**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
      10-KSB/A**




**x** **ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**




For
      year
      ended June 30, 2007




**o** **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**




For
      the
      transition period from _____ to _____




**OmniReliant
      Holdings, Inc.**




(Exact
      name of registrant as specified in its charter)




Nevada
            000-51599
            54-2153837(State
                or other jurisdiction of incorporation)
            (Commission
                File Number)
            (I.R.S
                Employer Identification No.)




4218
      West Linebaugh Ave.


Tampa,
      FL 33624


(Address
      of principal executive offices)





**(813)
      885-5998**


(Issuer's
      telephone number, including area code)





4902
      Eisenhower Blvd., Suite 185


Tampa,
      FL
      33634


(Former
      name or former address, if changed since last report)




**Securities
      registered pursuant to Section 12(g) of the Act: Not
      Applicable**




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. x Yes o No




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
      not be contained, to the best of registrant's knowledge, in definitive proxy
      or
      information statements incorporated by reference in Part III of this Form 10-K
      or any amendment to this Form 10-K. o




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




State
      issuer's revenues for its most recent fiscal year. $ 2,640




The
      aggregate market value of the voting and non-voting equity held by
      non-affiliates computed by reference to the price at which common equity was
      sold, or the average bid and asked price of such common equity (i.e., does
      not
      include directors, executive officers or ten percent stockholders identified
      in
      Item 11 hereof) of the issuer as of October 4, 2007 was approximately
      $6,100,000, computed by referenced to the average of the high and low sale
      price
      on October 4, 2007 which was $3.05 and $3.05, respectively.




As
      of
      October 4, 2007, there were 14,000,000 shares of common stock
      outstanding.




Transitional
      Small Business Disclosure Format (check one) Yes o No x







**Explanatory
      Notes**





OmniReliant
      Holdings, Inc. (hereinafter referred to as “us,” “we,” or the “Company”) is
      filing this Amendment No. 1 on Form 10-KSB/A (the “First Amendment”) to its
      Annual Report for the fiscal period ended June 30, 2007, which was originally
      filed with the Securities and Exchange Commission (“SEC”) on November 1, 2007
      (the “Original Report”) in response to certain comments raised by the staff of
      the SEC. As more fully discussed in Note 12 to the accompanying consolidated
      financial statements, the purpose of this Amendment is to restate our
      consolidated financial statements and notes included in Part II, Item
      7 *Financial Statements* and Part
      II, Item 2 *Management’s
      Discussion and Analysis* to
      address the following matters:





·
            We
                concluded that the amortization period for a license agreement required
                restatement to reflect amortization of the asset over the contractual
                term
                of the license.


·
            We
                concluded that the accounting for our Series A Preferred and Series
                B
                Preferred Stock Financing Arrangements, dated November 22, 2006 and
                May
                25, 2007, respectively, was incorrect. The financial statements have
                been
                restated to afford the accounting for these financing arrangements
                prescribed in Statements 133 and 150, as well as other relevant standards
                and interpretations.







**OmniReliant
      Holdings, Inc.**




**FORM
      10-KSB/A**




**For
      the Fiscal Year Ended June 30, 2007**










**Part
                I**
            
            **Page**Item
                1.
            Description
                of Business.
            3Item
                2.
            Description
                of Property.
            12Item
                3.
            Legal
                Proceedings.
            12Item
                4.
            Submission
                of Matters to a Vote of Security Holders.
            12**Part
                II**Item
                5.
            Market
                for Common Equity and Related Stockholder Matters.
            13Item
                6.
            Management's
                Discussion and Analysis or Plan of Operation.
            14Item
                7.
            Financial
                Statements
            F-1Item
                8.
            Changes
                In and Disagreements With Accountants on Accounting and Financial
                Disclosure.
            20Item
                8A.
            Controls
                and Procedures.
            21Item
                8B.
            Other
                Information.
            22**Part
                III**Item
                9.
            Directors,
                Executive Officers, Promoters and Control Persons; Compliance with
                Section
                16(a) of the Exchange Act.
            23Item
                10.
            Executive
                Compensation.
            25Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            27Item
                12.
            Certain
                Relationships and Related Transactions.
            28Item
                13.
            Exhibits.
            31Item
                14.
            Principal
                Accountant Fees and Services.
            32Signatures.
            34










**PART
      I**





**FORWARD-LOOKING
      STATEMENTS:**





This
      Annual Report on Form 10-KSB (including the section regarding Management's
      Discussion and Analysis of Financial Condition and Results of Operations)
      contains forward-looking statements regarding our business, financial condition,
      results of operations and prospects. Words such as "expects," "anticipates,"
      "intends," "plans," "believes," "seeks," "estimates" and similar expressions
      or
      variations of such words are intended to identify forward-looking statements,
      but are not deemed to represent an all-inclusive means of identifying
      forward-looking statements as denoted in this Annual Report on Form 10-KSB.
      Additionally, statements concerning future matters are forward-looking
      statements.





Although
      forward-looking statements in this Annual Report on Form 10-KSB reflect the
      good
      faith judgment of our Management, such statements can only be based on facts
      and
      factors currently known by us. Consequently, forward-looking statements are
      inherently subject to risks and uncertainties and actual results and outcomes
      may differ materially from the results and outcomes discussed in or anticipated
      by the forward-looking statements. Factors that could cause or contribute to
      such differences in results and outcomes include, without limitation, those
      specifically addressed under the heading "Risks Related to Our Business" below,
      as well as those discussed elsewhere in this Annual Report on Form 10-KSB.
      Readers are urged not to place undue reliance on these forward-looking
      statements, which speak only as of the date of this Annual Report on Form
      10-KSB. We file reports with the Securities and Exchange Commission ("SEC").
      You
      can obtain any materials we file with the SEC at the SEC's Public Reference
      Room
      at 100 F Street, NE, Washington, DC 20549. You can obtain additional information
      about the operation of the Public Reference Room by calling the SEC at
      1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov)
      that contains reports, proxy and information statements, and other information
      regarding issuers that file electronically with the SEC, including
      us.





We
      undertake no obligation to revise or update any forward-looking statements
      in
      order to reflect any event or circumstance that may arise after the date of
      this
      Annual Report on Form 10-KSB. Readers are urged to carefully review and consider
      the various disclosures made throughout the entirety of this annual Report,
      which attempt to advise interested parties of the risks and factors that may
      affect our business, financial condition, results of operations and
      prospects.









**Item
      1. DESCRIPTION OF BUSINESS**





**Organizational
      History**





OmniReliant
      Holdings, Inc. fka Willowtree Advisor, Inc. (the “Company”) engages in the
      creation, design, distribution, and sale of affordable luxury products. The
      Company plans to make these products available to U.S. and international
      consumers through direct response infomercials, live shopping networks,
      ecommerce, direct mail and traditional retail channels.  The Company will
      first focus on bringing the Kathy Hilton “Private Beauty Spa” product line to
      market, after which the Company plans to develop other personalities and
      designer licenses. Ms. Hilton, who is the wife of Rick Hilton, the grandson
      of
      the Hilton Hotel founder, has agreed to appear in television segments and
      infomercials.





On
      November 22, 2006, the Company fka Willowtree Advisor, Inc. entered into a
      Securities Purchase Agreement (the “Common Stock Purchase Agreement”) with
      OmniReliant Corporation and Cynthia Allison, pursuant to which OmniReliant
      Corporation purchased 5,000,000 shares of the Company’s common stock from Ms.
      Allison. Also on November 22, 2006, the Company entered into an exchange
      agreement (the “Exchange Agreement”) pursuant to which the Company acquired one
      hundred percent (100%) of the equity of OmniReliant Corporation from, the
      stockholders of OmniReliant Corporation. Contemporaneously, the Company entered
      into a securities purchase agreement with an accredited investor for the sale
      of
      convertible preferred stock and warrants for an aggregate purchase price of
      $3,000,000 (the “Preferred Stock Purchase Agreement”).




The
      aforementioned transactions resulted in a change in control of the Company.
      As a
      result of the Exchange Agreement, (i) OmniReliant Corporation became a
      wholly-owned subsidiary of the Company and (ii) the Company succeeded to the
      business of OmniReliant Corporation as its sole business. As a result of the
      foregoing transactions, Willowtree changed its name to OmniReliant Holdings,
      Inc.




**Overview
      of Business**





OmniReliant
      engages in the creation, design, distribution, and sale of affordable luxury
      products. OmniReliant plans to make these products available to U.S. and
      international consumers through direct response infomercials, live shopping
      networks, ecommerce, direct mail and traditional retail channels.  
OmniReliant will first focus on bringing the Kathy Hilton “Private Beauty Spa”
product line to market, after which OmniReliant plans to develop other
      personalities and designer licenses. Ms. Hilton, who is the wife of Rick Hilton,
      the grandson of the Hilton Hotel founder, has agreed to appear in television
      segments and infomercials.





**Industry
      Overview**





The
      global market for anti-aging beauty care products is estimated to be worth
      approximately $50 billion dollars in 2006 and is expected to hit $56 billion
      in
      2007, according to the www.CosmeticsDesign-Europe.com website.





Beauty
      care products are sold through direct response marketing such as infomercials,
      as well as on established home shopping television channels such as the Home
      Shopping Network (HSN) and QVC. Over the last several years, the trend for
      direct response marketing of beauty-related products has been to use celebrity
      spokespersons. Successfully launched brands include “Bare Essentials”, Victoria
      Principal’s “Principal Secrets Anti-Aging System”, and Susan Lucci’s “Youthful
      Essence”.





**Products**





The
      Kathy
      Hilton line of products is expected to include the following items:





Skincare


Perfumes


Spa
      wellness


Cosmetics


Fragrances
      and related products


Scented
      candles


3


The
      retail prices for the Kathy Hilton line of products are expected to range from
      $15.00 to $295.00.





OmniReliant’s
      first product, the “Kathy Hilton  Personal Beauty Spa Collection” is
      expected to be used as a lead-in item to a planned product line of essential
      skin care  items.   The  Kathy
      Hilton  Personal Beauty Spa Collection is a  collection
      of   innovative spa treatments for the
      skin featuring  an exclusive HOT-COLD TCT (Thermal
      Cosmetic Treatment)(R) formula developed by  the Transvital private beauty
      laboratories.  This HOT-COLD SPA (R) formula is designed to self-heat
      and self-cool rapidly before use.




OmniReliant
      has obtained from Guaber S.P.A., the parent company of Transvital, the exclusive
      right to market and distribute the HOT-COLD SPA (R) formula, under its own
      brand
      name. The exclusive rights are limited to the United States and Canada.
      OmniReliant has also obtained a non-exclusive right to market and distribute
      the
      Kathy Hilton Personal Beauty Spa Collection in other countries.





The
      Company is working on securing the rights to purchase additional
      Guaber/Transvital skincare and beauty products that will be branded under the
      Kathy Hilton name and sold throughout the world. These products are intended
      to
      be high-end products with only the best ingredients and proven
      results.





It
      is the
      Company’s intention to design, manufacture, market and distribute prestige
      fragrances and related products. The Company plans to engage contract packagers
      and professionals in the field. In the United States, our plan is to enter
      into
      agreements to distribute our products through a targeted group of department
      and
      specialty stores, such as Macy's, Foley's, Marshall Fields, Famous Barr, Belks,
      Elder Beerman, Carson Pirie Scott, and Filenes. In international markets, we
      plan to distribute our products through established prestige distribution
      channels.





*Salicylic
      Acid Product*





On
      June
      18, 2007, we entered into an Agreement for Acquisition of a Patent Application
      with Product & Technology Partners LLC (“Seller”). Pursuant to the
      Agreement, the Company acquired from Seller the rights to a patent-pending
      self-warming topical pharmaceutical product capable of delivering salicylic
      acid
      in a foam suitable for consumer use (the “Product”). In consideration for the
      Product, the Company agreed to pay Seller in the following manner:





a)
            Upon
                execution of the Agreement, the Company paid Seller (i) an aggregate
                of
                Twenty Five Thousand dollars ($25,000) and (ii) issued to the Seller
                Two
                Hundred Thousand (200,000) shares of the Company’s common stock.b)
            Following
                the completion of due diligence (which shall be six months from the
                date
                of the Agreement), if the Company is satisfied with the Product and
                intends to offer Product for sale, the Company shall pay to Seller
                Twenty
                Five Thousand dollars ($25,000).c)
            The
                Company shall also pay Seller installment payments of up to a maximum
                of
                Four Hundred Thousand Dollars ($400,000), payable over a period of
                4 years
                beginning six months from the date of the Agreement. If no revenues
                are
                generated from the sale of the Product, no installment payments shall
                be
                due hereunder.





**Marketing
      and Distribution**





OmniReliant
      plans to initially distribute its product lines via direct response television
      programming.





On
      October 13, 2006, OmniReliant has entered into a license agreement with KRH
      Licensing Company LLC, which is the owner of the Kathy Hilton Class III
      Cosmetics Trademark License (the “Kathy Hilton Trademark”). Pursuant to the
      License Agreement, OmniReliant has obtained the exclusive right to use the
      Kathy
      Hilton Trademark and to sell products bearing the Kathy Hilton Trademark. In
      addition, OmniReliant has obtained the personal services of Ms. Hilton in
      connection with the promotion and sale of products bearing the Kathy Hilton
      Trademark. In exchange, KRH Licensing will receive royalty payments in
      2007.


4


On
      October 19, 2007, our wholly-owned subsidiary OmniReliant Corp. (“ORC”) entered
      into and closed a share exchange agreement with ResponzeTV (the “Exchange
      Agreement”). Pursuant to the terms of the Exchange Agreement, ResponzeTV
      acquired all of the issued and outstanding shares of capital stock of KHL
      Holdings, Inc., a newly formed Florida corporation and wholly-owned subsidiary
      of ORC (“KHL”), in exchange for 9,500,000 ordinary shares of stock of
      ResponzeTV. On October 12, 2007, ORC entered into an exclusive sublicense
      agreement with KHL, pursuant to which ORC granted KHL the exclusive right and
      license to our rights to use the Kathy Hilton Trademark and to sell products
      bearing the Kathy Hilton Trademark exclusive of fragrance. The initial term
      of
      this sublicense agreement shall terminate on June 30, 2012. ORC shall have
      the
      option to renew this Agreement for an additional five year period. Kevin
      Harrington and Tim Harrington, who are directors of the Company, are officers
      and directors of ResponzeTV.





OmniReliant
      has also entered into a consulting agreement with Harrington Business
      Development LLC (“HBD”) pursuant to which HBD will oversee marketing of  
OmniReliant’s brands, including visual and audio productions. The principals of
      HBD, Kevin and Tim Harrington, are veterans of the infomercial industry and
      have
      previously launched successful products via infomercials. Pursuant to the
      consulting agreement with HBD, OmniReliant will pay HBD a fee of $15,000 per
      month for a term of six (6) months beginning on October 1, 2006. On April 1,
      2007, the Company verbally agreed to extend the consulting agreement for a
      term
      of three (3) months.





The
      Kathy
      Hilton Personal Beauty Spa Collection and Cosmetics are expected to be sold
      initially on live shopping networks. OmniReliant’s current operating plan
      includes an infomercial that is being planned to air in 2007. Kathy Hilton
      has
      agreed to personally appear in most of the live shopping network programming
      and
      all of the infomercial programming. In addition, Kathy Hilton has agreed to
      personally promote the brand by making personal appearances in various talk
      shows and industry related events.





The
      media
      exposure and subsequent branding which is expected to result from the planned
      marketing of OmniReliant’s products on live shopping networks and infomercials
      is expected to generate opportunities for retail distribution as well.
      OmniReliant plans to seek distribution arrangements with large retailers in
      the
      U.S. and abroad.





OmniReliant
      also expects that its products will be sold through web sites operated by the
      live shopping networks which agree to carry our products. In addition,
      OmniReliant plans to establish a proprietary website to sell its products at
      www.omnireliant.com. The information contained on OmniReliant's website is
      not a
      part of this Report, nor is it incorporated by reference into this
      Report.





OmniReliant
      will not directly manufacture any product, nor take large positions in
      inventory. Margins will vary depending on sales venue. Net profit margins for
      products sold on live shopping networks are estimated to be approximately 25%,
      while net profit margins for products sold in infomercials are estimated to
      be
      approximately 10%. In both cases, the margins are expected to increase as sales
      volume increases.




**Competition**





Other
      companies have had success selling beauty care products via direct response
      marketing as well as through established home shopping television
      channels.





Competition
      in the retailing industry is intense and may be expected to intensify. There
      are
      other, larger and well-established retailers with whom OmniReliant must compete.
      OmniReliant competes directly with several companies which generate sales from
      infomercials. OmniReliant also competes with a large number of consumer product
      companies and retailers which have substantially greater financial, marketing
      and other resources than OmniReliant, some of which have recently commenced,
      or
      indicated their intent to conduct, direct response marketing. OmniReliant also
      competes with companies that make imitations of OmniReliant's products at
      substantially lower prices. Products similar to OmniReliant's products may
      be
      sold in department stores, pharmacies, general merchandise stores and through
      magazines, newspapers, direct mail advertising and catalogs. It is management's
      opinion that all of its major competitors are better and longer established,
      better financed and with enhanced borrowing credit based on historical
      operations, and enjoy substantially higher revenues than OmniReliant does
      currently. As a new entrant into this marketing industry, OmniReliant relies
      on
      the skill, experience and innovative discernment of management in the hope
      that
      superior judgment will provide its only competitive advantage. OmniReliant's
      major competitors include Thane International, Inc.; Fitness Quest, Inc.;
      Telebrands Advertising Corporation; Tristar; Idea Village; Media Enterprises,
      Inc. and Guthy-Renker Corp. Other competitors in the direct response market
      include Avon Products, Inc. (NYSE: AVP), Nu Skin (NYSE: NUS), BeautiControl,
      Inc., Parlux, Bare Essentials, and Mary Kay Cosmetics.


5


**Investment
      in ResponseTV**





On
      October 19, 2007, we entered into a subscription agreement with ResponzeTV
      PLC
      (“ResponzeTV”) (the “Subscription Agreement”) pursuant to which we purchased
      8,500,000 ordinary shares of ResponzeTV and received warrants to purchase
      17,000,000 ordinary shares of ResponzeTV for an aggregate purchase price of
      US$5,100,000. The warrants are to be issued in the following manner: (i) a
      warrant to purchase 8,500,000 common shares with an exercise price of £37p, (ii)
      a warrant to purchase 4,250,000 common shares with an exercise price of £50p and
      (iii) 4,250,000 common shares with an exercise price of £100p. Each warrant
      shall have a term of five years from the date of issuance. Kevin Harrington
      and
      Tim Harrington, who are directors of the Company, are officers and directors
      of
      ResponzeTV.





**Government
      Regulation**





Various
      aspects of the Company's business are subject to regulation and ongoing review
      by a variety of federal, state, and local agencies, including the Federal Trade
      Commission, the United States Post Office, the Consumer Product Safety
      Commission, the Federal Communications Commission, Food and Drug Administration,
      various States' Attorneys General and other state and local consumer protection
      and health agencies. The statutes, rules and regulations applicable to the
      Company's operations, and to various products marketed by it, are numerous,
      complex and subject to change.





The
      Company will collect and remit sales tax in the states in which it has a
      physical presence. The Company is prepared to collect sales taxes for other
      states, if laws are passed requiring such collection. The Company does not
      believe that a change in the tax laws requiring the collecting of sales tax
      will
      have a material adverse effect on the Company's financial condition or results
      of operations.




**EMPLOYEES:**





As
      of
      June 30, 2007, we had 2 employees, both of whom are full-time. We consider
      our
      relations with our employees to be good.


6




**RISK
      FACTORS**





This
      investment has a high degree of risk. Before you invest you should carefully
      consider the risks and uncertainties described below and the other information
      in this prospectus. If any of the following risks actually occur, our business,
      operating results and financial condition could be harmed and the value of
      our
      stock could go down. This means you could lose all or a part of your
      investment.





**RISKS
      RELATED TO OUR BUSINESS:**





**WE
      ARE A DEVELOPMENT STAGE COMPANY AND WE HAVE A LIMITED OPERATING HISTORY UPON
      WHICH YOU CAN BASE AN INVESTMENT DECISION.**





We
      have a
      limited operating history upon which you can make an investment decision, or
      upon which we can accurately forecast future sales. You should, therefore,
      consider us subject to the business risks associated with a new business. The
      likelihood of our success must be considered in light of the expenses,
      difficulties and delays frequently encountered in connection with the formation
      and initial operations of a new business.




**TO
      DATE WE HAVE HAD SIGNIFICANT OPERATING LOSSES, AND AN ACCUMULATED DEFICIT AND
      HAVE HAD LIMITED REVENUES AND DO NOT EXPECT TO BE PROFITABLE FOR AT LEAST THE
      FORESEEABLE FUTURE, AND CANNOT PREDICT WHEN WE MIGHT BECOME PROFITABLE, IF
      EVER.**





We
      have
      been operating at a loss since our inception, and we expect to continue to
      incur
      substantial losses for the foreseeable future. Net loss for the period from
      August 21, 2006 (inception) to June 30, 2007 was $(24,163,903) resulting in
      an
      accumulated deficit of $(28,425,179). We had revenue of $2,640 for the fiscal
      year ended June 30, 2007. Further, we may not be able to generate significant
      revenues in the future. In addition, we expect to incur substantial operating
      expenses in order to fund the expansion of our business. As a result, we expect
      to continue to experience substantial negative cash flow for at least the
      foreseeable future and cannot predict when, or even if, we might become
      profitable.





**OUR
      AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS
      A
      GOING CONCERN.**





In
      their
      report dated October 19, 2007, KBL LLP stated that our financial statements
      for
      the fiscal year ended June 30, 2007, were prepared assuming that we would
      continue as a going concern. Our ability to continue as a going concern is
      an
      issue raised as a result of our recurring losses from operations and our net
      capital deficiency. We continue to experience net operating losses. Our ability
      to continue as a going concern is subject to our ability to generate a profit.





**ADDITIONAL
      FINANCING IS NECESSARY FOR THE IMPLEMENTATION OF OUR GROWTH
      STRATEGY.**





We
      may
      require additional debt and/or equity financing to pursue our growth strategy.
      Given our limited operating history and existing losses, there can be no
      assurance that we will be successful in obtaining additional financing. Lack
      of
      additional funding could force us to curtail substantially our growth plans
      or
      cease our operations. Furthermore, the issuance by us of any additional
      securities pursuant to any future fundraising activities undertaken by us would
      dilute the ownership of existing shareholders and may reduce the price of our
      common stock.





Furthermore,
      debt financing, if available, will require payment of interest and may involve
      restrictive covenants that could impose limitations on our operating
      flexibility. Our failure to successfully obtain additional future funding may
      jeopardize our ability to continue our business and operations.


7


**WE
      MAY BE UNABLE TO MANAGE OUR GROWTH OR IMPLEMENT OUR EXPANSION
      STRATEGY.**





We
      may
      not be able to expand our product and service offerings, our client base and
      markets, or implement the other features of our business strategy at the rate
      or
      to the extent presently planned. Our projected growth will place a significant
      strain on our administrative, operational and financial resources. If we are
      unable to successfully manage our future growth, establish and continue to
      upgrade our operating and financial control systems, recruit and hire necessary
      personnel or effectively manage unexpected expansion difficulties, our financial
      condition and results of operations could be materially and adversely
      affected.





**FLUCTUATIONS
      IN OUR OPERATING RESULTS AND ANNOUNCEMENTS AND DEVELOPMENTS CONCERNING OUR
      BUSINESS AFFECT OUR STOCK PRICE.**




Our
      quarterly operating results, the number of stockholders desiring to sell their
      shares, changes in general economic conditions and the financial markets, the
      execution of new contracts and the completion of existing agreements and other
      developments affecting us, could cause the market price of our common stock
      to
      fluctuate substantially.




**OUR
      OFFICERS AND DIRECTORS ARE INVOLVED IN OTHER BUSINESSES WHICH MAY CAUSE THEM
      TO
      DEVOTE LESS TIME TO OUR BUSINESS.**





Our
      officers' and directors' involvement with other businesses may cause them to
      allocate their time and services between us and other entities. Consequently,
      they may give priority to other matters over our needs which may materially
      cause us to lose their services temporarily which could affect our operations
      and profitability.





**WE
      LACK SALES, MARKETING AND DISTRIBUTION CAPABILITIES AND DEPEND ON THIRD PARTIES
      TO MARKET OUR SERVICES.**





We
      have
      minimal personnel dedicated solely to sales and marketing of our services and
      therefore we must rely primarily upon third party distributors to market and
      sell our services. These third parties may not be able to market our product
      successfully or may not devote the time and resources to marketing our services
      that we require. We also rely upon third party carriers to distribute and
      deliver our services. As such, our deliveries are to a certain extent out of
      our
      control. If we choose to develop our own sales, marketing or distribution
      capabilities, we will need to build a marketing and sales force with technical
      expertise and with supporting distribution capabilities, which will require
      a
      substantial amount of management and financial resources that may not be
      available. If we or a third party are not able to adequately sell and distribute
      our product, our business will be materially harmed.




**OUR
      BUSINESS MAY BE AFFECTED BY FACTORS OUTSIDE OF OUR
      CONTROL.**





Our
      ability to increase sales, and to profitably distribute and sell our products
      and services, is subject to a number of risks, including changes in our business
      relationships with our principal distributors, competitive risks such as the
      entrance of additional competitors into our markets, pricing and technological
      competition, risks associated with the development and marketing of new products
      and services in order to remain competitive and risks associated with changing
      economic conditions and government regulation.





**OUR
      SUCCESS DEPENDS, IN PART, ON THE QUALITY AND SAFETY OF OUR
      PRODUCTS.**





Our
      success depends, in part, on the quality and safety of our products. If our
      products are found to be defective or unsafe, or if they otherwise fail to
      meet
      our customers’ standards, our relationship with our customers could suffer, our
      brand appeal could be diminished, and we could lose market share and/or become
      subject to liability claims, any of which could result in a material adverse
      effect on our business, results of operations and financial
      condition.


8


**OUR
      BUSINESS IS CONDUCTED WORLDWIDE PRIMARILY IN ONE CHANNEL, DIRECT
      SELLING** .





We
      plan
      to market our products primarily through home shopping television channels
      and
      infomercials. If consumers change their purchasing habits, such as by reducing
      purchases of beauty and related products through home shopping television
      channels and infomercials, this could reduce our sales and have a material
      adverse effect on our business, financial condition and results of
      operations.





**RISKS
      RELATING TO OUR CURRENT FINANCING ARRANGEMENT:**





**THERE
      ARE A LARGE NUMBER OF SHARES UNDERLYING OUR SERIES C CONVERTIBLE PREFERRED
      STOCK
      AND WARRANTS THAT MAY BE AVAILABLE FOR FUTURE SALE AND THE SALE OF THESE SHARES
      MAY DEPRESS THE MARKET PRICE OF OUR COMMON STOCK.**





On
      November 22, 2006, we entered into a Securities Purchase Agreement with Vicis
      Capital Master Fund pursuant to which Vicis purchased 3,000 shares of the
      Company’s series A 10% convertible preferred stock and 6,000,000 common stock
      purchase warrants. The Preferred Stock has a conversion price of $1.00 and
      is
      convertible into an aggregate of 3,000,000 shares of the Company’s common stock.
      The series A-1 warrants have an exercise price of $1.50, and the series A-2
      warrants have an exercise price of $3.00. **** The
      conversion price of the Preferred Stock and the exercise price of the Warrants
      are subject to adjustment in certain instances, including the issuance by the
      Company of securities with a lower conversion or exercise price. In addition,
      in
      connection with the Securities Purchase Agreement, the Company issued an
      aggregate of 900,000 common stock purchase warrants to Midtown Partners &
Co., LLC, which served as the Company’s placement agent. The warrants are
      exercisable at prices which are below the current market price of our common
      stock, as follows: one-third of the warrants issued to Midtown are exercisable
      at $1.00 per share, one-third are exercisable at $1.50 per share, and the
      remaining one-third are exercisable at $3.00 per share.





We
      entered into a Securities Purchase Agreement on May 25, 2007 with Dynamic
      Decisions Strategic Opportunities pursuant to which Dynamic Decisions purchased
      600 shares of the Company’s series A 10% convertible preferred stock (the
“Preferred Stock”) and 960,000 common stock purchase warrants. The Preferred
      Stock has a conversion price of $1.25 and is convertible into an aggregate
      of
      600,000 shares of the Company’s common stock. The series B-1 warrants have an
      exercise price of $1.87, and the series B-2 warrants have an exercise price
      of
      $3.75. **** The
      conversion price of the Preferred Stock and the exercise price of the Warrants
      are subject to adjustment in certain instances, including the issuance by the
      Company of securities with a lower conversion or exercise price. In addition,
      in
      connection with the Securities Purchase Agreement, the Company issued an
      aggregate of 144,000 common stock purchase warrants to Midtown Partners &
Co., LLC, which served as the Company’s placement agent. The warrants are
      exercisable at prices which are below the current market price of our common
      stock, as follows: one-third of the warrants issued to Midtown are exercisable
      at $1.25 per share, one-third are exercisable at $1.87 per share, and the
      remaining one-third are exercisable at $3.75 per share.




