Union Dental Holdings, Inc. - Annual Report (Small Business Issuers) (10KSB)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-KSB

(Mark One)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the fiscal year ended December 31, 2007

|_| 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: 000-26703

Union Dental Holdings, Inc.
(Name of small business issuer in its charter)

 Florida 65-0710392
------------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
 incorporation or organization) Identification No.)


 1700 University Drive, Suite 200
 Coral Springs, Florida 33071
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(Address of principal executive offices) (Zip Code)

Issuer's telephone number: (954) 575-2252

Securities registered pursuant to Section 12(b) of the Exchange Act: None

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

Common Stock, Par Value $0.0001 Per Share

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

Yes |X| No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. |X|

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes |_| No |X|

State issuer's revenues for its most recent fiscal year ended December 31, 2007:
$2,593,176

Of the 109,722,510 shares of our common stock issued and outstanding as of March 7, 2008 approximately 76,582,310 shares were held by non-affiliates. The aggregate market value of the voting stock held by non-affiliates of the registrant computed by reference to the closing bid price of $0.006 of our Common Stock as reported on the OTC Bulletin Board on March 7, 2008 was approximately $459,494.

DOCUMENTS INCORPORATED BY REFERENCE

Post Effective Registration Statement No. 3 filed on August 16, 2007

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

PART I

The following discussion should be read in conjunction with the Company's audited financial statements and notes thereto. In connection with, and because the Company desires to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company cautions readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on its behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on the Company's behalf. Without limiting the generality of the foregoing, words such as "may", "anticipate", "intend", "could", "estimate", or "continue" or the negative or other comparable terminology are intended to identify forward-looking statements. The Company disclaims any obligation to update forward-looking statements.

Item 1. Description of Business

(a) Business Overview: We are a Florida corporation. We operate a dental office and provide a network of dental providers who provide services to union members through our two wholly owned subsidiaries, Union Dental Corp. ("UDC") and Direct Dental Services, Inc. ("DDS").

DDS operates a dental practice in Coral Springs, Florida. UDC operates a network of duly licensed dental providers (the "Dental Referral") who provide dental services through the network to union members in accordance with arrangements between UDC and various unions.

(b) Funding Agreements: On August 17, 2005, we entered into an Investment Agreement with Dutchess Private Equities Fund II, L.P.. Pursuant to this Agreement, Dutchess will commit to purchase up to $5,000,000 (the "Line") of our Common Stock over the course of 36 months ("Line Period"), after a registration statement has been declared effective by the SEC (the "Effective Date"). The amount that we shall be entitled to request from each of the purchase "Puts", shall be equal to either (1) $100,000 or (2) 200% of the averaged daily volume (U.S market only) ("ADV") of our Common Stock for the 20 Trading days prior to the "Put" notice, multiplied by the average of the 3 daily closing prices immediately preceding the Put Date. The Pricing Period shall be the five (5) consecutive trading days immediately after the Put Date. The Market Price shall be the lowest closing bid price of the Common Stock during the Pricing Period. The Purchase Price shall be set at 95% of the Market Price. The Put Date shall be the date that the Investor receives a Put Notice of draw down by us of a portion of the Line. There are put restrictions applied on days between the Put Date and the Closing Date with respect to that Put. During this time, we shall not be entitled to deliver another Put Notice. We shall automatically withdraw that portion of the put notice amount, if the Market Price with respect to that Put does not meet the Minimum Acceptable Price. The Minimum Acceptable Price is defined as 75% of the lowest closing bid price of the common stock for the ten
(10) trading day period prior to the Put Date.

In December 2005, we executed a promissory note in favor of Dutchess in the amount of $960,000 and received gross proceeds in the amount of $800,000 less $60,075 in fees for net proceeds of $739,925. We are obligated to repay the face amount of the loan on or before December 23, 2006. We are obligated to make payments to Dutchess from each Put notice under our equity line of credit. We

are obligated to pay Dutchess the greater of a) 50% of each Put notice or b) $80,000 until the face amount of the loan obligation has been repaid. We issued 50 signed Put notices to the Investor to use as collateral. Because of our declining stock prices, the Puts have not been exercised as we do not have a sufficient number of registered shares of Common Stock registered pursuant to the equity line of credit. As a result, we are in default. In the event of a default as defined in the agreement, the Holder shall have the right, but not the obligation, to 1) switch the Residual Amount to a three-year ("Convertible Maturity Date"), interest-bearing convertible debenture. If the Holder chooses to convert the Residual Amount to a Convertible Debenture, the Company shall have 20 business days after notice of the same (the "Notice of Convertible Debenture") to file a registration statement covering an amount of shares equal to 300% of the Residual Amount. Such registration statement shall be declared effective under the Securities Act of 1933, as amended (the "Securities Act"), by the Securities and Exchange Commission (the "Commission") within 40 business days of the date the Company files such Registration Statement. In the event the Company does not file such registration statement within 20 business days of the Holder's request, or such registration statement is not declared by the Commission to be effective under the Securities Act within the time period described above, the Residual Amount shall increase by $5,000 per day.

We are currently in default with respect to this obligation.

Debenture Agreement

Also on August 17, 2005, we sold $600,000 in principal amount of our five year convertible debentures to Dutchess Private Equities Fund II, L.P. These debentures bear interest at 10% per annum (payable in cash or stock at Dutchess' option). Our obligation to repay Dutchess is secured pursuant to the terms of a security agreement, which we have entered into with Dutchess. We have pledged all of our assets to insure repayment of the Debenture. Dutchess' security interest in our assets will be subject to any claims by our bank, which provides us with a line of credit. The conversion price of the debenture shall be $.092 per share or; the lowest closing bid price of the common stock during the fifteen trading days prior to the filing of this Registration Statement with the SEC covering the shares issuable on the underlying debt. We also issued Dutchess a warrant to purchase 1,304,348 shares of common stock with a strike price of $.092 per share. The warrant may be exercised for a period of five years.

Unless the context indicates otherwise, references hereinafter to the "Company", "we", "us" or "Union" include both Union Dental Holdings, Inc., a Florida corporation and our wholly owned subsidiaries, Union Dental Corp., a Florida corporation, Direct Dental Services, Inc., a Florida corporation. Our principal place of business is 1700 University Drive, Suite 200, Coral Springs, Florida 33071, and our telephone number at that address is (954) 575-2252.

(c) Business of the Company: We operate two subsidiaries, each of which is engaged in various aspects of our business. UDC operates a network of duly licensed dental providers to a network of union members while DDS manages a

dental practice in Coral Springs, Florida.

Union Dental Corp.:

Union Dental Corp. ("UDC") is a Florida corporation that operates a network of duly licensed dental providers (the "Dental Referral") who provide dental services through the network to union members in accordance with arrangements between UDC and various labor unions. UDC is not limited as to the type of labor union which UDC may solicit. UDC charges a annual management services fee to the participating dentists to practice in an "area of exclusivity" for union members. UDC has signed contracts with local unions, such as Communications Workers of America ("CWA"), International Brotherhood of Electrical Workers ("IBEW") and General Electric's International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers - Communications Workers of America ("IUE-CWA").

UDC also has both regional and national union contracts. Presently, UDC has a contract with the CWA covering its members in 19 states, including employees of AT&T, Lucent, Avaya, Verizon, Bell South, Cingular and SBC/Pactell. We also entered into agreements with the International Brotherhood of Electrical Workers Local #824 in Tampa, Florida and Local # 728 in Ft. Lauderdale, FL and General Electric's International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers - Communications Workers of America Local 761 in Louisville, Kentucky. We have an agreement with the Communications Workers of America ("CWA") Local 1101. This agreement gives us the opportunity for us to build our network of dental providers in New Jersey, Connecticut, Vermont, Rhode Island, New Hampshire, Massachusetts, New Jersey and New York. Our agreement with the Association of Flight Attendants represents our first nationwide agreement. We signed this agreement during 2006. To date, our focus has been to build a network of dental providers around various airport hubs. Once we are established in several hub cities, we will attempt to expand the network to other major airports.

During 2007, we did not secure contracts with any other union providers. Rather our focus was to further service the needs of our licensed dentists who are providing the dental services to the union member.

MARKETING AND SALES

BROCHURES AND POSTERS

The union itself is a viable component of our marketing strategy. We anticipate that the respective unions will be extremely helpful with promoting the dental benefits provided to their members. Currently, although we pay all the costs associated with the printing, distribution and mailing of the brochures, the individual unions are responsible for mailing all pamphlets and other literature designed and produced by us. We will also design and distribute poster boards to be placed in heavily frequented areas within the employer's offices, factories or lunchrooms. These poster boards contain brochures which provide information about the union's dental coverage and list the Dental Network members in their respective geographical area. We pay for the printing

and mailing of the brochures and poster boards.

SEMINARS

During 2006 we held five seminars where prospective Network members could learn about us and the benefits of Dental Network membership. Management was not satisfied with the results from these seminars when compared to the costs and time needed to host these seminars. As a result, no seminars were held in 2007.

WEB SITE DEVELOPMENT

We developed a website for use in the expansion of our Dental Network. Our website is used as an informative site, and dental directory, for union patients who are in need of the services offered by the dentists in the network and to locate a network dentist. The website provides patients with information about each member of the Dental Network to better inform the patient of the doctor's professional credentials. The web site is also used to establish a direct link between the patient and the doctor. We believe this approach enhances the dentist-patient relationship, improve patient loyalty, and increase utilization of dental services. We have two websites located at www.uniondental.com and www.uniondentalcorp.com respectively. To date, several unions have hyperlinked their website to our website in order to avail their members more access to the dental benefits offered to them and current information of dental providers in the network.

We presently derive our sales from the following: (1) sales of the "Areas of Exclusivity" in the selected geographical areas to dentists who provide dental services to the union employees in those specific areas; and (2) operating a dental practice at its corporate headquarters located in Coral Springs, Florida.

The UDC Dental Network currently consists of approximately 1,800 licensed dentists located in 35 states. The territory served by the Dental Network is divided into geographic areas using a predetermined formula that allocated approximately one general dentist to approximately 1,100 to 1,200 insured union employees which includes their immediate family members. Exclusive areas for specialists are allocated approximately 6,000-8,000 insured union employees, which includes their immediate family members, per specialist. Each member of the Dental Network enters into an annual network provider agreement with DDS for his or her respective Exclusive Area. Consideration paid by the Dental Network member is determined based upon the size of the Exclusive Area and the number of specialties covered under the respective member's contract.

UDC selects certain dentists in selected geographical areas to represent DDS. The dentists enter into exclusive agreements with DDS for an annual management services which typically range from $3,000 to $6,000. The specific fee which we charge is based on each specialty the dentist provides to the patients on a per office basis. Significantly lower fees may be charged for dental practices covering a large geographic area which employ a large number of participating dentists. We believe that this practice will provide us with greater exposure to the unions, dentists and the public. DDS receives a yearly membership fee from each dentist in order for him/her to maintain the exclusive area of each specialty that the dentist provides. Currently, areas of specialties include: (1) General Dentistry (2) Orthodontics (3) Periodontics (4) Pedodontics (5) Endodontics (6) Prosthodontics (7) Oral & Maxillofacial Surgery,
(8) Implants and (9) TMJ.

Members of the Dental Network are assigned "areas of exclusivity" established by UDC which grants the Dental Network provider primary responsibility to provide for the general dentistry and specialist services required by covered union members. DDS's Network dentists accept as payment in full for covered services the scheduled amount payable by the applicable union sponsored dental benefit plan together with a relatively small co-payment from the covered union member. The copayment to be paid by the union member is generally substantially lower than the scheduled copayment set forth in the applicable dental benefit plan, resulting in significant savings to the union member.

During 2007, UDC generated $548,494 in operating revenues.

Direct Dental Services, Inc.:

Direct Dental Services, Inc. ("DDS") is a Florida corporation that has acquired the assets (minus the client list) of Dr. George D. Green, P.A. effective October 15, 2004. Subsequent thereto, on May 17, 2005, DDS acquired certain assets and assumed certain liabilities of DORA VILK-SHAPIRO, D.M.D., P.A. d/b/a Dental Visions, a Florida corporation ("Dental Vision") for a purchase price of $283,241.

DENTAL PRACTICE

DDS manages a dental practice in Coral Springs, Florida. The office is run by Dr. George D. Green, a licensed dentist and our chief executive officer. DDS utilizes the services of 18 individuals pursuant to a management agreement with Dr. George D. Green, DDS, P.A. The Coral Springs office is comprised of two licensed dentists, a licensed orthodontist, a licensed associate dentist, two hygienists, four nurses, two office managers, a union dental insurance specialist, a union dental administrative director and four managerial staff members. For the year ended December 31, 2007, DDS generated $1,854,682 in revenues.

ACQUISITION OF ADDITIONAL PRACTICES

DDS intends to acquire existing dental practices in selected geographical areas throughout the United States to further expand its base of operations by providing additional locations for the benefit of union members.

In addition to providing services to the various unions, these dental offices will generate fee for services from their normal patient base. We believe that we have developed a unique management system which will enable us to expand the business of any dental practice we acquire. Training will be accomplished by having the licensed dentist train at the corporate headquarters prior to being placed into the newly acquired dental practices. After a period of time the dentist will be evaluated in his/her management skills and operating procedures. At that time, we intend to allow these dentists to purchase the existing dental practice from us, after the completion of a transition period. We intend to finance the acquired business when it is sold to the new dentist. To date, we have acquired one dental practice.

COMPETITIVE BUSINESS CONDITIONS

The fields of dental practice and dental network participation with unions are highly competitive. We compete with a number of businesses that provide the same or similar services. Many of these competitors have a longer operating history, greater financial resources, and provide other services to insurance companies that we do not provide. Principal competitors include national firms, as well as many regional firms. We believe that quality of service, high caliber dental services, proper pricing and range of services offered are the principal factors that will enable us to compete effectively.

GOVERNMENT REGULATIONS

As a participant in the health care industry, our operations are subject to extensive and increasing regulation by a number of governmental entities at the federal, state and local levels. We also are subject to laws and regulations relating to business corporations in general. The Company believes its operations are in material compliance with applicable laws and will be able to maintain compliant in an ever increasing regulatory environment.

Costs and Effects of Compliance with Environmental Laws.

Some of the services provided by the Company will produce byproducts or waste, the disposal of which is regulated by Federal or State guidelines. The Company is aware of the requirements of these regulating agencies and has taken steps to ensure compliance with the legal requirements.

EMPLOYEES

We operate our business through our wholly owned subsidiaries. Dr. Green, our chief executive officer, is the only employee of Union Dental Holdings. DDS employs a total of twenty three (23) individuals that assist in the operation of both Dr. George D. Green, DDS, P.A., its dental laboratory and Union Dental Corp. We anticipate hiring additional employees over the next twelve months if we are successful in implementing our plan of operations.

AVAILABLE INFORMATION

Information regarding the Company's annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K, and any amendments to these reports, are available to the public from the SEC's website at http://www.sec.gov as soon as reasonably practicable after the Company electronically files such reports with the Securities and Exchange Commission. Any document that the Company files with the SEC may also be read and copied at the SEC's public reference room. You may call the SEC at 1-800-SEC-0330 for further information on the public reference room. We will also supply this information to any shareholder requesting copies of any of the foregoing free of charge. Shareholders should contact our office at (954) 575-2252 if they desire copies of any of our filings with the Securities and Exchange Commission.

RISK FACTORS

Before you invest in our securities, you should be aware that there are various risks. you should consider each of the following risk factors and any other information set forth in this Form 10-KSB and the other Company's reports

filed with the Securities and Exchange Commission ("SEC"), including the Company's financial statements and related notes, in evaluating the Company's business and prospects. The risks and uncertainties described below are not the only ones that impact on the Company's operations and business. Additional risks and uncertainties not presently known to the Company, or that the Company currently considers immaterial, may also impair its business or operations. If any of the following risks actually occur, the Company's business and financial condition, results or prospects could be harmed.

RISKS ASSOCIATED WITH THE COMPANY'S PROSPECTIVE BUSINESS AND OPERATIONS

IT IS UNLIKELY THAT WE WILL BE ABLE TO SUSTAIN PROFITABILITY IN THE FUTURE.

We incurred significant losses in 2007 and there can be no assurance that we will be able to reverse this trend. Even if we are able to successfully implement our planned operations. There can be no assurance that we will be able to operate profitably.

It is critical to our success that we continue to devote financial resources to sales and marketing our network of dental providers and to acquire additional dental practices. As a result, we expect that our operating expenses will continue to increase. As we increase spending, there can be no assurance that we will be able to operate on a profitable basis. As a result, we may not be able to sustain profitable operations, or if we do achieve profitability in any period, we may not be able to sustain or increase profitability on a quarterly or annual basis.

