**U.S.      SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-QSB**

**(Mark      One)**

**xQUARTERLY      REPORT      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR      THE      QUARTERLY PERIOD ENDED MARCH 31, 2007**

**OR**

**oTRANSITION      REPORT      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR      THE      TRANSITION PERIOD FROM ______________ TO ______________**

**COMMISSION      FILE NUMBER: 0-30639**

**WORLD      AM, INC.**

| Nevada                                                                          |   | 90-0142757                                            |
|---------------------------------------------------------------------------------|--------|-------------------------------------------------------|
| (State                  or Other Jurisdiction of Incorporation or Organization) |   | (I.R.S.                  Employer Identification No.) |

----

**TABLE      OF CONTENTS**

|                                                                                                                                                                                                                                                        |       | **PAGE**   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|
| **PART                  I - FINANCIAL INFORMATION PAGE**                                                                                                                                                                                                    | ** ** | ** ** |
| **ITEM                  1. FINANCIAL STATEMENTS (UNAUDITED)**                                                                                                                                                                                               | ** ** | ** ** |
| **CONSOLIDATED                  BALANCE SHEETS AS OF MARCH 31, 2007 AND 2006**                                                                                                                                                                              | ** ** | **3**      |
|                                                                                                                                                                                                                                                        |       |       |
| **CONSOLIDATED                  STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2007                  AND                  2006, AND FOR THE PERIOD FROM MARCH 4, 2005(INCEPTION) THROUGH                  MARCH 31,                  2007**  | ** ** | **5**      |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **CONSOLIDATED                  STATEMENTS OF STOCKHOLDERS' DEFICIT FOR THE PERIOD FROM MARCH 4,                  2005                  (INCEPTION) THROUGH MARCH 31, 2007**                                                                                | ** ** | **6**      |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **CONSOLIDATED                  STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2007                  AND                  2006, AND FOR THE PERIOD FROM MARCH 4, 2005 (INCEPTION) THROUGH                  MARCH 31,                  2007** | ** ** | **14**     |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **NOTES                  TO CONSOLIDATED FINANCIAL STATEMENTS**                                                                                                                                                                                             | ** ** | **17**     |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **ITEM                  2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF                  OPERATION**                                                                                                                                                     | ** ** | **40**     |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **ITEM                  3. CONTROLS AND PROCEDURES**                                                                                                                                                                                                        | ** ** | **57**     |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **PART                  II - OTHER INFORMATION**                                                                                                                                                                                                            |       |       |
| **ITEM                  1. LEGAL PROCEEDINGS**                                                                                                                                                                                                              | ** ** | **58**     |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **ITEM                  2. UNREGISTERED SALES OF EQUITY**                                                                                                                                                                                                   | ** ** | ** ** |
| **SECURITIES                  AND USE OF PROCEEDS**                                                                                                                                                                                                         | ** ** | **59**     |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **ITEM                  3. DEFAULTS UPON SENIOR SECURITIES**                                                                                                                                                                                                | ** ** | **59**     |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **ITEM                  4. SUBMISSION OF MATTERS TO A VOTE**                                                                                                                                                                                                | ** ** | ** ** |
| **OF                  SECURITY HOLDERS**                                                                                                                                                                                                                    | ** ** | **59**     |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **ITEM                  5. OTHER INFORMATION**                                                                                                                                                                                                              | ** ** | **59**     |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **ITEM                  6. EXHIBITS**                                                                                                                                                                                                                       | ** ** | **61**     |
| ** **                                                                                                                                                                                                                                                  | ** ** | ** ** |
| **SIGNATURES**                                                                                                                                                                                                                                              |       | **62**     |

----

**PART      I-FINANCIAL INFORMATION**

**Item      1. FINANCIAL INFORMATION**

**WORLD      AM, INC.**

**(A      Development Stage Company)**

**CONSOLIDATED      BALANCE SHEETS**

**(Unaudited)**

|                                                                                                                                          |   | **March                31,****2007** |      | **March                31, 2006** |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-----------|-----------------------------------|--------|
| **ASSETS**                                                                                                                               |   |
|                                                                                                                                     |   |                            |      |                              |   |
| Cash                                                                                                                                     |   | $                                    | 47,272    |                              | $      | 21,069 |   |
| Accounts                receivable, net                                                                                                  |   |                                 | 21,739    |                              |   | 20,378 |   |
| Inventories                                                                                                                              |   |                                 | 88,292    |                              |   | 12,681 |   |
| Prepaid                expenses and other current assets                                                                                 |   |                                 | 4,653     |                              |   | 2,179 |   |
| Total                current assets                                                                                                      |   |                                 | 161,956   |                              |   | 56,307 |   |
|                                                                                                                                     |   |                                 |      |                              |   |   |   |
| Fixed                assets, net                                                                                                         |   |                                 | 12,052    |                              |   | 5,225 |   |
| Intangible                assets                                                                                                         |   |                                 | 176,604   |                              |   | 4,000 |   |
| Refundable                deposit                                                                                                        |   |                                 | 3,820     |                              |   | — |   |
|                                                                                                                                     |   |                                 |      |                              |   |   |   |
| Total                assets                                                                                                              |   | $                                    | 354,432   |                              | $      | 65,532 |   |
|                                                                                                                                     |   |                                 |      |                              |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS’ DEFICIT**                                                                           |
| Current                liabilities                                                                                                       |   |                                 |      |                              |   |   |   |
| Accounts                payable                                                                                                          |   | $                                    | 524,338   |                              | $      | 262,627 |   |
| Due                to related party                                                                                                      |   |                                 | 227,332   |                              |   | — |   |
| Accrued                consultant fees                                                                                                   |   |                                 | 86,914    |                              |   | 17,516 |   |
| Accrued                wages                                                                                                             |   |                                 | 142,517   |                              |   | 39,808 |   |
| Due                to stockholders                                                                                                       |   |                                 | 326,474   |                              |   | 381,820 |   |
| Payroll                taxes payable                                                                                                     |   |                                 | 306,204   |                              |   | 346,275 |   |
| Deferred                revenue                                                                                                          |   |                                 | 61,347    |                              |   | — |   |
| Notes                payable                                                                                                             |   |                                 | 45,151    |                              |   | 223,180 |   |
| Convertible                debenture and accrued interest payable, net of unamortized discount                of                $187,863 |   |                                 | 100,498   |                              |   | — |   |
| Total                current liabilities                                                                                                 |   |                                 | 1,820,775 |                              |   | 1,271,226 |   |
|                                                                                                                                     |   |                                 |      |                              |   |   |   |
| Derivative                and warrant liabilities                                                                                        |   |                                 | 3,468,305 |                              |   | — |   |
|                                                                                                                                     |   |                                 |      |                              |   |   |   |
| Total                liabilities                                                                                                         |   |                                 | 5,289,081 |                              |   | 1,271,226 |   |
|                                                                                                                                     |   |                                 |      |                              |   |   |   |
| Commitments                and contingencies                                                                                             |   |                                 |      |                              |   |   |   |

----

**WORLD      AM, INC.**

**(A      Development Stage Company)**

**CONSOLIDATED      BALANCE SHEETS**

**(Unaudited)**

**(Continued)**

|                                                                                                                                                                                                                                                                                                        |   | **March                31,****2007** |       | **March                31, 2006** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|------------|-----------------------------------|--------|
| Stockholders’                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 as of March 31, 2007 and 2006                               |   |                                 | —    |                              |   | — |   |
| Class                B preferred stock, $0.0001 par value (liquidation preference of $145,455                per share); 40,000,000 shares authorized, 55 shares issued and outstanding                as of March 31, 2007 and 2006                                                                        |   |                                 | —    |                              |   | — |   |
| Common                stock; $0.0001 par value; 1,500,000,000 shares authorized, 477,396,371                shares issued and outstanding as                of March 31, 2007; 199,547,958 issued and 169,441,035 shares issued                and                outstanding as of March 31, 2006 (1) |   |                                 | 47,739     |                              |   | 16,945 |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                                   |   |                                 | 1,384,992  |                              |   | (4,427 | ) |
| Receivable                related to issuance of common stock                                                                                                                                                                                                                                               |   |                                 | —    |                              |   | (220,000 | ) |
| Deficit                accumulated during the development stage                                                                                                                                                                                                                                             |   |                                 | (6,367,378 | )                                 |   | (998,212 | ) |
| Total                stockholders’ deficit                                                                                                                                                                                                                                                            |   |                                 | (4,934,648 | )                                 |   | (1,205,694 | ) |
|                                                                                                                                                                                                                                                                                                        |   |                                 |       |                              |   |   |   |
| Total                liabilities and stockholders’ deficit                                                                                                                                                                                                                                            |   | $                                    | 354,432    |                              | $      | 65,532 |   |