On
      October 18, 2007, we entered into securities purchase agreements (the “Purchase
      Agreements”) with Vicis Capital Master Fund (“Vicis”) and Dynamic Decisions
      Strategic Opportunities (“Dynamic Decisions”) pursuant to which Vicis and
      Dynamic Decisions purchased 6,000,000 and 400,000, shares of our series C
      convertible preferred stock (“Series C Preferred Stock”), respectively for an
      aggregate purchase price of $6,400,000. In connection with the purchase of
      the
      Series C Preferred Stock, Vicis and Dynamic Decisions received an aggregate
      amount of 16,000,000 and 1,066,668 common stock purchase warrants, respectively.
      Vicis and Dynamic Decisions received a Series C-1 warrant to purchase 8,000,000
      and 533,334 shares of common stock, respectively, at an exercise price of $1.50
      (the “C-1 Warrant”) as well as a Series C-2 warrant to purchase 8,000,000 and
      533,334 shares of common stock, respectively, at an exercise price of $2.00
      (the
“C-2 Warrant”). The C-1 Warrant shall be valid for five years from the date of
      issuance and the C-2 Warrant shall be valid for ten years from the date of
      issuance. The Series C Preferred Stock has a conversion price of $0.75 and
      is
      convertible into an aggregate amount of 8,000,000 and 533,334 shares of common
      stock, respectively. The Series C Preferred stock does not pay annual dividends
      but each holder of Series C Preferred Stock shall have the right to such number
      of votes equal to the number of shares of common stock that the Series C
      Preferred Stock shall be converted into.


9


Furthermore,
      pursuant to the terms of the Purchase Agreements, Vicis and Dynamic Decisions
      exchanged their 3,000 shares of series A preferred stock and 600 shares of
      series B preferred stock, respectively, for 3,285,354 and 624,210 shares of
      Series C Preferred Stock, respectively. In connection with the Purchase
      Agreements, Vicis and Dynamic Decisions received a Series C-1 Warrant to
      purchase 4,380,472 and 832,280 shares of common stock, respectively and a
      series C-2 Warrant to purchase 4,380,472 and 832,280 and shares of common
      stock, respectively. The Series C-1 Warrant and the Series C-2 Warrant shall
      have an exercise price of $1.50 and $2.00, respectively, and shall be valid
      for
      five year and ten years from the date of issuance, respectively.





Midtown
      Partners & Co., LLC, which served as the Company’s placement agent in
      connection with the Purchase Agreements, received aggregate placement agent
      fees
      of approximately $340,000, as well as the following common stock purchase
      warrants: (a) series BD-7 common stock purchase warrants entitling Midtown
      Partners to purchase 853,333 shares of the Company's common stock at an exercise
      price of seventy-five cents ($0.75) per share, and (b) series BD-8 common stock
      purchase warrants entitling Midtown Partners to purchase 853,333 shares of
      the
      Company's common stock at an exercise price of one dollar and fifty cents
      ($1.50) per share and (c) series BD-9 common stock purchase warrants entitling
      Midtown Partners to purchase 853,333 shares of the Company's common stock at
      an
      exercise price of two dollars ($2.00) per share. The Series BD warrants have
      a
      term of ten years. Midtown Partners & Co., LLC is a FINRA registered
      broker-dealer.





The
      sale
      of these shares underlying the Preferred Stock and Warrants may adversely affect
      the market price of our common stock.





**RISKS
      RELATING TO OUR COMMON STOCK:**





**IF
      WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED
      FROM THE OTC BULLETIN BOARD WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS
      TO
      SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDER TO SELL THEIR SECURITIES
      IN
      THE SECONDARY MARKET.**





Companies
      trading on the OTC Bulletin Board, such as us, must be reporting issuers under
      Section 12 of the Securities Exchange Act of 1934, as amended, and must be
      current in their reports under Section 13, in order to maintain price quotation
      privileges on the OTC Bulletin Board. If we fail to remain current on our
      reporting requirements, we could be removed from the OTC Bulletin Board. As
      a
      result, the market liquidity for our securities could be severely adversely
      affected by limiting the ability of broker-dealers to sell our securities and
      the ability of stockholders to sell their securities in the secondary
      market.





**OUR
      DIRECTORS AND EXECUTIVE OFFICERS BENEFICIALLY OWN APPROXIMATELY 60% OF OUR
      COMMON STOCK; THEIR INTERESTS COULD CONFLICT WITH YOURS; SIGNIFICANT SALES
      OF
      STOCK HELD BY THEM COULD HAVE A NEGATIVE EFFECT ON OUR STOCK PRICE; STOCKHOLDERS
      MAY BE UNABLE TO EXERCISE CONTROL.**





As
      of
      June 30, 2007, our executive officers, directors and affiliated persons
      beneficially owned approximately 64.2% of our common stock. As a result, our
      executive officers, directors and affiliated persons will have significant
      influence to:





·
            elect
                or defeat the election of our directors;·
            amend
                or prevent amendment of our articles of incorporation or
                bylaws;·
            effect
                or prevent a merger, sale of assets or other corporate transaction;
                and·
            control
                the outcome of any other matter submitted to the stockholders for
                vote.




As
      a
      result of their ownership and positions, our directors and executive officers
      collectively are able to significantly influence all matters requiring
      stockholder approval, including the election of directors and approval of
      significant corporate transactions. In addition, sales of significant amounts
      of
      shares held by our directors and executive officers, or the prospect of these
      sales, could adversely affect the market price of our common stock. Management's
      stock ownership may discourage a potential acquirer from making a tender offer
      or otherwise attempting to obtain control of us, which in turn could reduce
      our
      stock price or prevent our stockholders from realizing a premium over our stock
      price.


10


**BECAUSE
      WE MAY BE SUBJECT TO THE “PENNY STOCK” RULES, YOU MAY HAVE DIFFICULTY IN SELLING
      OUR COMMON STOCK.**





If
      our
      stock price is less than $5.00 per share, our stock may be subject to the SEC’s
      penny stock rules, which impose additional sales practice requirements and
      restrictions on broker-dealers that sell our stock to persons other than
      established customers and institutional accredited investors. The application
      of
      these rules may affect the ability of broker-dealers to sell our common stock
      and may affect your ability to sell any common stock you may own.




According
      to the SEC, the market for penny stocks has suffered in recent years from
      patterns of fraud and abuse. Such patterns include:




•
            Control
                of the market for the security by one or a few broker-dealers that
                are
                often related to the promoter or
                issuer;




•
            Manipulation
                of prices through prearranged matching of purchases and sales and
                false
                and misleading press releases;





•
            “Boiler
                room” practices involving high pressure sales tactics and unrealistic
                price projections by inexperienced sales
                persons;




•
            Excessive
                and undisclosed bid-ask differentials and markups by selling
                broker-dealers; and




•
            The
                wholesale dumping of the same securities by promoters and broker-dealers
                after prices have been manipulated to a desired level, along with
                the
                inevitable collapse of those prices with consequent investor
                losses.




As
      an
      issuer of “penny stock” the protection provided by the federal securities laws
      relating to forward looking statements does not apply to us.





Although
      the federal securities law provide a safe harbor for forward-looking statements
      made by a public company that files reports under the federal securities laws,
      this safe harbor is not available to issuers of penny stocks. As a result,
      if we
      are a penny stock we will not have the benefit of this safe harbor protection
      in
      the event of any claim that the material provided by us contained a material
      misstatement of fact or was misleading in any material respect because of our
      failure to include any statements necessary to make the statements not
      misleading.





**FAILURE
      TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH SECTION
      404 OF THE SARBANES-OXLEY ACT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
      BUSINESS AND OPERATING RESULTS AND STOCKHOLDERS COULD LOSE CONFIDENCE IN OUR
      FINANCIAL REPORTING.**





Effective
      internal controls are necessary for us to provide reliable financial reports
      and
      effectively prevent fraud. If we cannot provide reliable financial reports
      or
      prevent fraud, our operating results could be harmed. We may be required in
      the
      future to document and test our internal control procedures in order to satisfy
      the requirements of Section 404 of the Sarbanes-Oxley Act, which requires
      increased control over financial reporting requirements, including annual
      management assessments of the effectiveness of such internal controls and a
      report by our independent certified public accounting firm addressing these
      assessments. Failure to achieve and maintain an effective internal control
      environment, regardless of whether we are required to maintain such controls
      could also cause investors to lose confidence in our reported financial
      information, which could have a material adverse effect on our stock
      price.


11


**Item
      2. DESCRIPTION OF PROPERTY:**





OmniReliant’s
      principal offices are located at 4218 West Linebaugh Ave., Tampa, Florida 33624
      and are provided at no cost to the Company by one of our officers. It is
      anticipated that the Company will lease office space in the near future however
      no current lease has been negotiated.





**Item
      3. LEGAL PROCEEDINGS**





We
      are
      not a party to any pending legal proceeding, nor is its property the subject
      of
      a pending legal proceeding, that is not in the ordinary course of business
      or
      otherwise material to the financial condition of our business.





**Item
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**





**None**




12




**PART
      II**





**Item
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





Shares
      of
      the Company’s common stock are quoted on the Over the Counter Bulletin Board
      ("OTCBB") under the symbol ORHI. Our shares were listed for trading in July,
      2006. The following table sets forth, since July, 2006, the range of high and
      low intraday closing bid information per share of our common stock as quoted
      on
      the Over the Counter Bulletin Board.





Quarter
                Ended
            
            High
                ($)
            
            Low
                ($)September
                30, 2007
            
            
            3.40
            
            
            2.10June
                30, 2007
            
            
            3.60
            
            
            2.50March
                31, 2007
            
            
            3.875
            
            
            2.50December
                31, 2006
            
            
            3.00
            
            
            0.10September
                30, 2006
            
            
            0.10
            
            
            0.10





**Holders:**





As
      of
      June 30, 2007, we had approximately 12 record holders of our common stock.
      The
      number of record holders was determined from the records of our transfer agent
      and does not include beneficial owners of common stock whose shares are held
      in
      the names of various security brokers, dealers, and registered clearing
      agencies. The transfer agent of our common stock is Register and Transfer
      Company.





**Dividend
      Policy**





The
      Company has not paid or declared any dividends on its common stock and does
      not
      anticipate paying cash dividends in the foreseeable future.





The
      series A preferred stock pays an annual dividend of 10% which is payable
      quarterly, at the option of OmniReliant, either in cash or in shares of
      registered common stock at a 10% discount to the Company’s stock price. On
      October 18, 2007, we exchanged all of the outstanding shares of series A
      preferred stock outstanding for 3,285,354 shares of series C preferred
      stock.





The
      series B preferred stock pays an annual dividend of 10% which is payable
      quarterly, at the option of OmniReliant, either in cash or in shares of
      registered common stock at a 10% discount to the Company’s stock price. On
      October 18, 2007, we exchanged all of the outstanding shares of series B
      preferred stock outstanding for 624,210 shares of series C preferred
      stock.





The
      series C preferred stock does not pay an annual dividend.





***Equity
      Compensation Plan Information***





The
      following table summarizes the equity compensation plans under which our
      securities may be issued as of June 30, 2007.





*Plan
                Category*
            
            Number of securities
              to be issued upon
              exercise of
              outstanding options
              and warrants
            
            Weighted-average
              exercise price of
              outstanding options
              and warrants
            
            Number of securities
              remaining available
              for future issuance
              under equity
              compensation plansEquity
                compensation plans approved by security holders
            
            
            -0-
            
            
            -0-
            
            
            -0Equity
                compensation plan not approved by security holders
            
            
            -0-
            
            
            -0-
            
            
            -0




13


**ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
      OPERATION**





Some
      of
      the information in this Form 10-KSB contains forward-looking statements that
      involve substantial risks and uncertainties. You can identify these statements
      by forward-looking words such as "may," "will," "expect," "anticipate,"
      "believe," "estimate" and "continue," or similar words. You should read
      statements that contain these words carefully because they:





·
            discuss
                our future expectations;


·
            contain
                projections of our future results of operations or of our financial
                condition; and


·
            state
                other "forward-looking"
                information.





We
      believe it is important to communicate our expectations. However, there may
      be
      events in the future that we are not able to accurately predict or over which
      we
      have no control. Our actual results and the timing of certain events could
      differ materially from those anticipated in these forward-looking statements
      as
      a result of certain factors, including those set forth under "Risk Factors,"
      "Business" and elsewhere in this Form 10-KSB. See "Risk Factors."





**Reverse
      Acquisition**





OmniReliant
      Corporation was incorporated on August 21, 2006 under the laws of the State
      of
      Florida. On November 22, 2006, Willowtree Advisor, Inc., an entity which was
      incorporated on June 16, 2004 under the laws of the State of Nevada, entered
      into an exchange agreement with the stockholders of OmniReliant Corporation
      (the
“Exchange Transaction”).





As
      a
      result of the Exchange Transaction, OmniReliant Corporation became a
      wholly-owned subsidiary of Willowtree Advisor, Inc. and succeeded to the
      business of OmniReliant Corporation as its sole business. The Exchange
      Transaction is deemed to be a reverse acquisition for accounting purposes.
      As a
      result, in accordance with the Accounting and Financial Reporting
      Interpretations and Guidance provided by the staff of the U.S. Securities and
      Exchange Commission, Willowtree Advisor, Inc. (the legal acquirer) is considered
      the accounting acquiree and OmniReliant Corporation (the legal acquiree) is
      considered the accounting acquirer. The discussions below, and the consolidated
      financial statements attached hereto, will in substance be those of OmniReliant
      Corporation, with the assets and liabilities, and revenues and expenses, of
      Willowtree Advisor, Inc. being included effective from the date of consummation
      of the Exchange Transaction.





**Plan
      of Operation - Development Stage Company**





The
      Company is a development stage company with limited revenues and limited
      historical information upon which to base an evaluation of its
      performance.





The
      Company engages in the creation, design, distribution, and sale of affordable
      luxury products. The Company plans to make these products available to U.S.
      and
      international consumers through direct response infomercials, live shopping
      networks, ecommerce, direct mail and traditional retail channels. The Company
      will first focus on bringing the Kathy Hilton fragrance product line to market,
      after which OmniReliant plans to develop other personalities and designer
      licenses. Ms. Hilton, who is the wife of Rick Hilton, the grandson of the Hilton
      Hotel founder, has agreed to appear in television segments and infomercials.
      We
      have entered into a license agreement with KRH Licensing Company, LLC, an
      affiliate of Rick and Kathy Hilton.





It
      is the
      Company’s intention to design, manufacture, market and distribute prestige
      fragrances and related products. In addition, the Company has an agreement
      to
      market and distribute hair straightening irons. The Company plans to engage
      contract packagers and professionals in the field. In the United States, our
      plan is to enter into agreements to distribute our products through a targeted
      group of department and specialty stores, such as Macy's, Foley's, Marshall
      Fields, Famous Barr, Belks, Elder Beerman, Carson Pirie Scott, and Filenes.
      In
      international markets, we plan to distribute our products through established
      prestige distribution channels. We hope to sell products under private label
      that have already reached its market entry point.


14


As
      a
      development stage company, we may not be successful in implementing our plan
      to
      manufacture, market and distribute prestige fragrances and related products.
      Until our products are successfully manufactured and marketed on a live shopping
      network or via infomercials, we will not generate significant revenues and
      may
      not be successful. If we cannot generate sufficient revenues to continue
      operations, we will be forced to suspend or cease operations, and may forfeit
      our rights under license agreements.





We
      do not
      expect to make any significant purchases of equipment nor do we expect a
      significant change in the number of our employees.





Our
      officers and directors will handle our administrative duties with the help
      of a
      consultant, TotalCFO, LLC.





We
      cannot
      guarantee that we will be successful in our business operations. Our business
      is
      subject to risks inherent in the establishment of a new business enterprise.





**Results
      of Operations**





The
      following discussion of the financial condition and results of operations should
      be read in conjunction with the financial statements included herewith. This
      discussion should not be construed to imply that the results discussed herein
      will necessarily continue into the future, or that any conclusion reached herein
      will necessarily be indicative of actual operating results in the
      future.





**Period
      from August 21, 2006 (inception) to fiscal year ended June 30,
      2007**





***Net
      Revenues*** *–* We had
      revenues for ****** the
      period from August 21, 2006 (inception) to June 30, 2007 of $2,640. These levels
      of revenues reflect our current status as a development stage enterprise.
      However, we have certain valuable revenue producing assets, such as our license
      agreement, for which our management is actively developing sales channels and
      other uses. If we are unable to implement our plan to manufacture, market and
      distribute, or license, our products and rights, our revenues will not
      significantly increase during the upcoming fiscal year.





***Cost
      of Sale**–* Cost
      of
      goods sold for the period from August 21, 2006 (inception) to June 30, 2007
      amounted to $1,320. If, as described under revenues, we are successful in
      implementing our plan to increase manufacturing and distribution of our
      products, our cost of goods sold will significantly increase during the upcoming
      fiscal year. If we are unable to implement our plan to manufacture, market
      and
      distribute, or license, our products and rights, our revenues will not
      significantly increase during the upcoming fiscal year.





***Professional
      and Consulting*** *–*
      Our professional and consulting expenses amounted to $2,824,082 for the period
      from August 21, 2006 (inception) to June 30, 2007. This caption includes
      share-based payments in the form of warrants to a public relations firm that
      had
      a fair value, using the Black-Scholes-Merton technique, of $2,490,151. The
      remainder represents our payments to outside financial and other consultants
      and
      payments for legal services. We expect to continue to compensate consultants
      to
      perform accounting, reporting and back office services until we establish those
      operations internally. We do not currently expect to incur further expenses
      for
      public relations at the current period levels for the foreseeable
      future.





***Amortization**–* Amortization
      expense related to our intangible assets amounted to $411,966 for the period
      from August 21, 2006 (inception) to June 30, 2007. We amortize our intangible
      assets using the straight-line method over periods of future benefit. We also
      consider our intangible assets for impairment when circumstances, if any, arise
      that indicates that we may not recover these assets through future revenue
      streams. During the period from August 21, 2006 (inception) through June 30,
      2007, and through the date of this report, we concluded that our intangible
      assets were recoverable and that our estimated useful lives continued to be
      appropriate. However, given the developmental nature of our operations, we
      will
      continue to evaluate these assets as of each future reporting period. Our
      operations will continued to reflect amortization of these intangible assets
      over the remaining estimated useful lives.


15




***Salaries
      and Wages –*** Salaries
      and wages paid to our two employees amounted to $154,894 for the period from
      August 21, 2006 (inception) to June 30, 2007. We may incur additional salaries
      and wages in future periods as we build our internal resources. In these
      circumstances, we would expect our consulting expenses, as discussed above,
      to
      decrease. In addition, we intend to use share-based payments to compensate
      employees in the future. We are required to recognize share-based payments,
      when
      and if they are made, at their fair values on the grant date over the vesting
      period of the related awards.





***General
      and Administrative –*** Our
      general and administrative expenses ****** amounted
      to $155,550 for the period from August 21, 2006 (inception) to June 30, 2007.
      We
      may incur higher levels of general and administrative expenses when our
      operations become established and increase.





***Derivative
      Fair Value Adjustments*** **–** Our
      derivative fair value adjustments **** amounted
      to $20,156,269 for the period from August 21, 2006 (inception) to June 30,
      2007. Derivative
      financial instruments, as defined in Financial Accounting Standard No. 133
      consist of financial instruments or other contracts that contain a notional
      amount and one or more underlying (e.g. interest rate, security price or other
      variable), require no initial net investment and permit net settlement.
      Derivative financial instruments may be free-standing or embedded in other
      financial instruments. Further, derivative financial instruments are initially,
      and subsequently, measured at fair value and recorded as liabilities or, in
      rare
      instances, assets. We generally do not use derivative financial instruments
      to
      hedge exposures to cash-flow, market or foreign-currency risks. However, we
      have
      entered into certain other financial instruments and contracts, such as
      redeemable preferred stock arrangements and freestanding warrants with features
      that are either (i) not afforded equity classification, (ii) embody risks not
      clearly and closely related to host contracts, or (iii) may be net-cash settled
      by the counterparty. As required by Statement 133, these instruments are
      required to be carried as derivative liabilities, at fair value, in our
      financial statements.





Our
      derivative fair value adjustments for the period from August 21, 2006
      (inception) to June 30, 2007 include (i) $17,186,455 related to day-one losses
      from the establishment of derivatives arising from financing transactions at
      their fair values on the financing inception dates, (ii) $3,204,910 related
      to
      increases in fair value of derivative warrants and (iii) ($235,094) related
      to
      decreases in fair value of forward derivative contracts associated with
      redemption puts. Because we are required to carry our derivative financial
      instruments at fair value, our income will continue to reflect the volatility
      in
      the value of these financial instruments until they are settled or, if ever,
      modified to achieve equity classification. Further, changes in fair value are
      largely predicated in the changes in the assumptions underlying the valuation
      techniques and changes in our trading market prices (as to share-indexed
      derivatives), such as the warrants.





We
      note
      that all share-indexed financial instruments previously and subsequently issued
      will require derivative liability classification, unless otherwise exempted
      under Statement 133, so long as the Series A Preferred Stock embodies its
      current variable share-indexed redemption because, under these circumstances,
      share-settlement is presumed not to be within our control and net-cash
      settlement is assumed.





Subsequent
      to our year ended June 30, 2007, we completed the sale of Series C Preferred
      Stock and Warrants for gross cash proceeds of $6,400,000 and we exchanged Series
      C Preferred Stock and warrants for our Series A and B Preferred Stock. Our
      accounting for the financing and exchange is reflected in Note 13 to our
      consolidated financial statements. We currently anticipate that the exchange
      will remove from our liabilities the significant amounts reflected in our
      redeemable preferred stock and derivative liabilities and the related effects
      on
      our income.





***Preferred
      Fair Value Adjustments –*** Preferred fair value adjustments are based upon estimates of the fair value
      of
      our Series A and Series B Preferred that are carried as liabilities. While
      there
      were no fair value adjustments during the short period that these instruments
      were classified in liabilities, future adjustments will require recognition
      in
      our income. The fair values are significantly influenced by changes in our
      trading stock prices. Our income will reflect the changes in fair value of
      our
      Series A and Series B Preferred Stock until these financial instruments are
      settled or otherwise reclassified to stockholders’ equity.





***Finance
      Costs –*** Finance
      costs, which represent amortization of asset-classified finance costs arising
      from our Series A and Series B Preferred Stock and Warrant financing
      transactions **** amounted
      to $229,519 for the period from August 21, 2006 (inception) to June 30, 2007.
      We
      will continue to amortize deferred financing costs over the terms of the
      liability classified financial instruments.


16





***Registration
      Payments –*** Registration
      payments represent the liquidated damages that arose when we failed to achieve
      the requirements of our registration rights agreement underlying the Series
      A
      Preferred Stock and Warrant Financing Arrangement. ****** Registration
      payments amount to $232,943 for the period August 21, 2006 (inception) to June
      30, 2007 and may continue to accrue and increase if we are not able to satisfy
      our requirements under the registration rights agreements.





***Net
      Loss –*** Our
      net
      loss amounted to ($24,163,903) for the period from August 21, 2006 (inception)
      to June 30, 2007 and gives effect to the components of our operational income
      and costs and expenses and our other income and expense categories as discussed
      above.





***Loss
      Applicable to Common Shareholders –*** Loss
      applicable to common stockholders represents our net loss as adjusted for
      cumulative dividends and accretions of discounts on our Series A and Series
      B
      Preferred Stock. Our loss applicable to common shareholders and our loss per
      common share (basic and diluted) amounted to ($27,358,371) and ($2.57),
      respectively, for the period August 21, 2006 (inception) through June 30, 2007.
      We will continue to reflect the preferred dividends as they accumulate in our
      future calculations of loss applicable to common stock and loss per common
      share
      until the Series A and Series B Preferred Stock are settled or
      redeemed.





**Liquidity
      and Capital Resources**





***Liquidity***  ***and
      Going Concern*** –
Cash
      and cash equivalents amounted to $711,484 as of June 30, 2007. The Company
      has a
      working capital deficiency of ($32,264,971). Included in the working capital
      deficiency is $32,678,932 of redeemable preferred stock and derivative financial
      instruments because either (i) redeemable preferred stock has become redeemable
      or (ii) net cash settlement is assumed with respect to certain share-indexed
      financial instruments, principally warrants. Subsequent to our year ended June
      30, 2007, we completed the sale of Series C Preferred Stock and Warrants for
      gross cash proceeds of $6,400,000 and we exchanged Series C Preferred Stock
      and
      warrants for our Series A and B Preferred Stock and Warrants. Our accounting
      for
      the financing and exchange is reflected in Note 13 to our consolidated financial
      statements. We currently anticipate that the exchange will remove from our
      liabilities the significant amounts reflected in our redeemable preferred stock
      and derivative liabilities.





The
      Company has suffered recurring losses while devoting substantially all of its
      efforts to raising capital, identifying and pursuing businesses opportunities.
      Moreover, the Company's total liabilities exceed its total assets and the
      Company's liquidity is substantially dependent on raising capital. Currently
      the
      Company does not generate significant revenues from its operations, and the
      Company will require additional cash to develop its business plan and to pay
      ongoing operating expenses, including licensing fees.





These
      factors raise substantial doubt about the Company's ability to continue as
      a
      going concern. The accompanying consolidated financial statements have been
      prepared on a going concern basis, which contemplates continuing operations,
      realization of assets and liquidation of liabilities in the ordinary course
      of
      business. The Company's ability to continue as a going concern is dependent
      upon
      its ability to raise sufficient capital to implement a successful business
      plan
      and to generate profits sufficient to become financially viable.





To
      the
      extent that it becomes necessary to raise additional cash in the future as
      our
      current cash and working capital resources are depleted, we will seek to raise
      it through the public or private sale of debt or equity securities, the
      procurement of advances on contracts or licenses, funding from joint-venture
      or
      strategic partners, debt financing or short-term loans, or a combination of
      the
      foregoing. We also may seek to satisfy indebtedness without any cash outlay
      through the private issuance of debt or equity securities.





We
      have
      no assurance that future financings will be available to us on acceptable terms.
      If financing is not available to us on acceptable terms, we may be unable to
      continue our operations.





***Cash
      Flow from Operating Activities*** –
We
      used
      cash of ($776,695) in our operating activities during the period
      from August 21, 2006 (inception) to June 30, 2007. Our cash flow gives effect
      to
      our net loss, as adjusted for non-cash charges and credits to income, including
      fair value adjustments to derivatives, share-based payments and amortization.
      Our net operating liabilities increased to ($103,055) during the period, which
      gives effect to, among other things, our purchase of inventories and increases
      in our payables and accrued expenses.


17





***Cash
      Flow from Investing Activities*** –
We
      used
      cash of ($1,031,010) in our investing activities to purchase intangible assets
      including our license agreement and patents. Our license agreement requires
      guaranteed minimum payments to the licensor amounting to approximately
      $1,000,000 annually, less royalty payments for sales of licensed product. We
      otherwise have no commitment to purchase long-lived assets.





***Cash
      Flow from Financing Activities*** –
We
      received $2,519,187 in cash from our financing activities that principally
      relate to the sale of Series A and Series B Preferred Stock and Warrants.
      Subsequent to our fiscal year ended June 30, 2007, we received $6,400,000 from
      the sale of Series C Preferred Stock and Warrants. This transaction will be
      accounted for and reported in the period in which the transaction was
      completed.





**Critical
      Accounting Policies**





Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon our financial statements, which have been prepared in accordance
      with
      accounting principles generally accepted in the United States of America. The
      preparation of these consolidated financial statements requires us to make
      estimates and judgments that affect the reported amounts of assets, liabilities,
      revenues and expenses, and related disclosures of contingent assets and
      liabilities. For a description of those estimates, see Note 3, Summary of
      Significant Accounting Policies, contained in the explanatory notes to our
      audited financial statements for the period from August 21, 2006 (inception)
      to
      June 30, 2007 attached to this Form 10-KSB. On an on-going basis, we evaluate
      our estimates, including those related to reserves, deferred tax assets and
      valuation allowance, impairment of long-lived assets, fair value of equity
      instruments issued to consultants for services and estimates of costs to
      complete contracts. We base our estimates on historical experience and on
      various other assumptions that we believe to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      the carrying value of assets and liabilities that are not readily apparent
      from
      other sources. Actual results may differ from these estimates under different
      assumptions or conditions; however, we believe that our estimates, including
      those for the above-described items, are reasonable.





**Recent
      Accounting Pronouncements**





In
      June
      2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in
      Income Taxes-an interpretation of FASB Statement No. 109" ("FIN 48"), which
      clarifies the accounting for uncertainty in income taxes. FIN 48 prescribes
      a
      recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. The Interpretation requires that the Company recognize in the
      financial statements the impact of tax position, if that position is more likely
      than not of being sustained on audit, based on the technical merits of the
      position. FIN 48 also provides guidance on derecognition, classification,
      interest and penalties, accounting in interim periods and disclosure. The
      provisions of FIN 48 are effective for fiscal years beginning after December
      15,
      2006 with the cumulative effect of the change in accounting principle recorded
      as an adjustment to beginning retained earnings. The adoption of this statement
      did not have a material impact on the Company's consolidated financial position
      or results of operations.





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". This
      standard defines fair value, establishes a framework for measuring fair value
      in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. This statement is effective for financial statements issued
      for fiscal years beginning after November 15, 2007. Earlier application is
      encouraged. The adoption of this accounting pronouncement is not expected to
      have a material effect on our consolidated financial statements.





In
      September 2006, the Securities and Exchange Commission issued SAB No. 108
      "Considering the Effects of Prior Year Misstatements When Quantifying
      Misstatements in Current Year Financial Statements", which provides interpretive
      guidance on how the effects of the carryover or reversal of prior year
      misstatements should be considered in quantifying a current year misstatement.
      The guidance is applicable beginning fiscal 2008. The adoption of this statement
      did not have a material impact on the Company's consolidated financial position
      or results of operations.


18





**Accounting
      for Stock-Based Compensation**





As
      of
      June 30, 2007, the Company had not yet created a stock incentive plan which
      authorizes the issuance of options to purchase common stock. Prior to January
      1,
      2006, the Company accounted for Stock Options and Stock Based Compensation
      under
      the recognition and measurement provisions of APB Opinion No. 25, “Accounting
      for Stock Issued to Employees”, and related Interpretations, as permitted by
      FASB Statement No. 123, “Accounting for Stock-Based Compensation”. Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of
      SFAS No. 123(R), Share-Based Payment, using the modified-prospective-transition
      method. Under that transition method, compensation cost for all share-based
      payments granted prior to, but not yet vested as of January 1, 2006 are based
      on
      (a) the grant date fair value estimated in accordance with the original
      provisions of SFAS No. 123, and (b) compensation cost for all share-based
      payments granted subsequent to January 1, 2006 are based on the grant-date
      fair
      value estimated in accordance with the provisions of SFAS No.123(R). Results
      for
      prior periods have not been restated.





