UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 ---------------

                                  FORM 10-KSB/A
                                 Amendment No. 2

                                 ---------------

|X|         ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
            ACT OF 1934 For the fiscal year ended December 31, 2005

|_|         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 For the transition period from ______ to ______

Commission file number: 1-11476

                         WORLD WASTE TECHNOLOGIES, INC.

                 (Name of small business issuer in its charter)



                    California                            95-3977501
         (State or other jurisdiction of               (I.R.S. Employer
          incorporation or organization)            Identification Number)


     13250 Evening Creek Drive, San Diego, California           92128
        (Address of principal executive offices)              (Zip Code)


                    Issuer's telephone number: (858) 391-3400

           Securities registered under Section 12(b) of the Act: None.

              Securities registered under Section 12(g) of the Act:
                         Common Stock, $.001 par value.

      Check whether the issuer is not required to file reports pursuant to
                  Section 13 or 15(d) of the Exchange Act. |_|

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 past 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.
Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |_|

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

Issuer's revenues for its most recent fiscal year: $0

Aggregate market value of voting and non-voting common equity held by
non-affiliates of the Issuer computed by reference to the price at which the
common equity was sold as of June 30, 2006 was approximately $50,073,000
assuming solely for purposes of this calculation that all directors and
executive officers of the Issuer and all stockholders beneficially owning more
than 10% of the Issuer's common stock are "affiliates." This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.

There were 25,096,235 shares of the Company's common stock outstanding on
June 30, 2006.

Transitional Small Business Disclosure Format: Yes [_] No [X]





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                                EXPLANATORY NOTE


World Waste Technologies, Inc., a California corporation (the "Company"), is
filing this Amendment No. 2 on Form 10-KSB/A (this "Amendment") to amend its
Annual Report on Form 10-KSB for the year ended December 31, 2005, which was
filed with the Securities and Exchange Commission (the "SEC") on March 30, 2006
(the "Original 10-KSB") and which was amended by Amendment No. 1 to the Original
10-KSB which was filed with the SEC on May 15, 2006 (the "First Amendment").

The purpose of this Amendment is to restate the Company's financial statements
for the years ended December 31, 2004 and 2005, and to amend the related
disclosures in the Original 10-KSB, to correct certain accounting errors in the
original financial statements related to the fair value of options and warrants,
the relative value of senior secured debt and the related warrants and the
classification of redeemable preferred stock. Note 16 to the restated financial
statements that are included in this Amendment describes in more detail the
nature and effects of the restatement. The Amendment also includes updated
information regarding the Company's liquidity.

This Amendment amends and restates in full the following Items and Exhibits:

o           Item 6 - Management's Discussion and Analysis or Plan of Operation

o           Item 7 - Financial Statements

o           Item 8A - Controls and Procedures

o           Item 13 - Exhibits

o           Exhibits 31.1, 31.2, 32.1 and 32.2 - Officers' Certifications

In addition, on the cover page of this Amendment, (i) the reference in the
Original 10-KSB to the incorporation by reference of the Company's 2006
definitive proxy statement has been deleted, and (ii) the information with
respect to the number of outstanding shares of the Company's common stock and
the market value of such shares held by Company non-affiliates has been updated.
Although the full text of Items 1-5, 8 and 8B has been included in this
Amendment, the text in such Items has not been modified from the text in the
Original 10-KSB.

Except for the amendments and updates that are described in the preceding
paragraphs, (i) this Amendment does not modify or update the Original 10-KSB or
the First Amendment, and (ii) this Amendment does not reflect events that
occurred after the filing of the Original 10-KSB or the First Amendment except
as required to reflect the effects of the restatement described in Note 16 to
the accompanying financial statements.


Throughout this Amendment, the terms "World Waste", "WWT", "we", "us", "our",
the "Company" and "our Company" refer to World Waste Technologies, Inc., a
California corporation formerly known as Voice Powered Technologies
International, Inc., and, unless the context indicates otherwise, also includes
our subsidiary, World Waste Operations, Inc., a California corporation.

Forward-Looking Statements

This Amendment contains forward-looking statements, which reflect the views of
our management with respect to future events and financial performance. These
forward-looking statements are subject to a number of uncertainties and other
factors that could cause actual results to differ materially from such
statements. Forward-looking statements are identified by words such as
"anticipates," "believes," "estimates," "expects," "plans," "projects,"
"targets" and similar expressions. Readers are cautioned not to place undue
reliance on these forward-looking statements, which are based on the information
available to management at this time and which speak only as of this date. Our
actual results may differ materially from results anticipated in these
forward-looking statements. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. For a discussion of some of the factors that may cause
actual results to differ materially from those suggested by the forward-looking
statements, please read carefully the information under "Factors that May Affect
Future Results and Market Price of Our Stock".


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                  TABLE OF CONTENTS



PART I                                                                         1

    ITEM 1.   DESCRIPTION OF BUSINESS                                          1

    ITEM 2.   DESCRIPTION OF PROPERTY                                          7

    ITEM 3.   LEGAL PROCEEDINGS                                                7

    ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS              7

PART II                                                                        7

    ITEM 5    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS         7

    ITEM 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION        9

    ITEM 7.   FINANCIAL STATEMENTS, RESTATED                                  24

    ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                AND FINANCIAL DISCLOSURE                                      24

    ITEM 8A.  CONTROLS AND PROCEDURES                                         24


    ITEM 8B.  OTHER INFORMATION                                               24


PART III                                                                      25

    ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT             25

    ITEM 10.  EXECUTIVE COMPENSATION                                          25

    ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT AND RELATED STOCKHOLDER MATTERS                      25

    ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                  25

    ITEM 13.  EXHIBITS                                                        25

    ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES                          28

                                        i

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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

                                Company Overview

World Waste Technologies, Inc. ("WWT") is a development stage company formed to
convert Residual Municipal Solid Waste ("RMSW") into valuable, reusable
commodities through the application of conventional and licensed patented and
proprietary technology.

WWT is a California corporation with its corporate headquarters in San Diego,
California. Its telephone number is 858-391-3400.

We are constructing a processing facility in Anaheim, California to convert RMSW
into valuable, reusable commodities through the application of conventional and
licensed patented and proprietary technology. RMSW is garbage that has been
initially sorted and processed at a Material Recovery Facility ("MRF"). Our
first operating facility is under construction in a leased facility on the
campus of the regional transfer facility in Anaheim, California of Taormina
Industries, a wholly owned subsidiary of Republic Services, Inc. We have entered
into a contract with Taormina to supply us with RMSW.

Taormina is expected to deliver RMSW to us after sorting the garbage (referred
to as Municipal Solid Waste ("MSW")) in its MRF. Currently, the sorting process
typically consists of the following steps: (1) MSW enters Taormina's MRF from
curbside and commercial collection vehicles where it is sorted to remove
non-recyclable items such as bulky items; (2) the remaining waste is then
transported via conveyor lines where machines and laborers remove salable
commodities such as aluminum, steel, and cardboard; (3) the residual waste, or
RMSW, is then typically removed and deposited in a landfill.

Our solution provides for the RMSW to be delivered to our facility for further
processing via a patented and proprietary technology licensed by us. This
technology employs a process generally known as "Pressurized Steam
Classification". The type of pressurized steam classification that we plan to
use utilizes a sealed rotating vessel to combine steam, heat, pressure and
agitation to change the waste's physical composition.

This Pressurized Steam Classification process converts paper, cardboard, and
paper packaging found in MSW into a cellulose biomass fiber-containing material
that can be screened and cleaned using conventional pulp recycling equipment. We
anticipate selling the resulting material, known as "wetlap pulp," as a raw
material for making new lower grade paper stocks such as linerboard, corrugating
medium, and packaging. We also anticipate selling other inorganic, recyclable
materials such as aluminum, steel, and tin captured in the process, into
commodities markets. We may also pursue other value-added products and commodity
products with the cellulose biomass from our process. Such products could
include, but not be limited to, the following: fuel grade ethanol, building
products and building product additives, higher value paper products, cellulose
insulation and refuse derived fuels for energy production.

We have signed letters of intent with each of Smurfit-Stone and Newark Pacific
Paperboard, large box makers, for the sale, at a discount to published commodity
market prices, of up to 40-60 tons per day of the wetlap pulp that we expect to
produce once our process is operational. Both letters require us to provide a
specified amount of fiber to the box makers for testing, at no cost. Any
proposed contractual relationship is conditioned upon the box maker's successful
testing of this fiber. We have also entered into a letter of intent with
Weyerhaeuser Company which documents discussions pursuant to which Weyerhaeuser
has expressed an interest in entering into a three year agreement with us for
the purchase of 60-90 tons per day of recycled fiber at a price based on a
discount to published commodity market prices. The obligation of Weyerhaeuser to
enter into a definitive agreement is conditioned upon its determination that the
fiber provided to it is suitable for use in specified applications. The letters
do not require the potential customers to purchase any minimum amount of pulp
and are non-exclusive. We have not yet provided the large quantities of pulp for
testing to any of these potential customers and therefore cannot yet ascertain
whether any of the large volume tests will be successful or when, if ever, we
will enter into definitive agreements.

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It is expected that after we process the RMSW, we will have some residual solid
waste by-product that is not saleable. Our contract with Taormina requires that
they haul away such non-saleable material and that we pay to Taormina an amount
equal to the tipping fee that they paid us in connection with the initial
delivery to us of such waste.

Our initial facility, currently under construction at Taormina's regional
transfer facility in Anaheim, California is expected to be capable of processing
an estimated 500 tons per day of RMSW. We plan to build a second plant in the
Anaheim area that will be capable of processing an estimated 2,000 tons per day
of RMSW, at which point we would have the capacity to process an estimated 2,500
tons per day, the total amount of RMSW deliverable by Taormina under our first
agreement. Our business strategy includes the construction of such larger plants
at other sites, which is expected to enable us to spread our overhead costs
across a larger revenue base. Our ability to successfully complete construction
of our initial facility and any additional facilities is subject to a number of
contingencies, including our ability to raise sufficient capital to fund these
activities. Accordingly, we cannot assure you that we will complete the
construction of our initial facility, or any additional facilities, or that if
constructed these facilities will result in profitable operations. We also may
seek to acquire additional intellectual property useful in the field through
mergers, acquisitions, joint ventures and licensing arrangements.

                       Corporate History of Reverse Merger

We were formed as a result of two mergers that occurred in 2004. First, in March
2004, World Waste of America, Inc. ("WWA") merged with and into a wholly owned
subsidiary of Waste Solutions, Inc. ("WSI"), a California corporation. Cagan
McAfee Capital Partners and its affiliates were the controlling shareholders of
WSI. As a result of this merger, WSI continued as the surviving corporation,
assumed the operations and business plan of WWA, the stockholders of WWA became
stockholders of WSI, and WSI changed its name to World Waste Technologies, Inc.
("Old WWT").

In March 2004, Old WWT entered into an Agreement and Plan of Reorganization with
Voice Powered Technologies International, Inc., a California corporation
("VPTI"), to merge with and into a wholly owned subsidiary of VPTI. VPTI was a
publicly traded company trading under the stock symbol VPTI.OB. VPTI had no
material assets, liabilities or operations. The merger of Old WWT with VPTI's
wholly owned subsidiary was completed on August 24, 2004. Pursuant to the
merger, Old WWT's shareholders become the holders of approximately 95% of the
outstanding shares of VPTI. Upon completion of this merger, VPTI changed its
name to World Waste Technologies, Inc. VPTI was incorporated on June 21, 1985
and provided voice recognition and voice activated products. We currently do not
plan to conduct any business other than operations heretofore conducted or
contemplated to be conducted by WWT. Because the shareholders of Old WWT became
the controlling shareholders of VPTI after the merger, Old WWT was treated as
the acquirer for accounting purposes, and therefore the transaction was
accounted for as a reverse merger. Accordingly, for accounting purposes, the
historical financial statements presented are those of Old WWT. Additionally,
the prior operating results of VPTI are not indicative of our future operations,
and none of the assets or liabilities on our balance sheet as of December 31,
2004 relate to VPTI prior to the merger.

Since the formation of WWA in 2002, our efforts have been principally devoted to
research and development activities, construction of our initial facility,
raising capital, and recruiting additional personnel and advisors. To date, we
have not marketed or sold any product and have not generated any revenues. We do
not anticipate generating any revenue until completion of our first facility,
which we currently anticipate will occur in the second quarter of 2006, subject
to our ability to raise sufficient additional working capital in a timely
manner.

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Our stock is quoted on the OTC Bulletin Board under the new symbol of

WDWT.

Our Planned Revenue

Pursuant to our current business model, we anticipate our product and services
will result in three distinct revenue streams. First, under the terms of our
agreement with Taormina, Taormina has agreed to pay a "tipping fee" to us for
each ton of RMSW delivered to and processed by us. The initial tipping fee is
$30 per ton (payable monthly) of "Net Processed Waste" (defined as the total
RMSW delivered to us less the total residual/non-processable waste removed by
Taormina for handling and disposal by Taormina). The tipping fee is subject to
increase or decrease based upon changes in certain county landfill disposal fees
Taormina is required to pay. Second, our process is expected to mechanically
sort and collect standard recyclable materials such as scrap steel, cans, and
aluminum. We expect to collect and sell these materials to Taormina for resale
to commodities buyers. Third, our process is expected to recover a cellulose
biomass which we plan to refine into unbleached fiber in the form of wet-lap
pulp suitable for sale to paper and board manufacturing facilities for
incorporation into their products. The cellulose fiber is currently anticipated
to be suitable for unbleached grades of paper which would include corrugating
medium. We will also pursue additional markets and products for our cellulose
biomass and other residual materials.

Our Anticipated Markets

Once our Anaheim Facility is operating appropriately, we expect to provide
processing services to other companies and municipalities in the Municipal Solid
Waste ("MSW") industry throughout the country. According to industry sources,
the MSW industry in the United States accounts for approximately $36 billion in
spending and is dominated by large MSW processors such as Waste Management,
Inc., Allied Waste Industries, Inc. and Republic Services, Inc. Many other
smaller regional companies and municipalities are also in the waste handling
business. many state governments in the United States mandate that certain
percentages of all MSW be recycled. The State of California, where our
headquarters are located and our Anaheim Facility is under construction,
currently mandates the highest standard in the United States by requiring that
50% of all incoming MSW be diverted from landfills. We believe that the trend in
state law throughout the country is to migrate toward the California standard of
requiring 50% of all MSW to be diverted from landfills. Accordingly, we
anticipate providing our processing services to MSW handlers looking for
efficient ways to increase the percentage of their recycled MSW.

Our Anaheim Facility is also expected to allow us to operate our Pressurized
Steam Classification process to produce a cellulose biomass fiber containing
material, which once screened and cleaned using conventional paper recycling
equipment, is known as "unbleached fiber" or "wetlap pulp." This wetlap pulp can
be sold as a raw material for making new lower-grade paper stocks such as
linerboard, corrugating medium, and packaging. Industry sources estimate the
market for corrugating medium in the United States to be $22 billion annually.
Moreover, due to the increased demand for packaging in China and India, industry
sources expect export demand to grow from over 5 million tons today to over 7
million tons by 2010 and domestic demand is expected to grow from 19 million
tons in 2004 to over 20 million tons by 2010.

Our process is expected to mechanically sort and collect other inorganic
standard recyclable materials such as scrap steel, tin cans, and aluminum cans
and scrap. These materials are expected to be collected and sold to Taormina.

Sales and Marketing

We currently plan to market our services to waste handlers, waste collectors and
municipalities, focusing on higher recycling rates, with the goal of lowering
use of the landfills and creating a cost savings for these customers. We also
plan to market our wetlap pulp to paperboard and packaging mills as a raw
material for making new lower-grade paper stocks such as linerboard, corrugating
medium, and packaging, among other things. In addition, we plan to sell the
other inorganic standard recyclable materials such as scrap steel, cans, and
aluminum to Taormina for bailing and selling in the marketplace.

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Other than the Taormina agreement which requires Taormina to provide us with up
to 2,500 tons of waste per day, 500 tons for the initial facility and 2,000 tons
for an anticipated second facility, and to pay us for every ton of RMSW that we
process, as well as pay us 90% of the price Taormina receives for standard
recyclable materials we collect in our process, we currently do not have any
agreements in place to market any of our products or services. We currently
expect to establish an in-house marketing and sales program to promote our
services. Alternatively, we may enter into strategic alliances with larger
companies. We currently expect that our services and products will be marketed
in the U.S. Although they are not definitive, binding contracts, we have signed
three non-binding letters of intent with companies that are interested in
purchasing our wetlap pulp.

The Taormina Agreement

In June 2003, we entered into a 10-year contract, with Taormina Industries, a
wholly owned division of Republic Services, Inc. The contract provides for three
five-year extensions. The Taormina Recycle Agreement requires Taormina to
deliver up to 500 tons of RMSW per day to us for processing at our Anaheim
Facility currently under construction on the campus of Taormina in Anaheim, CA.
Under the terms of the Taormina agreement, Taormina is required to pay us a
tipping fee per ton of RMSW delivered to us. The second phase of the Taormina
agreement calls for us to build a 2,000-tons per day plant in the Orange County,
California-area. The Taormina agreement also grants Taormina a right of first
refusal to participate in potential future projects in an additional 10 counties
throughout California where Taormina has operations. Our success is highly
dependent on the ability of both parties to the contract to fulfill their
obligations, of which there can be no assurance.

The Taormina agreement was amended twice to allow us additional time to complete
all permitting, approvals and construction and to occupy the facility. We
completed the primary construction of this facility at the end of March 2006. In
April 2006, Taormina Industries, LLC accepted our completion and commencement
notification in accordance with the lease agreement.

Competition

We expect to compete with numerous other products, technologies and services
that are in use currently or are subsequently developed by companies, academic
institutions and research institutions. These competitors consist of both large
established companies as well as small, single product or service development
stage companies. We expect competition from these companies as they develop
different and/or novel approaches to the processing of MSW. Some of these
approaches may directly compete with the products or services that we are
currently developing.

Three companies dominate the MSW industry in the United States: Waste
Management, Inc. (32% market share, with $11.5 billion in revenues); Allied
Waste Industries, Inc. (15% market share, with $5.25 billion in revenues); and
Republic Services, Inc. (7% share, with $2.52 billion in revenues). There are
also many smaller regional companies and municipalities in the waste handling
business. Although we do not view MSW haulers as competitors, but rather as
consumers for the services we plan to provide, such haulers would be competitors
to the extent they make capital investments in material recovery facilities,
incineration, composting, or landfills rather than outsourcing through us. We
believe that the primary competitive factors in our industry are price,
reliability of service, and quality of recycling programs.

Corrugating packaging and mixed waste paper companies may also be a source of
competition for us. Our process converts MSW into a sanitized cellulose fiber
containing material, which once screened and cleaned using

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conventional paper recycling equipment, is known as "wetlap pulp." Wetlap pulp
can be used by many paper mills in the manufacture of corrugating cardboard and
associated packaging materials and other products. These paper mills also use
other feedstocks such as used cardboard, mixed waste paper and virgin pulp in
their mill processes. To the extent that companies which provide other
feedstocks which may include MRFs, meet or exceed the demand of the mills for
feedstock, they could have a negative impact on the demand for our wetlap.

Regulation

Our business is subject to extensive federal, state and local environmental,
health, safety and transportation laws and regulations. These laws and
regulations are administered by the Environmental Protection Agency ("EPA") and
various other federal, state and local environmental, zoning, transportation,
land use, health and safety agencies in the United States. Many of these
agencies regularly examine our operations to monitor compliance with these laws
and regulations and have the power to enforce compliance, obtain injunctions or
impose civil or criminal penalties in case of violations.

Because a major component of our business will be the processing of solid waste
in an environmentally sound manner, a portion of our capital expenditures is
related, either directly or indirectly, to environmental protection measures,
including compliance with federal, state or local provisions that regulate the
discharge of materials into the environment. There will be costs associated with
sighting, design, operations, monitoring, site maintenance, corrective actions,
and financial assurance of each facility that we plan to operate. In connection
with our development or expansion of a facility, we must often spend
considerable time, effort and money to obtain or maintain necessary required
permits and approvals. There cannot be any assurances that we will be able to
obtain or maintain necessary governmental approvals. Once obtained, operating
permits are subject to modification and revocation by the issuing agency.
Compliance with these and any future regulatory requirements could require us to
make significant capital and operating expenditures. Although we have obtained
all of our environmental permits necessary to construct our initial facility in
Anaheim, California, we cannot assure you that we will successfully retain these
permits, or that we will obtain or retain the permits required to operate this
or any additional facilities we may seek to construct.