----

**WORLD      AM, INC.**

**(A      Development Stage Company)**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

**(Unaudited)**

|                                                                        |   | **Three                Months Ended****March                31, 2007** |                  | **Three                Months****Ended****March                31, 2006** |   | **From****March                4, 2005 (Inception) Through****March                31, 2007** |   |
|-----------------------------------------------------------------------------|--------|------------------------------------------------------------------------|-----------------------|---------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|--------|
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |
| Revenues                                                                    |   | $                                                                      | 53,270                |                                                                      | $      | 68,660                                                                                        |   | $ | 511,518 |   |
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| Cost                of revenues                                             |   |                                                                   | 12,738                |                                                                      |   | 31,443                                                                                        |   |   | 211,350 |   |
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| Gross                profit                                                 |   |                                                                   | 40,532                |                                                                      |   | 37,217                                                                                        |   |   | 300,168 |   |
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| General                and administrative expenses                          |   |                                                                   | 586,898               |                                                                      |   | 433,856                                                                                       |   |   | 3,436,876 |   |
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| Loss                from operations                                         |   |                                                                   | (546,366              | )                                                                         |   | (396,639                                                                                      | )      |   | (3,136,708 | ) |
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| Other                income (expense):                                      |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| Miscellaneous                income (expense)                               |   |                                                                   | 1,741                 |                                                                      |   | 402                                                                                           |   |   | (13,756 | ) |
| Settlement                gain                                              |   |                                                                   | —               |                                                                      |   | —                                                                                       |   |   | 116,000 |   |
| Interest                expense                                             |   |                                                                   | (29,462               | )                                                                         |   | (1,468                                                                                        | )      |   | (3,180,062 | ) |
| Change                in fair value of derivative and warrant liabilities   |   |                                                                   | (816,645              | )                                                                         |   | —                                                                                       |   |   | (152,852 | ) |
|                                                                        |   |                                                                   | (844,366              | )                                                                         |   | (1,066                                                                                        | )      |   | (3,230,670 | ) |
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| Loss                before provision for income taxes                       |   |                                                                   | (1,390,732            | )                                                                         |   | (397,705                                                                                      | )      |   | (6,367,378 | ) |
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| Provision                for income taxes                                   |   |                                                                   | —               |                                                                      |   | —                                                                                       |   |   | — |   |
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| Net                loss                                                     |   | $                                                                      | (1,390,732            | )                                                                         | $      | (397,705                                                                                      | )      | $ | (6,367,378 | ) |
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| Loss                per common share, basic and diluted                     |   | $                                                                      | (                0.00 | )                                                                         | $      | (0.00                                                                                         | )      |   |   |   |
|                                                                        |   |                                                                   |                  |                                                                      |   |                                                                                          |   |   |   |   |
| Basic                and diluted weighted average common shares outstanding |   |                                                                   | 431,402,458           |                                                                      |   | 142,426,403                                                                                   |   |   |   |   |

----

**WORLD      AM, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ DEFICIT**

**FOR      THE PERIOD FROM MARCH 4, 2005 (INCEPTION) THROUGH MARCH 31,      2007**

|                                                                                                                               |   | **Class                A Preferred Stock** |    | **Class                B Preferred Stock** |   | **Common                Stock** |   | **Additional                Paid-In** |    | **Receivable                    Related to****Issuance                    of****Common** |   | **Deficit                    Accumulated During the Development** |   | **Total****Stockholders’** |       |
|------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|---------|--------------------------------------------|--------|---------------------------------|--------|---------------------------------------|---------|------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|----------------------------------|------------|
|                                                                                                                               |   | **Shares**                                 |    | **Amount**                                 |   | **Shares**                      |   | **Amount**                            |    | **Shares**                                                                               |   | **Amount**                                                        |   | **Capital**                      |       | **Stock** |   | **Stage** |   | **Deficit** |   |
| Senz-It,                Inc. March 4, 2005 (inception)                                                                             |   |                                       | — |                                       | $      | —                         |   |                                  | — |                                                                                     | $      | —                                                           |   |                             | —    |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   |
|                                                                                                                               |   |                                       |    |                                       |   |                            |   |                                  |    |                                                                                     |   |                                                              |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                of shares to Senz-It, Inc. founders                                                                        |   |                                       | — |                                       |   | —                         |   |                                  | 55      |                                                                                     |   | —                                                           |   |                             | —    |   |   | — |   |   | 10,000 |   |   | — |   |   | — |   |   | 10,000 |   |
|                                                                                                                               |   |                                       |    |                                       |   |                            |   |                                  |    |                                                                                     |   |                                                              |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assumption                by Senz-It, Inc. of World Am, Inc. capital structure and outstanding                warrants and options |   |                                       | 1,369   |                                       |   | —                         |   |                                  | — |                                                                                     |   | —                                                           |   |                             | 66,570,285 |   |   | 6,656 |   |   | (773,977 | ) |   | (220,000 | ) |   | — |   |   | (987,321 | ) |
|                                                                                                                               |   |                                       |    |                                       |   |                            |   |                                  |    |                                                                                     |   |                                                              |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in September 2005 for services, weighted average $0.004                per                share |   |                                       | — |                                       |   | —                         |   |                                  | — |                                                                                     |   | —                                                           |   |                             | 15,410,573 |   |   | 1,541 |   |   | 52,916 |   |   | — |   |   | — |   |   | 54,457 |   |
|                                                                                                                               |   |                                       |    |                                       |   |                            |   |                                  |    |                                                                                     |   |                                                              |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in October 2005 for services, weighted average $0.003                per                share   |   |                                       | — |                                       |   | —                         |   |                                  | — |                                                                                     |   | —                                                           |   |                             | 12,748,670 |   |   | 1,275 |   |   | 39,521 |   |   | — |   |   | — |   |   | 40,796 |   |
|                                                                                                                               |   |                                       |    |                                       |   |                            |   |                                  |    |                                                                                     |   |                                                              |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in October 2005 for services, weighted average $0.018                per                share   |   |                                       | — |                                       |   | —                         |   |                                  | — |                                                                                     |   | —                                                           |   |                             | 1,795,574  |   |   | 180 |   |   | 31,961 |   |   | — |   |   | — |   |   | 32,141 |   |
|                                                                                                                               |   |                                       |    |                                       |   |                            |   |                                  |    |                                                                                     |   |                                                              |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                stock issued in November 2005 to employees, weighted average $0.024                per                share  |   |                                       | — |                                       |   | —                         |   |                                  | — |                                                                                     |   | —                                                           |   |                             | 10,375,000 |   |   | 1,038 |   |   | 249,229 |   |   | — |   |   | — |   |   | 250,267 |   |

