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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-KSB



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(Mark One)

|x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------

For the Fiscal Year Ended March 31, 2006



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------

For the transition period from  to

Commission file number: 333-82580



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DIABETIC TREATMENT CENTERS OF AMERICA, INC.

(Exact name of Registrant as specified in its charter)



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|                                                               |  |                        
|-------------------------------------------------------------- |  | -----------------------
|Delaware                                                       |  | 59-3733133             
|(State or other Jurisdiction of Incorporation or Organization) |  | (IRS Employer I.D. No.)

50 South 900 East, #1

Salt Lake City, Utah 84102

(801) 746-0408

(Address and telephone number of principal executive offices)

975 East 5400 South, Suite 100

Salt Lake City, Utah 84117

(801) 207-1856

(Former name, former
address and former fiscal year, if changed since last report)



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



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange on which registered
|None                |  | None                                     

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

None

Title of Class



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Indicate by check mark whether registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.    x  Yes ̈No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is
not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form
10-KSB.  x

Issuers revenues for its most recent fiscal year were
$54,593.

Aggregate market value of voting and nonvoting stock held by non-affiliates as of July 13, 2006 was $1,976,080 based on a price of $0.05.

The number of shares of the registrants common stock, par value $0.0001 per share, outstanding as of July 13, 2006 was 40,969,759 and there
were 93 stockholders of record.

Transitional Small Business Issuer Format: ̈Yes    x  No

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



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DIABETIC TREATMENT CENTERS OF AMERICA, INC.

FORM 10-KSB

TABLE OF CONTENTS



|         |  |                                                                                                |  |     
|-------- |  | ---------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                |  | Page
|PART I   |  | 1                                                                                             
|         |  |                                                                                               
|Item 1.  |  | Description of Business                                                                        |  | 1   
|Item 2.  |  | Description of Property                                                                        |  | 6   
|Item 3.  |  | Legal Proceedings                                                                              |  | 6   
|Item 4.  |  | Submissions of Matters to a Vote of Security Holders                                           |  | 7   
|         | 
|PART II  |  | 7                                                                                             
|         |  |                                                                                               
|Item 5.  |  | Market for Registrants Common Stock and Related Stockholder Matters                           |  | 7   
|Item 6.  |  | Managements Discussion and Analysis or Plan of Operation                                      |  | 8   
|Item 7.  |  | Financial Statements                                                                           |  | 12  
|Item 8.  |  | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure           |  | 12  
|Item 8a. |  | Controls and Procedures                                                                        |  | 12  
|Item 8b. |  | Other Information                                                                              |  | 13  
|         | 
|PART III |  | 13                                                                                            
|         |  |                                                                                               
|Item 9.  |  | Directors and Executive Officers of the Registrant                                             |  | 13  
|Item 10. |  | Executive Compensation                                                                         |  | 14  
|Item 11. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 15  
|Item 12. |  | Certain Relationships and Related Transactions                                                 |  | 16  
|Item 13. |  | Exhibits                                                                                       |  | 16  
|Item 14. |  | Principal Accountant Fees and Services                                                         |  | 16  



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Forward Looking Statements

We have made forward-looking statements, within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, in this Annual
Report on Form 10-KSB, including the sections entitled Managements Discussion and Analysis of Financial Condition and Results of Operations and Business that are based on our managements beliefs and assumptions
and on information currently available to our management. Forward-looking statements include the information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry
environment, potential growth opportunities and the effects of future regulation and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking
terminology such as the words believe, expect, anticipate, intend, plan, estimate or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in the forward-looking
statements. You should understand that many important factors, in addition to those discussed elsewhere in this Annual Report on Form 10-KSB, could cause our results to differ materially from those expressed in the forward-looking statements. These
factors include, without limitation, the rapidly changing industry and regulatory environment, our limited operating history, our ability to implement our growth strategy, our ability to integrate acquired companies and their assets and personnel
into our business, our fixed obligations, our dependence on new capital to fund our growth strategy, our ability to attract and retain quality personnel, our competitive environment, economic and other conditions in markets in which we operate,
increases in maintenance costs and insurance premiums and cyclical and seasonal fluctuations in our operating results. The Company, unless legally required, undertakes no obligation to update or revise any forward-looking statements, whether as a
result of new information, future events, or otherwise.

For further information about these and other risks, uncertainties and factors,
please review the disclosure included in this report under the caption Risk Factors.



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PART I

ITEM 1. DESCRIPTION OF BUSINESS

Overview

Diabetic Treatment Centers of America, Inc. a Delaware corporation, was incorporated on April 4, 2001 for the purpose of acquiring the wholesale golf
equipment and accessories business previously conducted by our former president, Jeff Arthur Jones, as a sole proprietorship under the name A and Z Golf. We acquired the business from Mr. Jones, through our wholly owned subsidiary,
A & Z Golf Corp., on June 5, 2001, in exchange for 10,000,000 shares of our common stock. Prior to that date, Mr. Jones conducted the business as a sole proprietorship.

Until August 2004, through our wholly-owned subsidiary, A & Z Golf Corp., we engaged primarily in the business of wholesale distribution of
golf-related equipment, accessories and apparel. Our goal was to grow our wholesale customer base through client solicitation efforts and expanded product offerings. Our strategy was to benefit from our managements experience and relationships
in the golf industry to grow our business as a wholesaler by expanding our supplier base and adding customers. Due to our low volume of purchases, it was difficult to improve our cost of sales.

Due to our inability to expand our wholesale golf operations, on July 1, 2004, the Board of Directors approved changing our name from Flagstick
Ventures, Inc. to Diabetic Treatment Centers of America, Inc. to reflect our new business direction of owning and operating diabetic treatment centers. On August 4, 2004, we ceased operating in the wholesale golf industry to fully pursue our
new direction of owning and operating diabetic treatment centers. Our prior wholesale golf operations are included on the statement of operations as discontinued operations for the year ended March 31, 2005.

On October 7, 2004, we entered into an Agreement with Diabetes Medical Development Corporation, d/b/a DiabMed, to secure the exclusive rights to
market and sell certain technologies and products used to treat diabetes in Murray, Utah. As of June 2006, DiabMed has not provided a licensing agreement with terms that are acceptable to us, and therefore, we have been unable to finalize this
agreement. We do not anticipate being able to reach an agreement and have no further plans of pursuing these rights.

We acquired Microvas
Therapy technology in May 2005. The therapy is delivered with a machine with emitter pads that directs powerful electronic waveforms though a patients limb or body to stimulate neuromuscular contractions. This therapy increases the blood flow
through the treatment area increasing blood oxygen, helping move antibiotics to wounds and induces involuntary exercise of muscles. This therapy can be used to treat diabetic neuropathy, hypoxia, foot ulcers and a variety of other medical disorders.
We began treating patients with the Microvas therapy in June 2005.

On May 12, 2006 we entered into a joint venture with Personal
Performance Medical Corporation to manage and develop the operations of Personal Performance Medical Corporation (d/b/a/ Fit-Well), a Utah based Corporation. Fit-Well offers full service prosthetic and orthotic care and manufacturing, durable
medical equipment and soft goods sales.

Unless otherwise indicated, references in this Annual Report to 2006 and 2005 are to our fiscal
years ended March 31, 2006 and 2005, respectively.

Our principal executive offices and mailing address is 50 South 900 East, #1 Salt
Lake City, UT 84102, and our telephone number is (801) 746-0408.

Employees

We have assembled a management team led by our CEO, Scott Allen and CFO Steven Weldon. We have two full time employees. None of our employees are covered
by a collective bargaining agreement, nor have we experienced a strike or other adverse work stoppage due to organized labor. We offer our employees a benefits package that includes vacation and medical coverage.



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RISK FACTORS

Risks Specific to Our Company

We have limited operating funds, and our ability to continue as a going concern is dependent upon
our ability to obtain additional capital to operate the business.

We have experienced net losses since April 4, 2001 (date of
inception), which losses have caused an accumulated deficit of approximately $1,033,600 as of March 31, 2006. In addition, we have consumed net cash used in operating activities of approximately $318,400 and $339,600 for the years ended March
31, 2006 and 2005, respectively. We will require additional funds to sustain and expand our current business, and to continue implementing our business plan. Our lack of sufficient financing to implement our business plan, and our expectation to
continue operating losses for the foreseeable future raises substantial doubt about our ability to continue as a going concern. Our independent certified public accountants issued their report, which included an explanatory paragraph for going
concern uncertainty on our financial statements as of March 31, 2006. Our ability to continue as a going concern is heavily dependent upon our ability to obtain additional capital to sustain operations. Currently, we have no commitments to
obtain additional capital, and there can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.

Since we
are in the early stage of development and have a limited operating history, it may be difficult for you to assess our business and future prospects.

We were incorporated on April 4, 2001 and engaged primarily in the business of wholesale distribution of golf-related equipment, accessories and apparel until August 2004. In August 2004, we ceased operations in
the wholesale golf industry to fully pursue our new direction of opening diabetic treatment centers. Because of this limited operating history, our prospects are difficult to predict and must be considered in light of the risks, expenses and
problems frequently encountered by companies that are in the early stages of development and that operate in new and rapidly changing markets which are discussed in greater detail in this section.

We will need additional capital, the availability of which is uncertain, to fund our business and complete the implementation of our business plan.

We will require additional financing in order to carry out our business plan. Such financing may take the form of the issuance of common or preferred
stock or debt securities, or may involve bank financing. There can be no assurance that we will obtain such additional capital on a timely basis, on favorable terms, or at all. If we are unable to generate the required amount of additional capital,
our ability to meet our financial obligations and to implement our business plan may be adversely affected.

Our current management does not have
experience in managing a public company; this may negatively impact our business operations.

Mr. Scott Allen is currently serving
as our CEO. Mr. Allen has not had any previous experience managing a public company. There can be no assurance that we will be able to effectively manage the expansion of our operations, that our systems, procedures, or controls will be
adequate to support our operations or that our management team will be able to achieve the rapid execution necessary to fully exploit the market opportunity. Any inability to operate our business, manage our growth, comply with the regulatory
requirements of a company subject to regulation by governmental agencies such as the Securities & Exchange Commission could reduce the efficiency of our business operations, thereby causing our operating expenses to increase and our
operating margins to decrease.



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As we have incurred losses since inception, we are not now, nor will we be in the foreseeable future, in a position to
pay dividends on our issued and outstanding stock.

