U.S. SECURITIES AND EXCHANGE COMMISSION
                                 Washington, D.C. 20549

                                     FORM 10-KSB/A

(Mark One)

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

OR

[ ] 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: 0-30639

                                     WORLD AM, INC.
                (Exact Name of Company as Specified in its Charter)

                Nevada                                       90-0142757
(State or Other Jurisdiction of Incorporation             (I.R.S. Employer
              or Organization)                            Identification No.)

     1400 West 122nd Avenue, Suite 104, Westminster, Colorado       80234
           (Address of Principal Executive Offices)               (Zip Code)

                  Company's telephone number:  (303) 452-0022

          Securities registered pursuant to Section 12(b) of the Act: None

         Securities registered pursuant to Section 12(g) of the Act: Common
                               stock, $0.0001 par value

     Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Company was required to file such reports),
and (2) been subject to such filing requirements for the past 90 days.
Yes     X        No           .

     Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-B is not contained herein, and
will not be contained, to the best of Company'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 [   ].

     The Company had revenues of $466,603 for the fiscal year ended on
December 31, 2004.  The aggregate market value of the voting stock
held by non-affiliates of the Company as of March 31, 2005:
$1,876,576.  As of March 31, 2005, the Company had 10,165,891 shares
of common stock issued and outstanding.

     Transitional Small Business Disclosure Format (check one): Yes  No    X .

     The Company, by this Form 10-KSB/A, amends the following: (a) The
explanation of revenue recognition under Critical Accounting Policies
in Part II, Item 6, Management's Discussion and Analysis of Financial
Condition and Results of Operations; (b) Part II, Item 7, Financial
Statements, to include a discussion of revenue recognition under Note
1 to the financial statements; (c) Part II, Item 8A, Controls and
Procedures, to make certain changes to disclosure regarding the
Company's controls and procedures, including the Company's belief that
they were ineffective as of December 31, 2004; and (d) Part III, Item
13, Exhibits (Exhibits 31 and 32), and the Signatures, to indicate
that the Company's president/chief executive officer also acts as the
principal financial officer of the Company.  Besides these changes, no
other changes have been made to the Form 10-KSB for the year ended
December 31, 2004.  In addition, the remaining information in this
amended Form 10-KSB has not been changed or updated to reflect any
changes in information that may have occurred subsequent to the date
of the reporting period that this Form 10-KSB relates.

PART I.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

     The following discussion and analysis of financial condition and
results of operations of the Company is based upon, and should be read
in conjunction with, its audited consolidated financial statements and
related notes included elsewhere in this Form 10-KSB, which have been
prepared in accordance with accounting principles generally accepted in
the United States.

Overview.

     The Company has developed and/or is in the process of developing
innovative systems and processes in the field of "Transparent
Security" and "Automated Passage Control."  Company personnel have
installed systems for Lawrence Livermore Labs, Mellon Bank, Wells
Fargo Bank and the United States Air Force and United States
Department of Energy to name just a few.

     The Company believes that it's planned growth and profitability
will depend in large part on the ability to promote its services, gain
clients and expand its relationship with current clients.
Accordingly, the Company intends to focus its attentions and
investment of resources in marketing, strategic partnerships, and
development of its client base.  If the Company is not successful in
promoting its services and expanding its client base, this may have a
material adverse effect on its financial condition and the ability to
continue to operate the business.

Results of Operations.

     Subsequent to the issuance of the Company's financial statements
management became aware that those financial statements did not
reflect certain account balances properly for the year ended December
31, 2003.  Properly accounting of these items in the revised financial
statements has the following effect.

                                                      Year Ended
                                      Year Ended       December      Restated
                                       December       31, 2003       Increase
                                       31, 2003       (Restated)     (Decrease)

Revenues                              $  654,726      $  654,726     $      --

Cost of revenues                         623,148         623,148            --

Gross profit                              31,578          31,578            --

Operating expense                      1,989,475       1,295,680      (693,795)

Loss from operations                  (1,957,897)     (1,264,102)      693,795

Other income                             600,911          28,741      (572,170)

Net loss                              (1,356,986)     (1,235,361)     (121,625)

Basic and diluted loss per
common share                               (0.27)          (0.24)        (0.03)

     For the year ended December 31, 2003, the change in the statement
of operations was primarily related to an accounting error whereby the
Company did not record the value of options granted which totalled
$336,705.  Additionally, the Company recorded the related exercise of
these options as other income totalling $572,170 and the related
issuance of common stock for the option exercise as an operating
expense totalling $1,030,500.  Accordingly, the net decrease in
operating expenses was the result of reversing the stock as issued for
services totalling $1,030,500 and recording the related value of the
option grants totalling $336,705.  The net change of $(121,625)
decreased the net loss from $1,356,986 ($0.27 per weighted average
common share outstanding) to $1,235,361 ($0.24 per weighted average
share outstanding).

(a)  Revenues.

     Revenues for the year ended December 31, 2004 were
$466,603 as compared to $654,726 in 2003.  The $188,123 decrease in
revenues, approximately 29%, is primarily attributed to a general
slowdown in the pace of order procurement by both the financial and
government sectors. The cost of revenues for the year ended December
31, 2004, was $475,710, or 102% of gross revenues, as compared with
$623,148, or 96% of gross revenues, for the year ended December
31,2003. The principal reason for the increase is that there are
certain cost that are inelastic such as shop overhead that caused the
relatively higher cost of revenues.  Despite increased quoting
activities, the rate at which orders were converted to sales after
they were received during 2004 was somewhat slower and the sales cycle
for the Company's products seemed to lengthen by several months; with
the absence of additional operational funding, the Company's ability
to continue as a going concern is still in doubt.

(b)  Operating Expenses.

     Operating expenses for the year ended December 31, 2004 were
$1,849,424 as compared to $1,295,680 for the prior year, an increase
of $553,744 or approximately 43%.  The operating expenses reflect the
impact of the use of restricted common and S-8 stock to compensate
needed services by various professionals and consultants in the
absence of equity funding; in addition the increase also includes
increased general and administrative expenses from the year ended
December 31, 2004, were $942,409 as compared to $549,607 this increase
of approximately 72% or $392,802 is attributed to increased costs for
payroll, employee benefits, general insurance and travel and
entertainment costs.

(c)  Other Income.

     As a result of the restated financial statement for the
fiscal year ended December 31, 2004, the Company realized other income
of $76 as compared with $28,741 for the fiscal year ended December 31,
2003, a decrease of approximately 378%. The resulting change in Other
Income is reflected in the table shown in Results of Operations, above.

     For the year ended December 31, 2003, the change in the statement
of operations was primarily related to an accounting error whereby the
Company did not record the value of options granted which totalled
$336,705.  Additionally, the Company recorded the related exercise of
these options as other income totalling $572,170 and the related
issuance of common stock for the option exercise as an operating
expense totalling $1,030,500.

(d)  Net Operating Loss.

     The net loss from operations for the year ended December 31,
2004, was $1,859,942 as compared to $1,235,361 during the
corresponding period of 2003, a decrease of $624,581 or approximately
51%.  Management has attempted to control expenses and to increase the
net results of operations, however, less than expected sales revenues
and continued dependence upon stock compensation to employees,
consultants and professionals have resulted in continued losses.

(e)  Net Operating Loss Carry forward.

     For the fiscal year ending December 31, 2004, the Company
had net operating loss carry forward of $8,954,082 as compared with
$7,094,140 for the previous fiscal year.  Realization of deferred tax
assets is dependent upon future earnings, if any, the timing and
amount of which are uncertain.  Accordingly, the net deferred tax
assets have been fully offset by a valuation allowance.  The increase
in net operating loss carry forward is the result of the parent
company's operating loss experienced in fiscal 2004.

     As of December 31, 2004, the Company has available net operating
loss carryforwards that will expire in various periods through 2024.
Such losses may not be fully deductible due to the significant amounts
of non-cash service costs and the change in ownership rules under
Section 382 of the Internal Revenue Code.  The Company has established
a valuation allowance for the full tax benefit of the operating loss
carryovers due to the uncertainty regarding realization.

Factors That May Affect Operating Results.