The primary United States federal statutes affecting our business are summarized
below:

The Resource Conservation and Recovery Act of 1976, as amended ("RCRA"),
regulates handling, transporting and disposing of hazardous and non-hazardous
wastes and delegates authority to the states to develop programs to ensure the
safe disposal of solid wastes. In 1991, the EPA issued its final regulations
under Subtitle D of RCRA, which set forth minimum federal performance and design
criteria for solid waste landfills. These regulations must be implemented by the
states, although states can impose requirements that are more stringent than the
Subtitle D standards. We expect to incur costs in complying with these standards
in the ordinary course of our operations.

The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), which is also known as Superfund, provides for
federal authority to respond directly to releases or threatened releases of
hazardous substances into the environment. CERCLA's primary means for addressing
such releases is to impose liability for cleanup of disposal sites upon current
and former site owners and operators, generators of the hazardous substances at
the site and transporters who selected the disposal site and transported
substances to the site. Liability under CERCLA is not dependent on the
intentional disposal of hazardous substances; it can be based upon the release
or threatened release, even as a result of lawful, unintentional and
non-negligent action, of hazardous substances as the term is defined by CERCLA
and other applicable statutes and regulations.

The Federal Water Pollution Control Act of 1972 (the "Clean Water Act")
regulates the discharge of pollutants into streams, rivers, groundwater, or
other surface waters from a variety of sources. If run-off from our operations
may be discharged into surface waters, the Clean Water Act would require us to
apply for and obtain discharge permits, conduct sampling and monitoring, and,

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under certain circumstances, reduce the quantity of pollutants in those
discharges. In addition, if a landfill or a transfer station discharges
wastewater through a sewage system to a publicly owned treatment works, the
facility must comply with discharge limits imposed by the treatment works. The
Clean Water Act provides for civil, criminal and administrative penalties for
violations of its provisions.

The Clean Air Act of 1970, as amended, provides for increased federal, state and
local regulation of the emission of air pollutants. The Clean Air Act would
apply to certain of our planned operations, including solid waste landfills and
waste collection vehicles.

The Occupational Safety and Health Act of 1970, as amended ("OSHA"), establishes
certain employer responsibilities, including maintenance of a workplace free of
recognized hazards likely to cause death or serious injury, compliance with
standards promulgated by the Occupational Safety and Health Administration, and
various record keeping, disclosure and procedural requirements.

There are also various state and local regulations that affect our operations.
Sometimes states' regulations are stricter than comparable federal laws and
regulations.

Many states, provinces and local jurisdictions have enacted "fitness" laws that
allow the agencies that have jurisdiction over waste services contracts or
permits to deny or revoke these contracts or permits based on the applicant's or
permit holder's compliance history. Some states, provinces and local
jurisdictions go further and consider the compliance history of the parent,
subsidiaries or affiliated companies, in addition to the applicant or permit
holder. These laws authorize the agencies to make determinations of an applicant
or permit holder's fitness to be awarded a contract to operate, and to deny or
revoke a contract or permit because of unfitness, unless there is a showing that
the applicant or permit holder has been rehabilitated through the adoption of
various operating policies and procedures put in place to assure future
compliance with applicable laws and regulations.

Research and Development

During 2004 and 2005, we spent an aggregate of $534,647 on research and
development activities.

Intellectual Property

On June 21, 2002, we entered into a U.S. technology license agreement with
Bio-Products International, Inc., an Alabama corporation, with respect to
several patent claims and other related intellectual property relating to the
methods and processes developed by the University of Alabama in Huntsville
("UAH"). The technology was designed to provide for the processing and
separation of material contained in MSW. This unique process treats MSW with a
combination of time, temperature and pressure. Temperatures of several hundred
degrees sterilize the material and the pressure, and agitation causes a pulping
action. This combination is designed to result in a large volume reduction,
yielding a high-density cellulose biomass product. The significant portion of
the material is a biomass cellulose with significant papermaking fiber content
that may be sold to container board plants after a screening and cleaning
process. The most recent patent includes the capturing of all Volatile Organic
Compounds and was granted by the United States Patent and Trademark Office in
October 2001. See Note 15.

The UAH currently holds the patent for this technology. This patent was licensed
to Bio-Products International, Inc. ("BPI") and this license was sub-licensed to
us for commercialization in the United States. Under the license agreement, we
paid an upfront license fee and currently pay a monthly fee for technical
services. We are also required to pay royalties based on the tons of waste
processed utilizing the technology as well as royalties based on the sales price
of fiber products recovered from the process.

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The license extends until the expiration date of the last patent issued to
Bio-Products and/or the UAH covering the technology, which is expected to occur
on October 23, 2021. In its license with the UAH, BPI is required to continue to
make certain payments to the UAH to maintain exclusivity.

Employees

As of May 20, 2006, we had nine full-time employees. There are four members in
our executive management team and five persons employed in operations and
administration. We are not a party to any collective bargaining agreements. We
have not experienced work stoppages and we believe that our relationship with
our employees is good.

ITEM 2. DESCRIPTION OF PROPERTY

Our principal executive offices are in San Diego, California, where we lease
approximately 1,700 square feet under a lease expiring in September 30, 2006,
with monthly rental payments of $4,720.

We are currently constructing a plant on leased real property in Anaheim,
California, which covers an approximately 30,000 square foot building and
expires in July 2014. The lease provides for three five year extensions. Base
rent under this lease is $15,900 per month, subject to annual cost-of-living
adjustments.

ITEM 3. LEGAL PROCEEDINGS

In December 2003, Reid and Simi Jilek (the "Jileks") filed a complaint against
Steve Racoosin (our former President), World Waste of California, Inc., World
Waste International, Inc., and Environmental Technologies Corporation ("ETC") in
the Superior Court of California, County of San Diego, Central Judicial
District, alleging breach of contract, securities violations, and fraud and
seeking monetary damages and injunctive relief (the "Litigation"). The Jileks
amended their complaint to eliminate the securities violations cause of action
and in March 2004 filed a second amended complaint to name additional parties,
Thomas L. Collins (our former CEO) and Darren Pederson, and to add additional
causes of action of breach of the covenant of fair dealing, conspiracy, and
specific performance for delivery of a warrant. The suit stems from an alleged
oral and written arrangement providing for the rent of the Jileks' house to Mr.
Racoosin with an option to buy the house, which option was to be exercised with
warrants to purchase five percent (5%) of the shares of ETC. Mr. Racoosin
vacated the premises in early January 2004 and the Jileks sold the house in
2004. Defendants World Waste of California, Inc., World Waste International,
Inc., and ETC demurred to the second amended complaint. The court granted the
demurrer in whole, with leave to amend and the Jileks filed a third amended
complaint in August 2004.

In October 2004, we entered into an agreement with the Jileks settling the
Litigation. Pursuant to this settlement, we agreed to pay the Jileks a total of
$150,000 over the next 12 months. The Jileks also dismissed their claims against
all defendants with prejudice. As of December 31, 2005, the settlement was paid
in full.

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

We did not submit any matters to a vote of our shareholders during the fourth
quarter of 2005.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock has been traded on the OTC Bulletin Board over-the-counter
market since August 24, 2004 under the symbol "WDWT." Prior to the merger in
which World Waste Technologies, Inc. became our wholly owned subsidiary on
August 24, 2004, our common stock was listed on the OTC Bulletin Board
over-the-counter market under the symbol "VPTI." There is no trading market for
our outstanding preferred stock.

                                        7

<PAGE>



There was little trading in our common stock prior to the merger on August 24,
2004 and there has only been limited trading since then. Prior to the merger,
trading in our common stock was not necessarily based on our company's
operations or prospects, and trading since the merger also may not be fully
reflective of those factors. On March 25, 2004, the controlling stockholder of
VPTI approved a one-for-60 reverse split of our common stock to be effectuated
upon the closing of the merger between VPTI and Old WWT. The reverse stock split
became effective at the close of business on August 24, 2004. The following
table sets forth, for the periods indicated, the high and low closing bid prices
for our Common Stock on the OTC Bulletin Board, for the quarters presented. The
bid prices have been adjusted to reflect the reverse stock split. Bid prices
represent inter-dealer quotations without adjustments for markups, markdowns,
and commissions, and may not represent actual transactions.

Quarter Ending                            High                Low
---------------                           -----               ---

Fiscal 2003
-----------
March 31, 2003                            $0.60              $0.60
June 30, 2003                             $0.60              $0.60
September 30, 2003                        $0.60              $0.60
December 31, 2003                         $3.60              $0.60

Fiscal 2004
-----------
March 31, 2004                            $9.00              $0.60
June 30, 2004                            $11.40              $4.20
September 30, 2004                        $7.00              $2.50
December 31, 2004                         $4.85              $3.20

Fiscal 2005
-----------
March 31, 2005                            $4.90              $2.80
June 30, 2005                             $5.50              $2.80
September 30, 2005                        $4.55              $2.10
December 31, 2005                         $3.50              $2.15



As of June 30, 2006, there were 25,096,235 common shares outstanding. As of such
date, there were approximately 866 shareholders of record, not including holders
who hold their shares in "street name".

Dividends

To date, we have not paid any dividends on our common stock. Any payment of cash
dividends on our common stock in the future will be dependent upon the amount of
funds legally available, our earnings, if any, our financial condition, our
anticipated capital requirements and other factors that our Board of Directors
deem relevant. However, we currently intend for the foreseeable future to follow
a policy of retaining all of our earnings, if any, to finance the development
and expansion of our business and, therefore, do not expect to pay any dividends
on our common stock in the foreseeable future. Additionally, the terms of our
preferred stock and senior secured debt restrict our ability to pay dividends.

                                        8

<PAGE>



Repurchase of Securities

We did not repurchase any shares of our common stock during the fourth quarter
of the year ended December 31, 2005.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Forward-Looking Statements

The following Plan of Operations, as well as information contained elsewhere in
this report, contain "forward-looking statements." These statements include
statements regarding the intent, belief or current expectations of us, our
directors or our officers with respect to, among other things: anticipated
financial or operating results, financial projections, business prospects,
future product performance and other matters that are not historical facts. The
success of our business operations is dependent on factors such as the impact of
competitive products, product development, commercialization and technology
difficulties, the results of financing efforts and the effectiveness of our
marketing strategies, and general competitive and economic conditions.
Forward-looking statements are not guarantees of future performance and involve
risks and uncertainties. Actual results may differ materially from those
projected in the forward-looking statements as a result of various factors,
including those described under "Factors That May Affect Future Results and
Market Price of Our Stock" below.

Overview

We were formed as a result of two mergers that occurred in 2004. First, in March
2004, World Waste of America, Inc. ("WWA") merged with and into a wholly owned
subsidiary of Waste Solutions, Inc. ("WSI"), a California corporation. Cagan
McAfee Capital Partners and its affiliates were the controlling shareholders of
WSI. As a result of this merger, WSI continued as the surviving corporation,
assumed the operations and business plan of WWA, the stockholders of WWA became
stockholders of WSI, and WSI changed its name to World Waste Technologies, Inc.
("Old WWT").

In March 2004, Old WWT entered into an Agreement and Plan of Reorganization with
Voice Powered Technologies International, Inc., a California corporation
("VPTI"), to merge with and into a wholly owned subsidiary of VPTI. VPTI was a
publicly traded company trading under the stock symbol VPTI.OB. VPTI had no
material assets, liabilities or operations. The merger of Old WWT with VPTI's
wholly owned subsidiary was completed on August 24, 2004. Pursuant to the
merger, Old WWT's shareholders become the holders of approximately 95% of the
outstanding shares of VPTI. Upon completion of this merger, VPTI changed its
name to World Waste Technologies, Inc. VPTI was incorporated on June 21, 1985
and provided voice recognition and voice activated products. We currently do not
plan to conduct any business other than operations heretofore conducted or
contemplated to be conducted by WWT. Because the shareholders of Old WWT became
the controlling shareholders of VPTI after the merger, Old WWT was treated as
the acquirer for accounting purposes, and therefore the transaction was
accounted for as a reverse merger. Accordingly, for accounting purposes, the
historical financial statements presented are those of Old WWT. Additionally,
the prior operating results of VPTI are not indicative of our future operations,
and none of the assets or liabilities on our balance sheet as of December 31,
2004 relate to VPTI prior to the merger.

Since the formation of WWA in 2002, our efforts have been principally devoted to
research and development activities, construction of our initial facility,
raising capital, and recruiting additional personnel and advisors. To date, we
have not marketed or sold any product and have not generated any revenues. We do
not anticipate generating any revenue until completion of our first facility,
which we currently anticipate will occur in the second quarter of 2006, subject
to our ability to raise sufficient additional working capital in a timely
manner.

                                        9

<PAGE>



Plan of Operations

Through March 31, 2006, we purchased certain assets and equipment needed to
construct our first facility to process residual municipal solid waste ("RMSW")
delivered to us after processing through a materials recovery facility (MRF).
WWT has a license for a patented technology and other related intellectual
property capable of separating MSW into cellulose biomass and other commodities.
This process, known as "pressurized steam classification," uses a pressurized,
rotating autoclave to treat MSW and convert it into separable streams of metals,
plastics, and cellulose biomass. The process minimizes detrimental discharges to
the air, water and soil. The main product of the process is a cellulose biomass
material with significant papermaking fiber content which after thorough
screening and cleaning is expected to be sold for the production of liner or
corrugated medium or other industrial uses. In addition to recovering cellulose,
the process creates a saleable stream of standard recycled materials of
aluminum, tin, steel and plastics. Although the Company has not reached a
conclusion on the economic feasibility at a commercial stage, we may be able to
produce additional products such as ethanol and refuse derived fuel, cellulose
insulation or sell additional residual materials into other markets. In December
2005, we began testing the "pressurized steam classification" process of this
first facility. Through March 31, 2006, we had completed 10 trials on the
front-end material handling equipment and steam classification vessels. We have
processed over 200 tons of RMSW and produced approximately 150 tons of cellulose
biomass material. In February 2006, the University of Washington Paper Science
and Engineering Laboratory tested for us on samples of this cellulose biomass
material and results indicated that the fiber produced was comparable to fiber
produced during our prototype trials. We completed the primary construction of
this facility at the end of March 2006. In April 2006, Taormina Industries, LLC
accepted our completion and commencement notification in accordance with the
lease agreement.

Laboratory testing of the cellulose biomass created during the trials between
December 2005 and March 31, 2006 has indicated that higher than anticipated
levels of biological oxygen demand (BOD) will be present in our wastewater
discharge. We believe technology to address and remove these BOD levels is
readily available to us and that equipment incorporating such technology can be
installed at this first facility. We also believe it may be economically
advantageous to us to purchase and install this additional equipment which may
increase our capital requirements.

Beginning in April 2006, we began testing and commissioning the facility's
unbleached fiber cleaning and screening process. As of May 20, 2006, although we
are still in the testing and commissioning phase, the Company has produced
unbleached fiber in the form of "wetlap." During the testing and commissioning
phase and early stages of operations, we expect very little revenue. We do not
expect to reach a full stage of operations for 6 to 9 months.


On May 1, 2006, pursuant to a Patent Assignment Agreement and a Patent
Assignment, both dated as of May 1, 2006, (the "Patent Assignment Agreement and
a Patent Assignment"), the Company completed the purchase of all right, title
and interest in United States Patent No. 6,306,248 (the "Patent") and related
intellectual property, subject to existing licenses, from the University of
Alabama in Huntsville for $100,000 and 167,000 shares of the Company's
unregistered common stock. We continue to exploit the technology covered by the
Patent through a sublicense from the original licensee, Bio-Products
International, Inc. By virtue of our acquisition of the Patent, we now own all
right, title and interest in the Patent, subject to Bio-Products International,
Inc.'s existing license, which in turn continues to sublicense the technology to
us.


Our current plan of operation for the remainder of the year ending December 31,
2006 primarily involves testing, commissioning and operating our first facility
and making improvements to the equipment and process. We currently do not expect
to reach a full stage of operations for 6 to 9 months. We currently anticipate
hiring an additional 50 to 60 employees during the remainder of 2006. The
amounts we expend on research and development and related activities during 2006
may vary significantly depending on numerous factors, including pace and success
of the ramp up of processing of our first facility, and the possible acquisition
of assets. Based on our current estimates, we believe that as of May 20, 2006,
we estimate that we will need approximately $7.0 to $9.0 million to sustain our
operations for the next 12 months. We intend to meet these needs by raising
additional equity and/or debt financing, although we cannot assure you that we
will be able to raise such funds on terms acceptable to us, in the time
required, or at all. Upon the successful production of wetlap at our first
facility, subject to us raising sufficient additional capital, we anticipate
that we will begin the planning process of our second facility, including site
location, permitting, design, engineering and the ordering of equipment. We
believe we may not reach profitability until after the completion of the second
facility which is expected to be in two years.

You should read this discussion in conjunction with the selected historical
financial information and the financial statements and related notes included
elsewhere in this report.


                                       10
<PAGE>


Financial information for the period from June 18, 2002 (date of inception) to
December 31, 2003 is the historical financial information of Old WWT. Financial
information for the year ended December 31, 2004 and 2005 is the historical
financial information of Old WWT and VPTI combined.

Financing Transaction and Extinguishment of Senior Debt

We recently completed a $25 million private placement of equity securities. As
part of this transaction approximately $2,485,000 principal amount of our Senior
Debt was exchanged for our equity securities, with the balance of such debt
$3,780,000 being repaid with a portion of the offering proceeds. Additionally,
as part of this transaction we are required to seek shareholder approval to
modify certain terms of our Redeemable Convertible Preferred Stock. The
foregoing will probably result in significant charges to our earnings.

Reverse Stock Split

On March 25, 2004, VPTI's controlling stockholder approved a one-for-60 reverse
stock split of our common stock to be effectuated upon the closing of the merger
between VPTI and Old WWT, which became effective at the close of business on
August 24, 2004.

Trends in Our Business

The Resource Conservation and Recovery Act of 1991 requires landfills to install
expensive liners and other equipment to control leaching toxics. Due to the
increased costs and expertise required to run landfills under this Act, many
small, local landfills closed during the 1990's. Industry sources estimate that
from 1991 to 2001 over one-half of the landfills in the United States were
closed. Larger regional landfills were built requiring increased logistics costs
for the waste haulers.

In addition, state and federal governments have continued to increase the
pressure on the industry to improve its recycling percentages. California
currently mandates one of the highest standards in the United States by
requiring 50% of all incoming MSW to be diverted from landfills. We believe that
the trend in state law throughout the U.S. is to migrate toward the California
standard of requiring 50% of all MSW to be diverted from landfills.

Industry sources estimate that over the ten year period from 1994 to 2004, the
demand for corrugating container medium has increased 35%. Due in part to
increasing demands for packaging material from China and India, the increasing
demand is expected to continue into the future.

The resale price our products, including wetlap pulp, aluminum, steel and tin
will be tied to commodity markets. The resale and market demand for these
materials can be volatile, significantly impacting our results of operations.

Critical Accounting Policies and Estimates

Management's discussion and analysis of our financial condition and plan of
operations are based on our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires management
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, management evaluates its estimates,
including those related to revenue recognition, bad debts, impairment of
long-lived assets, including finite lived intangible assets, accrued liabilities
and certain expenses. We base our 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 values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ materially from these estimates under
different assumptions or conditions.

Our significant accounting policies are summarized in Note 1 to our audited
financial statements for the year ended December 31, 2005. We believe the
following critical accounting policies affect our more significant judgments and
estimates used in the preparation of our consolidated financial statements:

Amendment and Restatement

The accompanying consolidated financial statements are amended and restated from
the original Form 10-KSB filed March 30, 2006. (see note 16)


                                       11
<PAGE>


Basis of Presentation

Our consolidated financial statements included in this report are prepared in
accordance with accounting principles generally accepted in the United States of
America. We are a new enterprise in the development stage as defined by
Statement No. 7 of the Financial Accounting Standards Board, since we have
derived no revenues from our activities to date.

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company had a net loss for
the year ended December 31, 2005 of $3,078,917 compared to a net loss of
$2,496,188 for the year ended December 31, 2004, and the Company had net loss
from inception of $6,739,073 at December 31, 2005. The Company expects to incur
substantial additional costs and capital expenditures to complete its initial
facility and through the initial year of processing. The ability to complete and
operate the facility is subject to the Company obtaining funding and/or
obtaining equipment financing. If this funding is not obtained the Company may
be unable to continue as a going concern for a reasonable period of time.

