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                                  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, 2005
                                                    -----------------

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

                        For the transition period from _________ to __________.

                        Commission File Number:  000-51731
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                         NATIONAL HEALTH PARTNERS, INC.
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                 (Name of Small Business Issuer in Its Charter)

                 Indiana                                   04-3786176
     ---------------------------------                  ------------------
       (State or Other Jurisdiction                     (I.R.S. Employer
     of Incorporation or Organization)                  Identification No.)

       120 Gibraltar Road, Suite 107
               Horsham, PA                                   19044
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 (Address of Principal Executive Offices)                 (Zip Code)

                                 (215) 682-7114
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                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

                                                 Name of Each Exchange
    Title of Each Class                           On Which Registered
    -------------------                          ---------------------
          None                                            None
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Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock, $.001 par value per share
                  ----------------------------------------------
                                (Title of Class)

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

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

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

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

         The issuer's revenues for its most recent fiscal year were: $245,973.

         The aggregate market value of the voting common equity held by
non-affiliates of the issuer computed by reference to the price at which the
common equity was sold on March 30, 2006, was $6,795,150.

         As of March 30, 2006, 21,728,825 shares of the registrant's common
stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.

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

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                                TABLE OF CONTENTS
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PART I
<S>        <C>
Item 1.     Description of Business...............................................................................2

Item 2.     Description of Property..............................................................................35

Item 3.     Legal Proceedings....................................................................................35

Item 4.     Submission of Matters to a Vote of Security Holders..................................................36


PART II

Item 5.     Market For Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of
             Equity Securities...................................................................................36

Item 6.     Management's Discussion and Analysis of Financial Condition and Results of Operations................40

Item 7.     Financial Statements.................................................................................53

Item 8.     Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.................53

Item 8A.    Controls and Procedures..............................................................................53

Item 8B.    Other Information....................................................................................54


PART III

Item 9.     Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of
             the Exchange Act....................................................................................55

Item 10.    Executive Compensation...............................................................................58

Item 11.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.......64

Item 12.    Certain Relationships and Related Transactions.......................................................67

Item 13.    Exhibits.............................................................................................69

Item 14.    Principal Accountant Fees and Services...............................................................74

Index to Financial Statements...................................................................................F-1
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                 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

         This report contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included or incorporated by reference in this
report, including, without limitation, statements regarding our future financial
position, business strategy, budgets, projected revenues, projected costs and
plans and objectives of management for future operations, are forward-looking
statements. In addition, forward-looking statements generally can be identified
by the use of forward-looking terminology such as "may," "will," "expects,"
"intends," "plans," "projects," "estimates," "anticipates," or "believes" or the
negative thereof or any variation thereon or similar terminology or expressions.

         These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from results proposed in
such statements. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from our expectations include, but are not
limited to:

     o   our ability to fund future growth and implement our business strategy;

     o   demand for and acceptance of our CARExpress membership programs;

     o   our dependence on a limited number of preferred provider organizations
         ("PPOs") and other provider networks for healthcare providers;

     o   our dependence upon a limited number of marketing and distribution
         partners for substantially all of our revenue;

     o   our ability to develop and expand the market for our CARExpress
         membership programs;

     o   our ability to market our CARExpress membership programs;

     o   growth and market acceptance of the health savings industry;

     o   competition in the health savings industry and our markets;

     o   our ability to attract and retain qualified personnel;

     o   legislative or regulatory changes in the healthcare industry;

     o   the condition of the securities and capital markets;

     o   general economic and business conditions, either nationally or
         internationally or in the jurisdictions in which we are doing business;

and statements of assumption underlying any of the foregoing, as well as any
other factors set forth under the captions "Risk Factors" and "Management's
Discussions an Analysis of Financial Condition and Results of Operations" in
this report.

         All subsequent written and oral forward-looking statements attributable
to us, or persons acting on our behalf, are expressly qualified in their
entirety by the foregoing. Except as required by law, we assume no duty to
update or revise our forward-looking statements based on changes in internal
estimates or expectations or otherwise.

<PAGE>
ITEM 1.  DESCRIPTION OF BUSINESS.

OVERVIEW

         National Health Partners, Inc. (d/b/a "International Health Partners,
Inc.") is a national healthcare savings organization founded in 1989 and
reorganized in 2001 by healthcare professionals to address the need for
affordable healthcare nationwide. We create, market and sell discount healthcare
membership programs to predominantly underserved markets in the healthcare
industry through a national healthcare savings network called CARExpress
("CARExpress").

         CARExpress is a network of hospitals, doctors, dentists, pharmacists
and other healthcare providers comprised of over 1,000,000 medical professionals
that have agreed to render their services and products to CARExpress members at
discounted prices. CARExpress enables people to engage in point-of-service
transactions directly with these providers and pay discounted prices that are
similar in amount to those paid by insurance companies on behalf of their
insureds.

         Our programs offer savings on healthcare services to persons who are
uninsured, underinsured, or who have elected to purchase only high deductible or
limited benefit medical insurance policies by providing access to the same PPOs
that are utilized by employers that self-fund at least a portion of their
employees' healthcare costs. Our programs are also used to supplement benefit
plans and fill in the gaps created by the need to reduce health benefits to keep
the costs of health insurance reasonable. These programs are sold through a
network marketing strategy under the name CARExpress, through resellers that
privately label or co-brand our CARExpress membership programs, and through
employers as part of their employee benefit plans.

HEALTHCARE INDUSTRY

         The U.S. Department of Commerce estimates that 15.6% of all Americans,
or 45 million individuals, were without health insurance coverage in 2003, up
from 15.2%, or 43.6 million individuals, in 2002, an increase of 1.4 million
people. The percentage of people working full-time without health insurance in
2003 was 17.5%, an increase from 16.8% in 2002. Several factors have contributed
to the increase in the cost of healthcare, including the following:

         Over Utilization of the Healthcare System. American citizens are
utilizing healthcare services at an ever-increasing rate. Behind this phenomenon
is the fact that insurance plans and HMOs are structured to encourage usage.
Small co-payments, generally from $10 or $15 per office visit, encourage insured
consumers to use the healthcare system more frequently because they do not
perceive themselves as having to pay the full cost of the medical products and
services received.

         Strict State Insurance Regulations. A number of insurance companies
have pulled out of certain states due to state regulations that no longer
provide a viable operating environment. As a result of these health coverage
cancellations, those formerly insured individuals and families are required to
pay more for their insurance coverage, cannot obtain any coverage because of
pre-existing conditions, or simply remain uninsured.

                                       2
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         Escalating Tensions Between Medical Providers and Payors. Tensions
between medical providers and payors are escalating. The medical decision is
often no longer in the hands of the doctor and the patient. Rather,
administrators at HMOs and insurance companies determine the procedures to be
performed through their coverage policies. In addition, doctors and hospitals,
having experienced decreases in their income and profits, are demanding higher
compensation, particularly from HMOs.

         These increasing costs have led to limitations on reimbursement from
insurance companies, HMOs and government sources and have generated demand for
products and services designed to control healthcare costs. Many employers have
responded to the increased cost of providing health insurance to their employees
by reducing or eliminating available insurance coverage and/or by requiring
employees to contribute heavily to premiums, especially for family members.

         As a result, more Americans are being forced to self-insure and pay a
growing portion of the cost of their healthcare. Some are entirely uninsured.
Others can only afford or choose only a high deductible or limited benefit
health insurance policy. In either case, this patient population increasingly
forgoes medical procedures or relies on emergency care for its healthcare needs
and often incurs prohibitive expenses. Additionally, costs of healthcare (in
doctors' offices and hospitals) for this patient population are often far higher
than the amount an insurance company would pay for the same healthcare services
for its insureds. The uninsured and underinsured patients have had no one to
negotiate healthcare service costs on their behalf.

         We believe market demand is significant for any product that can
accomplish one or more of the following:

     o   provide a low-cost alternative to health insurance for the 90-plus
         million Americans who have either no insurance or only catastrophic
         insurance coverage;

     o   provide small businesses that do not provide health benefits to
         employees with an affordable way to provide benefits to their
         employees;

     o   reduce the cost of claims and re-insurance premiums for large
         corporations, unions and insurance companies;

     o   provide quality care at a price that is both affordable to consumers
         and that will pay providers a reasonable fee for their services; and

     o   provide supplemental benefits, such as dental, vision, elective
         surgery, chiropractic and alternative care, that are not covered by
         insurance plans.

HEALTH SAVINGS INDUSTRY

         The need for solutions to the problems facing the healthcare industry
led to the development of the health savings industry. The health savings
industry is generally comprised of organizations that offer discount health
programs to uninsured and underinsured individuals that enable these individuals
to purchase the healthcare products and services they need at discounted prices.
Discount health programs provide these individuals with a low-cost alternative
to insurance that assist them in reducing their out-of-pocket healthcare costs.
Discount health programs are typically offered to these individuals in the form
of traditional membership service programs.

                                       3
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OUR CAREXPRESS HEALTHCARE SOLUTION

Overview

         We offer discount healthcare membership programs designed in response
to the growing number of people who can no longer obtain adequate health
insurance. Our programs provide a lower-cost, non-insurance alternative to
individuals who are seeking to reduce their out-of-pocket healthcare costs not
covered by insurance or who are unable to obtain healthcare insurance due to
their medical history, age or occupation. For a monthly fee, our members are
able to pay discounted prices that are typically between 10% and 50% off the
retail price of participating healthcare provider products and services.
Acceptance into our health programs is unrestricted and our programs may be
utilized by the member's entire household.

Our CARExpress Membership Programs

         We design and offer our discount healthcare membership programs for
uninsured and underinsured individuals. Our membership programs encompass all
aspects of healthcare, including physicians, hospitals, ancillary services,
dentists, prescription drugs, vision care, hearing aids, chiropractic services,
alternative care, 24-hour nurseline, medical supplies and equipment, and
long-term care facilities, which include skilled nursing facilities, assisted
living facilities, respite care and home health care. We offer our programs
through a national healthcare savings network called CARExpress. We provide
CARExpress members with access to healthcare providers affiliated with PPOs such
as CareMark, Cigna, Optum, Integrated Health, Three Rivers, International
Med-Care and Careington International through which our members can utilize the
products and services of over 1,000,000 healthcare providers in the United
States. Our CARExpress membership programs enable people across the country to
utilize just about any type of healthcare service wherever it is available,
whether the person needs a comprehensive healthcare package or simply needs
supplemental healthcare benefits, such as dental or vision care or
prescriptions.

         We sell our CARExpress membership programs directly and indirectly
through marketing representatives, brokers and other third parties. Our programs
typically range in price from $9.95 to $39.95 per month, depending upon the
program selected. We also offer features to encourage potential members to try
out our CARExpress membership programs, including refund guarantees and "trial"
periods of free or discounted membership. Healthcare products and services are
bundled, priced and marketed utilizing relationship marketing strategies to
target the profiled needs of our customers. The discounted prices paid by our
members typically range from between 10% and 50% off providers' usual and
customary fees. Our CARExpress membership programs require members to pay the
provider at the time of service, thereby eliminating the need to file any
insurance claims. These discounts are designed to save the individual
substantially more than the cost of the program itself.

                                       4
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         Our CARExpress membership programs are not insurance. There is no
undertaking by us to pay a portion of any fee for services or prescriptions
purchased using our CARExpress membership cards. Rather, our CARExpress
membership programs provide consumers with access to healthcare providers who,
through their affiliations with PPOs, have agreed in advance to honor our
CARExpress membership cards and accept the discounted fees set by the PPOs.
CARExpress members simply present their CARExpress membership card to the
participating provider at the time of the service to receive the discounted
price.

         We believe that millions of Americans can benefit in some manner from
joining CARExpress, whether they have health insurance or not. We believe that
our CARExpress membership programs are most attractive to the following people
and organizations:

     o   people without insurance coverage, including self-employed individuals
         and part-time or temporary employees;

     o   people with gaps in their insurance coverage;

     o   people who have been turned down for insurance coverage due to a
         pre-existing condition clause;

     o   people who have been turned down for insurance because of age,
         occupation, medical history, lifestyle or other reasons;

     o   people who have reached the yearly and/or lifetime benefit limits of
         their insurance policy;

     o   people who choose alternative healthcare solutions that are often not
         covered by HMOs, PPOs, or other insurance, or who seek providers not
         covered by their present health plans;

     o   small business owners who want to provide their employees with a
         low-cost healthcare program;

     o   employees whose employers have terminated or curtailed employee health
         benefits;

     o   people who may be underinsured because of restrictions or provisions in
         their managed care plans, such as limited coverage, high deductibles or
         co-insurance limits;

     o   small businesses, chambers of commerce, employers of temporary or
         part-time personnel and other businesses seeking affordable health
         benefits for their employees in order to promote employee loyalty and
         differentiate their companies in the marketplace; and

     o   unions, associations, trade groups and other organizations seeking to
         increase membership and promote member/customer loyalty by providing or
         offering a discount health benefit.


                                       5
<PAGE>
How CARExpress Works

         People gain access to our network of healthcare providers by paying us
monthly membership fees. Most members pay for our programs on a monthly basis,
either through automatic bank drafts or credit cards. People who do not wish to
use either of these payment methods are required to pay annually at the time of
enrollment. Groups of 20 or more can also choose to be billed on a monthly
basis. Members may cancel their membership at any time by returning their
identification cards, along with a written notice of cancellation. We offer a
30-day money-back guarantee so that if a member is not completely satisfied with
the program, the member will be refunded the program fee upon the return of the
identification cards. Upon enrollment, new members receive a membership kit that
includes instructions on using the program, provider directories for their area
and a CARExpress membership card. Except with respect to hospitals, members
select a participating provider, make their appointment, present their
CARExpress membership card to the provider and receive their discount at the
time of service. The provider may verify an individual's membership status by
calling a phone number imprinted on the CARExpress membership card or reviewing
electronic files that we have submitted to the provider. There are no claim
forms or bills to be processed. Both the member and provider are finished with
the transaction.

         In order to obtain discounts from participating hospitals, our members
complete a payment pre-certification process which will make their medical visit
similar to other medical payment insurance plans. The member calls a third-party
plan administrator to arrange for pre-certification and prepayment using a major
credit card or certified funds. The plan administrator assigns a case manager
who coordinates and oversees the member's hospital stay. The member makes no
payment to the provider at the time services are rendered but simply presents
his or her CARExpress membership card. The provider bills the plan administrator
and the plan administrator pays the provider and charges the discounted amount
to the member. The member subsequently receives a statement of savings
indicating the original amount billed, the amount charged after savings were
applied and the total amount saved.

Benefits of Using CARExpress

         Our CARExpress membership programs provide benefits to our members,
unions, associations and businesses, and healthcare providers and provider
networks.

         Benefits to Members. We believe our CARExpress membership programs are
attractive to our members because our programs provide them with access to a
variety of healthcare products and services at discounted prices. Membership in
our CARExpress membership programs is unrestricted and provides benefits to
individuals who, because of their medical history, age or occupation, are unable
to obtain health insurance. Our CARExpress membership programs cover each person
in the member's immediate family and can be used as often as they wish. In
addition, unlike many insurance or managed care programs, members have no
paperwork or claims to prepare and no waiting periods.

                                       6
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         Benefits to Unions, Associations and Businesses. We believe that our
CARExpress membership programs are attractive to unions, associations,
businesses and other organizations with large numbers of members or employees
because our programs can assist these organizations in their efforts to attract
and retain members and employees by enabling them to offer a more complete
healthcare benefits package. Similarly, as competition among HMOs for
participants intensifies, we believe that our CARExpress membership programs
will enable HMOs to offer a more complete array of potential healthcare
benefits. Due to the low cost of our CARExpress membership programs, these
organizations may offer them to part-time employees who often are not eligible
for healthcare benefits offered to full-time employees. Moreover, because our
CARExpress membership programs are discount health programs and not insurance
products, these organizations can offer discounts to their members or employees
without bearing any economic risk in excess of the annual cost of the program.

         Benefits to Healthcare Providers and Provider Networks. We believe that
our CARExpress membership programs are attractive to physicians, hospitals and
other healthcare providers because our programs help healthcare providers and
provider networks increase their customer base. While members will pay fees and
charges that are less than those paid by non-members, the incremental business
from members offers an additional source of revenue to the providers, with
little or no increase in their overhead costs. In addition, healthcare providers
are paid at the time of service, reducing the billing procedures and cost
associated with insurance and allowing the provider to immediately collect
payment. We believe that our CARExpress membership programs are also attractive
to provider networks because they increase the likelihood that healthcare
providers will affiliate with the provider networks so as to gain access to a
greater number of potential customers and patients.

STRATEGY

         Our strategy is to sustain and expand our position as a provider of
unique healthcare membership service programs. We intend to focus predominantly
in underserved markets where individuals either have limited or no healthcare
benefits. We have developed programs that give individuals access to healthcare
providers at reduced fees that offer value and savings to people throughout the
country. Through product design, competitive membership pricing and strong
distribution channel partners, we plan to fill a significant void in the
healthcare market that insurance companies have not addressed.

         Key elements of our strategy are as follows:

         Develop Unique Healthcare Service Programs For Broad Markets. Our focus
is on the continued development and introduction of unique programs that address
the health and lifestyle needs of targeted consumer groups. We continually
research our markets to keep abreast of trends in the demand for consumer-paid
healthcare. We intend to further develop and expand our marketing capabilities
by increasing the content currently available on our Web site, developing
programs to offer our CARExpress membership programs directly to affinity
groups, such as unions, small businesses, trade associations and charitable
organizations, and expanding our in-house marketing staff. We intend to increase
sales of our CARExpress membership programs by adding related products and
services, such as accidental death coverage.

                                       7
<PAGE>
         Recruit Marketing and Distribution Partners. Growth in sales of our
CARExpress membership programs is dependent upon our marketing and distribution
partners continuing to market our CARExpress membership programs to prospective
customers and recruit additional marketing and distribution partners to market
our CARExpress membership programs to prospective customers. We intend to
continue to focus our efforts on retaining our existing marketing and
distribution partners and obtaining new marketing and distribution partners
through our direct sales team. We also intend to continue to support our
marketing and distribution partners by training our customer service staff to
completely and accurately explain the benefits, limitations, and use of our
CARExpress membership programs. We also plan to improve the productivity of our
marketing and distribution partners through lead development, marketing support,
sales assistance and training.

         Leverage PPOs and Provider Networks. We intend to negotiate agreements
with additional PPOs and other provider networks. While we currently have
contractual relationships with several PPOs, we need to continuously assess the
capabilities of our PPOs and work towards making alternative healthcare
solutions available to our members. We believe that our large provider base
enhances our CARExpress membership programs with market credibility, and we
intend to leverage this credibility to further our market penetration.

         Provide High Quality Customer Service. In order to achieve our
anticipated growth and to ensure member, healthcare provider and marketing and
distribution partner loyalty, we continue to develop and invest significantly in
our customer service systems. We recently moved into a customer service center
from which both cardholders and providers can get prompt, courteous, and
complete information about all aspects of our CARExpress membership programs. We
have also developed a proprietary computer database system that provides
customer service representatives with immediate access to provider demographic
data and member information, including the components of each member program or
plan and the details a member requires to properly utilize the program.

         Develop a Corporate-Level Sales Team. To complement individual and
group sales and lead generation accomplished through our marketing and
distribution partners, we are attempting to promote sales of our CARExpress
membership programs to groups and self-funded employers through a
corporate-level sales team with experience in group insurance market and the
operations of third-party administrators.

CUSTOMERS

         The target customers of CARExpress products are individuals who are
uninsured and underinsured.

         Our primary target customer group is comprised of the 45 million
Americans who have no health insurance of any kind. This group includes
self-employed individuals and part-time or temporary employees, and people who
have been turned down for insurance because of age, occupation, medical history,
lifestyle or other reasons. For this group, CARExpress is an effective and
low-cost alternative to health insurance.

                                       8
<PAGE>
         Our secondary target customer group includes the approximately 61
million Americans who lack complete health insurance coverage. This group
includes people with gaps in their insurance coverage, employees paying large
deductibles or premiums, and employees who do not receive adequate insurance
coverage through their employers. It also includes people who are underinsured
because of restrictions or provisions in their managed care plans, such as
limited coverage, high deductibles or co-insurance limits, people who have been
turned down for insurance coverage for a medical procedure due to a pre-existing
condition clause, and people who have been turned down for insurance because of
age, occupation, medical history, lifestyle or other reasons. The supplementary
programs offered by CARExpress allow an individual to purchase whatever benefits
they need to fill the gaps in their insurance coverage.

PROGRAMS

         We offer several distinct CARExpress membership programs that provide
members with access to distinct discounted healthcare products and services. We
also design healthcare membership programs for unions, associations, businesses
and other organizations that sell our CARExpress membership programs in
combination with third-party insurance products on a co-branded basis.

CARExpress Membership Programs

         We currently offer five standard CARExpress membership programs that
provide benefits that range from prescription drug and vision care to
comprehensive physician, hospital, vision, dental and other care. A description
of each of these programs is provided below.

         Comprehensive Care Program. This program is designed for individuals
and families with no health insurance. It provides members with access to all of
our CARExpress products and services, including physician, hospital and
ancillary care, dental and vision care, retail and mail order pharmacy, 24-hour
nurseline, hearing care, chiropractic and complementary alternative care,
medical supplies and equipment, and long-term care facilities. Our comprehensive
care program targets those with little or no insurance, or those with only
catastrophic coverage. We believe that our comprehensive care program will be of
particular interest to consumers who are not covered by group health or
individual benefit plans. The monthly retail price for this membership program
is $39.95 per family.

         Supplemental Care Program. This program is designed for individuals and
families who are underinsured and offers everything our comprehensive care
program offers, except for access to doctors and hospitals. Our supplemental
care program generally presumes the member has some level of basic medical
insurance coverage. It offers services that are typically not covered under a
traditional health insurance plan or an insurance plan that may have certain
coverage limits. This program typically is marketed as an add-on service
alongside an existing health plan or as a stand-alone product for those who have
health insurance but with minimal benefits for prescription or other ancillary
services. The monthly retail price for this membership program is $29.95 per
family.

         Preferred Program. This program is designed for individuals and
families who are under-insured and need to save on the basic health services not
covered under a traditional health insurance plan. It offers savings on
prescriptions, vision and dental care, and a 24-hour nurseline. The monthly
retail price for this membership program is $19.95 per family.

                                       9
<PAGE>
         Dental & Vision Care Program. This program is designed for individuals
and families who typically have health insurance, but who do not have either
dental care or vision care. The monthly retail price for this membership program
is $14.95 per family.

         Prescription & Vision Care Program. This program is designed to offer
members an inexpensive way to save money on prescriptions and vision care. This
program is our low-cost entry program. The monthly retail price for this program
is $9.95 per family.

CARExpress Membership Programs Combined With Insurance Products

         We also design healthcare membership programs for organizations,
associations and corporations that combine our CARExpress membership programs
with various types of insurance products. The use of these products in
conjunction with our CARExpress membership programs can provide an affordable
solution to individuals and groups who previously could not afford fully
inclusive medical plans, and can provide greater assurance of payment to the
healthcare providers. These products are bundled, priced and marketed utilizing
relationship marketing strategies or direct marketing to target the profiled
needs of the clients' particular member base.

         Insurance products that are suitable for combination with our
CARExpress membership programs include:

         Catastrophic Health Insurance. This type of insurance usually takes the
form of a high deductible major medical policy in which the insurance company
pays nothing until expenditures reach a threshold that is typically between
$2,500 and $20,000. We have identified several A+ rated insurance companies that
may benefit by offering our CARExpress programs as a supplement to their
catastrophic health insurance products. A consumer may use one of our CARExpress
membership programs to reduce his or her out-of-pocket costs until he or she
reaches the deductible amount and then use the insurance for all additional
expenses.

         Mini-Med Programs. Mini-Med programs are insurance options offered by
insurance companies that restrict claim losses by limiting the amount of
insurance that can be paid. For example, the amount of insurance that would be
payable to an individual for a particular outpatient hospital procedure could be
limited to $1,000. Our CARExpress membership programs can be designed as a
supplement to insurance companies' Mini-Med programs. The consumer would then
use CARExpress to reduce their out-of-pocket costs and use the Mini-Med program
to reimburse them a fixed amount per visit.

         Our CARExpress membership programs are currently sold in combination
with insurance products indirectly, through insurance companies and independent
third parties. We intend to sell these combined products directly in the future
through National Health Brokerage Group, Inc., our wholly-owned subsidiary. We
plan to operate National Health Brokerage Group like an insurance brokerage with
respect to sales of these combined products and plan to obtain the necessary
licenses in all states in which National Health Brokerage Group may sell our
CARExpress membership programs in combination with insurance products and offer
these combined products for sale through marketing and distribution partners
that are licensed insurance agents.

                                       10
<PAGE>
SUPPLIERS

         We do not contract directly with any physicians, dentists, hearing care
specialists, eye care specialists or other healthcare providers. Instead, we
contract with numerous PPOs or their affiliates and other provider networks for
access to the discounted rates they have negotiated with their healthcare
providers. We only select and utilize those provider networks that we believe
can deliver adequate savings to our members while providing adequate support for
our CARExpress membership programs with the healthcare providers. We typically
pay a per member per month fee for use of a provider network that is determined
in part based on the number of providers participating in the network, the
number of CARExpress members accessing the network, and the particular products
and services utilized by the CARExpress members. We only pay fees for those
members authorized to utilize the network. The agreements through which we have
contracted for access to the PPO or other provider networks are generally for a
term of between one and two years, may be terminated by either party on between
45 and 180 days' prior written notice, and renew automatically for additional
terms unless so terminated. Most of these agreements are not exclusive as it is
not customary in the health savings industry for PPOs to agree to work
exclusively with a single healthcare savings organization, and most contain
provisions maintaining the confidentiality of the terms of the agreement.

         The principal suppliers of the over 1,000,000 healthcare providers that
comprise CARExpress are CareMark, Cigna, Optum, Integrated Health, Three Rivers,
International Med-Care and Careington International. Under our various
agreements with these PPOs or their respective affiliates, our members are
provided with access to their network of healthcare providers in varying
combinations of specialties and at varying discounts from the scheduled prices
for covered products and services. Although we have arrangements in place with
several secondary networks, these PPOs currently supply the provider commitments
for almost all of our members. If we lose our arrangement with any of these PPOs
for any reason, we would attempt to establish a primary relationship with one of
our secondary suppliers. If we are unable to replace the lost arrangement with a
similar arrangement with another provider network, however, our business may be
adversely affected.

         CareMark. CareMark provides CARExpress with access to the Caremark
pharmacy network at discounted rates and provides pharmacy benefit management
services, including the electronic maintenance of prescription, price,
eligibility and plan information, the negotiation of discounts and rebates on
pharmaceutical products with pharmaceutical companies, and the preparation of
reports of services performed. The Caremark pharmacy network is comprised of an
aggregate of 45,000 retail pharmacies plus a mail order pharmacy option.

         CIGNA. National Benefit Builders provides CARExpress with access to the
CIGNA dental network at discounted rates. The CIGNA dental network is comprised
of an aggregate of approximately 50,000 dentists and other dental service
providers.

                                       11
<PAGE>
         Optum. United HealthCare Services provides CARExpress with access to
the network of nurses of Optum at discounted rates. The Optum nurses provide a
nurseline 24 hours per day for general health information, the identification of
specific health-related concerns and the provision of educational information
regarding those concerns. Optum also provides an audiotape library covering over
1,100 healthcare topics that are accessible by CARExpress members.

         Integrated Health, Three Rivers and International Medcare. Competitive
Health, Inc. provides CARExpress with access to the network of healthcare
providers of Integrated Health, Three Rivers and International Medcare at
discounted rates, and services consisting of pre-certification of members,
re-pricing of claims, claim resolution and healthcare provider relations. The
healthcare provider networks of Integrated Health, Three Rivers and
International Medcare are comprised of an aggregate of approximately 610,000
physicians, 5,300 hospitals and acute care facilities, and 33,000 ancillary
healthcare providers, including laboratory, radiology, rehabilitation, mental
health and physical therapy providers.

         Careington International. Careington International provides CARExpress
with access to its network of dentists at discounted rates. The Careington
dental network is comprised of an aggregate of approximately 28,000 dentists and
other dental service providers. We make monthly payments under this agreement
based on the number of CARExpress members utilizing the Careington network.

         We can provide no assurance that our contracts with these PPOs and
their affiliates will not expire or be terminated by us or them, nor can we
provide any assurance that we will be able to replace the services available to
our CARExpress members under these agreements in the event they do expire or are
terminated. In addition, we can provide no assurance that these organizations
will refrain from partnering with one of our competitors or competing directly
with our CARExpress membership programs. Accordingly, the expiration or
termination of these relationships, or the decision by any of these
organizations to partner with one of our competitors or compete directly with
us, may have a material adverse effect on our business, financial performance
and results of operations.

MARKETING AND DISTRIBUTION

         We market our CARExpress membership programs directly to individual
consumers through television, radio, newspapers, magazines and the Internet. We
also market and support our CARExpress membership programs through our Web site.
Our Web site enables consumers to review our CARExpress membership programs, our
healthcare providers and their locations, the products and services available
through our healthcare providers, and the discounts and special promotions
available to members for their products and services. Consumers can also
purchase our CARExpress membership programs through our Web site by filling out
an application online. Direct sales to consumers provide us with higher
long-term margins on sales because we do not have to pay commissions to any
intermediary organization of which the consumer is a member. In addition, the
advertising and marketing campaigns that we engage in to target consumers
provide us with increased market awareness and support for the retail chains,
outlets, unions and associations comprising our other marketing and distribution
channels.

