**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 Washington,
        DC 20549
 
 **FORM
        10-QSB**
 
 [X]
              Quarterly
                  Report pursuant to Section 13 or 15(d) of the Securities Exchange
                  Act of
                  1934For
                  the quarterly period endedSeptember
                  30, 2006[
                  ]
              Transition
                  Report pursuant to 13 or 15(d) of the Securities Exchange Act of
                  1934For
                  the transition period __________to__________Commission
                  File Number:000-27621
 
 United
        American Corporation
 (Exact
        name of small business issuer as specified in its charter)
 
 Florida
              95-4720231(State
                  or other jurisdiction of incorporation or organization)
              (IRS
                  Employer Identification No.)
  4150
                  Ste-Catherine Street West, Suite 200 , Montreal, Quebec, Canada
                  H3Z
                  0A1(Address
                  of principal executive offices)
 
 514-313-6010(Issuer’s
                  telephone number)_______________________________________________________________(Former
                  name, former address and former fiscal year, if changed since last
                  report)
 
 Check
        whether the issuer (1) filed all reports required to be filed by Section
        13 or
        15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
        (or
        for such shorter period that the issuer was required to file such reports),
        and
        (2) has been subject to such filing requirements for the past 90 days [X]
        Yes [
        ] No
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act). [ ] Yes [X] No
 
 State
        the
        number of shares outstanding of each of the issuer’s classes of common stock, as
        of the latest practicable date: 49,969,985 common shares as of September
        30,
        2006.
 
 Transitional
        Small Business Disclosure Format (check one): Yes [ ] No [X]
  Table
            of Contents
  TABLE
                  OF CONTENTS
              PagePART
                  I - FINANCIAL INFORMATIONItem
                  1.
              Financial
                  Statements
              3Item
                  2.
              Management’s
                  Discussion and Analysis
              4Item
                  3.
              Controls
                  and Procedures
              16PART
                  II - OTHER INFORMATIONItem
                  1.
              Legal
                  Proceedings
              17Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of
                  Proceeds
              17Item
                  3.
              Defaults
                  Upon Senior Securities
              17Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  Holders
              17Item
                  5.
              Other
                  Information
              18Item
                  6.
              Exhibits
              18
  2
 Table
            of Contents
  **PART
        I - FINANCIAL INFORMATION**
 
 **Item
        1.****Financial
        Statements**
 
 Our
                  unaudited condensed consolidated financial statements included
                  in this
                  Form 10-QSB are as follows:F-1
              Unaudited
                  Condensed Consolidated Balance Sheet as of September
                  30, 2006F-2
              Unaudited
                    Condensed Consolidated Statements of Operations and Comprehensive
                    Income
                    (Loss)for
                    the Nine and Three Months Ended September 30, 2006 and
                    2005;F-3
              Unaudited
                    Condensed Consolidated Statements of Cash Flows for the Nine
                    Months EndedSeptember
                    30, 2006 and 2005;F-4
              Notes
                  to Condensed Consolidated Financial
                  Statements;
 
 
 These
        unaudited condensed consolidated financial statements have been prepared
        in
        accordance with accounting principles generally accepted in the United States
        of
        America for interim financial information and the SEC instructions to Form
        10-QSB. In the opinion of management, all adjustments considered necessary
        for a
        fair presentation have been included. Operating results for the interim period
        ended September 30, 2006 are not necessarily indicative of the results that
        can
        be expected for the full year.





3
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


CONDENSED
      CONSOLIDATED BALANCE
      SHEET


SEPTEMBER
      30, 2006


(UNAUDITED)




**ASSETS****(IN
                US$)**Current
                Assets:Cash
                and cash equivalents
            
            $
            -Accounts
                receivable, net
            
            
            745,878Inventory
            
            
            11,034Prepaid
                expenses - Intelco Communications
            
            
            124,363Prepaid
                expenses and other current assets
            
            
            34,539Total
                Current Assets
            
            
            915,814Fixed
                assets, net of depreciation
            
            
            573,336**TOTAL
                ASSETS**
            
            $
            1,489,150**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)****LIABILITIES**Current
                Liabilities:Bank
                overdraft
            
            $
            370Deferred
                revenue
            
            
            8,290Loan
                payable - related parties - line of credit
            
            
            22,368Loan
                payable - related parties
            
            
            560,666Convertible
                debentures
            
            
            90,961Derivative
                liability
            
            
            9,039Accounts
                payable and accrued expenses
            
            
            763,221Total
                Current Liabilities
            
            
            1,454,915**Total
                Liabilities**
            
            
            1,454,915**MINORITY
                INTEREST**
            
            
            555,180**STOCKHOLDERS'
                EQUITY (DEFICIT)**Common
                  stock, $.001 Par Value; 50,000,000 shares authorizedand
                49,969,985 shares issued and outstanding
            
            
            49,970Additional
                paid-in capital
            
            
            4,219,448Accumulated
                deficit
            
            
            (4,875,077)Accumulated
                other comprehensive income (loss)
            
            
            84,714**Total
                Stockholders' Equity (Deficit)**
            
            
            (520,945)**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**
            
            $
            1,489,150





The
      accompanying notes are an integral part of the condensed consolidated financial
      statements.


F-1
 Table
          of Contents


UNITED
        AMERICAN
        CORPORATION
 CONDENSED
        CONSOLIDATED STATEMENTS
        OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 FOR
        THE NINE AND THREE MONTHES ENDED SEPTEMBER
        30, 2006 AND 2005
 (UNAUDITED)


**IN
                    US$****NINE
                        MONTHS ENDED****SEPTEMBER
                    30,**
                
                **THREE
                      MONTHS ENDED****SEPTEMBER
                    30,****2006**
                
                **2005**
                
                **2006**
                
                **2005****OPERATING
                    REVENUES**Sales
                $
                10,838,193
                
                $
                2,794,530
                
                $
                6,490,857
                
                $
                1,578,134**COST
                    OF SALES**Inventory,
                    beginning of period
                
                51,652
                
                
                44,059
                
                
                15,862
                
                
                102,490Purchases
                
                9,587,898
                
                
                2,581,312
                
                
                5,827,902
                
                
                1,545,796Inventory,
                    end of period
                
                (11,034)
                
                
                (32,468)
                
                
                (11,034)
                
                
                (32,468)**Total
                    Cost of Sales**
                
                9,628,516
                
                
                2,592,903
                
                
                5,832,730
                
                
                1,615,818**GROSS
                    PROFIT (LOSS)**
                
                1,209,677
                
                
                201,627
                
                
                658,127
                
                
                (37,684)**OPERATING
                    EXPENSES**Selling
                    and promotion
                
                73,728
                
                
                128,104
                
                
                17,508
                
                
                5,060Research
                    and development
                
                -
                
                
                103,006
                
                
                -
                
                
                103,006Professional
                    and consulting fees
                
                234,673
                
                
                591,972
                
                
                95,485
                
                
                7,308Commissions
                    and wages
                
                821,408
                
                
                310,157
                
                
                379,839
                
                
                77,547Other
                    general and administrative expenses
                
                116,382
                
                
                77,408
                
                
                44,291
                
                
                20,542Depreciation,
                    amortization and impairment
                
                184,700
                
                
                138,303
                
                
                65,950
                
                
                39,220**Total
                    Operating Expenses**
                
                1,430,891
                
                
                1,348,950
                
                
                603,073
                
                
                252,683**INCOME
                    (LOSS) BEFORE OTHER INCOME (EXPENSE)**
                
                (221,214)
                
                
                (1,147,323)
                
                
                55,054
                
                
                (290,367)**OTHER
                    INCOME (EXPENSE)**Interest
                    expense
                
                (28,453)
                
                
                (9,000)
                
                
                (11,826)
                
                
                (3,000)**Total
                    Other Income (Expense)**
                
                (28,453)
                
                
                (9,000)
                
                
                (11,826)
                
                
                (3,000)**NET
                    INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES****AND
                    NONCONTROLLING INTEREST**
                
                (249,667)
                
                
                (1,156,323)
                
                
                43,228
                
                
                (293,367)Minority
                    interest
                
                112,154
                
                
                86,170
                
                
                64,334
                
                
                -**NET
                    INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES**
                
                (137,513)
                
                
                (1,070,153)
                
                
                107,562
                
                
                (293,367)**Provision
                    for Income Taxes**
                
                -
                
                
                -
                
                
                -
                
                
                -**NET
                    INCOME (LOSS) APPLICABLE TO COMMON SHARES**
                $
                (137,513)
                
                $
                (1,070,153)
                
                $
                107,562
                
                $
                (293,367)**NET
                    EARNINGS (LOSS) PER BASIC AND DILUTED SHARES**
                $
                (0.00)
                
                $
                (0.02)
                
                $
                0.00
                
                $
                (0.01)**WEIGHTED
                    AVERAGE NUMBER OF COMMON****SHARES
                    OUTSTANDING**
                
                49,969,985
                
                
                47,425,846
                
                
                49,969,985
                
                
                49,969,985**COMPREHENSIVE
                    INCOME (LOSS)**Net
                    income (loss)
                $
                (137,513)
                
                $
                (1,070,153)
                
                $
                107,562
                
                $
                (293,367)Other
                    comprehensive income (loss)Currency
                    translation adjustments
                
                45,692
                
                
                88,376
                
                
                (8,085)
                
                
                43,699Comprehensive
                    income (loss)
                $
                (91,821)
                
                $
                (981,777)
                
                $
                99,477
                
                $
                (249,668)
   The
        accompanying notes are an integral part of the
        condensed consolidated financial statements.
 F-2
 Table
            of Contents


UNITED
        AMERICAN
        CORPORATION
 CONDENSED
        CONSOLIDATED STATEMENTS
        OF CASH FLOWS
 FOR
        THE NINE MONTHS ENDED SEPTEMBER 30, 2006
        AND 2005
 (UNAUDITED)




**IN
                  US$****2006**
              
              **2005****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  loss
              $
              (137,513)
              
              $
              (1,070,153)**Adjustments
                    to reconcile net loss to net cash****used in
                  operating activities:**Depreciation,
                  amortization and impairment
              
              184,700
              
              
              138,303Shares
                  issued for services
              
              -
              
              
              473,750**Changes
                  in assets and liabilities**(Increase)
                  in accounts receivable
              
              (559,049)
              
              
              (68,367)Decrease
                  in inventory
              
              40,618
              
              
              11,591(Increase)
                  in prepaid expenses and other current assets
              
              (108,846)
              
              
              (22,661)Increase
                    in accounts payable andand accrued expenses
              
              155,245
              
              
              282,707Increase
                  in deferred revenue
              
              8,290
              
              
              -Total
                  adjustments
              
              (279,042)
              
              
              815,323**Net
                  cash (used in) operating activities**
              
              (416,555)
              
              
              (254,830)**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Acquisitions
                  of fixed assets
              
              (117,935)
              
              
              (85,498)**Net
                  cash (used in) investing activities**
              
              (117,935)
              
              
              (85,498)**CASH
                  FLOWS FROM FINANCING ACTIVITES**Increase
                  (decrease) in bank overdraft
              
              (16,535)
              
              
              -Proceeds
                  from loan payable
              
              -
              
              
              8,793Proceeds
                  from loan payable - related parties
              
              482,965
              
              
              60,890Proceeds
                  from loan payable - related parties - line of credit
              
              22,368
              
              
              -Proceeds
                  from convertible debentures
              
              -
              
              
              331,760**Net
                  cash provided by financing activities**
              
              488,798
              
              
              401,443Effect
                  of foreign currency
              
              45,692
              
              
              88,376**NET
                  INCREASE IN****CASH
                  AND CASH EQUIVALENTS**
              
              -
              
              
              149,491**CASH
                  AND CASH EQUIVALENTS -****BEGINNING
                  OF PERIOD**
              
              -
              
              
              84,254**CASH
                  AND CASH EQUIVALENTS - END OF PERIOD**
              $
              -
              
              $
              233,745**CASH
                  PAID DURING THE PERIOD FOR:**Interest
                  expense
              $
              22,453
              
              $
              6,000


The
      accompanying notes are an integral part of the
      condensed consolidated financial statements.


