRIPTION OF BUSINESS

General

North  American  Gaming  and  Entertainment  Corporation  (the  "Company")  was
incorporated  under  the  laws  of  the  State of Delaware in 1969. The Company
changed its name from Western Natural Gas  Company to North American Gaming and
Entertainment Corporation on October 17, 1994  in  connection  with  its merger
(the "Merger") with OM Investors, Inc. ("OM").

Operation of Video Poker Casinos

Until  August  20,  2001,  the Company was engaged in the video gaming business
through its partial ownership  of three operating companies that operated video
poker machines located in truck  stops in Louisiana. Effective August 20, 2001,
the  Company  sold  all  of  the Company's  interest  in  the  three  operating
companies. The Company does not  intend to liquidate as a result of the sale of
its  assets  and  is  instead  reviewing   other   business   and   acquisition
opportunities. There can be no assurances that other opportunities will  become
available on terms and conditions acceptable to the Company.


Future Business

The  Company  currently  has  no  sources  of revenue. See Item 6, Management's
Discussion and Analysis or Plan of Operations.

The Company's principal business currently is to locate and consummate a merger
with  or  acquisition of a private entity. Because  of  the  Company's  current
status of having  no substantial assets and no recent operating history, in the
event the Company does successfully acquire or merge with an operating business
opportunity,  it  is  likely  that  the  Company's  current  shareholders  will
experience dilution, resulting in a change in control of the Company.

The Company is obligated  to  file  with the Securities and Exchange Commission
certain interim and periodic reports  including  an  annual  report  containing
audited  financial  statements.  The Company intends to continue to file  these
periodic reports under the Securities  Exchange  Act  of 1934. The Company does
not maintain a website or otherwise post any of its reports on the Internet.

There can be no assurance that the Company will have the  ability to acquire or
merge with an operating business, business opportunity or property that will be
of  material  value  to the Company. Management plans to investigate,  research
and, if justified, potentially  acquire  or merge with or make an investment in
one or more businesses or business opportunities.

The Company intends to use various sources in its search for potential business
opportunities  including  its  officers  and  directors,  consultants,  special
advisors,  securities  broker-dealers,  venture  capitalists,  members  of  the
financial  community  and  others who may present management  with  unsolicited
proposals. To date, the Company has not engaged any prospective consultants for
these purposes. The Company  does  not  intend  to  restrict  its search to any
specific  kind  of  industry  or  business.  The  Company  may investigate  and
ultimately  acquire a venture that is in its preliminary or development  stage,
is already in  operation,  or  in various stages of its corporate existence and
development. Management cannot predict at this time the status or nature of any
venture in which the Company may  participate.  A  potential venture might need
additional capital or merely desire to have its shares publicly traded.



<PAGE>
Once the Company has identified a particular non-public  entity  as a potential
acquisition  or  merger  candidate,  management will seek to determine  whether
acquisition  or  merger  is  warranted  or  whether  further  investigation  is
necessary. Such determination will generally be based on management's knowledge
and  experience, or with the assistance of  outside  advisors  and  consultants
evaluating  the preliminary information available to them. Management may elect
to engage outside  independent  consultants  to perform preliminary analysis of
potential business opportunities. However, because  of  the  Company's  limited
capital,  it  may  not  have  the necessary funds for a complete and exhaustive
investigation  of any particular  opportunity.  In  evaluating  such  potential
business opportunities,  the  Company  will consider, to the extent relevant to
the specific opportunity, several factors  including  potential benefits to the
Company  and  its  shareholders;  working capital, financial  requirements  and
availability of additional financing;  history  of operation, if any; nature of
present and expected competition; quality and experience  of  management;  need
for  further  research,  development  or  exploration; potential for growth and
expansion; potential for profits; and other  factors  deemed  relevant  to  the
specific  opportunity.  Because  the  Company  has not made any agreement for a
specific  business  opportunity  as  of  the  date hereof,  there  are  certain
unidentified  risks  that  cannot  be  adequately  expressed   prior   to   the
identification  of  a  specific business opportunity. There can be no assurance
following consummation of  any  acquisition or merger that the business venture
will develop into a going concern  or,  if  the  business is already operating,
that it will continue to operate successfully. Many  of  the potential business
opportunities available to the Company may involve new and  untested  products,
processes or market strategies which may not ultimately prove successful.

The  Company  cannot currently predict the manner in which it might participate
in a prospective business opportunity. Each separate potential opportunity will
be reviewed and,  upon  the basis of that review, a suitable legal structure or
method of participation will  be  chosen.  The  particular  manner in which the
Company participates in a specific business opportunity will  depend  upon  the
nature of that opportunity, the respective needs and desires of the Company and
management  of  the  opportunity,  and the relative negotiating strength of the
parties involved. Actual participation  in a business venture may take the form
of  an  asset  purchase,  lease,  joint venture,  license,  partnership,  stock
purchase, reorganization, merger or consolidation. The Company may act directly
or indirectly through an interest in  a partnership, corporation, or other form
of  organization;  however,  the Company does  not  intend  to  participate  in
opportunities through the purchase of minority stock positions.

Because of the Company's current status, it is likely that any potential merger
or  acquisition  with  another  operating  business  will  require  substantial
dilution of the Company's existing  shareholders.  There could also be a change
in control of the Company, with the incoming owners  of  the targeted merger or
acquisition candidate taking over control of the Company.  Management  has  not
established  any  guidelines  as  to  the  amount  of  control it will offer to
prospective business opportunity candidates, since this  issue will depend to a
large degree on the economic strength and desirability of  each  candidate, and
relative bargaining power of the parties. However, management will  endeavor to
negotiate the best possible terms for the benefit of the Company's shareholders
as the case arises.

If  a  private  sale  of the Company's securities is deemed appropriate in  the
future, management will  endeavor  to acquire funds on the best terms available
to the Company. However, there can be  no  assurance  that  the Company will be
able to obtain funding when and if needed, or that such funding,  if available,
can be obtained on terms reasonable or acceptable to the Company.

In the event of a successful acquisition or merger, a finder's fee, in the form
of  cash  or securities of the Company, may be paid to persons instrumental  in
facilitating  the  transaction. The Company has not established any criteria or
limits for the determination  of  a  finder's  fee,  although  most  likely  an
appropriate  finder's fee will be negotiated between the parties, including the
potential business  opportunity  candidate,  based upon economic considerations
and reasonable value as estimated and mutually  agreed at that time. A finder's
fee would generally be payable upon completion of  the  proposed acquisition or
merger  in  the  normal  case,  and management does not contemplate  any  other
arrangement at this time. Management  has not actively undertaken a search for,
or retention of, any finder's fee arrangement  with  any person. It is possible
that a potential merger or acquisition candidate would  have  its  own finder's
fee  arrangement,  or  other  similar  business brokerage or investment banking
arrangement, whereupon the terms may be governed by a pre-existing contract,
and in such case, the Company may be limited in its ability to affect the terms
of compensation.



