**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**Form
      10-Q**





(Mark
      One)


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





**For
      the quarterly period ended March 31, 2008**





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





For
      the
      transition period from _______________ to _______________.





**Commission
      file number 0-30639**





**World
      Am, Inc.**


(Exact
      Name of Company as Specified in its Charter)





**Nevada**
            **90-0142757**(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer
              Identification
                No.)





**4340
                Von Karman Avenue**
              **Suite
                200**
              **Newport
                Beach, CA**
            **92660**(Address
                of principal executive offices)
            (Zip
                Code)





**Issuer’s
      telephone number, including area code (949) 955-5355**





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





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):





Large
                accelerated filer ̈
            Accelerated
                filer ̈Non-accelerated
                filer ̈
            Smaller
                reporting companyx


(Do
      not
      check if a smaller reporting company)





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





**Applicable
      only to issuers involved in bankruptcy proceedings during the preceding five
      years**





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


Yes  ̈ No  ̈ .





**Applicable
      only to corporate issuers:**





Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date. As of April 30, 2008, there were
      1,173,671,325 shares of common stock, par value $0.0001, issued and
      outstanding.





**WORLD
      AM, INC.**





**TABLE
      OF CONTENTS**





**PART
                I – FINANCIAL
                INFORMATION**
            
            **2**ITEM
                1
            Financial
                Statements (Unaudited)
            
            2ITEM
                2
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            34ITEM
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            
            46ITEM
                4
            Controls
                and Procedures
            
            46ITEM
                4T
            Controls
                and Procedures
            
            48**PART
                II – OTHER INFORMATION**
            
            49ITEM
                1
            Legal
                Proceedings
            
            49ITEM
                1A
            Risk
                Factors
            
            51ITEM
                2
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            51ITEM
                3
            Defaults
                Upon Senior Securities
            
            51ITEM
                4
            Submission
                of Matters to a Vote of Security Holders
            
            51ITEM
                5
            Other
                Information
            
            51ITEM
                6
            Exhibits
            
            52







**PART
      I-FINANCIAL INFORMATION**





This
      Quarterly Report includes forward-looking statements within the meaning of the
      meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the
      Securities Exchange Act of 1934, and are subject to the safe harbor created
      by
      those rules. All statements, other than statements of fact, included in this
      Quarterly Report, including, without limitation, statements regarding our
      potential future plans and objectives, are forward-looking statements that
      involve risks and uncertainties. There can be no assurance that such statements
      will prove to be accurate and actual results and future events could differ
      materially from those anticipated in such statements. Technical complications
      that may arise could prevent the prompt implementation of any strategically
      significant plan(s) outlined above. We caution that these forward looking
      statements are further qualified by other factors including, but not limited
      to
      those, set forth in the World Am, Inc. Form 10-KSB filing and other filings
      with
      the United States Securities and Exchange Commission (available at www.sec.gov ).
      We
      undertake no obligation to publicly update or revise any statements in this
      Quarterly Report, whether as a result of new information, future events or
      otherwise.





**ITEM
              1.**
            **Financial
                Statements****(unaudited).**


2





**WORLD
        AM, INC.**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 
 **March 31,**
                **2008**
              
              **December 31,**
                **2007**(unaudited)**ASSETS**Current
                  assetsCash
                  and cash equivalents
              
              $
              12,333
              
              $
              538,373Accounts
                  receivable, net of allowance of $0 and $0, respectively
              
              
              74,437
              
              
              77,167Unbilled
                  revenues on uncompleted contracts
              
              
              60,009
              
              
              73,465Inventories
              
              
              75,526
              
              
              44,162Prepaid
                  expenses and other current assets
              
              
              29,892
              
              
              32,156Advances
                  to related party
              
              
              1,204
              
              
              3,259Total
                  current assets
              
              
              253,401
              
              
              768,582Intangible
                  assets
              
              
              205,548
              
              
              184,547Fixed
                  assets, net
              
              
              64,451
              
              
              71,675Refundable
                  deposit
              
              
              5,127
              
              
              5,127Total
                  assets
              
              $
              528,527
              
              $
              1,029,931**LIABILITIES
                  AND STOCKHOLDERS’ DEFICIT**Current
                  liabilitiesAccounts
                  payable and accrued liabilities
              
              $
              993,195
              
              $
              744,876Due
                  to stockholders
              
              
              321,884
              
              
              321,884Due
                  to related parties
              
              
              28,147
              
              
              186,901Payroll
                  taxes payable
              
              
              221,248
              
              
              192,177Deferred
                  revenue
              
              
              31,935
              
              
              57,563Notes
                  payable – short term
              
              
              1,259
              
              
              1,193Convertible
                  debenture and accrued interest, net of unamortized discount of
                  $95,444 and
                  $118,548, respectively
              
              
              173,865
              
              
              157,687Total
                  current liabilities
              
              
              1,771,533
              
              
              1,662,281Notes
                  payable
              
              
              1,863
              
              
              2,239Derivative
                  and warrant liabilities
              
              
              1,871,122
              
              
              2,056,313Total
                  liabilities
              
              
              3,644,518
              
              
              3,720,833Commitments
                  and contingenciesStockholders’
                  deficit:Class
                  A preferred stock, $0.0001 par value; liquidation preference of
                  $1,700 per
                  share; 40,000,000 shares authorized, 1,369 shares issued and no
                  shares
                  outstanding
              
              
              —
              
              
              —
  3
  **WORLD
        AM, INC.**
 **CONDENSED
        CONSOLIDATED BALANCE SHEET**
 **(Continued)**
 **March 31,**
                  **2008**
                
                **December 31,**
                  **2007**(unaudited)Class
                    B preferred stock, $0.0001 par value; liquidation preference
                    of
                    $8,000,025; 40,000,000 shares authorized, 55 shares issued and
                    no shares
                    outstanding
                
                
                —
                
                
                —Common
                    stock; $0.0001 par value; 1,500,000,000 shares authorized, 1,105,708,931
                    and 1,008,192,691 shares issued and outstanding
                
                
                110,571
                
                
                100,819Additional
                    paid-in capital
                
                
                4,345,394
                
                
                4,149,659Accumulated
                    deficit
                
                
                (7,571,956
                )
                
                (6,941,380
                )Total
                    stockholders’ deficit
                
                
                (3,115,991
                )
                
                (2,690,902
                )Total
                    liabilities and stockholders’ deficit
                
                $
                528,527
                
                $
                1,029,931
 
 See
        notes
        to the condensed consolidated financial statements.
 
 4
  **WORLD
        AM, INC.**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(Unaudited)**
 
 Three Months
                Ended March
                31, 2008
              
              Three months
                Ended March
                31, 2007Revenues:Contract
                  research and development revenue
              
              $
              127,544
              
              $
              —Product
                  sales
              
              
              187,106
              
              
              53,270314,650
              
              
              53,270Cost
                  and expenses:Cost
                  of contract research and development revenue
              
              
              127,544
              
              
              —Cost
                  of product sales
              
              
              61,251
              
              
              12,738General
                  and administrative expenses
              
              
              908,241
              
              
              586,898Loss
                  from operations
              
              
              (782,386
              )
              
              (546,366
              )Other
                  income (expense)Change
                  in fair value of derivative and warrant liabilities
              
              
              185,191
              
              
              (816,645
              )Interest
                  expense
              
              
              (34,131
              )
              
              (29,462
              )Interest
                  income
              
              
              1,032
              
              
              —Miscellaneous
                  income (expense)
              
              
              (282
              )
              
              1,741Total
                  other income (expense)
              
              
              151,810
              
              
              (844,366
              )Loss
                  before provision for income taxes
              
              
              (630,576
              )
              
              (1,390,732
              )Provision
                  for income taxes
              
              
              —
              
              
              —Net
                  loss
              
              $
              (630,576
              )
              $
              (1,390,732
              )Loss
                  per common share, basic and diluted
              
              $
              (0.00
              )
              $
              (0.00
              )Basic
                  and diluted weighted average common shares outstanding
              
              
              1,059,721,003
              
              
              431,402,458
  See
        notes
        to the condensed consolidated financial statements
  5
  **WORLD
        AM, INC.**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT**
 **FOR
        THE PERIOD FROM DECEMBER 31, 2006 THROUGH MARCH 31, 2008**
 
 Class A Preferred
                Stock
              
              Class B Preferred Stock
              
              Common Stock
              
              Additional
                Paid-In
              
              Accumulated
              
              Total
                Stockholders’Shares
              
              Amount
              
              Shares
              
              Amount
              
              Shares
              
              Amount
              
              Capital
              
              Deficit
              
              DeficitBalance,
                  December 31, 2006
              
              
              1,369
              
              $
              —
              
              
              55
              
              $
              —
              
              
              330,037,091
              
              $
              33,004
              
              $
              630,214
              
              $
              (4,976,646
              )
              $
              (4,313,428
              )Common
                  stock issued to pay operating expenses
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              197,617,357
              
              
              19,761
              
              
              955,304
              
              
              —
              
              
              975,065Common
                  stock issued for cash
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              480,000,000
              
              
              48,000
              
              
              3,477,000
              
              
              —
              
              
              3,525,000Cancellation
                  of common stock issued to a consultant in 2006, subsequently
                  replaced
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (4,103,136
              )
              
              (410
              )
              
              (20,590
              )
              
              —
              
              
              (21,000
              )Cancellation
                  of common stock issued to an employee in 2005
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (100,000
              )
              
              (10
              )
              
              (870
              )
              
              —
              
              
              (880
              )Initial
                  fair value of warrants reclassified to derivatives and warrant
                  liabilities
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (607,875
              )
              
              —
              
              
              (607,875
              )Common
                  stock issued to convert debt at calculated price of $0.00022 per
                  share
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              4,731,379
              
              
              473
              
              
              527
              
              
              —
              
              
              1,000Common
                  stock issued for exercise of warrant
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              10,000
              
              
              1
              
              
              9,999
              
              
              
              
              
              10,000Stock
                  issuance costs
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              —
              
              
              —
              
              
              (324,750
              )
              
              —
              
              
              (324,750
              )Options
                  vesting during the period
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              —
              
              
              —
              
              
              30,700
              
              
              —
              
              
              30,700
 
 6
  **WORLD
        AM, INC.**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT**
 **FOR
        THE PERIOD FROM DECEMBER 31, 2006 THROUGH MARCH 31, 2008**
 **(continued)**
  Class A Preferred Stock
              
              Class B Preferred Stock
              
              Common Stock
              
              Additional
                Paid-In
              
              Accumulated
              
              Total
                Stockholders’Shares
              
              Amount
              
              Shares
              
              Amount
              
              Shares
              
              Amount
              
              Capital
              
              Deficit
              
              DeficitNet
                  Loss
              
              
              —
              
              
              —
              
              
              —
              
              
              
              
              
              —
              
              
              —
              
              
              
              
              
              (1,964,734
              )
              
              (1,964,734
              )Balance,
                  December 31, 2007
              
              
              1,369
              
              
              —
              
              
              55
              
              
              —
              
              
              1,008,192,691
              
              
              100,819
              
              
              4,149,659
              
              
              (6,941,380
              )
              
              (2,690,902
              )Common
                  stock issued to pay operating expenses (unaudited)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              45,049,733
              
              
              4,505
              
              
              114,057
              
              
              —
              
              
              118,562Common
                  stock issued to convert debt at calculated price of $0.00014
                  (unaudited)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              52,393,514
              
              
              5,240
              
              
              2,059
              
              
              —
              
              
              7,299Common
                  stock issued for exercise of warrant at $1.00 per share (unaudited)
                  (Note
                  6)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              72,993
              
              
              7
              
              
              47,986
              
              
              —
              
              
              47,993Options
                  vesting during the period (unaudited)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              31,633
              
              
              —
              
              
              31,633Net
                  loss (unaudited)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (630,576
              )
              
              (630,576
              )Balance,
                  March 31, 2008 (Unaudited)
              
              
              1,369
              (1)
              $
              —
              
              
              55
              
              $
              —
              
              
              1,105,708,931
              
              $
              110,571
              
              $
              4,345,394
              
              $
              (7,571,956
              )
              $
              (3,115,991
              )
 
 (1)
        In
        January 2006, the Company made the determination to cancel the 1,369 shares
        of
        Class A preferred stock based on non-performance under a related loan agreement.
        Therefore, the Company considers these shares to be issued, since they have
        not
        actually been cancelled yet, but not outstanding.
 
 See
        notes
        to the condensed consolidated financial statements.
  7
  **WORLD
        AM, INC.**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(Unaudited)**
  Three Months
                Ended March 31,
                2008
              
              Three Months
                Ended March 31,
                2007Cash
                  flows from operating activities:Net
                  loss
              
              $
              (630,576
              )
              $
              (1,390,732
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Change
                  in fair value of derivative and warrant liability
              
              
              (185,191
              )
              
              816,645Depreciation
                  and amortization
              
              
              30,328
              
              
              23,633Stock
                  issued to pay operating expenses
              
              
              118,562
              
              
              265,050Options
                  vesting during the period
              
              
              31,633
              
              
              6,963Changes
                  in operating assets and liabilities:Accounts
                  receivable, net
              
              
              2,730
              
              
              (3,265
              )Unbilled
                  revenues on uncompleted contracts
              
              
              13,456
              
              
              —Inventories
              
              
              (31,364
              )
              
              (8,491
              )Prepaid
                  expenses and other current assets
              
              
              2,264
              
              
              707Accounts
                  payable and accrued liabilities
              
              
              252,692
              
              
              (46,641
              )Payroll
                  taxes payable
              
              
              29,071
              
              
              (21,866
              )Due
                  to related parties
              
              
              (156,699
              )
              
              —Deferred
                  revenue
              
              
              (25,628
              )
              
              —Net
                  cash used in operating activities
              
              
              (548,722
              )
              
              (357,997
              )
 
 8
  **WORLD
        AM, INC.**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(Unaudited)**
 **(continued)**
 
 Three Months
                Ended March 31,
                2008
              
              Three Months
                Ended March 31,
                2007Cash
                  flows from investing activities:Purchase
                  of fixed assets
              
              
              —
              
              
              (8,345
              )Purchase
                  of intangible assets
              
              
              (21,001
              )
              
              (151,604
              )Net
                  cash used in investing activities
              
              
              (21,001
              )
              
              (159,949
              )Cash
                  flows from financing activities:Net
                  proceeds from sale of common and preferred stock, net of issuance
                  costs
              
              
              —
              
              
              497,500Proceeds
                  from exercise of warrants
              
              
              47,993
              
              
              —Principal
                  payments on notes payable
              
              
              (4,310
              )
              
              (54,290
              )Net
                  cash provided by financing activities
              
              
              43,683
              
              
              443,210Net
                  change in cash
              
              
              (526,040
              )
              
              (74,736
              )Cash,
                  beginning of period
              
              
              538,373
              
              
              122,008Cash,
                  end of period
              
              $
              12,333
              
              $
              47,272Supplemental
                  disclosure of cash flow informationCash
                  paid for income taxes
              
              $
              —
              
              $
              —Cash
                  paid for interest
              
              $
              —
              
              $
              —Schedule
                  of non-cash investing and financing activities:Common
                  stock issued for the conversion of debt
              
              $
              7,299
              
              $
              —
  See
        notes
        to the condensed consolidated financial statements
  9
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        1 – ORGANIZATION AND BASIS OF PRESENTATION**
  Organization.
 
 World
        Am,
        Inc. (“World Am” or “the Company”) was incorporated in Florida in 1994. In 2002,
        World Am changed its domicile from Florida to Nevada. The Company currently
        has
        three wholly-owned subsidiaries: Technology Development International, Inc.
        (“TDI”), Isotec, Inc. (“Isotec”) and Senz-It, Inc. (“Senz-It”).
  TDI
        is a
        Colorado corporation incorporated in 1997 and, at present, is
        dormant.
 
 Isotec
        is
        a Colorado corporation incorporated in 1998 that develops, manufactures and
        distributes automated passage control and security devices to government
        and
        other commercial enterprises. At present, the majority of the Company’s revenue
        is generated by Isotec.
 
 Senz-It
        is a California corporation incorporated on March 4, 2005 to develop,
        commercialize and market technology in the
        field of micro-sensor elements and sensor arrays to the homeland security,
        indoor air quality, food purity and processing and medical diagnostic
        industries.
 
 Acquisition
        of Senz-It, Inc. and Reverse Acquisition Accounting.
 
 On
        August
        31, 2005, the Company consummated an agreement to acquire 100% of the issued
        and
        outstanding capital stock of Senz-It, Inc. In exchange, the Company issued
        a
        warrant to purchase 18,000,000 shares of its common stock and 55 shares of
        its
        Series B convertible preferred stock to SUTI Holdings LP (“SUTI”), the owner of
        Senz-It at the time. The exercise price of the common shares under these
        warrants is $0.001 per share. The warrant vested immediately and expires
        in
        August 2010. Each share of Class B preferred stock is convertible into the
        greater of (i) 1% of the outstanding common shares of the Company at the
        time of
        conversion, including the common stock equivalents of all unexercised warrants,
        options and convertible securities, and (ii) 7,272,728 shares of common stock.
        The holders of the Series B preferred stock are entitled to the number of
        votes
        the holder would be entitled to had they converted the shares of Series B
        preferred stock at the time of the vote. In addition, SUTI has selected three
        directors to sit on the Company’s board of directors, constituting a majority of
        the board.
 