The Company intends to raise additional debt and/or equity financing to sustain
its operations and to complete its capital expenditures, although there can be
no assurance that it will be able to raise such funds on terms acceptable to the
Company, or at all.

The consolidated financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern is dependent upon its ability to generate sufficient cash flow to meet
its obligations on a timely basis, to obtain additional financing, and
ultimately to attain successful operations.

Use of Estimates

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Fixed Assets

Machinery and equipment is stated at cost. Depreciation is computed on the
straight-line method over the estimated useful asset lives, to commence when the
asset is put in use.

Intangibles

Intangible assets are recorded at cost. At December 31, 2005 and December 31,
2004, our only intangible asset was our license to the technology. We will begin
amortizing this intangible asset upon completion of our first facility, on a
straight-line basis over the remaining life of the license. Our policy regarding
intangible assets is to review such intangible assets for impairment whenever
events or changes in circumstances indicate that their carrying amount may not
be recoverable. If the review indicates that intangible assets are not
recoverable (i.e. the carrying amount is more than the future projected
undiscounted cash flows), their carrying amount would be reduced to fair value.
We carried no goodwill on our books at either December 31, 2005 or December 31,
2004. Further, during the years ended December 31, 2004 and 2005 we had no
material impairment to our intangible asset.

Research and Development

Research and development costs are charged to operations when incurred.

Stock-Based Compensation

During the fourth quarter of 2004, we adopted SFAS No. 123 entitled, "Accounting
for Stock-Based Compensation" retroactively to our inception. Accordingly, we
have expensed the compensation cost for the options and warrants issued based on
their fair value at their grant dates.

Redeemable Convertible Preferred Stock

Preferred Stock which may redeemable for cash at the determination of the holder
is classified as mezzanine equity.

                                       12


<PAGE>



Results of Operations

Comparison of Fiscal Year ended December 31, 2005 and 2004

During 2005, we continued research on the licensed process and the intended use
of the products from that process, development of our business plan,
construction of our first facility in Anaheim, CA and capital raising
activities.

Revenues

We did not generate any operating revenues in fiscal 2005 or 2004.

Expenses

General and administrative expenses increased by approximately $1.4 million in
2005 primarily due to increases in employee-related expenses, rent and
consulting fees. Employee-related expenses increased by approximately $1,000,000
in 2005 due to salaries of approximately $650,000 related to the hiring of
additional staff as we prepared for the opening of our first facility,
amortization of employee stock option expense of approximately $350,000, travel
due to increased business activities of $90,000 and relocation expense related
to the hiring of additional staff of approximately $75,000. Rent increased by
approximately $122,000 due to the payment of 12 months' rent in 2005 versus only
four months' rent in 2004. Professional and consulting fees increased by
approximately $100,000 in 2005 due primarily to the costs associated with
complying with SEC reporting requirements as a result of becoming a reporting
company in August 2004.

Interest income (expense)

Interest income (expense) changed by approximately $128,000, from an expense of
$65,000 in 2004 to income of $63,000 in 2005, primarily as a result of the cash
received and invested from the sale of our common stock, preferred stock and
senior debt.

Change in fair value of warrant liabilities

Change in fair value of warrant liabilities of approximately $709,000 in 2005
relates to the fair value adjustment of warrants to purchase common stock issued
with registration rights as part of our preferred stock offering in 2005 in
accordance with SFAS 133 and EITF 00-19.

Comparison of Fiscal Year ended December 31, 2004 and 2003

During 2004, we continued research on the licensed process and the intended use
of the products from that process, continued the development of our business
plan, designed and began construction of our first facility in Anaheim, CA and
continued raising capital.

Revenues

We did not generate any operating revenues in fiscal 2004 or 2003.

Expenses

Research and development expenses increased by $75,758 to $284,587 in 2004
compared to 2003 due to additional research done by Bio Products to continue to
improve the system in accordance with the license agreement.

                                       13

<PAGE>



General and administrative expenses increased by approximately $2.8 million to
$2,146,407 in 2004 compared to 2003, as a result of a number of factors.
Salaries increased by approximately $350,000 to $683,969 in 2004 compared to
2003 due to our head count increasing from 3 to 7 employees, including the
hiring of two officers as we continued to prepare to open our first facility in
2005. Professional fees increased by $380,343 to $433,853 in 2004 compared to
2003 due to business development consulting of $275,000 and increased accounting
fees of $100,000 due to SEC reporting requirements. Legal fees increased
$331,781 to $346,705 in 2004 compared to 2003 due to the two mergers during
2004, the lease negotiations with Taormina Industries, the license modifications
and SEC reporting requirements. Rent increased $80,661 to $128,660 in 2004
compared to 2003 primary due to the lease in Anaheim with Taormina Industries.
The litigation settlement of $150,000 in 2004 reflects the settlement of
litigation pursuant to which we agreed to pay a total of $150,000 over a 12
month period. Pursuant to a consulting agreement entered into by us in February
2003 with Liviakis Financial Communications, Inc. ("Liviakis"), Liviakis agreed
to assist us in various investor relation support activities. As consideration
for such services, we issued Liviakis and certain of its principles the right to
acquire membership interests in WSI, which interests converted into warrants to
acquire a total of 350,000 shares of the common stock of Old WWT (prior to the
merger of Old WWT into a subsidiary of VPTI). Investor relations expense of
$172,000 in 2004 relates to the amortization of this stock compensation to
Liviakis. We began amortizing the value of these warrants, $459,322, on March
25, 2004, the date the definitive merger agreement with VPTI was announced (see
Note 1 to our consolidated financial statements), over 24 months, the term of
the consulting agreement. The contract does not require any services or fees
after March 25, 2006.

Liquidity and Capital

At December 31, 2005, we had cash on hand of approximately $2.8 million or an
increase of approximately $1.7 million as compared to cash on hand at December
31, 2004. This increase was due primarily to our sale of Series A Preferred
Stock for net proceeds of approximately $9.5 million, our sale of Senior Secured
Debt for net proceeds of approximately $3.7 million and our sale of common stock
for net proceeds of approximately $3.0 million, offset by the uses of cash for
operating purposes during our development stage of approximately $3.1 million
and the purchase of equipment and construction costs related to the construction
of our first facility of approximately $11.6 million.

On each of May 26, 2006 and May 30, 2006 we completed a private placement of
equity securities, resulting in total gross proceeds to us of $25.0 million. We
intend to use the net proceeds to start-up operations at, and make improvements
to, its initial facility located in Anaheim, CA, to begin preparations for
additional facilities and for general corporate purposes. We expect these funds
to sustain us until we begin construction of our second facility which we expect
to be within the next twelve months.

On November 1, 2005 and on February 10, 2006, we issued Senior Secured Debt (see
notes 9 and 15) totaling approximately $6.3 million of Senior Secured Debt
outstanding. This debt carried an interest rate of 10% per year, payable
quarterly in arrears, of approximately $160,000 per quarter. All of this debt
has either been converted into our equity securities or repaid with the proceeds
of the offering described above.

 We are not a party to any off-balance sheet arrangements, and we do not engage
in trading activities involving non-exchange traded contracts. In addition, we
have no financial guarantees, debt or lease agreements or other arrangements
that could trigger a requirement for an early payment or that could change the
value of our assets.

We do not believe that inflation has had a material impact on our business or
operations.

New Accounting Pronouncements

SFAS No. 155, Accounting for Certain Hybrid Financial Instruments - An Amendment
of FASB Statements No. 133 and 140 This statement provides for the following: 1.
Clarifies which interest-only strips and principal-only strips are not subject
to the requirements of Statement 133;

                                       14

<PAGE>



2. Establishes a requirement to evaluate interests in securitized financial
assets to identify interests that are freestanding derivatives or that are
hybrid financial instruments that contain an embedded derivative requiring
bifurcation;

3. Clarifies that concentrations of credit risk in the form of subordination are
not embedded derivatives; and

4. Amends Statement 140 to eliminate the prohibition on a qualifying
special-purpose entity from holding a derivative financial instrument that
pertains to a beneficial interest other than another derivative financial
instrument. Statement 155 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. Management believes that this statement will not have a
significant impact on the Company's financial statements.

SFAS No. 154, Accounting Changes and Error Corrections - A Replacement of APB
Opinion No. 20 and FASB Statement No. 3 Among other changes, Statement 154
requires that a voluntary change in accounting principle be applied
retrospectively with all prior period financial statements presented on the new
accounting principle, unless it is impracticable to do so. Statement 154 also
provides that (1) a change in method of depreciating or amortizing a long-lived
nonfinancial asset be accounted for as a change in estimate (prospectively) that
was effected by a change in accounting principle, and (2) correction of errors
in previously issued financial statements should be termed a "restatement." The
new standard is effective for accounting changes and correction of errors made
in fiscal years beginning after December 15, 2005. Early adoption of this
standard is permitted for accounting changes and correction of errors made in
fiscal years beginning after June 1, 2005. Management believes that this
statement will not have a significant impact on the Company's financial
statements.

SFAS No. 123 (Revised 2004), Share-Based Payment The new FASB rule requires that
the compensation cost relating to share-based payment transactions be recognized
in financial statements. That cost will be measured based on the fair value of
the equity or liability instruments issued. Public entities (other than those
filing as small business issuers) will be required to apply Statement 123R as of
the first interim or annual reporting period that begins after June 15, 2005
Public entities that file as small business issuers will be required to apply
Statement 123R in the first interim or annual reporting period that begins after
December 15, 2005. As the Company uses the fair value method to measure its
equity instruments, management believes that this statement will not have a
significant impact on the Company's financial statements.

Issue 05-8, "Income Tax Consequences of Issuing Convertible Debt with a
Beneficial Conversion Feature" Application of Issue No. 98-5 to Certain
Convertible Instruments," provide guidance on how companies should bifurcate
convertible debt issued with a beneficial conversion feature into a liability
and an equity component. For income tax purposes, such an instrument is only
recorded as a liability. A question has been raised as to whether a basis
difference results from the issuance of convertible debt with a beneficial
conversion feature and, if so, whether the basis difference is a temporary
difference. This issue has been added to the EITF's agenda to address these
questions. Consensus was agreed to at the September 15, 2005 meeting and
ratified by the FASB at the meeting on September 28, 2005. The Company account
for the income tax consequences of the beneficial conversion feature of it
Series A Preferred Stock consistent with this consensus.

Issue 05-7, "Accounting for Modifications to Conversion Options Embedded in Debt
Securities and Related Issues" EITF Issue No. 96-19, "Debtor's Accounting for a
Modification or Exchange of Debt Instruments," provides guidance on whether
modifications of debt result in an extinguishment of

                                       15

<PAGE>



that debt. In certain situations, companies may change the terms of a conversion
option as part of a debt modification, which may result in the following
circumstances: (a) the change in the conversion option's terms causes the fair
value of the conversion option to change but does not result in the modification
meeting the condition in Issue 96-19 that would require the modification to be
accounted for as an extinguishment of debt, and (b) the change in the conversion
option's terms did not result in separate accounting for the conversion option
under Statement 133. When both of these circumstances exist, questions have
arisen regarding whether

(a) the modification to the conversion option, which changes its fair value,
should affect subsequent interest expense recognition related to the debt and
(b) a beneficial conversion feature related to a debt modification should be
recognized by the borrower if the modification increases the intrinsic value of
the debt. This issue has been added to the EITF's agenda to address these
questions. Consensus was agreed to at the September 15, 2005 meeting and
ratified by the FASB at the meeting on September 28, 2005. Management does not
believe that this consensus will have a significant impact on the Company's
financial statements.

EITF Issue 05-2, The Meaning of "Conventional Convertible Debt Instrument" in
EITF Issue 00-19, "Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Company's Own Stock" Paragraph 4 of Issue 00-19
states that "the requirements of paragraphs 12-32 of this issue do not apply if
the hybrid contract is a conventional convertible debt instrument in which the
holder may only realize the value of the conversion option by exercising the
option and receiving the entire proceeds in a fixed number of shares or the
equivalent amount of cash (at the discretion of the issuer)". The term
"conventional convertible debt instrument" is not defined in Issue 00-19 and, as
a result, questions have arisen regarding when a convertible debt instrument
should be considered "conventional" for purposes of Issue 00-19. A question has
also arisen related to whether conventional convertible preferred stock should
be treated similar to conventional convertible debt. This issue was added to the
EITF's agenda to address these questions. Consensus was reached at the June
15-16, 2005 meeting and was ratified by the FASB at the June 29, 2005 meeting.
Management believes that this consensus will not have a significant impact on
the Company's financial statements.

Factors that May Affect Future Results and Market Price of Our Stock

An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information contained
in this Annual Report before deciding to invest in our company. If any of the
following risks actually occur, our business, financial condition or operating
results and the trading price or value of our securities could be materially
adversely affected.


RISKS RELATED TO OUR BUSINESS

            We may be unable to achieve commercial production levels at
our initial facility on a timely basis or at all.

            We recently completed construction of our initial facility in
Anaheim, California. Prior to completion, laboratory testing of the cellulose
biomass created during certain trial runs of our process indicated that the
level of biological oxygen demand ("BOD") that will result from our process
could be higher than the levels previously anticipated. We believe that the
sewer surcharges by the local sanitation district as a result of such discharges
would negatively affect our profitability. We believe that the technology
capable of significantly reducing these BOD discharges to acceptable levels is
readily available to us and that equipment incorporating such technology is
available for purchase and installation at our facility. We estimate, however,
that it will take us an additional six to nine months before we are able to
install the necessary equipment. In the meantime, we plan to conduct a
controlled startup of the facility, and we do not anticipate that we will
commence full production until such time as we determine what equipment is
required and such equipment is installed and fully functional.

            Our success depends on our ability to protect our proprietary
technology.

            Our success depends, to a significant degree, upon the protection of
our, and that of our licensors', proprietary technologies. We exploit our
technology through the sublicense of a patent from Bio-Products International,
Inc. Bio Products licenses this patent from the patent owner, which had been,
until recently, the University of Alabama in Huntsville. Although we recently
acquired ownership of the patent from the University, our use of the technology
is still subject to our sublicense with Bio-Products. Additionally, the need to
pursue additional protections for our intellectual property is likely as new
products and techniques are developed and as existing products are enhanced, and
such protections may not be attained in a timely manner or at all.

            Legal fees and other expenses necessary to obtain and maintain
appropriate patent protection in the U.S. could be material. Insufficient
funding may inhibit our ability to obtain and maintain such protection.
Additionally, if we must resort to legal proceedings to enforce our intellectual
property rights, or those of our licensors', the proceedings could be burdensome
and expensive and could involve a high degree of risk to our proprietary rights
if we are unsuccessful in, or cannot afford to pursue, such proceedings.

                                       16
<PAGE>

            We also rely on trade secrets and contract law to protect certain of
our proprietary technology. If any of our contracts is breached or if any of our
trade secrets becomes known or independently discovered by third parties, we
could face significant increased competition and our business could be harmed.

            If other persons independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to our trade
secrets and know-how, the result could be significant increased competition for
our services. In addition, we may be required to obtain licenses to patents or
other proprietary rights from third parties. If we are unable to obtain such
licenses on acceptable terms, we may encounter delays in product development or
find that the development, manufacture or sale of products requiring such
licenses could be foreclosed.

            We may face delays in the development of our technology, and our
technology may not work as well as expected or be economically viable.

            The steam classification and processing technology that we intend to
use has not yet been widely applied within the municipal solid waste industry
and may not work as well as expected or be economically viable. The successful
application of the technology at large scale and high volumes to create
commercially usable cellulose fiber has yet to be proven. Any inability under
our current plan to operate the plant in a manner that will produce large
volumes of commercially usable cellulose fiber may require additional investment
in capital equipment and/or increased operating expenses beyond currently
contemplated business and construction plans, such as handling large quantities
of textiles and contamination levels of the water discharge to the sewer.
Unforeseen difficulties in the development or market acceptance of this
cellulose fiber may lead to significant delays in production and the subsequent
generation of revenue. For example, laboratory testing of the cellulose biomass
created during trials since December 2005 has indicated that higher than
anticipated levels of biological oxygen demand (BOD) will result from our fiber
cleaning and screening process. Although we believe technology to address and
remove these BOD levels is readily available to us and that equipment
incorporating such technology can be installed at this facility, if we are
unable to resolve this problem within our anticipated budget, we might need to
raise additional financing (which would reduce the percentage ownership of our
company held by our existing stockholders) or might be forced to curtail or
cease operations altogether.



            Our limited operating history makes it difficult to predict future
results.

            We are in the development stage and are subject to all the business
risks associated with a new enterprise, including uncertainties regarding
product development, constraints on our financial and personnel resources, and
dependence on and need for third party relationships. For the period from June
18, 2002 (inception) to December 31, 2005, we incurred total net losses of
approximately $6.8 million. We have had no revenues to date and do not know when
or whether we will be able to develop sources of revenue or whether our
operations will become profitable, even if we are able to begin generating
revenue. We have not yet sold any products or services or otherwise generated
revenue, and we may never be able to do so. If we are unable to generate
revenue, we would need to develop a new business plan or curtail or cease
operations completely.

            The auditors' report with respect to our financial statements for
the fiscal year ended December 31, 2005 includes an explanatory paragraph
wherein they expressed substantial doubt about our ability to continue as a
going concern. The financial statements do not include any adjustment that might
result from the outcome of these uncertainties.

            We may be unable to obtain the large amount of additional capital
that we need to operate our business.

            We raised approximately $5.4 million, net of offering costs, prior
to the closing of the Merger in August 2004, which funds were used for the
purchase of equipment, leasehold improvements and working capital purposes. In
addition, we raised approximately $15.3 million, net of offering costs, between
August 2004 and December 31, 2005, which funds were also used for the purchase
of equipment, leasehold improvements and working capital purposes. On May 26 and
May 30, 2006 completed two private placements of our equity securities
generating net proceeds to us of approximately $18.5 million (after the
repayment of our outstanding senior secured debt) The required additional
financing may not be available on terms acceptable to us, or at all. If we are
unable to raise such additional funds, we anticipate that we can continue to
fund our operations through June 2006.

            To date, we have funded all of our activities through the sale of
securities. You should not rely on the prospect of future financings in
evaluating us. Any additional funding that we obtain is likely to reduce the
percentage ownership of the company held by our existing stockholders. The
amount of this dilution may be substantially increased if the trading price of
our common stock has declined at the time of any financing from its current
levels.

            We may not be able to obtain or sustain market acceptance for our
services and products.



                                       17
<PAGE>

            We do not intend to engage in advertising during our development
phase. Failure to establish a brand and presence in the marketplace on a timely
basis could adversely affect our financial condition and operating results. We
may fail to successfully complete the development and introduction of new
products or product enhancements, and new products that we develop may not
achieve acceptance in the marketplace. We may also fail to develop and deploy
new products and product enhancements on a timely basis. Any of the foregoing
could require us to revise our business plan, raise additional capital or
curtail operations.

            The market for services and products in the solid waste processing
and recycling industry is competitive, and we may not be able to compete
successfully.

            The market for services and products in the solid waste processing
industry is highly competitive. Most of these competitors have longer operating
histories and significantly greater financial, technical, marketing and other
resources than we have, and may be able to respond more quickly than we can to
new or changing opportunities and customer requirements. Also, our competitors
have greater name recognition and more extensive customer bases that they can
leverage to gain market share. These competitors are able to undertake more
extensive promotional activities, adopt more aggressive pricing policies and
offer more attractive terms to purchasers than we can, which could adversely
affect our competitive position and business.

            The demand for our services may be adversely affected by
environmental laws and regulations.

            To a certain extent, demand for our services is created by
environmental laws and regulations, including (a) requirements to safely dispose
of RMSW by various methods including in properly constructed and operated
landfills, (b) requirements to attempt to recycle a certain proportion of RMSW,
and (c) requirements that businesses operating in the solid waste industry
comply with applicable land, water and air emission regulations. The lack of
environmental laws and regulations, or the loosening or non-enforcement of
existing regulations, would decrease demand for our services and may have a
material adverse affect on our business.

            If we do not obtain a significant supply of solid waste and timely
payment for that solid waste, our operating results could be adversely affected.