We have never declared or paid cash dividends on our capital stock and do not
anticipate paying any cash dividends in the foreseeable future. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business.

Our management may be unable to effectively integrate our acquisitions and to manage our growth and we may be unable to fully realize any anticipated benefits of
these acquisitions.

Our future results will depend in part on our success in implementing our growth and acquisition strategy. Our
ability to implement this strategy will be dependent on our ability to identify, consummate and successfully assimilate acquisitions on economically favorable terms. In addition, acquisitions involve a number of special risks that could adversely
effect our operating results, including the diversion of managements attention, failure to retain key acquired personnel, risks associated with unanticipated events or liabilities, legal, accounting and other expenses associated with
acquisitions, some or all of which could increase our operating costs, reduce our revenues and cause a material adverse effect on our business, financial condition and results of operations. We have no preliminary agreements or understandings to
acquire or be acquired by a company as of the date of this prospectus.

If we complete future acquisitions, we may dilute existing stockholders by
issuing more of our common stock or we may incur expenses related to debt and goodwill, which could reduce our earnings.

We may issue
equity securities in future acquisitions that could be dilutive to our shareholders. We also may incur additional debt in future acquisitions. Interest expense on debt incurred to fund our acquisitions may significantly reduce our profitability.
While goodwill and other intangible assets with indefinite lives are not amortized to expense under generally accepted accounting principles, we are required to review all of these assets at regular intervals for impairment and to charge an
appropriate amount to expense when we identify impairment. If we identify impairment and are required to write off a significant portion of our intangible assets at one time, then there could be a material adverse impact on our stock price.

Risks Specific to Our Industry

Third party payers and government-sponsored programs may reduce payments to us.

Our future revenues
will depend on reimbursement from third-party payers, such as managed care companies and government-sponsored health insurance programs. Third-party and governmental payers exercise significant control over patient access and increasingly use their
enhanced bargaining power to secure discounted rates and other concessions from providers. This trend, as well as other changes in reimbursement rates, policies or payment practices by third-party and governmental payers (whether initiated by the
payer or legislatively mandated) could have an adverse impact on our revenues.

Our sales and profitability are affected by the efforts of all payers to
contain or reduce the cost of healthcare by lowering reimbursement rates and limiting the scope of covered services. Any changes that lower reimbursement levels under Medicare, Medicaid or private pay programs, including managed care contracts,
could adversely affect us. Furthermore, other changes in these reimbursement programs or in related regulations could adversely affect us. These changes may include modifications in the timing or processing of payments and more stringent
reimbursement procedures. Any failure to comply with Medicare or Medicaid reimbursement procedures could result in delays in, or loss of, reimbursement and other sanctions, including fines and exclusion from participation in the programs.

If Congress or CMS changes Medicare or Medicaid programs for services we provide, then our future revenue and earnings could be adversely affected.

If the government changes the Medicare, Medicaid or similar government programs or the rates those programs pay for our services, then
our future revenue and earnings may be adversely affected. Any of the following actions in connection with government programs could cause our revenue and earnings to be adversely affected:



| |  |  | a reduction of the amount paid to us under government programs;
| | - |  | ---------------------------------------------------------------



| |  |  | an increase in the costs associated with performing our services that are subject to inflation, such as labor and supply costs, without a corresponding increase in reimbursement
rates;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | the inclusion of some or all ancillary services, for which we are now reimbursed separately, in the flat composite rate for a dialysis treatment; or
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in laws, or the interpretations of laws, which could cause us to modify our operations.
| | - |  | -----------------------------------------------------------------------------------------------

If our business is alleged or found to violate heath care or other applicable laws, our future revenue and earnings could be adversely affected.

We are subject to extensive federal, state and local regulation. The laws that apply to our operations include, but are not limited to, the following:



| |  |  | fraud and abuse prohibitions under state and federal health care laws;
| | - |  | ----------------------------------------------------------------------



| |  |  | prohibitions and limitations on patient referrals;
| | - |  | --------------------------------------------------



| |  |  | billing and reimbursement rules, including false claims prohibitions under health care reimbursement laws;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | rules regarding the collection, use, storage and disclosure of patient health information, including the federal Health Insurance Portability and Accountability Act of 1996, which
we refer to as HIPAA, and state law equivalents of HIPAA;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | facility licensure;
| | - |  | -------------------



| |  |  | and health and safety requirements.
| | - |  | -----------------------------------

Much of the
regulation of our business, particularly in the areas of fraud and abuse and patient referral, is complex and open to differing interpretations. Due to the broad application of the statutory provisions and the absence in many instances of
regulations or court decisions addressing the specific arrangements by which we conduct our business, including our arrangements with medical directors, physician stockholders and physician joint venture partners, governmental agencies could
challenge some of our practices under these laws.

New regulations governing electronic transactions and the collection, use, storage, and
disclosure of health information impose significant administrative and financial obligations on our business. If, after the required compliance date, we are found to have violated these regulations, we could be subject to:



| |  |  | criminal or civil penalties, including significant fines;
| | - |  | ---------------------------------------------------------



| |  |  | claims by people who believe their health information has been improperly used or disclosed; and
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | administrative penalties by payers.
| | - |  | -----------------------------------

Government
investigations of health care providers have continued to increase, and the government may investigate our business in the future. If any of our operations are found to violate applicable laws, then we may be subject to severe sanctions, or we could
be required to alter or discontinue the challenged conduct or both. If we are required to alter our practices, we may not be able to do so successfully. If any of these events occurs, our future revenue and earnings may be adversely affected.

Changes in the health care delivery, financing or reimbursement systems could adversely affect our business.

The healthcare industry in the United States may be entering a period of change and uncertainty. Health care organizations, public or private, may
dramatically change the way they operate and pay for services. Our business is designed to function within the current health care financing and reimbursement system. During the past several years, the health care industry has been subject to
increasing levels of government regulation of, among other things, reimbursement rates and relationships with referring physicians. In addition, proposals to reform the health care system have been considered by Congress. In light of the continued
increases in the cost of health care and the current economic weakness, there may be new proposals to change the health care system and control costs. These proposals, if enacted, could further increase the governments oversight role and
involvement in health care, lower reimbursement rates and otherwise change the operating environment for health care companies. We cannot predict the likelihood of those events or what impact they may have on our business.

We operate in highly competitive businesses.

The
healthcare industry is characterized by rapidly developing technology and increased competition. In all of our product and service lines, we compete with companies, large and small, located in the United States and



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abroad. Competition is strong in all of our lines without regard to the number and size of the competing companies
involved. Some of our competitors and potential competitors have significantly greater financial, technical and sales resources than we do and may, in some locations, possess licenses or certificates that permit them to provide products and services
that we cannot currently provide. We compete on a number of factors, including innovative products and services, customer loyalty and price.

There can be no assurance that we will not encounter increased or more effective competition in the future which could limit our ability to maintain or increase our business and adversely affect our operating results.

Risks Related to Our Securities

Our common stock is subject to the penny stock rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a penny stock, for the
purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt,
the rules require:



| |  | that a broker or dealer approve a persons account for transactions in penny stocks; and
| | - | ----------------------------------------------------------------------------------------



| |  | the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

In order to approve a persons account for transactions in penny stocks, the broker or dealer must:



| |  | obtain financial information and investment experience objectives of the person; and
| | - | ------------------------------------------------------------------------------------



| |  | make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transactions in penny stocks.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The broker or dealer must also deliver, prior to any
transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:



| |  | sets forth the basis on which the broker or dealer made the suitability determination; and
| | - | ------------------------------------------------------------------------------------------



| |  | that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
| | - | ----------------------------------------------------------------------------------------------------------

Generally, brokers may be less willing to execute transactions in securities subject to the penny stock rules. This may make it more
difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be
made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights
and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in
penny stocks.

The sale of a substantial amount of our restricted shares under rule 144 may adversely affect our ability to raise capital in the future
through the sale of equity securities.

Of the shares of our common stock that are currently issued and outstanding, 28,129,864 shares
are restricted securities. Scott Allen, our Chief Executive Officer, President and a Director, owns 7,500,000 of these shares and Jeff Jones, our former President owns 9,801,250 of these shares. Messrs. Allen and Jones are affiliates of
ours, as that term is defined in Rule 144 under the Securities Act. Absent registration under the Securities Act, the



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sale of such shares is subject to Rule 144, as promulgated under the Securities Act. All of the restricted
securities are eligible for resale under Rule 144. In general, under Rule 144, subject to the satisfaction of certain other conditions, a person, who has beneficially owned restricted shares of our common stock for at least one year is
permitted to sell in a brokerage transaction, within any three-month period, a number of shares that does not exceed the greater of 1% of the total number of outstanding shares of the same class, or, if our common stock is quoted on a stock
exchange, the average weekly trading volume during the four calendar weeks preceding the sale, if greater. Rule 144 also permits a person who presently is not and who has not been an affiliate of ours for at least three months immediately preceding
the sale and who has beneficially owned the shares of common stock for at least two years to sell such shares without regard to any of the volume limitations described above. Specifically, subject to the satisfaction of the other conditions of Rule
144, of the 9,801,250 shares owned by Mr. Jones, 500 shares became eligible for resale on April 4, 2002, and the remainder of the shares became eligible for resale on September 5, 2002.

No prediction can be made as to the effect, if any, that sales of shares of common stock or the availability of such shares for sale will have on the
market prices of our common stock prevailing from time to time. The possibility that substantial amounts of our common stock may be sold under Rule 144 into the public market may adversely affect prevailing market prices for the common stock and
could impair our ability to raise capital in the future through the sale of equity securities.

We are, and will continue to be, controlled by our
former officer and director, which could result in us taking actions that other stockholders do not approve.

Mr. Jeff Jones, our
former executive officer and director beneficially owns approximately 23% of the voting power of our common stock. Mr. Jones is in a position to elect and remove directors and control the outcome of most matters submitted to a vote of the
stockholders. Additionally, Mr. Jones is able to significantly influence any proposed amendment to our Certificate of Incorporation, a merger proposal, a proposed sale of our assets or other major corporate transaction or a non-negotiated
takeover attempt. This concentration of ownership may discourage a potential acquirer from making an offer to buy us, which, in turn, could adversely affect the market price of our common stock.

Our share price may be highly volatile.