 Due
        to
        the change in voting control and of senior management, the transaction was
        recorded as a “reverse-merger” whereby Senz-It was considered to be the acquirer
        for accounting purposes. The transaction is equivalent to the issuance of
        stock
        by Senz-It, a development stage company, for the net monetary assets of the
        Company, a public company, accompanied by a recapitalization. Prior to the
        transaction, World Am was a public company with assets of $88,656, liabilities
        totalling $1,075,978 and 66,570,285 shares of common stock issued and
        outstanding. Senz-It was a privately owned, non-operating development stage
        company. The accounting for the transaction is identical to that resulting
        from
        a reverse acquisition, except goodwill or other intangible assets were not
        recorded. Accordingly, these financial statements are the historical financial
        statements of Senz-It. The accompanying consolidated financial statements
        reflect activities from March 4, 2005, the date of inception of Senz-It and
        forward.
  10
 
 **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        1 – ORGANIZATION AND BASIS OF PRESENTATION** **(continued)**
 
 On
        March
        7, 2006, SUTI Holdings, LP, the former stockholder of Senz-It, assigned the
        warrant to Select University Technologies, Inc., which then exercised the
        warrant in a cashless transaction that resulted in the issuance of 17,880,000
        restricted shares of common stock (the balance of 120,000 shares was withheld
        in
        the cashless exercise of the warrant).
 
 Basis
        of Presentation.
 
 The
        unaudited interim condensed consolidated financial statements present the
        condensed consolidated financial statements of the Company and its subsidiaries.
        All intercompany transactions and balances have been eliminated in
        consolidation.
 
 The
        interim condensed financial information is unaudited. In the opinion of
        management, all adjustments necessary to present fairly the consolidated
        financial position as of March 31, 2008 and the results of operations and
        cash
        flows for the three months ended March 31, 2008 have been included in the
        consolidated financial statements. Interim results are not necessarily
        indicative of results of operations for the full year.
 
 The
        accompanying unaudited condensed consolidated financial statements have been
        prepared in accordance with accounting principles generally accepted in the
        United States of America for interim financial information and pursuant to
        the
        instruction to Form 10-Q and Article 8 of Regulation S-X promulgated by the
        Securities and Exchange Commission (“SEC”). Therefore, they do not include all
        of the information and disclosures required by accounting principles generally
        accepted in the United States of America for complete financial statements.
        The
        consolidated financial statements should be read in conjunction with the
        Company’s Form 10-KSB for the year ended December 31, 2007.
 
 Effective
        January 1, 2008, the Company is no longer in the development stage, as defined
        in Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and
        Reporting by Development Stage Enterprises.” The Company believes that the
        revenues generated from Senz-It and Isotec during the three months ended
        March
        31, 2008 as well as the projected revenues for the remainder of 2008 demonstrate
        that WDAM has emerged from the product development phase.
  Going
        Concern.
  The
        Company’s net losses and accumulated deficit were $7,571,956 through March 31,
        2008. The Company cannot provide assurance that it can achieve or sustain
        profitability on a quarterly or annual basis in the future. The Company
        anticipates it will continue to incur losses until it is able to establish
        significant levels of revenue while controlling its expenses. The Company’s
        success is dependent upon the successful development and marketing of its
        products, as to which there is no assurance. Any future success that the
        Company
        might experience will depend upon many factors, including factors out of
        its
        control or which cannot be predicted at this time. These factors may include
        changes in or increased levels of competition, including the entry of additional
        competitors and increased success by existing competitors, changes in general
        economic conditions, increases in operating costs, including costs of supplies,
        personnel and equipment, reduced margins caused by competitive pressures
        and
        other factors. These conditions may have a materially adverse effect upon
        the
        Company or may force it to reduce or curtail
        operations. In addition, the Company will require additional funds to sustain
        and expand its sales and marketing activities, particularly if a well-financed
        competitor emerges.
  11
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        1 – ORGANIZATION AND BASIS OF PRESENTATION** **(continued)**
  In
        view
        of the matters described above, recoverability of a major portion of the
        recorded asset amounts shown in the accompanying condensed consolidated balance
        sheets is dependent upon continued operations of the Company, which in turn
        is
        dependent upon the Company’s ability to raise additional capital, obtain
        financing and to succeed in its future operations. The condensed consolidated
        financial statements do not include any adjustments relating to the
        recoverability and classification of recorded asset amounts and classification
        of liabilities that might be necessary should the Company be unable to continue
        as a going concern.
  **NOTE
        2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
  Use
        of
        Estimates.
  The
        preparation of the condensed consolidated financial statements in conformity
        with accounting principles generally accepted in the United States of America
        requires management to make estimates and assumptions that affect the reported
        amounts of assets and liabilities, disclosure of contingent assets and
        liabilities at the date of the financial statements and the reported amounts
        of
        revenue and expenses during the reporting period. Significant estimates include
        the realization of accounts receivable and inventories, the realizability
        of
        long-lived assets, the value of shares and options issued for services and
        the
        amount of the deferred tax asset valuation allowance. Accordingly, actual
        results could differ from these estimates.
  Concentration
        of Credit Risk.
  Cash.
  The
        Company maintains its cash balances at credit-worthy financial institutions
        that
        are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to
        $100,000. As of March 31, 2008 and December 31, 2007, the Company had cash
        balances in excess of the FDIC limit of $0 and $438,373,
        respectively.
  Customers.
  The
        Company had four customers that accounted for essentially all revenue during
        the
        three months ended March 31, 2008 and one customer that accounted for
        essentially all revenue for the comparable prior year period. As of March
        31,
        2008, two customers owed $63,714. As of December 31, 2007, two customers
        owed
        $64,820.
  Accounts
        Receivable.
  Accounts
        receivable consists of amounts billed to customers upon performance of service
        or delivery of goods. The Company performs ongoing credit evaluations of
        customers and adjusts credit limits based upon payment history and the
        customers’ current creditworthiness, as determined by its review of their
        current credit information. The Company continuously monitors collections
        and
        payments from its customers and maintains a provision for estimated credit
        losses based upon its historical experience and any customer-specific collection
        issues that it has identified. The Company records specific reserve provisions
        for individual accounts when the Company becomes aware of a customer’s inability
        to meet its financial obligation to the Company.
  12
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
  Inventories.
  Inventories
        are stated at the lower of cost or market. Cost is principally determined
        by
        using the average cost method. Inventories consist of raw materials,
        work-in-process and finished goods held for sale. The Company’s management
        monitors the inventories for excess and obsolete items and makes necessary
        valuation adjustments when required. Adjustments are considered to be a
        permanent reduction in the cost basis of the corresponding inventory.
        Inventories consist of raw materials used in product sales by Isotec at March
        31, 2008. Certain raw materials used in Isotec’s products are only available
        from a few suppliers. If these sources of raw materials are lost, Isotec’s
        production could be significantly affected.
  Estimated
        Costs to Complete and Accrued Loss on Contracts.
  The
        Company reviews and reports on the performance of its contracts against the
        respective plans. These reviews are summarized in the form of estimates of
        costs
        to complete the contracts (“ETC”). ETCs include management’s current estimates
        of remaining amounts for direct labor, material, subcontract support and
        allowable indirect costs based on each contract’s completion status and either
        the current or adjusted future technical requirements under the contract.
        If an
        ETC indicates a potential overrun against budgeted program resources, management
        generally seeks to revise the program plan in a manner consistent with customer
        objectives to eliminate such overrun and to secure necessary customer agreement
        to such revision. To mitigate the financial risk of such revisions, the Company
        attempts to negotiate as much flexibility in deliverable dates as possible.
        When
        revisions to the contract do not appear possible within program budgets,
        an
        accrual for contract overrun is recorded based on the most recent ETC of
        the
        particular program. For the three months ended, March 31, 2008 and for the
        year
        ended December 31, 2007, the Company has not estimated any cost overruns
        on its
        contract.
  Fixed
        Assets.
  Fixed
        assets are recorded at cost and are depreciated using the straight-line method
        over the estimated useful lives of the assets. The useful lives for the related
        assets range from three to seven years.
  Maintenance
        and repairs are charged to expense as incurred. Renewals and improvements
        of a
        major nature are capitalized. At the time of retirement or other disposition
        of
        property and equipment, the cost and accumulated depreciation are removed
        from
        the accounts and any resulting gains or losses are reflected in the consolidated
        statement of operations.
  13
 
 **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
  Long-Lived
        Assets.
  The
        Company accounts for its long-lived assets in accordance with SFAS No. 144,
        “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144
        requires that long-lived assets be reviewed for impairment whenever events
        or
        changes in circumstances indicate that the historical cost carrying value
        of an
        asset may no longer be appropriate. The Company assesses recoverability of
        the
        carrying value of an asset by estimating the future net cash flows expected
        to
        result from the asset, including eventual disposition. If the future net
        cash
        flows are less than the carrying value of the asset, an impairment loss is
        recorded equal to the difference between the asset’s carrying value and fair
        value or disposable value. As of March 31, 2008 and December 31, 2007, the
        Company does not believe there has been any impairment of its long-lived
        assets.
        There can be no assurances, however, that demand for the Company’s products and
        services will continue, which could result in an impairment of long-lived
        assets
        in the future.
  Convertible
        Debenture and Beneficial Conversion Feature.
  If
        the
        conversion feature of conventional convertible debt provides for a rate of
        conversion that is below market value, this feature is characterized as a
        beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a
        debt discount pursuant to Emerging Issues Task Force (“EITF”) Issue No. 98-5,
“Accounting for Convertible Securities with Beneficial Conversion Features
        or
        Contingency Adjustable Conversion Ratio,” and EITF Issue No. 00-27, “Application
        of EITF Issue No. 98-5 to Certain Convertible Instruments.” In those
        circumstances, the convertible debt will be recorded net of the discount
        related
        to the BCF. The Company amortizes the discount to interest expense over the
        life
        of the debt using the effective interest method.
  Derivative
        Financial Instruments.
  In
        accounting for non-conventional convertible debt, the Company bifurcates
        its
        embedded derivative instruments and records them under the provisions of
        SFAS
        No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as
        amended, and EITF Issue No. 00-19, “Accounting for Derivative Financial
        Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock.” The
        Company’s derivative financial instruments consist of embedded derivatives
        related to a non-conventional debenture entered into with Golden Gate Investors,
        Inc./La Jolla Cove Investors, Inc. (“LaJolla Cove”) (see Note 6). These embedded
        instruments related to the Debenture include the conversion feature, liquidated
        damages related to registration rights and default provisions. The accounting
        treatment of derivative financial instruments requires that the Company record
        the derivatives and related warrants at their fair value as of the inception
        date of the agreement and at fair value as of each subsequent balance sheet
        date. Any change in fair value will be recorded as non-operating, non-cash
        income or expense at each reporting period. If the fair value of the derivatives
        is higher at the subsequent balance sheet date, the Company will record a
        non-operating, non-cash charge. If the fair value of the derivative is lower
        at
        the subsequent balance sheet date, the Company will record non-operating,
        non-cash income.
  14
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
  During
        the year ended December 31, 2006, the Company recorded the initial fair value
        of
        the conversion feature of $1,151,759 of which $876,759 was recorded as interest
        expense in the consolidated statement of operations and $275,000 was recorded
        as
        a discount on the debt and is being amortized to interest expense over the
        life
        of the debt. The Company also recorded the initial fair value of the attached warrants,
        related to the debt financing in 2006, of $2,075,694 as a component of interest
        expense in the consolidated statements of operations for the year ended December
        31, 2006. The initial fair value of the conversion-related derivatives and
        warrants were valued primarily using the Black-Scholes pricing model with
        the
        following assumptions: dividend-yield of 0%, annual volatility of 127% and
        risk-free interest rate of 4.70% – 4.74%. At December 31, 2007, the fair value
        of the conversion feature and the warrants amounted to $1,788,376. At March
        31,
        2008, the fair value of the La Jolla Cove conversion feature and the warrants
        amounted to $1,610,221. The decrease in the fair value of the La Jolla Cove
        conversion features and warrants of $178,155 at March 31, 2008 and the increase
        in the fair value of the conversion features and warrants of $772,645 at
        March
        31, 2007 are included as other income (expense) in the accompanying condensed
        consolidated statements of operations.
  As
        of
        December 31, 2007, the derivatives and warrants were valued primarily using
        the
        Black-Scholes pricing model with the following assumptions: dividend yield
        of
        0%, annual volatility of 133.2% – 161.8%, and risk free interest rate of
        3.07%-3.45%. The derivatives are classified as long-term liabilities in the
        accompanying condensed consolidated balance sheet.
  As
        of
        March 31, 2008, the derivatives and warrants were valued primarily using
        the
        Black-Scholes pricing model with the following assumptions: dividend yield
        of
        0%, annual volatility of 134.6% – 156.3%, and risk free interest rate of
        1.55%-2.46%. The derivatives are classified as long-term liabilities in the
        accompanying condensed consolidated balance sheet.
  In
        addition, under the provisions of EITF Issue No. 00-19, as a result of entering
        into the convertible debt, the Company is required to classify all other
        non-employee stock options and warrants as liabilities and mark them to market
        at each reporting date. Non-employee stock options and warrants were valued
        primarily using the Black-Scholes pricing model with the following assumptions:
        dividend yield of 0%, volatility of 138% and risk free interest rate of 4.54%.
        At December 31, 2007, the fair value of the non-employee warrant was $267,937.
        The decrease in the fair value of non-employee stock options in the amount
        of
        $425,938 since December 31, 2007 is included in other income in the December
        31,
        2007 consolidated statement of operations.
  At
        March
        31, 2008, the fair value of the non-employee warrants was $260,901. The decrease
        in the fair value of non-employee stock options and warrants in the amount
        of
        $7,036 since December 31, 2007 and the increase of $44,000 since December
        31,
        2006 are included in other income (expense) in the accompanying condensed
        consolidated statements of operations.
  Fair
        Value of Financial Instruments.
  The
        Company’s financial instruments consist of cash, accounts receivable, accounts
        payable, accrued expenses, amounts due to stockholders and related parties,
        notes payable and convertible debentures. Pursuant to SFAS No. 107, “Disclosures
        About Fair Value of Financial Instruments,” the Company is required to estimate
        the fair value of all financial instruments at the balance sheet date. The
        Company considers the carrying values of its financial instruments in the
        financial statements to approximate their fair values due to their short
        maturities and rates currently available to the Company for similar debt
        instruments, except for convertible debt, for which an equivalent instrument
        could not be located.
  15
 