<PAGE>

Investments.  In March 2004, the Company  entered into a loan agreement with US
Daylighting, L.L.C. ("Daylighting").  Under  the terms of the Note, the Company
is  to  initially  advance  up to $150,000 to Daylighting,  with  interest  due
monthly at 9%.  Accrued interest  on the note has not been paid as of September
30, 2005.  The Company may advance an additional $150,000 and has the option to
convert  the  total  of  all  advances  ($300,000)   into  a  25%  interest  in
Daylighting.  Advances under the note are due within six months of demand being
made by the Company, and the note is in default as of  December  31, 2006.  The
note is secured by various membership interests of Daylighting.  As of December
31,  2006,  the  Company  had  advanced  $133,000  under this note, and accrued
interest receivable on this note is $33,590 as of December 31, 2006.

Competition

The  Company  will face competition in its desire to merge  with  an  operating
company with similar  objectives.  In  recent  years,  an  increasing number of
companies have avoided the traditional initial public offering process in favor
of  a reverse merger with a public entity having assets and businesses  ranging
from  nothing to substantial revenues and operations. The Company believes that
its history  as  an  operating  company, subsequent attempts to engage in a new
business, and its current balance  sheet  will  enable  it to achieve a reverse
merger  with fewer regulatory hurdles than could be accomplished  by  a  "blank
check" public company having no assets or operating history.

Employees

As of December  31,  2006  the Company retained one full time and one part time
worker on contract and one hired consultant.

ITEM 2.    PROPERTIES

The Company's principal executive  office  is  located  in  Dallas,  Texas  and
occupies 800 square feet under a lease paid for by a related party.

ITEM 3.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NONE



<PAGE>
PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The  Company's  Common Stock is traded over-the-counter and quoted from time to
time  in  the  OTC  Bulletin   Board   under   the  trading  symbol  "NAGM.OB".
Consequently, there is currently no established  public  trading market for the
Company's Common Stock. The following table sets forth the  range  of  high and
low bid prices as reported by the OTC Bulletin Board for the periods indicated.
Such  quotations represent inter-dealer prices without retail markup, markdown,
or commission, and may not necessarily represent actual transactions


CALENDAR YEARS	BY QUARTER          BID PRICE
--------------	----------	 --------------
              			  HIGH      LOW
				 -----	  -----
     2006       First     	 $0.06    $0.03
                Second       	  0.04     0.03
                Third        	  0.12     0.02
                Fourth       	  0.12     0.04
     2005       First     	 $0.08    $0.03
                Second       	  0.06     0.03
                Third        	  0.03     0.03
                Fourth       	  0.03     0.03


At December 31, 2006 the Company had approximately 3,072 common stockholders of
record.

The Company  has  not  paid  cash dividends on Common Stock during the last two
years and the Board of Directors  of  the  Company does not currently intend to
pay cash dividends on Common Stock in the foreseeable  future.  The Company may
not  declare  or  pay  dividends  on Common Stock if there are accumulated  and
unpaid  dividends  on its former outstanding  Class  A  Preferred  Stock.  From
October 17, 1994 through May 31, 1996, the former outstanding Class A Preferred
Stock bore a dividend  of  $.30 per annum (payable monthly), an annual dividend
of $480,000 because all 1,600,000  shares  were outstanding. As of December 31,
2006, the Company is in arrears on dividends  on its former outstanding Class A
Preferred Stock in the amount of $15,003. All other former holders of the Class
A  Preferred Stock have entered into settlement  agreements  with  the  Company
pursuant to which their accrued dividends were cancelled.

As of  December 31, 2006, all but $12,700 of the subordinated debentures issued
by the Company  in  connection with the redemption of 313,000 shares of Class A
Preferred Stock had been redeemed by the Company pursuant to various settlement
agreements entered into with the holders of the subordinated debentures.

There were no redemptions of the Company's stock for the fourth quarter 2006.


EQUITY COMPENSATION PLAN INFORMATION

                   	(a)        	(b)        	(c)
Plan Category      	Number of  	Weighted-  	Number of
                   	securities 	average    	securities
                   	to be      	exercise   	remaining for
                   	issued     	price of   	future
                   	upon       	outstanding	issuance
                   	exercise of	options,   	under equity
                   	outstanding	warrants   	compensation
                   	options,   	and rights.	plans
                   	warrants 	             	(excluding
                   	and rights.	           	securities
                                   	 	     	reflected in
							column (a)


Equity compensation	   None       	   N/A        	   N/A
plans approved by
security holders
Equity compensation	 1,000,000  	 $ .03125   	     None
plans not approved	 ---------	 --------	 --------
by security holders
TOTAL              	 1,000,000  	 $ .03125	        -
			 =========	 ========  	 ========



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

Liquidity and Capital Resources

General Condition. The  Company  ended  2006  with  $784 in cash, $2,831 in net
fixed assets, $33,590 in accrued interest receivable  and  $133,000  in  a note
receivable.   Total  liabilities were $530,744 at December 31, 2006 and consist
of accounts payable and  accrued  liabilities  of  $96,037,  notes  payable  of
$419,704  and  preferred  stock  dividends  payable  of  $15,003. The Company's
current  liabilities  increased  from  $346,094  at  December 31,  2005.   This
increase was due primarily to the additional borrowings from related parties.



CONTRACTUAL OBLIGATIONS AS           PAYMENTS DUE BY PERIOD
OF DECEMBER 31, 2006

                                TOTAL    LESS     1-3    3-5  MORE THAN
                                         THAN    YEARS  YEARS  5 YEARS
                                         1 YEAR
8% - 12% notes payable          $419,704 $419,704      -      -      -
				-------- -------- ------ ------ ------
Total                           $419,704 $419,704      -      -      -
				======== ======== ====== ====== ======



Plan of Operations

Effective  August  20,  2001, the Company sold its interests  in  video  gaming
business for cash and notes receivable. During 2003, the Company sold the notes
receivable for cash. As a  result,  the  Company  has no on-going operations or
revenues.  The  Company's  plan  is  to  continue  exploring   for  acquisition
opportunities  and  the  financing  required  to  buy  and support an operating
business. There is no assurance that we will be able to  do so, and during 2006
we will have to continue to rely on advances from management  and  shareholders
to pay our basic level of operating expense.

Our independent accountants have expressed substantial doubt about our  ability
to continue as a going concern.



Results of Operations

Operating Income (Expense)

The  Company  recorded a loss from operations of $183,073 during the year ended
December 31, 2006  compared  to  loss  from operations of $153,652 for the year
ended December 31, 2005.  The increase in  the loss is primarily due to $28,000
in director compensation expense during 2006 related to stock options.