F-3
 Table
          of Contents


UNITED
        AMERICAN
        CORPORATION
 NOTES
        TO CONDENSED CONSOLIDATED
        FINANCIAL STATEMENTS
 SEPTEMBER
        30, 2006 AND
        2005


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





The
      unaudited condensed consolidated financial statements included herein have
      been
      prepared, without audit, pursuant to the rules and regulations of the Securities
      and Exchange Commission (“SEC”). The condensed consolidated financial statements
      and notes are presented as permitted on Form 10-QSB and do not contain
      information included in the Company’s annual consolidated statements and notes.
      Certain information and footnote disclosures normally included in financial
      statements prepared in accordance with accounting principles generally accepted
      in the United States of America have been condensed or omitted pursuant to
      such
      rules and regulations, although the Company believes that the disclosures are
      adequate to make the information presented not misleading. It is suggested
      that
      these condensed consolidated financial statements be read in conjunction with
      the December 31, 2005 audited consolidated financial statements and the
      accompanying notes thereto. While management believes the procedures followed
      in
      preparing these condensed consolidated financial statements are reasonable,
      the
      accuracy of the amounts are in some respects dependent upon the facts that
      will
      exist, and procedures that will be accomplished by the Company later in the
      year.





These
      condensed consolidated unaudited financial statements reflect all adjustments,
      including normal recurring adjustments which, in the opinion of management,
      are
      necessary to present fairly the consolidated operations and cash flows for
      the
      periods presented.





United
      American Corporation (the “Company”) was incorporated under the laws of the
      State of Florida on July 17, 1992 under the name American Financial Seminars,
      Inc. with authorized common stock of 1,000 shares at $1.00 par value. Since
      its
      inception the Company has made several name changes and increased the authorized
      common stock to 50,000,000 shares with a par value of $.001. On February 5,
      2004, the name was changed to United American Corporation.





The
      Company was first organized for the purpose of marketing a software license
      known as “Gnotella”, however, in late 2001 this activity was
      abandoned.





On
      July
      18, 2003, the Company entered into a share exchange agreement with 3874958
      Canada Inc. (a Canadian corporation and an affiliate of the Company by common
      officers) to transfer 26,250,000 shares of its common stock for 100 shares
      of
      American United Corporation (a Delaware corporation and wholly owned subsidiary
      of 3874958 Canada Inc.) which represented 100% of the outstanding shares of
      American United Corporation. The Company in this transaction acquired internet
      telecommunications equipment valued at $874,125. These assets did not go into
      service until 2004. The 26,250,000 shares of the Company were issued into an
      escrow account on October 6, 2003, the effective date of the transaction. Later,
      American United Corporation was dissolved. The equipment value was based on
      an
      independent valuation. The shares issued were to 3874958 Canada Inc., whose
      sole
      owner at the time, was the President and CEO of the Company. This transaction
      did not constitute a reverse merger even though the Company issued in excess
      of
      50% of its then current issued and outstanding shares.


F-4
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      1-**  **ORGANIZATION
      AND BASIS OF PRESENTATION** **(CONTINUED)**





The
      transaction was viewed as a reorganization of equity under common control since
      the beneficial owner of the majority shares in the Company was the same before
      and after the transaction.





In
      January 2004, the Company took ownership of all 100 shares issued and
      outstanding of 3894517 Canada, Inc. (a Canadian corporation), whose 100% owner
      was at the time President and CEO of the Company. At this time, 3894517 Canada,
      Inc. became the operating unit of the Company for the services they were
      providing utilizing the equipment acquired in 2003 from American United
      Corporation. There was no consideration paid for these 100 shares.





On
      August
      27, 2004, the Company entered the telecommunications business by the creation
      of
      United American Telecom, a division focused on terminating call traffic in
      the
      Caribbean, and by the creation of Teliphone, a division focused on providing
      Voice-over-Internet -Protocol (VoIP) calling services to residential and
      business customers.





Teliphone,
      Inc. was founded in order to develop a VoIP network which enables users to
      connect an electronic device to their internet connection at the home or office
      which permits them to make telephone calls to any destination phone number
      anywhere in the world. VoIP is currently growing in scale significantly in
      North
      America. Industry experts predict the VoIP offering to be one of the fastest
      growing sectors from now until 2009. This innovative new approach to
      telecommunications has the benefit of drastically reducing the cost of making
      these calls as the distances are covered over the Internet instead of over
      dedicated lines such as traditional telephony. Teliphone has grown primarily
      in
      the Province of Quebec, Canada through the sale of its product offering in
      retail stores and over the internet.





In
      March
      2005, Teliphone Inc. issued 4 shares of stock to management. After this
      transaction, the Company owned 96% of Teliphone, Inc. Therefore, a
      noncontrolling interest is reflected in the consolidated financial statements.
      Subsequently, on April 28, 2005, the Company entered into a merger and
      reorganization agreement with OSK Capital II Corp., a Nevada corporation, where
      OSK Capital II Corp. became a 79% majority owned subsidiary of the Company,
      and
      Teliphone, Inc. became a wholly owned subsidiary of OSK Capital II Corp.





On
      August
      1, 2006, Teliphone Inc. entered into an agreement with 3901823 Canada Inc.
      (“3901823”) and Intelco Communications (“Intelco Communications”) whereby
      Teliphone Inc. will issue 35 class A voting shares of its common stock
      representing 25.2% of Teliphone Inc.’s issued shares to 3901823 in exchange for
      fixed costs approximating $144,000 for the period August 1, 2006 through July
      31, 2007, a line of credit of $75,000 (CAD$), of which $25,000 (CAD$) was drawn
      upon in July 2006 and the use of its software to sell to Intelco Communications
      existing customer base the services of Teliphone Inc. In lieu of receiving
      cash
      for the licensing of its software,


F-5
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL
        STATEMENTS
 SEPTEMBER
        30, 2006 AND
        2005




**NOTE
      1-**  **ORGANIZATION
      AND BASIS OF PRESENTATION** **(CONTINUED)**





Teliphone
      Inc. will apply $1 per customer per month at a minimum of $5,000 per month
      for
      the 25.2% ownership. 3901823 will receive additional shares of Teliphone Inc.
      should Intelco Communications not earn $144,000 in charges under these license
      fees over the one-year period. 3901823 could earn a maximum of 8.34% in addition
      to the 25.2% for a total of 33.54% of Teliphone Inc.





On
      March
      20, 2006, our majority-owned subsidiary OSK Capital II Corp. changed its name
      to
      Teliphone Corp.





On
      October 23, 2006, United American Corporation shareholders voted in the majority
      to spin-off its entire holdings of 25,737,785 shares of the common stock of
      Teliphone Corp. with an effective date of October 30, 2006.





**Going
      Concern**





As
      shown
      in the accompanying condensed consolidated financial statements the Company
      has
      incurred losses of $137,513 and $1,070,153 for the nine months ended September
      30, 2006 and 2005, and has a working capital deficiency of $539,101 as of
      September 30, 2006. The Company had emerged from the development stage and
      as of
      March 31, 2004 has started generating revenues.





There
      is
      no guarantee that the Company will be able to raise enough capital or generate
      revenues to sustain its operations. These conditions raise substantial doubt
      about the Company’s ability to continue as a going concern for a reasonable
      period.





Management
      believes that the Company’s capital requirements will depend on many factors.
      These factors include the increase in sales through existing channels as well
      as
      the Company’s ability to continue to expand its distribution points and
      leveraging its technology into the commercial small business segments. The
      Company’s strategic relationships with telecommunications interconnection
      companies, internet service providers and retail sales outlets has permitted
      the
      Company to achieve consistent monthly growth in acquisition of new customers.





In
      the
      near term, the Company will continue to pursue bridge financing, in addition
      to
      the approximately $100,000 it raised through convertible debentures in 2004
      to
      assist them in meeting their current working capital needs. The Company’s
      ability to continue as a going concern for a reasonable period is dependent
      upon
      management’s ability to raise additional interim capital and, ultimately,
      achieve profitable operations. There can be no assurance that management will
      be
      able to raise sufficient capital, under terms satisfactory to the Company,
      if at
      all.





The
      condensed consolidated financial statements do not include any adjustments
      relating to the carrying amounts of recorded assets or the carrying amounts
      and
      classification of recorded liabilities that may be required should the Company
      be unable to continue as a going concern.




F-6
 Table
          of Contents
 UNITED
          AMERICAN
          CORPORATION
 NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS
 SEPTEMBER
          30, 2006 AND
          2005
 **NOTE 2-**  **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**




**Principles
      of Consolidation**





The
      condensed consolidated financial statements include the accounts of the Company
      and all of its wholly owned and majority owned subsidiaries. All significant
      intercompany accounts and transactions have been eliminated in consolidation.
      All minority interests are reflected in the condensed consolidated financial
      statements.





**Use
      of Estimates**





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. On an on-going basis, the Company evaluates its
      estimates, including, but not limited to, those related to bad debts, income
      taxes and contingencies. The Company bases its estimates on historical
      experience and on various other assumptions that are believed to be reasonable
      under the circumstances, the results of which form the basis for making
      judgments about the carrying value of assets and liabilities that are not
      readily apparent from other sources. Actual results could differ from those
      estimates.





**Cash
      and Cash Equivalents**





The
      Company considers all highly liquid debt instruments and other short-term
      investments with an initial maturity of three months or less to be cash
      equivalents.





**Comprehensive
      Income**





The
      Company adopted Statement of Financial Accounting Standards No, 130, “Reporting
      Comprehensive Income,” (SFAS No. 130). SFAS No. 130 requires the reporting of
      comprehensive income in addition to net income from operations.





Comprehensive
      income is a more inclusive financial reporting methodology that includes
      disclosure of information that historically has not been recognized in the
      calculation of net income.





**Inventory**





Inventory
      is valued at the lower of cost or market determined on a first-in-first-out
      basis. Inventory consisted only of finished goods.





F-7
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005


**NOTE
      2-**   **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**  **(CONTINUED)**





**Fair
      Value of Financial Instruments (other than Derivative Financial
      Instruments)**





The
      carrying amounts reported in the condensed consolidated balance sheet for cash
      and cash equivalents, and accounts payable approximate fair value because of
      the
      immediate or short-term maturity of these financial instruments. For the notes
      payable, the carrying amount reported is based upon the incremental borrowing
      rates otherwise available to the Company for similar borrowings. For the
      convertible debentures, fair values were calculated at net present value using
      the Company’s weighted average borrowing rate for debt instruments without
      conversion features applied to total future cash flows of the
      instruments.





**Currency
      Translation**




For
      subsidiaries outside the United States that prepare financial statements in
      currencies other than the U.S. dollar, the Company translates income and expense
      amounts at average exchange rates for the year, translates assets and
      liabilities at year-end exchange rates and equity at historical rates. The
      Company’s reporting currency is that of the US dollar while its functional
      currency is that of the Canadian dollar. The Company records these translation
      adjustments as accumulated other comprehensive income (loss). Gains and losses
      from foreign currency transactions commenced in 2004 when the Company utilized
      a
      Canadian subsidiary to record all of the transactions. The Company recognized
      a
      gain (loss) of $45,692 and $88,376 for the nine months ended September 30,
      2006
      and 2005.