The market
prices of equity securities of small companies have experienced extreme price volatility in recent years not necessarily related to the individual performance of specific companies. Factors such as announcements by us, or our competitors concerning
products, technology, governmental regulatory actions, other events affecting healthcare companies generally and general market conditions may have a significant impact on the market price of our shares and could cause it to fluctuate substantially.

ITEM 2. DESCRIPTION OF PROPERTY

All of our operations were based in our facility located at 975 East
5400, Suite 100, Salt Lake City, UT, 84117. Our rent for this location is approximately $4,500 per month and our three year lease was to expire on February 28, 2009. On May 1, 2006, we vacated this property and moved our operations to 50
South 900 East, #1, Salt Lake City, Utah, 84102. We have a liability of $9,000 for April and May of 2006 and $4,500 for June and July of 2006. Half of our space was rented to another tenant in June 2006 and we expect the remaining space will be
rented by another tenant in July 2006. Our personal property consists of furniture and fixtures, computer equipment and medical equipment.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any pending legal proceeding or litigation. In addition,
none of our property is the subject of a pending legal proceeding. We are not aware of any legal proceedings against the Company or our property contemplated by any governmental authority.



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

No matters were submitted to a vote of
security holders during the last quarter of the fiscal year ended March 31, 2006

Part II

ITEM 5. MARKET FOR REGISTRANTS COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Our common stock is
quoted on the OTC Bulletin Board under the symbol DBTC.

For the periods indicated, the following table sets forth the high and
low per share intra-day sales prices per share of common stock. These prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions.



|                 |  |          |      |         |   |     
|---------------- |  | -------- | ---- | ------- | - | ----
|Fiscal Year 2006 |  | High ($) |      | Low ($)
|Fourth Quarter   |  | $        | 0.13 |         | $ | 0.04
|Third Quarter    |  | $        | 0.10 |         | $ | 0.04
|Second Quarter   |  | $        | 0.16 |         | $ | 0.06
|First Quarter    |  | $        | 0.25 |         | $ | 0.11
|                 |  |         
|Fiscal Year 2005 |  |          |      |        
|Fourth Quarter   |  | $        | 0.71 |         | $ | 0.20
|Third Quarter    |  | $        | 1.22 |         | $ | 0.58
|Second Quarter   |  | $        | 1.00 |         | $ | 0.75
|First Quarter    |  | $        | 1.32 |         | $ | 0.11

Dividends and Dividend Policy

We have never declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain future earnings, if any,
to finance the expansion of our business and for general corporate purposes. We cannot assure you that we will pay dividends in the future. Our future dividend policy is within the discretion of our Board of Directors and will depend upon various
factors, including our results of operations, financial condition, capital requirements and investment opportunities.

Recent Sales of Unregistered
Securities

On November 21, 2005, we entered into a stock purchase agreement with a group of investors. This agreement allows the
investors to purchase a minimum of 7,500,000 and a maximum of 18,750,000 shares of our common stock at a purchase price of $.04 per a share. These shares are deemed restricted securities as defined in Rule 144 of the Securities Act of 1933. The
investors must invest a minimum of $300,000 in order to receive shares. As of March 31, 2006 the investors have invested a total of $300,000 and we issued 7,500,000 shares on April 12, 2006. The proceeds from the sale were used for working
capital.

Equity Compensation Plan Information

On
August 11, 2005, the Board of Directors adopted the Diabetic Treatment Centers of America, Inc. 2005 Restricted Stock Plan (the 2005 Plan) and it was approved on August 11, 2005 by our stockholders at the 2005 Annual
Meeting. The terms of the 2005 Plan provide for grants of restricted stock awards.

Under the 2005 Plan, the total number of shares of restricted common
stock that may be subject to the granting of Awards during the term of the 2005 Plan shall be equal to 5,000,000 shares. Shares with respect to which awards previously granted that are forfeited, cancelled or terminated are returned to the plan and
may be reissued. A grant of 200,000 shares was made to a director and 100,000 shares to an employee. The director forfeited 70,000 shares on April 21, 2006 when he resigned and the employee forfeited 10,000 shares on May 31, 2006 when he
was terminated.



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

The following discussion of our
plan of operation, financial condition and results of operations should be read in conjunction with the Companys consolidated financial statements, and notes thereto, included elsewhere herein. This discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors including, but not limited to, those discussed in this Annual Report.

Overview

Diabetic Treatment
Centers of America, Inc. is a Delaware corporation incorporated on April 4, 2001 for the purpose of acquiring the wholesale golf equipment and accessories business previously conducted by our president, Jeff Arthur Jones, as a sole
proprietorship under the name A and Z Golf. We acquired the business from Mr. Jones, through our wholly owned subsidiary, A & Z Golf Corp., on June 5, 2001, in exchange for 10,000,000 shares of our common stock. Prior to
that date, Mr. Jones conducted the business as a sole proprietorship.

Until August 2004, through our wholly-owned subsidiary, A &
Z Golf Corp., we engaged primarily in the business of wholesale distribution of golf-related equipment, accessories and apparel. Our goal was to grow our wholesale customer base through client solicitation efforts and expanded product offerings. Our
strategy was to benefit from our managements experience and relationships in the golf industry to grow our business as a wholesaler by expanding our supplier base and adding customers. Due to our low volume of purchases, it was difficult to
improve our cost of sales.

Due to our inability to expand our wholesale golf operations, on July 1, 2004, the Board of Directors
approved changing our name from Flagstick Ventures, Inc. to Diabetic Treatment Centers of America, Inc. to reflect our new business direction of owning and operating diabetic treatment centers. On August 4, 2004, we ceased operating in the
wholesale golf industry to fully pursue our new direction of owning and operating diabetic treatment centers. Our prior wholesale golf operations are included on the statement of operations as discontinued operations.

On October 7, 2004, we entered into an Agreement with Diabetes Medical Development Corporation, d/b/a DiabMed, to secure the exclusive rights to
market and sell certain technologies and products used to treat diabetes in Murray, Utah. As of June 2006, DiabMed has not provided a licensing agreement with terms that are acceptable to us, and therefore, we have been unable to finalize this
agreement. We do not anticipate being able to reach an agreement and have no further plans of pursuing these rights.

We acquired Microvas
Therapy technology in May 2005. The therapy is delivered with a machine with emitter pads that directs powerful electronic waveforms though a patients limb or body to stimulate neuromuscular contractions. This therapy increases the blood flow
through the treatment area increasing blood oxygen, helping move antibiotics to wounds and induces involuntary exercise of muscles. This therapy can be used to treat diabetic neuropathy, hypoxia, foot ulcers and a variety of other medical disorders.

On May 12, 2006 we entered into a joint venture with Personal Performance Medical Corporation to manage and develop the operations of
Personal Performance Medical Corporation (d/b/a/ Fit-Well), a Utah based Corporation. Fit-Well offers full service prosthetic and orthotic care and manufacturing, DME and soft goods sales.

Based upon the current level of revenues and the cash position, we will need to raise additional capital prior to the end of the second quarter of 2007
in order to fund current operations. These factors raise substantial doubt about our ability to continue as a going concern. We are pursuing several alternatives to address this situation, including the raising of additional funding through
equity or debt financing. We are in discussions with our existing stockholders to provide additional funding in exchange for a notes or equity. In order to finance existing operations and pay current liabilities over the next twelve months, we
will need to raise $366,500 of capital. However, there



8



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can be no assurance that the requisite financing will be consummated in the necessary time frame or on terms acceptable
to us. Should we be unable to raise sufficient funds, we may be required to curtail our operating plans or worst case cease operations. No assurance can be given that we will be able to operate profitably on a consistent basis, or at all,
in the future.

Plan of Operation

In
June 2004, with the decline of our wholesale golf operations, we began pursuing a new business direction of owning and operating diabetic treatment centers. Our goal is to acquire the latest technologies to treat diabetics and those suffering from
neuropathy, hypoxia and foot ulcers. In October 2004, we entered into an agreement to acquire certain technologies and products to treat diabetics from Diabetes Medical Development d/b/a DiabMed. As of November 2005, we have been unable to reach
terms agreeable to both parties. We are continuing to seek remedies pursuant to the agreement signed by us in October 2004. To continue with our goal of acquiring the latest technologies for treating the symptoms caused by diabetes, we acquired
Microvas Technology in June 2005.

Microvas therapy is delivered with a machine with emitter pads that directs powerful electronic
waveforms though a patients limb or body to stimulate neuromuscular contractions. Microvas causes muscle fasciculation and contraction-relaxation cycles that effectively pumps blood through the microcirculation system. The therapy increases
the blood flow through the treatment area increasing blood oxygen, helping move antibiotics to wounds and induces involuntary exercise of muscles. The therapy can be used to treat diabetic neuropathy, hypoxia and foot ulcers.

We also plan to grow our business by acquiring or partnering with other medical businesses. On May 12, 2006 we entered into a joint venture with
Personal Performance Medical Corporation to manage and develop the operations of Personal Performance Medical Corporation (d/b/a/ Fit-Well), a Utah based Corporation. Fit-Well offers full service prosthetic and orthotic care and manufacturing, DME
and soft goods sales.

We continue to operate with very limited capital. We have been unable to locate a consistent source of financing for
use in our operational or expansion plans. In the absence of additional financing, we will be unable to pursue our expansion plan.

Cash Requirements

We estimate that we will require an additional $366,500 to fund our currently anticipated requirements for ongoing operations for
our existing business for the next twelve-month period. We expect to pay $120,000 in salaries and benefits, $60,000 for professional fees and expense related to being a public company, and $20,000 for expenses related to general operations. We will
also need approximately $166,500 to repay $150,500 of notes payable and the related interest of approximately $16,000.

Results of Operations

Comparison of the fiscal year ended March 31, 2006 and March 31, 2005.

CONSOLIDATED FINANCIAL INFORMATION



|                                |  |          |   |  |          |  
|------------------------------- |  | -------- | - |  | -------- | -
|                                |  | 2006     |   |  | 2005     |  
|Net revenue                     |  | 54,600   |   |  |         |  
|Cost of revenue                 |  | (115,500 | ) |  |         |  
|General and administrative      |  | (347,000 | ) |  | (337,700 | )
|Interest (income) expense , net |  | (11,900  | ) |  | (18,000  | )
|Write down of impaired assets   |  | (35,000  | ) |  |         |  
|Rental income                   |  | 9,600    |   |  |          |  
|Loss on discontinued operations |  |         |   |  | (20,800  | )
|                                |  |          |   |  |          |  
|Net loss                        |  | (445,200 | ) |  | (376,500 | )



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Net Revenue. Net sales from continuing operations were $54,600 in 2006 compared to $0 in
2005. This increase was due to the opening of our diabetic treatment centers during 2006.