     The operating results of the Company can vary significantly
depending upon a number of factors, many of which are outside the
company's control.  General factors that may affect the Company's
operating results include:

     - market acceptance of and changes in demand for products and
       services;

     - a small number of customers account for, and may in future periods
       account for, substantial portions of the Company's revenue, and
       revenue could decline because of delays of customer orders or the
       failure to retain customers;

     - gain or loss of clients or strategic relationships;

     - announcement or introduction of new services and products by the
       Company or by its competitors;

     - the ability to build brand recognition;

     - timing of sales to customers;

     - price competition;

     - the ability to upgrade and develop systems and infrastructure to
       accommodate growth;

     - the ability to introduce and market products and services in
       accordance with market demand;

     - changes in governmental regulation; and

     - reduction in or delay of capital spending by clients due to the
       effects of terrorism, war and political instability.

     The Company believes that its planned growth and profitability
will depend in large part on the ability to promote its services, gain
clients and expand its relationship with current clients.  Accordingly,
the Company intends to invest in marketing, strategic partnerships, and
development of its client base.  If the Company is not successful in
promoting its services and expanding its client base, this may have a
material adverse effect on its financial condition and the ability to
continue to operate the business.

     The Company is also subject to the following specific factors that
may affect the company's operating results:

(a)  Competition.

     The market for products and services offered by the Company
is highly competitive.  The Company's future success will depend on
its ability to adapt to rapidly changing technologies, evolving
industry standards, product offerings and evolving demands of the
marketplace.

     Some of our competitors have:

     - longer operating histories;

     - larger customer bases;

     - greater name recognition and longer relationships with clients;
       and

     - significantly greater financial, technical, marketing, public
       relations and managerial resources than the company.

     Competitors may develop or offer services that provide
significant (technological, creative, performance, price) or other
advantages over the products offered by the Company .  If the company
fails to gain market share or lose existing market share, our
financial condition, operating results and business could be adversely
affected and the value of the investment in the company could be
reduced significantly.   The Company may not have the financial
resources, technical expertise or marketing, distribution or support
capabilities to compete successfully.

(b)  Technological and Market Changes.

     The markets in which the Company competes are characterized
by rapid technological change, frequent new product introductions,
evolving industry standards and changing needs of customers.  There
can be no assurance that the Company's existing products will continue
to be properly positioned in the market or that the company will be
able to introduce new or enhanced products into the market on a timely
basis, or at all.  Currently, the Company is focusing on upgrading and
introducing new products.  There can be no assurance that enhancements
to existing products or new products will receive customer acceptance.
As competition in the electronic payments industry increases, it may
become increasingly difficult for the company to be competitive.

     Risks associated with the development and introduction of
new products include delays in development and changes in payment
processing, and operating system technologies that could require the
Company to modify existing products.  There is also the risk to the
Company that there may be delays in initial shipments of new products.
Further risks inherent in new product introductions include the
uncertainty of price-performance relative to products of competitors,
competitors' responses to the introductions and the desire by
customers to evaluate new products for longer periods of time.

(c)  New Versions of Company's Products May Contain Errors or Defects.

     The Company's products are complex and, accordingly, may
contain undetected errors or failures when first introduced or as new
versions are released.  This may result in the loss of, or delay in,
market acceptance of the Company's products.  The Company may in the
future discover errors and additional scalability limitations in new
releases or new products after the commencement of commercial
shipments or be required to compensate customers for such limitations
or errors, as a result of which our business, cash flow, financial
condition and results of operations could be materially adversely affected.

(d)  Protection of Proprietary Rights.

     The Company's success and ability to compete will be
dependent in part on the protection of its potential patents,
trademarks, trade names, service marks and other proprietary rights.
The Company intends to rely on trade secret and copyright laws to
protect the intellectual property that it plans to develop, but there
can be no assurance that such laws will provide sufficient protection
to us, that others will not develop a service that are similar or
superior to ours, or that third parties will not copy or otherwise
obtain and use our proprietary information without authorization.  In
addition, certain of the Company's know-how and proprietary technology
may not be patentable.

     The Company may rely on certain intellectual property
licensed from third parties, and may be required to license additional
products or services in the future, for use in the general operations
of its business plan.  The Company currently has no licenses for the
use of any specific products.  There can be no assurance that these
third party licenses will be available or will continue to be
available to the Company on acceptable terms or at all.  The inability
to enter into and maintain any of these licenses could have a material adverse
effect on the Company's business, financial condition or operating results.

     There is a risk that some of the Company's products may
infringe the proprietary rights of third parties.  In addition,
whether or not the Company's products infringe on proprietary rights
of third parties, infringement or invalidity claims may be asserted or
prosecuted against it and it could incur significant expense in
defending them.  If any claims or actions are asserted against us, wet
may be required to modify its products or seek licenses for these
intellectual property rights.  The Company may not be able to modify
its products or obtain licenses on commercially reasonable terms, in a
timely manner or at all.  The Company's failure to do so could have a
negative affect on its business and revenues.

(e)  Economic Conditions.

     The Company's business can be affected by the general
condition of the world economy, as well as by social, political and
military conditions.  In light of the current economic environment
these factors could have a material adverse impact on the Company's
business, operating results, and financial condition and we may
continue to incur losses for the foreseeable future.

(f)  Key Personnel.

     The Company's success is largely dependent on the personal
efforts and abilities of the company's senior management.  The loss of
certain members of the Company's management, including its chief
executive officer or chief technical officer, could have a material
adverse effect our business and prospects.

     The Company intends to recruit in fiscal year 2004 employees
who are skilled in the products of the company.  The failure to
recruit these key personnel could have a material adverse effect on
the Company's business. As a result, the Company may experience
increased compensation costs that may not be offset through either
improved productivity or higher revenue.  There can be no assurances
that the company will be successful in retaining existing personnel or
in attracting and recruiting experienced qualified personnel.

Operating Activities.

     The net cash used in operating activities was $682,608 for the
year ended December 31, 2004 compared to $344,064 for the year ended
December 31, 2003, an increase of $338,544.  This increase is
attributed to many changes from year to year, including prepaid
service related to the issuance of common stock.

Liquidity and Capital Resources.

     As of December 31, 2004, the Company had total current assets of
$97,707 and total current liabilities of $700,661, resulting in a
working capital deficit of $602,954; as of that date, the Company had
cash of $37,995.  During the years ended December 31, 2004 and 2003,
the Company incurred losses of $1,859,942 and $1,235,361,
respectively, and the Company has an accumulated deficit of $8,954,082
as of December 31, 2004.  These factors raise substantial doubt as to
the Company's ability to continue as a going concern.

     The accompanying financial statements have been prepared assuming
that the Company continues as a going concern that contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business assuming the Company will continue as a
going concern.  However, the ability of the Company to continue as a
going concern on a longer-term basis will be dependent upon its
ability to generate sufficient cash flow from operations to meet its
obligations on a timely basis, to retain its current financing, to
obtain additional financing, and ultimately attain profitability.

     Our current cash flow from operations will not be sufficient to
maintain our capital requirements for the next twelve months.
Accordingly, we will need to continue raising capital through either
debt or equity instruments.  We believe we will need to raise at least
$2,000,000 within the next twelve months so we may continue executing
our business plans.  Whereas the Company has in the past in raised
capital, no assurance can be given that these sources of financing
will continue to be available to us and/or that demand for our
equity/debt instruments will be sufficient to meet its capital needs,
or that financing will be available on terms favorable to the Company.
The financial statements do not include any adjustments relating to
the recoverability and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern.

     If funding is insufficient at any time in the future, we may not
be able to take advantage of business opportunities or respond to
competitive pressures, or may be required to reduce the scope of our
planned product development and marketing efforts, any of which could
have a negative impact on its business and operating results. In
addition, insufficient funding may have a material adverse effect on
our financial condition, which could require us to:

     - curtail operations significantly;

     - sell significant assets;

     - seek arrangements with strategic partners or other parties that
       may require the company to relinquish significant rights to
       products, technologies or markets; or

     - explore other strategic alternatives including a merger or sale of
       the Company.

     To the extent that we raise additional capital through the sale
of equity or convertible debt securities, the issuance of such
securities may result in dilution to existing stockholders. If
additional funds are raised through the issuance of debt securities,
these securities may have rights, preferences and privileges senior to
holders of common stock and the terms of such debt could impose
restrictions on our operations. Regardless of whether our cash assets
prove to be inadequate to meet our operational needs, we may seek to
compensate providers of services by issuance of stock in lieu of cash,
which may also result in dilution to existing shareholders.