----

**WORLD      AM, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ DEFICIT**

**FOR      THE PERIOD FROM MARCH 4, 2005 (INCEPTION) THROUGH MARCH 31,      2007**

**(continued)**

|                                                                                                                                           |   | **Class                  A Preferred Stock** |    | **Class                  B Preferred Stock** |   | **Common                  Stock** |   | **Additional****Paid-In** |    | **Receivable                      Related to****Issuance                      of****Common** |   | **Deficit                      Accumulated During the Development** |   | **Total****Stockholders’** |        |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|----------------------------------------------|--------|-----------------------------------|--------|---------------------------|---------|----------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|----------------------------------|-------------|
|                                                                                                                                           |   | **Shares**                                   |    | **Amount**                                   |   | **Shares**                        |   | **Amount**                |    | **Shares**                                                                                   |   | **Amount**                                                          |   | **Capital**                      |        | **Stock** |   | **Stage** |   | **Deficit** |   |
| Common                  stock issued in December 2005 to employees, weighted average $0.024                  per                  share        |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                                         |   | —                                                             |   |                             | 2,005,000   |   |   | 201 |   |   | 19,460 |   |   | (4,040 | ) |   | — |   |   | 15,621 |   |
|                                                                                                                                           |   |                                         |    |                                         |   |                              |   |                      |    |                                                                                         |   |                                                                |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Conversion                  of note payable for shares of common stock in December 2005, weighted                  average of $0.013 per share |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                                         |   | —                                                             |   |                             | 4,642,857   |   |   | 464 |   |   | 59,893 |   |   | — |   |   | — |   |   | 60,357 |   |
|                                                                                                                                           |   |                                         |    |                                         |   |                              |   |                      |    |                                                                                         |   |                                                                |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                                                                                      |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                                         |   | —                                                             |   |                             | —     |   |   | — |   |   | — |   |   | — |   |   | (600,507 | ) |   | (600,507 | ) |
|                                                                                                                                           |   |                                         |    |                                         |   |                              |   |                      |    |                                                                                         |   |                                                                |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  December 31, 2005                                                                                                    |   |                                         | 1,369   |                                         |   | —                           |   |                      | 55      |                                                                                         |   | —                                                             |   |                             | 113,547,959 |   |   | 11,355 |   |   | (310,997 | ) |   | (224,040 | ) |   | (600,507 | ) |   | (1,124,189 | ) |
|                                                                                                                                           |   |                                         |    |                                         |   |                              |   |                      |    |                                                                                         |   |                                                                |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in January 2006 to employees, weighted average $0.009                  per                  share         |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                                         |   | —                                                             |   |                             | 3,740,000   |   |   | 374 |   |   | 34,082 |   |   | — |   |   | — |   |   | 34,456 |   |
|                                                                                                                                           |   |                                         |    |                                         |   |                              |   |                      |    |                                                                                         |   |                                                                |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued to vendor in January 2006 for services, weighted average                  $0.010 per share                |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                                         |   | —                                                             |   |                             | 12,000,000  |   |   | 1,200 |   |   | 121,200 |   |   | — |   |   | — |   |   | 122,400 |   |
|                                                                                                                                           |   |                                         |    |                                         |   |                              |   |                      |    |                                                                                         |   |                                                                |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in January 2006, for services, weighted average $0.009                  per                  share        |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                                         |   | —                                                             |   |                             | 2,700,000   |   |   | 270 |   |   | 23,310 |   |   | — |   |   | — |   |   | 23,580 |   |
|                                                                                                                                           |   |                                         |    |                                         |   |                              |   |                      |    |                                                                                         |   |                                                                |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in February 2006 to employees, weighted average $0.018                  per                  share        |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                                         |   | —                                                             |   |                             | 2,623,077   |   |   | 263 |   |   | 46,893 |   |   | — |   |   | — |   |   | 47,156 |   |

----

**WORLD      AM, INC.**

**(A      DEVELOPMENTS STAGE COMPANY)**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ DEFICIT**

**FOR      THE PERIOD FROM MARCH 4, 2005 (INCEPTION) THROUGH MARCH 31,      2007**

**(continued)**

|                                                                                                                                    |   | **Class                  A Preferred Stock** |    | **Class                  B Preferred Stock** |   | **Common                  Stock** |   | **Additional                  Paid-In** |    | **Receivable                      Related to****Issuance                      of****Common** |   | **Deficit                      Accumulated During the Development** |   | **Total****Stockholders’** |       |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|----------------------------------------------|--------|-----------------------------------|--------|-----------------------------------------|---------|----------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|----------------------------------|------------|
|                                                                                                                                    |   | **Shares**                                   |    | **Amount**                                   |   | **Shares**                        |   | **Amount**                              |    | **Shares**                                                                                   |   | **Amount**                                                          |   | **Capital**                      |       | **Stock** |   | **Stage** |   | **Deficit** |   |
| Common                  stock issued in February 2006 for services, weighted average $0.018                  per                  share |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 2,150,000  |   |   | 215 |   |   | 38,649 |   |   | — |   |   | — |   |   | 38,864 |   |
|                                                                                                                                    |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in March 2006 to employees, weighted average $0.017                  per                  share    |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 626,923    |   |   | 63 |   |   | 10,366 |   |   | — |   |   | — |   |   | 10,429 |   |
|                                                                                                                                    |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in March 2006 for exercise of warrant, weighted average                  $0.0001 per share         |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 30,879,999 |   |   | 3,088 |   |   | 24,700 |   |   | — |   |   | — |   |   | 27,788 |   |
|                                                                                                                                    |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in March 2006 for services, weighted average $0.014                  per                  share    |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 500,000    |   |   | 50 |   |   | 6,950 |   |   | — |   |   | — |   |   | 7,000 |   |
|                                                                                                                                    |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in March 2006 for services, weighted average $0.017                  per                  share    |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 673,077    |   |   | 67 |   |   | 11,131 |   |   | — |   |   | — |   |   | 11,198 |   |
|                                                                                                                                    |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Payment                  for shares issued in December 2005                                                                             |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | —    |   |   | — |   |   | — |   |   | 4,040 |   |   | — |   |   | 4,040 |   |
|                                                                                                                                    |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in April 2006 for services, weighted average $0.015                  per                  share    |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 1,600,000  |   |   | 160 |   |   | 24,382 |   |   | — |   |   | — |   |   | 24,542 |   |
|                                                                                                                                    |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

**WORLD      AM, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ DEFICIT**

**FOR      THE PERIOD FROM MARCH 4, 2005 (INCEPTION) THROUGH MARCH 31,      2007**

**(continued)**

|                                                                                                                                 |   | **Class                  A Preferred Stock** |    | **Class                  B Preferred Stock** |   | **Common                  Stock** |   | **Additional                  Paid-In** |    | **Receivable                      Related to****Issuance                      of****Common** |   | **Deficit                      Accumulated During the Development** |   | **Total****Stockholders’** |       |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|----------------------------------------------|--------|-----------------------------------|--------|-----------------------------------------|---------|----------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|----------------------------------|------------|
|                                                                                                                                 |   | **Shares**                                   |    | **Amount**                                   |   | **Shares**                        |   | **Amount**                              |    | **Shares**                                                                                   |   | **Amount**                                                          |   | **Capital**                      |       | **Stock** |   | **Stage** |   | **Deficit** |   |
| Common                  stock issued in April 2006 to employees, weighted average $0.015                  per                  share |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 350,000    |   |   | 35 |   |   | 5,215 |   |   | — |   |   | — |   |   | 5,250 |   |
|                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in May 2006 to employees, weighted average $0.0119                  per                  share  |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   |  —                                                       |   |                             | 1,000,000  |   |   | 100 |   |   | 11,800 |   |   | — |   |   | — |   |   | 11,900 |   |
|                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cancellation                  of common stock issued to an employee in 2005                                                          |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | (4,459,481 | ) |   | (446 | ) |   | (47,320 | ) |   | — |   |   | — |   |   | (47,766 | ) |
|                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in June 2006 for services, weighted average $0.007                  per                  share  |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 1,500,000  |   |   | 150 |   |   | 10,350 |   |   | — |   |   | — |   |   | 10,500 |   |
|                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in June 2006 to employees, weighted average $0.007                  per                  share  |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 2,200,000  |   |   | 220 |   |   | 15,880 |   |   | — |   |   | — |   |   | 16,100 |   |
|                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in July 2006 for services, weighted average $0.007                  per                  share  |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 33,285,713 |   |   | 3,329 |   |   | 229,671 |   |   | — |   |   | — |   |   | 233,000 |   |
|                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                         |   |                                                                |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in July 2006 to employees, weighted average $0.0081                  per                  share |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                         |   | —                                                             |   |                             | 3,595,125  |   |   | 359 |   |   | 28,595 |   |   | — |   |   | — |   |   | 28,954 |   |

