**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 endedMarch
                  31, 2007[
                  ]
              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 Quest, 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: 51,079,985 common shares as of April 15,
        2007.
 
 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
              10PART
                  II - OTHER INFORMATIONItem
                  1.
              Legal
                  Proceedings
              12Item
                  2.
              Unregistered
                  Sales of Equity Securities and Use of
                  Proceeds
              12Item
                  3.
              Defaults
                  Upon Senior Securities
              12Item
                  4.
              Submission
                  of Matters to a Vote of Security
                  Holders
              12Item
                  5.
              Other
                  Information
              12Item
                  6.
              Exhibits
              12
  2
 Table
            of Contents
  **PART
        I - FINANCIAL INFORMATION**
 
 **Item1.**  **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 March 31,
                  2007F-2
              Unaudited
                  Condensed Consolidated Statements of Operations and
                  Comprehensive Income (Loss) for the three months ended March 31,
                  2007 and
                  2006F-3
              Unaudited
                  Condensed Consolidated Statements of Cash Flows for
                  the three months ended March 31, 2007 and 2006F-4
              Notes
                  to Unaudited 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 March 31, 2007 are not necessarily indicative of the results that can
        be
        expected for the full year.


3
 Table
          of Contents


**UNITEDAMERICAN
      CORP**


****CONDENSED
      CONSOLIDATED BALANCE SHEET****


**MARCH
      31, 2007**


**(UNAUDITED)**


**ASSETS****(IN
                US$)**Current
                Assets:Cash
                and cash equivalents
            $
            381,178Accounts
                receivable, net
            
            657,978Interest
                receivable
            
            24,000Prepaid
                expenses and other current assets
            
            11,610Loan
                receivable - related company
            
            429,975Total
                Current Assets
            
            1,504,741Fixed
                assets, net of depreciation
            
            422,964**TOTAL
                ASSETS**
            $
            1,927,704**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)****LIABILITIES**Current
                Liabilities:Loans
                payable - related parties
            $
            419,081Other
                payables
            
            636,631Convertible
                debentures
            
            90,961Derivative
                liability
            
            27,688Accounts
                payable and accrued expenses
            
            1,494,675Total
                Current Liabilities
            
            2,669,036**Total
                Liabilities**
            
            2,669,036**STOCKHOLDERS'
                EQUITY (DEFICIT)**Common
                  stock, $.001 Par Value; 100,000,000 shares authorized
                and
                  51,079,985 shares issued and outstanding
            
            51,080Additional
                paid-in capital
            
            4,865,893Accumulated
                deficit
            
            (5,723,704)Accumulated
                other comprehensive income (loss)
            
            65,399**Total
                Stockholders' Equity (Deficit)**
            
            (741,332)**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**
            $
            1,927,704




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


F-1
 Table
          of Contents


**UNITEDAMERICAN
        CORPORATION**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS AND**
 **COMPREHENSIVE
        INCOME (LOSS)**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
  **IN
                      US$**
                    **2007**
                
                **2006****OPERATING
                    REVENUES**Sales
                $
                5,483,752
                
                $
                2,463,170**COST
                    OF SALES**Inventory,
                    beginning of period
                
                -
                
                
                51,652Purchases
                
                4,555,235
                
                
                2,293,893Inventory,
                    end of period
                
                -
                
                
                (20,014)**Total
                    Cost of Sales**
                
                4,555,235
                
                
                2,325,531**GROSS
                    PROFIT**
                
                928,517
                
                
                137,639**OPERATING
                    EXPENSES**Selling
                    and promotion
                
                72,811
                
                
                26,988Professional
                    and consulting fees
                
                122,515
                
                
                70,836Commissions
                    and wages
                
                595,565
                
                
                255,584Other
                    general and administrative expenses
                
                8,814
                
                
                37,529Depreciation,
                    amortization and impairment
                
                58,446
                
                
                56,745**Total
                    Operating Expenses**
                
                858,151
                
                
                447,682**LOSS
                    BEFORE OTHER INCOME (EXPENSE)**
                
                70,366
                
                
                (310,043)**OTHER
                    INCOME (EXPENSE)**Interest
                    expense
                
                (39,694)
                
                
                (4,266)**Total
                    Other Income (Expense)**
                
                (39,694)
                
                
                (4,266)**NET
                      INCOME (LOSS) BEFORE PROVISION FORINCOME
                      TAXES AND MINORITY INTEREST**
                
                30,672
                
                
                (314,309)Minority
                    interest
                
                -
                
                
                27,828**NET
                      INCOME (LOSS) BEFORE PROVISIONFOR
                      INCOME TAXES**
                
                30,672
                
                
                (286,481)**Provision
                    for Income Taxes**
                
                -
                
                
                -**NET
                      INCOME (LOSS) APPLICABLE**TO
                      COMMON SHARES
                $
                30,672
                
                $
                (286,481)**NET
                    INCOME (LOSS) PER BASIC AND DILUTED SHARES****BASIC**
                $
                0.00
                
                $
                (0.01)**FULLY
                    DILUTED**
                $
                0.00
                
                
                (0.01)**WEIGHTED
                      AVERAGE NUMBER OF COMMONSHARES
                      OUTSTANDING - BASIC**
                
                51,079,985
                
                
                49,969,985**WEIGHTED
                      AVERAGE NUMBER OF COMMONSHARES
                      OUTSTANDING - FULLY DILUTED**
                
                52,508,556
                
                
                49,969,985**COMPREHENSIVE
                    INCOME (LOSS)**Net
                    income (loss)
                $
                30,672
                
                $
                (286,481)Other
                    comprehensive income (loss)Currency
                    translation adjustments
                
                (4,721)
                
                
                6,474Comprehensive
                    income (loss)
                $
                25,951
                
                $
                (280,007)