During  the  year ended December 31, 2006, the  Company  recorded  general  and
administrative  costs  of  $183,073  compared to $153,652 during the year ended
December  31,  2005.   Included  in  general   and   administrative   costs  is
depreciation  expense of $1,356 and $399 for the years ended December 31,  2006
and 2005, respectively.

Interest Expense

The Company recorded  interest  expense  of $31,592 for the year ended December
31,  2006,  compared to $24,163 for the year  ended  December  31,  2005.   The
increase is due to additional borrowings during 2006.

Interest Income and Other Income (Expense)

The Company recorded  interest  income  of  $11,970  in each of the years ended
December 31, 2006 and 2005.  Interest income relates to  the  Company's secured
note receivable with U.S. Daylighting, L.L.C.

The  Company  recorded  no other income for the year ended December  31,  2006,
compared to net other income  of  $57,058 for the year ended December 31, 2005.
The net other income in 2005 is related  to  interest  and fees of $32,000 plus
the collection of previously charged-off amounts of $25,000 from Techlite.

Lease

The  Company  occupied  office  space under a 72-month operating  lease,  which
commenced in November 1996 and expired  on October 31, 2002. Effective November
1, 2002, the Company negotiated a six-month  lease  of  871  square feet with a
monthly  rent of approximately $900.00.  Effective March 1, 2007,  the  Company
moved its offices and occupies approximately 800 square feet under a lease paid
for by a related party.

Critical Accounting Policies

Impairment:  We review all assets to be held and used in the Company's business
for impairment,  whenever  events or changes in circumstances indicate that the
related carrying amount may  not  be  recoverable.  When  required,  impairment
losses on assets to be held and used are recognized based on the fair  value of
the assets.

Share-Based  Compensation:   We  record  expense  for  share-based  payments to
employees,  directors  and other entities based on the estimated fair value  of
these awards.  We estimate  the  fair  value  of  stock  options using a Black-
Scholes  model  and reasonable assumptions regarding risk-free  interest  rate,
stock price volatility  and  estimated  term  of  such  options.   Stock  price
volatility is determined based on the historical stock price of the Company.

Forward Looking Statements

Statements  that  are  not  historical  facts  included in this Form 10-KSB are
"forward-looking  statements"  within the meaning  of  the  Private  Securities
Litigation Reform Act of 1995 that  involve  risks and uncertainties that could
cause actual results to differ from projected  results. Such statements address
activities,  events  or  developments  that  the  Company   expects,  believes,
projects, intends or anticipates will or may occur, including  such  matters as
future  capital,  debt  restructuring,   pending  legal  proceedings,  business
strategies,  expansion  and  growth of the Company's operations, and cash flow.
Factors  that could cause actual  results  to  differ  materially  ("Cautionary
Disclosures") are described throughout this Form 10-KSB. Cautionary Disclosures
include, among  others:  general  economic conditions, the Company's ability to
find, acquire, market, develop and  produce  new  properties or new businesses,
the strength and financial resources of the Company's  competitors, anti-gaming
sentiment,  labor relations, availability and cost of material  and  equipment,
the results of debt restructuring efforts, regulatory
developments  and  compliance,  and  pending legal proceedings. All written and
oral  forward-looking statements attributable  to  the  Company  are  expressly
qualified  in  their  entirety  by  the  Cautionary  Disclosures.  The  Company
disclaims  any obligation to update or revise any forward-looking statement  to
reflect  events   or  circumstances  occurring  hereafter  or  to  reflect  the
occurrence of anticipated or unanticipated events.

ITEM 7.    FINANCIAL STATEMENTS

The financial statements required by this item begin at Page F-1 hereof.

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

None.

ITEM 8A.    CONTROLS AND PROCEDURES

     (a)Within the 90-day period prior to the date  of  this report, we carried
        out an evaluation, under the supervision and with  the participation of
        our  management,  including  the  Chief  Executive  Officer  and  Chief
        Financial Officer, of the effectiveness of the design  and operation of
        our disclosure controls and procedures pursuant to Rule  13a-14  of the
        Securities  Exchange  Act of 1934 (the "Exchange Act"). Based upon that
        evaluation, the Chief Executive  officer  and  Chief  Financial Officer
        concluded that our disclosure controls and procedures are  effective in
        timely  alerting  them to material information relating to the  Company
        (including it consolidated subsidiaries) required to be included in our
        Exchange Act filings.

     (b)There have been no  significant  changes in our internal controls or in
        other  factors,  which  could significantly  affect  internal  controls
        subsequent to the date we carried out our evaluation.


ITEM 8B.    OTHER

None.




<PAGE>
                                   PART III

ITEM 9.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;

The following table provides information  as  of March 1, 2007, with respect to
each of the Company's directors and each executive officer:

							 SERVED AS
                                                         EXECUTIVE
                                                         OFFICER OR
NAME             	AGE     POSITION  		 DIRECTOR SINCE
---------------------	---	-----------------------	 --------------
E.H. Hawes, II          68 	Director (Chairman),               1998
                             	President, Chief
                             	Executive Officer and
				Chief Financial Officer

Richard P. Crane, Jr.   68 	Director and Secretary             1994


E. H. Hawes, II.   Mr. Hawes has been the Chairman  of the Board, President and
Chief Executive Officer of the Company since January  7,  1998. He has been the
Chairman  of  the  Board  of IT Financial Corporation ("ITFC"),  which  is  the
holding company for International  Tours,  Inc.  ("International"), since 1969,
and has been the Chairman of the Board of International  since  1969.  ITFC and
International  are  privately  owned  corporations  engaged  in the business of
travel agency franchising and travel agency training and schools. Mr. Hawes has
also been President of Glacier Petroleum, Inc., a privately owned  oil  and gas
exploration company, since 1971.

Richard  P.  Crane,  Jr.    Mr.  Crane  has  been  a partner in the law firm of
Kirkpatrick and Lockhart, Los Angeles, California, for approximately two years,
and prior to that time was a partner in the laws firms  of  Musick,  Peeler and
Garrett, Santa Monica, California, for approximately five years, Crane, Rayle &
Lennemann, Santa Monica, California, for approximately two years, and  Girardi,
Keese  &  Crane, Los Angeles, California, for 14 years. Mr. Crane has practiced
law for over  34  years,  seven  of which were with the U.S. Attorney General's
Office where for five years he was  the  Attorney  in  Charge  and  Chief Trial
Counsel of the Organized Crime and Racketeering Section of the Western Regional
Office.  He  has  served  as  a  Director and as Secretary of the Company since
October 1994. Mr. Crane is also a  director  of Service Merchandise, Inc. which
is a publicly traded company. He is a graduate  of  Vanderbilt  University  and
holds a law degree from Vanderbilt University Law School.