 **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
  Stock-Based
        Compensation.
  All
        issuances of the Company’s stock for non-cash consideration have been assigned a
        per share amount equalling either the market value of the shares issued or
        the
        value of consideration received, whichever is more readily determinable.
        The
        majority of the non-cash consideration received pertains to services rendered
        by
        consultants and others and have been valued at the amount billed by the
        consultant for services provided.
  The
        Company’s accounting policy for equity instruments issued to consultants and
        vendors in exchange for goods and services follows the provisions of EITF
        Issue
        No. 96-18, “Accounting for Equity Instruments That are Issued to Other Than
        Employees for Acquiring, or in Conjunction with Selling, Goods or Services,” and
        EITF Issue No. 00-18, “Accounting Recognition for Certain Transactions Involving
        Equity Instruments Granted to Other Than Employees.” The measurement date for
        the fair value of the equity instrument issued is determined at the earlier
        of
        (a) the date at which a commitment for performance by the consultant or vendor
        is reached or (b) the date at which the consultant or vendor’s performance is
        complete. In the case of equity instruments issued to consultants, the fair
        value of the equity instrument is recognized over the term of the consulting
        agreement. In accordance with EITF Issue No. 00-18, an asset acquired in
        exchange for the issuance of fully vested, non-forfeitable equity instruments
        should not be presented or classified as an offset to equity on the grantor’s
        balance sheet once the equity instrument is granted for accounting purposes.
        Accordingly, the Company will record the fair value of the fully vested
        non-forfeitable common stock issued for future consulting services as prepaid
        expenses in the consolidated balance sheet.
  The
        Company accounts for its employee stock-based compensation under the provisions
        of SFAS No. 123 (revised 2004), “Share-Based Payment,” (“SFAS No. 123(R)”). SFAS
        No. 123(R) requires a public entity to measure the cost of employee services
        received in exchange for an award of equity instruments, including stock
        options, based on the grant-date fair value of the award and to recognize
        it as
        compensation expense over the period the employee is required to provide
        service
        in exchange for the award, usually the vesting period. The Company has also
        applied the provisions of Staff Accounting Bulletin (“SAB”) No. 107 relating to
        SFAS No. 123(R).
  SFAS
        No.
        123(R) requires companies to estimate the fair value of share-based payment
        awards on the date of grant using an option-pricing model. The value of the
        portion of the award that is ultimately expected to vest is recognized as
        expense over the requisite service periods in the Company’s consolidated
        statements of operations.
  Stock-based
        compensation expense recognized during the period is based on the value of
        the
        portion of share-based payment awards that is ultimately expected to vest
        during
        the period. SFAS No. 123(R) requires forfeitures to be estimated at the time
        of
        grant and revised, if necessary, in subsequent periods if actual forfeitures
        differ from those estimates. The forfeiture rate that the Company presently
        uses
        is 0%.
  SFAS
        No.
        123(R) requires the cash flows resulting from the tax benefits resulting
        from
        tax deductions in excess of the compensation cost recognized for those options
        to be classified as financing cash flows. Due to the Company’s loss position,
        there were no such tax benefits for the three months ended March 31, 2008
        and
        2007, respectively.
  16
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
  Net
        Loss Per Common Share.
  The
        Company computes net loss per common share in accordance with SFAS No. 128,
        “Earnings per Share,” and SAB No. 98. Under the provisions of SFAS No. 128 and
        SAB No. 98, basic net loss per share is computed by dividing the net loss
        available to common stockholders for the period by the weighted average number
        of shares of common stock outstanding during the period. The calculation
        of
        diluted net loss per share gives effect to common stock equivalents; however,
        potential common shares are excluded if their effect is anti-dilutive. For
        the
        three months ended March 31, 2008 and 2007, basic and diluted earnings per
        share
        were the same. Had such shares been included in diluted earnings per share,
        they
        would have resulted in weighted-average common shares of 4,886,051,790 for
        the
        three months ended March 31, 2008 and 2,286,311,731 for the three months
        ended
        March 31, 2007.
  Revenue
        Recognition.
  The
        Company recognizes revenue in accordance with SAB No. 101, “Revenue Recognition
        in Financial Statements,” as revised by SAB No. 104. As such, the Company
        recognizes revenue when persuasive evidence of an arrangement exists, title
        transfer has occurred, the price is fixed or readily determinable and collection
        is probable.
  The
        Company’s revenues were derived from product sales at Isotec, which primarily
        consisted of shipments of security portals. Revenue from product sales are
        recorded when products are shipped.
  Revenues
        derived from contracts to develop prototypes and provide research, development,
        design, testing and evaluation of complex detection and control defense systems
        were $127,544 and $-0- during the three months ended March 31, 2008 and 2007,
        respectively. The Company’s research and development contract is cost
        reimbursement. The Company’s cost reimbursement research and development
        contracts require the Company’s good faith performance of a statement of work
        within overall budgetary constraints, but with some flexibility as it relates
        to
        scheduling and resources, both personnel and equipment. Revenues for research
        and development contracts are recognized as costs are incurred in the proportion
        that costs incurred bear to estimated final costs.
  Costs
        and
        estimated earnings in excess of billings under government research and
        development contracts are accounted for as unbilled revenues on uncompleted
        contracts stated at estimated realizable value and expected to be realized
        in
        cash within one year.
  As
        of
        March 31, 2008 and December 31, 2007, the Company recorded deferred revenue
        of
        $31,935 and $57,563, respectively, for customer deposits on ordered
        products.
  The
        Company has contracts with various governments and governmental agencies.
        Government contracts are subject to audit by the applicable governmental
        agency.
        Such audits could lead to inquiries from the government regarding the
        acceptability of costs under applicable government regulations and potential
        adjustments of contract revenues. To date, the Company has not been involved
        in
        any such audits.
  17
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        (continued)**
  Income
        Taxes
  The
        Company accounts for income taxes under the provisions of SFAS No. 109,
“Accounting for Income Taxes.” Under SFAS No. 109, deferred tax assets and
        liabilities are recognized for future tax benefits or consequences attributable
        to temporary differences between the financial statement carrying amounts
        of
        existing assets and liabilities and their respective tax bases. Deferred
        tax
        assets and liabilities are measured using enacted tax rates expected to apply
        to
        taxable income in the years in which those temporary differences are expected
        to
        be recovered or settled. A valuation allowance is provided for significant
        deferred tax assets when it is more likely than not that such assets will
        not be
        realized through future operations.
  Recent
        Accounting Pronouncements.
  In
        September 2006, the FASB adopted SFAS No. 157, “Fair Value Measurements.” SFAS
        No. 157 establishes a framework for measuring fair value and expands disclosure
        about fair value measurements. Specifically, this standard establishes that
        fair
        value is a market-based measurement, not an entity specific measurement.
        As
        such, the value measurement should be determined based on assumptions the
        market
        participants would use in pricing an asset or liability, including, but not
        limited to assumptions about risk, restrictions on the sale or use of an
        asset
        and the risk of non-performance for a liability. The expanded disclosures
        include disclosure of the inputs used to measure fair value and the effect
        of
        certain of the measurements on earnings for the period. SFAS No. 157 was
        effective for fiscal years beginning after November 15, 2007 and the FASB
        has
        issued a one-year deferral of fair value measurement requirements for
        non-financial assets and liabilities. The Company has not yet determined
        the
        effect adoption of SFAS No. 157 will have on its financial position or results
        of operations.
  In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities- Including an Amendment of FASB
        Statement No. 115.” SFAS No. 159 would create a fair value option of accounting
        for qualifying financial assets and liabilities under which an irrevocable
        election could be made at inception to measure such assets and liabilities
        initially and subsequently at fair value, with all changes in fair value
        reported in earnings. SFAS No. 159 is effective as of the beginning of the
        first
        fiscal year beginning after November 15, 2007. The Company is currently
        evaluating the impact that the adoption of SFAS No. 159 will have on its
        consolidated financial position, results of operations and cash
        flows.
  In
        June
        2007, the FASB ratified a consensus opinion reached by the EITF on EITF Issue
        07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services
        Received for Use in Future Research and Development Activities *”* (“EITF
        Issue 07-3”). The guidance in EITF Issue 07-3 requires the Company to defer and
        capitalize non-refundable advance payments made for goods or services to
        be used
        in research and development activities until the goods have been delivered
        or
        the related services have been performed. If the goods are no longer expected
        to
        be delivered nor the services expected to be performed, the Company would
        be
        required to expense the related capitalized advance payments. The consensus
        in
        EITF Issue 07-3 is effective for fiscal years, and interim periods within
        those
        fiscal years, beginning after December 15, 2007 and is to be applied
        prospectively to new contracts entered into on or after December 15, 2007.
        The
        Company has adopted EITF Issue 07-3 effective January 1, 2008. The impact
        of
        applying this consensus will apply to Senz-It’s research and development
        contractual arrangements entered into after January 1, 2008 did not have
        a
        material impact on its consolidated financial position, results of operations
        or
        cash flows.
  18
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        3 – INTANGIBLE ASSETS**
  During
        the year ended December 31, 2006, Senz-It entered into a technology license
        agreement with the Research Foundation of SUNY (the “Foundation”) (the “License
        Agreement”). The Foundation granted an exclusive field of use license to Senz-It
        to facilitate the development and commercialization of certain technology
        developed at SUNY. Per the License Agreement, Senz-It will have the exclusive
        license to make, have made, use, sell and offer for sale certain licensed
        products over the term of the License Agreement of ten years. In exchange
        for
        this license, Senz-It paid an upfront fee of $25,000 which it recorded as
        an
        intangible asset, royalties of 3% of net sales with an annual minimum of
        $10,000, 35% of any defined sublicensing fees, reimburse the Foundation for
        certain defined patent costs for the licensed technologies, and provide
        additional research funding to SUNY, which the Company expenses, as
        follows:
  March
                  31, 2008
              
              $
              50,000March
                  31, 2009
              
              $
              75,000March
                  31, 2010
              
              $
              100,000March
                  31, 2011
              
              $
              125,000
 
 During
        the three months ended March 31, 2008 and 2007, respectively, the Company
        recorded royalty fee expense of $4,230 and $-0- and $21,001 and $151,604
        for
        patent cost reimbursement, respectively. As of March 31, 2008 and December
        31,
        2007, Senz-It has incurred a total of $205,548 and $184,547, respectively,
        related to certain items of the License Agreement and has recorded the costs
        as
        an intangible asset in the accompanying condensed consolidated financial
        statements. Upon commencement of sales of the licensed technologies, Senz-It
        will amortize the cost of the intangibles over the lesser of either their
        estimated useful life or the remaining term of the License Agreement.
        Amortizable intangible assets are tested for impairment based on undiscounted
        cash flows, and, if impaired, written down to fair value based on either
        discounted cash flows or appraised values.
 
 **NOTE
        4 – DUE TO STOCKHOLDERS**
 
 Due
        to
        stockholders was $321,884 as of March 31, 2008 and as of December 31, 2007.
        The
        balance consists of un-reimbursed expenses and accrued wages to various
        stockholders and employees, including $251,884 that is owed to the Company’s
        former president and chief executive officer for accrued salary and
        reimbursement of expenses and $70,000 payable related to a finder’s fee and
        other services provided by a consultant. These amounts are non-interest bearing
        and are due on demand.
  19
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        5 – PAYROLL TAXES PAYABLE**
  As
        of
        March 31, 2008 and December 31, 2007, payroll taxes payable consist of late
        payroll taxes and estimated accrued interest and penalties for payroll and
        stock
        option activity totalling $221,248 and $192,177, respectively. A payment
        arrangement through 2008 has been agreed upon between the parties that will
        resolve this matter.
  **NOTE
        6 – WARRANTS AND CONVERTIBLE DEBENTURE**
  The
        Company entered into a Securities Purchase Agreement with La Jolla Cove (see
        Note 2), a company under common control with Golden Gate Investors, Inc.
        (“Golden Gate”) dated June 19, 2006 (the “Agreement”) to replace the agreement
        dated January 23, 2006 with Golden Gate. Under the Agreement, La Jolla Cove
        agreed to provide funds to the Company in the form of a convertible debenture
        (the “Debenture”) in the aggregate principal amount of $500,000 with an annual
        interest rate of 6.25%. The conversion price is equal to the lesser of (i)
        $0.20, or (ii) 80% of the average of the three lowest volume weighted average
        prices during the 20 trading days prior to the election to convert, or (iii)
        80%
        of the volume weighted average price on the trading day prior to the election
        to
        convert. The number of common shares into which the Debenture may be converted
        is equal to the dollar amount of the Debenture being converted multiplied
        by
        eleven, minus the product of the conversion price multiplied by ten times
        the
        dollar amount of the Debenture being converted, and the entire foregoing
        result
        shall be divided by the conversion price. However, if the volume weighted
        average price is below $0.0005 per share during any ten consecutive trading
        days, La Jolla Cove may elect to convert the Debenture only, without exercising
        the related warrants (see below) (in such case, the number of common shares
        that
        the holder receives upon conversion of this Debenture will be the amount
        of the
        Debenture being converted divided by the conversion price). La Jolla Cove
        advanced a total of $275,000 in debentures under the Agreement.
  The
        initial fair value assigned to the conversion feature was $1,151,759, of
        which
        $275,000 was recorded as a discount on convertible debt and $876,759 was
        included in interest expense in 2006 consolidated statement of operations.
  The
        discount on convertible debt is amortized to interest expense over the life
        of
        the Debenture. Amortization expense charged to operations during the three
        months ended March 31, 2008 and March 31, 2007, was $23,105 and $22,851,
        respectively. Interest accrued on the Debenture and added to the principal
        balance was $4,372 for the three months ended March 31, 2008 and $4,677 for
        the
        three months ended March 31, 2007. No interest payments were made during
        the
        three months ended March 31, 2008 and during the three months ended March
        31,
        2007. During the three months ended March 31, 2008, 52,393,514 shares of
        common
        stock were issued to La Jolla Cove in connection with the conversion of $7,299
        of the Debenture at a calculated conversion price of $0.00014, as defined
        above.
        Additionally, the Company repaid $4,000 of the Debentures in the three months
        ended March 31, 2008. The balance on the debenture, including accrued interest
        payable (net of unamortized discount of $95,444 and $118,548 as of March
        31,
        2008 and December 31, 2007) was $173,865 and $157,687,
        respectively.
  If
        La
        Jolla Cove elects to convert a portion of the Debenture and, on the day that
        the
        election is made, the volume weighted average price is below $0.01 per share,
        the Company will have the right to prepay that portion of the Debenture that
        the
        holder elected to convert, plus any accrued and unpaid interest, at 125%
        of such
        amount. In the event that the Company elects to prepay that portion of the
        Debenture, La Jolla Cove will have the right to withdraw its conversion notice.
        If, at anytime during the month, the volume weighted average price is below
        $0.01 per share, La Jolla Cove will not be obligated to convert any portion
        of
        the Debenture during that month.
  20
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        6 – WARRANTS AND CONVERTIBLE DEBENTURE (continued)**
  In
        conjunction with the Debenture, the Company issued to La Jolla Cove a warrant,
        dated June 19, 2006, to purchase 5,000,000 shares of common stock of the
        Company, exercisable at $1.00 per share. During the three months ended March
        31,
        2008, La Jolla Cove exercised 72,993 warrants at $1.00 per share leaving
        a
        warrant balance of 4,917,007 shares at March 31, 2008 and 4,990,000 shares
        at
        December 31, 2007. The Company received $47,993 in cash proceeds from the
        warrant exercise as of March 31, 2008. The Company received the remaining
        $25,000 in cash proceeds in April 2008 and has recorded such amount as an
        increase to additional paid-in-capital at that date. The Company also issued
        a
        warrant to La Jolla Cove, dated June 29, 2006, to purchase up to that number
        of
        shares of common stock equal to $2,750,000 divided by 120% of the average
        of the
        closing prices of the common stock for the 20 trading days prior to June
        19,
        2006, at a price per share equal to the 120% of the average of the current
        market price of the common stock for the 20 trading days prior to June 19,
        2006,
        totalling 266,472,868 shares.
  In
        connection with this transaction, the Company also granted to La Jolla Cove
        certain rights under a registration rights agreement, dated June 19, 2006,
        which
        requires that the Company register the shares into which the Debenture and
        the
        related warrants may be converted into.
  Beginning
        in the first full calendar month after a registration statement is declared
        effective, La Jolla Cove is required to convert at least 10% of the face
        value
        of the Debenture and exercise 10% of the warrants in any particular calendar
        month, the Company’s remedy will be that LaJolla will not be entitled to collect
        interest on the Debenture for that month if the Company gives La Jolla written
        notice, at least five business days prior to the end of the month, of its
        failure to convert and/or exercise the minimum required amount for that month,
        of its failure to covert and/or exercise the minimum required amount for
        that
        month. In the event that LaJolla does not covert at least 10% of the Debenture
        or exercise 10% of the warrants for two consecutive calendar months, in addition
        to the penalty set forth in the previous sentence, the Company may repay,
        at
        par, an amount of the Debenture equal to two times the differential between
        10%
        of the face value of the Debenture and the amount actually converted by La
        Jolla
        Cove.
  Under
        a
        letter agreement, dated June 26, 2006, the parties agreed to enter into an
        additional Debenture and warrant to purchase common stock on the same terms
        and
        conditions as the Debenture and the 5,000,000 share warrant discussed above.
        The
        parties must enter into the additional debenture and warrant no later than
        thirty days after the principal amount of the Debenture is less than $100,000.
        Failure to enter into the additional debenture and warrant by either party
        will
        result in $100,000 of liquidated damages by that party. To date, the parties
        have not entered into an additional debenture.
  The
        market value of the Company’s common stock significantly impacts the extent to
        which the Company maybe required or may be permitted to convert the unrestricted
        portion of the debenture into shares of the Company’s common stock. The lower
        the market price of the Company’s common stock at the respective times of
        conversion, the more shares the Company will need to convert the principal
        and
        interest payments then due on the Debenture. If the market price of the
        Company’s common stock falls below certain thresholds, the Company will be
        unable to convert any such repayments of principal and interest into equity,
        and
        the Company will be forced to make such repayments in cash. The Company’s
        operations could be materially impacted if the Company is forced to make
        repeated cash payments on the Debenture.
  21
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        7 – STOCK COMPENSATION PLANS**
  2005
        Non-Employee Directors and Consultants Retainer Stock Plan.
  The
        World
        Am, Inc. Amended and Restated Non-Employee Directors and Consultants Retainer
        Stock Plan (“Non-Employee Plan”), dated December 22, 2005, is intended to enable
        the Company to promote the interests of the Company by attracting and retaining
        consultants and **** independent
        contractors capable of furthering the business of the Company and by aligning
        their economic interests more closely with those of the Company’s stockholders,
        and allow the Company to pay their retainer or fees in the form of shares
        of
        common stock or stock options. The maximum number of shares of stock that
        may be
        issued under this plan is 291,000,000 as of March 31, 2008.
  As
        of
        March 31, 2008 and December 31, 2007, 2,161,277 shares of common stock remain
        to
        be issued under the Non-Employee Plan.
  2006
        Employee Stock Incentive Plan.
  The
        World
        Am, Inc. Amended and Restated Employee Stock Incentive Plan (“ESIP Plan”), dated
        February 7, 2006, is intended to allow designated officers and employees,
        and
        certain non-employees of the Company, to receive options to purchase common
        stock, and to receive common stock grants subject to certain restrictions.
        The
        purpose of this plan is to provide employees with equity-based compensation
        incentives to make significant and extraordinary contributions to the long-term
        performance and growth of the Company, and to attract and retain employees
        of
        exceptional ability. The purchase price of shares under the plan is $0.015
        per
        share. The option period begins on the date of grant and will not exceed
        ten
        years. The maximum number of shares of stock that may be issued under the
        amended ESIP Plan is 485,000,000 as of March 31, 2008.
  As
        of
        December 31, 2007, a total of 105,319,929 shares of common stock remain to
        be
        issued under the ESIP Plan. During the three months ended March 31, 2008,
        a
        total of 45,049,733 shares of common stock were awarded out of the ESIP Plan.
        As
        of March 31, 2008, there were 60,270,196 shares of common stock remaining
        to be
        issued under the ESIP plan. The monthly fully vested stock option issued
        to the
        distributor (see Note 10), totaling 11,200,000 shares at March 31, 2008 and
        8,400,000 at December 31, 2007, will, when exercised, come from the ESIP
        Plan.
  2007
        Stock Option Plan.
 
