**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 endedJune
                30, 2007[
                ]
            Transition
                Report pursuant to 13 or 15(d) of the Securities Exchange Act of
                1934For
                the transition periodto__________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 August
      13, 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


Table
          of Contents


**PART
      I - FINANCIAL INFORMATION**




**Item
      1.****Financial
      Statements**





Our
                unaudited condensed consolidated financial statements included in
                this
                Form 10-QSB are as follows:F-1
            Unaudited
                Condensed Consolidated Balance Sheet as of June 30,
                2007F-2
            Unaudited
                Condensed Consolidated Statements of Operations and Comprehensive
                Income
                (Loss) for the three and six months endedJune
                30, 2007 and 2006;F-3
            Unaudited
                Condensed Consolidated Statements of Cash Flows for
                the six months ended June 30, 2007 and 2006;F-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 June 30, 2007 are not necessarily indicative of the results that can
      be
      expected for the full year.


3
 Table
          of Contents


**UNITED
        AMERICAN CORP**


**CONDENSED
        CONSOLIDATED BALANCE SHEET**
 **JUNE
        30, 2007**
 **(UNAUDITED)**
  **ASSETS****(IN
                  US$)**Current
                  Assets:Cash
                  and cash equivalents
              $
              398,400Accounts
                  receivable, net
              
              1,020,533Interest
                  receivable
              
              33,000Prepaid
                  expenses and other current assets
              
              12,643Loan
                  receivable - related company
              
              435,751Total
                  Current Assets
              
              1,900,327Fixed
                  assets, net of depreciation
              
              377,726**TOTAL
                  ASSETS**
              $
              2,278,052**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)****LIABILITIES**Current
                  Liabilities:Loans
                  payable - related parties
              $
              286,757Other
                  payables
              
              636,631Convertible
                  debentures
              
              90,961Derivative
                  liability
              
              18,885Accounts
                  payable and accrued expenses
              
              1,555,608Total
                  Current Liabilities
              
              2,588,842**Total
                  Liabilities**
              
              2,588,842**STOCKHOLDERS'
                  EQUITY (DEFICIT)**Common
                  stock, $.001 Par Value; 100,000,000 shares authorizedand
                  51,079,985 shares issued and outstanding
              
              51,080Additional
                  paid-in capital
              
              4,865,893Accumulated
                  deficit
              
              (5,291,209)Accumulated
                  other comprehensive income (loss)
              
              63,4462,588,842**Total
                  Stockholders' Equity (Deficit)**
              
              2,278,052**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**
              $
              4,866,894




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


F-1
 Table
          of Contents


**UNITED
        AMERICAN CORPORATION**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS
        AND**
 **COMPREHENSIVE
        INCOME (LOSS)**
 **FOR
        THE SIX AND THREE MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
  **IN
                    US$**
                    **SIX
                      MONTHS**
                    **JUNE
                      30,**
                
                **IN
                    US$**
                    **THREE
                      MONTHS**
                    **JUNE
                      30,****2007**
                
                **2006**
                
                **2007**
                
                **2006****OPERATING
                    REVENUES**Sales
                $
                13,170,050
                
                $
                4,347,336
                
                $
                7,686,298
                
                $
                1,884,166**COST
                    OF SALES**Inventory,
                    beginning of period
                
                -
                
                
                51,652
                
                
                -
                
                
                20,014Purchases
                
                11,315,659
                
                
                3,759,996
                
                
                6,756,746
                
                
                1,466,103Inventory,
                    end of period
                
                -
                
                
                (15,862)
                
                
                -
                
                
                (15,862)**Total
                    Cost of Sales**
                
                11,315,659
                
                
                3,795,786
                
                
                6,756,746
                
                
                1,470,255**GROSS
                    PROFIT**
                
                1,854,391
                
                
                551,550
                
                
                929,552
                
                
                413,911**OPERATING
                    EXPENSES**Selling
                    and promotion
                