The Company has a limited operating history in connection with its network provider business ("UDC") upon which an evaluation of its future success or failure can be made. The Company's ability to achieve and maintain profitability and positive cash flow over time will be dependent upon, among other things, its ability to (i) identify and execute exclusive contracts with the unions and (ii) raise the necessary capital to operate during this period. At this stage in the Company's development, it cannot be predicted how much financing will be required to accomplish these objectives.

Our auditors have issued a going concern opinion based on our financial situation as of December 31, 2007 We have accumulated losses from operations totaling $4,717,766, a working capital deficit of $2,601,221 and a stockholders' deficit of $2,435,522. A significant portion of the operating losses in 2007 is attributable to our salaries and related stock based compensation. Management also continues to invest significant time and money in cultivating closer relationships with the unions, marketing its union contracts with dental practitioners and securing a network of dental providers. Management believes that these steps will result in increased revenues in the coming years. Nevertheless, if we are not able to continue as a going concern, you will likely lose your entire investment.

The Company needs to raise substantial funds in the foreseeable future in order to implement its business plan. The Company presently does not have sufficient revenues nor profits required to acquire dental practices and to expand its network provider businesses. No assurances can be given that the Company will be able to obtain the necessary funding during this time to make these acquisitions and expand its network of dental providers or even maintain its current operating levels. The inability to raise additional funds will have a material adverse affect on the Company's business, plan of operation and prospects. The Company's success is dependent upon a limited number of people.

The ability to implement the Company's business plan is significantly dependent upon the efforts of its President, Dr. George D. Green. The loss of his services would have a material adverse affect on the Company.

The Company's business will be harmed if it is unable to manage growth.

The Company's business may experience periods of rapid growth that will place significant demands on its managerial, operational and financial resources. In order to manage this possible growth, the Company must continue to improve and expand its management, operational and financial systems and controls. The Company will need to expand, train and manage its employee base. No assurances can be given that the Company will be able to timely and effectively meet such demands. The issuance of shares through our stock compensation and incentive plan has enabled us to retain the services of various consultants. However, issuance of shares of our Common Stock to these consultants has had a dilutive impact on existing shareholders.

We have used and anticipate continuing to use stock options, stock grants and other equity-based incentives, to provide motivation and compensation to our officers, employees and key independent consultants. The award of any such incentives will continue to result in immediate and potentially substantial dilution to our existing shareholders and can result in a decline in the value of our stock price.

We have financed part of our growth over the past year through an equity line of credit and the sale of convertible debt instruments. The use of these financing tools has resulted in further dilution to our existing shareholders and has been a contributing factor to the decline in the value of our Common Stock.

We have not voluntarily implemented various corporate governance measures in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.

Recent Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to

promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and Nasdaq are those that address board of directors' independence, audit committee oversight, and the adoption of a code of ethics. While our board of directors has adopted a Code of Ethics and Business Conduct, we have not yet adopted any of these other corporate governance measures and, since our securities are not yet listed on a national securities exchange or Nasdaq, we are not required to do so. It is possible that if we were to adopt some or all of these corporate governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

Provisions of our Articles of Incorporation and Bylaws may delay or prevent take-over, which may not be in the best interest of our stockholders.

Provisions of our articles of incorporation and bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of the Florida Statutes also may be deemed to have certain anti-takeover effects , which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation's disinterested stockholders. In addition, our articles of

incorporation authorize the issuance of up to 25,000,000 shares of preferred stock with such rights and preferences as may be determined from time to time by our board of directors, of which 3,000,000 shares of Class A Preferred Stock are issued and outstanding as of March 1, 2007. Each share of Class A Preferred shall have 15 votes per share. Our board of directors may, without stockholder approval, issue preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our common stock.

Risks Related to the Company's Common Stock

The Company does not expect to pay dividends in the foreseeable future.

The Company has never paid cash dividends on its common stock and has no plans to do so in the foreseeable future. The Company intends to retain earnings, if any, to develop and expand its business.

"Penny stock" rules may make buying or selling the common stock difficult and severely limit their market and liquidity.

Trading in the Company's common stock is subject to certain regulations adopted by the SEC commonly known as the "Penny Stock Rules". The Company's common stock qualifies as penny stock and is covered by Section 15(g) of the Securities and Exchange Act of 1934, as amended (the "1934 Act"), which imposes additional sales practice requirements on broker/dealers who sell the Company's common stock in the market. The "Penny Stock" rules govern how broker/dealers can deal with their clients and "penny stock". For sales of the Company's common stock, the broker/dealer must make a special suitability determination and receive from clients a written agreement prior to making a sale. The additional burdens imposed upon broker/dealers by the "penny stock" rules may discourage broker/dealers from effecting transactions in the Company's common stock, which could severely limit its market price and liquidity. This could prevent investors from reselling our common stock and may cause the price of the common stock to decline.

Although publicly traded, the Company's common stock has substantially less liquidity than the average trading market for a stock quoted on other national exchanges, and our price may fluctuate dramatically in the future.

Although the Company's common stock is listed for trading on the Over-the-Counter Electronic Bulletin Board, the trading market in the common stock has substantially less liquidity than the average trading market for companies quoted on other national stock exchanges and our price may fluctuate dramatically. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace of willing buyers and sellers of our common stock at any given time. This presence depends on the individual decisions of investors and general economic and market conditions over which we have no control. Due to limited trading volume, the market price of the Company's common stock may fluctuate significantly in the future, and these fluctuations may be unrelated to the Company's performance. General market price declines or overall market volatility in the future could adversely affect the price of the Company's common stock, and the current market price may not be indicative of future market prices.

Our stock price may be volatile

The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including:

o technological innovations or new products and services by us or our competitors;
o additions or departures of key personnel;
o sales of our common stock
o our ability to integrate operations, technology, products and services;
o our ability to execute our business plan;
o operating results below expectations;

o loss of any strategic relationship;
o industry developments;
o economic and other external factors; and
o period-to-period fluctuations in our financial results.

Because we have a limited operating history with our Direct Dental Services, business, you may consider any one of these factors to be material. Our stock price may fluctuate widely as a result of any of the above listed factors.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

Risks relating to the Debenture Agreement:

Dutchess, the holder of a Convertible Debenture issued by us on August 17, 2005 has the option of converting the Debenture into shares of our common stock. Dutchess may also exercise their common stock purchase options. If the Debenture is converted or the warrants exercised, there will be dilution of your shares of our common stock.

The issuance of shares of our common stock upon conversion of the Debenture will result in the dilution to the interests of other holders of our common stock, since Dutchess may sell all of the resulting shares into the public market.

The principal amount of the Debenture plus accrued interest may be converted at the option of the Dutchess into shares of our common stock at a conversion price equal to $.092. Based on the price of our common stock over the past year, there is very little likelihood that Dutchess will convert any part of the Debenture into shares of our Common Stock.

Sales of a substantial number of shares of our common stock into the public market by the holder of our Convertible Debenture may result in significant downward pressure on the price of our common stock and could affect the ability of our stockholders to realize the current trading price of our stock.

As we draw down the equity line of credit and we issue common stock to Dutchess, such common stock will be purchased by Dutchess at less than the then market price. At such times, Dutchess will have a financial incentive to sell our common stock immediately upon receiving the shares. When Dutchess sells shares of our common stock, the price of our stock could decrease. If our stock price decreases, Dutchess may have a further incentive to sell the shares of our common stock that it holds. Such sales of common stock by Dutchess could cause the market price of our common stock to decline. If Dutchess converts the Convertible Debenture and any accrued interest, we will be required to issue a significant number of additional shares of our common stock. This will result in dilution to the interests of the other holders of our common stock. The resale of our common stock will increase the number of publicly traded shares which could depress the market price of our common stock and thereby affect the ability of our shareholders to realize the current price of our common stock. In addition, as all of the shares we issue to Dutchess will be available for resale, the mere prospect of our sales to them could depress the market price of our common stock.

With our Common Stock trading at significantly less than the Conversion Price it is unlikely that Dutchess will convert any of its common stock. As a result, we are required to make monthly interest payments of approximately $62,000. We do not have sufficient operating funds to make these monthly interests payments and as a result, we are in default.

We are also obligated to repay Dutchess the sum of $960,000 pursuant to a one year promissory note dated December 22, 2005. We have not repaid this note and are in default. For so long as this obligation remains in default, our ability to secure additional financing will be impaired.

Risks relating to the Investment Agreement:

There are a large number of shares underlying our periodic equity investment agreement with Dutchess. The issuance and sale of shares upon delivery of an advance by Dutchess Private Equities Fund II, LP ("Dutchess") pursuant to the Investment Agreement in the amount up to $5,000,000 and the conversion of the Debenture and exercise of options by Dutchess are likely to

result in substantial dilution to the interests of other stockholders. Up to 38,461,538 are reserved for issuance pursuant to the Investment Agreement with Dutchess Private Equities Fund II, LP. Assuming the issuance of 38,461,538 shares under the Investment Agreement, existing shareholders will experience substantial dilution of our shares of Common Stock.

Our Investment Agreement with Dutchess contemplates the potential future issuance and sales of up to $5,000,000 of our Common Stock to Dutchess subject to certain restrictions and obligations. Given out current capital needs and the market price of our common stock, we presently have no intention of drawing down the entire amount available to us unless the market price of our common stock increases.

The large number of shares issuable under the Investment Agreement may result in a change of control. Provided however, that the holders of our Series A preferred shares will in all likeli.

We have registered a total of 40,080,763 shares for sale pursuant to the Investment Agreement. Based on our current trading price, and after taking into account the number of shares of common stock which we have already issued pursuant to our equity line of credit, it is unlikely that we will be able to secure even $1 million in financing unless we register additional shares of our common stock. This will result in even further dilution to our common stock and the likelihood of an even lower price of our common stock. Because we are in default under our obligations to Dutchess and the likelihood that we will have to issue to Dutchess a significant amount of additional common stock, Dutchess may be able to exert substantial influence over all matters submitted to a vote of the shareholders, including the election and removal of directors, amendments to our articles of incorporation and by-laws, and the approval of a merger, consolidation or sale of all or substantially all of our assets. In addition, this concentration of ownership could inhibit the management of our business and affairs and have the effect of delaying, deferring or preventing a change in control or impeding a merger, consolidation, takeover or other business combination which our shareholders, may view unfavorably.

The lower the stock price, the greater the number of shares issuable under the Investment Agreement.

The number of shares that Dutchess will receive under its agreement with us is calculated based upon the market price of our common stock prevailing at the time of each "put". The lower the market price, the greater the number of shares issuable under the agreement. Upon issuance of the shares, to the extent that Dutchess will attempt to sell the shares into the market, these sales may further reduce the market price of our common stock. This in turn will increase the number of shares issuable under the agreement. This may lead to an escalation of lower market prices and ever greater numbers of shares to be issued. A larger number of shares issuable at a discount to a continuously declining stock price will expose our shareholders to greater dilution and a reduction of the value of their investment.

The sale of our stock under the Dutchess agreement could encourage short sales which could contribute to the future decline of our stock price and materially dilute existing stockholders' equity and voting rights.

Neither the Investment Agreement nor the Debenture Agreement contain restrictions on short selling. Accordingly, any significant downward pressure on the price of our common stock can encourage short sales by them or others,

subject to applicable securities laws. This is particularly the case if the shares being placed into the market exceed the market's ability to absorb the increased number of shares of stock or if we have not performed in such a manner

to show that the equity funds raised will be used by us to grow. Such an event could place further downward pressure on the price of our common stock. Even if we use the proceeds under the agreement to grow our revenues and profits or invest in assets, which are materially beneficial to us, the opportunity exists for short sellers and others to contribute to the future decline of our stock price. If there are significant short sales of our stock, the price decline that would result from this activity will cause the share price to decline more so, which, in turn, may cause long holders of the stock to sell their shares thereby contributing to sales of stock in the market. If there is an imbalance on the sell side of the market for the stock, our stock price will decline. If this occurs, the number of shares of our common stock that is issuable pursuant to the Investment Agreement will increase, which will materially dilute existing stockholders' equity and voting rights.

Item 2. Description of Property

Our offices are located at 1700 University Drive, Coral Springs, Florida 33071. In June 2006, we signed a new lease agreement consolidating all of our operations under a single lease agreement. We currently lease approximately 4,650 square feet of space at a cost of $6,982 per month inclusive of sales tax but exclusive of common area operating expenses which are estimated to be an additional $2,200 per month. Our base rent will increase on the anniversary date of the lease by the greater of 5% or the increase in the Consumer Price Index. We operate both subsidiaries from the leased premises as well as operate a dental lab.

Item 3. Legal Proceedings

None.

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

No matter was submitted to a vote of our shareholders, through the solicitation of proxies or otherwise during the fourth quarter of our fiscal year ended December 31, 2007, covered by this report.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

a) Market Information. The Company's common stock began trading on the Over-the-Counter Bulletin Board (the "OTCBB") on October 6, 2004. Our current stock symbol is "UDHI.OB". The following table sets forth, for the periods indicated, the range of high and low closing bid quotations for our common stock as quoted on the OTCBB. The reported bid quotations reflect inter-dealer prices without retail markup, markdown or commissions, and may not necessarily represent actual transactions. Prices set forth below have been adjusted to give

effect to the one for forty reverse stock split which was approved by the stockholders on May 10, 2004.

Year 2005 High Low
------------------- ------ -----
First Quarter $.73 $.17
Second Quarter .21 .08
Third Quarter .22 .10
Fourth Quarter .15 .09

Year 2006 High Low
------------------- ------ -----
First Quarter $.12 $.08
Second Quarter .08 .02
Third Quarter .10 .07
Fourth Quarter .07 .04

Year 2007 High Low
-------------------- ------ -----
First Quarter $.05 $.027
Second Quarter .034 .022
Third Quarter .03410 .009
Fourth Quarter .014 .007

Year 2008 High Low
-------------------- ------ -----
Through March 11 $.01 $.006

Such market quotations reflect the high bid and low prices as reflected by the OTCBB or by prices, without retail mark-up, markdown or commissions and may not necessarily represent actual transactions. Some of the companies who serve as market makers for our common stock include WM. V. Frankel & Co., Hill Thompson Magid & Co, Knight Equity Markets, L.P. and Schwab Capital Markets L.P. Our shares are subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the Exchange Act"), commonly referred to as the "penny stock" rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.

The Commission generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the Commission; authorized for quotation on The NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 persuade) or the registrant's net tangible assets; or exempted from the definition by the Commission. Since our shares are deemed to be "penny stocks", trading in the shares will be subject to additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors.

For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such securities and must have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the securities. Finally, the monthly statements must be sent disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of broker dealers to trade and/or maintain a market in our Common Stock and may affect the ability of shareholders to sell their shares.

Transfer Agent

Our transfer agent is Interwest Transfer Co., Inc., 1981 East Murray Holiday Road, Suite 100, Salt Lake City, UT 84117. Their telephone number is
(801) 272-9294.

Holders. As of March 13, 2007 there were 422 shareholders of record of our

common stock.

Dividend Policy. We have not declared or paid cash dividends or made distributions in the past, and we do not anticipate that we will pay cash dividends or make distributions in the foreseeable future. We currently intend to retain and reinvest future earnings, if any, to finance our operations.

Securities authorized for issuance under equity compensation plans

The following table sets forth all securities which we may issue under any equity compensation plan.

 Number of securities to Weighted average
 be issued upon exercise exercise price of Number of securities
 of outstanding options, outstanding options, remaining available for
 Plan category warrants and rights warrants and rights future issuance
 (a) (b) (c)
===================================== ======================= ==================== =======================
Equity compensation plans approved
by security holders (1)(3) 1,508,000 $0.16 6,792,000

Equity compensation plans no
approved by security holders (2) -0- $-0- -0-

Total 1,508,000 $0.16 6,792,000

(1)Effective December 30, 2006, we reached agreement with several holders of our outstanding options whereby we cancelled 1.5 million options at exercise prices varying between $.50 and $.60 per share and issued a total of 950,000 options at prices ranging from $.13 to $.15 per share. At the time of the grant of the options, the closing bid price of the Company's common stock was $.10 per share. All of the outstanding options were cancelled, and new options were issued at a lower exercise price.

(2)Includes 1,304,348 warrants which may be exercised at a price of $.092 per share issued to Dutchess Private Equities Fund II, L.P. and 500,000 warrants which may be exercised at a price of $.20 per share issued to Hawk Associates. Both Dutchess options and the Hawk warrants and the underlying shares were registered as part of our SB-2 registration statement filed with the Securities and Exchange Commission on September 9, 2005.

(3) Does not include a total of 1,245,000 performance based options of which 997,500 have been granted to George Green and 247,500 granted to a consultant.

Recent Sales of Unregistered Securities.

