<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
     OF 1934

                  For the quarterly period ended: JUNE 30, 2006

                                       OR

[_] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT OF 1934

          For the transition period from ___________ to ______________

                          Commission File No. 000-51731

                         NATIONAL HEALTH PARTNERS, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                 INDIANA                             04-3786176
      (State or Other Jurisdiction of              (IRS Employer
       Incorporation or Organization)           Identification No.)

                               120 GIBRALTAR ROAD
                                    SUITE 107
                                HORSHAM, PA 19044
                    (Address of Principal Executive Offices)

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

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

Yes [X] No [_]
                     APPLICABLE ONLY TO ISSUERS INVOLVED IN
                        BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

     Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.

Yes [_] No [_]

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

Yes [_] No [X]
                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: There were 25,586,981 issued
and outstanding shares of the issuer's common stock, $.001 par value per share,
on August 11, 2006.

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

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
                                     PART I
                              FINANCIAL INFORMATION

Item 1.   Financial Statements ..........................................     1
          Consolidated Balance Sheet at June 30, 2006 (Unaudited) .......     1
          Consolidated Statements of Operations for the Three and Six
             Months Ended June 30, 2006 and 2005 (Unaudited).............     2
          Consolidated Statements of Cash Flows for the Six Months
             Ended June 30, 2006 and 2005 (Unaudited)....................     3
          Notes to Consolidated Financial Statements (Unaudited).........     5

Item 2.   Management's Discussion and Analysis of Financial Condition
             and Results of Operations ..................................    15

Item 3.   Controls and Procedures .......................................    28

                                     PART II
                                OTHER INFORMATION

Item 2.   Recent Sales of Unregistered Securities and Use of Proceeds ...    28

Item 5.   Other Information .............................................    29

Item 6.   Exhibits ......................................................    29

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                 NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
                     Consolidated Balance Sheet (Unaudited)

                                                                     June 30,
                                                                       2006
                                                                   ------------
ASSETS
Current assets:
   Cash and cash equivalents                                       $  1,008,068
   Prepaid expense                                                      545,329
   Deposits                                                              35,478
   Other current assets                                                  10,000
                                                                   ------------
      Total current assets                                            1,598,875
                                                                   ------------
Property and equipment, net                                             141,617
Prepaid expense                                                       1,150,031
                                                                   ------------
      Total assets                                                 $  2,890,523
                                                                   ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                                   $     89,201
Accrued expenses                                                         60,000
Deferred revenue                                                        101,850
                                                                   ------------
      Total current liabilities                                         251,051
                                                                   ------------
Long-term liabilities:
   Accrued expenses                                                      10,010
                                                                   ------------
      Total liabilities                                                 261,061
                                                                   ------------
Commitments and contingencies
Stockholders' equity:
   Common stock, $0.001 par value, 100,000,000 shares
      authorized, 23,671,981 shares issued and outstanding               23,672
   Additional paid-in capital                                        12,377,027
   Accumulated deficit                                              (10,421,757)
   Stock subscriptions                                                1,140,000
   Deferred compensation                                               (489,480)
                                                                   ------------
      Total stockholders' equity                                      2,629,462
                                                                   ------------
      Total liabilities and stockholders' equity                   $  2,890,523
                                                                   ============

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

<PAGE>

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

<TABLE>
<CAPTION>
                                      For the Three Months Ended    For the Six Months Ended
                                               June 30,                     June 30,
                                      --------------------------   -------------------------
                                          2006          2005           2006          2005
                                      -----------   ------------   -----------   -----------
<S>                                   <C>           <C>            <C>           <C>
Net revenue                           $   317,024   $    16,997    $   641,428   $    35,376
Direct costs                              252,772        51,756        401,859        66,581
                                      -----------   -----------    -----------   -----------
Gross profit                               64,252       (34,759)       239,569       (31,205)
                                      -----------   -----------    -----------   -----------
Operating expenses:
   Selling and marketing                  841,357        48,515        943,694       125,358
   General and administrative             869,117       848,960      1,895,190     1,278,188
                                      -----------   -----------    -----------   -----------
Total operating expenses                1,710,474       897,475      2,838,884     1,403,546
                                      -----------   -----------    -----------   -----------
Loss from operations                   (1,646,222)     (932,234)    (2,599,315)   (1,434,751)
                                      -----------   -----------    -----------   -----------
Other income (expense):
   Interest income                         21,936            --         55,018            --
   Interest expense                        (5,699)         (785)       (12,130)       (1,723)
   Gain on extinguishment of debt          35,932            --         35,932            --
   Common stock issued for releases            --            --             --      (295,100)
   Other income (expense)                      --           (90)         1,972          (964)
                                      -----------   -----------    -----------   -----------
Total other income (expense)               52,169          (875)        80,792      (297,787)
                                      -----------   -----------    -----------   -----------
Net loss                              $(1,594,053)  $  (933,109)   $(2,518,523)  $(1,732,538)
                                      ===========   ===========    ===========   ===========
Loss per share -- basic and diluted   $     (0.07)  $     (0.07)   $     (0.12)  $     (0.15)
                                      ===========   ===========    ===========   ===========
Weighted average number of shares
   outstanding -- basic and diluted    22,901,201    13,146,837     21,131,779    11,696,858
                                      ===========   ===========    ===========   ===========
</TABLE>