Inflation.

     The impact of inflation on the costs of the Company, and the
ability to pass on cost increases to its customers over time is
dependent upon market conditions. The Company is not aware of any
inflationary pressures that have had any significant impact on the
Company's operations over the past year and, the Company does not
anticipate that inflationary factors will have a significant impact on
future operations.

Other.

     The Company does not provide post-retirement or post-employment
benefits requiring charges under Statements of Financial Accounting
Standards No. 106 and No. 112.

Critical Accounting Policies.

     The Securities and Exchange Commission ("SEC") has issued
Financial Reporting Release No. 60, "Cautionary Advice Regarding
Disclosure About Critical Accounting Policies" ("FRR 60"), suggesting
companies provide additional disclosure and commentary on their most
critical accounting policies.  In FRR 60, the Commission has defined
the most critical accounting policies as the ones that are most
important to the portrayal of a company's financial condition and
operating results, and require management to make its most difficult
and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain.  Based on this
definition, the Company's most critical accounting policies include:
(a) use of estimates in the preparation of financial statements; (b)
non-cash compensation valuation; and (c) revenue recognition.  The
methods, estimates and judgments the Company uses in applying these
most critical accounting policies have a significant impact on the
results the company reports in its financial statements.

(a)  Use of Estimates in the Preparation of Financial Statements.

     The preparation of these financial statements requires the Company
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 on-going basis, the Company
evaluates these estimates, including those related to revenue
recognition and concentration of credit risk.  The Company bases its
estimates on historical experience and on various other assumptions
that is 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 from these estimates under
different assumptions or conditions.

(b)  Stock-Based Compensation Arrangements.

     The Company intends to issue shares of common stock to various
individuals and entities for management, legal, consulting and
marketing services.  These issuances will be valued at the fair market
value of the service provided and the number of shares issued is
determined, based upon the open market closing price of common stock as
of the date of each respective transaction.  These transactions will be
reflected as a component of selling, general and administrative
expenses in the accompanying statement of operations.

(c)  Revenue Recognition.

     Sales and construction of customized commercial products are
recognized under the percentage-of-completion basis when: (1)
contracts executed by the parties normally include provisions that
clearly specify the enforceable rights regarding goods or services to
be provided and received by the parties, the consideration to be
exchanged, and the manner and terms of settlement; (2) the buyer can
be expected to satisfy his obligations under the contract; and (3) the
Company can be expected to perform our contractual obligations and 4)
the Company can make reasonably dependable estimates of costs to
complete and the extent of progress toward completion.  The Company
measures the extent of progress toward completion by using a ratio of
costs incurred to total estimated costs.  The effects of changes in
the estimates, if any, are reported in the period of change and
subsequent periods.  Contracts not meeting the above criteria are
reported on the completed contract method.  All other sales of
products are recognized upon delivery.

Forward Looking Statements.

     Information in this Form 10-KSB contains "forward looking
statements" within the meaning of Rule 175 of the Securities Act of
1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as
amended.  When used in this Form 10-KSB, the words "expects,"
"anticipates," "believes," "plans," "will" and similar expressions are
intended to identify forward-looking statements.  These are statements
that relate to future periods and include, but are not limited to,
statements regarding our adequacy of cash, expectations regarding net
losses and cash flow, statements regarding our growth, our need for
future financing, our dependence on personnel, and our operating expenses.

     Forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
those projected.  These risks and uncertainties include, but are not
limited to, those discussed below, as well as risks related to our
ability to manage market fluctuations and our ability to obtain future
financing, and the risks set forth below under "Factors That May Affect
Operating Results."  These forward-looking statements speak only as of
the date hereof.  The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in
its expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.

ITEM 7.  FINANCIAL STATEMENTS.

     Consolidated financial statements as of and for the year ended
December 31, 2004, and for the year ended December 31, 2003 (restated)
are presented in a separate section of this report following Item 14.

ITEM 8A.  CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

     The Company maintains disclosure controls and procedures (as
defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities
Exchange Act of 1934, as amended ("Exchange Act)) that are designed to
ensure that information required to be disclosed in our periodic
reports filed under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's
rules and forms, and that such information is accumulated and
communicated to our management, including our principal
executive/financial officer, to allow timely decisions regarding
required disclosure.

     As of the end of the period covered by this report, our
management carried out an evaluation, under the supervision and with
the participation of our principal executive/financial officer, of our
disclosure controls and procedures (as defined in Rule 13a-15(e) and
Rule 15d-15(e) of the Exchange Act).  Based upon the evaluation, our
principal executive/financial officer concluded that our disclosure
controls and procedures were ineffective at a reasonable assurance
level to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified
in the SEC's rules and forms.  In addition, he concluded that the
Company's disclosure controls and procedures were also ineffective at
a reasonable assurance level to ensure that information required to be
disclosed in the reports that the Company files or submits under the
Exchange Act is accumulated and communicated to the Company's
management, including its principal executive/financial officer, to
allow timely decisions regarding required disclosure.

     The foregoing ineffective controls and procedures resulted in
revisions in the draft financial statement disclosures (which are
reflected in, and does not affect, the financial statement
disclosures) as a result of the audit process.

     Subsequent to December 31, 2004, the Company has taken the
following steps to help to ensure that its controls and procedures are
effective: (a) it has retained as a consultant an individual that has
had experience as the controller of two other public companies to
provide advice to the company regarding such matters;  (b) it is
seeking to retain the services of a full-time chief financial officer.

     Because of the inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, will be or have been
detected.  These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can
occur because of simple error or mistake.  Additionally, controls can
be circumvented by the individual acts of some persons, by collusion
of two or more people, and/or by management override of the control.
The design of any system of controls also is based in part upon
certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions; over time,
controls may become inadequate because of changes in conditions,
and/or the degree of compliance with the policies and procedures may
deteriorate. Because of the inherent limitations in a cost-effective
internal control system, misstatements due to error or fraud may occur
and not be detected.

ITEM 13.  EXHIBITS.

     Exhibits included or incorporated by reference in this document
are set forth in the Exhibit Index.

                                  SIGNATURES

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

                                       World Am, Inc.


Dated: October 12, 2005                By: /s/ James H. Alexander
                                       James H. Alexander
                                       President/Chief Executive Officer
                                       Principal Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:

Signature                    Title                           Date

/s/ James H. Alexander     President/Chief Executive        October 12, 2005
James H. Alexander         Officer (principal financial
                           officer)/Director

/s/ Willis J. Kollars      Secretary/Director               October 12, 2005
Willis J. Kollars

          REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
World Am, Inc. (formerly World Am Communications, Inc.)
Westminster, Colorado

We have audited the accompanying consolidated balance sheet of World
Am, Inc. (formerly World Am Communications, Inc.) as of December 31,
2004, and the related consolidated statements of operations,
stockholders' deficit, and cash flows for the year ended December 31,
2004 and 2003 (restated).  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 audit 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.  The Company is not required to have, nor were we
engaged to perform, an audit of its 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 includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of World Am, Inc. as of December 31, 2004, and the results of its
activities and cash flows for the years ended December 31, 2004 and
2003 (restated) in conformity with accounting principles generally
accepted in the United States of America.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern.  As
discussed in Note 1 to the consolidated financial statements, the
Company has suffered losses from operations and current liabilities
exceed current assets, all of which raise substantial doubt about its
ability to continue as a going concern.  Management's plans in regards
to these matters are also described in Note 1.  The consolidated
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.