During  2006,  the  Board of Directors took three corporate action by unanimous
written consent. The  Company  does  not  have an audit committee, a nominating
committee,  or  a compensation committee or any  committee  performing  similar
functions.

The Company reimburses  the  directors  for their expenses (if any) incurred in
connection with their duties as directors.  Mr.  Crane  was  granted options on
January 20, 2000 to purchase 1,000,000 shares of Common Stock  at  an  exercise
price  of  $.03125  per  share, the approximate fair market value on such date,
with such options vesting  immediately and having a term of five years from the
date of grant.  In March 2006, the options were extended for an additional five
year period, expiring March 29, 2011.  This resulted in compensation expense of
$28,000, representing the estimated  fair  value  of  these options at the date
these options were extended.

Section 16(a) Beneficial Ownership Reporting Compliance

Based  solely  upon  a  review  of Forms 3, 4 and 5 furnished  to  the  Company
pursuant to Rule 16a-3(e) promulgated under the Securities Exchange Act of 1934
(the "Exchange Act"), or upon written  representations received by the Company,
the Company is not aware of any failure  by any officer, director or beneficial
owner of more than 10% of the Company's Common  Stock  to  timely file with the
Securities and Exchange Commission any Form 3, 4 or 5 relating to 2002.



<PAGE>
ITEM 10.  EXECUTIVE COMPENSATION

The  following  table  sets  forth  the  compensation paid by the  Company  for
services rendered during the fiscal years  ended  December  31,  2006, 2005 and
2004, and the number of options granted, to the Chief Executive Officer  of the
Company,  and the value of the unexercised options held by such Chief Executive
Officer on  December  31,  2006.  No  other  executive  officer  of the Company
received remuneration in excess of $100,000 during 2006.

                          Summary Compensation Table

<TABLE>
<CAPTION>
                        ANNUAL
                     COMPENSATION


<S>               <C>  <C>    <C>   <C>                     <C>                <C>
NAME AND         	YEAR	SALARY	BONUS	STOCK AND 	ALL OTHER      	  TOTAL
PRINCIPAL                                       OPTION AWARDS	COMPENSATION
POSITION
--------		----	------	-----	-------------	------------  	---------
E. H. Hawes, II, 	2006 	$  -  	$  -       	-     	$      0(1)     $     0(1)
  Chief Executive	2005	   - 	   -       	-              0(1)           0(1)
  Officer        	2004	   -  	   -       	-         27,000(1)      27,000(1)

</TABLE>

(1)  Represents consulting fees paid by the Company.

The  Board  of  Directors  has committed the Company to pay up to a maximum  of
$50,000 in consulting payments to Mr. Hawes during 2007.

                 Outstanding Equity Awards at Fiscal Year-End

<TABLE>
<CAPTION>




NAME		NUMBER OF	NUMBER OF	OPTION		OPTION		NUMBER OF	NUMBER OF
		EXERCISABLE	UNEXERCISABLE	EXERCISE	EXPIRATION	VESTED		UNVESTED
		SECURITIES	SECURITIES	PRICE		DATE		SHARES		SHARES
		UNDERLYING	UNDERLYING	($/Sh)				OF		OF
		UNEXERCISED	UNEXERCISED					STOCK		STOCK
		OPTIONS OR	OPTIONS OR					#		#
		WARRANTS	WARRANTS
		GRANTED		GRANTED
		#		#
		-----------	------------	---------	-----------	----------	-----------


		<C>		<C>		<C>		<C>		<C>		<C>
E.H. HAWES, II		  -		   -		-		  -		 -		  -




</TABLE>


                       Director Compensation

<TABLE>
<CAPTION>

<S>            <C>                  <C>    <C> <C>


NAME			FEES EARNED	STOCK 	OPTION	     NON-EQUITY		NONQUALIFIED	ALL OTHER 	TOTAL
			OR PAID		AWARDS	AWARDS	     INCENTIVE		DEFERRED	COMPENSATION
			IN CASH				     COMPENSATION	COMPENSATION
--------------------	-----------	------  -------	     ------------	------------	------------	-------
E.H. HAWES, II	        $	  0     $    0  $     0      $		0       $	   0    $	   0    $     0
Richard P. Crane Jr.    	  0          0   28,000(1)              0             	   0               0     28,000


</TABLE>


(1) Mr. Crane was granted options  on  January  20,  2000 to purchase 1,000,000
shares  of  common  stock  at  an  exercise  price of $.03125  per  share,  the
approximate  fair  market  value  on  such  date,  with  such  options  vesting
immediately and having a term of five years from the  date  of grant.  In March
2006,  the  options were extended for an additional five year period,  expiring
March 29, 2011.  This resulted in compensation expense of $28,000, representing
the estimated  fair  value  of  these  options  at  the date these options were
extended.  The options were fully vested at the date of this award.


The Company reimburses the directors for their expenses  (if  any)  incurred in
connection with their duties as directors.


<PAGE>
ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following table sets forth certain information regarding the ownership  of
Common  Stock as of March 31, 2007, by each stockholder known to the Company to
own beneficially  more  than five percent of the outstanding Common Stock, each
current director, and all executive officers and directors as a group, based on
information provided to the  Company  by  such  persons.  Except  as  otherwise
stated,  each such person has sole investment and voting power with respect  to
the shares set forth in the table:


NAME AND ADDRESS OF BENEFICIAL OWNER	NUMBER OF SHARES	PERCENT
------------------------------------	----------------	-------
International Tours, Inc.(1)         	12,886,960       	53.2%
13150 Coit Road
Suite 125
Dallas, Texas 75240

Hawes Partners(1)                    	13,122,620       	54.2%
2512 Maple Avenue
Dallas, Texas  75201

E.H. Hawes, II(1)                    	13,124,954       	54.2%
2512 Maple Avenue
Dallas, Texas  75201

Richard P. Crane, Jr.(2)             	1,535,556         	6.1%
530 Wilshire Blvd., Ste. 400
Santa Monica, California 90401

Daryl N. Snadon(3)                   	2,535,673        	10.4%
15280 Addison Rd., Ste 300
Dallas, Texas 75248

Mike D. Case                         	1,750,000         	7.2%
4200 East Skelly Drive
Tulsa, Oklahoma 74135

James Bowyer                         	2,058,644         	8.5%
10956 Weyburn Avenue, Ste. 202
Los Angeles, CA 90024

All Executive Officers and           	14,660,510       	60.5%
Directors as a Group
(2) persons)(1)(2)


(1) International  Tours,  Inc.  ("International")  owns  12,886,960  shares of
    Common  Stock  of  record and beneficially. E. H. Hawes, II, owns of record
    and beneficially 2,334  shares  of Common Stock. I.T. Financial Corporation
    ("ITFC") owns 235,660 shares of Common  Stock  of  record and beneficially.
    Hawes   Partners  is  owned  100%  owned  by  Mr.  Hawes.  Hawes   Partners
    beneficially  owns  100% of the outstanding capital stock of International.
    Consequently, the 12,651,300  shares  of  Common  Stock owned of record and
    beneficially by International may also be deemed to  be  beneficially owned
    by each of Hawes Partners and Mr. Hawes, and are reflected  accordingly  in
    the  table  above  for their respective ownership positions. Hawes Partners
    also beneficially owns  more than a majority of ITFC and Hawes Partners and
    Mr. Hawes may also be deemed  to  beneficially own the shares owned by ITFC
    and such shares are reflected as being  beneficially  owned by each of them
    in the table above.