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


                                        2

<PAGE>

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

<TABLE>
<CAPTION>
                                                             For the Six Months Ended
                                                                     June 30,
                                                            -------------------------
                                                                2006          2005
                                                            -----------   -----------
<S>                                                         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                 $(2,518,523)  $(1,732,538)
   Adjustments to reconcile net loss to net cash used by
      operating activities:
      Common stock issued for services                          156,138       194,800
      Warrants issued for services                               48,863       270,970
      Options issued for services                               584,981            --
      Common stock issued for releases                               --       295,100
      Depreciation                                               29,338        24,725
   Changes in operating assets and liabilities:
      Increase in deposits                                      (16,478)           --
      Increase in other current assets                           (5,958)      (20,039)
      Increase (decrease) in accounts payable and accrued
         expenses                                                30,641       (29,979)
      Decrease in accounts payable -- related party             (16,373)           --
      Increase (decrease) in deferred revenue                    33,209        (3,621)
      Decrease in notes payable                                 (23,742)           --
      Increase in deferred compensation                          20,042            --
                                                            -----------   -----------
         Net cash used by operating activities               (1,677,862)   (1,000,582)
                                                            -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
      Proceeds from sale of marketable securities                    --       223,135
      Increase in notes receivable                                   --       (25,000)
      Decrease (increase) in certificates of deposit             35,717       (35,000)
      Increase in property and equipment                        (43,692)      (23,359)
                                                            -----------   -----------
         Net cash provided (used) by investing activities        (7,975)      139,776
                                                            -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
      Proceeds from sale of common stock                        127,160       888,001
      Proceeds from stock subscriptions                       1,140,000        14,650
      Proceeds from exercise of warrants                      1,484,938            --
      Payments on notes payable                                (168,000)      (23,278)
                                                            -----------   -----------
         Net cash provided by financing activities            2,584,098       879,373
                                                            -----------   -----------
Net increase in cash                                            898,261        18,567
Cash at beginning of year                                       109,807       421,915
                                                            -----------   -----------
Cash at end of quarter                                      $ 1,008,068   $   440,482
                                                            ===========   ===========
</TABLE>

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


                                        3

<PAGE>

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

                                                 For the Six Months Ended
                                                         June 30,
                                                 ------------------------
                                                     2006         2005
                                                  ----------   ----------
SCHEDULE OF NON-CASH FINANCING ACTIVITIES

   Common stock issued for services               $  156,138   $  194,800
   Warrants issued for services                   $   48,863   $  270,970
   Stock options issued for services              $  584,981   $       --
   Common stock issued for releases               $       --   $  295,100

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


                                        4

<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
             Notes to Consolidated Financial Statements (Unaudited)
                                  June 30, 2006

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.

NOTE 2. BASIS OF PRESENTATION

          The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America and in conformity with the instructions to Form 10-QSB
and Article 10 of Regulation S-X and the related rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States of America for complete financial statements. In the
opinion of management, the disclosures included in these financial statements
are adequate to make the information presented not misleading.

          The unaudited consolidated financial statements included in this
document have been prepared on the same basis as the annual consolidated
financial statements and in management's opinion, reflect all adjustments,
including normal recurring adjustments, necessary to present fairly the
Company's financial position, results of operations and cash flows for the
interim periods presented. The unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and the notes thereto for the year ended December 31, 2005 included in the
Company's Annual Report on Form 10-KSB. The results of operations for the three
and six months ended June 30, 2006, respectively, are not necessarily indicative
of the results that the Company will have for any subsequent quarter or full
fiscal year.

          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. 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. Certain amounts in the financial statements for
2005 have been reclassified to conform to the 2006 presentation. These
reclassifications did not result in any change to the previously reported total
assets, net loss or stockholders' equity.

          Except as described in Note 3 below, as of June 30, 2006, the
Company's significant accounting policies and estimates, which are detailed in
the Company's Annual Report on Form 10-KSB for the year ended December 31, 2005,
have not changed materially.


                                        5

<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
             Notes to Consolidated Financial Statements (Unaudited)
                                  June 30, 2006

NOTE 3. STOCK COMPENSATION EXPENSE

          Effective January 1, 2006, the Company adopted the fair value
recognition provisions of Financial Statement of Financial Accounting Standards
No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"), using the modified
prospective transition method. SFAS 123R replaced Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123") and superseded APB Opinion No. 25, "Accounting for Stock Issued to
Employees" ("APB 25"). Under the modified prospective transition method,
compensation cost recognized for the three-month period ended March 31, 2006
includes: (a) compensation cost for all share-based payments granted, but not
yet vested as of January 1, 2006, based on the grant-date fair value estimated
in accordance with the original provisions of SFAS 123, and (b) compensation
cost for all share-based payments granted subsequent to January 1, 2006, based
on the grant-date fair value estimated in accordance with the provisions of SFAS
123R. Such amounts have been reduced by the Company's estimate of forfeitures of
all unvested awards.

          Prior to January 1, 2006, the Company accounted for its stock options
under the recognition and measurement provisions of APB 25 for all stock options
granted to employees. Under APB 25, when the exercise price of stock-based
compensation granted to employees equals the market price of the common stock on
the date of grant, no compensation expense is recorded. When the exercise price
of stock-based compensation granted to employees is less than the market price
of the common stock on the date of grant, compensation expense is recognized
over the vesting period. For stock-based compensation granted to non-employees,
the Company recognizes compensation expense in accordance with the requirements
of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock Based Compensation" (Statement 123). Statement 123 requires that companies
recognize compensation expense based on the estimated fair value of options
granted to non-employees over their vesting period, which is generally the
period during which services are rendered by such non-employees.

          As a result of adopting SFAS 123R on January 1, 2006, the Company
recognized $142,492 and $584,981 of stock option expense that it would not have
otherwise recognized during the three and six months ended June 30, 2006,
respectively, under APB 25. As a result, the Company's net loss for the three
and six months ended June 30, 2006 was $(1,594,053) and $(2,518,523),
respectively, and its basic and diluted net loss per share was $(0.07) and
$(0.12), respectively. Had the Company continued to account for stock options
under APB 25, its net loss for the three and six months ended June 30, 2006
would have been $(1,451,561) and $(1,933,542) and its basic and diluted net loss
per share would have been $(0.06) and $(0.09), respectively.

          The following table illustrates the effect on net loss and net loss
per share for the three and six months ended June 30, 2005 had the Company
adopted SFAS 123R on January 1, 2005:


                                        6

<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
             Notes to Consolidated Financial Statements (Unaudited)
                                  June 30, 2006

NOTE 3. STOCK COMPENSATION EXPENSE (CONTINUED)

                                             For the Three    For the Six
                                              Months Ended    Months Ended
                                             June 30, 2005   June 30, 2005
                                             -------------   -------------
Net loss as reported                          $  (933,109)    $(1,732,538)
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                    (126,545)       (487,335)
                                              -----------     -----------
Pro forma net income (loss)                   $(1,059,654)    $(2,219,873)
                                              ===========     ===========
Earnings (loss) per share:
   Basic & diluted - as reported              $     (0.07)    $     (0.15)
   Basic & diluted - pro forma                $     (0.08)    $     (0.19)

NOTE 4. 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 three- and
six-month periods, and is calculated by dividing the reported net loss for the
applicable three- and six-month periods by the weighted average number of shares
of common stock outstanding during the applicable three- and six month periods.
The Company calculates diluted loss per share by dividing the reported net loss
for the applicable three- and six-month periods by the weighted average number
of shares of common stock outstanding during the applicable three- and six-month
periods as adjusted to give effect to the exercise of all potentially dilutive
options and warrants outstanding at the end of the applicable three- and
six-month periods. An aggregate of 23,193,677 and 21,401,004 shares of common
stock underlying options and warrants that were outstanding on June 30, 2006 and
2005, 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 three- and six-month periods.