 The
        World
        Am, Inc. Stock Option Plan, dated January 2, 2007, is intended to allow
        designated directors, officers and employees of the Company, to receive options
        to purchase restricted shares of common stock. The purpose of this plan is
        to
        provide directors, officers and employees with equity-based compensation
        incentives to make significant and extraordinary contributions to the long-term
        performance and growth of the Company and to attract and retain directors,
        officers and employees of exceptional ability. The purchase price of shares
        under the plan is $0.005 per share. The option period begins
        on
        the date of grant and will not exceed ten years. The maximum number of shares
        of
        stock that may be issued under this plan is 45,000,000. Options covering
        a total
        of 44,500,000 shares have been granted through December 31, 2007 leaving
        a
        balance of 500,000 shares to be issued from this plan.
  22
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        7 – STOCK COMPENSATION PLANS (continued)**
  If
        the
        employee has been employed (or in the case of an independent director, been
        in
        such a position) for a period of one year from the date of the option grant,
        then the employee vests in 25% of the total number of shares covered by the
        option, and thereafter, 1/48th of the total number of shares covered by the
        option at the end of each full calendar month. If the employee leaves the
        Company prior to the expiration of the one-year period, then the employee
        does
        not have the right to purchase any shares under the option. The option remains
        valid only while the employee remains with the Company. Upon a termination
        of
        his or her relationship with the Company, the employee has a period of 90
        calendar days thereafter to purchase the amount of shares that are vested
        to
        date or they are forfeited. As of March 31, 2008, 13,906,250 of the options
        have
        vested and -0- shares vested as of December 31, 2007.
 
 General
        Discussion.
 
 The
        fair
        value of each stock-based award is estimated on the grant date using the
        Black-Scholes pricing model. Expected volatilities are based on the historical
        volatilities of comparable companies. The expected term of options granted
        is
        derived using the simplified method as defined in SAB No. 107. The risk-free
        rate for periods within the contractual life of the option is based on the
        U.S.
        Treasury interest rates in effect at the time of grant. The fair value of
        options granted was estimated using the following weighted-average
        assumptions:
  2008
              
              2007Risk-free
                  interest rate
              
              1.55%
              
              3.34%-
                  4.48%Expected
                  life of the options
              
              3
                  years
              
              3-6
                  yearsExpected
                  volatility
              
              156%
              
              127-
                  162%Expected
                  dividend yield
              
              0%
              
              0%
  23
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        7 – STOCK COMPENSATION PLANS (continued)**
  The
        following is a summary of all stock option activity as of March 31, 2008
        and
        changes during the three months ended March 31, 2008:
  Number of Shares
              
              Weighted
                Average
                Exercise
                Price
              
              Weighted
                Average
                Remaining
                Contractual
                Term
                (Years)
              
              Aggregate
                Intrinsic
                ValueOptions
                  outstanding at January 1, 2008
              
              
              73,619,991
              
              $
              0.009
              
              
              5.95
              
              $
              —Granted
              
              
              2,800,000
              
              $
              0.02Expired/forfeited
              
              
              —
              
              
              —Exercised
              
              
              —
              
              
              —Options
                  outstanding at March 31, 2008
              
              
              76,419,991
              
              $
              0.009
              
              
              5.95
              
              $
              —Options
                  exercisable at March 31, 2008
              
              
              45,826,241
              
              $
              0.012
              
              
              4.27
              
              $
              —Options
                  expected to vest at March 31, 2008
              
              
              76,419,991
              
              $
              0.009
              
              
              5.95
              
              $
              —
  The
        aggregate intrinsic values set forth in the above table represent the total
        pre-tax intrinsic values, based on the Company’s closing stock price of $0.0024
        as of March 31, 2008, which would have been paid by the optionee had all
        of them
        exercised their options as of that date.
 
 Stock-based
        compensation expense for the three months ended March 31, 2008 and March
        31,
        2007 was $31,633 and $6,963, respectively. These amounts were included in
        general and administrative expenses in the accompanying consolidated statements
        of operations.
  24
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        7 – STOCK COMPENSATION PLANS (continued)**
  The
        following summarizes the activity of the Company’s non-vested
        options:
  Weighted-Average
              
              Remaining
              
              Remaining
                UnrecognizedShares
              
              Grant-Date
                Fair Value
              
              Months to
                Vest
              
              Compensation
                CostNon-vested
                  outstanding at January 1, 2008
              
              
              44,500,000
              
              $
              0.005
              
              
              49
              
              $
              127,722Granted
              
              
              2,800,000
              
              $
              0.02
              
              
              36
              
              
              4,036Vested
              
              
              (16,706,250
              )
              $
              0.02
              
              
              
              
              
              (31,633
              )Forfeited
              
              
              —
              
              
              —
              
              
              
              
              
              —Non-vested
                  outstanding, related to the 2007 Stock Option Plan, at March 31,
                  2008
              
              
              30,593,750
              
              $
              0.005
              
              
              46
              
              $
              100,125
 
 **NOTE
        8 - STOCKHOLDERS’ DEFICIT**
 
 Preferred
        Stock.
 
 **Class
        A.**
 
 The
        Company is authorized to issue up to 40 million shares of Class A convertible
        preferred stock with a par value of $0.0001 per share. Each share has a
        liquidation preference of $1,700 per preferred share. Such amounts shall
        be paid
        on all outstanding Class A preferred shares before any payment shall be made
        or
        any assets distributed to the holders of the common stock or any other stock
        of
        any other series or class-ranking junior to the shares as to dividends or
        assets. Each preferred share is convertible into 1,000,000 shares of the
        Company’s common stock at the option of the holder. Each holder of Class A
        preferred stock is entitled to 1,000,000 votes and is entitled to such dividends
        as may be declared by the board of directors from time to time.
 
 During
        June 2004, the Company entered into a loan agreement with a lender whereby
        the
        lender agreed to use its best efforts to provide the Company a loan in the
        maximum amount of 2,000,000 subject to certain terms and conditions. The
        Company
        agreed to issue 1,370 shares of Class A preferred stock as collateral on
        the
        loan. The shares were issued in June 2004. The lender did not fund the loan
        and
        accordingly, the Company provided a written demand for the return of the
        shares;
        the certificate for 1,370 shares were returned to the Company and
        cancelled.
 
 During
        May 2005, the lender assigned all rights set forth in the loan agreement
        to
        Coldwater Capital Partners, LLC. On this basis, a certificate for 1,370 shares
        of Class A preferred stock was issued on June 4, 2005. On July 21, 2005,
        the
        Company authorized that one share of the Class A preferred stock be converted
        into 1,000,000 restricted shares of common stock. The Company never received
        any
        funding under this loan agreement. Therefore, in January 2006 the Company
        made
        the determination to cancel the balance of 1,369 shares of Class A preferred
        stock (such shares have not yet been cancelled). The Company is analyzing
        its
        alternatives with regard to the 1,000,000 share conversion.
  25
 
 **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        8 - STOCKHOLDERS’ DEFICIT (continued)**
 
 **Class
        B.**
 
 The
        Company is authorized to issue up to 40 million shares of Class B preferred
        stock with a par value of $0.0001 per share. To the extent assets are available,
        holders of Class B preferred shares have a liquidation preference equal to
        the
        original issue price of the shares of $145,455 per share plus all declared
        but
        unpaid dividends on the Series B preferred shares. Such amounts shall be
        paid on
        all outstanding Class B preferred shares before any payment shall be made
        or any
        assets distributed to the holders of common stock or of any other stock of
        any
        series or class junior to the shares as to dividends or assets, but junior
        to
        Class A preferred shareholders. Each share of Class B preferred stock is
        convertible into the greater of (i) 1% of the shares of common stock outstanding
        on the date of conversion, after giving consideration to shares issued as
        a
        result of the conversion and any options, warrants or other convertible
        securities outstanding and (ii) 7,272,728 shares of common stock. The holders
        of
        these preferred shares shall have the right to vote and cost that number
        of
        votes which the holder would have been entitled to cast had such holder
        converted the shares immediately prior to the record date for such
        vote.
 
 On
        August
        31, 2005, the Company completed a Share Exchange Agreement with Senz-It.
        Under
        this agreement, Senz-It became a wholly owned subsidiary of the Company in
        exchange for 55 shares of Class B convertible preferred stock that were issued
        to SUTI Holdings, LP among other consideration (see Note 1).
 
 Common
        Stock.
 
 The
        holders of the Company’s common stock are entitled to one vote per share of
        common stock held.
 
 The
        following summarizes the common stock activity for the three months ended
        March
        31, 2008:
 
 Shares
                  issued under the ESIP Plan
              
              
              45,049,733Shares
                  issued for conversion of Debenture
              
              
              52,393,514Exercise
                  of warrants
              
              
              72,993Total
                  net shares issued
              
              
              97,516,240
  26
 
 **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        8- STOCKHOLDERS’ DEFICIT (continued)**
 
 A
        summary
        of the warrant activity for the three months ended March 31, 2008 is as
        follows:
 
 Warrants
              
              Weighted-
                Average
                Exercise
                Price
              
              Weighted-
                Average
                Remaining
                Contractual
                LifeBalance,
                  December 31, 2007
              
              
              449,891,816
              
              $
              0.023
              
              
              35
                  monthsWarrants
                  issued
              
              
              18,578,948
              
              $
              0.0026
              
              
              12
                  monthsWarrants
                  exercised
              
              
              (72,993
              )
              $
              1.00Warrants
                  expired
              
              
              (18,078,948
              )
              $
              0.0025Balance,
                  March 31, 2008
              
              
              450,318,823
              
              $
              0.0230
              
              
              32
                  months
 
 In
        February 2008, the Company issued a warrant to G. Raymond Pironti, Jr. to
        purchase 18,078,948 shares of its common stock at the lowest reported bid
        price
        of the Company’s common stock from February 4, 2008 to March 31, 2008, which was
        $0.0017, for a period of twelve months in exchange for consulting services.
        The
        fair value of the warrant was determined to be $26,312 at March 31, 2008
        and is
        included in derivative and warrant liabilities in the accompanying condensed
        consolidated balance sheets.
 
 In
        February 2008, the Company issued a warrant to an individual to purchase
        500,000
        shares of its common stock at $0.005 per share for a period of twelve months
        in
        exchange for consulting services. The fair value of the warrant was determined
        to be $486 at March 31, 2008 and is included in derivative and warrant
        liabilities in the accompanying condensed consolidated balance
        sheets .
 
 **NOTE
        9 - RELATED PARTY TRANSACTIONS**
 
 G.
        Raymond Pironti, Jr.
 
 See
        Note
        8 (above) for a description of the warrant that was issued to Mr. Pironti
        in
        February 2008.
 
 In
        connection with the factoring agreement, the Company issued to JJ Ellis a
        warrant to purchase $60,000 of the Company’s common stock and has been recorded
        as a warrant liability in the accompanying consolidated balance sheet. The
        calculation of the number of shares underlying this warrant is based on the
        lowest bid price recorded ($0.0025) over a 365-day look back period or a
        20%
        discount at time of execution, whichever is lower. Based on this calculation,
        the number of shares fixed for this warrant on April 25, 2006 was 24,000,000.
        This warrant is exercisable for a period of five years from the grant date
        of
        April 25, 2005 at the lower of $0.0025 per share or 80% of the closing price
        on
        the date of exercise and no warrants have been exercised as of March 31,
        2008.
 
 27
 
 **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        9 - RELATED PARTY TRANSACTIONS (continued)**
 
 Select
        University Technologies, Inc.
 
 **Venture
        Acceleration Agreement.**
 
 A
        Venture
        Acceleration Agreement, (“Venture Agreement”) was entered into between Senz-It
        and Select University Technologies, Inc., the general partner of SUTI, dated
        June 20, 2005. Under the terms of the Venture Agreement, Senz-It appointed
        Select University Technologies, Inc. to provide certain services, personnel
        and
        property for consideration of a management fee and a performance fee through
        October 2009.
 
 The
        management fee calls for a one-time payment of $100,000, payable in $50,000
        of
        common stock and $50,000 of cash, at such time when the Company has the
        financial capability to pay in cash and an annual management fee of $930,000
        payable in monthly instalments of $77,500. Of the monthly management fee,
        $25,000 is payable in cash and the remainder is payable in common stock.
        For the
        three months ended March 31, 2008 and March 31, 2007, the Company recorded
        $232,500 in management fees. As of March 31, 2008 and December 31, 2007,
        the
        amount owed to Select University Technologies Inc. was $28,147 and $186,901
        respectively, which consists of amounts due under the terms of the Venture
        Agreement and amounts due for rent and reimbursement of operating
        expenses.
 
 The
        performance fee is 6% of gross revenue for the first three years of the Venture
        Agreement. Thereafter, the performance fee is to be calculated at 15% of
        quarterly operating profit (as defined in the Valuation Agreement). To date,
        no
        amounts are owed related to the performance fee.
 
 Office
        Space.
 
 The
        Company shares office space with Select University Technologies, Inc. The
        Company is charged $800 per month, plus operating and administrative expenses.
        The total rent and operating expenses charged to the Company for the three
        months ended March 31, 2008 and 2007 was $4,800 and $2,400,
        respectively.
 
 SUTI
        Holdings, LP.
 
 On
        May
        18, 2006, the Company’s subsidiary, Isotec, issued a demand promissory note in
        favor of the Company’s controlling stockholder, SUTI. Under the terms of the
        promissory note, the Company may borrow up to $100,000 to assist in the ongoing
        operations of the Company.
 
 Principal
        and interest are due no later than 30 days following the commencement date
        of
        May 2006. The outstanding principal amount bears simple interest through
        the
        maturity date at the rate of 8% of the loan amount. After an Event of Default
        (as defined in the promissory note), all past due principal and, to the extent
        permitted by applicable law, interest upon this note is to bear interest
        at the
        rate per annum equal to 12%. As of March 31, 2008 and December 31, 2007,
        the
        Company did not owe any monies related to this note.
  28
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        10 - COMMITMENTS AND CONTINGENCIES**
 
 Litigation
 
 (a)
        On
        August 2, 2006, a complaint was filed against the Company and certain
        individuals by Karen Alexander. The complaint principally alleges that World
        Am,
        Inc. breached an employment agreement with the plaintiff by not paying her
        certain amounts allegedly owing.
 
 On
        February 29, 2008, the Bolder County District Court (“the Court”) entered a
        judgment against the Company and found that the Company owed Karen Alexander
        a
        total of $39,000 plus reasonable attorney fees to be determined by the Court.
        Accordingly, the Company has recorded $39,000 as accounts payable
 and
        accrued liabilities in the accompanying condensed consolidated balance sheets
        as
        of March 31, 2008 and December 31, 2007; and has not accrued an additional
        amount for attorney fees as they cannot be reasonably estimated at March
        31,
        2008.
 
 (b)
        On
        September 20, 2006, a complaint was filed against the Company by James
        Alexander, the Company’s former president and chief executive officer. The
        complaint principally alleges that World Am breached an employment agreement
        with the plaintiff by not paying him certain amounts allegedly owing and
        seeks
        damages in the amount of $714,718. The Company then filed a counterclaim
        against
        Mr. Alexander seeking damages for breach of fiduciary duty and breach of
        the
        duty of loyalty to the Company. The matter is scheduled to go to trial in
        2008.
  Management
        believes the Company has meritorious claims and defences to the plaintiff’s
        claims and ultimately will prevail on the merits. However, there can be no
        assurance as to the outcome of the lawsuit. Litigation is subject to inherent
        uncertainties, and unfavorable rulings could occur. If an unfavorable ruling
        were to occur, there could be a material adverse on the Company’s financial
        condition, results of operations or liquidity.
 
 (c)
        On
        October 25, 2004, a complaint was filed against the Company by Mitchell Vince.
        The complaint alleges that Isotec terminated Mr. Vince without cause prior
        to
        the expiration of the term of an alleged employment agreement. The complaint
        sought monetary damages of $240,000. This matter was settled in December
        2006.
        Under this settlement, Mr. Vince will be paid $6,000 per month in cash or
        shares
        of free trading common stock for a period of 20 months commencing January
        1,
        2007. The remaining balance on the settlement of $28,734 is included in accounts
        payable in the accompanying consolidated balance sheet as of March 31,
        2008.
 
 (d)
        On or
        about October 10, 2007, one of the Company’s former consultants filed a
        complaint against the Company alleging breach of contract, failure to pay
        monies
        owed and other common counts. The former consultant is seeking to recover
        $30,108. The Company is in settlement discussions with the former
        consultant.
  29
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        10 - COMMITMENTS AND CONTINGENCIES (continued)**
 
 (e) On
        January 30, 2004, a complaint was filed against the Company by Robert Hainey
        and
        Internet Marketing Solutions, Inc. The complaint, which has causes of action
        for
        breach of contract and unjust enrichment, alleges that the defendants failed
        to
        pay the plaintiffs for certain consulting and public relations and related
        work,
        reimbursement of certain business expenses incurred on behalf of the defendants,
        and to repay a loan made by the plaintiffs to the defendants. The complaint
        sought total monetary damages of approximately $308,000.
 
 In
        March
        2008, the Company agreed to settle this matter. Under the terms of the
        settlement, the Company agreed to pay Robert Hainey and Internet Marketing
        Solutions, Inc. the sum of $116,000, which was recorded in general and
        administrative expense during the three months ended March 31, 2008. The
        Company
        has paid $12,000 in 2008 per the settlement and monthly payments in the amount
        of $5,000, in stock or cash, will begin in April 2008 through April 2010.
        In the
        event that the Company fails to make any of the aforementioned payments,
        the
        Company agrees to pay to Robert Hainey and Internet Marketing Solutions,
        Inc. a
        penalty of $1,000 for each occurrence. The remaining balance owed as of March
        31, 2008 is $104,000 and is included in accounts payable in the accompanying
        condensed consolidated balance sheets.
 
 Operating
        Leases.
 
 Isotec
        leases a 4,800 square foot facility in Westminster, Colorado with a monthly
        rent
        and common area expense of $4,061 through December 31, 2011. Rent and common
        area expense totalled $12,556 and $11,715 for the three months ended March
        31,
        2008 and 2007, respectively.
 
