UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              --------------------
                                   FORM 10-KSB
                              --------------------

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

|_|    TRANSITION REPORT PURSUANT TO 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 March 15, 2006 was approximately $67,079,000,
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.


<PAGE>

There were 24,686,236 shares of the Company's common stock outstanding on March
15, 2006.

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

Documents Incorporated by Reference: Portions of the issuer's Definitive Proxy
Statement to be filed with the Commission pursuant to Regulation 14A in
connection with the registrant's 2006 Annual Meeting of Stockholders, to be
filed subsequent to the date hereof, are incorporated by reference into Parts II
and III of this Annual Report. Such Definitive Proxy Statement will be filed
with the Securities and Exchange Commission not later than 120 days after the
conclusion of the issuer's fiscal year ended December 31, 2005.


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<PAGE>


                                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 OPERATIONS......  9

   ITEM 7.   FINANCIAL STATEMENTS............................................ 26

   ITEM 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
              AND FINANCIAL DISCLOSURE....................................... 26

   ITEM 8A.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
              AND FINANCIAL DISCLOSURE....................................... 26

   ITEM 8B.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
              AND FINANCIAL DISCLOSURE....................................... 26

PART III..................................................................... 26

   ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
              COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.............. 27

   ITEM 10.  EXECUTIVE COMPENSATION.......................................... 27

   ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT AND RELATED STOCKHOLDER MATTERS..................... 27

   ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................. 27

   ITEM 13.  EXHIBITS........................................................ 27


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Introductory Comment

Throughout this annual report on Form 10-KSB, 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 annual report 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".



<PAGE>


                                     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.


                                       1
<PAGE>

         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 ocurred 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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<PAGE>

         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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<PAGE>

         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 extentions. 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.
Currently, Taormina may terminate the agreement, as amended, 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. The Company is currently in
discussions with Taormina regarding an extension of this deadline. While
management believes that the deadline will be extended, there can be no
assurance that we will meet this deadline and if not met, that Taormina will
agree to a further extension.

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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<PAGE>

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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<PAGE>

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 more strict 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.

         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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<PAGE>

         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 March 15, 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 extentions.
Base rent under this lease is $15,900 per month, subject to annual
cost-of-living adjustments. This lease is subject to termination by the lessor
if we do not complete construction of our facility by April 8, 2006.

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 March 15, 2006, there were 24,686,236 common shares outstanding
and approximately 866 shareholders of record, not including holders who hold
their stock 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 ocurred 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

         We currently are purchasing, and are planning to purchase, certain
assets, including additional equipment needed to construct our first facility to
process municipal solid waste ("MSW"). WWT has a license for a patented
technology and other related intellectual property capable of converting MSW
into cellulose biomass and other commodities. This process, known as
"pressurized steam classification," uses a pressurized, rotating autoclave that
has been filled with MSW. The process converts MSW into separable components of
organic and inorganic materials and allows minimal discharges to the air, water
and soil. The product of the process is a cellulose biomass material with
significant papermaking fiber content that can be sold to containerboard plants
after a screening and cleaning process. The inorganic materials captured are
similar to the standard recycled materials of aluminum, tin, and steel. 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 15, 2006, we had completed 10
trials on the front-end material handling equipment and steam classification
vessels in which we have processed over 200 tons of RMSW and produced
approximately 150 tons of cellulose biomass material. The University of
Washington is currently performing tests for us on samples of this cellulose
biomass material that preliminarily indicate that the fiber produced was
comparable to fiber produced during our prototype trials. We anticipate that the
construction of this facility will be completed on or around the end of March
2006, at which time we plan to begin testing and commissioning the facility's
unbleached fiber cleaning and screening process. Laboratory testing of the
cellulose biomass created during the 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. 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.
Although we anticipate that this first facility will be operational in the
second quarter of 2006, operations are dependent on our ability to raise
additional working capital in a timely matter. We intend to raise additional
capital by means of 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.