                                        7

<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
             Notes to Consolidated Financial Statements (Unaudited)
                                  June 30, 2006

NOTE 4. LOSS PER SHARE (CONTINUED)

<TABLE>
<CAPTION>
                                           For the Three Months        For the Six Months
                                              Ended June 30,             Ended June 30,
                                        -------------------------   -------------------------
                                           2006           2005          2006         2005
                                        -----------   -----------   -----------   -----------
<S>                                     <C>           <C>           <C>           <C>
Net loss as reported                    $(1,594,053)  $  (933,109)  $(2,518,523)  $(1,732,538)
Weighted average number of shares
   outstanding - basic and diluted       22,901,201    13,146,837    21,131,779    11,696,858
                                        -----------   -----------   -----------   -----------
Earnings (loss) per share - basis and
   diluted                              $     (0.07)  $     (0.07)  $     (0.12)  $     (0.15)
                                        ===========   ===========   ===========   ===========
</TABLE>

NOTE 5. PROPERTY AND EQUIPMENT

          Property and equipment consisted of the following at June 30, 2006 and
2005, respectively:

                                           June 30,
                                    --------------------
                                      2006        2005
                                    ---------   --------
Computers                           $  56,813   $ 32,524
Software                                6,109         --
Furniture                              11,322     11,322
Telephone                              78,807     52,262
Website                                89,207     89,207
   Less: accumulated depreciation    (100,641)   (44,227)
                                    ---------   --------
Property and equipment, net         $ 141,617   $141,088
                                    =========   ========

Depreciation expense for the three months ended June 30, 2006 and 2005 was
$14,910 and $8,076, respectively, and for the six months ended June 30, 2006 and
2005 was $29,338 and $14,428, respectively.

NOTE 6. 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 a note payable bearing interest at 5% that was paid off in 2006, 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 June 30, 2006 and 2005 was $70,010
and $75,955, respectively.


                                        8

<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
             Notes to Consolidated Financial Statements (Unaudited)
                                  June 30, 2006

NOTE 7. COMMITMENTS AND CONTINGENCIES

          The Company's material commitments and contingencies consist of an
operating lease for its office space in Pennsylvania and employment agreements
with its executive officers.

OPERATING LEASES

          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 security
deposit of $19,000. The starting monthly payment 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     $ 79,025
                                  2007       65,854
                                           --------
                                           $144,879
                                           ========

EMPLOYMENT AGREEMENTS

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

                             Fiscal Year     Amount
                             -----------   ----------
                                 2006      $  449,175
                                 2007         848,430
                                 2008         933,273
                                 2009         655,252
                                 2010          48,718
                                           ----------
                                           $2,934,848
                                           ==========

NOTE 8. 2006 STOCK INCENTIVE PLAN

          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 June 30, 2006, awards for an aggregate of 4,346,575 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.


                                        9

<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
             Notes to Consolidated Financial Statements (Unaudited)
                                  June 30, 2006

NOTE 9. COMMON STOCK AND WARRANTS

         The Company's authorized capital consisted of 100,000,000 shares of
common stock, $0.001 par value per share, at June 30, 2006 and 2005,
respectively, of which 23,671,981 and 17,054,200 shares of common stock were
outstanding at June 30, 2006 and 2005, respectively. Warrants exercisable into
an aggregate of 15,548,677 and 15,636,004 shares of the Company's common stock
were outstanding on June 30, 2006 and 2005, respectively.

         The Company estimates the fair value of warrants issued for services on
the date of grant by using the Black-Scholes pricing model. Under this model,
the Company used the following weighted-average assumptions to determine the
fair value of the warrants issued for services during the six months ended June
30, 2006: a dividend yield of zero percent, an expected volatility of 278%, a
risk-free interest rate of 3.5% and a remaining contractual term of 4.05 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 agreements since the services
are being rendered on an ongoing basis during the term of the agreements.

NON CAPITAL-RAISING TRANSACTIONS

          On February 8, 2006, the Company issued 300,000 shares of common stock
to Roger H. Folts, the Company's former Chief Financial Officer, in partial
consideration for certain accounting and related services to be provided to the
Company under a consulting agreement. The shares were valued at $0.40 per share
for total consideration of $120,000. The Company recognized $10,028 and $15,647
of expense during the three and six months ended June 30, 2006, respectively, in
connection with the issuance of these shares.

          In February and March 2006, the Company issued 2,507,000 shares of
common stock and warrants to acquire 1,530,000 shares to service providers and
consultants for services pursuant to several agreements. Each warrant gives the
holder the right to purchase one share of common stock. All warrants have an
exercise price of $.60 per share, are exercisable for a period of 24 months from
the date of warrant, and expire on March 31, 2008. The shares and warrants were
valued at $0.40 per share for total consideration of $1,584,200. The Company
recognized $111,401 and $154,987 of expense during the three and six months
ended June 30, 2006, respectively, in connection with the issuance of these
shares and warrants.

          On March 24, 2006, the Company issued 36,250 shares of common stock to
employees in partial payment of accrued salaries. The shares were valued at
$0.40 per share for total consideration of $14,500, all of which was recognized
as expense during the six months ended June 30, 2006.


                                       10

<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
             Notes to Consolidated Financial Statements (Unaudited)
                                  June 30, 2006

NOTE 9. COMMON STOCK AND WARRANTS (CONTINUED)

          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. The shares were valued at $0.40 per share for total
consideration of $540,000. The Company recognized $49,042 and $50,520 of expense
during the three and six months ended June 30, 2006, respectively, in connection
with the issuance of these shares.