The accompanying notes are an integral
        part of
        the condensed consolidated financial statements.
 F-2
 Table
            of Contents
 **UNITEDAMERICAN
            CORPORATION**
 **CONDENSED
            CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **FOR
            THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
  **IN
                        US$**
                      **2007**
                  
                  **2006****CASH
                      FLOWS FROM OPERATING ACTIVITIES**Net
                      income (loss)
                  $
                  30,672
                  
                  $
                  (286,481)**Adjustments
                      to reconcile net income (loss) to net cash**
                    ****provided
                      by (used in) operating
                      activities:****Depreciation,
                      amortization and impairment
                  
                  58,446
                  
                  
                  56,745**Changes
                      in assets and liabilities**Decrease
                      in accounts receivable
                  
                  755,361
                  
                  
                  60,878Decrease
                      in investment tax credits
                  
                  -
                  
                  
                  73Decrease
                      in interest receivable
                  
                  (9,000)
                  
                  
                  -Decrease
                      in inventory
                  
                  -
                  
                  
                  31,638Decrease
                      in prepaid expenses and other current assets
                  
                  14,215
                  
                  
                  6,240(Decrease)
                        in accounts payable and accrued expenses
                  
                  (363,530)
                  
                  
                  (9,455)Total
                      adjustments
                  
                  455,492
                  
                  
                  146,119**Net
                      cash provided by (used in) operating activities**
                  
                  486,164
                  
                  
                  (140,362)**CASH
                      FLOWS FROM INVESTING ACTIVITIES**Acquisitions
                      of fixed assets
                  
                  (59,931)
                  
                  
                  (7,245)(Increase)
                      in loan receivable - related company
                  
                  (9,217)
                  
                  
                  -**Net
                      cash (used in) investing activities**
                  
                  (69,148)
                  
                  
                  (7,245)**CASH
                      FLOWS FROM FINANCING ACTIVITES**(Decrease)
                      in bank overdraft
                  
                  -
                  
                  
                  (1,525)Proceeds
                      from loan payable, net of repayments
                  
                  -
                  
                  
                  74Proceeds
                      from loan payable - related parties, net of repayments
                  
                  (95,927)
                  
                  
                  142,584**Net
                      cash provided by (used in) financing activities**
                  
                  (95,927)
                  
                  
                  141,133Effect
                      of foreign currency
                  
                  (9,464)
                  
                  
                  6,474**NET
                        INCREASE (DECREASE) INCASH
                        AND CASH EQUIVALENTS**
                  
                  311,625
                  
                  
                  -**CASH
                        AND CASH EQUIVALENTS -BEGINNING
                        OF YEAR**
                  
                  69,553
                  
                  
                  -**CASH
                      AND CASH EQUIVALENTS - END OF PERIOD**
                  $
                  381,178
                  
                  $
                  -**CASH
                      PAID DURING THE PERIOD FOR:**Interest
                      expense
                  $
                  39,694
                  
                  $
                  3,000
 The accompanying notes are an integral
            part of
            the condensed consolidated financial statements.
 F-3
 Table
                of Contents


**UNITEDAMERICAN
      CORPORATION**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2007 AND 2006 (UNAUDITED)**




**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, 2006 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**


**MARCH
      31, 2007 AND 2006 (UNAUDITED)**




**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.




In
      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 former division focused on
      providing Voice-over-Internet -Protocol (VoIP) calling services to residential
      and business customers.




Teliphone,
      Inc. was founded on August 27, 2004 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 minority
      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. OSK Capital II Corp.
      changed its name to Teliphone Corp. on August 21, 2006.




Related
      party transactions the Company has entered into are advances to the entities
      consolidated within 3894517 Canada, Inc. which is a wholly-owned subsidiary,
      all
      of which have been eliminated herein. Additionally, from time to time
      shareholders or entities under common control will advance amounts to the
      Company to assist in cash flow. These are all short-term amounts and interest
      bearing at rates ranging between 10-20%.




F-5
 Table
          of Contents
 **UNITED
          AMERICAN CORPORATION**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
          31, 2007 AND 2006 (UNAUDITED)**





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




Teliphone
      Inc., at the time, a wholly owned subsidiary of the Company’s subsidiary
      Teliphone Corp., 3901823 Canada Inc., the holding company of Intelco
      Communications (“3901823”), and Intelco Communications (“Intelco”) 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 and repaid on December 2006.




Teliphone
      Inc. also agreed to make available to the customers of Intelco 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
      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 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 will not
      be
      entitled to the issuance of any additional shares of Teliphone Inc. common
      stock.




Teliphone
      Inc. recognized a prepaid expense for the fair value of the shares issued to
      Intelco. The value of the prepaid expense was determined based on the estimated
      cost of the services that Teliphone Inc. is to receive under the Joint Venture
      Agreement entered into for a one-year period of time. The cost was estimated
      at
      $12,000 (CDN$) per month. Teliphone Inc. up through October 30, 2006, the date
      that Teliphone Corp. was spun-off as noted herein, had not used the $12,000
      (CDN$) per month. Prior to the spin-off, the balance remaining in the prepaid
      expense for Intelco was $115,588 US$.




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.
      with an effective date of October 30, 2006. In accordance with APB 29,
“Accounting for Nomonetary Transactions”, the Company distributed the capital
      stock they owned in Teliphone Corp. to their stockholders (a “spin-off”). As a
      result, the Company recognized the value of the assets and liabilities spun-out
      based on the respective recorded amounts after reduction for any impairment
      of
      value due to the fact that this was a nonreciprocal transfer to owners. (See
      Note 10).




**Going
      Concern**




As
      shown
      in the accompanying consolidated financial statements the Company has incurred
      a
      net income of $30,672 and a loss of $286,481 for the three months ended March
      31, 2007 and 2006, and has a working capital deficiency of $1,164,295 as of
      March 31, 2007.