/s/  L.L. Bradford & Company, LLC
March 21, 2005
(except for Note 14, as to which the date is April 6, 2005)
Las Vegas, Nevada



                                 WORLD AM, INC.
                  (formerly World Am Communications, Inc.)
                         CONSOLIDATED BALANCE SHEET
                             DECEMBER 31, 2004

                                  ASSETS

Current assets
Cash                                                          $    37,995
Accounts receivable, net                                           30,589
Inventory                                                          29,123

Total current assets                                               97,707

Fixed assets, net                                                  19,912

Other assets                                                          650

Total assets                                                      118,269

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable and accrued liabilities                          115,167
Due to stockholders                                               293,905
Payroll taxes payable                                             264,600
Line of credit                                                      4,850
Notes payable                                                      11,000
Capital lease obligation                                           11,139

Total current liabilities                                         700,661

Total liabilities                                                 700,661

Commitments and contingencies                                          --

Stockholders' deficit
Class A preferred stock; $0.0001 par value;
40,000,000 shares authorized 1,370 shares issued and no
shares outstanding                                                     --

Class B preferred stock; $0.0001 par value;
40,000,000 shares authorized no shares issued and outstanding          --

Common stock; $0.0001 par value;
1,500,000,000 shares authorized
8,321,053 shares issued and outstanding                               832

Additional paid-in capital                                      8,590,858
Receivable related to issuance of common stock                   (220,000)
Accumulated deficit                                            (8,954,082)

Total stockholders' deficit                                      (582,392)

Total liabilities and stockholders' deficit                       118,269

                See accompanying notes to financial statements


                                  WORLD AM, INC.
                  (formerly World Am Communications, Inc.)
                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                            For the Year Ended December 31,
                                                  2004          2003
                                                             (Restated)

Revenues                                         $  466,603     $  654,726

Cost of revenues                                    475,710        623,148

Gross profit (loss)                                  (9,107)        31,578

Operating expenses
General and administrative                          719,215        576,046
Professional and consulting                         942,409        549,607
Salaries and wages                                  187,800        164,277
Bad debt                                                 --          5,750

Total operating expenses                          1,849,424      1,295,680

Loss from operations                             (1,858,531)    (1,264,102)

Other income (expense)
Other income                                             76         28,741
Interest expense                                     (1,487)            --

Total other income (expense)                         (1,411)        28,741

Net loss                                         (1,859,942)    (1,235,361)

Basic and diluted loss per common share               (0.32)         (0.24)

Basic and diluted weighted average common
shares outstanding                                5,778,989      5,046,960

                    See accompanying notes to financial statements


                                    WORLD AM, INC.
                      (formerly World Am Communications, Inc.)
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT



<TABLE>
<CAPTION>
                                                                                  Receivables                        Total
                                         Common Stock     Additional   Prepaid    Related to                      Stockholders'
                                                           Paid-in    Consulting  Issuance of      Accumulated        Deficit
                                       Shares    Amount    Capital     Services   Common Stock        Deficit
<S>                                    <C>       <C>       <C>         <C>        <C>               <C>               <C>
Balance, December 31, 2002          6,797,359   $    680   $ 5,623,975  $     --  $        --       $(5,858,779)   $   (234,124)

Common stock issued for services    1,055,100        106       518,803        --           --               --          518,909
   for prepaid services, $0.0049
   per share

Options granted to employees
for services                               --         --      137,048         --           --               --          137,048

Exercise of employee stock options    650,000         65      254,454         --           --               --          254,519

Options granted to consultants
for services                               --         --      199,657         --           --               --          199,657

Exercise of consultant stock
options                             1,152,000        115      437,536         --     (120,000)              --          317,651

Cancellation of common stock
previously issued for
services                           (5,000,000)      (500)     (49,500)        --           --               --          (50,000)

Net loss                                   --         --           --         --           --       (1,235,361)      (1,235,361)

Balance, December 31, 2003
(RESTATED)                          4,654,459        466    7,121,973         --     (120,000)      (7,094,140)         (91,701)

Exercise of employee stock
options                               730,350         73       94,906         --           --               --           94,979

Common stock issued for
prepaid services                      418,500         42      265,508   (265,550)          --               --               --

Common stock
issued for salary                     292,873         29      131,764         --           --               --          131,793

Common stock issued to
directors for services                 76,370          7       20,613         --           --               --           20,620

Common stock issued for
services                            1,948,501        195      675,548         --           --               --          675,743

Common stock issued for
receivable                            200,000         20      219,980         --      (220,000)             --               --

Options granted
to employees for services                  --         --       60,566         --            --              --           60,566

Cash received for receivable
related to 2003
exercise of consulting stock
options                                    --         --           --         --       120,000              --          120,000

Current period amortization of
prepaid services                           --         --           --    265,550           --               --          265,550

Net loss                                   --         --           --         --           --       (1,859,942)      (1,859,942)

Balance, December 31, 2004          8,321,053        832    8,590,858         --     (220,000)      (8,954,082)        (582,392)
</TABLE>




                    See accompanying notes to financial statements


                                         WORLD AM, INC.
                          (formerly World Am Communications, Inc.)
                            CONSOLIDATED STATEMENTS OF CASH FLOWS

                                               For the Year Ended December 31,
                                                      2004         2003
                                                                (Restated)

Cash flows from operating activities:
Net loss                                            $(1,859,942)   $(1,235,361)
Adjustments to reconcile net loss to net
 cash used in operating activities:
Depreciation                                              1,941          2,458
Bad debt                                                     --          5,750
Stock based compensation                                888,722        855,614
Amortization of prepaid service related to
issuance of common stock                                265,550             --
Disposal of assets                                           --          3,763

Changes in operating assets and liabilities:
Change in accounts receivable, net                       36,539        (60,113)
Change in inventory                                      (3,002)       (19,520)
Change in other assets                                    3,114         (7,202)
Change in accounts payable and accrued liabilities      (75,392)       107,615
Change in taxes payable                                  59,862             --

Net cash used in operating activities                  (682,608)      (346,996)

Cash flows from investing activities:
Purchase of fixed assets                                 (2,394)            --

Net cash used in investing activities                    (2,394)            --

Cash flows from financing activities:
Change in due to related parties                        293,905             --
Proceeds from exercise of employee options               94,979        254,519
Proceeds from exercise of consulting options                 --        317,651
Proceeds (payments) from line of credit                    (505)        (1,311)
Proceeds from note payable                                   --             --
Proceeds related to stock options exercised in 2003
recorded as receivable related to the issuance of
common stock                                            120,000             --

Principal payments on note payable                      (12,000)       (20,205)
Assumption of capital lease obligation                       --             --
Principal payments on capital lease obligations          (2,451)            --

Net cash provided by financing activities               493,928        550,654

Net change in cash                                     (191,074)       203,658

Cash, beginning of period                               229,069         25,411

Cash, end of period                                      37,995        229,069

Supplemental disclosure of cash flow information:
Cash paid for income taxes                                   --             --

Cash paid for interest                                      336             --

Schedule of non-cash operating,
investing and financing activities:

Issuance of 250,000 shares of common
stock in relation to
consulting stock options exercised
in 2003 recorded as
receivable related to the issuance
of common stock                                              --       120,000

Note payable assumed in relation to
dismissal of action                                          --        30,000

Assumption of capital lease obligation                   13,590            --

Issuance of 418,500 shares of common
stock for prepaid services                             265,550             --

Issuance of 200,000 shares of common
stock for receivable                                   220,000             --


                    See accompanying notes to financial statements


                                     WORLD AM, INC.
                      (formerly World Am Communications, Inc.)
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS, HISTORY, AND SUMMARY OF SIGNIFICANT POLICIES

Description of Business - World Am, Inc. (formerly World Am
Communications, Inc.) ("Company") was incorporated in the state of
Florida on July 1, 1994 under the name of Bedroc's of Brandon, Inc.
The Company changed its name to World-Am Communications on September
16, 1998 and then to World Am, Inc. on August 2, 2004.  The Company's
primary business operations are carried on at this time through its
wholly owned subsidiary, Isotec, Inc., the acquisition of which was
finalized in February 2000.  Isotec is a designer, developer, and
manufacture of Automated Passage Control, security and surveillance
products using computer integrated video and beam technology products
for traffic control and access.

History - The Company commenced operations in January 1995 as a family
restaurant in Brandon, Florida.  In September 1996, the restaurant
closed for renovations and reopened in August 1997.  In March 1998,
the Company discontinued the restaurant operations (its only business
segment) and wrote-off the net book value of the restaurant property
and equipment.

In February 2000, the Company acquired all of the outstanding stock of
Isotec, Inc. accounted for using the purchase method of accounting.
Isotec became the Company wholly owned subsidiary.  In May 2000, the
Company acquired Allmon Corporation, a Delaware corporation, by the
purchase method.  Allmon Corporation was a development stage company
formed on March 6, 2000.  At the time of purchase, Allmon had no
operations.