----

**WORLD      AM, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ DEFICIT**

**FOR      THE PERIOD FROM MARCH 4, 2005 (INCEPTION) THROUGH MARCH 31,      2007**

**(continued)**

|                                                                                                                                      |   | **Class                  A Preferred Stock** |    | **Class                  B Preferred Stock** |   | **Common                  Stock** |   | **Additional****Paid-In** |    | **Receivable                  Related to****Issuance                  of Common** |   | **Deficit                  Accumulated During the Development** |   | **Total****Stockholders’** |       |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|----------------------------------------------|--------|-----------------------------------|--------|---------------------------|---------|-----------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|----------------------------------|------------|
|                                                                                                                                      |   | **Shares**                                   |    | **Amount**                                   |   | **Shares**                        |   | **Amount**                |    | **Shares**                                                                        |   | **Amount**                                                      |   | **Capital**                      |       | **Stock** |   | **Stage** |   | **Deficit** |   |
| Common                  stock issued in August 2006 to employees, weighted average $0.0054                  per                  share    |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 2,968,000  |   |   | 297 |   |   | 15,656 |   |   | — |   |   | — |   |   | 15,953 |   |
|                                                                                                                                      |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in August 2006 for services, weighted average $0.006                  per                  share     |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 2,153,846  |   |   | 215 |   |   | 12,708 |   |   | — |   |   | — |   |   | 12,923 |   |
|                                                                                                                                      |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in September 2006 to employees, weighted average $0.0054                  per                  share |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 2,176,240  |   |   | 217 |   |   | 11,178 |   |   | — |   |   | — |   |   | 11,395 |   |
|                                                                                                                                      |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in September 2006 for services, weighted average $0.0045                  per                  share |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 5,952,381  |   |   | 595 |   |   | 26,189 |   |   | — |   |   | — |   |   | 26,784 |   |
|                                                                                                                                      |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reversal                  of receivable related to issuance of common stock                                                               |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | —    |   |   | — |   |   | (220,000 | ) |   | 220,000 |   |   | — |   |   | — |   |
|                                                                                                                                      |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in October 2006 for services, weighted average $0.005                  per                  share    |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 22,362,000 |   |   | 2,236 |   |   | 109,574 |   |   | — |   |   | — |   |   | 111,810 |   |
|                                                                                                                                      |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercise                  of stock option in October 2006, weighted average $0.002 per                  share                             |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 3,396,774  |   |   | 340 |   |   | 6,454 |   |   | — |   |   | — |   |   | 6,794 |   |

----

**WORLD      AM, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ DEFICIT**

**FOR      THE PERIOD FROM MARCH 4, 2005 (INCEPTION) THROUGH MARCH 31,      2007**

**(continued)**

|                                                                                                                                     |   | **Class                  A Preferred Stock** |    | **Class                  B Preferred Stock** |   | **Common                  Stock** |   | **Additional****Paid-In** |    | **Receivable                  Related to****Issuance                  of Common** |   | **Deficit                  Accumulated During the Development** |   | **Total****Stockholders’** |        |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|----------------------------------------------|--------|-----------------------------------|--------|---------------------------|---------|-----------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|----------------------------------|-------------|
|                                                                                                                                     |   | **Shares**                                   |    | **Amount**                                   |   | **Shares**                        |   | **Amount**                |    | **Shares**                                                                        |   | **Amount**                                                      |   | **Capital**                      |        | **Stock** |   | **Stage** |   | **Deficit** |   |
| Common                  stock issued in October 2006 to employees, weighted average $0.0048                  per                  share  |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 3,603,301   |   |   | 360 |   |   | 16,781 |   |   | — |   |   | — |   |   | 17,141 |   |
|                                                                                                                                     |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in November 2006 for services, weighted average $0.0043                  per                  share |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 3,136,905   |   |   | 314 |   |   | 13,036 |   |   | — |   |   | — |   |   | 13,350 |   |
|                                                                                                                                     |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in November 2006 to employees, weighted average $0.0041                  per                  share |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 4,403,822   |   |   | 440 |   |   | 17,682 |   |   | — |   |   | — |   |   | 18,122 |   |
|                                                                                                                                     |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in December 2006 for services, weighted average $0.0041                  per                  share |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 2,317,074   |   |   | 232 |   |   | 9,268 |   |   | — |   |   | — |   |   | 9,500 |   |
|                                                                                                                                     |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in December 2006 to employees, weighted average $0.0040                  per                  share |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 4,054,356   |   |   | 406 |   |   | 15,813 |   |   | — |   |   | — |   |   | 16,219 |   |
|                                                                                                                                     |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in December 2006 for cash, weighted average $0.005                  per share                       |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | 65,000,000  |   |   | 6,500 |   |   | 307,850 |   |   | — |   |   | — |   |   | 314,350 |   |
|                                                                                                                                     |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options                  vesting during the year                                                                                         |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | —     |   |   | — |   |   | 3,168 |   |   | — |   |   | — |   |   | 3,168 |   |
|                                                                                                                                     |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                                                                                                                |   |                                         | — |                                         |   | —                           |   |                      | — |                                                                              |   | —                                                         |   |                             | —     |   |   | — |   |   | — |   |   | — |   |   | (4,376,139 | ) |   | (4,376,139 | ) |
|                                                                                                                                     |   |                                         |    |                                         |   |                              |   |                      |    |                                                                              |   |                                                            |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                  December 31, 2006                                                                                              |   |                                         | 1,369   |                                         |   | —                           |   |                      | 55      |                                                                              |   | —                                                         |   |                             | 330,037,091 |   |   | 33,004 |   |   | 630,214 |   |   | — |   |   | (4,976,646 | ) |   | (4,313,428 | ) |

----

**WORLD      AM, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ DEFICIT**

**FOR      THE PERIOD FROM MARCH 4, 2005 (INCEPTION) THROUGH MARCH 31,      2007**

**(continued)**

|                                                                                                                                                 |   | **Class                  A Preferred Stock** |    | **Class                  B Preferred Stock** |   | **Common                  Stock** |   | **Additional                  Paid-In** |    | **Receivable                  Related to****Issuance                  of****Common** |   | **Deficit                  Accumulated During the Development** |   | **Total****Stockholders’** |       |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|---------|----------------------------------------------|--------|-----------------------------------|--------|-----------------------------------------|---------|--------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|----------------------------------|------------|
|                                                                                                                                                 |   | **Shares**                                   |    | **Amount**                                   |   | **Shares**                        |   | **Amount**                              |    | **Shares**                                                                           |   | **Amount**                                                      |   | **Capital**                      |       | **Stock** |   | **Stage** |   | **Deficit** |   |
| Common                  stock issued in January 2007 for services, weighted average $0.0049                  per                  share (unaudited)  |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                 |   | —                                                         |   |                             | 17,220,298 |   |   | 1,722 |   |   | 83,726 |   |   | — |   |   | — |   |   | 85,448 |   |
|                                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                 |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in January 2007 to employees, weighted average $0.0047                  per                  share (unaudited)  |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                 |   | —                                                         |   |                             | 3,483,197  |   |   | 348 |   |   | 16,182 |   |   | — |   |   | — |   |   | 16,530 |   |
|                                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                 |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in January 2007 for cash, weighted average $0.005                  per share                  (unaudited)       |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                 |   | —                                                         |   |                             | 90,000,000 |   |   | 9,000 |   |   | 413,500 |   |   | — |   |   | — |   |   | 422,500 |   |
|                                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                 |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in February 2007 for services, weighted average $0.0070                  per                  share (unaudited) |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                 |   | —                                                         |   |                             | 15,404,838 |   |   | 1,540 |   |   | 111,235 |   |   | — |   |   | — |   |   | 112,775 |   |
|                                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                 |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in February 2007 for cash, weighted average $0.005                  per share                  (unaudited)      |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                 |   | —                                                         |   |                             | 15,000,000 |   |   | 1,500 |   |   | 73,500 |   |   | — |   |   | — |   |   | 75,000 |   |
|                                                                                                                                                 |   |                                         |    |                                         |   |                              |   |                                    |    |                                                                                 |   |                                                            |   |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock issued in February 2007 to employees, weighted average $0.0073                  per                  share (unaudited) |   |                                         | — |                                         |   | —                           |   |                                    | — |                                                                                 |   | —                                                         |   |                             | 3,030,387  |   |   | 303 |   |   | 22,825 |   |   | — |   |   | — |   |   | 23,128 |   |