F-6
 Table
          of Contents


**UNITED
      AMERICAN CORPORATION**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2007 AND 2006 (UNAUDITED)**




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




**Going
      Concern** **(Continued)**




Despite,
      the recurring losses, the Company has been successful in establishing
      distribution channels in Africa and generating significant revenue growth in
      the
      past six months. There is no guarantee that the Company will be able to continue
      to grow at this pace, raise enough capital or generate revenues from other
      areas
      of the world 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.





**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.




F-7
 Table
          of Contents
 **UNITED
          AMERICAN CORPORATION**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
          31, 2007 AND 2006 (UNAUDITED)**





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




**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, foreign currency risks, derivative liabilities 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.




**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.




F-8
 Table
          of Contents


**UNITED
      AMERICAN CORPORATION**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2007 AND 2006 (UNAUDITED)**




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




**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 for its subsidiaries. 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 ($4,721) and $6,474 for
      the three months ended March 31, 2007 and 2006, respectively.




**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. they began to recognize revenue from their VoIP services
      when the services were rendered and collection was reasonably assured in
      accordance with SAB 101.




There
      are
      limited estimates required in connection with recognition of revenue because
      voice traffic is measured in automated switches and routers, and contractual
      rates for traffic are used to bill or declare revenue on a monthly basis.
      However, for certain voice contracts, historical traffic may be retroactively
      re-rated within a contract period. This traffic re-rating is calculated and
      recognized immediately in the month the new contractual rate is established.
      Although relatively infrequent, there can be material disputes with customers
      over volume or traffic recognized on our customers’ switches. The Company’s
      practice is to maintain recorded revenue based on our traffic data until the
      merits of a dispute are identified.




**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.





F-9
 Table
          of Contents


**UNITED
      AMERICAN CORPORATION**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2007 AND 2006 (UNAUDITED)**




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




**Accounts
      Receivable** **(Continued)**




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. The
      Company has not established an allowance for doubtful accounts as of March
      31,
      2007.




**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.




**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.




**Advertising
      Costs**




The
      Company expenses the costs associated with advertising as incurred. Advertising
      expenses for the three months ended March 31, 2007 and 2006 are included in
      general and administrative expenses in the condensed consolidated statements
      of
      operations.




F-10
 Table
          of Contents


**UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 AND 2006 (UNAUDITED)**





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




**Concentration
      Risk**




In
      the
      three months ended March 31, 2007 and 2006, the Company generated 98% of their
      sales from one customer. A major customer is a customer that represents greater
      than 10% of the total sales.




In
      the
      three months ended March 31, 2007 and 2006, the Company incurred 98% and 78%
      of
      their purchases from two vendors and one vendor, respectively. A major vendor
      is
      a vendor that represents greater than 10% of the total purchases.




**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.




**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 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.
      There has been no further impairment since this date.





F-11
 Table
          of Contents


**UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 AND 2006 (UNAUDITED)**





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




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




Basic
      net
      earnings (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 as well as from
      convertible debentures. 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 the period presented.




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


**March
                    31,**
                  **2007**
              
              **March
                    31,**
                  **2006**Net
                  income (loss)
              $
              30,672
              
              $
              (286,481)Weighted-average
                  common sharesOutstanding
                  (Basic)
              
              51,079,985
              
              
              49,969,985Weighted-average
                  common stockEquivalentsConvertible
                  debentures
              
              1,428,571
              
              
              500,000Stock
                  options
              
              -
              
              
              -Warrants
              
              -
              
              
              -Weighted-average
                  common sharesOutstanding
                  (Diluted)
              
              52,508,556
              
              
              50,469,985




**Stock-Based
      Compensation**




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 fiscal year after December
      15,
      2005. The Company has adopted the provisions of SFAS 123R for its fiscal year
      ended December 31, 2006. The adoption of this principle had no effect on the
      Company’s operations.





F-12
 Table
          of Contents
 **UNITED
          AMERICAN CORPORATION**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
          31, 2007 AND 2006 (UNAUDITED)**





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




**Stock-Based
      Compensation** **(Continued)**




On
      January 1, 2006, the Company adopted the provisions of FAS No. 123R “Share-Based
      Payment” (“FAS 123R”) which requires recognition of stock-based compensation
      expense for all share-based payments based on fair value. Prior to January
      1,
      2006, the Company measured compensation expense for all of its share-based
      compensation using the intrinsic value method prescribed by Accounting
      Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to
      Employees” (“APB 25”) and related interpretations. The Company has provided pro
      forma disclosure amounts in accordance with FAS No. 148, “Accounting for
      Stock-Based Compensation - Transition and Disclosure - an amendment of FASB
      Statement No. 123” (“FAS 148”), as if the fair value method defined by FAS No.
      123, “Accounting for Stock Based Compensation” (“FAS 123”) had been applied to
      its stock-based compensation.




The
      Company has elected to use the modified-prospective approach method. Under
      that
      transition method, the calculated expense in 2006 is equivalent to compensation
      expense for all awards granted prior to, but not yet vested as of January 1,
      2006, based on the grant-date fair values estimated in accordance with the
      original provisions of FAS 123. Stock-based compensation expense for all awards
      granted after January 1, 2006 is based on the grant-date fair values estimated
      in accordance with the provisions of FAS 123R. The Company recognizes these
      compensation costs, net of an estimated forfeiture rate, on a pro rata basis
      over the requisite service period of each vesting tranche of each award. The
      Company considers voluntary termination behavior as well as trends of actual
      option forfeitures when estimating the forfeiture rate.




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-13
 Table
          of Contents


**UNITED
      AMERICAN CORPORATION**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2007 AND 2006 (UNAUDITED)**





**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 three geographical locations.




**Recent
      Accounting Pronouncements**




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 condensed
      consolidated financial statements.




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 condensed consolidated financial statements.




In
      September 2006, the FASB issued SFAS 157, “Fair Value Measurements.” This
      standard defines fair value, establishes a framework for measuring fair value
      in
      generally accepted accounting principles, and expands disclosure about fair
      value measurements. This statement is effective for financial statements issued
      for fiscal years beginning after November 15, 2007. Early adoption is
      encouraged. The adoption of SFAS 157 is not expected to have a material impact
      on the condensed consolidated financial statements.