 Senz-It
        leases a 934 square foot facility in Newport Beach, California. The lease
        commenced October 22, 2007 through October 21, 2008. Upon expiration, the
        lease
        terms will continue for successive thirty-day periods until cancelled by
        either
        party in writing. Rent and common area expense totalled $2,615 for the three
        months ended March 31, 2007.
  30
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        10 - COMMITMENTS AND CONTINGENCIES (continued)**
  Consulting
        Agreement.
  On
        March
        10, 2008, the Company renewed its consulting agreement with its chief executive
        officer, Robert Hovee, through an agreement with RAH Consulting Group, Inc.
        This
        agreement covers his services to be rendered for this Company in that position
        for the period of January 1, 2008 through December 31, 2008. In consideration
        of
        the services rendered, the Company will pay Mr. Hovee a fee of $8,000 per
        month,
        in cash or stock, at the Company’s discretion. Mr. Hovee is eligible to
        participate in the Company’s Stock Option Plan. The Company will reimburse Mr.
        Hovee for all reasonable business expenses incurred while performing services
        for the Company. In addition, healthcare insurance premiums for Mr. Hovee
        will
        be paid by the Company. This agreement is to remain in effect until terminated
        by either party as of the date set forth in a written notice to the other
        party
        delivered in accordance with the notice provisions of the agreement at least
        30
        days prior to such date. In the event of the termination of this agreement,
        any
        accrued but unpaid fees will be paid within ten days of the effective date
        of
        such termination. As of March 31, 2008, the Company owed $0 under this
        agreement.
  An
        advance of $3,259 on the consulting fees owed Robert Hovee was made during
        2007.
        The remaining advance to related party as of March 31, 2008 is
        $1,204.
  Distributor
        Agreements
 
 The
        Company has entered into several distributor agreements for distribution
        of the
        Company’s products in the United States. These agreements call for the provision
        of services to the distributors in exchange for the promotion of the Company’s
        products. The products are sold to the distributor at a discount from the
        list
        price of 15% to 25%.
 
 In
        addition, the Company has alliance agreements to assist the Company in
        establishing international distributorships. The agreements have one-year
        terms
        and may be renewed with the mutual consent of both parties. The alliance
        agreements specify a commission of 10% of license fees and 5% of product
        sales
        made pursuant to the alliance agreements.
 
 On
        May 1,
        2007, the Company entered into a distributor agreement for the purpose of
        appointing a distributor responsible for the worldwide, excluding Singapore,
        sales and marketing of the Senz-It product line for a period of forty-eight
        months unless sooner terminated as specified in the agreement. In addition
        the
        distributor provides sales and marketing consulting services for an initial
        term
        of twelve months. As payment for these consulting fees, the Company agreed
        to
        the following compensation arrangement: (a) 10,000,000 shares (50% of the
        shares
        in the form of S-8 shares and 50% of the shares were in the form of Rule
        144
        shares) were issued totalling $60,000 (valued at the closing price of $0.006
        on
        the date issued), and (b) World Am stock options, fully vested, issued monthly
        in the amount of 1,200,000 through November 2007 and 1,000,000 through May
        2008
        at an exercise price of $0.02 per share. The stock option shares remain
        exercisable for a period of thirty-six months from the date of issuance.
        No
        additional compensation or expense reimbursement shall be made to distributor
        for their efforts in this matter. As of March 31, 2008, a total of 11,200,000
        fully vested options have been issued, valued at $27,806. This amount has
        been
        recorded in general and administrative expenses in the accompanying condensed
        consolidated statements of operations. This amount is also included in the
        options vesting during the period (unaudited) in the accompanying condensed
        consolidated statements of stockholders’ deficit.
  31
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        10 - COMMITMENTS AND CONTINGENCIES (continued)**
  License
        Agreement
  Through
        March 31, 2008, the Company has incurred $205,548 related to certain terms
        in
        the License Agreement, which the Company has recorded as an intangible asset
        in
        the accompanying condensed consolidated financial statements (see Note 3).
        Upon
        commencement of sales of the licensed technologies, Senz-It will amortize
        the
        cost of the intangibles over the lesser of their estimated useful lives or
        over
        the remaining term of the License Agreement. Amortizable intangible assets
        are
        tested for impairment based on undiscounted cash flows, and, if impaired,
        written down to fair value based on either discounted cash flows or appraised
        values.
 
 In
        connection with the License Agreement (see Note 3), Senz-It issued 100,000
        restricted shares of its common stock in January 2007, and will issue additional
        such shares to SUNY pursuant to the terms of a Stock Purchase Agreement dated
        December 1, 2006,  so
        that
        it will maintain a minimum ownership of 10% in Senz-It. Finally, Senz-It
        entered
        into a Stockholders Agreement dated  December
        1, 2006 with SUNY that covers the rights of stockholders of Senz-It. At such
        time as Senz-It earns a profit, the minority interest will be allocated to
        SUNY.
        In connection with these agreements, the Company entered into confidentiality
        and non-disclosure agreements with SUNY as to certain specific terms of the
        agreements.
 
 Indemnities
        and Guarantees.
 
 During
        the normal course of business, the Company has made certain indemnities and
        guarantees under which it may be required to make payments in relation to
        certain transactions. These indemnities include certain agreements with the
        Company’s officers under which the Company may be required to indemnify such
        persons for liabilities arising out of their employment relationship, lease
        agreements where the Company may be required to indemnify landlords for damages
        arising from non-compliance with environmental laws, contracts where the
        Company
        may be required to indemnify the other party from liabilities resulting from
        claimed infringements of the proprietary rights of third parties or
        confidentiality provisions and the La Jolla Cove agreement where the Company
        may
        be required to indemnify La Jolla Cove for breach of representation or warranty.
        The duration of these indemnities and guarantees varies, and in certain cases,
        is indefinite.
 
 The
        majority of these indemnities and guarantees do not provide for any limitation
        of the maximum potential future payments the Company would be obligated to
        make.
        Historically, the Company has not been obligated to make significant payments
        for these obligations and no liability has been recorded for these indemnities
        in the accompanying consolidated balance sheets.
  32
  **WORLD
        AM, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**
 
 **NOTE
        11 - SUBSEQUENT EVENTS**
 
 The
        Company had the following stock issuances in April 2008:
 
 (1)  The
        Company issued 30,458,388 shares of its common stock to pay operating expenses
        totalling $53,636.
 
 (2)  The
        Company issued 15,455,250 shares of its common stock to La Jolla Cove for
        the
        conversion of debt, at a calculated price of $0.000087 valued at
        $1,350.
 
 (3)  The
        Company issued 22,010,256 shares of its common stock to La Jolla Cove for
        the
        conversion of debt, at a calculated price of $0.000114 valued at
        $2,500.
 
 (4)  The
        company issued 38,500 shares of its common stock to La Jolla Cove in exchange
        for the exercise of 38,500 warrants at $1.00 per share, for cash proceeds
        of
        $38,500.
  33




**ITEM
              2.**
            **Management’s
                Discussion and Analysis o****f
                Financial Condition and Results of
                Operations.**





Our
      Management’s Discussion and Analysis may contain forward-looking information
      within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6
      under the Securities Exchange Act of 1934, and are subject to the safe harbor
      created by those rules. All statements, other than statements of fact, included
      in this section, including, without limitation, statements regarding our
      potential future plans and objectives, are forward-looking statements that
      involve risks and uncertainties. There can be no assurance that such statements
      will prove to be accurate and actual results and future events could differ
      materially from those anticipated in such statements. Technical complications
      that may arise could prevent the prompt implementation of any strategically
      significant plan(s) outlined above. We caution that these forward looking
      statements are further qualified by other factors including, but not limited
      to
      those, set forth in the World Am, Inc. Form 10-KSB filing and other filings
      with
      the United States Securities and Exchange Commission (available at www.sec.gov ).
      We
      undertake no obligation to publicly update or revise any statements in this
      section, whether as a result of new information, future events or otherwise.





The
      following discussion and analysis of financial condition and results of
      operations of the Company is based upon, and should be read in conjunction
      with,
      its unaudited condensed consolidated financial statements and related notes
      included elsewhere in this Form 10-Q, which have been prepared in accordance
      with accounting principles generally accepted in the United States.





**Overview**





All
      of
      the operations are conducted through our majority-owned subsidiary, Senz-It
      and
      our wholly owned subsidiary, Isotec, Inc.





Senz-It,
      Inc. (“Senz-It”)





Senz-It
      intends to manufacture sensors in the field of rapid detection. The company
      provides innovative advancements in the field of micro-sensors that have broad
      application in Food Safety and Processing, Homeland Security, Indoor Air
      Quality, and Water Quality. Senz-It's products are being designed to identify
      patterns of molecules present in liquid and gas quicker and for significantly
      less cost than current modalities.





The
      technology is based on molecular imprinted xerogel (“MIX”) processes whereby
      fluorescent reporter molecules are affixed to each site specific binding site
      for the target analyte. The advantage of MIX based materials include: analyte
      detection specificity exceeding current laboratory standard methods: robustness
      and stability under extreme chemical and physical conditions, an ability to
      design recognition sites even for analytes that lack suitable bio-recognition
      elements.





The
      result is that Senz-It's proposed products are intended to provide rapid,
      simultaneous and continuous on site detection and measurement of biological
      and
      chemical substances in liquid, gaseous and solid media. The technology virtually
      eliminates false positives, is comparable to advanced laboratory test accuracy
      and precision and detects in seconds, not hours or days.


34


In
      November 2007, Senz-It in conjunction with the Air Force Institute for
      Operational Health (AFIOH) was awarded a development contract through the
      Defense Thread Reduction Agency (DTRA) for up to $417,000 for the development
      of
      ovalbumin-sensitive microarrays. On January 21, 2008, Senz-It submitted the
      Stage 2 deliverables of the contract to the AFIOH. The deliverables included
      ovalbumin-imprinted array images, CAD drawings of the test beds, and standard
      operating procedures for the proprietary software used to analyze the array
      images at various ovalbumin concentrations. These deliverables were approved
      by
      the AFIOH, and Senz-It has recorded a total of $243,000 in revenues through
      March 31, 2008. Senz-It plans to submit Stage 3 deliverables in May 2008, and
      Stage 4 deliverables in June 2008, thus completing the contract. The successful
      completion of this contract could lead into Phase 2 funding for Senz-It, where
      the scope of work would entail the detection and quantification of bio-toxins
      and harmful bacteria. The successful completion of Phase 2 of the contract
      could
      yield up to $1,200,000 in revenue for Senz-It.





In
      January 2008, Senz-It partnered with BioMedix, a biotech product management
      and
      distribution company, to develop and distribute a sensor system that will detect
      and quantify levels of putrescine and cadaverine in fish and other types of
      seafood. Putrescine and cadaverine are chemical byproducts specifically
      associated with the level of decomposition in seafood, and their respective
      levels are presently tested in a purely qualitative and subjective
      manner.





The
      Senz-It engineering team has focused on designing and developing the base unit
      instrument in addition to the consumable test kits used for sample analysis.
      The
      team has finalized a high-level design for the base unit, and is performing
      validation and reproducibility tests on seafood samples in the laboratory.
      Additionally, the Senz-It business development has focused on identifying
      potential customers and educating these customers on the importance of
      putrescine and cadaverine testing to ensure the distribution of fresh
      product.





Senz-It’s
      current full time staff has grown to include individuals with expertise in
      electrical engineering, chemistry, biochemistry, mechanical engineering,
      manufacturing, software engineering and marketing.





Isotec,
      Inc. (“Isotec, Inc.”)





Isotec,
      Inc. develops, integrates and manufactures Automated Security Portal products,
      broadly categorized as Access Control, Weapons Control or Materials Control
      Systems. These structures protect, not just detect, by rigorously controlling
      passage of people and materials into and out of a facility based on specific
      security rules, while reducing the need for security personnel. Applications
      of
      the technology have been delivered to the commercial, retail and government
      sectors. Isotec's experience in this field allows it to provide high quality,
      code compliant, feature-rich application optimized solutions at the lowest
      cost
      in the shortest time frame.





Isotec
      has installed systems for high security United States Department of Energy
      facilities such as Los Alamos Labs, Lawrence Livermore Labs, Sandia Labs and
      military installations for the United States Air Force and Navy. Commercial
      installations include a growing number of commercial banking facilities, and
      various retail facilities such as jewelry stores.


35


The
      planned growth and profitability will depend in large part on the ability to
      promote and differentiate products, expand relationships with current and new
      distributors and gain new clients. Accordingly, Isotec intends to focus its
      attention and investment of resources in marketing, strategic partnerships
      and
      development of its client base. If the company is not successful in promoting
      its products and expanding its client and distributor base, this may have a
      material adverse effect on its financial condition and the ability to continue
      to operate the business.





Isotec’s
      revenue for the quarter ending March 31, 2008, continued at roughly the level
      of
      the fourth quarter of 2007, and was up over 3 times that of the comparable
      prior
      year period. It should be noted that Isotec’s revenue continues to fluctuate due
      to the effect of large contracts and seasonality, although with growing sales
      and distribution channels, we believe the effect will continue to decrease.





Much
      of
      our sales development effort in the first quarter was focused on continued
      training and education of the distributor sales force to increase their
      effectiveness, and that effort will continue in the second quarter. New printed
      materials as well as web-based tools have been introduced, and our quotation
      level continues to increase on a quarter-to-quarter basis. Providing three
      dimensional CAD renderings with each product proposal has allowed the customer
      to visualize their product in simulation, and provides a significant
      differentiator relative to competitive offerings. The ability to customize
      our
      already leading edge software and operator interface has allowed the
      introduction of Data Output capability, which in turn allows our customers
      to
      remotely monitor multiple portals from a central security station, and to
      provide printed reports of events and statistics. We believe this capability
      is
      unique in the industry. In addition, the operating team has developed a cost
      reduction program for manufacturing, which should improve profitability in
      future shipments.





**Results
      of Operations for the Three Months Ended March 31, 2008 compared to the Three
      Months Ended March 31, 2007** .





Three Months
              Ended
              March 31, 2008
            
            Three Months
              Ended
              March 31, 2007Revenues:Contract
                research and development
            
            $
            127,544
            
            $
            —Product
                sales
            
            
            187,106
            
            
            53,270314,650
            
            
            53,270Cost
                and expenses:Cost
                of contract research and development
            
            
            127,544
            
            
            —Cost
                of product sales
            
            
            61,251
            
            
            12,738General
                and administrative expenses
            
            
            908,241
            
            
            586,898Loss
                from operations
            
            
            (782,386
            )
            
            (546,366
            )Other
                income (expense), net
            
            
            151,810
            
            
            (844,366
            )Net
                loss
            
            $
            (630,576
            )
            $
            (1,390,732
            )


36


Revenue





Our
      revenue for the three months ended March 31, 2008 was $314,650, compared to
      revenues of $53,270 for the three months ended March 31, 2007, which was an
      increase of $261,380. The increase in revenue for the three months ended March
      31, 2008 was due to the increase in sales of Isotec’s security portals to
      financial institutions through a primary distributor as well as contract
      research and development revenue recognized by Senz-It based on their Phase
      One
      United States Air Force biological development contract.





Cost
      of revenue





Our
      total
      cost of revenues were $188,795 for the three months ended March 31, 2008
      compared to our total cost of revenues of $12,738 for the three months ended
      March 31, 2007, which was an increase of $176,057. Our increased cost of
      revenues for the three months ended March 31, 2008 was due to the increase
      in
      production costs associated with the increased level of sales at Isotec and
      the
      Department of Air Force biological development contract is a cost reimbursement
      contract and was not in existence during the three months ended March 31, 2007.
      Our gross profit percentage was 40% for the three months ended March 31, 2008,
      compared to 76% for the three months ended March 31, 2007. The decrease in
      the
      gross profit percentage is related to the lower profit margin contracts being
      awarded as well as the fact that Department of Air Force contract is cost
      reimbursement only.





General
      and administrative expenses





We
      incurred general and administrative expenses of $908,241 for the three months
      ended March 31, 2008 compared to general administrative expenses of $586,898
      for
      the three months ended March 31, 2007, which was an increase of $321,343. The
      major general and administrative expense categories for the three months ended
      March 31, 2008 and 2007 were as follows:





Three Months
              Ended
              March 31, 2008
            
            Three Months
              Ended
              March 31, 2007Professional
                fees
            
            $
            373,527
            
            $
            92,280Payroll
                expenses
            
            
            108,385
            
            
            116,715Engineering
                salaries
            
            
            122,730
            
            
            —Rent
            
            
            21,278
            
            
            11,714Management
                fees
            
            
            232,500
            
            
            232,500Director
                fees
            
            
            13,500
            
            
            —





Our
      increased expenses for the three months ended March 31, 2008 compared to the
      three months ended March 31, 2007 were primarily the result of an increase
      in
      professional fees particularly the legal fees related to the ongoing litigation,
      engineering salaries and director fees.


37


Other
      Income (Expense), Net





Our
      total
      other income of $151,810 for the three months ended March 31, 2008 compared
      to
      our total other expense of $844,366 for the three months ended March 31, 2007,
      which was a decrease of $996,176. This decrease was primarily the result of
      the
      decrease in the fair value of the derivative and warrant liabilities that were
      caused primarily by the decreased stock price throughout the first quarter
      of
      2008.





Net
      Income (Loss)





We
      had a
      net loss of ($630,576) for the three months ended March 31, 2008 compared to
      a
      net loss of ($1,390,732) for the three months ended March 31, 2007, a decrease
      of $760,156. The net loss for the three months ended March 31, 2008 was
      primarily the result of an increase in general and administrative expense levels
      offset by a decrease in the fair value of derivatives and warrant liabilities.