            If we do not obtain a supply of solid waste at quantities and
qualities that are sufficient to operate our proposed facilities at the expected
operating levels, or if third parties do not promptly pay for the solid waste
they deliver to us for processing, our financial condition and operating results
could be adversely affected. Additionally, our current waste supply agreement
does not include a specification requirement for the composition of materials in
our incoming waste stream. One or more of the following factors could impact the
price and supply of waste:

            o           defaults by waste suppliers under their contracts;

            o           changing composition of the material in the waste
                        stream;

            o           a decline in recyclables in the solid waste supply due
                        to increased recovery by material recovery facilities;

            o           composting of municipal solid waste;

            o           incineration of municipal solid waste;

            o           legal prohibitions against processing of certain types
                        of solid waste in our facilities; or

            o           increased competition from landfills and recycling
                        facilities.

            The loss of key executives and the failure to attract qualified
management could limit our growth and negatively impact our operations.

            We depend highly upon our senior management team. We will continue
to depend on operations management personnel with waste handling and pulp
industry experience. At this time, we do not know the availability of such
experienced management personnel or how much it may cost to attract and retain
such personnel. The loss of the services of any member of senior management or
the inability to hire experienced operations management personnel could have a
material adverse effect on our operations and financial condition.



                                       18
<PAGE>

            Our results of operations may be adversely affected by changing
resale prices or market requirements for recyclable materials.

            The resale price for our recycled products, including our unbleached
fiber product, aluminum, and steel, will be tied to commodity pricing. Our
results of operations may be adversely affected by changing resale prices or
market requirements for these recyclable materials. The resale, and market
demand for, these materials can be volatile due to numerous factors beyond our
control, which may cause significant variability in our period-to-period results
of operations.

            Our revenues and results of operations will fluctuate.

            Our revenues and results of operations will vary from quarter to
quarter in the future. A number of factors, many of which are outside our
control, may cause variations in our results of operations, including:

            o           demand and price for our products;

            o           the timing and recognition of product sales;

            o           unexpected delays in developing and introducing
                        products;

            o           unexpected delays in building and permitting our
                        processing facilities;

            o           unexpected downtime in operations to maintain or improve
                        equipment;

            o           increased expenses, whether related to plant operations,
                        marketing, product development or administration or
                        otherwise;

            o           the mix of revenues derived from products;

            o           the hiring, retention and utilization of personnel;

            o           waste collection companies are impacted by seasonal and
                        cyclical changes that may adversely affect our business
                        and operations;

            o           general economic factors; and

            o           changes in the revenue recognition policies required by
                        generally accepted accounting principles.

            We may engage in strategic transactions that may fail to enhance
stockholder value.

            From time to time, we may consider possible strategic transactions,
including the potential acquisitions of products, technologies and companies,
and other alternatives with the goal of maximizing stockholder value. We may
never complete a strategic transaction(s) and in the event that we do complete a
strategic transaction(s), it may not be consummated on terms favorable to us.
Further, such transactions may impair stockholder value or otherwise adversely
affect our business. Any such transaction may require us to incur non-recurring
or other charges and may pose significant integration challenges and/or
management and business disruptions, any of which could harm our results of
operation and business prospects.

            Environmental regulations and litigation could subject us to fines,
penalties, judgments and limitations on our ability to expand.

            We are subject to potential liability and restrictions under
environmental laws, including those relating to handling, recycling, treatment,
storage of wastes, discharges to air and water, and the remediation of
contaminated soil, surface water and groundwater. The waste management industry
has been, and will continue to be, subject to significant regulation, including
permitting and related financial assurance requirements, as well as to attempts
to further regulate the industry through new legislation. Our business is
subject to a wide range of federal, state and, in some cases, local
environmental, odor and noise and land use restrictions and regulations. If we
are not able to comply with the requirements that apply to a particular facility
or if we operate without necessary approvals, we could be subject to civil, and
possibly criminal, fines and penalties, and we may be required to spend
substantial capital to bring an operation into compliance or to temporarily or
permanently discontinue, and/or take corrective actions. We may not have
sufficient insurance coverage for our environmental liabilities. Those costs or
actions could be significant to us and significantly impact our results of
operations, as well as our available capital.

            In addition to the costs of complying with environmental laws and
regulations, if governmental agencies or private parties brought environmental
litigation against us, we would likely incur substantial costs in defending
against such actions. We may be, in the future, a defendant in lawsuits brought
by parties alleging environmental damage, personal injury, and/or property
damage. A judgment against us, or a settlement by us, could harm our business,
our prospects and our reputation.


                                       19
<PAGE>

            Future costs under environmental, health and safety laws may
adversely affect our business.

            We could be liable if our operations cause environmental damage to
our properties or to the property of other landowners, particularly as a result
of the contamination of drinking water sources or soil. Under current law, we
could even be held liable for damage caused by conditions that existed before we
acquired the assets or operations involved. Any substantial liability for
environmental damage could have a material adverse effect on our financial
condition, results of operations and cash flows.

            We may be unable to obtain permits that are required to operate our
business.

            Although we have obtained all of our environmental permits necessary
to construct our initial facility in Anaheim, California, our failure to retain
these permits or our failure to obtain or retain the permits required to operate
additional facilities we may seek to construct would have a material negative
effect on our business operations. Permits to operate waste processing
facilities have become increasingly difficult and expensive to obtain and retain
as a result of many factors including numerous hearings and compliance with
zoning, environmental and other regulatory measures. The granting of these
permits is also often subject to resistance from citizen or other groups and
other political pressures. Our failure to obtain or retain the required permits
to operate our facilities could have a material negative effect on our future
results of operations.

            A substantial portion of our revenues will be generated from our
agreement with Taormina Industries, which agreement may be terminated by
Taormina under certain circumstances.

            In June 2003, we signed a 10-year contract with Taormina Industries,
a division of Republic Services, Inc. The agreement provides for Taormina to
deliver up to 500 tons of MSW per day to us for processing at our Anaheim
facility currently under construction on the campus of Taormina in Anaheim,
California. The second phase calls for us to build an additional plant in the
Orange County area at which Taormina will deliver up to an additional 2,000 tons
of MSW per day. The agreement grants Taormina a right of first refusal to
participate in potential additional projects in an additional 10 counties
throughout California where Taormina has operations. Under the terms of the
agreement, Taormina will pay a per ton tipping fee to the Company. We anticipate
that a substantial portion of our revenues will be generated from this agreement
for the foreseeable future.

            The Taormina agreement, as amended, provides that Taormina can
terminate the agreement in the event that, among other things, we do not
complete all permitting, approvals and construction of the leased facility by
April 8, 2006, or if we fail to occupy and use the leased facility by April 8,
2006. We believe that we met the foregoing conditions prior to April 8, 2006 and
received sign acknowledgement by Taormina of our meeting this requirement, if
this agreement is terminated for any reason or if we are unable to extend this
agreement on terms favorable to us or at all prior to its expiration, our
business, financial condition and results of operations would be materially
harmed.

            We may be exposed to substantial liability claims in the ordinary
course of our business.

            Since our personnel are expected to routinely handle solid waste
materials, we may be subject to liability claims by employees, customers and
third parties. We currently have liability insurance in place, but such
insurance may not be adequate to cover claims asserted against us. Also, we may
be unable to maintain or purchase such insurance in the future. Either of these
events could have a material adverse affect on our financial condition or our
ability to raise additional capital.

            Claims by other companies that we infringe their intellectual
property or proprietary rights may adversely affect our business.

            If any of our products or processes is found to violate third party
intellectual property rights, we may be required to re-engineer one or more of
those products or processes or seek to obtain licenses from third parties to
continue offering our products or processes without substantial re-engineering,
and such efforts may not be successful. We may be unable to obtain such licenses
at a reasonable cost, if at all. Failure to do so could result in significant
curtailment of our operations.

            Future patents may be issued to third parties upon which our
technology may infringe. We may incur substantial costs in defending against
claims under any such patents. Furthermore, parties making such claims may be
able to obtain injunctive or other equitable relief, which effectively could
block our ability to further develop or commercialize some or all of our
products or services, and could result in the award of substantial damages
against us. In the event of a claim of infringement, we may be required to
obtain one or more licenses from third parties. We may be unable to obtain such
licenses at a reasonable cost, if at all. Defense of any lawsuit or failure to
obtain any such license could have a material adverse effect on our business and
results of operations.


                                       20
<PAGE>

            Our license agreement with Bio-Products International, Inc. is not
exclusive in all respects and imposes certain requirements on us to maintain
exclusivity in specified applications.

            Our license agreement with Bio-Products International, Inc. ("BPI")
grants us the exclusive rights to exploit the technology covered by the license
in the United States with respect to most applications. We do not, however, have
the exclusive right to applications in which the cellulose biomass product of
waste, including municipal solid waste, processed utilizing the licensed
technology is either used directly as a fuel source or converted into an end
product for energy production. Accordingly, BPI may grant third parties the
right to use the technology for the production of marketable solid combustion
fuel end products. In order to maintain exclusivity with respect to the other
applications, we are required to continue to improve our initial facility in
Anaheim, California on a regular schedule or construct new facilities. Our
failure to maintain exclusivity of the license could have a material adverse
effect on our business, financial condition and results of operations.

            If we fail to implement new technologies, we may not be able to keep
up with our industry, which could have an adverse affect on our business.

            We expect to utilize patented and proprietary steam classification
technology in our processing facilities and to adopt other technologies from
time to time. Our future growth is partially tied to our ability to improve our
knowledge and implementation of waste processing technologies. Inability to
successfully implement commercially viable waste processing technologies in
response to market conditions in a manner that is responsive to our customers'
requirements could have a material adverse effect on our business and results of
operation.

            Changes in stock option accounting rules may adversely affect our
reported operating results, our stock price and our ability to attract and
retain employees.

            In December 2004, the Financial Accounting Standards Board published
new rules that require companies to record all stock-based employee compensation
as an expense. The new rules apply to stock option grants, as well as a wide
range of other share-based compensation arrangements including restricted share
plans, performance-based awards, share appreciation rights, and employee share
purchase plans. During the fourth quarter of 2004, we adopted this accounting
policy, retroactive to our inception. As a small company with limited financial
resources, we have depended upon compensating our officers, directors, employees
and consultants with such share-based compensation awards in the past in order
to limit our cash expenditures and to attract and retain officers, directors,
employees and consultants. Accordingly, if we continue to grant stock options or
other stock based compensation awards to our officers, directors, employees, and
consultants, our future earnings, if any, will be reduced (or our future losses
will be increased) by the expenses recorded for those grants. These compensation
expenses may be larger than the compensation expense that we would be required
to record were we able to compensate these persons with cash in lieu of
securities.

            The expenses we will have to record as a result of future options
grants may be significant and may materially negatively affect our reported
financial results. For example, for the year ended December 31, 2005 , we
incurred approximately $423,000 of expenses as a result of share-based
compensation. The adverse effects that the new accounting rules may continue to
have on our future financial statements should we continue to rely heavily on
stock-based compensation may reduce our stock price and make it more difficult
for us to attract new investors. However, reducing our use of stock plans to
reward and incentivize our officers, directors, employees and consultants, could
result in a competitive disadvantage to us in the employee marketplace.

o           RISKS RELATED TO OUR COMMON STOCK

            Substantial sales of our common stock could cause our stock price to
fall.

            As of December 31, 2005, we had outstanding 24,686,230 and 4,075,600
shares of common stock and preferred stock, respectively (exclusive of accrued
but unpaid dividends on our preferred stock of approximately 226,000 additional
shares of preferred stock), as well as options and warrants to acquire up to an
additional 3,799,362 shares of common stock, all of which were "restricted
securities" (as that term is defined under Rule 144 promulgated under the
Securities Act of 1933, as amended). A substantial portion of these shares are
either freely tradable shares or eligible for public resale under Rule 144.
Although Rule 144 restricts the number of shares that any one holder can sell
during any three-month period under Rule 144, because more than one stockholder
holds these restricted shares, a significant number of shares are now eligible
for sale. Pursuant to two private placements completed in May, 2006, we issued
shares of preferred stock convertible into a total of approximately 11,000,000
shares of our common stock, as well as warrants exercisable for a total of
approximately 2,750,000 shares of our common stock. We are contractually
obligated to file and have declared effective with the SEC a registration
statement covering the resale of a significant number of shares held by certain
stockholders, including the shares of common stock underlying the securities
sold in the recent private placements.. Sales of the shares subject to Rule 144
or an effective registration statement, or the possibility that substantial
amounts of common stock may be sold in the public market under Rule 144 or such
a registration statement, may adversely affect prevailing market prices for our
common stock and could impair our ability to raise capital through the sale of
our equity securities.

                                       21
<PAGE>

            The limited market for our common stock may adversely affect trading
prices or the ability of a shareholder to sell our shares in the public market.

            Our common stock is thinly-traded on the OTC Bulletin Board, meaning
that the number of persons interested in purchasing our common stock at or near
ask prices at any given time may be relatively small or non-existent. This
situation is attributable to a number of factors, including the fact that we are
a small company that is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate or
influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an
unproven, early stage company such as ours or purchase or recommend the purchase
of our shares until such time as we became more seasoned and viable. As a
consequence, there may be periods of several days or more when trading activity
in our shares is minimal or non-existent, as compared to a seasoned issuer which
has a large and steady volume of trading activity that will generally support
continuous sales without an adverse effect on share price. Due to these
conditions, an investor may be unable to sell its shares at or near ask prices
or at all if it needs money or otherwise desires to liquidate its shares.

            You may have difficulty selling our shares because they are deemed
"penny stocks".

            Since our common stock is not listed on the Nasdaq Stock Market, if
the trading price of our common stock remains below $5.00 per share, trading in
our common stock will be subject to the requirements of certain rules
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which require additional disclosure by broker-dealers in connection with
any trades involving a stock defined as a penny stock (generally, any non-Nasdaq
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally defined as an investor with a net worth in
excess of $1,000,000 or annual income exceeding $200,000 individually or
$300,000 together with a spouse). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
the sale. The broker-dealer also must disclose the commissions payable to the
broker-dealer, current bid and offer quotations for the penny stock and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Such information
must be provided to the customer orally or in writing before or with the written
confirmation of trade sent to the customer. Monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. The additional burdens
imposed upon broker-dealers by such requirements could discourage broker-dealers
from effecting transactions in our common stock, which could severely limit the
market liquidity of our common stock and the ability of holders of our common
stock to sell their shares.

            The holders of our preferred stock have certain rights that could
adversely affect the value of our common stock.

            Under our articles of incorporation, our board of directors has the
power, without further action by the holders of our common stock, to designate
the relative rights and preferences of the preferred stock, and to issue the
preferred stock in one or more series as designated by our board of directors.
The designation of rights and preferences could include preferences as to
liquidation, redemption and conversion rights, voting rights, dividends or other
preferences, any of which may be dilutive of the interest of the holders of our
common stock or the preferred stock of any other series. The issuance of
preferred stock may have the effect of delaying or preventing a change in
control of our company without further stockholder action and may adversely
affect the rights and powers, including voting rights, of the holders of our
common stock.

            As of March 31, 2006, we have one such series of preferred stock,
designated as "8% Series A Cumulative Redeemable Convertible Participating
Preferred Stock." The Series A Preferred is convertible into our common stock
under certain circumstances and has the following preferences to our common
stock:

            Dividends. Holders of Series A Preferred are entitled to receive
cumulative dividends, payable quarterly in additional shares of Series A
Preferred, currently at the rate of 9% per annum, and are entitled to fully
participate in any dividends paid to the holders of our common stock on a common
stock equivalent basis. The dividend rate on the Series A Preferred will be
reduced to 8% once a registration statement covering the resale of the shares of
common stock issuable upon conversion of such preferred stock is declared
effective by the SEC.

            Special Voting Rights. So long as at least 50% of the shares of
Series A Preferred remain outstanding (but prior to the "Operational Date,"
generally defined as if and when our initial plant in Anaheim, California first
generates total operating cash flow of at least $672,000 for any consecutive
three month period), we are prohibited from taking certain actions without the
approval of the holders of a majority of the outstanding shares of Series A
Preferred, including, among other things, a sale of all or substantially all of
our assets, a transfer or cancellation of our license from our technology
licensor, the making of certain restricted payments, the incurrence of any
indebtedness (subject to certain exceptions), or a change in our principal
business.

                                       22
<PAGE>

            Board Change of Control. In the event the Operational Date has not
occurred by September 30, 2006, the holders of the Series A Preferred have the
right to elect a majority of the members of our board of directors. This right
would terminate, however, upon the first to occur of the Operational Date or the
date on which less than 50% of the shares of Series A Preferred remain
outstanding.

            Liquidation Rights. Upon any liquidation, dissolution or winding-up
of our company (including a sale of our company), the holders of Series A
Preferred have the right to receive $2.50 per share (plus accrued but unpaid
dividends), prior to and in preference over any liquidation payment on our
common stock or any other class of preferred stock. Following payment of the
aforementioned liquidation preference, holders of the Series A Preferred are
entitled to participate fully with the holders of our common stock on a common
stock equivalent basis with respect to the distribution of any remaining assets.

            Redemption. The holders of a majority of the shares of Series A
Preferred have the option to require us to redeem all outstanding shares of
Series A Preferred on May 27, 2010 at a redemption price equal to $2.50 per
share, plus accrued and unpaid dividends to that date.

            In May 2006 we designated a second series of preferred stock as "8%
Series B Cumulative Redeemable Convertible Participating Preferred Stock." The
Series B Preferred is convertible into our common stock under certain
circumstances and has generally the same rights, preferences and privileges with
respect to dividends and redemption and upon liquidation as our Series A
Preferred.

            Our directors, executive officers and their affiliates hold a
substantial amount of our common stock and may be able to prevent other
stockholders from influencing significant corporate decisions.

            As of March 31, 2006, our directors and executive officers and their
affiliates beneficially owned over approximately 40.0% of our outstanding common
stock. These stockholders, if they were to act together, would likely be able to
direct the outcome of matters requiring approval of the stockholders, including
the election of our directors and other corporate actions such as:

            o           our merger with or into another company;

            o           a sale of substantially all of our assets; and

            o           amendments to our articles of incorporation.

            The decisions of these stockholders may conflict with our interests
or those of our other stockholders.

o The market price of our stock may be adversely affected by market volatility.

The market price of our common stock is likely to be volatile and could
fluctuate widely in response to many factor, including:

o           developments with respect to patents or proprietary rights;

o           announcements of technological innovations by us or our competitors;

o           announcements of new products or new contracts by us or our
            competitors;

o           actual or anticipated variations in our operating results due to the
            level of development expenses and other factors;

o           changes in financial estimates by securities analysts and whether
            our earnings meet or exceed such estimates;

o           conditions and trends in the waste industries and other industries;

o           new accounting standards;

o           general economic, political and market conditions and other factors;
            and the occurrence of any of the other risks described in this Form
            10-QSB.


                                       23
<PAGE>




ITEM 7. FINANCIAL STATEMENTS

See the F pages for the financial statements and notes thereto.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None


ITEM 8A. CONTROLS AND PROCEDURES

            The Company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC and that such information is accumulated and communicated to the
Company's management, including the Chief Executive Officer and the Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. As required by SEC Rule 13a-15(b), the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Chief Executive Officer and the Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures as of the end of the period covered by this
report.

            Based on the foregoing, the Company's Chief Executive Officer and
Chief Financial Officer concluded that, as of the end of the period covered by
this report, the Company's disclosure controls and procedures were effective in
ensuring that the information required to be disclosed in reports that the
Company files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms and that such information is accumulated and communicated to the Company's
management, including the Chief Executive Officer and the Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure.

            There was no change in the Company's internal control over financial
reporting during the quarter that ended December 31, 2005 that has materially
affected, or is reasonably likely to materially affect, the Company's internal
control over financial reporting.

            On May 12, 2006, the Company determined that it would amend its
Annual Report on Form 10-KSB for the year ended December 31, 2005 to correct
certain accounting errors in the financial statements included in such report
related to the fair value of options and warrants, the relative fair value of
senior secured debt and the related warrants and the classification of
Redeemable Preferred Stock. The decision to restate our financial statements
does not cause our management to change its conclusion that our internal control
over financial reporting was effective as of December 31, 2005 or that our
disclosure controls and procedures were effective as of that date. Based on the
SEC's Staff Statement on Management's Report on Internal Control Over Financial
Reporting (dated May 16, 2005), we believe that, to a significant degree, the
determination of whether a material weakness exists in our financial reporting
involves subjective judgment and we do not believe that such restatement, given
the facts and circumstances of our situation, constitutes a material weakness in
internal control over financial reporting.

            That conclusion was discussed with, and approved by the Audit
Committee of our Board of Directors.



ITEM 8B. OTHER INFORMATION

None.