                93,228
                
                
                56,220
                
                
                20,417
                
                
                29,232Professional
                    and consulting fees
                
                218,315
                
                
                139,188
                
                
                95,800
                
                
                68,352Commissions
                    and wages
                
                892,380
                
                
                441,569
                
                
                296,816
                
                
                185,985Other
                    general and administrative expenses
                
                13,727
                
                
                72,091
                
                
                8,590
                
                
                34,562Depreciation,
                    amortization and impairment
                
                117,835
                
                
                118,750
                
                
                59,389
                
                
                62,005**Total
                    Operating Expenses**
                
                1,335,485
                
                
                827,818
                
                
                481,012
                
                
                380,136**GAIN
                    (LOSS) BEFORE OTHER INCOME**
                
                518,906
                
                
                (276,268)
                
                
                448,540
                
                
                33,775**OTHER
                    INCOME (EXPENSE)**Gain
                    on derivative liability
                
                8,803
                
                
                -
                
                
                8,803
                
                
                -Interest
                    expense
                
                (64,540)
                
                
                (16,627)
                
                
                (24,846)
                
                
                (12,361)**Total
                    Other Income (Expense)**
                
                (55,737)
                
                
                (16,627)
                
                
                (16,043)
                
                
                (12,361)**NET
                    INCOME (LOSS) BEFORE PROVISION FOR**
                  **INCOME
                    TAXES AND MINORTY INTEREST**
                
                463,169
                
                
                (292,895)
                
                
                432,497
                
                
                21,414Minority
                    interest
                
                -
                
                
                47,820
                
                
                -
                
                
                19,993**NET
                    INCOME (LOSS) BEFORE PROVISION**
                  **FOR
                    INCOME TAXES**
                
                463,169
                
                
                (245,075)
                
                
                432,497
                
                
                41,407**Provision
                    for Income Taxes**
                
                -
                
                
                -
                
                
                -
                
                
                -**NET
                      INCOME (LOSS) APPLICABLE**
                    **TO
                      COMMON SHARES**
                $
                463,169
                
                $
                (245,075)
                
                $
                432,497
                
                $
                41,407**NET
                    INCOME (LOSS) PER BASIC AND DILUTED SHARES****BASIC**
                $
                0.01
                
                $
                (0.00)
                
                $
                0.01
                
                $
                0.00**FULLY
                    DILUTED**
                $
                0.01
                
                
                (0.00)
                
                $
                0.01
                
                
                0.00**WEIGHTED
                      AVERAGE NUMBER OF COMMON****SHARES
                    OUTSTANDING - BASIC**
                
                51,079,985
                
                
                49,969,985
                
                
                51,079,985
                
                
                49,969,985**WEIGHTED
                    AVERANGE NUMBER OF COMMON**
                  **SHARES
                    OUTSTANDING -- FULLY DILUTED**
                
                52,508,556
                
                
                49,969,985
                
                
                52,508,556
                
                
                49,969,985**COMPREHENSIVE
                    INCOME (LOSS)**Net
                    income (loss)
                $
                463,169
                
                $
                (245,075)
                
                $
                432,497
                
                $
                41,407Other
                    comprehensive income (loss)Currency
                    translation adjustments
                
                (6,674)
                
                
                53,777
                
                
                (1,953)
                
                
                47,303Comprehensive
                    income (loss)
                $
                456,495
                
                $
                (191,298)
                
                $
                430,544
                
                $
                88,710
  The
        accompanying notes are integral part of the condensed consolidated financial
        statements.


F-2
 Table
          of Contents


**UNITED
        AMERICAN CORPORATION**


**CONDENSED
        CONSOLIDATED STATEMENTS OF CASH
        FLOWS**


**FOR
        THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006**
 **(UNAUDITED)**
  **IN
                  US$****2007**
              
              **2006****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  income (loss)
              $
              463,169
              
              $
              (245,075)**Adjustments
                    to reconcile net income (loss) to net cash****provided by (used in) operating
                    activities:**Depreciation,
                  amortization and impairment
              
              117,835
              
              
              118,750Gain
                  on derivative liability
              
              (8,803)
              
              
              -**Changes
                  in assets and liabilities**(Increase)
                  decrease in accounts receivable
              
              480,558
              
              
              (138,966)Decrease
                  in investment tax credits
              
              -
              
              
              (689)Decrease
                  in interest receivable
              
              -
              
              
              -(Increase)
                  decrease in prepaid expenses and other current assets
              