**Research
      and Development**





The
      Company annually incurs costs on activities that relate to research and
      development of new products. Research and development costs are expensed as
      incurred. Certain of these costs are reduced by government grants and investment
      tax credits where applicable.





**Revenue
      Recognition**





In
      2004,
      when the Company emerged from the development stage with the acquisition of
      American United Corporation/ 3874958 Canada Inc. and after assuming ownership
      of
      3894517 Canada Inc. as well as the establishment of Teliphone, Inc. they began
      to recognize revenue from their VoIP services when the services were rendered
      and collection was reasonably assured in accordance with SAB 101.





*VoIP
      Service Revenue*





Substantially
      all of the Company’s revenues (related to American United) are derived from the
      sale of wholesale long distance termination services to Tier 1 and Tier 2
      Telecommunications carriers. These services were rendered and collection was
      reasonably assured in accordance with SAB 101.





F-8
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      2-**   **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**  **(CONTINUED)**





**Revenue
      Recognition** **(Continued)**





*VoIP
      Service Revenue* *(Continued)*





Teliphone,
      Inc.’s revenues which represent a small portion of the total revenues are
      derived from the Company’s retail operation, and for the retail operation
      monthly subscription fees are charged to customers under the Company’s service
      plans. Monthly subscription fees are generally charged to customers’ credit
      cards on the first day of the customers’ billing cycle. The Company offers
      residential and business unlimited calling packages, along with per minute
      long
      distance dialing services.





The
      Company invoices customers on the anniversary date of their service activation
      for their monthly services, and this invoice is paid predominantly via the
      customer’s credit card or through automatic debit from the customer’s bank
      account. Long distance dialing services are charged in increments of $10 to
      the
      customer’s credit card or automatic debit as required based on the customer’s
      consumption of long distance minutes.





The
      Company records these revenues monthly and the revenues generated are for the
      most part through retail channels.





Under
      typical contracts, customers subscribe for a period of two years. When a
      contract is not signed, there is no hardware subsidy, and the customer can
      disconnect service at any time.





*Customer
      Equipment*





For
      retail sales, the equipment is sold to re-sellers at a subsidized price below
      that of cost and below that of the retail sales price. The customer purchases
      the equipment at the retail price from the re-seller. The customer accepts
      the
      terms of the service agreement upon activation by credit card. Should the
      Company’s customers meet the minimum service requirements, the fee paid by the
      customers for the equipment would be refunded through monthly service billing.
      This refund is reflected in customer equipment revenue.





Customer
      equipment expense is recorded to direct cost of goods sold when the hardware
      is
      initially purchased from our suppliers.





For
      wholesale customers, there are no refunds for equipment. The Company does not
      subsidize equipment sales to wholesale customers.





*Activation
      and Disconnect Fees*





The
      Company also generates revenue from initial activation fees associated with
      the
      service contracts, and disconnect fees associated with early termination of
      service contracts. These fees are included in service revenue as they are
      considered part of the service component when the service is delivered or
      performed.





F-9
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      2-**   **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**  **(CONTINUED)**





**Revenue
      Recognition** **(Continued)**





*Shipping
      revenues*





The
      Company generates revenues from shipping equipment direct to customers and
      our
      re-seller partners. This revenue is considered part of the VoIP service
      revenues.





*Additional
      One-Time Customer Support Revenues*





The
      Company also realizes revenues for support of customer and re-seller
      installations. We typically charge these revenues by the hour or by the service.
      These revenues are considered part of VoIP service revenues.





*Commissions
      Paid to Wholesalers*





Commissions
      paid to wholesalers is recognized as a cost of sales due to the Company
      receiving an identifiable benefit in exchange for the consideration, and the
      Company can reasonably estimate the fair value of the benefit identified. Should
      the consideration paid by the Company exceed the fair value of the benefit
      received, that amount would be reflected as a reduction of revenue when
      recognized in the Company’s statement of operation.





*Recognition*





The
      Company recognizes revenue utilizing the guidance set forth in EITF 00-21,
      “Revenue Arrangements with Multiple Deliverables”. Under a retail agreement, the
      cost of the equipment is recognized as deferred revenue, and amortized over
      the
      length of the service agreement. Upon satisfying the minimum service
      requirements the equipment charges are refunded through subsequent billings
      netting out this charge against service charges. Upon refund, the deferred
      revenue is fully amortized.





In
      some
      cases and for promotional reasons, the Company may offer a “Mail-In-Credit”
program to retail customers. As part of this program, upon satisfying the
      minimum service requirements, the equipment charges are refunded through
      subsequent billings netting out this charge against service
      charges.





Under
      a
      wholesale agreement, the equipment charge is recognized upon delivery of the
      equipment to the reseller. There is no refund in this instance.





The
      Company commenced sales in September 2004. The Company is still essentially
      in
      the beginning phases of securing distribution channels and updates their service
      plans to remain competitive in this industry. The Company incurred some
      promotional expenses in their initial year of operation to satisfy customer
      demand for this service, and equipment sales were not significant. As a result,
      deferred revenue was not material since minimum service requirements were
      achieved for the units sold.





F-10
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      2-**   **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**  **(CONTINUED)**





**Accounts
      Receivable**





The
      Company conducts business and extends credit based on an evaluation of the
      customers’ financial condition, generally without requiring collateral. Exposure
      to losses on receivables is expected to vary by customer due to the financial
      condition of each customer. The Company monitors exposure to credit losses
      and
      maintains allowances for anticipated losses considered necessary under the
      circumstances. The Company has recorded an allowance for doubtful accounts
      of
      $2,684 as of September 30, 2006.





Accounts
      receivable are generally due within 30 days and collateral is not required.
      Unbilled accounts receivable represents amounts due from customers for which
      billing statements have not been generated and sent to the
      customers.





**Income
      Taxes**





The
      Company accounts for income taxes utilizing the liability method of accounting.
      Under the liability method, deferred taxes are determined based on differences
      between financial statement and tax bases of assets and liabilities at enacted
      tax rates in effect in years in which differences are expected to reverse.
      Valuation allowances are established, when necessary, to reduce deferred tax
      assets to amounts that are expected to be realized.





**Convertible
      Instruments**





The
      Company reviews the terms of convertible debt and equity securities for
      indications requiring bifurcation, and separate accounting, for the embedded
      conversion feature. Generally, embedded conversion features where the ability
      to
      physical or net-share settle the conversion option is not within the control
      of
      the Company are bifurcated and accounted for as a derivative financial
      instrument. (See Derivative Financial Instruments below). Bifurcation of the
      embedded derivative instrument requires allocation of the proceeds first to
      the
      fair value of the embedded derivative instrument with the residual allocated
      to
      the debt instrument. The resulting discount to the face value of the debt
      instrument is amortized through periodic charges to interest expense using
      the
      Effective Interest Method.





F-11
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      2-**   **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**  **(CONTINUED)**





**Derivative
      Financial Instruments**





The
      Company generally does not use derivative financial instruments to hedge
      exposures to cash-flow or market risks. However, certain other financial
      instruments, such as warrants or options to acquire common stock and the
      embedded conversion features of debt and preferred instruments that are indexed
      to the Company’s common stock, are classified as liabilities when either (a) the
      holder possesses rights to net-cash settlement or (b) physical or net share
      settlement is not within the control of the Company. In such instances, net-cash
      settlement is assumed for financial accounting and reporting, even when the
      terms of the underlying contracts do not provide for net-cash settlement. Such
      financial instruments are initially recorded at fair value and subsequently
      adjusted to fair value at the close of each reporting period. Fair value for
      option-based derivative financial instruments is determined using the
      Black-Scholes Valuation Method.





**Advertising
      Costs**





The
      Company expenses the costs associated with advertising as incurred. Advertising
      expenses for the nine months ended September 30, 2006 and 2005 are included
      in
      general and administrative expenses in the condensed consolidated statements
      of
      operations.




**Fixed
      Assets**




Fixed
      assets are stated at cost. Depreciation is computed using the straight-line
      method over the estimated useful lives of the assets; automobiles - 3 years,
      computer and internet telecommunications equipment - 5 years, and furniture
      and
      fixtures - 5 years.




When
      assets are retired or otherwise disposed of, the costs and related accumulated
      depreciation are removed from the accounts, and any resulting gain or loss
      is
      recognized in income for the period. The cost of maintenance and repairs is
      charged to income as incurred; significant renewals and betterments are
      capitalized. Deduction is made for retirements resulting from renewals or
      betterments.





F-12
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      2-**   **SUMMARY
      OF
      SIGNIFICANT ACCOUNTING POLICIES**  **(CONTINUED)**





**Impairment
      of Long-Lived Assets**





Long-lived
      assets, primarily fixed assets, are reviewed for impairment whenever events
      or
      changes in circumstances indicate that the carrying amount of the assets might
      not be recoverable. The Company does not perform a periodic assessment of assets
      for impairment in the absence of such information or indicators. Conditions
      that
      would necessitate an impairment assessment include a significant decline in
      the
      observable market value of an asset, a significant change in the extent or
      manner in which an asset is used, or a significant adverse change that would
      indicate that the carrying amount of an asset or group of assets is not
      recoverable. For long-lived assets to be held and used, the Company recognizes
      an impairment loss only if its carrying amount is not recoverable through its
      undiscounted cash flows and measures the impairment loss based on the difference
      between the carrying amount and estimated fair value. The Company, determined
      based upon an independent valuation performed on its equipment acquired from
      American United Corporation that their was impairment of $1,750,875 (on October
      6, 2003) based upon the fair value of the stock issued for the equipment. This
      amount is reflected as impairment in the December 31, 2003 financial
      statements.




**(Loss)
      Per Share of Common Stock**





Basic
      net
      (loss) per common share is computed using the weighted average number of common
      shares outstanding. Diluted earnings per share (EPS) includes additional
      dilution from common stock equivalents, such as stock issuable pursuant to
      the
      exercise of stock options and warrants. Common stock equivalents were not
      included in the computation of diluted earnings per share when the Company
      reported a loss because to do so would be antidilutive for periods
      presented.





F-13
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      2-**   **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**  **(CONTINUED)**




**(Loss)
      Per Share of Common Stock** **(Continued)**





The
      following is a reconciliation of the computation for basic and diluted
      EPS:




**Setpember
                    30,****2006**
              
              **September
                    30,**
                  **2005**Net
                  loss
              $
              (137,513)
              
              $
              (1,070,153)Weighted-average
                  common sharesOutstanding
                  (Basic)
              
              49,969,985
              
              
              47,425,846Weighted-average
                  common stockEquivalentsStock
                  options
              
              -
              
              
              -Warrants
              
              -
              
              
              -Weighted-average
                  common sharesOutstanding
                  (Diluted)
              
              49,969,985
              
              
              47,425,846


**Stock-Based
      Compensation**





The
      Company measures compensation expense for its employee stock-based compensation
      using the intrinsic-value method. Under the intrinsic-value method of accounting
      for stock-based compensation, when the exercise price of options granted to
      employees and common stock issuances are less than the estimated fair value
      of
      the underlying stock on the date of grant, deferred compensation is recognized
      and is amortized to compensation expense over the applicable vesting period.
      In
      each of the periods presented, the vesting period was the period in which the
      options were granted. All options were expensed to compensation in the period
      granted rather than the exercise date.





The
      Company measures compensation expense for its non-employee stock-based
      compensation under the Financial Accounting Standards Board (FASB) Emerging
      Issues Task Force (EITF) Issue No. 96-18, “ *Accounting
      for Equity Instruments that are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling, Goods or Services* ”.
      The
      fair value of the option issued is used to measure the transaction, as this
      is
      more reliable than the fair value of the services received. The fair value
      is
      measured at the value of the Company’s common stock on the date that the
      commitment for performance by the counterparty has been reached or the
      counterparty’s performance is complete. The fair value of the equity instrument
      is charged directly to compensation expense and additional paid-in
      capital.