During the year ended December 31, 2007 we issued the following unregistered shares of our Common Stock

Date: Number of Shares Valuation

January 4 250,000 $11,250
January 12 300,000 15,000
January 24 1,500,000 67,500
January 24 250,000 11,250
January 24 250,000 11,250
February 16 3,000,000 126,000
May 9 2,000,000 54,000
June 18 2,000,000 40,000
June 19 3,000,000 60,000
June 26 300,000 6,000
September 14 1,000,000 12,000
September 28 3,000,000 30,000
November 8 2,000,000 20,000
December 10 1,000,000 7,000
December 13 3,000,000 19,500

We, also on January 24, 2007, issued 2 million shares of our preferred stock which we valued at $.001 per share.

The securities issued in the foregoing transactions were made in reliance upon an exemption from registration under Rule 701 promulgated under Section 3(b) of the Securities Act and or Section 4(2) of the Securities Act. Alternatively, these issuances of securities were undertaken under Rule 506 of Regulation D under the Securities Act of 1933, as amended, by the fact that:

- the sale was made to a sophisticated or accredited investor, as defined in Rule 502;

- we gave the purchaser the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which we possessed or could acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished;

- at a reasonable time prior to the sale of securities, we advised the purchaser of the limitations on resale in the manner contained in Rule
502(d)2; and

- neither we nor any person acting on our behalf sold the securities by any form of general solicitation or general advertising; and

Use of Proceeds from sale of Registered Securities

During the year ended December 31, 2007, we received approximately $69,825 in net proceeds from the sale of our registered securities pursuant to the Equity Line of Credit with Dutchess and issued a total of 4,306,452 shares of our common stock. We used these funds for general working capital purposes. We also issued approximately 12,000,000 shares of our Common Stock pursuant to our Equity Compensation Plan which was registered with the Securities and Exchange Commission on Form S-8. The shares were issued to various consultants and employees for services rendered.

Item 6. Management's Discussion and Analysis

Operations

This report on Form 10-KSB contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements and from historical results of operations. Among the risks and uncertainties which could cause such a difference are those relating to our dependence upon certain key personnel, our ability to manage our growth, our success in implementing the business strategy, our success in arranging financing where required, and the risk of economic and market factors affecting our customers or us. Many of such

risk factors are beyond the control of the Company and its management.

Plan of Operations

We operate our business through our two wholly owned subsidiaries, Direct Dental Services, Inc. ("DDS") and Union Dental Corp. ("UDC"). UDC operates a network of duly licensed dental providers. Members of the dental network pay an annual management service fee for the right to be a member of the dental network. DDS operates a dental practice in Coral Springs, Florida. The Company intends to expand its network of dental providers. The Company may also expand and offer participating unions other professional services such as chiropractic and optometrists. The Company may also acquire additional dental practices which the Company believes application of its Dental Practice Management Model will improve operating performance.

In furtherance thereof during 2007, we spent significant time and money exploring the possible acquisition of a large dental practice in California. Closing of the transaction would have required us to pay the Seller a large sum of cash at Closing. We could not be certain if we could secure the required

financing to close on this transaction. As a result, when we were required to to deliver a non-refundable deposit on the purchase of the property, we determined that the risk was too great to put this money at risk and as a result, turned down the potential acquisition without further liability except for the fees and costs we incurred in conducting our due diligence.

We are currently investigating the possible acquisition of a dental practice in North Carolina. Closing of the transaction will be subject to our further due diligence and securing the required financing. The acquisition of the dental practice will also include real estate

Management's current focus is the expansion of its dental network. We intend to expand in existing markets primarily by enhancing the operating performance of our existing office, by acquiring dental practices, by adding union contracts in states where we currently do not have union contracts and by developing dental network union contracts with other unions. At this time it is not possible to project what income or expenses will result from the expansion of these services.

In order to finance our operations, growth and expansion, on August 17, 2005, we entered into an Investment Agreement with Dutchess Private Equity Fund II, LLP ("Dutchess"). Pursuant to this Agreement, Dutchess will commit to purchase up to $5,000,000 of our Common Stock over the course of 36 months, beginning September 15, 2005, the date our registration statement was declared effective by the SEC. Under the agreement, we may sell to Dutchess on each occasion, either (1) $100,000 in shares of our common stock or (2) 200% of the averaged daily volume (U.S market only) of our Common Stock for the 20 trading days prior to our "Put" notice, multiplied by the average of the 3 daily closing prices immediately preceding the Put Date. The Market Price shall be the lowest closing bid price of our common stock during the Pricing Period. The Purchase Price shall be set at 95% of the Market Price. This Investment Agreement establishes what is sometimes termed an equity line of credit or an equity drawdown facility.

In general, the drawdown facility operates as follows: Dutchess, has committed to provide us with up to $5,000,000 as we request over a 36 month period, in return for common stock that we issue to Dutchess. We may, in our sole discretion, during the Open Period deliver a "put notice" (the "Put Notice") to Duchess which states the dollar amount which we intend to sell to Dutchess on the Closing Date. The Open Period is the period beginning on the trading after the Effective Date and which ends on the earlier to occur of 36 months from the Effective Date or termination of the Investment Agreement in accordance with its terms. The Closing Date shall mean no more than seven trading days following the Put Notice Date. The Put Notice Date shall mean the Trading Day immediately following the day on which Dutchess receives a Put Notice, as defined in the agreement.

During the Open Period, we are not entitled to submit a Put Notice until after the previous Closing has been completed.

Upon the receipt by Dutchess of a validly delivered Put Notice, Dutchess shall be required to purchase from us, during the period beginning on the Put Notice Date and ending on and including the date that is 5 trading days after such Put Notice, that number of shares having an aggregate purchase price equal to the lesser of (a) the Put Amount set forth in the Put Notice, or (b) 20% of the aggregate trading volume of our common stock during the applicable Pricing Period times (x) the lowest closing bid price of our common stock during the specified Pricing period, but only if such said shares bear no restrictive legend and are not subject to stop transfer instructions, prior to the applicable Closing Date.

As a result of this variable price feature, the number of shares issuable pursuant to the agreement will increase if the market price of our stock decreases. In addition there is no upper limited on the number of shares issuable pursuant to the agreement. Therefore our shareholders may be subject to significant dilution and face the prospect of a change in control. (See Footnote 4 to our Financial Statements).

For the year ended December 31, 2007, the Company delivered Put Notices to draw on the equity line of credit. In connection with our Put Notices, the Company issued 4,306,452 shares of our Common Stock and received net proceeds of $69,825. (See note 4 to our financial statements.)

Because of the significant decline in the price of our common stock since the execution of our Line of Credit with Dutchess, it is unlikely that we will be able to draw down the entire $5,000,000. As a result, we may have to obtain additional operating capital from other sources to enable us to execute our business plan. We anticipate that we may be able to obtain a portion of any additional required working capital through the private placement of Common Stock to domestic accredited investors pursuant to Regulation D of the Securities Act of 1933, as amended. We may also rely on the exemption afforded by Regulation S of the Securities Act of 1933, as amended, and solicit non-U.S. citizens. There is no assurance that we will obtain the additional working capital that we need through the private placement of our Common Stock. In addition, such financing may not be available in sufficient amounts or on terms acceptable to us.

Also in connection with the Dutchess financing, on August 17, 2005, we entered into a Debenture Agreement with Dutchess, an accredited investor, for the issuance and sale of $600,000 of 10% secured convertible debenture due August 17, 2010 in a private transaction exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) and Regulation D of the Act. At the time of signing the Debenture Agreement, we also issued Dutchess a five-year common stock purchase warrant to purchase 1,304,348 shares of our common stock at $.092 per share.

Interest is payable on the secured convertible debentures at the rate of 10% per year. Amortizing payments will be made by us in satisfaction of this Debenture. Payments shall be made monthly on the first day of each business day of each month while there is an outstanding balance on the Debenture, to the Holder, in the amounts outlined below on the following schedule:

Payment for Month 1: $ 4,951
 (due within three (3)
 days of the Issuance Date)
Payment for Month 2: $ 4,951
Payment for Month 3: $ 4,951
Payment for Month 4
 and each month thereafter: $62,716

The principal amount of the Debenture plus accrued interest may be converted at the option of Dutchess into shares of our common stock, anytime following the closing date, at a conversion price equal to the lesser of (i) the lowest closing bid price during the 15 days of full trading, as defined, prior to the conversion date; or (ii) $0.092. In addition, in the event that any portion of the debenture remains outstanding on the maturity date of August 17, 2010, such outstanding amount shall be automatically converted into shares of our common stock. In the event that we do not make delivery of the common stock as instructed by Dutchess, we shall be obligated to pay to Dutchess 3% in cash of the dollar value of the debentures being converted, compounded daily, per each day after the 3rd business day following the conversion date that the common stock is not delivered to Dutchess. In the event of default as defined in the Debenture Agreement, Dutchess may among other things:

(a) elect to secure a portion of the Company's assets not to exceed 200% of the Face Amount of the Note, in Pledged Collateral;
(b) elect to garnish Revenue from us in an amount that will repay the Holder on the payment schedule set forth above;
(c) exercise its right to increase the Face Amount of the debenture by ten percent (10%) as an initial penalty and for each Event of Default under the Debenture;
(d) elect to increase the Face Amount by two and one-half percent (2.5%) per month (pro-rata for partial periods) paid as a penalty for liquated damages which will be compounded daily;

The debenture provides that Dutchess shall not be entitled to convert that amount of Debenture into common stock, which when added with the sum of the number of shares beneficially owned by Dutchess would exceed 4.99% of the number of shares of our common stock outstanding on the conversion date.

In order to secure its obligations under the secured convertible debenture and related documents, we have granted Dutchess a security interest in all of our assets and property.

At December 31, 2007, the balance of the convertible debenture amounted to $586,408.

On December 22, 2005, the Company signed a promissory note (the "Note") in favor of Dutchess in the amount of $960,000 (the "Face Amount") and received gross proceeds in the amount of $800,000 less $60,075 in fees associated with the financing for net proceeds of $739,925. The Company is obligated to repay the Investor the Face Amount on or before December 23, 2006. There is no stated interest rate on the Note. Payments are to be made by the Company from each Put from the Company's Equity Credit Line we have with Dutchess. The Company is obligated to pay Dutchess the greater of a) 50% of each Put to the Investor or
b) $80,000 until the face Amount minus any fees have been paid. The first payment was due and made on February 15, 2006 and all subsequent payments will be made at the Closing of every Put to Dutchess thereafter. The Put Amount will be the maximum amount allowed under the Investment Agreement with Dutchess. Payments made by the Company in satisfaction of this Note shall be made from each Put from the Equity Line of Credit with Dutchess. Additionally, in connection with this obligation, the Company issued 1,500,000 shares of common stock.

We issued 50 signed Put Notices to Dutchess as collateral. In the event, that Dutchess uses the collateral in full, we are obligated to immediately deliver to Dutchess additional Put Sheets as requested. In the event that on the maturity date we have any remaining amounts unpaid on this Note (the "Residual Amount"), the Holder can exercise its right to increase the Face Amount by ten percent (10%) as an initial penalty and an additional 2.5% per month paid, pro rata for partial periods, compounded daily, as liquated damages ("Liquidated Damages").

Additionally, in the event of a default as defined in the agreement, the Holder shall have the right, but not the obligation, to 1) switch the Residual Amount to a three-year ("Convertible Maturity Date"), interest-bearing convertible debenture. If the Holder chooses to convert the Residual Amount to a Convertible Debenture, we shall have 20 business days after notice of the same (the "Notice of Convertible Debenture") to file a registration statement covering an amount of shares equal to 300% of the Residual Amount. Such registration statement shall be declared effective under the Securities Act of 1933, as amended (the "Securities Act"), by the Securities and Exchange Commission (the "Commission") within 40 business days of the date we file such Registration Statement. In the event we do not file such registration statement within 20 business days of the Holder's request, or such registration statement is not declared by the Commission to be effective under the Securities Act within the time period described above, the Residual Amount shall increase by $5,000 per day.

The Holder is entitled to convert the Debenture Residual Amount, plus accrued interest, anytime following the Convertible Maturity Date, at the lesser of (i) 50% of the lowest closing bid price during the 15 trading immediately preceding the Convertible Maturity Date or (ii) 100% of the lowest bid price for the 20 trading days immediately preceding the Convertible Maturity Date ("Fixed Conversion Price").

We are currently in default under the terms and conditions of this Agreement. No notice of Default has been received. (See Footnote 5.)

Results of Operations

FISCAL YEAR ENDED DECEMBER 31, 2007 ("FISCAL 2007") AS COMPARED TO THE FISCAL YEAR ENDED DECEMBER 31, 2006 ("FISCAL 2006")

Revenues

For the year ended December 31, 2007 as compared to December 31, 2006 we generated revenue of $2,593,176 as compared to $2,197,099. This increase in revenues is attributable to both increased revenues which we generated from the dental practice and an increase in the number of participating dental service providers as we continue to expand our network of local, regional and national agreements with unions to provide discounted dental services to their members. This increase is partly attributable to revenues of $190,000 which we received

in connection with the settlement of a lawsuit.

Operating Expenses

The Company's total operating expenses increased $135,399 or 4% for the year ended December 31, 2007 as compared to the 2006 period. These increases include:

o COST OF SERVICES PERFORMED Cost of services performed expense consists of personnel cost, dental supplies, and lab costs. For fiscal 2007, the cost of services performed were $329,923 as compared to $447,090 for the 2006 period, a decrease of $117,167 or 26%. This decrease was primarily due to the result of a decrease in lab expenses of approximately $85,000 due to the performance of certain lab procedures in-house and a decrease in dental supplies of approximately $31,000.
o SALARIES, RELATED TAXES AND STOCK-BASED COMPENSATION Salaries, related taxes and stock-based compensation expense consists of personnel cost and the fair value of common shares issued for services to employees. For fiscal 2007, salaries, related taxes and stock-based compensation costs were $1,522,523 as compared to $1,086,777 for the 2006 period, an increase of $435,746 or 40%. The increase in salaries relates to adding additional personnel and normal wage increases. Additionally, we recognized stock based compensation of $360,760 for fiscal 2007 attributable to the fair value of common shares issued for services to our CEO and certain employees.
o For fiscal 2007, we recorded depreciation expense of $67,967 as compared to $67,454 for the 2006 period. We purchase additional computer equipment during fiscal 2007 amounting to $1,015 which resulted in a minimal increase in depreciation.
o For fiscal 2007, we incurred professional fees of $148,816 as compared to $186,538 for the 2006 period, an increase of $37,722 or 20%. The decrease during fiscal 2007 was attributable to decrease in accounting fees.
o For fiscal 2007, we incurred consulting fees of $392,247 as compared to $567,678 for the 2006 period, a decrease of $175,431 or 31%. The decrease was primarily attributable to a decrease in use of consultants for investor relations, business development and advisory services during fiscal 2007.
o For fiscal 2007, we incurred other general and administrative expenses of $773,139 as compared to $743,679 for the 2006 period, an increase of $29,460 or 4%. Other general and administrative expenses consisted

of rent, insurance, printing, office expenses, utilities, maintenance, computer expenses, postage, travel, and other expenses. The increase in fiscal 2007 is primarily related to an increase in operations.

Other income (expenses)

o For fiscal 2007, we recorded amortization of debt issuance costs of $6,685 as compared to $129,028 in the 2006 period. The decrease was primarily attributable to the full amortization of debt issuance cost related to our notes payable with dutchess in the 2006 period as compared to $0 for fiscal 2007.

o For fiscal 2007, we recorded a loss from the revaluation of a derivative liability of $109,478 as compared to a gain of $437,497 in the 2006 period. The increase in loss from the revaluation of a derivative liability during fiscal 2007 is attributable to a decrease in conversion price of our convertible notes payable from dutchess after its maturity date thereby increasing the number of common stock equivalents.
o For fiscal 2007, interest expense was $128,260 as compared to $1,419,751 for the 2006 period, a decrease of $1,291,491 and was attributable to the amortization of discount on our debenture and convertible note payable in 2006. The amortization of debt discount for fiscal 2007 amounted to $2,463 as compared to $1,155,610 in the 2006 period. Additionally, the significant decrease in interest expense is primarily attributable to decreasing borrowing costs and repayment obligations as a result of the various financings we have undertaken with Dutchess and to a lesser extent, costs associated with our bank line of credit.

Net Loss

As a result of these factors, we reported a net loss of $884,259 or $.01 per share for fiscal 2007 as compared to net loss of $2,013,399 or $.05 per share for the 2006 period. Investors should note that as of December 31, 2007, the weighted average number of shares outstanding was 71,501,374 as compared to 40,056,555 for fiscal 2006.