The
      adoption of SFAS No.123(R) on January 1, 2006 did not have any effect on the
      Company's net income and earnings per share for the year ended June 30, 2007
      since no options were granted.





**Off
      Balance Sheet Arrangements**





None.




19




**ITEM
      7. FINANCIAL STATEMENTS.**


**OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **JUNE
        30, 2007**
 
 **INDEX
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **Report
                  of Independent Registered Public Accounting Firm**
              
              **F-2****Consolidated
                  Balance Sheet as of June 30, 2007**
              
              **F-3****Consolidated
                  Statements of Operations for the period from August 21, 2006 (inception)
                  to****June
                  30, 2007**
              
              **F-4****Consolidated
                  Statements of Cash Flows for the period from August 21, 2006 (inception)
                  to****June
                  30, 2007**
              
              **F-5****Consolidated
                  Statements of Stockholders' Equity (Deficit) for the period from
                  August
                  21, 2006 (inception) to June 30, 2007**
              
              **F-6****Notes
                  to Consolidated Financial Statements**
              
              **F-8**
  F-1
  **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 To
        the
        Board of Directors and Stockholders of
 OmniReliant
        Holdings, Inc. and Subsidiary
 Tampa,
        Florida
 
 We
        have
        audited the accompanying consolidated balance sheet of OmniReliant Holdings,
        Inc
        and subsidiary as of June 30, 2007 and the related consolidated statement
        of
        operations, stockholders’ equity (deficit), and cash flows for the period from
        August 21, 2006 (inception) to June 30, 2007. These financial statements
        are the
        responsibility of the Company’s management. Our responsibility is to express an
        opinion on these financial statements based on our audit.
 
 We
        conducted our audit 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 purpose of expressing an
        opinion on the effectiveness of the Company’s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit also includes
        examining, on a test basis, evidence supporting the amounts and disclosures
        in
        the financial statements, assessing the accounting principles used and
        significant estimates made by management, as well as evaluating the overall
        financial statement presentation. We believe that our audit provide a reasonable
        basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of OmniReliant Holdings,
        Inc.
        and subsidiary as of June 30, 2007, and the results of their operations,
        changes in their stockholders equity (deficit) and their cash flows for the
        period from August 21, 2006 (inception) to June 30, 2007, in conformity with
        accounting principles generally accepted in the United States of America.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern.
        As shown in the financial statements and discussed in Note 1 of the accompanying
        financial statements, the Company has incurred significant recurring losses
        from
        operations since inception and is dependent on outside sources of financing
        for
        continuation of its operations. These factors raise substantial doubt about
        the
        Company's ability to continue as a going concern.
 
 As
        more
        fully discussed in Note 12, the accompanying financial statements have been
        restated to give effect to the correction of the errors discussed
        therein.
 
 Tampa,
        Florida
 October
        19, 2007, except for Note 13, as to which
 the
        date
        is June 6, 2008
  F-2
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **CONSOLIDATED
        BALANCE SHEET**
 **June
        30, 2007 (Restated)**
 **ASSETS**Current
                    assets:Cash
                    and cash equivalents
                
                $
                711,484Inventory
                
                
                120,624Prepaid
                    expenses
                
                
                33,999Total
                    current assets
                
                
                866,107Intangible
                    assets, net of accumulated amortization of $411,965
                
                
                1,691,543Deferred
                    financing costs, net of accumulated amortization of
                    $229,519
                
                
                2,148,389**Total
                    assets**
                
                **$**
                **4,706,039****LIABILITIES
                    AND STOCKHOLDERS' EQUITY (DEFICIT)**Current
                    liabilities:Accounts
                    payable
                
                $
                24,734Preferred
                    stock dividends
                
                
                194,468Registration
                    payments
                
                
                232,943Redeemable
                    preferred stock
                
                
                5,980,000Derivative
                    liabilities
                
                
                26,698,932Total
                    current liabilities
                
                
                33,131,077Stockholders'
                    equity (deficit):Common
                    stock, $0.00001 par value; 100,000,000 sharesauthorized;
                    14,000,000 shares issued and outstanding.
                
                
                140Additional
                    paid-in capital
                
                
                —Deficit
                    accumulated during development stage
                
                
                (28,425,178)
                )Total
                    shareholders' equity (deficit)
                
                
                (28,425,038)
                )**Total
                    liabilities and shareholders' equity (deficit)**
                
                **$**
                **4,706,039**
 
 The
        accompanying notes are an integral part of these Consolidated Financial
        Statements.
  F-3
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **CONSOLIDATED
        STATEMENT OF OPERATIONS**
 **Period
        from August 21, 2006 (inception) to June 30, 2007
        (Restated)**
 
 Revenue
              
              $
              2,640Cost
                  of goods sold
              
              
              1,320Gross
                  margin
              
              
              1,320Operating
                  expenses:Professional
                  and consulting
              
              
              2,824,082Amortization
                  expense
              
              
              411,965General
                  and administrative
              
              
              155,551Salaries
                  and wages
              
              
              154,894Total
                  operating expenses
              
              
              3,546,492Operating
                  loss
              
              
              (3,545,172
              )Other
                  (expense):Derivative
                  fair value adjustments
              
              
              (20,156,269
              )Interest
                  expense
              
              
              (229,519
              )Registration
                  payments
              
              
              (232,943
              )Total
                  other expense
              
              
              (20,618,731
              )Loss
                  before income taxes
              
              
              (24,163,903
              )Income
                  taxes
              
              
              —**Net
                  loss**
              
              
              **(24,163,903**
              **)****Reconciliation
                  of net loss to loss applicable to****common
                  shareholders:**Accretion
                  of preferred stock to redemption value
              
              
              (3,000,000
              )Preferred
                  stock dividends, in arrears
              
              
              (194,468
              )**Loss
                  applicable to common shareholders**
              
              **$**
              **(27,358,371**
              **)****Loss
                  per common share (basic)**
              
              $
              **(2.57**
              **)****Loss
                  per common share (diluted)**
              
              $
              **(2.57**
              **)****Weighted
                  average common shares outstanding**
              
              
              **10,652,363**
 
 The
        accompanying notes are an integral part of these Consolidated Financial
        Statements.
  F-4
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **Period
        from August 21, 2006 (inception) to June 30, 2007
        (Restated)**
 
 **Cash
                  flows from operating activities:**Net
                  loss
              
              $
              (24,163,903
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Derivative
                  fair value adjustments
              
              
              20,156,269Share-based
                  payments
              
              
              2,486,401Amortization
                  of intangible assets
              
              
              411,965Amortization
                  of deferred finance costs
              
              
              229,519Changes
                  in operating assets and liabilities:Inventory
              
              
              (120,624
              )Prepaid
                  expenses
              
              
              (33,999
              )Accounts
                  payable
              
              
              24,734Accrued
                  registration payments
              
              
              232,943Net
                  cash flow from operating activities
              
              
              (776,695
              )**Cash
                  flows from investing activities:**Payments
                  for licenses
              
              
              (1,006,010
              )Payments
                  for patents
              
              
              (25,000
              )Net
                  cash flow from investing activities
              
              
              (1,031,010
              )**Cash
                  flows from financing activities:**Net
                  proceeds from sales of preferred stock
              
              
              2,995,000Purchase
                  and retirement of common shares
              
              
              (475,811
              )Net
                  cash flow from financing activities
              
              
              2,519,189Net
                  increase in cash and cash equivalents
              
              
              711,484Cash
                  and cash equivalents at beginning of year
              
              
              —**Cash
                  and cash equivalents at end of year**
              
              **$**
              **711,484****Supplemental
                  cash flow information:**Interest
                  paid in cash
              
              
              —Income
                  taxes paid in cash
              
              
              —Non-cash
                  investing and financing activities:Common
                  stock issued for patent, at fair value
              
              $
              720,000Common
                  stock issued for license, at fair value
              
              $
              352,500
 
 The
        accompanying notes are an integral part of these Consolidated Financial
        Statements.
  F-5
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)**
 **Period
        from August 21, 2006 (inception) to June 30, 2007
        (Restated)**
 
 Common
                  Stock
              
              Paid-in
              
              AccumulatedShares
              
              Amount
              
              Capital
              
              Deficit
              
              TotalBalance,
                  November 22, 2006 (unaudited)
              
              
              6,485,000
              
              $
              65
              
              $
              254,264
              
              $
              (254,329
              )
              $
              -Recapitalization
              
              
              7,300,000
              
              
              73
              
              
              (400,215
              )
              
              254,329
              
              
              (145,813
              )Beneficial
                  conversion on Series A Preferred offering (1)
              
              
              -
              
              
              -
              
              
              1,173,510
              
              
              -
              
              
              1,173,510Allocation
                  of deferred finance costs (2), (1)
              
              
              -
              
              
              -
              
              
              (911,135
              )
              
              (157,303
              )
              
              (1,068,438
              )Placement
                  agent warrants (1)
              
              
              -
              
              
              -
              
              
              2,492,312
              
              
              -
              
              
              2,492,312Accretion
                  to redemption value (1)
              
              
              -
              
              
              -
              
              
              -
              
              
              (3,000,000
              )
              
              (3,000,000
              )Accrual
                  of dividends on Series A Preferred
              
              
              -
              
              
              -
              
              
              -
              
              
              (34,167
              )
              
              (34,167
              )Net
                  loss for the three months ended December 31, 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              (17,857,636
              )
              
              (17,857,636
              )Balance,
                  December 31, 2006
              
              
              13,785,000
              
              $
              138
              
              $
              2,608,736
              
              $
              (21,049,106
              )
              $
              (18,440,232
              )Issuance
                  related to license agreement
              
              
              15,000
              
              
              -
              
              
              52,500
              
              
              -
              
              
              52,500Accrual
                  of Series A Preferred dividends
              
              
              -
              
              
              -
              
              
              -
              
              
              (41,687
              )
              
              (41,687
              )Net
                  income for the three months ended March 31, 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              1,884,327
              
              
              1,884,327Balance,
                  March 31, 2007
              
              
              13,800,000
              
              $
              138
              
              $
              2,661,236
              
              $
              (19,206,466
              )
              $
              (16,545,092
              )Reclassification
                  of amount out additional paid in capital
              
              
              -
              
              
              -
              
              
              (49,999
              )
              
              -
              
              
              (49,999
              )Reclassification
                  of Series A to a liability (3), (1)
              
              
              -
              
              
              -
              
              
              (1,600,270
              )
              
              -
              
              
              (1,600,270
              )Reclassification
                  of warrants to liability-Series A (4)
              
              
              -
              
              
              -
              
              
              (4,202,366
              )
              
              (909,504
              )
              
              (5,111,870
              )Accrual
                  of Series A Preferred dividends
              
              
              -
              
              
              -
              
              
              -
              
              
              (112,781
              )
              
              (112,781
              )Accrual
                  of Series B Preferred dividends
              
              
              -
              
              
              -
              
              
              -
              
              
              (5,833
              )
              
              (5,833
              )Issuance
                  of 1,000,000 warrants to consultant
              
              
              -
              
              
              -
              
              
              2,471,401
              
              
              -
              
              
              2,471,401Issuance
                  related to patent agreement
              
              
              200,000
              
              
              2
              
              
              719,998
              
              
              -
              
              
              720,000Net
                  loss for the three months ended June 30, 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              (8,190,594
              )
              
              (8,190,594
              )Balance,
                  June 30, 2007
              
              
              14,000,000
              
              $
              140
              
              $
              -
              
              $
              (28,425,178
              )
              $
              (28,425,038
              )
  The
        accompanying notes are an integral part of these Consolidated Financial
        Statements.
  F-6
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)**
 **Period
        from August 21, 2006 (inception) to June 30, 2007
        (Restated)**
 
 Explanatory
        Notes:
 
 (1)
              The
                  initial classification of the Series A Preferred Stock was in the
                  mezzanine section of the balance sheet, outside of stockholders’ equity.
                  These amounts reflect the effects of the financing on stockholders’
                  equity. See Note 9 for details of the
                  allocation.
 (2)
              Aggregate
                  financing costs were allocated to deferred financing costs and
                  paid-in
                  capital based upon the relative fair values of the financial instruments
                  issued in the financing. Since, as discussed in Note 9, no amount
                  was
                  initially allocated to the mezzanine classification, the amount
                  associated
                  with that financial instrument was recorded as a deemed
                  dividend.
 (3)
              As
                  discussed in Note 9, the Series A Preferred fell within the scope
                  of
                  Statement 150 on May 22, 2007 and was re-classed to liabilities
                  accordingly.
 (4)
              Also,
                  as discussed in Note 9, share settlement of share-indexed financial
                  instruments was no longer within the Company’s control as a result of the
                  variable-conversion rate in the Series A Preferred triggered on
                  May 22,
                  2007. Warrants previously classified in stockholders’ equity required
                  reclassification to derivative liabilities on that date, based
                  upon their
                  fair value. Amounts in excess of paid-in capital were classified
                  as
                  charges to accumulated deficit.
  F-7
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **NOTE
        1 - ORGANIZATION AND NATURE OF BUSINESS**
 
 ***Organization***
 
 Willowtree
        Advisor, Inc. ("the Company" or “OmniReliant Holdings, Inc”) was incorporated on
        June 16, 2004 under the laws of the State of Nevada to offer landscape advisory
        services. On November 22, 2006, Willowtree Advisor, Inc. entered into a
        Securities Purchase Agreement with OmniReliant Corporation (“OmniReliant”) and
        Cynthia Allison, pursuant to which OmniReliant purchased 5,000,000 shares
        of the
        Company's common stock from Ms. Allison for $475,811. Pursuant to the Common
        Stock Purchase Agreement, OmniReliant transferred the 5,000,000 shares to
        the
        Company for cancellation. The transaction with Ms. Allison was accounted
        for as
        a reduction of additional paid in capital.
 
 Also
        on
        November 22, 2006, Willowtree entered into an exchange agreement pursuant
        to
        which the Company acquired one hundred percent (100%) of the equity of
        OmniReliant from, the stockholders of OmniReliant. Contemporaneously, the
        Company entered into to a securities purchase agreement with an accredited
        investor for the sale of convertible preferred stock and warrants for an
        aggregate purchase price of $3,000,000. As a result of the Exchange Agreement,
        OmniReliant became a wholly-owned subsidiary of the Company and the Company
        succeeded to the business of OmniReliant as its sole business.
 
 The
        Exchange Transaction is deemed to be a reverse acquisition. In accordance
        with
        the Accounting and Financial Reporting Interpretations and Guidance provided
        by
        the staff of the U.S. Securities and Exchange Commission, WillowTree (the
        legal
        acquirer) is considered the accounting acquiree and OmniReliant (the legal
        acquiree) is considered the accounting acquirer. A reverse merger is accounted
        for as the issuance of shares of the accounting acquirer for the net-monetary
        assets or liabilities of the accounting acquire, accompanied by a
        recapitalization of stockholders’ equity. The consolidated financial statements
        of the combined entity will, in substance, be those of the accounting acquire,
        OmniReliant, which, as discussed below, was organized on August 21, 2006.
 
 Effective
        December 29, 2006, the Registrant’s name changed from Willowtree Advisor, Inc.
        to OmniReliant Holdings, Inc. ("the Company").
 
 ***Nature
        of Business***
 
 OmniReliant
        Corporation was incorporated on August 21, 2006 under the laws of the State
        of
        Florida. The Company is in the development stage and has realized only minor
        revenues from its planned operations. OmniReliant Corporation (“OmniReliant”)
        engages in the creation, design, distribution, and sale of affordable luxury
        products. OmniReliant plans to make these products available to U.S. and
        international consumers through direct response infomercials, live shopping
        networks, ecommerce, direct mail and traditional retail
        channels. OmniReliant will first focus on bringing the Kathy Hilton
“Private Beauty Spa” product line to market, after which OmniReliant plans to
        develop other personalities and designer licenses. Ms. Hilton, who is the
        wife
        of Rick Hilton, the grandson of the Hilton Hotel founder, has agreed to appear
        in television segments and infomercials.
 
 Until
        the
        Company’s products are successfully marketed on a live shopping network or via
        infomercials, we will not generate significant revenues and may not be
        successful. If we cannot generate sufficient revenues to continue operations,
        we
        will be forced to suspend or cease operations.
  F-8
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        1 - ORGANIZATION AND NATURE OF BUSINESS (continued)**
 
 ***Going*** ***Concern***
 
 The
        Company is in its development stage and has incurred losses and has used
        cash in
        its operating activities while devoting substantially all of its efforts
        to
        raising capital and identifying and pursuing businesses opportunities. The
        Company's total liabilities exceed its total assets and the Company's liquidity
        is substantially dependent on raising capital. These factors raise substantial
        doubt about the Company's ability to continue as a going concern.
        The accompanying consolidated financial statements have been prepared on
        a going concern
        basis, which contemplates continuing operations, realization of assets and
        liquidation of liabilities in the ordinary course of business. The Company's
        ability to continue as a going concern
        is dependent upon its ability to raise sufficient capital to implement a
        successful business plan and to generate profits sufficient to become
        financially viable. The consolidated financial statements do not include
        adjustments relating to the recoverability of recorded assets or liabilities
        that might be necessary should the Company be unable to continue as a going concern.
 
 **NOTE
        2- BASIS OF PRESENTATION**
 
 This
        summary of significant accounting policies is presented to assist in
        understanding the financial statements. The financial statements and notes
        are
        representations of the Company’s management, which is responsible for their
        integrity and objectivity. These accounting policies conform to accounting
        principles generally accepted in the United States of America and have been
        consistently applied in the preparation of the financial
        statements.
 
 **NOTE
        3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 ***Revenue
        Recognition —*** Revenue
        is recognized when the product is shipped to a customer, or in the limited
        circumstances, at destination, when terms provide that title passes at
        destination. Estimated amounts for sales returns and allowances are recorded
        at
        the time of sale.
 
 ***Principles
        of Consolidation —*** The
        Consolidated Financial Statements include the accounts of the Company and
        its
        wholly-owned subsidiary.  All significant intercompany accounts, profits
        and transactions have been eliminated in consolidation.
 
 ***Use
        of Estimates*** —
        The process of preparing financial statements in conformity with accounting
        principles generally accepted in the United States of America requires the
        use
        of estimates and assumptions regarding certain types of assets, liabilities,
        revenues, and expenses. Such estimates primarily relate to unsettled
        transactions and events as of the date of the financial statements. Accordingly,
        upon settlement, actual results may differ from estimated amounts.
 
 ***Cash
        and Equivalents*** ***—*** Cash
        equivalents are comprised of certain highly liquid investments with maturity
        of
        three months or less when purchased.
 
 ***Merchandise
        Inventories —*** ******Merchandise
        inventories are recorded at the lower of average cost or market. In-bound
        freight-related costs from our vendors are included as part of the net cost
        of
        merchandise inventories. Other costs associated with acquiring, storing and
        transporting merchandise inventories are expensed as incurred and included
        in
        cost of goods sold.
 
 ***Intangible
        Assets —*** Trademarks and licenses are recorded at cost and those with finite lives
        are
        amortized over the estimated periods of benefit. Amortization expense for
        the
        period from August 21, 2006 (inception) through June 30, 2007( as restated)
        was
        $411,965. See Note 6.
  F-9
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
 
 ***Income
        Taxes —*** Deferred
        income taxes result primarily from temporary differences between financial
        and
        tax reporting and operating loss carry forwards. Deferred tax assets and
        liabilities are determined based on the difference between the financial
        statement basis and tax basis of assets and liabilities using enacted tax
        rates.
        A valuation allowance is recorded to reduce the deferred tax asset for the
        portion that is not expected to be realized.
 
 ***Advertising-*** Advertising costs are charged to operations when incurred and are included
        in
        operating expenses. Advertising costs for the period from August 21, 2006
        (inception) through June 30, 2007 were $29,744.
 
 ***Loss
        Per Common Share —*** The
        Company applies SFAS No. 128, “ *Earnings
        Per Share* ”
for
        calculating the basic and diluted loss per share. Basic loss per share is
        computed by dividing loss attributable to common shareholders by the weighted
        average number of common shares outstanding. Diluted loss per share is computed
        similar to basic loss per share except that the denominator is increased
        to
        include the number of additional common shares that would have been outstanding
        if the potential shares had been issued and if the additional shares were
        dilutive. Common equivalent shares are excluded from the computation of net
        loss
        per share as they would be anti-dilutive.
 
 ***Stock
        Based Compensation -*** In
        December 2004, the FASB issued SFAS No.123 (revised 2004), "Share-Based
        Payment". SFAS 123(R) will provide investors and other users of financial
        statements with more complete and neutral financial information by requiring
        that the compensation cost relating to share-based payment transactions be
        recognized in financial statements. That cost will be measured based on the
        fair
        value of the equity or liability instruments issued. SFAS 123(R) covers a
        wide
        range of share-based compensation arrangements including share options,
        restricted share plans, performance-based awards, share appreciation rights,
        and
        employee share purchase plans. SFAS 123(R) replaces FASB Statement No. 123,
        "Accounting for Stock-Based Compensation", and supersedes APB Opinion No.
        25,
        "Accounting for Stock Issued to Employees". SFAS 123, as originally issued
        in
        1995, established as preferable a fair-value-based method of accounting for
        share-based payment transactions with employees. However, that statement
        permitted entities the option of continuing to apply the guidance in Opinion
        25,
        as long as the footnotes to financial statements disclosed what net income
        would
        have been had the preferable fair-value-based method been used. Public entities
        (other than those filing as small business issuers) were required to apply
        SFAS
        123(R) as of the first interim or annual reporting period that begins after
        June
        15, 2005. For public entities that file as small business issuers, SFAS 123(R)
        was applicable as of the beginning of the first interim or annual reporting
        period that begins after December 15, 2005.
 
 ***Financial
        Instruments –*** Financial
        instruments, as defined in Financial Accounting Standard No. 107 Disclosures
        about Fair Value of Financial Instruments (Statement 107), consist of cash, evidence of ownership in an entity, and
        contracts that both (i) impose on one entity a contractual obligation to
        deliver
        cash or another financial instrument to a second entity, or to exchange other
        financial instruments on potentially unfavorable terms with the second entity,
        and (ii) conveys to that second entity a contractual right (a) to receive
        cash
        or another financial instrument from the first entity, or (b) to exchange
        other
        financial instruments on potentially favorable terms with the first entity.
        Accordingly, our financial instruments consist of cash and cash equivalents,
        accounts receivable, accounts payable, accrued liabilities, derivative financial
        instruments, and redeemable preferred stock that we have concluded is more
        akin
        to equity than debt.
  F-10
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
 
 We
        carry
        cash and cash equivalents, accounts payable and accrued liabilities at
        historical costs; their respective estimated fair values approximate carrying
        values due to their current nature. We carry derivative financial instruments
        at
        fair value in accordance with Financial Accounting Standard No. 133 Accounting
        for Derivative Financial Instruments and Hedging Activities (Statement 133). We carry redeemable preferred stock at either its basis
        derived
        from the cash received or fair value depending upon the classification afforded
        the preferred stock, or embedded components thereof, in accordance with
        Statement 133 and Financial Accounting Standard No. 150 Financial
        Instruments with Characteristics of both Equity and Liabilities (Statement 150).
 
 Derivative
        Financial Instruments –
        Derivative financial instruments, as defined in Statement 133 consist of
        financial instruments or other contracts that contain a notional amount and
        one
        or more underlying (e.g. interest rate, security price or other variable),
        require no initial net investment and permit net settlement. Derivative
        financial instruments may be free-standing or embedded in other financial
        instruments. Further, derivative financial instruments are initially, and
        subsequently, measured at fair value and recorded as liabilities or, in rare
        instances, assets.
 
 We
        generally do not use derivative financial instruments to hedge exposures
        to
        cash-flow, market or foreign-currency risks. However, we have entered into
        certain other financial instruments and contracts, such as redeemable preferred
        stock arrangements and freestanding warrants with features that are either
        (i)
        not afforded equity classification, (ii) embody risks not clearly and closely
        related to host contracts, or (iii) may be net-cash settled by the counterparty.
        As required by Statement 133, these instruments are required to be carried
        as
        derivative liabilities, at fair value, in our financial statements.
 
 Redeemable
        Preferred Stock –
        Redeemable preferred stock (and, if ever, any other redeemable financial
        instrument we may enter into) is initially evaluated for possible classification
        as liabilities under Statement 150. Redeemable preferred stock classified
        as
        liabilities is recorded and carried at fair value. Redeemable preferred stock
        that does not, in its entirety, require liability classification is evaluated
        for embedded features that may require bifurcation and separate classification
        as derivative liabilities under Statement 133. In all instances, the
        classification of the redeemable preferred stock host contract that does
        not
        require liability classification is evaluated for equity classification or
        mezzanine classification based upon the nature of the redemption features.
        Generally, any feature that could require cash redemption for matters not
        within
        our control, irrespective of probability of the event occurring, requires
        classification outside of stockholders’ equity. See Note 9 for further
        disclosures about our redeemable preferred stock.
 
 ***Registration
        Payment Arrangement*** **s**– Certain
        financial instruments, including convertible preferred stock and the related
        freestanding warrants issued in connection with those convertible instruments,
        are subject to registration rights agreements, which impose penalties for
        our
        failure to register the underlying common stock by a defined date. These
        potential cash penalties, which are referred to as registration payment
        arrangements, are recorded when payments are both probable and reasonably
        estimable, in accordance with FAS No. 5, Accounting
        for Contingencies *.* As
        of
        June 30, 2007 as more fully discussed in Note 9, we are in default of certain
        registration rights agreements and the investors then had certain rights
        to
        demand payments. However, the investors have not demanded payment, nor have
        they
        indicated that they will demand payment beyond amounts accrued over time.
        As of
        June 30, 2007 we accrued $232,943 for liquidated damages associated with
        the
        Series A Preferred Stock, representing our best estimate of registration
        related
        payments that we will be required to make to the investors under the
        registration rights agreement.
  F-11
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
 
 ***Recent
        Accounting Pronouncements***
 
 In
        June
        2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty
        in
        -Income Taxes-an interpretation of FASB Statement No. 109" ("FIN 48"), which
        clarifies the accounting for uncertainty in income taxes. FIN 48 prescribes
        a
        recognition threshold and measurement attribute for the financial statement
        recognition and measurement of a tax position taken or expected to be taken
        in a
        tax return. The Interpretation requires that the Company recognize in the
        financial statements the impact of tax position, if that position is more
        likely
        than not of being sustained on audit, based on the technical merits of the
        position. FIN 48 also provides guidance on derecognition, classification,
        interest and penalties, accounting in interim periods and disclosure. The
        provisions of FIN 48 are effective for fiscal years beginning after December
        15,
        2006 with the cumulative effect of the change in accounting principle recorded
        as an adjustment to beginning retained earnings. The adoption of this statement
        did not have a material impact on the Company's consolidated financial position
        or results of operations.
 
 In
        September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements".
        This
        standard defines fair value, establishes a framework for measuring fair value
        in
        generally accepted accounting principles, and expands disclosures about fair
        value measurements. This statement is effective for financial statements
        issued
        for fiscal years beginning after November 15, 2007. Earlier application is
        encouraged. The adoption of this accounting pronouncement is not expected
        to
        have a material effect on our consolidated financial statements.
 
 In
        September 2006, the Securities and Exchange Commission issued SAB No. 108
        "Considering the Effects of Prior Year Misstatements When Quantifying
        Misstatements in Current Year Financial Statements", which provides interpretive
        guidance on how the effects of the carryover or reversal of prior year
        misstatements should be considered in quantifying a current year misstatement.
        The guidance is applicable beginning fiscal 2008. The adoption of this statement
        did not have a material impact on the Company's consolidated financial position
        or results of operations.
 
 **NOTE
        4 - ACCOUNTING FOR STOCK BASED COMPENSATION**
 
 As
        of
        June 30, 2007, the Company had not yet created a stock incentive plan which
        authorizes the issuance of options to purchase common stock. Prior to January
        1,
        2006, the Company accounted for Stock Options and Stock Based Compensation
        under
        the recognition and measurement provisions of APB Opinion No. 25, “Accounting
        for Stock Issued to Employees”, and related Interpretations, as permitted by
        FASB Statement No. 123, “Accounting for Stock-Based Compensation”. Effective
        January 1, 2006, the Company adopted the fair value recognition provisions
        of
        SFAS No. 123(R), Share-Based Payment, using the modified-prospective-transition
        method. Under that transition method, compensation cost for all share-based
        payments granted prior to, but not yet vested as of January 1, 2006 are based
        on
        (a) the grant date fair value estimated in accordance with the original
        provisions of SFAS No. 123, and (b) compensation cost for all share-based
        payments granted subsequent to January 1, 2006 are based on the grant-date
        fair
        value estimated in accordance with the provisions of SFAS No.123(R). Results
        for
        prior periods have not been restated.
 
 Although
        the Company acknowledges that it owes two employees a total of 350,000 options
        once it establishes a qualified stock option plan, the Company has not yet
        established the plan. The options for these employees call for an option
        (the
        "Option") to purchase 300,000 and 50,000 shares of the Company's Common Stock,
        par value $.001 per share ("Common Stock"), at an exercise price of $1.00.
        The
        Option may be exercised, in whole or in part, at employee’s option any time
        following execution and vesting requirements of this agreement. The Option
        shall
        expire five (5) years from the issuance date, and must be exercised, if at
        all,
        as shares become vested or before the Expiration Date. The Company has yet
        to
        execute the option and has not determined the vesting requirements. The Company
        reserves the right to settle any obligation that may arise in the future
        due to
        the above individuals in the Company’s common stock or in cash.
  F-12
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        4 - ACCOUNTING FOR STOCK BASED COMPENSATION
        (continued)**
 
 The
        adoption of SFAS No.123(R) on January 1, 2006 did not have any effect on
        the
        Company's net income and earnings per share for the period from August 21,
        2006
        (inception) to June 30, 2007 since no options were granted.
 