                                       12
<PAGE>

         We also market our CARExpress membership programs indirectly through:
(i) marketing representatives, (ii) brokers and agents, (iii) retail chains and
outlets, (iv) small businesses and trade associations, and (v) unions and
associations.

         Marketing Representatives. We utilize the services of marketing
representatives to market our CARExpress membership programs to prospective
customers, such as individual consumers and employers typically having less than
50 employees. Marketing representatives are sales persons or groups of sales
persons that market our CARExpress membership programs directly to prospective
customers through face-to-face contact and such media as television, radio,
internet and print ads. We estimate that a total of between 150 and 200 such
sales persons currently market our CARExpress membership programs to prospective
customers. The marketing representatives that we utilize typically offer and
sell our CARExpress membership programs on a part-time basis, and may engage in
other related or unrelated business activities, including selling the products
or services of our competitors. Most of the prospective customers to whom
marketing representatives market our programs are current clients of the
marketing representatives who have purchased products or services through the
marketing representatives in the past. The other prospective customers are new
clients that the marketing representatives have identified through their own
efforts. To receive the right to market and sell our CARExpress membership
programs, marketing representatives sign a standard services agreement. These
agreements are typically for a term of one year and renew automatically for
additional one-year terms unless written notice of termination is delivered by
either party at least 30 days prior to the then-current term. Our marketing
representatives are not required to be licensed insurance agents unless they are
selling these programs in combination with insurance products.

         We pay marketing representatives fees that are typically comprised of a
commission on the sale price of the CARExpress membership program and/or an
up-front fee per member generated. The amount of the commissions and up-front
fees that we pay to marketing representatives are determined based on the type
of membership programs being sold by the marketing representatives and the
number of members being generated over a set period of time by the marketing
representatives. We typically pay marketing representatives the up-front fee for
obtaining a new member only if the member becomes a paying member, and we only
pay marketing representatives commissions for membership periods during which we
are receiving membership fees. Marketing representatives are paid these
commissions for the life of the members' enrollment with CARExpress. Marketing
representatives may also recruit other representatives to sell our CARExpress
membership programs and receive a portion of the commissions earned by these
other representatives on sales that they make. While the process of marketing
representatives recruiting other marketing representatives can extend through as
many as five levels, it typically extends to between only one and three levels.
Our obligation to pay a marketing representative a commission for a particular
month accrues on the date we receive payment of the monthly membership fee from
the member for that month. No minimum member retention period is required for a
commission payment to be earned by our marketing representatives for paying
members.

                                       13
<PAGE>

         Brokers and Agents. We sell our CARExpress membership programs through
brokers and agents by entering into commission-sharing arrangements with them
under which they market and sell our CARExpress membership programs to
individual consumers through large employer groups, insurance brokers and
associations. Our CARExpress membership programs are not competitive with the
insurance products they sell, but instead are viewed as complementary product
offerings. Brokers and agents who sell healthcare benefits programs to employers
and individuals may use our CARExpress membership programs as a value-added
offering to the traditional insurance products that they sell.

         Retail Chains and Outlets. We market our CARExpress membership programs
to retail chains and outlets that sell products to consumers on a retail level,
such as grocery stores, pharmacy chains and convenience stores. Retail
distribution of our CARExpress membership programs offers us several benefits,
including a large pool of potential target customers, increased credibility from
being aligned with well-named retailers, private labeling opportunities with the
retailers, and visibility through in-store membership displays. These
organizations will typically market our CARExpress membership programs
themselves by adding our CARExpress membership cards to floor and display racks
where other prepaid, discount and gift cards are sold, and will typically earn a
marketing fee for each membership sold.

         Small Businesses and Trade Associations. We use small businesses, trade
associations, charitable organizations and other similar organizations to market
our CARExpress membership programs. Under these types of arrangements, we
customize our CARExpress membership cards by adding the sponsoring organization
name and/or logo on the card and provide access to our networks as well as all
required fulfillment services. We believe that these private label cards are
attractive to these organizations because the cards will enable them to more
closely identify themselves with the benefits provided to their members.
Moreover, we believe that the preexisting relationship between the sponsor and
its employees or members will enhance the likelihood that the employee or member
will purchase our CARExpress membership cards. These organizations may purchase
our CARExpress membership programs for their employees or members, or subsidize
a portion of the monthly membership fees of our programs for their employees or
members. No fee will typically be paid by us to such organizations if the
organizations opt to purchase or subsidize our programs. Alternatively, these
organizations may simply offer their employees or members the opportunity to
purchase our programs directly from us or through a payroll deduction plan. In
this event, we will typically pay such organizations a marketing fee for each
membership sold.

         Unions and Associations. We market our CARExpress membership programs
to unions, associations, corporations and similar organizations. These
organizations provide us with the opportunity to acquire a large group of
members. Group accounts provide us with higher retention rates for memberships
because of factors such as organization sponsorship of its members or employees,
subsidizing of monthly membership fees by such organizations, and lower cost
memberships to members or employees resulting from significantly lower prices
charged to the organization. These organizations may purchase our CARExpress
membership programs for their employees or members, or subsidize a portion of
the monthly membership fees of our programs for their employees or members. No
fee will typically be paid by us to the organizations if the organizations opt
to purchase or subsidize our programs. Alternatively, these organizations may
simply offer their employees or members the opportunity to purchase our programs
directly from us or through a payroll deduction plan. In this event, we will
typically pay the organizations a marketing fee for each membership sold.

                                       14
<PAGE>

SERVICE PROVIDERS, CONSULTANTS AND ADVISORS

         Over the past 12 months, we have entered into agreements with several
service providers, consultants and advisors for the provision of various
services on our behalf. These services generally consist of such activities as
the sale of our CARExpress membership programs, marketing and promotion of our
business and CARExpress membership programs, support for our marketing
activities, advice with respect to our marketing strategies, product development
and business development, assistance regarding the identification and evaluation
of opportunities for us to engage in joint ventures, strategic partnerships and
alliances with companies offering complementary products and services,
management consulting services, and advice regarding strategic planning, mergers
and acquisitions, capital expenditures, and general corporate and organizational
matters. Under the terms of these agreements, we agreed to compensate the
consultants and advisors in shares of our common stock and/or warrants
exercisable into shares of our common stock rather than cash so as to conserve
our cash resources and provide the service providers, consultants and advisors
with an incentive to help us succeed in our efforts to grow our business. These
agreements are for terms ranging between six months and five years.

CUSTOMER SERVICE, TRAINING AND SUPPORT

         We believe that providing superior customer support is critical to our
business. Currently, we maintain a call center at our corporate headquarters in
Horsham, Pennsylvania, where we employ full-time customer service
representatives and utilize the services of temporary customer service
representatives on an as-needed basis. Our call center is available to members
and may be accessed via e-mail or toll-free numbers, Monday through Friday, from
9:00 a.m. to 7:00 p.m. Eastern Standard Time. We also utilize an outside call
center for after-hours calls so that we are able to provide full 24-hour
toll-free coverage for our members. Our call center provides dependable and
timely resolution of customer technical inquiries and is available to customers
by telephone and e-mail. Our call center staff delivers education, training and
pre-sales support to our members, employers and other sponsoring organizations,
and healthcare providers and provider networks. We also offer online training to
our customers and resellers to provide them with the knowledge and skills to
successfully deploy, use and maintain our products. Our customer service team is
responsible for handling general customer inquires, answering questions about
the ordering process, updating and maintaining customer account information,
investigating the status of orders and payments, as well as processing customer
orders. In addition, our customer service team proactively updates customers on
a variety of topics, including release dates of new products and updates to
existing products.

         In order to achieve our anticipated growth and to ensure client, member
and marketing and distribution partner loyalty, we intend to continue to develop
and invest in our customer service systems and staff. In 2004, we moved into a
fully-equipped facility with a state-of-the-art computer and telecommunications
room that is wired to handle our growing needs and provides us with the capacity
to expand our customer service base to approximately 80 customer service agents.
Our proprietary computer database system provides our customer service
representatives immediate access to provider demographic data and member
information, including the components of each member program or plan and the
details a member requires to properly utilize the program. All new customer
service representatives are required to complete a training course before
beginning to take calls and attend on-the-job training thereafter. Through our
training programs, systems and software, we seek to provide members with
friendly, rapid and effective answers to questions. We continue to work closely
with our healthcare providers and organizations to ensure that their
representatives are knowledgeable about our CARExpress membership programs.

                                       15
<PAGE>

         We provide extensive training to our sales representatives to assure
that they accurately represent our products and services. This training is
available in a variety of forms, including a training manual, audiotapes and
videotapes, local and regional training meetings and weekly conference calls.
The training encompasses both product training as well as marketing training and
sales techniques. We have also implemented policies and procedures in place to
control any advertising or promotions that are utilized by our sales
representatives. We believe these policies and procedures are necessary to
assure the proper representation of the program at all times and include the
pre-approval of all advertising, adherence to anti-spamming and anti-fax
blasting rules, and limits where the representatives can advertise our programs.
The failure of a representative to follow these rules can result in termination
of the representative's relationship with us.

TECHNOLOGY

         In 2004, we completed the installation of a state-of-the-art
telecommunication network and purchased additional computers for our customer
service department. Our management information systems were designed in-house
and are used in most aspects of our business, including:

      o     maintaining member eligibility and demographic information;

      o     maintaining representative information;

      o     paying commissions;

      o     maintaining a database of all providers and offering provider
            locator services;

      o     drafting members' accounts on a monthly basis; and

      o     tracking of cash receipts and revenues.


         We have also created an extensive Web site for our CARExpress
membership programs that provides information about the various services, allows
for provider searches, answers questions, provides savings schedules, and allows
new members and representatives to enroll online. It also allows representatives
to access support and training files and to view their genealogy and commission
information through a password-protected area.


                                       16
<PAGE>


COMPETITION

         The medical savings industry is rapidly evolving and competition for
members is becoming increasingly intense. Competitors vary in size and in scope
and breadth of the products and services they offer. We offer membership
programs that provide products and services similar to or directly in
competition with products and services offered by PPOs, HMOs, healthcare
membership programs, retail pharmacies, mail order prescription companies, and
other ancillary healthcare insurance organizations. Competition for new
representatives is also intense, as these individuals have a variety of products
that they can choose to market, whether competing with us in the healthcare
market or not.

         We believe that success in the health savings industry is dependent
upon the ability of companies to:

      o     identify retail markets and outlets, unions and associations, and
            consumers that may benefit from health membership programs;

      o     maintain contracts with reputable preferred provider organization
            networks that offer substantial healthcare savings;

      o     identify, develop and market unique membership healthcare programs;

      o     develop and implement effective marketing campaigns;

      o     provide programs comparable or superior to those of competitors at
            competitive prices;

      o     enhance the quality and breadth of the membership programs offered;

      o     maintain and improve the quality and extent of customer service
            offered to providers and members;

      o     offer substantial savings on the major-medical costs such as
            hospital and surgical costs;

      o     combine the programs with affordable insurance plans that have high
            deductibles or set pre-defined payment for hospitalization;

      o     adapt quickly to evolving industry trends or changing market
            requirements;

      o     satisfy investigations on the part of state attorney generals,
            insurance commissioners and other regulatory bodies; and

      o     hire and retain marketing and distribution partners and finance
            promotions for the recruiting of new members.

         Our principal competitors include Best Benefits, Care Entree, Family
Care, People's Benefit Services, AmeriPlan, Full Access Medical and New
Benefits, Inc. People's Benefit Services, AmeriPlan and New Benefits focus
generally on the provision of retail and mail order pharmacy services and vision
and dental care, and thus compete with only a portion of our CARExpress
membership programs. Best Benefits, Care Entree, Family Care and Full Access
Medical provide a broader range of products and services including hospital,
physician, 24-hour nurseline, chiropractic and nursing home care, and thus
compete with our full range of CARExpress membership programs. Our principal
competitors generally offer their discount health membership programs at a
monthly or annual fee that is equal to or greater than the monthly fees that we
charge for comparable CARExpress membership programs, and offer cancellation
privileges, refund guarantees, and "trial" periods of free or discounted
memberships similar in nature and amount to those that we offer.



                                       17
<PAGE>

         We also face current and potential competition from insurance carriers,
third-party administrators, retail pharmacies, financial institutions, federal
and state governments, PPOs, HMOs and other healthcare networks. In addition, a
number of companies offer medical discount programs that are localized
geographically, or specialized in certain service categories such as dental,
chiropractic, or pharmacy only. Recently, several of the major drug
manufacturers have begun, or announced plans to begin, offering prescription
discount cards applicable to their own drug brands only.

         Some of our current and potential competitors have longer operating
histories and significantly greater financial, technical, marketing,
administrative and other resources than we do. They may have significantly
greater name recognition, established marketing relationships and access to a
larger installed base of customers. In addition, current and potential
competitors have established or may establish cooperative relationships among
themselves or with third parties to design customized products to better address
customer needs. Accordingly, new competitors or alliances among competitors may
emerge and rapidly acquire significant market share. Increased competition may
result in price reductions, reduced gross margins and loss of market share, any
of which could have a material adverse affect on our business, financial
condition and results of operations.

REGULATORY AND LEGISLATIVE ISSUES

         We are subject to a variety of laws and regulations applicable to
companies engaged in the healthcare industry. Because the nature of our services
is relatively new and the health savings industry is rapidly evolving, we may
not be able to accurately predict which regulations will be applied to our
business and we may become subject to new or amended regulations.

         Insurance Regulations. The sale of our CARExpress membership programs
is subject to federal, state and local regulation, including the prohibition of
business corporations from providing medical care, the fraud and abuse
provisions of the Medicare and Medicaid statutes, state laws that prohibit
referral fees and fee splitting, and regulations applicable to insurance
companies and organizations that provide healthcare services. Our CARExpress
membership programs are not insurance programs and we are not subject to
regulation as an insurance company or as a seller of insurance in connection
with the sale of our CARExpress membership programs. However, a few states, such
as Florida, Illinois and Kansas, currently regulate or restrict companies
offering discount health savings programs by requiring such companies to obtain
a license or register with them prior to offering such programs there.
Compliance with such regulations or legislation could have a material adverse
affect on our operations and financial condition.



                                       18
<PAGE>

         Occasionally, we receive inquires from insurance commissioners in
various states that require us to supply information about our CARExpress
membership programs to the insurance commissioner or other state regulatory
agency. To date, these agencies have concurred with our view that these programs
are not a form of insurance and are being sold in a proper manner. We can
provide no assurance that this situation will not change in the future, or that
an insurance commissioner will not successfully challenge our ability to offer
our CARExpress membership programs without compliance with state insurance
regulations. Furthermore, states may adopt regulations or enact legislation that
may affect the manner by which we sell our CARExpress membership programs or
restrict or prohibit the sale of our CARExpress membership programs. If we do
not comply with the regulations or legislation of these states, we may be
prevented from selling our programs in these states or may be subject to fines
and penalties that could have a material adverse affect on our operations and
financial condition.

         We intend to sell our CARExpress membership programs in combination
with various types of insurance products, such as catastrophic health insurance
and Mini-Med programs, through National Health Brokerage Group, our wholly-owned
subsidiary. The sale of insurance products and licensing of insurance brokers
and agents are subject to regulation and supervision predominantly by state
authorities. While the scope of regulation and form of supervision may vary from
state to state, insurance laws relating to the sale of insurance products and
licensing of insurance brokers and agents are often complex and generally grant
broad discretion to supervisory authorities in adopting regulations. States have
broad powers over the granting, renewing and revoking of licenses and approvals,
marketing activities and the receipt of commissions. While we have obtained
insurance licenses for National Health Brokerage Group in some states, we have
not yet engaged in the sale of our CARExpress membership programs in combination
with insurance products. In the event we decide to sell these combined products
in the future, we will need to comply with the insurance brokerage laws and
regulations of each state in which we wish to sell the combined products. If we
do not comply with the rules and regulations of any of these states, the
regulatory authorities of the applicable state may revoke our license to sell
combined products in that state and may subject us to fines and penalties.

         Our failure to comply with current, as well as newly enacted or
adopted, federal and state regulations could have a material adverse effect upon
our business, financial condition and results of operations in addition to the
following:

      o     non-compliance may cause us to become the subject of a variety of
            enforcement or private actions;

      o     compliance with changes in applicable regulations could materially
            increase the associated operating costs;

      o     non-compliance with any rules and regulations enforced by a federal
            or state consumer protection authority may subject us or our
            management personnel to fines or various forms of civil or criminal
            prosecution; and

      o     non-compliance or alleged non-compliance may result in negative
            publicity potentially damaging our reputation, network
            relationships, client relationships and the relationship with
            program members, representatives and consumers in general.

         Product Claims and Advertising Laws. The Federal Trade Commission and
certain states regulate advertising, product claims, and other consumer matters.
The Federal Trade Commission may institute enforcement actions against companies
for false and misleading advertising of consumer products. In addition, the
Federal Trade Commission has increased its scrutiny of the use of testimonials,
similar to those used by us and our marketing representatives. We have not been
the target of Federal Trade Commission enforcement action since entering the
health savings industry in 2001. We can provide no assurance, however, that:

                                       19
<PAGE>

      o     the Federal Trade Commission will not question our advertising or
            other operations in the future;

      o     a state will not interpret product claims presumptively valid under
            federal law as illegal under that state's regulations; or

      o     future Federal Trade Commission regulations or decisions will not
            restrict the permissible scope of such claims.

         We are also subject to the risk of claims by marketing representatives
and their customers who may file actions on their own behalf, as a class or
otherwise, and may file complaints with the Federal Trade Commission or state or
local consumer affairs offices. These agencies may take action on their own
initiative against us for alleged advertising or product claim violations, or on
a referral from marketing representatives, customers or others. Remedies sought
in these actions may include consent decrees and the refund of amounts paid by
the complaining marketing representatives or consumer, refunds to an entire
class of marketing representatives or customers, client refunds, or other
damages, as well as changes in our method of doing business. A complaint based
on the practice of one marketing representative, whether or not we authorized
the practice, could result in an order affecting some or all of our marketing
representatives in a particular state. Also, an order in one state could
influence courts or government agencies in other states considering similar
matters. Proceedings resulting from these complaints could result in significant
defense costs, settlement payments or judgments and could have a material
adverse effect on us.

         Marketing Laws and Regulations. While we do not employ any network
marketing personnel and do not intend to employ any such personnel in the
future, we utilize the services of marketing representatives to market our
CARExpress membership programs to the public. The marketing activities of the
marketing representatives that we utilize, including the manner by which such
marketing representatives recruit additional marketing representatives to market
our CARExpress membership programs and the number of levels of marketing
representatives through which the marketing representative recruitment process
extends, may be subject to scrutiny by various state and federal governmental
regulatory agencies to ensure compliance with securities, franchise investment,
business opportunity, marketing and criminal laws prohibiting the use of
"pyramid" or "endless chain" types of selling organizations. These regulations
are generally directed at ensuring that advancement within a network marketing
organization is based on sales of the organization's products rather than
investment in the organization or other non-sales related criteria. For
instance, some of these regulations place limits on the extent to which
marketing representatives may receive commissions on sales of products or
services generated by marketing representatives that were not directly recruited
by the marketing representative. The compensation structure of these selling
organizations is very complex, and compliance with all of the applicable laws is
uncertain in light of evolving interpretation of existing laws and the enactment
of new laws and regulations pertaining to this type of product distribution. We
are not aware of any legal actions pending or threatened by any governmental
authority against us regarding the legality of the network marketing operations
of the marketing representatives that we utilize.

                                       20
<PAGE>

         Health Insurance Portability and Accountability Act. In December 2000,
The Department of Health and Human Services issued final privacy regulations
pursuant to the Health Insurance Portability and Accountability Act of 1996
("HIPAA") that became effective in April 2003. HIPAA and the applicable
regulations impose extensive restrictions on the use and disclosure of
individually identifiable health information by certain entities. Also as part
of HIPAA, the Department of Health and Human Services has issued final
regulations standardizing electronic transactions between health plans,
providers and clearinghouses. Health plans, providers and clearinghouses are
required to conform their electronic and data processing systems with HIPAA's
electronic transaction requirements. We believe that we are not currently
required to comply with HIPAA since our CARExpress membership programs are not
insurance. In the event we obtain the necessary insurance licenses for National
Health Brokerage Group and decide to sell CARExpress membership programs in
combination with insurance products, we may in the future be required to comply
with HIPAA. In the event we do become subject to HIPAA, we will be subject to
HIPAA's extensive restrictions on the use and disclosure of individually
identifiable health information by certain entities. This may subject us to
increased costs of compliance which may have a negative impact on our business
and operations. Sanctions for failing to comply with standards issued pursuant
to HIPAA include criminal penalties and civil sanctions.

         Franchise Laws and Regulations. The Federal Trade Commission, as well
as the securities regulators in states that have franchise laws, may assert that
our relationships with marketing representatives are subject to the
registration, disclosure and reporting requirements applicable to franchises.
Although we structure our marketing relationships so as to avoid application of
franchise laws, we may from time to time have to expend resources in refuting
such franchise law claims, and if we are found to be in violation may have to
pay civil penalties, be enjoined from doing business in the jurisdiction, or
expend funds to bring our operations into compliance with those laws.

INTELLECTUAL PROPERTY RIGHTS

         Our intellectual property rights are important to our business. We rely
upon confidentiality procedures and contractual provisions to protect our
business, proprietary technology and CARExpress brand. Our general policy is to
enter into confidentiality agreements with our employees and consultants, and
nondisclosure agreements with all other parties to whom we disclose confidential
information. We do not have any trademark registrations for our CARExpress brand
or patents relating to our proprietary technologies. We have applied for
trademark registration for our CARExpress brand and may apply for legal
protection for certain of our other intellectual property in the future.
However, we can provide no assurance that we will receive such legal protection
or that, if received, such legal protection will be adequate to protect our
intellectual property rights.


                                       21
<PAGE>


EMPLOYEES

         As of March 30, 2006, we had 12 employees. Of this number, 11 were
full-time employees, comprised of our management and full-time customer service
personnel, and one was a part-time employee. We utilize the services of
approximately 20 consultants and advisors as well as after-hours call center
representatives and temporary customer service representatives. We do not employ
the individuals working for our after-hours call center or the temporary
customer service representatives. None of our employees are represented by a
labor union, and we have never experienced a work stoppage. We believe that our
relations with our employees are good.

RISKS AND UNCERTAINTIES

         An investment in our common stock involves a high degree of risk. You
should carefully consider the following risk factors in addition to other
information in this report before purchasing our common stock. The risks and
uncertainties described below are those that we currently deem to be material
and that we believe are specific to our company, our industry and our stock. In
addition to these risks, our business may be subject to risks currently unknown
to us. If any of these or other risks actually occurs, our business may be
adversely affected, the trading price of our common stock may decline and you
may lose all or part of your investment.

Risks Associated With Our Business

We are an early-stage company with an unproven business model, which makes it
difficult for us to evaluate our current business and future prospects.

         We entered the health savings industry in 2001 to address the need for
affordable healthcare nationwide. From 2001 to 2004, we engaged in relatively
limited operations due to our lack of available capital. During that time, our
employees performed limited duties and our operations were focused almost
exclusively on building CARExpress. In early 2004, we took a number of steps to
grow our business and generate revenues, including hiring our current Chief
Executive Officer, raising capital through private placements of our equity
securities, and marketing our CARExpress membership programs to the public.
During 2005, we entered into agreements with various marketing companies that
are generating an increasing number of members and sales of our programs.

         While we are actively engaged in marketing our CARExpress membership
programs to the public and are experiencing rapid growth in members and sales of
our CARExpress membership programs, we have generated only minimal revenues to
date. In addition, since we have only been offering our CARExpress membership
programs since 2003, we have very limited historical data with respect to sales
of our CARExpress membership cards. As a result of these factors, the revenue
and income potential of our business is unproven, and we have only a limited
operating history upon which to base an evaluation of our current business and
future prospects. Because of our limited operating history and because the
health savings industry is rapidly evolving, we have limited insight into trends
that may emerge and affect our business. We may make errors in predicting and
reacting to relevant business trends, which could harm our business.



                                       22
<PAGE>

         Before purchasing our common stock, you should consider an investment
in our common stock in light of the risks, uncertainties and difficulties
frequently encountered by early-stage companies in new and rapidly evolving
markets such as ours, including those described herein. We may not be able to
successfully address any or all of these risks. Failure to adequately address
such risks could cause our business, financial condition and results of
operations to suffer.

We have a history of losses and do not expect to begin generating positive cash
flows from operations until the second half of 2006.

         We have experienced net losses in each fiscal quarter since our
inception and as of December 31, 2005, had an accumulated deficit of
approximately $7.9 million. We incurred net losses to common shareholders of
approximately $4.5 million for the year ended December 31, 2005 and
approximately $2.6 million during the year ended December 31, 2004. As a result
of these conditions, the report of our independent accountants issued in
connection with the audit of our financial statements as of and for our fiscal
year ended December 31, 2005 contained a qualification raising a substantial
doubt about our ability to continue as a going concern. While we expect that our
cash flows from sales of our CARExpress membership programs will improve during
2006, that our net losses from operations will decrease during the next six
months and that we will begin generating positive cash flows from operations
during the second half of 2006, we can provide no assurance that these
expectations will be met. As a result, we may continue to generate losses for
the foreseeable future.

We will need to raise additional funds in the future to cover our long-term
contractual obligations, notes payable and operating expenses, which funds may
not be available or, if available, may not be available on acceptable terms.

         We have significant long-term contractual obligations that we must
satisfy over the next several years. We are a party to employment agreements
with David M. Daniels, Alex Soufflas, Patricia S. Bathurst and David A. Taylor
pursuant to which we are paying each of them an annualized base salary of
$254,100, $210,000, $162,000 and $145,200, respectively, for 2006. We must also
make payments under operating leases for our office space in Horsham,
Pennsylvania and Sarasota, Florida in the aggregate amount of approximately
$260,000 for 2006. If we are unable to satisfy these obligations as they come
due, our business may be materially and adversely affected.

         We currently have outstanding indebtedness to third parties in the
aggregate principal amount of approximately $186,000, all of which is due within
the next four months. This indebtedness consists primarily of promissory notes
in the aggregate principal amount of $167,000. We also expect to incur
additional operating expenses over the next 12 months as we:

      o     develop new discount healthcare membership programs;

      o     recruit and hire additional personnel, including customer service
            and support staff and marketing and distribution partners;

      o     leverage and develop relationships with additional PPOs and provider
            networks;

                                       23
<PAGE>

      o     upgrade our operational and financial systems, procedures and
            controls; and

      o     comply with Securities and Exchange Commission ("SEC") reporting
            requirements and fulfill the other responsibilities we will have as
            a public company.

We may also experience a material decrease in liquidity due to unforeseen
capital requirements or other events and uncertainties.

         We believe that our current cash resources will not be sufficient to
sustain our current operations for the next 12 months. As a result, we will need
to raise additional funds during the next 12 months. We have not made
arrangements to obtain additional financing and we can provide no assurance that
additional financing will be available in an amount or on terms acceptable to
us, if at all. If we cannot raise funds when they are needed or if such funds
cannot be obtained on acceptable terms, we may not be able to pay our costs and
expenses as they are incurred, sell or create new CARExpress membership
programs, execute on our business plan, take advantage of future opportunities
or respond to competitive pressures or unanticipated requirements. This may
seriously harm our business, financial condition and results of operations.

We must develop and expand our use of marketing and distribution partners to
increase revenue and improve our operating results.

         Our success will depend in large part upon our ability to attract,
retain and motivate the marketing and distribution partners that market our
CARExpress membership programs. We will need to expand our existing
relationships and enter into new relationships with marketing and distribution
partners in order to increase our current and future market share and revenue.
We compete with all types of retail product and service companies throughout the
United States and overseas for marketing and distribution partners. We can
provide no assurance that we will be able to maintain and expand our existing
relationships or enter into new relationships, or that any new relationships
will be available on commercially reasonable terms. If we are unable to maintain
and expand our existing relationships or enter into new relationships with
marketing and distribution partners, we may lose customer introductions,
co-marketing benefits and sales, and our operating results may suffer.

Our reliance on marketing representatives could result in reduced revenue growth
because we have little control over them or their marketing representatives.

         Marketing representatives currently account for substantially all of
our revenues. None of these parties is obligated to continue selling our
CARExpress membership programs. Our ability to generate increased revenue
depends significantly upon the ability and willingness of our marketing
representatives to market and sell our CARExpress membership programs throughout
the United States. If they are unsuccessful in their efforts or are unwilling or
unable to market and sell our programs, our operating results may suffer.

         We cannot control the level of effort these parties expend or the
extent to which any of them will be successful in marketing and selling our
CARExpress membership programs. Our marketing representatives typically offer
and sell our programs on a part-time basis, and may engage in other business
activities. These marketing representatives may give higher priority to the
products or services of our competitors and reduce their efforts devoted to
marketing our programs. We may not be able to prevent our marketing
representatives from devoting greater resources to support our competitors'
products and reducing or eliminating their efforts to sell our programs.



                                       24
<PAGE>

Developing and maintaining relationships with PPOs are critical to our success
and the loss of any such relationships could have a material adverse effect on
our business.

         As part of our business operations, we must develop and maintain
relationships with PPOs and other provider networks within each market area that
our services are offered. Developing and maintaining relationships with PPOs is
based in part on professional relationships and the reputation of our management
and marketing personnel. Our PPO relationships may be adversely affected by
events beyond our control, including departures of key personnel and alterations
in professional relationships. The loss of a PPO within a geographic market area
that is not be replaced on a timely basis, or at all, could have a material
adverse effect on our business, financial condition, and results of operations.