Cost of Revenue. Cost of sales
from continuing operations increased to $115,500 in 2006 from $0 in 2005. This increase was due to the opening of our diabetic treatment centers during 2006.

General and Administrative Expenses. General and Administrative expenses were $347,000 in 2006, an increase of 3% from $337,700 in 2005. This increase is do to and increases of $20,500 of payroll, $42,800 of rent, $
2,400 of depreciation, $24,400 of bad debt, $12,300 of printing, $5,300 web hosting, and $34,500 of professional and decreases of $23,600 of advertising, $62,200 of investor relations, $49,600 of licenses

Interest income and expense, net. Net interest expense was $11,933 in 2006, a net decrease of 34% from $17,995 of interest expense in 2005.
The net interest expense is the result interest expense accrued on promissory notes.

Write down of impaired assets. Write
down of impaired assets increased $35,000 or 100% in 2006. This increase was due to the write down of certain property and equipment that is not being utilized when the clinic temporarily stopped treating patients on April 28, 2006.

Liquidity and Capital Resources

We had
cash balances totaling approximately $108,800 as of March 31, 2006. Historically, our principal source of funds has been cash generated from financing activities.

Cash flow from operations. We have been unable to generate either significant liquidity or cash flow to fund our current operations. We frequently change our pricing structure to take into account our
customers fluctuating cash flows, service and product needs. We anticipate that cash flows from operations will be insufficient to fund our business operations for the next twelve-month period.

Operating cash outflows from discontinued operations in 2005 were approximately $20,700. We were able to conserve more cash by discontinuing the golf
operations.

Cash flows from investing activities.Net cash used in investing activities was from the purchase
of additional medical and office equipment of approximately $32,900.

Cash flows from financing activities. Net cash
provided by financing activities was generated from unsecured promissory notes that total $150,500 from a stockholder and the sale of $300,000 of restricted stock.

Variables and Trends

We have a limited operating history in connection with the current operation of diabetic treatments.
Accordingly, the comparison of the financial data for the periods presented may not be a meaningful indicator of our future performance and must be considered in light of our limited operating history.

Critical Accounting Policies

We prepare our
financial statements in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information
available to us. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting
policies that we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

Revenue Recognition.We recognize revenue from its medical treatments on the date the procedures are performed, and accounts receivable are recorded at that time. Revenues are reported at the estimated realizable amounts from the
third-party payers. If such third-party payers were to change their reimbursement policies, the effect on revenue could be significant and have a material impact on the Companys results of operations. Provisions have been made, based on prior
period collections, for uncollectible accounts at March 31, 2006.



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Impairment of Long Lived Assets.We assess the impairment of long-lived assets on an ongoing basis
and whenever events or changes in circumstances indicate that the carrying value may not be recoverable based upon an estimate of future undiscounted cash flows. Factors we consider that could trigger an impairment review include the following:
(i) significant underperformance relative to expected historical or projected future operating results; (ii) significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
(iii) significant negative industry or economic trends; (iv) significant decline in our stock price for a sustained period; and (v) our market capitalization relative to net book value.

When we determine that the carrying value of any long-lived asset may not be recoverable based upon the existence of one or more of the above indicators of impairment,
we measure impairment based on the difference between an assets carrying value and an estimate of fair value, which may be determined based upon quotes or a projected discounted cash flow, using a discount rate determined by our management to
be commensurate with our cost of capital and the risk inherent in our current business model, and other measures of fair value.

Net
operating loss carryforwards.We have not recognized the benefit in our financial statements with respect to the approximately $1,017,100 net operating loss carryforward for federal income tax purposes as of March 31, 2006. This benefit was
not recognized due to the possibility that the net operating loss carryforward would not be utilized, for various reasons, including the potential that we might not have sufficient profits to use the carryforward or that the carryforward may be
limited as a result of changes in our equity ownership. We intend to use this carryforward to offset our future taxable income. If we were to use any of this net operating loss carryforward to reduce our future taxable income and the Internal
Revenue Service were to then successfully assert that our carryforward is subject to limitation under Code Section 382 as a result of capital transactions occurring in 2002 or otherwise, we may be liable for back taxes, interest and, possibly,
penalties prospectively.

Commitments

Except as shown
in the following table, as of March 31, 2006, we did not have any material capital commitments, other than funding our operating losses and repaying outstanding debt. It is anticipated that any capital commitments that may occur will be
financed principally through borrowings from shareholders (although such additional financing has not been arranged). However, there can be no assurance that additional capital resources and financings will be available to us on a timely basis, or
if available, on acceptable terms.

Future payments due on our contractual obligations as of March 31, 2006 are as
follows:



|                        |  |      |        
|----------------------- |  | ---- | -------
|                        |  | 2007
|Operating lease         |  | $    | 48,000 
|Loans from stockholders |  |      | 150,500
|Accrued interest        |  |      | 11,933 
|                        |  |      |        
|Total                   |  | $    | 210,433
|                        |  |      |        

Off Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Stock-Based Compensation

We have elected to account for our stock-based compensation granted to employees in accordance
with the provisions of Accounting Principles Board Opinion 25 (APB 25), Accounting for Stock Issued to Employees. Under



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APB 25, compensation expense is based on the difference, if any, on the date of the grant, between the fair value of the
Companys stock and the amount the employee is required to pay. Stock issued to non-employees is accounted for under the provisions of Statement of Financial Accounting Standards (SFAS)123, Accounting for Stock-Based Compensation and the
Emerging Issues Task Force (EITF) Consensus in Issue 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). Under
Statement 123, non-employee stock-based compensation is accounted for based on the fair value of the consideration received or equity instruments issued, whichever is more readily determinable. However, Statement 123 does not address the measurement
date and recognition period. EITF 96-18 states a consensus that the measurement date should be the earlier of the date at which a commitment for performance by the counterparty is reached or the date at which the counterpartys performance is
complete.

The Companys nonemployee stock-based compensation is determined using the fair value of the Companys equity instruments.

Recent Accounting Pronouncements

In
December 2004, the FASB issued Statement No. 123R, Share-Based Payment, which requires companies to recognize in the statement of operations all share-based payments to employees, including grants of employee stock options,
based on their fair values. Accounting for share-based compensation transactions using the intrinsic method supplemented by pro forma disclosures will no longer be permissible. The new statement will be effective for public entities in the first
annual reporting period beginning after June 15, 2005, and, accordingly, will be adopted by us in the first quarter of fiscal year 2007. The actual impact of adoption of SFAS 123R cannot be fully predicted at this time because it will depend on
levels of share-based payments granted in the future. The adoption of this new statement will have no effect until share-based compensation is issued by the Company.

ITEM 7. FINANCIAL STATEMENTS

The financial statements required to be filed hereunder are set forth on
pages F-1 through F-15 and are incorporated herein by this reference.

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

None.

ITEM 8A. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. Under the
supervision and with the participation of our senior management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Annual Report (the Evaluation Date). Based on this evaluation, our chief executive
officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were, to the best of their knowledge, effective such that the information relating to Diabetic Treatment Centers of America, Inc.,
including our consolidated subsidiaries, required to be disclosed in our Securities and Exchange Commission (SEC) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms,
and (ii) is accumulated and communicated to Diabetics management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that
occurred during the year ended March 31, 2006 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.



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##### Table of Contents

ITEM 8B. OTHER INFORMATION

None.

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The names of our executive officers and
directors, their ages as of June 25, 2006, and the positions currently held by each are as follows:



|              |  |     |  |                                     
|------------- |  | --- |  | ------------------------------------
|Name          |  | Age |  | Position                            
|Scott Allen   |  | 38  |  | Chief Executive Officer and Director
|Steven Weldon |  | 30  |  | Chief Financial Officer and Director

Scott Allen is the owner of Fit-Well, a prosthetics company and orthopedic appliance
company with multiple locations throughout Utah. Mr. Allen has over 25 years experience in the treatment of the end-stage complications of diabetes, which is the target market of vascular stimulation therapy. Mr. Allen is a
member in the American Academy of Orthotists & Prosthetists and the International Society for Prosthetics and Orthotics. Mr. Allen holds three United States Patents related to prosthetic feet and is also the founder of Corporation
Fitness Wellness Centers, a nonprofit company which provides therapy, support, instruction and training to amputees to aid in their recovery and improves their quality of life.

Steven Weldon, a Certified Public Accountant,has served as our Chief Financial Officer since September 2005. Prior to
joining Diabetic Treatment Centers of America, Inc. Mr. Weldon was the Tax Manager for Westgate Resorts, Ltd., a timeshare developer, since July 2000. Since September 2005, Mr. Weldon has also served as the Chief Financial Officer of
Inverted Paradigms Corp., a golf retailer and software developer. Mr. Weldon was an adjunct professor at Florida Southern College from January 2002 to October 2005. Since May 2005, Mr. Weldon has served as the president, sole stockholder
and director of Steven W. Weldon, PA, a public accounting firm providing tax and accounting services. Mr. Weldon received his Bachelor of Science degree and his Masters in Business Administration from Florida Southern College.

During the past five years none of our directors, executive officers, promoters or control persons was:



| | 1) | the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or
within two years prior to that time;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2) | convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------



| | 3) | subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4) | found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or
commodities law.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Section 16(a) Beneficial Ownership Reporting Compliance.

Since we have no stock registered under Section 12(b) or Section 12(g) of the Securities Exchange Act of 1934, there is no persons who need to file
reports required by Section (16)a of the Securities Exchange Act of 1934.



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##### Table of Contents

Code of Ethics

We adopted the Diabetic Treatment Centers of America, Inc. Code of Ethics for the CEO and Senior Financial Officers (the finance code of ethics), a code of ethics that applies to our Chief Executive
Officer, Chief Financial Officer and other finance organization employees. A copy of the finance code of ethics may be obtained from the Company, free of charge, upon written request delivered to Diabetic Treatment Centers of America, Inc. 50 South
900 East, #1, Salt Lake City, Utah, 84102. If we make any substantive amendments to the finance code of ethics or grant any waiver, including any implicit waiver, from a provision of the code to our Chief Executive Officer or Chief Financial
Officer, we will disclose the nature of such amendment or waiver in a report on Form 8-K.