                                       24


<PAGE>



                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

The information required by this item is contained in Amendment No.1 to the
Company's Annual Report on Form 10-KSB, which was filed with the SEC on May 15,
2006 (the "First Amendment")..

ITEM 10. EXECUTIVE COMPENSATION

The information required by this item is contained in the First Amendment.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The information required by this item is contained in the First Amendment.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is contained in the First Amendment

ITEM 13. EXHIBITS
Exhibit
Number       Description

2.1         Amended Agreement and Plan of Reorganization by and between Voice
            Powered Technology International, Inc., V-Co Acquisition, Inc. and
            World Waste Technologies, Inc., dated as of March 25, 2004. (1)

2.2         Amendment No. 1 dated August 24, 2004 to Agreement and Plan of
            Reorganization dated as of March 25, 2004 among Voice Powered
            Technology International, Inc., V-CO Acquisition, Inc. and World
            Waste Technologies, Inc. (2)

3.1         Amended and Restated Articles of Incorporation of the Company. (7)

3.2         Certificate of Determination of Rights, Preferences and Privileges
            of the 8% Series A Cumulative Redeemable Convertible Participating
            Preferred Stock of the Company (8)

3.3         Bylaws of the Company, as amended. (3)

4.1         Specimen Stock Certificate. (7)

4.2         Form of outstanding Warrant. (4)

10.1        Form of Indemnity Agreement entered into between the Company and its
            directors and officers. (5)

10.2        Form of Registration Rights Agreement. (2)

10.3        2004 Stock Option Plan. (7)

                                       25
<PAGE>

10.4        Form of stock option agreement. (7)

10.5        Lease between World Waste of America, Inc., a wholly-owned
            subsidiary of the Company, and Legacy Sabre Springs, LLC, dated as
            of March 10, 2004. (7)

10.6        Lease Agreement between the Company and Taormina Industries, LLC,
            dated as of July 14, 2004. (2)

10.7        Amendment No. 1 to Lease Agreement between the Company and Taormina
            Industries, LLC, dated as of March 17, 2005. (6)

10.8        Waste Recycle Agreement between the Company and Taormina Industries,
            LLC, dated as of June 27, 2003. (2)

10.9        Revised Amended and Restated Technology License Agreement between
            the Company and Bio-Products International, Inc., dated August 19,
            2005. (11)

10.10       Employment Agreement with Thomas L. Collins. (9)

10.11       Employment Agreement with Steve Racoosin. (9)

10.12       Employment Agreement with Fred Lundberg. (9)

10.13       Employment Agreement with David A. Rane. (9)

10.14       Stock Purchase Warrant Issued to Thomas L. Collins. (2)

10.15       Stock Purchase Warrant Issued to Steven Racoosin. (2)

10.16       Stock Purchase Warrant Issued to Fred Lundberg. (2)

10.17       Stock Purchase Warrant Issued to Dr. Michael Eley. (2)

10.18       Stock Purchase Warrant Issued to Don Malley. (2)

10.19       Senior Promissory Note in favor of Trellus Management, LLC. (8)

10.20       Securities Purchase Agreement dated as of April 28, 2005 among the
            Company, Trellus Offshore Fund Limited, and Trellus Partners, LP,
            Trellus Partners II, LP. (9)

10.21       Form of Warrant. (9)

10.22       Registration Rights Agreement dated as of April 28, 2005 by and
            among the Company, Trellus Offshore Fund Limited, Trellus Partners,
            LP, and Trellus Partners II, LP, a Delaware limited partnership and
            the individuals and entities set forth on the signature pages
            thereto. (9)

                                       26
<PAGE>

10.23       Engagement Agreement dated as of April 28, 2005 between the Company
            and John Pimentel. (9)

10.24       Engagement Agreement dated as of April 28, 2005 between the Company
            and Cagan McAfee Capital Partners, LLC. (9)

10.25       Engagement Agreement dated as of April 28, 2005 between the Company
            and Chadbourn Securities, Inc. and Addendum dated April 29, 2005.
            (9)

10.26       Amendment No. 1 to Lease Agreement between the Company and Taormina
            Industries, LLC, dated as of March 17, 2005. (10)

10.27       Form of Subscription Agreement (12)

10.28       Form of Common Stock Purchase Warrant. (12)

10.29       Form of Senior Secured Promissory Note. (12)

10.30       Form of Registration Rights Agreement, dated as of November 1, 2005
            between the Company and the Investors named therein. (12)

10.31       Form of Security Agreement, dated as of November 1, 2005 between the
            Company and the Investors named therein. (12)

10.32       Agreement dated December 2, 2005 between the Company and Steven
            Racoosin. (13)

21.1        Subsidiaries of the Company. (14)

31.1        Certification of the Chief Executive Officer pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002. *

31.2        Certification of the Chief Financial Officer pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002. *

32.1        Certification of the Chief Executive Officer pursuant to Section 906
            of the Sarbanes-Oxley Act of 2002. *

32.2        Certification of the Chief Financial Officer pursuant to Section 906
            of the Sarbanes-Oxley Act of 2002. *

           -------------------

*           Filed herewith.

(1)         Incorporated by reference to the Company's Current Report on Form
            8-K filed on March 29, 2004

(2)         Incorporated by reference to the Company's Current Report on Form
            8-K filed on August 30, 2004.

                                       27
<PAGE>

(3)         Incorporated by reference to the Company's Registration Statement on
            Form SB-2, File No. 33-50506, effective October 20, 1993

(4)         Incorporated by reference to the Company's Current Report on Form
            8-K filed on September 30, 2004.

(5)         Incorporated by reference to the Company's Current Report on Form
            8-K filed on November 5, 2004.

(6)         Incorporated by reference to the Company's Current Report on Form
            8-K filed on March 23, 2005.

(7)         Incorporated by reference to the Company's Annual Report on Form
            10-KSB filed on March 31, 2005.

(8)         Incorporated by reference to the Company's Current Report on Form
            8-K filed on April 15, 2005.

(9)         Incorporated by reference to the Company's Current Report on Form
            8-K filed on May 4, 2005.

(10)        Incorporated by reference to the Company's Current Report on Form
            8-K filed on August 2, 2005.

(11)        Incorporated by reference to the Company's Current Report on Form
            8-K filed on August 23, 2005.

(12)        Incorporated by reference to the Company's Current Report on Form
            8-K filed on November 7, 2005.

(13)        Incorporated by reference to the Company's Current Report on Form
            8-K filed on December 8, 2005.

(14)        Incorporated by reference to the Company's Annual Report on Form
            10-KSB filed on March 30, 2006. o


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this item is contained in the First Amendment


                                       28
<PAGE>




                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Company caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


Date: July 6, 2006                WORLD WASTE TECHNOLOGIES, INC.


                                  By:     /s/ John Pimentel
                                  -------------------------------
                                          John Pimentel
                                          Chief Executive Officer

                                  By:     /s/ David A. Rane
                                  -------------------------------
                                          David A. Rane
                                          Chief Financial Officer




                                       29
<PAGE>




                              FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULE

 Report of Independent Registered Public Accounting Firm            F-2

 Consolidated Financial Statements, restated:
     Balance Sheet                                                  F-3
     Statement of Operations                                        F-4
     Statement of Stockholders' Equity                              F-5
     Statement of Cash Flow                                         F-6
 Notes to Consolidated Financial Statements                         F-7

                                      F - 1


<PAGE>
            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To The Board of Directors and Stockholders of World Waste Technologies, Inc.
San Diego, California

We have audited the accompanying balance sheet of World Waste Technologies, Inc.
as of December 31, 2005 and 2004 and the related statements of operations,
stockholders' deficit and cash flows for the two years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of World Waste Technologies, Inc.
as of December 31, 2005 and 2004 and the results of its operations and its cash
flows for the two years then ended, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the company as a going concern. As discussed in Note
2, the Company has incurred significant net losses since its inception and has
an accumulated deficit of $8,041,072 and expects to incur substantial additional
costs and capital expenditures to complete the initial facility and through the
initial year of processing. The Company has not generated any revenues to date.
The foregoing matters raise substantial doubt about the ability of the Company
to continue as a going concern. Management's plans in regard to these matters
are described in Note 2 of the accompanying financial statements. These
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.


/s/ Stonefield Josephson
------------------------
Stonefield Josephson


Los Angeles, California
February 17, 2006, Except for (Note 16, which is as of May 19, 2006)



                                      F - 2
<PAGE>





<TABLE>
<CAPTION>


                 World Waste Technologies, Inc. and Subsidiaries
                     (Formerly World Waste of America, Inc.)
                          (A Development Stage Company)
                           Consolidated Balance Sheet


                                                                     December 31,        December 31,
                                                                         2005                2004
                                                                      (Restated)          (Restated)
       ASSETS:
       Current Assets:
<S>                                                                <C>                 <C>
         Cash                                                      $    2,864,377      $    1,128,502
         Prepaid Expenses                                                 181,912              94,203
         Debt Offering Cost                                               453,264                   -
                                                                  ------------------------------------
       Total Current Assets                                             3,499,553           1,222,705
                                                                  ------------------------------------
       Fixed Assets:
         Machinery and Equipment, net of accumulated
          depreciation of $30,958 at  Dec. 31, 2005 and $16,508
          at Dec. 31, 2004                                             12,846,912             539,401
         Deposits on Equipment                                             79,372           3,417,959
         Construction in Progress                                       4,094,263           1,041,509
                                                                  ------------------------------------
       Total Fixed Assets                                              17,020,547           4,998,869
       Other Assets:
         Deposit L/T                                                      104,839             114,278
         Patent License                                                   556,605             556,605
                                                                  ------------------------------------
         TOTAL ASSETS                                              $   21,181,544      $    6,892,457
                                                                  ====================================
       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
       LIABILITIES:
       Current Liabilities:
         Accounts Payable                                          $    1,292,810      $    1,380,790
         Accrued Salaries Payable                                         217,684             132,703
         Accrued Litigation Payable                                             -             122,500
         Retention Payable                                                380,572                   -
         Deposit on Senior Secured Debt                                   250,000                   -
         Other Liabilities                                                188,039             114,242
         Current portion of Note Payable                                        -               5,343
                                                                  ------------------------------------
       Total Current Liabilities                                        2,329,105           1,755,578
                                                                  ------------------------------------
       Long-Term Liabilities:
         Note Payable, less current portion                                     -              17,025
         Senior Secured Debt, net (see Note 9)                          3,191,811                   -
         Warrant liabilities                                              618,654                   -
                                                                  ------------------------------------
       Total Long-Term Liabilities                                      3,810,465              17,025

                                                                  ------------------------------------
         TOTAL LIABILITIES                                              6,139,570           1,772,603
                                                                  ------------------------------------

       Redeemable Preferred Stock, net (see Note 10)                    7,096,544                   -
                                                                  ------------------------------------
       STOCKHOLDERS' EQUITY (DEFICIT):
         Common Stock - $.001 par value: 100,000,000 shares
          authorized, 24,686,230 and 22,725,190 shares issued
          and outstanding at Dec. 31, 2005 and at Dec. 31,
          2004                                                             24,686              22,725
         Additional Paid-in Capital                                    15,961,816           8,824,811
         Deficit Accumulated during development stage                  (8,041,072)         (3,727,682)
                                                                  ------------------------------------
         TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                           7,945,430           5,119,854
                                                                  ------------------------------------
         TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK
            AND STOCKHOLDERS' EQUITY (DEFICIT)                     $   21,181,544      $    6,892,457
                                                                  ====================================
</TABLE>

                                      F - 3


<PAGE>

<TABLE>
<CAPTION>



                 World Waste Technologies, Inc. and Subsidiaries
                     (Formerly World Waste of America, Inc.)
                          (A Development Stage Company)
                      Consolidated Statements of Operations


                                                             For the Year Ending             June 18, 2002
                                                                                            (Inception) to
                                                         Dec. 31, 2005     Dec. 31, 2004     Dec. 31, 2005
                                                        ----------------  ----------------  ----------------
                                                            (Restated)       (Restated)        (Restated)
<S>                                                      <C>               <C>               <C>
     GROSS REVENUE:                                      $            -    $            -    $            -

     EXPENSES:
       Research and Development                                (250,060)         (284,587)         (767,386)
       General and Administrative:                           (3,601,754)       (2,146,407)       (6,603,291)*

                                                        ----------------  ----------------  ----------------
       Loss from Operations                                  (3,851,814)       (2,430,994)       (7,370,677)
                                                        ----------------  ----------------  ----------------

       Interest Income (Expense)                                 63,485           (65,194)          (77,808)
       Change in fair value of warrant liabilities              709,412                 -           709,412
                                                        ----------------  ----------------  ----------------
       Net Loss before provision for Income Tax          $   (3,078,917)   $   (2,496,188)   $   (6,739,073)
                                                        ----------------  ----------------  ----------------

       Income Taxes                                                   -                 -                 -

                                                        ----------------  ----------------  ----------------
       Net Loss                                          $   (3,078,917)   $   (2,496,188)   $   (6,739,073)
                                                        ----------------  ----------------  ----------------

       Preferred Stock Dividend and amortization
        of preferred stock warrants, offering costs
        And the beneficial conversion feature                (1,234,473)                -        (1,234,473)

                                                        ----------------  ----------------  ----------------
       Net Loss available to common shareholders         $   (4,313,390)   $   (2,496,188)   $   (7,973,546)
                                                        ================  ================  ================

       Basic and diluted Net Loss available to common
        shareholders per share                           $        (0.18)   $        (0.15)   $        (0.51)
                                                        ================  ================  ================

       Weighted average number of shares
        outstanding used in calculation (see Note 3)         24,277,661        17,104,555        15,723,490
                                                        ================  ================  ================

     *    Approximately $67,526 in Consulting and Travel expenses
          incurred prior to inception of the business on June 18, 2002
          are not included.
</TABLE>

                                      F - 4


<PAGE>

<TABLE>
<CAPTION>



                 World Waste Technologies, Inc. and Subsidiaries
                     (Formerly World Waste of America, Inc.)
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)


                                               ----------------------    Additional    Common Stock   Accumulated
                                                 Shares     Dollars   Paid-in Capital  Subscription     Deficit *      Total
                                               --------------------------------------------------------------------------------
<S>                                             <C>           <C>         <C>         <C>             <C>          <C>
    Preformation Expenses                                                                               $(67,526)    $(67,526)


    Formation - June 18, 2002                    9,100,000     $100        $73,036                                     73,136
       Net Loss - 2002                                                                                  (359,363)    (359,363)
                                               --------------------------------------------------------------------------------
    December 31, 2002                            9,100,000     $100        $73,036                     ($426,889)   ($353,753)
                                               ================================================================================

       Additional Paid-in Capital                                              100                                        100
       Common Stock Subscribed                                                            125,000                     125,000
       Net Loss - 2003                                                                                  (804,605)    (804,605)
                                               --------------------------------------------------------------------------------
    December 31, 2003                            9,100,000     $100        $73,136       $125,000    ($1,231,494) ($1,033,258)
                                               ================================================================================

       Merger with Waste Solutions, Inc.         7,100,000       63          2,137                                      2,200
       Common Stock Subscriptions                  125,000        1        124,999       (125,000)
       Common Stock and warrants net of
        offering cost prior to VPTI merger,
        restated                                 3,045,206       31      3,952,321                                  3,952,352
       Shares cancelled                           (500,000)      (5)             5
       Warrants Issued, restated                                           281,171                                    281,171
       Merger with VPTI                          1,200,817   21,062        (21,062)
       Conversion of Promissory Notes            1,193,500       12      1,193,488                                  1,193,500
       Accrued Interest on Notes Forgiven                                  135,327                                    135,327
       Common Stock and warrants net of
        offering cost                            1,460,667    1,461      2,865,462                                  2,866,923
       Amortization of stock options and
        warrants, restated                                                 217,827                                    217,827
       Net Loss - 2004, restated                                                                      (2,496,188)  (2,496,188)
                                               --------------------------------------------------------------------------------
    December 31, 2004, restated                 22,725,190  $22,725     $8,824,811             $0    ($3,727,682)  $5,119,854
                                               ================================================================================

       Common Stock sold and warrants
        exercised, net of offering costs,
        restated                                 1,961,040    1,961      3,072,116                                  3,074,077
       Amortization of employee and consultant
        stock options and warrants, restated                               654,220                                    654,220
       Dividend (Preferred Stock)                                          106,645                      (671,768)    (565,123)
       Warrants Issued (Preferred Stock),
        restated                                                           861,853                                    861,853
       Bridge Financing Warrants, restated                               1,114,105                                  1,114,105
       Beneficial conversion feature on
        Redeemable Preferred Stock, restated                             1,328,066                                  1,328,066
       Amortization of Beneficial
        conversion feature, warrants, and
        offer costs on Redeemable
        Preferred Stock, restated                                                                       (562,705)    (562,705)
       Net Loss - 2005, restated                                                                      (3,078,917)  (3,078,917)
                                               --------------------------------------------------------------------------------
    December 31, 2005, restated                 24,686,230  $24,686    $15,961,816             $0    ($8,041,072)  $7,945,430
                                               ================================================================================

    * During 2002, the Company issued $67,526 of Convertible Promissory Notes
      payable for preformation funds received and expended prior to Inception.

</TABLE>

                                      F - 5


<PAGE>

<TABLE>
<CAPTION>


                 World Waste Technologies, Inc. and Subsidiaries
                     (Formerly World Waste of America, Inc.)
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flow


                                                               For the Year       For the Year       June 18, 2002
                                                                   Ending            Ending          (Inception) to
                                                            December 31, 2005   December 31, 2004   December 31, 2005
                                                            ------------------  ------------------  ------------------
                                                                 (Restated)
(Restated) (Restated)
        Cash Flow from Operating Activities:

<S>                                                               <C>                 <C>                 <C>
           Net Loss                                               $(3,078,917)        $(2,496,188)        $(6,739,073)
        Adjustments to reconcile net loss to net cash used
         in operating activities:
           Depreciation                                                14,450               8,315              30,958
           Interest Forgiveness                                                           135,327             135,327
           Warrant and Common Stock Issued for Consulting              10,000              74,566              84,566
           Amortization of warrants & Options to
            employees and consultants                                 654,220             217,827             872,046
           Change in Fair Value of warrant liabilities               (709,412)                               (709,412)

        Changes in operating assets and liabilities:
           Prepaid Expenses                                           (87,709)                               (181,912)
           Accounts Payable                                            64,761             102,230             179,491
           Accrued Salaries                                            84,981               9,873             217,684
           Accrued Litigation Settlement                             (122,500)            122,500
           Accrued Other Liabilities                                   61,898             (64,307)            176,140
                                                            ------------------  ------------------  ------------------
           Net Cash used in Operating Activities                   (3,108,228)         (1,889,857)         (5,934,185)
                                                            ------------------  ------------------  ------------------
        Cash flows from investing activities:
           Construction in Progress                                (3,387,621)           (633,068)         (4,043,205)
           Deposits on Equipment                                   (3,688,179)         (2,560,458)         (5,311,008)
           Purchase Machinery & Equipment                          (4,561,605)           (518,924)         (6,032,509)
           Purchase of Intangible                                                        (167,500)           (350,000)
           Notes Receivable                                                                12,336
           Deposit                                                      9,439            (114,278)           (104,839)
                                                            ------------------  ------------------  ------------------
           Net Cash used in Investing Activities                  (11,627,966)         (3,981,892)        (15,841,561)
                                                            ------------------  ------------------  ------------------
        Cash flows from financing activities:
           Note Payable                                               (22,368)             (5,342)
           Deposit on Senior Secured Debt                             250,000                                 250,000
           Redeemable Preferred Stock                               9,486,703                               9,486,701
           Senior Secured Debt                                      4,008,353                               4,008,353
           Senior Secured Debt Offering Cost                         (298,098)                               (298,098)
           Warrants, Common Stock and
            Additional Paid-in Capital                              3,047,479           6,837,975          11,193,167
                                                            ------------------  ------------------  ------------------
            Net Cash Provided by Financing Activities              16,472,069           6,832,633          24,640,123
                                                            ------------------  ------------------  ------------------
        Net Increase in Cash                                        1,735,875             960,883           2,864,377
        Beginning Cash                                              1,128,502             167,619
                                                            ------------------  ------------------  ------------------
        Ending Cash                                                $2,864,377          $1,128,502          $2,864,377
                                                            ==================  ==================  ==================
        Non-Cash Investing and Financing Activities:
           Interest (Paid) Received                                   $63,485            ($65,194)           ($77,808)
           Income Taxes Paid                                               $0                                      $0

        *    During 2002, the Company issued $67,526 of Convertible Promissory
             Notes payable for preformation funds received and expended prior to
             Inception.