         Our current plan of operation for the year ending December 31, 2006
primarily involves completing the construction of our first facility to process
RMSW and operating the facility upon completion. We currently anticipate hiring
an additional 50 to 60 employees in 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 construction of our first
facility, the results of our first facility, and the possible acquisition of
assets. Based on our current estimates, we believe that as of March 15, 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 completion of our first facility,
subject to us raising sufficient additional capital, we anticipate that we will
begin the construction process of our second facility, site location,
permitting, design, engineering and the ordering of equipment.

         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.

         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.

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.


                                       10
<PAGE>

         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:

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 $3,151,860 compared to a net
loss of $2,474,218 for the year ended December 31, 2004, and the Company had an
accumulated deficit of $7,600,105 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.


                                       11
<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.

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. At December 31, 2005 we had capitalized fixed assets of
approximately $17 million related to our initial plant in Anaheim, California.
Construction is expected to be completed and operations started in the second
quarter of 2006, assuming additional funds are available.

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 Preferred Stock

         Preferred Stock which may redeemable for cash at the determination of
the holder is classified as a long term liability.


                                       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 $1.2
million in 2005 primarily due to increases in employee-related expenses, rent
and consulting fees. Employee-related expenses increased by approximately
$800,000 in 2005 due to salaries of approximately $450,000 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 $175,000, 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 $129,000, from an
expense of $65,000 in 2004 to income of $64,000 in 2005, primarily as a result
of the cash received and invested from the sale of our common stock, preferred
stock and senior debt.

Other income

         Change in fair value of warrant liability of approximately $385,000 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 $ 1,591,986 to
$2,124,436 in 2004 compared to 2003, as a result of a number of factors.
Salaries increased by $328,148 to $661,998 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 $2,800,000,
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. As of March 15, 2006, we estimate that we will require approximately
$7.0 to $9.0 million to sustain operations for the next 12 months (exclusive of
the additional approximately $6.3 million necessary to repay our Senior Secured
Debt.) We intend to raise additional equity and/or debt financing in order to
have the funds required to carry out these activities. We cannot assure you that
we will be able to raise such funds on terms acceptable to us, or at all.

         On November 1, 2005 and on February 10, 2006, we issued Senior Secured
Debt (see notes 9 and 15) such that we currently have approximately $6.3 million
of Senior Secured Debt outstanding. This debt will be due on August 10, 2007. It
carries an interest rate of 10% per year, payable quarterly in arrears. Because
to date we have generated no revenue, this interest is being funded by proceeds
from financing transactions.

         As of December 31, 2005, we had no long-term debt obligations, no
capital lease obligations, no operating lease obligations, no purchase
obligations, or other similar long-term liabilities, except for the Taormina
agreement described in "Business" above, the monthly payment due Bio-Products as
part of the license agreement, and the Senior Secured Debt. 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, except for the Senior Secured Debt.

         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

Our initial facility may not be completed on a timely basis, within budget, or
at all.

         We cannot assure you that our currently planned facility under
construction in Anaheim, California will be completed on a timely basis, within
budget, or at all. This facility is currently under construction and is expected
to be completed and operations started in the second quarter of 2006, assuming
addition funds are available. Unless and until we complete construction, we will
not generate any revenue. If we are unable to complete construction on a timely


                                       16
<PAGE>

basis or on budget, we would likely need to raise significant additional
capital. If sufficient capital is not available, we would need to significantly
curtail our construction schedule or cease construction completely. Even if
completed, we cannot assure you that the facility will be adequate for our needs
or work without difficulties or down times, in which case we would again likely
need to raise additional capital in order to fund further development of the
facility. We currently anticipate that we will need to construct additional
facilities to serve our needs and anticipated growth and that such future
facilities will also require additional capital. Unforeseen difficulties in the
planning or completion of our initial facility or any future facility may lead
to significant delays in production and the subsequent generation of revenue.