ITEM 10. EXECUTIVE COMPENSATION

The following summary compensation table reflects all compensation
awarded to, earned by, or paid to our Chief Executive Officer and president and other employees for all services rendered to us in all capacities during each of the years ended March 31, 2006, 2005 and 2004. None of our other executive officers
received salary and bonus exceeding $100,000 during those years.

Summary Compensation Table



|                                               |  |      |  |                     |  |                              |  |                        |  |                      
|---------------------------------------------- |  | ---- |  | ------------------- |  | ---------------------------- |  | ---------------------- |  | ---------------------
|                                               |  |      |  | Annual Compensation |  | Long-Term CompensationAwards
|Name and Position                              |  | Year |  | Salary ($)          |  | Other AnnualCompensation($)  |  | RestrictedStock Awards |  | All OtherCompensation
|Scott Allen, CEO, Director, and President      |  | 2006 |  | 12,000              |  |                             |  |                       |  |                     
|                                               |  |      |  |                     | 
|Steven Weldon, CFO and Director                |  | 2006 |  | 8,750               |  |                             |  |                       |  |                     
|                                               |  |      |  |                     | 
|Allen Woodlief, former CFO and former Director |  | 2006 |  | 13,750              |  |                              |  |                        |  |                      
|                                               |  |      |  |                     | 
|Arden Oliphant, former CEO and former Director |  | 2006 |  | 25,000              |  |                             |  |                       |  |                     
|                                               |  | 2005 |  | 34,000              |  |                             |  |                       |  |                     
|                                               |  |      |  |                     | 
|Jeff Jones, former President                   |  | 2006 |  |                    |  |                             |  |                       |  |                     
|                                               |  | 2005 |  | 38,270              |  |                             |  |                       |  |                     
|                                               |  | 2004 |  | 39,813              |  |                             |  |                       |  |                     

Directors Compensation

Directors are not currently compensated, although each is entitled to be reimbursed for reasonable and necessary expenses incurred on our behalf. All directors hold office until the next annual meeting of stockholders
and until their successors have been duly elected and qualified. There are no agreements with respect to the election of directors. We compensated one of our former directors, Robert Genesi, for service on the Board of Directors with 130,000 shares
of restricted stock from our 2005 Restricted Stock Plan. As of March 31, 2006, no director has accrued any expenses or compensation. Officers are appointed annually by the Board of Directors and each executive officer serves at the discretion
of the Board of Directors. Our board of directors does not have an audit or any other committee.



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##### Table of Contents

2005 Restricted Stock Plan

On August 11, 2005, the Board of Directors adopted the Diabetic Treatment Centers of America, Inc. 2005 Restricted Stock Plan (the 2005 Plan) and recommended that it be submitted to our
stockholders for their approval at the 2005 Annual Meeting. The terms of the 2005 Plan provide for grants of restricted stock awards.

Under the 2005 Plan,
the total number of shares of restricted common stock that may be subject to the granting of Awards during the term of the 2005 Plan shall be equal to 5,000,000 shares. Shares with respect to which awards previously granted that are forfeited,
cancelled or terminated are returned to the plan and may be reissued. A grant of 200,000 shares was made to a director and 100,000 shares to an employee. The director forfeited 70,000 shares on April 21, 2006 when he resigned and the employee
forfeited 10,000 shares on May 31, 2006 when he was terminated.

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

The following table presents information known to us, as of July 13, 2006, relating to the beneficial ownership of common stock by:



| |  |  | each person who is known by us to be the beneficial holder of more than 5% of our outstanding common stock;
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | each of our named executive officers and directors; and
| | - |  | -------------------------------------------------------



| |  |  | our directors and executive officers as a group.
| | - |  | ------------------------------------------------

We
believe that all persons named in the table have sole voting and investment power with respect to all shares beneficially owned by them, except as noted.

Percentage ownership in the following table is based on 40,969,759 shares of common stock outstanding as of June 25, 2006. A person is deemed to be the beneficial owner of securities that can be acquired by that
person within 60 days from the date of this Annual Report upon the exercise of options, warrants or convertible securities. Each beneficial owners percentage ownership is determined by dividing the number of shares beneficially owned by that
person by the base number of outstanding shares, increased to reflect the shares underlying options, warrants or other convertible securities included in that persons holdings, but not those underlying shares held by any other person.



|                                              |  |                                                   |  |                                        |  
|--------------------------------------------- |  | ------------------------------------------------- |  | -------------------------------------- | -
|Name of Beneficial Owner                      |  | Number of Shares of CommonStock BeneficiallyOwned |  | Percentage of SharesBeneficially Owned |  
|Scott Allen                                   |  | 7,794,000                                         |  | 19.02                                  | %
|                                              |  |                                                  
|Steven Weldon                                 |  | 301,300                                           |  | 0.74                                   | %
|                                              |  |                                                  
|Jeff Jones                                    |  | 9,533,828                                         |  | 23.27                                  | %
|                                              |  |                                                  
|American Medical Technologies Management, LLC |  | 5,000,000                                         |  | 12.20                                  | %
|                                              |  |                                                  
|All directors and officers (3 persons)        |  | 8,095,300                                         |  | 19.76                                  | %

---

|(1) | Unless otherwise noted, the address of each person listed isc/o Diabetic Treatment Centers of America, Inc. 50 South 900 East, #1, Salt Lake City, Utah, 84102
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our current notes payable of $150,500 are held
by a limited liability company which is 50% owned by Steven Weldon, our Chief Financial Officer and Director.

Subsequent to year end on
May 15, 2006 we entered into a joint venture agreement with Performance Medical Corporation which is owned by Scott Allen, our Chief Executive Officer and a Director.

ITEM 13. EXHIBITS



|              |  |                                                                                                                                                                                
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBITNUMBER |  | DESCRIPTION                                                                                                                                                                    
|3.1           |  | Form of Articles of Incorporation of Diabetic Treatment Centers of America, Inc.(1)                                                                                            
|              | 
|3.2           |  | Bylaws of Diabetic Treatment Centers of America, Inc.(1)                                                                                                                       
|              | 
|10.1          |  | Code of Ethics(2)                                                                                                                                                              
|              | 
|10.2          |  | Diabetic Treatment Centers of America, Inc. 2005 Restricted Stock Plan(3)                                                                                                      
|              | 
|10.3          |  | Joint Venture Agreement(4)                                                                                                                                                     
|              | 
|31.1          |  | Certification of Chief Executive Officer Pursuant to Securities and Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*
|              | 
|31.2          |  | Certification of Chief Financial Officer Pursuant to Securities and Exchange Act Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*
|              | 
|32.1          |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*                            
|              | 
|32.2          |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*                            
|              | 
|99.1          |  | Audit Committee Pre-Approval Policy(2)                                                                                                                                         

---

|* | Filed Herewith
|- | --------------

|(1) | Incorporated by reference to the Registrants Registration Statement on Form SB-2, filed on February 12, 2002, File No. 333-82580
|--- | ---------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to the Registrants Form 10KSB dated March 31, 2004, filed on June 22, 2004, File No. 333-82580
|--- | -------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference to the Companys Proxy Statement on Schedule 14A (filed 8/11/05) (No. 333-83580).
|--- | -----------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reverence to the Companys Form 8-K filed on May 16, 2006, File No. 333-82580
|--- | ---------------------------------------------------------------------------------------------

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES



|                      |  |             |        |             |   |       
|--------------------- |  | ----------- | ------ | ----------- | - | ------
|                      |  | Fiscal 2006 |        | Fiscal 2005
|Audit Fees(1)         |  | $           | 35,111 |             | $ | 23,500
|Audit-Related Fees(2) |  |             | -0-    |             |   | -0-   
|Tax Fees(3)           |  |             | -0-    |             |   | -0-   
|                      |  |             |        |             |   |       
|Subtotal              |  | $           | 35,111 |             | $ | 23,500
|                      |  |            
|All other Fees(4)     |  |             | -0-    |             |   | -0-   
|                      |  |             |        |             |   |       
|Total                 |  | $           | 35,111 |             | $ | 23,500
|                      |  |             |        |             |   |       

---

|(1) | Audit Fees  Audit fees billed to the Company by Tedder, James, Worden &
Associates, P.A. for auditing the Companys annual financial statements and reviewing the financial statements included in the Companys Quarterly Reports on Form 10-QSB.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|(2) | Audit-Related Fees  There were no other fees billed by Tedder, James,
Worden & Associates, P.A. during the last two fiscal years for assurance and related services that were reasonably related to the performance of the audit or review of the Companys financial statements and not reported under
Audit Fees above.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Tax Fees  There were no tax fees billed during the last past fiscal year
for professional services by Tedder, James, Worden & Associates, P.A.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(4) | All Other Fees  There were no other fees billed by during the last two fiscal years for products and services provided.
|--- | ------------------------------------------------------------------------------------------------------------------------

Pre-approval of Audit and Non-Audit Services of Independent Auditor

The Board of Directors policy is to pre-approve all audit and non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other
services. The Board of Directors pre-approval policy with respect to non-audit services is included as Exhibit 99.1 of to this Annual Report. Pre-approval is generally provided for up to 12 months from the date of pre-approval and any
pre-approval is detailed as to the particular service or category of services. The Board of Directors may delegate pre-approval authority to one or more of its members when expedition of services is necessary. The Board of Directors has determined
that the provision of non-audit services by Tedder, James, Worden & Associates, P.A. is compatible with maintaining its independence.