          On April 1, 2006, the Company issued 10,000 shares of common stock to
Centerpointe Property, LLC in connection with the termination of its lease for
the office space in Sarasota, Florida in full payment of all rent and other
expenses that were due and payable, and the Company and Centerpointe 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 lease. The Company did not incur any material
early termination penalties in connection with the termination of the Lease. The
shares were valued at $0.50 per share for total consideration of $5,000, all of
which was recognized as expense during the three months ended June 30, 2006. The
Company recognized a gain on the extinguishment of debt in the amount of $35,932
during the three months ended June 30, 2006 in connection with the issuance of
these shares.

          On April 1, 2006, the Company issued 350,000 shares of common stock to
a consultant pursuant to a consulting agreement. The shares were valued at $0.50
per share for total consideration of $175,000. The Company recognized $14,370 of
expense during the three months ended June 30, 2006.

          In April, May and June 2006, the Company issued 23,325 shares of
common stock to a consultant pursuant to a consulting agreement. The shares were
issued at the closing price of the Company's common stock on the day immediately
preceding the date of issuance for total consideration of $30,000, all of which
was recognized as expense during the three months ended June 30, 2006.

CAPITAL-RAISING TRANSACTIONS

          In May 2006, the Company completed a private offering of 211,934
shares of common stock. The shares were sold for $0.60 per share for aggregate
gross proceeds of $127,160. 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 $1.20 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 $0.60 per share, are exercisable for a period of 18 months commencing on the
date of issuance, and expire at the end of the exercise period. All Class B
warrants have an exercise price of $0.80 per share, are exercisable for a period
of 36 months commencing on the date of issuance, and expire at the end of the
exercise period.

          During the six months ended June 30, 2006, the Company received
aggregate gross proceeds of $1,484,938 from the exercise of warrants held by
certain of the Company's security holders. The Company issued a total of
1,829,272 shares in connection therewith at exercise prices ranging from $0.60
to $2.00.


                                       11

<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
             Notes to Consolidated Financial Statements (Unaudited)
                                  June 30, 2006

NOTE 10. STOCK OPTIONS

         Stock options exercisable into an aggregate of 7,645,000 shares of the
Company's common stock were outstanding on June 30, 2006, of which 3,745,000
were vested. The weighted average exercise price of the stock options
outstanding on June 30, 2006 was $0.40. 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 used the following
weighted-average assumptions to determine the fair value of the stock options
issued: a dividend yield of zero percent, an expected volatility of 282%, a
risk-free interest rate of 3.5 percent and a remaining contractual life of 8.51
years. No stock options were issued or exercised during the six months ended
June 30, 2006.

NOTE 11. RELATED-PARTY TRANSACTIONS

          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 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 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.


                                       12

<PAGE>

                  NATIONAL HEALTH PARTNERS, INC. AND SUBSIDIARY
             Notes to Consolidated Financial Statements (Unaudited)
                                  June 30, 2006

          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 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 April 1, 2006, the Company entered into a Termination and Mutual
Release with Centerpointe Property, LLC. Under the agreement, the lease between
the Company and Centerpointe with respect to the office space the Company was
leasing in Sarasota, Florida was terminated effective April 1, 2006, the Company
issued 10,000 shares of its common stock to Centerpointe in full payment of all
rent and other expenses that were due and payable under the lease, and the
Company and Centerpointe 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 lease. The
Company did not incur any material early termination penalties in connection
with the termination of the Lease. Ronald F. Westman and his wife own all of the
outstanding membership interests in Centerpointe. Mr. Westman beneficially owns
approximately 24% of the Company's common stock and served as a member of the
Company's board of directors from June 29, 2005 to September 26, 2005.

NOTE 12. INITIAL PUBLIC OFFERING

          On January 27, 2006, the Company's registration statement on Form
SB-2, File No. 333-126315, was declared effective by the Securities and Exchange
Commission in connection with the initial public offering of 10,258,135 shares
of common stock to be sold by certain selling security holders. The Company did
not receive any proceeds from the offering.

NOTE 13. SUBSEQUENT EVENTS

          On August 9, 2006, the Company completed a private offering of
1,705,000 shares of common stock for aggregate gross proceeds of $1,364,000. The
shares were sold in units consisting of one share of common stock, one Class A
warrant and one Class B warrant at a purchase price of $0.80 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 $0.80 per share, are exercisable
until August 31, 2006, and expire at the end of the exercise period. All Class B
warrants have an exercise price of $1.00 per share, are exercisable until
November 30, 2006, and expire at the end of the exercise period. The Company
granted registration rights covering all shares of common stock issued by the
Company upon the exercise of the warrants.

          Between July 1, 2006 and August 11, 2006, the Company received
aggregate gross proceeds of $261,125 from the exercise of warrants held by
certain of the Company's security holders.


                                       13

<PAGE>

           CAUTIONARY STATEMENT 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 in the jurisdictions in which
          we are doing business;

and statements of assumption underlying any of the foregoing, as well as those
set forth under the captions "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our Annual Report
on Form 10-KSB filed with the Securities and Exchange Commission ("SEC").

          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.


                                       14

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

          Unless otherwise indicated or the context otherwise requires, all
references to the "Company," "we," "us" or "our" and similar terms refer to
National Health Partners, Inc. (d/b/a "International Health Partners, Inc.") and
its subsidiaries.

          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 captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission. The following should be read in conjunction with our
consolidated financial statements included above in Item 1 of Part I of this
report.

OVERVIEW

          We are a national healthcare savings organization that was formed 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 and
underinsured and to those who 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. We sell our programs directly and indirectly
through resellers that privately label or co-brand our programs and employers
that offer our programs to their employees.

          We are actively engaged in marketing our CARExpress membership
programs to the public and our primary strategic objectives are to generate
increased sales of our CARExpress membership programs and 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 continue 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 are
pursuing opportunities in the healthcare market that insurance plans have not
addressed.