(2) Includes vested options to acquire 1,000,000 shares.

(3) Includes  535,666  shares pledged as collateral on a note  payable  to  Mr.
    Snadon's former wife.


ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Consulting Fees. E.H. Hawes,  II  is  the  Chairman of the Board, President and
Chief Executive Officer of the Company. Mr.  Hawes provides consulting services
to the Company and was paid $-0- in consulting  fees  during  2006  and $-0- in
2005. He does not receive a salary from the Company. The Company has  agreed to
pay  Mr.  Hawes  up  to  a maximum of $50,000 during fiscal 2007 for consulting
services and expense reimbursements.







                                  SIGNATURES

In accordance with Section  13 or 15(d) of the Securities Exchange Act of 1934,
the Company has duly caused this  report  to  be  signed  on  its behalf by the
undersigned, thereunto duly authorized.

                	NORTH AMERICAN GAMING AND
                	ENTERTAINMENT CORPORATION
			---------------------------------
April 4, 2007		By:/s/ E. H. HAWES, II, PRESIDENT
			---------------------------------
                	E. H. Hawes, II, President
                	and Chief Executive Officer
                	(Principal Executive Officer and
                	Principal Financial and Accounting
                	Officer)


In  accordance with the Securities Exchange Act of 1934, this report  has  been
signed  below  by  the  following  persons  on behalf of the Company and in the
capacities and on the dates indicated.


April 4, 2007		/s/    E. H. HAWES, II
			----------------------
             		E.H. Hawes, II
             		Director (Chairman)

April 4, 2007		/s/    RICHARD P. CRANE, JR.
			----------------------------
             		Richard P. Crane, Jr.
             		Director





ITEM 13.    EXHIBITS

(a) The following documents are filed as part of this Annual Report on Form 10-
    KSB:

    1.  Financial Statements: The financial statements filed as part of
	this report are listed in the "Index to  Financial  Statements"
	on Page F-1 hereof.

    2.  Exhibits required to be filed by Item 601 of Regulation S-B:

3.1.1	Certificate of Incorporation of the Company, as  amended, filed
	as Exhibit 3.1 to the Company's Annual Report on  Form 10-K for
     	the fiscal year ended December 31, 1986 (the "1986 Form 10-K"),
	and incorporated herein by reference.

3.1.2	Certificate of Amendment of Certificate of Incorporation of the
	Company dated April 18, 1994, filed as  Exhibit  3.1.8  to  the
     	Company's Annual Report on Form 10-K for the fiscal year  ended
	December  31,  1993  (the "1993 Form 10-K"),  and  incorporated
     	herein by reference.

3.1.3	Certificate of Amendment of Certificate of Incorporation of the
	Company effecting one-for-three  reverse stock split  filed  as
     	Exhibit 3.1 to the Company's Current Report  on  Form 8-K dated
	October 17, 1994, and incorporated herein by reference.

3.1.4	Certificate of Amendment of Certificate of Incorporation of the
	Company  effecting  name change, increase of authorized shares,
     	authorization of Class A preferred stock  and  stock  ownership
 	limitations filed as  Exhibit  3.2  to  the  Company's  Current
	Report  on  Form  8-K dated  October 17, 1994, and incorporated
	herein by reference.

3.1.5	Form of "Certificate of Designation, Preferences and Rights  of
	Series B Convertible Preferred Stock"  creating  the  Series  B
     	Preferred  Stock  filed  as  Exhibit 10.1.4  to  the  Company's
	Current  Report  on  Form  8-K   dated   June  10,  1996,   and
	incorporated herein by reference.

3.1.6	Certificate  of  Amendment  of Certificate  of Incorporation of
	the  Company  increasing  the  number  of  authorized shares of
	Common Stock to 100,000,000 shares filed as Exhibit  3.1.6   to
	the Quarterly Report on  Form 10-QSB  for  the  fiscal  quarter
	ended June 30, 1998 and incorporated herein by reference.

3.2  	Amended and Restated Bylaws of the Company filed as Exhibit 3.2
	to the Company's Quarterly Report on Form 10-QSB for the fiscal
	quarter	ended  September  30,  1998, and incorporated herein by
	reference.

31.1	Certification of Chief Executive Officer  and  Chief  Financial
	Officer Under Section 302 of the Sarbanes-Oxley Act of 2002.

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









<PAGE>
ITEM 14.    PRINCIPAL ACCOUNTANT SERVICES AND FEES

The  Company's  principal  accountants  are  Sartain Fischbein & Co. located in
Tulsa, Oklahoma. Fees paid for audit and tax services  for  the  past two years
are:

                    Audit    Audit-Related	  Tax
                     Fees        Fees   	  Fees

2006               $23,050  $      -             $3,400 (1)
2005                22,600         -              1,600 (1)


(1) Tax fees relate to preparation of the Company's corporate income tax
returns for the preceding year.


The Audit Committee preapproves all services performed by the Company's
principal accountant.



<PAGE>


NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION
TABLE OF CONTENTS

Financial Statements of North American Gaming and Entertainment Corporation

<TABLE>
<CAPTION>
                                                                                  PAGE
<S>                                                                              <C>
Report of Independent Registered Public Accounting Firm                           F-2
Financial Statements:
    Balance Sheet - December 31, 2006                                             F-3
    Statements Of Operations - Years Ended  December 31, 2006 and 2005            F-4
    Statements Of Stockholders' Deficit - Years Ended December 31, 2006 and 2005  F-5
    Statements Of Cash Flows - Years Ended December 31, 2006 and 2005             F-6
    Notes To Financial Statements                                               F-7-F-10
</TABLE>

                                      F-1

<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
North American Gaming and Entertainment Corporation


We  have  audited  the accompanying balance sheet of North American Gaming  and
Entertainment Corporation  (a Delaware corporation) as of December 31, 2006 and
the related statements of operations,  stockholders' deficit and cash flows for
the years ended December 31, 2006 and 2005.  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.   The Company is not
required  to  have,  nor were we engaged to perform, an audit of  its  internal
control over financial reporting.  Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the  circumstances, but not for the purpose of expressing an
opinion on the effectiveness  of  the Company's internal control over financial
reporting.  Accordingly, we express  no  such  opinion.  An audit also includes
examining, on a test basis, evidence supporting  the amounts and disclosures in
the  financial  statements,  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 Gaming and
Entertainment  Corporation  as of December 31, 2006, and  the  results  of  its
operations and its cash flows for the years ended December 31, 2006 and 2005 in
conformity with accounting principles  generally  accepted in the United States
of America.