----

**WORLD      AM, INC.**

**(A      DEVELOPMENT STAGE COMPANY)**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ DEFICIT**

**FOR      THE PERIOD FROM MARCH 4, 2005 (INCEPTION) THROUGH MARCH 31,      2007**

**(continued)**

|                                                                                                                                                   |   | **Class                    A Preferred Stock** |    | **Class                    B Preferred Stock** |   | **Common                    Stock** |   | **Additional                    Paid-In** |    | **Receivable                    Related to****Issuance                    of****Common** |   | **Deficit                    Accumulated During the Development** |   | **Total****Stockholders’** |        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|---------|------------------------------------------------|--------|-------------------------------------|--------|-------------------------------------------|---------|------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|----------------------------------|-------------|
|                                                                                                                                                   |   | **Shares**                                     |    | **Amount**                                     |   | **Shares**                          |   | **Amount**                                |    | **Shares**                                                                               |   | **Amount**                                                        |   | **Capital**                      |        | **Stock** |   | **Stage** |   | **Deficit** |   |
| Common                    stock issued in March 2007 to employees, weighted average $0.008                    per share                    (unaudited) |   |                                           | — |                                           |   | —                             |   |                                      | — |                                                                                     |   | —                                                           |   |                             | 2,100,226   |   |   | 210 |   |   | 16,592 |   |   | — |   |   | — |   |   | 16,802 |   |
|                                                                                                                                                   |   |                                           |    |                                           |   |                                |   |                                      |    |                                                                                     |   |                                                              |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                    stock issued in March 2007 for services, weighted average $0.008                    per share                    (unaudited) |   |                                           | — |                                           |   | —                             |   |                                      | — |                                                                                     |   | —                                                           |   |                             | 5,223,470   |   |   | 522 |   |   | 30,845 |   |   | — |   |   | — |   |   | 31,367 |   |
|                                                                                                                                                   |   |                                           |    |                                           |   |                                |   |                                      |    |                                                                                     |   |                                                              |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cancellation                    of common stock issued to a                    consultant in 2006 (unaudited)                                          |   |                                           | — |                                           |   | —                             |   |                                      | — |                                                                                     |   | —                                                           |   |                             | (4,103,136  | ) |   | (410 | ) |   | (20,590 | ) |   | — |   |   | — |   |   | (21,000 | ) |
|                                                                                                                                                   |   |                                           |    |                                           |   |                                |   |                                      |    |                                                                                     |   |                                                              |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options                    vesting during the period (unaudited)                                                                                       |   |                                           | — |                                           |   | —                             |   |                                      | — |                                                                                     |   | —                                                           |   |                             | —     |   |   | — |   |   | 6,963 |   |   | — |   |   | — |   |   | 6,963 |   |
|                                                                                                                                                   |   |                                           |    |                                           |   |                                |   |                                      |    |                                                                                     |   |                                                              |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    loss (unaudited)                                                                                                                |   |                                           | — |                                           |   | —                             |   |                                      | — |                                                                                     |   | —                                                           |   |                             | —     |   |   | — |   |   | — |   |   | — |   |   | (1,390,732 | ) |   | (1,390,732 | ) |
|                                                                                                                                                   |   |                                           |    |                                           |   |                                |   |                                      |    |                                                                                     |   |                                                              |   |                             |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,                    March 31, 2007 (unaudited)                                                                                                 |   |                                           | 1,369   | (1)                                            | $      | —                             |   |                                      | 55      |                                                                                     | $      | —                                                           |   |                             | 477,396,371 |   | $ | 47,739 |   | $ | 1,384,992 |   | $ | — |   | $ | (6,367,378 | ) | $ | (4,934,648 | ) |

----

**WORLD      AM, INC.**

**(A      Development Stage Company)**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(Unaudited)**

|                                                                                                      |   | **Three                Months Ended March 31, 2007** |       | **Three                Months Ended March 31, 2006** |   | **From****March                4, 2005 (Inception) Through****March                31, 2007** |   |
|-----------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|------------|------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|--------|
| Cash                flows from operating activities:                                                      |   |                                                 |       |                                                 |   |                                                                                          |   |
| Net                loss                                                                                   |   | $                                                    | (1,390,732 | )                                                    | $      | (397,705                                                                                      | )      | $ | (6,367,378 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities: |   |                                                 |       |                                                 |   |                                                                                          |   |   |   |   |
| Initial                fair value of derivative and warrant                liabilities                    |   |                                                 | —    |                                                 |   | —                                                                                       |   |   | 3,058,453 |   |
| Change                in fair value of derivative and warrant                liabilities                  |   |                                                 | 816,645    |                                                 |   | —                                                                                       |   |   | 134,852 |   |
| Depreciation                                                                                              |   |                                                 | 782        |                                                 |   | 644                                                                                           |   |   | 5,412 |   |
| Stock                issued for services                                                                  |   |                                                 | 265,050    |                                                 |   | 189,646                                                                                       |   |   | 1,095,865 |   |
| Loss                on reclassification of capital lease asset                                            |   |                                                 | —    |                                                 |   | —                                                                                       |   |   | 2,388 |   |
| Options                vesting during the period                                                          |   |                                                 | 6,963      |                                                 |   | —                                                                                       |   |   | 10,131 |   |
| Settlement                gain                                                                            |   |                                                 | —    |                                                 |   | —                                                                                       |   |   | (116,000 | ) |
| Accrued                interest added to principal balance, net of interest                payments       |   |                                                 | 4,677      |                                                 |   | —                                                                                       |   |   | 14,622 |   |
| Amortization                of discount on convertible debt                                               |   |                                                 | 22,851     |                                                 |   | —                                                                                       |   |   | 87,137 |   |
| Changes                in operating assets and liabilities:                                               |   |                                                 |       |                                                 |   |                                                                                          |   |   |   |   |
| Accounts                receivable                                                                        |   |                                                 | (3,265     | )                                                    |   | 3,730                                                                                         |   |   | 26,377 |   |
| Inventories                                                                                               |   |                                                 | (8,491     | )                                                    |   | (529                                                                                          | )      |   | (77,208 | ) |
| Prepaid                expenses and other current assets                                                  |   |                                                 | 707        |                                                 |   | 871                                                                                           |   |   | (4,653 | ) |
| Refundable                deposits                                                                        |   |                                                 | —    |                                                 |   | —                                                                                       |   |   | 6,430 |   |
| Accounts                payable and accrued expenses                                                      |   |                                                 | (51,318    | )                                                    |   | 74,790                                                                                        |   |   | 801,567 |   |
| Payroll                taxes payable                                                                      |   |                                                 | (21,866    | )                                                    |   | 49,551                                                                                        |   |   | 121,685 |   |
| Deferred                revenue                                                                           |   |                                                 | —    |                                                 |   | —                                                                                       |   |   | 61,347 |   |
| Net                cash used in operating activities                                                      |   |                                                 | (357,997   | )                                                    |   | (79,002                                                                                       | )      |   | (1,138,973 | ) |