We currently rely heavily on a small number of PPOs, the loss of any one of
which or the change in our relationship with any one of which could have a
material adverse effect on our business.

         CareMark, Cigna, Optum, Integrated Health, Three Rivers, International
Med-Care and Careington International are the principal PPOs through which our
members receive savings on healthcare products and services through our
CARExpress membership programs. Our agreements with these PPOs are not
exclusive, so they may choose to partner with one of our competitors or compete
directly with our programs. In addition, these agreements may be terminated by
either party on between 45 and 180 days' prior written notice. While we
currently have a good relationship with each of these PPOs, we can provide no
assurance that we will continue to have a good relationship with any of them in
the future. If these organizations choose to partner with our competitors or
compete directly with out programs, our business could be adversely affected. In
addition, if, for any reason, we should lose a provider relationship and be
unable to promptly replace it with a new one, we may be unable to offer certain
benefits to members, which could have a negative impact on our sales.

We currently generate almost all of our revenues through a limited number of
marketing and distribution partners.

         A limited number of marketing and distribution partners currently
generate almost all of our revenues for us. Although we are attempting to expand
the number of marketing and distribution partners selling our CARExpress
membership programs, we expect that a limited number of marketing and
distribution partners will continue to generate almost all of our revenues for
the foreseeable future. In the event any of these marketing and distribution
partners cease to sell our programs to prospective members, or if prospective
members do not purchase our programs through these marketing and distribution
partners, our business, financial condition and results of operations could be
materially and adversely affected.



                                       25
<PAGE>

Because we expect to derive substantially all of our future revenues from our
CARExpress membership programs, any failure of these programs to satisfy
customer demands or to achieve meaningful market acceptance may seriously harm
our business.

         Substantially all of our revenues come from monthly membership fees
that we receive from the sale of our CARExpress membership programs. We expect
our CARExpress membership programs to continue to account for substantially all
of our revenues for the foreseeable future. If, for any reason, revenues derived
from sales of our CARExpress membership programs decline or do not grow as
rapidly as we anticipate, our operating results and our business may be
significantly impaired. If our CARExpress membership programs fail to meet the
needs of our target customers, or if they do not compare favorably in breadth
and price to competing products, our growth may be limited. We cannot assure you
that our CARExpress membership programs will achieve any meaningful market
acceptance. If we cannot develop a market for our products, or if they develop
more slowly than expected, our business, financial condition and results of
operations may suffer.

We may not be able to develop acceptable new discount healthcare membership
programs at a rate required by our rapidly changing market.

         Our future success depends on our ability to develop new discount
healthcare membership programs that keep pace with the rapidly evolving health
savings industry and that address the changing needs of our customers. We may
not be successful in either developing such programs or achieving market
acceptance of any new programs that we develop. Uncertainties about the timing
and nature of changes to healthcare regulations and the evolution of the health
savings industry could delay our development of new programs or increase the
expenses in developing them. The failure of our CARExpress membership programs
to satisfy the needs of our customers may limit or reduce the market for these
programs, result in customer dissatisfaction, and seriously harm our business,
financial condition and results of operations.

We may become subject to government regulation much like an insurance company,
which may have an adverse effect on our business.

         We offer and sell our CARExpress membership programs without license by
any federal, state, or local regulatory licensing agency or commission. By
comparison, companies that provide insurance benefits and operate healthcare
management organizations ("HMOs") and PPOs are regulated by federal and state
licensing agencies and commissions and are subject to federal and state
legislation, such as the Health Insurance Portability and Accountability Act of
1996. These regulations cover operations, including scope of benefits, rate
formula, delivery systems, utilization review procedures, quality assurance,
enrollment requirements, claim payments, marketing and advertising. Federal and
state insurance regulatory agencies and commissions may, in the future,
determine that our programs are subject to governmental regulation, which may
adversely affect or limit our future operations. Compliance with these statutes
and regulations is costly and may limit our operations. Statutes and regulations
applicable to other healthcare organizations with which we may contract, such as
patient freedom of choice laws and anti-discrimination laws, may force our
healthcare PPOs to withdraw as our provider networks.



                                       26
<PAGE>

We may need to comply with insurance brokerage laws in the event we sell our
CARExpress membership programs in combination with insurance products.

         We intend in the future to sell our CARExpress membership programs in
combination with insurance products through National Health Brokerage Group, our
wholly-owned subsidiary. While we have obtained insurance licenses for National
Health Brokerage Group in some states, we have not yet engaged in the marketing
or sale of these combined products. The sale of insurance products and licensing
of insurance brokers and agents are subject to regulation and supervision,
predominantly by state authorities. While the scope of regulation and form of
supervision may vary from state to state, insurance laws relating to the sale of
insurance products and licensing of insurance brokers and agents are often
complex and generally grant broad discretion to supervisory authorities in
adopting regulations. States have broad powers over the granting, renewing and
revoking of licenses and approvals, marketing activities and the receipt of
commissions. In the event we decide to market and sell our CARExpress membership
programs in combination with insurance products in the future through National
Health Brokerage Group, we will need to comply with the insurance brokerage laws
and regulations of each state in which we wish to engage in these activities.
Our failure to comply with the rules and regulations of any of these states may
result in the revocation of our license to sell these combined products in that
state and may subject us to fines and penalties.

Our operations may be affected by future changes in insurance laws and
regulations.

         Our CARExpress membership programs are not regulated as insurance
products, and our marketing and distribution partners are not required to be
licensed as insurance brokers to be able to sell our CARExpress membership
programs. Congress or state legislatures may in the future seek to bring our
CARExpress membership programs and sales activities under the jurisdiction of
insurance regulators through changes to insurance laws and regulations. Should
that occur, we may face material costs of compliance with the new laws and
regulations, and if we cannot comply, we may be prohibited from selling our
programs in certain jurisdictions.

         If we become subject to any insurance licensing or regulatory
requirements, whether as a result of changes in insurance laws bringing our
CARExpress membership programs under the jurisdiction of federal and state
insurance agencies or as a result of National Health Brokerage Group becoming
licensed to sell our CARExpress membership programs in combination with
insurance products and engaging in sales of the combined products, our failure
to comply with any such requirements could lead to a revocation, suspension or
loss of licensing status, termination of contracts, and legal and administrative
enforcement actions. In addition, the use of the internet in the marketing and
distribution of our CARExpress membership programs is relatively new and
presents certain regulatory issues, such as whether internet service providers,
gateways or cybermalls are engaged in the solicitation or sale of insurance
policies or otherwise transacting business requiring licensure under the laws of
one or more states. Regulatory requirements are subject to change from time to
time and may become more restrictive in the future, thereby making compliance
more difficult or expensive or otherwise affecting or restricting our ability to
conduct our business as now conducted or proposed to be conducted.



                                       27
<PAGE>

Our use of marketing representatives could subject us to enforcement actions,
penalties and negative publicity if any such representatives do not comply with
applicable federal and state regulations.

         The marketing representatives that we utilize and the manner by which
such marketing representatives recruit additional marketing representatives to
market our CARExpress membership programs are subject to federal and state laws
and regulations administered by the Federal Trade Commission and various state
agencies. These laws and regulations include securities, franchise investment,
business opportunity, and criminal laws prohibiting the use of "pyramid" or
"endless chain" types of selling organizations. These regulations are generally
directed at ensuring that product and service sales are ultimately made to
consumers (as opposed to other marketing representatives) and that advancement
within the marketing organization is based on sales of products and services,
rather than on investment in the organization or other non-retail sales related
criteria. Compliance with all of the applicable regulations and laws is
uncertain because of the evolving interpretations of existing laws and
regulations, and the enactment of new laws and regulations pertaining in general
to marketing organizations and product and service distribution. Accordingly,
there is the risk that the marketing organizations that we use may be found to
be in violation with applicable laws and regulations. Such a finding could:

      o     result in an enforcement action and imposition of a penalty against
            us or the marketing organization;

      o     require the marketing organization to modify its marketing
            representative network system;

      o     result in negative publicity to us or the network marketing
            organization; or

      o     have a negative affect on the morale and loyalty of the marketing
            representatives in the marketing organization.

Any of these consequences could have a material adverse effect on our business,
financial condition and results of operations.

Our systems may be vulnerable to security risks or service disruptions that
could harm our business.

         Although we have taken measures to secure our systems against security
risks and other causes of disruption of electronic services, our servers are
vulnerable to physical or electronic break-ins and service disruptions, which
could lead to interruptions, delays, loss of data or the inability to process
customer requests. Such events could be very expensive to remedy, could damage
our reputation and could discourage existing and potential customers from
purchasing our CARExpress membership programs. Any such events could
substantially harm our business, results of operations and financial condition.



                                       28
<PAGE>


Our continued growth could strain our personnel and infrastructure resources,
and if we are unable to implement appropriate controls and procedures to manage
our growth, we may not be able to successfully implement our business plan.

         We are beginning to experience rapid growth in our operations, which is
placing, and will continue to place, a significant strain on our management,
administrative, operational and financial infrastructure. Our future success
will depend in part upon the ability of our management to manage growth
effectively. This may require us to hire and train additional personnel to
manage our expanding operations. In addition, we will be required to continue to
improve our operational, financial and management controls and our reporting
systems and procedures. If we fail to successfully manage our growth, we may be
unable to execute upon our business plan.

We face increasing competition from more established companies that have
significantly greater resources than we do that may place pressure on our
pricing and that could prevent us from increasing revenue or attaining
profitability.

         The health savings industry is rapidly evolving and competition for
members is becoming increasingly intense. Our CARExpress membership programs are
similar to or directly in competition with products and services offered by many
of our direct and potential competitors. Some of our healthcare providers may
provide, either directly or through third parties, programs that directly
compete with our programs. If discount healthcare membership programs become
standard features of healthcare companies, the demand for our CARExpress
membership programs may decrease. In addition, the PPOs and provider networks
that we use may decide to develop or sell competing products instead of our
CARExpress membership programs. Moreover, even if our CARExpress membership
programs provide a greater breadth of products and services and greater price
discounts than programs offered by other companies operating in the health
savings industry, potential customers might accept this limited offering in lieu
of purchasing our CARExpress membership programs due to their lack of
familiarity with our programs.

         Some of our competitors enjoy substantial competitive advantages, such
as:

      o     programs that are functionally similar or superior to our membership
            programs;

      o     established reputations relating to membership programs;

      o     greater name recognition and larger marketing budgets and resources;

      o     established marketing relationships and access to larger customer
            bases; and

      o     substantially greater financial, personal and other resources.

         We compete with numerous well-established companies that design and
implement membership programs. Our current principal competitors include
companies that offer healthcare products and services through membership
programs much like our CARExpress membership programs, as well as insurance
companies, PPOs and provider networks, and other organizations that offer health
benefit programs to their customers. Some of our competitors may be companies
that have programs that are functionally similar or superior to our health
membership programs. Most of our competitors possess substantially greater
financial, marketing, personnel and other resources than us.

                                       29
<PAGE>

         We can provide no assurance that our current or future competitors will
not:

      o     provide healthcare benefit programs comparable or superior to our
            programs at lower membership prices;

      o     adapt more quickly to evolving healthcare industry trends or
            changing industry requirements;

      o     respond more quickly and effectively to new or changing
            opportunities, technologies, standards or customer requirements;

      o     increase their emphasis on programs similar to ours to more
            effectively compete with us; or

      o     successfully recruit marketing representatives by offering more
            attractive sales commissions and fees.

For these and other reasons, we may not be able to compete successfully against
our current and future competitors. Increased competition may result in price
reductions, reduced gross margins, and loss of market share, any of which could
have a material, adverse effect on our business, financial condition and results
of operations.

Our failure to adequately protect our CARExpress brand and other intellectual
property could have an adverse effect on our business.

         Intellectual property is important to our success. We generally rely
upon confidentiality procedures and contractual provisions to protect our
business, proprietary technology and CARExpress brand. Our general policy is to
enter into confidentiality agreements with our employees and consultants, and
nondisclosure agreements with all other parties to whom we disclose confidential
information. We do not have any trademark registrations for our CARExpress brand
or patents relating to our proprietary technologies. We have applied for
trademark registration for our CARExpress brand and may apply for legal
protection for certain of our other intellectual property in the future. Any
such legal protection we obtain may be challenged by others or invalidated
through administrative process or litigation. As a result, our means of
protecting our proprietary technology and brands may be inadequate. Furthermore,
despite our efforts, we may be unable to prevent third parties from infringing
upon or misappropriating our intellectual property. Any such infringement or
misappropriation could have a material adverse effect on our business, financial
condition and results of operations.

We are dependent on our management team, and the loss of any key member of this
team may prevent us from implementing our business plan in a timely manner.

         Our success depends largely upon the continued services of our
executive officers and other key management and development personnel. Each of
our executive officers may terminate their employment with us at any time
without penalty. We do not maintain key person life insurance policies on any of
our employees. The loss of one or more of our key employees could seriously harm
our business, financial condition or results of operations. In such an event we
may be unable to recruit personnel to replace these individuals in a timely
manner, or at all, on acceptable terms.

                                       30
<PAGE>

Because competition for our target employees is intense, we may not be able to
attract and retain the highly-skilled employees that we need to support our
planned growth.

         To execute our growth plan, we must attract and retain highly-qualified
personnel. We need to hire additional personnel in virtually all operational
areas, including selling and marketing, operations and technical support,
customer service and administration. Competition for these personnel remains
intense, especially for individuals with high levels of experience in designing
and developing health savings programs. We may not be successful in attracting
and retaining qualified personnel. Many of the companies with which we compete
for experienced personnel have greater resources than we have. If we fail to
attract new personnel or retain and motivate our current personnel, our business
and future growth prospects could be severely harmed.

If we acquire any healthcare companies or products in the future, such companies
and products could prove difficult to integrate, disrupt our business, dilute
stockholder value and adversely affect our operating results.

         We may acquire or make investments in complementary healthcare
companies, businesses, assets, products and services in the future. We have not
made any such acquisitions or investments to date, and therefore, our ability to
make acquisitions or investments is unproven. Acquisitions and investments
involve numerous risks, including:

      o     difficulties in integrating operations, technologies, services and
            personnel;

      o     the diversion of financial and management resources from existing
            operations;

      o     the risk of entering new markets;

      o     the potential loss of key employees; and

      o     the inability to generate sufficient revenue to offset acquisition
            or investment costs.

         In addition, if we finance any acquisitions by issuing convertible debt
or equity securities, our existing stockholders may be diluted which could
affect the market price of our stock. As a result, if we fail to properly
evaluate and execute any acquisitions or investments, our business and prospects
may be seriously harmed.

Risks Associated With Our Industry

The health savings industry is rapidly evolving, and if we are not successful in
promoting the benefits of our CARExpress membership programs and our CARExpress
brand, our growth may be limited.

         Based on our experience with consumers, we believe that many consumers
are not familiar with the health savings industry and the benefits provided by
discount healthcare membership programs. In addition, there may be a
limited-time opportunity to achieve and maintain a significant share of the
market for healthcare membership programs due in part to the rapidly evolving
nature of the health savings industry and the substantial resources available to
our existing and potential competitors. If people do not recognize or
acknowledge these benefits, the market for our CARExpress membership programs
may develop more slowly than we expect, which could adversely affect our
operating results.



                                       31
<PAGE>

         Developing and maintaining awareness of our CARExpress brand is
critical to achieving widespread acceptance of our existing and future
CARExpress membership programs. Furthermore, we believe that the importance of
brand recognition will increase as competition in our market develops.
Successful promotion of our CARExpress brand will depend largely on the
effectiveness of our marketing efforts and on our ability to develop reliable
and useful CARExpress membership programs at competitive prices. If we fail to
successfully promote our CARExpress brand, or if our expenses to promote and
maintain our CARExpress brand are greater than anticipated, our financial
condition and results of operations could suffer.

The success of our business depends upon the continued growth and acceptance of
discount healthcare membership programs as a suitable alternative or supplement
to traditional health insurance.

         Growth in sales of our CARExpress membership programs depends on the
acceptance of health membership programs as a suitable alternative or supplement
to traditional health insurance. Discount healthcare membership programs could
lose their viability as an alternative to health insurance due to changes in
healthcare laws and regulations, an inadequate number of healthcare providers
participating in the programs, customer dissatisfaction with the method of
making payments and receiving discounts, and new alternative healthcare
solutions. If discount healthcare membership programs do not gain widespread
market acceptance, the demand for our CARExpress membership programs could be
significantly reduced, which could have a material adverse effect on our
business, financial condition and results of operations.

Evolving regulation of the health savings industry may affect us adversely.

         As the health savings industry continues to evolve, increasing
regulation by federal and state agencies becomes more likely. The sale of
discount healthcare membership programs is subject to federal, state and local
regulation, including the prohibition of business corporations from providing
medical care, the fraud and abuse provisions of the Medicare and Medicaid
statutes, state laws that prohibit referral fees and fee splitting, and
regulations applicable to insurance companies and organizations that provide
healthcare services. Compliance with changes in applicable regulations could
materially increase the associated operating costs. Non-compliance with these
laws and regulations could cause us to become the subject of a variety of
enforcement or private actions, subject us or our management personnel to fines
or various forms of civil or criminal prosecution, and result in negative
publicity potentially damaging our reputation, our PPO relationships, and our
relationships with members, representatives and consumers in general. Our
failure to comply with current, as well as newly enacted or adopted federal and
state regulations, could have a material adverse effect upon our business,
financial condition and results of operations.



                                       32
<PAGE>

Risks Associated With Our Stock

Future sales of our common stock may cause our stock price to decline.

         As of March 30, 2006, we had 21,728,825 shares of common stock
outstanding. Of this amount, 9,618,375 are freely tradable without restriction
or further registration under the Securities Act, unless the shares are
purchased by our affiliates. The remaining 12,110,450 shares of common stock
outstanding are "restricted securities" as that term is defined under Rule 144
of the Securities Act. None of our directors, executive officers, or employees
is subject to lock-up agreements or market stand-off provisions that limit their
ability to sell shares of our common stock. In addition, only 1,580,750 of the
shares of our common are subject to lock-up agreements or market stand-off
provisions. The sale of a large number of shares of our common stock, or the
belief that such sales may occur, could cause a drop in the market price of our
common stock.

We intend to attempt to raise additional funds in the future, and such
additional funding may be dilutive to stockholders or impose operational
restrictions.

         We intend to raise additional capital in the future to help fund our
operations through sales of shares of our common stock or securities convertible
into shares of our common stock, as well as issuances of debt. Such additional
financing may be dilutive to our stockholders, and debt financing, if available,
may involve restrictive covenants which may limit our operating flexibility. If
additional capital is raised through the issuances of shares of our common stock
or securities convertible into shares of our common stock, the percentage
ownership of existing stockholders will be reduced. These stockholders may
experience additional dilution in net book value per share and any additional
equity securities may have rights, preferences and privileges senior to those of
the holders of our common stock.

We have issued a significant number of securities to business partners, service
providers, consultants and advisors and may issue additional securities to such
persons in the future.

         Since January 1, 2004, we have issued 5,744,000 shares of our common
stock, options exercisable into 400,000 shares of our common stock and warrants
exercisable into 4,629,000 shares of our common stock to business partners,
service providers, consultants and advisors as compensation for services
rendered or to be rendered in the future. In addition, during the past 12
months, we have issued options exercisable into 7,645,000 shares of our common
stock and restricted stock awards with respect to 1,350,000 shares of our common
stock to our employees and directors. We may issue additional shares of our
common stock or securities convertible or exercisable into shares of our common
stock to such persons in the future as compensation for services rendered or to
be rendered. The issuance of additional securities to such persons will result
in dilution to existing stockholders since the percentage ownership of such
stockholders will be reduced.


                                       33
<PAGE>


The market price of our common stock is likely to be highly volatile and subject
to wide fluctuations.

         The market price of our common stock is likely to be highly volatile
and could be subject to wide fluctuations in response to a number of factors
that are beyond our control, including:

      o     announcements of new programs or services by our competitors;

      o     demand for our CARExpress membership programs, including
            fluctuations in license renewals; and

      o     fluctuations in revenue from the marketing and distribution partners
            that we use.

        In addition, the market price of our common stock could be subject to
wide fluctuations in response to:

      o     quarterly variations in our revenues and operating expenses;

      o     announcements of new programs or services by us; and

      o     our ability to accommodate future growth in our operations.

         In addition, the stock market has experienced significant price and
volume fluctuations that have particularly affected the market price of the
stock of many early-stage companies and that often have been unrelated or
disproportionate to the operating performance of these companies. Market
fluctuations such as these may seriously harm the market price of our common
stock. Further, securities class action suits have been filed against companies
following periods of market volatility in the price of their securities. If such
an action is instituted against us, we may incur substantial costs and a
diversion of management attention and resources, which would seriously harm our
business, financial condition and results of operations.

Our operating results may fluctuate significantly, and these fluctuations may
cause our stock price to fall.

         Our operating results will likely vary in the future primarily as the
result of fluctuations in our billings, revenues and operating expenses. We
expect to incur additional operating expenses in the future as we expand our
selling and marketing activities, develop new discount healthcare membership
programs, hire additional personnel and comply with SEC reporting requirements.
If our results of operations do not meet the expectations of our shareholders or
the investment community, the price of our common stock may decline.

There is no established public market for our common stock.

         There is no established public market for our common stock. Our common
stock began trading on the OTC Bulletin Board on March 30, 2006. While our
common stock currently trades on the OTC Bulletin Board, it does not trade on
any regional or national securities exchange or the Nasdaq Stock Market.
Securities trading on the OTC Bulleting Board are generally substantially less
liquid than securities trading on national and regional securities exchanges or
the Nasdaq Stock Market. We can provide you with no assurance that an
established public market will develop for our common stock or, if such a market
develops, that it will be sustained.

                                       34
<PAGE>

Applicable SEC rules governing the trading of "penny stocks" may limit the
trading and liquidity of our common stock which may affect the trading price of
our common stock.

         Our common stock is a "penny stock" as defined under Rule 3a51-1 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and is
accordingly subject to SEC rules and regulations that impose limitations upon
the manner in which our common stock can be publicly traded. These regulations
require the delivery, prior to any transaction involving a penny stock, of a
disclosure schedule explaining the penny stock market and the associated risks.
Under these regulations, certain brokers who recommend such securities to
persons other than established customers or certain accredited investors must
make a special written suitability determination regarding such a purchaser and
receive such purchaser's written agreement to a transaction prior to sale. These
regulations may have the effect of limiting the trading activity of our common
stock and reducing the liquidity of an investment in our common stock.

If our executive officers, directors and principal stockholders choose to act
together, they may be able to influence our management and operations, which may
prevent us from taking actions that may be favorable to you.

         Our executive officers, directors and principal stockholders, and their
respective affiliates, beneficially own approximately 54% of our outstanding
common stock. These stockholders, acting together, have the ability to exert
substantial influence over any matters requiring approval by our stockholders,
including the election and removal of directors and any proposed merger,
consolidation or sale of all or substantially all of our assets. In addition,
they could dictate the management of our business and affairs. This
concentration of ownership could have the effect of delaying, deferring or
preventing a change in control of us or impeding a merger or consolidation,
takeover or other business combination that could be favorable to you.

ITEM 2.    DESCRIPTION OF PROPERTY.

         Our corporate headquarters and principal offices are located at 120
Gibraltar Road, Suite 107, Horsham, Pennsylvania 19044, where we lease
approximately 7,100 square feet of space for a monthly rent payment of
approximately $13,000. This lease expires on May 30, 2007. We also lease
additional office space at 2033 Main Street, Suite 501, Sarasota, Florida 34237.
We lease approximately 4,000 square feet of space for a monthly rent payment of
approximately $8,200. This lease commenced on July 1, 2005 and will expire on
June 30, 2010. We believe that our office space is adequate to support our
current operations and that adequate additional space is available to support
projected growth in our operations over the next 12 months.

ITEM 3.  LEGAL PROCEEDINGS.

         We are not currently a party to any material legal proceedings. We may
from time to time become involved in litigation relating to claims arising in
the ordinary course of our business.



                                       35
<PAGE>

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

         None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
        ISSUER PURCHASES OF EQUITY SECURITIES.

         Our common stock currently trades on the OTC Bulletin Board under the
symbol "NHPR". The first reported trade of our common stock on the OTC Bulletin
Board occurred on March 30, 2006. The last reported trading price of our common
stock as reported on the OTC Bulletin Board on March 30, 2006 was $0.40 per
share. The quotations for our common stock on the OTC Bulleting Board represent
inter-dealer prices, without retail mark-up, markdown or commission, and may not
represent actual transactions.

HOLDERS

         As of March 30, 2006, the number of stockholders of record of our
common stock was 133.

DIVIDENDS

         We have not paid any cash dividends on our common stock to date, nor do
we intend to pay any cash dividends on our common stock in the foreseeable
future. We intend to retain future earnings, if any, to finance the operation
and development of our business.

RECENT SALES OF UNREGISTERED SECURITIES

         During our fiscal year ended December 31, 2005, we sold the following
securities without registration under the Securities Act of 1933, as amended
(the "Securities Act"):

         In February 2005, we completed a private offering of 2,448,750 shares
of our common stock, Class A warrants to acquire 816,252 shares of our common
stock, and Class B warrants to acquire 816,252 shares of our common stock, for
aggregate cash consideration of $979,500. These securities were sold in units
comprised of three shares of common stock, one Class A warrant and one Class B
warrant. The units were sold at a purchase price of $1.20 per unit. Each Class A
warrant is initially exercisable into one share of our common stock at an
exercise price of $1.00 per share during a period of 180 days beginning on the
date a registration statement covering the public resale of certain of the
shares underlying the warrants is declared effective by the SEC and expires on
November 30, 2006. Each Class B warrant is initially exercisable into one share
of our common stock at an exercise price of $2.00 per share during a period of
360 days beginning on the date a registration statement covering the public
resale of certain of the shares underlying the warrants is declared effective by
the SEC and expires on November 30, 2006. We issued these securities to a
limited number of accredited investors in a private offering exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) of the
Securities Act and/or Rule 506 promulgated thereunder without engaging in any
advertising or general solicitation of any kind.

                                       36
<PAGE>

         In March 2005, we completed a private offering of 737,750 shares of our
common stock, Class A warrants to acquire 368,875 shares of our common stock,
and Class B warrants to acquire 368,875 shares of our common stock. These
securities were sold in units comprised of two shares of common stock, one Class
A warrant and one Class B warrant. These units were issued to each person that
purchased units in our private offering of units completed in August 2004 (the
"August 2004 Offering") and our private offering of units completed in September
2004 (the "September 2004 Offering"; together with the August 2004 Offering, the
"August and September 2004 Offerings"), and the number of units issued was equal
to 25% of the aggregate number of units purchased in the August and September
2004 Offerings. The units were issued to each person in exchange for each person
agreeing to an amendment to their respective securities purchase agreements for
the August and September 2004 Offerings pursuant to which (i) the date by which
we would use our reasonable best efforts to file a registration statement with
the SEC for certain of the securities purchased in the August and September 2004
Offerings was extended to June 30, 2005, and (ii) we were released from any
liability for any possible breach of the securities purchase agreements for the
August and September 2004 Offerings arising out of our obligation to use our
reasonable best efforts to file a registration statement with the SEC. Each
Class A warrant is initially exercisable into one share of our common stock at
an exercise price of $1.00 per share during a period of 180 days beginning on
the date a registration statement covering the public resale of certain of the
shares underlying the warrants is declared effective by the SEC and expires on
November 30, 2006. Each Class B warrant is initially exercisable into one share
of our common stock at an exercise price of $2.00 per share during a period of
360 days beginning on the date a registration statement covering the public
resale of certain of the shares underlying the warrants is declared effective by
the SEC and expires on November 30, 2006. We issued these securities to a
limited number of accredited investors in a private offering exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) of the
Securities Act without engaging in any advertising or general solicitation of
any kind.

         In April 2005, we issued 1,800,000 shares of our common stock, Class A
warrants to acquire 1,800,000 shares of our common stock, and Class B warrants
to acquire 1,800,000 shares of our common stock to Ronald F. Westman, an
accredited investor, for aggregate consideration consisting of 2,740,000 shares
of common stock of Infinium Labs, Inc., a Delaware corporation, that the
accredited investor owned and that was then valued at $720,000. Our securities
were sold in units comprised of three shares of common stock, three Class A
warrants and three Class B warrants. The units were sold at a purchase price of
$1.20 per unit. Each Class A warrant is initially exercisable into one share of
our common stock at an exercise price of $.60 per share during a period of 18
months beginning on the date a registration statement covering the public resale
of certain of the shares underlying the warrants is declared effective by the
SEC and expires on December 31, 2007. Each Class B warrant is initially
exercisable into one share of our common stock at an exercise price of $.80 per
share during a period of three years beginning on the date a registration
statement covering the public resale of certain of the shares underlying the
warrants is declared effective by the SEC and expires on December 31, 2008.
These securities were issued to one accredited investor in a private placement
transaction exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) of the Securities Act directly by us without engaging
in any advertising or general solicitation of any kind and without payment of
underwriting discounts or commissions to any person.