With the filing of Articles of Merger with the Nevada Secretary of
State, the Company changed its domicile from Florida to Nevada.  This
occurred after the old company and the new Nevada corporation had
entered into an Agreement and Plan of Merger.

Going Concern - The Company incurred a net loss of approximately
$1,860,000 and $1,235,000 (restated) for the years ended December 31,
2004 and 2003.  The Company's current liabilities exceed its current
assets by approximately $603,000.  The accumulated deficit was
approximately $8,954,000 as of December 31, 2004.  These factors
create substantial doubt about the Company's ability to continue as a
going concern. The Company's management has plans to promote its
services, gain clients and expand its relationships with current
clients.  The Company will also seek additional sources of capital
through the issuance of debt and equity financing, but there can be no
assurance that the Company will be successful in accomplishing its
objectives.

The ability of the Company to continue as a going concern is dependent
on additional sources of capital and the success of the Company's
plan. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going
concern.

Amended Articles of Incorporation - A Certificate of Amendment to
Articles of Incorporation, dated August 20, 2002, added to the
authorized stock 80,000,000 shares of preferred stock: 40,000,000
shares of Class A Preferred Stock, $0.0001 par value, and 40,000,000
shares of Class B Preferred Stock, $0.0001 par value.  A Certificate
of Amendment to Articles of Incorporation, dated December 20, 2002,
increased the authorized limit of common stock to 800,000,000 shares.
A Certificate of Amendment to Articles of Incorporation, dated
December 1, 2004, increased the authorized limit of common stock to
1,500,000,000 shares.

Stock Splits - In January 2000, the Company had a four-to-one reverse
split of common shares authorized and outstanding.  In October 2000,
the Company had a thirty-to-one reverse split of common shares
authorized and outstanding.  In January 2005, the Company had a 100-
to-one reverse split of common shares authorized and outstanding.  All
share and per share amounts in the accompanying financial statements
of the Company and notes thereto, have been retroactively adjusted to
give effect to the stock splits.

Principals of Consolidation - The accompanying consolidated financial
statements include the accounts of the Company, Isotec, Inc., and
Technology Development International, Inc. ("TDI").  TDI is a dormant
entity with no assets, liabilities, or operations as of December 31,
2004 and for the years ended December 31, 2004 and 2003.    All
significant intercompany transactions have been eliminated in
consolidation.

Concentration - The Company is dependent upon the federal government
and six dealers for all of its business.

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

Revenue Recognition - Sales and construction of customized commercial
products are recognized under the percentage-of-completion basis when:
(1) contracts executed by the parties normally include provisions that
clearly specify the enforceable rights regarding goods or services to
be provided and received by the parties, the consideration to be
exchanged, and the manner and terms of settlement; (2) the buyer can
be expected to satisfy his obligations under the contract; and (3) the
Company can be expected to perform our contractual obligations and 4)
the Company can make reasonably dependable estimates of costs to
complete and the extent of progress toward completion.  The Company
measures the extent of progress toward completion by using a ratio of
costs incurred to total estimated costs.  The effects of changes in
the estimates, if any, are reported in the period of change and
subsequent periods.  Contracts not meeting the above criteria are
reported on the completed contract method.  All other sales of
products are recognized upon delivery.

Reclassification - The financial statements from 2003 reflect certain
reclassifications, which have no effect on net income, to conform to
classifications in the current year.

Inventory - Inventory is stated at the lower of cost or market.  Cost
is principally determined by using the average cost method.  Inventory
consists of raw materials as well as finished goods held for sale.
The Company's management monitors the inventory for excess and
obsolete items and makes necessary valuation adjustments when required.

Fixed Assets - Fixed assets are stated at cost less accumulated
depreciation.  Depreciation is provided principally on the straight-
line method over the estimated useful lives of the assets that is
primarily 3 years.  The cost of repairs and maintenance is charged to
expense as incurred.  Expenditures for property betterments and
renewals are capitalized.  Upon sale or other disposition of a
depreciable asset, cost and accumulated depreciation are removed from
the accounts and any gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and circumstances
have occurred that may warrant revision of the estimated useful life
of fixed assets or whether the remaining balance of fixed assets
should be evaluated for possible impairment.  The Company uses an
estimate of the related undiscounted cash flows over the remaining
life of the fixed assets in measuring their recoverability.

Research and Development Costs - Research and development expenditures
are charged to expenses as incurred.  Research and development costs
expensed for the years ended December 31, 2004 and 2003 approximated
$2,500 and $22,500, respectively.

Advertising and Marketing Costs - The Company recognizes advertising
and marketing costs in accordance with Statement of Position 93-7
"Reporting on Advertising Costs."  Accordingly, the Company expenses
the costs of producing advertisements at the time production occurs,
and expenses the costs of communication advertising in the period in
which the advertising space or airtime is used.  Advertising costs are
charged to expense as incurred.  Advertising expenses was $1,821 and
$1,526 for the years ended December 31, 2004 and 2003, respectively.

Fair Value of Financial Instruments - The carrying values of the
Company's financial instruments approximate their fair value due to
their short-term nature.

Income Taxes - The Company accounts for its income taxes in accordance
with Statement of Financial Accounting Standards No. 109, which
requires recognition of deferred tax assets and liabilities for future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.

As of December 31, 2004, the Company has available net operating loss
carryforwards that will expire in various periods through 2024. Such
losses may not be fully deductible due to the significant amounts of
non-cash service costs and the change in ownership rules under Section
382 of the Internal Revenue Code. The Company has established a
valuation allowance for the full tax benefit of the operating loss
carryovers due to the uncertainty regarding realization.

Comprehensive Loss - The Company has no components of other
comprehensive loss.  Accordingly, net loss equals comprehensive loss
for all periods.

Segment Information - The Company discloses segment information in
accordance with Statement of Financial Accounting Standards ("SFAS")
No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which uses the management approach to determine
reportable segments.  The Company operates under one segment.

Stock-Based Compensation - The Company applies Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees, and Related Interpretations", in accounting for stock
options issued to employees.  Under APB Opinion No. 25, employee
compensation cost is recognized when estimated fair value of the
underlying stock on date of the grant exceeds exercise price of the
stock option.  For stock options and warrants issued to non-employees,
the Company applies SFAS No. 123, "Accounting for Stock-Based
Compensation".  SFAS No 123 requires the recognition of compensation
cost using a fair value based method whereby compensation cost is
measured at the grant date based on the value of the award and is
recognized over the service period, which is usually the vesting
period.  The Company uses the Black-Scholes pricing model to calculate
the fair value of options and warrants issued to non-employees.  Stock
issued for compensation is valued using the market price of the stock
on the date of the related agreement.

The fair value under SFAS No. 123 is the same as the value as
calculated under APB Opinion No. 25 due to the immediate conversion by
employees upon grant of options.

Net Loss Per Common Share - The Company computes net loss per share in
accordance with SFAS No. 128, "Earnings per Share" and SEC Staff
Accounting Bulletin ("SAB") No. 98.  Under the provisions of SFAS No.
128 and SAB No. 98, basic net loss per share is computed by dividing
the net loss available to common stockholders for the period by the
weighted average number of shares of common stock outstanding during
the period.  The calculation of diluted net loss per share gives
effect to common stock equivalents, however, potential common shares
are excluded if their effect is antidilutive.  For the years ended
December 31, 2004 and 2003 and for the period from December 20, 2002
(inception) through December 31, 2004, no shares were excluded from
the computation of diluted earnings per share because their effect
would be antidilutive.  Net loss per share for the years ended
December 31, 2004 and 2003 reflect the 100-to-1 reverse stock split
that occurred during January 2005.