              (3,698)
              
              
              12,298(Decrease)
                    in accounts payable and and
                    accrued expenses
              
              (390,247)
              
              
              (339,600)Total
                  adjustments
              
              195,645
              
              
              (312,417)**Net
                  cash provided by (used in) operating activities**
              
              658,814
              
              
              (557,492)**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Acquisitions
                  of fixed assets
              
              (59,931)
              
              
              (50,110)(Increase)
                  decrease in loan receivable - related company
              
              18,443
              
              
              -**Net
                  cash (used in) investing activities**
              
              (41,488)
              
              
              (50,110)**CASH
                  FLOWS FROM FINANCING ACTIVITES**(Decrease)
                  in bank overdraft
              
              -
              
              
              (16,905)Proceeds
                  from loan payable, net of repayments
              
              -
              
              
              9,225Proceeds
                  from loan payable - related parties, net of repayments
              
              (250,654)
              
              
              594,417**Net
                  cash provided by (used in) financing activities**
              
              (250,654)
              
              
              586,737Effect
                  of foreign currency
              
              (37,825)
              
              
              53,777**NET
                    INCREASE (DECREASE) IN** **CASH AND CASH
                    EQUIVALENTS**
              
              328,847
              
              
              32,912**CASH
                    AND CASH EQUIVALENTS - BEGINNING YEAR**
              
              69,553
              
              
              -**CASH
                  AND CASH EQUIVALENTS - END OF PERIOD**
              $
              398,400
              
              $
              32,912**CASH
                  PAID DURING THE PERIOD FOR:**Interest
                  expense
              $
              64,540
              
              $
              6,000




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


F-3
 Table
          of Contents


**UNITED
          AMERICAN CORPORATION**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
          30, 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**
 **JUNE
          30, 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.
 
 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**
 JUNE
          30,
          2007 AND 2006 (UNAUDITED)
  NOTE
        1-ORGANIZATION
        AND BASIS OF PRESENTATION(CONTINUED)
  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).
 
 Subsequently
        on July 1, 2007, the Company dissolved its wholly-owned subsidiary 3894517
        Canada Inc. as it was no longer required for the Company to effectuate its
        normal day-to-day operations See Note 12- Subsequent Events.
 
 **Going
        Concern**
 
 As
        shown
        in the accompanying consolidated financial statements the Company has started
        to
        show net profits ($463,169 for the six months ended June 30, 2007), but prior
        to
        this time, the Company had incurred significant net losses, and accumulated
        a
        deficit of $5,2915,209 through June 30, 2007 and has a working capital
        deficiency of $688,515 as of June 30, 2007.
 
 Despite
        the prior 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 customer base in the
        international telecommunications market.
 
 In
        the
        near term, the Company does not require additional financing to continue
        its
        operations as it has achieved a profitable level of operations. The Company’s
        ability to continue as a going concern for a reasonable period is dependent
        upon
        management’s ability to continue to achieve profitable operations. There can be
        no assurance that management will be able to continue operations at a profitable
        level and hence, the Company would have to raise sufficient capital, under
        terms
        satisfactory to the Company, if at all.
 
 F-6
 Table
            of Contents
 **UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007 AND 2006 (UNAUDITED)**
 
 NOTE
        1-ORGANIZATION
        AND BASIS OF PRESENTATION(CONTINUED)
 
 Going
        Concern(Continued)
 
 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.
 
 **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.
 
 F-7
 Table
            of Contents
 **UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 JUNE
        30,
        2007 AND 2006 (UNAUDITED)
 
 NOTE
        2-SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
 
 **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.
 
 **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 ($5,889) and $53,777
        for
        the six months ended June 30, 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.
 
 F-8
 Table
            of Contents
 **UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007 AND 2006 (UNAUDITED)**
 
 NOTE
        2-SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
 
 Revenue
        Recognition(Continued)
 
 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.
 
 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 June
        30,
        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.
 