 ***Stock
        Options and Warrants:***
 
 The
        following table summarizes the activity related to all Company stock options
        and
        warrants for the period from August 21, 2006 (inception) to June 30,
        2007:
 Weighted
                      AverageExercise
                      Price
                  
                  Exercise
                      PriceStock
                  
                  Per
                      Share
                  
                  Per
                      ShareWarrants
                  
                  Options
                  
                  Warrants
                  
                  Options
                  
                  Warrants
                  
                  OptionsOutstanding
                      at June 30, 2006
                  
                  
                  -
                  
                  
                  -
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -Granted
                  
                  
                  9,004,000
                  
                  
                  -
                  
                  $
                  1.00-3.75
                  
                  
                  -
                  
                  
                  2.13
                  
                  
                  -Exercised
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Cancelled
                      or expired
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Outstanding
                      at June 30, 2007
                  
                  
                  9,004,000
                  
                  
                  -
                  
                  $
                  1.00-3.75
                  
                  
                  -
                  
                  $
                  2.13
                  
                  
                  -Exercisable
                      at June 30, 2007
                  
                  
                  9,004,000
                  
                  
                  -
                  
                  $
                  1.00-3.75
                  
                  
                  -
                  
                  $
                  2.13
                  
                  
                  -
  The
        warrants expire at various dates ranging from April 2010 through March
        2016.
 
 **NOTE
        5 - LOSS PER SHARE**
 
 Components
        of loss per share for the period from August 21, 2006 (inception) to June
        30,
        2007 are as follows:
 
 Net
                  income available to common shareholders
              
              $
              (27,358,371
              )Weighted
                  average shares outstanding:Basic
              
              
              10,652,363Diluted
              
              
              10,652,363Earnings
                  per share:Basic
              
              $
              (2.57
              )Diluted*
              
              $
              (2.57
              )
 
 *Diluted
        weighted average per share outstanding for the year ended June 30, 2007 does
        not
        include the effect of dilutive Series A and B Preferred Stock and Series
        A-1,
        A-2, B-1, B-2, BD-1, BD-2, BD-3, BD-4, BD-5, BD6 and consultant warrants
        because
        to do so would have been anti-dilutive (see detailed list of anti-diluted
        shares
        below). Accordingly, basic and diluted net loss per share for this period
        is the
        same.
  F-13
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        5 - LOSS PER SHARE (continued)**
 Below
                  is a detailed list of the Company’s common stock equivalents:
              
              Common**Securities**
              
              Equivalents***Preferred***:Series
                  A Preferred
              
              
              3,000,000Series
                  B Preferred
              
              
              480,000***Warrants:***Class
                  A-1 Warrants
              
              
              3,000,000Class
                  A-2 Warrants
              
              
              3,000,000Class
                  B-1 Warrants
              
              
              480,000Class
                  B-2 Warrants
              
              
              480,000Class
                  BD-1 Warrants
              
              
              300,000Class
                  BD-2 Warrants
              
              
              300,000Class
                  BD-3 Warrants
              
              
              300,000Class
                  BD-4 Warrants
              
              
              48,000Class
                  BD-5 Warrants
              
              
              48,000Class
                  BD-6 Warrants
              
              
              48,000Warrant
                  issued to consultants
              
              
              1,000,000Total
                  common stock equivalent shares
              
              
              12,484,000
 
 **NOTE
        6**–**INTANGIBLE ASSETS**
 
 Our
        intangible assets consist of the following at June 30, 2007:
 
 **Carrying**
                
                **Accumulated****Intangible
                    Assets:**
                
                **Amount**
                
                **Amortization**License
                    agreement
                
                $
                1,306,010
                
                $
                (385,715
                )Patent
                    costs
                
                
                745,000
                
                
                —Straightening
                    iron agreement
                
                
                52,500
                
                
                (26,250
                )Total
                
                $
                2,103,510
                
                $
                (411,965
                )**Aggregate
                    Amortization Expense**For
                    the year ended June 30, 2007
                
                $
                411,965**Estimated
                    Amortization Expense**Year
                    ending June 30:2008
                
                
                687,4712009
                
                
                111,2202010
                
                
                61,2202011
                
                
                98,7202012
                
                
                63,007Thereafter
                
                
                669,905$
                1,691,543
  F-14
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        6 – INTANGIBLE ASSETS (continued)**
 
 ***Licensing
        Agreement*** *-* On
        October 13, 2006, the Company entered into an agreement with a related party.
        This agreement was subsequently amended on November 20, 2006. Under the terms
        of
        the Licensing Agreement the Company obtained the exclusive right and license
        to
        certain licensed products through December 31, 2011 with an option to renew
        for
        an additional five year period provided all the minimum royalty payments
        have
        been paid during the initial term. In consideration of the license granted
        and
        the services to be performed, the Company will compensate the other party
        an
        annual guaranteed minimum (payable semi-annually) royalty as
        follows:
 
 **Annual**
              
              
              
              **Minimum****Period**
              
              **Dates**
              
              **Royalty**1
              
              Effective
                  Date to 12/31/07
              
              $
              1,000,0002
              
              1/1/08
                  to 12/31/08
              
              $
              1,000,0003
              
              1/1/09
                  to 12/31/09
              
              $
              1,000,0004
              
              1/1/10
                  to 12/31/10
              
              $
              1,000,0005
              
              1/1/11
                  to 12/31/11
              
              $
              1,000,0006
              
              1/1/12
                  to 12/31/15
              
              $
              1,500,000
 
 In
        addition to the minimum royalty payment the Company will also compensate
        the
        other party a sales royalty of eight percent (8%) on each annual period's
        net
        sales made in all venues other than infomercials; a minimum of three percent
        (3%) on each annual period's net sales made through infomercials and four
        percent (4%) should the revenues exceed media expenditures by a three to
        one
        media ratio. The sales royalty is payable on a quarterly basis within forty-five
        (45) days after the close of the prior quarter's sales. The payment of sales
        royalties are credited against the guaranteed minimum royalty payment for
        any
        annual period.
 
 In
        addition to the sales royalties and guaranteed minimum royalties being paid
        the
        Company also delivered three million (3,000,000) shares of the Company's
        common
        stock, which represented 25% of the issued and outstanding common stock on
        that
        date.
 
 On
        November 20, 2006 the Licensing Agreement was amended to change the date
        of the
        first annual Guaranteed Minimum Royalty payment from thirty (30) days following
        the effective date to January 3, 2007. In addition, the amendment revised
        subsequent payments to occur on January 1 st and July
        1 st of each
        annual period. On November 22, 2006 the Company made a payment of $850,000
        pursuant to this agreement. On January 10, 2007 the Company made a payment
        of
        $150,000 pursuant to the licensing agreement. The payment was the final payment
        of the $1,000,000 initial installment due under the agreement.
 
 For
        the
        year ended June 30, 2007 the Company recognized $385,715 of expense related
        to
        this agreement.
  F-15
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        6 – INTANGIBLE ASSETS (continued)**
 
 ***Straightening
        Irons Agreement -*** **** On
        February 12, 2007, the Company entered into an agreement with a manufacturer
        of
        straightening irons. Pursuant to the terms of the contract the Company **** agrees
        to
        pay Licensor a Royalty payment of one percent (1.0%) of the Adjusted Gross
        Collected Revenues (“AGCR”), defined below, on all revenues generated from the
        sale of the Product and up-sells of like category sold in connection with
        the
        Product and through the inbound call. The Royalties shall be paid quarterly,
        along with sufficient reports justifying the calculation of the Royalty
        payments. Should the Infomercial’s performance exceeds a two
        point two five (2.25X) times the media ratio, meaning the revenues generated
        by
        the Infomercial, less returns and charge backs exceed two and one quarter
        times
        the expenditures on the media ratio (the “Media Ratio”), the Royalty shall
        increase to two and one half percent (2.5%) of the AGCR. Should the Media
        Ratio
        exceeds three times (3X) Media Ratio the Royalty shall be bumped to three
        and
        one half percent (3.5%) and if the Media Ratio exceeds three and one half
        times
        (3.5X) the Royalty shall be four percent (4%) and in the event the Media
        Ratio
        exceeds four times Media Ratio the Royalty shall be boosted to five percent
        (5%). The Royalty on sales in all other channels of distribution except Live
        Shopping shall be five percent (5%) of the wholesale revenues. Licensor shall
        receive six percent (6%) Royalty for Live Shopping on wholesale revenues
        less
        returns. Upon the execution of this Agreement, ORH shall issue Licensor 15,000
        common shares of OmniReliant Holdings, Inc. (ORHI) which shall be restricted
        stock and subject to the SEC 144 Rules.
 
 Adjusted
        Gross Collected Revenues. “AGCR”
        shall mean ORH’s Gross Revenue from sales of the Products, less all of the
        following:
 
 (A)
        Shipping & Handling, credit card fees, refunds, credits or other allowances
        on business, as actually incurred and as reserved for
        (“Returns”);not
 (B)
        Sales, excise, use, value added or any like taxes;
 (C)
        Cost
        of goods for purposes of liquidation or closeout (“Liquidation Sales”). Licensor
        shall have the first right of refusal to purchase the liquidation inventory
        at a
        penny above ORH’s best offer.
 
 The
        reserve for Returns and un-collectibles shall initially be ten percent (10%)
        of
        Adjusted Gross Revenues, and shall be adjusted periodically based upon actual
        experience.
 
 The
        Company shall have the right to sell and distribute the Products at such
        prices,
        and on such terms and conditions (including shipping and handling charges)
        as
        ORH may establish. In the event that ORH fails, during the one-year period
        commencing upon Rollout and continuing thereafter, to generate $2,000,000
        in
        Product sales per year (“Minimum Quantities”), Licensor may provide 30 days
        prior written notice to ORH make ORH’s rights hereunder non-exclusive. For the
        life of the Product, ORH or a designated third party, such as the manufacturer,
        on behalf of ORH will maintain and keep in force product liability insurance
        with an insurer approved by Licensor in the amounts not less than $2,000,000
        per
        occurrence and $5,000,000 in the aggregate covering all Products licensed
        by ORH
        from Licensor. ORH, Licensor and, upon ORH’s request, any of ORH’s subsidiaries,
        affiliates or sub-licensees who are involved with the marketing and distribution
        of the Products) shall be named as additional insured on all such insurance
        policies, each of which shall be endorsed so as to provide at least 30 days
        notice to ORH of its cancellation, termination or non-renewal.
 
 For
        the
        year ended June 30, 2007 the Company recognized $26,250 of amortization expense
        related to this agreement.
  F-16
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        6 – INTANGIBLE ASSETS (continued)**
 
 ***Patent
        Application Agreement -*** On June
        18, 2007, OmniReliant Holdings, Inc. (“the Company”) entered into an Agreement
        for Acquisition of a Patent Application with Product & Technology Partners
        LLC. Pursuant to the Agreement, the Company acquired from Seller the rights
        to a
        patent-pending self-warming topical pharmaceutical product capable of delivering
        salicylic acid in a foam suitable for consumer use. In consideration for
        the
        rights to the product, the Company agreed to pay Seller in the following
        manner:
 
 ·
              Upon
                  execution of the Agreement, the Company paid Seller (i) an aggregate
                  of
                  Twenty Five Thousand dollars ($25,000) and (ii) issued to the Seller
                  Two
                  Hundred Thousand (200,000) shares of the Company’s common
                  stock.
  ·
              Following
                  the completion of due diligence (which shall be six months from
                  the date
                  of the Agreement), if the Company is satisfied with the Product
                  and
                  intends to offer Product for sale, the Company shall pay to Seller
                  Twenty
                  Five Thousand dollars ($25,000).
  ·
              The
                  Company shall also pay Seller installment payments of up to a maximum
                  of
                  Four Hundred Thousand Dollars ($400,000), payable over a period
                  of 4 years
                  beginning six months from the date of the Agreement. If no revenues
                  are
                  generated from the sale of the Product, no installment payments
                  shall be
                  due.
  On
        January 22, 2008 the Company paid the additional $25,000 pursuant to the
        terms
        listed above.
 
 The
        Company has received a written opinion issued by the USPTO as International
        Search Authority and a response was filed as entering Chapter ii of the PCT
        designating the USPTO as International Examining Authority. The Company has
        consulted with the scientist regarding the application and we believe the
        technology has many future uses. Once approved, the Company plans to market
        and
        sell products using the technology acquired.
 
 The
        Company estimates the patent pending application will take up to 3 years
        to go
        through the approval process. At such time the Company will begin amortizing
        the
        cost over 20 years, the useful life of the asset.
 
 In
        the
        event additional assistance is required with the patent pending application
        or
        development of a product the members of Product & Technology Partners, LLC
        have agreed to work with the Company on a consulting basis.
 
 For
        the
        year ended June 30, 2007 the Company did not recognize any expense related
        to
        this agreement.
 
 **NOTE
        7 - COMMITMENTS & CONTINGENCIES**
  ***Consulting
        Agreement*** *-* On
        October 1, 2006 the Company entered into a six (6) month consulting agreement
        with Harrington Business Development, LLC (“HBD”) to provide services related to
        the creation, production, and editing of infomercials and also to consult
        the
        Company on marketing and distribution of its products. In consideration for
        the
        services performed the Company will compensate HBD $15,000 per month. On
        April
        1, 2007 the Company verbally extended the term of the Harrington Business
        Development, LLC consulting agreement for an additional 3 months. The
        shareholders of HBD are also shareholders of the Company. For the year ended
        June 30, 2007 the Company recognized $135,000 of expense related to this
        agreement.
  F-17
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        7 - COMMITMENTS & CONTINGENCIES** **(continued)**
  ***Employment
        Agreement*** *-* On
        October 31, 2006 the Company entered into an employment agreement with Paul
        Morrison to act as its Chief Operating Officer and President. Under the terms
        of
        the agreement Mr. Morrison's contract will be for a term of two (2) years
        with
        automatic successive two (2) year term renewals subject to a notice of
        non-renewal. In consideration for the services he is to receive a base salary
        of
        $120,000 per year with annual pay increases of ten percent (10%); incentive
        bonus of one and half percent (1.5%) of pretax profits on the sales of certain
        products payable the day after the Company's 10-KSB annual report is filed
        with
        the SEC; the issuance of 300,000 shares the Company's restricted common stock
        payable as follows: 150,000 shares upon execution of the agreement and 150,000
        shares on the first anniversary of employment with the Company. On October
        31,
        2006, prior to the recapitalization, OmniReliant Corporation issued Mr. Morrison
        150,000 shares and recorded $15,000 of stock compensation expense related
        to
        this agreement.
 
 ***Assignment
        of Contract -*** On
        November 10, 2006 the Company entered into an agreement with Reliant
        International Media, LLC (“RIM”) to assume a marketing and distribution
        agreement RIM had with a third party manufacturer of spa related products.
        The
        original agreement was entered into on September 25, 2006 for a term of twelve
        (12) months. The agreement gives the Company exclusive rights to market and
        distribute the product in the United States and Canada. The Company also
        received the non-exclusive right to all other countries. The shareholders
        of RIM
        are also shareholders of the Company.
 
 ***International
        Distribution Agreement -*** On March
        19, 2007, the Company entered into an International Distribution Agreement
        with
        Reliant International Media LLC. Pursuant to the Agreement, the Company has
        granted Reliant the exclusive right to represent the Company with respect
        to
        sales of certain products through retail distribution channels in the United
        Kingdom, Japan and Korea. The products covered by the agreement include any
        and
        all products marketed by the Company under the Kathy Hilton name, likeness
        or
        brand, excluding all perfume and perfume related products. In consideration
        for
        Reliant’s marketing services, the Company has agreed to pay to Reliant a royalty
        equal to ten percent of the Company’s gross revenues. The shareholders of
        Reliant International Media are also shareholders of the Company. For the
        year
        ended June 30, 2007 the Company has not recognized any expense related to
        this
        agreement.
 
 ***Public
        Relations Agreement -*** On
        April
        27, 2007 the Company entered into a three year consulting agreement with
        a
        public relations firm. Pursuant to the terms of the agreement the Company
        will
        pay the following as compensation for services: $7,500 payable each month;
        1,000,000 warrants with a term of 3 years, issued at the onset, entitling
        the
        holder to purchase shares of the Company’s common stock at an exercise price of
        $1.00 per share; exclusive rights to all future public relation contracts
        awarded to the Company for Kathy Hilton licenses; and compensation at the
        rate
        of 3% of projected gross wholesale sales per year on all future Kathy Hilton
        licenses awarded to the Company. For the year ended June 30, 2007 the Company
        recognized $2,490,151 of expense related to this agreement, of which $2,471,401
        was associated with the 1,000,000 warrants which were issued. The value of
        the
        warrants was determined by using the Black-Scholes option pricing model.
        The
        Company used a volatility percentage of 23.6%, a risk free interest rate
        of
        5.00%, and an expected life of 1 1⁄2 years in calculating the fair
        value.
  F-18
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **NOTE
        8 – STOCKHOLDERS’ EQUITY**
  ***Common
        Stock Purchase Agreement***
 
 On
        November 22, 2006 the Company and OmniReliant entered into a securities purchase
        agreement with the Company's then principal stockholder, Cynthia Allison,
        pursuant to which OmniReliant purchased 5,000,000 shares of the Company's
        common
        stock from Ms. Allison for a purchase price of $475,811. Pursuant to the
        Common
        Stock Purchase Agreement, OmniReliant transferred the 5,000,000 shares to
        the
        Company for cancellation. The transaction with Ms. Allison was accounted
        for as
        a reduction of additional paid in capital.
 
 ***Exchange
        Agreement***
 
 Pursuant
        to the Exchange Agreement, dated November 22, 2006, the Company issued
        12,300,000 shares of common stock to the OmniReliant stockholders. The common
        stock was issued to the following stockholders pursuant to the Exchange
        Agreement:
 
 **Name**
              
              **Number of**
                **Shares**Apogee
                  Financial Investments, Inc.
              
              
              3,000,000ZTZ
                  Trust Inc.
              
              
              3,000,000Kevin
                  Harrington
              
              
              1,500,000Tim
                  Harrington
              
              
              1,500,000KRH
                  Licensing Company, LLC
              
              
              3,000,000Paul
                  Morrison
              
              
              300,000Total
              
              
              12,300,000
 
 ***Public
        Relations Agreement -*** On
        April
        27, 2007 the Company entered into a three year consulting agreement with
        a
        public relations firm. Pursuant to the terms of the agreement the Company
        issued
        1,000,000 warrants with a term of 3 years, issued at the onset, entitling
        the
        holder to purchase shares of the Company’s common stock at an exercise price of
        $1.00 per share. For the year ended June 30, 2007 the Company recognized
        expense
        of $2,490,151 associated with the 1,000,000 warrants which were issued. The
        value of the warrants was determined by using the Black-Scholes option pricing
        model. The Company used a volatility percentage of 23.6%, a risk free interest
        rate of 5.00%, and an expected life of 1 1⁄2 years in calculating the fair value.
        See *“Public
        Relations Agreement”* above
        for additional details.
 
 As
        more
        fully discussed in Note 9, these warrants were reclassified to liabilities
        on
        May 22, 2007, and are carried at their fair values, with adjustments to
        income.
 
 ***Patent
        Application Agreement -*** On June
        18, 2007, the Company entered into an Agreement for Acquisition of a Patent
        Application. The Company upon execution of the Agreement issued to the Seller
        Two Hundred Thousand (200,000) shares of the Company’s common stock. For the
        year ended June 30, 2007 the Company did not recognize any expense related
        to
        this agreement. See *“Patent
        Application Agreement”* above
        for additional details.
 
 F-19
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS**
  This
        footnote includes (i) the details of our redeemable preferred stock, (ii)
        our
        accounting for the Series A and Series B Financing Transactions both on the
        inception dates and thereafter, (iii) our consideration related to and
        accounting for warrants issued in these transactions and (iv) registration
        payment arrangements extended to the investors.
 
 ***Series
        A and Series B Convertible Preferred Stock:***
 
 The
        Company is authorized to sell or issue 100,000,000 shares of preferred stock.
        Redeemable preferred stock included in our liabilities under Statement 150
        consists of the following at June 30, 2007:
 
 Series
                  A 10% Convertible Preferred Stock, par value $0.0001, 3,000 shares
                  designated, 3,000 shares issued and outstanding; at fair
                  value
              
              
              5,200,000Series
                  B 10% Convertible Preferred Stock, par value $0.0001, 1,000 shares
                  designated, 600 shares issued and outstanding; at fair
                  value
              
              
              780,000$
              5,980,000
 
 On
        November 22, 2006, we designated 3,000 shares of our preferred stock as Series
        A
        10% Convertible Preferred Stock (“Series A Preferred”). On May 25, 2007, we
        designated 1,000 shares of our preferred stock as Series B 10% Convertible
        Preferred Stock (“Series B Preferred”). Each series has a par value of $0.0001,
        a stated value of $1,000 and a liquidation preference of $1,000, plus accrued
        dividends, if any. The Series A Preferred and Series B Preferred are immediately
        convertible into our common stock at stated conversion prices of $1.00 and
        $1.25, respectively, based upon the stated value. The conversion prices are
        subject to anti-dilution protection for (i) traditional capital restructurings,
        such as splits, stock dividends and reorganizations and (ii) sales or issuances
        of common shares or contracts to which common shares are indexed at less
        than
        the stated conversion prices.
 
 Holders
        of the Company’s Series A Preferred and the Series B Preferred (collectively the
“Series A and B Preferred”) are entitled to cumulative dividends at the rate per
        share of 10% per annum, payable quarterly on January 1, April 1, July 1 and
        October 1. Dividends are payable in cash or common stock, as follows: (a)
        if
        funds are legally available and certain equity conditions, described below,
        have
        not been met during the preceding five consecutive trading days payment must
        be
        in cash; (b) if funds are available and the equity conditions have been
        me **t** during
        the five preceding trading days the payment may be made, at the sole election
        of
        the Company, in either cash or common shares (at a 10% discount to the trading
        market price, as defined in the Certificate of Designation).
 
 The
        Certificate of Designation provides that dividends are cumulative and
        unconditionally payable, even in the absence of a Board declaration.
        Accordingly, we accrued dividends as they are earned. As of June 30, 2007,
        we
        had accrued $188,635 and $5,833 in dividends related to the Series A and
        B
        Preferred shares, respectively. Preferred stock dividends are recorded as
        a
        reduction of stockholders’ equity. However, we also reflect preferred stock
        dividends as a reduction of our net loss for purposes of calculating income
        (loss) applicable to common stockholders and our net loss per common
        share.
  F-20
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
  **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
  Certain
        equity conditions in the Certificate of Designations provide that (i) the
        Corporation shall have duly honored all conversions scheduled to occur or
        occurring by virtue of one or more Notices of Conversion of the applicable
        Holder on or prior to the dates so requested or required, if any, (ii) the
        Corporation shall have paid all liquidated damages and other amounts owing
        to
        the applicable Holder in respect of the Preferred Stock, (iii) there is an
        effective Conversion Shares Registration Statement pursuant to which the
        Holders
        are permitted to utilize the prospectus thereunder to resell all of the shares
        of Common Stock issuable pursuant to the Transaction Documents (and the
        Corporation believes, in good faith, that such effectiveness will continue
        uninterrupted for the foreseeable future), (iv) the Common Stock is trading
        on a
        Trading Market and all of the shares issuable pursuant to the Transaction
        Documents are listed for trading on such Trading Market (and the Corporation
        believes, in good faith, that trading of the Common Stock on a Trading Market
        will continue uninterrupted for the foreseeable future), (v) there is a
        sufficient number of authorized, but unissued and otherwise unreserved, shares
        of Common Stock for the issuance of all of the shares of Common Stock issuable
        pursuant to the Transaction Documents, (vi) there is no existing Triggering
        Event (see definition below) or no existing event which, with the passage
        of
        time or the giving of notice, would constitute a Triggering Event, (vii)
        the
        issuance of the shares in question to the applicable Holder would not violate
        the limitations set forth in Section 6(c) herein, (viii) there has been no
        public announcement of a pending or proposed Fundamental Transaction or Change
        of Control Transaction that has not been consummated, (ix) the applicable
        Holder
        is in possession of any information that constitutes, or may constitute,
        material non-public information, and (x) for a period of 20 consecutive Trading
        Days prior to the applicable date in question, the daily trading volume for
        the
        Common Stock on the principal Trading Market exceeds 100,000 shares per Trading
        Day (subject to adjustment for forward and reverse stock splits and the
        like).
 
 The
        Series A and Series B Preferred are redeemable for cash or, at the holder’s
        option, common stock upon the occurrence of certain events. The cash redemption
        price amounts to the greatest of 130% of the stated value or the common stock
        equivalent value. The common stock redemption is affected when elected by
        the
        holder through the issuance of the number of common shares equal to the
        aforementioned cash redemption price divided by 75% of a trading market price,
        as defined. The following events give rise to a redemption triggering
        event:
 
 ·
              The
                  failure of a Conversion Shares Registration Statement to be declared
                  effective by the Commission on or prior to the 180thday after the Original Issue Date;
 ·
              The
                  effectiveness of the Conversion Shares Registration Statement lapses
                  for
                  more than an aggregate of 60 calendar days (which need not be consecutive
                  calendar days) during any 12 month period, or the Holders shall
                  not
                  otherwise be permitted to resell Registrable Securities under the
                  Conversion Shares Registration Statement for more than an aggregate
                  of 60
                  calendar days (which need not be consecutive calendar days) during
                  any 12
                  month period;
 ·
              The
                  Corporation shall fail to deliver certificates representing Conversion
                  Shares issuable upon a conversion hereunder that comply with the
                  provisions hereof prior to the fifth Trading Day after such shares
                  are
                  required to be delivered hereunder, or the Corporation shall provide
                  written notice to any Holder, including by way of public announcement,
                  at
                  any time, of its intention not to comply with requests for conversion
                  of
                  any shares of Preferred Stock in accordance with the terms
                  hereof;
 ·
              Default
                  events provided in a Registration Rights Agreement (see further
                  discussion
                  in the accounting section below) have not been cured to the satisfaction
                  of the Holders prior to the expiration of 30 calendar days from
                  the Event
                  Date;
 ·
              The
                  Corporation shall fail for any reason to pay in full a amount of
                  cash due
                  pursuant to a Buy-In within five calendar days after notice therefore
                  is
                  delivered hereunder or shall fail to pay all amounts owed on account
                  of
                  any event as defined in the Registration Rights Agreement within
                  five days
                  of the date due;
 ·
              The
                  Corporation shall fail to have available a sufficient number of
                  authorized
                  and unreserved shares of Common Stock to issue to such Holder upon
                  a
                  conversion hereunder;
 ·
  F-21
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
 
 ·
              Unless
                  specifically addressed elsewhere in this Certificate of Designation
                  as a
                  Triggering Event, the Corporation shall fail to observe or perform
                  any
                  other covenant, agreement or warranty contained in, or otherwise
                  commit
                  any breach of the Transaction Documents, and such failure or breach
                  shall
                  not, if subject to the possibility of a cure by the Corporation,
                  have been
                  cured within 30 calendar days after the date on which written notice
                  of
                  such failure or breach shall have been
                  delivered;
 ·
              The
                  Corporation shall redeem more than a de minimis number of Junior
                  Securities other than as to repurchases of Common Stock or Common
                  Stock
                  Equivalents from departing officers and directors of the Corporation,
                  provided that, while any of the Preferred Stock remains outstanding,
                  such
                  repurchases shall not exceed an aggregate of $100,000 from all
                  officers
                  and directors;
 ·
              The
                  Corporation shall be party to a Change of Control Transaction;
 ·
              There
                  shall have occurred a Bankruptcy Event;
 ·
              The
                  Common Stock shall fail to be listed or quoted for trading on a
                  Trading
                  Market for more than five Trading Days, which need not be consecutive
                  Trading Days; or
 ·
              Any
                  monetary judgment, writ or similar final process shall be entered
                  or filed
                  against the Corporation, any Subsidiary or any of their respective
                  property or other assets for greater than
                  $50,000.
  ***Sales
        of Series A and Series B Preferred Stock and
        Warrants:***
 
 On
        November 22, 2006 and May 25, 2007, we sold 3,000 Series A Preferred shares
        and
        600 Series B Preferred shares, respectively, plus two tranches of warrants
        with
        each financing. We also issued warrants to placement agents. The following
        table
        illustrates details of the sales of these financial instruments:
 
 Series A
              
              Series B
              
              TotalGross
                  proceeds
              
              $
              3,000,000
              
              $
              600,000
              
              $
              3,600,000Financing
                  costs paid in cash
              
              
              (475,000
              )
              
              (95,000
              )
              
              (570,000
              )Net
                  proceeds
              
              $
              2,525,000
              
              $
              505,000
              
              $
              3,030,000Common
                  shares indexed to financial instruments:Series
                  A and B Preferred
              
              
              3,000,000
              
              
              480,000
              
              
              3,480,000Investor
                  warrants:Tranche
                  A/B-1
              
              
              3,000,000
              
              
              480,000
              
              
              3,480,000Tranche
                  A/B-2
              
              
              3,000,000
              
              
              480,000
              
              
              3,480,000Placement
                  agent warrants
              
              
              900,000
              
              
              144,000
              
              
              1,044,0009,900,000
              
              
              1,584,000
              
              
              11,484,000
 
 Apogee
        Financial Investments, Inc., a company owned by certain of our stockholders,
        received cash fees of $125,000 for consulting and due diligence services
        rendered in connection with the transactions, which amount is included in
        the
        financing costs paid in cash in the table above.
  F-22
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
  The
        following table illustrates the terms of the warrants issued in connection
        with
        the Series A and B Preferred Financings:
 
 Strike Price
              
              TermWarrant
                  terms:Tranche
                  A-1
              
              $
              1.50
              
              
              5
                  yearsTranche
                  A-2
              
              $
              1.00
              
              
              10
                  yearsTranche
                  B-1
              
              $
              1.87
              
              
              3
                  yearsTranche
                  B-2
              
              $
              3.75
              
              
              5
                  yearsPlacement
                  agents:Series
                  A Financing
              
              $
              1.00—$3.00
              
              
              10
                  yearsSeries
                  B Financing
              
              $
              1.87—$3.75
              
              
              10
                  years
 
 The
        following tables illustrate (i) how the net proceeds arising from each of
        the
        Series A Preferred and Series B Preferred financing was allocated on
        the
        financing inception dates and (ii)
        how the aggregate financing costs (both cash and warrant consideration) were
        allocated on
        the
        inception dates :
 
 Series A
              
              Series B
              
              TotalClassificationRedeemable
                  preferred stock (mezz)
              
              $
              —
              
              $
              —
              
              $
              —Redeemable
                  preferred stock (liability)
              
              
              
              
              
              (780,000
              )
              
              (780,000
              )Derivative
                  warrants (investor warrants)
              
              
              (16,342,550
              )
              
              (1,655,567
              )
              
              (17,998,117
              )Beneficial
                  conversion feature
              
              
              (1,173,510
              )
              
              —
              
              
              (1,173,510
              )Derivative
                  put liability
              
              
              (834,826
              )
              
              —
              
              
              (834,826
              )Day-one
                  derivative loss
              
              
              15,350,886
              
              
              1,835,567
              
              
              17,186,453Gross
                  proceeds
              
              $
              (3,000,000
              )
              $
              (600,000
              )
              $
              (3,600,000
              )
 
 The
        accounting and reporting for complex financing transactions that embody multiple
        financial instruments, some of which are features embedded within financial
        instruments, can best be described as a step-by-step process where the terms
        and
        features of the financial instruments are compared to multiple standards
        in a
        hierarchy of decision making. The following summarizes this process and
        conclusions during the process.
 