F-14
 Table
          of Contents


**UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 AND 2006 (UNAUDITED)**


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




**Recent
      Accounting Pronouncements** **(Continued)**




In
      September 2006, the FASB issued SFAS 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements
      87, 88, 106 and 132(R)” (“SFAS 158”). SFAS 158 requires an employer to recognize
      the over-funded or under-funded status of a defined benefit postretirement
      plan
      (other than a multiemployer plan) as an asset or liability in its statement
      of
      financial position and to recognize changes in that funded status in the year
      in
      which the changes occur through comprehensive income. SFAS 158 also
      requires the measurement of defined benefit plan assets and obligations as
      of
      the date of the employer’s fiscal year-end statement of financial position (with
      limited exceptions). Management does not expect adoption of SFAS 158 to have
      a
      material impact on the Company’s condensed consolidated financial
      statements.




In
      February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115”, (“FAS 159”) which permits entities to choose to measure many financial
      instruments and certain other items at fair value at specified election dates.
      A
      business entity is required to report unrealized gains and losses on items
      for
      which the fair value option has been elected in earnings at each subsequent
      reporting date. This statement is expected to expand the use of fair value
      measurement. FAS 159 is effective for financial statements issued for fiscal
      years beginning after November 15, 2007, and interim periods within those fiscal
      years.




In
      July
      2006, the FASB issued Interpretation No. 48 (FIN No. 48), “Accounting for
      Uncertainty in Income Taxes.” This interpretation requires recognition and
      measurement of uncertain income tax positions using a “more-likely-than-not”
approach. FIN No. 48 is effective for fiscal years beginning after December
      15,
      2006. Management is still evaluating what effect this will have on the Company’s
      condensed consolidated financial statements.




In
      September 2006, the United States Securities and Exchange Commission (“SEC”)
      issued SAB 108, “Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements.”




This
      SAB
      provides guidance on the consideration of the effects of prior year
      misstatements in quantifying current year misstatements for the purpose of
      a
      materiality assessment. SAB 108 establishes an approach that requires
      quantification of financial statement errors based on the effects of each of
      the
      company’s financial statements and the related financial statement disclosures.
      SAB 108 permits existing public companies to record the cumulative effect of
      initially applying this approach in the first year ending after November 15,
      2006 by recording the necessary correcting adjustments to the carrying values
      of
      assets and liabilities as of the beginning of that year with the offsetting
      adjustment recorded to the opening balance of retained earnings. Additionally,
      the use of the cumulative effect transition method requires detailed disclosure
      of the nature and amount of each individual error being corrected through the
      cumulative adjustment and how and when it arose. The Company does not anticipate
      that SAB 108 will have a material impact on its condensed consolidated financial
      statements.





F-15
 Table
          of Contents


**UNITED
      AMERICAN CORPORATION**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2007 AND 2006 (UNAUDITED)**





**NOTE 3-**
            **FIXED
              ASSETS**




Fixed
      assets as of March 31, 2007 were as follows:





Estimated
                  Useful
                Lives
                  (Years)Computer
                equipment
            
            5
            
            $
            1,137,971Less:
                accumulated depreciation
            
            
            
            
            ($715,007)Fixed
                assets, net
            
            
            
            $
            422,964





There
      was
      $58,446 and $56,745 depreciation charged to operations for the three months
      ended March 31, 2007 and 2006, respectively.




**NOTE 4-**
            **RELATED PARTY LOANS AND
              TRANSACTIONS**




On
      August
      1, 2006, the Company converted $421,080 of the $721,080 of its loans receivable
      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. No interest has been
      paid since the $300,000 became interest bearing. The Company has recognized
      $24,000 of interest receivable through March 31, 2007. In addition, there
      are
      approximately $129,975 of non-interest bearing loans that were incurred after
      August 2006. These loans are considered as advances and are not interest bearing
      and due upon demand.




The
      Company had loans with various directors and companies that are related to
      those
      directors that were non-interest bearing. There was $330,263 outstanding as
      of
      March 31, 2007. These loans are short-term in nature.




The
      Company had $136,542 in short-term related party loans payable that accrue
      interest at rates ranging between 8% and 12% per annum. As of March 31, 2007,
      $11,538 in interest is accrued. The Company has expensed $4,873 and $0 in
      interest expense for the three months ended March 31, 2007 and 2006,
      respectively. There were no amounts outstanding at March 31, 2006.




The
      Company paid commissions to a company with common ownership in the amount of
      $519,795 and $208,597 in the three months ended March 31, 2007 and 2006,
      respectively.




F-16
 Table
          of Contents


**UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 AND 2006 (UNAUDITED)**





**NOTE 5-**
            **LOANS PAYABLE - NON-RELATED
              PARTIES**




The
      Company has $95,208 in loans payable with non-related parties that are due
      on
      demand, non-interest bearing and unsecured. Of this amount approximately $88,604
      is being repaid monthly, based on 50% of the profits generated on certain
      international routes to a private company that provided financing towards the
      development of those international routes.





**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 had a maturity date of October 18, 2006, and incurred
      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 original conversion rate was $.20 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.




For
      disclosure purposes, the fair value of the derivative is estimated on the date
      of issuance of the debenture (October 18, 2004), with the following
      weighted-average assumptions used for March 31, 2007 and 2006; no annual
      dividends, volatility of 125%, risk-free interest rate of 3.28%, and expected
      life of 1 year. For disclosure purposes as of March 31, 2007 the derivative
      call
      option was approximately $0.0194 per share.




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




Interest
      expense for the three months ended March 31, 2007 and 2006 was approximately
      $3,000 for each period. At March 31, 2007, there was no interest
      accrued.




F-17
 Table
          of Contents


**UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 AND 2006 (UNAUDITED)**





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




**Agreements**




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.