 F-9
 Table
            of Contents
 **UNITED
          AMERICAN CORPORATION**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
          30, 2007 AND 2006 (UNAUDITED)**
 NOTE
          2-SUMMARY
          OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
 
 **Derivative
        Financial Instruments**
 
 The
        Company generally does not use derivative financial instruments to hedge
        exposures to cash-flow or market risks. However, certain other financial
        instruments, such as warrants or options to acquire common stock and the
        embedded conversion features of debt and preferred instruments that are indexed
        to the Company’s common stock, are classified as liabilities when either (a) the
        holder possesses rights to net-cash settlement or (b) physical or net share
        settlement is not within the control of the Company. In such instances, net-cash
        settlement is assumed for financial accounting and reporting, even when the
        terms of the underlying contracts do not provide for net-cash settlement.
        Such
        financial instruments are initially recorded at fair value and subsequently
        adjusted to fair value at the close of each reporting period.
 
 **Advertising
        Costs**
 
 The
        Company expenses the costs associated with advertising as incurred. Advertising
        expenses for the six months ended June 30, 2007 and 2006 are included in
        general
        and administrative expenses in the condensed consolidated statements of
        operations.
 
 **Concentration
        Risk**
 
 In
        the
        six months ended June 30, 2007 and 2006, the Company generated 97% and 98%
        of
        their sales from one customer. A major customer is a customer that represents
        greater than 10% of the total sales.
 
 In
        the
        six months ended June 30, 2007 and 2006, the Company incurred 99% and 67%
        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.
  F-10
 Table
            of Contents
 **UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 JUNE
        30,
        2007 AND 2006 (UNAUDITED)
 
 NOTE
        2-SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES(CONTINUED)
 
 **Impairment
        of Long-Lived Assets**
 
 Long-lived
        assets, primarily fixed assets, are reviewed for impairment whenever events
        or
        changes in circumstances indicate that the carrying amount of the assets
        might
        not be recoverable. The Company does not perform a periodic assessment of
        assets
        for impairment in the absence of such information or indicators. Conditions
        that
        would necessitate an impairment assessment include a significant decline
        in the
        observable market value of an asset, a significant change in the extent or
        manner in which an asset is used, or a significant adverse change that would
        indicate that the carrying amount of an asset or group of assets is not
        recoverable. For long-lived assets to be held and used, the Company recognizes
        an impairment loss only if its carrying amount is not recoverable through
        its
        undiscounted cash flows and measures the impairment loss based on the difference
        between the carrying amount and estimated fair value. The Company, determined
        based upon an independent valuation performed on its equipment acquired from
        American United Corporation that 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**
 JUNE
        30,
        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:
  **June
                      30,**
                    **2007**
                
                **June
                      30,**
                    **2006**Net
                    income (loss)
                $
                463,169
                
                $
                (245,075)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**
 JUNE
        30,
        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**
 JUNE
          30,
          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 adoption of SFAS 154
        has not
        had 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 adoption of SFAS 155 has not had a material
        impact 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 has not had a material impact on its
        condensed consolidated financial statements.
  F-14
 Table
            of Contents
 **UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 JUNE
        30,
        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). The adoption of SFAS 158 has not had a material impact
        on
        its 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. The adoption of SFAS 159 has not had a material impact on its condensed
        consolidated financial statements.
 
 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. The adoption of FIN No. 48 has not had a material impact on its 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 adoption of SAB 108
        has not
        had a material impact on its condensed consolidated financial
        statements.
 
 F-15
 Table
            of Contents
 **UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 JUNE
        30,
        2007 AND 2006 (UNAUDITED)
 NOTE
        3-FIXED
        ASSETS
 
 Fixed
        assets as of June 30, 2007 were as follows:
 Estimated
                    Useful
                    Lives
                      (Years)Computer
                    equipment
                
                5
                
                $
                1,137,971Less:
                    accumulated depreciation
                
                
                
                
                ($760,245)Fixed
                    assets, net
                
                
                
                $
                377,726
 There
        was
        $117,835 and $118,750 depreciation charged to operations for the six months
        ended June 30, 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 $33,000
        of
        interest receivable through June 30, 2007. In addition, there are approximately
        $137,170 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 $288,171 outstanding
        as of
        June 30, 2007. These loans are short-term in nature.
 