                                       15

<PAGE>

RECENT DEVELOPMENTS

          We have experienced a substantial increase in our membership base and
revenues over the past 12 months. As of June 30, 2006, we had approximately
6,300 CARExpress members, compared to approximately 400 members at June 30,
2005. We achieved revenues of $317,024 for the three-month period ended June 30,
2006, compared to revenues of $16,997 for the three-month period ended June 30,
2005. 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.

          Irwin Naturals Co-Marketing Program. We recently entered into a
co-marketing agreement with Irwin Naturals, a leading formulator and supplier of
high-quality natural health, herbal and nutritional supplement products for
consumers that are sold in over 50 countries worldwide through specialty natural
health, nutrition and retail stores like GNC and Vitamin Shoppe. Irwin Naturals
will co-market our CARExpress programs to its customer base through a
combination of direct marketing and up-sell marketing. This is the first time we
have attempted to co-market CARExpress to the nutritional supplement market.

          Trident Marketing International. We have recently begun to experience
accelerating membership growth through our relationship with Trident Marketing
International, Inc. Trident is currently devoting additional resources and sales
personnel towards sales of CARExpress membership programs. Trident is a leading
provider of outsourced communication solutions, specializing in customer
acquisition, customer care and retention, and interactive voice response
services.

          Hispanic Advertising Campaign Featuring Lucia Mendez. We initiated a
national advertising campaign targeting the Hispanic marketplace in June 2006.
Lucia Mendez, an international superstar entertainer, stars in television and
radio commercials as our spokeswoman for the campaign. She will also be starring
in print ads and other directed marketing campaigns focused on the Hispanic
community. We have aired the television commercials on Univision, which is the
largest Hispanic television network in the United States, and will be airing the
radio commercials on radio stations focused on the Hispanic community.

          CARExpress Visa/MasterCard Program. We began offering our CARExpress
Visa/MasterCard program to the public during June 2006. Many of the people who
are uninsured or underinsured do not have a debit or credit card. As a result,
this program is ideally suited for them. CARExpress members participating in the
program place money on their card and can use the card to pay their CARExpress
monthly membership fees. They can also use the card for all healthcare purchases
they make through CARExpress.

          CARExpress "Wrap-Around" Program. We intend to sell CARExpress
membership programs in combination with low-cost insurance products such as
Mini-Med programs and catastrophic health insurance as part of our unique
"wrap-around" program. We intend to market and sell our "wrap-around" programs
directly through National Health Brokerage Group, Inc., our wholly-owned
subsidiary, and indirectly through insurance companies and independent third
parties. The combination of our CARExpress programs with these low-cost
insurance products provides an innovative and affordable solution to individuals
who previously


                                       16

<PAGE>

could not afford a comprehensive medical plan. These products will be bundled,
priced and marketed utilizing relationship marketing strategies or direct
marketing to target the profiled needs of the clients' particular member base.

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. 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. 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.

          A key metric for evaluating our success is 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.
Member retention rates can be influenced by a variety of factors, including the
type of CARExpress membership programs being sold, the marketing campaign being
used to sell our CARExpress membership programs, the financial condition and
loyalty of our members, the distribution channel selling our CARExpress
membership programs, and the type and amount of compensation being paid to our
marketing and distribution partners and other parties to sell our CARExpress
membership programs.

          We have obtained valuable information regarding member demographics
through the test marketing campaigns that we have conducted over the last 12
months and are focusing our marketing and advertising campaigns on members and
member groups that we have identified as being most suitable for our CARExpress
membership programs. As a result, we expect our retention rates to improve
substantially over the next 12 months as we pursue these opportunities through
our various marketing and distribution channels.

OUTLOOK

          Our strategy is to continue to expand our position as a provider of
unique healthcare membership service programs. We implemented several strategic
growth initiatives during the first half of 2006 through which we achieved
new contracts and strategic partnerships with a number of marketing and
distribution companies. We have also initiated several measures in anticipation
of our future growth, including hiring additional customer service staff and
transitioning our current customer service staff from one shift to two shifts to
ensure adequate coverage for our members. We expect to generate a substantial
increase in revenues and


                                       17

<PAGE>

members primarily through our co-marketing agreement with Irwin Naturals, our
relationship with Trident Marketing, our Hispanic advertising campaign, our
CARExpress Visa/MasterCard program and our CARExpress "wrap-around" program, as
well as new strategic collaborations and joint ventures that we are in the
process of negotiating. We intend to finance each of these projects through cash
on hand, internally generated cash flows from operating activities and proceeds
from the exercise of outstanding warrants. We will use any additional
investments that we receive to accelerate the expansion of each of our
advertising campaigns and programs and more quickly realize recurring monthly
membership fees.

          As a result of our co-marketing agreement with Irwin Naturals, our
expanding relationship with Trident Marketing, our Hispanic television and radio
advertising campaign featuring international superstar Lucia Mendez, our
CARExpress Visa/MasterCard program and sales of our "wrap-around" program, we
expect the number of CARExpress members generated each month to increase
substantially for the foreseeable future. We also expect to generate additional
members over the next 12 months through new strategic collaborations and joint
ventures that we are in the process of negotiating. 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. 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 as the recurring membership
fees from our increasing membership base overtake the costs associated with
obtaining the new members we are generating.

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


                                       18

<PAGE>

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 fair value
recognition provisions of Financial Statement of Financial Accounting Standards
No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"). We adopted SFAS
123R on January 1, 2006 using the modified prospective transition method. Under
this method, compensation cost recognized for the three- and six-month periods
ended June 30, 2006 includes: (a) compensation cost for all share-based payments
granted, but not yet vested as of January 1, 2006, based on the grant-date fair
value estimated in accordance with the original provisions of SFAS 123, and (b)
compensation cost for all share-based payments granted subsequent to January 1,
2006, based on the grant-date fair value estimated in accordance with the
provisions of SFAS 123R. Such amounts have been reduced by the Company's
estimate of forfeitures of all unvested awards. 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."

          Prior to January 1, 2006, we accounted for our employee stock-based
compensation under the recognition and measurement provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"). Under APB 25, when the exercise price of stock-based compensation
granted to employees equals the market price of the common stock on the date of
grant, no compensation expense is recorded. When the exercise price of
stock-based compensation granted to employees is less than the market price of
the common stock on the date of grant, compensation expense is recognized over
the vesting period. Since all of our currently issued employee stock-based
compensation had been issued prior to January 1, 2006 at an exercise price equal
to or greater than the market price of our common stock on the date of grant, we
did not previously recognize any expense as a result of the issuances.