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. While we currently
have a license with Bio-Products International, Inc. in the U.S. within the
scope of our anticipated business to exploit a number of U.S. patent claims that
protect our processes, 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 there is no guarantee that such
protections will 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.

         We also rely on trade secrets and contract law to protect certain of
our proprietary technology. We cannot assure you that any of our contracts will
not be breached, or that if breached, we will have adequate remedies.
Furthermore, we cannot assure you that any of our trade secrets will not become
known or independently discovered by third parties. If any of the foregoing were
to occur, we could face significant increased competition.

         We cannot assure you that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to our trade secrets and know-how, which could also lead to
significant increased competition for our services. In addition, we may be
required to obtain licenses to patents or other proprietary rights from third
parties. We cannot assure you that any licenses required under any patents or
proprietary rights would be made available on acceptable terms, if at all. If we
do not obtain required licenses, we may encounter delays in product development
or find that the development, manufacture or sale of products requiring such
licenses could be foreclosed because we are not able to obtain the licenses on
acceptable terms, or at all.

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, we cannot
assure you that we will be able to resolve this problem within our anticipated
budget or at all.


                                       17
<PAGE>

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, 2004, we incurred total net losses of
approximately $3.6 million. For the years ended December 31, 2004 and 2005, our
net losses were approximately $2.5 million, and $3.2 million, respectively. We
have had no revenues to date and we cannot assure you as to when or whether we
will be able to develop sources of revenue or that 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 cannot
assure you that we will 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.

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. As of March 15,
2006, we estimate that we will need at least an additional $7.0 to $9.0 million
to sustain our operations for the next 12 months (exclusive of the additional
approximately $6.3 million necessary to repay our 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 be unable to repay our indebtedness when it becomes due.

         As of January 31, 2006, we owed the holders of our Senior Secured Debt
approximately $6.3 million. These debentures, which are secured by all of our
assets, are due upon the first to occur of a closing of equity financing by us
of at least $9.0 million, or August 10, 2007. If we are unable to repay these
debentures when they become due or are unable to make the cash quarterly
interest payments, whether with cash from operations or pursuant to a
re-financing, the holders of such debentures will have the ability to foreclose
on our assets to satisfy the amounts owed to them. Any such foreclosure would
likely result in our inability to continue operations.

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

         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. Moreover,
we cannot assure you that we will successfully complete the development and
introduction of new products or product enhancements or that any new products
developed will 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.


                                       18
<PAGE>

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 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.

We will depend on a significant supply of solid waste and timely payment for
that solid waste.

         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
adversely be 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.


                                       19
<PAGE>

Our results of operations may be 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 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.


                                       20
<PAGE>

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.

We cannot predict with certainty the extent of future costs under environmental,
health and safety laws, and cannot guarantee that they will not be material.

         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 required permits.

         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. 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 an option for three
additional five-year periods, 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.


                                       21
<PAGE>

         The Taormina agreement was amended twice to allow us additional time to
complete all permitting, approvals and construction and to occupy the facility.
Currently, Taormina may terminate the agreement, as amended, 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. The Company is currently in
discussions with Taormina regarding an extension of this deadline. While
management believes that the deadline will be extended, there can be no
assurance that we will meet this deadline and if not met, that Taormina will
agree to a further extension. 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 expiration, our business, financial condition and results of operations
would be materially harmed.

We may be exposed to litigation 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, however, we
cannot assure you that such insurance will be adequate to cover claims asserted
against us or that we will be able to maintain or purchase such insurance in the
future, either of which could have a material adverse affect on our financial
condition or our ability to raise additional capital.

Other companies may claim that we infringe their intellectual property or
proprietary rights.

         We do not believe that our products or processes violate third party
intellectual property rights. Nevertheless, we cannot assure you that any such
third party rights are not being, and will not be, violated. 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 cannot assure you that we will be able 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 cannot assure you that we will be able 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.

