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EX-31.1 - CERTIFICATION - Medical Care Technologies Inc.f10k2010a1ex31i_medicalcare.htm
EX-32.1 - CERTIFICATION - Medical Care Technologies Inc.f10k2010a1ex32i_medicalcare.htm
EX-32.2 - CERTIFICATION - Medical Care Technologies Inc.f10k2010a1ex32ii_medicalcare.htm
EX-31.2 - CERTIFICATION - Medical Care Technologies Inc.f10k2010a1ex31ii_medicalcare.htm


UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
 
FORM 10-K/A

x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the fiscal year ended December 31, 2010
 
OR
 
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from ______ to ______
 
Commission file number 000-53665
 
MEDICAL CARE TECHNOLOGIES INC.
(Formerly AM Oil Resources and Technology)
 
Nevada
(State or other jurisdiction of incorporation or organization)
 
Room 815, No. 2 Building
Beixiaojie, Dongzhimen Nei
Beijing, China 10009
(Address of Principal Executive Offices, including zip code)
 
(8610) 6407 0580
(Issuer’s telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
 
Securities registered pursuant to section 12(g) of the Act:
None
 
Common Stock
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  o No  x
 
Indicate by check mark if the registrant is required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  o No  x
 
Indicate by check mark whether the 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. Yes  x No  o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  o No  x
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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-K or any amendment to this Form 10-K.  x
 
 
 

 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 
Large Accelerated Filer
o
Accelerated Filer
o
 
Non-accelerated Filer
o
Smaller Reporting Company
x
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No  x
 
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, 2011: $2,982,000.
 
The registrant had 164,923,228 shares of common stock outstanding as of March 31, 2011.

 
EXPLANATORY NOTE

The Company is filing this amendment on Form 10-K/A to restate the financial statements for the nine months ended December 31, 2010. The Company identified several errors relating to the accounting of share-based compensation to non-employees. During the year ended December 31, 2010, the Company entered into various consulting and software development agreements, which awarded shares to non-employees, but no compensation was recorded. In connection with one of these agreements, the Company had erroneously accrued $55,800 at December 31, 2010, which represented the cash settlement provision in the agreement. After further review, the Company has determined that the fair value of the 1,395,000 shares of common stock should have been recorded upon the completion of services or when the shares were fully vested, which occurred prior to December 31, 2010.

The effect of the restatement is to increase net loss by $249,064 for the year ended December 31, 2010. Net loss per share for the year ended December 31, 2010 was unchanged.

 
 

 
 
 
TABLE OF CONTENTS
 
 
Page
PART I
 
   
Item 1. Business.
 1
Item 1A. Risk Factors.
 7
Item 1B. Unresolved Staff Comments.
 7
Item 2. Properties.
 7
Item 3. Legal Proceedings.
 8
Item 4. Removed and Reserved.
 8
   
PART II
 
   
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 8
Item 6. Selected Financial Data.
 12
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
 12
   
PART III
 
   
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
 17
Item 8. Financial Statements and Supplementary Data.
 18
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
 19
Item 9A. Controls and Procedures
 19
Item 9B. Other Information
 20
Item 10. Directors, Executive Officers and Corporate Governance.
 20
Item 11. Executive Compensation
 25
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
 29
Item 13. Certain Relationships and Related Transactions, and Director Independence
 30
   
PART IV
 
   
Item 14. Principal Accountant Fees and Services.
 30
Item 15. Exhibits and Financial Statement Schedules.
 32

 
 

 
PART I
 
ITEM 1.           BUSINESS
 
General
 
We are a Developing Stage Company, as defined by the Accounting Standard Codification (“ASC”) ASC 915-15 “ Accounting and Reporting by Development Stage Enterprises.
 
We were incorporated in the State of California on February 27, 2007 as Aventerra Explorations Inc. On December 3, 2008, we changed our name to AM Oil Resources and Technology Inc. On September 28, 2009, we incorporated a wholly owned State of Nevada subsidiary, Medical Care Technologies Inc. (the “Company”), for the sole purpose of effecting a name change. On October 6, 2009, the Company entered into a letter of intent to acquire 100% of the medical care technologies and software held by Great Union Corporation (“Great Union”), a Hong Kong corporation. On October 13, 2009, we filed Articles of Merger with the Nevada Secretary of State to effect a merger with the subsidiary and assume the subsidiary’s name. On November 20, 2009, the Financial Industry Regulatory Authority (FINRA) informed us that the name change had been processed and had taken effect and, in conjunction with the name change, a new trading symbol “MDCE” had been granted.
 
On January 9, 2010, the Company entered into an Asset Acquisition Agreement (“Asset Agreement”) with Great Union to acquire Great Union’s various technologies associated with the development and maintenance of secure information systems which increase access to medical resources and services, health education and wellness, pharmaceutical and nutraceutical products.
 
Background and Overview
 
On November 25, 2008, as Aventerra Explorations Inc., we entered into a preliminary agreement to acquire two patents from AM Oil Resources & Technology Inc., a California corporation (“AM Oil”). In consideration for the acquisition of the patents, we issued thirty million (30,000,000) restricted shares of our common stock. Subsequent to this agreement, we changed our name to AM Oil Resources & Technology Inc.
 
As a result of a breach of several provisions concerning patent title and ownership of the Asset Purchase Agreement with AM Oil, we terminated the Agreement on November 17, 2009 and cancelled 30,000,000 shares of common stock that were issued in connection with the Agreement.
 
As such and as a result of the termination of the Agreement, we are no longer pursuing the technologies to improve the recovery of oil and gas from existing oil and gas wells.
 
Because the Company never received title, the Company determined that it never owned the assets, which resulted in an error in the first two quarters of 2009. As a result, the quarterly reports on Form 10-Q were amended and restated to remove the patent asset and related debt. In addition, the cancellation of common stock issued in connection with this transaction was reflected in the amended quarterly filings.
 
On October 6, 2009, we entered into a non-binding Letter of Intent (“LOI”) to acquire 100% of medical care technologies and software held by Great Union Corporation (“Great Union”), a Hong Kong corporation, by way of a reverse merger. In accordance with the letter of intent, Great Union must complete a foreign ownership structure in which the medical care technologies and software will be held by a company incorporated in the State of Nevada (the “Nevada Company”). We must exchange 38,400,000 shares of common stock for all of the outstanding common shares of the Nevada Company. In addition, we must cancel 57,300,000 shares of common stock held by the former President of the Company.
 
On September 28, 2009, we incorporated a wholly owned subsidiary, Medical Care Technologies Inc. in Nevada for the purpose of effecting a name change and on October 13, 2009, we merged with the subsidiary and assumed our current business name. On November 20, 2009, and in conjunction with the name change, a new trading symbol “MDCE” was granted to us.

 
1

 
 
On January 9, 2010, the Company entered into an Asset Acquisition Agreement (“Asset Agreement”) with Great Union to acquire Great Union’s various technologies associated with the development and maintenance of secure information systems which increase access to medical resources and services, health education and wellness, pharmaceutical and nutraceutical products. In consideration, the Company agreed to issue 57,300,000 shares of its common stock to Great Union. On February 1, 2010, the Company cancelled 57,300,000 units of common stock held by the former President of the Company and issued these shares to Great Union.
 
Our mission now is to open and operate private children’s health clinics throughout China. Concurrent with, and in addition to the clinics we plan to operate, it is our plan to add to our bottom revenue line by offering affordable, standardized and secure software information systems to electronically connect healthcare providers, academic institutions, pharmaceutical and nutraceutical companies, alternative health companies and individual consumers with healthcare information, products and services in China. Initially, we aim to generate e-management revenues and nutraceutical and pharmaceutical product distribution revenues.
 
Our current operations consist of three business segments: Pediatric Clinics, Medical Management Software Systems and; Pharmaceutical and Nutraceutical Products.
 
Pediatric Clinics
 
The company plans to seize the opportunities available for businesses that provide medical type services in China by opening and operating private pediatric clinics and mainly locating them in economically developing and/ developed cities. We have entered into verbal discussions with Chinese health officials to initiate our pediatric health care objectives. We expect to sign a Memorandum of Understanding after the first quarter 2011.
 
Medical Management Software Systems
 
We produce an array of standardized and secure medical management software systems that can be used in a wide range of healthcare settings to electronically connect the healthcare industry with the consumer. They include healthcare monitoring devices for glucose monitoring and cardiovascular monitoring and solutions, among others. The primary customers served by our software systems are hospitals and clinics; physicians’ office practices; retail pharmacies and; healthcare providers.
 
We expect to serve the healthcare industry through the following products and services described below:
 
E-Management Solution #1: We have developed and expect to deploy a secure software information platform called the Med-Suite™ Professional Practice Management information system. Med-Suite™ is geared for usage mainly by healthcare providers such as physicians and nurses in hospitals, nursing homes and clinics. Med-Suite™ in combination with a secure browser based application simplifies workflows, decreases costs and improves the quality of doctor-patient care. Our e-management solution addresses the growing needs of healthcare providers to manage and communicate administrative and clinical data in a cost-effective manner. Med-Suite™ saves the healthcare provider time and money by automating repetitive, labor-intensive administrative and clinical procedures such as: (i) scheduling; (ii) computer-based patient records and encounters tracking; and (iii) multi-site access and data integration. We expect to generate a revenue stream with this service by charging hospitals, nursing homes and doctor’s clinics for purchase installation and maintenance or hosting of Med-Suite™.
 
E-Management Solution #2: Our second information systems product we have developed is the Tele-Health™ Suite. Tele-Health™ functions similarly to a hospital or doctor’s chart and is an interactive record to communicate patient data between (i) healthcare providers and; (ii) healthcare providers and patients for more efficient and effective treatment support, management and monitoring of the patient’s health.
 
 
2

 
 
CareBox™ Concept: The CareBox™ concept is an innovative and powerful product specifically designed for persons needing Tele-Health™ but who do not have access to the necessary computer hardware. The CareBox™ is a personal internet communication device that functions as the interface to the subscriber based network. Our Company’s network will provide users access to telecommunication, tele-medicine applications and product access. The CareBox™ is revolutionary in the development of healthcare service delivery to the individual subscriber.
     
 
a)
CareBox™-Mediated Tele-Health™ System: The CareBox™ system offers the convenience of remote, real-time, audio-visual communication between patient and healthcare personnel. It offers a complete medical assessment, diagnosis, and treatment from a remote location. The CareBox™ processes on-site collections of physiological measurements and provides bi-directional audio-video communication.
     
 
b)
CareBox™ Design: (i) CareBox™ Bluetooth software requirements installed to mobile computing devices; (ii) compatible with iPhone, BlackBerry and other mobile cellular phone protocols and; (iii) enables wireless upload of personal medical information from compatible medical and wellness monitoring devices.
     
 
c)
CareBox™ Usage: Using a secure online facility, healthcare providers (doctors, nurses) can admit and assess patients, and subsequently create and revise individual healthcare plans. Attachments can be made to the CareBox™, for monitoring blood-oxygen levels, temperature, blood pressure, pulse, as well as blood glucose levels. If readings are outside normal limits, the system will initiate a pre-programmed response and instruction for client intervention will be given. The system provides continuous monitoring at home for our clients, which serves to lengthen the period of time a person can live independently, while reducing the number of re-admissions to care facilities. We believe this method consequently lowers the cost of care for individuals and their community.
 
Pharmaceutical and Nutraceutical Products
 
It is our strategy to develop or source and sell high-quality pharmaceutical and nutraceutical products and a wide variety of other merchandise, including over-the-counter medicines, herbal products, personal care products, family care products in our planned Pediatric Clinics, through our website, retail pharmacies and through established sales and distribution channels in China. We will also offer private label products, which we believe will distinguish us from our key competitors. Further, our target customers in this segment are retail pharmacies, pharmaceutical companies; hospitals; physicians’ office practices; consumers; and industrial and food microbiology laboratories. Med-Suite™, in concert with a person’s secure personal health record, will allow the medical professional to communicate pharmaceutical, administrative, clinical data in a cost-effective manner.
 
Executive Offices
 
Our executive offices are located at Room 815, No. 2 Building, Beixiaojie, Dongzhimen Nei, Beijing, People’s Republic of China 10009. We currently lease approximately 600 square feet of space in a commercial building at 1,000RMB per month.
 