                                       37
<PAGE>

         In May 2005, we completed a private offering of 635,750 shares of our
common stock, Class A warrants to acquire 317,875 shares of our common stock,
and Class B warrants to acquire 317,875 shares of our common stock, for
aggregate cash consideration of $254,300. These securities were sold in units
comprised of three shares of common stock, one Class A warrant and one Class B
warrant. The units were sold at a purchase price of $1.20 per unit. Each Class A
warrant is initially exercisable into one and one-half shares of our common
stock at an exercise price of $.60 per share during a period of 18 months
beginning on the date a registration statement covering the public resale of
certain of the shares underlying the warrants is declared effective by the SEC
and expires on December 31, 2007. Each Class B warrant is initially exercisable
into one and one-half shares of our common stock at an exercise price of $.80
per share during a period of three years beginning on the date a registration
statement covering the public resale of certain of the shares underlying the
warrants is declared effective by the SEC and expires on December 31, 2008. We
issued these securities to a limited number of accredited investors in a private
offering exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated
thereunder without engaging in any advertising or general solicitation of any
kind.

         In June 2005, we completed a private offering of 1,490,000 shares of
our common stock, Class A warrants to acquire 1,490,000 shares of our common
stock, and Class B warrants to acquire 1,490,000 shares of our common stock to a
limited number of accredited investors for aggregate cash consideration of
$596,000. These securities were sold in units comprised of three shares of
common stock, three Class A warrants and three Class B warrants. The units were
sold at a purchase price of $1.20 per unit. Each Class A warrant is initially
exercisable into one share of our common stock at an exercise price of $.60 per
share during a period of 18 months beginning on the date a registration
statement covering the public resale of certain of the shares underlying the
warrants is declared effective by the SEC and expires on December 31, 2007. Each
Class B warrant is initially exercisable into one share of our common stock at
an exercise price of $.80 per share during a period of three years beginning on
the date a registration statement covering the public resale of certain of the
shares underlying the warrants is declared effective by the SEC and expires on
December 31, 2008. Park Financial Group, Inc., a registered broker-dealer,
served as our placement agent for this offering. We paid Park Financial Group a
placement agent fee consisting of $44,800 and 137,000 units that were identical
to the units sold in the offering. These securities were issued to a limited
number of accredited investors in a private placement transaction exempt from
the registration requirements of the Securities Act pursuant to Section 4(2) of
the Securities Act directly by us without engaging in any advertising or general
solicitation of any kind.

         In June 2005, we issued an aggregate of 2,450,000 shares of our common
stock, Class A warrants to acquire 600,000 shares of our common stock, Class B
warrants to acquire 600,000 shares of our common stock, and Class C warrants to
acquire 1,625,000 shares of our common stock to a limited number of accredited
investors in exchange for various consulting services to be rendered to us. Each
Class A warrant is initially exercisable into one share of our common Stock at
an exercise price of $.60 per share during a period of 18 months beginning on
the date a registration statement covering the public resale of certain of the
shares underlying the warrants is declared effective by the SEC and expires on
December 31, 2007. Each Class B warrant is initially exercisable into one share
of our common stock at an exercise price of $.80 per share during a period of
three years beginning on the date a registration statement covering the public
resale of certain of the shares underlying the warrants is declared effective by
the SEC and expires on December 31, 2008. Each Class C warrant is initially
exercisable into one share of our common stock at an exercise price of $.60 per
share during a period of 180 days beginning on the date a registration statement
covering the public resale of certain of the shares underlying the warrants is
declared effective by the SEC and expires on December 31, 2006. The securities
were issued to a limited number of accredited investors in private placement
transactions exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) of the Securities Act directly by us without engaging
in any advertising or general solicitation of any kind and without payment of
underwriting discounts or commissions to any person.



                                       38
<PAGE>

         In June 2005, we issued an option to acquire 400,000 shares of our
common stock to Trident Marketing International, Inc., an accredited investor,
in exchange for services to be rendered to us in connection with the marketing
of our various CARExpress membership programs. The option was initially
exercisable into shares of our common stock at an exercise price of $.50 per
share upon the achievement of various performance objectives during 2005, and
expires on June 24, 2006. These securities were issued to one accredited
investor in a private placement transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act directly by us without engaging in any advertising or general solicitation
of any kind and without payment of underwriting discounts or commissions to any
person.

         In November and December 2005, we issued promissory notes in the
aggregate principal amount of $180,000 to a limited number of accredited
investors for aggregate cash consideration of $180,000. The notes have a
maturity date that is 90 days after the date we received the applicable funds
and accrue interest at the rate of 15% per annum. The principal and accrued
interest are payable on the maturity date and may be prepaid by us in whole or
in part at any time prior to the maturity date at our option without penalty.
The securities were issued to a limited number of accredited investors in
private placement transactions exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) of the Securities Act directly by us
without engaging in any advertising or general solicitation of any kind and
without payment of underwriting discounts or commissions to any person.



                                       39
<PAGE>


ITEM 6.  MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

         This Management's Discussion and Analysis of Financial Condition and
Results of Operations and other parts of this report contain forward-looking
statements that involve risks and uncertainties. All forward-looking statements
included in this report are based on information available to us on the date
hereof, and, except as required by law, we assume no obligation to update any
such forward-looking statements. Our actual results may differ materially from
those anticipated in these forward-looking statements as a result of a number of
factors, including those set forth under the caption "Risk Factors" and
elsewhere in this report. The following should be read in conjunction with our
audited consolidated financial statements beginning on page F-1 of this report.

OVERVIEW

         We are a national healthcare savings organization that designs and
offers discount healthcare membership programs to uninsured and underinsured
individuals. Our membership programs encompass all aspects of healthcare,
including physicians, hospitals, ancillary services, dentists, prescription
drugs, vision care, hearing aids, chiropractic and alternative care, 24-hour
nurseline, medical supplies and equipment, and long-term care facilities. We
offer our discount healthcare membership programs through a national healthcare
savings network called CARExpress. Through CARExpress, we can provide members
access to healthcare providers affiliated with PPOs and other provider networks.

         We entered the health savings industry in 2001 to address the need for
affordable healthcare nationwide. From 2001 to 2004, we engaged in limited
operations due to our lack of available capital. During that time, our employees
performed relatively limited duties and our operations were focused almost
exclusively on building CARExpress. In early 2004, we took a number of steps to
increase our business and generate revenues, including hiring our current Chief
Executive Officer, raising capital through private placements of our equity
securities, and marketing our CARExpress membership programs to the public
directly through mail, print ad, television and internet campaigns, and
indirectly through marketing representatives, brokers and agents, retail chains
and outlets, small businesses and trade associations, and unions and
associations. We also moved into a larger facility that provides us with 17
executive offices, a fully equipped state-of-the-art computer and
telecommunications room, and the capacity to expand our customer service base to
approximately 80 customer service agents, and completed the development of our
Website.

         From late 2004 through 2005, we began to more actively pursue
opportunities to sell our CARExpress membership programs. During 2005, we
entered into agreements with several marketing and distribution partners to
market and sell our CARExpress membership programs, and engaged in our first
test marketing campaign during the second quarter of 2005. We also entered into
agreements with several consultants and advisors in the second quarter of 2005
for the marketing and promotion of our business and CARExpress membership
programs, advice with respect to our marketing strategies, product development
and business development, and assistance regarding the identification and
evaluation of opportunities for us to engage in joint ventures, strategic
partnerships and alliances with companies offering complementary products and
services. We are currently actively engaged in marketing our CARExpress
membership programs to the public and are focused on generating increased sales
of our CARExpress membership programs.



                                       40
<PAGE>

         Our strategy is to sustain and expand our position as a provider of
unique healthcare membership service programs. The target market for our
programs is comprised of individuals who have either limited health benefits or
no health benefits. We intend to pursue specific opportunities that we may
identify in this market through our various marketing and distribution channels.
Through product design, competitive membership pricing and a variety of
distribution channel partners, we intend to pursue opportunities in the
healthcare market that insurance plans have not addressed.

RECENT DEVELOPMENTS

         On January 27, 2006, our registration statement on Form SB-2, File No.
333-126315, was declared effective by the SEC. We had filed the registration
statement in connection with our initial public offering of 10,258,135 shares of
common stock on behalf of certain of our selling security holders.

         In addition, we have experienced a substantial increase in our
membership base and revenues over the past 12 months. As of December 31, 2005,
we had approximately 4,300 CARExpress members, compared to approximately 350
members at December 31, 2004. We achieved revenues of approximately $246,000 for
the year ended December 31, 2005, compared to revenues of approximately $28,000
for the year ended December 31, 2004. We have entered into agreements with
several marketing and distribution partners and are currently engaging in test
marketing campaigns with some of them. In addition, we are currently in
negotiations with several other companies regarding the sale of our CARExpress
membership programs. We can provide no assurance that we will enter into
agreements with companies with which we are currently in negotiations or, if we
do, that the agreements will result in new members and revenues to us.

OPERATIONAL METRICS

         Our revenues consist almost exclusively of recurring monthly membership
fees that we receive from members of our CARExpress membership programs. To
generate revenue, we engage in marketing campaigns offering money-back
guarantees and free-trial periods as an incentive for prospective members to try
our CARExpress membership programs. In addition, we pay commissions to our
marketing and distribution partners that typically include an up-front fee for
the acquisition of new members. Upon becoming paying members, the members pay us
membership fees each month for the duration of their membership.

         The average membership fee per member per month that we receive is
approximately $35. Approximately 90% of the CARExpress membership programs that
we have sold to our current members consist of our Comprehensive Care Program
which is sold at a monthly retail price of $39.95. The remaining CARExpress
membership programs that we have sold to our current members consist of a mix of
our less expensive programs. After the initial free-trial period or monthly
membership period is complete, the member is charged for the next monthly
membership period unless the member cancels the membership prior to the
expiration of the free-trial period. Monthly membership payments are recognized
as revenue evenly over the applicable monthly membership period. As a result,
there is a delay of one month between the date we receive a monthly membership
fee and the date we recognize the entire monthly membership fee as revenue.



                                       41
<PAGE>

         We pay our marketing and distribution partners fees that are typically
comprised of a commission on the sale price of the CARExpress membership program
and/or an up-front fee per member generated. The amount of the commissions and
up-front fees that we pay to our marketing and distribution partners is
determined based on the type of membership programs being sold by them and the
number of members being generated by them over a set period of time. We
typically pay our marketing and distribution partners the up-front fee for
obtaining a new member when the member becomes a paying member, and typically
only pay our marketing and distribution partners commissions for membership
periods during which we are receiving membership fees. Our marketing and
distribution partners are paid these commissions for the life of the members'
enrollment with CARExpress. Our obligation to pay our marketing and distribution
partners a commission for a particular month accrues on the date we receive
payment of the monthly membership fee from the member for that month. No minimum
member retention period is typically required for a commission payment to be
earned by our marketing and distribution partners for paying members.

         The up-front fee that we pay to our marketing and distribution partners
for obtaining a new member combined with the commission that we pay to our
marketing and distribution partners for a paying member's first monthly
membership period is typically equal in amount to the membership fee that we
receive from the paying member for the first monthly membership period. Since we
recognize monthly membership payments as revenue evenly over the applicable
monthly membership period and since our obligation to pay our marketing and
distribution partners a commission for a particular month accrues on the date we
receive payment of the monthly membership fee from the member, it takes
approximately one month for the amount of revenues that we recognize from the
membership to equal the costs of obtaining the new paying member.

         A key metric towards evaluating our success in the future will be our
member retention rates. Member retention rates represent the percentage of new
members that we acquire that we are able to retain for a specified period of
time. Since we incur a large portion of our costs up front and receive recurring
membership fees throughout the term of the membership, the longer we are able to
retain the members we acquire, the greater the income potential of the
CARExpress membership programs that we sell. We believe that the key to
obtaining a high member retention rate is to target our marketing campaigns
towards those individuals and organizations that are most in need of our
programs, most capable of paying for our programs, and most loyal to us and our
programs.



                                       42
<PAGE>

         We have been selling our CARExpress membership programs for only a
short period of time. As a result, our ability to evaluate our member retention
rates is hampered by the relatively little information available to us for
evaluation. As we continue to engage in test marketing campaigns, we expect to
be able to determine, based on member demographics, which types of members and
member groups are most suitable for our CARExpress membership programs. During
the next 12 months, we expect our member retention rates to fluctuate
significantly as a result of a variety of factors, including:

      o     the type of CARExpress membership programs being sold;

      o     the marketing campaign being used to sell our CARExpress membership
            programs;

      o     the financial condition and loyalty of our members;

      o     the distribution channel selling our CARExpress membership programs;
            and

      o     the type and amount of compensation being paid to our marketing and
            distribution partners and other parties to sell our CARExpress
            membership programs.

OUTLOOK

         We expect the number of CARExpress members generated each month through
our marketing and distribution partners to continue to increase for the
foreseeable future as they follow through on their plans to increase the number
of sales persons marketing our CARExpress membership programs to the public. We
also expect to generate additional members over the next 12 months through
additional marketing and distribution partners with which we have entered into
agreements or with which we expect to enter into agreements in the future, and
to engage in test marketing campaigns with some of these marketing and
distribution partners through which we will offer our free-trial programs. We
expect our retention rates to improve over the next 12 months as we obtain
additional information regarding member demographics and target our test
marketing campaigns at prospective members and member groups that are most
suitable for our CARExpress membership programs. In addition, we expect our cash
flows from sales of our CARExpress membership programs through our marketing and
distribution partners to improve during 2006 as the recurring membership fees
from our increasing membership base overtake the costs associated with obtaining
the new members we are generating. As a result, we expect our net losses from
operations to decrease during the next six months and expect to begin generating
positive cash flows from operations during the second half of 2006.

         We can provide no assurance that our marketing and distribution
partners will continue to generate new members for us, that our membership base
will increase as projected, that we will successfully enter into new agreements
for the sale of our CARExpress membership programs or that we will generate new
members and revenues under our current and new agreements. In addition, we can
provide no assurance that our member retention rates will improve over the next
12 months, that our cash flows from sales of our CARExpress membership programs
will improve during 2006, that our net losses from operations will decrease
during the next six months or that we will begin generating positive cash flows
from operations during the second half of 2006.




                                       43
<PAGE>

CRITICAL ACCOUNTING POLICIES

         Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements and accompanying
notes, which have been prepared in accordance with accounting principals
generally accepted in the United States. The preparation of these financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. When making these estimates and
assumptions, we consider our historical experience, our knowledge of economic
and market factors and various other factors that we believe to be reasonable
under the circumstances. Actual results may differ under different estimates and
assumptions.

         The accounting estimates and assumptions discussed in this section are
those that we consider to be the most critical to an understanding of our
financial statements because they inherently involve significant judgments and
uncertainties.

Revenue Recognition

         We sell discount healthcare membership cards in return for monthly
membership fees. We recognize these membership fees as revenues when persuasive
evidence of an arrangement exists, delivery or performance has occurred, the
sales price is fixed and determinable, and collectibility is reasonably assured.
At the beginning of each membership period, the membership fee is charged to the
member's credit card, resulting in deferred revenue. We then recognize the
membership fees as revenue as the services are rendered. Shipping and handling
fees that we receive for the shipment of membership packages to new members are
included in our membership fees and recorded as deferred revenue. These fees are
then recognized as revenue on a straight-line basis over the longer of the
initial contractual term or the expected period during which the services will
be performed if the relationship with the member is expected to extend beyond
the initial contractual term and the member continues to benefit from the
payment of the fees.

Stock-Based Compensation

         We account for employee stock-based compensation using the intrinsic
value method in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB 25"), and related
interpretations. APB 25 requires that we recognize compensation cost for stock
options issued to employees to the extent the fair value of our common stock
exceeds the exercise price of the options on the date of grant. Accordingly, no
compensation expense has been recognized for options granted to employees with
an exercise price greater than or equal to the market value of our common stock
on the date of grant.

         We account for non-employee stock-based compensation in accordance with
Statement of Financial Accounting Standards No. 123, "Accounting For Stock-Based
Compensation" ("SFAS 123") and Emerging Issues Task Force No. 96-18 "Accounting
for Equity Instruments That Are Issued to Other Than Employees for Acquiring or
in Conjunction with Selling Goods or Services" ("EITF 96-18"). SFAS 123 and EITF
96-18 require that we account for our option and warrant grants to non-employees
based on the fair value of the options and warrants granted.



                                       44
<PAGE>

         We use the Black-Scholes pricing model to determine the fair value of
the options and warrants that we grant to employees and non-employees. We are
required to make certain assumptions in connection with this determination, the
most important of which involves the calculation of volatility with respect to
the price of our common stock. The computation of volatility is intended to
produce a volatility value that is representative of our expectations about the
future volatility of the price of our common stock over an expected term. We
used our past share price history to determine volatility and cannot predict how
the price of our shares of common stock will react on the open market since our
common stock just began trading on the OTC Bulletin Board on March 30, 2006. As
a result, the volatility value that we calculated may differ from the future
volatility of the price of our shares of common stock.

         We will adopt Statement of Financial Accounting Standards No. 123R,
"Share-Based Payment" ("SFAS No. 123R"), which revised SFAS No. 123, on January
1, 2006. A summary of SFAS No. 123R is provided below under "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Recent Accounting
Pronouncements."

         For a more complete discussion of our accounting policies and
procedures, see our Notes to Consolidated Financial Statements beginning on page
F-8.

RECENT ACCOUNTING PRONOUNCEMENTS

         In December 2004, FASB issued Statement of Financial Accounting
Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"), which
replaces Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" and supersedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"). SFAS 123R establishes standards for
accounting for transactions in which an entity exchanges its equity instruments
for goods or services or incurs liabilities in exchange for goods or services
that are based on the fair value of the entity's equity instruments. It focuses
primarily on accounting for transactions in which an entity obtains employee
services in share-based payment transactions. SFAS 123R requires that entities
account for share-based payments using the fair value based method rather than
the intrinsic value method of accounting in APB 25 and that entities disclose
information about the nature of the share-based payment transactions and the
effects of those transactions on the financial statements. SFAS 123R requires an
entity to measure the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of the award over
the period during which an employee is required to provide service for the
award. The grant-date fair value of employee stock options and similar
instruments must be estimated using option-pricing models adjusted for the
unique characteristics of those instruments unless observable market prices for
the same or similar instruments are available. SFAS 123R also requires an entity
to measure the cost of employee services received in exchange for an award of
liability instruments based on its current fair value and that the fair value of
that award be remeasured at each reporting date through the settlement date.
SFAS No. 123R becomes effective for small business issuers as of the beginning
of the first interim or annual reporting period that begins after December 15,
2005. As a result, we will adopt SFAS No. 123R on January 1, 2006 using the
modified prospective method. The adoption of SFAS 123R is expected to have an
adverse impact on our results of operations in future periods.



                                       45
<PAGE>

         In March 2005, the SEC released Staff Accounting Bulletin No. 107,
"Share-Based Payment" ("SAB 107"), which provides guidance on the implementation
of SFAS 123R. In particular, it provides guidance related to valuation methods,
accounting for income tax effects of share-based payments, modifications of
employee stock options prior to the adoption of SFAS 123R, classification of
compensation expense, capitalization of compensation cost related to share-based
payment arrangements, first-time adoption of SFAS 123R in an interim period, and
other disclosures subject to the adoption of SFAS 123R. We will apply the
principles of SAB 107 in conjunction with the adoption of SFAS 123R.

         In May 2005, the FASB issued FASB Statement No. 154, "Accounting
Changes and Error Corrections" ("SFAS 154"). SFAS 154 replaces APB Opinion No.
20, "Accounting Changes," and SFAS No. 3, "Reporting Accounting Changes in
Interim Financial Statements - An Amendment of APB Opinion 28" and establishes
retrospective application as the required method for reporting a change in
accounting principle. SFAS 154 provides guidance for determining whether
retrospective application of a change in accounting principle is impracticable
and reporting a change when retrospective application is impracticable. The
reporting of a correction of an error by restating previously issued financial
statements is also addressed. SFAS 154 is effective for accounting changes and
correction of errors made in fiscal years beginning after December 15, 2005. We
expect that the adoption of SFAS 154 will not have a material impact on our
consolidated financial statements.

COMPARISON OF YEARS ENDED DECEMBER 31, 2005 AND 2004

Revenues

         Revenues consist of the monthly membership fees that we receive from
members of our CARExpress membership programs and commissions that we receive
from the sale of CARExpress membership programs sold in combination with
third-party insurance products. To date, revenues have consisted almost
exclusively of the monthly membership fees we receive from members of our
CARExpress membership programs. Revenues increased $218,044 to $245,973 for the
year ended December 31, 2005 from $27,929 for the year ended December 31, 2004.
The increase of $218,044 was primarily a result of increased sales of our
CARExpress membership programs to new customers and existing members.

         Approximately 95% of the revenues that we generated during the year
ended December 31, 2005 was derived from sales of our CARExpress membership
programs to first-time members, compared to approximately 20% during the year
ended December 31, 2004. The remainder of the revenues that we generated during
these periods was derived from existing members. For the year ended December 31,
2005, we derived approximately 75% of our revenues from marketing
representatives, and derived approximately 20% of our revenues from small
businesses and trade associations, unions and associations, and retailers and
outlets. By comparison, for the year ended December 31, 2004, we derived
approximately 50% of our revenues from marketing representatives, and derived
approximately 40% of our revenues from small businesses and trade associations,
and unions and associations. The remainder of the revenues that we generated
during these periods was derived primarily from our sales of CARExpress
membership programs directly to consumers.



                                       46
<PAGE>

         We expect growth in revenues to accelerate over the next 12 months as
our marketing and distribution partners increase the number of sales persons
marketing our CARExpress membership programs and as we continue to enter into
sales and marketing agreements with marketing representatives, brokers and
agents, retailers and outlets, small businesses and trade associations, and
unions and associations, execute upon our advertising and marketing campaigns,
and design and sell unique discount healthcare membership solutions to new and
existing customers. We also expect to begin generating commissions from the sale
of CARExpress membership programs sold in combination with third-party insurance
products over the next 12 months. The percentage of future revenues derived from
first-time and existing members and the percentage of future revenues derived
from marketing representatives, brokers and agents, retailers and outlets, small
businesses and trade associations, and unions and associations may differ
significantly from the percentages set forth above as we have been selling our
CARExpress membership programs for only a short period of time and have
generated minimal revenues to date.

Direct Costs

         Direct costs consist of sales commissions that we pay to our marketing
and distribution partners and fees that we pay to our PPOs and provider networks
for access to their networks. Direct costs increased $284,565 to $350,666 for
the year ended December 31, 2005, from $66,101 for the year ended December 31,
2004. The increase of $284,565 was due to an increase of $263,340 for sales
commissions and $21,224 for PPO and provider network costs. We expect cost of
sales to increase over the next 12 months as increased sales of our CARExpress
membership programs result in higher overall sales commission expenses and PPO
and provider networks costs.

Selling and Marketing Expenses

         Selling and marketing expenses consist of advertising expenses,
marketing expenses, salaries paid to employees selling and marketing our
CARExpress membership programs, rent expense allocated to our selling and
marketing activities, depreciation and amortization expense allocated to our
selling and marketing activities, and all other selling and marketing expenses
incurred by us. Selling and marketing expenses decreased $135,589 to $241,692
for the year ended December 31, 2005, from $377,281 for the year ended December
31, 2004. The decrease of $135,589 was due primarily to a decrease of $118,939
for advertising and marketing campaigns and $64,405 for sales salaries,
partially offset by an increase of $16,411 for allocated rent and $20,920 for
Web site amortization.



                                       47
<PAGE>


General and Administrative Expenses

         General and administrative expenses consist primarily of salary
expense, professional fees, rent expense, and other general and administrative
expenses.

         Salary Expense. Salary expense consists of all salaries and related
compensation that we pay to our employees and the payroll taxes associated
therewith that are not associated with our selling and marketing activities.
Salary expense decreased $425,901 to $897,837 for the year ended December 31,
2005, from $1,323,738 for the year ended December 31, 2004. The decrease of
$425,901 was due to our issuance of 1,748,250 shares of our common stock valued
at $874,125 to David M. Daniels in February 2004 as a signing bonus in
connection with Mr. Daniels accepting his appointment as our Chief Executive
Officer, partially offset by an increase of $430,212 for salaries and related
compensation resulting from an increase in the number of executive officers and
other individuals who we employed during 2005 and $18,012 in additional taxes
paid due to the increased payroll in 2005. We are party to an employment
agreement with David M. Daniels and Patricia S. Bathurst, two of our executive
officers, and have entered into employment arrangements with Alex Soufflas and
David A. Taylor. A summary of the material terms of these employment agreements
and arrangements and our financial obligations thereunder is provided below
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Contractual Obligations" and "Executive Compensation," and under
"Note 6 - Commitments and Contingencies - Employment Agreements" of our
consolidated financial statements for the year ended December 31, 2005. In
addition, we may retain additional executive management personnel with
substantial experience in the healthcare or health savings industry. As a
result, we expect salary expense to increase over the next 12 months.

         Professional Fees. Professional fees consist of fees paid to our
independent accountants, lawyers and other professionals. Professional fees
increased $2,301,592 to $2,606,365 for the year ended December 31, 2005 from
$304,773 for the year ended December 31, 2004. The increase of $2,301,592 was
due primarily to an increase of $41,727 in fees paid to our independent
accountant in connection with the preparation of our Registration Statement on
Form SB-2 and our audited and interim financial statements, $79,727 in legal
fees paid in connection with the various capital-raising and business
transactions that we commenced or completed during the year and the preparation
of the Registration Statement on Form SB-2, $2,000,065 in stock compensation
paid to consultants and advisors for various consulting and advisory services,
and $209,200 for placement agent fees, partially offset by a decrease of $12,324
in computer system and hardware consulting expenses due to the costs of our new
computer system being amortized in connection with the completion and proper
functioning of the computer system. A description of the securities that we
issued to the consultants and advisors is provided in "--Recent Sales of
Unregistered Securities" under Item 5 of this report and under Note 7 to our
audited consolidated financial statements for the year ended December 31, 2005,
and a summary of the agreements that we entered into with the consultants and
advisors is provided under "Item 1. Description of Business - Service Providers,
Consultants and Advisors" of this report. We expect professional fees to
decrease over the next 12 months because we recognized all of the deferred
consulting expense associated with fees paid to our various consultants and
advisors under contracts terminating on December 31, 2005 and because we believe
that any stock compensation expense that we will incur over the next 12 months
will be less in amount than the amount of stock compensation expense we incurred
during the past 12 months. We expect this decrease in professional fees to be
minimally offset by increases in the cost of our compliance with SEC reporting
requirements that we have as a public company and increases in the costs that we
will incur as we attempt to enter into agreements with additional marketing
representatives, brokers and agents, retailers and outlets, small businesses and
trade associations, and unions and associations for the marketing and sale of
our CARExpress membership programs.



                                       48
<PAGE>

         Rent Expense. Rent expense consists of the rent that we pay under the
lease for our office facilities that is not associated with our selling and
marketing activities. Rent expense increased $65,646 to $161,571 for the year
ended December 31, 2005 from $95,925 for the year ended December 31, 2004. The
increase of $65,646 resulted primarily from the annual increases in our lease
payments for our facility in Horsham, Pennsylvania and rent payments that we
began making under the lease for our facility in Sarasota, Florida that we
entered into on July 1, 2005. A summary of the material terms of these leases is
provided under "Note 6 - Commitments and Contingencies" of our audited
consolidated financial statements for the year ended December 31, 2005. We
expect rent expense to increase over the next 12 months as a result of annual
increases in our lease payments for these facilities.

         Other General and Administrative Expenses. Other general and
administrative expenses consist of costs for supplies, computer hardware and
system costs, costs for temporary customer service representatives, health
insurance costs, general business expenses, severance expense and miscellaneous
general and administrative expenses that are not associated with our selling and
marketing activities. Other general and administrative expenses decreased
$143,030 to $216,487 for the year ended December 31, 2005 from $359,517 for the
year ended December 31, 2004. The decrease of $143,030 resulted primarily from a
decrease of $39,162 in travel and entertainment expense, $24,136 in insurance
expense, $25,000 in general business expenses, $16,242 in computer hardware and
systems costs, and a decrease in several miscellaneous fees and expenses
included in other general and administrative expenses, partially offset by an
increase of $26,465 for supplies, $29,610 for costs of temporary customer
service representatives and $20,000 in employee severance expense. We expect
other general and administrative expenses to increase over the next 12 months as
we incur additional expenses for filing fees, health insurance costs, travel and
entertainment, temporary customer service representatives, supplies, computer
hardware and systems, and other miscellaneous items associated with the general
growth in our business.

Common Stock Issued for Releases

         Common stock issued for releases consists of the cost of the shares of
common stock issued to previous investors in consideration for an amendment to
their securities purchase agreements and a release from certain potential claims
thereunder. We incurred expenses for common stock issued for releases of
$295,100 for the year ended December 31, 2005. We did not incur any such
expenses for the year ended December 31, 2004. The expenses for common stock
issued for releases of $295,100 that we incurred for the nine months ended
September 30, 2005 resulted from our issuance of 737,750 shares of our common
stock valued at $295,100 to previous investors in exchange for their execution
of an amendment to their securities purchase agreements for the securities that
they purchased from us in the private offerings that we completed in August 2004
and September 2004 and a release from certain potential claims thereunder. We do
not expect to incur any additional expenses for common stock issued for releases
over the next 12 months because we do not expect to issue any additional
securities to previous investors for amendments and releases to their securities
purchase agreements.