        *    The Company issued warrants to purchase 315,354 shares of common
             stock to the placement agent for services rendered in connection
             with the fund raising effort.

        *    During 2004, the Company issued 1,193,500 shares of common stock
             upon conversion of the Convertible Promissory notes payable and
             accrued interest of $135,327.

        *    During 2004, the Company issued warrants to purchase 250,000 shares
             of its common stock for a modification to the technology license
             agreement.

        *    Accounts Payable of $1,113,319 retention payable of $380,572 and
             other liabilities of $11,899 at December 31,2005 related to asset
             acquisitions of Construction in progress of $73,574, deposits on
             equipment of $51,058 and machinery and equipment of $381,158. The
             impact has been adjusted in the year ending December 31, 2005 and
             June 18, 2002 (inception) to December 31, 2005 statements of cash
             flow.

        *    Accounts Payable of $1,266,060 and other liabilities of $114,242 at
             December 31, 2004 related to asset acquisitions of construction in
             progress of $408,441, deposits on equipment of $857,501 and
             machinery and equipment of $118. The impact has been adjusted in
             the year ending December 31, 2005 and June 18, 2002 (inception) to
             December 31, 2005 statements of cash flow.

        *    During the year ending December 31, 2005, $6,220,323 of deposits on
             equipment was transferred to machinery and equipment upon the
             receipt of the machinery and equipment by the company.
</TABLE>

                                      F - 6

<PAGE>



                 World Waste Technologies, Inc. and Subsidiaries
                     (Formerly World Waste of America, Inc.)
                          (A Development Stage Company)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2005

Note 1. DESCRIPTION OF BUSINESS

The accompanying consolidated financial statements include the accounts of World
Waste Technologies, Inc. (Formerly World Waste of America, Inc.) and its wholly
owned subsidiaries World Waste of Anaheim, Inc., and World Waste of California,
Inc. (collectively the "Company"). All significant inter-company accounts and
transactions have been eliminated upon consolidation. World Waste Technologies,
Inc. (WWTI), a California corporation, was formed on June 18, 2002 as World
Waste of America, Inc. WWTI holds the United States license from Bio-Products
International, Inc. with respect to patented technology developed at the
University of Alabama in Huntsville, and other related intellectual property,
which technology was designed to convert a large percent of municipal solid
waste into a cellulose biomass fiber containing material. It is anticipated that
additional value will be realized through the capture of inorganic, recyclable
materials such as aluminum, steel, tin, and other products. The Company intends
to generate revenue from receiving the waste (tipping fees) and from selling
cellulose fiber, recyclable materials and other products.

In March 2004, World Waste of America, Inc. (WWA), merged with a wholly owned
subsidiary of Waste Solutions, Inc. (WSI), a California corporation, and changed
its name to World Waste Technologies, Inc. (Old WWTI). Cagan McAfee Capital
Partners and its affiliates were the controlling shareholders of WSI. Prior to
the merger WSI had 7,100,000 shares of common stock outstanding and WWA had
9,100,000 shares of common stock outstanding. The merger was transacted by WSI
issuing one of its shares for each share of WWA. After the merger there were
16,200,000 shares outstanding. The transaction was accounted for as a reverse
merger of WWA, similar to a recapitalization, because the shareholders of WWA
became the controlling shareholders of the entity after the exchange.
Accordingly, for accounting purposes, the historical financial statements
presented are those of WWA.

In March 2004, Old WWTI entered into an Agreement and Plan of Reorganization
with Voice Powered Technologies International, Inc., a California corporation
("VPTI"), to merge with and into VPTI. VPTI was a publicly traded company
trading under the stock symbol VPTI.OB. VPTI had no material assets, liabilities
or operations. The merger with VPTI was completed on August 24, 2004. Pursuant
to the merger, Old WWTI shareholders received 20,063,706 VPTI shares or
approximately 95% of the outstanding shares of VPTI in exchange for 20,063,706
Old WWTI shares, or a one for one exchange. Upon completion of the merger, VPTI
changed its name to World Waste Technologies, Inc. Because the shareholders of
Old WWTI became the controlling shareholders of VPTI after the exchange, Old
WWTI was treated as the acquirer for accounting purposes, and therefore the
transaction was accounted for as a reverse merger. Accordingly, for accounting
purposes, the historical financial statements presented are those of Old WWTI.

Note 2. GOING CONCERN

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company had a net loss for
the year ended December 31, 2005 of $3,078,917 compared to a net loss of
$2,496,188 for the year ended December 31, 2004, and the Company had an
accumulated deficit attributable to common shareholders of $8,041,072 at
December 31, 2005. The Company expects to incur substantial additional costs and
capital expenditures to complete its initial facility and through the initial
year of processing. The ability to complete and operate the facility is subject
to the Company obtaining funding and/or obtaining equipment financing. If this
funding is not obtained the Company may be unable to continue as a going concern
for a reasonable period of time.

The Company intends to raise additional debt and/or equity financing to sustain
its operations and to complete its capital expenditures, although there can be
no assurance that it will be able to raise such funds on terms acceptable to the
Company, or at all.

                                      F - 7

<PAGE>



The consolidated financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern is dependent upon its ability to generate sufficient cash flow to meet
its obligations on a timely basis, to obtain additional financing, and
ultimately to attain successful operations.

Note 3. SUMMARY OF ITS SIGNIFICANT ACCOUNTING POLICIES



                            Amendment and Restatement

The accompanying consolidated financial statements are amended and restated from
the original Form 10-KSB filed March 30, 2006. (see note 16)



                              Basis of Presentation

The accompanying consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United States of America.
The Company is a new enterprise in the development stage as defined by Statement
No. 7 of the Financial Accounting Standards Board, since it has derived no
revenues from its activities to date.

                                Use of Estimates

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

                            Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less when purchased, which are not securing any corporate obligations,
to be cash equivalents. The Company has no cash equivalents at December 31,
2005.

                          Concentration of Credit Risk

The Company maintains its cash balances in a financial institution. Cash
balances at the institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. The Company has not experienced any losses in
connection with such accounts.

                                  Fixed Assets

Machinery and Equipment is stated at cost. Depreciation is computed on the
straight-line method over the estimated useful asset lives, to commence when the
asset is put in use.

The Company is in the process of constructing its initial plant in Anaheim,
California and plans to capitalize all costs directly associated with developing
the plant throughout the remainder of construction. Construction was completed
and testing, commissioning and operations started in the second quarter 2006.

                                   Intangibles

Intangible assets are recorded at cost. At December 31, 2005 and December 31,
2004, the Company's only intangible asset was the license from Bio-Products for
the patented technology and other related intellectual property. The Company
will begin amortizing this intangible asset upon completion of its first
facility on a straight-line basis over the remaining life of the license. The
Company's policy regarding intangible assets is to review such intangible assets
for impairment whenever events or changes in circumstances indicate that its
carrying amount may not be recoverable. If the review indicates that intangible
assets are not recoverable (i.e. the carrying amount is more than the future
projected undiscounted cash flows), its carrying amount would be reduced to fair
value. The Company carried no goodwill on its books at either December 31, 2005
or December 31, 2004. Further, during the years ended December 31, 2005 or
December 31, 2004, the Company had no material impairment to its intangible
asset.

                                      F - 8

<PAGE>



                     Redeemable Convertible Preferred Stock

Preferred Stock which may redeemable for cash at the determination of the holder
is classified as mezzanine equity.

                            Research and Development

Research and development costs are charged to operations when incurred.

                                  Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." In
accordance with SFAS No. 109, the Company records a valuation allowance against
net deferred tax assets if, based upon the available evidence, it is more likely
than not that some or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income and when temporary differences become deductible. The
Company considers, among other available information, uncertainties surrounding
the recoverability of deferred tax assets, scheduled reversals of deferred tax
liabilities, projected future taxable income, and other matters in making this
assessment.

                                Segment Reporting

The Company currently operates in a single segment. In addition, financial
results are prepared and reviewed by management as a single operating segment.
The Company continually evaluates its operating activities and the method
utilized by management to evaluate such activities and will report on a segment
basis when appropriate to do so.

                              Comprehensive Income

SFAS No. 130, "Reporting Comprehensive Income," establishes standards for the
reporting and display of comprehensive income and its components in the
financial statements. As of December 31, 2005 and December 31, 2004, the Company
has no items that represent other comprehensive income and, therefore, has not
included a schedule of comprehensive income in the consolidated financial
statements.

                       Fair Value of Financial Instruments

The carrying values of cash, note receivable, note payable, accounts payable and
other accrued liabilities approximate fair value due to either their short-term
nature or interest rates which approximate market rates.

                                Reclassification

Certain amounts for the year ended December 31, 2004 have been reclassified to
conform with the presentation of the December 31, 2005 amounts. These
reclassifications have no effect on reported net loss.

                       Stock-Based Compensation (Restated)

During the fourth quarter of 2004, the Company adopted SFAS No. 123 entitled,
"Accounting for Stock-Based Compensation." Accordingly, the Company has expensed
the compensation cost for the options and warrants issued based on the fair
value at the warrant grant dates. The Company recognized an expense of $422,708
and $45,577 in 2005 and 2004, respectively, related to the value of options and
warrants issued to employees and directors.

                                      F - 9

<PAGE>



The fair value of these warrants was estimated at the dates of grant using the
Black-Scholes option valuation model with the following weighted-average
assumptions:

                                                     For the Year Ended
                                              --------------------------------
                                               December 31,       December 31,
                                                  2005               2004
                                                 ------             ------
       Risk-free interest rate                3.75 to 4.82           3.6%
       Dividend yield                              --                 --
       Volatility                                  70%                70%


The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restriction and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's options and warrants issued to employees have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

Employee and Director Options and Warrants
<TABLE>
<CAPTION>

                                                             Average Exercise   Weighted Average Grant
                                                    Number        Price            Date Fair Value
                                                   -------   ----------------   ----------------------
<S>                                                 <C>        <C>               <C>
     Outstanding at December 31, 2003
     Granted during the period                     407,000        $2.18                $1.20
     Vested during the period                         --            --                   --
     Forfeited during the period                      --            --                   --
     Exercised during the period                      --            --                   --
     Exercisable at December 31, 2004                 --            --                   --
     Outstanding at December 31, 2004              407,000        $2.18                $1.20
     Granted during the period                   1,830,000        $3.11                $1.55
     Vested during the period                      248,667        $2.23                $1.13
     Forfeited during the period                   650,000        $4.21                $2.32
     Exercised during the period                      --            --                   --
     Outstanding at December 31, 2005            1,587,000        $2.42                $1.15
     Exercisable at December 31, 2005              248,667        $2.23                $1.13
</TABLE>


During the year ended December 31, 2004, the Company issued 250,000 warrants to
officers of the Company. In addition, during the year ended December 31, 2004,
the Company adopted the 2004 Incentive Stock Option Plan (Plan) with 2,000,000
shares available for grant. Options available for grant at December 31, 2005 and
2004 were, 633,000 and 1,843,000, respectively. Options are granted from time to
time to officers and directors. Options granted to date from the plan have been
at the market price on the date of the grant and vest over one to four years and
are exercisable over a five to ten year period.

The weighted average remaining vesting period of employee and director options
and warrants outstanding is 2.7 years.

                                     F - 10

<PAGE>



Non employment stock based compensation

During 2004 and 2005, the Company issued the following warrants to purchase the
Company's stock as part of investment units or as payment for services rendered
to the Company.
<TABLE>
<CAPTION>

                                                                          Average Exercise   Weighted Average Grant
                                                                 Number        Price            Date Fair Value
                                                                -------   ----------------   ----------------------
<S>                                                              <C>        <C>               <C>
                  Outstanding at December 31, 2003                 --            --                   --
                  Granted during the period                   1,448,671        $0.75                $1.40
                  Vested during the period                    1,448,671        $0.75                $1.40
                  Exercised during the period                    460335        $0.03                $1.74
                  Exercisable at December 31, 2004              988,336        $1.08                $1.24
                  Outstanding at December 31, 2004              988,336        $1.08                $1.24
                  Granted during the period                   1,850,726        $1.66                $2.23
                  Vested during the period                    1,850,726        $1.66                $2.23
                  Exercised during the period                   626,700        $0.14                $1.87
                  Outstanding at December 31, 2005            2,212,362        $1.83                $1.84
                  Exercisable at December 31, 2005            2,212,362        $1.83                $1.84
</TABLE>


Earnings Per Share

The Company has adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS No. 128). SFAS No. 128 provides for the calculation
of basic and diluted earnings per share.

Basic earnings per share includes no dilution and is computed by dividing income
available to common shareholders by the weighted average number of common shares
outstanding for the period. Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of an entity, such as
stock options, warrants or convertible securities. Due to their anti-dilutive
effect, common stock equivalents of 8,101,011 in 2005 and 1,395,338 in 2004 were
not included in the calculation of diluted earnings per share. Common stock
equivalents at December 31, 2005 are comprised of employee options of 1,587,000,
non employee options of 2,212,362 discussed above and Convertible Series A
Preferred Stock plus accumulated dividends convertible at $2.50 per share of
4,301,649.

New Accounting Pronouncements

SFAS No. 155, Accounting for Certain Hybrid Financial Instruments - An Amendment
of FASB Statements No. 133 and 140 This statement provides for the following: 1.
Clarifies which interest-only strips and principal-only strips are not subject
to the requirements of Statement 133; 2. Establishes a requirement to evaluate
interests in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments that contain
an embedded derivative requiring bifurcation; 3. Clarifies that concentrations
of credit risk in the form of subordination are not embedded derivatives; and 4.
Amends Statement 140 to eliminate the prohibition on a qualifying
special-purpose entity from holding a derivative financial instrument that
pertains to a beneficial interest other than another derivative financial
instrument. Statement 155 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. Management believes that this statement will not have a
significant impact on the Company's financial statements.

                                     F - 11

<PAGE>



SFAS No. 154, Accounting Changes and Error Corrections - A Replacement of APB
Opinion No. 20 and FASB Statement No. 3 Among other changes, Statement 154
requires that a voluntary change in accounting principle be applied
retrospectively with all prior period financial statements presented on the new
accounting principle, unless it is impracticable to do so. Statement 154 also
provides that (1) a change in method of depreciating or amortizing a long-lived
non financial asset be accounted for as a change in estimate (prospectively)
that was effected by a change in accounting principle, and (2) correction of
errors in previously issued financial statements should be termed a
"restatement." The new standard is effective for accounting changes and
correction of errors made in fiscal years beginning after December 15, 2005.
Early adoption of this standard is permitted for accounting changes and
correction of errors made in fiscal years beginning after June 1, 2005.
Management believes that this statement will not have a significant impact on
the Company's financial statements.

SFAS No. 123 (Revised 2004), Share-Based Payment The new FASB rule requires that
the compensation cost relating to share-based payment transactions be recognized
in financial statements. That cost will be measured based on the fair value of
the equity or liability instruments issued. Public entities (other than those
filing as small business issuers) will be required to apply Statement 123R as of
the first interim or annual reporting period that begins after June 15, 2005
Public entities that file as small business issuers will be required to apply
Statement 123R in the first interim or annual reporting period that begins after
December 15, 2005. As the Company uses the fair value method to measure its
equity instruments, management believes that this statement will not have a
significant impact on the Company's financial statements.

Issue 05-8, "Income Tax Consequences of Issuing Convertible Debt with a
Beneficial Conversion Feature" Application of Issue No. 98-5 to Certain
Convertible Instruments," provide guidance on how companies should bifurcate
convertible debt issued with a beneficial conversion feature into a liability
and an equity component. For income tax purposes, such an instrument is only
recorded as a liability. A question has been raised as to whether a basis
difference results from the issuance of convertible debt with a beneficial
conversion feature and, if so, whether the basis difference is a temporary
difference. This issue has been added to the EITF's agenda to address these
questions. Consensus was agreed to at the September 15, 2005 meeting and
ratified by the FASB at the meeting on September 28, 2005. The Company account
for the income tax consequences of the beneficial conversion feature of it
Series A Preferred Stock consistent with this consensus.

Issue 05-7, "Accounting for Modifications to Conversion Options Embedded in Debt
Securities and Related Issues" EITF Issue No. 96-19, "Debtor's Accounting for a
Modification or Exchange of Debt Instruments," provides guidance on whether
modifications of debt result in an extinguishment of that debt. In certain
situations, companies may change the terms of a conversion option as part of a
debt modification, which may result in the following circumstances: (a) the
change in the conversion option's terms causes the fair value of the conversion
option to change but does not result in the modification meeting the condition
in Issue 96-19 that would require the modification to be accounted for as an
extinguishment of debt, and (b) the change in the conversion option's terms did
not result in separate accounting for the conversion option under Statement 133.
When both of these circumstances exist, questions have arisen regarding whether
(a) the modification to the conversion option, which changes its fair value,
should affect subsequent interest expense recognition related to the debt and
(b) a beneficial conversion feature related to a debt modification should be
recognized by the borrower if the modification increases the intrinsic value of
the debt. This issue has been added to the EITF's agenda to address these
questions. Consensus was agreed to at the September 15, 2005 meeting and
ratified by the FASB at the meeting on September 28, 2005. Management does not
believe that this consensus will have a significant impact on the Company's
financial statements.

                                     F - 12

<PAGE>



EITF Issue 05-2, The Meaning of "Conventional Convertible Debt Instrument" in
EITF Issue 00-19, "Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Company's Own Stock" Paragraph 4 of Issue 00-19
states that "the requirements of paragraphs 12-32 of this issue do not apply if
the hybrid contract is a conventional convertible debt instrument in which the
holder may only realize the value of the conversion option by exercising the
option and receiving the entire proceeds in a fixed number of shares or the
equivalent amount of cash (at the discretion of the issuer)". The term
"conventional convertible debt instrument" is not defined in Issue 00-19 and, as
a result, questions have arisen regarding when a convertible debt instrument
should be considered "conventional" for purposes of Issue 00-19. A question has
also arisen related to whether conventional convertible preferred stock should
be treated similar to conventional convertible debt. This issue was added to the
EITF's agenda to address these questions. Consensus was reached at the June
15-16, 2005 meeting and was ratified by the FASB at the June 29, 2005 meeting.
Management believes that this consensus will not have a significant impact on
the Company's financial statements.

Note 4. LICENSE AGREEMENT, RESTATED

On June 21, 2002, the Company entered into a U.S. technology license agreement
with Bio-Products International, Inc., an Alabama corporation with respect to
certain intellectual property and patented methods and processes. This agreement
was amended on June 21, 2004 and again on August 19, 2005. The technology was
designed to provide for the processing and separation of material contained in
Municipal Solid Waste (MSW). This unique process, treats MSW with a combination
of time, temperature and steam pressure. Temperatures of several hundred degrees
cook the material and the pressure, and agitation causes a pulping action. This
combination is designed to result in a large volume reduction, yielding
high-density, cellulose biomass product that is ready for processing and/or
market. The most recent patent includes the capturing of all Volatile Organic
Compounds and was granted by the United States Patent and Trademark Office in
October 2001.

The University of Alabama in Huntsville currently owns the patent for this
technology. This patent was licensed to Bio-Products International, Inc.
("Bio-Products") and this license was assigned to the Company for the United
States. Bio-Products is required to continue to make certain payments to the
University of Alabama in Huntsville to maintain exclusivity to the patent for
the technology.

The license extends for a period of 20 years from the effective date of the
agreement. The agreement shall be automatically extended until the expiration
date of the last patent issued to Bio-Products and/or the University of Alabama
in Huntsville covering the technology.

For the license, the Company agreed to pay a one-time fee of $350,000, payable
in several installments. The Company has recorded an intangible asset of
$350,000 at December 31, 2003 and has recorded a payable for the outstanding
balance of $167,500 at December 31, 2003. The final installment of $167,500 was
paid in August 2004, two years after the signing of the agreement. The license
will be amortized over the remaining life of the license beginning when the
Company's plant is first operational.

During June 2004, the Company issued warrants to purchase 250,000 shares of its
common stock at $1.50 per share to the owners of Bio-Products in consideration
for their assistance in obtaining certain modifications and amendments to the
license agreement. The fair value of the warrants of $206,605 was estimated at
the date of grant using the option valuation model. The value of the warrants
was estimated using the Black-Scholes option pricing model with the following
assumptions: average risk-free interest of 3.6%; dividend yield of 0%; average
volatility factor of the expected market price of the Company's common stock of
70%; and a term of 4 years. The Company recorded the $206,605 fair value of the
warrants as an increase to the capitalized license.