 As
        an
        initial consideration, we are required to consider whether the Series A and
        B
        Preferred Stock are, by their terms, financial instruments that require
        liability classification under Statements on Financial Accounting Standards
        No.
        150 Accounting
        for Certain Financial Instruments with Characteristics of both Equity and
        Liability .
        Statement 150 generally provides that financial
        instruments that are issued in the form of shares that are mandatorily
        redeemable on a fixed or determinable date or upon an event certain to occur
        be
        classified as liabilities. Neither the Series A Preferred nor the Series
        B
        Preferred provide for their redemption on fixed or determinable date. In
        addition, events that could give rise to cash redemption are conditional
        and not
        certain to occur.
 
 ·
              Series
                  A Preferred—November 22, 2006—The Series A Preferred did not require
                  liability classification on the inception date because the contract
                  did
                  not provide for a fixed or determinable redemption (an unconditional
                  payment requirement) and events that could give rise to cash redemption
                  were conditional and not certain to occur on the inception date.
                  However,
                  other standards exist that provide for classification of redeemable
                  securities outside of stockholders’ equity when, irrespective of
                  probability, contingent redemption events are outside of the issuer’s
                  control. As a result, the Series A Preferred required classification
                  outside of stockholders’ equity on the inception
                  date.
  F-23
 **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
 
 ·
              Series
                  B Preferred—May 25, 2007—The Series B Preferred has terms and features
                  consistent with those embodied in the Series A Preferred. However,
                  as more
                  fully discussed below, on the issuance date the Company’s ability to share
                  settle any of its share-indexed financial instruments was not within
                  its
                  control, due to the triggering of the variable-share-indexed conversion
                  feature in the Series A Preferred. Because share settlement was
                  not within
                  the Company’s control, net cash settlement was assumed and the Series B
                  Preferred was initially classified in liabilities, at fair
                  value.
  The
        terms
        and conditions of the Series A Preferred were also subject to evaluation
        under
        Statement 133. Derivative financial instruments, as defined in Statement
        133
        consist of financial instruments or other contracts that contain a notional
        amount and one or more underlying (e.g. interest rate, security price or
        other
        variable), require no initial net investment and permit net settlement.
        Derivative financial instruments may be free-standing or embedded in other
        financial instruments. Further, derivative financial instruments are initially,
        and subsequently, measured at fair value and recorded as liabilities or,
        in rare
        instances, assets.
 
 In
        considering the application of Statement 133, we identified those specific
        terms
        and features embedded in the contracts that possess the characteristics of
        derivative financial instruments. Those features included the conversion
        option,
        redemption features and other equity-indexed terms and conditions. In evaluating
        the respective classification of these embedded derivatives, we are required
        to
        determine whether the host contract (the Series A and B Preferred) is more
        akin
        to a debt or equity instrument in regards to the risks. This determination
        is
        subjective. In order to reach this conclusion we reviewed the salient terms
        and
        features of the financing arrangements to develop the basis for conclusions
        under EITF D-109 Determining the Nature of a Host Contract Related to a Hybrid Financial
        Instrument Issued in the Form of a Share under Statement No. 133 .
        These
        terms and conditions include: the term or maturity date, inclusion of a coupon
        rate and participation versus protective rights. The perpetual nature of
        the
        Preferred Stock is persuasive evidence that it is more akin to equity. The
        Series A Preferred Stock agreement contains a cumulative dividend feature
        which
        is traditional and is expected due to the preferred nature of the security.
        The
        dividend feature, however, does include a default remedy that is most consistent
        with a debt issuance. The cumulative dividend feature would normally be
        considered a neutral indicator, however, it is considered to be minimal evidence
        of an akin to debt instrument due to its structure and operation in the
        Preferred Stock arrangement. Generally, equity instruments are expected to
        embody participation rights. Conversely, creditors generally provide for
        protective rights in debt contracts. Participating rights in the agreement
        includes the right to allow the holder to veto changes in the Company’s
        organization and participate in earnings through the cumulative dividend
        and the
        liquidation feature. Protective rights in the agreement include certain
        redemption features designed to protect the investor’s investment. The
        participating and protective rights have equal merit and neither contain
        a
        strong indicator of debt or equity. In complying with the guidance provided
        in
        EITF D-109 Determining
        the Nature of a Host Contract Related to a Hybrid Financial Instrument Issued
        in
        the Form of a Share under Statement No. 133 we
        concluded, based upon the preponderance and weight of all terms, conditions
        and
        features of the host contracts, that the Series A Preferred was more akin
        to an
        equity instrument for purposes of considering the clear and close relation
        of
        the embedded feature to the host contract. Based upon this conclusion, we
        further concluded that:
 
 (i)
              the
                  equity indexed and settled embedded features did not require derivative
                  liability classification.
  F-24
 **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
  (ii)
              certain
                  redemption features (that is, features that afford the investor
                  the right
                  to put the instruments for cash) required bifurcation and classification
                  as compound embedded derivative liabilities, at fair value on the
                  inception date. These redemption features provide for the redemption
                  in
                  cash, or in some instances in common stock at the holder’s option, at the
                  occurrence of certain events, some of which are presumed not to
                  be within
                  management’s control. In addition, certain provisions embody a penalty
                  provision that provides for an incremental cash payment when paid
                  in cash
                  or a discount to the trading market value of the common stock when
                  settled
                  with common stock. These redemption features are reflected in the
                  table
                  above as derivative put liabilities and are valued using multiple,
                  probability-weighted cash flow outcomes and market discount rates
                  that are
                  commensurate with our estimated credit
                  risk.
 
 Although,
        as described above, the embedded conversion feature did not require liability
        classification under Statement 133, we were required to consider if the hybrid
        preferred contracts embodied beneficial conversion features (“BCF”). A BCF is
        present when the “effective” conversion price ascribed to the conversion feature
        has intrinsic value. Further, a BCF is accounted for as a component of paid-in
        capital on the inception date. As reflected in the tables above, the Series
        A
        Preferred was found to have a BCF. The aggregate BCF at its intrinsic value
        amounted to $9,326,490. This amount gives effect to the (i) the trading market
        price on the contract dates and (ii) the effective conversion price of each
        preferred issuance after allocation of proceeds to all financial instruments
        sold based upon their relative fair values. Notwithstanding, BCF was limited
        to
        the value ascribed to the remaining hybrid contract (using the relative fair
        value approach). Accordingly, the BCF allocated to paid-in capital amounted
        to
        $1,173,510.
 
 In
        determining how the basis of the hybrid instruments would be allocated to
        the
        host contracts, detachable warrants, and the embedded conversion features,
        we
        utilized the guidance of Statement 133 Implementation Issue No. B-6 (“DIG Issue
        B6”) provided by the Derivatives Implementation Group. DIG Issue B6 provides
        that the initial carrying values of the host contract component and the embedded
        derivative components of a hybrid instrument should be determined by recording
        the embedded derivative at fair value and determining the initial carrying
        value
        assigned to the host contract as the difference between the basis of the
        hybrid
        instrument and the fair value of the embedded derivatives (a “with and without”
method based on the fair value of the embedded derivative). Since there were
        warrants issued concurrently with the host instrument and a BCF calculated
        upon
        inception, these components also needed to be considered when calculating
        the
        value to be assigned to the host instrument. When we evaluated the warrants,
        we
        concluded that equity classification was not appropriate for the investor
        warrants under EITF 00-19, “Accounting
        for Derivative Financial Instruments Indexed to, and Potentially Settled
        in, a
        Company’s Own Stock”.
        Accordingly the proceeds from the issuance of the debt and the detachable
        warrants was first allocated to the debt and the warrants based on their
        relative fair values as described in APB 14. The embedded derivatives in
        the
        debt instrument that required bifurcation (put liability) were then bifurcated
        at their fair values from the proceeds allocated to the debt under APB 14
        and
        then the BCF was calculated. After the allocation process, any residual proceeds
        would be allocated to the debt host, however, the aggregate fair values of
        the
        warrants, put and BCF exceeded the gross proceeds so we recognized a day-one
        derivative loss as indicated.
  F-25
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
 
 As
        discussed above, the initial allocation of the basis in the Series A Preferred
        Financing transaction resulted in no basis ascribed to the redeemable preferred
        stock. According to EITF D-98 Classification
        and Measurement of Redeemable Securities ,
        if the
        security is not currently redeemable and it is not probable that the security
        will be become redeemable, accretion to face value is not necessary. The
        Series
        A Preferred is convertible upon inception and there was no persuasive evidence
        that the Preferred Stock would not be redeemed. Based on this information,
        redemption could not be considered “not probable” of occurring and accretion was
        necessary. Redeemable preferred stock is required to be accreted to its
        redemption values through periodic charges to retained earnings or, if no
        term
        of redemption is embodied in the contract, as is the case of the Series A
        Preferred, on the date of issuance. As a result, a day-one deemed dividend
        of
        $3,000,000 was recorded to accrete the Series A Preferred to its redemption
        value.
 
 ***Subsequent
        and Ongoing Classification Considerations:***
 
 The
        evaluation of the classification of the Series A and B Preferred is required
        at
        each reporting date. Statement 150 requires reclassification of financial
        instruments otherwise classified in stockholders’ equity or redeemable preferred
        stock to liabilities when the conditional redemption becomes certain of
        occurrence. On May 21, 2007 and thereafter we are in default under the terms
        and
        conditions of the Series A Preferred due to non-registration of the underlying
        common shares (also see registration rights, below). On that date, the Series
        A
        Preferred Stock became redeemable for cash at 130% of the stated value, or
        $3,900,000, or, at the holder’s option, in the number of common shares equal to
        the cash redemption price divided by the 75% of the trading market price.
        While
        the holders have not elected to redeem the preferred stock, they have the
        right
        to do so. In addition, the operation of the feature related to the holder’s
        rights to redeem in common shares has rendered the number of shares necessary
        to
        share-settle the contract indeterminate. Therefore, share settlement of the
        Series A Preferred, and all other of our share-indexed financial instruments
        is
        presumed no longer to be within our control. The triggering of the redemption
        and the share-settlement feature of the Series A Preferred had the following
        financial effects:
 
 ·
              The
                  Series A Preferred required reclassification from its mezzanine
                  classification to liabilities, at fair value, because the redemption
                  is no
                  longer conditional. This reclassification was accomplished by transferring
                  the fair value from the mezzanine classification and joining the
                  put
                  derivative (that was fair valued on the date of the redemption
                  triggering
                  event with a charge to income).
 ·
              The
                  Series B Preferred Stock, although possessing terms and conditions
                  similar
                  to those of the Series A Preferred was not afforded equity classification
                  because share-settlement is presumed not to be within the Company’s
                  control. In addition, investor and broker warrants issued with
                  the Series
                  B Preferred did not achieve equity classification for this same
                  reason.
 ·
              Other
                  share-indexed financial instruments, such as warrants, required
                  reclassification to liabilities because our ability to share-settle
                  those
                  instruments is no longer within our control. This reclassification
                  was
                  accomplished by transferring the fair value of these instruments
                  from
                  stockholders’ equity to liabilities at their fair values. They require
                  ongoing fair value measurement. See “Warrant Considerations,”
                  below.
  F-26
 **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
 
 The
        following table illustrates the activity with respect to each of the Series
        A
        and Series B Preferred from their respective inception dates to June 30,
        2007:
 
 Series A
              
              Series B
              
              TotalInitial
                  allocation of Series A Preferred in the mezzanine
              
              $
              —
              
              
              
              
              $
              —Accretion
                  to redemption value
              
              
              3,000,000
              
              
              
              
              
              3,000,000Reclassification
                  to liabilities
              
              
              (3,000,000
              )
              
              
              
              
              (3,000,000
              )Redeemable
                  preferred stock
              
              $
              —
              
              
              
              
              $
              —Reclassification
                  from mezzanine
              
              $
              3,000,000
              
              $
              —
              
              $
              3,000,000Reclassification
                  from paid-in capital
              
              
              1,600,270
              
              
              —
              
              
              1,600,270Reclassification
                  from derivative
              
              
              599,730
              
              
              —
              
              
              599,730Initial
                  allocation of Series B Preferred
              
              
              —
              
              
              780,000
              
              
              780,000Redeemable
                  preferred stock (liabilities)
              
              $
              5,200,000
              
              $
              780,000
              
              $
              5,980,000
 
 The
        redeemable preferred stock is reflected in liabilities based upon the redemption
        values calculated as follows:
 Ø
              Series
                  A—This amount represents the common stock equivalent value associated
                  with
                  the holders’ redemption alternative to require the Company to settle the
                  debt in common stock, in the number of shares equal to the cash
                  redemption
                  amount (130% of the stated value) divided by 75.0% of the trading
                  market
                  value.
 Ø
              Series
                  B—This amount represents only the cash redemption value because,
                  unlike
                  the Series A Preferred holders, the Series B Preferred holders
                  do not have
                  the right to require redemption in common
                  stock.
 
 Note:
        In
        accordance with SFAS 150, the carrying amount of the Series A and B Preferred
        Stock were measured at fair value when the instruments were classified as
        liabilities. Certain provisions in the Preferred Stock were considered when
        determining the fair value of the instrument. There was no right to participate
        in earnings, the liquidation preference of the Preferred Stock was the same
        as
        the stated rate, there were no voting rights and the Preferred Stock was
        not
        redeemable by the Company, so no value was ascribed to these provisions.
        There
        was also no value ascribed to the cumulative dividend feature since the Company
        was unable to pay its dividend from earnings. Accordingly, the fair value
        approximates the redemption value of the Preferred Stock which is calculated
        as
        a common stock equivalent value based upon observable market prices.
 
 ***Warrant
        Considerations***
 
 The
        overall accounting for the Series A and B Preferred Financings required
        consideration regarding the classification of the investor and placement
        agent
        warrants. Warrants are derivative financial instruments that are indexed
        to the
        Company’s own stock and, accordingly, equity classification of the warrants is
        dependent upon meeting eight specific conditions for equity classification
        provided in EITF 00-19 Accounting
        for Derivative Financial Instruments Indexed to, and Potentially Settled
        in, a
        Company’s Own Stock .
        In
        evaluating the warrants under EITF 00-19, we noted that there were no explicit
        conditions that required net cash settlement. However, equity classification
        is
        permissible only in instances where the contract permits us to settle in
        unregistered shares.
 
 ·
              The
                  shares underlying the investor warrants are subject to firm registration
                  rights. That is, we are required to deliver registered shares,
                  and the
                  Registration Rights Agreement does not specify how the warrant
                  contract
                  would be settled in the event that we are unable to deliver registered
                  shares. As a result, net-cash settlement is assumed under the standard.
                  That ultimate assumption requires us to classify the warrants as
                  derivative liabilities at their fair values and account for the
                  warrants
                  at fair value with changes recognized in
                  income.
  F-27
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
 
 ·
              The
                  shares underlying the placement agent warrants are not subject
                  to the
                  registration rights. Accordingly, the placement agent warrants
                  issued with
                  the Series A Preferred Financing were afforded equity classification.
                  On
                  May 21, 2007, however, our ability to share-settle our share-indexed
                  financial instruments was placed out of our control because the
                  number of
                  shares necessary to share-settle the Series A Preferred became
                  indeterminate and we potentially could have insufficient authorized
                  shares
                  to settle all of our share-indexed financial instruments. On that
                  date,
                  the warrants issued with the Series A Preferred required reclassification
                  to liabilities. Subsequently, on May 25, 2007, the placement agent
                  warrants issued with the Series B Preferred Financing did not achieve
                  equity classification for this
                  reason.
  The
        investor warrants were valued using BSM. Significant assumptions underlying
        the
        BSM calculations are as follows:
 
 A-1
              
              A-2
              
              B-1
              
              B-2Financing
                  Inception Dates:Trading
                  market price
              
              $
              3.50
              
              $
              3.50
              
              $
              3.50
              
              $
              3.50Strike
                  or exercise price
              
              $
              1.50
              
              $
              1.00
              
              $
              1.87
              
              $
              3.75Expected
                  term in years
              
              
              5yrs
              
              
              10yrs
              
              
              3yrs
              
              
              5yrsVolatility
              
              
              43.91
              %
              
              51.15
              %
              
              39.86
              %
              
              42.19
              %Risk-free
                  rate
              
              
              4.57
              %
              
              4.57
              %
              
              4.81
              %
              
              4.80
              %Expected
                  dividend rate
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
 
 A-1
              
              A-2
              
              B-1
              
              B-2June
                  30, 2007:Trading
                  market price
              
              $
              3.60
              
              $
              3.60
              
              $
              3.60
              
              $
              3.60Strike
                  or exercise price
              
              $
              1.50
              
              $
              1.00
              
              $
              1.87
              
              $
              3.75Expected
                  term in years
              
              
              4.4yrs
              
              
              9.4yrs
              
              
              2.9yrs
              
              
              4.9yrsVolatility
              
              
              40.26
              %
              
              51.69
              %
              
              36.00
              %
              
              41.30
              %Risk-free
                  rate
              
              
              4.92
              %
              
              5.03
              %
              
              4.89
              %
              
              4.92
              %Expected
                  dividend rate
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
              
              $
              0.00
 
 The
        fair
        value of the warrants issued to placement agents in connection with the Series
        A
        Preferred and Series B Preferred financing transactions amounted to $2,492,312
        and $384,034, respectively; $2,876,346 in the aggregate. The fair values
        were
        calculated using the Black-Scholes-Merton (“BSM”) valuation technique.
        Significant assumptions included award date trading market values of $3.50
        and
        $3.50, volatility percentages of 51.00% and 51.15%, and risk-free rates of
        4.57%
        and 4.86%, respectively. In all instances, the contractual term was used
        for the
        expected term.
  F-28
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
 
 Notes
        to
        BSM: We did not have a historical trading history sufficient to develop an
        internal volatility rate for use in BSM. As a result, we have used a peer
        approach wherein the historical trading volatilities of certain companies
        with
        similar characteristics as ours and who had a sufficient trading history
        were
        used as an estimate of our volatility. In developing this model, no one company
        was weighted more heavily. We do not have a history to develop the expected
        term
        for our warrants. Accordingly, we have used the contractual remaining term
        in
        our calculations. Finally, for purposes of our risk-free rate, we have used
        the
        publicly-available yields on zero-coupon Treasury securities with remaining
        terms to maturity consistent with the remaining contractual term of the
        warrants. These assumptions are estimates of future trends. Actual results
        during the periods that the warrants are outstanding will most likely be
        different.
 
 ***Direct
        Financing Costs:***
 
 Aggregate
        financing costs arising from the Series A and B Preferred financings amounted
        to
        $2,967,313 and $479,034, respectively. As noted in the tables, below, these
        financing costs were allocated among deferred financing costs, paid-in capital
        and retained earnings. The allocation of total financing costs was based
        upon
        the relative fair values of the components of the financing. That is, liability
        classified financial instruments (i.e. derivatives), mezzanine financial
        instruments and equity classified financial instruments (i.e. BCF). Since,
        as
        previously discussed, no basis was ascribed to the redeemable preferred stock,
        the amount of financing costs allocated to this category are reflected as
        a
        charge to retained earnings. As discussed in Note 13, the Series A and B
        Preferred Stock were exchanged for Series C Preferred Stock in October 2007.
        At
        the time of the exchange, the unamortized balance in the deferred finance
        account was included in the carrying value of the Series A and Series B
        Preferred Stock when calculating the excess of the fair value of the Series
        C
        Preferred Stock over the carrying value of the instruments
        exchanged.
 
 The
        following table illustrates the allocation of financing costs associated
        with
        the Series A and Series B Financing Transactions:
 
 Series A
              
              Series B
              
              TotalClassificationDeferred
                  financing costs (asset)
              
              $
              1,898,875
              
              $
              479,034
              
              $
              2,377,909Paid-in
                  capital
              
              
              911,135
              
              
              —
              
              
              911,135Accumulated
                  deficit (deemed dividend)
              
              
              157,303
              
              
              —
              
              
              157,303Cash,
                  liability and equity finance costs
              
              $
              2,967,313
              
              $
              479,034
              
              $
              3,446,347
  F-29
 **OMNIRELIANT
          HOLDINGS, INC. & SUBSIDIARY**
 **(A
          Development Stage Company)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **NOTE
            9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
            REGISTRATION PAYMENT ARRANGEMENTS (continued)**
 ***Derivative
          Financial Instruments***
 
 The
          following table summarizes the components of derivative liabilities as
          of June
          30, 2007:
 
 Warrant
                  DerivativesFinancing
                    Transaction:Series
                    A Convertible Preferred Financing—Investor warrants
                
                $
                (19,299,969
                )Series
                    B Convertible Preferred Financing—Investor warrants
                
                
                (1,703,232
                )Other
                    warrants, reclassified:Series
                    A and B—Placement Agents
                
                
                (2,963,431
                )Consultant
                    warrants
                
                
                (2,732,300
                )$
                (26,698,932
                )Common
                    shares indexed to derivative warrants
                
                
                9,004,000
 
 Embedded
          derivatives that required bifurcation under the Series A Convertible Preferred
          on the inception date (put and redemption features that were not clearly
          and
          closely related to the host contract) were recombined with the host preferred
          stock when, under Statement 150, the preferred stock required liability
          classification. If the preferred stock reacquires equity or mezzanine
          classification, the embedded features in the Series A and Series B Preferred
          Stock would continue to require liability classification. These instruments
          had
          fair values of $599,731 as related to the Series A Preferred and $189,105
          as
          related to the Series B Preferred, as of June 30, 2007.
 
 The
          following table summarizes the components of derivative income (expense)
          arising
          from fair value adjustments during the periods from the financing inception
          dates to June 30, 2007:
 
 Embedded
                  Derivatives
                
                Warrants
                  Derivatives
                
                TotalFinancing
                    Transactions:Series
                    A Financing
                
                
                235,096
                
                
                (2,957,418
                )
                
                (2,722,322
                )Series
                    B Financing
                
                
                —
                
                
                (56,332
                )
                
                (56,332
                )Other
                    warrants, reclassified
                
                
                —
                
                
                (191,160
                )
                
                (191,160
                )Day-one
                    derivative losses
                
                
                (17,186,455
                )
                
                —
                
                
                (17,186,455
                )Total
                    derivative income (expense)
                
                
                (16,951,359
                )
                
                (3,204,910
                )
                
                (20,156,269
                )
  F-30
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
  ***Derivative
        Financial Instruments***
 
 We
        estimate fair values of derivative financial instruments using various
        techniques (and combinations thereof) that are considered to be consistent
        with
        the objective measuring fair values. In selecting the appropriate technique,
        we
        consider, among other factors, the nature of the instrument, the market risks
        that it embodies and the expected means of settlement. For less complex
        derivative instruments, such as free-standing warrants, we generally use
        the
        Black-Scholes-Merton option valuation technique because it embodies all of
        the
        requisite assumptions (including trading volatility, estimated terms and
        risk
        free rates) necessary to fair value these instruments. For forward contracts
        that contingently require net-cash settlement as the principal means of
        settlement, we project and discount future cash flows applying
        probability-weightage to multiple possible outcomes. Estimating fair values
        of
        derivative financial instruments requires the development of significant
        and
        subjective estimates that may, and are likely to, change over the duration
        of
        the instrument with related changes in internal and external market factors.
        In
        addition, option-based techniques are highly volatile and sensitive to changes
        in the trading market price of our common stock, which has a high estimated
        historical volatility. Since derivative financial instruments are initially
        and
        subsequently carried at fair values, our income will reflect the volatility
        in
        these estimate and assumption changes.
 
 ***Registration
        Rights Agreements***
 
 In
        connection with the Series A and B Preferred financings, the Company and
        the
        Investors entered into a registration rights agreement pursuant to which
        the
        Company agreed to file, within 90 days after the closing (the Filing Date),
        a
        registration statement covering the common stock issuable upon conversion
        of the
        Preferred Stock and exercise of the Warrants. If (i) a Registration Statement
        is
        not filed on or prior to its Filing Date (if the Company files a Registration
        Statement without affording the Holders the opportunity to review and comment
        on
        the same as required or (ii) the Company fails to file with the Commission
        a
        request for acceleration in accordance with Rule 461 promulgated under the
        Securities Act, within five Trading Days of the date that the Company is
        notified (orally or in writing, whichever is earlier) by the Commission that
        a
        Registration Statement will not be “reviewed,” or not subject to further review,
        or (iii) prior to its Effectiveness Date, the Company fails to file a
        pre-effective amendment and otherwise respond in writing to comments made
        by the
        Commission in respect of such Registration Statement within 10 calendar days
        after the receipt of comments by or notice from the Commission that such
        amendment is required in order for a Registration Statement to be declared
        effective, or (iv) a Registration Statement filed or required to be filed
        hereunder is not declared effective by the Commission by its “Effectiveness
        Date” (the 150 th calendar
        day following the date the agreement was entered into or the 180 th calendar
        day in the event of a “full review” of the initial Registration Statement by the
        Commission), or (v) after the Effectiveness Date, a Registration Statement
        ceases for any reason to remain continuously effective as to all Registrable
        Securities, for which it is required to be effective, or the Holders are
        otherwise not permitted to utilize the Prospectus therein to resell such
        Registrable Securities for more than 10 consecutive calendar days or more
        than
        an aggregate of 15 calendar days during any 12-month period (which need not
        be
        consecutive calendar days) then, in addition to any other rights the Holders
        may
        have hereunder or under applicable law, on each such Event Date and on each
        monthly anniversary of each such Event Date (if the applicable Event shall
        not
        have been cured by such date) until the applicable Event is cured, the Company
        shall pay to each Holder an amount in cash or shares of Common Stock, or
        combination thereof, as partial liquidated damages and not as a penalty,
        equal
        to 1.5% of the aggregate purchase price paid by such Holder pursuant to the
        Purchase Agreement for any Registrable Securities then held by such Holder
        (calculated as if all convertible securities had been fully converted.)
  F-31
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        9 – REDEEMABLE PREFERRED STOCK, DERIVATIVE FINANCIAL INSTRUMENTS AND
        REGISTRATION PAYMENT ARRANGEMENTS (continued)**
  ***Registration
        Rights Agreements***
 
 The
        parties agree that (1) the Company will not be liable for liquidated damages
        under this Agreement with respect to any Warrants or Warrant Shares, (2)
        in no
        event will the Company be liable for liquidated damages under this Agreement
        in
        excess of 1.5% of the aggregate Subscription Amount of the Holders in any
        30-day
        period and (3) the maximum aggregate liquidated damages payable to a Holder
        under this Agreement shall be 9% of the aggregate Subscription Amount paid
        by
        such Holder pursuant to the Purchase Agreement. The price at which shares
        of
        Common Stock issuable in lieu of cash hereunder shall be equal to the lesser
        of
        (x) [90% of the average of the 5 consecutive VWAPs immediately prior to the
        applicable Event Date, (y) [90% of the average of the 5 consecutive VWAPs
        immediately prior to the date such damages are due or (z) the then applicable
        Conversion Price. Notwithstanding anything herein to the contrary, payment
        in
        shares of Common Stock may only occur if during the period from the applicable
        Event Date until such issuance is made in full all of the Equity Conditions
        (as
        defined above-“ *Convertible
        Preferred Stock Rights and Preferences”* )
        have
        been met and the Company shall have given the Holder written irrevocable
        notice
        within 2 Trading Days of the Event Date. Subject to the terms and conditions
        described above, the decision whether to pay partial liquidated damages in
        shares of Common Stock or cash shall be at the discretion of the Company.
        Subject to the aforementioned conditions, failure to timely provide such
        written
        notice shall be deemed an election by the Company to pay the partial liquidated
        damages on such Event Date in cash. Except as otherwise provided, if at any
        time
        the Company pays partial liquidated damages partially in cash and partially
        in
        shares of Common Stock, then such payment shall be distributed ratably among
        the
        Holders based upon the subscription amount paid by each Holder. If the Company
        fails to pay any partial liquidated damages in full within seven days after
        the
        date payable, the Company will pay interest thereon at a rate of 18% per
        annum
        (or such lesser maximum amount that is permitted to be paid by applicable
        law)
        to the Holder, accruing daily from the date such partial liquidated damages
        are
        due until such amounts, plus all such interest thereon, are paid in full.
        The
        partial liquidated damages pursuant to the terms hereof shall apply on a
        daily
        pro-rata basis for any portion of a month prior to the cure of an
        Event.
 