                                       49
<PAGE>

Loss on Extinguishment of Debt

         Loss on extinguishment of debt consists of losses realized upon the
extinguishment of our existing debt obligations and the write-off of associated
unamortized debt issuance costs. We incurred loss on extinguishment of debt of
$83,388 for our fiscal year ended December 31, 2004. We did not incur any loss
on extinguishment of debt for our fiscal year ended December 31, 2005. The loss
on extinguishment of debt of $83,388 that we incurred during our fiscal year
ended December 31, 2004 consisted of losses realized upon the issuance of shares
of our common stock and the payment of cash in exchange for the extinguishment
of debt obligations and the write-off of unamortized debt issuance costs
resulting therefrom that we had incurred in connection with the funding of our
business operations. While we had $203,742 in notes payable outstanding on
December 31, 20054, we do not expect to incur any material loss on the
extinguishment of debt during the next 12 months.

LIQUIDITY AND CAPITAL RESOURCES

         Since our inception, we have funded our operations primarily through
private sales of equity securities and the use of short-term debt. As of March
30, 2006, we had cash and cash equivalents of approximately $312,000.

         Net cash used by operating activities was $1,915,381 for the year ended
December 31, 2005 compared to $1,622,875 for the year ended December 31, 2004.
The $292,506 increase in cash used in operating activities was due primarily to
increased net loss of approximately $1,940,000, partially offset by an increase
in the fair value of warrants expensed of approximately $1,130,000, an increase
in common stock issued for releases of approximately $295,000, and an increase
in accounts payable and accrued expenses of approximately $222,000.

         Net cash provided by investing activities was $223,180 for the year
ended December 31, 2005 compared to net cash used by investing activities of
$161,956 for the year ended December 31, 2004. The $385,136 increase in cash
provided by investing activities was due primarily to an increase in proceeds
from the sale of marketable securities of approximately $320,000 and a decrease
in purchases of fixed assets and Web site costs of approximately $125,000.

         Net cash provided by financing activities was $1,380,093 for the year
ended December 31, 2005 compared to $2,206,576 for the year ended December 31,
2004. The $826,483 decrease in net cash provided by financing activities was due
primarily to a decrease in proceeds from the sale of our common stock of
approximately $1,086,000, partially offset by an increase in proceeds from the
issuance of notes payable of approximately $169,000 and a decrease in payments
on notes payable of approximately $149,000.



                                       50
<PAGE>

         Our primary sources of capital over the past 12 months are set forth
below.

         In February 2005, we completed a private offering of 2,448,750 shares
of our common stock, Class A warrants to acquire 816,252 shares of our common
stock, and Class B warrants to acquire 816,252 shares of our common stock, for
aggregate cash consideration of $979,500. These securities were sold in units
comprised of three shares of common stock, one Class A warrant and one Class B
warrant. The units were sold at a purchase price of $1.20 per unit. Each Class A
warrant is initially exercisable into one share of our common Stock at an
exercise price of $1.00 per share. Each Class B Warrant is initially exercisable
into one share of our common stock at an exercise price of $2.00 per share.

         In April 2005, we completed a private offering of 1,800,000 shares of
our common stock, Class A warrants to acquire 1,800,000 shares of our common
stock, and Class B warrants to acquire 1,800,000 shares of our common stock, for
aggregate consideration consisting of 2,740,000 shares of common stock of
Infinium Labs, Inc., a Delaware corporation, that was then valued at $720,000.
These securities were sold in units comprised of three shares of common stock,
three Class A warrants and three Class B warrants. The units were sold at a
purchase price of $1.20 per unit. Each Class A warrant is initially exercisable
into one share of our common Stock at an exercise price of $.60 per share. Each
Class B warrant is initially exercisable into one share of our common stock at
an exercise price of $.80 per share.

         In May 2005, we completed a private offering of 635,750 shares of our
common stock, Class A warrants to acquire 317,875 shares of our common stock,
and Class B warrants to acquire 317,875 shares of our common stock, for
aggregate cash consideration of $254,300. These securities were sold in units
comprised of three shares of common stock, one Class A warrant and one Class B
warrant. The units were sold at a purchase price of $1.20 per unit. Each Class A
warrant is initially exercisable into one and one-half shares of our common
Stock at an exercise price of $.60 per share. Each Class B warrant is initially
exercisable into one and one-half shares of our common stock at an exercise
price of $.80 per share.

         In June 2005, we completed a private offering of 1,490,000 shares of
our common stock, Class A warrants to acquire 1,490,000 shares of our common
stock, and Class B warrants to acquire 1,490,000 shares of our common stock, for
aggregate cash consideration of $596,000. These securities were sold in units
comprised of three shares of common stock, three Class A warrants and three
Class B warrants. The units were sold at a purchase price of $1.20 per unit.
Each Class A warrant is initially exercisable into one share of our common Stock
at an exercise price of $.60 per share. Each Class B warrant is initially
exercisable into one share of our common stock at an exercise price of $.80 per
share.

         In November and December 2005, we issued promissory notes in the
aggregate principal amount of $180,000 to a limited number of accredited
investors for aggregate cash consideration of $180,000. The notes have a
maturity date that is 90 days after the date we received the funds from the
respective investors and accrue interest at the rate of 15% per annum. The
principal and accrued interest are payable by us on the maturity date and may be
prepaid by us in whole or in part at any time prior to the maturity date at our
option without penalty. We recently extended the maturity date of one of these
promissory notes in the principal amount $25,000 until April 7, 2006, and
extended the maturity date of two of these promissory notes in the aggregate
principal amount of $130,000 until June 30, 2006. We paid the principal and
accrued interest on the remaining promissory note in accordance with its terms.



                                       51
<PAGE>

         To date, our capital needs have been principally met through the
receipt of proceeds from sales of our equity and debt securities. We do not
currently maintain a line of credit or term loan with any commercial bank or
other financial institution. We have used the proceeds from the private
offerings we completed in 2004 and 2005 to pay virtually all of the costs and
expenses we incurred during these years. These costs and expenses were comprised
of operating expenses, which consisted of the salary expenses, professional
fees, rent expenses and other general and administrative expenses discussed
above, and the costs of sales discussed above to the extent such costs of sales
exceeded our revenues.

         We believe that our current cash resources will not be sufficient to
sustain our current operations for the next 12 months. We will need to obtain
additional cash resources within the next 12 months to enable us to pay our
ongoing costs and expenses as they are incurred, repay our outstanding
indebtedness to third parties in the aggregate amount of approximately $186,000,
all of which is due within the next four months, and finance the growth of our
business. We intend to obtain these funds through sales of debt or equity
securities and through proceeds received from the exercise of outstanding
options and warrants by our security holders. We intend to continue to invest
our cash in excess of current operating requirements in interest-bearing,
investment-grade securities. The sale of additional equity or convertible debt
securities would result in additional dilution to our shareholders. The issuance
of additional debt would result in increased expenses and could subject us to
covenants that may have the effect of restricting our operations. We have not
made arrangements to obtain additional financing and we can provide no assurance
that additional financing will be available in an amount or on terms acceptable
to us, if at all. If we are unable to obtain additional funds when they are
needed or if such funds cannot be obtained on terms favorable to us, we may be
unable to execute upon our business plan or pay our costs and expenses as they
are incurred, which could have a material, adverse effect on our business,
financial condition and results of operations.

CONTRACTUAL OBLIGATIONS

         The following summarizes our material long-term contractual obligations
as of December 31, 2005:
<TABLE>
<CAPTION>

Contractual
Obligations                     Total           2006          2007            2008          2009          2010
-----------                    ------          ------        ------         -------       -------       --------
<S>                           <C>             <C>           <C>            <C>           <C>            <C>
Employment Agreements (1)     $1,945,429      $442,860      $439,230       $483,153      $531,468       $48,718

Office Leases (2)                710,194       258,553       170,803        108,373       112,708        59,757
     Total                    $2,655,623      $701,413      $610,033       $591,526      $644,176      $108,475
</TABLE>

(1) At December 31, 2005, we were a party to employment agreements with David M.
Daniels, Roger H. Folts and Patricia S. Bathurst. On March 29, 2006, we entered
into employment agreements with Alex Soufflas and David A. Taylor pursuant to
which we agreed to pay them an annualized base salary of $210,000 and $162,000,
respectively. On February 8, 2006, Mr. Folts resigned as our Chief Financial
Officer and Secretary and we terminated our employment agreement with him. We
agreed to pay Mr. Folts the amount of salary to which he would have been
entitled under his employment agreement through March 31, 2006. As a result,
this table reflects only those payments to Mr. Folts that we are obligated to
pay through March 31, 2006. A summary of these employment agreements and
arrangements is provided under "Executive Compensation - Employment Contracts
and Arrangements."



                                       52
<PAGE>

(2) We have entered into two office leases. One is for our office space in
Horsham, Pennsylvania and the other is for our office space in Sarasota,
Florida. A summary of these office leases is provided under "Description of
Business - Properties."

To date, we have made payments under these obligations with proceeds received
from sales of our equity and debt securities. We intend to make future payments
due under these obligations with proceeds from additional sales of our equity
and debt securities and cash generated from the sale of our CARExpress
membership programs.

OFF-BALANCE SHEET ARRANGEMENTS

         As of December 31, 2005, we did not have any relationships with
unconsolidated entities or financial partners, such as entities often referred
to as structured finance or special purpose entities, that had been established
for the purpose of facilitating off-balance sheet arrangements or other
contractually narrow or limited purposes. As such, we are not materially exposed
to any financing, liquidity, market or credit risk that could arise if we had
engaged in such relationships.

ITEM 7.  FINANCIAL STATEMENTS.

         Our audited consolidated financial statements at December 31, 2005 and
for each of the years ended December 31, 2005 and 2004, respectively, begin on
page F-1 of this report located immediately after the signature page.

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

         None.

ITEM 8A.  CONTROLS AND PROCEDURES.

         As of December 31, 2005, we carried out the evaluation of the
effectiveness of our disclosure controls and procedures required by Rule
13a-15(e) under the Exchange Act under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer. Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that, as of December 31, 2005, our disclosure
controls and procedures were effective to provide reasonable assurance that
information we are required to disclose in reports that we file or submit under
the Exchange Act is: (i) recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and (ii) accumulated and
communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required
disclosure. There has been no change in our internal control over financial
reporting identified in connection with this evaluation that occurred during our
fiscal quarter ended December 31, 2005 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.



                                       53
<PAGE>

ITEM 8B.  OTHER INFORMATION.

APPOINTMENT OF PRINCIPAL OFFICERS

         The description set forth below is included herewith for the purpose of
providing the disclosure required under "Item 5.02. Departure of Directors or
Principal Officers; Election of Directors; Appointment of Principal Officers" of
Form 8-K in connection with: (i) our appointment of Alex Soufflas as our Chief
Financial Officer, Executive Vice President and Secretary on February 15, 2006
and his resignation as our General Counsel in connection therewith, all to be
effective February 1, 2006, and (ii) our appointment of David A. Taylor as our
Senior Vice President - National Sales on February 15, 2006 and his resignation
as our Vice President - Sales in connection therewith, all to be effective
February 1, 2006.

         On February 15, 2006, Alex Soufflas was appointed our Chief Financial
Officer and Secretary and, in connection therewith, resigned as our General
Counsel, all effective February 1, 2006. On February 15, 2006, David A. Taylor
was appointed our Senior Vice President - National Sales and, in connection
therewith, resigned as our Vice President - Sales, all effective February 1,
2006. A description of Messrs. Soufflas' and Taylor's business experience is set
forth under "-- Directors and Executive Officers" in Item 9 of this report and
incorporated by reference herein. A description of the employment agreements
that we entered into with Messrs. Soufflas and Taylor on March 29, 2006 is set
forth under "-- Employment Contracts and Arrangements" in Item 10 of this report
and incorporated by reference herein.

ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

         The description set forth below is included herewith for the purpose of
providing the disclosure required under "Item 1.01 - Entry into a Material
Definitive Agreement" of Form 8-K in connection with our issuance of restricted
stock awards to David M. Daniels, Alex Soufflas, David A. Taylor and Patricia S.
Bathurst on March 28, 2006, and our entry into an employment agreement with each
of Alex Soufflas and David A. Taylor on March 29, 2006.

         On March 28, 2006, we issued restricted stock awards to David M.
Daniels, Alex Soufflas, David A. Taylor and Patricia S. Bathurst, our four
executive officers, with respect to 450,000, 300,000, 375,000 and 225,000 shares
of our common stock, respectively. A description of the restricted stock awards
is set forth under "-- Employment Contracts and Arrangements" in Item 10 of this
report and incorporated by reference herein.

         On March 29, 2006, we entered into employment agreements with each of
Alex Soufflas and David A. Taylor, two of our executive officers. A description
of the employment agreements that we entered into with Messrs. Soufflas and
Taylor on March 29, 2006 is set forth under "-- Employment Contracts and
Arrangements" in Item 10 of this report and incorporated by reference herein.



                                       54
<PAGE>


                                    PART III

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

DIRECTORS AND EXECUTIVE OFFICERS

         The following chart sets forth certain information about each of our
directors and executive officers.
<TABLE>
<CAPTION>
<S>                                          <C>                           <C>

Name                                       Age                           Positions Held
----                                      -----                         ----------------
David M. Daniels                            48         Chairman, Chief Executive Officer and President

Alex Soufflas                               31         Chief Financial Officer, Executive Vice President
                                                       and Secretary

David A. Taylor                             48         Senior Vice President - National Sales

Patricia S. Bathurst                        51         Vice President - Marketing
</TABLE>

         The following is a brief summary of the business experience of each of
the above-named individuals:

         David M. Daniels has served as our Chief Executive Officer and a member
of our board of directors since February 2004, and has served as our President
since February 2005. From 1998 to February 2004, Mr. Daniels provided financing
and management consulting services to several companies operating in the
manufacturing, technology and services industries, including Market Pathways
Financial Relations, Inc., a financial consulting firm, from April 2000 until
February 2004, The Research Works, Inc., an equity research firm, from April
2001 until December 2003, and XRAYMEDIA, Inc., an advertising agency, from
September 2001 until February 2004. Mr. Daniels served as the Chief Financial
Officer of North American Technologies Group, Inc., a research and development
company, from 1994 to 1995, and served as the President and Chief Operating
Officer from 1995 to 1998. Mr. Daniels founded Industrial Pipe Fittings, Inc., a
manufacturer of industrial fittings for the high density polyethylene market, in
1994 and served as the Chairman, President and Chief Executive Officer until
1998. Prior to 1994, Mr. Daniels served in several capacities with Morgan
Stanley Dean Witter, achieving the position of First Vice President of the
company in 1986. Mr. Daniels is a graduate of the Georgia Military Academy and
the University of Houston, where he received a B.A. in finance.

         Alex Soufflas has served as our Chief Financial Officer and Secretary
since February 2006 and has served as our Executive Vice President since August
2005. Mr. Soufflas served as our General Counsel from August 2005 until February
2006. From May 2004 to August 2005, Mr. Soufflas was an attorney at Duane Morris
LLP, a national law firm, where he specialized in public and private securities
offerings, mergers & acquisitions, contracts and corporate counseling. Prior to
that, Mr. Soufflas specialized in general corporate law as an attorney at
Spector Gadon & Rosen, P.C., a Philadelphia-based law firm, from April 2003 to
May 2004, and at Sullivan & Worcester, LLP, a Boston-based law firm, from
September 2000 to October 2002. Mr. Soufflas received a B.S. in accounting from
Purdue University and a juris doctor from Boston College Law School.



                                       55
<PAGE>

         David A. Taylor has served as our Senior Vice President - National
Sales since February 2006 and served as our Vice President - Sales from August
2005 to February 2006. From March 2005 to August 2005, Mr. Taylor was a partner
and served as the Chief Financial Officer and Senior Vice President of Trident
Marketing International, Inc., a customer interaction solutions company, and
from April 1998 to March 2005, Mr. Taylor served as the Vice President - Sales
Operations and Systems for Z-Tel Communications, Inc., a communications service
provider. Prior to that, Mr. Taylor served in various capacities for Delta Air
Lines, Inc., an international airline, serving as a financial planner from 1991
to 1992, the Controller - Corporate Services from 1992 to 1994, the General
Manager - Marketing Services from 1994 to 1995, and the Director - Purchasing,
Contract Services and Sales from 1995 to April 1998. Mr. Taylor received a B.A.
in business administration from Oswego State University and an MBA from Dowling
College.

         Patricia S. Bathurst has served as our Vice President - Marketing since
March 2001. From 1989 to 2000, Ms. Bathurst served as the Vice President of
Marketing for National Health and Safety Corporation, where she was responsible
for all of the marketing, advertising and promotional functions for the company.
From 1985 to 1989, Ms. Bathurst served as the Director of Marketing for Horizon
Healthcare Group, Inc., a provider of healthcare services utilizing national
provider networks that she co-founded in 1985. Prior to 1985, Ms. Bathurst
served as the Director of Administration and Customer Service for Phoenix
International Corporation, a provider of healthcare services utilizing national
provider networks. Ms. Bathurst is a graduate of Temple University with a B.A.
in business administration.

BOARD OF DIRECTORS

         David M. Daniels, our Chief Executive Officer and President, is the
sole member of our board of directors. Mr. Daniels will serve until the next
annual meeting of shareholders or until his successor is duly elected and
qualified. Officers are elected annually by our board of directors and serve at
the discretion of our board of directors. We do not currently have any
committees of our board of directors.

DIRECTOR COMPENSATION

         We provide our non-employee directors with a standard compensation
package for serving as a member of our board of directors. Non-employee
directors receive an option to acquire 350,000 shares of our common stock, and
$1,000 plus reasonable travel expenses for attendance in person at any meetings
of the board of directors for which attendance in person was specifically
requested by the chairman of the board of directors. The options have a
five-year term, an exercise price of $.40 per share, and vest as follows: (i)
100,000 shares on the date of grant, and (ii) 250,000 shares on the first
anniversary of the date of grant if the director remains a member of our board
of directors continuously during the period commencing on the date of grant and
ending on the first anniversary of the date of grant. We do not provide any
compensation to our employee directors.



                                       56
<PAGE>

CODE OF BUSINESS CONDUCT AND ETHICS


         We have adopted a Code of Business Conduct and Ethics that applies to
our principal executive officer, principal financial officer, principal
accounting officer or controller, and persons performing similar functions. Our
Code of Business Conduct and Ethics is designed to deter wrongdoing and promote:
(i) honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional relationships;
(ii) full, fair, accurate, timely and understandable disclosure in reports and
documents that we file with, or submit to, the SEC and in other public
communications that we make; (iii) compliance with applicable governmental laws,
rules and regulations; (iv) prompt internal reporting of violations of the code
to an appropriate person or persons identified in the code; and (v)
accountability for adherence to the code.

         A copy of our Code of Business Conduct and Ethics is available on our
website at www.nationalhealthpartners.com.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Exchange Act requires that our officers and
directors and persons who beneficially own more than 10% of our common stock
file initial reports of ownership and reports of changes in beneficial ownership
of our common stock with the SEC. They are also required to furnish us with
copies of all Section 16(a) forms that they file with the SEC. Based solely on
our review of the copies of such forms received by us, or written
representations from such persons that no reports were required for those
persons, we believe that all Section 16(a) filing requirements were satisfied in
a timely fashion during our fiscal year ended December 31, 2005.



                                       57
<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION.

         The following table provides certain summary information concerning
compensation earned by the executive officers named below during the fiscal
years ended December 31, 2005, 2004 and 2003.



                           SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                                                Annual Compensation                     Long-Term Compensation
                                                -------------------                     -----------------------
                                                                                       Awards               Payouts
                                                                                       ------               -------
                                                                  Other Annual   Restricted    Securities      All Other
Name and                       Fiscal                               Compen-        Stock       Underlying       Compen-
Principal Position              Year   Salary ($)   Bonus ($)     sation ($)(5)  Awards ($)    Options (#)   sation ($)(6)
------------------            -------  ----------  ----------    --------------- ----------    -----------   -------------

<S>                             <C>      <C>             <C>            <C>            <C>      <C>               <C>
David M. Daniels(1)             2005     235,241        -0-            -0-            -0-       2,500,000         34,067
President and                   2004     148,000     12,000          1,748        874,125(7)           -0-           -0-
Chief Executive Officer


Alex Soufflas(2)                2005      59,400        -0-            -0-            -0-       1,000,000            -0-
Chief Financial Officer,
Executive Vice President and
Secretary

David A. Taylor(3)              2005      49,500        -0-            -0-         11,000(8)     1,000,000           -0-
Senior Vice President -
National Sales

Patricia S. Bathurst            2005     134,500        -0-            -0-            -0-       1,000,000            -0-
Vice President -- Marketing     2004      88,000        -0-         10,000         43,040(9)          -0-            -0-
                                2003         -0-        -0-         60,000            -0-             -0-            -0-


Roger H. Folts(4)               2005     160,900        -0-            -0-          1,000(10)   1,000,000            -0-
Former Chief Financial          2004     113,500        -0-          7,270         18,120(11)         -0-            -0-
Officer and Secretary           2003         -0-        -0-         13,685            -0-             -0-

</TABLE>


(1) Mr. Daniels was appointed our Chief Executive Officer on February 17, 2004
and our President on February 13, 2005.

(2) Mr. Soufflas was appointed our Chief Financial Officer and Secretary on
February 15, 2006 and, in connection therewith, resigned as our General Counsel.
Mr. Soufflas was appointed our Executive Vice President on August 15, 2005.

(3) Mr. Taylor was appointed our Senior Vice President - National Sales on
February 15, 2006 and, in connection therewith, resigned as our Vice President -
Sales.

(4) Mr. Folts resigned as our Chief Financial Officer and Secretary on
February 8, 2006.

(5) Consists of non-salary cash consulting fees that we paid to the applicable
executive officers prior to our implementation of salaries for them in March
2004.

(6) Consists of the dollar value of insurance premiums that we paid with
respect to term life insurance for the benefit of the applicable executive
officer as well as amounts reimbursed to the applicable executive officer for
the payment of taxes thereon.



                                       58
<PAGE>

(7) Represents 1,748,250 shares of common stock at an ascribed value of $.40 per
share.

(8) Represents 27,500 shares of common stock at an ascribed value of $.40 per
share.

(9) Represents 107,600 shares of common stock at an ascribed value of $.40 per
share.

(10) Represents 2,500 shares of common stock at an ascribed value of $.40 per
share.

(11) Represents 45,300 shares of common stock at an ascribed value of $.40 per
share.

         We are a party to employment agreements with each of David M. Daniels,
Alex Soufflas, David A. Taylor and Patricia M. Bathurst. Under these agreements,
we are currently paying Messrs. Daniels, Soufflas and Taylor and Ms. Bathurst an
annualized base salary of $254,100, $210,000, 162,000 and $145,200,
respectively. We have issued Mr. Daniels an option to acquire 2,500,000 shares
of our common stock and have issued each of Messrs. Soufflas and Taylor and Ms.
Bathurst an option to acquire 1,000,000 shares of our common stock. In addition,
we recently issued restricted stock awards to each of Messrs. Daniels, Soufflas
and Taylor and Ms. Bathurst with respect to 450,000, 300,000, 375,000 and
225,000 shares of our common stock, respectively. A summary of these employment
agreements and securities is provided under "Executive Compensation - Employment
Contracts and Arrangements."

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (INDIVIDUAL GRANTS)

         The following table sets forth, for each named executive officer,
information regarding options granted to the officers during our fiscal year
ended December 31, 2005. We have not granted any stock appreciation rights to
any of our named executive officers.



<TABLE>
<CAPTION>

                                                     Percent of
                                   Number of        Total Options
                                  Securities         Granted to         Exercise or
                                  Underlying        Employees in        Base Price
Name                           Options Granted (#)   Fiscal Year         ($ / Sh)        Expiration Date
----                           -------------------  -------------       ------------     ----------------
<S>                                   <C>              <C>                 <C>                  <C>
David M. Daniels                      2,500,000        32.8%               0.40             May 12, 2015

Patricia S. Bathurst                  1,000,000        13.1%               0.40             May 12, 2015

Roger H. Folts                        1,000,000        13.1%               0.40             May 12, 2015

Alex Soufflas                         1,000,000        13.1%               0.40          August 14, 2015

David A. Taylor                       1,000,000        13.1%               0.40          August 14, 2015
</TABLE>



                                       59
<PAGE>


                       AGGREGATED OPTION/SAR EXERCISES IN
             LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES

         The following table sets forth, for each named executive officer,
information regarding the number and value of stock options held by the officers
at December 31, 2005, each on an aggregated basis. We have not issued any stock
appreciation rights to any of our named executive officers. No stock options
were exercised by any of our executive officers during our fiscal year ended
December 31, 2005.
<TABLE>
<CAPTION>

                                             Number Of Unexercised          Value Of Unexercised
                                               Options At Fiscal       In-The-Money Options At Fiscal
                                              Year-End Exercisable/          Year-End Exercisable/
Name                                           Unexercisable (#)           Unexercisable ($) (1)
----                                        -----------------------     ------------------------------
<S>                                                 <C>                                <C>
David M. Daniels                               625,000 / 1,875,000           687,500 / 2,062,500

Patricia S. Bathurst                             250,000 / 750,000             275,000 / 825,000

Roger H. Folts                                   250,000 / 750,000             275,000 / 825,000

Alex Soufflas                                      -0- / 1,000,000               -0- / 1,100,000

David A. Taylor                                    -0- / 1,000,000               -0- / 1,100,000

</TABLE>

* Not applicable.

(1)   Based on the offering price of $1.50 per share set forth in our
      Registration Statement on Form SB-2.

            LONG-TERM INCENTIVE PLANS AND AWARDS IN LAST FISCAL YEAR

         We did not make any awards under long-term incentive plans to any of
our named executive officers during the fiscal year ended December 31, 2005.

                      EMPLOYMENT CONTRACTS AND ARRANGEMENTS

         We are a party to employment agreements with David M. Daniels, Alex
Soufflas, Patricia S. Bathurst and David A. Taylor. A summary of the material
terms of these employment agreements and the stock options and restricted stock
awards granted to each of these executive officers is provided below.

David M. Daniels

         On May 13, 2005, we entered into an employment agreement with David M.
Daniels to serve as our Chief Executive Officer effective February 1, 2005. The
agreement is for an initial term of five years and renews automatically for
successive one-year periods unless earlier terminated or prior notice of
non-renewal is provided by either party. Under the agreement, Mr. Daniels is
entitled to an annual base salary of $231,000 with annual increases on January 1
of each year of a minimum of 10% of the annual base salary for the immediately
preceding year, and is eligible for an annual bonus and incentive compensation
awards in an amount and form to be determined by our board of directors in its
sole discretion. Pursuant to the agreement, Mr. Daniels received an option to
acquire 2,500,000 shares of our common stock. On March 28, 2006, we granted Mr.
Daniels a restricted stock award with respect to 450,000 shares of our common
stock.

                                       60
<PAGE>

Alex Soufflas

         On March 29, 2006, we entered into an employment agreement with Alex
Soufflas to serve as our Chief Financial Officer and Executive Vice President
effective February 1, 2005. The agreement is for an initial term of three years
and renews automatically for successive one-year periods unless earlier
terminated or prior notice of non-renewal is provided by either party. Under the
agreement, Mr. Soufflas is entitled to an annual base salary of $210,000 with
annual increases on January 1 of each year of a minimum of 10% of the annual
base salary for the immediately preceding year, and is eligible for an annual
bonus and incentive compensation awards in an amount and form to be determined
by our board of directors in its sole discretion. On August 15, 2005, we granted
Mr. Soufflas an option to acquire 1,000,000 shares of our common stock and March
28, 2006, we granted Mr. Soufflas a restricted stock award with respect to
300,000 shares of our common stock.

David A. Taylor

         On March 29, 2006, we entered into an employment agreement with David
A. Taylor to serve as our Senior Vice President - National Sales effective
February 1, 2005. The agreement is for an initial term of three years and renews
automatically for successive one-year periods unless earlier terminated or prior
notice of non-renewal is provided by either party. Under the agreement, Mr.
Taylor is entitled to an annual base salary of $162,000 with annual increases on
January 1 of each year of a minimum of 10% of the annual base salary for the
immediately preceding year, and is eligible for an annual bonus and incentive
compensation awards in an amount and form to be determined by our board of
directors in its sole discretion. On August 15, 2005, we granted Mr. Taylor an
option to acquire 1,000,000 shares of our common stock and March 28, 2006, we
granted Mr. Taylor a restricted stock award with respect to 375,000 shares of
our common stock.

Patricia S. Bathurst

         On May 13, 2005, we entered into an employment agreement with Patricia
S. Bathurst to serve as our Vice President - Marketing effective February 1,
2005. The agreement is for an initial term of five years and renews
automatically for successive one-year periods unless earlier terminated or prior
notice of non-renewal is provided by either party. Under the agreement, Ms.
Bathurst is entitled to an annual base salary of $132,000 with annual increases
on January 1 of each year of a minimum of 10% of the annual base salary for the
immediately preceding year, and is eligible for an annual bonus and incentive
compensation awards in an amount and form to be determined by our board of
directors in its sole discretion. Pursuant to the agreement, Ms. Bathurst
received an option to acquire 1,000,000 shares of our common stock. On March 28,
2006, we granted Ms. Bathurst a restricted stock award with respect to 225,000
shares of our common stock.



                                       61
<PAGE>

         The employment agreements with Mr. Daniels and Ms. Bathurst provide
that if we terminate the employment of the applicable executive officer without
"cause" or the officer terminates his or her employment with us for "good
reason," as such terms are defined in the agreements, the officer is immediately
entitled to two years' annual base salary, the full annual base salary to which
the officer would otherwise have been entitled during the remainder of the
initial term, and all other compensation and benefits to which the officer would
have been entitled had the officer been employed by us for the remainder of the
initial term. "Good reason" includes a "change in control," which includes: (i)
the acquisition by any person of 30% or more of the combined voting power of our
outstanding securities; (ii) a change in the majority of our board of directors
that was not approved by at least 50% of our board of directors; (iii) the
completion of a reorganization, merger or consolidation of us, or the sale or
other disposition of at least 80% of our assets; or (iv) approval by our
stockholders of a liquidation or dissolution of us.