New Accounting Pronouncements - During December 2003, the Financial
Accounting Standards Board ("FASB") issued Interpretation No. 46(R),
"Consolidation of Variable Interest Entities."  Interpretation No.
46(R) clarified the application of existing accounting pronouncements
to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties.
Effective March 31, 2004, we adopted Interpretation No. 46(R).  The
implementation of Interpretation No. 46(R) did not have a material
effect on the Company's financial statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities."
SFAS No. 149 amends SFAS No. 133 for decisions made (1) as part of the
Derivatives Implementation Group process that effectively required
amendments to SFAS No. 133, (2) in connection with other board
projects dealing with financial instruments, and (3) in connection
with implementation issues raised in relation to the application of
the definition of a derivative. The Statement clarifies under what
circumstances a contract with an initial net investment meets the
characteristics of a derivative discussed in paragraph 6(b) of SFAS
No. 133, clarifies when a derivative contains a financing component,
amends the definition of underlying to conform it to language used in
FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others," and amends certain other existing
pronouncements.  Those changes will result in more consistent
reporting of contracts as either derivatives or hybrid instruments.
This statement is effective for contracts entered into or modified
after June 30, 2003 and for hedging relationships designated after
June 30, 2003.  The implementation of SFAS No. 149 did not have a
material effect on the Company's financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and
Equity."  SFAS No. 150 establishes standards for how an issuer
classifies and measures certain financial instruments with
characteristics of both liabilities and equity.  In addition, the
statement requires an issuer to classify certain instruments with
specific characteristics described in it as liabilities. This
statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003.
The implementation of SFAS No. 150 did not have a material effect on
the Company's financial statements.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, An
Amendment of ARB No. 43, Chapter 4."  SFAS No. 151 amends the guidance
in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the
accounting for abnormal amounts of idle facility expense, handling
costs and wasted material (spoilage).  Among other provisions, the new
rule requires that such items be recognized as current-period charges,
regardless of whether they meet the criterion of "so abnormal" as
stated in ARB No. 43.  SFAS No. 151 is effective for fiscal years
beginning after June 15, 2005. The Company does not expect that
adoption of SFAS No. 151 will have a material effect on its
consolidated financial position, consolidated results of operations,
or liquidity.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets, An Amendment of APB No. 29, Accounting for
Nonmonetary Transactions."  SFAS No. 153 requires exchanges of
productive assets to be accounted for at fair value, rather than at
carryover basis, unless (1) neither the asset received nor the asset
surrendered has a fair value that is determinable within reasonable
limits or (2) the transactions lack commercial substance.  SFAS No.
153 is effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. The Company does not expect the
adoption of this standard to have a material effect on its financial
position, results of operations or cash flows.

In December 2004, the FASB issued SFAS No. 123R, which is a revision
of SFAS No. 123, Accounting for Stock-Based Compensation.  This
Statement supersedes APB Opinion No. 25, "Accounting for Stock Issued
to Employees," and its related implementation guidance.  This
Statement establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or
services.  It also addresses transactions in which an entity incurs
liabilities in exchange for goods or services that are based on the
fair value of the entity's equity instruments or that may be settled
by the issuance of those equity instruments.  This Statement focuses
primarily on accounting for transactions in which an entity obtains
employee services in share-based payment transactions.  This Statement
requires a public entity to measure the cost of employee services
received in exchange for an award of equity instruments based on the
grant-date fair value of the award (with limited exceptions).  That
cost will be recognized over the period during which an employee is
required to provide service in exchange for the award - the requisite
service period (usually the vesting period).  The Company files as a
small business issuer and must meet the requirements of this Statement
for accounting periods after December 15, 2005. The Company is
evaluating SFAS No. 123R and believes it may have a material effect on
the Company's financial statements.

NOTE 2 - INVENTORY

Inventory totaling $29,123 consists of finished goods.

NOTE 3 - FIXED ASSETS

Fixed assets consist of the following as of December 31, 2004:

Furniture and equipment                                    $  29,528
Less: accumulated depreciation                                 9,616

                                                           $  19,912

NOTE 4 - DUE TO STOCKHOLDERS

Due to stockholder totaling $293,905 as of December 31, 2004 consist of
unreimbursed expenses and accrued wages to various stockholders and
employees, including $220,285 that is owed to the Company's President
and Chief Executive Officer for accrued salary.

NOTE 5 - PAYROLL TAXES PAYABLE

As of December 31, 2004, payroll taxes payable consists of late
payroll taxes for both payroll and stock option activity totalling
$264,600.

NOTE 6 - LINE OF CREDIT

The Company has a line of credit through a credit card company with a
credit line up to $8,260 with an annual variable rate (currently
24.91%).  As of December 31, 2004, the balance on the line of credit
totalled $4,850.

NOTE 7 - NOTES PAYABLE

During December 2002, an entity filed a complaint against the Company
alleging defaults of contractual obligations and non-payment of debt
in connection with services alleged to have been performed by the
entity.  In June 2003, a settlement was reached whereby the Company
entered into a promissory note agreement totalling $30,000 with the
entity.  The note is unsecured, bears no interest (1.25% interest in
the event of default), is payable in monthly principal only
installments of $1,000, and matures December 2005.  As of December 31,
2004 the balance totals $11,000.

NOTE 8 - CAPITAL LEASE OBLIGATION

The Company is obligated under a capital lease for manufacturing
equipment.  For financial reporting purposes, minimum lease payments
relating to the equipment have been capitalized.  The capital lease
obligation totaling $11,575 requires twelve minimum monthly lease
payments of $425 and a final payment of $9,450, with an imputed
interest rate of 8.5%.  The future minimum lease payments required
under the capital lease obligation as of December 31, 2004, are as follows:

2005                                            $  11,575
Less: amount representing interest                    436

Present value of minimum lease payments         $  11,139

Equipment leased under this capital lease totals $12,505, which is net
of accumulated depreciation totaling $1,085.

NOTE 9 - PREFERRED STOCK

During June 2004, the Company entered into a loan agreement with a
lender whereby the lender agreed to use its best efforts to provide
the Company a loan in the maximum amount of $2,000,000 subject to
certain terms and conditions.  The Company agreed to issue 1,370
shares of Class A Preferred stock that is convertible to common stock
at a ratio of 1-to-1,000,000 as collateral on the loan.  The shares
were issued in June 2004.  The lender did not fund the loan and
accordingly, the Company provided a written demand for the return of
the shares, as provided in the loan agreement.  As of December 31,
2004, the Company had not received the shares.  As the shares were
issued as collateral, the Company recorded the shares as issued but
not outstanding as of December 31, 2004.

NOTE 10 - COMMON STOCK

During 2003, the Company issued 1,055,100 shares of common stock for
services totalling $518,909.

During 2003, the Company received and cancelled 5,000,000 shares of
common stock previously issued for services in prior years.

During January 2004, the Company issued 30,000 shares of common stock
for prepaid services totalling $14,700, all of which have been
expensed as of December 31, 2004.

During February 2004, the Company issued 292,873 shares of common
stock to the Company's President and Chief executive officer, as well
as a stockholder, for salaries totalling $131,793.

During February 2004, the Company issued 118,000 shares of common
stock for prepaid services totalling $53,100, all of which have been
expensed as of December 31, 2004.

During February 2004, the Company issued 55,000 shares of common stock
for services totalling $19,250.

During March 2004, the Company issued 80,000 shares of common stock
for prepaid services totalling $50,400, all of which have been
expensed as of December 31, 2004.

During March 2004, the Company issued 100,000 shares of common stock
for services totalling $63,000.

During April 2004, the Company issued 80,500 shares of common stock
for prepaid services totalling $88,550, all of which have been
expensed as of December 31, 2004.

During May 2004, the Company issued 30,000 shares of common stock for
services totalling $14,400.

During June 2004, the Company issued 110,000 shares of common stock
for prepaid services totalling $58,800, all of which have been
expensed as of December 31, 2004.

During June 2004, the Company issued 654,072 shares of common stock
for services totalling $340,117.

During July 2004, the Company issued 57,449 shares of common stock for
services totalling $20,992.

During August 2004, the Company issued 76,370 shares of common stock
for board of director services totalling $20,620.

During August 2004, the Company issued 113,176 shares of common stock
for services totalling $27,333.

During September 2004, the Company issued 194,422 shares of common
stock for services totalling $51,149.

During October 2004, the Company issued 221,507 shares of common stock
for services totalling $51,609.

During November 2004, the Company issued 344,275 shares of common stock
for services totaling $62,889.

During December 2004, the Company issued 178,600 shares of common stock
for services totaling $25,004.