Liquidity and Capital Resources

At December 31, 2007, we had cash and accounts receivable totaling $340,328. We had total current assets of $405,532. Also, as of December 31, 2007, we had total assets of $571,231 Our total current liabilities at December 31, 2007 were $3,006,753. We have a working capital deficit as of December 31, 2007 of $2,601,221. Our working capital deficit is primarily attributable to the financing we have secured with Dutchess including the outstanding current portion of a convertible debenture which we have recorded at $226,873, a note payable in the amount of $752,899 and a derivative liability in the amount of $613,722. We also have convertible notes payable totaling $586,408. The derivative liability which we recorded on our books is the result of the convertibility feature and the registration rights which we have granted to Dutchess. (See Footnotes 3,4 and 5 of our financial statements). We are also in default under our lending agreement when we failed to maintain certain affirmative covenants required under the loan documentation. This loan obligation has been subsequently assigned by Bank of America. We have not received any notice of default by the Assignee and we continue to make the required monthly payments. Nevertheless, we have designated the entire amount of this liability, as a short term liability.

We owe our CEO, George Green, the sum of $268,451. This liability resulted from a loan which he provided the company in the amount of $270,000. Dr. Green individually signed a 30 year promissory note in the amount of $270,000 with Sun Trust Bank, which requires 360 monthly principal and interest payments at the rate of 8.4% per annum until March 7, 2037. (See Footnote 8.)

We have also recorded a liability for unearned membership fees totaling $333,752.

To the extent that revenues are insufficient to support ongoing operations, the Company will have to draw against its equity line of credit. With our stock price currently trading below the conversion price of $.092 per share, it is unlikely that Dutchess would convert any portion of the outstanding obligation at the fixed conversion price. Moreover, we were required to deliver Put notices to Dutchess to satisfy the terms and conditions of the $960,000 promissory note. This obligation is in default. In order to satisfy this obligation, we will be required to draw down our equity line of credit. This will require us to issue additional shares of our common stock which will cause further dilution and likely downward pressure on the price of our common stock. Our Common Stock currently trades at approximately $.006 per share. At this price, we have not

registered a sufficient number of registered shares available under our equity line of credit to satisfy the outstanding obligation. Based on the current price of our common stock, we have not have registered a sufficient number of shares of common stock to draw against the equity credit line. As such, we will in all likelihood continue to be in default under these obligations.

We have an accumulated deficit of $4,717,766. We recorded shareholder transactions in 2007 of $1,489,711. As of December 31, 2007 we had a stockholders' deficit of $2,435,522.

You are urged to review the accompanying financial statements and financial footnotes in order to fully understand our financial condition.

On August 11, 2006, George Green, individually and on behalf of the Company, entered into a Promissory Note in the amount of $50,000 with the Community Bank of Broward. The interest rate on this promissory note is 8% per annum calculated by using the 365/360 day method. The note requires 60 monthly principal and interest payments of approximately $1,017 and is secured by certain assets of the Company. At December 31, 2007, the principal amount outstanding on this note amounts to $38,575.

On October 20, 2006, George Green, individually and on behalf of the Company entered into a Promissory Note in the amount of $250,000 with, Black Forrest International, LLC a non-affiliated third party. The interest rate on this promissory note is 10% per annum calculated by using a 360 day year. The principal balance and all accrued and unpaid interest was due on June 19, 2007 and was paid in full. The note is secured by certain assets of the Company.

Subsequent Events:

In January 2008, we exercised a put notice in accordance with our Investment Agreement with Dutchess and repaid principal and accrued interest on its notes payable of $37,501 for which we issued an aggregate of 6,644,496 shares of our common stock to Dutchess.

CRITICAL ACCOUNTING POLICIES

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

Income per share: Basic income per share excludes dilution and is computed by dividing the income attributable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the income of the Company. Diluted income per share is computed by dividing the income available to common shareholders by the weighted average number of common shares outstanding for the period and dilutive potential common shares outstanding unless consideration of such dilutive potential common shares would result in anti-dilution. Common stock equivalents were not considered in the calculation of diluted income per share as their effect would have been anti-dilutive for the period ended December 31, 2007 and 2006.

We review the carrying value of property and equipment for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are

considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.

Effective January 1, 2006, we adopted the provisions of SFAS No. 123(R), "Share-Based Payment," under the modified prospective method. SFAS No. 123(R) eliminates accounting for share-based compensation transactions using the intrinsic value method prescribed under APB Opinion No. 25, "Accounting for Stock Issued to Employees," and requires instead that such transactions be accounted for using a fair-value-based method. Under the modified prospective method, we are required to recognize compensation cost for share-based payments to employees based on their grant-date fair value from the beginning of the fiscal period in which the recognition provisions are first applied. For periods prior to adoption, the financial statements are unchanged, and the pro forma disclosures previously required by SFAS No. 123, as amended by SFAS No. 148, will continue to be required under SFAS No. 123(R) to the extent those amounts differ from those in the Statement of Operations.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements. We do not anticipate entering into any off-balance sheet arrangements during the next 12 months.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115", under which entities will now be permitted to measure many financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis. This Statement is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS 157. The Company is currently assessing the impact, if any, the adoption of SFAS 159 will have on its financial statements.

In May 2007, the FASB issued FASB Staff Position No. FIN 48-1, Definition of Settlement in FASB Interpretation No. 48 ("the FSP"). The FSP provides guidance about how an enterprise should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. Under the FSP, a tax position could be effectively settled on completion of examination by a taxing authority if the entity does not intend to appeal or litigate the result and it is remote that the taxing authority would examine or re-examine the tax position. The Company does not expect that this interpretation will have a material impact on its financial position, results of operations, or cash flows.

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations," which replaces SFAS No. 141, " Business Combinations," which, among other things, establishes principles and requirements for how an acquirer entity recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed (including intangibles) and any noncontrolling interests in the acquired entity. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We are currently evaluating what impact our adoption of SFAS No. 141(R) will have on our financial statements.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51." SFAS No. 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It also amends certain of ARB 51's consolidation procedures for consistency with the requirements of SFAS No. 141(R). SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We are currently evaluating what impact our adoption of SFAS No. 160 will have on our financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Item 7. Financial Statements

Our financial statements for the year ended December 31, 2007 have been examined to the extent indicated in their reports by Kramer Weisman and Associates, LLP and have been prepared in accordance with generally accepted accounting principles and pursuant to Regulation S-B as promulgated by the Securities and Exchange Commission and are included herein, on Page F-1 hereof in response to Part F/S of this Form 10-KSB.

Item 8. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

ITEM 8(a) Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer, who is also our chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms.

(b) Changes in internal controls. There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:

* Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

* Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

* Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2007. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.

Inherent in small business is the pervasive problem of segregation of duties. Given that the Company only employs one officer who also serves as the Company's sole director, segregation of duties is not possible at this stage in the corporate lifecycle.

Based on its assessment, management concluded that, as of December 31, 2007, the Company's internal control over financial reporting is effective based on those criteria. There have been no significant changes in the Company's internal controls or in other factors since the date of the Chief Executive Officer and Chief Financial Officer's (or persons performing similar functions) evaluation that could significantly affect these internal controls during the period covered by this report or from the end of the reporting period to the date of this Form 10-KSB, including any corrective actions with regards to significant deficiencies and material weaknesses.

ITEM 8B. OTHER INFORMATION

None.

PART III

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

(a) The following table sets forth the names, ages, positions and address of our current directors and executive officers.

Name Age Position(s) with Company Election Date
--------------- --- ----------------------------------- -------------
George D. Green 51 Chief Executive Officer, President, December 2004
 Secretary and Director(1)

Business Experience

Dr. George D. Green 48, is our Chairman, President and Chief Executive Officer of Union Dental Corp. He currently serves as our sole officer and director. He graduated from the University of Miami in 1983. He attended Georgetown University School of Dentistry where he graduated in 1985 with his Doctor of Dental Surgery (DDS) degree. Dr. Green started his general dentistry practice in Florida in 1986 and currently maintains that office. He has been President of the Coral Springs Business Club from 1993-96 and President of the Coral Springs/Parkland Rotary Club from 1996-97. He is the Founder of Union Dental Corp., and has held the management positions of the Company since inception. Dr. Green has been a Dental Network participant since 1992 in General Dentistry, Endodontics and Periodontics. In August 2000, he purchased 50% ownership of DDS and on December 31, 2003, he purchased the remaining 50% of DDS.

Committees of the Board of Directors

We presently do not have an audit committee, compensation committee, nominating committee, an executive committee of our board of directors, stock plan committee or any other committees.

Compensation of Directors

Our directors do not receive cash compensation for their services as directors or members of committees of the board, but are reimbursed for their reasonable expenses incurred in attending board or committee meetings.

Terms of Office

There are no family relationships among our directors and/or officers. Our directors are appointed for one-year terms to hold office until the next annual general meeting of the holders of our Common Stock or until removed from office in accordance with our by-laws. Our officers are appointed by our board of directors and hold office until removed by our board of directors.

Involvement in Certain Legal Proceedings

Except as indicated in this Annual Report, no event listed in Sub-paragraphs (1) through(4) of Subparagraph (d) of Item 401 of Regulation S-B, has occurred with respect to any of our present executive officers or directors or any nominee for director during the past five years which is material to an evaluation of the ability or integrity of such director or officer.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

For companies registered pursuant to section 12(g) of the Exchange Act,
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than ten percent of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish us with copies of all
Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of reports furnished to us and written representations that no other reports were required, Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with on a timely basis for the period which this report relates.

Code of Ethics

On December 28, 2004, we adopted a Code of Ethics that meets the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We will provide to any person without charge, upon request, a copy of such Code of Ethics. Persons wishing to make such a request should contact George D. Green, Chief Executive Officer, 1700 University Drive, Suite 200, Coral Springs, Florida 33071.

Indemnification of Officers and Directors.

Our By-Laws provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of the Company. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such persons promise to repay the Company therefor if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us, which we may not be able to recoup.

ITEM 10. EXECUTIVE COMPENSATION

The following table shows all the cash compensation paid by the Company, as well as certain other compensation paid or accrued, during the fiscal years

ended December 31, 2007, 2006, 2005 and 2004 to the Company's President and highest paid executive officers. No restricted stock awards, long-term incentive plan payouts or other types of compensation, other than the compensation identified in the hart below, no compensation was paid to these executive officers during these fiscal years.

 SUMMARY COMPENSATION TABLE
 Long Term Compensation
------------------ ------- -------------------------------------- ---------------------- ---------- -------------
 Annual Compensation Awards Payouts
------------------ ------- ------------ ---------- -------------- ----------- ---------- --------- -------------
 (a) (b) (c) (d) (e) (f) (g) (h) (i)
 Other Restricted Securities LTIP All Other
Name and Annual Stock Underlying Payouts Compensation
Principal Year Salary ($) Bonus ($) Compensation Award(s) Options/ ($) ($)
Position ($) ($) SARs(#)
------------------ ------- ------------ ---------- -------------- ----------- ---------- --------- -------------
George D. Green, 2007 114,000
CEO 2006 195,000
 2005 190,000
 2004 118,000

Compensation of Directors

Dr. Green, our sole director, did not receive any compensation solely by virtue of his role as a member of our Board of Directors.

Bonuses and Deferred Compensation

We do not have any bonus, deferred compensation or retirement plan. Such plans may be adopted by us at such time as deemed reasonable by our board of directors. We do not have a compensation committee, all decisions regarding compensation are determined by our board of directors.

Stock Option Plans.

In June 2005 the Board of Directors adopted the 2005 Equity Compensation Plan (the "2005 Plan"). The Plan permits the granting of an aggregate of 5,000,000 Shares. The Plan also permits the granting of either incentive or nonstatutory options. The 2005 Plan was filed with the Securities and Exchange Commission on Form S-8. During the year ended December 31, 2005, we issued a total of 1,200,000 shares of our common stock pursuant to the Plan. There were no incentive or nonstatutory options granted under the Plan.

In June 2005 the Board of Directors adopted the 2005 Equity Compensation Plan (the "2005 Plan"). The Plan permits the granting of an aggregate of 5,000,000 Shares. The Plan also permits the granting of either incentive or nonstatutory options. The 2005 Plan was filed with the Securities and Exchange Commission on Form S-8. During the year ended December 31, 2005. There were no incentive or nonstatutory options granted under the Plan.

In December 2007 the Board of Directors adopted the 2007 Equity Compensation Plan (the "2007 Plan"). The Plan permits the granting of an aggregate of 5,000,000 Shares. The Plan also permits the granting of either incentive or nonstatutory options. The 2007 Plan was filed with the Securities and Exchange Commission on Form S-8 on December 21, 2006. There were no incentive or nonstatutory options granted under the Plan.

Option Grants in Last Fiscal Year to Executive Officers

The Company did not issue any stock options during 2007 or 2006. In prior years, the Company has issued the following options.

 Number of % of Total
 Securities Options
 Underlying Granted to Exercise
 Options Employees Price Expiration
Name Granted (#) in Fiscal Year ($/sh) Date
---------------- ----------- -------------- --------- ----------
George D. Green 500,000* 49.6% $ 0.15 2009

-----------------

* Dr. Green was initially issued 750,000 options at an exercise price of $.60 per share. On December 30, 2005, the Company cancelled these options and issued Dr. Green a total of 500,000 options at an exercise price of $0.15 per share. At the time of the grant, the closing bid price of the Company's common stock was $.10 per share. All options are now fully vested. The Company has issued a total of 1,008,000 options to various employees including Dr. Green.

During the year ended 2004, Dr. Green was granted 997,500 performance based options. These options vest at the market value calculated as of the date the following revenue milestones are met: 332,500 shares upon the Company reaching $3,000,000 in revenue, 332,500 shares upon the Company reaching $4,000,000 in revenue, and 332,500 shares upon the Company reaching $5,000,000 in revenue. The Company has issued a total of 1,245,000 performance options

On October 15, 2004, the Board of Directors adopted the 2004 Stock Option Plan (the "2004 Plan"). The 2004 Plan permits the granting of an aggregate of 5,000,000 Shares. As of March 15, 2006 we have issued a total of 1,508,000 options under this Plan at exercise prices ranging from $0.13 to $0.50 per share plus an additional 1,740,000 performance based options which are issuable at the then current market price. Under the 2004 Plan, either incentive stock options or nonstatutory options may be granted as an incentive to key employees (including directors and officers who are key employees), non-employee directors, independent contractors and consultants of the Company and to offer an additional inducement in obtaining the services of such individuals. The Plan also permits the award of common stock to qualified recipients.

The exercise price of the Shares under each option is determined by a committee appointed by the Board of Directors; provided, however, that the exercise price shall not be less than the fair market value of the Shares on the date of the grant for statutory options. The term of each option granted pursuant to the 2004 Plans is established by the committee appointed by the Board of Directors, in its sole discretion, provided that the term shall not exceed ten years from the date of the grant.

All of the Company's Plans provide that the number of Shares subject thereto and the outstanding options and their exercise prices are to be appropriately adjusted for mergers, consolidations, recapitalizations, stock dividends, stock splits or combinations of shares.

The following table summarizes the number and dollar value of unexercised stock options at March 1, 2008 for the Named Executive Officers.

 Shares Value Number of Securities Value of Unexercised
 Acquired Realized Underlying Unexercised In-the-Money Options
Name on Exercise (#) ($) Options at FY-End (#) at FY-End ($)(1)
----------------- -------------- ---------- ------------------------- -------------------------
 Exercisable/Unexercisable Exercisable/Unexercisable
 ----------- ------------- ----------- -------------
George D. Green -0- -0- 500,000 997,500 $ -0- -0-*

(1) The closing price of the Company's Shares on March 7, 2008 as reported by OTC Bulletin Board was $0.006 per Share.
* The value of the exercisable and unexercisable options shall be determined upon the date of issuance.

Termination of Employment and Change of Control Arrangement

There are no compensatory plans or arrangements, including payments to be received from us, with respect to any person named in cash compensation set out above which would in any way result in payments to any such person because of his resignation, retirement, or other termination of such person's employment with us or our subsidiaries, or any change in control of us, or a change in the person's responsibilities following a changing in control.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of March 7, 2008 information with respect to the beneficial ownership of our common stock by (i) persons known by us to beneficially own more than five percent of the outstanding shares, (ii) each director, (iii) each executive officer and (iv) all directors and executive officers as a group. As of March 1, 2008 there were issued and outstanding 109,722,510 shares of Common Stock and 1,508,000 Shares of Common Stock issuable upon the exercise of presently exercisable stock options and warrants.

 Common Stock
 Beneficially Owned
 Title of ----------------------------
Name and Address Class Number Percent (4)
--------------------------------------------------------------------------------
George D. Green Common 33,140,200(1)(2)(3) 30.2%
1700 University Drive
Coral Springs, FL 33071

All Executive Officers and
Directors as a Group Common 33,140,200 30.2%
 (One (1) person)
--------------------------------------------------------------------------------

(1) Includes a total of 75,000 and 50,000 shares which Dr. Green transferred to his children, Jacyln and Joshua. However, Dr. Green has disclaimed beneficial ownership of these transferred shares.

(2) Includes options to purchase 500,000 shares which are either currently exercisable or which become exercisable within 60 days of the date of March 15, 2008.