         The employment agreements with Messrs. Soufflas and Taylor provide that
if we terminate the employment of the applicable executive officer without
"cause" or the officer terminates his or her employment with us for "good
reason," as such terms are defined in the agreements, the officer is entitled to
receive an amount equal to the annual base salary such officer was receiving on
the date of termination to be paid over a period of 12 months. "Good reason"
includes a "change in control," which includes: (i) the acquisition by any
person of 50% or more of the combined voting power of our outstanding
securities; (ii) a change in the majority of our board of directors that was not
approved by at least 50% of our board of directors; (iii) the completion of a
reorganization, merger or consolidation of us, or the sale or other disposition
of all or substantially all of our assets; or (iv) approval by our stockholders
of a liquidation or dissolution of us.

         The options we granted to Mr. Daniels, Mr. Folts and Ms. Bathurst are
for a term of 10 years, have an exercise price of $.40 per share, and vest in
four equal installments commencing on the date of grant and continuing on
February 1st of each of the following three years. In the event the employment
of the applicable executive officer is terminated for any reason other than for
"cause," as such term is defined in the employment agreements, the officer's
option vests in full immediately and may be exercised at any time prior to the
expiration date of the option. In the event we terminate the employment of the
applicable executive officer without "cause" or the officer terminates his or
her employment with us for "good reason" (including a "change in control"), as
such terms are defined in the employment agreements, we are required to use our
best efforts to prepare and file a registration statement with the SEC within
180 days of the date of termination to register the public resale of the shares
underlying the officer's option. In the event the employment of the applicable
executive officer is terminated for "cause," the option terminates immediately.

         The options granted to Mr. Soufflas and Mr. Taylor are for a term of 10
years, have an exercise price of $.40 per share, and vest in four equal annual
installments commencing on February 1, 2006. In the event the employment of the
applicable executive officer is terminated for any reason other than for
"cause," as such term is defined in the option, the officer's option may be
exercised to the extent exercisable on the date of such termination of
employment until the earlier of the date that is 90 days after the date of such
termination of employment or the expiration date of the option. In the event the
employment of the applicable executive officer is terminated for "cause," the
option terminates immediately.



                                       62
<PAGE>

         The restricted stock awards that we granted to Messrs. Daniels,
Soufflas and Taylor and Ms. Bathurst vest in three equal annual installments
commencing on the date of grant. In the event we terminate the employment of the
applicable executive officer without "cause" or the officer terminates his or
her employment with us for "good reason," as such terms are defined in such
officer's respective employment agreement, the officer's restricted stock award
vests in full immediately. "Good reason" includes a "change in control," which
includes: (i) the acquisition by any person of 50% or more of the combined
voting power of our outstanding securities; (ii) a change in the majority of our
board of directors that was not approved by at least 50% of our board of
directors; (iii) the completion of a reorganization, merger or consolidation of
us, or the sale or other disposition of all or substantially all of our assets;
or (iv) approval by our stockholders of a liquidation or dissolution of us. In
the event the employment of the applicable executive officer is terminated for
"cause," any shares of common stock that have not vested as of the date of
termination are forfeited to us and cancelled.



                                       63
<PAGE>


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

         The following table sets forth, as of March 30, 2006, information with
respect to the securities holdings of all persons that we have reason to
believe, pursuant to filings with the SEC, may be deemed the beneficial owner of
more than five percent of our outstanding common stock. The following table also
sets forth, as of such date, the beneficial ownership of our common stock by all
executive officers and directors, individually and as a group.

         The beneficial owners and amount of securities beneficially owned have
been determined in accordance with Rule 13d-3 under the Exchange Act and, in
accordance therewith, includes all shares of our common stock that may be
acquired by such beneficial owners within 60 days of March 30, 2006 upon the
exercise or conversion of any options, warrants or other convertible securities.
Unless otherwise indicated, each person or entity named below has sole voting
and investment power with respect to all common stock beneficially owned by that
person or entity, subject to the matters set forth in the footnotes to the table
below, and has an address of 120 Gibraltar Road, Suite 107, Horsham,
Pennsylvania 19044.

<TABLE>
<CAPTION>

                                                                        Amount and Nature
                                                                          of Beneficial              Percentage
Name and Address of Beneficial Owner                                      Ownership (1)            of Class (1)
------------------------------------                                    -----------------          ----------------
<S>                                                                        <C>                          <C>
David M. Daniels                                                           2,698,050 (2)                12.4%

Roger H. Folts                                                             1,397,800 (3)                 6.4%

Patricia S. Bathurst                                                         832,600 (4)                 3.8%

Alex Soufflas                                                                550,000 (5)                 2.5%

David A. Taylor                                                              652,500 (6)                 3.0%

Ronald F. Westman                                                          5,680,000 (7)                26.1%

R. Dennis Bowers                                                           1,181,250                     5.4%
P.O. Box 94
Lahaska, PA 18974

Dennis Lastine                                                            1,095,000 (8)                  5.0%

Jesus Lozano                                                              1,650,000 (9)                  7.6%

Jose Lozano                                                               1,800,000 (10)                 8.3%

Gabriel Vidales                                                           1,350,000 (11)                 6.2%

All officers and directors as a group (5 persons)                         6,130,950 (12)                28.2%
</TABLE>
_____________________
* Less than 1%.

(1) This table has been prepared based on 21,728,825 shares of our common stock
outstanding on March 30, 2006.

(2) Includes 1,250,000 shares issuable upon the exercise of options that have an
exercise price of $.40 per share and 450,000 shares underlying restricted stock
awards.

(3) Includes 1,000,000 shares issuable upon the exercise of options that have an
exercise price of $.40 per share.



                                       64
<PAGE>

(4) Includes 500,000 shares issuable upon the exercise of options that have an
exercise price of $.40 per share and 225,000 shares underlying restricted stock
awards.

(5) Includes 250,000 shares issuable upon the exercise of options that have an
exercise price of $.40 per share and 300,000 shares underlying restricted stock
awards.

(6) Includes 250,000 shares issuable upon the exercise of options that have an
exercise price of $.40 per share and 375,000 shares underlying restricted stock
awards.

(7) Includes 100,000 shares issuable upon the exercise of options that have an
exercise price of $.40 per share, 1,860,000 shares issuable upon the exercise of
warrants that have an exercise price of $.60 per share, and 1,860,000 shares
issuable upon the exercise of warrants that have an exercise price of $.80 per
share.

(8) Includes 30,000 shares issuable upon the exercise of warrants that have an
exercise price of $.60 per share, 30,000 shares issuable upon the exercise of
warrants that have an exercise price of $.80 per share, 238,750 shares issuable
upon the exercise of warrants that have an exercise price of $1.00 per share,
and 238,750 shares issuable upon the exercise of warrants that have an exercise
price of $2.00 per share.

(9) Includes 550,000 shares issuable upon the exercise of warrants that have
an exercise price of $.60 per share and 550,000 shares issuable upon the
exercise of warrants that have an exercise price of $.80 per share.

(10) Includes 600,000 shares issuable upon the exercise of warrants that have an
exercise price of $.60 per share and 600,000 shares issuable upon the exercise
of warrants that have an exercise price of $.80 per share.

(11) Includes 450,000 shares issuable upon the exercise of warrants that have an
exercise price of $.60 per share and 450,000 shares issuable upon the exercise
of warrants that have an exercise price of $.80 per share.

(12) Includes 2,750,000 shares issuable upon the exercise of options that have
an exercise price of $.40 per share.



                                       65
<PAGE>


                      EQUITY COMPENSATION PLAN INFORMATION

         The following table sets forth information regarding the number of
stock options, warrants, rights and similar securities that were outstanding at
December 31, 2005 under equity compensation plans that have not been approved by
our security holders. None of our securities were outstanding at December 31,
2005 under plans that have been approved by our security holders.


<TABLE>
<CAPTION>
                                                                                               Number of securities
                                                    Number of               Weighted-          remaining available
                                                 securities to be       average exercise       for future issuance
                                                   issued upon              price of               under equity
                                                   exercise of             outstanding          compensation plans
                                                   outstanding              options,          (excluding securities
                                                options, warrants         warrants and             reflected in
                                                    and rights               rights                 column (a))
                                                       (a)                     (b)                     (c)
                                                ------------------    -------------------      -------------------
<S>                                                  <C>                        <C>                         <C>
Equity compensation plans approved by
   security holders                                        -0-                    -0-                      -0-

Equity compensation plans not approved by
   security holders:
       Stock options issued to directors and
         employees                                   7,645,000                  $0.40                      -0-
       Stock option issued to business
         partner                                       400,000                  $0.50                      -0-
       Warrants issued to placement agent              274,000                  $0.70                      -0-
       Warrants issued to consultants and
         advisors                                    2,825,000                  $0.64                      -0-

                                                    ----------                  -----                    ----
              Total                                 11,144,000                  $0.47                      -0-
                                                    ==========                  =====                    =====
</TABLE>

STOCK OPTIONS ISSUED TO DIRECTORS, EMPLOYEES AND BUSINESS PARTNER

         A description of the stock options issued to our directors, employees
and business partner that were outstanding at December 31, 2005 is set forth in
Note 8 to our audited consolidated financial statements beginning on page F-1 of
this report.

WARRANTS ISSUED TO PLACEMENT AGENT, CONSULTANTS AND ADVISORS

         A description of the warrants issued to Park Financial Group, Inc. for
serving as our placement agent in the private offering of units completed in
June and the warrants issued to certain of our consultants and advisors that
were outstanding at December 31, 2005 is set forth in Note 7 to our audited
consolidated financial statements beginning on page F-1 of this report.



                                       66
<PAGE>

                            2006 STOCK INCENTIVE PLAN

         On February 2, 2006, our board of directors adopted the National Health
Partners, Inc. 2006 Stock Incentive Plan. Awards may be made under the plan for
up to 4,500,000 shares of our common stock in the form of stock options,
warrants, stock appreciation rights, restricted stock, restricted stock units,
unrestricted stock, and other equity-based or equity-related awards. Awards may
be made to our employees, officers or directors as well as our consultants or
advisors. The plan is administered by our board of directors which has full and
final authority to interpret the plan, select the persons to whom awards may be
granted, and determine the amount, vesting and all other terms of any awards. To
the extent permitted by applicable law, our board of directors may delegate any
or all of its powers under the plan to one or more committees or subcommittees
of the board. The plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended, and is not a "qualified
plan" under Section 401(a) of the Internal Revenue Code of 1986, as amended. The
plan has not been approved by our shareholders. As a result, "incentive stock
options" as defined under Section 422 of the Internal Revenue Code may not be
granted under the plan until such approval is received for the plan. The plan
terminates on February 1, 2016.

         Unless otherwise determined by the Board, awards may not be transferred
except by will or the laws of descent and distribution and terminate 90 days
after termination of employment with us, whether voluntarily by either party or
by disability, or death or retirement. In the event that termination of
employment or association is for "cause," as that term is defined in the plan,
awards terminate immediately upon such termination. The plan provides for the
immediate vesting or awards or the assumption of awards in the event of certain
"change in control" and "reorganization events," which are defined generally
under the plan to include the acquisition by any person of 30% or more of the
combined voting power of our outstanding securities, a change in the majority of
our board of directors that was not approved by at least a majority of our board
of directors, the completion of a reorganization, merger, share exchange or
consolidation of us, the sale or other disposition of all or substantially all
of our assets, or our liquidation or dissolution.

          As of March 30, 2006, we have issued awards under the plan with
respect to 4,323,250 shares of our common stock.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In April 2005, we issued 1,800,000 shares of our common stock, Class A
warrants to acquire 1,800,000 shares of our common stock, and Class B warrants
to acquire 1,800,000 shares of our common stock to Ronald F. Westman for
aggregate consideration consisting of 2,740,000 shares of common stock of
Infinium Labs, Inc., a Delaware corporation, that Mr. Westman owned and that
were then valued at $720,000. Under the terms of the agreement, in the event we
obtained less than $720,000 from the sale of the Infinium Labs shares, Mr.
Westman was required to pay the difference to us in cash or additional shares of
Infinium Labs common stock. We completed the sale of the last of our shares of
common stock of Infinium Labs on September 7, 2005, resulting in aggregate gross
proceeds from the sale of all 2,740,000 shares of $320,506. Mr. Westman paid the
remaining funds to us in cash on September 16, 2005. Mr. Westman beneficially
owns approximately 33.3% of our common stock and served as a member of our board
of directors from June 29, 2005 to September 26, 2005. We sold the shares of our
common stock and warrants to Mr. Westman at a price per share of $.40, which is
the same price we received for shares of our common stock sold in the private
offerings we conducted immediately prior to and after the date of the
transaction with Mr. Westman.

                                       67
<PAGE>

         In May 2005, we entered into a consulting agreement with Jose Lozano.
Under the agreement, Mr. Lozano agreed to perform marketing and advisory
services consisting primarily of the marketing and promotion of us and our
products and services, support for our marketing and related activities, and
consultation and advice with respect to our marketing strategies, product
development, business development and opportunities, joint ventures, strategic
partnerships and alliances, and general corporate and marketing matters. In
consideration for these services, we agreed to issue Mr. Lozano 600,000 shares
of our common stock, Class A warrants to acquire 600,000 shares of our common
stock, and Class B warrants to acquire 600,000 shares of our common stock, and
agreed to include all of the shares of common stock issued and all of the shares
of common stock underlying the warrants in a registration statement to be filed
with the SEC by June 30, 2005. Each Class A warrant is exercisable into one
share of our common stock at an exercise price of $.60 per share during a period
of 18 months beginning on the date the registration statement is declared
effective by the SEC and expires on December 31, 2007. Each Class B warrant is
exercisable into one share of our common stock at an exercise price of $.80 per
share during a period of three years beginning on the date the registration
statement is declared effective by the SEC and expires on December 31, 2008.
Upon receiving the shares of common stock and warrants, Mr. Lozano became the
beneficial owner of approximately 10.6% of our common stock. The agreement is
for a term ending on December 30, 2005. We believe that the compensation we are
paying to Mr. Lozano under this agreement approximates the fair value of the
services to be provided by Mr. Lozano during the term of the agreement.

         In June 2005, we entered into a lease for additional office space in
the Centerpointe Office Building located at 2033 Main Street, Suite 501,
Sarasota, Florida 34237. The lease is for approximately 4,000 square feet of
space for a monthly rent payment of approximately $7,500, commenced on July 1,
2005 and expires on July 1, 2010. Centerpointe Office Building is owned by
Centerpointe Property, LLC. Ronald F. Westman owns all of the outstanding
membership interests in Centerpointe Property, LLC jointly with his wife,
beneficially owns approximately 33.3% of our common stock, and served as a
member of our board of directors from June 29, 2005 to September 26, 2005. The
rent per square foot that we pay for this office space is the same price per
square foot that the other tenants in the building pay for office space in this
building.

         In October 2005, we entered into a severance arrangement with R. Dennis
Bowers. Under this arrangement, we agreed to pay Mr. Bowers $20,000 upon
entering into the arrangement and agreed to enter into a 15-month consulting
agreement with Mr. Bowers. Under the consulting agreement, Mr. Bowers agreed to
market and promote us and our products to prospective customers whom Mr. Bowers
may identify from time to time. In consideration for these services, we agreed
to pay Mr. Bowers a monthly consulting fee of $9,500 in cash or, if certain
conditions are met, $10,000 in shares of our common stock, the form of such
payment to be decided upon at our sole discretion, the first of such payments to
be made on October 13, 2005 and the remainder of such payments to be made
monthly beginning October 22, 2005 and ending November 22, 2005. We also agreed
to pay Mr. Bowers commissions ranging from between 40% and 50% of the gross
revenues that we receive from sales of our products generated by Mr. Bowers. The
agreement is for a term ending on January 5, 2007. Mr. Bowers served as our
Chief Executive Officer from March 1, 2001 until February 13, 2004, our
President from March 1, 2001 to January 31, 2005, and our Chairman of the Board
from March 1, 2001 to February 13, 2005. Mr. Bowers beneficially owns
approximately 6.9% of our common stock. We believe that the compensation we are
paying to Mr. Bowers under this agreement approximates the fair value of the
services to be provided by Mr. Bowers during the term of the agreement.



                                       68
<PAGE>

         On February 8, 2006, Roger H. Folts resigned as our Chief Financial
Officer and Secretary. Concurrently therewith, we entered into a termination and
mutual release with Mr. Folts effective February 1, 2006 pursuant to which his
employment agreement was terminated effective February 1, 2006, and we and Mr.
Folts agreed to release each other from any and all claims that they may now
hold or may in the future hold arising out of the employment agreement or Mr.
Folts' employment with or separation from us. We also entered into a consulting
agreement with Mr. Folts on February 8, 2006 pursuant to which Mr. Folts agreed
to provide accounting and related services to us on a full-time basis until June
30, 2006 and thereafter on a part-time basis until February 1, 2009, and in
exchange for which we agreed to issue him 300,000 shares of our common stock and
continue paying him the salary he was receiving under his employment agreement
until March 31, 2006.

ITEM 13.  EXHIBITS

         The following exhibits are filed as part of this report:
<TABLE>
<CAPTION>

    Exhibit No.              Exhibit
    -----------              -------
<S>                    <C>
        3.1          Restated  Articles  of  Incorporation  (incorporated  by  reference  to  Exhibit  3.1  to the
                     registration  statement  on  Form  SB-2,  File  No.  333-126315,  initially  filed  with  the
                     Securities and Exchange  Commission  ("SEC") on June 30, 2005, as amended (the  "Registration
                     Statement")

        3.2          Amended and Restated  Bylaws  (incorporated  by reference to Exhibit 3.2 to the  Registration
                     Statement)

        4.1          Specimen  Stock  Certificate  (incorporated  by reference to Exhibit 4.1 to the  Registration
                     Statement)

       10.1          Employment  Agreement,  dated May 13,  2005,  by an between the Company and David M.  Daniels
                     (incorporated by reference to Exhibit 10.1 to the Registration Statement)

       10.2          Employment  Agreement,  dated May 13,  2005,  by an between  the  Company  and Roger H. Folts
                     (incorporated by reference to Exhibit 10.2 to the Registration Statement)

</TABLE>

                                       69
<PAGE>


<TABLE>
<CAPTION>
      <S>         <C>

       10.3          Employment Agreement,  dated May 13, 2005, by an between the Company and Patricia S. Bathurst
                     (incorporated by reference to Exhibit 10.3 to the Registration Statement)

       10.4          Option to Acquire Shares of Common Stock,  dated May 13, 2005, issued by the Company to David
                     M. Daniels (incorporated by reference to Exhibit 10.4 to the Registration Statement)

       10.5          Option to Acquire Shares of Common Stock,  dated May 13, 2005, issued by the Company to Roger
                     H. Folts (incorporated by reference to Exhibit 10.5 to the Registration Statement)

       10.6          Option to  Acquire  Shares of Common  Stock,  dated May 13,  2005,  issued by the  Company to
                     Patricia  S.  Bathurst  (incorporated  by  reference  to  Exhibit  10.6  to the  Registration
                     Statement)

       10.7+         Network Access Agreement, dated April 30, 2001, between the Company and Careington International
                     Corporation (incorporated by reference to Exhibit 10.7 to the Registration Statement)

       10.8+         Optum Services Agreement, dated October 1, 2001, between the Company and United HealthCare
                     Services, Inc. (incorporated by reference to Exhibit 10.8 to the Registration Statement)

       10.9+         Network  Access and Repricing  Agreement,  dated  September 1, 2002,  between the Company and
                     First Access, Inc. (incorporated by reference to Exhibit 10.9 to the Registration Statement)

      10.10+         Network Leasing Agreement,  dated December 18, 2003, between the Company and National Benefit
                     Builders, Inc. (incorporated by reference to Exhibit 10.10 to the Registration Statement)

      10.11+         AdvancePCS,  L.P. Managed Pharmaceutical  Benefit Agreement,  dated July 1, 2001, between the
                     Company and AdvancePCS,  L.P. (incorporated by reference to Exhibit 10.11 to the Registration
                     Statement)

       10.12         Agreement of Lease, dated April 22, 2004, between Liberty Property Limited Partnership and the
                     Company (incorporated by reference to Exhibit 10.12 to the Registration Statement)

       10.13         Commercial Office Lease, dated June 13, 2005, between Centerpointe Property, LLC and the Company
                     (incorporated by reference to Exhibit 10.13 to the Registration Statement)


       10.14         Form of Securities Purchase Agreement by and between the Company and shareholders participating in
                     the August 2004 Offering, September 2004 Offering, March 2005 Offering, February 2005 Offering, May
                     2005 Offering and June 2005 Offering (incorporated by reference to Exhibit 10.14 to the
                     Registration Statement)

</TABLE>

                                       70
<PAGE>



<TABLE>
<CAPTION>
      <S>         <C>
       10.15         Securities  Purchase  Agreement,  dated April 12, 2005, by and between the Company and Ronald
                     F. Westman (incorporated by reference to Exhibit 10.15 to the Registration Statement)

       10.16         Option to Acquire  Shares of Common  Stock,  dated June 29,  2005,  issued by the  Company to
                     Ronald F. Westman (incorporated by reference to Exhibit 10.16 to the Registration Statement)

       10.17         Option to Acquire Shares of Common Stock, dated June 29, 2005, issued by the Company to Jay Rosen
                     (incorporated by reference to Exhibit 10.17 to the Registration Statement)

       10.18         Option to Acquire Shares of Common Stock, dated August 15, 2005, issued by the Company to Alex
                     Soufflas (incorporated by reference to Exhibit 10.18 to the Registration Statement)

       10.19         Option to Acquire Shares of Common Stock, dated August 15, 2005, issued by the Company to David A.
                     Taylor (incorporated by reference to Exhibit 10.19 to the Registration Statement)

       10.20         Summary of the terms of the Company's employment arrangement with Alex Soufflas (incorporated by
                     reference to Exhibit 10.20 to the Registration Statement)

       10.21         Summary  of  the  terms  of  the  Company's  employment  arrangement  with  David  A.  Taylor
                     (incorporated by reference to Exhibit 10.21 to the Registration Statement)

       10.22         Form of Class A Warrant issued by the Company to the shareholders participating in the August 2004
                     Offering, September 2004 Offering, March 2005 Offering, February 2005 Offering, May 2005 Offering
                     and June 2005 Offering (incorporated by reference to Exhibit 10.22 to the Registration Statement)

       10.23         Form of Class B Warrant issued by the Company to the shareholders participating in the August 2004
                     Offering, September 2004 Offering, March 2005 Offering, February 2005 Offering, May 2005 Offering
                     and June 2005 Offering (incorporated by reference to Exhibit 10.23 to the Registration Statement)

       10.24         Form of First Amendment to Securities Purchase Agreement and Release by and between the Company and
                     the shareholders participating in the August 2004 Offering and the September 2004 Offering
                     (incorporated by reference to Exhibit 10.24 to the Registration Statement)

       10.25         Form of Class A Warrant issued by the Company to consultants and advisors in June 2005
                     (incorporated by reference to Exhibit 10.25 to the Registration Statement)
</TABLE>


                                       71
<PAGE>

<TABLE>
<CAPTION>
      <S>         <C>


         10.26    Form of Class B Warrant issued by the Company to consultants and advisors in June 2005 (incorporated
                  by reference to Exhibit 10.26 to the Registration Statement)

         10.27    Form of Class C Warrant issued by the Company to consultants and advisors in June 2005 (incorporated
                  by reference to Exhibit 10.27 to the Registration Statement)

         10.28    CARExpess Broker Agreement, dated March 28, 2005, by and between the Company and Trident Marketing
                  International, Inc. (incorporated by reference to Exhibit 10.28 to the Registration Statement)

         10.29    Marketing Incentive Plan, dated June 24, 2005, by and between the Company and Trident Marketing
                  International, Inc. (incorporated by reference to Exhibit 10.29 to the Registration Statement)

         10.30    Option, dated June 24, 2005, issued by the Company to Trident Marketing International, Inc.
                  (incorporated by reference to Exhibit 10.30 to the Registration Statement)

         10.31    CARExpess Broker Agreement, dated August 12, 2005, by and between the Company and Hispanic Global LLC
                  (incorporated by reference to Exhibit 10.31 to the Registration Statement)

         10.32    Consulting Agreement, dated May 16, 2005, by and between the Company and Jose Lozano (incorporated by
                  reference to Exhibit 10.32 to the Registration Statement)

         10.33    Consulting Agreement, dated June 24, 2005, by and between the Company and El CID IV (incorporated by
                  reference to Exhibit 10.33 to the Registration Statement)

         10.34    Consulting Agreement, dated October 5, 2005, by and between the Company and R. Dennis Bowers
                  (incorporated by reference to Exhibit 10.34 to the Registration Statement)

         10.35    Promissory Note, dated November 11, 2005, issued by the Company to Rene Ortega, Jr. (incorporated by
                  reference to Exhibit 10.35 to the Registration Statement)

         10.36    Promissory Note, dated November 16, 2005, issued by the Company to Uwe Weibel (incorporated by
                  reference to Exhibit 10.36 to the Registration Statement)

         10.37    Promissory Note, dated November 16, 2005, issued by the Company to Daniel Eggenberger (incorporated by
                  reference to Exhibit 10.37 to the Registration Statement)

         10.38    Promissory Note, dated December 7, 2005, issued by the Company to Ronda Westman (incorporated by
                  reference to Exhibit 10.38 to the Registration Statement)

</TABLE>

                                       72
<PAGE>

<TABLE>
<CAPTION>
      <S>         <C>


         10.39    National Health Partners, Inc. 2006 Stock Incentive Plan (incorporated by reference to Exhibit 99.1 to
                  the registration statement on Form S-8, File No. 333-131589, filed with the SEC on February 6, 2006)

         10.40    Termination and Mutual Release, dated February 8, 2006, by and between the Company and Roger H. Folts
                  (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on
                  February 15, 2006)

         10.41    Consulting Agreement, dated February 8, 2006, by and between the Company and Roger H. Folts
                  (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on
                  February 15, 2006)

         10.42    Amendment No. 1 to Promissory Note, dated February 17, 2006, by and between the Company and Uwe Weibel
                  (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on
                  February 23, 2006)

         10.43    Amendment No. 1 to Promissory Note, dated February 17, 2006, by and between the Company and Daniel
                  Eggenberger (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with
                  the SEC on February 23, 2006)

         10.44    Amendment No. 1 to Promissory Note, dated March 4, 2006, by and between the Company and Ronda Westman

         10.45    Employment Agreement, dated March 29, 2006, by and between the Company and Alex Soufflas

         10.46    Employment Agreement, dated March 29, 2006, by and between the Company and David A. Taylor

         10.47    Restricted Stock Award Agreement, dated March 28, 2006, by and between the Company and David M.
                  Daniels

         10.48    Restricted Stock Award Agreement, dated March 28, 2006, by and between the Company and Alex Soufflas

         10.49    Restricted Stock Award Agreement, dated March 28, 2006, by and between the Company and Patricia S.
                  Bathurst

         10.50    Restricted Stock Award Agreement, dated March 28, 2006, by and between the Company and David A. Taylor

         14.1     Code of Business Conduct and Ethics

         21.1     Subsidiaries of the Company

         23.1     Consent of H J & Associates, LLC

         31.1     Certification of Chief Executive Officer required by Rule 13a-14(a) under the Securities Exchange Act
                  of 1934, as amended

         31.2     Certification of Chief Financial Officer required by Rule 13a-14(a) under the Securities Exchange Act
                  of 1934, as amended
</TABLE>

                                       73
<PAGE>
<TABLE>
<CAPTION>
      <S>         <C>


         32.1     Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) under
                  the Securities Exchange Act of 1934, as amended
</TABLE>


+ Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

      The following table presents fees for professional audit services
performed by HJ & Associates, LLC for the audit of our annual financial
statements for our fiscal years ended December 31, 2005 and 2004, and fees
billed for other services rendered by HJ & Associates during such years.

                                                  2005                   2004
                                                  ----                   ----
Audit Fees:                                    $33,131                $22,593

Audit-Related Fees:                             30,398                    ---

Tax Fees:                                          791                    ---

All Other Fees:                                    ---                    ---
                                        --------------         --------------

     Total:                                    $64,320                $22,593
                                        ==============         ==============

         Audit Fees consist of fees billed for professional services rendered by
  our principal accountant for the audit of our annual consolidated financial
  statements and review of our interim consolidated financial statements
  included in our quarterly reports and services that are normally provided by
  our principal accountant in connection with statutory and regulatory filings
  or engagements.

         Audit-Related Fees consist of fees billed for assurance and related
  services rendered by our principal accountant that are reasonably related to
  the performance of the audit or review of our consolidated financial
  statements and are not reported under "Audit Fees" and relate to services
  performed in connection with the review of our Registration Statement on Form
  SB-2.

         Tax Fees consists of fees billed for professional services rendered by
  our principal accountant for tax compliance, tax advice and tax planning.
  These services include assistance regarding federal and state tax compliance
  and filings.


         All Other Fees consist of fees billed for products and services
  provided by our principal accountant, other than those services described
  above.

         Our board of directors serves as our audit committee. It approves the
engagement of our independent auditors, and meets with our independent auditors
to approve the annual scope of accounting services to be performed and the
related fee estimates. It also meets with our independent auditors prior to the
completion of our annual audit and reviews the results of their audit and review
of our annual and interim consolidated financial statements, respectively.