The  accompanying  financial statements have been prepared  assuming  that  the
Company will continue  as  a  going  concern.   As  discussed  in Note 1 to the
financial statements, the Company currently has no sources of revenue  and  its
cash  flow needs will soon exhaust the available cash.  This raises substantial
doubt about the Company's ability to continue as a going concern.  Management's
plans in  regarding the continuation of the Company as a going concern are also
described in  Note  1.  The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

                                               /s/  Sartain Fischbein & Co.

March 26, 2007
Tulsa, Oklahoma










                                      F-2

<PAGE>


<TABLE>
<CAPTION>

<S>				<C>				<C>			<C>
NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION
BALANCE SHEET


December 31,                                                                                 2006
											--------------
ASSETS

Current Assets

Cash                                                                                    $          784
Interest receivable                                                                             33,590
											--------------
Total current assets                                                                            34,374

Property and equipment, net of accumulated depreciation of $1,755                                2,831

Note receivable                                                                                133,000
											--------------
Total Assets                                                                            $      170,205
											==============

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities

Notes payable                                                                           $      419,704
Accounts payable and accrued liabilities                                                        96,037
Preferred stock dividends payable                                                               15,003
											--------------
Total current liabilities                                                                      530,744
											==============
Stockholders' Deficit

Class A preferred stock, $3.00 par value, 10% annual cumulative dividend,
  1,600,000 shares authorized, no shares issued and outstanding                                      -
Preferred stock, $.01 par value, 10,000,000 shares authorized, 8,000,000
  shares designated Series "B", no shares issued and outstanding                                     -
Common stock, $.01 par value, 100,000,000 shares authorized,
  41,788,552 shares issued, 24,216,058 shares outstanding                                      417,886
Additional paid-in capital                                                                     517,214
Treasury stock, 17,572,494 shares, at cost                                                    (489,258)
Accumulated deficit                                                                           (806,381)
											--------------
Total stockholders' deficit                                                                   (360,539)
											--------------
Total liabilities and stockholders' deficit                                             $      170,205
											==============

The accompanying notes are an integral part of the financial statements.
</TABLE>



                                      F-3

<PAGE>
NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION
STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,               		2006       2005
<S>                                    		<C>      <C> <C>
Costs and expenses:
General and administrative                     $ 183,073  $ 153,652
					       ---------  ---------
Operating loss                          	(183,073)  (153,652)
Interest expense				 (31,592)   (24,163)
Interest income                           	  11,970     11,970
Other income                                           -     57,058
					       ---------  ---------
Loss before provision for income taxes  	(202,695)  (108,787)
Provision for income taxes                     	       -          -
					       ---------  ---------
Net loss                               	       $(202,695) $(108,787)
					       =========  =========
Loss Per Share:
Basic:
Net Loss                               	       $   (0.01) $      (*)
					       ---------  ---------
Diluted:
Net Loss                                       $   (0.01) $      (*)
					       ---------  ---------
</TABLE>

*less than $(0.005)

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




                                      F-4



<PAGE>

<TABLE>
<CAPTION>

<S>            <C>               <C>       <C>     <C>

NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION
STATEMENTS OF STOCKHOLDERS' DEFICIT

Years Ended December 31, 2006 and 2005

                                	SERIES              CAPITAL
			CLASS A		PREFERRED  COMMON   ADDITIONAL	TREASURY   ACCUMULATED	 ACCUMULATED	TOTAL
			PREFERRED	STOCK	   STOCK    PAID-IN	STOCK	   OTHER	 DEFICIT	STOCKHOLDERS
			STOCK		SERIES		    CAPITAL		   COMPREHENSIVE		DEFICIT
					"B"					   INCOME
			-------         -------   --------   --------   ---------  -----------	 -----------	 ----------
Balance,
January 1, 2005      	$     -         $     -   $417,886   $489,214   $(489,258) $         -   $  (494,899)    $  (77,057)

Net loss-2005       	      -               -          -          -           -            -      (108,787)      (108,787)
			-------         -------   --------   --------   ---------  -----------	 -----------	 ----------
Balance,
December 31, 2005             -               -    417,886    489,214    (489,258)           -      (603,686)      (185,844)

Issuance of
stock options          	      -               -          -     28,000           -            -             -         28,000

Net loss-2006       	      -               -          -          -           -            -      (202,695)      (202,695)
			-------         -------   --------   --------   ---------  -----------	 -----------	 ----------
Balance,
dDecember 31, 2006   	$     -         $     -   $417,886   $517,214   $(489,258) $         -   $  (806,381)    $ (360,539)
			=======		=======	  ========   ========	=========  ===========	 ===========	 ==========

</TABLE>

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














                                      F-5

<PAGE>

<TABLE>
<CAPTION>

<S>							<C>				<C>
NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION
STATEMENTS OF CASH FLOWS


YEARS ENDED DECEMBER 31,                                             2006           2005
								-------------	------------
Cash Flows From Operating Activities:
Net loss                                                        $    (202,695)  $   (108,707)
  Adjustments to reconcile net loss to net cash used
	in operating activities:
    Depreciation                                                        1,356            399
    Changes in allowance for doubtful accounts                              -        (25,000)
    Director stock option compensation expense                         28,000              -
Changes in operating assets and liabilities:
    Decrease (Increase) in:
       Interest receivable                                            (11,970)       (11,970)
    Increase (decrease) in:
       Accounts payable and accrued liabilities                        41,657        (22,057)
								-------------	------------
Net Cash Used In Operating Activities                                (143,658)      (123,301)
								-------------	------------
Cash Flows From Investing Activities:
    Increase in advances                                                    -              -
    Repayment of advances                                                   -         75,000
    Additions to property and equipment                                (1,062)        (3,254)
								-------------	------------
    Advances on note receivable

Net Cash Provided By (Used In) Investing Activities                    (1,062)        71,746
								-------------	------------
Cash Flows From Financing Activities:
    Borrowings under notes payable                                    146,000         77,500
    Payments of notes payable                                          (3,000)       (41,188)
    Payments on debentures                                                  -              -
								-------------	------------
Net Cash Provided By Financing Activities                             143,000         36,312
								-------------	------------
Net Decrease In Cash                                                  (1,720)        (15,513)
Cash, beginning of year                                         $      2,504    $     18,017
								-------------	------------
Cash, end of year                                               $        784    $      2,504
								-------------	------------
</TABLE>

Summary of Noncash Financing Activities:
  Interest expense added to notes payable			$     11,192    $     12,472

Other Disclosures:
Interest paid							$          -    $          -
Income taxes paid						$          -    $          -

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



                                      F-6

<PAGE>


NORTH AMERICAN GAMING AND ENTERTAINMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS

Years Ended December 31, 2006 and 2005

1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

North  American  Gaming  and  Entertainment  Corporation  (the  "Company")  was
incorporated under the laws of the State of Delaware in 1969.