 As
        of
        June 30, 2007 we accrued $232,943 and $-0- for liquidated damages associated
        with the Series A and B Preferred Stock, respectively, representing our best
        estimate of registration related payments that we will be required to make
        to
        the investors under the registration rights agreement.
 
 **NOTE
        10 - INCOME TAXES**
  The
        income tax provision (benefit) consists of the following:
 
 **Income
        Taxes:**
 
 The
        components of the provision for income taxes are as follows:
 
 **2007**Current
                  taxes
              
              $
              —Deferred
                  taxes
              
              
              —Provision
                  for income taxes
              
              $
              —
  F-32
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        10 - INCOME TAXES**
 
 The
        items
        accounting for the difference between income taxes computed at the federal
        statutory rate and the provision for income taxes are as follows:
 
 **Rate**Income
                  tax at federal statutory rate
              
              
              (34.00)
              %State
                  tax, net of federal effect
              
              
              (3.96)
              %Non-deductible
                  expenses, principally valuation adjustments on financial
                  instruments
              
              
              31.66
              %Valuation
                  Allowance
              
              
              6.30
              %Effective
                  rate
              
              
              0.00
              %
  Deferred
        income taxes reflect the net tax effects of temporary differences between
        the
        carrying amount of assets and liabilities for financial reporting purposes
        and
        the amounts used for income tax purposes. Significant components of the
        Company's net deferred income taxes are as follows:
  **June
                  30, 2007**Deferred
                  tax assets (liabilities):Net
                  operating loss carry forward
              
              $
              1,336,571Amortization
                  of intangible assets over lives different for income tax
                  purposes
              
              
              96,822Amortization
                  of finance costs associated with equity-indexed financial
                  instruments
              
              
              87,125Valuation
                  allowance
              
              
              (1,520,518
              )$
              —
 
 As
        of
        June 30, 2007, the Company has an estimated net tax operating loss of
        ($3,521,000) that is available to offset future taxable income if any in
        future
        periods, subject to expiration and other limitations imposed by the Internal
        Revenue Service, if any.
 
 **NOTE
        11 - RELATED PARTY TRANSACTIONS**
 
 ***Consulting
        Agreement*** *-* On
        October 1, 2006 the Company entered into a six (6) month consulting agreement
        with Harrington Business Development, LLC (“HBD”). The shareholders of HBD are
        also shareholders of the Company. The Company has recognized expense related
        to
        this agreement in the amount of $135,000 for the year ended June 30, 2007.
        See
“ *Consulting
        Agreement* ”
above
        for further details.
 
 ***Licensing
        Agreement*** *-* On
        October 13, 2006, the Company entered into a licensing agreement with a
        shareholder of the Company. On November 22, 2006 the Company made a payment
        of
        $850,000 pursuant to the agreement. On January 10, 2007, pursuant to the
        agreement, the Company paid the remaining balance due of $150,000. The Company
        has recognized expense related to this agreement in the amount of $600,903
        for
        the year ended June 30, 2007. See *“Licensing
        agreement”* above
        for further details.
  ***Assignment
        of Contract -*** On
        November 10, 2006 the Company entered into an agreement with Reliant
        International Media, LLC (“RIM”). The members of RIM are also shareholders of
        the Company. See “ *Assignment
        of Contract* ”
above
        for further details.
  F-33
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        11 - RELATED PARTY TRANSACTIONS**
 
 ***Preferred
        Stock Purchase Agreement-*** Midtown
        Partner & Co. LLC, served as the Company's placement agent in
        connection with the Series A and B Preferred Stock Purchase Agreements. Midtown
        Partners & Co. LLC received an aggregate placement agent fee related to
        Series A Preferred Stock Purchase agreement of approximately $300,000, as
        well
        as the following common stock purchase warrants: (a) series BD-1 common stock
        purchase warrants entitling Midtown Partners to purchase 300,000 shares of
        the
        Company's common stock at an exercise price of one dollar ($1.00) per share,
        (b)
        series BD-2 common stock purchase warrants entitling Midtown Partners to
        purchase 300,000 shares of the Company's common stock at an exercise price
        of
        one dollar and fifty cents ($1.50) per share, and (c) series BD-3 common
        stock
        purchase warrants entitling Midtown Partners to purchase 300,000 shares of
        the
        Company's common stock at an exercise price of three dollars ($3.00) per
        share.
        The BD-1 Series, BD-2 Series, and BD-3 Series warrants have a term of ten
        years.
 
 In
        addition, Midtown Partner & Co. LLC received an aggregate placement
        agent related to the Series B Preferred Stock Purchase agreement of
        approximately $60,000, as well as the following common stock purchase warrants:
        (a) series BD-4 common stock purchase warrants entitling Midtown Partners
        to
        purchase 48,000 shares of the Company's common stock at an exercise price
        of one
        dollar and eighty-seven cents ($1.87) per share, and (b) series BD-5 common
        stock purchase warrants entitling Midtown Partners to purchase 48,000 shares
        of
        the Company's common stock at an exercise price of three dollars and
        seventy-five cents ($3.75) per share and (c) series BD-6 common stock purchase
        warrants entitling Midtown Partners to purchase 48,000 shares of the Company's
        common stock at an exercise price of one dollar and twenty five cents ($1.25)
        per share. The BD-4 Series, BD-5 Series, and BD-6 Series warrants have a
        term of
        ten years. The member’s of Midtown Partners & Co. LLC are also
        shareholders of the Company. See “ *Preferred
        Stock Purchase Agreement”* above
        for further details.
 
 ***Preferred
        Stock Purchase Agreement -*** ** Pursuant
        to a verbal agreement, Apogee Financial Investments, Inc., a merchant bank,
        received a cash fee of $125,000 for consulting and due diligence services
        rendered in connection with the Preferred Stock Purchase Agreement, Exchange
        Agreement and the Common Stock Purchase Agreement. Apogee Financial Investments,
        Inc. is owned by shareholders of the Company. See “ *Preferred
        Stock Purchase Agreement”* above
        for further details.
 
 ***Consulting
        Agreement*** *-* On
        December 8, 2006 the Company entered into a verbal agreement with TotalCFO,
        LLC.
        TotalCFO, LLC is owned by a shareholder of the Company. The Company has
        recognized $45,310 of expense related to this agreement for the year ended
        June
        30, 2007.
 
 ***International
        Distribution Agreement -*** On March
        19, 2007, the Company entered into an International Distribution Agreement
        with
        Reliant International Media LLC. The shareholders of Reliant International
        Media, LLC are also shareholders of the Company. See “ *International
        Distribution Agreement* ”
above
        for further details.
 
 **NOTE
        12 — RESTATEMENTS**
  The
        accompanying financial statements have been restated to give effect to the
        following:
 
 ·
              The
                  amortization expense associated with intangible assets was revised
                  to
                  provide for amortization over the contractual terms of the assets
                  and an
                  intangible asset was included which had been omitted in the original
                  filing.
  ·
              The
                  Series A and Series B Preferred Stock and related warrants were
                  restated
                  to reflect the accounting required under Statements 133 and 150
                  and other
                  related pronouncements and standards. The financial instruments
                  associated
                  with the financings were revalued using reasonable techniques and
                  correct
                  assumptions.
  In
        addition to the above restatements, certain reclassifications and expanded
        details have been provided in the restated financial
        statements.
  F-34
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        12 – RESTATEMENTS (Continued)**
 
 The
        following table illustrates the effects of the restatements on our balance
        sheet
        as of June 30, 2007 and our statement of operations for the period August
        21,
        2006 (inception) to June 30, 2007, each as originally filed and as
        restated.
 As Originally
                  Filed
                
                Adjustments
                
                As
                    Restated**Balance
                    sheet:**Current
                    assets
                
                $
                866,107
                
                
                —
                
                $
                866,107License
                
                
                581,357
                
                
                365,186
                a
                
                946,543Patents
                
                
                745,000
                
                
                —
                
                
                745,000Deferred
                    financing costs
                
                
                —
                
                
                2,148,389
                b
                
                2,148,389Total
                    assets
                
                $
                2,192,464
                
                
                2,513,575
                
                $
                4,706,039Accounts
                    payable and accrued expenses
                
                $
                24,735
                
                
                (1
                )
                $
                24,734Dividends
                    and penalties
                
                
                427,411
                
                
                —
                
                
                427,411Derivative
                    liabilities
                
                
                —
                
                
                26,698,932
                c
                
                26,698,932Redeemable
                    preferred stock
                
                
                23,757,499
                
                
                (17,777,499
                )d
                
                5,980,000Total
                    liabilities
                
                
                24,209,645
                
                
                8,921,432
                
                
                33,131,077Common
                    stock
                
                
                140
                
                
                —
                
                
                140Additional
                    paid in capital
                
                
                2,283,480
                
                
                (2,283,480
                )e
                
                —Stockholders’
                    deficit
                
                
                (24,300,803
                )
                
                (4,124,375
                )f
                
                (28,425,178
                )Total
                    stockholders’ deficit
                
                
                (22,017,183
                )
                
                (6,407,855
                )
                
                (28,425,038
                )Liabilities
                    and stockholders’ deficit
                
                $
                2,192,462
                
                
                2,513,577
                
                $
                4,706,039
  As Originally
                  Filed
                
                Adjustments
                
                As
                    Restated**Statement
                    of operations:**Revenues
                
                $
                2,640
                
                
                —
                
                $
                2,640Costs
                    and expenses
                
                
                3,913,001
                
                
                (365,189
                )a
                
                3,547,812Other
                    expenses:Derivative
                    fair value adjustments
                
                
                —
                
                
                (20,156,269
                )c
                
                (20,156,269
                )Preferred
                    fair value adjustments
                
                
                (20,157,499
                )
                
                20,157,499
                d
                
                —Interest
                    expense
                
                
                —
                
                
                (229,519
                )b
                
                (229,519
                )Registration
                    payments
                
                
                (232,943
                )
                
                —
                
                
                (232,943
                )Total
                    other expenses
                
                
                (20,390,442
                )
                
                (228,289
                )
                
                (20,618,731
                )Net
                    loss
                
                $
                (24,300,803
                )
                
                136,900
                
                $
                (24,163,903
                )Loss
                    applicable to common shareholders:Net
                    income (loss)
                
                $
                (24,300,803
                )
                
                136,900
                
                $
                (24,163,903
                )Accretion
                    of preferred
                
                
                (3,600,000
                )
                
                600,000
                
                
                (3,000,000
                )Preferred
                    stock dividends
                
                
                (194,468
                )
                
                —
                
                
                (194,468
                )Loss
                    applicable to common shareholders
                
                $
                (28,095,271
                )
                
                736,900
                
                $
                (27,358,371
                )Loss
                    per common share:Basic
                
                $
                (2.64
                )
                
                0.07
                
                $
                (2.57
                )Diluted
                
                $
                (2.64
                )
                
                0.07
                
                $
                (2.57
                )
  F-35
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        12 – RESTATEMENTS (Continued)**
 
 Notes
        to
        the tables:
 
 a.
              Amortization
                  expense on the intangible assets was corrected from $777,154 to
                  $411,966
                  due to amortization expense related to a licensing fee for Kathy
                  Hilton
                  which had been omitted from the original amortization and a correction
                  of
                  the remaining estimated life of the Licensing Agreements from 15
                  months to
                  20 months due to an amendment of the terms of the agreement. See
                  Note 6
                  for additional information related to this amendment. The correction
                  of
                  estimated lives of these assets and additional amortization related
                  to the
                  Kathy Hilton licensing fee gave rise to a debit to licenses and
                  a credit
                  to amortization expense in the amount of
                  $365,189.
 b.
              Our
                  previously filed financial statements did not give effect to finance
                  charges. Finance costs arise from the Series A and Series B Preferred
                  Financing Transactions. As more fully disclosed in Note 9, the
                  financing
                  costs were allocated to deferred assets, mezzanine and stockholders’
                  equity based upon the relative fair values of the related financial
                  instruments. Total financing costs allocated to deferred finance
                  costs
                  amounted to $2,377,909. Amortization of the deferred financing
                  costs was
                  recorded as a debit to interest expense and a credit to deferred
                  financing
                  costs of $229,519.
 c.
              Our
                  previously filed financial statements did not separately disclose
                  our
                  derivative financial instruments. Derivative financial instruments
                  represent derivative warrants that are carried at fair value. See
                  Note 9
                  for a summarization of the components of the derivative liability
                  account.
                  Changes in the fair value of derivative liabilities are reflected
                  in our
                  income. The following table summarizes the components of derivative
                  income
                  (expense) arising from fair value adjustments during the periods
                  from the
                  financing inception dates to June 30,
                  2007:
 
 **Financing Transactions**
              
              **Embedded Derivatives**
              
              **Warrant Derivatives**
              
              **Total**Series
                  A Financing
              
              $
              235,096
              
              $
              (2,957,418
              )
              $
              (2,722,322
              )Series
                  B Financing
              
              
              —
              
              
              (56,332
              )
              
              (56,332
              )Other
                  Warrants Reclassified
              
              
              —
              
              
              (191,160
              )
              
              (191,160
              )Day-one
                  derivative loss
              
              
              (17,186,455
              )
              
              —
              
              
              (17,186,455
              )Total
                  derivative income (expense)
              
              $
              (16,951,359
              )
              $
              (3,204,910
              )
              $
              (20,156,269
              )
  F-36
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        12 – RESTATEMENTS (Continued)**
 
 c.
        Continued -The
        following table summarizes the components of derivative liabilities as of
        June
        30, 2007:
 
 **Financing
                  Transactions**
              
              **Derivative Liabilities**Series
                  A Financing – Investor Warrants
              
              $
              (19,299,969
              )Series
                  B Financing – Investor Warrants
              
              
              (1,703,232
              )Series
                  A and B Warrants reclassified to liabilities
              
              
              (2,963,431
              )Consultant
                  Warrants
              
              
              (2,732,300
              )Total
                  Derivative Liabilities
              
              $
              (26,698,932
              )
 
 d.
              Our
                  previous financial statements combined our derivative warrants
                  with the
                  redeemable preferred stock. In addition, the values of the warrants
                  and
                  the redeemable preferred stock required revision. This entry gives
                  effect
                  to the reclassification of derivatives to their proper classification
                  and
                  the revaluation using proper assumptions and techniques. See the
                  table in
                  Note 9 which represents the activity in the Redeemable Preferred
                  Stock
                  account related to the $5,980,000 balance at June 30,
                  2007.
 
 e.
              The
                  entry to correct additional paid in capital included the following
                  amounts:
  To
                  reverse incorrect entry to record deferred finance costs
              
              $
              570,000To
                  properly record finance costs allocated to Additional paid in
                  capital
              
              
              2,754,687Entry
                  to record the difference between the fair value of the FAS150 liability
                  and the carrying value of the Series A Redeemable Preferred upon
                  event of
                  default
              
              
              (1,600,270
              )To
                  reclass warrants from equity to a liability upon tainting
                  event
              
              
              (5,111,870
              )To
                  reclass amounts charged to additional paid in capital which are
                  above the
                  amounts available in that category
              
              
              909,504To
                  reclass dividends on preferred stock from additional paid in capital
                  to
                  Accumulated deficit
              
              
              194,467Net
                  effect of restatement entries for additional paid in
                  capital
              
              $
              (
                  2,283,480
              )
 
 f.
              The
                  entry to correct the accumulated deficit included the following
                  amounts:
 
 To
                  reverse incorrect entry for fair value adjustments on preferred
                  stock and
                  other impact on net loss due to the restatement entries
              
              $
              (967,074
              )Entry
                  to record finance costs allocated to accumulated deficit
              
              
              (157,302
              )Entry
                  to record the accretion of the Series A Preferred Stock
              
              
              (3,000,000
              )Net
                  effect of restatement entries for accumulated deficit
              
              $
              (
                  4,124,376
              )
  F-37
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        13 - SUBSEQUENT EVENTS**
  *Sale
          and Exchange of Series C Preferred Stock:*
 
 On
          October 18, 2007, we sold 6,400,000 Series C Preferred shares plus two
          tranches
          of warrants. We also issued warrants to placement agents. On October 18,
          2007,
          we also exchanged all outstanding Series A Preferred and Series B Preferred
          for
          3,909,564 shares of Series C Preferred and two tranches of warrants. The
          following table illustrates details of the sales of these financial
          instruments:
 
 Series C
                  Financing
                
                Series C
                  Exchange
                
                TotalGross proceeds
                
                $
                6,400,000
                
                $
                —
                
                $
                6,400,000Financing
                    costs paid in cash
                
                
                (340,000
                )
                
                —
                
                
                (340,000
                )Net
                    proceeds
                
                $
                6,060,000
                
                $
                —
                
                $
                6,060,000Common
                    shares indexed to financial instruments:Series
                    C Preferred
                
                
                8,533,333
                
                
                5,212,752
                
                
                13,746,085Investor
                    warrants:Tranche
                    C-1
                
                
                8,533,334
                
                
                5,212,752
                
                
                13,746,086Tranche
                    C-2
                
                
                8,533,334
                
                
                5,212,752
                
                
                13,746,086Placement
                    agent warrants
                
                
                2,559,999
                
                
                —
                
                
                2,559,99928,160,000
                
                
                15,638,256
                
                
                43,798,256
 
 Apogee
          Financial Investments, Inc., a company owned by certain of our stockholders,
          and
          Midtown Partners & Company LLC, a related company, received cash fees of
          $340,000 for consulting and due diligence services rendered in connection
          with
          the transactions, which amount is included in the financing costs paid
          in cash
          in the table above.
 
 The
          following table illustrates the terms of the warrants issued in connection
          with
          the Series C Preferred Financings:
 
 Warrant
                    terms:
                
                Strike Price
                
                TermTranche
                    C-1
                
                $
                1.50
                
                
                5
                    yearsTranche
                    C-2
                
                $
                2.00
                
                
                10
                    yearsPlacement
                    agents
                
                $
                0.75-$2.00
                
                
                10
                    years
  F-38
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        13 - SUBSEQUENT EVENTS (Continued)**
 
 The
        following tables illustrate how the net proceeds arising from each of the
        Series
        C Preferred Financing and Exchange was allocated on the inception
        dates:
 
 Series C
                Financing
              
              Series C
                Exchange
              
              TotalRedeemable
                  preferred stock (mezzanine)
              
              $
              —
              
              $
              (13,553,155
              )
              $
              (13,553,155
              )Beneficial
                  conversion feature (paid-in capital)
              
              
              (2,766,833
              )
              
              —
              
              
              (2,766,833
              )Derivative
                  put liability
              
              
              (399,150
              )
              
              —
              
              
              (399,150
              )Sub-total
                  redeemable preferred
              
              
              (3,165,983
              )
              
              (13,553,155
              )
              
              (16,719,138
              )Paid-in
                  capital (investor warrants)
              
              
              (3,633,167
              )
              
              (17,796,834
              )
              
              (21,430,001
              )Loss
                  on extinguishment of redeemable preferred stock
              
              
              —
              
              
              26,247,006
              
              
              26,247,006Day-one
                  derivative loss
              
              
              399,150
              
              
              —
              
              
              399,150Loss
                  on extinguishment of other liabilities
              
              
              —
              
              
              271,109
              
              
              271,109Gross
                  proceeds (financing) basis (exchange)
              
              $
              (6,400,000
              )
              $
              (4,831,874
              )
              $
              (11,231,874
              )Deferred
                  financing costs (asset)
              
              $
              43,079
              
              $
              —
              
              $
              43,079Paid-in
                  capital
              
              
              4,998,925
              
              
              —
              
              
              4,998,925Redeemable
                  preferred stock
              
              
              496,793
              
              
              —
              
              
              496,793Cash
                  and equity finance costs
              
              $
              5,538,797
              
              $
              —
              
              $
              5,538,797
 
 The
        Exchange of Series A and B Preferred for Series C Preferred and related
        warrants, was accounted for as the settlement of the former financial
        instruments resulting in (i) an extinguishment loss, to the extent that the
        fair
        value of the Series C Preferred exceeded the carrying values of the Series
        A and
        B Preferred (included in liabilities). The following table illustrates the
        calculations related to the Exchange.
 
 Fair
                  value of Series C Preferred
              
              $
              13,553,155Fair
                  value of Series C investor warrants
              
              
              17,796,834Total Fair
                  value
              
              
              31,349,989Carrying
                  values of financial instruments exchanged:Series
                  A Preferred
              
              
              (5,200,000
              )Series
                  B Preferred
              
              
              (780,000
              )Accrued
                  dividends
              
              
              (309,564
              )Accrued
                  damages
              
              
              (542,080
              )Unamortized
                  finance costs
              
              
              1,999,771Total
                  carrying values
              
              
              (4,831,873
              )Excess
                  of fair values over carrying values
              
              $
              26,518,116Allocation
                  of excess:Extinguishment
                  of redeemable preferred
              
              $
              26,247,007Extinguishment
                  of other liabilities
              
              
              271,109Excess
                  of fair values over carrying values
              
              $
              26,518,116
  F-39
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        13 - SUBSEQUENT EVENTS (Continued)**
 
 Warrants
        were repriced to $0.75 in connection with the Series C Convertible Preferred
        and
        Warrant Financing Transaction on October 19, 2007. The repricing gave rise
        to an
        approximate $3.2 million derivative expense.
 
 The
        Series C Preferred Financing and Exchange transactions are to be reported
        in our
        amended quarterly report on Form 10QSB/A for the quarterly period ended December
        31, 2007.
 
 *Transactions
        with ReponzeTV:*
 
 Sublicense
        Agreement:
 
 On
        October 19, 2007, we entered into a sublicense arrangement with ResponzeTV
        PLC
        providing for restricted rights to use the Kathy Hilton Trademark, as provided
        in our Principal License Agreement with KHL Holdings, Inc., without territorial
        restriction. The only restriction is as to fragrance related products. The
        arrangement was structured to allow for the tax free transfer of the sublicense,
        as follows:
 
 ·
              We
                  created a wholly-owned subsidiary named KHL Holdings, Inc. with
                  minimal
                  capitalization on October 12, 2007. The subsidiary had no operations,
                  nor
                  was there any operations transferred to the subsidiary.
 ·
              Also
                  on October 12, 2007, we executed a formal sublicense agreement
                  with the
                  newly formed for the use of the licensed trademark, which agreement
                  required and received the formal acknowledgement of Kathy Hilton.
 ·
              On
                  October 19, 2007 all outstanding common stock KHL Holdings, Inc.
                  was
                  exchanged for 10,000,000 shares of ResponzeTV common stock, which
                  had a
                  value of $6,538,240 based upon ResponzeTV’s trading market
                  price.
 ·
              On
                  October 19, 2007, in order to convey the rights to the sublicense
                  agreement we executed a formal assignment agreement providing for
                  the
                  assignment of KHL Holdings, Inc. rights in the sublicense agreement
                  to
                  ResponzeTV.The
                  assignment was necessary due to the non-assignable right clause
                  with
                  unrelated parties contained in the original license agreement.
  The
        sublicense agreement provides for Minimum Annual Guaranteed Payments that
        coincide with the Principal License Agreement (although in lower amounts
        in
        recognition of the restriction as to product types) and royalty payments
        in
        amounts consistent with the Principal License Agreement.
 
 The
        substance of the above series of transactions is that of a sublicense
        arrangement between us and ResponzeTV; that is, a revenue arrangement. Our
        accounting for the activity arising from this arrangement, which will commence
        in the second fiscal quarter of our year ending June 30, 2008, provides for
        recognition of deferred revenue to the extent of the consideration received
        for
        the sublicense, which amounts will be recognized in our earnings when amounts
        are earned.
 
 Investment
        in ResponzeTV:
 
 On
        October 19, 2007, we purchased 8,500,000 shares of ResponzeTV common stock
        (valued at $5,557,504 based upon the trading market price of $0.653824, as
        translated to US$) and warrants to purchase ResponzeTV common stock at prices
        between $0.75 and $2.04 for $5,100,000. The common shares purchased are freely
        trading in the United Kingdom; the warrants are not traded. We issued 500,000
        of
        the purchased shares to brokers.
 
 Upon
        the
        completion of the aforementioned sublicense agreement, the purchase and the
        issuance of shares to the brokers, we owned 16.78% of ResponzeTV’s outstanding
        common stock. In addition, two of our directors hold in aggregate 18,160,735
        shares and retain two of the six seats on the board of directors of ResponzeTV.
        The shares held by the directors represented 16.48% of the 110,154,638 shares
        outstanding in ResponzeTV after the transaction.
  F-40
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        13 - SUBSEQUENT EVENTS (Continued)**
 
 Investment
        in ResponzeTV (continued):
 
 Our
        voting control coupled with our representation on ResponzeTV’s board of
        directors indicates that we have substantial influence with respect to
        ResponzeTV. As a result, the Company is accounting for the investment under
        the
        equity method of accounting in accordance with Accounting Principles Board
        Opinion No.18, “The Equity Method for Accounting for Investments in Common
        Stock” (APB 18).
 
 We
        are
        currently gathering the information necessary to commence accounting for
        ResponzeTV under the Equity Method of Accounting upon our investment in the
        second fiscal quarter of our year ending June 30, 2008.
 
 Following
        a review of the financial reporting systems, certain accounting discrepancies
        have emerged within the Company's US operations Reliant International Media.
        The
        board is currently investigating these discrepancies however there can be
        no
        guarantee, at this stage, that the Company will be able to continue trading
        following clarification of its financial position.
 
 It
        is
        unlikely that the Company will be able to publish its audited results for
        the
        year ended 31 December 2007 by 30 June 2008 as it’s required under the AIM
        Rules. A further announcement will be made in this regard in due course.
 
 The
        Board
        of Directors is discussing the Company's financial position with its accountants
        and funders.
 
 Accordingly,
        The Company believes that the future filings will reflect an impairment change
        as a result of the delisting.
 
 *Other
        events:*
 
 On
        January 23, 2008, Christopher Phillips resigned as interim chief executive
        officer and chief financial officer of OmniReliant Holdings, Inc. (the
“Company”), effective January 24, 2008. There was no disagreement or dispute
        between Mr. Phillips and the Company which led to his resignation.
 
 On
        January 24, 2008, our Board of Directors appointed Paul Morrison as chief
        executive officer and director of the Company. There is no understanding
        or
        arrangement between Mr. Morrison and any other person pursuant to which Mr.
        Morrison was selected as an executive officer and director. Mr. Morrison
        presently does not serve on any committee of our Board of Directors. Mr.
        Morrison may be appointed to serve as a member of a committee although there
        are
        no current plans to appoint him to a committee as of the date hereof. Mr.
        Morrison does not have any family relationship with any director, executive
        officer or person nominated or chosen by us to become a director or an executive
        officer. Mr. Morrison has served as the Company’s President and Chief Operating
        Officer since November 22, 2006.
 
 On
        January 24, 2008, the Company formally acquired the rights to a unique patented
        topical pharmaceutical product capable of delivering salicylic acid in a
        non-stick clear solid composition to treat acne. Omni Reliant will use the
        patented product to compliment the company’s patent pending warming foam acne
        treatment product.
 
 On
        April
        30, 2008, the Company entered into securities purchase agreement (the “Purchase
        Agreement”) with Vicis Capital Master Fund (“Vicis”) pursuant to which Vicis
        purchased 7,000,000 shares of our series
        D
        convertible preferred
        stock (“Series
        D Preferred Stock”), respectively for an aggregate purchase price of $7,000,000.
        The Series D Preferred Stock has a conversion price of $0.50 and is convertible
        into an aggregate amount of 14,000,000 shares of common stock. The Series
        D
        Preferred stock does not pay annual dividends but each holder of Series D
        Preferred Stock shall have the right to such number of votes equal to the
        number
        of shares of common stock that the Series D Preferred Stock shall be converted
        into, subject to the beneficial ownership limitation described below.
  F-41
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        13 - SUBSEQUENT EVENTS (Continued)**
 
 In
        connection with the Agreement, Vicis received a series D warrant to purchase
        28,000,000 shares of common stock of the Company (“Series D Warrants”). The
        Series D Warrants is exercisable for a period of seven years from the date
        of
        issuance at an initial exercise price of $0.75. Vicis may exercise the Series
        D
        Warrants on a cashless basis if the shares of common stock underlying the
        Series
        D Warrants are not then registered pursuant to an effective registration
        statement. In the event Vicis exercises the Series D Warrants on a cashless
        basis, then we will not receive any proceeds.
 
 The
        conversion price of the Series D Preferred Stock and the exercise price of
        the
        Series D Warrants are subject to full ratchet and anti-dilution adjustment
        for
        subsequent lower price issuances by the Company, as well as customary
        adjustments provisions for stock splits, stock dividends, recapitalizations
        and
        the like. Additionally, outstanding warrants issued in connection with previous
        financings and adjusted to full ratchet anti-dilution protection required
        adjustments to exercise prices as a result of the Series D financing
        transaction.
  In
        addition, the Company, Vicis and Dynamic Decisions Strategic Opportunities
        (“Dynamic Decisions”) have entered into Amendment No. 1 to its amended and
        restated registration rights agreement (“Amended Registration Rights Agreement”)
        pursuant to which if at any time after the date of the Amended Registration
        Rights Agreement the Company shall decide to prepare and file with the
        Commission a registration statement relating to an offering for its own account
        or the account of others under the Securities Act of any of its equity
        securities, other than on Form S-4 or Form S-8 (each as promulgated under
        the
        Securities Act) or their then equivalents relating to equity securities to
        be
        issued solely in connection with any acquisition of any entity or business
        or
        equity securities issuable in connection with the stock option or other employee
        benefit plans, then the Company shall send to each holder a written notice
        of
        such determination and, if within fifteen days after the date of such notice,
        any such holder shall so request in writing, the Company shall include in
        such
        registration statement, all or any part of such Registrable Securities (as
        defined in Amended Registration Rights Agreement) such holders request to
        be
        registered.
 