F-14
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      2-**   **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**  **(CONTINUED)**





**Segment
      Information**





The
      Company follows the provisions of SFAS No. 131, “ *Disclosures
      about Segments of an Enterprise and Related Information”* .
      This
      standard requires that companies disclose operating segments based on the manner
      in which management disaggregates the Company in making internal operating
      decisions. Commencing with the creation of Teliphone, Inc. the Company began
      operating in two segments, and two geographical locations.





**Recent
      Accounting Pronouncements**





On
      December 16, 2004, the Financial Accounting Standards Board (“FASB”) published
      Statement of Financial Accounting Standards No. 123 (Revised 2004),
“ *Share-Based
      Payment* ”
(“SFAS
      123R”). SFAS 123R requires that compensation cost related to share-based payment
      transactions be recognized in the financial statements. Share-based payment
      transactions within the scope of SFAS 123R include stock options, restricted
      stock plans, performance-based awards, stock appreciation rights, and employee
      share purchase plans. The provisions of SFAS 123R, as amended, are effective
      for
      small business issuers beginning as of the next interim period after December
      15, 2005.





In
      February 2006, the FASB issued Statement of Financial Accounting Standard No.
      155, *“Accounting
      for Certain Hybrid Instruments”* (“SFAS
      155”). FASB 155 allows financial instruments that have embedded derivatives to
      be accounted for as a whole (eliminating the need to bifurcate the derivative
      from its host) if the holder elects to account for the whole instrument on
      a
      fair value basis. This statement is effective for all financial instruments
      acquired or issued after the beginning of an entity’s first fiscal year that
      begins after September 15, 2006. The Company will evaluate the impact of SFAS
      155 on its consolidated financial statements.





In
      May
      2005, the FASB issued Statement of Financial Accounting Standard No. 154, *“Accounting
      Changes and Error Corrections”* (“SFAS
      154”). SFAS 154 is a replacement of APB No. 20, *“Accounting
      Changes”* ,
      and
      SFAS No. 3, *“Reporting
      Accounting Changes in Interim Financial Statements”* .
      SFAS
      154 applies to all voluntary changes in accounting principle and changes the
      requirements for accounting and reporting of a change in accounting principle.
      This statement establishes that, unless impracticable, retrospective application
      is the required method for reporting of a change in accounting principle in
      the
      absence of explicit transition requirements specific to the newly adopted
      accounting principle. It also requires the reporting of an error correction
      which involves adjustments to previously issued financial statements similar
      to
      those generally applicable to reporting an accounting change retrospectively.
      SFAS 154 is effective for accounting changes and corrections of errors made
      in
      fiscal years beginning after December 15, 2005. The Company believes the
      adoption of SFAS 154 will not have a material impact on its consolidated
      financial statements.





F-15
 Table
          of Contents
 UNITED
          AMERICAN
          CORPORATION
 NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS
 SEPTEMBER
          30, 2006 AND
          2005
 **NOTE
        3-**  **FIXED
        ASSETS**





Fixed
      assets as of June 30, 2006 were as follows:


Estimated
                    UsefulLives
                  (Years)Computer
                  equipment
              
              5
              
              $
              1,073,352Less:
                  accumulated depreciation
              
              
              
              
              (500,016)Fixed
                  assets, net
              
              
              
              $
              573,336




There
      was
      $184,700 and $138,305 depreciation charged to operations for the nine months
      ended September 30, 2006 and 2005, respectively.





The
      Company acquired telecommunications equipment in its acquisition of American
      United Corporation valued at $874,125, net of impairment of $1,750,875 in the
      issuance of the 26,250,000 shares of common stock. This equipment however,
      was
      not placed into service until 2004, therefore no depreciation was recorded
      for
      those assets in 2003.





**NOTE
      4-**  **RELATED
      PARTY LOANS**





On
      August
      1, 2006, the Company converted $421,080 of the $721,080 of its loans into
      Teliphone Corp. (formerly OSK Capital II Corp) common stock. The $300,000
      remaining on the loan has become interest bearing at 12% per annum, payable
      monthly with a maturity date of August 1, 2009. These amounts were eliminated
      in
      consolidation. In addition, there are approximately $41,297 of non-interest
      bearing loans that were incurred in August and September 2006. These loans
      as
      well were eliminated in consolidation.





Additionally,
      the Company had loans with various directors and companies that are related
      to
      those directors that were non-interest bearing. There was $560,666 outstanding
      as of September 30, 2006. These loans are short-term in nature.





Teliphone,
      Inc. a majority owned subsidiary of Teliphone Corp. and the Company, as part
      of
      the agreement they entered into with Intelco Communications and Intelco
      Communication’s parent, 3901823 Canada Inc., was extended $25,000 (CDN$),
      $22,368 (US$) from the $75,000 (CDN$) line of credit extended to them by Intelco
      Communications. This amount remains outstanding as of September 30,
      2006.


F-16
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
          6-** **CONVERTIBLE
          DEBENTURES**





On
      October 18, 2004, the Company entered into 12% Convertible Debentures (the
      “Debentures”) with Strathmere Associates International Limited in the amount of
      $100,000. The Debentures have a maturity date of October 18, 2006, and incur
      interest at a rate of 12% per annum, payable every six months.





On
      November 14, 2006, the Company and Strathmere Associates International Limited
      agreed to extend the maturity date to October 31, 2007, while maintaining the
      same interest rate of 12% per annum, payable every month.





The
      Debentures can either be paid to the holders on October 31, 2007 or converted
      at
      the holders’ option any time up to maturity at a conversion price equal of $0.07
      per share. The convertible debentures met the definition of hybrid instruments,
      as defined in SFAS 133, *Accounting
      for Derivative Instruments and Hedging Activities* (SFAS
      No. 133). The hybrid instruments are comprised of a i) a debt instrument, as
      the
      host contract and ii) an option to convert the debentures into common stock
      of
      the Company, as an embedded derivative. The embedded derivative derives its
      value based on the underlying fair value of the Company’s common stock. The
      Embedded Derivative is not clearly and closely related to the underlying host
      debt instrument since the economic characteristics and risk associated with
      this
      derivative are based on the common stock fair value. The Company has separated
      the embedded derivative from the hybrid instrument based on an independent
      valuation of $43,537 based on 500,000 shares ($100,000 at a $0.20 (changing
      to
      $0.07 November 2006 exercise price).





For
      disclosure purposes, the fair value of the derivative is estimated on the date
      of issuance of the debenture (October 18, 2004) using the Black-Scholes
      option-pricing model, which approximates fair value, with the following
      weighted-average assumptions used for September 30, 2006 and 2005; no annual
      dividends, volatility of 125%, risk-free interest rate of 3.28%, and expected
      life of 2 years. For disclosure purposes as of September 30, 2006 and 2005
      the
      derivative call option was approximately $.018 and $.024 per share, therefore
      there was a decrease of $0 and $31,622 in the derivative liability recognized
      for the nine months ended September 30, 2006 and 2005, respectively.





The
      embedded derivative did not qualify as a fair value or cash flow hedge under
      SFAS No. 133.





Interest
      expense for the nine months ended September 30, 2006 and 2005 was $9,000 and
      $9,000, respectively. At September 30, 2006, there was $5,000 of interest
      accrued.


F-17
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      7-**  **COMMITMENTS**





On
      October 12, 2004, the Company entered into a carrier agreement with XO
      Communications, Inc. This carrier agreement provides the Company with the
      ability to purchase telephone numbers in any of thirty-seven major metropolitan
      markets in the United States. As a result, services can be provided to consumers
      in any of these markets with each consumer being assigned a telephone number
      with a local area code. Prior to this agreement, we were only able to provide
      phone numbers with Canadian area codes. This contract was cancelled in July
      2006. The Company is able to offer US-based area codes utilizing RNK Telecom’s
      network, an agreement entered into December 2005 which really took effect in
      June 2006.





Additionally,
      the Company in 2004 and 2005 entered into various agreements with wireless
      Internet access providers, to provide VoIP services to the Company’s customers.
      On November 3, 2004, the Company also entered into a telecommunications
      agreement with Kore Wireless Canada, Inc., a supplier of global systems for
      mobile communications.





On
      March
      1, 2005, the Company entered into a distribution agreement with MSBR
      Communication Inc. for the purpose of accessing the retail consumer portion
      of
      the Company’s target market through retail and Internet-based sales. The
      territory for this distribution is the Province of Quebec in Canada exclusive
      of
      Sherbrooke, Quebec. This is a renewable two-year agreement.





On
      March
      11, 2005, the Company entered into a marketing and distribution rights with
      Podar Infotech Ltd. The five-year renewable agreement grants Podar the exclusive
      marketing and distribution rights for the Company’s products and services for
      India, China, Sri Lanka, Russia and UAE for which the Company will receive
      contractually agreed payments.





**NOTE
      8-**  **STOCKHOLDERS’
      EQUITY (DEFICIT)**





**Common
      Stock**




As
      of
      September 30, 2006, the Company has 50,000,000 shares of common stock authorized
      with a par value of $.001.





The
      Company has 49,969,985 shares issued and outstanding as of September 30,
      2006.





The
      Company has not issued any shares for the nine months ended September 30,
      2006.





During
      the year ended December 31, 2005, the Company issued 1,400,000 for services
      at
      $.10 per share and 4,450,000 at $.075 per share for a value of
      $473,750.





During
      2004, the Company issued 926,743 for services at a fair market value of $.10
      or
      $92,674; and 2,250,000 shares of common stock for services at a fair market
      value of $.15 per share or $337,500.





F-18
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      8-**  **STOCKHOLDERS’
      EQUITY (DEFICIT)** **(CONTINUED)**





**Common
      Stock** **(Continued)**





The
      Company has not issued any options or warrants.





**NOTE
      9-**  **PROVISION
      FOR INCOME TAXES**





Deferred
      income taxes are determined using the liability method for the temporary
      differences between the financial reporting basis and income tax basis of the
      Company’s assets and liabilities. Deferred income taxes are measured based on
      the tax rates expected to be in effect when the temporary differences are
      included in the Company’s tax return. Deferred tax assets and liabilities are
      recognized based on anticipated future tax consequences attributable to
      differences between financial statement carrying amounts of assets and
      liabilities and their respective tax bases.





At
      September 30, 2006, deferred tax assets consist of the
      following:




Net
                  operating losses
              $
              1,657,500Valuation
                  allowance
              
              (1,657,500)$
              -




At
      September 30, 2006, the Company had a net operating loss carryforwards of
      approximately $4,875,000, available to offset future taxable income through
      2026. The Company established valuation allowances equal to the full amount
      of
      the deferred tax assets due to the uncertainty of the utilization of the
      operating losses in future periods.





A
      reconciliation of the Company’s effective tax rate as a percentage of income
      before taxes and federal statutory rate for the periods ended September 30,
      2006
      and 2005 is summarized as follows:







2006
            
            2005Federal
                statutory rate
            
            (34.0)%
            
            
            (34.0)%State
                income taxes, net of federal benefits
            
            3.3
            
            
            3.3Valuation
                allowance
            
            30.7
            
            
            30.70%
            
            
            0%





F-19
 Table
          of Contents
 UNITED
          AMERICAN
          CORPORATION
 NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL
          STATEMENTS
 SEPTEMBER
          30, 2006 AND
          2005
 **NOTE
        10-**  **SEGMENT
        INFORMATION** ****





The
      Company’s reportable operating segments include wholesale VoIP services which is
      the physical buying of minutes (3894517 Canada Inc.), and the VoIP connection
      services (Teliphone Corp. (Formerly OSK Capital II Corp.). The Company also
      has
      corporate overhead expenses. The wholesale services are essentially provided
      in
      Africa, and the connection services are provided in North America. The segment
      data presented below details the allocation of cost of revenues and direct
      operating expenses to these segments.