                                     F - 13

<PAGE>



In addition, the Company is obligated to pay a royalty for every ton of waste
processed using the licensed technology as follows:

              Rate                   Tons processed per day
     ----------------------    ----------------------------------

             $0.50                       1      -       2,000

             $1.00                   2,001      -      10,000

             $1.50                  10,001             and up


The Company is also obligated to pay a bonus to Bio-Products of two and one half
percent (2.5%) of the gross sales price in excess of ten dollars ($10.00) per
ton for the cellulose biomass product produced from MSW, utilizing the
technology.

As additional consideration and for their experience and know-how regarding the
technology, the Company agreed to pay Bio-Products a monthly payment for
technical services of ten thousand dollars ($10,000) per month from January 2003
to April 2004 and twenty thousand dollars ($20,000) per month until the first
plant becomes operational and then $15,000 per month for five years thereafter.
As of December 31, 2005, all amounts due through such date have been paid.

Due to the proprietary nature of the vessel design utilized in the process, the
Company also agreed that Bio-Products shall maintain the exclusive right of
vessel manufacture, and the Company shall purchase all required process vessels
exclusively from Bio-Products at a purchase price of cost plus 15%.

Note 5. SIGNIFICANT CONTRACT

In June 2003, the Company signed a 10-year contract with Taormina Industries,
LLC, a wholly owned division of Republic Services, Inc., whereby TI has agreed
to deliver residual waste to the Company for processing at its initial facility
which will be located on the campus of TI in Anaheim, CA and is expected to be
capable of processing approximately 500 tons per day. The second phase of the
contract calls for the Company to build up to a 2,000 ton per day plant in the
Orange County, California-area at a site mutually agreeable to both parties. It
is estimated that the initial facility will cost the Company approximately $20
million and is projected to be completed and operations started in the second
quarter of 2006, assuming funds are available. It is estimated that the second
phase will cost the Company approximately $50 million, excluding land and
building, and is projected to be completed in 2007 or 2008, if the Company is
successful in raising the necessary funds in a timely manner. The agreement also
grants TI a right of first refusal for an additional 10 counties throughout
California where TI has operations. Under the terms of this contract, TI is
obligated to pay a per ton tipping fee to the Company. The initial tipping fee
is $30 per ton (payable monthly) of "Net Processed Waste" (defined as the total
RMSW delivered to us less the total residual/non-processed waste removed by
Taormina for handling and disposal by Taormina). The tipping fee is subject to
increase or decrease based upon changes in certain county landfill disposal fees
Taormina is required to pay. Our process is also expected to mechanically sort
and collect standard recyclable materials such as scrap steel, cans, and
aluminum. Although the Company has not concluded on the economic feasibility on
a commercial scale, it intends to study the possibility of making other products
such as higher value paper products, ethanol, refuse derived fuel, cellulose
insulation and building product additives. Under the terms of this first
contract, these materials will be collected and sold to Taormina for resale to
commodities buyers. The ultimate success of the Company is highly dependent on
the ability of both parties to the contract to fulfill their obligations, of
which there can be no assurance. The contract provides for three five year
extensions.

                                     F - 14

<PAGE>



Effective July 26, 2004, the Company entered into a ten-year operating lease
agreement, with one option for an additional 5-year extension, with TI for the
site of the Company's initial processing facility. This lease agreement was
amended on March 17, 2005 and July 27, 2005. The lease requires monthly rent of
$15,900, subject to annual cost-of-living adjustments. The Company paid the
lessor $95,400 upon execution of the lease representing prepaid rent of $63,600
and a $31,800 security deposit. The Company will also be required to lease
facilities to complete the second phase of the contract.

Note 6. CONVERTIBLE PROMISSORY NOTES PAYABLE, NET

Convertible Promissory Notes Payable were convertible into common stock of World
Waste of Anaheim, Inc. until 90 days after the first plant is fully operational.
The number of shares shall be equal in value to the outstanding balance of the
note and shall constitute 0.01% ownership in World Waste of Anaheim, Inc. for
each $1,000 of the Note Payable. The Notes accrued interest at eight percent
(8%) per annum. Unconverted promissory notes payable plus accrued interest were
due and payable December 31, 2004. The Notes also had piggyback registration
rights and were convertible into the Company's Common Stock at $1.00 per share
in the event the Company becomes a public entity. All notes were converted to
Common Stock of the Company at the time of the merger with VPTI in August 2004
and all accrued interest of $135,327 was forgiven and credited to Additional
Paid in Capital.

Note 7. INCOME TAXES

The components of the income tax (expense) benefit for the fiscal years ended
December 31, 2005 and 2004, and for the period from June 18, 2002 (Inception) to
December 31, 2005, are as follows:
<TABLE>
<CAPTION>

                                                                                                      June 18, 2002
                                                                       December 31,    December 31,    to December
                                                                           2005            2004          31, 2005
                                                                     --------------- --------------- ---------------
               Federal (expense) benefit:
<S>                                                                   <C>             <C>             <C>
               Current                                                            0               0               0
               Deferred                                                   1,025,022         745,151       2,152,683
               Valuation allowance                                       (1,025,022)       (745,151)     (2,152,683)
               State (expense) benefit:
               Current
               Deferred                                                     279,770         212,294         600,928
               Valuation allowance                                         (279,770)       (212,294)       (600,928)

                                                                     --------------- --------------- ---------------
               Total income tax (expense) benefit                                 0               0               0
                                                                     =============== =============== ===============
</TABLE>


The income tax (expense) benefit differs from the federal statutory rate because
of the effects of the following items for the fiscal years ended December 31,
2005 and 2004, and for the period from June 18, 2002 (Inception) to December 31,
2005:
<TABLE>
<CAPTION>
                                                                                                      June 18, 2002
                                                                       December 31,    December 31,    to December
                                                                           2005            2004          31, 2005
                                                                     --------------- --------------- ---------------
<S>                                                                            <C>             <C>             <C>
               Statutory rate                                                  34.0%           34.0%           34.0%
               State income taxes, net of federal benefit                       5.7%            5.6%            5.7%
               Start-up costs                                                   0.0%            0.0%            0.3%
               Non-deductible items                                             1.6%           -0.9%            0.4%
               Change in valuation allowance                                  -41.3%          -38.7%          -40.4%

                                                                     --------------- --------------- ---------------
               Effective tax (expense) benefit rate                             0.0%            0.0%            0.0%
                                                                     =============== =============== ===============
</TABLE>

                                     F - 15

<PAGE>



Deferred income taxes are provided to reflect temporary differences in the basis
of net assets for income tax and financial reporting purposes, as well as
available tax credits.

The tax effected temporary differences and credit carry-forwards comprising the
Company's deferred income taxes as of December 31, 2005 and 2004 are as follows:

<TABLE>
<CAPTION>
                                                                  December 31,    December 31,
                                                                      2005            2004
                                                                  ----------------------------
<S>                                                                  <C>             <C>
              State taxes                                            (204,316)       (108,378)
              Difference in basis of property                         (85,530)              0
              Mark-to-Market Adjustment                              (165,346)              0
              Capitalized Start-up costs                              524,702         674,616
              Reserves not currently deductible                        50,709          87,691
              Deferred compensation                                   252,727          66,963
              Net operating losses                                  2,380,665         727,927
              Valuation Allowance                                  (2,753,611)     (1,448,819)

                                                                  ----------------------------
              Net deferred income tax asset                                 0               0
                                                                  ============================
</TABLE>


The Company has recorded a valuation allowance in the amount set forth above for
certain deferred tax assets where it is more likely than not the Company will
not realize future tax benefits related to these items. The net changes in the
valuation allowance for the fiscal years ended December 31, 2005 and 2004, and
for the period from June 18, 2002 (Inception) through December 31, 2005 were
$1,304,792, $957,445 and $2,753,611, respectively.

As of December 31, 2005, the Company has federal and state net operating loss
carryforwards available to offset future taxable income of approximately
$5,584,869 and $5,450,338, respectively. These federal and state net operating
loss carryforwards expire through 2025 and 2015, respectively.

The Tax Reform Act of 1986 imposed substantial restrictions on the utilization
of NOLs in the event of an "ownership change" (as defined in the Internal
Revenue Code) of a corporation. The NOLs attributable to Voice Powered
Technology International before its merger with World Waste of America, Inc. are
almost completely limited according to these provisions. As such, the Company
has excluded a significant portion of them in this analysis.

Note 8. NOTE PAYABLE

Note payable is comprised as follows:

                                                     December 31,   December 31,
                                                         2005           2004
                                                       --------       --------

  Note Payable, monthly installments of $575, with
  interest at 7.8%, secured by a vehicle               $   --         $ 22,368

  Less: Current portion                                    --            5,343
                                                       --------       --------
                                                       $   --         $ 17,025
                                                       ========       ========


During the first quarter of 2005, the note was paid in full.

                                     F - 16

<PAGE>



Note 9. SENIOR SECURED DEBT, RESTATED

On November 1, 2005, the Company sold to accredited investors $4,015,000
aggregate principal amount of senior secured notes and Warrants to purchase up
to a total of 529,980 shares of Common Stock. The Notes are due and payable in
full on the earlier to occur of (i) the closing of one or more equity financings
generating gross proceeds in an aggregate amount of at least $9.0 million, or
(ii) May 1, 2007. The Notes bear interest at an annual rate of 10.00% payable
quarterly in arrears, on December 31, March 31, June 30 and September 30 of each
year, beginning on December 31, 2005. The Notes are secured by a first-priority
lien on substantially all of the Company's assets, and rank pari passu in right
of payment with all existing and future senior indebtedness of the Company, and
senior in right of payment to any subordinated indebtedness. If an event of
default on the Notes occurs, the principal amount of the Notes, plus accrued and
unpaid interest, if any, may be declared immediately due and payable, subject to
certain conditions set forth in the Notes. These amounts automatically become
due and payable in the case of certain types of bankruptcy or insolvency events
of default involving the Company.

The Warrants are exercisable for a period of five years commencing as of their
issuance date, at an exercise price of $0.01 per share. In connection with the
sale and issuance of these securities, the Company and the investors entered
into a Registration Rights Agreement, dated November 1, 2005, and subsequently
amended on February 10, 2006, pursuant to which the Company agreed to use best
efforts to include the shares of Common Stock issuable upon exercise of the
Warrants on a registration statement filed by the Company with the Securities
and Exchange Commission. The fair value of the warrants was $1,187,422. The
value of the warrants was estimated using the Black-Scholes option pricing model
with the following assumptions: average risk-free interest of 4.82%; dividend
yield of 0%; average volatility factor of the expected market price of the
Company's common stock of 70%; and a term of one and a half years. In accordance
with APB Opinion 14, the fair value of the warrant issued to the investors of
$1,187,422, is shown as a discount to the face value of the Notes on the balance
sheet at its relative fair value of $923,450.

Chadbourn Securities, Inc. served as the Company's placement agent in connection
with the offering in certain states in which Chadbourn is registered with the
NASD as a broker/dealer (the "Chadbourn States"), and, for serving as such,
received a cash fee from the Company of $307,340, and was issued warrants to
acquire up to 134,600 shares of Common Stock at an exercise price of $2.50 per
share and otherwise on the same terms as the Warrants sold to the investors. The
Company also agreed to reimburse Chadbourn for its reasonable expenses incurred
in connection with the offering. Chadbourn in turn has re-allowed a portion of
these fees ($267,550 in cash and warrants to acquire up to 79,300 shares of
Common Stock) to Northeast Securities, Inc., an NASD registered broker/dealer
("NES"), in connection with NES acting as a selling agent for the offering.

NES also received a cash fee from the Company equal to 8.0% of the principal
amount of Notes sold in all non-Chadbourn States (for a total cash fee of
$4,000) and warrants to acquire up to 2,000 shares of Common Stock. The Company
also agreed to reimburse NES for its reasonable expenses incurred in connection
with the offering.

In addition to the fees referred to above, the Company paid $10,000 in cash and
issued warrants to acquire up to 24,000 shares of Common Stock to third party
finders.

The fair value of all of the 160,600 placement warrants, was $193,594. The value
of the warrants was estimated using the Black-Scholes option pricing model with
the following assumptions: average risk-free interest of 4.82%; dividend yield
of 0%; average volatility factor of the expected market price of the Company's
common stock of 70%; and a term of four years. The value of the warrants was
deducted along with the cash placement fees paid from the face value of the debt
and is being amortized as additional interest expense.

The Company's chief executive officer, works with Cagan McAfee Capital Partners,
LLC ("CMCP"); Laird Cagan, a Managing Director of CMCP, acted as a registered
representative of Chadbourn in connection with this offering.

                                     F - 17

<PAGE>



The debt offering cost of $514,934, consisting of cash of $321,340 and warrant
value of $193,594, is shown as a current asset and is being amortized over 18
months. In accordance with APB Opinion 14, the fair value of the warrant issued
to the investors of $1,187,422, is shown as a discount to the face value of the
Notes on the balance sheet at its relative fair value of $923,450 and is also
being amortized over 18 months, the term of the Notes.

The interest expense of $68,032 and the amortization of the offering costs and
warrant value of $188,323 were capitalized as construction cost on the Anaheim
facility.

Note 10. SERIES A CUMULATIVE REDEEMABLE CONVERTIBLE PARTICIPATING PREFERRED
STOCK, RESTATED

On April 28, 2005, the Company entered into a Securities Purchase Agreement
whereby the Company sold and issued 4,000,000 shares of newly created 8% Series
A Cumulative Redeemable Convertible Participating Preferred Stock of the Company
(the "Series A Preferred") and warrants (the "Warrants," and, together with the
Series A Preferred, the "Securities") to purchase up to 400,000 shares of common
stock of the Company. On May 9, 2005, the Company entered into a Securities
Purchase Agreement whereby the Company sold and issued an additional 75,600
shares of Series A Preferred Stock and Warrants to purchase up to 7,560 shares
of common stock of the Company. The gross aggregate proceeds to the Company from
the sales of the securities were $10,189,000.

The Company is required to apply the proceeds of the sale of the Securities
primarily to the construction and operation of the Company's initial plant in
Anaheim, California. The investors are entitled to recommend for election to the
Company's Board of Directors two individuals designated by such investors. Two
employee directors resigned from the board of directors upon the election of the
investors' designees.

Holders of Series A Preferred are entitled to receive cumulative dividends,
payable quarterly in additional shares of Series A Preferred, at the rate of 8%
per annum. This dividend rate is subject to increase to 9% in the event the
Company does not comply with certain registration rights provisions. Each share
of Series A Preferred is entitled to that number of votes equal to the number of
whole shares of the Common Stock into which it is convertible. In addition, so
long as at least 50% of the shares of Series A Preferred remain outstanding, the
Company is prohibited from taking certain actions without the approval of the
holders of a majority of the outstanding shares of Series A Preferred.

The holders of a majority of the shares of Series A Preferred have the option to
require the Company to redeem all outstanding shares of Series A Preferred on
the five year anniversary of issuance at a redemption price equal to $2.50 per
share, plus accrued and unpaid dividends to that date. In the event the holders
do not exercise this redemption right, all shares of Series A Preferred will
automatically convert into shares of Common Stock on such five-year anniversary,
as described below.

Each share of Series A Preferred will automatically convert into one share of
Common Stock (i) in the event the Company consummates an underwritten public
offering of its securities at a price per share not less than $5.00 and for a
total gross offering amount of at least $10 million, (ii) in the event of a sale
of the Company resulting in proceeds to the holders of Series A Preferred of a
per share amount of at least $5.00, (iii) in the event that the closing market
price of the Common Stock averages at least $7.50 per share over a period of 20
consecutive trading days and the daily trading volume averages at least 75,000
shares over such period, (iv) upon the approval of a majority of the
then-outstanding shares of Series A Preferred, or (v) unless the Company is
otherwise obligated to redeem the shares as described above, on April 28, 2010.

Each holder has the right to convert its shares Series A Preferred into shares
of Common Stock on a one-for-one basis at any time following the first to occur
of September 30, 2006 or the Operational Date.

The Warrants are exercisable for a period of five years commencing as of their
issuance date, at an exercise price of $4.00 per share. The fair value of the
warrants was $1,328,066. The value of the warrants was estimated using the
Black-Scholes option pricing model with the following assumptions: average
risk-free interest of 3.75%; dividend yield of 0%; average volatility factor of
the expected market price of the Company's common stock of 70%; and a term of
five years. The value of the warrants was deducted from the face amount of the
Series A Preferred and is being amortized as dividends. In accordance with EITF
00-19, the value of the warrants have been recorded as a liability until such
time as the Company meets the registration obligation of the underlying shares.
In accordance with SFAS 133 the warrant liability is adjusted to its fair value,
and the adjustment is recorded as other income (expense). As the fair value of
the warrants at December 31, 2005 was determined to be $618,653 compared to
$1,328,066 at issuance, the Company has recognized other income of $709,413
during 2005 as a result of this adjustment.



                                      F - 18


<PAGE>



In accordance with EITF 98-5 and 00-27 it was determined that the Series A
Preferred's effective conversion price was issued at a discount to fair value.
The value of this discount, called a beneficial conversion feature, was
determined to be $1,328,066. The beneficial conversion feature was deducted from
the carrying value of the Series A Preferred stock and is amortized over five
years. The amortization amount is treated consistent with preferred stock
dividends. In connection with the issuance of the Securities, on April 28, 2005,
the Company entered into a Registration Rights Agreement granting the investors
certain demand and piggyback registration rights of the common stock issued upon
conversion of the Series A Preferred and exercise of the Warrants. The Company
filed a registration statement on August 4, 2005 to register for resale the
underlying common stock shares related to the conversion feature of the Series A
Preferred and the related Warrants. The registration statement was withdrawn on
December 19, 2005. As of March 15, 2006, the registration statement has not been
re-filed.

In connection with this transaction, certain of the Company's officers and
significant shareholders agreed that, subject to certain exceptions, they would
not offer, sell, contract to sell, lend, pledge, grant any option to purchase,
make any short sale or otherwise dispose of any shares of Common Stock, or any
options or warrants to purchase any shares of Common Stock with respect to which
the holder has beneficial ownership until the earlier of 90 days following the
conversion into Common Stock of at least 50% of the shares of Series A Preferred
Stock, or 90 days following the closing of a Qualified Public Offering as
defined in the agreement.

Chadbourn Securities, Inc. served as the Company's placement agent in connection
with the offering, and for serving as such, received a cash fee from the Company
of $375,000, and was issued warrants to acquire up to 244,536 shares of Common
Stock at an exercise price of $2.50 per share and otherwise on the same terms as
the Warrants sold to the investors.

The fair value of the placement warrants was $861,852. The value of the warrants
was estimated using the Black-Scholes option pricing model with the following
assumptions: average risk-free interest of 6.75%; dividend yield of 0%; average
volatility factor of the expected market price of the Company's common stock of
70%; and a term of four years. The value of the warrants was discounted along
with the cash placement fees paid, $321,200, from the face value of the Series A
Preferred.

The accounting for the Series A Preferred is as follows:

            Gross proceeds                                       $10,189,000
            Less: beneficial conversion feature                   (1,328,066)
            Less: offering costs                                  (1,564,152)
            Less: warrant value at issuance date                  (1,328,066)
                                                                 ------------
               Subtotal                                            5,968,716
            Amortization of the beneficial conversion feature        177,075
            Amortization of warrant value                            177,075
            Amortization of offering costs                           208,554
            In-kind dividend                                         565,124
                                                                 ------------
            Balance at December 31, 2005                          $7,096,544
                                                                 ============


Note 11. SHAREHOLDERS' EQUITY, RESTATED

Prior to the merger with WSI, WSI received $750,000 for the issuance of a
promissory note and obtained a commitment for an additional $250,000 from an
investor. The investor also received a warrant for the purchase of 133,333
shares of common stock for $0.01 per share in connection with these additional
funds. These warrants were exercised in March of 2004. After the merger, the
promissory note was exchanged for 500,000 shares of common stock in World Waste
Technologies, Inc. In April 2004, the Company received the additional $250,000
for the purchase of an additional 166,667 shares of common stock. The relative
fair value allocated to the warrant was $170,844 using the Black-Scholes
calculation. The value of the warrant was estimated using the Black Scholes
option pricing model with the following assumptions: average risk free interest
of 3.6%; dividend yield of 0%; average volatility factor of the expected market
price of the Company's common stock of 70%; and a term of 4 years.