Our Target Market
 
The primary targets for our e-management healthcare services as well as our pharmaceutical and nutraceutical products include the vertical markets of:
 
 
a)
Healthcare Professionals: i.e. the healthcare providers themselves who have a need to provide information to their patients or peers/associates; and
 
b)
HealthCare Institutions: i.e. all government and academic institutions that have a need to provide information to their staff, collaborators and patients.
 
 
3

 
 
Marketing and Promotion
 
Our marketing and promotion strategy is to build brand recognition to our children’s clinics and the products we plan to sell, increase patient/customer awareness and, therefore, patient/customer purchases to our products, attract new patients/customers, build strong patient/customer loyalty, maximize repeat customer visits and develop incremental revenue opportunities.
 
We plan to implement a marketing department to design our nationwide marketing efforts as well as to design regional promotions based on local demographics and market conditions. We also plan to launch single clinic promotional campaigns and community activities in connection with the openings of new clinics. In addition, we plan to offer special discounts and gift promotions for selected products periodically in conjunction with our suppliers’ marketing programs.
 
We plan to design many of our promotion programs to encourage suppliers to invest resources to market their brands within our clinics. We plan to charge suppliers promotional fees in exchange for granting them the right to promote and display their products in our clinics during promotional periods. We believe that these types of promotions will improve patients’/customers’ shopping experience because suppliers provide purchasing incentives and information to help patients/customers to make informed purchase decisions.
 
We also plan to run advertisements periodically in selected regional and national newspapers to promote our private label brand and the products carried in our clinics. In selected regions, we plan to promote our private label brand and products using billboards and on the passenger compartments of subway trains. In all cases, we expect the advertising expenses to be borne by the manufacturers/suppliers of the products being advertised. We will aim to design our advertisements to promote our private label brand, our corporate image and the prices of products available for sale in our clinics. We are aware that such advertising is currently not subject to the series of measures regulating the advertising of pharmaceutical products recently adopted by the Chinese government.
 
Distribution of Products
 
We plan to market our pharmaceutical and nutraceutical products in the children’s clinics through independent distribution channels and directly to end-users by independent sales representatives.
 
We expect to lease warehouses that will operate as regional distribution centers for the purpose of serving our children’s clinics. We plan to have suppliers deliver products to our regional distribution centers, which in turn serve our children’s clinics in the region.
 
We expect the operations of our regional distribution centers, including inventory management and deliveries, to be integrated and coordinated by our integrated management information system. We believe that this will provide us with up-to-date product availability information so as to optimize our inventory management.
 
Our Strategies
 
We intend to implement the following strategies for Fiscal 2011:
 
Open Children’s Medical Clinics in Large and Fast-Growing Metropolitan Markets
 
Desirable geographic market is essential to competing effectively as well as maintaining and generating profitability. In 2011 and based upon successful financings, we plan to open new clinics and pharmacies mainly in metropolitan centers with a focus on growing middle and upper-middle class demographics. We are planning entries into cities in both southern and northern China. There is enormous potential for growth in these cities as there are many under-penetrated and untapped local neighborhoods available for us to establish clinics and gain market share.
 
To further our competitive advantage, we plan to create facilities with ambiance catered to children and youth; such facilities are considered to be unique features in the current China market. Additionally, each planned medical clinic will contain an in-house health and wellness shop. With a “one-stop” shopping approach, our mission is to become the preferred medical clinic in residential communities.

 
4

 
 
Capture Patient/ Customer Trust and Loyalty with Effective Marketing and Promotional Programs
 
A strong brand name is critical to winning customers’ trust in us, our products, as well as building customer loyalty and increasing customer visits to our children’s clinics in order to purchase our products. As a result, we intend to promote both our brand name and our private label products. Specifically, we will continue to deploy the following marketing and promotional initiatives:
 
 
offer services that are carefully tailored to meet our patients’/customers’ healthcare needs, including integrated health programs focused on pediatric care, health supplements, weight management, skin care and treatment, obesity, diabetes and sports injury
     
 
organize community-based activities and targeted promotion programs to gain patient/customer loyalty
     
 
form an alliance with a number of promotional partners and develop promotional campaigns with these partners in order to increase awareness of our brand name and private label products; and
     
 
advertise our brand, services and products in television and selected newspapers/magazines that service our targeted cities
 
Offer Health and Wellness Products
 
We will concentrate on the promotion of western health and wellness product lines to develop and strengthen our brand identity in China and to achieve targeted profitability. In particular, we plan to:
 
 
sell an assortment of superior quality, high margin nutritional supplements and herbal products
     
 
develop and invest in multiple private label products targeted at various product categories, geographic regions and patient/customer groups; and
     
 
offer a selection of high, medium and low price private label products within each product category in order to appeal to a broad range of customers
     
 
all products will be FDA and SFDA approved
 
Develop Reliable Distribution Channels for our Products
 
The recent regulatory changes implemented by the Chinese government is an indication that new opportunities have opened up which will allow us to market western health and wellness products.
 
Each pediatric clinic shall be complemented with a health and wellness shop, dedicated to preventive medicine. This shall provide a framework for horizontal integration of healthcare.
 
All goods and services are planned to be well-researched and substantiated by certified market researchers. By utilizing existing networks already firmly established, we estimate the ramp up time to take three to six months.
 
Implement Management Information Systems in our Medical Clinics and Pharmacies
 
We plan to utilize our information management system to build a secured integrated data network for electronic health records and medical information management. The ideal and achievable state is to provide our patients and our medical staff access to the patients’ medical data at any of our locations. The patients’ up-to-date medical records shall be readily available should they chose to go to any of our medical clinics. The overall process creates a sense of trust that all of our medical staff are well aware of their children’s medical history if they are travelling to another city that has our children’s clinics.
 
Operationally, our systems and processes give us an infrastructural advantage. It will streamline delivery, facilitate data mining and fully integrate procurement, inventory management, pricing, and distribution. The system will provide the delivery of data aggregation capabilities and enhanced category management, enabling us to fine-tune processes such as product selection, optimal product/pricing mix, shelf space allocation and automate store replenishment requests. These features are expected to yield significant benefits in the form of economies of scale, lower costs and reduced expenditures for our clinical operations.
 
5

 
 
Looking to the Future:
 
Selectively Pursue Complementary Acquisitions
 
We plan to strategically acquire independently operated clinics that will serve to establish a presence in new markets. Growth is to be achieved through acquisition in large cities such as Beijing and Shanghai. Each acquisition opportunity will be screened by focusing on already existing clinics in prime, well-developed facilities and patient/customer bases which are commercially attractive.
 
We will promote our own private labels for products that will further secure our market shares in Asia.
 
Employees and Employment Agreements
 
At present, we have no full-time employees. Our officers and directors are part-time employees/consultants and; with the exception of our Chief Executive Officer and Chief Operating Officer, each devotes about 25% of his time or 10 hours per week to our operation. We currently have a Consultancy Agreement with the Chief Executive Officer and an Executive Officer Employment Agreement with our Chief Operating Officer. Currently, the CEO devotes approximately 85% or 35 hours per week of her time to the business operations of the Company and the COO devotes about 50% of his time or 20 hours per week to our operations. On December 30, 2010, we adopted a 2010 Stock Option Plan (the “Plan”), the purpose of which is to provide incentives to key employees, officers, directors, consultants, and agents of the Company for high levels of performance and to reward unusual efforts which increase the earnings and long-term growth of the Company. Prior to grant of options under the Plan, there were 10,000,000 shares of common stock available for issuance under the Plan. During the year ended December 31, 2010, we granted 700,000 stock options with an exercise price of $0.25 per share to four of our executive officers. All 700,000 stock options are exercisable until December 30, 2020. Subsequent to the year ended December 31, 2010, on February 1, 2011, we granted 100,000 stock options with an exercise price of $0.25 per share to the Chief Operating Officer of the Company pursuant to an Executive Officer Employment Agreement mentioned above.
 
Other than as described above, we have no other employee contracts. We presently do not have pension, health, annuity, insurance, profit sharing or similar benefit plans; however, we expect to adopt these plans in the future. Our officers and directors will handle our administrative duties until we raise enough funds to be able to hire administrative personnel.
 
Limited Operating History and Need for Additional Capital
 
There is no historical financial information about us upon which to base an evaluation of our performance. We have just started our current operations and have not generated any revenues from activities. We cannot guarantee we will be successful in our business activities. Our business is subject to risks inherent in the establishment of a new business enterprise, including the following: (i) limited capital resources, (ii) ability to develop brand name, (iii) possible delays in obtaining products we sell, (iv) strong competition in the medical technology industry, (v) implementation of strict government regulations in the healthcare industry, (vi) and possible cost overruns due to price and cost increases in services. To become profitable and competitive, we must be able to deploy and sell a sufficient number of management information systems, open and operate successfully a number of pediatric clinics and market and sell large volumes of our products to generate revenues and profits. We have no assurance that future financing will be available to us in the future on satisfactory terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our activities. Equity financing could result in additional dilution to existing shareholders.
 
 
6

 
 
Our future growth is dependent upon selling products, and we cannot guarantee that such products will be available. An element of our strategy is to promote a revenue stream by focusing on pharmaceutical and nutraceutical products that deliver greater benefits to patients, healthcare workers and researchers. The sourcing of these products requires significant time and research. The results of our product sourcing efforts may be affected by a number of factors, including our ability to source and subsequently obtain new products from suppliers, or gain and maintain market approval of these products. There can be no assurance that any products now or that we may seek to sell in our children’s clinics in the future will achieve the revenues we hope for or gain market acceptance.
 
The medical management information technology industry is very competitive and is subject to rapid technological changes, and we face significant competition across our product lines and in each market in which our products may be sold. We face this competition from a wide range of companies. These include large medical device companies, some of which may have greater financial and marketing resources than we do. We also face competition from firms that are more specialized than us with respect to particular markets. Other firms engaged in the distribution of medical technology products have become manufacturers of medical devices and instruments as well. In some instances, competitors, including pharmaceutical companies, also offer their own brand name products and may render our products or proposed products obsolete or less competitive. In addition, the entry into the healthcare market in China and other low-cost locations are creating increased pricing pressures, particularly in developing markets. New entrants may also appear, creating more competition for us.
 
Regulation. Our proposed pediatric clinics and medical management information technology operations and proposed products are subject to regulation by Chinese state agencies. These agencies enforce laws and regulations that govern the development, testing, manufacturing, labeling, advertising, marketing and distribution, and market surveillance of our business, technology and medical products. These regulatory controls can affect the time and cost associated with the development, introduction and continued availability of our services and selling of new products. These agencies possess the authority to take various administrative and legal actions against us, such as product recalls, product seizures and other civil and criminal sanctions.
 
We cannot guarantee that any of our strategic acquisitions, investments or alliances will be successful. While our strategy to open and operate pediatric clinics and promote various revenue streams is driven by the internal development and promotion of our medical management information systems, sourcing and selling large quantities of products and, branding our private label, we seek to supplement our growth through strategic acquisitions, investments and alliances. Such transactions are inherently risky. The success of any acquisition, investment or alliance may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity or to successfully integrate it into our existing business. We cannot guarantee that any future transaction will be successful.
 
ITEM 1A.           RISK FACTORS
 
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
 
ITEM 1B.           UNRESOLVED STAFF COMMENTS
 
None.
 
ITEM 2.             PROPERTIES
 
Our executive offices are located in Beijing, People’s Republic of China. We currently lease approximately 600 square feet of space in a commercial building at 1,000RMB per month. We will generally seek to rent the building in which our planned clinics will operate, although in some regions in China, we will lease the space. Additionally, we expect to open sales offices and distribution facilities for storage of our products but these facilities may be used for multiple purposes, such as additional regional administrative offices. We seek to open clinics in the most developed cities in China, including Shenzhen, Guangzhou, Dalian, Hangzhou, Ningbo, Suzhou and Kunming.
 
7

 
 
We plan to carefully select our clinic sites to maximize consumer traffic, clinic visibility and convenience for our patients/customers. We plan to substantially locate our clinics in well-established urban residential communities and prime retail locations in Chinese cities where living standards and consumer purchasing power are relatively high.
 
ITEM 3.           LEGAL PROCEEDINGS
 
As of the date of this report, there are no material pending legal proceedings (other than ordinary routine litigation incidental to our business) to which we are a party or concerning any of our properties. Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.