The  accompanying  financial  statements  have  been prepared assuming that the
Company will continue as a going concern. However, the Company currently has no
sources  of  revenue and its cash flow needs will soon  exhaust  the  available
cash.  Management  plans  to continue operating the business and pursue various
business, investment and financing  opportunities.  The financial statements do
not  include  any  adjustments that might  result  from  the  outcome  of  this
uncertainty.

Use of Estimates:
The  preparation  of  financial   statements   in  conformity  with  accounting
principles  generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amount 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 reporting period. Actual results could differ from  those
estimates.

Property and Equipment:
Property and equipment,  which  consists  of  office  equipment, is depreciated
using the straight-line method over the estimated useful  lives  of the related
assets.   Repairs  and  maintenance  are  expensed  as incurred, whereas  major
improvements are capitalized.

Income Taxes:
The Company uses the asset and liability method of accounting for income taxes.
Under the asset and liability method, deferred tax assets  and  liabilities are
recognized for the future tax consequences attributable to differences  between
the  consolidated  financial statement carrying amounts of existing assets  and
liabilities and their  respective  tax  consolidated basis. Deferred tax assets
and liabilities are measured using enacted  tax  rates  expected  to  apply  to
taxable  income  in the years in which those temporary differences are expected
to be recovered or  settled.  The effect on deferred tax assets and liabilities
of a change in tax rates is recognized  in  income  in the period that includes
the enactment date.

Fair Value of Financial Instruments:
The carrying amounts of financial instruments including  cash,  advances, notes
receivable, accounts payable and accrued expenses approximated fair value as of
December   31,   2006  because  of  the  relatively  short  maturity  of  these
instruments.

The carrying amounts  of debt issued approximates fair value as of December 31,
2006 because interest rates  on  these  instruments approximate market interest
rates.

Stock Options
For stock options granted or modified after  January  1,  2006 (see Note 8, the
Company uses the fair value based method of accounting prescribed  by Statement
of  Financial Accounting Standards (SFAS) No. 123R, Share-Based Payment,  which
was adopted  by  the  Company  effective January 1, 2006.  The adoption of SFAS
123R had no impact on the Company's financial statements as of January 1, 2006,
since no share-based payments were  outstanding at that date.  Under SFAS 123R,
compensation  expense related to stock  options  is  determined  based  on  the
estimated fair  value  of the options granted and recognized over the requisite
service period or immediately  if  there  is  no  requisite service period.  As
discussed in Note 8, the Company recorded compensation  expense  of $28,000 for
options awarded to a director in March 2006

Notes Receivable and Advances
The Company records notes receivables at cost and accrues interest based on the
stated rates in the note agreement, unless such rates are materially  different
than  prevailing  market  rates  and  unless  ultimate  collectibility  of such
interest  is  not  reasonably  assured.   The  Company records an allowance for
doubtful accounts for amounts estimated to be uncollectible  from  such parties
and their guarantors, as applicable.



                                      F-7

Recent Accounting Pronouncements
In  September  2006,  the Financial Accounting Standards Board ("FASB")  issued
SFAS 157, Fair Value Measurements.   The  new standard provides guidance on the
definition of and how to measure fair value and what sources of information are
to be used in such measurements.  It also prescribes expanded disclosures about
fair value measurements contained in the financial  statements.  The Company is
in the process of evaluating the new standard, which  is  not  expected to have
any  effect  on  its  financial  position  or  results  of operations, although
financial statement disclosures may be revised to conform  to the new guidance.
The pronouncement, including the new disclosures, is effective  for the Company
as of January 1, 2008.

2.  EARNINGS PER SHARE

The following data shows the amounts used in computing loss per share.

                                     NET INCOME    WEIGHT    PER SHARE AMOUNT
                                       (LOSS)      SHARES
                                     (NUMERATOR)(DENOMINATOR)

For the Year Ended December 31, 2005:
    Basic loss per common share       $(108,787) 24,216,058   $(*)

    Effect of dilutive stock options         -          -
				       --------	 ----------
    Diluted loss per common share     $(108,787) 24,216,058   $(*)
				       ========  ==========    ===
For the Year Ended December 31, 2006:
    Basic loss per common share       $(202,695) 24,216,058   $(0.01)

    Effect of dilutive stock options         -          -
				       --------	 ----------
    Diluted loss per common share     $(202,695) 24,216,058   $(0.01)
				       --------	 ----------    -----

*less than $(0.005)

Options  for  1,000,000  shares of common stock have not been included  in  the
computation of diluted earnings per share due to their being anti-dilutive.

3.  OTHER INCOME

In February and March 2004,  the  Company  advanced  a  total  of  $125,000  to
Techlite,  Inc., an unrelated publicly held Company located in Tulsa, Oklahoma.
The advances were non-interest bearing and were to be repaid in the short-term.
In consideration  for  making  this  advance,  Techlite,  Inc.  agreed to issue
110,000 shares of restricted Techlite, Inc. stock to the Company.  The advances
were  collateralized by certain accounts receivables of Techlite, Inc.   As  of
September 30, 2004, the advances became past due, and the Company filed suit to
enforce  collection.   As  such, the Company recorded an allowance for doubtful
accounts of $40,000 on the advances  and  had  not  recorded  any receivable or
income related to the 110,000 shares of restricted Techlite, Inc. stock, due to
the  uncertainty  of  collection  of the advances.  During December  2004,  the
Company collected $50,000 on this note  and subsequently received a judgment to
collect the remaining outstanding amounts  plus interest and legal fees.  Based
on the judgment and actual amounts received,  the Company reduced the allowance
for doubtful accounts by $15,000 as of December  31,  2004,  and the balance of
the advances as of December 31, 2004 was $50,000, net of allowance for doubtful
accounts of $25,000.  During 2005, the Company received $107,000 from Techlite,
Inc. in satisfaction of all outstanding obligations, which included  collection
of  the gross amount of the outstanding advances of $75,000, plus interest  and
fees  of  $32,000.   The  interest  and fees of $32,000, plus the collection of
previously charge-off amounts of $25,000  (totaling  $57,000)  are  included in
other income in the accompanying 2005 statement of operations.