**Liquidity
      and Capital Resources.**





Introduction





As
      of
      March 31, 2008, we had total current assets of $253,401 and total current
      liabilities of $1,771,533, resulting in a working capital deficit of $1,518,132.
      As of March 31, 2008, our current assets consisted primarily of accounts
      receivable ($74,437), inventory ($75,526), unbilled revenues of uncompleted
      contracts ($60,009) and cash and cash equivalents ($12,333). We had an
      accumulated deficit of $7,571,956 as of March 31, 2008.





Our
      ability to continue as a going concern on a long-term basis is dependent upon
      our ability to generate sufficient cash flow from operations to meet our
      obligations on a timely basis, and our ability to obtain additional financing
      and ultimately attain profitability.





Although
      we have been successful in the past in raising capital, no assurance can be
      given that sources of financing will continue to be available and/or that demand
      for our equity/debt instruments will be sufficient to meet our capital needs,
      or
      that financing will be available on favorable terms. Our condensed consolidated
      financial statements do not include any adjustments relating to the
      recoverability and classification of assets and liabilities that might be
      necessary should we be unable to continue as a going concern.





If
      funding is insufficient at any time in the future, we may not be able to take
      advantage of business opportunities or respond to competitive pressures or
      may
      be required to reduce the scope of our planned product development and marketing
      efforts, any of which could have a negative impact on business and operating
      results. In addition, insufficient funding may have a material adverse effect
      on
      our financial condition, which could require us to:





·
            curtail
                operations significantly;


·
            sell
                significant assets;


·
            seek
                arrangements with strategic partners or other parties that may require
                us
                to relinquish significant rights to products, technologies or markets;
                or


·
            explore
                other strategic alternatives including a merger or
                sale.


38


To
      the
      extent that we raise additional capital through the sale of equity or
      convertible debt securities, dilution of the interests of existing shareholders
      may occur. If we raise additional funds through the issuance of debt securities,
      these securities may have rights, preferences and privileges senior to holders
      of common stock and the terms of such debt could impose restrictions on our
      operations. Regardless of whether our assets prove to be inadequate to meet
      our
      operational needs, we may seek to compensate providers of services by issuance
      of stock in lieu of cash, which may also result in dilution to existing
      shareholders.





Our
      cash,
      accounts receivable, inventories, prepaid expenses, total current assets,
      primary current liabilities, and total current liabilities as of March 31,
      2008,
      compared to the end of our last fiscal year were:




As of
              March 31,
              2008
            
            As of
              December 31,
              2007
            
            ChangeCash
                and cash equivalents
            
            $
            12,333
            
            $
            538,373
            
            $
            (526,040
            )Accounts
                receivable
            
            
            74,437
            
            
            77,167
            
            
            (2,730
            )Unbilled
                revenues on uncompleted contracts
            
            
            60,009
            
            
            73,465
            
            
            (13,456
            )Inventories
            
            
            75,526
            
            
            44,162
            
            
            31,364Prepaid
                expenses and other current assets
            
            
            31,096
            
            
            35,415
            
            
            (4,319
            )Total
                current assets
            
            
            253,401
            
            
            768,582
            
            
            (515,181
            )Accounts
                payable and accrued expenses
            
            
            993,195
            
            
            744,876
            
            
            248,319Due
                to related party
            
            
            28,147
            
            
            186,901
            
            
            (158,754
            )Due
                to stockholders
            
            
            321,884
            
            
            321,884
            
            
            —Payroll
                taxes payable
            
            
            221,248
            
            
            192,177
            
            
            29,071Total
                current liabilities
            
            $
            1,771,533
            
            $
            1,662,281
            
            $
            109,252





Cash
      Requirements





We
      intend
      to use our available funds as well as our working capital and our borrowing
      ability to expand the operations of Senz-It and Isotec.





Sources
      and Uses of Cash





*Operating
      Activities*





Our
      net
      cash used in operating activities was $548,722 for the three months ended March
      31, 2008 and $357,997 for the three months ended March 31, 2007, an increase
      of
      $190,725. The principal components of the increase net cash used in operations
      for the three months ended March 31, 208 were: (a) a net loss of $630,576,
      (b)
      change in fair value of derivative and warrant liabilities of $185,191; (c)
      a
      increase in inventory of $31,364; (d) a decrease in due to related parties
      of
      $156,699; and (e) an decrease in deferred revenue of $25,628; offset by (f)
      depreciation and amortization of $30,328; (g) stock issued to pay operating
      expenses in the amount of $118,562; (h) increase in accounts payable and accrued
      expenses of $252,692; and (i) an increase in payroll taxes payable of $29,071.


39


*Investing
      Activities*





Our
      net
      cash used in investing activities was $21,001 for the three months ended March
      31, 2008 and was used for acquisition of intangible assets of $21,001, compared
      to our net cash used in investing activities of $159,949 for the three months
      ended March 31, 2007 which was used for the acquisition of fixed and intangible
      assets of $8,435 and $151,604, respectively.





*Financing
      Activities*





Our
      net
      cash provided by financing activities of $43,683 for the three months ended
      March 31, 2008, which resulted from proceeds from the exercise of warrants
      totaling $47,993 which were offset by repayments of notes payable of $4,310.
      Our
      net cash provided by financing activities was $443,210 for the three months
      ended March 31, 2007, which resulted from proceeds, net of issuance costs,
      from
      sales of common stock to investors in a private stock offering of $497,500
      which
      were offset by repayments of note payable of $54,290.





**Contractual
      Obligations.**





Operating
      Leases





Isotec
      leases a 4,800 square foot facility in Westminster, Colorado with a monthly
      rent
      and common area expense of $4,061 through December 31, 2011. Rent and common
      area expense totaled $12,556 and $11,715 for the three months ended March 31,
      2008 and March 31, 2007, respectively.





As
      of
      March 31, 2008, future minimum non-cancelable facility rental payments required
      under the operating lease are as follows:





2008
                (last nine months)
            
            $
            36,6622009
            
            
            51,1832010
            
            
            53,2322011
            
            
            55,362$
            196,439





Senz-It
      leases a 934 square foot facility in Newport Beach, California. The lease
      commenced October 22, 2007 through October 21, 2008. Upon expiration, the lease
      terms will continue for successive thirty-day periods until cancelled by either
      party in writing. Rent and common area expense totaled $2,615 for the three
      months ended March 31, 2008. There were no rent and common area expenses
      associated with this lease for the three months ended March 31, 2007. As of
      March 31, 2008 future minimum non-cancellable facility rental payment required
      under the operating lease for 2008 are $8,732.


40


Consulting
      Agreement





On
      March
      10, 2008, we renewed our consulting agreement with its chief executive officer,
      Robert Hovee, through an agreement with RAH Consulting Group, Inc. This
      agreement covers his services to be rendered for us in that position for the
      period of January 1, 2008 through December 31, 2008. In consideration of the
      services rendered, we will pay Mr. Hovee a fee of $8,000 per month, in cash
      or
      stock, at our discretion. Mr. Hovee is eligible to participate in the Company’s
      Stock Option Plan. We will reimburse Mr. Hovee for all reasonable business
      expenses incurred while performing services for us. In addition, healthcare
      insurance premiums for Mr. Hovee will be paid by us. This agreement is to remain
      in effect until terminated by either party as of the date set forth in a written
      notice to the other party delivered in accordance with the notice provisions
      of
      the agreement at least 30 days prior to such date. In the event of the
      termination of this agreement, any accrued but unpaid fees will be paid within
      ten days of the effective date of such termination. As of March 31, 2008, we
      did
      not owe Mr. Hovee any money.




An
      advance of $3,259 on the consulting fees owed Robert Hovee was made during
      2007.
      The remaining advance to related party as of March 31, 2008 is
      $1,204.





Distributor
      Agreements





We
      have
      entered into several distributor agreements for distribution of the our products
      in the United States. These agreements call for the provision of services to
      the
      distributors in exchange for the promotion of our products. The products are
      sold to the distributor at a discount from the list price of 15% to
      25%.





In
      addition, we have alliance agreements to assist us in establishing international
      distributorships. The agreements have one-year terms and may be renewed with
      the
      mutual consent of both parties. The alliance agreements specify a commission
      of
      10% of license fees and 5% of product sales made pursuant to the alliance
      agreements.





On
      May 1,
      2007, we entered into a distributor agreement for the purpose of appointing
      a
      distributor responsible for the worldwide, excluding Singapore, sales and
      marketing of the Senz-It product line for a period of forty-eight months unless
      sooner terminated as specified in the agreement. In addition the distributor
      provides sales and marketing consulting services for an initial term of twelve
      months. As payment for these consulting fees, we agreed to the following
      compensation arrangement: (a) 10,000,000 million shares (50% of the shares
      in
      the form of S-8 shares and 50% of the shares were in the form of Rule 144
      shares) were issued totalling $60,000 (valued at the closing price of $0.006
      on
      the date issued), and (b) World Am stock options, fully vested, issued monthly
      in the amount of 1,200,000 through November 2007 and 1,000,000 through May
      2008
      at an exercise price of $0.02 per share. The stock option shares remain
      exercisable for a period of thirty-six months from the date of issuance. No
      additional compensation or expense reimbursement shall be made to distributor
      for their efforts in this matter. As of March 31, 2008, a total of 11,200,000
      fully vested options had been issued, valued at $27,806. This amount has been
      recorded in general and administrative expenses (see Note 10).


41


License
      Agreement





Through
      March 31, 2008, we have incurred a total of $205,548 related to certain items
      in
      the License Agreement, which we have recorded as an intangible asset in the
      accompanying condensed consolidated financial statements (see Note 3). Upon
      commencement of sales of the licensed technologies, Senz-It will amortize the
      cost of the intangibles over the lesser of their estimated useful lives or
      over
      the remaining term of the License Agreement. Amortizable intangible assets
      are
      tested for impairment based on undiscounted cash flows, and, if impaired,
      written down to fair value based on either discounted cash flows or appraised
      values.





In
      connection with the License Agreement (see Note 3), Senz-It issued 100,000
      restricted shares of its common stock in January 2007, and will issue additional
      such shares to SUNY pursuant to the terms of a Stock Purchase Agreement dated
      December 1, 2006,  so
      that
      it will maintain a minimum ownership of 10% in Senz-It. Finally, Senz-It entered
      into a Stockholders Agreement dated  December
      1, 2006 with SUNY that covers the rights of stockholders of Senz-It. At such
      time as Senz-It earns a profit, the minority interest will be allocated to
      SUNY.
      In connection with these agreements, we entered into confidentiality and
      non-disclosure agreements with SUNY as to certain specific terms of the
      agreements.





Indemnities
      and Guarantees





During
      the normal course of business, we have made certain indemnities and guarantees
      under which we may be required to make payments in relation to certain
      transactions. These indemnities include certain agreements with our officers
      under which we may be required to indemnify such party for liabilities arising
      out of their employment relationship, lease agreements where we maybe required
      to indemnify the landlord for damages arising out of non-compliance with
      environmental laws, contracts where we may be required to indemnify the other
      party from damages resulting from claimed infringements of the propriety rights
      of third parties or confidentiality provisions and the LaJolla Cove agreement
      where we may be required to indemnify La Jolla Cove for breach of representation
      or warranty. The duration of these indemnities and guarantees varies, and in
      certain cases, is indefinite.





The
      majority of these indemnities and guarantees do not provide for any limitation
      of the maximum potential future payments we would be obligated to make.
      Historically, we have not been obligated to make significant payments for these
      obligations and no liability has been recorded for these indemnities in the
      accompanying consolidated balance sheets.





Off
      Balance Sheet Arrangements





Other
      than our operating lease, we do not engage in any off balance sheet arrangements
      that are reasonably likely to have a current or future effect on our
      consolidated financial condition, revenues, and results of operations, liquidity
      or capital expenditures.





Inflation





The
      impact of inflation on our costs and the ability to pass on cost increases
      to
      our customers over time is dependent upon market conditions. We are not aware
      of
      any inflationary pressures that have had any significant impact on our
      operations over the past quarter, and we do not anticipate that inflationary
      factors will have a significant impact on future operations.


42


**Critical
      Accounting Policies.**





The
      SEC
      has issued Financial Reporting Release No. 60, “Cautionary Advice Regarding
      Disclosure About Critical Accounting Policies” (“FRR 60”), suggesting companies
      provide additional disclosure and commentary on their most critical accounting
      policies. In FRR 60, the SEC has defined the most critical accounting policies
      as the ones that are most important to the portrayal of a company’s financial
      condition and operating results and require management to make its most
      difficult and subjective judgments, often as a result of the need to make
      estimates of matters that are inherently uncertain. Based on this definition
      and
      in consultation with our Board of Directors, we have identified the following
      accounting policies that we believe are critical to an understanding of our
      financial statements. These are important accounting policies that require
      management’s most difficult, subjective judgments, and include: (a) valuation of
      stock-based compensation arrangements; (b) revenue recognition; (c)
      realizability of long-lived assets; (d) valuation of derivative financial
      instruments; and (e) valuation of income taxes. The methods, estimates and
      judgments we use in applying these most critical accounting policies have a
      significant impact on the results we report in our consolidated financial
      statements.





Valuation
      of Stock-Based Compensation Arrangements





All
      issuances of our stock for non-cash consideration have been assigned a per
      share
      amount equaling either the market value of the shares issued or the value of
      consideration received, whichever is more readily determinable. The majority
      of
      the non-cash consideration received pertains to services rendered by consultants
      and others and have been valued at the amount billed by the consultant for
      services provided.




Our
      accounting policy for equity instruments issued to consultants and vendors
      in
      exchange for goods and services follows the provisions of EITF Issue No. 96-18,
      “Accounting for Equity Instruments That are Issued to Other Than Employees for
      Acquiring, or in Conjunction with Selling, Goods or Services,” and EITF Issue
      No. 00-18, “Accounting Recognition for Certain Transactions Involving Equity
      Instruments Granted to Other Than Employees.” The measurement date for the fair
      value of the equity instrument issued is determined at the earlier of (a) the
      date at which a commitment for performance by the consultant or vendor is
      reached or (b) the date at which the consultant or vendor’s performance is
      complete. In the case of equity instruments issued to consultants, the fair
      value of the equity instrument is recognized over the term of the consulting
      agreement. In accordance with EITF Issue No. 00-18, an asset acquired in
      exchange for the issuance of fully vested, non-forfeitable equity instruments
      should not be presented or classified as an offset to equity on the grantor’s
      balance sheet once the equity instrument is granted for accounting purposes.
      Accordingly, we will record the fair value of the fully vested non-forfeitable
      common stock issued for future consulting services as prepaid expenses in the
      consolidated balance sheet.




We
      account for our employee stock-based compensation under the provisions of SFAS
      No. 123 (revised 2004), “Share-Based Payment,” (“SFAS No. 123(R)”). SFAS No.
      123(R) requires a public entity to measure the cost of employee services
      received in exchange for an award of equity instruments, including stock
      options, based on the grant-date fair value of the award and to recognize it
      as
      compensation expense over the period the employee is required to provide service
      in exchange for the award, usually the vesting period. We have also applied
      the
      provisions of Staff Accounting Bulletin (“SAB”) No. 107 relating to SFAS No.
      123(R).


43


SFAS
      No.
      123(R) requires companies to estimate the fair value of share-based payment
      awards on the date of grant using an option-pricing model. The value of the
      portion of the award that is ultimately expected to vest is recognized as
      expense over the requisite service periods in our consolidated statements of
      operations.




Stock-based
      compensation expense recognized during the period is based on the value of
      the
      portion of share-based payment awards that is ultimately expected to vest during
      the period. SFAS No. 123(R) requires forfeitures to be estimated at the time
      of
      grant and revised, if necessary, in subsequent periods if actual forfeitures
      differ from those estimates. The forfeiture rate that we presently uses is
      0%.




SFAS
      No.
      123(R) requires the cash flows resulting from the tax benefits resulting from
      tax deductions in excess of the compensation cost recognized for those options
      to be classified as financing cash flows. Due to our loss position, there were
      no such tax benefits for the three months ended March 31, 2008 and 2007,
      respectively.




Revenue
      Recognition





We
      recognize revenue in accordance with SAB No. 101, “Revenue Recognition in
      Financial Statements,” as revised by SAB No. 104. As such, we recognize revenue
      when persuasive evidence of an arrangement exists, title transfer has occurred,
      the price is fixed or readily determinable and collection is probable.




Our
      revenues were derived from product sales at Isotec, which primarily consisted
      of
      shipments of security portals. Revenue from product sales are recorded when
      products are shipped.




Revenues
      derived from contracts to develop prototypes and provide research, development,
      design, testing and evaluation of complex detection and control defense systems
      were $127,544 and $-0- during the three months ended March 31, 2008 and 2007,
      respectively. Our research and development contract is cost reimbursement.
      Our
      cost reimbursement research and development contracts require our good faith
      performance of a statement of work within overall budgetary constraints, but
      with some flexibility as it relates to scheduling and resources, both personnel
      and equipment. Revenues for research and development contracts are recognized
      as
      costs are incurred in the proportion that costs incurred bear to estimated
      final
      costs.




Costs
      and
      estimated earnings in excess of billings under government research and
      development contracts are accounted for as unbilled revenues on uncompleted
      contracts stated at estimated realizable value and expected to be realized
      in
      cash within one year.




As
      of
      March 31, 2008 and December 31, 2007, we recorded deferred revenue of $31,935
      and $57,563, respectively, for customer deposits on ordered
      products.




We
      have
      contracts with various governments and governmental agencies. Government
      contracts are subject to audit by the applicable governmental agency. Such
      audits could lead to inquiries from the government regarding the acceptability
      of costs under applicable government regulations and potential adjustments
      of
      contract revenues. To date, we have not been involved in any such
      audits.