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.




**Operating
      Lease**




The
      Company has entered into operating lease agreements which mature between
      November 11, 2008 and December 19, 2009. Minimum rentals for the next three
      years and in the aggregate are:




Year
                EndingDecember
                31,2007
              (9 months)
            $
            24,1722008
            
            31,6552009
            
            23,229Total
            $
            79,056




F-18
 Table
          of Contents


**UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 AND 2006 (UNAUDITED)**





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




**Common
      Stock**




As
      of
      March 31, 2007, the Company has 100,000,000 shares of common stock authorized
      with a par value of $.001. The Company’s shareholders approved an increase of
      50,000,000 authorized shares from 50,000,000 to 100,000,000 shares on October
      23, 2006.




The
      Company has 51,079,985 shares issued and outstanding as of March 31,
      2007.




The
      Company has not issued any shares in the three months ended March 31,
      2007.




During
      the year ended December 31, 2006, the Company issued 1,110,000 for services
      at
      $.06 per share for a value of $66,600.




**Stock
      Options and Warrants**




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
      March
      31, 2007, deferred tax assets consist of the following:




Net
                operating losses
            $
            1,734,000Valuation
                allowance
            
            (1,734,000)$
            -




At
      March
      31, 2007, the Company had a net operating loss carryforwards of approximately
      $5,100,000, available to offset future taxable income through 2027. 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.





F-19
 Table
          of Contents


**UNITED
      AMERICAN CORPORATION**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2007 AND 2006 (UNAUDITED)**





**NOTE 9-**
            **PROVISION FOR INCOME
              TAXES**(CONTINUED)****




A
      reconciliation of the Company’s effective tax rate as a percentage of income
      before taxes and federal statutory rate for the three months ended March 31,
      2007 and 2006 is summarized as follows:





2007
            
            2006Federal
                statutory rate
            (34.0)%
            
            (34.0)%State
                income taxes, net of federal benefits
            0.0
            
            0.0Valuation
                allowance
            34.0
            
            34.00%
            
            0%





**NOTE 10-**
            **SPIN-OFF OF TELIPHONE
              CORP.******




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.
      with an effective date of October 30, 2006. In accordance with APB 29,
“Accounting for Nomonetary Transactions”, the Company distributed the capital
      stock they owned in Teliphone Corp. to their stockholders (a “spin-off”). As a
      result, the Company recognized the value of the assets and liabilities spun-out
      based on the respective recorded amounts after reduction for any impairment
      of
      value due to the fact that this was a nonreciprocal transfer to owners. As
      noted
      in the chart below, the net result was $580,955 recognized as contributed
      capital, an increase to the Company’s additional paid in capital at October 30,
      2006, due to the Company’s shareholders receipt of common shares of a Company
      that had net liabilities as of the date of spin-off. In addition, the Company’s
      minority interest of $232,659 were adjusted to earnings in the
      spin-off.




Balances
                of Teliphone Corp. at October 30, 2006:Cash
            $
            (8,710)Accounts
                receivable
            
            18,885Inventory
            
            12,512Other
                assets
            
            142,007Fixed
                assets
            
            97,484Loans
                payable
            
            (363,415)Accounts
                payable and accrued expenses
            
            (126,125)Current
                notes payable - related
            
            (155,005)Deferred
                revenue
            
            (10,720)Other
                payables
            
            (187,868)$
            (580,955)




F-20
 Table
          of Contents


**UNITED
      AMERICAN CORPORATION**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**MARCH
      31, 2007 AND 2006 (UNAUDITED)**




**NOTE 11-**
            ****SEGMENT
              INFORMATION********




The
      Company’s reportable operating segments include wholesale VoIP services which is
      the physical buying of minutes (3894517 Canada Inc.) over brokered routes and
      direct routes. A brokered route is one where the Company purchases from a
      supplier who has direct termination capabilities with the local wireline and
      mobile operators in the country and re-sell the termination destination to
      the
      Company’s customers. A direct route is when the Company has the ability to
      directly terminate the traffic with the local wireline and mobile operators,
      such as the Company’s direct routes in Mali, Gabon and Cameroon, Africa., During
      2006, the Company also recorded retail interconnection services through its
      majority owned subsidiary Teliphone Corp (Formerly OSK Capital II Corp.). These
      revenues and expenses are listed below for the consolidation period from January
      1, 2006 to October 30, 2006 only, as the Company spun off its holdings of
      Teliphone Corp. to its shareholders on October 30, 2006. The Company also has
      corporate overhead expenses. The wholesale direct route services are essentially
      provided in Africa, and the wholesale brokered route services are supplied
      to
      customers 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 three months ended March 31, 2007 are as follows:





Corporate
            
            Wholesale
                  Services
                  Brokered
            
            Wholesale
                  Services
                  Direct
            
            Connection
                Services
            
            TotalSales
            $
            -
            
            $
            4,690,914
            
            $
            792,838
            
            $
            -
            
            $
            5,483,752Cost
                of sales
            
            -
            
            
            3,997,613
            
            
            557,622
            
            
            -
            
            
            4,555,235Gross
                profit
            
            -
            
            
            693,301
            
            
            235,216
            
            
            -
            
            
            928,517Operating
                expenses
            
            53,002
            
            
            635,236
            
            
            111,467
            
            
            -
            
            
            799,705Depreciation,
                amortization and impairment
            
            44,610
            
            
            13,836
            
            
            -
            
            
            -
            
            
            58,446Interest
                (net)
            
            -
            
            
            (16,822)
            
            
            (22,872)
            
            
            -
            
            
            (39,694)Net
                income (loss)
            
            (97,612)
            
            
            27,407
            
            
            100,877
            
            
            -
            
            
            30,672Segment
                assets
            
            273,071
            
            
            1,282,269
            
            
            372,364
            
            
            -
            
            
            1,927,704Fixed
                Assets, net of depreciation
            
            248,490
            
            
            174,474
            
            
            -
            
            
            -
            
            
            422,964





Operating
      segment data for the three months ended March 31, 2006 are as follows:





Corporate
            
            Wholesale
                      Services
                      Brokered
            
            Wholesale
                      Services
                      Brokered
            
            Connection
                Services
            
            TotalSales
            $
            -
            
            $
            -
            
            $
            2,355,452
            
            $
            107,718
            
            $
            2,463,170Cost
                of sales
            
            -
            
            
            -
            
            
            2,220,013
            
            
            105,518
            
            
            2,325,531Gross
                profit (loss)
            
            -
            
            
            -
            
            
            135,439
            
            
            2,200
            
            
            137,639Operating
                expenses
            
            25,368
            
            
            -
            
            
            260,970
            
            
            104,599
            
            
            390,937Depreciation,
                amortization and impairment
            
            44,610
            
            
            -
            
            
            3,480
            
            
            8,655
            
            
            56,745Interest
                (net)
            
            (3,000)
            
            
            -
            
            
            (1,010)
            
            
            (256)
            
            
            (4,266)Net
                income (loss)
            
            (72,978)
            
            
            -
            
            
            (130,021)
            
            
            (111,310)
            
            
            (314,309)Segment
                assets
            
            401,490
            
            
            -
            
            
            136,551
            
            
            242,269
            
            
            780,310Fixed
                Assets, net of depreciation
            
            401,490
            
            
            -
            
            
            42,942
            
            
            146,149
            
            
            590,601




F-21
 Table
          of Contents


**UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **MARCH
        31, 2007 AND 2006 (UNAUDITED)**





**NOTE 11-**
            ******SEGMENT
              INFORMATION**(CONTINUED)********




In
      addition, the segment data broken out by geographical location for the three
      months ended March 31, 2007 are as follows:





North,
                    Central
                  and
                    South
                  America
            
            Europe,
                    Middle
                  East
                    and
                  Africa
            
            Asia
            
            TotalSales
            $
            1,376,899
            
            $
            3,918,251
            
            $
            188,602
            
            $
            5,483,752Cost
                of sales
            
            1,144,684
            
            
            3,253,757
            
            
            156,794
            
            
            4,555,235Gross
                profit (loss)
            
            232,215
            
            
            664,494
            
            
            31,808
            
            
            928,517Operating
                expenses
            
            199,805
            
            
            572,532
            
            
            27,368
            
            
            799,705Depreciation,
                amortization and impairment
            
            14,675
            
            
            41,761
            
            
            2,010
            
            
            58,446Interest
                (net)
            
            (9,967)
            
            
            (28,362)
            
            
            (1,365)
            
            
            (39,694)Net
                income (loss)
            
            7,768
            
            
            21,839
            
            
            1,065
            
            
            30,672Segment
                assets
            
            484,022
            
            
            1,377,383
            
            
            66,299
            
            
            1,927,704Fixed
                Assets, net of depreciation
            
            106,201
            
            
            302,216
            
            
            14,547
            
            
            422,964





The
      geographical location segmentation information for the three months ended March
      31, 2006 is as follows:





North,
                    Central
                  and
                    South
                  America
            
            Europe,
                    Middle
                  East
                    and Africa
            
            Asia
            
            TotalSales
            $
            2,463,170
            
            
            -
            
            
            -
            
            $
            2,463,170Cost
                of sales
            
            2,325,531
            
            
            
            
            
            -
            
            
            2,325,531Gross
                profit (loss)
            
            137,639
            
            
            -
            
            
            -
            
            
            137,639Operating
                expenses
            
            390,937
            
            
            -
            
            
            -
            
            
            390,937Depreciation,
                amortization and impairment
            
            56,745
            
            
            -
            
            
            -
            
            
            56,745Interest
                (net)
            
            (4,266)
            
            
            -
            
            
            -
            
            
            (4,266)Net
                income (loss)
            
            (314,309)
            
            
            -
            
            
            -
            
            
            (314,309)Segment
                assets
            
            780,310
            
            
            -
            
            
            -
            
            
            780,310Fixed
                Assets, net of depreciation
            
            590,601
            
            
            -
            
            
            -
            
            
            590,601




F-22
 Table
          of Contents
  **Item2.     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.
 
 **Overview**
 
 We
          were
          incorporated under the laws of the State of Florida on July 17, 1992 under
          the
          name American Financial Seminars, Inc. On February 5, 2004, our name was
          changed
          to United American Corporation. On July 18, 2003, we 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.
          In
          this transaction we acquired internet telecommunications equipment valued
          at
          $874,125 which we utilizes to provide VoIP (Voice-over-Internet-Protocol)
          telecommunications services to wholesale providers worldwide.
 
 Our
          revenues are derived primarily from the sale of international call termination
          services to wholesale customers. We also sold call local call termination
          services to retail customers in the domestic North American market, but
          have
          since ceased this area of our business since we completed the spin-off
          of our
          majority-owned subsidiary, Teliphone Corp., on October 30,
          2006.
  4
 Table
              of Contents
  Our
          management believes that we can successfully operate within the Wholesale
          Telecommunications Market as a result of the following:
 
 ·
                There
                    is a natural migration in the wholesale telecommunications marketplace
                    to
                    utilize the internet as the main network between telecommunications
                    carriers due to its lower cost of operation than traditional
                    networks. We
                    specialize in the deployment of internet-based technologies.
 
 ·
                Developing
                    nations, primarily in Africa, Latin and South America, are confronted
                    with
                    the need to upgrade their telecommunications technologies resulting
                    in a
                    need for support in this venture over the next 3-5 years, producing
                    solid
                    opportunities for us to leverage our knowledge in order to solidify
                    long
                    term consulting mandates and direct route termination capabilities
                    with
                    these countries.
 
 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 received the call and transmitted the call to our server in
          Haiti.
          An established telecommunication line was then 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.
          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.
 