4.  NOTE RECEIVABLE

In  March  2004, the Company entered into a loan agreement with US Daylighting,
L.L.C. (Daylighting).  Under the terms of the Note, the Company is to initially
advance up to  $150,000  to  Daylighting, with interest due monthly at 9%.  The
Company may advance an additional  $150,000  and  has the option to convert the
total of all advances ($300,000) into a 25% interest  in Daylighting.  Advances
under the note are due within six months of demand being  made  by the Company,
and  the  note is in default as of December 31, 2006.  The note is  secured  by
various membership  interests  of  Daylighting.   As  of December 31, 2006, the
Company has advanced $133,000 under this note, and accrued  interest receivable
on  this  note is $33,590_as of December 31, 2006.  No allowance  for  doubtful
accounts is  considered  necessary,  due  to  the  terms of the note payable to
related party as discussed in Note 5.
                                      F-8

5.  NOTES PAYABLE

Notes payable as of December 31, 2006 consist of the following:

       Note payable to unrelated party     $  101,992
       Note payable to related party          305,012
       Other notes payable                     12,700
					    ---------
                                           $  419,704
					    ---------

In May 2004, the Company issued a 12% promissory note  to an unrelated party in
the amount of $110,000, due in 90 days.  The note is unsecured,  and guaranteed
by  an  officer  of  the  Company.   The note has been renewed in August  2004,
February 2005, August 2005, and February 2006, and August 2006.  As of December
31, 2006 the balance of the note is $101,992  and  due  February 18, 2007.  The
note was renewed in the amount of $108,195 and is due in 180 days on August 18,
2007.   At each renewal date, the renewal amount has included  any  outstanding
principal and accrued interest payable.

In July 2004,  the Company issued an 8% promissory note to a related party, due
in 180 days.  The  note  has  been  renewed in January 2005, July 2005, January
2006, July 2006, and December 2006, and as of December 31, 2006, the balance of
the  note  is  $305,012,  and the note is  due  June  30,  2007.  The  note  is
collateralized by the note receivable from Daylighting.  Under the terms of the
current renewal, the related  party  lender's  sole remedy for collection is to
foreclose  the collateral note receivable from Daylighting  and  seek  recovery
from Daylighting.  The related party lender also agreed it had no claim against
the Company  for  any deficiency in the collection, by the Company, of the note
receivable from Daylighting.   Accrued  interest on the note payable to related
party  was  $31,445 as of December 31, 2006.   Interest  expense  on  the  note
payable for the  years  ended  December  31,  2006  and  2005  were $17,894 and
$10,427, respectively.

Other notes payable in the amount of $12,700 at December 31, 2006,  consist  of
amounts  due to former preferred stockholders of the Company.  Those notes bear
interest at  9%  and  were payable in 2001.  The notes are unsecured and are in
default at December 31, 2006.

The average total balance of the above obligations for 2006 was approximately
$335,000.  The weighted average interest rate for the above obligations
outstanding at December 31, 2006 is 9.0%.

6.  INCOME TAXES

The components of the provision  for  income taxes as shown on the accompanying
consolidated statements of operations are as follows:

               YEARS ENDED DECEMBER 31,

                  2006       2005
Current-Federal  $   -       $   -
Current-State        -           -
Deferred             -           -
		 -----       -----
                 $   -       $   -
		 -----       -----


    Components of the net deferred tax  asset  at  December  31,  2006  are  as
follows:


Deferred tax assets:

Net operating loss carryforwards      $1,296,000
Less-valuation allowance              (1,296,000)
				      ----------
                                      $        -
				      ----------


At  December  31,  2006,  the  Company  had  a  net operating loss carryforward
available for Federal income tax purposes of approximately  $3.8  million.  The
amounts of operating loss carryforwards expire in varying amounts through 2021.
Due  to  the  uncertainty  of  realization  and restrictions on utilization,  a
deferred tax asset valuation allowance has been  provided  for  the  entire net
operating loss carryforward.

                                      F-9

The  following  is  a  reconciliation  of  the  U.S.  statutory tax rate to the
Company's effective rate for the years ended December 31, 2006 and 2005:

                                                  2006   2005

Statutory rate                                    34.0%  34.0%
Change in deferred tax asset valuation allowance  (34.0) (34.0)
						 ------ ------
Company's effective rate                             0%     0%
						 ------ ------


7.  CONCENTRATIONS, COMMITMENTS AND CONTINGENCIES

The  Company's  cash balances with financial institutions  are  insured  up  to
$100,000 for each account.

The Company's combined  note  receivable  and  accrued  interest  balance  with
Daylighting  represents 98% of the Company's total assets at December 31, 2006.
The note receivable  is  secured  by  collateral  as discussed in Note 4 and is
indirectly guaranteed as discussed in Note 5.

In  the  opinion of management, there are no contingent  claims  or  litigation
against the  Company  which  would materially affect its consolidated financial
position.

8.  STOCKHOLDERS' EQUITY

Preferred Stock

The Company has authorized 10,000,000 shares of preferred stock with attributes
as determined by the Board of Directors.

The Board of Directors designated  a series of preferred stock, Preferred Stock
Series "B". The maximum shares under  the  series  is  8,000,000. The Preferred
Stock Series B has a par value of $.01, accrues no dividends  and converts on a
1 to 1 basis into common stock.

The  Company  has also authorized 1,600,000 shares of Class A Preferred  Stock.
The Class A Preferred  Stock  has  a  par  value  of  $3.00, bears a 10% annual
cumulative dividend, payable monthly and is convertible  into common stock on a
6.4 to 1 basis.

As  of  December 31, 2006, there were no shares of preferred  stock  issued  or
outstanding.

Stock Options

In January  2000, the Company granted two directors stock options, whereby each
may acquire 1,000,000  shares  of common stock, at an exercise price of $.03125
per share. The options were fully  vested  as  of the date of grant and expired
five years from the date of grant. In November 2002, one director resigned as a
director of North American Gaming and Entertainment Corporation upon which time
his 1,000,000 option was cancelled.  No new options  to  purchase the Company's
common  stock  were  issued  or  granted  in 2005, and the existing  director's
options expired in January 2005.  In March  2006, the board of directors of the
Company extended the stock options for 1,000,000  shares of common stock to the
existing director for a term of five years (expiring  in  March  2011),  at the
exercise  price  of  $.03125 per share.  The options are fully vested as of the
date of grant.  The intrinsic  value  of  the  options at the date of grant was
$(0.00125)  per  share.   In accordance with SFAS 123R,  the  Company  recorded
compensation expense of $28,000  in  2006 for the estimated fair value of these
options at the date of grant.  The estimated  fair  value  of  these options at
grant  date  was  determined  using  a  Black-Scholes  model with the following
assumptions: risk-free interest rate of 4.72%, stock price  volatility  of 113%
(determined from the volatility of the Company's stock price from December  31,
2003  through  March  31,  2006), no expected dividends, and expected term of 5
years.  None of these options  were  exercised during 2006.  As of December 31,
2006, the remaining contractual term of  the  options  was 4  3/4 years and the
aggregate intrinsic value of the options was $8,750.





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