17



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##### Table of Contents

SIGNATURES

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



|                     |  |                                             |  |                                                
|-------------------- |  | ------------------------------------------- |  | -----------------------------------------------
|                     |  | DIABETIC TREATMENT CENTERS OF AMERICA, INC.
|                     |  |                                            
|Dated: July 14, 2006 |  |                                             |  |                                                
|                     |  |                                            
|                     |  | By:                                         |  | /S/ Scott Allen                                
|                     |  | Name:                                       |  | Scott Allen                                    
|                     |  | Title:                                      |  | Chief Executive Officer, President and Director

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



|                     |  |                                             |  |                                                
|-------------------- |  | ------------------------------------------- |  | -----------------------------------------------
|                     |  | DIABETIC TREATMENT CENTERS OF AMERICA, INC.
|                     |  |                                            
|Dated: July 14, 2006 |  |                                             |  |                                                
|                     |  |                                            
|                     |  | By:                                         |  | /S/ Scott Allen                                
|                     |  | Name:                                       |  | Scott Allen                                    
|                     |  | Title:                                      |  | Chief Executive Officer, President and Director
|                     |  |                                            
|                     |  | By:                                         |  | /S/ Steven Weldon                              
|                     |  | Name:                                       |  | Steven Weldon                                  
|                     |  | Title:                                      |  | Chief Financial Officer and Director           



18



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Consolidated Financial Statements

March 31, 2006



---

##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Table of Contents



|                                                                                                           |  |    
|---------------------------------------------------------------------------------------------------------- |  | ---
|Report of Independent Registered Certified Public Accounting Firm                                          |  | F-1
|                                                                                                           | 
|Consolidated Financial Statements:                                                                         |  |    
|                                                                                                           | 
|Consolidated Balance Sheet  March 31, 2006                                                                |  | F-2
|                                                                                                           | 
|Consolidated Statements of Operations  Years ended March 31, 2006 and 2005                                |  | F-3
|                                                                                                           | 
|Consolidated Statements of Stockholders Equity (Capital Deficiency)  Years ended March 31, 2006 and 2005 |  | F-4
|                                                                                                           | 
|Consolidated Statements of Cash Flows  Years ended March 31, 2006 and 2005                                |  | F-5
|                                                                                                           | 
|Notes to Consolidated Financial Statements                                                                 |  | F-6



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##### Table of Contents

Report of Independent Registered Certified Public Accounting Firm

To the Board of
Directors and Stockholders of Diabetic Treatment Centers of America, Inc.

We have audited the accompanying consolidated balance sheet of Diabetic
Treatment Centers of America, Inc. and Subsidiary as of March 31, 2006, and the related consolidated statements of operations, stockholders equity (capital deficiency), and cash flows for the years ended March 31, 2006 and 2005.
These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
March 31, 2006, and the results of their operations and their cash flows for the years ended March 31, 2006 and 2005, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has incurred net losses and negative cash flows from operations since inception. These factors, and the need for additional financing in order for the Company to meet its business plans, raise
substantial doubt about its ability to continue as a going concern. Managements plans in regard to these matters are also discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ Tedder, James, Worden and Associates, P.A.

Orlando, Florida

June 19, 2006



F-1



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Consolidated Balance Sheet

March 31, 2006



|                                                                                                                          |  |               |            |  
|------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | -
|                                                                                                                          |  | March 31,2006 |           
|Assets                                                                                                                    |  |               |            |  
|Current assets:                                                                                                           |  |               |            |  
|Cash                                                                                                                      |  | $             | 108,812    |  
|Accounts receivable, net                                                                                                  |  |               | 4,680      |  
|                                                                                                                          |  |               |            |  
|Total current assets                                                                                                      |  |               | 113,492    |  
|                                                                                                                          |  |               |            |  
|Property and equipment, net                                                                                               |  |               | 26,212     |  
|Other assets                                                                                                              |  |               | 655        |  
|                                                                                                                          |  |               |            |  
|Total assets                                                                                                              |  | $             | 140,359    |  
|                                                                                                                          |  |               |            |  
|Liabilities and Capital Deficiency                                                                                        |  |               |            |  
|Current liabilities:                                                                                                      |  |               |            |  
|Accounts payable                                                                                                          |  | $             | 41,767     |  
|Accrued expenses                                                                                                          |  |               | 51,470     |  
|Loans from stockholders                                                                                                   |  |               | 150,500    |  
|                                                                                                                          |  |               |            |  
|Total current liabilities                                                                                                 |  |               | 243,737    |  
|                                                                                                                          |  |               |            |  
|Capital deficiency:                                                                                                       |  |               |            |  
|Common stock, $0.0001 par value, 50,000,000 shares authorized, 31,049,759 shares issued and outstanding at March 31, 2006 |  |               | 3,105      |  
|Additional paid-in capital                                                                                                |  |               | 938,116    |  
|Deferred stock-based employee compensation                                                                                |  |               | (10,970    | )
|Accumulated deficit                                                                                                       |  |               | (1,033,629 | )
|                                                                                                                          |  |               |            |  
|Total capital deficiency                                                                                                  |  |               | (103,378   | )
|                                                                                                                          |  |               |            |  
|Total liabilities and capital deficiency                                                                                  |  | $             | 140,359    |  
|                                                                                                                          |  |               |            |  

See accompanying notes to the consolidated financial statements.



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Consolidated Statements of Operations

For the years ended March 31, 2006 and 2005



|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                                                                                                     |  | 2006 |            |   | 2005 |  
|Net revenue                                                                                                                                                          |  | $    | 54,593     |   |      | $ |           |  
|                                                                                                                                                                     |  |     
|Cost of revenue                                                                                                                                                      |  |      | 115,537    |   |      |   |           |  
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Gross loss                                                                                                                                                           |  |      | (60,944    | ) |      |   |           |  
|                                                                                                                                                                     |  |     
|General and administrative expenses                                                                                                                                  |  |      |            |   |      |   |            |  
|Payroll and related expenses (inclusive of non-cash stock-based employee compensation of $13,030 and $-0- for the years ended March 31,
2006 and 2005, respectively) |  |      | 112,420    |   |      |   | 91,946     |  
|Rent                                                                                                                                                                 |  |      | 78,796     |   |      |   | 36,000     |  
|Professional fees                                                                                                                                                    |  |      | 41,843     |   |      |   | 7,313      |  
|Loss on impairment of property and equipment                                                                                                                         |  |      | 34,956     |   |      |   |           |  
|Bad debt expense                                                                                                                                                     |  |      | 24,402     |   |      |   |           |  
|Marketing and advertising                                                                                                                                            |  |      | 10,963     |   |      |   | 34,574     |  
|Depreciation                                                                                                                                                         |  |      | 6,627      |   |      |   | 4,186      |  
|Licensing fees                                                                                                                                                       |  |      | 371        |   |      |   | 50,000     |  
|Investor relations                                                                                                                                                   |  |      |           |   |      |   | 62,190     |  
|Other general and administrative expenses                                                                                                                            |  |      | 71,574     |   |      |   | 51,533     |  
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Total general and administrative expenses                                                                                                                            |  |      | 381,952    |   |      |   | 337,742    |  
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Loss from continuing operations                                                                                                                                      |  |      | (442,896   | ) |      |   | (337,742   | )
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Other income (expense):                                                                                                                                              |  |      |            |   |      |   |            |  
|Interest expense                                                                                                                                                     |  |      | (11,933    | ) |      |   | (17,995    | )
|Rental income                                                                                                                                                        |  |      | 9,600      |   |      |   |           |  
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Net other (expense) income                                                                                                                                           |  |      | (2,333     | ) |      |   | (17,995    | )
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Net loss from continuing operations                                                                                                                                  |  | $    | (445,229   | ) |      | $ | (355,737   | )
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Loss from discontinued operations                                                                                                                                    |  |      |           |   |      |   | (20,748    | )
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Net loss                                                                                                                                                             |  | $    | (445,229   | ) |      | $ | (376,485   | )
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Weighted average common shares outstanding                                                                                                                           |  |      | 23,290,033 |   |      |   | 22,742,869 |  
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Net loss per share from continuing operations - basic and diluted                                                                                                    |  | $    | (0.02      | ) |      | $ | (0.02      | )
|                                                                                                                                                                     |  |      |            |   |      |   |            |  
|Net loss per share from discontinued operations - basic and diluted                                                                                                  |  | $    | (0.00      | ) |      | $ | (0.00      | )
|                                                                                                                                                                     |  |      |            |   |      |   |            |  

See accompanying notes to the consolidated financial statements.



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Consolidated Statements of Stockholders
Equity (Capital Deficiency)

For the years ended March 31, 2006 and 2005



|                                                           |        |              |        |                           |       |                                          |   |         |                     |   |         |       |  |   |            |   |  |   |          |  
|---------------------------------------------------------- | ------ | ------------ | ------ | ------------------------- | ----- | ---------------------------------------- | - | ------- | ------------------- | - | ------- | ----- |  | - | ---------- | - |  | - | -------- | -
|                                                           |        | Common stock |        | Additionalpaid-in capital |       | Deferredstock-basedemployee compensation |   |         | Accumulated deficit |   |         | Total | 
|                                                           | Shares |              | Amount |                           |       |                                          |  
|Balance, March 31, 2004                                    |        | 22,721,145   |        | $                         | 2,272 |                                          | $ | 191,695 |                     | $ |        |       |  | $ | (211,915   | ) |  | $ | (17,948  | )
|Conversion of loans into common stock                      |        | 528,614      |        |                           | 53    |                                          |   | 423,201 |                     |   |        |       |  |   |           |   |  |   | 423,254  |  
|Net loss                                                   |        |             |        |                           |      |                                          |   |        |                     |   |        |       |  |   | (376,485   | ) |  |   | (376,485 | )
|                                                           |        |              |        |                           |       |                                          |   |         |                     |   |         |       |  |   |            |   |  |   |          |  
|Balance, March 31, 2005                                    |        | 23,249,759   |        | $                         | 2,325 |                                          | $ | 614,896 |                     | $ |        |       |  | $ | (588,400   | ) |  | $ | 28,821   |  
|                                                           |        |              |        |                           |       |                                          |   |         |                     |   |         |       |  |   |            |   |  |   |          |  
|Issuance of employee restricted stock                      |        | 300,000      |        |                           | 30    |                                          |   | 23,970  |                     |   | (24,000 | )     |  |   |           |   |  |   |         |  
|Sale of restricted stock                                   |        | 7,500,000    |        |                           | 750   |                                          |   | 299,250 |                     |   |        |       |  |   |           |   |  |   | 300,000  |  
|Amortization of deferred stock based employee compensation |        |             |        |                           |      |                                          |   |        |                     |   | 13,030  |       |  |   |           |   |  |   | 13,030   |  
|Net loss                                                   |        |             |        |                           |      |                                          |   |        |                     |   |        |       |  |   | (445,229   | ) |  |   | (445,229 | )
|                                                           |        |              |        |                           |       |                                          |   |         |                     |   |         |       |  |   |            |   |  |   |          |  
|Balance, March 31, 2006                                    |        | 31,049,759   |        | $                         | 3,105 |                                          | $ | 938,116 |                     | $ | (10,970 | )     |  | $ | (1,033,629 | ) |  | $ | (103,378 | )
|                                                           |        |              |        |                           |       |                                          |   |         |                     |   |         |       |  |   |            |   |  |   |          |  

See accompanying notes to consolidated financial statements.