----

**WORLD      AM, INC.**

**(A      Development Stage Company)**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(Unaudited)**

**(continued)**

|                                                                        |   | **Three                Months Ended March 31, 2007** |     | **Three                Months Ended****March                31, 2006** |   | **From****March                4, 2005 (Inception) Through****March                31, 2007** |   |
|-----------------------------------------------------------------------------|--------|------------------------------------------------------|----------|------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|--------|
| Cash                flows from investing activities:                        |   |                                                 |     |                                                                   |   |                                                                                          |   |   |   |   |
| Cash                acquired in reverse merger                              |   |                                                 | —  |                                                                   |   | —                                                                                       |   |   | 935 |   |
| Purchase                of fixed assets                                     |   |                                                 | (8,345   | )                                                                      |   | —                                                                                       |   |   | (9,754 | ) |
| Purchase                of intangible assets                                |   |                                                 | (151,604 | )                                                                      |   | —                                                                                       |   |   | (176,604 | ) |
| Net                cash used in investing activities                        |   |                                                 | (159,949 | )                                                                      |   | —                                                                                       |   |   | (185,423 | ) |
|                                                                        |   |                                                 |     |                                                                   |   |                                                                                          |   |   |   |   |
| Cash                flows from financing activities:                        |   |                                                 |     |                                                                   |   |                                                                                          |   |   |   |   |
| Net                change in due to related parties                         |   |                                                 | —  |                                                                   |   | (161,887                                                                                      | )      |   | (117,378 | ) |
| Proceeds                from exercise of warrants                           |   |                                                 | —  |                                                                   |   | 27,788                                                                                        |   |   | 27,788 |   |
| Proceeds                from issuance of convertible debenture              |   |                                                 | —  |                                                                   |   | 125,000                                                                                       |   |   | 275,000 |   |
| Proceeds                from sale of preferred stock                        |   |                                                 | —  |                                                                   |   | —                                                                                       |   |   | 10,000 |   |
| Proceeds                from exercise of employee stock options             |   |                                                 | —  |                                                                   |   | 98,767                                                                                        |   |   | 460,378 |   |
| Principal                payments on convertible note payable               |   |                                                 | —  |                                                                   |   | —                                                                                       |   |   | (30,000 | ) |
| Proceeds                from sale of common stock, net of professional fees |   |                                                 | 497,500  |                                                                   |   | —                                                                                       |   |   | 815,890 |   |
| Principal                payments on note payable                           |   |                                                 | (54,290  | )                                                                      |   | —                                                                                       |   |   | (70,010 | ) |
| Net                cash provided by financing activities                    |   |                                                 | 443,210  |                                                                   |   | 89,668                                                                                        |   |   | 1,371,668 |   |
|                                                                        |   |                                                 |     |                                                                   |   |                                                                                          |   |   |   |   |
| Net                change in cash                                           |   |                                                 | (74,736  | )                                                                      |   | 10,666                                                                                        |   |   | 47,272 |   |
|                                                                        |   |                                                 |     |                                                                   |   |                                                                                          |   |   |   |   |
| Cash,                beginning of period                                    |   |                                                 | 122,008  |                                                                   |   | 10,403                                                                                        |   |   | — |   |
|                                                                        |   |                                                 |     |                                                                   |   |                                                                                          |   |   |   |   |
| Cash,                end of period                                          |   | $                                                    | 47,272   |                                                                   | $      | 21,069                                                                                        |   | $ | 47,272 |   |

----

**WORLD      AM, INC.**

**(A      Development Stage Company)**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**(Unaudited)**

**(continued)**

|                                                                                                 |   | **Three                Months Ended March 31, 2007** |    | **Three                Months Ended****March                31, 2006** |   | **From****March                4, 2005 (Inception) Through****March                31, 2007** |   |
|------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|---------|------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|--------|
|                                                                                                 |   |                                                 |    |                                                                   |   |                                                                                          |   |
| Supplemental                disclosure of cash flow information:                                     |   |                                                 |    |                                                                   |   |                                                                                          |   |   |   |   |
| Cash                paid for income taxes                                                            |   | $                                                    | — |                                                                   | $      | —                                                                                       |   | $ | — |   |
| Cash                paid for interest                                                                |   | $                                                    | — |                                                                   | $      | 412                                                                                           |   | $ | 5,695 |   |
|                                                                                                 |   |                                                 |    |                                                                   |   |                                                                                          |   |   |   |   |
| Schedule                of non-cash operating, investing and financing activities:                   |   |                                                 |    |                                                                   |   |                                                                                          |   |   |   |   |
|                                                                                                 |   |                                                 |    |                                                                   |   |                                                                                          |   |   |   |   |
| Acquisition                of Senz-It, Inc. patent, licenses and options                             |   | $                                                    | — |                                                                   | $      | —                                                                                       |   | $ | 1,063,992 |   |
|                                                                                                 |   |                                                 |    |                                                                   |   |                                                                                          |   |   |   |   |
| Acquisition                other assets and liabilities in reverse merger                            |   | $                                                    | — |                                                                   | $      | —                                                                                       |   | $ | (995,956 | ) |
|                                                                                                 |   |                                                 |    |                                                                   |   |                                                                                          |   |   |   |   |
| Issuance                of 55 shares of Class B preferred stock                                      |   | $                                                    | — |                                                                   | $      | —                                                                                       |   | $ | — |   |
|                                                                                                 |   |                                                 |    |                                                                   |   |                                                                                          |   |   |   |   |
| Issuance                of warrants for purchase of 18,000,000 shares of                common stock |   | $                                                    | — |                                                                   | $      | —                                                                                       |   | $ | — |   |
|                                                                                                 |   |                                                 |    |                                                                   |   |                                                                                          |   |   |   |   |
| Reclassification                of capital lease                                                     |   | $                                                    | — |                                                                   | $      | —                                                                                       |   | $ | (8,175 | ) |
|                                                                                                 |   |                                                 |    |                                                                   |   |                                                                                          |   |   |   |   |
| Removal                of fixed asset due to reclassification of capital lease                       |   | $                                                    | — |                                                                   | $      | —                                                                                       |   | $ | 10,563 |   |
|                                                                                                 |   |                                                 |    |                                                                   |   |                                                                                          |   |   |   |   |
| Discount                on convertible debt                                                          |   | $                                                    | — |                                                                   | $      | —                                                                                       |   | $ | 275,000 |   |

----

**WORLD      AM, INC.**

**(A      Development Stage Company)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**NOTE      1 - ORGANIZATION AND BASIS OF PRESENTATION **

----

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**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

----

**Cash.**

**Customers.**

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----

----

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*“*

**NOTE      3 **
**      INTANGIBLE ASSETS**

**NOTE      4 - DUE TO STOCKHOLDERS**

**NOTE      5 - PAYROLL TAXES PAYABLE**

**NOTE      6 - WARRANTS AND CONVERTIBLE DEBENTURE**

----

|   | · | On                February 7, 2006, $100,000 was disbursed directly to the Company                for the                purchase of the Debenture; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | $50,000                was retained for services provided to the Company by various                professionals; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | Another                $125,000 was provided by La Jolla Cove to the Company in July                2006. |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

----

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**NOTE      7 - NOTES PAYABLE**