44


Realizability
      of Long-Lived Assets





The
      third
      critical accounting policy relates to realizability of long-lived assets. We
      account for long-lived assets in accordance with Statement of Financial
      Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or
      Disposal of Long-Lived Assets.” SFAS No. 144 requires that long-lived assets be
      reviewed for impairment whenever events or changes in circumstances indicate
      that the historical cost carrying value of an asset may no longer be
      appropriate. We assess recoverability of the carrying value of an asset by
      estimating the future net cash flows expected to result from the asset,
      including eventual disposition. If the future net cash flows are less than
      the
      carrying value of the asset, an impairment loss is recorded equal to the
      difference between the asset’s carrying value and fair value or disposable
      value. As of September 30, 2007, we do not believe there have been any
      impairment of our long-lived assets. There can be no assurances, however, that
      demand for our products and services will continue, which could result in an
      impairment of long-lived assets in the future.





Valuation
      of Derivative Financial Instruments





In
      accounting for non-conventional convertible debt, we bifurcate our embedded
      derivative instruments and records them under the provisions of SFAS No. 133,
      “Accounting for Derivative Instruments and Hedging Activities,” as amended, and
      EITF Issue No. 00-19, “Accounting for Derivative Financial Instruments Indexed
      to, and Potentially Settled in, a Company’s Own Stock.” Our derivative financial
      instruments consist of embedded derivatives related to a non-conventional
      debenture entered into with Golden Gate Investors, Inc./La Jolla Cove Investors,
      Inc. (“LaJolla Cove”) (see Note 6). These embedded instruments related to the
      Debenture include the conversion feature, liquidated damages related to
      registration rights and default provisions. The accounting treatment of
      derivative financial instruments requires that we record the derivatives and
      related warrants at their fair value as of the inception date of the agreement
      and at fair value as of each subsequent balance sheet date. Any change in fair
      value will be recorded as non-operating, non-cash income or expense at each
      reporting period. If the fair value of the derivatives is higher at the
      subsequent balance sheet date, we will record a non-operating, non-cash charge.
      If the fair value of the derivative is lower at the subsequent balance sheet
      date, we will record non-operating, non-cash income.




During
      the year ended December 31, 2006, we recorded the initial fair value of the
      conversion feature of $1,151,759 of which $876,759 was recorded as interest
      expense in the consolidated statement of operations and $275,000 was recorded
      as
      a discount on the debt and is being amortized to interest expense over the
      life
      of the debt. We also recorded the initial fair value of the attached warrants,
      related to the debt financing in 2006, of $2,075,694 as a component of interest
      expense in the consolidated statements of operations for the year ended December
      31, 2006. The initial fair value of the conversion-related derivatives and
      warrants were valued primarily using the Black-Scholes pricing model with the
      following assumptions: dividend-yield of 0%, annual volatility of 127% and
      risk-free interest rate of 4.70% – 4.74%. At December 31, 2007, the fair
      value of the conversion feature and the warrants amounted to $1,788,376. The
      2007 decrease in the fair value of the conversion features and warrants of
      $777,284 is included as a component of other income in the December 31, 2007
      consolidated statement of operations. At March 31, 2008, the fair value of
      the
      La Jolla Cove conversion feature and the warrants amounted to $1,610,221. The
      decrease in the fair value of the La Jolla Cove conversion features and warrants
      of $178,155 at March 31, 2008 and the increase in the fair value of the
      conversion features and warrants of $772,645 at March 31, 2007 are recorded
      as
      other income (expense) in the accompanying condensed consolidated statement
      of
      operations.


45


As
      of
      December 31, 2007, the derivatives and warrants were valued primarily using
      the
      Black-Scholes pricing model with the following assumptions: dividend yield
      of
      0%, annual volatility of 133.2% – 161.8%, and risk free interest rate of
      3.07%-3.45%. The derivatives are classified as long-term liabilities in the
      accompanying condensed consolidated balance sheet.




As
      of
      March 31, 2008, the derivatives and warrants were valued primarily using the
      Black-Scholes pricing model with the following assumptions: dividend yield
      of
      0%, annual volatility of 134.6% – 156.3%, and risk free interest rate of
      1.55%-2.46%. The derivatives are classified as long-term liabilities in the
      accompanying condensed consolidated balance sheet.




In
      addition, under the provisions of EITF Issue No. 00-19, as a result of entering
      into the convertible debt, we are required to classify all other non-employee
      stock options and warrants as liabilities and mark them to market at each
      reporting date. Non-employee stock options and warrants were valued primarily
      using the Black-Scholes pricing model with the following assumptions: dividend
      yield of 0%, volatility of 138% and risk free interest rate of 4.54%. At
      December 31, 2007, the fair value of the non-employee warrant was $267,937.
      The
      decrease in the fair value of non-employee stock options in the amount of
      $425,938 since December 31, 2007 is included in other income in the December
      31,
      2007 consolidated statement of operations.




At
      March
      31, 2008, the fair value of the non-employee warrants was $260,901. The decrease
      in the fair value of non-employee stock options and warrants in the amount
      of
      $7,036 since December 31, 2007 and the increase of $44,000 since December 31,
      2006 are included in other income (expense) in the accompanying condensed
      consolidated statement of operations.




Valuation
      of Income Taxes





The
      fifth
      critical accounting policy relates to valuation of income taxes. We account
      for
      income taxes under the provisions of SFAS No. 109, “Accounting for Income
      Taxes.” Under SFAS No. 109, deferred tax assets and liabilities are recognized
      for future tax benefits or consequences attributable to temporary differences
      between the financial statement carrying amounts of existing assets and
      liabilities and their respective tax bases. Deferred tax assets and liabilities
      are measured using enacted tax rates expected to apply to taxable income in
      the
      years in which those temporary differences are expected to be recovered or
      settled. A valuation allowance is provided for significant deferred tax assets
      when it is more likely than not that such assets will not be realized through
      future operations.





**ITEM
              3.**
            **Quantitative
                and Qualitative Disclosures About Market
                Risk.**





As
      a
      smaller reporting company we are not required to provide the information
      required by this Item.





**ITEM
              4.**
            **Controls
                and Procedures****.**





**Evaluation
      of Disclosure Controls and Procedures**





We
      conducted an evaluation, with the participation of our Chief Executive Officer
      and Chief Financial Officer, of the effectiveness of the design and operation
      of
      our disclosure controls and procedures, as defined in Rules 13a-15(e) and
      15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
      Act, as of March 31, 2008, to ensure that information required to be disclosed
      by us in the reports filed or submitted by us under the Exchange Act is
      recorded, processed, summarized and reported, within the time periods specified
      in the Securities Exchange Commission's rules and forms, including to ensure
      that information required to be disclosed by us in the reports filed or
      submitted by us under the Exchange Act is accumulated and communicated to our
      management, including our principal executive and principal financial officers,
      or persons performing similar functions, as appropriate to allow timely
      decisions regarding required disclosure. Based on that evaluation, our Chief
      Executive Officer and Chief Financial Officer have concluded that as of March
      31, 2008, our disclosure controls and procedures were not effective at the
      reasonable assurance level due to the material weaknesses described
      below.


46


In
      light
      of the material weaknesses described below, we performed additional analysis
      and
      other post-closing procedures to ensure our financial statements were prepared
      in accordance with generally accepted accounting principles. Accordingly, we
      believe that the consolidated financial statements included in this report
      fairly present, in all material respects, our financial condition, results
      of
      operations and cash flows for the periods presented.





A
      material weakness is a control deficiency (within the meaning of the Public
      Company Accounting Oversight Board (PCAOB) Auditing Standard No. 5) or
      combination of control deficiencies, such that there is a reasonable possibility
      that a material misstatement of the annual or interim financial statements
      will
      not be prevented or detected. Management has identified the following three
      material weaknesses which have caused management to conclude that, as of March
      31, 2008, our disclosure controls and procedures were not effective at the
      reasonable assurance level:





1.  We
      do not
      have written documentation of our internal control policies and procedures.
      Written documentation of key internal controls over financial reporting is
      a
      requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated
      the
      impact of our failure to have written documentation of our internal controls
      and
      procedures on our assessment of our disclosure controls and procedures and
      has
      concluded that the control deficiency that resulted represented a material
      weakness.





2.  We
      do not
      have sufficient segregation of duties within accounting functions, which is
      a
      basic internal control. Due to our size and nature, segregation of all
      conflicting duties may not always be possible and may not be economically
      feasible. However, to the extent possible, the initiation of transactions,
      the
      custody of assets and the recording of transactions should be performed by
      separate individuals. Management evaluated the impact of our failure to have
      segregation of duties on our assessment of our disclosure controls and
      procedures and has concluded that the control deficiency that resulted
      represented a material weakness.





To
      address these material weaknesses, management performed additional analyses
      and
      other procedures to ensure that the financial statements included herein fairly
      present, in all material respects, our financial position, results of operations
      and cash flows for the periods presented.





**Remediation
      of Material Weaknesses**




To
      remediate the material weaknesses in our disclosure controls and procedures
      identified above, we have continued to refine our internal procedures to begin
      to implement segregation of duties and to reduce the number of audit
      adjustments.


47


**Changes
      in Internal Control over Financial Reporting**




Except
      as
      noted above, there were no changes in our internal control over financial
      reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act,
      during our most recently completed fiscal quarter that have materially affected,
      or are reasonably likely to materially affect, our internal control over
      financial reporting .





**ITEM
              4T.**
            **Controls
                and Procedures****.**





At
      the
      end of the period covered by this report, we carried out the above evaluation,
      under the supervision and with the participation of our management, including
      our Chief Executive Officer and Chief Financial Officer, of the effectiveness
      of
      the design and operation of our disclosure controls and procedures pursuant
      to
      Securities Exchange Act Rule 13a-14.




Based
      upon that evaluation, the Chief Executive Officer and Chief Financial Officer
      concluded that, based on the above factors, our disclosure controls and
      procedures were not effective (1) to provide reasonable assurance that
      information required to be disclosed by us in the reports filed or submitted
      by
      us under the Securities Exchange Act were recorded, processed, summarized and
      reported within the time periods specified in the SEC’s rules and forms, and
      (2) to provide reasonable assurance that information required to be
      disclosed by us in such reports is accumulated and communicated to our
      management, including its Chief Executive Officer and Chief Financial Officer,
      as appropriate to allow for timely decisions regarding required
      disclosure.




**MANAGEMENT’S
      REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**





Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting for the Company. Our internal control over financial
      reporting is a process designed under the supervision of our Chief Executive
      Officer and Chief Financial Officer to provide reasonable assurance regarding
      the reliability of financial reporting and the preparation of our financial
      statements for external reporting purposes in accordance with U.S. generally
      accepted accounting principles. Management made a comprehensive review,
      evaluation and assessment of our internal control over financial reporting
      as of
      December 31, 2007, and it is included in our Annual Report on Form 10-KSB
      filed with the Commission on April 15, 2008. In making its assessment of
      internal control over financial reporting, management used the criteria issued
      by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)
      in Internal Control—Integrated Framework.





There
      were no changes to our internal control over financial reporting identified
      in
      connection with the evaluation set forth in our last Annual Report during our
      fiscal quarter ended March 31, 2008 that has materially affected, or is
      reasonably likely to materially affect, our internal control over financial
      reporting.


48




**PART
      II – OTHER INFORMATION**




**ITEM
              1.**
            **Legal
                Proceedings****.**





Other
      than as set forth below, we are not a party to any material pending legal
      proceedings and, to the best of our knowledge, no such action by or against
      us
      has been threatened.





(a)  On
      August
      2, 2006, a complaint was filed in the District Court of Boulder County,
      Colorado: *Karen
      Alexander v. World Am, Inc., Isotec, Inc., Robert A. Hovee, David J. Barnes,
      James R. Largent and Ken Jochim* . The
      lawsuit was based on an alleged employment contract between us and a former
      employee, the wife of our former CEO and Chairman who is also suing us over
      his
      employment contract (see below).  When this lawsuit was originally filed,
      there were seven causes of action involving three additional named
      defendants, including two of our current Board members.  By the time
      of trial, the three additional named defendants had been dismissed and the
      only
      remaining causes of action were breach of contract, intentional interference
      with contract, libel and slander, and a Colorado Wage Act claim.  The libel
      and slander claim was dismissed during trial and, at the close of evidence,
      the
      former employee demanded $1,000,000 in damages.   The jury returned a
      verdict in our favor, finding that there was no breach of contract or
      intentional interference with contract.  The jury did find that we
      owed plaintiff back wages, which is a claim we never disputed.  The
      former employee was awarded $39,000 for these back wages, a portion of
      which was a statutory penalty, and
      reasonable attorney’s fees in an amount yet to be determined.  We
      also
      have claims pending for certain of our attorneys fees incurred on a discovery
      matter. We
      accrued $39,000 in the 2007 consolidated financial statements and have not
      accrued an additional amount for attorney fees as they cannot be reasonably
      estimated at this time.





(b)  On
      September 20, 2006, a complaint was filed in the District Court of Adams County,
      Colorado: *James
      H. Alexander v. World Am, Inc* .
      The
      complaint principally alleges that we breached an employment agreement with
      the
      plaintiff by not paying him certain amounts allegedly owing and seeks damages
      in
      the amount of $714,718. The matter is currently scheduled to go to trial
      sometime in 2008.




This
      matter was recently moved to the United States District Court, District of
      Colorado. We then filed a counterclaim against Mr. Alexander seeking damages
      for
      breach of fiduciary duty and breach of the duty of loyalty to the Company in
      connection with the Share Exchange Agreement entered into between us and SUTI,
      dated June 10, 2005.





Management
      believes we have meritorious claims and defenses to the plaintiff’s claims and
      ultimately will prevail on the merits. However, there can be no assurance as
      to
      the outcome of the lawsuit. Litigation is subject to inherent uncertainties,
      and
      unfavorable rulings could occur. If an unfavorable ruling were to occur, there
      could be a material adverse effect on our financial condition, results of
      operations or liquidity.




(c)  On
      or
      about November 7, 2007, PR/DNA filed a Complaint for Breach of Contract,
      Account Stated and Other Common Counts against World-Am in Superior Court of
      California, Los Angeles County, Case No. 07CC11731 to recover $30,108.25,
      claiming that timely notice of termination was not given to PR/DNA under the
      terms of a written agreement and further claiming that PR/DNA is entitled to
      reimbursement of certain costs incurred during the term of the agreement.




49




We
      filed
      an answer to the complaint on or about December 28, 2007 and hav commenced
      settlement discussions with PR/DNA’s counsel. We do not believe the
      outcome of this lawsuit will be material.




(d)  On
      January 30, 2004, a complaint was filed in the District Court of Adams County,
      Colorado: *Robert
      Hainey and Internet Marketing Solutions, Inc. v. World Am Communications, Inc.
      and Isotec, Inc* .
      The
      complaint, which has causes of action for breach of contract and unjust
      enrichment, alleges that the defendants failed to pay the plaintiffs for certain
      consulting and public relations and related work, reimbursement of certain
      business expenses incurred on behalf of the defendants, and to repay a loan
      made
      by the plaintiffs to the defendants. The complaint sought total monetary damages
      of approximately $308,000.





On
      July
      27, 2005, the matter was settled. Under the terms of this settlement, we were
      obligated to pay the sum of $116,000 over a period of four years in semi-annual
      installments, beginning on October 1, 2005. The plaintiffs were obligated to
      pay
      us the sum of $2,000 per installment payment to reimburse it for administrative
      costs in connection with the payment of such sum in the form of S-8 stock.
      Accordingly, we assumed a settlement liability of $116,000 on August 31, 2005,
      with $29,000 recorded as short-term or amounts due within one year and $87,000
      recorded as long-term.





Management
      was previously advised by local legal counsel that the settlement was
      unenforceable in the State of Colorado because the action dismissed the
      plaintiff with prejudice, and cannot be presented in any other jurisdiction.
      In
      addition, this legal counsel advised that a new action cannot be re-filed since
      the relevant statute of limitations on this matter has expired. Accordingly,
      we
      eliminated the settlement liability and recorded a settlement gain of $116,000
      as of December 31, 2005.




The
      plaintiff subsequently filed a Motion to Reopen Case and Application for Entry
      of Judgment against World Am. On October 29, 2007, the District Court entered
      a
      judgment against us and found that we breached the previous settlement agreement
      by not paying any portion of the $116,000. The Court did not address the issue
      that the plaintiff never paid the $2,000 per installment fee. On November 9,
      2007, we filed a Motion for Reconsideration of Judgment Entered on October
      29,
      2007 requesting the judgment for $116,000 be withdrawn pending the Plaintiff’s
      request and payment of $2,000 for an installment; alternatively that said
      judgment be amended to $50,000 and no future installment need be made by us
      until a proper tender of $2,000 is made; or alternatively, for vacating said
      judgment pending a hearing to be set on notice by either party on Plaintiffs
      motion.





In
      March
      2008, we settled this matter. Under the terms of the settlement, we agreed
      to
      pay to Robert Haney and Internet Marketing Solutions, Inc., the sum of $116,000.
      Payments will be made as follows: a payment of $6,000 was made in January 2008,
      and another payment of $6,000 was made upon execution of the agreement, March
      4,
      2008. As of March 31, 2008, no additional monies have been paid to Mr. Haney
      and
      Internet Marketing Solutions. As of March 31, 2008, the balance owed is
      $104,000. Monthly payments in the amount of $5,000, in stock or cash, are set
      to
      begin on April 5, 2008 and continuing in the same amount on the fifth day of
      each month thereafter until fully paid in April 2010. The April 2010 payment
      will be $4,000, in cash or stock. In the event that we fail to make any of
      the
      aforementioned payments, we agree to pay Robert Haney and Internet Marketing
      Solutions, Inc., a penalty of $1,000 per occurrence.