NOTE 11 - STOCK COMPENSATION PLANS

2002 Stock Compensation Plan - During December 2002, the Company
adopted the 2002 Stock Compensation Plan.  The purposes of the plan
are to enable the Company to promote the interests of the company by
attracting and retaining consultants and independent contractors for
the company capable of furthering the business of the company and by
aligning their economic interests more closely with those of the
Company's shareholders, by paying their retainer or fees in the form
of shares of common stock.  All 55,000,000 shares of common stock
authorized under this plan have been registered Form S-8 filed with
the SEC during December 2002.  Terms of the options are determined at
the date of grant.  During the year ended December 31, 2003, the
Company granted 532,000 (53,200,000 pre-split) options that were
immediately exercised during 2003 whereby the Company recorded the
value of the grants at $133,109 and received cash totalling $173,326.
There were no options granted under the plan during the year ended
December 31, 2004.  As of December 31, 2004, there were 1,800,000
shares remaining to be issued under this plan

2002 Non-Employee Directors and Consultants Retainer Stock Plan -
During September 2002, the Company adopted the 2002 Non-Employee
Directors and Consultants Retainer Stock Plan.  The purposes of the
plan were to enable the Company to promote the interests of the
company by attracting and retaining consultants and independent
contractors for the company capable of furthering the business of the
company and by aligning their economic interests more closely with
those of the company's shareholders, by paying their retainer or fees
in the form of shares of common stock or stock options.  All
80,000,000 shares of common stock authorized under this plan have been
registered under a Form S-8 filed with the SEC during September 2002.
As of December 31, 2003, all shares registered under this plan had
been issued.

2003 Non-Qualified Stock Option Plan - During September 2003, the
Company adopted the 2003 Non-Qualified Stock Option Plan.  This plan
is intended to allow designated employees and non-employees of the
Company to receive options to purchase the Company's common stock.
The purpose of this plan is to provide these persons with equity-based
compensation incentives in order to serve the interests of the Company
and its stockholders as it allows such persons greater personal
financial interest in the Company, which is intended to stimulate
efforts on the Company's behalf, and to aid in the recruitment of
employees.  All 65,000,000 shares of common stock authorized under
this plan have been registered under a Form S-8 filed with the SEC
during October 2003.  The options are exercisable at 65% of the fair
market value of the Company's common stock on the date the stock
option is granted.  All options granted under the plan were
immediately exercised during the year ended December 31, 2003 and
there were no shares remaining to be issued as of that date; the
Company recorded the value of the grants at $137,048 and received cash
totalling $254,519.

2003 Consultants Stock Compensation Plan - During August 2003, the
Company adopted the 2003 Consultants Stock Compensation Plan.  The
purposes of this plan is to enable the Company to promote the
interests of the company by attracting and retaining consultants and
independent contractors for the Company capable of furthering the
business of the Company and by aligning their economic interests more
closely with those of the Company's shareholders, by paying their
retainer or fees in the form of shares of common stock or stock
options.  All 75,000,000 shares of common stock authorized under this
plan have been registered under a Form S-8 filed with the SEC during
August 2003.  During the year ended December 31, 2003, the Company
granted 620,000 (62,000,000 pre-split) options that were immediately
exercised during 2003 whereby the Company recorded the value of the
grants at $66,548 and received cash totalling $264,325.  There were no
options granted under the plan during the year ended December 31,
2004.  As of December 31, 2004, there were 13,000,000 shares of common
stock remaining to be issued under this plan.

Non-Employee Directors and Consultants Retainer Stock Plan - During
December 2004, the Company adopted the Amended and Restated Non-
Employee Directors and Consultants Retainer Stock Plan (Amendment No.
5).  The purposes of the plan are to enable the Company to promote the
interests of the company by attracting and retaining consultants and
independent contractors for the company capable of furthering the
business of the company and by aligning their economic interests more
closely with those of the company's shareholders, by paying their
retainer or fees in the form of shares of common stock or stock
options.  As of December 31, 2004, all 289,000,000 shares of common
stock authorized under this plan have been registered as a result of
Form S-8's filed with the SEC (the most recent being in December
2004).  As of December 31, 2004, 124,549,857 shares of common stock
remain to be issued under this plan.

Employee Stock Incentive Plan - During July 2004, the Company adopted
the Amended and Restated Employee Stock Incentive Plan (Amendment No.
2).  This plan is intended to allow designated officers and employees
of the Company to receive options to purchase the Company's common
stock.  The purpose of this plan is to provide the officers and
employees with equity-based compensation incentives to make
significant and extraordinary contributions to the long-term
performance and growth of the Company, and to attract and retain
Employees of exceptional ability.  All 110,000,000 shares of common
stock authorized under this plan have been registered as a result of
Form S-8's filed with the SEC (the most recent being in August 2004).
The options are exercisable at 65% of the fair market value of the
Company's common stock on the date the stock option is granted.
During 2004, the Company granted options for the purchase of 730,350
(73,035,000 pre-split) shares of common stock under the plan that were
immediately exercised during 2004 whereby the Company recorded the
value of the grant at $60,566 and received cash totaling $94,979.  As
of December 31, 2004, there were 2,696,500 shares remaining to be
issued under this plan.

NOTE 12 - RECEIVABLES RELATED TO ISSUANCE OF COMMON STOCK

Option Exercise - During November 2003, two consultants exercised
options to purchase 250,000 shares of the Company's common stock for
$120,000.  The Company issued the stock in November 2003 prior to the
receipt of cash.  Accordingly, the Company recorded a receivable
related to the issuance of common stock for the $120,000, which was
received during 2004.

Other - During May 2004, the Company entered into a Share Exchange
Agreement (the "Exchange Agreement") with World Am Security Venture
Company, Ltd. ("WSVC"), a privately held China corporation.  Under the
terms of the agreement, the Company will acquire all the outstanding
shares of WSVC in exchange for 200,000 shares of the Company's common
stock, and 100 shares of the Company's convertible preferred stock.
In addition, WSVC shall obtain the right to own or lease property and
to carry on business.  Further WSVC will invest up to $5,000,000 to
acquire a new manufacturing plant and other facilities for the purpose
of manufacturing authorized products of the Company.  Failure to make
this investment will be considered a breach of contract.

The Company issued the 200,000 shares of common stock in April 2004
required under the Exchange Agreement, however did not issue the 100
shares of convertible preferred stock.  As of December 31, 2004, WSVC
had established a business license, but had not completed the
acquisition of a manufacturing plant and other facilities.
Accordingly, the Company recorded a receivable totalling $220,000 in
anticipation that the remaining terms of the Exchange Agreement would
be fulfilled.  As of December 31, 2004, the Company determined that
WSVC would most likely be unable to fulfill the remaining terms.
Accordingly the Company placed a stop on the 200,000 shares with their
transfer agent and is currently seeking their return.  Management
feels the stop is sufficient to prevent transfer or sale of the stock
and that, if necessary, legal action will result in the cancellation
of the stock if they are not returned.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

Operating Leases - The Company operates from two leased facilities
under non-cancelable operating leases.  The agreements call for annual
base rent of $2,500 and $1,545, which increases on each anniversary of
the respective leases.  Rent expense totalled $76,318 and $52,810 for
the years ended December 31, 2004 and 2003, respectively, and include
various operating costs in addition to the base rent.

As of December 31, 2004, future minimum rental payments required under
the operating leases are as follows:

2005                         $  49,728
2006                            24,208
Thereafter                          --

                             $ $73,936

Legal issues - A former employee of the Company filed a complaint
alleging the employee was terminated without cause prior to the
expiration of the term of the related employment contract.  The case
is currently in the preliminary discovery phase.  Should the Company
not prevail, the loss may be $240,000.  Management is confident in the
likelihood of a favorable outcome should the case proceed to trial and
is contesting the case vigorously.

NOTE 14 - RESTATED FINANCIAL STATEMENTS

Subsequent to the issuance of the Company's financial statements
management became aware that those financial statements did not
reflect certain account balances properly for the year ended December
31, 2003.  Properly accounting of these items in the revised financial
statements has the following effect.