                                       74
<PAGE>

During the course of the year, our chairman has the authority to pre-approve
requests for services that were not approved in the annual pre-approval process.
The chairman reports any interim pre-approvals at the following quarterly
meeting. At each of the meetings, management and our independent auditors update
our board of directors regarding material changes to any service engagement and
related fee estimates as compared to amounts previously approved. During 2004
and 2005, all audit and non-audit services performed by our independent
accountants were pre-approved by our board of directors in accordance with the
foregoing procedures.


                                       75
<PAGE>



                                   SIGNATURES

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


                                      NATIONAL HEALTH PARTNERS, INC.



Date:  March 31, 2006                 By:  /s/   David M. Daniels
                                           ------------------------------
                                                 David M. Daniels
                                                 Chief Executive Officer

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
<S>                                                  <C>                                          <C>

Signature                                       Title                                             Date
---------                                       ----                                              ----

/s/  David M. Daniels                           Chief Executive Officer, President            March 31, 2006
--------------------------                       and Chairman of the Board (Principal
David M. Daniels                                 Executive Officer)


/s/  Alex Soufflas                              Chief Financial Officer, Executive            March 31, 2006
---------------------------                     Vice President and Secretary
Alex Soufflas                                   (Principal Financial and Accounting
                                                Officer)

</TABLE>







<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                        CONSOLIDATED FINANCIAL STATEMENTS

                                Table of Contents

<TABLE>
<S>                                                                                    <C>
Report of Independent Registered Public Accounting Firm............................... F-2

Consolidated Balance Sheet at December 31, 2005....................................... F-3

Consolidated Statements of Operations for the Years Ended December 31, 2005
and 2004.............................................................................. F-4

Consolidated Statements of Stockholders' Equity (Deficit) for the Years Ended
December 31, 2005 and 2004............................................................ F-5

Consolidated Statements of Cash Flows for the Years Ended December 31, 2005
and 2004.............................................................................. F-6

Notes to the Consolidated Financial Statements - December 31, 2005 and 2004........... F-8
</TABLE>

                                       F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
National Health Partners, Inc. and Subsidiary
Horsham, Pennsylvania

We have audited the accompanying consolidated balance sheet of National Health
Partners, Inc. and Subsidiary as of December 31, 2005 and the related
consolidated statements of operations, stockholders' equity (deficit) and cash
flows for the years ended December 31, 2005 and 2004. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with 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
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
National Health Partners, Inc. and Subsidiary as of December 31, 2005 and the
results of their operations and their cash flows for the years ended December
31, 2005 and 2004 in conformity with United States generally accepted accounting
principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company's recurring losses and cash used
by operations raise substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are also described in Note
2. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

HJ & Associates, LLC
Salt Lake City, Utah
March 20, 2006

                                       F-2
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                           Consolidated Balance Sheet

                                                                  December 31,
                                                                      2005
                                                                  ------------
ASSETS

Current assets:
     Cash and cash equivalents                                    $    109,807
     Certificate of deposit                                             35,717
     Other current assets                                                4,042
                                                                  ------------
           Total current assets                                        149,566
                                                                  ------------
Property and equipment, net                                            127,263
Deposits                                                                19,000
                                                                  ------------
           Total assets                                           $    295,829
                                                                  ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
     Accounts payable                                             $     70,432
     Accounts payable - related party                                   16,373
     Accrued expenses                                                   75,955
     Deferred revenue                                                   68,641
     Deferred compensation                                              29,000
     Notes payable                                                     203,742
                                                                  ------------
           Total current liabilities                                   464,143
                                                                  ------------
           Total liabilities                                           464,143
                                                                  ------------
Commitments and contingencies

Stockholders' equity (deficit):
     Common stock, $0.001 par value, 100,000,000 shares
      authorized, 17,054,200 shares issued and outstanding              17,054
     Additional paid-in capital                                      7,717,866
     Accumulated deficit                                            (7,903,234)
                                                                  ------------
           Total stockholders' equity (deficit)                       (168,314)
                                                                  ------------
           Total liabilities and stockholders' equity (deficit)   $    295,829
                                                                  ============

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

                                       F-3
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                      Consolidated Statements of Operations

                                                    For the Years Ended
                                                        December 31,
                                                ----------------------------
                                                    2005            2004
                                                ------------    ------------
Net revenue                                     $    245,973    $     27,929

Direct costs                                         350,666          66,101
                                                ------------    ------------
Gross deficit                                       (104,693)        (38,172)
                                                ------------    ------------
Operating expenses:
     Selling and marketing                           241,692         377,281
     General and administrative                    3,882,260       2,083,953
                                                ------------    ------------
Total operating expenses                           4,123,952       2,461,234
                                                ------------    ------------
Loss from operations                              (4,228,645)     (2,499,406)
                                                ------------    ------------
Other income (expense):
     Interest income                                     717             ---
     Interest expense                                 (5,724)         (7,106)
     Common stock issued for releases               (295,100)            ---
     Loss on extinguishment of debt                      ---         (83,388)
                                                ------------    ------------
Total other income (expense)                        (300,107)        (90,494)
                                                ------------    ------------
Net loss                                        $ (4,528,752)   $ (2,589,900)
                                                ============    ============
Loss per share - basic and diluted              $      (0.32)   $      (0.42)
                                                ============    ============
Weighted average number of shares
 outstanding - basic and diluted                  14,397,546       6,233,471
                                                ============    ============

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

                                       F-4
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
            Consolidated Statements of Stockholders' Equity (Deficit)

<TABLE>
<CAPTION>
                                                                                                                      Total
                                          Common Stock          Additional    Deferred Stock                  Stockholders'
                                   --------------------------      Paid-in      Subscription    Accumulated          Equity
                                      Shares        Amount         Capital           Payable        Deficit       (Deficit)
                                   ------------  ------------  ------------   --------------   ------------   -------------
<S>                                  <C>         <C>           <C>              <C>            <C>            <C>
BALANCE AT DECEMBER 31, 2003          1,687,500  $      1,688  $     14,568     $        ---   $   (784,582)  $    (768,326)

Common stock issued for
  extinguishment of debt at
  $0.46 per share                       618,200           618       283,512              ---            ---         284,130

Common stock issued for
  services at $0.50 per share           350,000           350       174,650              ---            ---         175,000

Common stock issued as
  signing bonus at $0.50 per
  share                               1,748,250         1,748       872,377              ---            ---         874,125

Common stock issued for cash
  at an average price of $0.46
  per share                           5,232,250         5,232     2,382,768              ---            ---       2,388,000

Common stock to be issued for
  stock subscription payable at
  $0.40 per share                           ---           ---           ---           14,650            ---          14,650

Net loss                                    ---           ---           ---              ---     (2,589,900)     (2,589,900)
                                   ------------  ------------  ------------   --------------   ------------   -------------
BALANCE AT DECEMBER 31, 2004          9,636,200         9,637     3,727,874           14,650     (3,374,482)        377,679

Common stock issued for stock
  subscription payable at $0.40
  per share                              36,625            37        14,613          (14,650)           ---             ---

Common stock issued for cash
  at $0.40 per share                  2,256,625         2,256       900,395              ---            ---         902,651

Common stock issued to prior
  investors for releases at
  $0.40 per share                       737,750           737       294,362              ---            ---         295,099

Common stock issued for stock
  exchange at $0.40 per
  share -- related party              1,800,000         1,800       718,200              ---            ---         720,000

Common stock issued for
  services at $0.40 per share         2,587,000         2,587     1,032,213              ---            ---       1,034,800

Warrants issued for services
  at $0.40 per share                        ---           ---     1,239,409              ---            ---       1,239,409

Stock offering costs                        ---           ---      (209,200)             ---            ---        (209,200)

Net loss                                    ---           ---           ---              ---     (4,528,752)     (4,528,752)
                                   ------------  ------------  ------------   --------------   ------------   -------------
BALANCE AT DECEMBER 31, 2005         17,054,200  $     17,054  $  7,717,866   $          ---   $ (7,903,234)  $    (168,314)
                                   ============  ============  ============   ==============   ============   =============
</TABLE>

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

                                       F-5
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                        For the Years Ended
                                                                            December 31,
                                                                    ----------------------------
                                                                        2005            2004
                                                                    ------------    ------------
<S>                                                                 <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                                                          $ (4,528,752)   $ (2,589,900)
  Adjustments to reconcile net loss to net cash used by
   operating activities:
     Common stock issued for services                                    980,000       1,049,126
     Warrants issued for services                                      1,129,809             ---
     Common stock issued for releases                                    295,100             ---
     Depreciation                                                         51,800          19,502
     Bad debt - note receivable                                           25,000             ---
     Loss on extinguishment of debt                                          ---          83,388
  Changes in operating assets and liabilities:
     Increase in other current assets                                     (4,042)            ---
     Increase in deposits                                                    ---         (15,000)
     Increase (decrease) in accounts payable and accrued expenses         28,783        (160,734)
     Increase (decrease) in accounts payable - related party              16,373         (16,350)
     Increase in deferred revenue                                         61,548           7,093
     Increase in deferred compensation                                    29,000             ---
                                                                    ------------    ------------
        Net cash used by operating activities                         (1,915,381)     (1,622,875)
                                                                    ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES

     Proceeds from sale of marketable securities                         320,506             ---
     Payment for note receivable                                         (25,000)            ---
     Increase in certificates of deposit                                 (35,717)            ---
     Purchase of fixed assets and website costs                          (36,609)       (161,956)
                                                                    ------------    ------------
        Net cash provided (used) by investing activities                 223,180        (161,956)
                                                                    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES

     Increase (decrease) in cash overdraft                                   ---            (840)
     Proceeds from sale of common stock                                1,302,144       2,388,000
     Payment of stock offering costs                                     (44,800)            ---
     Proceeds from stock subscription payable                                ---          14,650
     Proceeds from issuance of notes payable                             180,000          11,000
     Payments on notes payable                                           (57,251)       (196,234)
     Payments on notes payable - related party                               ---         (10,000)
                                                                    ------------    ------------
        Net cash provided by financing activities                      1,380,093       2,206,576
                                                                    ------------    ------------
Net increase (decrease) in cash                                         (312,108)        421,745
Cash at beginning of year                                                421,915             170
                                                                    ------------    ------------
Cash at end of year                                                 $    109,807    $    421,915
                                                                    ============    ============
</TABLE>

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

                                       F-6
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                Consolidated Statements of Cash Flows (Continued)

<TABLE>
<CAPTION>
                                                                        For the Years Ended
                                                                            December 31,
                                                                    ----------------------------
                                                                        2005            2004
                                                                    ------------    ------------
<S>                                                                 <C>             <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

     Cash paid for taxes                                            $        ---    $        ---
     Cash paid for interest                                                2,722             ---

SCHEDULE OF NON-CASH FINANCING ACTIVITIES

     Common stock issued for services                               $    980,000    $  1,049,126
     Warrants issued for services                                   $  1,129,809    $        ---
     Common stock issued for extinguishment of debt                 $        ---    $    284,130
     Common stock issued to prior investors for releases            $    295,100    $        ---
     Common stock issued for stock offering costs                   $    164,400    $        ---
</TABLE>

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

                                       F-7
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 1. DESCRIPTION OF BUSINESS.

         National Health Partners, Inc. (the "Company") was organized on
March 10, 1989 as Spectrum Vision Systems of Indiana, Inc. under the laws of the
State of Indiana. The Company changed its name to National Health Partners, Inc.
on March 13, 2001. On December 15, 2004,  National Health Brokerage Group,  Inc.
was organized as a wholly-owned subsidiary of the Company.

         The Company sells membership programs that encompass all aspects of
healthcare, including physicians, hospitals, ancillary services, dentists,
prescription drugs and vision care through a national healthcare savings network
called "CARExpress." The Company markets its programs directly through
infomercials, newspapers, publications and its website, and indirectly through
marketing representatives, brokers and agents, retail chains and outlets, small
businesses and trade associates, and unions and associations. The Company
derives substantially all of its revenue from the monthly membership fees it
receives from members of its membership programs.

         The Company typically pays aggregate commissions to marketing
representatives of between 35% and 50% of the sale price of the membership
programs and/or an up-front fee of between $3 and $20 per member. Marketing
representatives are paid these commissions for each member they enroll for the
life of that member's enrollment with CARExpress. Marketing representatives may
also recruit other representatives to sell the Company's membership programs and
receive a portion of the commissions earned by the other representatives on
sales made by those representatives. The marketing representatives do not pay
the Company any initial or ongoing fees as a result of their relationship with
the Company. They typically offer and sell the Company's membership programs on
a part-time basis and may engage in other related or unrelated business
activities, including selling the products or services of the Company's
competitors. The Company's agreements with the marketing representatives are
generally for a term of one year and renew automatically for additional one-year
terms unless written notice of termination is delivered by either party at least
30 days prior to the then-current term. None of the Company's employees are
compensated on a basis similar to the marketing representatives.

         The Company contracts with preferred provider organizations ("PPOs")
and other provider networks for access to the discounted rates they have
negotiated with their healthcare providers. The principal suppliers of the
healthcare providers that comprise CARExpress are PPONext, International
Med-Care, CareMark, Cigna, Optum and Careington International. The Company
selects and utilizes only those provider networks that it believes can deliver
adequate savings to its members while providing adequate support for its
CARExpress membership programs with the healthcare providers. The Company
typically pays a per member per month fee for use of a provider network that is
determined in part based on the number of providers participating in the
network, the number of CARExpress members accessing the network, and the
particular products and services utilized by the CARExpress members. The
Company's agreements with provider networks are generally for a term of between
one and two years, may be terminated by either party on between 45 and 180 days'
prior written notice, and renew automatically for additional terms unless so
terminated. Most of these agreements are non-exclusive and contain
confidentiality provisions.

                                       F-8
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

         This summary of significant accounting policies is provided to assist
the reader in understanding the Company's financial statements. The financial
statements and notes thereto are representations of the Company's management.
The Company's management is responsible for their integrity and objectivity.
These accounting policies conform to accounting principles generally accepted in
the United States of America and have been consistently applied in the
preparation of the financial statements.

BASIS OF PRESENTATION

         The Company's financial statements are prepared using accounting
principles generally accepted in the United States of America applicable to a
going concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has historically
incurred significant losses, which raises substantial doubt about the Company's
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of this uncertainty.

         On February 17, 2004, the Company amended its Articles of Incorporation
to increase the number of shares of common stock authorized for issuance from
1,000 to 10,000,000 and approved a forward stock split of 3,375 to 1. On June
30, 2004, the Company amended its Articles of Incorporation to increase the
number of shares of common stock authorized for issuance from 10,000,000 to
100,000,000 and to change the par value of its shares of common stock from no
par value per share to $0.001 par value per share. All references to common
stock have been restated retroactively to reflect the foregoing amendments to
the Company's Articles of Incorporation.

PRINCIPLES OF CONSOLIDATION

         The financial statements include the balances of National Health
Partners, Inc. and its wholly-owned subsidiary, National Health Brokerage Group,
Inc. All material intercompany balances and transactions have been eliminated in
consolidation.

RECLASSIFICATIONS

         Certain amounts in the 2004 financial statements have been reclassified
to conform to the 2005 presentation. These reclassifications did not result in
any change to the previously reported total assets, net loss or stockholders'
equity.

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 amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

                                       F-9
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE RECOGNITION

         The Company sells discount health care membership programs in return
for monthly membership fees. The date a monthly membership begins varies for
each individual member depending upon when the particular member purchased the
membership. The Company recognizes revenue when persuasive evidence of an
arrangement exists, delivery or performance has occurred, the sales price is
fixed and determinable, and collectibility is reasonably assured. At the
beginning of each membership period, the membership fee is charged to the
member's credit card and recorded as deferred revenue. The Company then
recognizes revenue as services are rendered. Shipping and handling fees that the
Company receives for the shipment of membership packages to new members are
included in its membership fees and recorded as deferred revenue. These fees are
then recognized as revenue on a straight-line basis over the longer of the
initial contractual term or the expected period during which the services will
be performed if the relationship with the member is expected to extend beyond
the initial contractual term and the member continues to benefit from the
payment of the fees. The Company typically receives cash within 5 days of the
date the membership fee is charged to the member's credit card. At December 31,
2005, the Company had deferred revenue of $68,641. The Company had minimal
deferred revenue at December 31, 2004.

         The Company typically offers a 30-day money-back guarantee to its
members. Members can cancel their membership during the first 30 days of their
initial membership period and receive a full refund. After that, members can
cancel their membership at the end of any subsequent monthly membership period.
If a member cancels his or her membership and the member's credit card has
already been processed for the next monthly membership period, a refund check
will be issued to the member and no revenue will be recognized for that period.
For the year ended December 31, 2005, the Company had cancellations and refunds
of $54,982. The Company had minimal cancellations and refunds for the year ended
December 31, 2004.

         The Company offers a 12-day free trial to some of its members. The
Company does not recognize any membership revenue during the free-trial period.
In the event the member continues the membership after the free-trial period
expires, the Company charges the member's credit card and recognizes revenue as
services are rendered.

DIRECT COSTS

         The Company's direct costs consist of sales commissions and fees paid
to PPOs and provider networks. The Company incurred sales commission expense of
$275,178 and $11,838 and network provider costs of $75,487 and $54,263 for the
years ended December 31, 2005 and 2004, respectively.

SELLING AND MARKETING EXPENSES

         The Company's selling and marketing expenses consist of advertising
expenses, marketing expenses, salaries paid to employees selling and marketing
the Company's CARExpress membership programs, rent expense allocated to the
Company's selling and marketing activities, depreciation and amortization
expense allocated to the Company's selling and marketing activities, and all
other selling and marketing expenses incurred by the Company. Depreciation and

                                      F-10
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SELLING AND MARKETING EXPENSES (CONTINUED)

amortization expense included in selling and marketing expense is derived from
the Company's telephones and website, and in part from the Company's computers,
all of which are an integral part of the Company's selling and marketing
activities.

STOCK-BASED COMPENSATION

         The Company accounts for employee stock-based compensation using the
intrinsic value method in accordance with Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), and related
interpretations. APB 25 requires that the Company recognize compensation cost
for stock options issued to employees to the extent the fair value of its common
stock exceeds the exercise price of the options on the date of grant.
Accordingly, no compensation expense has been recognized for options granted to
employees with an exercise price greater than or equal to the market value of
its common stock on the date of grant.

         The Company accounts for non-employee stock-based compensation in
accordance with Statement of Financial Accounting Standards No. 123, "Accounting
For Stock-Based Compensation" ("SFAS 123") and Emerging Issues Task Force No.
96-18 "Accounting for Equity Instruments That Are Issued to Other Than Employees
for Acquiring or in Conjunction with Selling Goods or Services" ("EITF 96-18").
SFAS 123 and EITF 96-18 require that the Company account for its option and
warrant grants to non-employees based on the fair value of the options and
warrants granted.

         The Company uses the Black-Scholes pricing model to determine the fair
value of the options and warrants that it grants to employees and non-employees.
The Company is required to make certain assumptions in connection with this
determination, the most important of which involves the calculation of
volatility with respect to the price of its common stock. The computation of
volatility is intended to produce a volatility value that is representative of
the Company's expectations about the future volatility of the price of its
common stock over an expected term. The Company used its past share price
history to determine volatility and cannot predict how the price of its shares
of common stock will react on the open market in the event they are listed for
trading on the OTC Bulletin Board or a national securities exchange. As a
result, the volatility value that the Company calculated may differ from the
future volatility of the price of its shares of common stock.

         Under SFAS 123, as amended by Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure" ("SFAS 148"), the Company is required to make pro forma disclosures
for net income and earnings per share as if the fair value method of valuing
employee stock-based compensation had been applied. Pursuant to SFAS 148, the
Company estimates the fair value of its employee stock-based compensation on the
date of grant by using the Black-Scholes pricing model assuming a dividend yield
of zero percent for all years, an expected volatility of 290%, a risk-free
interest rate of 3.5% and a weighted-average contractual term of 8.51 years. The
risk-free interest rate was determined using government securities with original
maturities similar to the respective expected life of the equity instruments on
the date of grant.

                                      F-11
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK-BASED COMPENSATION (CONTINUED)

         Had compensation expense for the Company's stock options granted to
directors and employees been based on the fair value as determined by the
Black-Scholes option pricing model at the grant date under the accounting
provisions of SFAS 123, the Company would have recorded additional compensation
expense of $623,774 and $2,805,985 and would have had a net loss of $5,152,526
and $5,395,885 for the years ended December 31, 2005 and 2004, respectively.

                                                       For the Years Ended
                                                           December 31,
                                                   ----------------------------
                                                       2005            2004
                                                   ------------    ------------
         Net income (loss) as reported             $ (4,528,752)   $ (2,589,000)

         Stock-based employee compensation
         cost included in net income (loss) as
         reported, net of related tax effects               ---             ---

         Stock-based employee compensation
         cost under the fair value based method,
         net of related tax effects                    (623,774)     (2,805,985)
                                                   ------------    ------------
         Pro forma net income (loss)               $ (5,152,526)   $ (5,395,885)
                                                   ============    ============
         Earnings (loss) per share:

              Basic & diluted - as reported        $      (0.32)   $      (0.42)
              Basic & diluted - pro forma          $      (0.36)   $      (0.87)

INCOME TAXES

         The Company uses the liability method of accounting for income taxes
under which deferred tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates in effect for
the year 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 as part of the provision for income taxes in the period that
includes the enactment date. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized in the
future.

                                      F-12
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES (CONTINUED)

         Net deferred tax assets consisted of the following components at
December 31, 2005 and 2004, respectively:

                                                          December 31,
                                                  ----------------------------
                                                      2005            2004
                                                  ------------    ------------
          Deferred tax assets:
             Net operating loss carryforwards     $  1,653,900    $    862,385

          Deferred tax liabilities:
             Depreciation                              (22,400)        (29,630)

          Valuation allowance                       (1,631,500)       (832,755)
                                                  ------------    ------------
          Net deferred tax asset                  $        ---    $        ---
                                                  ============    ============

         At December 31, 2005, the Company had net operating loss carry-forwards
of approximately $2,800,000 that may be offset against future taxable income
from the years 2006 through 2026. No tax benefit has been reported in the
December 31, 2005 financial statements since the potential tax benefit is offset
by a valuation allowance of the same amount.

         Utilization of the net operating loss carryforwards may be subject to a
substantial annual limitation due to ownership change limitations provided by
the Internal Revenue Code of 1986, as well as similar state and foreign
provisions. These ownership changes may limit the amount of net operating loss
carryforwards that can be utilized annually to offset future taxable income and
tax, respectively. Subsequent ownership changes could further affect the
limitation in future years. These annual limitation provisions may result in the
expiration of certain net operating losses and credits before utilization.

         In calculating the amount of pretax income from continuing operations
for the years ended December 31, 2005 and 2004, the amount of income tax
calculated under accounting principles generally accepted in the United States
of America differed from the amount of income tax determined under United States
federal and state income tax provisions as follows:

                                                         December 31,
                                                 ----------------------------
                                                     2005            2004
                                                 ------------    ------------
            Book Income                          $ (1,766,000)   $ (1,000,900)
            Meals and entertainment                     2,800          22,275
            Depreciation                              (25,677)            ---
            Accrued compensation                       29,000             ---
            Stock compensation                      1,002,030         409,150
            Loss on extinguishment of debt                ---          32,520
            Valuation allowance                       757,847         536,955
                                                 ------------    ------------
                                                 $        ---    $        ---
                                                 ============    ============

                                      F-13
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

LOSS PER SHARE

         Basic loss per share is based on the weighted average number of shares
of the Company's common stock outstanding during the applicable year, and is
calculated by dividing the reported net loss for the applicable year by the
weighted average number of shares of common stock outstanding during the
applicable year. The Company calculates diluted loss per share by dividing the
reported net loss for the applicable year by the weighted average number of
shares of common stock outstanding during the applicable year as adjusted to
give effect to the exercise of all potentially dilutive options and warrants
outstanding at the end of the year. An aggregate of 23,681,004 and 10,724,791
shares of common stock underlying options and warrants that were outstanding on
December 31, 2005 and 2004, respectively, have been excluded from the
computation of diluted earnings per share because they are anti-dilutive. As a
result, basic loss per share was equal to diluted loss per share for each year.

                                                       For the Years Ended
                                                           December 31,
                                                   ----------------------------
                                                       2005            2004
                                                   ------------    ------------
            Net Loss                               $ (4,528,725)   $ (2,589,900)
            Weighted average shares outstanding      14,397,546       6,233,471
                                                   ------------    ------------
            Earnings (loss) per share -
                basic and diluted                  $      (0.32)   $      (0.42)
                                                   ============    ============

CASH AND CASH EQUIVALENTS

         The Company considers all highly liquid investments with an original
maturity of three months or less on the date of purchase to be cash equivalents.

FINANCIAL INSTRUMENTS

         The carrying amounts of the Company's cash and cash equivalents,
accounts payable, accrued liabilities, notes payable and other short-term
liabilities in the consolidated balance sheets approximate their fair value due
to the short-tem maturity of these instruments and obligations.

DERIVATIVE FINANCIAL INSTRUMENTS

         In connection with the Company's issuance of common stock and warrants
to certain consultants to the Company, the Company evaluated the terms and
conditions of the common stock and warrants to determine whether the warrants
represented embedded or freestanding derivative instruments under the provisions
of Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," and Emerging Issues Task Force
No. 00-19, "Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Company's Own Stock" ("EITF 00-19"). The Company
determined that the warrants did not represent freestanding derivative
instruments and that the warrants did not meet the requirements for liability
classification under EITF 00-19. As a result, the fair value of the warrants is
reflected in the Company's additional paid-in capital. The fair value of the
Company's derivative financial

                                      F-14
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

instruments are estimated using the Black-Scholes pricing model which takes into
consideration the estimated term of the warrants, the volatility of the price of
the Company's common stock, interest rates and the probability that the warrants
will be exercised.

PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation and amortization are calculated
using the straight-line basis over the estimated useful lives of the related
assets. The estimated useful lives of the Company's property and equipment are
as follows:

            Computer equipment         3 years
            Computer software          3 years
            Furniture and fixtures     5 years
            Telephone equipment        5 years
            Website equipment          3 years

         The cost of major improvements to the Company's property and equipment
are capitalized. The cost of maintenance and repairs that do not improve or
extend the life of the applicable assets are expensed as incurred. When assets
are retired or otherwise disposed of, the cost and accumulated depreciation and
amortization are removed from the accounts and any resulting gain or loss is
reported in the period realized.

         The Company reviews property and equipment for impairment whenever
events or changes in circumstances indicate that the carrying amount of assets
may not be recoverable. Recoverability is measured by comparison of the carrying
amount of the assets to the future undiscounted net cash flows that the assets
are expected to generate. If the assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of these assets exceeds the fair value of the assets.

RECENT ACCOUNTING PRONOUNCEMENTS

         In December 2004, FASB issued Statement of Financial Accounting
Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"), which
replaces Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" and supersedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"). SFAS 123R establishes standards for
accounting for transactions in which an entity exchanges its equity instruments
for goods or services or incurs liabilities in exchange for goods or services
that are based on the fair value of the entity's equity instruments. It focuses
primarily on accounting for transactions in which an entity obtains employee
services in share-based payment transactions. SFAS 123R requires that entities
account for share-based payments using the fair value based method rather than
the intrinsic value method of accounting in APB 25 and that entities disclose
information about the nature of the share-based payment transactions and the
effects of those transactions on the financial statements. SFAS 123R requires an
entity to measure the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of the

                                      F-15
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

award over the period during which an employee is required to provide service
for the award. The grant-date fair value of employee stock options and similar
instruments must be estimated using option-pricing models adjusted for the
unique characteristics of those instruments unless observable market prices for
the same or similar instruments are available. SFAS 123R also requires an entity
to measure the cost of employee services received in exchange for an award of
liability instruments based on its current fair value and that the fair value of
that award be remeasured at each reporting date through the settlement date.
SFAS No. 123R becomes effective for small business issuers as of the beginning
of the first interim or annual reporting period that begins after December 15,
2005. The Company will adopt SFAS No. 123R on January 1, 2006 using the modified
prospective method. The adoption of SFAS 123R is expected to have an adverse
impact on the Company's results of operations in future periods.

         In March 2005, the SEC released Staff Accounting Bulletin No. 107,
"Share-Based Payment" ("SAB 107"), which provides guidance on the implementation
of SFAS 123R. In particular, it provides guidance related to valuation methods,
accounting for income tax effects of share-based payments, modifications of
employee stock options prior to the adoption of SFAS 123R, classification of
compensation expense, capitalization of compensation cost related to share-based
payment arrangements, first-time adoption of SFAS 123R in an interim period, and
other disclosures subject to the adoption of SFAS 123R. The Company will apply
the principles of SAB 107 in conjunction with the adoption of SFAS 123R.

         In May 2005, the FASB issued FASB Statement No. 154, "Accounting
Changes and Error Corrections" ("SFAS 154"). SFAS 154 replaces APB Opinion No.
20, "Accounting Changes," and SFAS No. 3, "Reporting Accounting Changes in
Interim Financial Statements - An Amendment of APB Opinion 28" and establishes
retrospective application as the required method for reporting a change in
accounting principle. SFAS 154 provides guidance for determining whether
retrospective application of a change in accounting principle is impracticable
and reporting a change when retrospective application is impracticable. The
reporting of a correction of an error by restating previously issued financial
statements is also addressed. SFAS 154 is effective for accounting changes and
correction of errors made in fiscal years beginning after December 15, 2005. The
Company expects that the adoption of SFAS 154 will not have a material impact on
its consolidated financial statements.