Operating
      segment data for the nine months ended September 30, 2006 are as follows:





Corporate
            
            WholesaleServices
            
            ConnectionServices
            
            TotalSales
            $
            -
            
            $
            10,499,030
            
            $
            339,163
            
            $
            10,838,193Cost
                of sales
            
            -
            
            
            9,393,932
            
            
            234,584
            
            
            9,628,516Gross
                profit (loss)
            
            -
            
            
            1,105,098
            
            
            104,579
            
            
            1,209,677Operating
                expenses
            
            99,065
            
            
            725,392
            
            
            421,734
            
            
            1,246,191Depreciation,
                amortization and impairment
            
            133,830
            
            
            14,660
            
            
            36,210
            
            
            184,700Interest
                (net)
            
            (9,000)
            
            
            (647)
            
            
            (18,806)
            
            
            (28,453)Net
                income (loss)
            
            (241,895)
            
            
            364,399
            
            
            (372,171)
            
            
            (249,667)Segment
                assets
            
            312,270
            
            
            1,009,545
            
            
            167,335
            
            
            1,489,150Fixed
                Assets, net of depreciation
            
            312,270
            
            
            145,985
            
            
            115,081
            
            
            573,336





Operating
      segment data for the nine months ended September 30, 2005 are as follows:





Corporate
            
            WholesaleServices
            ConnectionServices
            TotalSales
            $
                -
            
            $2,647,376
            $147,154
            $2,794,530Cost
                of sales
            -
            
            2,262,356
            330,547
            2,592,903Gross
                profit (loss)
            -
            
            385,020
            (183,393)
            201,627Operating
                expenses
            473,750
            
            442,581
            294,316
            1,210,647Depreciation,
                amortization and impairment
            111,525
            
            7,437
            19,341
            138,303Interest
                (net)
            (9,000)
            
            (0)
            (0)
            (9,000)Net
                income (loss)
            (594,275)
            
            (64,998)
            (497,050)
            (1,156,323)Segment
                assets
            483,275
            
            314,048
            283,907
            1,081,230Fixed
                Assets, net of depreciation
            483,275
            
            30,752
            156,398
            670,425





F-20
 Table
          of Contents


UNITED
      AMERICAN
      CORPORATION


NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL
      STATEMENTS


SEPTEMBER
      30, 2006 AND
      2005





**NOTE
      10-**  **SEGMENT
      INFORMATION** **(CONTINUED)**





In
      addition, the segment data broken out by geographical location for the nine
      months ended September 30, 2006 are as follows:





North,
                    Centraland
                  SouthAmerica
            
            Europe, Middle
                  East andAfrica
            
            Asia
            
            TotalSales
            $
            4,123,832
            
            $
            4,130,807
            
            $
            2,583,554
            
            $
            10,838,193Cost
                of sales
            
            3,663,561
            
            
            3,669,758
            
            
            2,295,197
            
            
            9,628,516Gross
                profit (loss)
            
            460,271
            
            
            461,049
            
            
            288,357
            
            
            1,209,677Operating
                expenses
            
            474,164
            
            
            474,966
            
            
            297,061
            
            
            1,246,191Depreciation,
                amortization and impairment
            
            70,277
            
            
            70,396
            
            
            44,027
            
            
            184,700Interest
                (net)
            
            (10,826)
            
            
            (10,844)
            
            
            (6,783)
            
            
            (28,453)Net
                income (loss)
            
            (94,996)
            
            
            (95,197)
            
            
            (59,514)
            
            
            (249,667)Segment
                assets
            
            566,608
            
            
            567,566
            
            
            354,976
            
            
            1,489,150Fixed
                Assets, net of depreciation
            
            218,149
            
            
            218,518
            
            
            136,669
            
            
            573,336





The
      Company operated in one geographical location for the nine months ended
      September 30, 2005.




**NOTE
      11-**  **SUBSEQUENT
      EVENTS**





On
      October 23, 2006, the Company’s shareholders voted in the majority to spin-off
      its entire holdings of 25,737,785 shares of the common stock of Teliphone Corp.
      (formerly OSK Capital II Corp.) with an effective date of October 30,
      2006.





On
      October 23, 2006, the Company changed its Articles of Incorporation to increase
      its authorized share limit from 50,000,000 to 100,000,000 shares.





On
      November 14, 2006, the Company and Strathmere Associates International Limited
      agreed to extend the maturity date of the convertible debentures to October
      31,
      2007, while maintaining the same interest rate of 12% per annum, payable every
      month.




F-21
 Table
          of Contents
  **Item
          2.     Management’s Discussion and Analysis**
 
 **Forward-Looking
          Statements**
 
 Certain
          statements, other than purely historical information, including estimates,
          projections, statements relating to our business plans, objectives, and
          expected
          operating results, and the assumptions upon which those statements are
          based,
          are “forward-looking statements” within the meaning of the Private Securities
          Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
          and Section 21E of the Securities Exchange Act of 1934. These
          forward-looking statements generally are identified by the words “believes,”
“project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and
          similar expressions. We
          intend
          such forward-looking statements to be covered by the safe-harbor provisions
          for
          forward-looking statements contained in the Private Securities Litigation
          Reform
          Act of 1995, and are including this statement for purposes of complying
          with
          those safe-harbor provisions. Forward-looking
          statements are based on current expectations and assumptions that are subject
          to
          risks and uncertainties which may cause actual results to differ materially
          from
          the forward-looking statements. Our
          ability to predict results or the actual effect of future plans or strategies
          is
          inherently uncertain. Factors which could have a material adverse affect
          on our
          operations and future prospects on a consolidated basis include, but are
          not
          limited to: changes in economic conditions, legislative/regulatory changes,
          availability of capital, interest rates, competition, and generally accepted
          accounting principles. These risks and uncertainties should also be considered
          in evaluating forward-looking statements and undue reliance should not
          be placed
          on such statements. We
          undertake no obligation to update or revise publicly any forward-looking
          statements, whether as a result of new information, future events or otherwise. Further
          information concerning our business, including additional factors that
          could
          materially affect our financial results, is included herein and in our
          other
          filings with the SEC.
 
 **Business
          Description**
 
 Following
          the acquisition of American United Corporation (“AUC”) in 2003, we revised our
          business plan and implemented the business plan of AUC. AUC began its operations
          in 2002 as a holding company focused on the acquisition of network-centric
          technology and telecommunication companies. Given the rapid changes in
          the
          telecommunications marketplace, and the strong need for a competitive edge,
          we
          revised our business plan and set out on a new course to provide Voice
          over
          Internet Protocol (VoIP) solutions.
 
 VoIP
          means that the technology used to send data over the Internet is now being
          used
          to transmit voice as well. The technology is known as packet switching.
          Instead
          of establishing a dedicated connection between two devices (computers,
          telephones, etc.) and sending the message "in one piece," this technology
          divides the message into smaller fragments, called 'packets'. These packets
          are
          transmitted separately over a decentralized network and when they reach
          the
          final destination, they're reassembled into the original
          message.
  4
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              of Contents
  VoIP
          allows a much higher volume of telecommunications traffic to flow at much
          higher
          speeds than traditional circuits do, and at a significantly lower cost.
          VoIP
          networks are significantly less capital intensive to construct and much
          less
          expensive to maintain and upgrade than legacy networks or what is commonly
          referred to as traditional circuit-switched networks. Since VoIP networks
          are
          based on internet protocol, they can seamlessly and cost-effectively interface
          with the high-technology, productivity-enhancing services shaping today's
          business landscape. These networks can seamlessly interface with web-based
          services such as virtual portals, interactive voice response (IVR), and
          unified
          messaging packages, integrating data, fax, voice, and video into one
          communications platform that can interconnect with the existing
          telecommunications infrastructure.
 
 Since
          we
          implemented our new business plan to provide Voice over Internet Protocol
          (VoIP)
          solutions, our business has evolved and we have organized our operations
          into
          two different segments of the market. Our operations are focused servicing
          the
          wholesale VoIP market or retail VoIP providers by constructing VoIP networks
          and
          enabling them to purchases termination minutes using our networks. In August
          2004, we incorporated Teliphone, Inc. (“Teliphone”), a Canadian corporation, as
          a wholly-owned subsidiary to service the retail VoIP market by handling
          the
          origination, management, and billing of calls. Teliphone also handles servicing
          and providing businesses and individuals with a mobile or landline phone
          to
          access our VoIP networks. Following the approval and effectiveness of the
          spin-off of our majority owned subsidiary, Teliphone Corp., our operations
          subsequent to the reporting report will be exclusively focused on selling
          wholesale termination services to global Tier1 and Tier 2 telecommunications
          companies. We will no longer focus on the retail VoIP market.
 
 *Wholesale
          VoIP Market*
 
 We
          constructed our first VoIP network which we refer to as CaribbeanONE. To
          construct this network, we established servers in Haiti that utilize our
          intellectual property to connect with our servers located in Montreal,
          Quebec,
          Canada. Following the successful testing of our servers in Haiti, the
          CaribbeanONE network was completed in March 2004. The establishment of the
          CaribbeanONE network was critical in that it enabled us to charge significantly
          less than other providers that exclusively utilize established telecommunication
          lines for calls that originate in North America and terminate in any country
          in
          the Caribbean. When one of our consumers originated a call in North America,
          our
          VoIP network will receive the call and transmit the call to our server
          in Haiti
          and an established telecommunication line will only be utilized to transmit
          the
          call from our server in Haiti to the termination point of the call in the
          Caribbean. The establishment of the CaribbeanONE network was our first
          step in
          strategically establishing computer servers in specified geographical areas
          to
          construct an international VoIP network.
 
 In
          May
          2006, we were forced to terminate our CarribbeanOne network due to political
          changes with government telecommunications regulators in Haiti, the hosting
          site
          of our gateway, resulting in our inability to acquire local termination
          minutes
          to direct a call from our gateway to its destination point within Haiti.
          During
          the reporting period, we were unsuccessful in our efforts to acquire local
          termination minutes within Haiti. As a result, we no longer utilize our
          CarribbeanOne network and have focused our operations on other gateways
          recently
          developed. The success of our business plan is not dependent on the
          CarribbeanOne network and we do not
  5
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              of Contents
  anticipate
          that the shut down of the CarribbeanOne network will negatively impact
          our
          results of operations.
 
 As
          part
          of our growth plan, we expanded our long distance VoIP termination services
          outside of the Caribbean and into additional routes in Africa. During the
          third
          quarter of 2005, we built a VoIP gateway in Gabon, Africa. Similar to our
          CaribbeanONE infrastructure located in Haiti, we are now able to offer
          wholesale
          termination services to global Tier1 and Tier 2 telecommunications companies
          to
          utilize our VoIP link between Montreal, Canada and Gabon in order to terminate
          their long distance calls. This gateway installation permits us to expand
          the
          number of voice channels that we have in operation in our global network
          and
          sell more long distance termination minutes to our existing and future
          customers.
 
 We
          further expanded our network by entered into a partnership with Tectacom
          Inc. of
          Montreal and established a VoIP gateway in Mali, Africa in May of 2006.
          As a
          result, we have established a profit-sharing understanding with Tectacom
          for
          VoIP long distance termination minutes transiting through our gateways.
          Tectacom
          holds an agreement with the
          government-operated telecommunications provider in Mali ,
          permitting them to reserve voice channel capacity within the Mali
          telecommunications infrastructure. The government-operated telecommunications
          provider in Mali owns all local landlines within the country and approximately
          40% of cellular telephone services provided in the country. This agreement
          permitted us access to install our gateways and to interconnect the Mali
          voice
          channels operated by the government-owned telecommunications provider with
          our
          servers in Montreal. This agreement further enables us to sell this direct
          route
          connection to our customers in order for them to offer long distance services
          to
          their respective retail customer base. Tectacom is further developing additional
          routes in Africa and we anticipate growth in the establishment of new gateways
          with them in the future.
 