Prior to the merger with VPTI, 500,000 shares of common stock were contributed
to the Company by the founder of VPTI in connection with an agreement in which
the founder sold approximately 1,000,000 other shares of common stock to
accredited investors in a private sale.



                                      F - 19

<PAGE>



During the second and third quarters ended June 30, 2004 and September 30, 2004
respectively, the Company obtained through a private placement an additional
$3,093,910 from the sale of 2,311,872 shares of common stock, net of fees paid
of $273,890 (2,245,206 of these shares were issued prior to the merger with VPTI
on August 24, 2004). Under a Registration Rights Agreement, the Company agreed
to use commercially reasonable efforts to prepare and file a registration
statement to register the resale of such shares within ninety days of completion
of the Merger, August 23, 2004, and use commercially reasonable efforts to cause
such registration statement to be declared effective by the SEC as soon as
practicable. The registration statement was withdrawn on December 19, 2005. As
of March 15, 2006, the registration statement has not been re-filed.

During July 2004, the Company issued a warrant to a consultant for the purchase
of 50,000 shares of common stock at an exercise price of $0.01 per share in
consideration for investment banking, financial structuring and advisory
services provided. The fair value of the warrant was $74,567. The value of the
warrant was estimated using the Black-Scholes option pricing model with the
following assumptions: average risk-free interest of 3.6%; dividend yield of 0%;
average volatility factor of the expected market price of the Company's common
stock of 70%; and a term of 4 years. The fair value of the warrant was expensed
during the year ended December 31, 2004. The warrant was exercised in full in
September 2004.

As discussed above, effective August 24, 2004, World Waste Technologies, Inc.
was merged into VPTI. Prior to the merger with VPTI, the holders of the
convertible promissory notes converted these notes into 1,193,500 shares of
common stock of World Waste Technologies, Inc.

Subsequent to the merger with VPTI, during the third and fourth quarters of the
year ended December 31, 2004, in connection with a private placement of
securities, the Company sold 1,192,000 units; each unit comprised of one (1)
share of common stock in the Company and warrants exercisable for 0.25 shares
(298,000 shares) of common stock of the Company at an exercise price of $0.01
per share for 5 years. The fair value of the warrants was $742,222. The value of
the warrants was estimated using the Black-Scholes option pricing model with the
following assumptions: average risk-free interest of 3.6%; dividend yield of 0%;
average volatility factor of the expected market price of the Company's common
stock of 70%; and a term of 1 to 4 years. The consideration paid for the units
was $2.50 per unit, for aggregate net proceeds to the Company of $1,879,770. As
of December 31, 2004, 152,000 of these warrants had been exercised for net
proceeds to the Company of $1,520. Under the Registration Rights Agreement, the
Company has agreed to use commercially reasonable efforts to prepare and file a
registration statement within ninety days of completion of the private placement
and use commercially reasonable efforts to cause such registration statement to
be declared effective by the SEC as soon as practicable registering the resale
of the shares and shares underlying the warrants. The registration statement was
filed on August 4, 2005. The registration statement was withdrawn on December
19, 2005. As of March 15, 2006, the registration statement has not been
re-filed.

During the quarter ended March 31, 2005, in connection with private placements
of unregistered securities, the Company raised gross proceeds of $3,387,000 by
issuing 1,354,800 units (each unit comprised of one (1) share of common stock in
the Company (1,354,800 shares of common stock) and warrants exercisable for 0.25
shares (338,700 warrants)) at a purchase price of $2.50 per unit. The warrants
expire five years after the date of the sale of the shares and are exercisable
at $0.01 per share, subject to adjustment. All of the warrants were exercised
during the quarter ended March 31, 2005. The fair value of the warrants was
$843,487. The value of the warrants was estimated using the Black-Scholes option
pricing model with the following assumptions: average risk-free interest of
3.75%; dividend yield of 0%; average volatility factor of the expected market
price of the Company's common stock of 70%; and a term of one year. Under the
Registration Rights Agreement, the Company has agreed to use commercially
reasonable efforts to prepare and file a registration statement within ninety
days of completion of the private placement and use commercially reasonable
efforts to cause such registration statement to be declared effective by the SEC
as soon as practicable registering the resale of shares and the shares
underlying the warrants. The registration statement was filed on August 4, 2005.
The registration statement was withdrawn on December 19, 2005. As of March 15,
2006, the registration statement has not been re-filed.

Note 12. COMMITMENT AND CONTINGENCIES

The Company and its subsidiaries and officers were named defendants in a lawsuit
alleging breach of contract, fraud, and misrepresentation related to the breach
of a residential real estate lease and an allegedly "detachable" warrant. On
October 5, 2004, the Company entered into an agreement to settle the litigation.
Pursuant to the settlement, the Company paid $150,000 by December 2005. The
plaintiff has agreed to dismiss all claims with prejudice.

                                     F - 20

<PAGE>



In March, 2004, the Company entered into a lease for office space in San Diego,
CA. The lease term is for two years commencing April 1, 2004. In March of 2006
the lease was extended for an additional six months. Annual rent is $54,943 for
year one, $56,634 for year two and $36,978 for the additional six months.

In July 2004, the Company entered into a lease for the initial facility in
Anaheim, CA. The lease term is for 10 years commencing July 1, 2004, with three
five-year renewal option. The monthly base rent of $15,900 adjusts annually
based on the Consumer Price Index of Orange County.

Minimum lease payments for these operating leases for the years ending December
31 are:

                 2006                $241,937

                 2007                $190,800

                 2008                $190,800

                 2009                $190,800

           Thereafter                $874,500


The Company is obligated to pay Bio Products for technical services $20,000 per
month until the first plant becomes operational and then $15,000 per month for
five years. The Company is also obligated to pay CMCP $5,000 per month for
advisory services through December 31, 2006.

Note 13. RELATED PARTY TRANSACTIONS, RESTATED

In December 2003, the Company entered into an agreement, amended in March 2004,
with Cagan McAfee Capital Partners, LLC ("CMCP"). The agreement provides for
CMCP to provide advisory and consulting services and for NASD broker dealer,
Chadbourn Securities Inc. ("Chadbourn"), to provide investment banking services
to the Company.

The agreement calls for, among other things, the Company to pay to CMCP a
monthly advisory fee of $15,000, increased to $20,000 beginning in September
2004. The total professional fees paid to CMCP for the year ended December 31,
2004 for advisory services was $200,000. In May 2005, the agreement was amended
to provide for the payment to CMCP of a monthly advisory fee of $5,000 and the
Company entered into a separate agreement with John Pimentel to pay his monthly
advisory fee of $15,000. In September 2005, John Pimentel was hired as the
Company's Chief Executive Officer. CMCP's fee for monthly advisory fees for the
year ended December 31, 2005 was $120,000. Prior to May 2005, John Pimentel was
paid by CMCP to provide services to the Company. Subsequent to May 2005 and
prior to his hiring as CEO, Mr. Pimentel was paid $60,000 for consulting
services by the Company.

Chadbourn and Laird Q. Cagan, a registered representative of Chadbourn, acted as
the placement agent (collectively, the "Placement Agent") for us in connection
with the private placement of 3,923,370 shares of our common stock in 2004. In
connection with those private placements, we paid the Placement Agent a
commission of 8% of the price of all shares sold by it, or approximately
$487,200. In addition, we paid the Placement Agent a non-accountable expense
allowance (equal to 2% of the purchase price of the shares or approximately
$90,000) and issued the Placement Agent, or its affiliates, warrants to purchase
392,337 of our common shares, at exercise prices between $1.00 and $2.50.



                                      F - 21

<PAGE>



The values of the warrants, $369,245, were estimated using the Black-Scholes
option pricing model with the following assumptions: average risk-free interest
of 3.6%; dividend yield of 0%; average volatility factor of the expected market
price of the Company's common stock of 70%; and a term of 4 years.

During 2005, the Placement Agent acted as the placement agent for us in
connection with the private placement of 1,354,800 shares of our common stock
and warrants to purchase 338,700 shares of our common stock, the private
placement of 4,075,600 shares of our Series A Preferred Stock and warrants to
purchase 407,560 shares of our common stock, and $4,015,000 aggregate principal
amount of our senior secured promissory notes and warrants to purchase up to a
total of 529,980 shares of Common Stock. In connection with those private
placements, we paid the Placement Agent a commission of approximately $961,550.
In addition, we paid the Placement Agent a non-accountable expense allowance of
$267,740 and issued the Placement Agent, or its affiliates, warrants to purchase
548,486 of our common shares, at exercise price of $2.50. The values of the
warrants, $756,247, were estimated using the Black-Scholes option pricing model
with the following assumptions: average risk-free interest rate 3.6% to 6.75%;
dividend yield of 0%; average volatility factor of the expected market price of
the Company's common stock of 70%; and a term of 4 years.

Note 14. EMPLOYMENT CONTRACTS

On April 28, 2005, the Company entered into new employment agreements with four
of its executive officers. The new agreements supersede and replace each
officer's existing employment agreement with the Company. Pursuant to the new
agreements, the officers will continue to serve the Company in the same
capacities but on an "at-will" basis. Effective December 31, 2005, the President
of the Company resigned. The total annual salaries of the three remaining
contracts are $650,000. Each officer is entitled to receive 12 months salary and
continuation of benefits in the event the Company terminates his agreement for
other than "good cause" or the officer resigns from the Company for "good
reason" (as such terms are defined in the agreements). In addition, each officer
is entitled to 12 months salary and continuation of benefits in the event of
disability or death during the term of his agreement. The current Company CEO is
not under an employment contract.

Note 15. SUBSEQUENT EVENTS (UNAUDITED)

On February 10, 2006, the Company issued and sold $2,250,000 aggregate principal
amount of its 10% senior secured debentures and warrants (the "Warrants") to
purchase up to an aggregate of 297,000 shares of the Company's common stock, to
three accredited investors.

The Warrants are exercisable for a period of five years commencing as of their
issuance date and have an exercise price of $0.01 per share. The debentures are
due and payable in full on the earlier to occur of (i) the closing of one or
more equity financings generating gross proceeds in an aggregate amount of at
least $9.0 million, or (ii) eighteen months after the closing date. The
debentures bear interest at an annual rate of 10.00% payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year. The
first interest payment is due on March 31, 2006. The debentures are secured by a
first-priority lien on substantially all of the Company's assets, and rank pari
passu in right of payment with all existing and future senior indebtedness of
the Company, and senior in right of payment to any subordinated indebtedness.

In connection with the issuance of the debentures, the Company entered into a
Registration Rights Agreement on February 10, 2006 pursuant to which it agreed
to use best efforts to include the shares of common stock issuable upon exercise
of the Warrants on a registration statement filed by the Company with the SEC.



                                      F - 22

<PAGE>



In connection with this transaction, the holders of the Company's 10% senior
secured notes described in Note 9 exchanged their notes for debentures on a
dollar-for-dollar basis. The only term that was changed was the maturity date.
Therefore, at the conclusion of the transaction the Company had a total of
$6,265,000 of Senior Secured Debt outstanding. The closing of this transaction
was subject to a requirement to obtain the consent of the holders of the
Company's Series A Preferred Stock. On February 6, 2006, the holders of the
Company's Series A Preferred Stock gave their consent to the transaction
pursuant to a letter agreement with the Company (the "Series A Consent"). In
connection with obtaining the Series A Consent, the Company agreed to deliver to
the holders of Series A Preferred Stock warrants to purchase a total of 407,560
shares of the Company's Common Stock at an exercise price of $0.01 per share.
Pursuant to the Series A Consent, (i) the Company also agreed to call a
shareholders' meeting to approve an amendment of certain provisions of the
Series A Preferred Stock Certificate of Determination, and (ii) the holders of
Series A Preferred Stock agreed to waive certain of their veto rights and
contractual rights to facilitate the Company's next round of financing.
On May 1, 2006, pursuant to a Patent Assignment Agreement and a Patent
Assignment, both dated as of May 1, 2006, (the "Patent Assignment Agreement and
a Patent Assignment"), the Company completed the purchase of all right, title
and interest in United States Patent No. 6,306,248 (the "Patent") and related
intellectual property, subject to existing licenses, from the University of
Alabama in Huntsville for $100,000 and 167,000 shares of the Company's
unregistered common stock valued at $698,000,the market value of the stock on
May 1, 2006.

We continue to exploit the technology covered by the Patent through a sublicense
from the original licensee, Bio-Products International, Inc. By virtue of our
acquisition of the Patent, we now own all right, title and interest in the
Patent, subject to Bio-Products International, Inc.'s existing license, which in
turn continues to sublicense the technology to us.

May 26, 2006, the Company announced that it had secured $25,000,000 in new
equity financing in two private placements. In the first transaction, which
closed May 25, 2006, the Company issued 89,000 shares of its newly created 8%
Series B Convertible Redeemable Preferred Stock at a price of $100 per share,
resulting in total gross proceeds to the Company of $8.9 million. In the second
transaction, the Company entered into definitive agreements for the sale of an
additional 161,000 shares of Series B Preferred Stock on the same terms, for
total additional gross proceeds to the Company of $16.1 million. This second
offering closed on May 30, 2006.

In addition to the sales described above, holders of the Company's $6,250,000
aggregate principal amount of senior secured debentures had the contractual
right to exchange their debentures for shares of Series B Preferred Stock on a
dollar-for-dollar basis. The holders of approximately $2,480,000 of such
debentures elected to exchange their debentures and accrued interest for a total
of 25,000 shares of Series B Preferred Stock (which shares of Preferred Stock
would be convertible into a total of 1,000,000 common shares and be included in
the registration statement described below).

Each share of Series B Preferred Stock is convertible for a period of five years
into 40 shares of the Company's common stock. To the extent not converted by the
five-year anniversary of issuance, the shares are subject to redemption at each
holder's option, with any shares not redeemed subject to automatic conversion.
The shares are also subject to mandatory conversion prior to the five-year
anniversary of issuance if the Company's common stock meets certain trading
price and volume criteria and under certain other circumstances. Holders of the
Series B Preferred Stock are entitled to receive cumulative dividends, payable
quarterly in additional shares of Series B Preferred, at the rate of 8% per
annum.

The Company is also issuing the investors in these transactions five-year
warrants to acquire up to a total of 2,500,000 shares of common stock at an
exercise price of $2.75 per share. The Company has agreed to file a registration
statement within 60 days of the closing covering the resale of the shares of
common stock issuable upon conversion of the Series B Preferred Stock and
exercise of the warrants.

After fees and expenses and the repayment of the Company's secured debentures,
the Company estimates the total net proceeds to it from these two offerings will
be approximately $18 million. The Company currently intends to use these net
proceeds to start-up operations at, and make improvements to, its initial
facility located in Anaheim, California, to begin preparations for additional
facilities, and for general corporate purposes.

Prior to April 8, 2006, the Company completed the construction of the facility
and sent a notice to Taromina of such completion in accordance with the terms of
the agreement with Taromina.


Note 16. AMENDMENT AND RESTATEMENT OF FORM 10-KSB

On May 12, 2006, the Company determined that it would amend its Annual Report on
Form 10-KSB for the year ended December 31, 2005 to correct certain accounting
errors in the financial statements included in such report related to the fair
value of options and warrants, the relative fair value of senior secured debt
and the related warrants and the classification of Redeemable Preferred Stock.


                                     F - 23
<PAGE>

The principal accounting errors reflected in such financial statements were as
follows:

1) Fair value of options and warrants: As previously disclosed in our reports
filed with the SEC, on August 24, 2004 World Waste Technologies, Inc., a private
company ("WWT") completed a reverse merger with and into a subsidiary of Voice
Powered Technologies International, Inc ("VPTI"), a publicly-traded company with
no assets, liabilities or operations. As a result of this merger, VPTI (renamed
World Waste Technologies, Inc.) succeeded to all of the assets, liabilities and
operations of WWT.

In order to properly account for the expense associated with the issuance of
options and warrants, it is required to determine the fair value of these
securities. In determining this value the Company undertook a "Black Scholes"
analysis, a method of valuation that takes into account the expected volatility
of the stock underlying the convertible securities being valued. Because at the
time of this valuation the Company had no stock trading history as a company
with the operations of WWT (i.e. all of the trading had been as VPTI, a company
with no operations), in determining its expected volatility, the Company decided
to use the trading prices of a representative sample of companies within its
industry as opposed to VPTI's trading history.

Based on discussions with the staff of the SEC as to current practices in
applying the applicable accounting guidelines (SFAS 123R) and further review of
the authoritative accounting literature for new public companies, the Company
concluded that the use of a volatility factor more consistent with its stage of
life cycle and financial leverage would be more appropriate than a volatility
factor based on the trading of shares of companies within its industry. As a
result, the Company changed the volatility factor previously used from
approximately 20% to 70%. Based on this analysis, the Company also changed the
price used in calculating the fair value of the warrants issued in connection
with a private placement of our Series A Preferred Stock from the price such
shares were actually sold at to the quoted market price of the Company's stock
as of the closing of such issuance. These changes affected primarily the
recorded value on our balance sheet of the following line item accounts: Debt
Offering Costs, Patent and Licenses, Senior Secured Debt, Redeemable Preferred
Stock, Warrant Liability, Additional Paid in Capital and Deficit Accumulated
during the Development Stage.

This change had the following impact on the Company's Consolidated Statement of
Operations: In 2004, General and Administrative Expense increased by $21,970 for
the increase in employee option expense. In 2005, General and Administrative
Expense increase by $250,507 for the increase in employee option expense and
Change in fair value of warrant liabilities increase by $323,450 resulting in a
net decrease in the Net Loss of $72,943. Also in 2005, the amortization of
Preferred Stock warrants, offering costs and beneficial conversion feature
classified similar to Preferred Stock dividends increased by $491,939.

2) Relative Fair Value: On November 1, 2005 the Company completed a private
placement of senior debt securities with detachable warrants. In accounting for
this transaction, the Company discounted the recorded value of the senior debt
securities by an amount equal to the fair value of the warrants. Upon further
review of the applicable accounting literature (APB Opinion 14), the Company
determined that it should have discounted the senior debt for the "relative fair
value" of the warrants rather than the "fair value" of the warrants. This had
the effect of overstating the discount on the senior debt at December 31, 2005
by approximately $235,000. This change had not impact on the Company's 2004 or
2005 Consolidated Statement of Operations.

3) Redeemable Convertible Preferred Stock: The Redeemable Convertible Preferred
Stock had been classified as a liability because it is redeemable at the end of
five years, at the option of the holders. Upon further review of authoritative
literature, Convertible Redeemable Preferred Stock will be reclassified as
"mezzanine equity" rather than as a liability. This change had no impact on the
Company's 2004 or 2005 Consolidated Statement of Operations.

Below is a summary of the significant effects of the restatement on the
consolidated statements of operations (in thousands) for the years ended
December 31, 2005 and 2004 and the balance sheets as at December 31, 2005 and
2004.


                                     F - 24

<PAGE>
<TABLE>
<CAPTION>

                                                   2005 as                         2004 as
                                                 Previously                      Previously
                                                  Reported     2005 as Restated   Reported   2004 as Restated
-------------------------------------------------------------------------------------------------------------
Statements of Operations

<S>                                            <C>             <C>             <C>            <C>
General and Administrative Expenses            $ (3,351,247)   $ (3,601,754)   $(2,124,436)   $(2,146,407)

Change in Fair Value of Warrant Liability           385,962         709,412

Net Loss                                         (3,151,860)     (3,078,917)    (2,474,218)    (2,496,188)

Preferred Stock Dividend and amortization
of Warrant Value, Offering Costs and
Beneficial Conversion Feature                      (742,533)     (1,234,473)

Net Loss Attributable to Common Shareholders   $ (3,894,393)   $ (4,313,390)   $(2,474,218)   $(2,496,188)

Balance Sheets
Debt Offering Costs                            $    343,054    $    453,264
Total Fixed Assets                               17,036,101      17,020,547
Patent License                                      450,625         556,605        450,625        556,605
   Total Assets                                $ 20,980,908    $ 21,181,544    $ 6,786,477    $ 6,892,457
Senior Secured Debt                               2,957,169       3,191,811
Redeemable Preferred Stock                        8,923,726            --
Warrant Liability                                   144,783         618,654
Total Liabilities                                12,025,678       6,139,570
Redeemable Preferred Stock                             --         7,096,544
Total Stockholders Equity                         6,626,125       7,945,430      5,013,873      5,119,854
   Total Liabilities and Stockholders Equity   $ 20,980,908    $ 21,181,544    $ 6,786,477    $ 6,892,457
</TABLE>

                                      F-25