          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 stock-based compensation
grants to non-employees based on the fair value of the stock-based compensation
on the date of grant.

          We use the Black-Scholes pricing model to determine the fair value of
the stock-based compensation 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


                                       19

<PAGE>

common stock will react on the open market in the future since our common stock
has only been trading on the OTC Bulletin Board since 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.

          For a more complete discussion of our accounting policies and
procedures, see our Notes to Consolidated Financial Statements beginning on page
5 of this report.

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. We adopted SFAS No. 123R on January 1, 2006 using the modified prospective
method. The adoption of SFAS 123R is expected to continue to have an adverse
impact on our 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. We apply the principles
of SAB 107 in conjunction with 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


                                       20

<PAGE>

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 adoption of SFAS 154 did not have a
material impact on our consolidated financial statements.

COMPARISON OF THE THREE-MONTH PERIODS ENDED JUNE 30, 2006 AND JUNE 30, 2005

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 $300,027 to $317,024 for the
three-month period ended June 30, 2006 from $16,997 for the corresponding period
in 2005. The increase of $300,027 resulted from increased sales of our
CARExpress membership programs to new members. Approximately 95% of the revenues
that we generated during the three-month period ended June 30, 2006 was derived
from sales of our CARExpress membership programs to first-time members, compared
to approximately 20% during the corresponding period in 2005. The remainder of
the revenues that we generated during these periods was derived from existing
members. We expect revenues to increase substantially over the next 12 months as
Trident continues to devote additional resources to sales of our programs, as
Irwin Naturals begins up-selling our programs to its customers, as we continue
to engage in our Hispanic advertising campaign and our CARExpress
Visa/MasterCard program, and as we implement our CARExpress "wrap-around"
program and enter into new strategic collaborations and joint ventures that we
are currently in the process of negotiating.

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 $201,016 to $252,772 for
the three-month period ended June 30, 2006, from $51,756 for the corresponding
period in 2005. The increase of $201,016 was due primarily to an increase of
$169,559 for sales commissions and $31,457 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 and other compensation 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 increased


                                       21

<PAGE>

$792,842 to $841,357 for the three-month period ended June 30, 2006, from
$48,515 for the corresponding period in 2005. The increase of $792,842 was due
primarily to an increase of $726,276 for our Hispanic advertising campaign and
other marketing campaigns and activities and $64,173 for sales salaries and
equity compensation. We expect selling and marketing expenses to increase during
the remainder of 2006 as we continue to engage in our Hispanic advertising
campaign and other marketing and advertising campaigns and activities.

General and Administrative Expenses

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

          Employee Compensation Expense. Employee compensation 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. Employee compensation expense increased $239,313 to
$442,289 for the three-month period ended June 30, 2006, from $202,976 for the
corresponding period in 2005. The increase of $239,313 was due primarily to
an increase of $142,492 of stock option expense resulting from our adoption of
Statement of Financial Accounting Standards No. 123R, "Share-Based Payment"
("SFAS No. 123R"), on January 1, 2006, an increase of $43,608 in salary and
payroll tax expense associated primarily with our addition of two executive
officers during the third quarter of 2005, and an increase of $35,419 in expense
associated with restricted stock awards granted to our executive officers in
2006. We intend to retain additional executive management personnel and other
employees in connection with the anticipated growth of our business. As a
result, we expect employee compensation 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
decreased $342,043 to $190,781 for the three-month period ended June 30, 2006
from $532,824 for the corresponding period in 2005. The decrease of $342,043 was
due primarily to a decrease of $341,136 in cash and equity-based compensation
paid to services providers and consultants for various services. We expect
professional fees to increase over the next 12 months as we recognize additional
expense associated with the equity-based compensation that we have paid to
service providers and consultants, incur additional accounting and legal fees
associated with our business operations, and incur additional costs associated
with the negotiation and execution of agreements with additional marketing and
distribution partners.

          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 $6,346 to $25,377 for the
three-month period ended June 30, 2006 from $19,031 for the corresponding period
in 2005. The increase of $6,346 resulted primarily from the annual increases in
our lease payments for our facility in Horsham, Pennsylvania. We expect rent
expense to increase over the next 12 months due to the annual increases in rent
that we pay under the lease for our facility in Horsham, Pennsylvania.

          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, financial printer costs, transfer agent costs,


                                       22

<PAGE>

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 increased $116,541 to
$210,670 for the three-month period ended June 30, 2006 from $94,129 for the
corresponding period in 2005. The increase of $116,541 resulted primarily from
increases of $29,006 in bank service charges associated with new member
transactions, $10,827 in insurance costs, $19,243 for supplies, $12,234 for
telephone expenses, $40,256 for temporary call center representatives, and
$15,460 for travel and entertainment. We expect other general and administrative
expenses to increase over the next 12 months as we incur additional expenses for
financial printer costs, transfer agent 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.

Gain on the Extinguishment of Debt

         Gain on the extinguishment of debt consists of the gain that we
recognized in connection with our termination of the lease for our office space
in Sarasota, Florida upon the issuance of common stock to Centerpointe Property,
LLC on April 1, 2006 in full payment of all rent and other expenses that were
due and payable under the lease and a mutual release from any and all claims
arising out of the lease. We recognized a gain on the extinguishment of debt of
$35,932 during the three months ended June 30, 2006 in connection with the
issuance of these shares. We did not recognize any such gain during the
three-month period ended June 30, 2005. We do not expect to incur any similar
gains on the extinguishment of debt in the foreseeable future.

Net Loss

          Our net loss increased $660,944 to $1,594,053 during the three-month
period ended June 30, 2006, from $933,109 during the corresponding period in
2005. The increase was primarily the result of increases of $201,016 of direct
costs incurred in connection with the sale of our membership programs, $726,276
for our Hispanic advertising campaign and other marketing campaigns and
activities, $239,313 in employee compensation expense (of which $142,492
consisted of non-cash stock option expense associated with our adoption of SFAS
No. 123R on January 1, 2006) and $116,540 in other general and administrative
expenses, partially offset by an increase of $300,027 in revenues and a decrease
of $341,136 in cash and equity-based compensation paid to services providers and
consultants for various services. 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 as the recurring membership
fees from our increasing membership base overtake the costs associated with
obtaining the new members we are generating.