ITEM 4.           REMOVED AND RESERVED.
 
PART II
 
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
 
Our common stock is not traded on any stock exchange in the United States and Canada and there is no established public trading market for our common stock. Our common stock is quoted on the OTC Bulletin Board, under the trading symbol MDCE.OB . The market for our stock is highly volatile. We cannot assure you that there will be a market in the future for our common stock. OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Bulletin Board stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
 
On December 30, 2010, we adopted 2010 Stock Option Plan (the “Plan”), the purpose of which is to provide incentives to key employees, officers, directors, consultants, and agents of the Company for high levels of performance and to reward unusual efforts which increase the earnings and long-term growth of the Company. Prior to grant of options under the Plan, there were 10,000,000 shares of common stock available for issuance under the Plan.
 
During the year ended December 31, 2010, we granted 1,350,000 stock options with an exercise price of $0.25 per share. All 1,350,000 stock options are exercisable until December 30, 2020.
 
Subsequent to the year ended December 31, 2010, we granted 100,000 stock options with an exercise price of $0.25 per share to the Chief Operating Officer of the Company.
 
There are no outstanding warrants to purchase.
 
On February 1, 2011, we entered into a Securities Purchase Agreement with Asher Enterprises, Inc. (“Asher”) for the sale of a Convertible Promissory Note (the “Note”) in the principal amount of $50,000. The Note, which is due on November 3, 2011, bears interest at the rate of 8% per annum. All principal and accrued interest on the Note is convertible into shares of our common stock at the election of Asher at any time after 180 days from February 1st at a conversion price equal to a 39.9% discount to the average of the 3 closing bid prices of the common stock during the 10 trading day period prior to conversion. The conversion price is subject to certain anti-dilution protection. 
 
 
8

 
 
On March 21, 2011, we entered into a Securities Purchase Agreement with Asher Enterprises, Inc. (“Asher”) for the sale of a Convertible Promissory Note (the “Note”) in the principal amount of $32,500. The Note, which is due on December 14, 2011, bears interest at the rate of 8% per annum. All principal and accrued interest on the Note is convertible into shares of our common stock at the election of Asher at any time after 180 days from March 11at a conversion price equal to a 39.9% discount to the average of the 3 closing bid prices of the common stock during the 10 trading day period prior to conversion. The conversion price is subject to certain anti-dilution protection. 
 
The following table shows the high and low closing prices of our common shares on the OTC Bulletin Board for each quarter since our common stock began to trade on the OTC Bulletin Board on January 9, 2008. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:

 Fiscal Year 2010
High Bid
Low Bid
 
Fourth Quarter 10-01-10 to 12-31-10
$0.0259
$0.01
 
Third Quarter 7-01-10 to 9-30-10
$0.032
$0.019
 
Second Quarter 4-01-10 to 6-30-10
$0.095
$0.021
 
First Quarter 1-01-10 to 3-31-10
$0.395
$0.07
       
 
Fiscal Year 2009
High Bid
Low Bid
 
Fourth Quarter 10-01-09 to 12-31-09
$0.25
$0.066
 
Third Quarter 7-01-09 to 9-30-09
$0.11
$0.02
 
Second Quarter 4-01-09 to 6-30-09
$0.17
$0.06
 
First Quarter 1-01-09 to 3-31-09
$1.01
$0.12
       
Fiscal Year 2008
High Bid
Low Bid
 
Fourth Quarter 10-01-08 to 12-31-08
$1.01
$0.02
 
Third Quarter 7-01-08 to 9-30-08
$0.27
$0.05
 
Second Quarter 4-01-08 to 6-30-08
$0.00
$0.00
 
First Quarter 1-01-08 to 3-31-08
$0.00
$0.00
 
Holders
 
On December 31, 2010, we had 20 shareholders of record of our common stock.
 
Dividend Policy
 
As of the date of this report, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our board of directors and will depend upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
 
Section 15(g) of the Securities Exchange Act of 1934
 
Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.
 
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as id and offer quotes, a dealers and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
 
 
9

 
 
Securities Authorized for Issuance Under Equity Compensation Plans
 
On December 30, 2010, we adopted 2010 Stock Option Plan (the “Plan”), the purpose of which is to provide incentives to key employees, officers, directors, consultants, and agents of the Company for high levels of performance and to reward unusual efforts which increase the earnings and long-term growth of the Company. Prior to grant of options under the Plan, there were 10,000,000 shares of common stock available for issuance under the Plan.
 
During the year ended December 31, 2010, we granted 1,350,000 stock options with an exercise price of $0.25 per share. All 1,350,000 stock options are exercisable until December 30, 2020.
 
Subsequent to the year ended December 31, 2010, we granted 100,000 stock options with an exercise price of $0.25 per share to the Chief Operating Officer of the Company.
 
Other than as described above, we have no other equity compensation plans and no other shares authorized for issuance under this plan.
 
Recent Sales of Unregistered Securities
 
The following securities were issued in transactions that were exempt from registration under Regulation D Rule 506 and/or Section 4(2) of the Securities Act of 1933, as amended (“Securities Act”), as transactions by an issuer not involving a public offering. All of the investors were knowledgeable, sophisticated and had access to comprehensive information about the Company and represented their intention to acquire the securities for investment only and not with a view to distribute or sell the securities. The Company placed legends on the securities stating that the securities were not registered under the Securities Act and set forth the restrictions on their transferability and sale.
 
Subsequent to year ended December 31, 2010, we completed the following sales of previously unreported, unregistered securities:
 
On January 5, 2011, we filed an S-8 Registration Statement to reserve 10,000,000 shares of common stock for its 2010 Stock Option Plan and to register 7,000,000 shares of common stock to be issued to various consultants pursuant to consulting agreements.
 
On January 11, 2011, we issued 1,097,141 restricted shares of common stock upon the conversion of the November 15, 2010 convertible promissory note.
 
On February 1, 2011, we entered into an Executive Officer Employment Agreement with our Chief Operating Officer. Pursuant to the agreement, we issued 2,000,000 restricted shares of common stock for the first year of service.
 
From January 1, 2010 to December 31, 2010, we completed the following sales of previously unreported, unregistered securities:
 
On December 6, 2010, we issued 100,000 restricted shares of common stock at a fair value of $1,400 pursuant to a consulting agreement related to services in the development, modification, packaging and marketing of certain consumer products acquired by us. Under the terms of the agreement, we agreed to issue 500,000 restricted shares of common stock, payable as follows: i) 100,000 shares upon execution of the agreement; ii) 100,000 shares on March 1, 2011; iii) 150,000 shares on August 1, 2011 and; iv) 150,000 shares on January 1, 2012. The term of the agreement is 24 months.

On November 15, 2010, we issued 275,000 shares of common stock at a fair value of $4,538 pursuant to an administrative services agreement. Under the terms of the agreement, we agreed to issue 1,100,000 shares of common stock registered under an S-8 registration statement. The term of the agreement is one year. The 1,100,000 shares are payable as follows: 275,000 upon the execution of the agreement; 275,000 shares on February 15, 2011; 275,000 shares on May 15, 2011 and; 275,000 shares on August 15, 2011.

On November 10, 2010, we issued 250,000 restricted shares of common stock at a fair value of $4,125 pursuant to an information technology consulting agreement The term of the agreement is 4 months.

On November 6, 2010, we issued 620,000 shares of common stock at a fair value of $10,540 pursuant to a consulting and software development agreement.
 
 
10

 
 
On October 1, 2010, we issued 3,000,000 shares of common stock at a fair value of $72,000 pursuant to a consulting agreement.  The term of the agreement is one year and fifteen days.
 
On September 15, 2010, we issued 3,826,087 restricted shares of common stock to Accredited Members, Inc. (“AMI”) at a fair value of $88,000 pursuant to which we will create and post a corporate profile on AMI’s community website which provides AMI’s members a channel to present information regarding their business to other members.
 
On September 13, 2010, we issued 38,000,000 restricted shares of common stock to our Chief Executive Officer and President of the Company at a fair value of $836,000 for management services.
 
On September 5, 2010, we issued 500,000 restricted shares of common stock at a fair value of $11,000 pursuant to an advisory board agreement.
 
On September 2, 2010, we issued 1,000,000 restricted shares of common stock at a fair value of $23,000 to a director of the Company for 1 year of service as a director of the Company.

On September 2, 2010, we issued 805,000 shares of common stock at a fair value of $18,515 pursuant to a consulting agreement.  The term of the agreement is one year.
 
On September 1, 2010, we issued 250,000 restricted shares of common stock at a fair value of $5,750 pursuant to an advisory board agreement.
 
On September 1, 2010, we issued 3,000,000 restricted shares of common stock at a fair value of $69,000 pursuant to three consulting agreements.
 
On August 31, 2010, we issued 250,000 restricted shares of common stock at a fair value of $5,500 pursuant to a consulting agreement. On December 22, 2010, the 250,000 restricted shares of common stock were returned to the Company for cancellation as the consulting agreement was terminated.
 
On August 31, 2010, we issued 705,000 shares of common stock at a fair value of $15,510 pursuant to a consulting agreement.  The term of the agreement is one year.

On August 28, 2010, we issued 2,500,000 restricted shares of common stock at a fair value of $70,000 pursuant to a business advisory and consulting agreement. We agreed to issue 500,000 restricted shares of common stock of the Company as consideration for entering in the agreement and 2,000,000 restricted shares for consulting services.
 
On May 18, 2010, we issued 2,500,000 restricted shares of common stock at a fair value of $102,500 pursuant to an information technology consulting agreement dated May 18, 2010.
 
On February 1, 2010, 57,300,000 shares of common stock with a fair value of $471,128 were issued pursuant to the Asset Acquisition Agreement with Great Union Corporation.
 
On February 1, 2010, 57,300,000 shares of common stock were cancelled and returned to treasury by the former President of the Company for $nil consideration.
 
On February 1, 2010, we issued 500,000 units at $0.20 per unit for cash proceeds of $100,000. Each unit consists of one share of common stock of the Company and one common share purchase warrant exercisable at $0.15 per share for a period of 36 months. Subsequent to the year ended December 31, 2010, the warrants expired unexercised.
 
Common stock issued during the year ended December 31, 2009:
 
On February 22, 2009, 30,000,000 shares of common stock with a deemed fair value of $4,676,795 were issued pursuant to the Asset Purchase Agreement with AM Oil Resources & Technology Inc. On September 28 2009, the 30,000,000 shares of common stock were cancelled and returned to treasury pursuant to the cancellation of the Asset Purchase Agreement.
 
On February 22, 2009, 57,500,000 shares of common stock were cancelled and returned to treasury by the President of the Company in consideration for $15,000. As we did not pay the $15,000, on September 28, 2009, 57,500,000 shares of common stock were re-issued to the then President of the Company.
 
 
11

 
 
ITEM 6.           SELECTED FINANCIAL DATA.
 
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
 
ITEM 7.           MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
 
This section of the report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
 
We are a start-up, development stage, medical technology company headquartered in Beijing, China and engaged principally in opening and operating children’s medical clinics, the development and maintenance of secure medical information systems used by healthcare institutions, life science researchers, clinical laboratories, the pharmaceutical industry and the general public and; selling and distributing pharmaceutical and nutraceutical products. We have not yet generated or realized any revenues from our business activities.
 
Our aim is to advance health care in China. In assessing the outcomes of our strategies and our financial condition and operating performance, management generally reviews quarterly forecast data, monthly actual results, product and segment sales and other similar information. We also consider trends related to certain key financial data, including gross profit margin, selling and administrative expense, investment in research and development, return on invested capital, and cash flow.
 
Our anticipated revenue streams over the next three years are expected to come from pediatric clinic market, e-management online healthcare market and pharmaceutical and nutraceutical supply market. We plan to develop in each of our business segments new products and services that provide increased benefits to patients, healthcare workers and researchers. Our ability to obtain long-term growth will depend on a number of factors, including our ability to expand our business (including geographical expansion), source new products with higher gross profit margins, and obtain operating efficiency and organizational effectiveness.
 