                                                      Year Ended
                                      Year Ended       December      Restated
                                       December       31, 2003       Increase
                                       31, 2003       (Restated)     (Decrease)

Revenues                              $  654,726      $  654,726     $      --

Cost of revenues                         623,148         623,148            --

Gross profit                              31,578          31,578            --

Operating expense                      1,989,475       1,295,680      (693,795)

Loss from operations                  (1,957,897)     (1,264,102)      693,795

Other income                             600,911          28,741      (572,170)

Net loss                              (1,356,986)     (1,235,361)     (121,625)

Basic and diluted loss per
common share                               (0.27)          (0.24)        (0.03)

For the year ended December 31, 2003, the change in the statement of
operations was primarily related to an accounting error whereby the
Company did not record the value of options granted which totalled
$336,705.  Additionally, the Company recorded the related exercise of
these options as other income totaling $572,170 and the related
issuance of common stock for the option exercise as an operating
expense totaling $1,030,500.  Accordingly, the net decrease in
operating expenses was the result of reversing the stock as issued for
services totaling $1,030,500 and recording the related value of the
option grants totaling $336,705.

NOTE 15 - SUBSEQUENT EVENTS

During January 2005, the Company issued 668,934 shares of common stock
for services totaling $96,878.

During January 2005, the Company granted options to purchase 269,650
shares of the Company's common stock pursuant to the Amended and
Restated Employee Stock Incentive Plan.  The options were immediately
exercised.
During February 2005, the Company issued 816,965 shares of common
stock for services totaling $134,405.

During March 2005, the Company issued 89,479 shares of common stock
for services totaling $14,467.

During April 2005, the Company received the preferred shares as
discussed in Note 9.


                               EXHIBIT INDEX

Number         Description

2.1     Agreement and Plan of Merger between the Company and Allmon
        Corporation, dated May 11, 2000 (incorporated by reference
        to Exhibit 2.1 of the Form 8-K12g-3 filed on May 16, 2000).

2.2     Stock Purchase Agreement between the Company, Isotec,
        Incorporated, and selling shareholders, dated February 22,
        2000 (incorporated by reference to Exhibit 2.2 of the Form
        10-QSB filed on May 21, 2001).

2.3     Share Exchange Agreement between the Company and World Am
        Security Venture Company, Ltd., dated May 18, 2004
        (incorporated by reference to Exhibit 2 of the Form 8-K
        filed on May 26, 2004).

3.1     Articles of Incorporation, dated July 5, 2002 (incorporated
        by reference to Exhibit 3.1 of the Form 10-QSB/A filed on
        February 5, 2004).

3.2     Certificate of Amendment to Articles of Incorporation, dated
        August 20, 2002 (incorporated by reference to Exhibit 3.2 of
        the Form 10-QSB/A filed on February 5, 2004).

3.3     Certificate of Amendment to Articles of Incorporation, dated
        December 20, 2002 (incorporated by reference to Exhibit 3.3
        of the Form 10-QSB/A filed on February 5, 2004).

3.4     Certificate of Amendment to Articles of Incorporation, dated
        August 2, 2004 (incorporated by reference to Exhibit 3.4 of
        the Form 10-QSB filed on August 20, 2004).

3.5     Certificate of Amendment of Articles of Incorporation, dated
        November 8, 2004 (incorporated by reference to Exhibit 3.1
        of the Form 8-K filed on November 16, 2004).

3.6     Certificate of Amendment of Articles of Incorporation, dated
        November 8, 2004 (incorporated by reference to Exhibit 3.2
        of the Form 8-K filed on November 16, 2004).

3.7     Bylaws, dated May 15, 2000 (incorporated by reference to
        Exhibit 3.2 of the Form 8-K12g-3 filed on May 16, 2000).

4.1     Employee Stock Incentive Plan, dated January 22, 2001
        (incorporated by reference to Exhibit 4.1 of the Form S-8
        filed on January 29, 2001).

4.2     Non-Employee Directors and Consultants Retainer Stock Plan,
        dated January 5, 2001 (incorporated by reference to Exhibit
        4.2 of the Form S-8 filed on January 29, 2001).

4.3     Common Stock Purchase Agreement between the Company and Four
        Way Associates, Inc., dated June 1, 2001 (incorporated by
        reference to Exhibit 4.3 of the Form SB-2 filed on August
        28, 2001).

4.4     Amended and Restated Employee Stock Incentive Plan, dated
        November 20, 2001 (incorporated by reference to Exhibit 4.1
        of the Form S-8 POS filed on January 31, 2002).

4.5     Amended and Restated Non-Employee Directors and Consultants
        Retainer Stock Plan, dated November 20, 2001 (incorporated
        by reference to Exhibit 4.2 of the Form S-8 POS filed on
        January 31, 2002).

4.6     2002 Non-Employee Directors and Consultants Retainer Stock
        Plan, dated September 12, 2002 (incorporated by reference to
        Exhibit 4 of the Form S-8 filed on September 18, 2002).

4.7     2002 Stock Compensation Plan, dated December 16, 2002
        (incorporated by reference to Exhibit 4 of the Form S-8
        filed on December 23, 2002)

4.8     2003 Consultants Stock Compensation Plan dated August 19,
        2003 (incorporated by reference to Exhibit 4 of the Form S-8
        filed on August 22, 2003).

4.9     2003  Non-Qualified  Stock  Option  Plan, dated September
        29, 2003  (incorporated by reference to Exhibit 4 of the
        Form S-8 filed on October 1, 2003).

4.10    Amended and Restated Non-Employee Directors and Consultants
        Retainer Stock Plan (Amendment No. 2), dated February 10,
        2004 (incorporated by reference to Exhibit 4 of the Form S-8
        POS filed on February 13, 2004).

4.11    Amended and Restated Non-Employee Directors and Consultants
        Retainer Stock Plan (Amendment No. 3), dated June 1, 2004
        (incorporated by reference to Exhibit 4 of the Form S-8 POS
        filed on June 10, 2004).

4.12    Amended and Restated Employee Stock Incentive Plan
        (Amendment No. 2), dated July 15, 2004 (incorporated by
        reference to Exhibit 4 of the Form S-8 POS filed on August
        6, 2004).

4.13    Amended and Restated Non-Employee Directors and Consultants
        Retainer Stock Plan (Amendment No. 4), dated October 12,
        2004 (incorporated by reference to Exhibit 4 of the Form S-8
        POS filed on October 19, 2004).

4.14    Amended and Restated Non-Employee Directors and Consultants
        Retainer Stock Plan (Amendment No. 5), dated December 1,
        2004 (incorporated by reference to Exhibit 4 of the Form S-8
        POS filed on December 13, 2004).

10.1    Employment Agreement between the Company and James
        Alexander, dated February 20, 2002 (incorporated by
        reference to Exhibit 10.4 of the Form 10-QSB filed on May
        14, 2002).

10.2    Amendment A to Employment Agreement between the Company and
        James Alexander, dated as of February 20, 2002 (incorporated
        by reference to Exhibit 10.1 of the Form 10-KSB filed on
        April 11, 2003).

10.3    Amendment B to Employment Agreement between the Company and
        James Alexander, dated January 15, 2004 (incorporated by
        reference to Exhibit 10.3 of the Form 10-KSB fled on April
        20, 2004).

14      Code of Business Conduct and Ethics, adopted by the
        Company's board of directors (incorporated by reference to
        Exhibit 14 of the Form 10-KSB filed on April 20, 2004).

16      Letter on Change in Certifying Accountant (incorporated by
        reference to Exhibit 16 of the Form 8-K/A filed on July 12, 2004).

21      Subsidiaries of the Company (incorporated by reference to
        Exhibit 21 of the Form 10-KSB filed on April 16, 2002).

23      Consent of Independent Registered Public Accounting Firm
        (filed herewith).

31      Rule 13a-14(a)/15d-14(a) Certification of James H. Alexander
        (filed herewith).

32      Section 1350 Certification of James H. Alexander (filed herewith).

99.1    Press release issued by the Company, dated October 7, 2003
        (incorporated by reference to Exhibit 99 of the Form 8-K
        filed on December 30, 2003).

99.2    Text of press release issued by the Company, dated May 26,
        2004 (incorporated by reference to Exhibit 99 of the Form 8-
        K filed on May 26, 2004).

99.3    Confirmation of Provisional Patent Application, dated
        September 2, 2004 (filed herewith).

99.4    Confirmation of Provisional Patent Application, dated
        September 2, 2004 (filed herewith).