COMPARISON OF THE SIX-MONTH PERIODS ENDED JUNE 30, 2006 AND JUNE 30, 2005

Revenues

          Revenues increased $606,052 to $641,428 for the six-month period ended
June 30, 2006 from $35,376 for the corresponding period in 2005. The increase of
$606,052 resulted from increased sales of our CARExpress membership programs to
new members. Approximately 95% of the revenues that we generated during the
six-month period ended June 30, 2006 was derived from sales of our CARExpress
membership programs to first-time members, compared.


                                       23

<PAGE>

to approximately 20% during the corresponding period in 2005. The remainder of
the revenues that we generated during these periods was derived from existing
members.

Direct Costs

          Direct costs increased $335,278 to $401,859 for the six-month period
ended June 30, 2006, from $66,581 for the corresponding period in 2005. The
increase of $335,278 was due to an increase of $275,640 for sales commissions
and $59,638 for PPO and provider network costs.

Selling and Marketing Expenses

          Selling and marketing expenses increased $818,336 to $943,694 for the
six-month period ended June 30, 2006, from $125,358 for the corresponding period
in 2005. The increase of $818,336 was due primarily to an increase of $706,161
for our Hispanic advertising campaign and other marketing campaigns and
activities and $105,625 for sales salaries and equity compensation.

General and Administrative Expenses

          Employee Compensation Expense. Employee compensation expense increased
$774,010 to $1,181,762 for the six-month period ended June 30, 2006, from
$407,752 for the corresponding period in 2005. The increase of $774,010 was due
to primarily to an increase of $584,981 of stock option expense resulting from
our adoption of Statement of Financial Accounting Standards No. 123R,
"Share-Based Payment" ("SFAS No. 123R"), on January 1, 2006, an increase of
$138,509 in salary and payroll tax expense associated primarily with our
addition of two executive officers during the third quarter of 2005, and an
increase of $36,486 in expense associated with restricted stock awards granted
to our executive officers in 2006.

          Professional Fees. Professional fees decreased $339,876 to $308,136
for the six-month period ended June 30, 2006 from $648,012 for the corresponding
period in 2005. The decrease of $339,876 was due primarily to a decrease of
$266,328 in cash and equity-based compensation paid to services providers and
consultants for various services and a decrease of $84,189 in legal fees due to
a reduction in the amount of legal work outsourced to third parties, partially
offset by an increase of $15,468 in fees paid to our independent accountant in
connection with the preparation of our Registration Statement on Form SB-2 and
our audited financial statements.

          Rent Expense. Rent expense increased $16,142 to $75,903 for the
six-month period ended June 30, 2006 from $59,761 for the corresponding period
in 2005. The increase of $16,142 resulted primarily from the annual increases in
our lease payments for our facility in Horsham, Pennsylvania and rent payments
that we made under the lease for our facility in Sarasota, Florida.

          Other General and Administrative Expenses. Other general and
administrative expenses increased $166,726 to $329,389 for the six-month period
ended June 30, 2006 from $162,663 for the corresponding period in 2005. The
increase of $166,726 resulted primarily from an increase of $54,777 in bank
service charges associated with new member transactions, an increase of $55,996
for financial printer costs associated with the preparation of our filings with
the SEC, an


                                       24

<PAGE>

increase of $27,686 for supplies and an increase of $41,316 for temporary call
center representatives.

Gain on the Extinguishment of Debt

          Gain on the extinguishment of debt consists of the gain that we
recognized in connection with our termination of the lease for our office space
in Sarasota, Florida upon the issuance of common stock to Centerpointe Property,
LLC on April 1, 2006 in full payment of all rent and other expenses that were
due and payable under the lease and a mutual release from any and all claims
arising out of the lease. We recognized a gain on the extinguishment of debt of
$35,932 during the six months ended June 30, 2006 in connection with the
issuance of these shares. We did not recognize any such gain during the
six-month period ended June 30, 2005.

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 six-month period ended June 30, 2005. We did not incur any such
expenses for the six-month period ended June 30, 2006. The expenses for common
stock issued for releases in 2005 resulted from our issuance of 737,750 shares
of our common stock 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 any potential claims thereunder. We do not
expect to incur any additional expenses for common stock issued for releases in
the foreseeable future.

Net Loss

          Our net loss increased $785,985 to $2,518,523 during the six-month
period ended June 30, 2006, from $1,732,538 during the corresponding period in
2005. The increase was primarily the result of increases of $335,278 in direct
costs incurred in connection with the sale of our membership programs, $706,161
for our Hispanic advertising campaign and other marketing campaigns and
activities, $774,010 in employee compensation expense (of which $584,981
consisted of non-cash stock option expense associated with our adoption of SFAS
No. 123R on January 1, 2006) and $166,726 in other general and administrative
expenses, partially offset by an increase of $606,052 in revenues, a decrease in
professional fees of $339,876 and a decrease in non-cash expense for common
stock issued for releases of $295,100.

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 August
11, 2006, we had cash and cash equivalents of approximately $820,000.

          Net cash used by operating activities was $1,677,862 for the six-month
period ended June 30, 2006 compared to $1,000,582 for the corresponding period
in 2005. The $677,280 increase


                                       25

<PAGE>

in cash used by operating activities was due primarily to an increase in net
loss of $785,985, a decrease in other non-cash compensation expense of $260,769
resulting from the recognition of the fair value of stock-based compensation to
employees, service providers and consultants, and a decrease in non-cash expense
associated with the issuance of common stock for releases of $295,100, partially
offset by an increase in non-cash stock option expense of $584,981 resulting
from our adoption of SFAS No. 123R on January 1, 2006.

          Net cash used by investing activities was $7,975 for the six-month
period ended June 30, 2006 compared to net cash provided by investing activities
of $139,776 for the corresponding period in 2005. The $147,751 difference in
cash flows from investing activities was due to a decrease of $223,135 in
proceeds from the sale of marketable securities, a decrease of $35,000 in
certificates of deposit acquired in 2005 and disposed of in 2006, and an
increase of $20,333 in property and equipment, partially offset by a decrease of
$25,000 in notes receivable.