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows

For the years ended March 31, 2006 and 2005



|                                                                            |  |      |          |   |      |   |          |  
|--------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                            |  | 2006 |          |   | 2005 |  
|Cash flows from operating activities:                                       |  |      |          |   |      |   |          |  
|Net loss from continuing operations                                         |  | $    | (445,229 | ) |      | $ | (355,737 | )
|                                                                            |  |     
|Adjustments to reconcile net loss to net cash used in operating activities: |  |      |          |   |      |   |          |  
|Depreciation                                                                |  |      | 12,551   |   |      |   | 4,186    |  
|Interest on loans from stockholders                                         |  |      | 11,933   |   |      |   | 18,254   |  
|Impairment loss on property and equipment                                   |  |      | 34,956   |   |      |   |         |  
|Bad debt                                                                    |  |      | 24,402   |   |      |   |         |  
|Amortization of deferred stock-based employee compensation                  |  |      | 13,030   |   |      |   |         |  
|Changes in operating assets and liabilities:                                |  |      |          |   |      |   |         |  
|Accounts receivable                                                         |  |      | (29,082  | ) |      |   | 1,623    |  
|Other assets                                                                |  |      | 3,845    |   |      |   | (4,500   | )
|Accounts payable                                                            |  |      | 22,193   |   |      |   | 14,889   |  
|Accrued expenses                                                            |  |      | 32,970   |   |      |   | 2,459    |  
|                                                                            |  |      |          |   |      |   |          |  
|Net cash used in continuing operating activities                            |  |      | (318,424 | ) |      |   | (318,826 | )
|Net cash used in discontinued operating activities                          |  |      |         |   |      |   | (20,748  | )
|                                                                            |  |      |          |   |      |   |          |  
|Net cash used in operating activities                                       |  |      | (318,424 | ) |      |   | (339,574 | )
|                                                                            |  |      |          |   |      |   |          |  
|Cash flows from investing activities:                                       |  |      |          |   |      |   |          |  
|Purchase of property and equipment                                          |  |      | (32,853  | ) |      |   | (45,051  | )
|                                                                            |  |      |          |   |      |   |          |  
|Net cash used in investing activities                                       |  |      | (32,853  | ) |      |   | (45,051  | )
|                                                                            |  |      |          |   |      |   |          |  
|Cash flows from financing activities:                                       |  |      |          |   |      |   |          |  
|Loans from stockholders                                                     |  |      | 150,500  |   |      |   | 385,000  |  
|Sale of restricted stock                                                    |  |      | 300,000  |   |      |   |         |  
|                                                                            |  |      |          |   |      |   |          |  
|Net cash provided by financing activities                                   |  |      | 450,500  |   |      |   | 385,000  |  
|                                                                            |  |      |          |   |      |   |          |  
|Net increase in cash                                                        |  |      | 99,223   |   |      |   | 375      |  
|                                                                            |  |      |          |   |      |   |          |  
|Cash, beginning of year                                                     |  | $    | 9,589    |   |      | $ | 9,214    |  
|                                                                            |  |      |          |   |      |   |          |  
|Cash, end of year                                                           |  | $    | 108,812  |   |      | $ | 9,589    |  
|                                                                            |  |      |          |   |      |   |          |  
|Supplemental disclosures of cash flow information:                          |  |      |          |   |      |   |          |  
|Cash paid during the year for:                                              |  |      |          |   |      |   |          |  
|Interest                                                                    |  | $    |         |   |      | $ |         |  
|                                                                            |  |      |          |   |      |   |          |  
|Non-cash financing activities:                                              |  |      |          |   |      |   |          |  
|Conversion of loans from stockholders to common stock                       |  | $    |         |   |      | $ | 423,254  |  
|                                                                            |  |      |          |   |      |   |          |  

See accompanying notes to the consolidated financial statements.



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2006

NOTE 1
 ORGANIZATION AND PRINCIPLES OF CONSOLIDATION

Reporting Entity. Diabetic Treatment Centers of America, Inc. (Diabetic,
Flagstick or the Company) was incorporated on April 4, 2001 under the laws of the State of Delaware. The Company is authorized to issue 50,000,000 shares of common stock, par value $.0001. On April 4, 2001 Flagstick
issued 500 shares to Jeff Arthur Jones in consideration for $100. Also on April 4, 2001 A&Z Golf Corp. was incorporated as a wholly owned subsidiary of Flagstick. On June 5, 2001 Flagstick issued 10,000,000 shares to Jeff Arthur Jones
in exchange for certain receivables purchased from Jeff A. Jones d/b/a A&Z Golf, pursuant to an asset purchase agreement. Flagsticks activities were devoted primarily to the wholesaling of golf equipment.

Due to our inability to expand our wholesale golf operations, on July 1, 2004, the Board of Directors approved changing the name of the Company from Flagstick
Ventures, Inc. to Diabetic Treatment Centers of America, Inc. to reflect our new business direction of owning and operating diabetic treatment centers. On August 4, 2004, the Company ceased operating in the wholesale golf industry to fully
pursue its new direction of opening diabetic treatment centers. In 2005, the Company has separately disclosed the operating, investing, and financing portion of the cash flows attributable to its discontinued operations, which in prior periods were
reported on a combined basis as a single amount.

Principles of Consolidation. The Companys consolidated financial statements for the
years ended March 31, 2006 and 2005, include the accounts of its wholly owned subsidiary A&Z Golf Corp., a Delaware corporation. All intercompany balances and transactions have been eliminated.

Stock Split.On June 1, 2004, the Company declared a five-for-one stock split in the form of a stock dividend, payable June 2, 2004 to
stockholders of record as of June 1, 2004. The Company retained the current par value of $0.0001 for all shares of common stock

NOTE 2 
BASIS OF PRESENTATION

The Companys consolidated financial statements have been prepared assuming the Company will continue as a going concern.
The Company has experienced net losses since April 4, 2001 (date of inception), which losses have caused an accumulated deficit of approximately $1,033,600 as of March 31, 2006. In addition, the Company has consumed cash in its operating
activities of approximately $318,400 and $339,600 for the years ended March 31, 2006 and 2005, respectively. These factors, among others, raise substantial doubt about the Companys ability to continue as a going concern.

Management has been able, thus far, to finance the losses through a public offering, private placements and obtaining operating funds from stockholders. The Company is
continuing to seek sources of financing. There are no assurances that the Company will be successful in achieving its goals.

In view of
these conditions, the Companys ability to continue as a going concern is dependent upon its ability to obtain additional financing or capital sources, to meet its financing requirements, and ultimately to achieve profitable operations. The
Company is currently providing Microvas treatments for diabetics and plans to expand by acquiring or partnering with other medical businesses. Management believes that its current and future plans provide an opportunity to continue as a going
concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that may be necessary in the event the
Company cannot continue as a going concern.



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2006

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition.The Company recognizes revenue from its medical treatments on the date the procedures are performed, and accounts receivable are
recorded at that time. Revenues are reported at the estimated realizable amounts from the third-party payers. If such third-party payers were to change their reimbursement policies, the effect on revenue could be significant and have a material
impact on the Companys results of operations. Provisions have been made, based on prior period collections, for uncollectible accounts at March 31, 2006. The provision for uncollectible accounts was $24,402 as of March 31, 2006.

Cost of Revenue. The components of cost of revenue in the accompanying consolidated statements of operations include all direct labor and
direct material associated with the delivery of Companys medical treatments and other services. In addition, an allocation of overhead costs is included in cost of revenue.

Advertising Costs. The company expenses advertising costs as they are incurred.

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

Income Taxes. The Company utilizes Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes,
which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in financial statements or tax returns. Under this method, deferred income taxes are recognized for the
tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has net operating loss carryforwards that may be offset against
future taxable income. Due to the uncertainty regarding the success of future operations, management has valued the deferred tax asset allowance at 100% of the related deferred tax assets.

Loss per Share. The Company utilizes Financial Accounting Standards Board Statement No. 128, Earnings Per Share. Statement No. 128
requires the presentation of basic and diluted loss per share on the face of the statement of operations.

Basic loss per share has been calculated using
the weighted average number of common shares outstanding during the period. In calculating diluted loss per share, the Company had no common stock equivalent shares as of March 31, 2006 and 2005. However, if the Company had such common stock
equivalents, they would be considered anti-dilutive due to there being losses, and therefore, basic and diluted loss per share are the same.

Stock-Based Compensation.The Company has elected to account for its stock-based compensation granted to employees in accordance with the provisions of Accounting Principles Board Opinion 25 (APB 25), Accounting for Stock
Issued to Employees. Under APB 25, compensation expense is based on the difference, if any, on the date of the grant, between the fair value of the Companys stock and the amount the employee is required to pay. Stock issued to
non-employees is accounted for under the provisions of



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2006

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

Statement of Financial Accounting Standards (SFAS)123, Accounting for Stock-Based Compensation and the Emerging Issues Task Force (EITF) Consensus in Issue
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).

Under SFAS 123, non-employee stock-based compensation is accounted for based on the fair value of the consideration received or equity instruments issued, whichever is more readily determinable. However, SFAS 123 does
not address the measurement date and recognition period. EITF 96-18 states a consensus that the measurement date should be the earlier of the date at which a commitment for performance by the counterparty is reached or the date at which the
counterpartys performance is complete.

The Companys nonemployee stock-based compensation is determined using the fair value of the
Companys equity instruments.

Fair Value of Financial Instruments. The carrying amount of cash, accounts receivable, accounts payable,
and other current liabilities approximates fair value because of the short maturity of those instruments.

Property and Equipment.Property
and equipment are carried at cost, less accumulated depreciation. Major replacements and improvements that extend the useful lives of property and equipment are capitalized. Routine maintenance and repairs are charged to expense when incurred.
Depreciation is computed using the straight-line method over the following estimated useful lives of the related assets.



|                        |  |                      
|----------------------- |  | ---------------------
|Description             |  | Estimated Useful Life
|Machinery and equipment |  | 5-7 years            
|Furniture and fixtures  |  | 5                    
|Software                |  | 3                    

Impairment of Long-Lived Assets.The carrying values of long-lived assets are reviewed if the facts
and circumstances indicate a potential impairment of their carrying values. Management evaluates the recoverability of the net carrying value of its property and equipment by comparing the carrying values to the estimated future undiscounted cash
flows. A deficiency in these cash flows relative to the carrying amounts is an indication of the need for a write-down due to impairment. The impairment write-down would be the difference between the carrying amounts and the fair value of these
assets. Any loss on impairment is recognized by a charge to operations in the period identified.