The accompanying financial statements have been prepared on a going concern basis, which implies we will continue to realize our assets and discharge our liabilities in the normal course of business. We have not generated any revenues and we do not anticipate to generate any revenues until i) we begin implementing our medical management software systems and devices in hospitals and clinics; ii) sourcing, marketing and selling pharmaceutical and nutraceutical products to healthcare providers and the general public and; iii) opening and serving patients in our children’s clinics. Accordingly, we must raise cash from private investors, through equity financings or by developing strategic alliances with other leading, world class players in the health industry. Our only other source for cash at this time is monies raised through loans and convertible promissory notes from friends and family. Subsequent to our year ended December 31, 2010, we received net proceeds of $77,000 from Asher Enterprises Inc. pursuant to two (2) Securities Purchase Agreements for the sale of Convertible Promissory Notes. The cash we raised has allowed us to pay our trade payables and will allow us to stay in business for at least to the end of the second quarter. Our success or failure will be determined by creating alliances with healthcare providers and financing groups who i) see merit in forming children’s clinic joint ventures with us; ii) need our medical technology and; iii) selling a large volume of our products throughout China.

 
12

 
 
Significant Events
 
On February 18, 2009, we reduced the authorized shares of common stock from 1,150,000,000 shares of common stock with a par value of $0.00001 per share to 150,000,000 shares of common stock with a par value of $0.00001 per share. The authorized shares of preferred stock remain unchanged.
 
On February 22, 2009, 57,500,000 shares of common stock were cancelled and returned to treasury by the President of the Company.
 
On September 28, 2009, the previously cancelled 57,500,000 shares of common stock were re-issued to Patricia Traczykowski, our then President, as a result of our failure to pay Ms. Traczykowski for her shares of common stock.
 
On October 13, 2009 Medical Care Technologies Inc., formerly known as AM Oil Resources & Technology Inc. (the “Company”), filed Articles of Merger with the Nevada Secretary of State to effect a merger with its wholly owned subsidiary, Medical Care Technologies Inc., and assume the subsidiary’s name. The subsidiary was incorporated entirely for the purpose of effecting this name change and the merger did not affect the Company’s Articles of Incorporation or corporate structure in any other way.
 
On November 20, 2009, the Financial Industry Regulatory Authority (FINRA) informed us that the name change had been processed and had taken effect and, in conjunction with the name change, a new trading symbol “MDCE” had been granted.
 
On September 13, 2010, we entered into a CEO Amendment Agreement to the Consultancy Agreement dated November 25, 2009 with Ning C.Wu, our current Chief Executive Officer and President. Pursuant to these Agreements, we issued 38,000,000 restricted shares of common stock to Wu for management services. Additionally, on September 13, 2010, we entered into a Lock Up Agreement whereby the Lock Up provides a restriction clause whereby Wu is not permitted to sell, dispose of, pledge or grant any rights with respect to the 38,000,000 restricted shares until September 13, 2012.
 
On September 17, 2010, we increased our authorized share capital of common stock to 500,000,000 shares with par value of $0.00001. The authorized shares of preferred stock remained unchanged.
 
Liquidity and Capital Resources
 
Cash on hand as of March 31, 2011 is $11,170. Net cash used for operating activities was $189,935 for the year ended December 31, 2010 compared to net cash used in operating activities of $82,050 for the year ended December 31, 2009. Operating expenses for the year ended December 31, 2010 included i) $494,918 in depreciation and amortization expenses; ii) stock based compensation of $1,481,897 of which an issuance of 38,000,000 common stock at a fair value of $836,000 was paid to the President of the Company for management services; 16,635,000 common stock at a fair value of $515,088 was paid to consultants for various information technology, business advisory, public relations and general consulting services; 3,826,087 common stock at a fair value of $88,000 was paid to a firm in exchange for the Company posting its corporate profile on the firm’s community website; 1,000,000 common stock at a fair value of $23,000 was paid to a former director as remuneration and; 750,000 common stock at a fair value of $16,750 was paid to 2 advisors pursuant to advisory board agreements; iii) paid down prepaid expenses of $6,500 and; iv) increase of $31,429 in accounts payable and accrued liabilities. We anticipate that overhead costs will increase in the near term as we increase our operational activities and move ahead with our planned initiatives for 2011 in opening pediatric clinics in China.
 
Cash flows provided by financing activities accounted for $189,851 for the year ended December 31, 2010 compared to financing activities of $72,734 for the year ended December 31, 2009. For the year ended December 31, 2010, financing activities included an issuance of common stock for cash of $100,000; an increase in loans payable of $20,449; an increase in convertible note payable of $10,000 and; an increase in related party loans of $57,402.
 
As of December 31, 2010, our total assets were $16,891 and our total liabilities were $246,253. Total assets increased from December 31, 2009 by $16,416 and total liabilities increased from December 31, 2009 by $118,872.  The increase in liabilities is mainly due to the increase in trade payables such as legal, professional and accounting fees and other filing costs of maintaining a public company. Additionally, we entered into various promissory note agreements which have added to this increase in liabilities.
 
 
13

 
 
On January 13, 2010 we completed a non-brokered private placement of 500,000 units at a price of US$0.20 per unit for total proceeds of US$100,000. Each unit purchased was comprised of one share of common stock and one Series A Warrant. Each Series A Warrant was non-transferable and was convertible into one share of common stock upon payment of $0.15 per Series A Warrant, exercisable for a period of twenty four (24) months. The units were sold pursuant to the exemption from registration contained in Regulation S of the Securities Act of 1933 in that the transaction took place outside the United States of America and the purchaser was a non-US person as defined in Regulation S. The securities that comprise the units are ‘restricted securities’ as that term is defined in Rule 144 of the Securities Act of 1933. Subsequent to the year ended December 31, 2010, on January 15, 2012, the Series A Warrant expired unexercised.
 
On November 15, 2010, we entered into a Convertible Promissory Note (the “Note”) with Margaret Chang (“Chang”) in the principal amount of $10,000. The Note, which is due on November 12, 2011, bears interest at the rate of 6% per annum. All principal and accrued interest on the Note is convertible into shares of our common stock at the election of Chang at any time upon submission of a conversion notice to us. Subsequent to the year ended December 31, 2010, on January 11, 2011, Chang elected to convert the principal and interest outstanding into common shares of the Company and received 1,097,141 restricted common shares in full payment of the Note.
 
On November 16, 2010, we entered into a Loan Agreement (the “Loan”) with Yee Wu in the principal amount of $10,000. The Loan, which is due November 24, 2011, bears interest at 6% per annum.
 
Subsequent to the year ended December 31, 2010 and on February 1, 2011, we entered into a Securities Purchase Agreement with Asher Enterprises, Inc. (“Asher”) for the sale of a Convertible Promissory Note (“Asher Note 1”) in the principal amount of $50,000. We received net proceeds from the issuance of the Note in the amount of $47,000. The Note, which is due on November 3, 2011, bears interest at the rate of 8% per annum. All principal and accrued interest on the Note is convertible into shares of our common stock at the election of Asher at any time after 180 days from February 1st at a conversion price equal to a 39.9% discount to the average of the 3 closing bid prices of the common stock during the 10 trading day period prior to conversion. If we fail to deliver shares to Asher upon conversion shall result in a payment to Asher of $2,000 in cash per day. The conversion price is subject to certain anti-dilution protection; for example, if we issue shares for a consideration less than the applicable conversion price, the conversion price is reduced to such amount. If we desire to exercise our right to prepay the Note during the first 90 days after its issuance, the prepayment penalty is 150% of all amounts owed to Asher; if we elect to prepay between the 91st and 180th day after issuance, the penalty is 175% of all amount owed. There is no right to prepay after the 181th day of issuance.
 
Subsequent to the year ended December 31, 2010 and on March 21, 2011, we received net proceeds of $30,000 as a result of a second Securities Purchase Agreement with Asher for the sale of a second Convertible Promissory Note (“Asher Note 2”) in the principal amount of $32,500. The Note, which is due on December 14, 2011, bears interest at the rate of 8% per annum. All principal and accrued interest on the Note is convertible into shares of our common stock at the election of Asher at any time after 180 days from March 11 (the date the Note was actually dated) at a conversion price equal to a 39.9% discount to the average of the 3 closing bid prices of the common stock during the 10 trading day period prior to conversion. If we fail to deliver shares to Asher upon conversion shall result in a payment to Asher of $2,000 in cash per day. The conversion price is subject to certain anti-dilution protection; for example, if we issue shares for a consideration less than the applicable conversion price, the conversion price is reduced to such amount. If we desire to exercise our right to prepay the Note during the first 90 days after its issuance, the prepayment penalty is 150% of all amounts owed to Asher; if we elect to prepay between the 91st and 180th day after issuance, the penalty is 175% of all amount owed. There is no right to prepay after the 181th day of issuance.
 
 
14

 
 
Results of Operations
 
Net Loss. We incurred a net loss of $2,189,271 for the year ended December 31, 2010, compared to a net loss of $85,121 for the year ended December 31, 2009. This was mainly as a result of: i) an increase of $880,324 in management fees ($896,016 in 2010 and $15,692 in 2009) due to an issuance of 38,000,000 shares of common stock to the President of the Company at a fair value of $836,000 for management services. The 38,000,000 share issuance is subject to a Two Year Lock Up Agreement; ii) an increase of $731,454 in general and administrative expenses ($800,119 in 2010 and $68,665 in 2009) mainly due to an increase of stock based compensation pursuant to various information technology, business advisory, public relations and general consulting services and director remuneration and advisory board compensation.;
 
From February 27, 2007 (inception date) to December 31, 2010 we incurred a net loss of $2,367,677 and had a working capital deficiency of $239,362.
 
 
Our ability to achieve profitable operations depends on developing revenue through the operation of private pediatric clinics throughout China. Our expectations are that we will not begin to show profitable results from the operation of pediatric clinics until end of 2012.
 
Limited Capital
 
We have used funds from a $10,000 loan, $10,000 convertible promissory note as well as the net proceeds of $77,000 received from Asher pursuant to two (2) Securities Purchase Agreements for the sale of Convertible Promissory Notes to pay our trade payables. Our limited cash will also be used to pay for our minimal office and administrative expenses in Beijing and legal, accounting and professional services required to prepare and file our reports with the SEC. Our remaining cash, however, will only be sufficient to sustain us for the short-term. If we are unable to locate additional financing within the short-term, we will be forced to suspend all public reporting with the SEC and possibly liquidate.
 
We are currently in discussions with investors to raise the funds necessary to carry out our operational plans and continue our business activities.
 
Other than as described above, we have no commitments for any additional financing, and there can be no assurance that, if needed, additional capital will be available to use on commercially acceptable terms or at all. Our failure to raise capital as needed would significantly restrict our growth and hinder our ability to compete. We may need to curtail expenses, and forgo business opportunities. Additional equity financings are likely to be dilutive to holders of our common stock and debt financing, if available, may involve significant payment obligations and covenants that restrict how we operate our business. If we are unable to secure funds to finance our operations, we may examine other possibilities, including, but not limited to, mergers or acquisitions.
 
Management believes the ability of the Company to continue as a going concern, earn revenues and achieve profitability is highly dependent on a number of factors including our ability to obtain sufficient financing to prepare a market analysis for submission to the appropriate state authorities in China in order to procure the necessary licensing approvals of establishing children’s health clinics. We have already completed a White Paper which outlines our vision for operating children’s health clinics in China.
 
The Company has not generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and to determine the existence, discovery and successful exploitation of economically recoverable reserves in its resource properties, confirmation of the Company’s interests in the underlying properties, and the attainment of profitable operations. As at December 31, 2010, the Company has a working capital deficit and has accumulated losses of since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
 
Off-Balance Sheet Arrangements
 
We have no off-balance sheet arrangements.
 
 
15

 
 
Inflation
 
The effect of inflation on our revenue and operating results has not been significant.
 
Recent Accounting Policies
 
In June 2009, the Financial Accounting Standards Board (“FASB”) issued guidance now codified within FASB Accounting Standards Codification (“ASC”) Topic 105, “Generally Accepted Accounted Principles,” establishing the ASC as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (“GAAP”), superseding existing FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force, and related accounting literature. The ASC reorganizes the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a consistent structure. Also included is relevant Securities and Exchange Commission guidance organized using the same topical structure in separate sections. This guidance was effective for financial statements issued for reporting periods that ended after September 15, 2009. The adoption did not impact the Company’s financial position, results of operations or liquidity.
 