(3)George D. Green holds 3,000,000 shares of our Series A preferred stock that provides for holders to receive 15 votes on all matters brought to a vote of our shareholders.

(4) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of shares of common stock actually outstanding on March 7, 2008. As of March 7, 2008 there were 109,722,510 shares of our common stock issued and outstanding.

Item 12. Certain Relationships and Related Transactions

Except as described below, none of the following persons has any direct or indirect material interest in any transaction to which we are a party during the past two years, or in any proposed transaction to which the Company is proposed to be a party:

(A) any director or officer;
(B) any proposed nominee for election as a director;
(C) any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our common stock; or (D) any relative or spouse of any of the foregoing persons, or any

relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary.

UDC entered into a Management Services Agreement and a Business Associate Agreement with Dr. George D. Green, DDS, P.A. ("Green PA") on October 15, 2004. Pursuant to these agreements, UDC shall manage the operations of Green PA for a management fee pursuant to the agreements.

On March 20, 2004, UDC, a wholly owned subsidiary of the Company, entered into an employment agreement with Dr. Green, the sole officer of UDC and our chief executive officer, for a term of seven years. The agreement provides for a base salary to Dr. Green of $225,000 in year one, $125,000 in year two, $185,000 in year three, $196,630 in year four, $208,427 in year five, $220,932 in year six and $234,187 in year seven. The agreement also provides for the issuance of options to Dr. Green upon signing, 750,000 options with an exercise price of $0.60 per share, half vested immediately and half vesting after two years, having an exercise life of five years. The agreement also provides for the issuance of options to Dr. Green as well, if certain revenue milestones are reached: If we achieve gross revenues of $3,000,000 in any calendar year, Dr. Green will be issued 332,500 options with an exercise price at the market price of the underlying common stock at issue date. Additional options pursuant to the same terms and conditions will be issued if the Company achieves $4,000,000 and again at $5,000,000 in gross revenue for any calendar year.

On October 15, 2004, Dr. Green sold his interest in his dental practice to UDC, an entity that he previously controlled, for $1,000,000, which amount was recorded by the Company as a shareholder loan. Specifically, in the financial statement presentation, the amount of the purchase price that exceeded the net book value of the dental practice assets acquired has been treated as a shareholder loan. This amount was deducted from the Company's stockholder's equity because the transaction was with a related party and such amount is not reflective of any funds due from Dr. Green.

In 2004 we incurred a charge to stockholders' equity in the amount of $1,539,129. This charge was a result of three related party transactions. First, UDC issued a $1 million note payable to Dr. Green, our controlling shareholder, as consideration for the purchase of the assets (minus the client list) of his dental practice, Dr. George D. Green, DDS, P.A. The Second transaction related to DDS executed a note payable to a bank in the amount of $1,215,000 to satisfy an outstanding liability of Dr. Green to purchase shares of DDS prior to the Reorganization. These amounts are offset by $675,871, representing a note receivable from Dr. Green resulting from the above transactions, net of other payables.

In December 2005, the Company cancelled the 750,000 options previously granted to Dr. Green with an exercise price of $.60 per share in consideration for the grant of 500,000 options at an exercise price of $.15 per share. At the time of the cancellation and grant, our common stock was trading at $.10 per share.

UDC entered into an employment agreement with Robert Gene Smith on February 15, 2004, pursuant to which Mr. Smith became a member of the Board of Directors of UDC and received an annual compensation of $24,000. The current agreement expired February 15, 2006. The parties have verbally agreed to extend the agreement on an annual basis pursuant to the same terms and conditions. However, it can be cancelled at any time by the Company on written notice to Mr. Smith.

Mr. Smith was previously granted 250,000 options to purchase shares of common stock at $0.50 per share and an additional 247,500 options dependent upon the achievement of certain revenue milestones.

In August 2006. Dr. Green, on behalf of the Company, personally guaranteed a promissory note in the amount of $50,000. Also, in October 2006, Dr. Green personally guaranteed a promissory note in the amount of $250,000. In consideration for these personal guarantees, Dr. Green was issued three million shares of our Common Stock.

In March 2007, Dr. Green, on behalf of the Company, signed a promissory note in the amount of $270,000 with SunTrust Bank and transferred the proceeds thereof to the Company. The loan carries an interest rate of 8.4% and is paid by the Company on behalf of Dr. Green.

Item 13. Exhibits and Reports on Form 8-K.

(a) The exhibits required to be filed herewith by Item 601 of Regulation S-B, as described in the following index of exhibits, are either filed herewith or incorporated herein by reference.

Exhibit
No. Description
-------- ----------------------------------------------------

2.2 Share Exchange Agreement between Shava, Inc. and National Business
 Holdings, Inc. dated May 28, 2004.

2.3 Reorganization Agreement, dated December 28, 2004, by and among the
 Company, Union Dental, DDS and the shareholders of Union Dental and
 DDS. (4)

2.4 Asset Purchase Agreement dated October 15, 2004 by and among Union
 Dental and George D. Green, DDS, P.A. (4)


3(i).1 Amended and Restated Articles of Amendment to the Articles of
 Incorporation of Mecaserto, Inc., A Florida Corporation

3(i).2 Articles of Incorporation of National Business Investors, Inc.

3(i).3 Articles of Incorporation of Union Dental Corp.(5)

3(i).4 Articles of Incorporation of Direct Dental Services, Inc. (5)

3(ii).1 Bylaws of National Business Holdings, Inc. (5)

3(ii).2 Bylaws of Union Dental Corp. (5)

3(ii).3 Bylaws of Direct Dental Services, Inc.

4.1 Form of Option issued to Union Dental optionholders. (4)

16.1 Letter from Lawrence Scharfman, CPA, P.A. (3)

10.1 Business Associate Agreement dated October 15, 2004 by and among Union
 Dental and George D. Green, DDS, P.A. (5)

10.2 Management Services Agreement dated October 15, 2004 by and among
 Union Dental and George D. Green, DDS, P.A. (5)

10.3 Employment Agreement dated March 20, 2004 by and among Union Dental
 and Dr. George D. Green. (4)

10.4 Employment Agreement dated October 26, 2004 by and among Union Dental
 and Dr. Leonard I. Weinstein. (4)

10.5 Shareholder's Agreement and Management Contract by and among Union
 Dental and Tropical Medical Services. (4)

10.6 Employment Agreement dated February 15, 2004 by and among Union Dental
 and Robert Gene Smith. (4)

10.7 2004 Stock Option Plan for Union Dental (4)

10.8 Form of Management Service Agreement with Participating Dentists

10.9 Form of Service Agreement with Participating Unions

10.10 Debenture Agreement executed between the Company and Dutchess Private
 Equities Fund II, L.P. (6)

10.11 Registration Rights Agreement between the Company and Dutchess Private
 Equities Fund II, L.P. (6)

10.12 Warrant Registration Rights Agreement between the Company and Dutchess
 Private Equities Fund II, L.P. (6)

10.13 Equity Line of Credit Registration Rights Agreement between the
 Company and Dutchess Private Equities Fund II, L.P. (6)

10.14 Investment Agreement between the Company and Dutchess Private Equities
 Fund II, L.P. (6)

10.15 Debenture Agreement between the Company and Dutchess Private Equities
 Fund II, L.P. (7)

14.1 Code of Ethics (4)

16.1 Letter from Lawrence Scharfman to the Securities and Exchange
 Commission dated January 3, 2005 (4)

16.2 Letter of Consent from DeMeo, Young, McGrath, dated March 31, 2007

17.1 Letter of Resignation of Dr. Melvyn Greenstein (4)

17.2 Letter of Resignation of Roger E. Pawson (4)

31 * Certificate of the Chief Executive Officer and Chief Financial Officer
 pursuant Section 302 of the Sarbanes-Oxley Act of 2002

32 * Certificate of the Chief Executive Officer and Chief Financial Officer
 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
---------------------------

(1) Filed as Exhibits 2.1, 2.2, 2.3 to the Company's Form 10-SB filed with the Securities and Exchange Commission on July 14, 1999, and incorporated by Reference herein.
(2) Filed as Exhibit 3.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 10, 2003, and incorporated by reference herein.
(3) Filed as Exhibits 16.1 and 16.2 to the Company's Form 8-K filed with the Securities and Exchange Commission on February 26, 2004.
(4) Filed as Exhibits to the Company's Form 8-K filed with the Securities and Exchange Commission on January 4, 2005.
(5) Filed as Exhibits to the Company's Form 8-K/A filed with the Securities and Exchange Commission on February 4, 2005.
(6) Filed as an exhibit to the Company's Form 8-k filed August 22, 2005.
(7) Filed as an exhibit to the Company's Form 8-k filed December 27, 2006
* Included herein

(b) Reports on Form 8-k. During the last quarter of the fiscal year ended December 31, 2006, no reports we filed on Form 8-k with the Securities and Exchange Commission.

ITEM 14. PRINCIPLE ACCOUNTANT FEES AND SERVICES

AUDIT FEES. The aggregate fees billed for professional services rendered was $ 26,500 and $50,677 for the audit of our annual financial statements for the fiscal years ended December 31, 2007 and 2006, respectively, and the reviews of the financial statements included in our Forms 10-QSB for those fiscal years.

AUDIT-RELATED FEES. There were no fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements and not reported under the caption "Audit Fee."

TAX FEES. No fees were billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning services.

ALL OTHER FEES. Other than the services described above, there were no other services provided by our principal accountants for the fiscal years ended December 31, 2007 and 2006.

We have no formal audit committee. However, our entire Board of Directors (the "Board") serves in the capacity of the audit committee. In discharging its oversight responsibility as to the audit process, the Board obtained from the independent auditors a formal written statement describing all relationships between the auditors and us that might bear on the auditors' independence as required by Independence Standards Board Standard No. 1, "Independence Discussions with Audit Committees." The Board discussed with the auditors any relationships that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors' independence. The Board also discussed with management and the independent auditors the quality and adequacy of its internal controls. The Board reviewed with the independent auditors their management letter on internal controls.

The Board discussed and reviewed with the independent auditors all matters required to be discussed by auditing standards generally accepted in the United States of America, including those described in Statement on Auditing Standards No. 61, as amended, "Communication with Audit Committees". The Board reviewed the audited consolidated financial statements of the Company as of and for the year ended December 31, 2007 with management and the independent auditors. Management has the responsibility for the preparation of the Company's financial statements and the independent auditors have the responsibility for the examination of those statements. Based on the above-mentioned review and discussions with the independent auditors and management, the Board of Directors approved the Company's audited consolidated financial statements and recommended that they be included in its Annual Report on Form 10-KSB for the year ended December 31, 2007, for filing with the Securities and Exchange Commission.

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2007

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

Report of Independent Registered Public Accounting Firm.....................F-2

Consolidated Financial Statements:

 Consolidated Balance Sheet..............................................F-3

 Consolidated Statements of Operations...................................F-4

 Consolidated Statements of Stockholders' Deficit........................F-5

 Consolidated Statements of Cash Flows...................................F-7

Notes to Consolidated Financial Statements..................................F-9

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Union Dental Holdings, Inc. and Subsidiaries Coral Springs, Florida

We have audited the accompanying consolidated balance sheet of Union Dental Holdings, Inc. and Subsidiaries as of December 31, 2007 and the related consolidated statements of operations, changes in shareholders' deficit and cash flows for the years ended December 31, 2007 and 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

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

In our opinion, the 2007 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Union Dental Holdings, Inc. and Subsidiaries as of December 31, 2007, and the results of their operations and their cash flows for the years ended December 31, 2007 and 2006, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 11 to the consolidated financial statements, the Company has net losses of $884,259 for the year ended December 31, 2007, had a working capital deficiency of $2,601,221, a shareholders' deficit of $ 2,435,522 and accumulated deficit of $4,717,766 at December 31, 2007. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 11. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 /s/ Kramer, Weisman and Associates, LLP
 Certified Public Accountants
Davie, Florida
March 14, 2008

F-2

 UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEET
 December 31, 2007

 ASSETS
CURRENT ASSETS:
 Cash $ 13,486
 Accounts receivable, less allowance for doubtful accounts of $109,930 326,842
 Inventory of supplies 37,480
 Prepaid expenses and other current assets 27,724
 ------------------------
Total current assets 405,532

Property and equipment, net 164,019
Other assets 1,680
 ------------------------
Total Assets $ 571,231
 ========================

 LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:
 Convertible notes payable $ 586,408
 Convertible debenture payable 226,873
 Notes payable 752,899
 Loan payable - related party 268,451
 Line of credit 20,650
 Accounts payable 74,395
 Accrued expenses 129,603
 Unearned membership fees 333,752
 Derivates liability 613,722
 ------------------------
Total current liabilities 3,006,753
 ------------------------

Commitments and contingencies -

SHAREHOLDERS' DEFICIT:
 Preferred stock ($.0001 Par value; 25,000,000 shares authorized;
 3,000,000 shares issued and outstanding) 300
 Common stock ($.0001 Par value; 300,000,000 share authorized;
 103,078,014 shares issued and outstanding) 10,308
 Additional paid-in capital 3,761,347
 Accumulated deficit (4,717,766)
 Shareholder transactions (1,489,711)
 ------------------------
Total shareholders' deficit (2,435,522)
 ------------------------

Total liabilities and shareholders' deficit $ 571,231
 ========================

See accompanying notes to consolidated financial statements.

F-3

 UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS

 For the Year Ended December 31,
 -----------------------------------------
 2007 2006
 ------------------- --------------------

Revenues, net $ 2,403,176 $ 2,197,099
Other revenue 190,000 -
 -------------------- --------------------
Total Revenues 2,593,176 2,197,099

Operating expenses:
 Cost of services performed 329,923 447,090
 Salaries and related taxes and stock-based compensation 1,522,523 1,086,777
 Depreciation and amortization 67,967 67,454
 Professional fees 148,816 186,538
 Consulting fees 392,247 567,678
 Other general and administrative 773,139 743,679
 -------------------- --------------------
Total operating expenses 3,234,615 3,099,216
 -------------------- --------------------

Loss from operations (641,439) (902,117)
 -------------------- --------------------

Other income (expense):
 Amortization of debt issuance costs (6,685) (129,028)
 Gain (loss) from valuation of derivatives liability (109,478) 437,497
 Interest income 1,603 -
 Interest expense (128,260) (1,419,751)
 -------------------- --------------------
 Total other income (expense) (242,820) (1,111,282)
 -------------------- --------------------

Loss before provision for income taxes (884,259) (2,013,399)
Income tax expense - -
 -------------------- --------------------
Net loss $ (884,259)$ (2,013,399)
 ==================== ====================

Net loss per common share:
 Net loss per common share - basic and diluted $ (0.01)$ (0.05)
 ==================== ====================
 Weighted average common shares outstanding - basic 71,501,374 40,056,555
 ==================== ====================
 Weighted average common shares outstanding - diluted 71,501,374 40,056,555
 ==================== ====================

See accompanying notes to consolidated financial statements.

F-4

 UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
 STATEMENTS OF CHANGES IN SHAREHOLDER' EQUITY (DEFICIT)
 FOR THE YEARS ENDED DECEMBER 31, 2007 and 2006



 Preferred Stock Common Stock
 $.0001 Par Value $.0001 Par Value
 -----------------------------------------------
 Number of Number of Paid-in
 Shares Amount Shares Amount Capital
 ----------------------------------------------------------

Balance - December 31, 2005 1,000,000 $ 100 33,676,303 $ 3,368 $ 1,309,007

Sale of common stock in connection with
 equity line of credit - - 2,257,496 226 173,140
Common stock issued pursuant to debenture
 conversion - - 1,002,205 100 60,640
Common stock issued for interest - - 1,289,418 129 39,751
Common stock issued for services - - 10,612,000 1,061 669,083
Derivative liabilty reclassified to equity - - - - 252,033
Amortization of deferred compensation - - - - -
Net loss for the year - - - - -
 ----------------------------------------------------------

Balance - December 31, 2006 1,000,000 100 48,837,422 4,884 2,503,654


Sale of common stock in connection
 with equity line of credit - - 4,306,452 431 69,394
Common stock issued pursuant to debenture
 conversion - - 7,574,040 758 155,265
Common stock issued for accrued interest
 on convertible notes - - 7,510,100 751 63,124
Preferred stock issued for personally
 guaranteeing loans 2,000,000 200 - - (200)
Common stock issued for services - - 33,194,450 3,319 674,178
Common stock issued for accrued services - - 1,655,550 165 75,113
Derivative liabilty reclassified to equity - - - - 220,819
Amortization of deferred compensation - - - - -
Net loss for the year - - - - -
 ----------------------------------------------------------

Balance -December 31, 2007 3,000,000 $ 300 103,078,014 $10,308 $3,761,347
 ==========================================================

F-5

 UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
 STATEMENTS OF CHANGES IN SHAREHOLDER' EQUITY (DEFICIT)
 FOR THE YEARS ENDED DECEMBER 31, 2007 and 2006
 (Continued)

 Additional Total
 Accumulated Shareholder Deferred Stockholders'
 Deficit Transactions Compensation Equity (Deficit)
-------------------------------------------------------------------------

 $ (1,820,108) $ (1,489,711) $ (14,970) $ (2,012,314)


 - - - 173,366

 - - - 60,740
 - - - 39,880
 - - (150,000) 520,144
 - - - 252,033
 - - 83,720 83,720
 (2,013,399) - - (2,013,399)
-------------------------------------------------------------------------

 (3,833,507) (1,489,711) (81,250) (2,895,830)

 - - - 69,825

 - - - 156,023

 - - - 63,875

 - - - -
 - - (139,500) 537,997
 - - - 75,278
 - - - 220,819
 - - 220,750 220,750
 (884,259) - - (884,259)
-------------------------------------------------------------------------

 $ (4,717,766) $ (1,489,711) $ - $ (2,435,522)
=========================================================================

See accompanying notes to consolidated financial statements.