 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 offered 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 permitted us to expand the number
          of
          voice channels that we had in operation in our global network and sell
          more long
          distance termination minutes to our existing and future customers.
  5
 Table
              of Contents
  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 established a profit-sharing understanding with Tectacom for
          VoIP
          long distance termination minutes transiting through our gateways. Tectacom held
          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 enabled 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.
 
 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
          received more favorable pricing for our use of its voice channels.
 
 In
          November 2006, we again further expanded our network by building a VoIP
          gateway
          in Cameroon, Africa.
 
 On
          December 6, 2006, we entered into an Agreement with Gabon Telecom, a
          government-operated telecommunications provider in Gabon, primarily for
          the
          purposes of assisting Gabon Telecom in regulating its international
          telecommunications traffic in order to prevent abuse of its existing agreements
          created by unauthorized use of its voice channels and failure to make payment.
          This Agreement enabled us to offer termination services through our VoIP
          gateway
          in Gabon. This Agreement was for a period of 5 years and renewable upon
          mutual
          agreement of the parties.
 
 The
          Mali,
          Gabon and Cameroon, Africa networks all commenced service during the year
          ended
          December 31, 2006. Due to frequently changing political conditions within
          each
          of these African nations, we have experienced difficulty enforcing the
          terms of
          our prior negotiated agreements. The current governments in these countries
          are
          not honoring the existing agreements described above in which we acquired
          termination routes within the country. For this reason, in February 2007
          we were
          forced to suspend our direct African route operations in Mali, Gabon and
          Cameroon. We are working to restore these networks to operational in 2007,
          but
          we can provide no assurance that we will be successful in reestablishing
          the
          Mali, Gabon and Cameroon networks. We anticipate that our failure to provide
          termination services in Mali, Gabon and Cameroon through our VoIP networks
          will
          significantly harm our business and results of operations in the
          2007.
 
 During
          2007, we our focusing our efforts on adding further routes in countries
          that do
          not present that same political risks and instability associated with our
          operations in Mali, Gabon and Cameroon, Africa.
  6
 Table
              of Contents
  **Results
          of Operations for the three months ended March 31, 2007 and
          2006**
 
 For
          the
          three months ended March 31, 2007, we generated total revenue of $5,483,752,
          compared to revenue of $2,463,170 for the three months ended March 31,
          2006. Our
          revenue was generated by sales of retail domestic and international voice
          and
          data products and services using VoIP.  Our increase in revenue for the
          three months ended March 31, 2007 when compared to the same reporting period
          in
          the prior year is primarily attributable to increases in sales of VoIP
          termination services in our both our brokered international telecom routes
          as
          well as our direct routes. A brokered route is one where we purchase from
          a
          supplier who has direct termination capabilities with the local wireline
          and
          mobile operators in the country and re-sell the termination destination
          to our
          customers. A direct route is when we have the ability to directly terminate
          the
          traffic with the local wireline and mobile operators, such as our direct
          routes
          in Mali, Gabon and Cameroon, Africa. Our ability to generate future revenues
          from the sale of direct routes has been significantly impaired as a result
          of
          the suspension of our Mali, Gabon, and Cameroon networks. During the three
          months ended March 31, 2007, $4,690,914 of revenues were attributed to
          our
          brokered routes and $792,838 of revenues were attributed to our direct
          routes,
          as compared to the three months ended March 31, 2006 where the wholesale
          revenue
          of $2,355,452 was generated entirely from our CaribbeanONE network, our
          first
          direct route which is no longer operational. Our remaining revenues for
          the
          three months ended March 31, 2006 were generated from our majority-owned
          subsidiary, Teliphone Corp. In October 2006, we completed the spin-off
          of our
          majority-owned subsidiary, Teliphone Corp.
 
 Our
          total
          cost of sales for the three months ended March 31, 2007 was $4,555,235
          compared
          to $2,325,531 for the three months ended March 31, 2006. This resulted
          in a
          gross profit of $928,517 and $137,639 for the three months ended March
          31, 2007
          and 2006 respectively. The increase in gross profit is a result of increase
          sales of brokered routes.
 
 We
          incurred operating expenses in the amount of $854,473 for the three months
          ended
          March 31, 2007, compared to $447,682 for the three months ended March 31,
          2006.
          The increase in our operating expenses is primarily attributable to increases
          in
          commissions paid on the increased revenues as well as increases in management
          fees. As a result of spinning-off our majority-owned subsidiary, Teliphone
          Corp,
          on October 30, 2006, there will be no further consolidation of their results
          of
          operations. We paid $595,565 in commissions and wages and management fees
          for
          the three months ended March 31, 2007, compared to $255,584 for the three
          months
          ended March 31, 2006.  We paid commissions and management fees based upon
          sales of VoIP termination services. As a result of a significant increase
          in the
          sales of VoIP termination services, our commission and management fees
          paid
          correspondingly increased.
  Our
          net
          income for the three months ended March 31, 2007 was $30,672, compared
          to a net
          loss of ($286,481) in the prior year.
  **Liquidity
          and Capital Resources**
 
 As
          of
          March 31, 2007, we had current assets of $1,504,741. Our current assets
          consisted of cash and cash equivalents of $381,178, accounts receivable
          in the
          amount of $657,978, a loan receivable from our now related party Teliphone
          Corp.
          (formerly majority-owned subsidiary until
  7
 Table
              of Contents
  its
          spin-off on October 30, 2006) of $429,975 and prepaid expenses and other
          current
          assets of $35,610. Our total current liabilities as of March 31, 2007 were
          $2,669,036. As a result, on March 31, 2007 we had working capital deficit
          of
          $1,164,295.
 