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 under
construction in Anaheim, California on a regular schedule or construct new
facilities. Further, BPI is required to make certain payments to the University


                                       22
<PAGE>

of Alabama at Huntsville, the assignee of the patent for the technology that it
has exclusively licensed to BPI, in order for BPI to maintain its exclusive
rights. 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 the
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 options 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 $172,000 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 and employees, could result in a
competitive disadvantage to us in the employee marketplace.

RISKS RELATED TO OUR COMMON STOCK

Substantial sales of 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 tradeable 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. No prediction can be made as to the effect, if any, that sales of the
shares subject to Rule 144 sales, or the availability of such shares for sale,
will have on the market prices prevailing from time to time. Nevertheless, the
possibility that substantial amounts of common stock may be sold in the public
market 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.


                                       23
<PAGE>

         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 shares of preferred stock have certain rights that could
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 15, 2006, we have one such series of preferred stock,
designated as "8% Series 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:


                                       24
<PAGE>

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.

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 the five-year anniversary of issuance at a redemption price equal to $2.50
per share, plus accrued and unpaid dividends to that date.

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 15, 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.

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 factors, including:


                                       25
<PAGE>

          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

          o    the occurrence of any of the other risks described in this Form
               10-KSB

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

         We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms and that such
information is accumulated and communicated to this company's management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow for timely decisions regarding required disclosure.

         As required by Securities and Exchange Commission Rule 13a-15(b), we
carried out an evaluation, under the supervision and with the participation of
the Company's management, including our Chief Executive Officer and the
Company's Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures as of the end of the quarter
covered by this report. Based on the foregoing, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
are effective to ensure the information required to be disclosed in our reports
filed or submitted under the Exchange Act is timely recorded, processed and
reported within the time periods specified in the Securities and Exchange
Commission rules and forms.

         There has been no change in our internal control over financial
reporting during our most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 8B. OTHER INFORMATION

         None.


                                       26
<PAGE>

                                    PART III

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

         The information required is incorporated herein by reference to our
definitive Proxy Statement for the 2006 Annual Meeting of Stockholders.

ITEM 10. EXECUTIVE COMPENSATION

         The information required is incorporated herein by reference to our
definitive Proxy Statement for the 2006 Annual Meeting of Stockholders.

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

         The information required is incorporated herein by reference to our
definitive Proxy Statement for the 2006 Annual Meeting of Stockholders.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required is incorporated herein by reference to our
definitive Proxy Statement for the 2006 Annual Meeting of Stockholders.

ITEM 13. EXHIBITS

         (a)

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 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 VPTI, V-CO
               Acquisition, Inc. and World Waste Technologies, Inc. (2)

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

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

3.3            Bylaws of 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 among the Registrant and
               our directors and officers. (5)

10.2           Form of Registration Rights Agreement. (2)

10.3           2004 Stock Option Plan. (7)

10.4           Form of stock option agreements.(7)


                                       27
<PAGE>

10.5           Lease between World Waste of American, 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 by and
               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 Steve 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 by and
               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)

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

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

10.25          Engagement Agreement dated as of April 28, 2005 by and 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)


                                       28
<PAGE>

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

10.31          Form of Security Agreement, dated as of November 1, 2005 by and
               among 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. *

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

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

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

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

(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.


         (b) Reports on Form 8-K

         The Company filed the following reports on Form 8-K during the last
quarter of the fiscal year ended December 31, 2005:


                                       29
<PAGE>

          o    On December 8, 2005, the Company filed a Current Report of Form
               8-K to announce the execution of a consulting agreement with Mr.
               Steve Racoosin (Item 1.01 and 9.01), the termination of Mr.
               Racoosin's employment agreement (Item 1.02) and the departure of
               Mr. Racoosin as an executive officer of the Company (Item 5.02).

          o    On November 7, 2005, the Company filed a Current Report of Form
               8-K to disclose the sale of unregistered securities that raised
               gross proceeds to the Company of $4,015,000 (Item 1.01, 3.02 and
               9.01).