 The
        Company has expensed $64,540 and $16,627 in interest expense for the six
        months
        ended June 30, 2007 and 2006, respectively. There were no amounts outstanding
        at
        June 30, 2006.
 
 The
        Company paid commissions to a company with common ownership in the amount
        of
        $102,206 and $208,597 in the six months ended June 30, 2007 and 2006,
        respectively.
  F-16
 Table
            of Contents
 **UNITED
          AMERICAN CORPORATION**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
          30, 2007 AND 2006 (UNAUDITED)**
 
 **NOTE
        5-**  **LOANS
        PAYABLE - NON-RELATED PARTIES**
 
 The
        Company has $98,065 in loans payable with non-related parties that are due
        on
        demand, non-interest bearing and unsecured. Of this amount approximately
        $9,908
        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 June 30, 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 June 30, 2007 the derivative
        call
        option was approximately $0.0132 per share.
 
 The
        embedded derivative did not qualify as a fair value or cash flow hedge under
        SFAS No. 133.
 
 Interest
        expense for the six months ended June 30, 2007 and 2006 was approximately
        $3,000
        for each period. At June 30, 2007, there was no interest accrued.
 
 F-17
 Table
            of Contents
 **UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007 AND 2006 (UNAUDITED)**
 **NOTE
        7-**  **COMMITMENTS**
 
 **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:
  2007
                (6 months)
              $
              16,1152008
              
              31,6552009
              
              23,229Total
              $
              70,999
  F-18
 Table
            of Contents
 **UNITED
        AMERICAN CORPORATION**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **JUNE
        30, 2007 AND 2006 (UNAUDITED)**
 **NOTE
        8-**  **STOCKHOLDERS’
        EQUITY (DEFICIT)**
 
 ****Common
        Stock**
  As
        of
        June 30, 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 June 30,
        2007.
 
 The
        Company has not issued any shares in the six months ended June 30,
        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
        June
        30, 2007, deferred tax assets consist of the following:
 
 Net
                    operating losses
                $
                1,589,500Valuation
                    allowance
                
                (1,589,500)$
                -
 
 At
        June
        30, 2007, the Company had a net operating loss carryforwards of approximately
        $4,675,000, 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**
 **JUNE
        30, 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 six months ended June 30,
        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**
 **JUNE
          30, 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 six months ended June 30, 2007 are as follows:
 
 Corporate
              
              Wholesale
                  Services
                    Brokered
              
              Wholesale
                  Services
                    Direct
              
              Connection
                  Services
              
              TotalSales
              $
              -
              
              $
              12,368,212
              
              $
              801,838
              
              $
              -
              
              $
              13,170,050Cost
                  of sales
              
              -
              
              
              11,264,017
              
              
              51,642
              
              
              -
              
              
              11,315,659Gross
                  profit
              
              -
              
              
              1,104,195
              
              
              750,196
              
              
              -
              
              
              1,854,391Operating
                  expenses
              
              118,536
              
              
              1,043,873
              
              
              46,438
              
              
              -
              
              
              1,208,847Depreciation,
                  amortization and impairment
              
              89,220
              
              
              28,615
              
              
              -
              
              
              -
              
              
              117,835Interest
                  (net)
              
              (36,000)
              
              
              -
              
              
              (28,540)
              
              
              -
              
              
              (64,540)Net
                  income (loss)
              
              (243,756)
              
              
              31,707
              
              
              675,218
              
              
              -
              
              
              463,169Segment
                  assets
              
              -
              
              
              2,026,277
              
              
              251,775
              
              
              -
              
              
              2,278,052Fixed
                  Assets, net of depreciation
              
              -
              
              
              173,846
              
              
              203,880
              
              
              -
              
              
              377,726
 
 Operating
        segment data for the six months ended June 30, 2006 are as follows:
 
 Corporate
              
              Wholesale
                Services
                  Brokered
              
              Wholesale
                  Services
                    Direct
              
              Connection
                  Services
              
              TotalSales
              $
              -
              
              $
              -
              
              $
              4,143,624
              
              $
              203,712
              
              $
              4,347,336Cost
                  of sales
              
              -
              
              
              -
              
              
              3,601,033
              
              
              194,753
              
              
              3,795,786Gross
                  profit (loss)
              