**NOTE      8 - STOCK COMPENSATION PLANS**

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|                                        | 2007                   |   | 2006                   |
|---------------------------------------------|------------------------|--------|------------------------|
| Risk-free                interest rate      | 4.48%                  |   | 5.10%                  |
| Expected                life of the options | 6                years |   | 5                years |
| Expected                volatility          | 127%                   |   | 139%                   |
| Expected                dividend yield      | 0%                     |   | 0%                     |

|                                                                |   |                     |       | Weighted |   | Remaining   |   |      |   |
|---------------------------------------------------------------------|--------|--------------------------|------------|----------|--------|-------------|--------|-----------|--------|
|                                                                |   |                     |       | Average  |   | Contractual |   | Aggregate |   |
|                                                                |   | Number                   |       | Exercise |   | Term        |   | Intrinsic |   |
|                                                                |   | of                Shares |       | Price    |   | (Years)     |   | Value     |   |
|                                                                |   |                     |       |     |   |        |   |      |   |
| Options                outstanding at January 1, 2007               |   |                     | 16,768,023 |     | $      | 0.013       |   |      | 3.21   |   | $ | — |   |
| Granted                                                             |   |                     | 44,500,000 |     | $      | 0.005       |   |      | 10.00  |   | $ | — |   |
| Expired/forfeited                                                   |   |                     | —    |     |   | —     |   |      |   |   |   |   |   |
| Exercised                                                           |   |                     | —    |     |   | —     |   |      |   |   |   |   |   |
|                                                                |   |                     |       |     |   |        |   |      |   |   |   |   |   |
| Options                outstanding at March 31, 2007                |   |                     | 61,268,023 |     | $      | 0.008       |   |      | 7.62   |   | $ | — |   |
|                                                                |   |                     |       |     |   |        |   |      |   |   |   |   |   |
| Options                vested or expected to vest at March 31, 2007 |   |                     | 61,268,023 |     | $      | 0.013       |   |      | 3.24   |   | $ | — |   |
|                                                                |   |                     |       |     |   |        |   |      |   |   |   |   |   |
| Options                exercisable at March 31, 2007                |   |                     | 16,714,023 |     | $      | 0.013       |   |      | 2.99   |   | $ | — |   |

----

|                                                     |   | March                31, 2007 |       |
|----------------------------------------------------------|--------|-------------------------------|------------|
|                                                     |   | Weighted-Average              |       |   |   |   |   |
|                                                     |   | Shares                        |       | Grant-Date                Fair Value |   | Remaining                Months to Vest |   | Remaining                Unrecognized Compensation Cost |   |
| Non-vested                outstanding at January 1, 2007 |   |                          | 72,000     |   | $ | 0.016 |   |   | 12 |   | $ | 1,152 |   |
| Granted                                                  |   |                          | 44,500,000 |   | $ | 0.003 |   |   | 60 |   | $ | 133,500 |   |
| Vested                                                   |   |                          | (18,000    | ) | $ | 0.016 |   |   |   |   |   | (288 | ) |
| Forfeited                                                |   |                          | —    |   |   | — |   |   |   |   |   | — |   |
| Non-vested                outstanding at March 31, 2007  |   |                          | 44,554,000 |   | $ | 0.003 |   |   | 57 |   | $ | 134,364 |   |

**NOTE      9- STOCKHOLDERS’ DEFICIT**

**Class      A.**

----

**Class      B.**

----

| Shares                issued under the Non-Employee Plan |   |   | 6,576,922   |   |
|----------------------------------------------------------|--------|--------|-------------|--------|
| Shares                issued under the ESIP Plan         |   |   | 39,885,494  |   |
| Private                sale of stock                     |   |   | 105,000,000 |   |
| ESIP                stock returned and cancelled         |   |   | (4,103,136  | )      |
| Total                net shares issued                   |   |   | 147,359,280 |   |

|                                    |   |   |       |  Weighted-Average                Exercise Price |   | Weighted-Average                Remaining Contractual Life |   |
|-----------------------------------------|--------|--------|------------|------------------------------------------------------|--------|------------------------------------------------------------|--------|
| Balance,                January 1, 2007 |   |   | 58,328,948 |                                                 | $      | 0.007                                                      |   |   | 21                months |   |
| Warrants                issued          |   |   | 26,250,000 |                                                 | $      | 0.020                                                      |   |   | 36                months |   |
| Warrants                exercised       |   |   | —    |                                                 |   | —                                                    |   |   | — |   |
| Balance,                March 31, 2007  |   |   | 84,578,948 |                                                 | $      | 0.011                                                      |   |   | 23                months |   |

**NOTE      10 - RELATED PARTY TRANSACTIONS**

----

**Venture      Acceleration Agreement.**

----

**Office      Space.**

**NOTE      11 - COMMITMENTS AND CONTINGENCIES**

----

----

----

**NOTE      12 - SUBSEQUENT EVENTS **

----

**ITEM      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF      OPERATION.**

**Overview**
***.***

----

----

**Results      of Operations.**

**(a)      **
**Revenues.      **

**(b)**
**Cost      of Revenues.**

----

**(c)      **
**General      and Administrative Expenses. **

|                                |   | Three                months endedMarch                31, 2007 |    | Three                months endedMarch                31, 2006 |   |
|-------------------------------------|--------|----------------------------------------------------------------|---------|----------------------------------------------------------------|--------|
|                                |   |                                                           |    |                                                           |   |
| Professional                fees    |   | $                                                              | 92,280  |                                                           | $      | 128,623 |   |
| Payroll                expenses     |   |                                                           | 116,715 |                                                           |   | 166,061 |   |
| Compensation                expense |   |                                                           | -       |                                                           |   | 17,519 |   |
| Rent                                |   |                                                           | 11,714  |                                                           |   | 10,640 |   |
| Warrant                expense      |   |                                                           | -       |                                                           |   | 27,788 |   |
| Management                fees      |   |                                                           | 232,500 |                                                           |   | - |   |

** **

**(d)      **
**Other      Expense.**

** **

**(e)      **
**Net      Loss.**

----

**Factors      That May Affect Operating Results.**

| · | market                acceptance of and changes in demand for products and                services; |
|--------|-----------------------------------------------------------------------------------------------------|

| · | consolidation                in the dealer channel; |
|--------|-----------------------------------------------------|

| · | a                small number of customers account for, and may in future periods                account                for, substantial portions of the Company’s revenue, and revenue could                decline because of delays of customer orders or the failure to retain                customers; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | gain                or loss of clients or strategic relationships; |
|--------|--------------------------------------------------------------------|

| · | announcement                or introduction of new services and products by the Company or by                its                competitors; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

| · | the                ability to build brand recognition; |
|--------|--------------------------------------------------------|

| · | timing                of sales to customers; |
|--------|----------------------------------------------|

| · | the                ability to upgrade and develop systems and infrastructure to accommodate                growth; |
|--------|--------------------------------------------------------------------------------------------------------------------|

| · | the                ability to introduce and market products and services in accordance                with                market demand; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------|

| · | changes                in governmental regulation; |
|--------|----------------------------------------------------|

| · | reduction                in or delay of capital spending by clients due to the effects of                terrorism, war and political                instability; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | valuation                of derivative liabilities; and |
|--------|---------------------------------------------------------|

| · | general                economic conditions. |
|--------|---------------------------------------------|

----

**(a)**
**The      Company May Not Be Able to Accommodate Rapid Growth Which Could Result in a      Loss      of Customers and a Decrease in Revenues.**

**(b)**
**Protection      of Proprietary Rights May Affect the Company’s Success and Ability to Compete      and Generate Revenues.**

----

**(c)**
**Dependence      on Suppliers May Affect the Company’s Ability to Conduct Business and Generate      Revenues.**

**(d)**
**The      Company Faces Strong Competition in the Market, Which Could Make It Difficult      for It to Generate Revenues.**

| · | longer                operating histories; |
|--------|--------------------------------------------|

| · | larger                customer bases; |
|--------|---------------------------------------|

| · | greater                name recognition and longer relationships with clients;                and |
|--------|---------------------------------------------------------------------------------------------------|

| · | significantly                greater financial, technical, marketing, public relations and managerial                resources than the Company. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|

**(e)**
**The      Company Could Fail To Develop New Products To Compete in an Industry of Rapidly      Changing Technology, Resulting in Decreased Revenues.**

----

**(f)**
**New      Versions of the Company’s Products May Contain Errors or Defects, Which Could      Affect Its Ability to Compete and Generate Revenues.**

**(g)**
**The      Company’s Ability to Grow is Directly Tied to Its Ability to Attract and Retain      Customers. Failure to Attract New Customers Could Result in Reduced      Revenues.**

**(h)**
**If      Government Regulation of Our Business Changes, the Company May Need to Change      the Manner in Which It Conducts Business, or Incur Greater Operating      Expenses.**

----

**(i)**
**The      Company’s Success Is Largely Dependent on the Abilities of Its Management and      Employees. **

**(j)**
**Any      Required Expenditures as a Result of Indemnification Will Result in an Increase      in Operating Expenses.**