In January 2010, the FASB issued guidance amending ASC Topic 820 to require new disclosures concerning transfers into and out of Levels 1 and 2 of the fair value measurement hierarchy, and activity in Level 3 measurements. In addition, the guidance clarifies certain existing disclosure requirements regarding the level of disaggregation and inputs and valuation techniques and makes conforming amendments to the guidance on employers’ disclosures about postretirement benefit plans assets. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009; however, the requirements to disclose separately purchases, sales, issuances, and settlements in the Level 3 reconciliation are effective for fiscal years beginning after December 15, 2010 (and for interim periods within such years). The Company does not expect the adoption to have a material impact on its financial position, results of operations or cash flows.
 
In June 2009, the FASB issued guidance which has not yet been codified in the ASC, amending the consolidation guidance applicable to variable interest entities. The amendments will affect the overall consolidation analysis under ASC Topic 810, “Consolidation.” The Company does not expect the adoption to have a material impact on its financial position, results of operations or cash flows.
 
Critical Accounting Estimates
 
Basis of Presentation and Consolidation: Our consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Aventerra Explorations Ltd, a company incorporated in England. All inter-company accounts and transactions have been eliminated.
 
Use of Estimates: The preparation of financial statements in conformity with US generally accepted accounting principles 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. The Company regularly evaluates estimates and assumptions related to donated expenses, and deferred income tax valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
 
Earnings (Loss) Per Share: The Company computes net earnings (loss) per share in accordance with ASC 260 “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. At December 31, 2010 and 2009, there were no dilutive potential common shares.

 
 
16

 
 
Foreign Currency Translation: The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Canadian dollars and management has adopted ASC 830 “Foreign Currency Translation Matters”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
 
ITEM 7A.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
 
 
17

 
 
ITEM 8.            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
Medical Care Technologies Inc.
 (A Development Stage Company)
December 31, 2010

 
 
 Index
   
Report of Independent Registered Public Accounting Firm
 F-1
   
Consolidated Balance Sheets
 F-2
   
Consolidated Statements of Expenses
 F-3
   
Consolidated Statements of Cash Flows
 F-4
   
Consolidated Statement of Stockholders’ Equity (Deficit)
 F-5
   
Notes to the Consolidated Financial Statements
 F-6 - F-18
 
 
18

 

 
Report of Independent Registered Public Accounting Firm

To the Board of Directors
Medical Care Technologies Inc.
(a development stage company)
Beijing, China
 

We have audited the consolidated balance sheets of Medical Care Technologies Inc. (the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of expenses, shareholders’ equity (deficit), and cash flows for the years then ended and for the period from February 27, 2007 (Inception) to December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 16 to the financial statements, the December 31, 2010 financial statements have been restated to correct the accounting errors.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Company as of December 31, 2010 and 2009, and the results of their expenses and their cash flows for the years then ended and for the period from February 27, 2007 (Inception) to December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying consolidated financial statements have been prepared assuming that Medical Care Technologies Inc. will continue as a going concern. As discussed in Note 1 to the financial statements, Medical Care Technologies Inc. suffered losses from operations and has a working capital deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
 
 
 /s/ MALONEBAILEY, LLP
www.malonebailey.com
Houston, Texas
 
April 1, 2011, except for Note 16, which is May 31, 2011

 
 
F-1

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Consolidated Balance Sheets


   
December 31,
   
December 31,
 
   
2010
   
2009
 
   
(Restated)
       
ASSETS
           
             
Current Assets
           
             
  Cash and cash equivalents
 
$
391
   
$
475
 
  Prepaid expenses
   
6,500
     
 
                 
Total Current Assets
   
6,891
     
475
 
                 
Property and equipment, net of accumulated depreciation of $40,000
   
10,000
     
 
Intangible assets, net of accumulated amortization of $476,928
   
     
 
                 
Total Assets
 
$
16,891
   
$
475
 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
               
                 
Current Liabilities
               
  Accounts payable
 
$
77,958
   
$
31,202
 
  Accrued liabilities
   
10,112
     
 
  Convertible note payable, net of unamortized discount of $8,503
   
1,573
     
 
  Derivative liability
   
6,095
     
 
  Due to related parties
   
59,402
     
25,439
 
  Loans payable
   
91,113
     
14,000
 
                 
Total Current Liabilities
   
246,253
     
70,641
 
                 
  Loans payable
   
     
56,740
 
                 
Total Liabilities
   
246,253
     
127,381
 
                 
Commitments and Contingency (Notes 12 and 13)
               
                 
Stockholders’ Deficit
               
                 
Preferred Stock, 100,000,000 shares authorized, $0.00001 par value, No shares issued and outstanding as of December 31, 2010 and 2009, respectively
   
     
 
                 
Common Stock, 500,000,000 shares authorized, $0.00001 par value, 161,006,087 and
98,900,000 shares issued and outstanding as of December 31, 2010 and 2009, respectively
   
1,610
     
989
 
                 
Additional Paid-in Capital
   
2,136,705
     
50,511
 
                 
Deficit Accumulated During the Development Stage
   
(2,367,677
)
   
(178,406
)
                 
Total Stockholders’ Deficit
   
(229,362
)
   
(126,906
)
                 
Total Liabilities and Stockholders’ Deficit
 
$
16,891
   
$
475
 
 
(The accompanying notes are an integral part of these consolidated financial statements)
 
 
F-2

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Consolidated Statements of Expenses

   
For the year ended
December 31,
   
Period from
 February 27, 2007
 
         
(Inception)
 
         
To December 31,
 
   
2010
   
2009
   
2010
 
   
(Restated)
         
(Restated)
 
Expenses
                 
                   
General and administrative
 
$
800,119
   
$
68,665
   
$
874,759
 
Depreciation and amortization expense
   
494,918
     
     
494,918
 
Management fees
   
896,016
     
15,692
     
911,708
 
                         
Total Operating Expenses
   
(2,191,053
)
   
(84,357
)
   
(2,281,385
)
                         
Other Income (Expense)
                       
                         
Accretion of discount on convertible debt
   
(341
)
   
     
(341
)
Gain on derivative
   
2,749
     
     
2,749
 
Foreign currency exchange gain (loss)
   
(626
)
   
(764
)
   
(1,390
)
                         
Total Other Income (Expense)
   
1,782
     
(764
)
   
1,018
 
                         
Loss Before Discontinued Operations
   
(2,189,271
)
   
(85,121
)
   
(2,280,367
)
                         
Loss from Discontinued Operations
                       
                         
Discontinued operations
   
     
     
(87,310
)
Net Loss
 
$
(2,189,271
)
 
$
(85,121
)
 
$
(2,367,677
)
                         
Net Loss Per Common Share – Basic and Diluted:
                       
                         
  Discontinued Operations
   
N/A
     
N/A
         
  Continued Operations
 
$
(0.02
)
 
$
(0.00
)
       
  Net Loss
 
$
(0.02
)
 
$
(0.00
)
       
                         
Weighted Average Common Shares Outstanding–Basic and Diluted
   
115,922,000
     
82,777,000
         
 
(The accompanying notes are an integral part of these consolidated financial statements)
 
F-3

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows

 
For the year ended
December 31,
   
Period from
February 27, 2007
 
             
(Date of Inception)
 
             
To December 31,
 
 
2010
   
2009
   
2010
 
 
(Restated)
         
(Restated)
 
                       
Operating Activities
                     
                       
Net loss for the period
$
(2,189,271
)
  $
(85,121
)  
(2,367,677
)
                       
                       
Donated services and expenses
 
     
     
10,500
 
Depreciation and amortization
 
494,918
     
     
494,918
 
Stock-based compensation
 
1,481,897
     
     
1,481,897
 
Accretion of discount on convertible debt
 
341
     
     
341
 
Gain on derivative
 
(2,749
)
   
     
(2,749
)
                       
Changes in operating assets and liabilities:
                     
Prepaid expenses
 
(6,500
)
   
     
(6,500
)
Accounts payable
 
21,317
     
6,946
     
53,154
 
Accrued liabilities
 
10,112
     
(3,875
)
   
10,112
 
Net Cash Used in Operating Activities
 
(189,935
)
   
(82,050
)
   
(326,004
)
                       
Financing Activities:
                     
Proceeds from sale of common stock for cash
 
100,000
     
     
141,000
 
Proceeds from loans payable
 
20,449
     
70,740
     
91,189
 
Proceeds from convertible note payable
 
10,000
     
     
10,000
 
Due to related party
 
59,402
     
1,994
     
84,206
 
Net Cash Provided by Financing Activities
 
189,851
     
72,734
     
326,395
 
                       
Increase (Decrease) in Cash and Cash Equivalent
 
(84
)
   
(9,716
)
   
391
 
                       
Cash – Beginning of Period
 
475
     
9,791
     
 
                       
Cash – End of Period
$
391
   
$
475
   
$
391
 
                       
Supplemental Disclosures
                     
  Interest paid
 
     
     
 
  Income taxes paid
 
     
     
 
                       
Non-Cash Disclosures
                     

Debt discount
 
$
8,844 
     
   
$
8,844
 
Cancellation of shares
 
$
573
   
$
   
$
573
 
Reclass of related party debt to/from accounts payable
 
$
25,439
   
$
   
$
48,249
 
Shares issued for acquisition of assets
 
$
504,918
   
$
   
$
504,918
 
 
(The accompanying notes are an integral part of these consolidated financial statements)
 
 
F-4

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders’ Equity (Deficit)

                     
Deficit
       
                     
Accumulated
       
   
Common Stock
   
Additional
   
During
       
         
Par
   
Paid-in
   
Development
       
   
Shares
   
Value
   
Capital
   
Stage
   
Total
 
                               
Balance – February 27, 2007 (Inception)
   
   
$
   
$
   
$
   
$
 
                                         
Issuance of common stock for cash at $0.00001 per share to the President of the Company
   
57,500,000
     
575
     
4,425
     
     
5,000
 
                                         
Issuance of common stock for cash at $0.0001 per share
   
41,400,000
     
414
     
35,586
     
     
36,000
 
                                         
Donated services
   
     
     
5,000
     
     
5,000
 
                                         
Net loss for the period
   
     
     
     
(37,543
)
   
(37,543
)
                                         
Balance – December 31, 2007
   
98,900,000
     
989
     
45,011
     
(37,543
)
   
8,457
 
                                         
Donated services
   
     
     
5,500
     
     
5,500
 
                                         
Net loss for the year
   
     
     
     
(55,742
)
   
(55,742
)
                                         
Balance – December 31, 2008
   
98,900,000
   
$
989
   
$
50,511
   
$
(93,285
)
 
$
(41,785
)
                                         
Cancellation of common stock – President of the Company
   
(57,500,000
)
   
(575
)
   
(14,425
)
   
     
(15,000
)
                                         
Issuance of common stock for cash - President of the Company
   
57,500,000
     
575
     
14,425
     
     
15,000
 
                                         
Net loss for the year
   
     
     
     
(85,121
)
   
(85,121
)
                                         
Balance – December 31, 2009
   
98,900,000
   
$
989
   
$
50,511
   
$
(178,406
)
 
$
(126,906
)
                                         
Cancellation of common stock
   
(57,300,000
)
   
(573
)
   
573
     
     
 
                                         
Issuance of common stock for acquisition of assets
   
58,695,000
     
587
     
504,331
     
     
504,918
 
                                         
Issuance of common stock for cash at $0.20 per share
   
500,000
     
5
     
99,995
     
     
100,000
 
                                         
Issuance of common stock for consulting services
   
16,635,000
     
166
     
514,921
     
     
515,088
 
                                         
Issuance of common stock for management services
   
38,000,000
     
380
     
835,620
     
     
836,000
 
                                         
Issuance of common stock for director fees
   
500,000
     
5
     
10,995
     
     
11,000
 
                                         
Issuance of common stock for business promotion services
   
3,826,087
     
38
     
87,962
     
     
88,000
 
                                         
Issuance of common stock for advisory services
   
1,250,000
     
13
     
28,737
     
     
28,750
 
                                         
Stock based compensation
   
     
     
3,012
     
     
3,012
 
                                         
Issuance of stock options for management and consulting services
   
     
     
48
     
     
48
 
                                         
Net loss for the year
   
     
     
     
(2,189,271
)
   
(2,189,271
)
                                         
Balance – December 31, 2010 (Restated)
   
161,006,087
   
$
1,610
   
$
2,136,705
   
$
(2,367,677
)
   
(229,3662
)
 
(The accompanying notes are an integral part of these consolidated financial statements)
 
 
F-5

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
 
1.
Development Stage Company and Going Concern
 
Medical Care Technologies Inc. (the “Company”) was incorporated in the State of Nevada on February 27, 2007 under the name of “Aventerra Explorations Inc.” and changed its name to “AM Oil Resources & Technology Inc.” on December 3, 2008. On September 28, 2009, the Company incorporated Medical Care Technologies Inc. for the sole purpose of effecting a name change. On October 6, 2009, the Company effected a merger with the wholly owned subsidiary and assumed the subsidiary’s name. In conjunction with the name change, the Company has also been granted a new trading symbol of MDCE. The Company is in the development stage as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “ Development Stage Entities ”.
 