 Operating
          activities provided $455,492 in cash for the three months ended March 31,
          2007.
          A decrease in our accounts receivable of $755,361 was the primary component
          of
          our positive operating cash flow. Investing activities during the three
          months
          ended March 31, 2007 used $69,148 primarily for the acquisition of fixed
          assets.
          Cash flows provided by financing activities during the three months ended
          March
          31, 2007 primarily consisted of $95,927 for proceeds from loans payable-
          related
          parties. We primarily relied on revenues to fund our operations during
          the three
          months ended March 31, 2007.
  As
          of
          April 30, 2007, our management believes that we have insufficient capital
          to
          support our operations at the current level over the next twelve months.
          The
          success of our business is contingent upon us obtaining additional financing.
          We
          intend to fund operations through debt and/or equity financing arrangements,
          which may be insufficient to fund our capital expenditures, working capital,
          or
          other cash requirements for the year ending December 31, 2007. There can
          be no
          assurance that any additional financing will be available to us on acceptable
          terms, or at all. We do not have any formal commitments or arrangements
          for the
          sales of stock or the advancement or loan of funds at this time.
 
 **Off
          Balance Sheet Arrangements**
 
 As
          of
          March 31, 2007, there were no off balance sheet arrangements.
 
 **Going
          Concern**
 
 As
          shown
          in the accompanying consolidated financial statements, we have a net income
          of
          $34,350 and a net loss of $286,481 for the three months ended March 31,
          2007 and
          2006, and have a working capital deficiency of $$1,164,295 as of March
          31, 2007.
          We have recently emerged from the development stage and have just started
          generating revenues. 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 presence in the international wholesale
          market
          with direct routes and consulting mandates with developing countries. Our
          strategic relationships with telecommunications carriers has permitted
          us to
          achieve consistent quarterly growth in revenues.
 
 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.
  8
 Table
              of Contents
  **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.
 
 **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., we began to recognize revenue from VoIP services when the
          services
          were rendered and collection was reasonably assured in accordance with
          SAB
          101.
 
 There
          are
          limited estimates required in connection with recognition of revenue because
          voice traffic is measured in automated switches and routers, and contractual
          rates for traffic are used to bill or declare revenue on a monthly basis.
          However, for certain voice contracts, historical traffic may be retroactively
          re-rated within a contract period. This traffic re-rating is calculated
          and
          recognized immediately in the month the new contractual rate is established.
          Although relatively infrequent, there can be material disputes with customers
          over volume or traffic recognized on our customers’ switches. Our practice is to
          maintain recorded revenue based on our traffic data until the merits of
          a
          dispute are identified.
 
 **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.
          There has
          been no further impairment since this date.
 
 **Recently
          Issued Accounting Pronouncements**
 
 In
          February 2006, the FASB issued Statement of Financial Accounting Standard
          No.
          155,
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  *“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
          February 2007, the FASB issued FAS No. 159, “The Fair Value Option for Financial
          Assets and Financial Liabilities - Including an amendment of FASB Statement
          No.
          115”, (“FAS 159”) which permits entities to choose to measure many financial
          instruments and certain other items at fair value at specified election
          dates. A
          business entity is required to report unrealized gains and losses on items
          for
          which the fair value option has been elected in earnings at each subsequent
          reporting date. This statement is expected to expand the use of fair value
          measurement. FAS 159 is effective for financial statements issued for fiscal
          years beginning after November 15, 2007, and interim periods within those
          fiscal
          years.
 
 In
          July
          2006, the FASB issued Interpretation No. 48 (FIN No. 48), “Accounting for
          Uncertainty in Income Taxes.” This interpretation requires recognition and
          measurement of uncertain income tax positions using a “more-likely-than-not”
approach. FIN No. 48 is effective for fiscal years beginning after December
          15,
          2006. Management is still evaluating what effect this will have on our
          consolidated financial statements.
 
 Other
          recent accounting pronouncements issued by the FASB (including its Emerging
          Issues Task Force), the American Institute of Certified Public Accountants,
          and
          the SEC did not or are not believed by management to have a material impact
          on
          our present or future consolidated financial statements included elsewhere
          herein.
  **Item3.     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 March 31, 2007. This evaluation was carried
          out
          under the supervision and with the participation of our Chief Executive
          Officer
          and Chief Financial Officer, Mr. Simon Lamarche. Based upon that evaluation,
          our
          Chief Executive Officer and Chief Financial Officer concluded that, as
          of March
          31, 2007, our disclosure controls and procedures are not effective. There
          have
          been no changes in our internal controls over financial reporting during
          the
          quarter ended March 31, 2007.
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  In
          particular, management has identified certain limitations in specific
          critical controls in our accounting system that are increasingly resulting
          in
          lengthier time lapses required in order for us to accurately disclose our
          financial statements.  In particular, these lengthier time lapses occur for
          the following reasons:
 
 ·
              Lack
                  of dedicated resources to track and keep records of supplier invoices
                  on a
                  daily basis; ·
              Lack
                  of dedicated resources to track and keep records of daily disbursements
                  against these invoices; ·
              Surplus
                  accounting entries required to track intercompany expenses, post
                  spin-off
                  of our majority-owned subsidiary, Teliphone Corp.; and ·
              Lack
                  of a dedicated resource person to oversee daily record keeping.  Management
          will look to dedicate resources to these tasks in the coming months in
          order to
          accelerate the reporting of our financial statements.  This resource
          dedication will result in the Company incurring additional costs which
          will
          affect the Company’s profitability going forward.  The Company's
          management anticipates that these costs will be up to $50,000 per year
          in order
          to maintain compliance with timely financial reporting
          requirements.
  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**
 
 **Item1.     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.
 
 **Item2.     Unregistered
          Sales of Equity
          Securities and Use of Proceeds**
 
 None
 
 **Item3.     Defaults
          upon Senior
          Securities**
 
 None
 
 **Item4.     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
          March
          31, 2007.
 
 **Item5.     Other
          Information**
 
 None
 
 **Item6.      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:
                May
                    21, 2007By:       /s/
                    Simon Lamarche
                  Simon
                    Lamarche
                  Title:**Chief
                    Executive Officer and
                    Director**