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2006

NOTE 4  PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of March 31, 2006:



|                                 |  |   |         |  
|-------------------------------- |  | - | ------- | -
|Machinery and equipment          |  | $ | 18,932  |  
|Furniture and fixtures           |  |   | 20,431  |  
|Leasehold improvements           |  |   | 1,226   |  
|Software                         |  |   | 2,359   |  
|                                 |  |   |         |  
|                                 |  |   | 42,948  |  
|Less accumulated depreciation    |  |   | (16,736 | )
|                                 |  |   |         |  
|Total net property and equipment |  | $ | 26,212  |  
|                                 |  |   |         |  

Depreciation expense charged to operations was $12,551 and $4,186 for the years ended March 31, 2006 and
2005, respectively

During the year ended March 31, 2006, the Company recognized an impairment loss on its leasehold improvements and medical
equipment of $34,956. The fair value was determined by managements estimate of the market price of similar used assets. The impairment loss relates to the Companys ongoing diabetic treatment centers and has been separately disclosed in
the Statement of Operations.

NOTE 5  DEFERRED INCOME TAXES

At March 31, 2006, the Company had net operating loss carryforwards for income tax purposes of approximately $1,009,000 available as offsets against future taxable income. The net operating loss carryforwards are
expected to expire at various times from 2022 through 2026.

Rate Reconciliation



|                                  |  |      |          |  
|--------------------------------- |  | ---- | -------- | -
|                                  |  | 2006 |         
|Tax at U.S. statutory rate of 34% |  | $    | (151,378 | )
|Non-deductible items              |  |      | 143      |  
|Change in Valuation Allowance     |  |      | 151,838  |  
|Other                             |  |      | (603     | )
|                                  |  |      |          |  
|Total                             |  | $    | 0        |  
|                                  |  |      |          |  

The tax effects of the primary temporary differences giving rise to the Companys deferred
tax assets and liabilities are as follows for the year ended March 31, 2006:



|                                |  |      |          |  
|------------------------------- |  | ---- | -------- | -
|                                |  | 2006 |         
|Deferred tax assets:            |  |      |          |  
|Net operating loss carryforward |  | $    | 343,045  |  
|Depreciation                    |  |      | 4,239    |  
|Stock compensation              |  |      | 4,430    |  
|                                |  |      |          |  
|Net deferred tax assets         |  |      | 351,714  |  
|Less valuation allowance        |  |      | (351,714 | )
|                                |  |      |          |  
|Net deferred tax asset          |  | $    |         |  
|                                |  |      |          |  

Because of the Companys lack of earnings history, the deferred tax assets have been fully offset by a
valuation allowance. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during those periods that the temporary differences become deductible.



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2006

NOTE 6  OTHER ACCRUED EXPENSES

Other accrued expenses consist of the following as of March 31, 2006:



|                  |  |   |       
|----------------- |  | - | ------
|Payroll           |  | $ | 5,222 
|Interest          |  |   | 11,422
|Lease termination |  |   | 30,000
|Other             |  |   | 4,826 
|                  |  |   |       
|                  |  | $ | 51,470
|                  |  |   |       

NOTE 7  LOANS FROM STOCKHOLDER

The following is a table of loans from stockholder at March 31, 2006 and their related accrued interest:



|            |  |          |  |                 |         |                 |   |       
|----------- |  | -------- |  | --------------- | ------- | --------------- | - | ------
|Date Issued |  | Due Date |  | PrincipalAmount |         | AccruedInterest
|04/12/05    |  | 04/12/06 |  | $               | 30,000  |                 | $ | 2,905 
|05/18/05    |  | 05/18/06 |  |                 | 40,000  |                 |   | 3,484 
|06/29/05    |  | 06/29/06 |  |                 | 10,000  |                 |   | 753   
|07/14/05    |  | 07/14/06 |  |                 | 10,000  |                 |   | 710   
|08/01/05    |  | 08/01/06 |  |                 | 10,000  |                 |   | 664   
|08/15/05    |  | 08/15/06 |  |                 | 10,000  |                 |   | 626   
|08/29/05    |  | 08/29/06 |  |                 | 25,000  |                 |   | 1,472 
|09/14/05    |  | 09/14/06 |  |                 | 5,500   |                 |   | 299   
|09/27/06    |  | 09/27/06 |  |                 | 10,000  |                 |   | 509   
|            |  |          |  |                 |         |                 |   |       
|Total       |  |          |  | $               | 150,500 |                 | $ | 11,422
|            |  |          |  |                 |         |                 |   |       

The loans from stockholders are unsecured notes that bear interest at 10 percent per annum. As of March 31,
2006, accrued interest payable of $11,421 is included in accrued expenses in the accompanying consolidated balance sheet. The loans from stockholders and related accrued interest are due no later than one year from the date of the loan. On
April 12, and May 18, 2006 the Company has defaulted on the loans due on those dates.

NOTE 8  COMMITMENT AND CONTINGENCIES

Office. The Company is currently operating a diabetic treatment center. On August 1, 2004, the Company signed a new lease agreement
to occupy approximately 4,000 square feet of office space in Salt Lake City, Utah, which would have served as our executive offices. Our rent for this location was $4,500 per month and our four year lease was to expire on July 31, 2008. On
April 28, 2006, the Company broke their lease and vacated the property. It is expected that the landlord will lease the vacated space to another tenant by the end of July 2006. Managements estimate of the range of loss for costs
associated with the lease termination is between $20,000 and $80,000. Lease termination costs of $30,000 are included in accrued expenses as of March 31, 2006. Rental expense during the years ended March 31, 2006 and 2005 amounted to
$54,000 and $36,000, respectively.



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2006

NOTE 8  COMMITMENT AND CONTINGENCIES, CONTINUED

Condominium. On September 9, 2005, the Company signed a new lease agreement to occupy a condominium in Park City, Utah. Our rent for this location was
$1,600 per month and expired on March 31, 2006. Rental expense during the year ended March 31, 2006 amounted to $10,773. The Company sub-leased the property from October 31, 2005 to March 31, 2006 for $1,600 per month for a total
rental income of $9,600.

NOTE 9  STOCKHOLDERS EQUITY (CAPITAL DEFICIENCY)

On March 23, 2005 the Company issued 528,614 shares to convert both the principal balance and accrued interest of promissory notes held by certain shareholders. At the date of the conversion the principal and
accrued interest on the loans from stockholders were $405,000 and $18,254, respectively.

NOTE 10  RESTRICTED STOCK BASED COMPENSATION

On August 11, 2005, the Board of Directors adopted the Diabetic Treatment Centers of America, Inc. 2005 Restricted Stock Plan (the
2005 Plan) and it was approved on August 11, 2005 by our stockholders at the 2005 Annual Meeting. The terms of the 2005 Plan provide for grants of restricted stock awards.

Under the 2005 Plan, the total number of shares of restricted common stock that may be subject to the granting of Awards during the term of the 2005 Plan shall be equal
to 5,000,000 shares. Shares with respect to which awards previously granted that are forfeited, cancelled or terminated are returned to the plan and may be reissued. As of March 31, 2006, 300,000 shares have been issued under this Plan.

NOTE 11  LICENSING AGREEMENT

Agreement
with DiabMed. On October 7, 2004, the Company entered into a licensing agreement with Diabetes Medical Development Corporation, d/b/a DiabMed, to secure the exclusive rights to market and sell certain technologies and products used to
treat diabetes and other metabolic disorders in Murray, Utah. Upon signing the agreement, the Company paid $50,000 which it recorded in the financial statements as Licensing Fees. As of June 1, 2005, based on analysis of management and
discussions with executives from DiabMed, the Company believes that DiabMed is in default of the licensing agreement between the Company and DiabMed. The Company does not anticipate being able to reach an agreement and has no further plans of
pursuing these rights.

NOTE 12  SUBSEQUENT EVENT

Stock Purchase Agreement. On April 12, 2006 the Company issued 7,500,000 shares of common stock in accordance with the Stock Purchase Agreement to the investor group.

Joint Ventures. On May 12, 2006, Diabetic Treatment Centers of America, Inc. entered into a Joint Venture Agreement with Personal Performance Medical
Corporation to manage and develop the operations of Personal Performance Medical Corporation (d/b/a/ Fit-Well), a Utah based Corporation that offers full service Prosthetic and Orthotic Care and Manufacturing, DME and soft goods sales. The term of
the Joint Venture will commence on May 12, 2006 and will continue for two consecutive years and will be renewable for one year with a unanimous vote of the parties or until the Joint Venture is liquidated or dissolved. Diabetic Treatment
Centers of America, Inc. will own 75% interest of the Joint Venture and Personal Performance Medical Corporation will own the remaining 25%.



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##### Table of Contents

DIABETIC TREATMENT CENTERS OF AMERICA, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

March 31, 2006

NOTE 12  SUBSEQUENT EVENT, CONTINUED

The initial capital contribution of each Party shall be as follows:

Diabetic
Treatment Centers of America, Inc.  5,000,000 shares of its common stock.

Personal Performance Medical Corporation (d/b/a Fit-Well)  the
management, expertise, use of equipment and necessary facilities to manage and develop a full service Prosthetic and Orthotic clinic.

Consulting
Agreement. On May 12, 2006, Diabetic Treatment Centers of America, Inc. entered into an agreement with Scott Allen to assist in business development and expansion. Mr. Allen will be compensated 5,000,000 shares of restricted common
stock .

Equity Compensation Plan. On April 21, 2006, a director forfeited 70,000 shares when he resigned and an employee forfeited
10,000 shares on May 31, 2006 when he was terminated.

NOTE 13 - RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued Statement No. 123R, Share-Based Payment, which requires companies to recognize in the statement of operations all
share-based payments to employees, including grants of employee stock options, based on their fair values. Accounting for share-based compensation transactions using the intrinsic method supplemented by pro forma disclosures will no longer be
permissible. The new statement will be effective for public entities in the first annual reporting period beginning after June 15, 2005, and, accordingly, will be adopted by us in the first quarter of fiscal year 2007. The actual impact of
adoption of SFAS 123R cannot be fully predicted at this time because it will depend on levels of share-based payments granted in the future. The adoption of this new statement will have no effect until share-based compensation is issued by the
Company.



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