 In
          October 2006, we entered into an agreement with the government-operated
          telecommunications provider in Mali to assist it in identifying the origination
          point of calls utilizing its voice channels. Identifying the original point
          of a
          telephone call is important because it will enable the provider to prohibit
          unauthorized use of its network which is commonly achieved by disguising
          the
          original point of a telephone call. In exchange for providing this service,
          we
          will receive more favorable pricing for our use of its voice
          channels.
 
 *Retail
          VoIP Network*
 
 In
          order
          to target the retail market segment and provide VoIP directly to consumers,
          we
          incorporated Teliphone, Inc. (“Teliphone”), a Canadian corporation as a
          wholly-owned subsidiary in August 2004. We formed Teliphone as a wholly-owned
          subsidiary for the purpose handling the origination, management, and billing
          of
          calls. Teliphone also handles servicing and providing businesses and individuals
          with a mobile or landline phone to access our VoIP network. The management
          of
          calls refers to the routing of calls from the origination point to the
          termination point. The billing of calls refers to the collection of charges
          for
          utilization of our VoIP network
 
 Following
          the incorporation of Teliphone, we began to offer businesses and individuals
          located in the Montreal, Quebec geographical area with the ability to utilize
          our VoIP network to
  6
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              of Contents
  transmit
          communications through the use of a mobile and landline phone that connects
          to
          the Internet. A critical component of Teliphone’s ability to expand its business
          and increase its sales presence internationally required that it have the
          ability to offer local phone numbers in an increasing amount of geographical
          areas. An inability to offer consumers area codes in their local would
          result in
          a competitive disadvantage with other providers that have the ability to
          offer
          local area codes to a consumer. During the fourth quarter of 2005, Teliphone
          entered into an agreement with RNK Telecom (“RNK”), a Massachusetts corporation,
          which provides it with the ability to offer potential consumers phone numbers
          with area codes in over 200 metropolitan markets throughout the United
          States
          and Canada. This agreement also provides it with access to international
          affiliates of RNK that will enable Teliphone to offer local phone number
          in
          various international cities in Europe, Asia and Latin America.
 
 Teliphone
          has increased the availability of its service by entering into agreements
          with
          Internet Service Providers within retail establishments such as coffee
          shops,
          hotels and airports enabling
 its
          consumers to access our VoIP network through the use their laptop or wireless
          VoIP devices in these particular retail establishments. In addition, Teliphone
          also entered into an agreement to make available a mobile phone that is
          compatible with both a VoIP network and a GSM network utilized for traditional
          cellular phone use resulting in an expanding coverage area. For consumers
          that
          utilize this service, Teliphone has the ability to integrate into a single
          bill
          charges for calls placed utilizing both the VoIP and GSM networks. Prior
          to this
          agreement, Teliphone was unable to offer phone service to consumers at
          times
          when they did not maintain an Internet connection.
 
 Once
          the
          requisite infrastructure was in place and operational, Teliphone sought
          to
          establish distribution agreements and incentives for retailers of telephone
          products to make available to retail consumers and small and medium sized
          companies a mobile or landline phone that utilizes VoIP. On March 1, 2005,
          Teliphone entered into a distribution agreement with BR Communications
          (“BR”),
          formerly known as MSBR Communication Inc., for the purpose accessing the
          retail
          target market through retail and Internet-based sales. Under the terms
          of this
          agreement, BR was granted the exclusive right to distribute mobile or landline
          phones that utilize our VoIP network via Internet-based sales or direct
          sales to
          retail establishments in the territory consisting of the Province of Quebec
          in
          Canada exclusive of Sherbrooke, Quebec. This agreement was entered into
          for a
          term of two (2) years with automatic renewals for additional one year terms
          unless either party provides notice within 90 days of the initial two year
          term.
          This agreement is subject to termination upon the occurrence of specified
          events
          triggering default. BR receives a pre-determined commission based upon
          sales of
          mobile or landline phones that utilize our VoIP network and revenues derived
          from retailer consumers who activated their VoIP service through distribution
          channels used by BR. As a result of this agreement, BR has succeeded in
          building
          a distribution network of over 70 points of retail sale, telemarketing
          sales
          partners and small business telecommunications interconnect companies.
          This
          distribution network is the primary source for the acquisition of new customers
          for Teliphone’s retail business.
 
 Teliphone
          has also entered into an exclusive marketing and distribution agreement
          to make
          available its products and services in India, China, Sri Lanka, United
          Arab
          Emirates, and Russia. Accounts activated in any of these geographical markets
          will be assigned a North American
  7
 Table
              of Contents
  telephone
          number. To date, retail sales to consumers in these geographical areas
          have not
          materially contributed to Teliphone’s sales.
 
 *Agreement
          with Intelco Communication, Inc.*
 
 Teliphone
          Inc., a wholly-owned subsidiary of our majority-owned subsidiary OSK Capital
          II,
          Corp., 3901823 Canada Inc., the holding company of Intelco Communications
          (“3901823”), and Intelco Communications (“Intelco Communications”) entered into
          an agreement (the “Agreement”) on July 14, 2006. Pursuant to the terms of the
          Agreement, Teliphone Inc. agreed to issue 35 class A voting shares of its
          common stock representing 25.2% of Teliphone Inc.'s issued shares to
          3901823 in exchange for office rent, use of Intelco’s data center for Teliphone
          Inc.'s equipment, and use of Intelco’s broadband telephony network valued at
          approximating $144,000 (CDN$) for the period August 1, 2006 through July
          31,
          2007, a line of credit of $75,000 (CDN$), of
          which
          $25,000 (CDN$) was already drawn upon in July 2006.
 
 Teliphone
          Inc. also agreed to make available to the customers of Intelco
          Communications certain proprietary software for broadband telephony use.
          In lieu
          of receiving cash for the licensing of this software, Teliphone Inc. will
          apply $1 per customer per month at a minimum of $5,000 per month. Following
          a
          twelve month period, Intelco Communications will receive additional shares
          of
          class A voting common stock of Teliphone Inc. for the difference in the
          value between $144,000 and the total payments credited back to Teliphone
          Inc.
          The maximum amount of additional shares that can be issued to Intelco
          Communications after the twelve month period is an additional 8.34% of
          Teliphone
          Inc.'s issued and outstanding shares. In the event that the total payments
          credited back to Teliphone Inc. exceeds $144,000, Intelco Communications
          will
          not be entitled to the issuance of any additional shares of Teliphone Inc.
          common stock.
 
 Upon
          the
          effective date of this transaction on August 1, 2006, Teliphone Inc. was no
          longer a wholly-owned subsidiary of Teliphone Corp. (Formerly OSK Capital
          II
          Corp.), our majority owned subsidiary.  Teliphone Inc. became a majority
          owned subsidiary and the noncontolling interest is reflected in the
          consolidated financial statements.
 
 **Subsidiary
          Spin-off**
 
 In
          March
          2005, our management proposed to spin-off our subsidiary, Teliphone, Inc.,
          subject to the approval of the stockholders. Our board of directors believed
          that spinning-off Teliphone enable Teliphone to focus on handling the
          origination, management, and billing of calls to retail consumers and allow
          us
          to concentrate on building an international VoIP focused primarily on call
          termination to wholesale consumers. This will allow both companies that
          have
          operations that are focused on different objectives to better prioritize
          the
          allocation of their management and their financial resources for achievement
          of
          their corporate objectives.
 
 In
          April
          2005, our management was presented with an opportunity where Teliphone
          would
          enter into a merger with a wholly-owned subsidiary of OSK Capital II Corp.
          (“OSK”), a public reporting company under Section 12(g) of the Securities
          Exchange Act of 1934. As a result of this opportunity, we did not present
          our
          original proposal to the shareholders for their consideration and approval.
  8
 Table
              of Contents
  On
          April
          28, 2005, OSK completed its acquisition of Teliphone, pursuant to an Agreement
          and Plan of Merger and Reorganization. At the effective time of the merger,
          OSK
          acquired all of the outstanding shares of Teliphone and Teliphone merged
          with
          OSK II Acquisition Corp., a Florida corporation and wholly-owned subsidiary
          of
          OSK Capital II, Corp. Following the merger, Teliphone was the surviving
          corporation. OSK issued 25,000,000 common shares in exchange for all of
          the
          issued and outstanding shares of Teliphone and these shares of OSK were
          issued
          to the shareholders Teliphone shareholders on a pro rata basis. We owned
          100
          common shares of the 104 common shares issued and outstanding in Teliphone.
          As a
          result, we received 24,038,462
 shares
          of
          OSK. Following the effectiveness of the merger, OSK had 30,426,000 common
          shares
          issued and outstanding. Consequently, Teliphone became a wholly owned subsidiary
          of OSK and OSK is currently a majority-owned subsidiary of our company.
          On
          August 21, 2006, OSK changed its name to Teliphone Corp. Thereafter, we
          acquired
          another 1,699,323 shares of Teliphone Corp. in consideration for loans
          previously advanced.
 
 Our
          management then renewed its proposal to spin-off our majority-owned subsidiary,
          Teliphone Corp. To complete the spin-off, we proposed to distribute the
          restricted shares of Teliphone Corp. that we own on a pro rata basis to
          our
          shareholders. This proposal was presented to our shareholders at the annual
          meeting on October 23, 2006 and approved. Shareholders of record as of
          October
          23, 2006 were entered to receive on a pro rata basis restricted shares
          of
          Teliphone Corp.
 
 **Results
          of Operations for the three and nine months ended September 30, 2006 and
          2005**
 
 *Revenues*
 
 Our
          total
          revenue reported for the three months ended September 30, 2006 was $6,490,857,
          a
          311% increase from $1,578,134 for the three months ended September 30,
          2005. Our
          total revenue reported for the nine months ended September 30, 2006 was
          $
          10,838,193, a 287% increase from $2,794,530 for the nine months ended September
          30, 2005. Our revenue for the three and nine months ended September 30,
          2006 and
          2005 was primarily generated by sales of VoIP termination services through
          our
          existing VoIP gateways. The increase in revenue for the three and nine
          months
          ended September 30, 2006 from the same reporting period in the prior year
          is
          primarily attributable to sales generated by our VoIP gateway in Mali.
          Our Mali
          VoIP gateway was established in May 2006.
 
 Sales
          of
          wholesale VoIP termination services through our existing VoIP gateways
          accounted
          for $10,499,030 or 97% of our total revenue generated for the nine months
          ended
          September 30, 2006. Retail sales of VoIP services in Canada through our
          majority-owned subsidiary, Teliphone Corp., accounted for $339,163 or 3%
          of our
          total revenue generated for the nine months ended September 30,
          2006.
 
 Sales
          of
          wholesale VoIP termination services through our then existing VoIP gateways
          accounted for $2,647,376 or 95% of our total revenue generated for the
          nine
          months ended September 30, 2005. Retail sales of VoIP services in Canada
          through
          our majority-owned subsidiary, Teliphone Corp., accounted for $147,154
          or 5% of
          our total revenue generated for the nine months ended September 30,
          2005.
  9
 Table
              of Contents
  *Cost
          of Sales*
 
 Our
          cost
          of sales for the three months ended September 30, 2006 was $5,832,730,
          a 261%
          increase from $1,615,818 for the three months ended September 30, 2005.
          Our cost
          of sales for the nine months ended September, 2006 was $9,628,516, a 271%
          increase from $2,592,903 for the nine months ended September 30, 2005.
          Our cost
          of sales is primarily the purchase of termination minutes from local providers
          required to transmit a telephone call from our gateway to the call’s local
          destination point. The increase in cost of sales is primarily attributable
          to
          increased sales in the reporting period. The increased purchases of inventory
          were required to service our expanding consumer base. Our purchases for
          the
          three months ended September 30, 2006 was $ 5,827,902, compared to $1,545,796
          for the same period in the prior year. Our purchases for the nine months
          ended
          September 30, 2006 $9,587,989, compared to $2,581,312 for the nine months
          ended
          September 30, 2005.
 