 Vicis
        has
        contractually agreed to restrict their ability to convert the Series D Preferred
        Stock and exercise the Series D Warrants and receive shares of our common
        stock
        such that the number of shares of the Company common stock held by them and
        their affiliates after such conversion or exercise does not exceed 4.99%
        of the
        Company’s then issued and outstanding shares of common stock.
 
 At
        any
        time before the one year anniversary of the date the Company initially issues
        the shares of Series D Preferred Stock, the Company may, upon written notice,
        redeem the outstanding shares of Series D Preferred Stock in cash at a price
        equal to 110% of Stated Value (as such term is defined in the Certificate
        of
        Designations).
 
 Midtown
        Partners & Co., LLC, which served as the Company’s placement agent in
        connection with the Purchase Agreement (“Midtown”), received aggregate placement
        agent fees of approximately $350,000, as well as the following common stock
        purchase warrants: (a) a series BD-10 warrant entitling Midtown Partners
        to
        purchase 700,000 shares of the Company's common stock at an exercise price
        of
        fifty cents ($0.50) per share, and (b) a series BD-11 warrant entitling Midtown
        Partners to purchase 1,400,000 shares of the Company's common stock at an
        exercise price of seventy-five cents ($0.75) per share. The Series BD-10
        and
        BD-11 warrants have a term of five years from the date of issuance. Midtown
        Partners & Co., LLC is a FINRA registered broker-dealer. Pursuant to the
        terms of a Registration Rights Agreement by and between the Company and Midtown,
        pursuant to which if at any time after the date of the Registration Rights
        Agreement the Company shall decide to prepare and file with the Commission
        a
        registration statement relating to an offering for its own account or the
        account of others under the Securities Act of any of its equity securities,
        other than on Form S-4 or Form S-8 (each as promulgated under the Securities
        Act) or their then equivalents relating to equity securities to be issued
        solely
        in connection with any acquisition of any entity or business or equity
        securities issuable in connection with the stock option or other employee
        benefit plans, then the Company shall send to each holder a written notice
        of
        such determination and, if within fifteen days after the date of such notice,
        any such holder shall so request in writing, the
        Company
        shall include in such registration statement, all or any part of such
        Registrable Securities (as defined in Registration Rights Agreement) such
        holders request to be registered.
  F-42
  **OMNIRELIANT
        HOLDINGS, INC. & SUBSIDIARY**
 **(A
        Development Stage Company)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 **NOTE
        13 - SUBSEQUENT EVENTS (Continued)**
 
 The
        Series D Preferred Stock is convertible into shares of stock at a conversion
        price of $.50.  Any previously issued and outstanding financial instruments
        afforded full ratchet protection with a conversion price greater than $.50
        will
        automatically have their conversion price ratcheted down to the lower conversion
        price.
 
 On
        May 7,
        2008, the Company entered into loan agreement (the “Purchase Agreement”) with
        ResponzeTV, PLC, a corporation incorporated under the laws of England and
        Wales
        (“RETV”) pursuant to which the Company purchased a 10% Promissory Note from RETV
        for an aggregate purchase price of $2,000,000 (the “Note”). The Note bears
        interest at 10% per annum and matures on June 21, 2008, forty-five days from
        the
        date of issuance (the “Maturity Date”).
  On
        the
        Maturity Date, the Company, at its sole discretion, may either (i) apply
        the
        principal amount of the Note, and any interest accrued thereon, towards the
        purchase price of a strategic transaction entered into with the RETV for
        the
        acquisition of the capital stock and/or assets of any of RETV’s subsidiaries
        and/or divisions (the “Strategic Transaction”) or (ii) convert the principal
        amount of the Note, and any interest accrued thereon, into (x) the Specified
        Number of New RETV Shares at a price of 25.75p per share plus (y) New RETV
        Warrants (the “New RETV Securities”). If the Company does not make any such
        express election, the Company will be deemed to have elected to convert the
        principal amount of the Note, and any accrued interest thereon, on the Maturity
        Date, in accordance with (ii) above. If the Company converts the Note in
        accordance with the provisions set forth above, the Company will hereby forgive
        RETV of its obligation to repay the principal amount of the Note and any
        interest accrued
        but unpaid thereunder and the Note shall become null and void as of the Maturity
        Date.
 
 For
        purposes of the New RETV Securities, “New RETV Shares” means new ordinary shares
        of 16p par value in the capital of RETV, credited as fully paid up, “New RETV
        Warrants” means new unlisted warrants to subscribe for New RETV Shares which
        will be issued and granted to the Company pursuant to a warrant instrument
        in
        substantially the same form as the warrant instrument granted to the Company
        in
        October 2007, in the following manner: (x) warrants equal to the Specified
        Number, which shall be exercisable at 37p; (y) warrants equal to 50% of the
        Specified Number, which shall be exercisable at 50p; and (z) warrants equal
        to
        50% of the Specified Number, which shall be exercisable at 100p. For purposes
        of
        this Section, “Specified Number” means the principal amount of the Note, and any
        interest accrued thereon, in Pounds Sterling (calculated at an agreed exchange
        rate of £1:US$1.98) divided by 25.75p (being the agreed price for each New RETV
        Share).
 
 Following
        a review of the financial reporting systems, certain accounting discrepancies
        have emerged within the Company's US operations Reliant International Media.
        The
        board is currently investigating these discrepancies however there can be
        no
        guarantee, at this stage, that the Company will be able to continue trading
        following clarification of its financial position.
 
 It
        is
        unlikely that the Company will be able to publish its audited results for
        the
        year ended 31 December 2007 by 30 June 2008 as it’s required under the AIM
        Rules. A further announcement will be made in this regard in due course.
 
 The
        Board
        of Directors is discussing the Company's financial position with its accountants
        and funders.
 
 Accordingly,
        The Company believes that the future filings will reflect an impairment change
        as a result of the delisting.
  F-43
  **ITEM
        8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE**





On
      December 15, 2006, the Registrant notified Williams & Webster, P.S.
      ("Williams & Webster") that it was dismissing Williams & Webster as its
      certifying accountant, effective immediately. The decision to dismiss the
      accountants was recommended and approved by the Registrant's Board of
      Directors.





During
      the two fiscal years ended June 30, 2006 and 2005, and any subsequent period
      through December 15, 2006, (i) there were no disagreements between Registrant
      and Williams & Webster on any matter of accounting principles or practices,
      financial statement disclosure or auditing scope or procedure which, if not
      resolved to the satisfaction of Williams & Webster would have caused
      Williams & Webster to make reference to the matter in its reports on
      Registrant's financial statements, and (ii) except for Williams & Webster’s
      report on Registrant's financial statements for the years ended June 30, 2006
      and 2005 which included an explanatory paragraph wherein they expressed
      substantial doubt about Registrant's ability to continue as a going concern,
      Williams & Webster's reports on Registrant's financial statements did not
      contain an adverse opinion or disclaimer of opinion, and was not modified as
      to
      uncertainty, audit scope or accounting principles. During the two fiscal years
      ended June 30, 2006 and 2005 and through December 15, 2006, there were no
      reportable events as the term described in Item 304(a)(1)(iv) of Regulation
      S-B.





On
      December 15, 2006, Registrant engaged the firm of Wheeler, Herman, Hopkins
&
Lagor, P.A., now known as Herman, Lagor, Hopkins & Meeks, P.A., to serve as
      its independent registered public accountants for the fiscal year ending June
      30, 2007.





During
      the two fiscal years ended June 30, 2006 and 2005, and through December 15,
      2006, the Company has not consulted with Herman, Lagor, Hopkins &
Meeks, P.A. regarding either:


20





1.
      The
      application of accounting principles to any specific transaction, either
      completed or proposed, or the type of audit opinion that might be rendered
      on
      Registrants' financial statements, and neither a written report was provided
      to
      Herman, Lagor, Hopkins & Meeks, P.A. nor oral advice was provided that
      Herman, Lagor, Hopkins & Meeks, P.A. concluded was an important factor
      considered by Registrant in reaching a decision as to the accounting, auditing
      or financial reporting issue; or





2.
      Any
      matter that was either subject of disagreement or event, as defined in Item
      304(a)(1)(iv) of Regulation S-B and the related instruction to Item 304 of
      Regulation S-B, or a reportable event, as that term is explained in Item
      304(a)(1)(iv) of Regulation S-B.





On
      December 15, 2006, the Company provided Williams & Webster with a copy of
      the disclosures and has requested that Williams & Webster furnish it with a
      letter addressed to the Securities and Exchange Commission stating whether
      it
      agrees with the above statements. Such letter is filed herewith as Exhibit
      16.1
      and incorporated herein by reference.





On
      July
      20, 2007, Herman, Lagor, Hopkins & Meeks, P.A. (“HLHM”) resigned as the
      independent auditors of OmniReliant Holdings, Inc. (the "Company") and its
      subsidiaries.





Since
      HLHM did not issue a report on the Company's financial statements for the fiscal
      years ended June 30, 2006 and 2005 or for any other relevant period, no report
      of HLHM on the financial statements of the Company for either of the past two
      years contained an adverse opinion or disclaimer of opinion, and were not
      qualified or modified as to uncertainty, audit scope or accounting principles.





From
      the
      date of HLHM’s engagement, December 15, 2006 through the date of their
      resignation, July 20, 2007: (i) there have been no disagreements with HLHM
      on
      any matter of accounting principles or practices, financial statement disclosure
      or auditing scope or procedure, which disagreements, if not resolved to the
      satisfaction of HLHM, would have caused it to make reference to the subject
      matter of the disagreement in connection with its reports and (ii) HLHM did
      not
      advise the Company of any of the events requiring reporting in this Current
      Report on Form 8-K under Item 304(a)(1)(iv)(B) of Regulation S-B.





The
      Company provided to HLHM the disclosure contained in this Form 8-K and requested
      HLHM to furnish a letter addressed to the Commission stating whether it agrees
      with the statements made by the Company herein and, if not, stating the respects
      in which it does not agree. A letter from HLHM is attached as Exhibit 16.2
      and
      incorporated herein by reference.





On
      July
      20, 2007, the Board of Directors approved the Company's engagement of KBL,
      LLP
      ("KBL") as independent auditors for the Company and its subsidiary. The Company
      engaged KBL on July 20, 2007.





Neither
      the Company nor anyone on its behalf consulted KBL regarding (i) the application
      of accounting principles to a specific completed or contemplated transaction,
      (ii) the type of audit opinion that might be rendered on the Company's financial
      statements, or (iii) any matter that was the subject of a disagreement or event
      identified in response to Item 304(a)(1)(iv) of Regulation S-B (there being
      none).





**ITEM
      8A - CONTROLS AND PROCEDURES**





*(a)
      Evaluation of disclosure controls and procedures.*





The
      Company, under the supervision and with the participation of its management,
      including the principal executive officer and principal financial officer,
      has
      evaluated the effectiveness of the design and operation of its disclosure
      controls and procedures as defined in Rule 13a-15(e) of the Securities Exchange
      Act of 1934, as amended (the “Act”) as of the end of the period covered by this
      report (the “Disclosure Controls”). Based upon the Disclosure Controls
      evaluation, the principal executive officer and principal financial officer
      have
      concluded that the Company’s disclosure controls and procedures were not
      effective in connection with preparing this Annual Report on Form 10-KSB due
      to
      a material weakness in the Company’s internal control over financial reporting,
      mainly its financial closing, review and analysis process. The Company
      determined that a restatement of its financial statements was necessary due
      to
      the issuance of convertible preferred stock and warrants (collectively, the
      “Securities”) in various private placements over the last two years. This
      restatement is required to properly reflect the Company’s financial results (i)
      to revise the amortization expense associated with intangible assets to provide
      for amortization over the contractual terms of the assets and (ii) to reflect
      the proper accounting required under FAS 133 and 150 and other related
      pronouncements and standards related to our Series A and Series B Preferred
      Stock Financings. The financial instruments associated with the financings
      were
      revalued using reasonable techniques and correct assumptions.


21





The
      Company believes that the issues surrounding the restatement of these reports,
      mainly the internal controls related to the financial closing, review, and
      analysis process have been addressed by the restatement of the financial
      statements.  The Company has taken additional steps to avoid the
      reoccurrence of this condition by implementing additional procedures for all
      future financing and investing transactions. The new procedures will require
      a
      statement be prepared and presented to the board of directors for approval
      with
      any future financing or investment agreements. The statement will address the
      following items: a completed derivatives checklist (when applicable), assessment
      of the appropriate accounting treatment, and a review of accounting personnel
      required to accurately account for and report the transactions. The Company
      believes that these additional efforts taken by management will strengthen
      the
      Company’s internal controls and will be effective in future periods.





A
      control
      system, no matter how well conceived and operated, can provide only reasonable,
      not absolute, assurance that the objectives of the control system are met.
      Further, the design of a control system must reflect the fact that there are
      resource constraints, and the benefits of controls must be considered relative
      to their costs. Because of the inherent limitations in all control systems,
      no
      evaluation of controls can provide absolute assurance that all control issues
      and instances of fraud, if any, within the Company have been detected. Because
      of the inherent limitations in a cost-effective control system, misstatements
      due to error or fraud may occur and not be detected.





The
      Company’s internal control over financial reporting has been modified by
      the Company by adding additional resources to address deficiencies in the
      financial closing, review and analysis process, which has materially improved
      the Company’s internal control over financial reporting.





*(b)* *Changes
      in internal control over financial reporting.*





We regularly
      review our system of internal control over financial reporting and make changes
      to our processes and systems to improve controls and increase efficiency, while
      ensuring that we maintain an effective internal control environment. Changes
      may
      include such activities as implementing new, more efficient systems,
      consolidating activities, and migrating processes.





We
      made
      the changes as specified above in our internal control over financial reporting
      that occurred during the period covered by this Annual Report on Form 10-KSB/A
      that have materially affected, or are reasonably likely to materially affect,
      our internal control over financial reporting.





**ITEM
      8B - Other Information**





None.


22





**PART
      III**





**Item
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
      WITH
      16(a) OF THE EXCHANGE ACT**





The
      following table sets forth certain information with respect to our directors
      and
      executive officers.





Below
      are
      the names and certain information regarding the Company's executive officers,
      directors and director nominees. Officers are elected annually by the Board
      of
      Directors.




Name
            
            Age
            
            PositionChristopher
                D. Phillips
            
            35
            
            Chief
                Executive Officer, Chief Financial Officer, Secretary, Treasurer,
                DirectorPaul
                Morrison
            
            40
            
            President,
                Chief Operating OfficerLucien
                Lallouz
            
            62
            
            ChairmanRichard
                Diamond
            
            44
            
            DirectorTim
                Harrington
            
            41
            
            DirectorKevin
                Harrington
            
            51
            
            Director





**Background
      of Executive Officers and Directors**





**Paul
      Morrison** .
      On
      November 22, 2006 Mr. Morrison was elected Chief Operating Officer, President
      and Assistant Secretary of the Company. Mr. Morrison has served as the
      President, Chief Operating Officer and Assistant Secretary of OmniReliant
      Corporation since October 31, 2006. From October 2005 until October 2006, Mr.
      Morrison was the COO of WG Products, a cosmetic company, where he directed
      all
      facets of operations including production, customer service, planning,
      scheduling, maintenance, warehousing, distribution, purchasing, sales, and
      strategic initiatives. From 2001 through 2005 he managed various operations
      at
      Wyeth Pharmaceuticals. Mr. Morrison started his career working for Calvin Klein
      Cosmetics, and has accumulated sixteen years of experience serving in cosmetic
      and pharmaceutical operations management roles for Fortune 100 companies. He
      received a Bachelor’s of Science degree in Business Management from the Rutgers
      University and an Honorable discharge from the United States Air
      Force.




**Christopher
      D. Phillips** .
      On
      November 22, 2006 Mr. Phillips was named as a Director and elected Chief
      Executive Officer, Chief Financial Officer, Secretary and Treasurer of the
      Company. Mr. Phillips has served as the Chief Executive Officer of OmniReliant
      Corporation since October 31, 2006. He has also served as its Chief Financial
      Officer since October 13, 2006. From its inception in August 2006 till October
      31, 2006 Mr. Phillips held the position of President of OmniReliant Corporation.
      Mr. Phillips also currently is the Secretary and Treasurer of OmniReliant
      Corporation positions he has held since its inception in August 2006. Since
      October 2004, Chris Phillips has been the President and CEO of Apogee Financial
      Investments, Inc. a merchant bank which owns 100% of Midtown Partners & Co.,
      LLC, a FINRA licensed broker-dealer.   Mr. Phillips holds a Bachelors
      of Science Degree in Accounting and Finance and a Masters of Accountancy
      with a concentration in Tax from the University of Florida. Mr. Phillips is
      a
      Florida licensed Certified Public Accountant. ****





Mr.
      Phillips will be working for the Company on a part-time basis.





**Lucien
      Lallouz** .
      On
      November 30, 2006 Mr. Lallouz was named as a Director of the Company and was
      subsequently named as its Chairman. Mr. Lallouz has served as a Director of
      OmniReliant Corporation since October 13, 2006. Since April 2004, Mr. Lallouz
      has worked as a business development consultant to Parlux Fragrances, Inc.
      (NASDAQ:PARL) From May, 2003 to May 2005, Lucien was President and Chief
      Executive Officer of Taylor Madison, Corp., which has since changed its name
      to
      Telzuit Medical Technologies, Inc. (TZMT.OB) Mr. Lallouz had previously served
      as Taylor Madison’s Senior Vice President since June 1999. From June 2001 to
      April 2003, Mr. Lallouz was Senior Vice President of Business Development for
      ECOMV, (NASDAQ:ECMV), the parent Company of Perfumania Retail
      Stores.





**Richard
      Diamond** .
      On
      November 30, 2006 Mr. Diamond was named as a Director of the Company. Mr.
      Diamond has served as a Director of OmniReliant Corporation since its inception
      in August 2006. Since October 2004, Mr. Diamond has served as the Senior Vice
      President of Apogee Financial Investments, Inc. (“Apogee”) a private merchant
      bank incorporated in Florida. His areas of responsibility include
      administration, due diligence, document preparation and review, and assisting
      clients with corporate filings and compliance. Apogee owns 100% of Midtown
      Partners & Co., LLC, a FINRA licensed broker-dealer. From April 2000 until
      December 2005, Mr. Diamond served as Managing Member and Vice President of
      Apogee Business Consultants, LLC, a Nevada limited liability corporation
      specializing in reverse mergers and acquisitions. From October 2001 until
      December 2005, Mr. Diamond served as founder, President and sole director of
      RJ
      Diamond Consulting, Inc., a privately owned Florida corporation specializing
      in
      financial and public company consulting. From July 2003 until December 2003,
      Mr.
      Diamond served as a Director of Sabre Marketing, Inc. a private Florida
      corporation. From August 2001 until August 2002, Mr. Diamond served as the
      sole
      officer and director of Conus Holdings, Inc., a publicly reporting Nevada shell
      corporation.


23





**Tim
      Harrington** .
      On
      November 30, 2006 Mr. Harrington was named as a Director of the Company. Mr.
      Harrington has served as a Director of OmniReliant Corporation since October
      13,
      2006. Since October 2004, Tim has been President and a Managing Member of
      Reliant International Media, LLC, a Florida limited liability corporation,
      where
      he oversees the day-to-day operations, media, legal, product development and
      financial concerns. Since January 2007, Tim has been Chief Operating Officer
      of
      ResponzeTV, PLC a Hong Kong based public company that trades on the AIM exchange
      (“RETV.L”) From 1998 until August 2004 Tim held the position of President of
      Reliant Interactive Media Corp. (“RIMC”) a publicly traded Nevada corporation.
      In 1998 Tim co-founded RIMC with his brother Kevin Harrington. From May 2002
      until August 2004 Tim held the position of Vice President of Thane International
      USA.





**Kevin
      Harrington** .
      On
      November 30, 2006 Mr. Harrington was named as a Director of the Company. Mr.
      Harrington has served as a Director of OmniReliant Corporation since October
      13,
      2006. Since October 2004, Kevin has been Chairman, CEO and a Managing Member
      of
      Reliant International Media, LLC a Florida limited liability corporation. Since
      January 2007, Kevin has been Chief Executive Officer of ResponzeTV, PLC a Hong
      Kong based public company that trades on the AIM Exchange (“RETV.L”) From 1998
      until August 2004, Kevin held the positions of Chairman and CEO of Reliant
      Interactive Media Corp. (“RIMC”) a publicly traded Nevada corporation. Kevin
      co-founded RIMC with his brother Tim Harrington. From May 2002 until August
      2004
      Kevin held the positions of Co-Chairman of Thane International USA. From July
      2002 until present Kevin has served as a director and President of Harrington
      Business Development, Inc. a private Florida corporation. Kevin Harrington
      has
      considerable experience in the production of direct-response marketing
      television programming, otherwise known as "infomercials." He produced his
      first
      infomercial in 1985.





**Employment
      Agreements**





On
      October 31, 2006, OmniReliant and Paul Morrison entered into an executive
      employment agreement pursuant to which Mr. Morrison will serve as OmniReliant’s
      President and Chief Operating Officer for a term of two years. The agreement
      provides for the following compensation: (i) a base annual salary of $120,000;
      (ii) a one-time grant of 300,000 shares of common stock; (iii) an incentive
      bonus equal to 1.5% of pretax profits on the sale of all Hilton related
      products, (iv) an option to purchase 300,000 shares of common stock at an
      conversion price of $1.00.





**Committees**





Our
      business, property and affairs are managed by or under the direction of the
      board of directors. Members of the board are kept informed of our business
      through discussion with the chief executive and financial officers and other
      officers, by reviewing materials provided to them and by participating at
      meetings of the board and its committees. We presently do not have any
      committees of our board of directors, however, our board of directors intends
      to
      establish various committees at some point in the near future.





The
      total
      number of meetings of the Board of Directors during the fiscal year ended June
      30, 2007 was four. The Board of Directors decided matters by written consent
      on
      fifteen occasions. Each of the incumbent directors attended a majority of (i)
      the meetings of the Board during the year and (ii) the total number of meetings
      of all committees of the Board on which the incumbent directors
      served.


24





**Code
      of Ethics**





We
      have
      adopted a Code of Ethics that applies to all officers, directors and employees.
      A copy of this Code of Ethics was filed as Exhibit 14.1 to our Form 10-KSB
      for
      the period ending June 30, 2005 and is incorporated herein by reference. We
      will
      furnish a copy of this code of ethics free of charge to any shareholder upon
      written request to the Company at 4218 Linebaugh Avenue, Tampa, Florida
      33624.





COMPLIANCE
      WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT of 1934





Section
      16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the
      Company's directors and executive officers, and persons who own more than ten
      percent of a registered class of the Company's equity securities, to file with
      the Commission initial reports of ownership and reports of changes in ownership
      of the Company's Common Stock and other equity securities of the Company.
      Officers, directors and greater than ten percent shareholders are required
      by
      the Commission's regulations to furnish the Company with copies of all Section
      16(a) forms they filed.





We
      have
      been provided with copies of all forms (3, 4 and 5) filed by officers,
      directors, or ten percent shareholders within three days of such filings. Based
      on our review of such forms that we received, or written representations from
      reporting persons that no Forms 5s were required for such persons, we believe
      that, during fiscal 2007, except for the list set forth below, all Section
      16(a)
      filing requirements have been satisfied on a timely basis for members of the
      Board of Directors and Executive Officers.





Name
            
            Section
                16 FormChris
                Phillips
            
            Form
                3
            
            5
                days lateForm
                4
            
            40
                days lateKRH
                Licensing Company, LLC
            
            Form
                3
            
            51
                days lateApogee
                Financial Investment, Inc.
            
            Form
                3
            
            53
                days lateForm
                4
            
            40
                days lateRichard
                Diamond
            
            Form
                3
            
            53
                days lateForm
                4
            
            40
                days lateTim
                Harrington
            
            Form
                3
            
            60
                days lateKevin
                Harrington
            
            Form
                3
            
            60
                days latePaul
                Morrison
            
            Form
                3
            
            63
                days lateZTZ
                Trust Corp.
            
            Form
                3
            
            67
                days lateLucien
                Lallouz
            
            Form
                3
            
            67
                days lateFamalom
                LLC
            
            Form
                3
            
            32
                days lateDecembra
                Diamond
            
            Form
                3
            
            34
                days late





**Item
      10. EXECUTIVE COMPENSATION**





The
      following table sets forth information concerning the annual and long-term
      compensation earned by or paid to our Chief Executive Officer and to other
      persons who served as executive officers as at and/or during the fiscal year
      ended June 30, 2007 who earned compensation exceeding $100,000 during 2006
      (the
“named executive officers”), for services as executive officers for the last two
      fiscal years.


25





**Summary
      Compensation Table**





Name &
              Principal Position
            
            Year
            
            Salary
              ($)
            
            Bonus
              ($)
            
            Stock
              Awards ($)
            
            Option
              Awards ($)
            
            Non-Equity
              Incentive Plan
              Compensation
              ($)
            
            Change in
              Pension
              Value and
              Non-
              Qualified
              Deferred
              Compensation
              Earnings ($)
            
            All Other
              Compensation
              ($)
            
            Total ($)Christopher Phillips,
                CEO (1)
            
            
            2007
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Paul
                Morrison, President
            
            
            2007
            
            
            90,000
            
            
            0
            
            $
            15,000
            (3)
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            $
            105,000Cynthia
                Allison, Former CEO (2)
            
            
            2006
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0





(1)
            Chris
                Phillips was named to the Board and elected CEO, CFO, Secretary and
                Treasurer on November 22, 2006.(2)
            Cynthia
                Allison resigned as the sole officer and director on November 22,
                2006.(3)
            Represents
                the market value of 150,000 shares of common stock granted to Mr.
                Morrison
                granted on October 19, 2006 (based on a $.10 per share, the closing
                price
                of the Company’s common stock on the Over-the-Counter Bulletin Board on
                the day of grant).




**Outstanding
      Equity Awards at Fiscal Year-End Table**




Option Awards
            
            Stock AwardsName
            
            Number
              of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            
            Number
              of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            
            Option
              Exercise
              Price
              ($)
            
            Option
              Expiration
              Date
            
            Number
              of
              Shares
              or Units
              of
              Stock
              That
              Have
              Not
              Vested
              (#)
            
            Market
              Value of
              Shares or
              Units of
              Stock
              That Have
              Not
              Vested
              ($)
            
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Unearned
              Shares,
              Units or
              Other
              Rights
              That Have
              Not
              Vested
              (#)
            
            Equity
              Incentive
              Plan
              Awards:
              Market or
              Payout
              Value
              of
              Unearned
              Shares,
              Units or
              Other
              Rights
              That Have
              Not
              Vested
              ($)Chris Phillips, CEO
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Paul Morrison, President (1)
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            150,000
            
            $
            540,000
            (2)
            
            0
            
            
            0





(1) Pursuant to the terms of his
      employment agreement, Mr. Morrison is to receive 300,000 shares of common stock,
      of which 50% was granted immediately and the remaining 50% is to be given to
      Mr.
      Morrison on the one year anniversary of his employment with the Company. The
      market value of the 150,000 shares of common stock granted to Mr. Morrison
      is
      based on $.10 per share, the closing price of the Company’s common stock on the
      Over-the-Counter Bulletin Board on the day of grant.


(2)
      Represents the market value of 150,000 shares of common stock (based on $3.60
      per share, the closing price of the Company's common stock on the
      Over-the-Counter Bulletin Board on June 29, 2007)


26





**Directors’
      Compensation**





For
      the
      fiscal year ended June 30, 2007, directors did not receive any remuneration
      in
      their capacity as a director.





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





The
      following table sets forth certain information, as of October 19, 2007 with
      respect to the beneficial ownership of the Company’s outstanding common stock by
      (i) any holder of more than five (5%) percent; (ii) each of the named executive
      officers, directors and director nominees; and (iii) our directors, director
      nominees and named executive officers as a group. Except as otherwise indicated,
      each of the stockholders listed below has sole voting and investment power
      over
      the shares beneficially owned.





Name of Beneficial Owner(1)
            
            Common Stock Beneficially
              Owned
            
            Percentage of Common Stock
              Beneficially Owned (2)Paul Morrison (3)
            
            
            600,000
            
            
            4.20
            %Chris
                Phillips (4)
            
            
            5,003,199
            
            
            28.58
            %Deecembra
                Diamond (7)
            
            
            4,703,199
            
            
            26.87
            %FAMALOM
                LLC (8)
            
            
            1,500,000
            
            
            10.71
            %ZTZ
                Trust Corp (5)
            
            
            3,000,000
            
            
            21.43
            %Kevin
                Harrington
            
            
            1,500,000
            
            
            10.71
            %Tim
                Harrington
            
            
            1,500,000
            
            
            10.71
            %Lucien
                Lallouz (5)
            
            
            3,000,000
            
            
            21.43
            %Richard
                Diamond (6)
            
            
            4,703,199
            
            
            26.87
            %KRH
                Licensing Company, LLC
            
            
            3,000,000
            
            
            21.43
            %All
                officers and directors as a group (6 persons)
            
            
            9,000,000
            
            
            65.0
            %




*
      Less
      than 1%





(1)
      Except as otherwise indicated, the address of each beneficial owner is c/o
      OmniReliant Corporation 4218 West Linebaugh Avenue, Suite 185, Tampa, FL
      33624.