                                       30
<PAGE>


                                   SIGNATURES

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

Date: March _____, 2006                      WORLD WASTE TECHNOLOGIES, INC.
      -----------------

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



         Pursuant to the requirements of the Securities Act of 1934, this annual
report has been signed by the following persons in the capacities and on the
dates indicated.

Signature               Title                                   Date
---------               -----                                   ----


/s/ John Pimentel       Chief Executive Officer, and Chairman   March ____, 2006
-----------------       (Principal Executive Officer)
John Pimentel


/s/ David A. Rane       Chief Financial Officer (Principal      March ____, 2006
-----------------       Financial Officer and Principal
David A. Rane           Accounting Officer)


/s/ Thomas L. Collins   Executive Vice President and Director   March ____, 2006
---------------------
Thomas L. Collins


/s/ James Ferris        Director                                March ____, 2006
----------------
James Ferris


/s/ Ross M. Patten      Director                                March ____, 2006
------------------
Ross M. Patten


/s/ Sam Pina Cortez     Director                                March ____, 2006
-------------------
Sam Pina Cortez



                                       31
<PAGE>


                              FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULE



Report of Independent Registered Public Accounting Firm                      F-1

Consolidated Financial Statements:
    Balance Sheet                                                            F-3
    Statement of Operations                                                  F-4
    Statement of Shareholders' Equity                                        F-5
    Statement of Cash Flows                                                  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 the 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. We were not engaged to perform an
audit of the Company's internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide 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 $7,600,105 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.


Stonefield Josephson
Los Angeles, California
February 17, 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
<S>                                                         <C>                 <C>
ASSETS:
Current Assets:
  Cash                                                      $    2,864,377      $    1,128,502
  Prepaid Expenses                                                 181,912              94,203
  Debt Offering Cost                                               343,054                   -
                                                           ------------------------------------
Total Current Assets                                             3,389,343           1,222,705
                                                           ------------------------------------
Fixed Assets:
  Machinery and Equipment, net of accumulated
   depreciation of $30,958 on  Dec. 31, 2005 and $16,508
   on Dec. 31, 2004                                             12,862,466             539,401
  Deposits on Equipment                                             79,372           3,417,959
  Construction in Progress                                       4,094,263           1,041,509
                                                           ------------------------------------
Total Fixed Assets                                              17,036,101           4,998,869
Other Assets:
  Deposit L/T                                                      104,839             114,278
  Patent License                                                   450,625             450,625
                                                           ------------------------------------
  TOTAL ASSETS                                              $   20,980,908      $    6,786,477
                                                           ====================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
LIABILITIES:
Current Liabilities:
  Accounts Payable                                          $    1,292,810      $    1,380,791
  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           1,755,579
                                                           ------------------------------------
Long-Term Liabilities:
  Note Payable, less current portion                                     -              17,025
  Senior Secured Debt, net (see Note 9)                          2,957,169                   -
  Redeemable Preferred Stock, net (see Note 10)                  8,923,726                   -
  Warrants-Common Stock                                            144,783                   -
                                                           ------------------------------------
Total Long-Term Liabilities                                     12,025,678              17,025

                                                           ------------------------------------
  TOTAL LIABILITIES                                             14,354,783           1,772,604
                                                           ------------------------------------
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 December 31,
   2004                                                             24,686              22,725
  Additional Paid-in Capital                                    14,201,544           8,696,860
  Deficit Accumulated during development stage                  (7,600,105)         (3,705,712)
  TOTAL STOCKHOLDERS' EQUITY                                     6,626,125           5,013,873
                                                           ------------------------------------
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $   20,980,908      $    6,786,477
                                                           ====================================
</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
                                                   ----------------  ----------------  ----------------
<S>                                                 <C>               <C>               <C>
GROSS REVENUE:

EXPENSES:
  Research and Development                          $     (250,060)   $     (284,587)   $     (767,386)
  General and Administrative:                           (3,351,247)       (2,124,436)       (6,330,814)*