During the year ended December 31, 2010, the Company issued 57.3 million shares of common stock in connection with the acquisition of certain software and computer equipment. The shares represented 57.6% of the total issued and outstanding shares of the Company, resulting in a change in control. This change of control will limit the utilization of our NOL carryforwards in future tax periods. The Company’s principal business now is to open and operate private children’s health clinics throughout China.
 
Going Concern
 
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations. As at December 31, 2010, the Company has a working capital deficit of $239,362 and has accumulated losses of $2,367,677 since inception. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
 
2.
Significant Accounting Policies
 
 
a) Basis of Presentation and Consolidation
 
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Aventerra Explorations Ltd., a company incorporated in England. All inter-company accounts and transactions have been eliminated.
 
 
b) Reclassification
 
Certain prior year amounts have been reclassified to conform with the current year presentation.
 
 
c) Use of Estimates
 
The preparation of financial statements in conformity with US generally accepted accounting principles 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. The Company regularly evaluates estimates and assumptions related to useful life and recoverability of long-lived assets, stock-based compensation, and deferred income tax valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
 
 
d) Cash and Cash Equivalents
 
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
 
 
e) Property and Equipment
 
Property and equipment consists of computer hardware and equipment and is recorded at cost and amortized over its estimated life on a straight-line basis:

Computer hardware
3 years
Equipment
4 years
 
 
F-6

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
 
 
f) Intangible assets
 
Intangible assets consist of computer software and database for tracking patient data and communicating patient data between healthcare providers. Intangible assets acquired are initially recognized and measured at cost and is amortized on a straight-line basis over its estimated life of 3 years. Impairment tests are conducted annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. The impairment test compares the carrying amount of the intangible asset with its fair value, and an impairment loss is recognized in income for the excess, if any. The amortization methods and estimated useful lives of intangible assets and goodwill are reviewed annually.
 
 
g) Earnings (Loss) Per Share
 
The Company computes net earnings (loss) per share in accordance with ASC 260 "Earnings per Share". ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. At December 31, 2010, there were 1,611,282 potential dilutive common shares. At December 31, 2009, there were no potential dilutive common shares.
 
 
h) Financial Instruments and Fair Value Measurements
 
ASC 820 “Fair Value Measurements” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
 
Level 1
 
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
 
Level 2
 
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
 
Level 3
 
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
 
The Company’s financial instruments consist principally of cash, accounts payable, convertible note payable, loans payable and amounts due to a related party. Pursuant to ASC 820, the fair value of cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
 
The Company’s operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.
 
 
i) Income Taxes
 
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes ”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
 
 
F-7

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
 
 
j) Foreign Currency Translation
 
The Company’s functional and reporting currency is the United States dollar. Occasional transactions may occur in Canadian dollars and management has adopted ASC 830 “Foreign Currency Translation Matters ”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Average monthly rates are used to translate revenues and expenses. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
 
 
k) Stock-based Compensation
 
The Company records stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation ”, and ASC 505-50, “Equity-Based Payments to Non-Employees ” using the fair value method.
 
All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
 
 
l) Comprehensive Income
 
ASC 220, “Comprehensive Income,” establishes standards for the reporting and display of comprehensive income and its components in the financial statements. For the years ended December 31, 2010 and 2009, the Company had no items that represent comprehensive income.
 
 
m) Recently Adopted Accounting Pronouncements
 
In January 2010, the FASB issued an amendment to ASC 820, “Fair Value Measurements and Disclosures ”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010.
 
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
 
3.
Asset Acquisition Agreement
 
a)
On January 9, 2010, the Company entered into an Asset Acquisition Agreement to acquire various computers, software, and technologies (the “assets”) held by Great Union Corporation (“Great Union”), a Hong Kong corporation. In consideration, the Company agreed to issue 57,300,000 shares of its common stock, which represents a controlling interest in Medical Care Technologies, Inc. As a result of this transaction, there was a change of control.
 
Based on the change in ownership, the assets were recorded based on historical basis and totaled $471,128. Pursuant to the agreement, on February 1, 2010, the Company cancelled 57,300,000 shares of common stock from the former President of the Company and issued these shares to Great Union.
 
The assets acquired are stated at cost and has the following remaining useful lives. Amortization is calculated using straight-line method over the remaining lives.

Computer hardware
1 year
Equipment
2 year
Computer software and database
1 year
 
b)
On November 25, 2008, the Company entered into a preliminary Asset Purchase Agreement (the “Agreement”) with AM Oil Resources & Technology Inc., (the “Vendor”) an unrelated company prior to the purchase of the patents, to acquire two patens for technologies that maximize oil production from existing oil wells. This Agreement was finalized on March 11, 2009. Pursuant to the Agreement, the Company recognized the acquisition of the two patents in exchange for $500,000, in the form of a payable, and 30,000,000 shares of common stock. The patents covered certain oil and gas recovery enhancement tachniques and were to expire in 2020.
 
 
F-8

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
 
Because the Company’s stock is not actively traded, the patens were valued using a discounted future cash flow model, which was based on management’s projections of future cash flows generated from the sale, license or other arrangement involving these patents. Based on the model, the patents were valued at $5,100,000 and were being amortized using the straight-line method over the life of the patents. The present value of the non-interest bearing $500,000 payable was recorded and the difference between the discounted rate and the face value was being accreted into interest expense over the life of the liability. Consequently the Company recorded a discount of $76,795 relating to the payable.
 
On November 17, 2009, it was determined that the patents had expired for failure to pay maintenance fees by the holder of the patents, thus leaving the patents open to the public domain. It was determined that US Patent No. 5979549 expired for failure to pay a maintenance fee on November 11, 2007 and US Patent No. 6129148 expired for failure to pay a maintenance fee on October 10, 2008. The Company did not have good and marketable title to the Assets. The Vendor did not own and failed to assign the Assets to the Company, being US Patent No. 5979549 and US Patent No. 6129148. As a result, the Vendor did not have clear title to convey ownership of the patents. Consequently, the Company never received title to these patents and due to the breach by the Vendor, the Company was never obligated to pay the $500,000 or issue the 30,000,000 shares pursuant to the Agreement. The shares and the debt were cancelled by the company and no payments the Company were made pursuant to the Agreement.
 
4.
Property and Equipment

   
Cost
$
   
Accumulated
Depreciation
$
   
December 31,
2010
Net Carrying
Value
$
   
December 31,
2009
Net Carrying
Value
$
 
                         
Computer hardware
   
30,000
     
(30,000
)
   
     
 
Equipment
   
20,000
     
(10,000
)
   
10,000
     
 
                                 
     
50,000
     
(40,000
)
   
10,000
     
 
 
5.
Intangible asset

   
Cost
$
   
Accumulated
Depreciation
$
   
December 31,
2010
Net Carrying
Value
$
   
December 31,
2009
Net Carrying
Value
$
 
                         
Computer software and database
   
476,928
     
(476,928
)
   
-
     
 
 
6.
Related Party Transactions
 
a)
During the year ended December 31, 2010, the Company recognized $60,000 of management fees. At December 31, 2010, the Company is indebted to the President of the Company for $59,402, representing $55,000 of management fees owed and $4,402 of expenditures paid on behalf of the Company. This amount is unsecured, bears no interest and is due on demand.
 
b)
On September 1, 2010, the Company issued 500,000 shares of common stock to two directors of the Company at a fair value of $11,500. Refer to Notes 13(h) and 13(i).
 
c)
On September 2, 2010, the Company issued 1,000,000 shares of common stock to a director of the Company at a fair value of $23,000 for 1 year of service as a director of the Company commencing September 2, 2010.  Refer to Note 9(j).
 
d)
On September 13, 2010, the Company issued 38,000,000 shares of common stock to the President of the Company at a fair value of $836,000 for management services. Refer to Note 9(h).
 
e)
On December 30, 2010, the Company issued 500,000 stock options to the President of the Company at a fair value of $5,377 with an exercise price of $0.25 per shares. The 500,000 stock options are exercisable until December 30, 2020.
 
f)
On December 30, 2010, the Company issued an aggregate of 250,000 stock options to four directors of the Company at a fair value of $2,684 with an exercise price of $0.25 per shares. The 250,000 stock options are exercisable until December 30, 2020.
 
g)
At December 31, 2009, the Company was indebted to the former President of the Company for $23,445, representing expenditures paid on behalf of the Company. During the year ended December 31, 2010, the amount was reclassified to accounts payable upon the resignation of the former President.

 
 
F-9

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
 
h)
At December 31, 2009, the Company was indebted to a former director of the Company for $1,994, representing expenditures paid on behalf of the Company. During the year ended December 31, 2010, the amount was reclassified to accounts payable upon the resignation of the former director.


7.
Loans payable
 
a)
On August 8, 2009, the Company received $6,032 (Cdn$6,000) and entered into a promissory note agreement. Under the terms of the note, the principal of the loan is unsecured and bears no interest if repaid by April 1, 2010. The Company failed to make the principal repayment on April 1, 2010. The note currently bears interest of 12% per annum and is payable in annual installments commencing April 1, 2011. In the event of default, the principal and all accrued interest shall be due and payable thereon.
 
b)
On August 9, 2009, the Company borrowed $22,000 and entered into a promissory note agreement. Under the terms of the note, the principal of the loan is unsecured and bears no interest if repaid by April 1, 2010. The Company failed to make the principal repayment on April 1, 2010. The note currently bears interest of 12% per annum and is payable in annual installments commencing April 1, 2011. In the event of default, the principal and all accrued interest shall be due and payable thereon.
 
c)
On August 9, 2009, the Company borrowed $28,740 and entered into a promissory note. Under the terms of the note, the principal of the loan is unsecured and bears no interest if repaid by April 1, 2010. The Company failed to make the principal repayment on April 1, 2010. The note currently bears interest of 12% per annum and is payable in annual installments commencing April 1, 2011. In the event of default, the principal and all accrued interest shall be due and payable thereon.
 
d)
On November 18, 2009, the Company borrowed $14,000 pursuant to a promissory note. Under the terms of the note, the principal of the loan is unsecured and bears no interest if repaid by April 1, 2010. The Company failed to make the principal repayment on April 1, 2010. The note currently bears interest of 12% per annum and is payable in annual installments commencing April 1, 2011. In the event of default, the principal and all accrued interest shall be due and payable thereon.
 
e)
On March 30, 2010 the Company borrowed $10,341 pursuant to a promissory note. Under the terms of the note, the principal of the loan is unsecured and bears no interest if repaid by April 1, 2010. The Company failed to make the principal repayment on April 1, 2010. The note currently bears interest of 12% per annum and is payable in annual installments commencing April 1, 2011. In the event of default, the principal and all accrued interest shall be due and payable thereon.
 
f)
On November 16, 2010, the Company borrowed $10,000 pursuant to a promissory note which is unsecured, bears interest at 6% per annum and due on November 16, 2011.
 
8.
Convertible Note Payable
 
On November 15, 2010, the Company entered into a Convertible Promissory Note agreement for $10,000. Pursuant to the agreement, the loan is convertible into shares of common stock at a variable conversion price equal to the lower of 80% of the average of the lowest three closing bid prices for the common stock during the 10 trading days prior to the date of the conversion notice. The loan bears interest at 6% per year and the principal amount and any interest thereon are due on November 12, 2011.
 