50


**ITEM
              1A**
            **Risk
                Factors**





As
      a
      smaller reporting company we are not required to provide the information
      required by this Item.





**ITEM
              2.**
            **Unregistered
                Sales of Equity Securities and Use of Proceeds****.**





On
      January 9, 2008, we issued an aggregate of 26,602,177 shares of our common
      stock
      to La Jolla Cove Investors, Inc. We issued 26,564,184 of these shares pursuant
      to a conversion request submitted to us by La Jolla to convert $3,799.27 of
      the
      outstanding amount due under that certain 63⁄4% Convertible Debenture dated June
      8, 2006. We issued the additional 37,993 shares pursuant to a mandatory exercise
      provision under a Warrant issued with the Convertible Debenture. Under the
      Warrant the exercise price is $1.00 per share, so we received $37,993 as a
      result of this exercise. The
      issuance was exempt from registration pursuant to Section 4(2) of the Securities
      Act of 1933, and the investor was accredited.





On
      March
      11, 2008, we issued an aggregate of 7,333,333 shares of our common stock to
      La
      Jolla Cove Investors, Inc. We issued 7,323,333 of these shares pursuant to
      a
      conversion request submitted to us by La Jolla to convert $1,000 of the
      outstanding amount due under that certain 63⁄4% Convertible Debenture dated June
      8, 2006. We issued the additional 10,000 shares pursuant to a mandatory exercise
      provision under a Warrant issued with the Convertible Debenture. Under the
      Warrant the exercise price is $1.00 per share, so we received $10,000 as a
      result of this exercise. The
      issuance was exempt from registration pursuant to Section 4(2) of the Securities
      Act of 1933, and the investor was accredited.





On
      March
      31, 2008, we issued an aggregate of 18,530,997 shares of our common stock to
      La
      Jolla Cove Investors, Inc. We issued 18,505,997 of these shares pursuant to
      a
      conversion request submitted to us by La Jolla to convert $2,500 of the
      outstanding amount due under that certain 63⁄4% Convertible Debenture dated June
      8, 2006. We issued the additional 25,000 shares pursuant to a mandatory exercise
      provision under a Warrant issued with the Convertible Debenture. Under the
      Warrant the exercise price is $1.00 per share, so we received $25,000 as a
      result of this exercise. The
      issuance was exempt from registration pursuant to Section 4(2) of the Securities
      Act of 1933, and the investor was accredited.




**ITEM
              3.**
            **Defaults
                Upon Senior Securities****.**





There
      have been no events required to be reported under this Item.





**ITEM
              4.**
            **Submission
                of Matters to a Vote of Security Holders****.**





There
      have been no events required to be reported under this Item.





**ITEM
              5.**
            **Other
                Information****.**





None.


51


**ITEM
              6.**
            **Exhibits****.**





(a)  Exhibits





2.1
            
            Agreement
                and Plan of Merger between the Company and Allmon Corporation, dated
                May
                11, 2000 (incorporated by reference to Exhibit 2.1 of the Form 8-K12g-3
                filed on May 16, 2000).2.2
            
            Stock
                Purchase Agreement between the Company, Isotec, Incorporated, and
                selling
                shareholders, dated February 22, 2000 (incorporated by reference
                to
                Exhibit 2.2 of the Form 10-QSB filed on May 21, 2001).2.3
            
            Share
                Exchange Agreement between the Company and World Am Security Venture
                Company, Ltd., dated May 18, 2004 (incorporated by reference to Exhibit
                2
                of the Form 8-K filed on May 26, 2004).3.1
            
            Articles
                of Incorporation, dated July 5, 2002 (incorporated by reference to
                Exhibit
                3.1 of the Form 10-QSB/A filed on February 5, 2004).3.2
            
            Certificate
                of Amendment to Articles of Incorporation, dated August 20, 2002
                (incorporated by reference to Exhibit 3.2 of the Form 10-QSB/A filed
                on
                February 5, 2004).3.3
            
            Certificate
                of Amendment to Articles of Incorporation, dated December 20, 2002
                (incorporated by reference to Exhibit 3.3 of the Form 10-QSB/A filed
                on
                February 5, 2004).3.4
            
            Certificate
                of Amendment to Articles of Incorporation, dated August 2, 2004
                (incorporated by reference to Exhibit 3.4 of the Form 10-QSB filed
                on
                August 20, 2004).3.5
            
            Certificate
                of Amendment of Articles of Incorporation, dated November 8, 2004
                (incorporated by reference to Exhibit 3.1 of the Form 8-K filed on
                November 16, 2004).3.6
            
            Certificate
                of Amendment of Articles of Incorporation, dated December 1, 2004
                (incorporated by reference to Exhibit 3.2 of the Form 8-K filed on
                November 16, 2004).3.7
            
            Bylaws,
                dated May 15, 2000 (incorporated by reference to Exhibit 3.2 of the
                Form
                8-K12g-3 filed on May 16, 2000).4.1
            
            Employee
                Stock Incentive Plan, dated January 22, 2001 (incorporated by reference
                to
                Exhibit 4.1 of the Form S-8 filed on January 29, 2001).4.2
            
            Non-Employee
                Directors and Consultants Retainer Stock Plan, dated January 5, 2001
                (incorporated by reference to Exhibit 4.2 of the Form S-8 filed on
                January
                29, 2001).4.3
            
            Common
                Stock Purchase Agreement between us and Four Way Associates, Inc.,
                dated
                June 1, 2001 (incorporated by reference to Exhibit 4.3 of the Form
                SB-2
                filed on August 28, 2001).




52




4.4
            
            Amended
                and Restated Employee Stock Incentive Plan, dated November 20, 2001
                (incorporated by reference to Exhibit 4.1 of the Form S-8 POS filed
                on
                January 31, 2002).4.5
            
            Amended
                and Restated Non-Employee Directors and Consultants Retainer Stock
                Plan,
                dated November 20, 2001 (incorporated by reference to Exhibit 4.2
                of the
                Form S-8 POS filed on January 31, 2002).4.6
            
            2002
                Non-Employee Directors and Consultants Retainer Stock Plan, dated
                September 12, 2002 (incorporated by reference to Exhibit 4 of the
                Form S-8
                filed on September 18, 2002).4.7
            
            2002
                Stock Compensation Plan, dated December 16, 2002 (incorporated by
                reference to Exhibit 4 of the Form S-8 filed on December 23,
                2002).4.8
            
            2003
                Consultants Stock Compensation Plan dated August 19, 2003 (incorporated
                by
                reference to Exhibit 4 of the Form S-8 filed on August 22,
                2003).4.9
            
            2003
                Non-Qualified Stock Option Plan, dated September 29, 2003 (incorporated
                by
                reference to Exhibit 4 of the Form S-8 filed on October 1,
                2003).4.10
            
            Amended
                and Restated Non-Employee Directors and Consultants Retainer Stock
                Plan
                (Amendment No. 2), dated February 10, 2004 (incorporated by reference
                to
                Exhibit 4 of the Form S-8 POS filed on February 13,
                2004).4.11
            
            Amended
                and Restated Non-Employee Directors and Consultants Retainer Stock
                Plan
                (Amendment No. 3), dated June 1, 2004 (incorporated by reference
                to
                Exhibit 4 of the Form S-8 POS filed on June 10, 2004).4.12
            
            Amended
                and Restated Employee Stock Incentive Plan (Amendment No. 2), dated
                July
                15, 2004 (incorporated by reference to Exhibit 4 of the Form S-8
                POS filed
                on August 6, 2004).4.13
            
            Amended
                and Restated Non-Employee Directors and Consultants Retainer Stock
                Plan
                (Amendment No. 4), dated October 12, 2004 (incorporated by reference
                to
                Exhibit 4 of the Form S-8 POS filed on October 19,
                2004).4.14
            
            Amended
                and Restated Non-Employee Directors and Consultants Retainer Stock
                Plan
                (Amendment No. 5), dated December 1, 2004 (incorporated by reference
                to
                Exhibit 4 of the Form S-8 POS filed on December 13,
                2004).4.15
            
            Amended
                and Restated Employee Stock Incentive Plan (Amendment No. 3), dated
                October 17, 2005 (incorporated by reference to Exhibit 4 of the Form
                S-8
                POS filed on December 6, 2005).4.16
            
            Amended
                and Restated Non-Employee Directors and Consultants Retainer Stock
                Plan
                (Amendment No. 6), dated December 22, 2005 (incorporated by reference
                to
                Exhibit 4 of the Form S-8 POS filed on January 6,
                2006).




53




4.17
            
            Securities
                Purchase Agreement between the Company and Golden Gate Investors,
                Inc.,
                dated January 23, 2006 (incorporated by reference to Exhibit 4.1
                of the
                Form 8-K filed on February 10, 2006).4.18
            
            63⁄4%
                Convertible Debenture issued to Golden Gate Investors, Inc., dated
                January
                23, 2006 (incorporated by reference to Exhibit 4.2 of the Form 8-K
                filed
                on February 10, 2006).4.19
            
            Warrant
                to Purchase Common Stock (due January 6, 2009) issued to Golden Gate
                Investors, Inc., dated January 23, 2006 (incorporated by reference
                to
                Exhibit 4.3 of the Form 8-K filed on February 10,
                2006).4.20
            
            Warrant
                to Purchase Common Stock (due January 6, 2011) issued to Golden Gate
                Investors, Inc., dated January 23, 2006 (incorporated by reference
                to
                Exhibit 4.4 of the Form 8-K filed on February 10,
                2006).4.21
            
            Registration
                Rights Agreement between the Company and Golden Gate Investors, Inc.,
                dated January 23, 2006 (incorporated by reference to Exhibit 4.5
                of the
                Form 8-K filed on February 10, 2006).4.22
            
            Addendum
                to Convertible Debenture and Warrant To Purchase Common Stock, dated
                February 7, 2006 (incorporated by reference to Exhibit 4.6 of the
                Form 8-K
                filed on February 10, 2006).4.23
            
            Amended
                and Restated Employee Stock Incentive Plan (Amendment No. 4), dated
                February 7, 2006 incorporated by reference to Exhibit 4 of the Form
                S-8
                POS filed on February 14, 2006).4.24
            
            Cancellation
                Letter between the Company and Golden Gate Investors, Inc., dated
                June 14,
                2006 (incorporated by reference to Exhibit 4.7 of the Form 8-K/A
                filed on
                June 27, 2006).4.25
            
            Securities
                Purchase Agreement between the Company and La Jolla Cove Investors,
                Inc.,
                dated June 19, 2006 (incorporated by reference to Exhibit 4.8 of
                the Form
                8-K/A filed on June 27, 2006).4.26
            
            63⁄4%
                Convertible Debenture issued to La Jolla Cove Investors, Inc., dated
                June
                19, 2006 (incorporated by reference to Exhibit 4.9 of the Form 8-K/A
                filed
                on June 27, 2006).4.27
            
            Warrant
                to Purchase Common Stock (due June 19, 2009) issued to La Jolla Cove
                Investors, Inc., dated June 19, 2006 (incorporated by reference to
                Exhibit
                4.10 of the Form 8-K/A filed on June 27, 2006).4.28
            
            Warrant
                to Purchase Common Stock (due June 19, 2011) issued to La Jolla Cove
                Investors, Inc., dated June 19, 2006 (incorporated by reference to
                Exhibit
                4.11 of the Form 8-K/A filed on June 27,
                2006).




54




4.29
            
            Registration
                Rights Agreement between the Company and La Jolla Cove Investors,
                Inc.,
                dated June 19, 2006 (incorporated by reference to Exhibit 4.12 of
                the Form
                8-K/A filed on June 27, 2006).4.30
            
            Additional
                Transaction Letter between the Company and La Jolla Cove Investors,
                Inc.,
                dated June 22, 2006 (incorporated by reference to Exhibit 4.13 of
                the Form
                8-K/A filed on June 27, 2006).4.31
            
            2007
                World Am, Inc. Stock Option Plan, dated January 2, 2007 (incorporated
                by
                reference to Exhibit 4.31 of the Form 10-KSB filed on April 15,
                2008).10.1
            
            Employment
                Agreement between the Company and James Alexander, dated February
                20, 2002
                (incorporated by reference to Exhibit 10.4 of the Form 10-QSB filed
                on May
                14, 2002).10.2
            
            Amendment
                A to Employment Agreement between the Company and James Alexander,
                dated
                as of February 20, 2002 (incorporated by reference to Exhibit 10.1
                of the
                Form 10-KSB filed on April 11, 2003).10.3
            
            Amendment
                B to Employment Agreement between the Company and James Alexander,
                dated
                January 15, 2004 (incorporated by reference to Exhibit 10.3 of the
                Form
                10-KSB filed on April 20, 2004).10.4
            
            Share
                Exchange Agreement between the Company, on the one hand, and Senz-It,
                Inc.
                and the stockholder of Senz-It, on the other hand, dated June 10,
                2005
                (including the following: Exhibit A: Shares to be Issued; Exhibit
                B:
                Warrant; Exhibit C Series B Preferred Stock Certificate of Designation;
                and Exhibit I:Funding
                Schedule) (not including the following: Exhibit D: World Am, Inc.
                Officer’s Certificate; Exhibit E: Senz It, Inc. Officer’s Certificate;
                Exhibit F: Senz It Financial Statements; Exhibit G: Senz It Contracts;
                Exhibit H: World Am Contracts; Exhibit J: Form 8-K; Exhibit K: Press
                Release; Schedule 5.7: Taxes; and Schedule 5.9: Legal Proceedings)
                (incorporated by reference to Exhibit 10.1 of the Form 8-K/A filed
                on
                September 7, 2005).10.5
            
            Promissory
                Note issued by the Company in favor of Torrey Peaks Ventures, dated
                June
                13, 2005(incorporated
                by reference to Exhibit 10.1 of the Form 8-K filed on March 21,
                2006).10.6
            
            Amendment
                “A” to Promissory Note, dated July 14, 2005 (incorporated by reference
                to
                Exhibit 10.2 of the Form 8-K filed on March 21, 2006).10.7
            
            First
                Amendment to Share Exchange Agreement between the Company,
                on the one hand, and Senz-It, Inc. and the stockholder of Senz-It,
                on the
                other hand, dated August 31, 2005 (incorporated by reference to Exhibit
                10.2 of the Form 8-K/A filed on September 7, 2005).10.8
            
            Option
                to Exclusive License Agreement betweenSenz-It
                Inc. andThe
                Research Foundation of State University of New York, dated June 20,
                2005(incorporated
                by reference to Exhibit 10.3 of the Form 8-K/A filed on September
                7,
                2005).




55




10.9
            
            Venture
                Acceleration Agreement between Senz-It, Inc. and Select University
                Technologies, Inc., dated June 20, 2005 (incorporated by reference
                to
                Exhibit 10.4 of the Form 8-K/A filed on November 28,
                2005).10.10
            
            Demand
                Promissory Note issued by the Company in favor of SUTI Holdings,
                LP, dated
                May 18, 2006 (incorporated by reference to Exhibit 10.10 of the Form
                10-KSB filed on April 2, 2007).10.11
            
            $75,000
                Factoring Agreement between the Company and JJ Ellis, LLC, dated
                April 25,
                2005, and attached warrant (incorporated by reference to Exhibit
                10.11 of
                the Form 10-KSB filed on April 2, 2007).10.12
            
            Addendum
                to Factoring Agreement, dated August 8, 2005 (incorporated by reference
                to
                Exhibit 10.12 of the Form 10-KSB filed on April 2,
                2007).10.13
            
            Consulting
                Agreement between the Company and Robert Hovee, dated February 21,
                2007
                (incorporated by reference to Exhibit 10.13 of the Form 10-KSB filed
                on
                April 2, 2007).10.14
            
            Consulting
                Agreement between the Company and Robert Hovee, dated February 19,
                2008
                (incorporated by reference to Exhibit 10.14 of the Form 10-KSB filed
                on
                April 15, 2008).10.15*
            
            Cost
                Reimbursement Subcontract dated November 1, 2007 (incorporated by
                reference to Exhibit 10.1 of the Form 8-K filed on December 12,
                2007).14
            
            Code
                of Business Conduct and Ethics, adopted by the Company’s board of
                directors (incorporated by reference to Exhibit 14 of the Form 10-KSB
                filed on April 20, 2004).16.1
            
            Letter
                on Change in Certifying Accountant (incorporated by reference to
                Exhibit
                16 of the Form 8-K/A filed on August 3, 2006).21
            
            Subsidiaries
                of the Company (incorporated by reference to Exhibit 21 of the Form
                10-KSB/A filed on June 30, 2006).31.1
            
            Rule
                13a-14(a)/15d-14(a) Certification of Robert A. Hovee (filed
                herewith).31.2
            
            Rule
                13a-14(a)/15d-14(a) Certification of C. Robert Kline (filed
                herewith).32.1
            
            Section
                1350 Certification of Robert A. Hovee (filed herewith).32.2
            
            Section
                1350 Certification of C. Robert Kline (filed herewith).99.1
            
            Confirmation
                of Provisional Patent Application, dated September 2, 2004 (incorporated
                by reference to Exhibit 99.3 of the Form 10-KSB filed on April 21,
                2005).




56




99.2
            
            Confirmation
                of Provisional Patent Application, dated September 2, 2004 (incorporated
                by reference to Exhibit 99.4 of the Form 10-KSB filed on April 21,
                2005).





*
            Portions
                of the exhibit have been omitted pursuant to a request for confidential
                treatment filed with the
                Commission.


57


**SIGNATURES**




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





World
                Am, Inc.Dated: May
                15, 2008
            /s/
            Robert
                A. HoveeBy:
            Robert
                A. HoveeIts:
            Chief
                Executive Officer,
              and
                Director




58