 *Gross
          Profit*
 
 Gross
          profit increased to $658,127, or approximately 10% of sales, for the three
          months ended September 30, 2006. This is an increase from a gross loss
          of
          $37,684 for the three months ended September 30, 2005. The significant
          increase
          in gross profit for the three months ended September 30, 2006 when compared
          to
          the same reporting period in the prior fiscal year is attributable to increased
          sales of termination traffic in our Gabon or Mali networks which now have
          greater profit margins that our CaribbeanOne network. During the reporting
          period, increased telephony traffic through our Gabon network enabled us
          to
          receive volume discounts for termination minutes with domestic telecommunication
          operators translating into higher profit margins. We acquire termination
          minutes
          from domestic telecommunication operators in order to be able to route
          calls
          from our gateways to the destination point.
 
 Gross
          profit increased to $1,209,677 for the nine months ended September 30,
          2006 from
          gross profit of $201,627 for the nine months ended September 30, 2005.
          Gross
          profit as a percentage of sales increased to 11% for the nine months ended
          September 30, 2006 from the 7% of sales reported for the nine months ended
          September 30, 2005.
 
 *Operating
          Expenses*
 
 Operating
          expenses for the three months ended September 30, 2006 was $603,073, a
          138%
          increase from $252,683 for the three months ended September 30, 2005. Our
          operating expenses for the three months ended September 30, 2006 consisted
          of
          selling and promotion expenses of $17,508, professional and consulting
          fees of
          $95,485, commissions and wages of $379,839, general and administrative
          expenses
          of $44,291, and depreciation, amortization and impartment expenses of $65,950.
          Our operating expenses for the three months ended September 30, 2005 consisted
          of selling and promotion expenses of $5,060, research and development expenses
          of $103,006, professional and consulting fees of $7,308, commissions and
          wages
          of $77,547, general and administrative expenses of $20,542, and depreciation,
          amortization and impartment expenses of $39,220.
  10
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  Operating
          expenses for the nine months ended September 30, 2006 was $1,430,891, a
          6%
          increase from $1,348,950 for the nine months ended September 30, 2005.
          Our
          operating expenses for the nine months ended September 30, 2006 consisted
          of
          selling and promotion expenses of $73,728, professional and consulting
          fees of
          $234,673, commissions and wages of $821,408, general and administrative
          expenses
          of $116,382, and depreciation, amortization and impartment expenses of
          $184,700.
          Our operating expenses for the nine months ended September 30, 2005 consisted
          of
          selling and promotion expenses of $128,104, research and development expenses
          of
          $103,006, professional and consulting fees of $591,972, commissions and
          wages of
          $310,157, general and administrative expenses of $77,408, and depreciation,
          amortization and impairment expenses of $138,303.
 
 The
          increase in operating expenses is primarily attributable to the payment
          of
          commissions based upon sales of VoIP termination services. As a result
          of an
          increase in the sales of VoIP termination services, our commissions and
          wages
          increased correspondingly.
 
 *Other
          Income (Expense)*
 
 During
          the three months ended September 30, 2006, we reported other expenses in
          the
          amount of $11,826, compared to reporting other expense in the amount of
          $3,000
          for the same reporting period in the prior year. During the nine months
          ended
          September 30, 2006, we reported other expenses in the amount of $28,453,
          compared to reporting other expense in the amount of $9,000 for the same
          reporting period in the prior year. The other income reported during the
          three
          and nine months ended September 30, 2006 and 2005 is attributable to interest
          expenses incurred on an outstanding convertible debenture.
 
 *Net
          Income (Loss)*
 
 We
          had
          net income of $107,562 for the three months ended September 30, 2006, compared
          to net loss of $293,367 for the three months ended September 30, 2005.
          This
          three-month period represents the second time since our inception that
          we have
          reported a net income. Net loss for the nine months ended September 30,
          2006 was
          $137,513, compared to a net loss of $1,070,153 for the nine months ended
          September 30, 2005. The reporting of net income during the three months
          ended
          September 30, 2006 was primarily attributable to increased sales with higher
          profit margins.
 
 Our
          income per common share for the three months ended September 30, 2006 was
          $0.00,
          compared to a loss per common share of $0.01 for the three months ended
          September 30, 2005. Our income per common share for the nine months ended
          September 30, 2006 was $0.00, compared to a loss per common share of $0.02
          for
          the nine months ended September 30, 2005.
  **Liquidity
          and Capital Resources**
 
 As
          of
          September 30, 2006, we had total current assets of $915,814, but did not
          maintain any cash and cash equivalents. Our total current liabilities as
          of
          September 30, 2006 were $1,454,915, resulting in a working capital deficit
          of
          $539,101 as of September 30, 2006.
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  Operating
          activities used $416,555 in cash for the nine months ended September 30,
          2006.
          Our increase in accounts receivable of $559,049 was the primary components
          of
          our negative operating cash flow. Investing activities during the nine
          months
          ended September 30, 2006 used $117,935 for the purchase of fixed assets.
          These
          fixed assets are attributable to our new gateway installations in Gabon
          and Mali
          Africa. Net cash flows provided by financing activities during the nine
          months
          ended September 30, 2006 was $488,798. We received $482,965 as proceeds
          from the
          issuance of notes payable to related parties during the nine months ended
          September 30, 2006.
 
 Based
          upon our current financial condition, we have insufficient cash to operate
          our
          business at the current level for the next twelve months. We intend to
          fund
          operations through increased sales and debt and/or equity financing
          arrangements, which may be insufficient to fund expenditures or other cash
          requirements. We plan to seek additional financing in a private equity
          offering
          to secure funding for operations. There can be no assurance that we will
          be
          successful in raising additional funding. If we are not able to secure
          additional funding, the implementation of our business plan will be impaired.
          There can be no assurance that such additional financing will be available
          to us
          on acceptable terms or at all.
 
 **Off
          Balance Sheet Arrangements**
 
 As
          of
          September 30, 2006, there were no off balance sheet arrangements.
 
 **Going
          Concern**
 
 As
          shown
          in the accompanying condensed consolidated financial statements, we have
          incurred recurring losses of $137,513 and $1,070,153 for the nine months
          ended
          September 30, 2006 and 2005, and had a working capital deficiency of $539,101
          as
          of September 30, 2006. We have recently emerged from the development stage
          and
          started generating revenues as of March 31, 2004. There is no guarantee
          that we
          will be able to raise enough capital or generate revenues to sustain our
          operations. These conditions raise substantial doubt about our ability
          to
          continue as a going concern for a reasonable period.
 
 Management
          believes that our capital requirements will depend on many factors. These
          factors include the increase in sales through existing channels as well
          as our
          ability to continue to expand our distribution points and leveraging our
          technology into the commercial small business segments. Our strategic
          relationships with telecommunications interconnection companies, internet
          service providers and retail sales outlets has permitted us to achieve
          consistent monthly growth in acquisition of new customers.
 
 In
          the
          near term, we will continue to pursue bridge financing to assist us in
          meeting
          our current working capital needs. Our ability to continue as a going concern
          for a reasonable period is dependent upon management’s ability to raise
          additional interim capital and, ultimately, achieve profitable operations.
          There
          can be no assurance that management will be able to raise sufficient capital,
          under terms satisfactory to us, if at all.
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  **Critical
          Accounting Policies**
 
 In
          December 2001, the SEC requested that all registrants list their most “critical
          accounting polices” in the Management Discussion and Analysis. The SEC indicated
          that a “critical accounting policy” is one which is both important to the
          portrayal of a company’s financial condition and results, and requires
          management’s most difficult, subjective or complex judgments, often as a result
          of the need to make estimates about the effect of matters that are inherently
          uncertain. We believe that the following accounting policies fit this
          definition.
 
 **Currency
          Translation**
 
 For
          subsidiaries outside the United States that prepare financial statements
          in
          currencies other than the U.S. dollar, we translates income and expense
          amounts
          at average exchange rates for the year, translates assets and liabilities
          at
          year-end exchange rates and equity at historical rates. Our reporting currency
          is that of the US dollar while its functional currency is that of the Canadian
          dollar. We record these translation adjustments as accumulated other
          comprehensive income (loss). Gains and losses from foreign currency transactions
          commenced in 2004 when we utilized a Canadian subsidiary to record all
          of the
          transactions. We recognized a gain (loss) of $45,692 and $88,376 for the
          nine
          months ended September 30, 2006 and 2005.
  **Revenue
            Recognition**
 
 In
            2004,
            when we emerged from the development stage with the acquisition of American
            United Corporation/ 3874958 Canada Inc. and after assuming ownership
            of 3894517
            Canada Inc. as well as the establishment of Teliphone, Inc. we began
            to
            recognize revenue from our VoIP services when the services were rendered
            and
            collection was reasonably assured in accordance with SAB 101.
 
 *VoIP
            Service Revenue*
 
 Substantially
            all of our revenues (related to American United) are derived from the
            sale of
            wholesale long distance termination services to Tier 1 and Tier 2
            Telecommunications carriers. These services were rendered and collection
            was
            reasonably assured in accordance with SAB 101.
  Teliphone,
            Inc.’s revenues which represent a small portion of the total revenues are
            derived from our retail operation, and for the retail operation monthly
            subscription fees are charged to customers under our service plans. Monthly
            subscription fees are generally charged to customers’ credit cards on the first
            day of the customers’ billing cycle. We offer residential and business unlimited
            calling packages, along with per minute long distance dialing
            services.
 
 We
            invoice customers on the anniversary date of their service activation
            for their
            monthly services, and this invoice is paid predominantly via the customer’s
            credit card or through automatic debit from the customer’s bank account. Long
            distance dialing services are charged in increments of $10 to the customer’s
            credit card or automatic debit as required based on the customer’s consumption
            of long distance minutes.
 
 We
            record
            these revenues monthly and the revenues generated are for the most part
            through
            retail channels.
 
 Under
            typical contracts, customers subscribe for a period of two years. When
            a
            contract is not signed, there is no hardware subsidy, and the customer
            can
            disconnect service at any time.
  *Customer
              Equipment*
 
 For
              retail sales, the equipment is sold to re-sellers at a subsidized price
              below
              that of cost and below that of the retail sales price. The customer
              purchases
              the equipment at the retail price from the re-seller. The customer
              accepts the
              terms of the service agreement upon activation by credit card. Should
              our
              customers meet the minimum service requirements, the fee paid by the
              customers
              for the equipment would be refunded through monthly service billing.
              This refund
              is reflected in customer equipment revenue.
 
 Customer
              equipment expense is recorded to direct cost of goods sold when the
              hardware is
              initially purchased from our suppliers.
 
 For
              wholesale customers, there are no refunds for equipment. We do not
              subsidize
              equipment sales to wholesale customers.
 
 *Activation
              and Disconnect Fees*
 
 We
              also
              generate revenue from initial activation fees associated with the service
              contracts, and disconnect fees associated with early termination of
              service
              contracts. These fees are included in service revenue as they are considered
              part of the service component when the service is delivered or
              performed.
 
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  *Shipping
            revenues*
 
 We
            generate revenues from shipping equipment direct to customers and our
            re-seller
            partners. This revenue is considered part of the VoIP service
            revenues.
 