F-6

 UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS

 For the Year Ended December 31,
 -----------------------------------------
 2007 2006
 ------------------- --------------------

Cash Flows From Operating Activities:
 Net loss $ (884,259) $ (2,013,399)
Adjustments to reconcile net loss to net cash used in
 operating activities:
 Depreciation and amortization 67,967 67,454
 Stock-based compensation and consulting 758,746 603,864
 Common stock issued for interest - 39,880
 Amortization of debt issuance costs 6,685 119,590
 Amortization of discount of debenture and note payable 2,463 1,155,610
 Gain (loss) from valuation of derivatives 109,478 (437,497)
Changes in assets and liabilities:
 Accounts receivable (56,698) 40,689
 Inventory of supplies 2,250 (10,845)
 Prepaid expenses and other current assets (22,891) (187)
 Other assets - 14,033
 Accounts payable 810 61,477
 Accrued expenses 80,613 88,882
 Due to related parties (3,000) 3,000
 Customer deposits - (35,997)
 Unearned membership fees (11,739) 32,117
 ------------------- --------------------
Net cash provided by (used in) operating activities 50,425 (271,329)
 ------------------- --------------------

Cash Flows From Investing Activities:
 Purchase of property and equipment (1,015) (4,500)
 ------------------- --------------------
Net cash used in investing activities (1,015) (4,500)
 ------------------- --------------------

Cash Flows From Financing Activities:
 Net proceeds from sales of common stock 69,825 173,366
 Proceeds from note payable 35,025 -
 Proceeds from short term debt - 250,000
 Proceeds from loan payable - related party 270,000 -
 Line of credit 20,650 -
 Payments on debenture payable - (116,972)
 Payments on loans payable - related party (1,549) -
 Payments on convertible note payable - (240,000)
 Payments on notes payable (547,431) (230,281)
 ------------------- --------------------
Net cash provided by (used in) financing activities (153,480) (163,887)
 ------------------- --------------------
Net increase (decrease) in cash (104,070) (439,716)

Cash - beginning of year 117,556 557,272
 ------------------- --------------------
Cash - end of year $ 13,486 $ 117,556
 =================== ====================

F-7

 UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS

 For the Year Ended December 31,
 -----------------------------------------
 2007 2006
 ------------------- --------------------

Supplemental Disclosures of Cash Flow Information
 Cash payments for interest $ 99,323 $ 55,868
 =================== ====================
 Cash payments for income taxes $ - $ -
 =================== ====================

Non-cash investing and financing activities:
 Issuance of common stock for debt and accrued interest $ 219,898 $ 60,740
 =================== ====================
 Reclassification of derivative liability to equity $ 220,819 $ 252,033
 =================== ====================
 Common stock issued in connection with accrued services $ 75,278 $ -
 =================== ====================

See accompanying notes to consolidated financial statements.

F-8

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Union Dental Holdings, Inc., (f/k/a National Business Holdings, Inc.), (the "Company") is a Florida corporation which conducts business from its headquarters in Ft. Lauderdale, Florida. The Company was incorporated on November 26, 1996. On December 27, 2004, the Company entered into a Share Exchange and Reorganization Agreement ("Reorganization") with both Union Dental Corp. ("UDC"), a Florida corporation and Direct Dental Services, Inc. ("DDS"), a Florida corporation, whereby UDC and DDS became wholly-owned subsidiaries of the Company in exchange for an aggregate of 17,500,000 shares of its common stock and 1,000,000 shares of its preferred stock issued to Dr. George Green with each share of preferred stock providing voting rights equal to 15 shares of the Company's common stock. In addition, the Company agreed to recognize the 3,452,250 issued and outstanding options to purchase UDC common stock as options to purchase the Company's common stock. Pursuant to the Reorganization Agreement, 22,287,977 shares of the Company's common stock were canceled. As a result, UDC's and DDS's former stockholders became the Company's majority stockholders with the Company's former shareholders retaining 10,000,000 shares of common stock.

On January 11, 2005, the Company amended its Articles of Incorporation to change its name from National Business Holdings, Inc. to Union Dental Holdings, Inc.

The acquisition of UDC and DDS by the Company was accounted for as a reverse merger because on a post-merger basis, the former UDC and DDS shareholders hold a majority of the outstanding common stock of the Company on a voting and fully diluted basis. As a result, UDC and DDS were deemed to be the acquirer for accounting purposes. Accordingly, the consolidated financial statements presented for the period ending December 31, 2007, are those of the combined results of UDC and DDS for all periods prior to the acquisition, and the financial statements of the consolidated companies from the acquisition date forward. The historical stockholders' deficit of the combined results of UDC and DDS prior to the acquisition have been retroactively restated (a recapitalization) for the equivalent number of shares received in the acquisition after giving effect to any differences in the par value of the Company and the combined UDC and DDS common stock, with an offset to additional paid-in capital. The restated consolidated retained earnings of the accounting acquirer (UDC and DDS) are carried forward after the acquisition.

Through its wholly-owned subsidiaries, UDC and DDS, the Company operates two distinct lines of business.

UDC operates a network of duly licensed dental providers, the Dental Referral, who provide dental services through the network to union members in accordance with arrangements between UDC and various labor unions. UDC is not limited as to the type of labor union which it may solicit. UDC charges an annual management services fee to the participating dentists to practice in an "area of exclusivity" for union members. UDC currently has exclusive contracts with several local unions.

DDS acquired the assets of George D. Green, DDS, PA and manages the operation of that general dental practice.

F-9

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of presentation

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). The consolidated financial statements of the Company include the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated.

Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates in 2007 and 2006 include the allowance for doubtful accounts, stock-based compensation, valuation of derivative liabilities, and the useful life of property and equipment.

Fair value of financial instruments

The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable and accrued expenses, debenture and loans payable approximate their fair market value based on the short-term maturity of these instruments.

Accounts receivable

The Company has a policy of reserving for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. At December 31, 2007, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amount of $109,930.

Inventory of dental supplies

The Company values inventory of dental supplies at the lower of cost or market, using the specific unit cost method.

Property and equipment

Property and equipment are carried at cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

F-10

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Impairment of long-lived assets

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," The Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset's estimated fair value and its book value. The Company did not consider it necessary to record any impairment charges during the year ended December 31, 2007.

Income taxes

The Company was taxed as an S-Corporation combination until December 31, 2004, when the Company changed its form of ownership to a C corporation. As a result of the change of ownership, the Company accounts for income taxes under the liability method in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under this method, deferred income tax assets and liabilities are determined based on differences between the financial

reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Had income taxes been determined based on an effective tax rate of 37.6% consistent with the method of SFAS 109, the Company's net losses for all periods presented would not materially change.

Loss per common share

In accordance with SFAS No. 128 "Earnings Per Share," Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period. Diluted loss per common share is not presented during the year ended December 31, 2007 and 2006 because it is anti-dilutive. The Company's common stock equivalents at December 31, 2007 include the following:

Convertible debentures 37,368,363
Derivatives options 147,035,573
Options 1,508,000
Warrants 1,304,348
 ---------------
 187,216,284
 ===============

F-11

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition

The Company follows the guidance of the Securities and Exchange Commission's Staff Accounting Bulletin 104 for revenue recognition. In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectibility is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:

DDS selects certain dentists in selected geographical areas to represent the Company. The dentist enters into an exclusive agreement with DDS for an annual management services fee, which is based on each specialty the dentist provides to the patients on a per office basis. DDS receives a yearly membership fee from each dentist in order for him/her to maintain the exclusive area of each specialty that the dentist provides. Revenues from membership fees are recognized over the term of the contract. Unearned membership fees at December 31, 2007 amounted to $333,752 and will be recognized as revenues over their respective term of contract.

The Company recognizes revenue from its dental practice when dental services are provided.

Concentrations of credit risk

The Company maintains its cash in bank deposit accounts, which, at times, exceed federally insured limits. At December 31, 2007, the Company did not reached bank balances exceeding the FDIC insurance limit. The Company has not experienced any losses in such accounts through December 31, 2007.

Stock-based compensation

Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), Share Based Payment ("SFAS No. 123R"). SFAS No. 123R establishes the financial accounting and reporting standards for stock-based compensation plans. As required by SFAS No. 123R, the Company recognized the cost resulting from all stock-based payment transactions including shares issued under its stock option plans in the financial statements.

Prior to January 1, 2006, the Company accounted for stock-based employee compensation plans (including shares issued under its stock option plans) in accordance with APB Opinion No. 25 and followed the pro forma net income, pro forma income per share, and stock-based compensation plan disclosure requirements set forth in the Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation ("SFAS No. 123"). For the year ended December 31, 2007, the Company did not grant any stock options.

Non-Employee Stock Based Compensation

The cost of stock based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in Emerging Issues Task Force Issue ("EITF") 96-18, "Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services" ("EITF 96-18").

F-12

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Common stock purchase warrants

The Company accounts for common stock purchase warrants in accordance with the provisions of Emerging Issues Tack Force Issue ("EITF") issue No. 00-19 "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock" ("EITF 00-19"). Based on the provisions of EITF 00-19, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the company), or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

Recent accounting pronouncements

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation (FIN) No. 48, "Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109." This interpretation provides guidance for recognizing and measuring uncertain tax positions, as defined in SFAS No. 109, "Accounting for Income Taxes." FIN No. 48 prescribes a threshold condition that a tax position must meet for any of the benefit of an uncertain tax position to be recognized in the financial statements. Guidance is also provided regarding de-recognition, classification, and disclosure of uncertain tax positions. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. The Company does not expect that this interpretation will have a material impact on its financial position, results of operations, or cash flows.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"). This Statement defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosure related to the use of fair value measures in financial statements. The Statement is to be effective for the Company's financial statements issued in 2008; however, earlier application is encouraged. The Company is currently evaluating the timing of adoption and the impact that adoption might have on its financial position or results of operations.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when quantifying Misstatements in Current Year Financial Statements ("SAB 108"). SAB 108 requires companies to evaluate the materiality of identified unadjusted errors on each financial statement and related financial statement disclosure using both the rollover approach and the iron curtain approach, as those terms are defined in SAB 108. The rollover approach quantifies misstatements based on the amount of the error in the current year financial statement, whereas the iron curtain approach quantifies misstatements based on the effects of correcting the misstatement existing in the balance sheet at the end of the current year, irrespective of the misstatement's year(s) of origin. Financial statements would require adjustment when either approach results in quantifying a misstatement that is material. Correcting prior year financial statements for immaterial errors would not require previously filed reports to be amended. If a Company determines that an adjustment to prior year financial statements is required upon adoption of SAB 108 and does not elect to restate its previous financial statements, then it must recognize the cumulative effect of applying SAB 108 in fiscal 2006 beginning balances of the affected assets and liabilities with a corresponding adjustment to the fiscal 2006 opening balance in retained earnings. SAB 108 is effective for interim periods of the first fiscal year ending after November 15, 2006. The adoption of SAB 108 did not have an impact on the Company's consolidated financial statements.

F-13

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent accounting pronouncements (continued)

In December 2006, FASB Staff Position No. EITF 00-19-2, "Accounting for Registration Payment Arrangements," was issued. The FSP specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument or other agreement, should be separately recognized and measured in accordance with SFAS No. 5, "Accounting for Contingencies." The Company believes that its current accounting is consistent with the FSP.

F-14

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 2 - PROPERTY AND EQUIPMENT

At December 31, 2007, property and equipment consist of the following:

 Useful Life
 --------------
Computer equipment 5 Years $ 9,695
Office equipment 5 years 424,747
Office furniture and fixtures 7 Years 62,128
Leasehold improvements 10 Years 30,593
 ----------
 527,163
Less accumulated depreciation (363,144)
 ----------
 $ 164,019
 ==========

For the years ended December 31, 2007 and 2006, depreciation expense amounted to $67,967 and $67,454, respectively.

NOTE 3 - CONVERTIBLE DEBENTURES PAYABLE

On August 17, 2005, the Company entered into a Debenture Agreement with Dutchess Private Equity Fund II, LLP ("Dutchess"), an accredited investor, for the issuance and sale of $600,000 of 10% secured convertible debentures in a private transaction exempt from registration under the Securities Act of 1933 in reliance on exemptions provided by Section 4(2) and Regulation D of that act. On August 17, 2005, the Company issued Dutchess a $600,000 principal amount 10% secured convertible debenture due August 17, 2010. At the time of signing the Debenture Agreement, the Company also issued Dutchess five-year common stock purchase warrants to purchase 1,304,348 shares of the Company's common stock at $.092 per share. Interest is payable on the secured convertible debentures at the rate of 10% per year. Amortizing payments will be made by the Company in satisfaction of this Debenture. Payments shall be made monthly on the first day of each business day of each month while there is an outstanding balance on the Debenture, to the Holder, in the amounts outlined below on the following schedule:

Payment for Month 1
 (due within three (3) days of the Issuance Date) $4,951
Payments for Months 2 and 3, respectively $4,951
Payment for Month 4 and each month thereafter $62,716

The principal amount of the Debenture plus accrued interest may be converted at the option of the Dutchess into shares of the Company's common stock, anytime following the closing date, at a conversion price equal to the lesser of (i) the lowest closing bid price during the 15 days of full trading, as defined, prior to the conversion date; or (ii) $0.092. In addition, in the event that any portion of the debenture remains outstanding on the maturity date of August 17, 2010, such outstanding amount shall be automatically converted into shares of the Company's common stock. In the event that the Company does not make delivery of the common stock as instructed by Dutchess, the Company shall be obligated to pay to Dutchess 3% in cash of the dollar value of the debentures being converted, compounded daily, per each day after the 3rd business day following the conversion date that the common stock is not delivered to Dutchess.

In the Event of default as defined in the Debenture Agreement, Dutchess may among other things:

(a) elect to secure a portion of the Company's assets not to exceed 200% of the Face Amount of the Note, in Pledged Collateral;
(b) elect to garnish revenue from the Company in an amount that will repay the Holder on the payment schedule set forth above;
(c) exercise its right to increase the Face Amount of the debenture by ten percent (10%) as an initial penalty and for each Event of Default under the Debenture;

F-15

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 3 - CONVERTIBLE DEBENTURES PAYABLE (continued)

(d) elect to increase the Face Amount by two and one-half percent (2.5%) per month (pro-rata for partial periods) paid as a penalty for liquated damages which will be compounded daily;

In order to secure its obligations under the secured convertible debenture and related documents, the Company has granted the debenture holder a security interest in all of its assets and property.

In accordance with Statement of Financial Accounting Standards No. 133, `Accounting for Derivative Instruments and Hedging Activities', ("FASB 133"), the Company determined that the conversion feature of the Debentures met the criteria of an embedded derivative and therefore the conversion feature of the debt needed to be bifurcated and accounted for as a derivative. Due to the reset provisions of the Debentures, the debt does not meet the definition of "conventional convertible debt" because the number of shares which may be issued upon the conversion of the debt is not fixed. Therefore, the conversion feature fails to qualify for equity classification under EITF 00-19, and must be accounted for as a derivative liability.

The $600,000 face amount of the debenture was stripped of its conversion feature due to the accounting for the conversion feature as a derivative, which was recorded using the residual proceeds method, whereby any remaining proceeds after allocating the proceeds to the warrants and conversion option were attributed to the debt. At December 31, 2007, the Company revalued this derivative liability. For the year ended December 31, 2007, after adjustment, the Company recorded a gain on revaluation of this derivative liability of $143,143. For the years ended December 31, 2007 and 2006, amortization of the discount on debenture amounted to $0 and $232,548. At December 31, 2007, the balance of the convertible debenture amounted to $226,873.