                                                   ----------------  ----------------  ----------------
  Loss from Operations                                  (3,601,307)       (2,409,023)       (7,098,200)
                                                   ----------------  ----------------  ----------------

  Interest Income (Expense)                                 63,485           (65,195)          (77,808)
  Change in fair value of warrant liability                385,962                 -           385,962
                                                   ----------------  ----------------  ----------------
  Net Loss before provision for Income Tax          $   (3,151,860)   $   (2,474,218)   $   (6,790,046)
                                                   ----------------  ----------------  ----------------

  Income Taxes                                                   -                 -                 -

                                                   ----------------  ----------------  ----------------
  Net Loss                                          $   (3,151,860)   $   (2,474,218)   $   (6,790,046)
                                                   ----------------  ----------------  ----------------

  Preferred Stock Dividend and amortization
   of beneficial conversion feature                       (742,533)                -          (742,533)

                                                   ----------------  ----------------  ----------------
  Net Loss available to common shareholders         $   (3,894,393)   $   (2,474,218)   $   (7,532,579)
                                                   ================  ================  ================

  Basic and diluted Net Loss available to common
   shareholders per share                           $        (0.16)   $        (0.14)   $        (0.48)
                                                   ================  ================  ================

  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       3,045,206       31      3,952,321                                  3,952,352
   Shares cancelled                           (500,000)      (5)             5
   Warrants Issued                                                     175,191                                    175,191
   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                                                           195,856                                    195,856
   Net Loss - 2004                                                                                (2,474,218)  (2,474,218)
                                           --------------------------------------------------------------------------------
December 31, 2004                           22,725,190  $22,725     $8,696,860             $0    ($3,705,712)  $5,013,873
                                           ================================================================================

   Common Stock sold and warrants
    excercised, net of offering cost         1,961,040    1,961      3,072,116                                  3,074,077
   Amortization of stock options and
    warrants                                                           403,713                                    403,713
   Dividend (Preferred Stock)                                          106,645                      (671,768)    (565,123)
   Warrants Issued (Preferred Stock)                                   137,373                                    137,373
   Bridge Financing Warrants                                         1,254,092                                  1,254,092
   Beneficial conversion feature on
    Redeemable Preferred Stock                                         530,745                                    530,745
   Amortization of Beneficial
    conversion feature on Redeemable
    Preferred Stock                                                                                  (70,765)     (70,765)
   Net Loss - 2005                                                                                (3,151,860)  (3,151,860)
                                           --------------------------------------------------------------------------------
December 31, 2005                           24,686,230  $24,686    $14,201,544             $0    ($7,600,105)  $6,626,125
                                           --------------------------------------------------------------------------------

* 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
                                                    ------------------  ------------------  ------------------
<S>                                                       <C>                 <C>                 <C>
Cash Flow from Operating Activities:

   Net Loss                                               $(3,151,860)        $(2,474,218)        $(6,790,046)
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                                  74,566              84,566
   Amortization of warrants & Options                         403,713                                 599,569
   Fair Value adjustment of warrant liability                (385,962)                               (385,962)
   Common Stock Issued for Services                            10,000
   Stock-based compensation                                                       195,856

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)         (1,889,858)         (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)
                                                    ------------------  ------------------  ------------------
                                                          (11,627,966)         (3,981,892)        (15,841,561)
                                                    ------------------  ------------------  ------------------
Cash flows from financing activities:
   Note Payable                                               (22,368)             (5,342)
   Deposit Senior Secure 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
                                                    ------------------  ------------------  ------------------
                                                           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 acquistions
     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 acquistions 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 $3,151,860 compared to a net loss of
$2,474,218 for the year ended December 31, 2004, and the Company had an
accumulated deficit of $7,600,105 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

                              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 is expected to
be completed and operations started in the second quarter 2006, assuming funds
are available.

                                   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 Preferred Stock

Preferred Stock which may redeemable for cash at the determination of the holder
is classified as a long term liability.