(2)
      Applicable percentage ownership of common stock is based on 14,000,000 shares
      of
      common stock outstanding as of October 19, 2007, together with securities
      exercisable or convertible into shares of common stock within 60 days of October
      19, 2007 for each stockholder. Beneficial ownership is determined in accordance
      with the rules of the Securities and Exchange Commission and generally includes
      voting or investment power with respect to securities. Shares of common stock
      underlying convertible securities that are currently exercisable or exercisable
      within 60 days of October 19, 2007 are deemed to be beneficially owned by the
      person holding such securities for the purpose of computing the percentage
      of
      ownership of such person, but are not treated as outstanding for the purpose
      of
      computing the percentage ownership of any other person.





(3)
      Represents (i) 300,000 shares of common stock, and (ii) an option to purchase
      300,000 shares of common stock at a conversion price of $1.00.




(4)
      Represents (i) 1,500,000 shares of common stock owned by FAMALOM, LLC, (ii)
      900,000 common stock purchase warrants owned by Midtown Partners & Co., LLC
      and (iii) 43,200 common stock purchase warrants owned by Midtown Partners &
Co., LLC and (iv) 2,559,999 common stock purchase warrants owned by Midtown
      Partners & Co., LLC. Mr. Phillips is the Manager and sole member of FAMALOM,
      LLC as well as a 50% owner of Apogee Financial Investments, Inc. which owns
      100%
      of Midtown Partners & Co., LLC, a FINRA licensed
      broker-dealer.


27





(5)
      Represents 3,000,000 shares of the Registrant’s outstanding common stock owned
      by ZTZ Trust Corp. Mr. Lallouz’s spouse, Sharon Lallouz Fixman, is the president
      and an owner of ZTZ Trust Corp. Mr. Lallouz disclaims beneficial ownership
      of
      the stock owned by ZTZ Trust Corp.





(6)
      Represents 1,200,000 shares of the Registrant’s common stock owned by Deecembra
      Diamond,, (ii) 900,000 common stock purchase warrants owned by Midtown Partners
      & Co., LLC (iii) 43,200 common stock purchase warrants owned by Midtown
      Partners & Co., LLC and (iv) 2,559,999 common stock purchase warrants owned
      by Midtown Partners & Co., LLC.. Mr. Diamond’s spouse, Deecembra Diamond,
      owns 40% of Apogee Financial Investments, Inc., which owns 100% of Midtown
      Partners & Co., LLC, a FINRA licensed broker-dealer. Mr. Diamond
      specifically disclaims beneficial ownership of these shares except to the extent
      of his pecuniary interests therein.





(7)
      Represents 1,200,000 shares of the Registrant’s common stock owned by Deecembra
      Diamond, (ii) 900,000 common stock purchase warrants owned by Midtown Partners
      & Co., LLC, (iii) 43,200 common stock purchase warrants owned by Midtown
      Partners & Co., LLC and (iv) 2,559,999 common stock purchase warrants owned
      by Midtown Partners & Co., LLC.. Mr. Diamond’s spouse, Deecembra Diamond,
      owns 40% of Apogee Financial Investments, Inc., which owns 100% of Midtown
      Partners & Co., LLC, a FINRA licensed broker-dealer.





(8)
      Mr.
      Phillips has sole voting and dispositive power over the shares of common stock
      held by FAMALOM, LLC





(9)
      Richard Hilton has sole voting and dispositive power over the shares of common
      stock held by KRH Licensing Company, LLC.





**Item
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





Except
      as
      set forth below, there were no transactions during the last two   fiscal
      years, and there are no proposed transactions, to which the Company was  
or is to become a party in which any director, executive officer, director
        nominee, beneficial owner of more than five percent (5%) of any class of
      our stock, or members of their immediate families had, or is to have, a direct
      or indirect material interest:





Chris
      Phillips, who is the Company’s CEO, CFO, Secretary, Treasurer and a director, is
      also the Manager and sole member of FAMALOM, LLC which is a 50% owner of Apogee
      Financial Investments, Inc., a merchant bank (“Apogee”). Apogee received a cash
      fee of $125,000 for consulting and due diligence services rendered in connection
      with the transactions. Apogee owns 100% of Midtown Partners & Co., LLC, a
      FINRA licensed broker-dealer. Midtown Partners was the placement agent for
      the
      Company’s convertible preferred stock and warrant financing, described above.
 Midtown received aggregate placement agent fees of approximately $300,000,
      as well as the following common stock purchase warrants: (a) series BD-1 common
      stock purchase warrants entitling Midtown Partners to purchase 300,000 shares
      of
      the Company's common stock at an exercise price of one dollar ($1.00) per share,
      (b) series BD-2 common stock purchase warrants entitling Midtown Partners to
      purchase 300,000 shares of the Company's common stock at an exercise price
      of
      one dollar and fifty cents ($1.50) per share, and (c) series BD-3 common stock
      purchase warrants entitling Midtown Partners to purchase 300,000 shares of
      the
      Company's common stock at an exercise price of three dollars ($3.00) per share.
      The Series BD warrants have a term of ten years.




OmniReliant
      has entered into a consulting agreement with Harrington Business Development
      LLC
      (“HBD”) pursuant to which HBD will oversee marketing of OmniReliant’s brands,
      including visual and audio productions. Pursuant to the consulting agreement
      with HBD, OmniReliant will pay HBD a fee of $15,000 per month for a term of
      six
      (6) months beginning on October 1, 2006. The principals of HBD, Kevin and Tim
      Harrington, own an aggregate of 3,000,000 shares, or 21.6% of the outstanding
      stock, of the Company. On April 1, 2007, the Company verbally agreed to extend
      the consulting agreement for a term of three (3) months.


28





Pursuant
      to the terms of the Kathy Hilton License Agreement between OmniReliant Corp.
      and
      KRH Licensing Company, LLC dated as of October 13, 2006, OmniReliant made an
      advance royalty payment in the amount of $150,000 to Lucien Lallouz in January
      2007.





On
      November 22, 2006 OmniReliant entered into a verbal agreement with TotalCFO,
      LLC
      (“TotalCFO”) pursuant to which TotalCFO will perform accounting services
      including accounting services in connection with Securities & Exchange
      Commission filings. Pursuant to the agreement with TotalCFO, OmniReliant will
      pay TotalCFO a fee of $15,000 per quarter based on a calendar year end plus
      related expenses. The Managing Member of TotalCFO, Christopher Phillips, is
      the
      CEO and CFO of OmniReliant Holdings and beneficially owns 5,003,119 shares,
      or
      28.58% of the outstanding stock of the Company. Christopher Phillips is not
      paid
      a salary by the Company.





On
      May
      25, 2007, the Company entered into the Preferred Stock Purchase Agreement with
      Dynamic Decisions Strategic Opportunities (the “Investor”), pursuant to which
      the Investor purchased 600 shares of the Company’s series B 10% convertible
      preferred stock (the “Preferred Stock”), 480,000 Series B-1 warrants, and
      480,000 series B-2 common stock purchase warrants (collectively, the “Warrants”)
      for an aggregate purchase price of $600,000. Midtown Partners LLC, which served
      as the Company’s placement agent in connection with the Preferred Stock Purchase
      Agreement, received placement agent fees of approximately $60,000, as well
      as
      the following common stock purchase warrants: (a) series BD-4 common stock
      purchase warrants entitling Midtown Partners to purchase 48,000 shares of the
      Company's common stock at an exercise price of one dollar and eighty-seven
      cents
      ($1.87) per share, and (b) series BD-5 common stock purchase warrants entitling
      Midtown Partners to purchase 48,000 shares of the Company's common stock at
      an
      exercise price of three dollars and seventy-five cents ($3.75) per share and
      (c)
      series BD-6 common stock purchase warrants entitling Midtown Partners to
      purchase 48,000 shares of the Company's common stock at an exercise price of
      one
      dollar and twenty five cents ($1.25) per share. The Series BD warrants have
      a
      term of ten years. Midtown Partners & Co., LLC is an FINRA registered
      broker-dealer. Chris Phillips, who is the Company’s CEO, CFO, Secretary,
      Treasurer and a director, is also the Manager and sole member of FAMALOM, LLC
      which is a 50% owner of Apogee Financial Investments, Inc., a merchant bank
      (“Apogee”). Apogee owns 100% of Midtown Partners & Co., LLC, a FINRA
      licensed broker-dealer.





On
      October 18, 2007, the Company entered into securities purchase agreements (the
      “Purchase Agreements”) with Vicis Capital Master Fund (“Vicis”) and Dynamic
      Decisions Strategic Opportunities (“Dynamic Decisions”) pursuant to which Vicis
      and Dynamic Decisions purchased 6,000,000 and 400,000, shares of our series
      C
      convertible preferred stock (“Series C Preferred Stock”), respectively for an
      aggregate purchase price of $6,400,000. In connection with the purchase of
      the
      Series C Preferred Stock, Vicis and Dynamic Decisions received an aggregate
      amount of 16,000,000 and 1,066,668 common stock purchase warrants, respectively.
      Vicis and Dynamic Decisions received a Series C-1 warrant to purchase 8,000,000
      and 533,334 shares of common stock, respectively, at an exercise price of $1.50
      (the “C-1 Warrant”) as well as a Series C-2 warrant to purchase 8,000,000 and
      533,334 shares of common stock, respectively, at an exercise price of $2.00
      (the
“C-2 Warrant”). The C-1 Warrant shall be valid for five years from the date of
      issuance and the C-2 Warrant shall be valid for ten years from the date of
      issuance. The Series C Preferred Stock has a conversion price of $0.75 and
      is
      convertible into an aggregate amount of 8,000,000 and 533,334 shares of common
      stock, respectively. The Series C Preferred stock does not pay annual dividends
      but each holder of Series C Preferred Stock shall have the right to such number
      of votes equal to the number of shares of common stock that the Series C
      Preferred Stock shall be converted into. Furthermore, pursuant to the terms
      of
      the Purchase Agreements, Vicis and Dynamic Decisions exchanged their 3,000
      shares of series A preferred stock and 600 shares of series B preferred stock,
      respectively, for 3,285,354 and 624,210 shares of Series C Preferred Stock,
      respectively. In connection with the Purchase Agreements, Vicis and Dynamic
      Decisions received a Series C-1 Warrant to purchase 4,380,472 and
      832,280 shares of common stock, respectively and a series C-2 Warrant to
      purchase 4,380,472 and 832,280 and shares of common stock, respectively.
      The Series C-1 Warrant and the Series C-2 Warrant shall have an exercise price
      of $1.50 and $2.00, respectively, and shall be valid for five year and ten
      years
      from the date of issuance, respectively.





Midtown
      Partners & Co., LLC, which served as the Company’s placement agent in
      connection with the Purchase Agreements, received aggregate placement agent
      fees
      of approximately $340,000, as well as the following common stock purchase
      warrants: (a) series BD-7 common stock purchase warrants entitling Midtown
      Partners to purchase 853,333 shares of the Company's common stock at an exercise
      price of seventy-five cents ($0.75) per share, and (b) series BD-8 common stock
      purchase warrants entitling Midtown Partners to purchase 853,333 shares of
      the
      Company's common stock at an exercise price of one dollar and fifty cents
      ($1.50) per share and (c) series BD-9 common stock purchase warrants entitling
      Midtown Partners to purchase 853,333 shares of the Company's common stock at
      an
      exercise price of two dollars ($2.00) per share. The Series BD warrants have
      a
      term of ten years. Midtown Partners & Co., LLC is a FINRA registered
      broker-dealer. Chris Phillips, who is the Company’s CEO, CFO, Secretary,
      Treasurer and a director, is also the Manager and sole member of FAMALOM, LLC
      which is a 50% owner of Apogee Financial Investments, Inc., a merchant bank
      (“Apogee”). Apogee owns 100% of Midtown Partners & Co., LLC, a FINRA
      licensed broker-dealer.


29


On
      October 19, 2007, we entered into a subscription agreement with ResponzeTV
      PLC
      (“ResponzeTV”) (the “Subscription Agreement”) pursuant to which we purchased
      8,500,000 ordinary shares of ResponzeTV and received warrants to purchase
      17,000,000 ordinary shares of ResponzeTV for an aggregate purchase price of
      US$5,100,000. The warrants are to be issued in the following manner: (i) a
      warrant to purchase 8,500,000 common shares with an exercise price of £37p, (ii)
      a warrant to purchase 4,250,000 common shares with an exercise price of £50p and
      (iii) 4,250,000 common shares with an exercise price of £100p. Each warrant
      shall have a term of five years from the date of issuance. Kevin Harrington
      and
      Tim Harrington, who are directors of the Company, are officers and directors
      of
      ResponzeTV. Midtown Partners & Co., LLC, which served as the Company’s
      placement agent in connection with the Subscription Agreement, received
      aggregate placement agent fees of US$50,000, as well as 500,000 ordinary shares
      of ResponzeTV. Midtown Partners & Co., LLC is a FINRA registered
      broker-dealer. Chris Phillips, who is the Company’s CEO, CFO, Secretary,
      Treasurer and a director, is also the Manager and sole member of FAMALOM, LLC
      which is a 50% owner of Apogee Financial Investments, Inc., a merchant bank
      (“Apogee”). Apogee owns 100% of Midtown Partners & Co., LLC, a FINRA
      licensed broker-dealer.





On
      October 19, 2007, our wholly-owned subsidiary OmniReliant Corp. (“ORC”) entered
      into and closed a share exchange agreement with ResponzeTV (the “Exchange
      Agreement”). Pursuant to the terms of the Exchange Agreement, ResponzeTV
      acquired all of the issued and outstanding shares of capital stock of KHL
      Holdings, Inc., a newly formed Florida corporation and wholly-owned subsidiary
      of ORC (“KHL”), in exchange for 9,500,000 ordinary shares of stock of
      ResponzeTV. On October 12, 2007, ORC entered into an exclusive sublicense
      agreement with KHL, pursuant to which ORC granted KHL the exclusive right and
      license to our rights to use the Kathy Hilton Trademark and to sell products
      bearing the Kathy Hilton Trademark exclusive of fragrance. The initial term
      of
      this sublicense agreement shall terminate on June 30, 2012. ORC shall have
      the
      option to renew this Agreement for an additional five year period. Kevin
      Harrington and Tim Harrington, who are directors of the Company, are officers
      and directors of ResponzeTV.


On
        April
        30, 2008, the Company entered into securities purchase agreement (the “Purchase
        Agreement”) with Vicis Capital Master Fund (“Vicis”) pursuant to which Vicis
        purchased 7,000,000 shares of our series D convertible preferred stock (“Series
        D Preferred Stock”), respectively for an aggregate purchase price of $7,000,000.
        The Series D Preferred Stock has a conversion price of $0.50 and is convertible
        into an aggregate amount of 14,000,000 shares of common stock. The Series
        D
        Preferred stock does not pay annual dividends but each holder of Series D
        Preferred Stock shall have the right to such number of votes equal to thenumber
        of shares of common stock that the Series D Preferred Stock shall be converted
        into, subject to the beneficial ownership limitation described
        below.
 
 In
        connection with the Agreement, Vicis received a series D warrant to purchase
        28,000,000 shares of common stock of the Company (“Series D Warrants”). The
        Series D Warrants is exercisable for a period of seven years from the date
        of
        issuance at an initial exercise price of $0.75. Vicis may exercise the Series
        D
        Warrants on a cashless basis if the shares of common stock underlying the
        Series
        D Warrants are not then registered pursuant to an effective registration
        statement. In the event Vicis exercises the Series D Warrants on a cashless
        basis, then we will not receive any proceeds. The conversion price of the
        Series
        D Preferred Stock and the exercise price of the Series D Warrants are subject
        to
        full ratchet and anti-dilution adjustment for subsequent lower price issuances
        by the Company, as well as customary adjustments provisions for stock splits,
        stock dividends, recapitalizations and the like. Additionally, outstanding
        warrants issued in connection with previous financings and adjusted to full
        ratchet anti-dilution protection required adjustments to exercise prices
        as a
        result of the Series D financing transaction.
 
 In
        addition, the Company, Vicis and Dynamic Decisions Strategic Opportunities
        (“Dynamic Decisions”) have entered into Amendment No. 1 to its amended and
        restated registration rights agreement (“Amended Registration Rights Agreement”)
        pursuant to which if at any time after the date of the Amended Registration
        Rights Agreement the Company shall decide to prepare and file with the
        Commission a registration statement relating to an offering for its own account
        or the account of others under the Securities Act of any of its equity
        securities, other than on Form S-4 or Form S-8 (each as promulgated under
        the
        Securities Act) or their then equivalents relating to equity securities to
        be
        issued solely in connection with any acquisition of any entity or business
        or
        equity securities issuable in connection with the stock option or other employee
        benefit plans, then the Company shall send to each holder a written notice
        of
        such determination and, if within fifteen days after the date of such notice,
        any such holder shall so request in writing, the Company shall include in
        such
        registration statement, all or any part of such Registrable Securities (as
        defined in Amended Registration Rights Agreement) such holders request to
        be
        registered. Vicis has contractually agreed to restrict their ability to convert
        the Series D Preferred Stock and exercise the Series D Warrants and receive
        shares of our common stock such that the number of shares of the Company
        common
        stock held by them and their affiliates after such conversion or exercise
        does
        not exceed 4.99% of the Company’s then issued and outstanding shares of common
        stock.
 
 At
        any
        time before the one year anniversary of the date the Company initially issues
        the shares of Series D Preferred Stock, the Company may, upon written notice,
        redeem the outstanding shares of Series D Preferred Stock in cash at a price
        equal to 110% of Stated Value (as such term is defined in the Certificate
        of
        Designations).
 
 30
 Midtown
        Partners & Co., LLC, which served as the Company’s placement agent in
        connection with the Purchase Agreement (“Midtown”), received aggregate placement
        agent fees of approximately $350,000, as well as the following common stock
        purchase warrants: (a) a series BD-10 warrant entitling Midtown Partners
        to
        purchase 700,000 shares of the Company's common stock at an exercise price
        of
        fifty cents ($0.50) per share, and (b) a series BD-11 warrant entitling Midtown
        Partners to purchase 1,400,000 shares of the Company's common stock at an
        exercise price of seventy-five cents ($0.75) per share. The Series BD-10
        and
        BD-11 warrants have a term of five years from the date of issuance. Midtown
        Partners & Co., LLC is a FINRA registered broker-dealer. Pursuant to the
        terms
        of a Registration Rights Agreement by and between the Company and Midtown,
        pursuant to which if at any time after the date of the Registration Rights
        Agreement the Company shall decide to prepare and file with the Commission
        a
        registration statement relating to an offering for its own account or the
        account of others under the Securities Act of any of its equity securities,
        other than on Form S-4 or Form S-8 (each as promulgated under the Securities
        Act) or their then equivalents relating to equity securities to be issued
        solely
        in connection with any acquisition of any entity or business or equity
        securities issuable in connection with the stock option or other employee
        benefit plans, then the Company shall send to each holder a written notice
        of
        such determination and, if within
        fifteen days after the date of such notice, any such holder shall so request
        in
        writing, the Company shall include in such registration statement, all or
        any part
        of
        such Registrable Securities (as defined in Registration Rights Agreement)
        such
        holders request to be registered.
 
 The
        Series D Preferred Stock is convertible into shares of stock at a conversion
        price of $.50. Any previously issued and outstanding financial instruments
        afforded full ratchet protection with a conversion price greater than $.50
        will
        automatically have their conversion price ratcheted down to the lower conversion price.
 
 On
        May 7,
        2008, the Company entered into loan agreement (the “Purchase Agreement”) with
        ResponzeTV, PLC, a corporation incorporated under the laws of England and
        Wales
        (“RETV”) pursuant to which the Company purchased a 10% Promissory Note from RETV
        for an aggregate purchase price of $2,000,000 (the “Note”). The Note bears
        interest at 10% per annum and matures on June 21, 2008, forty-five days from
        the
        date of issuance (the “Maturity Date”). On the Maturity Date, the Company, at
        its sole discretion, may either (i) apply the principal amount of the Note,
        and
        any interest accrued thereon, towards the purchase price of a strategic
        transaction entered into with the RETV for the acquisition of the capital
        stock
        and/or assets of any of RETV’s subsidiaries and/or divisions
        (the “Strategic Transaction”) or (ii) convert the principal amount of the Note,
        and any interest accrued thereon, into (x) the Specified Number of New RETV
        Shares at a price of 25.75p per share plus (y) New RETV Warrants (the “New RETV
        Securities”). If the Company does not make any such express election, the
        Company will be deemed to have elected to convert the principal amount of
        the
        Note, and any accrued interest thereon, on the Maturity Date, in accordance
        with
        (ii) above. If the Company converts the Note in accordance with the provisions
        set forth above, the Company will hereby forgive RETV of its obligation to
        repay
        the principal amount of the Note and any interest accrued but unpaid thereunder
        and the Note shall become null and void as of the Maturity Date.
 
 For
        purposes of the New RETV Securities, “New RETV Shares” means new ordinary shares
        of 16p par value in the capital of RETV, credited as fully paid up, “New RETV
        Warrants” means new unlisted warrants to subscribe for New RETV Shares which
        will be issued and granted to the Company pursuant to a warrant instrument
        in
        substantially the same form as the warrant instrument granted to the Company
        in
        October 2007, in the following manner: (x) warrants equal to the Specified
        Number, which shall be exercisable at 37p; (y) warrants equal to 50% of the
        Specified Number, which shall be exercisable at 50p; and (z) warrants equal
        to
        50% of the Specified Number, which shall be exercisable at 100p. For purposes
        of
        this Section, “Specified Number” means the principal amount of the Note, and any
        interest accrued thereon, in Pounds Sterling (calculated at an agreed exchange
        rate of £1:US$1.98) divided by 25.75p (being the agreed price for each New RETV
        Share).
 
 Following
        a review of the financial reporting systems, certain accounting discrepancies
        have emerged within the Company's US operations Reliant International Media.
        The
        board is currently investigating these discrepancies however there can be
        no
        guarantee, at this stage, that the Company will be able to continue trading
        following clarification of its financial position.
 
 It
        is
        unlikely that the Company will be able to publish its audited results for
        the
        year ended 31 December 2007 by 30 June 2008 as it’s required under the AIM
        Rules. A further announcement will be made in this regard in due
        course.
 
 The
        Board
        of Directors is discussing the Company's financial position with its accountants
        and funders.
 
 Accordingly,
        The Company believes that the future filings will reflect an impairment change
        as a result of the delisting.
  **ITEM
        13. EXHIBITS.**





Exhibit
              Number
            
            Description2.1
            
            Stock Exchange
                Agreement ***2.2
            
            Securities
                Purchase Agreement by and among OmniReliant Corporation, Willowtree
                Advisor and Cynthia Allison.***3.1
            
            Willowtree
                Advisor Articles of Incorporation *3.2
            
            Willowtree
                Advisor Bylaws *3.3
            
            Willowtree
                Advisor Certificate Designation of Series A 10% Convertible Preferred
                Stock ***3.4
            
            Articles
                of Merger******3.5
            
            Certificate
                of Designation of Series B 10% Convertible Preferred Stock
                ********3.6
            
            Certificate
                of Designation of Series C Convertible Preferred Stock4.1
            
            Form
                of Series A Common Stock Purchase Warrant ***4.2
            
            Form
                of Series B Common Stock Purchase Warrant ********4.3
            
            Form
                of Series C-1 Common Stock Purchase Warrant4.4
            
            Form
                or Series C-2 Common Stock Purchase Warrant10.1
            
            Securities
                Purchase Agreement by and among Willowtree Advisor and the Purchasers
                identified therein. ***10.2
            
            Registration
                Rights Agreement ***10.3
            
            Paul
                Morrison Executive Employment Agreement
                ***





31





10.4
            
            Kathy
                Hilton License Agreement ****10.5
            
            First
                Amendment to Kathy Hilton License Agreement ***10.6
            
            Harrington
                Business Development, LLC Consulting Agreement ***10.7
            
            Guaber
                S.P.A. International Marketing & Distribution Agreement
                ***10.8
            
            Assignment
                of Guaber S.P.A. International Marketing & Distribution Agreement
                ***10.9
            
            Midtown
                Partners & Co., LLC Placement Agent Agreement ***10.10
            
            First
                Amendment to Placement Agent Agreement ***10.11
            
            Amendment
                No. 1 to Registration Rights Agreement, dated November 22,
                2006*******10.12
            
            Securities
                Purchase Agreement by and among OmniReliant Holdings and the Purchasers
                identified therein., dated May 25, 2007 ********10.13
            
            Registration
                Rights Agreement by and between OmniReliant Holdings, Inc. and Dynamic
                Decisions Strategic Opportunities, dated May 25, 2007
                ********10.14
            
            Agreement
                for Acquistiion of Patent Application, dated June 18, 2007 by and
                between
                OmniReliant Holdings, Inc. and Product & Technology Partners
                LLC*******10.15
            
            Securities
                Purchase Agreement, dated October 18, 2007, by and between OmniReliant
                Holdings, Inc. and Vicis Capital Master Fund***********10.16
            
            Securities
                Purchase Agreement, dated October 18, 2007, by and between OmniReliant
                Holdings, Inc. and Dynamic Decisions Strategic
                Opportunities***********10.17
            
            Amended
                and Restated Registration Rights Agreement, dated October 18, 2007,
                by and
                among OmniReliant Holdings, Inc., Vicis Capital Master Fund and Dynamic
                Decisions Strategic Opportunities***********10.18
            
            Subscription
                Agreement, dated October 19, 2007, by and between OmniReliant Corp.
                and
                ResponzeTV PLC***********10.19
            
            Share
                Exchange Agreement, dated October 19, 2007 by and between OmniReliant
                Corp. and ResponzeTV PLC***********14.1
            
            Code
                of Ethics **16.1
            
            Letter
                from Williams & Webster, P.S. *****16.2
            
            Letter
                from Herman, Lagor, Hopkins & Meeks, P.A.
                **********31
            
            Certification
                by Chief Executive Officer and Chief Financial Officer, required
                by Rule
                13a-14(a) or Rule 15d-14(a) of the Exchange Act32
            
            Certification
                by Chief Executive Officer and Chief Financial Officer, required
                by Rule
                13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350
                of
                Chapter 63 of Title 18 of the United States
                Code




*
      Incorporated by reference from the Registrant's Form SB-2 Registration Statement
      filed with the Securities and Exchange Commission on August 2, 2004 (File No.
      333-117840).





**
      Incorporated by reference from to the Registrant’s Form 10-KSB for the period
      ending June 30, 2005 filed with the Securities and Exchange Commission on
      November 2, 2005.





***
      Incorporated by reference from to the Registrant’s Form 8-K filed with the
      Securities and Exchange Commission on November 29, 2006.





****
      Subject to a request for confidential treatment filed with the Securities and
      Exchange Commission pursuant to Rule 24b-2 promulgated under the Securities
      Exchange Act of 1934, as amended.





*****
      Incorporated by reference from to the Registrant’s Form 8-K filed with the
      Securities and Exchange Commission on December 20, 2006.




******
      Incorporated by reference from to the Registrant’s Form 8-K filed with the
      Securities and Exchange Commission on December 29, 2006.





*******Incorporated
      by reference from the Registrant’s Form SB-2 (File No. 333-140800) filed with
      the Securities and Exchange Commission on February 20, 2007.


32




********
      Incorporated by reference from to the
      Registrant’s Form 8-K filed with the Securities and Exchange Commission on June
      1, 2007.


*********
      Incorporated by reference from to the Registrant’s Form 8-K filed with the
      Securities and Exchange Commission on June 26, 2007.




**********
      Incorporated by reference from to the Registrant’s Form 8-K filed with the
      Securities and Exchange Commission on July 26, 2007.





***********
      Incorporated by reference from to the Registrant’s Form 8-K filed with the
      Securities and Exchange Commission on October 24, 2007.





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





The
      Company's board of directors reviews and approves audit and permissible
      non-audit services performed by its independent accountants, as well as the
      fees
      charged for such services. In its review of non-audit service fees and its
      appointment of Herman, Lagor, Hopkins & Meeks, P.A. as the Company's
      independent accountants, the board of directors considered whether the provision
      of such services is compatible with maintaining independence. All of the
      services provided and fees charged by Herman, Lagor, Hopkins & Meeks, P.A.
      in 2007 and Williams & Webster, P.S. in 2006 were approved by the board of
      directors.





Audit
      Fees





The
      aggregate fees billed for professional services for the audit of the annual
      financial statements of the Company and the reviews of the financial statements
      included in the Company's quarterly reports on Form 10-QSB for 2006 and 2005
      were $55,000 and $28,000 respectively, net of expenses.





Audit-Related
      Fees





There
      were no other fees billed by during the last two fiscal years for assurance
      and
      related services that were reasonably related to the performance of the audit
      or
      review of the Company's financial statements and not reported under "Audit
      Fees"
      above.





Tax
      Fees





There
      were $-0- per year spent on tax filings.





All
      Other Fees





There
      were no other fees billed during the last two fiscal years for products and
      services provided.


33


**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly authorized.


**OMNIRELIANT
                HOLDINGS, INC.**Date:
                September 26, 2008
            By:
            /s/
                Paul MorrisonPaul
                MorrisonChief
                Executive Officer and Chief Finacial
                Officer





Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, the
      report has been signed by the following persons on behalf of the Registrant
      and
      in the capacities and on the dates indicated.





Name
            
            Position
            
            Date/s/*Paul
                Morrison*
            
            Chief
                Executive Officer, and Chief Financial Officer
            
            September
                26, 2008Christopher
                Phillips
            
            (Principal
                Executive Officer, Financial Officer and
              Principal
                Accounting Officer) and Director/s/
                Lucien Lallouz
            
            Chairman
                of the Board
            
            September
                26, 2008Lucien
                Lallouz/s/
                Richard Diamond
            
            Director
            
            September
                26, 2008Richard
                Diamond/s/
                Tim Harrington
            
            Director
            
            September
                26, 2008Tim
                Harrington/s/
                Kevin Harrington
            
            Director
            
            September
                26, 2008Kevin
                Harrington




34