                                      F-16
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 3. PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following at December 31, 2005
and 2004, respectively:
                                                       December 31,
                                               ----------------------------
                                                   2005            2004
                                               ------------    ------------
         Computers                             $     43,012    $     22,024
         Software                                     2,762             ---
         Furniture                                   11,322           7,572
         Telephone                                   52,262          43,153
         Website                                     89,207          89,207
          Less: accumulated depreciation            (71,302)        (19,502)
                                               ------------    ------------
           Net property and equipment          $    127,263    $    142,454
                                               ============    ============

Depreciation expense for the years ended December 31, 2005 and 2004 was $51,800
and $19,502, respectively.

NOTE 4. ACCRUED EXPENSES

         Accrued expenses consist of amounts due to an unrelated third party for
its payment of certain Company liabilities in 2001 and 2002. In conjunction with
the note payable discussed in Note 5, the third party agreed to accept payments
of $5,000 per month until all amounts are paid in full. The balance of accrued
expenses at December 31, 2005 and 2004 was $75,955.

NOTE 5.  NOTES PAYABLE

         Notes payable outstanding at December 31, 2005 and 2004 consisted of
the following:

         Note payable bearing interest
         at 5.00% per annum requiring
         monthly payments of $5,000                 $     23,742

         Notes payable bearing interest at
         15% per annum and due during
         the first quarter of 2006                       180,000
                                                    ------------
                  Total                             $    203,742
                                                    ============

NOTE 6. COMMITMENTS AND CONTINGENCIES

         The Company's commitments and contingencies consist of operating leases
for its office space in Pennsylvania and Florida, an equipment lease for certain
of its computer equipment and employment agreements with certain of its
executive officers.

                                      F-17
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 6. COMMITMENTS AND CONTINGENCIES (CONTINUED)

OPERATING LEASES

         The Company has entered into operating leases for its executive offices
in Horsham, Pennsylvania and its office space in Sarasota, Florida.

Pennsylvania Facility

         The Company entered into a lease for a facility located in Horsham,
Pennsylvania on December 1, 2001, which was amended on April 22, 2004. This is a
three-year lease expiring on May 30, 2007. This lease required a deposit of
$19,000. The starting monthly payment, including operating expenses, is $12,579
for the first year and increases each subsequent year.

         Future minimum lease payments under this facility lease are as follows:

               Fiscal Year        Amount
               -----------     ------------
                  2006         $    158,356
                  2007               66,598
                               ------------
                               $    224,954
                               ============

Florida Facility

         The Company entered into a lease for a facility located in Sarasota,
Florida on July 1, 2005. This lease is a five-year lease expiring on June 30,
2010. This lease required an $18,000 security deposit to be paid on October 1,
2005. The starting monthly payment, including parking and Florida tax, is
$8,186.

         Future minimum lease payments under this facility lease are as follows:

               Fiscal Year        Amount
               -----------     ------------
                  2006         $    100,197
                  2007              104,205
                  2008              108,373
                  2009              112,708
                  2010               59,757
                               ------------
                               $    485,240
                               ============

EQUIPMENT LEASE

         On July 8, 2004, the Company entered into an equipment lease for
computer equipment for a period of 60 months. The monthly lease payment is $131.

                                      F-18
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 6. COMMITMENTS AND CONTINGENCIES (CONTINUED)

EQUIPMENT LEASE (CONTINUED)

         Future minimum payments under this equipment lease are as follows:

               Fiscal Year        Amount
               -----------     ------------
                  2006         $      1,572
                  2007                1,572
                  2008                1,572
                  2009                  524
                               ------------
                               $      5,240
                               ============

EMPLOYMENT AGREEMENTS

         The Company has entered into employment agreements with three of its
executive officers. Future minimum payments under these employment agreements
are as follows:

<TABLE>
<CAPTION>
                                                                    Fiscal Year
                                          --------------------------------------------------------------
Officer                         Term         2006         2007         2008         2009         2010
--------------------------   ----------   ----------   ----------   ----------   ----------   ----------
<S>                            <C>        <C>          <C>          <C>          <C>          <C>
Chief Executive Officer        5 years    $  254,100   $  279,510   $  307,461   $  338,207   $   31,002

Chief Financial Officer        3 years       174,240      191,664       17,569          ---          ---

Vice President - Marketing     5 years       145,200      159,720      175,692      193,261       17,716
                                          ----------   ----------   ----------   ----------   ----------
                                          $  573,540   $  630,894   $  500,722   $  531,468   $   48,718
                                          ==========   ==========   ==========   ==========   ==========
</TABLE>

The officers are also eligible for annual bonuses and other incentive
compensation at the discretion of the board of directors.

NOTE 7. COMMON STOCK AND WARRANTS

         The Company's authorized capital consisted of 100,000,000 and
10,000,000 shares of common stock, $0.001 par value per share, at December 31,
2005 and 2004, respectively, of which 17,054,200 and 9,636,200 shares of common
stock were outstanding at December 31, 2005 and 2004, respectively. Warrants
exercisable into an aggregate of 15,636,004 and 4,471,834 shares of the
Company's common stock were outstanding on December 31, 2005 and 2004,
respectively.

         The Company estimates the fair value of its warrants on the date of
grant by using the Black-Scholes pricing model assuming a dividend yield of zero
percent for all years, an expected volatility of 422%, a risk-free interest rate
of 3.5% and a weighted-average contractual term of 1.96 years. The Company
follows Emerging Issues Task Force No. 96-18 to recognize the fair value of
warrants granted. Under EITF 96-18, the fair value of the warrants should be
recognized as the services are rendered. The Company is recognizing the cost of
services evenly over the term of the

                                      F-19
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 7. COMMON STOCK AND WARRANTS (CONTINUED)

agreements since the services are being rendered on an ongoing basis during the
term of the agreements.

NON CAPITAL-RAISING TRANSACTIONS

         In February 2004, the Company issued 150,000 shares of common stock to
a note holder for the extinguishment of $66,117 of debt. The shares were valued
at $0.50 per share and resulted in a loss on extinguishment of debt of $8,883.

         In February 2004, the Company issued 1,748,250 shares of common stock
to its Chief Executive Officer in connection with his acceptance of employment
with the Company. The shares were valued at $0.50 per share for total
consideration of $874,125.

         In February 2004, the Company issued 100,000 shares of common stock to
a consultant for consulting services. The shares were valued at $0.50 per share
for total consideration of $50,000.

         In March 2004, the Company issued an aggregate of 202,900 shares of
common stock to two of its executive officers as payment for an aggregate of
$76,480 of unpaid consulting fees. The shares were valued at $0.50 per share and
resulted in a loss on extinguishment of debt of $24,970. The loss was debited to
additional paid-in capital because the transactions were related-party
transactions.

         In March 2004, the Company issued 175,000 shares of common stock to a
consultant as payment for $22,294 of unpaid consulting fees. The shares were
valued at $0.50 per share and resulted in a loss on extinguishment of debt of
$65,206.

         In March 2004, the Company issued an aggregate of 150,000 shares of
common stock to consultants for consulting services. The shares were valued at
$0.50 per share for total consideration of $75,000.

         In March 2004, the Company issued an aggregate of 59,600 shares of
common stock and paid an aggregate of $29,500 to three of its executive officers
for the extinguishment of an aggregate of $55,460 of loans payable. The shares
were valued at $0.50 per share and resulted in a loss on extinguishment of debt
of $3,840. The loss was debited to additional paid-in capital because the
transactions were related-party transactions.

         In March 2004, the Company issued an aggregate of 30,700 shares of
common stock to note holders for the extinguishment of an aggregate of $9,886 of
debt. The shares were valued at $0.50 per share and resulted in a loss on
extinguishment of debt of $5,459.

         In August 2004, the Company issued 100,000 shares of common stock to a
consultant for consulting services. The shares were valued at $0.50 per share
for total consideration of $50,000.

         In June 2005, the Company issued 2,450,000 shares of common stock,
Class A warrants to acquire 600,000 shares, Class B warrants to acquire 600,000
shares, and Class C warrants to acquire 1,625,000 shares to consultants for
services pursuant to several consulting agreements. Each warrant gives the
holder the right to purchase one share of common stock. All Class A

                                      F-20
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 7. COMMON STOCK AND WARRANTS (CONTINUED)

NON CAPITAL-RAISING TRANSACTIONS (CONTINUED)

warrants have an exercise price of $.60 per share, are exercisable for a period
of 18 months commencing on the effective date of a registration statement
covering certain of the shares underlying the warrants, and expire on December
31, 2007. All Class B warrants have an exercise price of $.80 per share, are
exercisable for a period of three years commencing on the effective date of a
registration statement covering certain of the shares underlying the warrants,
and expire on December 31, 2008. All Class C warrants have an exercise price of
$.60 per share, are exercisable for a period of 180 days commencing on the
effective date of a registration statement covering certain of the shares
underlying the warrants, and expire on December 31, 2006. The Company granted
registration rights covering 3,537,500 of these shares. The shares, Class A
warrants, Class B warrants and Class C warrants were valued at $0.40 per share
for total consideration of $2,110,000.

CAPITAL-RAISING TRANSACTIONS

         Between February 2004 and August 2004, the Company issued 2,777,000
shares of common stock for aggregate gross proceeds of $1,388,500, or $.50 per
share. The shares were sold in units consisting of two shares of common stock,
one Class A warrant and one Class B warrant at a purchase price of $1.00 per
unit. Each warrant gives the holder the right to purchase one share of common
stock. All Class A warrants have an exercise price of $1.00 per share, are
exercisable for a period of 180 days commencing on the effective date of a
registration statement covering certain of the shares underlying the warrants,
and expire on November 30, 2006. All Class B warrants have an exercise price of
$2.00 per share, are exercisable for a period of 360 days commencing on the
effective date of a registration statement covering certain of the shares
underlying the warrants, and expire on November 30, 2006. The Company granted
registration rights covering fifty percent of all shares issued and fifty
percent of all shares underlying the Class A warrants and Class B warrants.

         Between August 2004 and September 2004, the Company issued 174,000
shares of common stock for aggregate gross proceeds of $87,000, or $.50 per
share. The shares were sold in units consisting of two shares of common stock,
one Class A warrant and one Class B warrant at a purchase price of $1.00 per
unit. Each warrant gives the holder the right to purchase one share of common
stock. All Class A warrants have an exercise price of $1.00 per share, are
exercisable for a period of 180 days commencing on the effective date of a
registration statement covering certain of the shares underlying the warrants,
and expire on November 30, 2006. All Class B warrants have an exercise price of
$2.00 per share, are exercisable for a period of 360 days commencing on the
effective date of a registration statement covering certain of the shares
underlying the warrants, and expire on November 30, 2006. The Company granted
registration rights covering fifty percent of all shares issued and fifty
percent of all shares underlying the Class A warrants and Class B warrants.

         Between September 2004 and April 2005, the Company issued 2,448,750
shares of common stock for aggregate gross proceeds of $979,500, or $.40 per
share. The Company issued 2,281,250 of these shares for $912,500 during prior to
December 31, 2004. Subsequent to December 31, 2004, the Company issued 36,625 of
these shares for $14,650 that was received prior to December 31, 2004, and
issued 130,875 of these shares for $52,350 that was received

                                      F-21
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 7. COMMON STOCK AND WARRANTS (CONTINUED)

CAPITAL-RAISING TRANSACTIONS (CONTINUED)

subsequent to December 31, 2004. The shares were sold in units consisting of
three shares of common stock, one Class A warrant and one Class B warrant at a
purchase price of $1.20 per unit. Each warrant gives the holder the right to
purchase one share of common stock. All Class A warrants have an exercise price
of $1.00 per share, are exercisable for a period of 180 days commencing on the
effective date of a registration statement covering certain of the shares
underlying the warrants, and expire on November 30, 2006. All Class B warrants
have an exercise price of $2.00 per share, are exercisable for a period of 360
days commencing on the effective date of a registration statement covering
certain of the shares underlying the warrants, and expire on November 30, 2006.
The Company granted registration rights covering fifty percent of all shares
issued and fifty percent of all shares underlying the Class A warrants and Class
B warrants.

         In March 2005, the Company issued 737,750 shares of common stock to
previous investors participating in the private placements completed in August
and September 2004. In these private placements, the Company had originally
agreed to use its reasonable best efforts to file a registration statement with
the SEC within two months of the date of termination of the private placements
to register 50% of the shares of the common stock that it issued and 50% of the
shares of common stock underlying the Class A warrants and Class B warrants that
it issued. The Company issued the additional shares to these previous investors
in consideration for the investors agreeing to an amendment to their securities
purchase agreements for the private placements pursuant to which: (i) the date
by which the Company agreed to use its reasonable best efforts to file a
registration statement with the SEC was extended to June 30, 2005, and (ii) the
Company was released from any liability for any possible breach of the
securities purchase agreements arising out of the Company's obligation to use
its reasonable best efforts to file a registration statement with the SEC. The
Company ascribed an aggregate value of $295,100 to the shares issued in March
2005, equivalent to $.40 per share. These shares were sold in units consisting
of two shares of common stock, one Class A warrant and one Class B warrant. Each
warrant gives the holder the right to purchase one share of common stock. All
Class A warrants have an exercise price of $1.00 per share, are exercisable for
a period of 180 days commencing on the effective date of a registration
statement covering certain of the shares underlying the warrants, and expire on
November 30, 2006. All Class B warrants have an exercise price of $2.00 per
share, are exercisable for a period of 360 days commencing on the effective date
of a registration statement covering certain of the shares underlying the
warrants, and expire on November 30, 2006. The Company granted registration
rights covering fifty percent of all shares issued and fifty percent of all
shares underlying the Class A warrants and Class B warrants.

         In April 2005, the Company issued 1,800,000 shares of common stock,
Class A warrants to acquire 1,800,000 shares of common stock and Class B
warrants to acquire 1,800,000 shares of common stock to Ronald F. Westman, a
related party, in exchange for 2,740,000 shares of Infinium Labs, Inc. then
valued at $720,000. The shares were sold in units consisting of three shares of
common stock, three Class A warrants and three Class B warrants at a purchase
price of $1.20 per unit. Each warrant gives the holder the right to purchase one
share of common stock. All Class A warrants have an exercise price of $.60 per
share, are exercisable for a period of 18 months commencing on the effective
date of a registration statement covering certain of the shares underlying the
warrants, and expire on December 31, 2007. All Class B warrants have an exercise
price of $.80 per share, are exercisable for a period of three years commencing
on the effective

                                      F-22
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 7. COMMON STOCK AND WARRANTS (CONTINUED)

CAPITAL-RAISING TRANSACTIONS (CONTINUED)

date of a registration statement covering certain of the shares underlying the
warrants, and expire on December 31, 2008. The Company granted registration
rights covering fifty percent of all shares issued and fifty percent of all
shares underlying the Class A warrants and Class B warrants. If the proceeds
from the sale of the Infinium shares were less than $720,000, the investor was
required to make up the difference in either additional Infinium stock or cash.
If the proceeds from the sale of the Infinium shares were greater than $720,000,
the Company was required to return the excess proceeds to the investor. The
Company completed the sale of the last of its shares of common stock of Infinium
Labs on September 7, 2005, resulting in aggregate gross proceeds of $320,506
from the sale of all 2,740,000 shares. The investor paid the remaining funds to
the Company in cash on September 16, 2005.

         Between April and May 2005, the Company issued 635,750 shares of common
stock for aggregate gross proceeds of $254,300 or $.40 per share. The shares
were sold in units consisting of three shares of common stock, one Class A
warrant and one Class B warrant at a purchase price of $1.20 per unit. Each
warrant gives the holder the right to purchase one share of common stock. All
Class A warrants have an exercise price of $.60 per share, are exercisable for a
period of 18 months commencing on the effective date of a registration statement
covering certain of the shares underlying the warrants, and expire on December
31, 2007. All Class B warrants have an exercise price of $.80 per share, are
exercisable for a period of three years commencing on the effective date of a
registration statement covering certain of the shares underlying the warrants,
and expire on December 31, 2008. The Company granted registration rights
covering fifty percent of all shares issued and fifty percent of all shares
underlying the Class A warrants and Class B warrants.

         Between May and June 2005, the Company issued 1,490,000 shares of
common stock for aggregate gross proceeds of $596,000 or $.40 per share. The
shares were sold in units consisting of three shares of common stock, three
Class A warrants and three Class B warrants at a purchase price of $1.20 per
unit. Each warrant gives the holder the right to purchase one share of common
stock. All Class A warrants have an exercise price of $.60 per share, are
exercisable for a period of 18 months commencing on the effective date of a
registration statement covering certain of the shares underlying the warrants,
and expire on December 31, 2007. All Class B warrants have an exercise price of
$.80 per share, are exercisable for a period of three years commencing on the
effective date of a registration statement covering certain of the shares
underlying the warrants, and expire on December 31, 2008. Park Financial Group,
Inc., a registered broker-dealer, served as the Company's placement agent for
this offering. The Company paid Park Financial Group a placement agent fee
consisting of $44,800 and 137,000 units that were identical to the units sold in
the offering. The Company granted registration rights covering fifty percent of
all shares issued to the investors and Park Financial Group and fifty percent of
all shares underlying the Class A warrants and Class B warrants issued to the
investors and Park Financial Group.

NOTE 8. STOCK OPTIONS

         Stock options exercisable into an aggregate of 8,045,000 and 7,015,000
shares of the Company's common stock were outstanding on December 31, 2005 and
2004, respectively.

                                      F-23
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 8. STOCK OPTIONS (CONTINUED)

         The Company estimates the fair value of its stock options on the date
of grant by using the Black-Scholes pricing model in accordance with the
provisions of Statement of Financial Accounting Standards No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure." Under the
Black-Scholes pricing model, the Company assumed a dividend yield of zero
percent, an expected volatility of 290%, a risk-free interest rate of 3.5
percent and a weighted-average remaining contractual life of 8.51 years for the
stock options outstanding at December 31, 2005.

         In September 2004, the Company issued options to acquire an aggregate
of 7,000,000 shares of common stock to its executive officers. The options had
an exercise price of $0.40 per share, vested in full on the date of issuance and
had a term of 10 years.

         In December 2004, the Company issued options to acquire an aggregate of
15,000 shares of common stock to six of its employees. The options have an
exercise price of $0.40 per share, vested in full on the date of issuance and
expire on have a term of three years.

         In May 2005, the Company cancelled the options to acquire an aggregate
of 7,000,000 shares of common stock previously issued to its executive officers
in September 2004. The cancellation was effective February 1, 2005.

         In May 2005, the Company issued an option to acquire 150,000 shares of
common stock to a new employee. The option has an exercise price of $.40 per
share, vested in full on the date of grant, and has a term of five years.

         In May 2005, the Company issued options to acquire an aggregate of
4,500,000 shares of common stock to three of its executive officers. The options
have an exercise price of $0.40 per share and vest as follows: 25% on the date
of grant and 25% per year commencing February 1, 2006. The options have a term
of 10 years.

         In June 2005, the Company issued an option to acquire up to 400,000
shares of common stock to a business partner. The option has an exercise price
of $0.50, vests upon the achievement of various performance criteria by December
31, 2005, and has a term of one year. None of the performance criteria had been
met by December 31, 2005. As a result, the option will not vest as to any of the
underlying shares.

         In June 2005, the Company issued options to acquire 700,000 shares of
common stock to two of its non-employee directors. The options have an exercise
price of $.40 per share and vest as follows: 100,000 shares on the date of grant
and 250,000 shares on the first anniversary of the date of grant if the director
remains a member of the board of directors continuously during the period
commencing on the date of grant and ending on the first anniversary of the date
of grant. The options have a term of five years. Each of these directors
discontinued their service as members of the board of directors prior to the
first anniversary of the date of grant. As a result, these options will not vest
as to an aggregate of 500,000 of the underlying shares.

         In August 2005, the Company issued options to acquire an aggregate of
2,000,000 shares of common stock to two new executive officers. The options have
an exercise price of $0.40 per share, vest in four equal annual installments
commencing February 1, 2006, and have a term of 10 years.

                                      F-24
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 8. STOCK OPTIONS (CONTINUED)

         In September 2005, the Company issued an option to acquire 250,000
shares of common stock to a new employee. The option has an exercise price of
$.40 per share and vests as follows: (i) 50,000 shares on the date of grant, and
(ii) the remaining 200,000 shares in four equal annual installments commencing
on June 20, 2006. The option has a term of five years.

         In December 2005, the Company issued options for an aggregate of 30,000
shares of common stock to seven of its employees. The options are exercisable at
$0.40 per share, vested in full on the date of grant and have a term of three
years.

         A summary of the stock options issued during the year ended December
31, 2005 is as follows:

                                                                   Weighted
                                                                   Average
                                                                   Exercise
                                                    Shares           Price
                                                 ------------    ------------
           Outstanding, December 1, 2005            7,015,000    $       0.40
              Granted                               8,030,000            0.41
              Cancelled                            (7,000,000)           0.40
                                                 ------------    ------------
           Outstanding, December 31, 2005           8,045,000    $       0.41
                                                 ============    ============
           Exercisable, December 31, 2005           1,570,000    $       0.40
                                                 ============    ============

                                                   Weighted
                                                   Average         Weighted
                                      Number      Remaining        Average
                     Range of      Outstanding   Contractual       Exercise
                 Exercise Prices   at 12/31/05      Life             Price
                 ---------------   -----------   ------------    ------------
                  $0.40 - $0.50      8,045,000           8.51    $       0.41
                                   ===========   ============    ============

NOTE 9. RELATED-PARTY TRANSACTIONS

         In February 2004, the Company issued 1,748,250 shares of common stock
to its Chief Executive Officer in connection with his acceptance of employment
with the Company. The shares were valued at $0.50 per share for total
consideration of $874,125.

         In March 2004, the Company issued an aggregate of 202,900 shares of
common stock to two of its executive officers as payment for an aggregate of
$76,480 of unpaid consulting fees. The shares were valued at $0.50 per share and
resulted in a loss on extinguishment of debt of $24,970. The loss was debited to
additional paid-in capital because the transaction was a related-party
transaction.

                                      F-25
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 9. RELATED-PARTY TRANSACTIONS (CONTINUED)

         In March 2004, the Company issued an aggregate of 59,600 shares of
common stock and paid an aggregate of $29,500 to three of its executive officers
for the extinguishment of an aggregate of $55,460 of loans payable. The shares
were valued at $0.50 per share and resulted in a loss on extinguishment of debt
of $3,840. The loss was debited to additional paid-in capital because of the
transaction was a related-party transaction.

         In June 2005, the Company entered into a lease for office space in
Sarasota, Florida. The lease is for approximately 4,000 square feet of space,
commenced on July 1, 2005, requires initial monthly payments of $8,186, and
expires on July 1, 2010. The office building is owned by a principal stockholder
of the Company who served as a member of the Company's board of directors from
June 29, 2005 to September 26, 2005.

NOTE 10. PROPOSED PUBLIC OFFERING

         On June 30, 2005, the Company filed a registration statement on Form
SB-2, File No. 333-126315, with the Securities and Exchange Commission ("SEC")
in connection with the proposed public offering of 10,258,135 shares of common
stock to be sold by certain selling security holders. As of December 31, 2005,
the registration statement had not been declared effective by the SEC. The
Company will not receive any proceeds from the offering.

NOTE 11. SUBSEQUENT EVENTS

         On January 27, 2006, the registration statement on Form SB-2, File No.
333-126315, was declared effective by the SEC.

         On January 30, 2006, the Company filed a registration statement on Form
S-8, File No. 333-131379, with the SEC covering the public sale of 2,925,000
shares of common stock to be sold by certain selling security holders.

         On February 2, 2006, the Company adopted the National Health Partners,
Inc. 2006 Stock Incentive Plan. Under the plan, 4,500,000 shares of common stock
may be granted to employees, officers and directors of, and consultants and
advisors to, the Company under awards that may be made in the form of stock
options, warrants, stock appreciation rights, restricted stock, restricted
units, unrestricted stock and such other equity-based or equity-related awards.
As of March 30, 2006, awards for an aggregate of 4,323,250 shares of common
stock had been issued under the plan. The plan terminates on February 1, 2016.

         On February 6, 2006, the Company filed a registration statement on Form
S-8, File No. 333-131589, with the SEC covering the public sale of the 4,500,000
shares of common stock available for issuance under the National Health
Partners, Inc. 2006 Stock Incentive Plan.

         On February 8, 2006, Roger H. Folts resigned as the Chief Financial
Officer and Secretary of the Company. Concurrently therewith, the Company
entered into a termination and mutual release with Mr. Folts pursuant to which
his employment agreement with the Company was terminated effective February 1,
2006 and the Company and Mr. Folts released each other from any obligations or
claims arising in connection with his employment with the Company. Also on that
date, Mr. Folts entered into a consulting agreement with the Company. Under the
terms of the

                                      F-26
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 11. SUBSEQUENT EVENTS (CONTINUED)

consulting agreement, Mr. Folts agreed to provide accounting and related
services to the Company on a full-time basis until June 30, 2006, and thereafter
on a part-time basis until February 1, 2009. In exchange for his services, the
Company agreed to continue paying Mr. Folts the salary he was receiving under
his employment agreement until March 31, 2006, and agreed to issue 300,000
shares of common stock to Mr. Folts, a maximum of 25,000 of which may be sold
per calendar month during the period commencing April 1, 2006 and ending
December 31, 2006.

         On February 15, 2006, Alex Soufflas was appointed the Chief Financial
Officer and Secretary of the Company effective February 1, 2006 and in
connection therewith, resigned as General Counsel of the Company.

         On February 15, 2006, David A. Taylor was appointed Senior Vice
President - National Sales of the Company effective February 1, 2006 and in
connection therewith, resigned as Vice President - Sales of the Company.

         On February 17, 2006, the Company entered into agreements with two of
its note holders pursuant to which the maturity date of the promissory notes
previously issued to the note holders on November 16, 2005 was extended to June
30, 2006.

         On March 4, 2006, the Company entered into agreements with one of its
note holders pursuant to which the maturity date of the promissory note
previously issued to the note holder on December 7, 2005 was extended to April
7, 2006.

         On March 24, 2006, the Company approved the issuance of 36,250 shares
of common stock to employees in partial payment of accrued salaries.

         On March 28, 2006, the Company issued restricted stock awards to David
M. Daniels, Alex Soufflas, Patricia S. Bathurst and David A. Taylor for 450,000,
300,000, 225,000 and 375,000 shares of common stock, respectively. The awards
vest in three equal annual installments commencing on the first anniversary of
the date of grant.

         On March 29, 2006, the Company entered into an employment agreement
with Alex Soufflas to continue serving as its Chief Financial Officer and
Executive Vice President effective February 1, 2006. The employment agreement is
for an initial term of three years and renews automatically for successive
one-year periods unless earlier terminated or prior notice of non-renewal is
provided by either party. Under the agreement, Mr. Soufflas is entitled to an
annual base salary of $210,000 with annual increases on January 1st of each year
of a minimum of 10% of the annual base salary for the immediately preceding
year, and is eligible for an annual bonus and incentive compensation awards in
an amount and form to be determined by the Company's board of directors.

         On March 29, 2006, the Company entered into an employment agreement
with David A. Taylor to continue serving as its Senior Vice President - National
Sales effective February 1, 2006. The employment agreement is for an initial
term of three years and renews automatically for successive one-year periods
unless earlier terminated or prior notice of non-renewal is provided by either
party. Under the agreement, Mr. Taylor is entitled to an annual base salary of
$162,000 with annual increases on January 1st of each year of a minimum of 10%
of the annual base salary for

                                      F-27
<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                           December 31, 2005 and 2004

NOTE 11. SUBSEQUENT EVENTS (CONTINUED)

the immediately preceding year, and is eligible for an annual bonus and
incentive compensation awards in an amount and form to be determined by the
Company's board of directors.

         As of March 30, 2006, the Company had received $509,375 in connection
with the exercise of warrants held by certain of the Company's warrant holders.

                                      F-28

<PAGE>

                                 EXHIBIT INDEX
<TABLE>
<CAPTION>


Exhibit                             Exhibit Description
-------                             -------------------

<C>       <C>
10.44     Amendment  No. 1 to  Promissory  Note,  dated  March 4, 2006,  by and between the Company and
          Ronda Westman

10.45     Employment Agreement, dated March 29, 2006, by and between the Company and Alex Soufflas

10.46     Employment Agreement, dated March 29, 2006, by and between the Company and David A. Taylor

10.47     Restricted Stock Award Agreement,  dated March 28, 2006, by and between the Company and David
          M. Daniels

10.48     Restricted Stock Award  Agreement,  dated March 28, 2006, by and between the Company and Alex
          Soufflas

10.49     Restricted  Stock  Award  Agreement,  dated  March 28,  2006,  by and between the Company and
          Patricia S. Bathurst

10.50     Restricted Stock Award Agreement,  dated March 28, 2006, by and between the Company and David
          A. Taylor

14.1      Code of Business Conduct and Ethics

21.1      Subsidiaries of the Company

23.1      Consent of H J & Associates, LLC

31.1      Certification  of Chief  Executive  Officer  required by Rule 13a-14(a)  under the Securities
          Exchange Act of 1934, as amended

31.2      Certification  of Chief  Financial  Officer  required by Rule 13a-14(a)  under the Securities
          Exchange Act of 1934, as amended

32.1      Certification  of Chief  Executive  Officer  and Chief  Financial  Officer  required  by Rule
          13a-14(b) under the Securities Exchange Act of 1934, as amended
</TABLE>