NOTE 4 - EQUITY CREDIT LINE

On August 17, 2005, the Company entered into an Investment Agreement with Dutchess Private Equities Fund II, LLP ("Dutchess"). Pursuant to this Agreement, Dutchess committed to purchase up to $5,000,000 (the "Line") of the Company's common stock over the course of 36 months ("Line Period"), after the registration statement was declared effective by the SEC in September 2005 (the "Effective Date"). The amount that the Company shall be entitled to request from each of the purchase "Puts", shall be equal to either (1) $100,000 or (2) 200% of the averaged daily volume (US market only) ("ADV") of the Company's common stock for the 20 trading days prior to the "Put" notice, multiplied by the average of the 3 daily closing prices immediately preceding the Put Date. The Pricing Period shall be the five (5) consecutive trading days immediately after the Put Date. The Market Price shall be the lowest closing bid price of the Company's common stock during the Pricing Period. The Purchase Price shall be set at 95% of the Market Price. This Investment Agreement establishes what is sometimes termed an equity line of credit or an equity drawdown facility.

In general, the drawdown facility operates as follows: Dutchess, has committed to provide the Company up to $5,000,000 as it requests over a 36 month period, in return for common stock the Company issues to Dutchess. The Company, at its sole discretion, may during the Open Period deliver a "put notice" (the "Put Notice") to Dutchess which states the dollar amount which the Company intends to sell to Dutchess on the Closing Date. The Open Period is the period beginning on the trading after the Effective Date and which ends on the earlier to occur of 36 months from the Effective Date or termination of the Investment Agreement in accordance with its terms. The Closing Date shall mean no more than 7 trading days following the Put Notice Date. The Put Notice Date shall mean the Trading Day immediately following the day on which Dutchess receives a Put Notice, as defined in the agreement. During the Open Period, the Company shall not be entitled to submit a Put Notice until after the previous Closing has been completed. Additionally, Dutchess shall not be obligated to honor any Put Notice if at the time of the Put Notice Dutchess would own more than 4.99% of the Company's issued and outstanding common stock.

F-16

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 4 - EQUITY CREDIT LINE (continued)

Upon the receipt by Dutchess of a validly delivered Put Notice, Dutchess shall be required to purchase from the Company, during the period beginning on the Put Notice Date and ending on and including the date that is 5 trading days after such Put Notice, that number of shares having an aggregate purchase price equal to the lesser of (a) the Put Amount set forth in the Put Notice, or (b) 20% of the aggregate trading volume of the Company's common stock during the applicable Pricing Period times (x) the lowest closing bid price of the Company's common stock during the specified Pricing period, but only if such said shares bear no restrictive legend and are not subject to stop transfer instructions, prior to the applicable Closing Date.

For the year ended December 31, 2007, the Company delivered Put Notices to draw on the equity line of credit. In connection with these puts, the Company issued 4,306,452 shares of common stock for net proceeds of $69,825.

NOTE 5 - CONVERTIBLE NOTE PAYABLE

On December 22, 2005, the Company signed a promissory note (the "Note") in favor of Dutchess Private Equities Fund, LP (the "Investor"), in the amount of $960,000 (the "Face Amount") and received gross proceeds in the amount of $800,000 less $60,075 in fees associated with the financing for net proceeds of $739,925. The Company is obligated to repay the Investor the Face Amount on or before December 23, 2006. There is no stated interest rate on the Note and interest has been imputed at a rate of 32% per annum. Payments are to be made by the Company from each Put from the Company's Equity Credit Line (see note 4) with the Investor. The Company is obligated to pay the Investor the greater of
a) 50% of each Put to the Investor or b) $80,000 until the face Amount minus any fees have been paid. The first payment was due on February 15, 2006 and all subsequent payments will be made at the Closing of every Put to the Investor thereafter. The Put Amount will be the maximum amount allowed under the Investment Agreement with the Investor. The Company has not received any written notice of default in connection with this note.

As described in note 4, the Investment Agreement provides in part that the maximum amount of each Put is either $100,000 or 200% of the average daily volume multiplied by the average of the three daily closing prices immediately preceding the Put Date. Payments made by the Company in satisfaction of this Note shall be made from each Put from the Equity Line of Credit with the Investor given by the Company to the Investor. Additionally, in connection with Note, the Company issued 1,500,000 shares of common stock. The shares were valued at fair market value at date grant of $135,000 or $.09 per share and is reflected as a discount on the Note, which was amortized over the term.

The Company agreed to issue 50 signed Put Notices to the Investor to use as collateral. In the event, the Investor uses the collateral in full, the Company shall immediately deliver to the Investor additional Put Sheets as requested by the Holder. In the event that on the maturity date the Company has any remaining amounts unpaid on this Note (the "Residual Amount"), the Holder can exercise its right to increase the Face Amount by ten percent (10%) as an initial penalty and an additional 2.5% per month paid, pro rata for partial periods, compounded daily, as liquated damages ("Liquidated Damages").

Additionally, in the event of a default as defined in the agreement, the Holder shall have the right, but not the obligation, to 1) switch the Residual Amount to a three-year ("Convertible Maturity Date"), interest-bearing convertible debenture. If the Holder chooses to convert the Residual Amount to a Convertible Debenture, the Company shall have 20 business days after notice of the same (the "Notice of Convertible Debenture") to file a registration statement covering an amount of shares equal to 300% of the Residual Amount. Such registration statement shall be declared effective under the Securities Act of 1933, as amended (the "Securities Act"), by the Securities and Exchange Commission (the "Commission") within 40 business days of the date the Company files such Registration Statement. In the event the Company does not file such registration statement within 20 business days of the Holder's request, or such registration statement is not declared by the Commission to be effective under the Securities Act within the time period described above, the Residual Amount shall increase by $5,000 per day.

F-17

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 5 - CONVERTIBLE NOTE PAYABLE (continued)

of an embedded derivative and therefore the conversion feature of this debt needed to be bifurcated and accounted for as a derivative. Due to the conversion features of the Note which is convertible based on draws from the equity credit line, the debt does not meet the definition of "conventional convertible debt" because the number of shares which may be issued upon the conversion of the debt is not fixed. Therefore, the conversion feature fails to qualify for equity classification under EITF 00-19, and must be accounted for as a derivative liability.

The $960,000 face amount of the debenture was stripped of its conversion feature due to the accounting for the conversion feature as a derivative, which was recorded using the residual proceeds method, whereby any remaining proceeds after allocating the proceeds to the 1,500,000 common shares and conversion option would be attributed to the debt. The beneficial conversion feature (an embedded derivative) included in this Note resulted in a note discount of $665,000 in 2005. In accordance with EITF No. 00-19, EITF No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments, the values assigned to both the Note, and conversion feature were allocated based on their fair values. The amount allocated as a discount on the Note for the value of the conversion option is amortized to interest expense, using the effective interest method, over the term of the Note.

The holders of the Note and the underlying shares on the equity credit line have registration rights that required the Company to file a registration statement with the Securities and Exchange Commission to register the resale of the common stock issuable upon conversion of the debenture or the exercise of the warrants. Under EITF No. 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock, the ability to register stock was deemed to be outside of the Company's control. Accordingly, in 2005, the initial aggregate fair value of the derivatives (embedded and free-standing) of $1,002,049 was recorded as a derivative liability in the consolidated balance sheet, and is marked to market at the end of each reporting period. During the year ended December 31, 2007, the Company revalued this derivative liability. For the year ended December 31, 2007, after adjustment, the Company recorded a loss on revaluation of this derivative liability of $252,621 and reclassified $220,819 of the derivative liability to paid-in capital due to the payment of the debenture. For the years ended December 31, 2007 and 2006, amortization of the discount on the note amounted to $2,463 and $932,062, respectively. At December 31, 2007, the balance of the convertible note amounted to $586,408.

F-18

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 6 - NOTES PAYABLE

In December 2004, the Company agreed to assume the debt obligation of the principal stockholder for a bank loan utilized to purchase 50% of DDS from its founder and former owner and the remaining balance owed on the original 50% acquisition. The original note was in the amount $1,215,000. On May 17, 2005, the Company entered into an Amended and Restated Promissory Note in the amount of $1,384,000. The interest rate on this note is the LIBOR Fixed Rate plus 255 basis points (6.92% at September 30, 2006) calculated by using the 365/360 day method. The note requires monthly principal payments of $23,067 plus accrued interest payable monthly, and is secured by all of the assets of the Company. The principal stockholder is also the guarantor of this loan. In addition, the Company, on a consolidated basis, must maintain a minimum Global Debt Service Ratio, as defined by the bank, which is calculated annually, based on the Company's year end financial statements. The Company must also maintain property and casualty insurance on the business as well as a minimum of $700,000 of life insurance on the principal stockholder, assigned to the bank. In October 2005, as a result of a hurricane relief program, the bank extended the due date on the November and December 2005 payments, thereby extending the Note due date to July 17, 2010. As of December 31, 2007, the Company is in default of loan covenants and other terms of the agreement. Accordingly, the Company has shown the entire principal balance in current liabilities. At December 31, 2007, the principal amount outstanding on this note amounts to $714,324.

On August 11, 2006, the Company entered into a Promissory Note in the amount of $50,000 with a bank. The interest rate on this promissory note is 8% per annum calculated by using the 365/360 day method. The note requires 60 monthly principal and interest payments of approximately $1,017 and is secured by certain assets of the Company. This note is personally guaranteed by the Company's CEO. At December 31, 2007, the principal amount outstanding on this note amounts to $38,575.

On October 20, 2006, the Company entered into a Promissory Note in the amount of $250,000 with a third party. The interest rate on this promissory note is 10% per annum calculated by using a 360 day year. The principal balance and all accrued and unpaid interest is due on June 19, 2007. This note is personally guaranteed by the Company's CEO. The note is secured by certain assets of the Company. In connection with this note, on March 7, 2007 the Company received a

loan amounting to $270,000 from the Company's CEO for a full payment of the principal and accrued interest of the 10% promissory note which amounted to approximately $261,000 (see Note 8).

NOTE 7 - LINE OF CREDIT

On May 16, 2007, the Company was issued a $100,000 line of credit with SunTrust Bank. The line of credit bears an annual interest rate of 8.25% and interest is payable monthly. The balance of the line of credit was $20,650 as of December 31, 2007.

NOTE 8 - RELATED PARTY TRANSACTIONS

On March 20, 2004, UDC, a wholly owned subsidiary of the Company, entered into an employment agreement with the principal stockholder, the sole officer of UDC, with a term of 7 years. This contract provides for a base salary to the principal stockholder of $225,000 in year 1, $125,000 in year 2, $185,500 in year 3, $196,630 in year 4, $208,427 in year 5, $220,932 in year 6 and $234,187 in year 7. This contract also provides for the issuance of options to the principal stockholder upon signing , 750,000 options, (1 share per option), with an exercise price of $0.60 per share, half vested immediately and half vesting after two years , having an exercise life of five years. This contract also provides for the issuance of options to the principal stockholder as well, if certain revenue milestones are reached: at $3,000,000 in gross revenue for any calendar year he receives 332,500 options, (1 share per option), with an exercise price at the market price of the underlying common stock at issue date and the same again at $4,000,000 and $5,000,000 in gross revenue for a calendar year.

F-19

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 8 - RELATED PARTY TRANSACTIONS (continued)

On March 7, 2007, the Company received a loan amounting to $270,000 from the Company's CEO for a full payment of the principal and accrued interest of the 10% promissory note which amounted to approximately $261,000 (see Note 6). The Company's CEO individually signed a 30 year promissory note in the amount of $270,000 with SunTrust Bank, which requires 360 monthly principal and interest payments at the rate of 8.4% per annum until March 7, 2037 and is secured by a personal asset owned by the Company's CEO. The loan from the Company's CEO calls for the Company to make equal monthly payments. In the event of a default, all payments under the loan shall become immediately due and payable. The loan represents an unsecured obligation of the Company. At December 31, 2007, the principal amount outstanding on this loan amounts to $268,451.

NOTE 9 - SHAREHOLDERS' DEFICIT

Preferred Stock

On January 24, 2007, the Company issued 2,000,000 shares of class A Preferred Stock to a director/officer, in exchange for personally guaranteeing the loans of the Company. Each share of Class A Preferred shall have 15 votes per share. The Preferred shareholder is entitled to vote on any and all matters brought to a vote of shareholders of Common Stock. The Company recorded the issuance of 2,000,000 shares of class A Preferred Stock at par value.

Common Stock

In January 2006, the Company issued 75,000 shares of common stock upon the conversion of the debenture payable at $.092 per share or $6,900.

For the period from January 21, 2006 to September 30, 2006, the Company exercised put notices in accordance with its Investment Agreement with Dutchess (see note 3) and received $157,005 of net cash proceeds for which the Company issued 1,947,496 shares of its common stock to Dutchess.

During the three months ended March 31, 2006, the Company issued an aggregate 522,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at per share prices ranging from $.08 to $.10 or an aggregate of $44,960. In connection with issuance of these shares, the Company recorded professional fees of $16,000 for legal services performed, stock-based compensation of $4,960, and $24,000 in consulting fees for business development services performed during fiscal 2006.

On April 4, 2006, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and received $5,273 of net cash

proceeds for which the Company issued 75,000 shares of its common stock to Dutchess.

On April 25, 2006, the Company issued an aggregate 250,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.07 per share or $17,500. In connection with issuance of these shares, the Company recorded consulting fees of $17,500 for business development services performed during fiscal 2006.

On April 25, 2006, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and received $11,088 of net cash proceeds for which the Company issued 235,000 shares of its common stock to Dutchess.

On May 5, 2006, the Company issued an aggregate 622,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.05 per share or $31,100. During fiscal 2006, in connection with issuance of these shares, the Company recorded consulting fees of $12,500 and professional fees of $18,600 for business development and professional services performed, respectively.

F-20

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 9 - SHAREHOLDERS' DEFICIT (continued)

Common Stock (continued)

During May 2006, the Company issued 1,109,621 shares of common stock to Dutchess in accordance with its Investment Agreement for interest due amounting to $28,085.

On June 21, 2006, the Company issued 100,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.015 per share or $1,500. In connection with issuance of these shares, the Company recorded consulting fees of $1,500 for business development services performed during fiscal 2006.

On July 8, 2006, the Company issued 500,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.017 per share or $8,500. In connection with issuance of these shares, the Company recorded consulting fees of $8,500 for business development services performed during fiscal 2006.

On August 10, 2006, the Company issued 500,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.045 per share or $22,500. In connection with issuance of these shares, the Company recorded consulting fees of $22,500 for business development services performed during fiscal 2006.

On August 25, 2006, the Company issued 136,820 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.055 per share or $7,525. In connection with issuance of these shares, the Company recorded professional fees of $7,525 for accounting services performed during fiscal 2006.

On August 31, 2006, in connection with a three month consulting agreement, the Company issued 2,500,000 restricted shares of common stock for investor relation services. The Company valued these common shares at the fair market value on the date of grant at $.07 per share or $175,000. In connection with issuance of these shares, the Company recorded consulting expense of $175,000 during fiscal 2006.

On August 31, 2006, the Company issued 100,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.07 per share or $7,000. In connection with issuance of these shares, the Company recorded consulting fees of $7,000 for business development services performed during fiscal 2006.

On September 6, 2006, the Company issued 500,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.08 per share or $40,000. In connection with issuance of these shares, the Company recorded consulting fees of $40,000 for business development services performed during fiscal 2006.

On September 29, 2006, the Company issued 179,797 shares of common stock to Dutchess in accordance with its Investment Agreement for interest due amounting to $11,795.

During October 2006, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and repaid principal balance and accrued interest on its notes payable of $18,100 and $3,102, respectively for which the Company issued 343,500 shares of its common stock to Dutchess. Additionally, the Company issued 191,205 shares of common stock to Dutchess as payment for a $10,000 penalty related to the Investment Agreement.

F-21

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 9 - SHAREHOLDERS' DEFICIT (continued)

Common Stock (continued)

On October 5, 2006, the Company issued 2,000,000 shares of common stock for services rendered to an officer/director and an employee of the Company. The Company valued these common shares at the fair market value on the date of grant at $.06 per share or $120,000. In connection with issuance of these shares, the Company recorded stock-based compensation expense of $120,000 during fiscal 2006.

On October 11, 2006, the Company issued 50,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.06 per share or $3,000. In connection with issuance of these shares, the Company recorded consulting fees of $3,000 during fiscal 2006.

On October 20, 2006, in connection with a three month consulting agreement, the Company issued 1,000,000 restricted shares of common stock for investor relation services. The Company valued these common shares at the fair market value on the date of grant at $.075 per share or $75,000. In connection with issuance of these shares, the Company recorded consulting fees during the years ended December 31, 2006 and 2007 of $50,000 and $25,000, respectively.