 *Additional
            One-Time Customer Support Revenues*
 
 We
            also
            realize revenues for support of customer and re-seller installations.
            We
            typically charge these revenues by the hour or by the service. These
            revenues
            are considered part of VoIP service revenues.
 
 *Commissions
            Paid to Wholesalers*
 
 Commissions
            paid to wholesalers is recognized as a cost of sales due to us receiving
            an
            identifiable benefit in exchange for the consideration, and we can reasonably
            estimate the fair value of the benefit identified. Should the consideration
            paid
            by us exceed the fair value of the benefit received, that amount would
            be
            reflected as a reduction of revenue when recognized in our statement
            of
            operation.
 
 *Recognition*
 
 We
            recognize revenue utilizing the guidance set forth in EITF 00-21, “Revenue
            Arrangements with Multiple Deliverables”. Under a retail agreement, the cost of
            the equipment is recognized as deferred revenue, and amortized over the
            length
            of the service agreement. Upon satisfying the minimum service requirements
            the
            equipment charges are refunded through subsequent billings netting out
            this
            charge against service charges. Upon refund, the deferred revenue is
            fully
            amortized.
 
 In
            some
            cases and for promotional reasons, we may offer a “Mail-In-Credit” program to
            retail customers. As part of this program, upon satisfying the minimum
            service
            requirements, the equipment charges are refunded through subsequent billings
            netting out this charge against service charges.
 
 Under
            a
            wholesale agreement, the equipment charge is recognized upon delivery
            of the
            equipment to the reseller. There is no refund in this instance.
 
 We
            commenced sales in September 2004. We are still essentially in the
            beginning phases of securing distribution channels and updates their
            service
            plans to remain competitive in this industry. We incurred some promotional
            expenses in our initial year of operation to satisfy customer demand
            for this
            service, and equipment sales were not significant. As a result, deferred
            revenue
            was not material since minimum service requirements were achieved for
            the units
            sold.
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  Impairment
          of Long-Lived Assets
 
 Long-lived
          assets, primarily fixed assets, are reviewed for impairment whenever events
          or
          changes in circumstances indicate that the carrying amount of the assets
          might
          not be recoverable. We do not perform a periodic assessment of assets for
          impairment in the absence of such information or indicators. Conditions
          that
          would necessitate an impairment assessment include a significant decline
          in the
          observable market value of an asset, a significant change in the extent
          or
          manner in which an asset is used, or a significant adverse change that
          would
          indicate that the carrying amount of an asset or group of assets is not
          recoverable. For long-lived assets to be held and used, we recognize an
          impairment loss only if its carrying amount is not recoverable through
          its
          undiscounted cash flows and measures the impairment loss based on the difference
          between the carrying amount and estimated fair value. We, determined based
          upon
          an independent valuation performed on our equipment acquired from American
          United Corporation that there was impairment of $1,750,875 (on October
          6, 2003)
          based upon the fair value of the stock issued for the equipment. This amount
          is
          reflected as impairment in the December 31, 2003 financial
          statements.
  Recently
          Issued Accounting Pronouncements
  On
          December 16, 2004, the Financial Accounting Standards Board (“FASB”) published
          Statement of Financial Accounting Standards No. 123 (Revised 2004),
“ *Share-Based
          Payment* ”
(“SFAS
          123R”). SFAS 123R requires that compensation cost related to share-based payment
          transactions be recognized in the financial statements. Share-based payment
          transactions within the scope of SFAS 123R include stock options, restricted
          stock plans, performance-based awards, stock appreciation rights, and employee
          share purchase plans. The provisions of SFAS 123R, as amended, are effective
          for
          small business issuers beginning as of the next interim period after December
          15, 2005.
 
 In
          February 2006, the FASB issued Statement of Financial Accounting Standard
          No.
          155, *“Accounting
          for Certain Hybrid Instruments”* (“SFAS
          155”). FASB 155 allows financial instruments that have embedded derivatives
          to
          be accounted for as a whole (eliminating the need to bifurcate the derivative
          from its host) if the holder elects to account for the whole instrument
          on a
          fair value basis. This statement is effective for all financial instruments
          acquired or issued after the beginning of an entity’s first fiscal year that
          begins after September 15, 2006. We will evaluate the impact of SFAS 155
          on our
          consolidated financial statements.
 
 In
          May
          2005, the FASB issued Statement of Financial Accounting Standard No. 154,
 *“Accounting
          Changes and Error Corrections”* (“SFAS
          154”). SFAS 154 is a replacement of APB No. 20, *“Accounting
          Changes”* ,
          and
          SFAS No. 3, *“Reporting
          Accounting Changes in Interim Financial Statements”* .
          SFAS
          154 applies to all voluntary changes in accounting principle and changes
          the
          requirements for accounting and reporting of a change in accounting principle.
          This statement establishes that, unless impracticable, retrospective application
          is the required method for reporting of a change in accounting principle
          in the
          absence of explicit transition requirements specific to the newly adopted
          accounting principle. It also requires the reporting of an error correction
          which involves adjustments to previously issued financial statements similar
          to
          those generally applicable to reporting an accounting change retrospectively.
          SFAS 154 is effective for accounting changes and corrections of errors
          made in
          fiscal years beginning after December 15, 2005. We believe the adoption
          of SFAS
          154 will not have a material impact on our consolidated financial statements.
 
  15
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  **Item
            3.     Controls and Procedures**
 
 Disclosure
            controls and procedures are controls and other procedures that are designed
            to
            ensure that information required to be disclosed in our reports filed
            or
            submitted under the Exchange Act are recorded, processed, summarized
            and
            reported, within the time periods specified in the SEC's rules and forms.
            Disclosure controls and procedures include, without limitation, controls
            and
            procedures designed to ensure that information required to be disclosed
            in our
            reports filed under the Exchange Act is accumulated and communicated
            to
            management, including our Chief Executive Officer and Chief Financial
            Officer,
            to allow timely decisions regarding required disclosure.
 
 We
            carried out an evaluation of the effectiveness of the design and operation
            of
            our disclosure controls and procedures (as defined in Exchange Act Rules
            13a-15(e) and 15d-15(e)) as of
 
 Our
          board
          of directors are currently working towards implementing significant changes
          in
          our internal controls over financial reporting that are expected to materially
          affect such controls. Our board of directors is seeking to retain a consultant
          to recommend for implementation specific disclosure controls and procedures
          to
          ensure that information required to be disclosed in our reports filed or
          submitted under the Exchange Act are recorded, processed, summarized and
          reported, within the time periods specified in the SEC's rules and
          forms.
 
 Limitations
          on the Effectiveness of Internal Controls
 
 Our
          management does not expect that our disclosure controls and procedures
          or our
          internal control over financial reporting will necessarily prevent all
          fraud and
          material error. Our disclosure controls and procedures are designed to
          provide
          reasonable assurance of achieving our objectives and our Chief Executive
          Officer
          and Chief Financial Officer concluded that our disclosure controls and
          procedures are effective at that reasonable assurance level. Further, the
          design
          of a control system must reflect the fact that there are resource constraints,
          and the benefits of controls must be considered relative to their costs.
          Because
          of the inherent limitations in all control systems, no evaluation of controls
          can provide absolute assurance that all control issues and instances of
          fraud,
          if any, within the Company have been detected. These inherent limitations
          include the realities that judgments in decision-making can be faulty,
          and that
          breakdowns can occur because of simple error or mistake. Additionally,
          controls
          can be circumvented by the individual acts of some persons, by collusion
          of two
          or more people, or by management override of the internal control. The
          design of
          any system of controls also is based in part upon certain assumptions about
          the
          likelihood of future events, and there can be no assurance that any design
          will
          succeed in achieving its stated goals under all potential future conditions.
          Over time, control may become inadequate because of changes in conditions,
          or
          the degree of compliance with the policies or procedures may deteriorate.
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  **PART
          II - OTHER INFORMATION**
 
 **Item
          1.     Legal
          Proceedings**
 
 We
          are
          not a party to any pending legal proceeding. We are not aware of any pending
          legal proceeding to which any of our officers, directors, or any beneficial
          holders of 5% or more of our voting securities are adverse to us or have
          a
          material interest adverse to us.
 
 **Item
          2.     Unregistered Sales of Equity
          Securities and Use of Proceeds**
 
 None
 
 **Item
          3.     Defaults upon Senior
          Securities**
 
 None
 
 **Item
          4.     Submission of Matters to a Vote of
          Security Holders**
 
 No
          matters have been submitted to our security holders for a vote, through
          the
          solicitation of proxies or otherwise, during the quarterly period ended
          September 30, 2006.
 
 Subsequent
          to the reporting period on October 23, 2006, we held the annual meeting
          of our
          security holders. The meeting was called for the purpose of electing directors,
          confirming the appointment of Michael Pollack, CPA as the company’s independent
          certified public accountant for the fiscal year ended December 31, 2006,
          to
          consider a proposal to amend the Articles of Incorporation to increase
          the
          number of shares of common stock authorized for issuance from 50,000,000
          to
          100,000,000, to consider a plan to spin-off Teliphone Corp., a majority
          owned
          subsidiary. The total number of shares of common stock outstanding on the
          record
          date, September 12, 2006, was 49,969,985 shares. The number of votes represented
          at the meeting was 28,853,345 shares, or 57.74% of the shares eligible
          to
          vote.
 
 The
          following individuals were elected as directors with the votes being as
          follows:
 
 Nominee
                Votes
                    Cast For
                
                Votes
                    Cast Against
                
                AbstainGeorge
                    Metrakos
                28,746,645
                
                0
                
                106,700Simon
                    Lamarche
                28,746,645
                
                0
                
                106,700
 
  17
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  The
          appointment of Michael Pollack, CPA as the Company’s independent certified
          public accountant for the fiscal year ended December 31, 2006 was confirmed,
          with the votes cast being as follows:
  Votes
                    Cast For
                
                Votes
                    Cast Against
                
                Abstain28,737,545
                
                0
                
                115,800
  With
          respect to the proposed Amendment to the Articles of Incorporation to increase
          the number of shares of common stock authorized for issuance from 50,000,000
          to
          100,000,000, votes were cast for confirmation as follows:
 
 Votes
                    Cast For
                
                Votes
                    Cast Against
                
                Abstain28,813,334
                
                40,011
                
                0
 
 With
          respect to the proposal to approve the spin-off of Teliphone Corp., our
          majority-owned subsidiary, votes were cast for confirmation as
          follows:
 
 Votes
                    Cast For
                
                Votes
                    Cast Against
                
                Abstain28,847,845
                
                5,500
                
                0
 
 No
          other
          matters were acted upon by our security holders at our annual meeting.
 
 **Item
          5.     Other
          Information**
 
 None
 
 **Item
          6.      Exhibits**
 
 **Exhibit**
                  **Number**
                **Description
                    of Exhibit**31.1
                Certification
                    of Chief Executive Officer pursuant to 18
                    U.S.C. Section 1350, as adopted pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 200231.2
                Certification
                    of Chief Financial Officer pursuant to 18
                    U.S.C. Section 1350, as adopted pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 200232.1
                Certification
                    of Chief Executive Officer and Chief
                    Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant
                    to Section 906 of the Sarbanes-Oxley Act of
                    2002
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  **SIGNATURES**
 
 In
          accordance with the requirements of the Securities and Exchange Act of
          1934, the
          Registrant has duly caused this report to be signed on its behalf by the
          undersigned, thereunto duly authorized.
 
 **United
                    American Corporation**Date:
                November
                    20, 2006By:       /s/
                    Simon Lamarche
                  Simon
                    Lamarche
                  Title:**Chief
                    Executive Officer, Chief Financial Officer and
                    Director**