              -
              
              
              -
              
              
              542,591
              
              
              8,959
              
              
              551,550Operating
                  expenses
              
              60,045
              
              
              -
              
              
              470,450
              
              
              178,573
              
              
              709,068Depreciation,
                  amortization and impairment
              
              89,220
              
              
              -
              
              
              8,511
              
              
              21,019
              
              
              118,750Interest
                  (net)
              
              (6,000)
              
              
              -
              
              
              (647)
              
              
              (9,980)
              
              
              (16,627)Net
                  income (loss)
              
              (155,265)
              
              
              -
              
              
              62,983
              
              
              (200,613)
              
              
              (292,895)Segment
                  assets
              
              356,880
              
              
              -
              
              
              433,786
              
              
              193,811
              
              
              984,477Fixed
                  Assets, net of depreciation
              
              356,880
              
              
              -
              
              
              87,043
              
              
              127,537
              
              
              571,460
  F-21
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            of Contents
 **UNITED
          AMERICAN CORPORATION**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 JUNE
          30,
          2007 AND 2006 (UNAUDITED)
 NOTE
        11-SEGMENT
        INFORMATION(CONTINUED)
 
 In
        addition, the segment data broken out by geographical location for the six
        months ended June 30, 2007 are as follows:
 
 North,
                  Central
                  and
                    South
                    America
              
              Europe,
                  Middle
                  East
                    and
                    Africa
              
              Asia
              
              TotalSales
              $
              1,871,576
              
              $
              11,033,589
              
              $
              264,885
              
              $
              13,170,050Cost
                  of sales
              
              1,608,052
              
              
              9,480,019
              
              
              227,588
              
              
              11,315,659Gross
                  profit (loss)
              
              263,525
              
              
              1,553,569
              
              
              37,297
              
              
              1,854,391Operating
                  expenses
              
              171,787
              
              
              1,012,746
              
              
              24,313
              
              
              1,208,847Depreciation,
                  amortization and impairment
              
              16,745
              
              
              98,720
              
              
              2,370
              
              
              117,835Interest
                  (net)
              
              (9,172)
              
              
              (54,070)
              
              
              (1,298)
              
              
              (64,540)Net
                  income (loss)
              
              65,820
              
              
              388,033
              
              
              9,316
              
              
              463,169Segment
                  assets
              
              323,731
              
              
              1,908,504
              
              
              45,818
              
              
              2,278,052Fixed
                  Assets, net of depreciation
              
              53,678
              
              
              316,451
              
              
              7,597
              
              
              377,726
 
 The
        geographical location segmentation information for the six months ended June
        30,
        2006 is as follows:
 
 North,
                  Central
                  and
                    South
                    America
              
              Europe,
                  Middle
                  East
                    and
                    Africa
              
              Asia
              
              TotalSales
              $
              572,106
              
              $
              1,284,200
              
              $
              2,491,030
              
              $
              4,347,336Cost
                  of sales
              
              499,522
              
              
              1,121,273
              
              
              2,174,991
              
              
              3,795,786Gross
                  profit (loss)
              
              72,583
              
              
              162,927
              
              
              316,038
              
              
              551,549Operating
                  expenses
              
              95,501
              
              
              214,370
              
              
              415,824
              
              
              725,695Depreciation,
                  amortization and impairment
              
              15,627
              
              
              35,079
              
              
              68,044
              
              
              118,750Interest
                  (net)
              
              (2,188)
              
              
              (4,912)
              
              
              (9,527)
              
              
              (16,627)Net
                  income (loss)
              
              (38,545)
              
              
              (86,521)
              
              
              (167,830)
              
              
              (292,896)Segment
                  assets
              
              131,055
              
              
              294,178
              
              
              570,632
              
              
              995,865Fixed
                  Assets, net of depreciation
              
              75,204
              
              
              168,809
              
              
              327,447
              
              
              571,460
  **NOTE
        12-**  **SUBSEQUENT
        EVENTS**
 
 On
        July
        1, 2007, the Company dissolved its wholly-owned subsidiary 3894517 Canada
        Inc.
        as it no longer required the Canadian operating subsidiary for banking
        operations. The Company established its own banking operations in the State
        of
        Florida. There are no changes to the consolidated financial statements due
        to
        the dissolution, as all operations will now run through the parent
        company.