Pursuant to ASC 815, “Derivatives and Hedging,” the Company recognized the fair value of the embedded conversion feature of $8,844 as a derivative liability and reduced the carrying value of the convertible loan to $1,156. The initial fair value of the derivative liability at November 15, 2010 of $8,844 was determined using the Black Scholes option pricing model with a quoted market price of $0.0165, a conversion price of $0.0129, expected volatility of 188%, no expected dividends, an expected term of one year and a risk-free interest rate of 0.29%. The discount on the convertible loan is accreted over the term of the convertible loan. During the year ended December 31, 2010, the Company recorded accretion of $341 increasing the carrying value to the face value of $1,497. At December 31, 2010, accrued interest of $76 was outstanding and included in the convertible note balance on the accompanying balance sheet. The fair value of the derivative liability at December 31, 2010 was $6,095 and a gain of $2,749 was recognized on the change in fair value of the derivative liability. The fair value of the derivative liability at December 31, 2010 was determined using the Black Scholes option pricing model with a quote market price of $0.01, a conversion price of $0.0091, expected volatility of 155%, no expected dividends, an expected term of 0.87 years and a risk-free interest rate of 0.29%. On January 11, 2011, the note was converted into 1,097,141 restricted shares of common stock. Refer to Note 13(b).
 
9.
Common and Preferred Stock
 
The preferred stock may be divided into and issued in series by the Board of Directors. The Board is authorized to fix and determine the designations, rights, qualifications, preferences, limitations and terms, within legal limitations. As of December 31, 2010 and 2009, there was no preferred stock issued and outstanding.
 
 
F-10

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
 
Common stock issued during the year ended December 31, 2010:
 
a)
On December 6, 2010, the Company issued 100,000 shares of common stock at a fair value of $1,400 pursuant to the consulting agreement described in Note 13(s).

b)
On November 15, 2010, the Company issued 275,000 shares of common stock at a fair value of $4,538 pursuant to the consulting agreement described in Note 13(r).

c)
On November 10, 2010, the Company issued 250,000 shares of common stock at a fair value of $4,125 pursuant to the consulting agreement described in Note 13(q).

d)
On November 6, 2010, the Company issued 620,000 shares of common stock at a fair value of $10,540 pursuant to the consulting and software development agreement described in Note 13(d).

e)
On October 1, 2010, the Company issued 3,000,000 shares of common stock at a fair value of $72,000 pursuant to the consulting agreement described in Note 13(o).

f)
On September 17, 2010, the Company increased its authorized shares capital of common stock to 500,000,000 shares with par value of $0.00001. The authorized shares of preferred stock remained unchanged.
 
g)
On September 15, 2010, the Company issued 3,826,087 shares of common stock at a fair value of $88,000 pursuant to the agreement described in Note 13(n).
 
h)
On September 13, 2010, the Company issued 38,000,000 shares of common stock to the President of the Company at a fair value of $836,000 for management services. Refer to Note 6(d).
 
i)
On September 5, 2010, the Company issued 500,000 shares of common stock at a fair value of $11,000 pursuant to the advisory board agreement described in Note 13(m).
 
j)
On September 2, 2010, the Company issued 1,000,000 shares of common stock at a fair value of $23,000 to a director of the Company. Refer to Note 6(c).

k)
On September 2, 2010, the Company issued 805,000 shares of common stock at a fair value of $18,515 pursuant to the consulting agreement described in Note 13(l).

l)
On September 1, 2010, the Company issued 250,000 shares of common stock at a fair value of $5,750 pursuant to the advisory board agreement described in Note 13(k).
 
m)
On September 1, 2010, the Company issued 3,000,000 shares of common stock at a fair value of $69,000 pursuant to three consulting agreements described in Notes 6(b), 13(h), 13(i) and 13(j).
 
n)
On August 31, 2010, the Company issued 250,000 shares of common stock at a fair value of $5,500 pursuant to a consulting agreement described in Note 13(f). On December 22, 2010, the 250,000 shares of common stock were returned to the Company for cancellation as the consulting agreement was terminated.

o)
On August 31, 2010, the Company issued 705,000 shares of common stock at a fair value of $15,510 pursuant to a consulting agreement described in Note 13(g).

p)
On August 28, 2010, the Company issued 2,500,000 shares of common stock at a fair value of $70,000 pursuant to the consulting agreement described in Note 13(e).
 
q)
On August 16, 2010, the Company issued 775,000 shares of common stock at a fair value of $23,250 pursuant to the consulting and software development agreement described in Note 13(d).

r)
On May 18, 2010, the Company issued 2,500,000 shares of common stock at a fair value of $102,500 pursuant to a consulting agreement dated May 18, 2010. The term of the agreement is six months. Refer to Note 13(c).
s)
On May 8, 2010, the Company issued 3,500,000 shares of common stock with a fair value of $157,500 pursuant to the two consulting agreements. Refer to Notes 13(a) and (b).

t)
On February 1, 2010, 57,300,000 shares of common stock with a fair value of $471,128 were issued pursuant to the Asset Acquisition Agreement with Great Union Corporation described in Note 3(a).
 
u)
On February 1, 2010, 57,300,000 shares of common stock were cancelled and returned to treasury by the former President of the Company for $nil consideration.
 
v)
On February 1, 2010, the Company issued 500,000 units at $0.20 per unit for cash proceeds of $100,000. Each unit consists of one share of common stock of the Company and one common share purchase warrant exercisable at $0.15 per share for a period of 36 months.
 
Common stock issued during the year ended December 31, 2009:
 
t)
On February 22, 2009, 30,000,000 shares of common stock with a deemed fair value of $4,676,795 were issued pursuant to the Asset Purchase Agreement with AM Oil Resources & Technology Inc. described in Note 3(b). Because the Company’s common stock is not actively traded, the fair value of the stock was determined as the residual value of the fair value of the patent less the fair value of the note payable issued in the transaction. On September 28 2009, the 30,000,000 shares of common stock were cancelled and returned to treasury pursuant to the cancellation of the Asset Purchase Agreement.
 
u)
On February 22, 2009, 57,500,000 shares of common stock were cancelled and returned to treasury by the President of the Company in consideration for $15,000. As the Company did not pay the $15,000, on September 28, 2009, 57,500,000 shares of common stock were re-issued to the President of the Company.
 
v)
On February 18, 2009, the Company reduced the authorized shares of common stock from 1,150,000,000 shares of common stock with a par value of $0.00001 per share to 150,000,000 shares of common stock with a par value of $0.00001 per share. The authorized shares of preferred stock remained unchanged.
 
 
F-11

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
 
10.
Stock Options
 
On December 30, 2010, the Company adopted a stock option plan named 2010 Stock Option Plan (the “Plan”), the purpose of which is to provide incentives to key employees, officers, directors, consultants, and agents of the Company for high levels of performance and to reward unusual efforts which increase the earnings and long-term growth of the Company. Prior to grant of options under the Plan, there were 10,000,000 shares of common stock available for issuance under the Plan.
 
During the year ended December 31, 2010, the Company granted 1,350,000 stock options with an exercise price of $0.25 per share. All 1,350,000 stock option are exercisable until December 30, 2020. Of the 1,350,000 stock options, 458,330 stock options vest on June 28, 2011, 383,335 stock options vest on December 28, 2011 and 508,335 stock options vest on June 28, 2012. The fair value for these stock options was estimated at the date of grant using the Black-Scholes option-pricing model assuming a weighted average expected life of 10 years, a risk-free rate of 3.38%, an expected volatility of 251%, and a 0% dividend yield. The weighted average fair value of stock options granted was $0.011 per share. During the year ended December 31, 2010, the Company recorded stock-based compensation of $32 as general and administrative expense and $16 as management fees.
 
A summary of the Company’s stock option activity is as follows:
   
Number of Options
   
Weighted Average Exercise
Price
$
   
Weighted Average Remaining Contractual Life (years)
   
Aggregate
Intrinsic
Value
$
 
                         
Outstanding, December 31, 2009 and 2008
   
     
             
                             
Granted
   
1,350,000
     
0.25
             
                             
Outstanding, December 31, 2010
   
1,350,000
     
0.25
     
10.00
     
 
                                 
Exercisable, December 31, 2010
   
     
     
     
 
 
A summary of the status of the Company’s non-vested stock options as of December 31, 2010, and changes during the year ended December 31, 2010, is presented below:
Non-vested options
 
Number of Options
   
Weighted Average
Grant Date
Fair Value
$
 
             
Non-vested at December 31, 2009 and 2008
   
     
 
                 
Granted
   
1,350,000
     
0.011
 
Vested
   
     
 
                 
Non-vested at December 30, 2010
   
1,350,000
     
0.011
 
 
At December 31, 2010, there was $14,798 of unrecognized compensation costs related to non-vested share-based compensation arrangements granted under the Plan. There was $nil intrinsic value associated with the outstanding options at December 31, 2010.
 
11.
Share Purchase Warrants
 
A summary of the changes in the Company’s share purchase warrants is presented below:

   
Number of Warrants
   
Weighted Average
Exercise Price
$
 
             
Balance, December 31, 2008 and 2009
   
     
 
                 
Issued
   
500,000
     
0.15
 
                 
Balance, December 30, 2010
   
500,000
     
0.15
 
 
As at December 31, 2010, the following share purchase warrants were outstanding:

Warrants
 
Exercise Price
 
Expiration Date
         
500,000
 
$
0.15
 
January 15, 2012
 
 
F-12

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
 
12.
Contingent Liability
 
On October 13, 2009, the Company received communication from the Vendor of the Asset Purchase Agreement (Note 3(b)) which detailed the Vendor’s intention to pursue the amounts outstanding under the note payable. While the outcome of this matter is uncertain and there can be no assurance that the matter will be resolved in the Company’s favor, the Company believes that the outcome of an adverse decision in the proceeding related to this matter or any amount which it may be required to pay thereof having a material adverse impact on its financial position, results of operations or liquidity is unlikely. In determining that the patents expired prior to the signing of the Asset Purchase Agreement, the Company strongly feels that the Vendor did not have good and marketable rights or ownerships to the patents and the Company believes the claim is without merit and will defend its position. The accompanying financial statements do not reflect a liability for this contingency as the loss is not probable or reasonably estimable.
 
13.
Commitments
 
a)
On May 8, 2010, the Company entered into consulting agreement for corporate and management consulting services. Pursuant to the agreement, the Company agreed to issue 1,100,000 shares of common stock registered under an S-8 registration statement. The Company will issue 500,000 shares (the “Retainer Shares”) upon the execution of the agreement, and the remaining 600,000 shares upon the written approval by the Company of services rendered by the consultant, which services shall be described in writing and presented by consultant to the Company before the expiration of the agreement. The term of the agreement is 60 days commencing the date the Retainer Shares are delivered to the consultant. On May 8, 2010, the Company issued 500,000 shares at a fair value of $22,500.
 
b)
On May 8, 2010, the Company entered into consulting agreement for website consulting services. Pursuant to the agreement, the Company agreed to issue 3,800,000 shares of common stock registered under an S-8 registration statement. The Company will issue 3,000,000 shares (the “Retainer Shares”) upon the execution of the agreement, and the remaining 800,000 shares upon the delivery by the consultant of a new website for the Company. The term of the agreement is 60 days commencing the date the Retainer Shares are delivered to the consultant. On January 5, 2011, the Company filed an S-8 registration statement. On May 8, 2010, the Company issued 3,000,000 shares at a fair value of $135,000.
 
c)
On May 18, 2010, the Company entered into a consulting agreement for information technology consulting services. Pursuant to the agreement, the Company agreed to issue 2,500,000 restricted shares of common stock of the Company. The term of the agreement is six months.  On May 18, 2010, the Company issued 2,500,000 shares at a fair value of $102,500 to the consultant.
 
d)
On May 18, 2010, the Company entered into a consulting and software development agreement pursuant to which the contractor agreed to build a secure software information platform for the Company in consideration for 1,395,000 shares of common stock, registered under an S-8 registration statement. The 1,395,000 shares are issuable as follow: 775,000 shares upon the completion of the design and development of the software (“Phase I”) and 620,000 shares upon the implementation of the software (“Phase II”). On August 16, 2010, Phase I was completed and the Company issued 775,000 shares of common stock at a fair value of $23,250. On November 6, 2010, Phase II was completed and the Company issued 620,000 shares of common stock at a fair value of $10,540.
 
e)
On August 28, 2010, the Company entered into an agreement for business advisory and consulting services pursuant to which the Company agreed to issue 500,000 restricted shares of common stock of the Company as consideration for entering in the agreement and 2,000,000 shares for consulting services. The Company will also issue 250,000 stock options upon the implementation of an incentive stock option plan by the Company. In the event that a financing transaction is arranged using a source first introduced to the Company by the consultant, the Company will pay an advisory fee at closing equal to 7% of the gross proceeds received by the Company. The term of the agreement is 18 months. On August 28, 2010, the Company issued 2,500,000 shares at a fair value of $70,000. On December 30, 2010, the Company adopted a stock option plan and issued 250,000 stock options to the consultant.
 
f)
On August 31, 2010, the Company entered into a consulting agreement for information technology consulting services. Pursuant to the agreement, the Company agreed to i) issue 250,000 shares of common stock; ii) grant 50,000 stock options which entitles the holder to purchase 50,000 shares of Company’s common stock upon the implementation of an incentive stock option plan by the Company. The term of the agreement is twelve months. On August 31, 2010, the Company issued 250,000 shares at a fair value of $5,500. On December 22, 2010, the Company terminated the agreement as the consultant did not provide the services to the Company. The 250,000 shares of common stock were returned to the Company for cancellation.
 
g)
On August 31, 2010, the Company entered into an administrative services agreement. Pursuant to the agreement, the Company agreed to issue 705,000 shares of common stock registered under an S-8 registration statement. The term of the agreement is one year. On August 31, 2010, the Company issued 705,000 shares at a fair value of $15,510.