On October 20, 2006, in connection with a 240-day consulting agreement, the Company issued 1,000,000 restricted shares of common stock for advisory and business development services. The Company valued these common shares at the fair market value on the date of grant at $.075 per share or $75,000. In connection with the issuance of these shares, the Company recorded consulting fees during the years ended December 31, 2006 and 2007 of $18,750 and $56,250, respectively. Additionally, in connection with this agreement, the Company shall issue to the consultant 500,000 shares of common on the 100th day subsequent to the execution of this agreement and 500,000 common shares on the 200th day subsequent to the execution of this agreement.

On November 21, 2006, the Company issued 831,180 shares of common stock for services rendered to an employee of the Company. The Company valued these common shares at the fair market value on the date of grant at $.05 per share or $41,559. In connection with issuance of these shares, the Company recorded stock-based compensation expense of $41,559 during fiscal 2006.

During November 2006, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and repaid principal balance and accrued interest on its notes payable of $15,199 and $3,039, respectively for which the Company issued 298,000 shares of its common stock to Dutchess.

During December 2006, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and repaid principal balance and accrued interest on its notes payable of $3,667 and $733, respectively for which the Company issued 94,500 shares of its common stock to Dutchess.

On January 4, 2007, the Company issued 250,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.044 per share or $11,000. In connection with the issuance of these shares, the Company recorded consulting fees of $11,000 for business development services performed during fiscal 2007.

On January 5, 2007, the Company issued 250,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.045 per share or $11,250. In connection with the issuance of these shares, the Company recorded professional fees of $11,250 for professional services performed during fiscal 2007.

F-22

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 9 - SHAREHOLDERS' DEFICIT (continued)

Common Stock (continued)

On January 5, 2007, the Company issued 400,000 shares of common stock for services rendered to three employees of the Company. The Company valued these common shares at the fair market value on the date of grant at $.045 per share or $18,000. In connection with the issuance of these shares, the Company recorded stock based compensation expense of $18,000 during fiscal 2007.

On January 5, 2007, the Company issued 62,700 shares of common stock for accrued accounting services during 2006. The Company valued these common shares at the fair market value on the date of grant at $.05 per share or $3,135. In connection with issuance of these shares, the Company applied the value against accounts payable.

On January 12, 2007, the Company issued 300,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.045 per share or $13,500. In connection with issuance of these shares, the Company recorded consulting fees of $13,500 for business development services performed during fiscal 2007.

On January 24, 2007, the Company issued an aggregate 1,750,000 shares of common stock for services rendered to an officer/director and an employee of the Company. The Company valued these common shares at the fair market value on the date of grant at $.045 per share or $78,750. In connection with issuance of these shares, the Company recorded stock based compensation expense of $78,750 during fiscal 2007.

On January 24, 2007, the Company issued 500,000 restricted shares of common stock for advisory and business development services in connection with a 240-day consulting agreement entered on October 20, 2006. The Company valued these common shares at the fair market value on the date of grant at $.045 per share or $22,500. In connection with the issuance of these shares, for the year ended December 31, 2007, the Company recorded consulting expense of $22,500.

On January 24, 2007, the Company issued 500,000 shares of common stock to two consultants for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.045 per share or $22,500. In connection with issuance of these shares, the Company recorded consulting fees of $22,500 for business development services performed during fiscal 2007.

On February 1, 2007, the Company issued 92,850 shares of common stock for accrued accounting services during 2006. The Company valued these common shares at the fair market value on the date of grant at $.05 per share or $4,643. In connection with issuance of these shares, the Company applied the value against accounts payable.

On February 6, 2007, the Company issued 200,000 shares of common stock for legal services rendered. The Company valued these common shares at the fair market value on the date of grant at $.045 per share or $9,000. In connection with issuance of these shares, the Company recorded professional fees of $9,000 for professional services performed during fiscal 2007.

On February 16, 2007, the Company issued an aggregate 4,000,000 shares of common stock for services rendered to an officer/director and an employee of the Company. The Company valued these common shares at the fair market value on the date of grant at $.042 per share or $168,000. In connection with issuance of these shares, the Company recorded stock based compensation expense of $168,000 during fiscal 2007.

During February 2007, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and repaid principal balance on its notes payable of $9,456 for which the Company issued 247,000 shares of its common stock to Dutchess.

F-23

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 9 - SHAREHOLDERS' DEFICIT (continued)

Common Stock (continued)

During February 2007, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and received proceeds of $35,025 for which the Company issued 900,000 shares of its common stock to Dutchess.

On March 12, 2007, the Company issued 700,000 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.039 per share or $27,300. In connection with issuance of these shares, the Company recorded consulting fees of $27,300 for business development services performed during fiscal 2007.

During March 2007, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and repaid principal balance on its notes payable of $15,528 for which the Company issued 453,300 shares of its common stock to Dutchess.

The Company agreed to issue 3,000,000 shares of common stock for investor relation services in connection with a 60-day consulting agreement entered on May 14, 2007. The Company issued 2,000,000 shares at the date of agreement and the 1,000,000 shares were issued in September 2007. The Company valued these common shares at the fair market value on the date of grant at $.025 per share or $75,000. In connection with the issuance of these shares, for the year ended December 31, 2007, the Company recorded consulting expense of $75,000.

On June 19, 2007, the Company issued an aggregate 3,821,750 shares of common stock for services rendered to an officer/director and an employee of the Company. The Company valued these common shares at the fair market value on the date of grant at $.02 per share or $76,435. In connection with issuance of these shares, the Company recorded stock based compensation expense of $76,435 during fiscal 2007.

On June 20, 2007, the Company issued 2,000,000 restricted shares of common stock for investor relation services in connection with a 30-day consulting agreement. The Company valued these common shares at the fair market value on the date of grant at $.021 per share or $42,000. In connection with the issuance of these shares, for the year ended December 31, 2007, the Company recorded consulting expense of $42,000.

On June 26, 2007, the Company issued 502,700 shares of common stock for accounting services rendered. The Company valued these common shares at the fair market value on the date of grant at $.025 per share or $12,568. In connection with issuance of these shares, the Company recorded professional fees of $12,568 for professional services performed during fiscal 2007.

On June 28, 2007, the Company issued 300,000 shares of common stock for legal services rendered. The Company valued these common shares at the fair market value on the date of grant at $.024 per share or $7,200. In connection with issuance of these shares, the Company recorded professional fees of $7,200 for professional services performed during fiscal 2007.

In June 2007, the Company issued 220,000 shares of common stock for legal services rendered. The Company valued these common shares at the fair market value on the date of grant at $.022 per share or $4,855. In connection with issuance of these shares, the Company recorded professional fees of $4,855 for professional services performed during fiscal 2007.

During June 2007, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and received proceeds of $15,000 for which the Company issued 791,360 shares of its common stock to Dutchess.

F-24

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 9 - SHAREHOLDERS' DEFICIT (continued)

Common Stock (continued)

Between April 2007 and June 2007, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and repaid principal balance on its notes payable of $94,896 for which the Company issued 4,020,740 shares of its common stock to Dutchess.

On September 27, 2007, the Company issued an aggregate 4,000,000 shares of common stock for services rendered to an officer/director and an employee of the Company. The Company valued these common shares at the fair market value on the date of grant at $.01 per share or $40,000. In connection with issuance of these shares, the Company recorded stock based compensation expense of $40,000 during fiscal 2007.

In September 2007, the Company issued 1,518,554 shares of common stock for legal services rendered. The Company valued these common shares at the fair market value on the date of grant at $.01 per share or $15,489. In connection with issuance of these shares, the Company recorded professional fees of $15,489 for professional services performed during fiscal 2007.

Between July 2007 and September 2007, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and repaid principal balance on its notes payable of $36,144 for which the Company issued 2,853,000 shares of its common stock to Dutchess.

In October 2007, the Company issued 700,000 shares of common stock for accounting services rendered. The Company valued these common shares at the fair market value on the date of grant at $.01 per share or $7,000. In connection with issuance of these shares, the Company recorded professional fees of $7,000 for professional services performed during fiscal 2007.

In October 2007, the Company issued 1,363,637 shares of common stock for services rendered. The Company valued these common shares at the fair market value on the date of grant at $.011 per share or $15,000. In connection with issuance of these shares, the Company recorded stock-based consulting fees of $15,000 for services performed during fiscal 2007.

In November 2007, the Company issued 1,150,000 shares of common stock for legal services rendered. The Company valued these common shares at the fair market value on the date of grant at $.01 per share or $12,000. In connection with issuance of these shares, the Company recorded professional fees of $12,000 for professional services performed during fiscal 2007.

During November 2007, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and received proceeds of $19,800 for which the Company issued 2,615,092 shares of its common stock to Dutchess.

Between November 2007 and December 2007, the Company issued an aggregate 5,867,809 shares of common stock for services rendered to an officer/director and two employees of the Company. The Company valued these common shares at the fair market value on the date of grant ranging from $.007 to $.01 per share or $47,075. In connection with issuance of these shares, the Company recorded stock based compensation expense of $47,075 during fiscal 2007.

In December 2007, the Company issued 1,000,000 restricted shares of common stock for investor relation services in connection with a consulting agreement. The Company valued these common shares at the fair market value on the date of grant at $.007 per share or $7,000. In connection with the issuance of these shares, for the year ended December 31, 2007, the Company recorded consulting expense of $7,000.

F-25

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 9 - SHAREHOLDERS' DEFICIT (continued)

Common Stock (continued)

In December 2007, the Company issued 400,000 shares of common stock for accounting services rendered. The Company valued these common shares at the fair market value on the date of grant at $.007 per share or $2,780. In connection with issuance of these shares, the Company recorded professional fees of $2,780 for professional services performed during fiscal 2007.

Between October 2007 and December 2007, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and repaid accrued interest on its notes payable of $63,875 for which the Company issued in aggregate 7,510,100 shares of its common stock to Dutchess.

Stock Options

In October 2004, the Company adopted a Stock Option Plan that allows for both incentive based options as well as non-qualified options. As part and parcel to the reorganization on December 27, 2004, UDHI adopted this Plan. Under the terms of the Plan, the Plan Committee will set the option term and the exercise price. The Plan limits the ability to exercise incentive options for a first time holder in any one calendar year to $100,000 aggregate fair market value, based on grant date. The Plan also allows for the issuance of Stock Appreciation Rights to allow for cash-less exercise of underlying issued options.

A summary of the stock options as of December 31, 2007 and 2006 and changes during the periods is presented below:

 Year Ended December 31, 2007 Year Ended December 31, 2006
 ---------------------------- ----------------------------
 Weighted Average Number of Weighted Average
 Number of Options Exercise Price Options Exercise Price
 ----------------- ----------------- ---------- -----------------
Balance at beginning of year 1,508,000 $ 0.16 1,508,000 $ 0.16
Granted - - - -
Exercised - - - -
Forfeited - - - -
 ----------------- ----------------- ---------- -----------------
Balance at end of year 1,508,000 $ 0.16 1,508,000 $ 0.16
 ================= ================= ========== =================
Options exercisable at end of year 1,508,000 $ 0.16 1,508,000 $ 0.16
 ================= ================= ========== =================
Weighted average fair value of
options granted during the year $ - $ -

F-26

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 9 - SHAREHOLDERS' DEFICIT (continued)

Stock Options (continued)

The following information applies to options outstanding at December 31, 2007:

 Options Outstanding Options Exercisable
--------------------------------------------------------------- ----------------------------------
 Weighted
 Average Weighted Weighted
 Range of Remaining Average Average
 Exercise Number Contractual Exercise Number Exercise
 Price Outstanding Life (Years) Price Exercisable Price
 ------------ ---------------- --------------- ------------ ----------------- ------------
$ 0.10-0.15 950,000 3.00 $ 0.14 950,000 $ 0.14
$ 0.20-0.25 525,000 0.75 $ 0.21 525,000 $ 0.21
$ 0.50 33,000 2.00 $ 0.50 33,000 $ 0.50
 ---------------- ------------ ----------------- ------------
 1,508,000 $ 0.16 1,508,000 $ 0.16
 ================ ============ ================= ============

NOTE 10 - INCOME TAXES

The Company was taxed as an S-Corporation until December 31, 2004, when the Company changed its form of ownership to a C corporation. As of December 31, 2007, the Company had approximately $1,421,000 of U.S. federal and state net operating loss carryforwards available to offset future taxable income which begin expiring in 2027, if not utilized. Deferred income taxes reflect the net tax effects of operating loss and tax credit carry forwards and temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Due to the uncertainty of the Company's ability to realize the benefit of the deferred tax assets, the deferred tax assets are fully offset by a valuation allowance at December 31, 2007.

The table below summarizes the differences between the Company's effective tax rate and the statutory federal rate as follows for the periods ended December 31, 2007 and 2006:

 Year Ended Year Ended
 December 31, 2007 December 31, 2006
 ----------------- -----------------
Tax benefit computed at "expected" statutory rate $ (297,111) $ (684,556)
State income taxes, net of benefit (35,370) (72,482)
Other permanent differences 8,827 661,562
Increase in valuation allowance 323,654 95,476
 ----------------- -----------------
Net income tax benefit $ - $ -
 ================= =================

F-27

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 10 - INCOME TAXES (continued)

Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset is as follows:

 December 31, 2007 December 31, 2006
Deferred tax assets:
 Net operating loss carryforward $ 534,436 $ 206,492
 Allowance for doubtful accounts 41,334 41,210
 Unearned membership fees 125,491 129,905
 ----------------- -----------------
 Total deferred tax asset 701,261 377,607
 Less: Valuation allowance (701,261) (377,607)
 ----------------- -----------------
 - -
 ================= =================

The valuation allowance at December 31, 2007 was $701,261. The increase during 2007 was approximately $323,654.

NOTE 11 - GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit of $4,717,766 and a working capital deficit of $2,601,221 at December 31, 2007 and net losses for the year ended December 31, 2007 of $884,259. While the Company is attempting to increase sales, the growth has not been significant enough to support the Company's daily operations. In order to raise funds, on August 2005, the Company entered into an Investment Agreement and a Debenture Agreement (See Note 3 and 4), and a note payable agreement (See note 5), and has notes payable to a bank and a third party. Additionally, during the year ended December 31, 2007, the Company has a loan payable with the Company's CEO (see Note 8). Management may attempt to raise additional funds by way of a public or private offering. While the Company believes in the viability of its strategy to improve sales volume and in its ability to raise additional funds, there can be no assurances to that effect. The Company's limited financial resources have prevented the Company from aggressively advertising its products and services to achieve consumer recognition. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan and generate increased revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further implement its business plan and generate additional revenues provide the opportunity for the Company to continue as a going concern.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Employment Agreements

On March 20, 2004, UDC, a wholly-owned subsidiary of the Company, entered into an employment agreement with the principal stockholder, the sole officer of UDC, with a term of 7 years. This contract provides for a base salary to the principal stockholder of $225,000 in year 1, $125,000 in year 2, $185,500 in year 3, $196,630 in year 4, $208,427 in year 5, $220,932 in year 6 and $234,187 in year 7. This contract provides for the issuance of options to the principal stockholder as well, if certain revenue milestones are reached: at $3,000,000 in gross revenue for any calendar year he receives 332,500 options, with an exercise price at the market price of the underlying common stock at issue date and the same again at $4,000,000 and $5,000,000 in gross revenue for a calendar year.

F-28

UNION DENTAL HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007

NOTE 12 - COMMITMENTS AND CONTINGENCIES (continued)

Operating Leases

The Company leases its office facility under a five year lease that will expire in June 2011. The lease requires the Company to pay monthly base rent of $6,587 plus pro rata share of operating expenses. The base rental shall be subject to an increase by an amount greater of 5% or the Consumer Prices Index adjusted rent as defined in the agreement.

 Year Ended December 31,
 2008 $ 85,078
 2009 89,331
 2010 93,798
 2011 48,043
 ------------
Total minimum lease payments $ 316,250
 ============

Rent expense for the years ended December 31, 2007 and 2006 was $120,426 and

$99,774, respectively.

Litigations

During the second quarter of 2005, the Company was sued by another dentist who was previously a Direct Dental member. The suit was filed in Dade County, Florida (Case No. 05-0077-99) and alleges tortuous interference with a business relationship and libel. The Company filed a counterclaim against the Plaintiff. In April 2007, the Company was successful with the counterclaim and settled the litigation for payment of $190,000 and was included in the total revenues as other revenue in the accompanying consolidated statements of operations.

NOTE 13 - SUBSEQUENT EVENTS

In January 2008, the Company exercised a put notice in accordance with its Investment Agreement with Dutchess (see note 4) and repaid principal and accrued interest on its notes payable of $37,501 for which the Company issued in aggregate 6,644,496 shares of its common stock to Dutchess.

F-29

SIGNATURES

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

Date: March 31, 2008

Union Dental Holdings, Inc.
(Registrant)

By: /s/ GEORGE D. GREEN
 ----------------------------------------
 GEORGE D. GREEN, President and Director

Pursuant to the requirements of the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature Title Date


/s/ GEORGE D. GREEN CEO, President & Director March 31, 2008
-------------------
GEORGE D. GREEN

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