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          of Contents




**Item
      2.     Management’s Discussion and
      Analysis**





**Forward-Looking
      Statements**





Certain
      statements, other than purely historical information, including estimates,
      projections, statements relating to our business plans, objectives, and expected
      operating results, and the assumptions upon which those statements are based,
      are “forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933
      and Section 21E of the Securities Exchange Act of 1934. These
      forward-looking statements generally are identified by the words “believes,”
“project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,”
“may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and
      similar expressions. We
      intend
      such forward-looking statements to be covered by the safe-harbor provisions
      for
      forward-looking statements contained in the Private Securities Litigation Reform
      Act of 1995, and are including this statement for purposes of complying with
      those safe-harbor provisions. Forward-looking
      statements are based on current expectations and assumptions that are subject
      to
      risks and uncertainties which may cause actual results to differ materially
      from
      the forward-looking statements. Our
      ability to predict results or the actual effect of future plans or strategies
      is
      inherently uncertain. Factors which could have a material adverse affect on
      our
      operations and future prospects on a consolidated basis include, but are not
      limited to: changes in economic conditions, legislative/regulatory changes,
      availability of capital, interest rates, competition, and generally accepted
      accounting principles. These risks and uncertainties should also be considered
      in evaluating forward-looking statements and undue reliance should not be placed
      on such statements. We
      undertake no obligation to update or revise publicly any forward-looking
      statements, whether as a result of new information, future events or otherwise. Further
      information concerning our business, including additional factors that could
      materially affect our financial results, is included herein and in our other
      filings with the SEC.





**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 utilized 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 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.


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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 Tier 1 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.


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We
      further expanded our network by entering 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 bases.





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
      status 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
      2007.





During
      the third and fourth quarters of 2007, we are 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.


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**Results
      of Operations for the three and six months ended June 30, 2007 and
      2006**





For
      the three months ended June 30, 2007, we generated total revenue of $7,686,298,
      compared to revenue of $1,884,166 for the three months ended June 30, 2006.
      Our
      total revenue reported for the six months ended June 30, 2007 was $13,170,050,
      compared to revenue of $4,347,336 for the six months ended June 30, 2007. 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 and six months ended June 30, 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 brokered international telecom 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 six months ended June 30, 2007, $12,368,212 of revenues were attributed
      to
      our brokered routes and $801,838 of revenues were attributed to our direct
      routes, as compared to the six months ended June 30, 2006 where $0.00 of
      revenues were generated from brokered routes and $4,143,624 were generated
      from
      direct routes.





Our
      cost of sales for the three months ended June 30, 2007 was $6,756,746, a 360%
      increase from $1,470,255 for the three months ended June 30, 2006. Our cost
      of
      sales for the six months ended June 30, 2007 was $11,315,659, a 198% increase
      from $3,795,786 for the six months ended June 30, 2006. The increase in cost
      of
      sales is primarily attributable to increased sales of brokered routes in the
      reporting period. Our lack of inventory purchase for the three months and six
      months periods are due to our no longer consolidating Teliphone Corp, formerly
      majority-owned subsidiary and spun off on October 30, 2006.





We
      incurred operating expenses in the amount of $481,012 for the three months
      ended
      June 30, 2007, compared to $380,136 for the three months ended June 30, 2006.
      We
      incurred operating expenses in the amount of $1,335,485 for the six months
      ended
      June 30, 2007, compared to $827,818 for the six months ended June 30, 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 $296,816 in commissions and wages and management fees for
      the three months ended June 30, 2007, compared to $185,985 for the three months
      ended June 30, 2006.  We paid $892,380 in commissions and wages and
      management fees for the six months ended June 30, 2007, compared to $441,569
      for
      the six months ended June 30, 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.