 
F-13

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
 
h)
On September 1, 2010, the Company entered into a consulting agreement for public relations and marketing services. Pursuant to the agreement, the Company agreed to issue 250,000 shares of common stock and 50,000 stock options which entitle the holder to purchase 50,000 shares of common stock. The agreement may be terminated at any time by either party. On September 1, 2010, the Company issued 250,000 shares of common stock at a fair value of $5,750. On December 30, 2010, the Company adopted a stock option plan and issued 50,000 stock options to the consultant.
 
i)
On September 1, 2010, the Company entered into a consulting agreement for information technology consulting services. Pursuant to the agreement, the Company agreed to issue 250,000 shares of common stock and 50,000 stock options which entitle the holder to purchase 50,000 shares of common stock. The agreement may be terminated at any time by either party. On September 1, 2010, the Company issued 250,000 shares of common stock at a fair value of $5,750. On December 30, 2010, the Company adopted a stock option plan and issued 50,000 stock options to the consultant.
 
j)
On September 1, 2010, the Company entered into a consulting agreement related to strategic, planning, reporting and other general business consultation for its operations in the United States and China. Pursuant to the agreement, the Company agreed to issue 2,500,000 restricted shares of common stock of the Company. In addition, if the consultant is materially involved in a completed merger and acquisition (the “Transaction”) with a company introduced by the Company, the Company agrees to pay the consultant 5% of the total value of the Transaction in the same ratio of cash and/or stock as the Transaction. If the consulting is materially involved in a completed Transaction with a company introduced by the consultant, the Company agrees to pay the consultant 10% of the total value of the Transaction in the same ratio of cash and/or stock as the Transaction. The term of the agreement is 1 year and may be renewed for an additional one year. On September 1, 2010, the Company issued 2,500,000 shares at a fair value of $57,500 to the consultant.
 
k)
On September 1, 2010, the Company into an advisory board agreement pursuant to which the Company agreed to issue 250,000 restricted shares of common stock of the Company and 50,000 stock options. The advisor will devote up to 8 days in each twelve month period. The agreement may be terminated at any time by either party. On September 1, 2010, the Company issued 250,000 shares of common stock at a fair value of $5,750. On December 30, 2010, the Company adopted a stock option plan and issued 50,000 stock options to the advisor.
 
l)
On September 2, 2010, the Company entered into an administrative services agreement. Pursuant to the agreement, the Company agreed to issue 805,000 shares of common stock registered under an S-8 registration statement. The term of the agreement is one year. On September 2, 2010, the Company issued 805,000 shares at a fair value of $18,515.
 
m)
On September 5, 2010, the Company into an advisory board agreement pursuant to which the Company agreed to issue 500,000 restricted shares of common stock of the Company and 50,000 stock options. The advisor will devote up to 8 days in each twelve month period. The agreement may be terminated at any time by either party. On September 5, 2010, the Company issued 500,000 shares of common stock at a fair value of $11,000. At December 30, 2010, the Company adopted a stock option plan and issued 50,000 stock options.
 
n)
On September 15, 2010, the Company entered into an agreement with Accredited Members, Inc. (“AMI”), pursuant to which the Company will create and post a corporate profile on AMI’s community website which provides AMI’s members a channel to present information regarding their business to other members. Under the terms of the agreement, the Company agreed to pay $1,000 per month and issue $88,000 worth of restricted shares of common stock of the Company within 20 days of the signing of the agreement. If at the end of the 180-day restricted stock period (covered under Rule 144), the shares of common stock of the Company are valued at less than $88,000 (based on the lesser of the closing bid price at the 180 day mark or the trailing 20 day closing bid average), the Company will issue additional shares to equal the original $88,000 stock value at the start of the agreement. On September 15, 2010, the Company issued 3,826,087 shares of common stock at a fair value of $88,000.
 
o)
On October 1, 2010, the Company entered into a business advisory and consulting agreement pursuant to which the Company agreed to issue 3,000,000 shares of common stock registered under an S-8 registration statement. The term of the agreement is one year and fifteen days. On October 1, 2010, the Company issued 3,000,000 shares at a fair value of $72,000.
 
p)
On October 22, 2010, the Company signed a proposed term sheet for a $50,000 convertible debenture. According to the term sheet, the convertible debenture is due 9 months after issuance, bears interest at 8% per annum and is convertible at 39.9% discount of the average of the lowest 3 trading prices during the 10 trading day period ended on trading day prior to the date of the conversion. The debenture holder will be limited to convert no more than 4.99% of the issued and outstanding common stock of the Company at time of conversion at any one time.  The Company issued a convertible promissory note on February 1, 2011 for $50,000 and received net proceeds of $47,000. Refer to Note 15(f).
 
 
F-14

 
 
Medical Care Technologies Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
 
q)
On November 10, 2010, the Company entered into a consulting agreement pursuant to which the Company agreed to issue 250,000 restricted shares of common stock of the Company. The term of the agreement is 4 months. On November 10, 2010, the Company issued 250,000 shares at a fair value of $4,125.
 
r)
On November 15, 2010, the Company entered into an administrative services agreement. Pursuant to the agreement, the Company agreed to issue 1,100,000 shares of common stock registered under an S-8 registration statement. The term of the agreement is one year. The 1,100,000 shares are payable as follows: 275,000 upon the execution of the agreement; 275,000 shares on February 15, 2011; 275,000 shares on May 15, 2011 and; 275,000 shares on August 15, 2011. On November 15, 2010, the Company issued 275,000 shares at a fair value of $4,538.
 
s)
On December 6, 2010, the Company entered into a consulting agreement for consulting services related to development, modification, packaging and marketing of certain consumer products acquired by the Company. Under the terms of the agreement, the Company agreed to issue 500,000 restricted shares of common stock of the Company, payable as follows: i) 100,000 shares upon execution of the agreement; ii) 100,000 shares on March 1, 2011; iii) 150,000 shares on August 1, 2011 and; iv) 150,000 shares on January 1, 2012. The term of the agreement is 24 months from the effective date of the agreement. On December 6, 2010, the Company issued 100,000 shares at a fair value of $1,400.
 
14.
Income Taxes
 
The Company is subject to United States federal and state income taxes at an approximate rate of 35%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

   
December 31, 2010
   
December 31, 2009
 
             
Income tax recovery at statutory rate
 
$
766,245
   
$
29,792
 
Permanent differences
   
(691,043
)
   
 
Temporary differences
   
140
     
140
 
Valuation allowance change
   
(75,342
)
   
(29,932
)
                 
Provision for income taxes
 
$
   
$
 
 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income taxes arise from components of deferred income tax assets and liabilities at December 31, 2010 and 2009 are as follows:

   
December 31, 2010
   
December 31, 2009
 
Deferred income tax assets:
           
Net operating loss carryforward
 
$
133,700
   
$
58,350
 
Valuation allowance
   
(133,700
)
   
(58,350
)
                 
Net deferred income tax asset
 
$
   
$
 
 
The Company has a net operating loss carryforward of approximately $382,000 available to offset taxable income in future years which expires in fiscal 2029. However, a 100% valuation allowance was established since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management's judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.
 
15.
Subsequent Events
 
a)
On January 5, 2011, the Company file an S-8 Registration Statement to reserve 10,000,000 shares of common stock for its 2010 Stock Option Plan as described in Note 10 and to register 7,000,000 shares of common stock issued to various consultant pursuant to consulting agreements as described in Notes 13(d), (g), (l), (o) and (r).
 
b)
On January 11, 2011, the Company issued 1,097,141 restricted shares of common stock upon the conversion of the convertible note as described in Note 8.

 
 
F-15

 
 
16.      Restatement
 
The Company identified several errors relating to the accounting of share-based compensation to non-employees. During the year ended December 31, 2010, the Company entered into various consulting and software development agreements, which awarded shares to non-employees, but no compensation was recorded. In connection with one of these agreements, the Company had erroneously accrued $55,800 at December 31, 2010, which represented the cash settlement provision in the agreement. After further review, the Company has determined that the fair value of the 1,395,000 shares of common stock should have been recorded upon the completion of services or when the shares were fully vested, which occurred prior to December 31, 2010.
 
The effect of the restatement is to increase net loss by $249,064 for the year ended December 31, 2010. Net loss per share for the year ended December 31, 2010 was unchanged.
 
The following tables reflect the adjustment and restated amounts:

   
December 31, 2010
 
   
As Reported
   
Adjustment
   
As Restated
 
Consolidated Balance Sheet
                 
                   
Liabilities
                 
Accounts payable
  $ 133,758     $ (55,800 )   $ 77,958  
                         
Stockholders’ Equity (Deficit)
                       
Common Stock, 150,000,000 shares authorized, $0.00001 par value,
160,436,087 and 98,900,000 shares issued and outstanding as of
 December 31, 2010 and December 31, 2009, respectively
    1,513       97       1,610  
Additional Paid-in Capital
    1,831,938       304,767       2,136,705  
Deficit Accumulated During the Development Stage
    (2,118,613 )     (249,064 )     (2,367,677 )
Total Stockholders’ Deficit
    (285,162 )     55,800       (229,362 )
Total Liabilities and Stockholders’ Deficit
  $ 16,891    
$
      $ 16,891  

   
For the Year Ended December 31, 2010
 
   
As Reported
   
Adjustment
   
As Restated
 
Consolidated Statement of Operations
                 
                   
Expenses
                 
 Amortization
  $ 516,928     $ (22,010 )   $ 494,918  
 General and Administrative
    529,045       271,074       800,119  
                         
Total Expenses
    (1,941,989 )     (249,064 )     (2,191,053 )
                         
Loss before Discontinued Operations
    (1,940,207 )     (249,064 )     (2,189,271 )
                         
Net Loss
  $ (1,940,207 )   $ (249,064 )   $ (2,189,271 )
Net Loss Per Share - Basic and Diluted   $ (0.02 )   $ -     $ (0.02 )

   
Period from February 27, 2007 (Date of Inception)
to December 31, 2010
 
   
As Reported
   
Adjustment
   
As Restated
 
Consolidated Statement of Operations
                 
                   
Expenses
                 
 Amortization
  $ 516,928     $ (22,010 )   $ 494,918  
 General and Administrative
    603,685       271,074       874,759  
                         
Total Expenses
    (2,032,321 )     (249,064 )     (2,281,385 )
                         
Loss before Discontinued Operations
    (2,031,303 )     (249,064 )     (2,280,367 )
                         
Net Loss
  $ (2,118,613 )   $ (249,064 )   $ (2,367,677 )
 
 
F-16

 
 
   
For the Year Ended December 31, 2010
 
   
As Reported
   
Adjustment
   
As Restated
 
Consolidated Statement of Cash Flows
                 
                   
Operating Activities