                            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

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 $172,201
and $23,606 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:

                                     F - 10

<PAGE>


                                                     For the Year Ended
                                              --------------------------------
                                               December 31,       December 31,
                                                  2005               2004
                                                 ------             ------
Risk-free interest rate                       3.75 to 4.82           3.6%
Dividend yield                                     --                 --
Volatility                                   18.62 to 19.73%        26.4%



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                $0.58
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                $0.58
Granted during the period                   1,830,000        $3.11                $0.66
Vested during the period                      248,667        $2.23                $0.54
Forfeited during the period                   650,000        $4.21                $0.98
Exercised during the period                      --            --                   --
Outstanding at December 31, 2005            1,587,000        $2.42                $0.52
Exercisable at December 31, 2005              248,667        $2.23                $0.54
</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 - 11
<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 invement 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                   1,498,671        $1.34                $0.77
Vested during the period                    1,498,671        $1.34                $0.77
Exercised during the period                   510,335        $0.03                $1.73
Exercisable at December 31, 2004              988,336        $1.08                $1.25
Outstanding at December 31, 2004              988,336        $1.08                $1.25
Granted during the period                   1,850,726        $1.66                $1.56
Vested during the period                    1,850,726        $1.66                $1.56
Exercised during the period                   626,700        $0.14                $2.00
Outstanding at December 31, 2005            2,212,362        $1.83                $4.01
Exercisable at December 31, 2005            2,212,362        $1.83                $4.01
</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 - 12
<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 - 13
<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

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 $100,625 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
26.4%; and a term of 4 years. The Company recorded the $100,625 fair value of
the warrants as an increase to the capitalized license.


                                     F - 14
<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. We also intend to make 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 extentions


                                     F - 15
<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
                                                      --------------- --------------- ---------------
<S>                                                       <C>               <C>           <C>
Federal (expense) benefit:
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 - 16
<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:

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


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 - 17
<PAGE>

Note 9.  SENIOR SECURED DEBT

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, pursuant to which
the Company agreed to "piggyback" rights, which would 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 18.62%; and a term of
one and a half years. The value of the warrants was deducted from the face
amount of the debt and is being amortized as additional interest expense.

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 placement warrants, 160,600, was $66,670. 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 18.62%; 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 - 18
<PAGE>

The debt offering cost of $388,010, consisting of cash of $321,340 and warrant
value of $66,670, is shown as a current asset and is being amortized over 18
months. The fair value of the warrant issued to the investors of $1,187,422, is
shown as a reduction of the face value of the Notes on the balance sheet 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 $174,547 were capitalized as construction cost on the Anaheim
facility.

Note 10. SERIES A CUMULATIVE REDEEMABLE CONVERTIBLE PARTICIPATING PREFERRED
STOCK

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 was $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 and payment of the Note discussed in Note 8 above. 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 $530,745. 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 19.73%; 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.


                                     F - 19
<PAGE>

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 $137,373. 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
19.73%; and a term of four years. The value of the warrants was deducted 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                     (530,745)
               Less: offering costs                                    (839,673)
               Less: warrant value at issuance date                    (530,745)
                                                                    ------------
                  Subtotal                                            8,287,837
               Amortization of the beneficial conversion feature         70,765
               In kind dividend                                         565,124
                                                                    ------------
               Balance at December 31, 2005                          $8,923,726
                                                                    ============

Note 11. SHAREHOLDERS' EQUITY

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 $166,667 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 26.4%; 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 - 20
<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 26.4%; 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 $742,153. 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 26.4%; 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 19.73%; 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 - 21
<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

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 - 22
<PAGE>

The values of the warrants 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 26.4%; 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, 302,292 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 19.7%; 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

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 include the shares of common stock issuable upon exercise of the Warrants on
a registration statement filed by the Company with the SEC.

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. Therefore, at the conclusion of the transaction the
Company had a total of $6,265,000 of Senior Secured Debt outstanding.


                                     F - 23
<PAGE>

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.


                                     F - 24