**(k)**
**If      the Company is Unable to Issue Shares of Common Stock upon Conversion of the      Convertible Debenture for Any Reason, It Would be Required to Pay Certain      Penalties.**

| · |   | Pay                late payments to La Jolla Cove for late issuance of common stock                upon                conversion of the debenture, in the amount of $100 per business day                after                the delivery date for each $10,000 of Debenture principal amount                being                converted. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | In                the event the Company is prohibited from issuing common stock, or                fails to                timely deliver common stock on a delivery date, or upon the occurrence                of                an event of default, then at the election of La                Jolla Cove, the                Company must pay to La                Jolla Cove a                sum of money determined by multiplying up to the outstanding principal                amount of the convertible debenture designated by La                Jolla Cove by                130%, together with accrued but unpaid interest                thereon. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | If                ten days after the date the Company is required to deliver common                stock to                La                Jolla Cove pursuant                to a conversion, La                Jolla Cove purchases                (in an open market transaction or otherwise) shares of common stock                to                deliver in satisfaction of a sale by La                Jolla Cove of                the common stock which it anticipated receiving upon such conversion                (a                “Buy-In”), then the Company is required to pay in cash to La                Jolla Cove the                amount by which its total purchase price (including brokerage commissions,                if any) for the shares of common stock so purchased exceeds the aggregate                principal and/or interest amount of the convertible debenture for                which                such conversion was not timely honored, together with interest thereon                at                a rate of 15% per annum, accruing until such amount and any accrued                interest thereon is paid in full. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**(l)**
**Repayment      of the Debenture, If Required, Would Deplete Available Capital, or Could Result      in Legal Action if Not Repaid.**

**Operating      Activities.**

**Investing      Activities.**

----

**Financing      Activities.**

**Liquidity      and Capital Resources.**

----

----

| · | curtail                operations significantly; |
|--------|--------------------------------------------------|

| · | sell                significant assets; |
|--------|-----------------------------------------|

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

| · | explore                other strategic alternatives including a merger or sale of the                Company. |
|--------|---------------------------------------------------------------------------------------------------------------|

**Contractual      Obligations.**

**(a)**
**Capital      Lease.**

**(b)**
**Operating      Leases.**

----

**(c)**
**Consulting      Agreement.**

**(d)**
**Distributor      Agreements.**

**(e)**
**License      Agreement.**

----

**(f)**
**Indemnities      and Guarantees.**

**Off      Balance Sheet Arrangements.**

**Inflation.**

**Critical      Accounting Policies. **

----

**(a)**
**Valuation      of Stock-Based Compensation Arrangements.**

**(b)**
**Revenue      Recognition.**

**(c)**
**Realizability      of Long-Lived Assets.**

----

**(d)**
**Valuation      of Derivative Financial Instruments.**

**(e)**
**Valuation      of Income Taxes.**

----

**Forward      Looking Statements.**

**ITEM      3. CONTROLS AND PROCEDURES.**

**Evaluation      of Disclosure Controls and Procedures. **

----

**Changes      in Disclosure Controls and Procedures. **

**PART      II - OTHER INFORMATION**

**ITEM      1. LEGAL PROCEEDINGS.**

----

**ITEM      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF      PROCEEDS**

**ITEM      3. DEFAULTS UPON SENIOR SECURITIES.**

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

**ITEM      5. OTHER INFORMATION.**

**Corrections      to Form 10-KSB.**

----

|                                                            |   | Weighted-Average |        |                              |   |                                              |   |
|-----------------------------------------------------------------|--------|------------------|-------------|-----------------------------------|--------|---------------------------------------------------|--------|
|                                                                 |   | Shares           |        | Exercise                Price (1) |   | Remaining                Contractual Term (Years) |   | Aggregate                Intrinsic Value |   |
| Outstanding                at December 31, 2005                 |   |             | 42,837,220  |                              | $      | 0.0122                                            |   |   | 4.08 |   | $ | — |   |
| Options                exercised                                |   |             | (3,774,194  | )                                 |   |                                              |   |   |   |   |   |   |   |
| Cancelled/forfeited                                             |   |             | (23,955,003 | )                                 |   |                                              |   |   |   |   |   |   |   |
| Outstanding                and exercisable at December 31, 2006 |   |             | 15,108,023  |                              | $      | 0.0122                                            |   |   | 3.08 |   | $ | — |   |

**Subsequent      Events.**

**(a)**
**Stock      Issuances.**

----

**(b)**
**Private      Placement.**

**ITEM      6. EXHIBITS**

----

**SIGNATURES**

|                             |                                 |                                               |
|----------------------------------|--------------------------------------|----------------------------------------------------|
|                             | **World                Am, Inc.**    |
|                        |                            |                                          |
| Dated:              May 14, 2007 | By:                        | /s/ Robert              A.              Hovee |
|                             | Robert              A. Hovee,        |
|                             | Chief              Executive Officer |
|                             |                                 |                                               |
|----------------------------------|--------------------------------------|----------------------------------------------------|
| Dated:              May 14, 2007 | By:                        | /s/ David              J.              Barnes |
|                             | David              J. Barnes,        |
|                             | Chief              Financial Officer |

----

**EXHIBIT      INDEX**

| Number |   | Description                                                                                                                                                                                                                                                                                     |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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 the Company 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).                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                      |
| 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).  |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 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 between Senz-It                  Inc. and The                  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). |
|   |   |                                                                                                                                                                                                                                                                                                                                                                          |
| 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.                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                          |
| 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).                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                          |
| 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 July 12, 2004).                                                                                                                                                                                              |

----

| 16.2   |   | 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).                                                                       |
|   |   |                                                                                                                                                                                                                                        |
| 23.1   |   | Consent                  of L.L. Bradford & Company, LLC (incorporated by reference to Exhibit                  23.1 of the Form 10-KSB filed on April 2, 2007).                                                                        |
|   |   |                                                                                                                                                                                                                                        |
| 23.2   |   | Consent                  of KMJ Corbin & Company, LLP (incorporated by reference to Exhibit                  23.2 of the Form 10-KSB filed on April 2, 2007).                                                                           |
|   |   |                                                                                                                                                                                                                                        |
| 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 David J. Barnes (filed                  herewith).                                                                                                                               |
|   |   |                                                                                                                                                                                                                                        |
| 32     |   | Section                  1350 Certification of Robert A. Hovee and David J. Barnes (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).         |
|   |   |                                                                                                                                                                                                                                        |
| 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).         |
|   |   |                                                                                                                                                                                                                                        |
| 99.3   |   | Press                  release issued by the Company, dated June 13, 2005 (incorporated                  by                  reference to Exhibit 99 of the Form 8-K filed on June 16,                  2005).                              |
|   |   |                                                                                                                                                                                                                                        |
| 99.4   |   | Press                  Release issued by the Company, dated August 9, 2005 (incorporated                  by                  reference to Exhibit 99.2 of the Form 8-K/A filed on September                  7,                  2005).    |
|   |   |                                                                                                                                                                                                                                        |
| 99.5   |   | Press                  Release issued by the Company, dated September 7, 2005 (incorporated                  by                  reference to Exhibit 99.3 of the Form 8-K/A filed on September                  7,                  2005). |
|   |   |                                                                                                                                                                                                                                        |
| 99.6   |   | Press                  Release issued by the Company, dated November 7, 2005 (incorporated                  by                  reference to Exhibit 99 of the Form 8-K filed on November 14,                  2005).                       |
|   |   |                                                                                                                                                                                                                                        |
| 99.7   |   | Press                  Release issued by the Company, dated November 14, 2005 (incorporated                  by                  reference to Exhibit 99 of the Form 8-K filed on November 16,                  2005).                      |
|   |   |                                                                                                                                                                                                                                        |
| 99.8   |   | Press                  Release issued by the Company, dated February 21, 2006 (incorporated                  by                  reference to Exhibit 99 of the Form 8-K filed on March 2, 2006).                                           |

----