          Net cash provided by financing activities was $2,584,098 for the
six-month period ended June 30, 2006 compared to $879,373 for the corresponding
period in 2005. The $1,704,725 increase in cash provided by financing activities
was due to an increase of $364,509 in proceeds from the sale of common stock and
stock subscriptions for commons stock and $1,484,938 in proceeds received upon
the exercise of outstanding warrants, partially offset by an increase of
$144,722 in the payment of notes payable.

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

          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 had a maturity
date that was 90 days after the date we received the funds from the respective
investors and accrued interest at the rate of 15% per annum. The principal and
accrued interest was payable by us on the maturity date and could be prepaid by
us in whole or in part at any time prior to the maturity date at our option
without penalty. We paid the principal and accrued interest on each of these
promissory notes in accordance with their terms.

          In May 2006, we completed a private offering of 211,934 shares of
common stock, Class A warrants to acquire 105,967 shares of our common stock,
and Class B warrants to acquire 105,967 shares of our common stock for aggregate
cash consideration of $127,160. These securities were sold in units comprised of
two 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. The Class A warrants are
initially exercisable into one share of our common stock at an exercise price of
$.60 per share, are exercisable for a period of 18 months commencing on the date
of issuance, and


                                       26

<PAGE>

expire at the end of the exercise period. The Class B warrants are initially
exercisable into one share of our common stock at an exercise price of $.80 per
share, are exercisable for a period of 36 months commencing on the date of
issuance, and expire at the end of the exercise period.

          In August 2006, we completed a private offering of 1,705,000 shares of
common stock, Class A warrants to acquire 1,705,000 shares of our common stock,
and Class B warrants to acquire 1,705,000 shares of our common stock for
aggregate cash consideration of $1,364,000. These securities were sold in units
comprised of one share of common stock, one Class A warrant and one Class B
warrant. The units were sold at a purchase price of $0.80 per unit. The Class A
warrants are initially exercisable into one share of our common Stock at an
exercise price of $.80 per share, are exercisable until August 31, 2006, and
expire at the end of the exercise period. The Class B warrants are initially
exercisable into one share of our common stock at an exercise price of $1.00 per
share, are exercisable until November 30, 2006, and expire at the end of the
exercise period. We agreed to pay placement agent fees consisting of 248,000
units identical to the units sold in the offering and granted registration
rights to the participants in the offering covering all shares of common stock
issued by us upon the exercise of the warrants.

          During the period beginning January 1, 2006 and ending August 11, we
issued 2,012,397 shares of common stock upon the exercise of warrants at
exercise prices ranging between $0.60 and $2.00 per share for aggregate gross
cash proceeds of $1,746,063.

         To date, our capital needs have been met principally through the 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 exercise of warrants and our private offerings of
securities 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 and finance the growth of our
business. We intend to obtain these funds through internally generated cash
flows from operating activities and proceeds received upon the exercise of
outstanding warrants by our security holders. In the event these funds are
insufficient, we may also engage in additional sales of debt or equity
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.


                                       27

<PAGE>

OFF-BALANCE SHEET ARRANGEMENTS

          As of June 30, 2006, 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, which 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 3. CONTROLS AND PROCEDURES.

          As of June 30, 2006, 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 June 30, 2006, 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 June 30, 2006 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

                                     PART II
                                OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

          During the three months ended June 30, 2006, we sold the following
securities without registration under the Securities Act of 1933, as amended
(the "Securities Act"):

          On April 1, 2006, we issued 10,000 shares of common stock to
Centerpointe Property, LLC in connection with the termination of the Commercial
Office Lease dated June 13, 2005 with respect to the office space located in
Sarasota, Florida in consideration for which all rent and other expenses that
were due and payable under the lease were deemed paid in full, and we and
Centerpointe released each other from any and all claims that we may now hold or
may in the future hold arising out of the lease. 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.

          On April 1, 2006, we issued 350,000 shares of common stock to an
accredited investor in exchange for consulting and advisory services. 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


                                       28

<PAGE>

any advertising or general solicitation of any kind and without payment of
underwriting discounts or commissions to any person.

          In May 2006, we completed a private offering of 211,934 shares of
common stock, Class A warrants to acquire 105,967 shares of our common stock,
and Class B warrants to acquire 105,967 shares of our common stock for aggregate
cash consideration of $127,160. These securities were sold in units comprised of
two 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. The Class A warrants are
initially exercisable into one share of our common stock at an exercise price of
$.60 per share, are exercisable for a period of 18 months commencing on the date
of issuance, and expire at the end of the exercise period. The Class B warrants
are initially exercisable into one share of our common stock at an exercise
price of $.80 per share, are exercisable for a period of 36 months commencing on
the date of issuance, and expire at the end of the exercise period. 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 and without payment of
underwriting discounts or commissions to any person.

ITEM 5. OTHER INFORMATION.

          The description set forth below is included herewith for the purpose
of providing the disclosure required under "Item 3.02 - Unregistered Sales of
Equity Securities" of Form 8-K in connection with our completion of a private
offering of securities on August 9, 2006.

         On August 9, 2006, we completed a private offering of 1,705,000 shares
of common stock, Class A warrants to acquire 1,705,000 shares of our common
stock, and Class B warrants to acquire 1,705,000 shares of our common stock for
aggregate cash consideration of $1,364,000. 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. A description of this offering is set forth under "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" in Item 3 of Part I of this report and
incorporated by reference herein.

ITEM 6. EXHIBITS.

          The following exhibits are included herein:

Exhibit No.                                 Exhibit
-----------   ------------------------------------------------------------------
    31.1      Certification of Chief Executive Officer of the Company required
              by Rule 13a-14(a) under the Securities Exchange Act of 1934, as
              amended

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


                                       29

<PAGE>

                                   SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                           NATIONAL HEALTH PARTNERS, INC.


Date: August 14, 2006                      /s/ David M. Daniels
                                           -------------------------------------
                                           David M. Daniels
                                           Chief Executive Officer

<PAGE>

                                  EXHIBIT INDEX

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