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Our
      net income for the three months ended June 30, 2007 was $432,497, compared
      to a
      net income of $41,407 in the prior year. Net income for the six months ended
      June 30, 2007 was $463,169, compared to a net loss of $245,075 for the six
      months ended June 30, 2006. The reporting of net income during the three months
      ended June 30, 2007 was primarily attributable to increased sales with a higher
      profit margin.




**Liquidity
      and Capital Resources**





As
      of
      June 30, 2007, we had current assets of $1,900,327. Our current assets consisted
      of cash and cash equivalents of $398,400, accounts receivable in the amount
      of
      $1,020,533, a loan receivable from our now related party Teliphone Corp.
      (formerly majority-owned subsidiary until its spin-off on October 30, 2006)
      of
      $435,751 and prepaid expenses and other current assets of $12,643. Our total
      current liabilities as of June 30, 2007 were $2,588,842. As a result, on June
      30, 2007 we had working capital deficit of $688,515.





Operating
      activities provided $658,814 in cash for the six months ended June 30, 2007.
      A
      decrease in our accounts receivable of $480,558 was the primary component of
      our
      positive operating cash flow. Investing activities during the six months ended
      June 30, 2007 used $41,488, respectively, primarily for the acquisition of
      fixed
      assets. Cash flows used in\ financing activities during the six months ended
      June 30, 2007 primarily consisted of $250,654 for proceeds from loans payable-
      related parties. We primarily relied on revenues to fund our operations during
      the three and six months ended June 30, 2007.




As
      of June 30, 2007, our management believes that we have sufficient capital to
      support our operations at the current level over the next twelve months. The
      growth 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 June 30, 2007, there were no off balance sheet arrangements.





**Going
      Concern**





As
      shown
      in the accompanying consolidated financial statements the Company has started
      to
      show net profits ($463,169 for the six months ended June 30, 2007), but prior
      to
      this time, the Company had incurred significant net losses, and accumulated
      a
      deficit of $5,2915,209 through June 30, 2007 and has a working capital
      deficiency of $688,515 as of June 30, 2007.





Despite,
      the prior recurring losses, the Company has been successful in establishing
      distribution channels in Africa and generating significant revenue growth in
      the
      past six




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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 customer base in the
      international telecommunications market.





In
      the
      near term, the Company does not require additional financing to continue its
      operations as it has achieved a profitable level of operations. The Company’s
      ability to continue as a going concern for a reasonable period is dependent
      upon
      management’s ability to continue to achieve profitable operations. There can be
      no assurance that management will be able to continue operations at a profitable
      level and hence, the Company would have to raise sufficient capital, under
      terms
      satisfactory to the Company, if at all





**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




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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**




SEE
      NOTE
      2 IN FINANCIALS - RECENT ACCOUNTING PRONOUNCEMENTS




**Item
      3.     Controls and Procedures**




Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure




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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 June 30, 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 June
      30, 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 June 30, 2007.


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**





**Item
      1.     Legal
      Proceedings**





We
      are
      not a party to any pending legal proceeding. We are not aware of any pending
      legal proceeding to which any of our officers, directors, or any beneficial
      holders of 5% or more of our voting securities are adverse to us or have a
      material interest adverse to us.





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





None





**Item
      3.     Defaults upon Senior
      Securities**





None





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





No
      matters have been submitted to our security holders for a vote, through the
      solicitation of proxies or otherwise, during the quarterly period ended June
      30,
      2007.





**Item
      5.     Other
      Information**





None





**Item
      6.      Exhibits**





**Exhibit**
              **Number**
            **Description
                of Exhibit**31.1
            Certification
                of Chief Executive Officer pursuant to 18
                U.S.C. Section 1350, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2
            Certification
                of Chief Financial Officer pursuant to 18
                U.S.C. Section 1350, as adopted pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200232.1
            Certification
                of Chief Executive Officer and Chief
                Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant
                to Section 906 of the Sarbanes-Oxley Act of
                2002




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**SIGNATURES**





In
      accordance with the requirements of the Securities and Exchange Act of 1934,
      the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.





**United
                American Corporation**Date:
            August
                13, 2007By:      
                /s/George Metrakos
              George
                Metrakos
              Title:**Chief
                Executive Officer and
                Director**