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

                                  FORM 10-QSB/A
                                 AMENDMENT NO. 2


|X|   Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
      Exchange Act of 1934 for the quarterly period ended September 30, 2005.

|_|   Transition Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the transition period from ______ to ______.

                         Commission File Number: 0-24001

                             WHERIFY WIRELESS, INC.
        (Exact name of small business issuer as specified in its charter)

                  Delaware                               76-0552098
          (State of incorporation)             (IRS Employer Identification No.)

2000 Bridge Parkway, Suite 201, Redwood Shores, CA          94065
   (Address of principal executive offices)               (Zip Code)


                                  650-551-5200
                           (Issuer's telephone number)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act  during the  preceding  12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

      Yes: |X|     No: |_|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

      Yes: |_|     No: |X|

                      Applicable Only to Corporate Issuers:

As of November 14, 2005, there were 52,941,418 shares of common stock, no par
value, outstanding.

      Transitional Small Business Disclosure Format  |_| Yes     |X| No

<PAGE>


                             WHERIFY WIRELESS, INC.
                                  FORM 10-QSB/A
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2005

                                EXPLANATORY NOTE
                                ----------------

This quarterly report on Form 10-QSB/A ("Form 10-QSB/A") is being filed to amend
our quarterly report on Form 10-QSB/A for the quarter ended September 30, 2005
(the "Original Form 10-QSB/A"), which was originally filed with the Securities
and Exchange Commission ("SEC") on November 15, 2005 and subsequently amended on
February 16, 2006. Accordingly, Pursuant to rule 12b-15 under the Securities
Exchange Act of 1934, as amended, the Form 10-QSB/A contains complete text of
Item 3 of Part I, as amended, as well as currently dated certifications from the
Principal Executive Officer and the Principal Financial Officer. In addition,
this report also sets forth the remainder of the Items required by Form 10-QSB
that have not been amended in this filing.

In connection with the Company's preparation of its recent registration
statements on Form SB-2, the Securities and Exchange Commission ("SEC") through
its comment letter process requested certain changes in the content and scope of
our disclosure related to our controls and procedures disclosure in several of
our periodic reports to the SEC, including our first quarter period ended
September 30, 2005. As a result, the Company's quarterly report on Form 10-QSB/A
for the three months ended September 30, 2005 is being amended to correct these
disclosure issues.

The amendment contained herein reflects changes resulting from correction of the
Controls and Procedures disclosure described above. We have not updated the
information contained herein for events occurring subsequent to November 15,
2005, the filing date of the Form 10-QSB/A, except to reflect the amended
controls and procedures disclosure for the period indicated above and to reflect
the restatement of our financial statements as reflected in the Amended Form
10-QSB/A filed on February 16, 2006. We recommend that this report be read in
conjunction with our reports filed subsequent to November 15, 2005.



<PAGE>

                             WHERIFY WIRELESS, INC.
                                  FORM 10-QSB/A
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2005

                                TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION                                              Page

    Item 1.   Financial Statements............................................3

              Balance Sheet as of September 30, 2005 (Unaudited)..............3

              Statements of Operations for the three months
              ended September 30, 2005 and 2004 (Unaudited) (Restated)........4

              Statements of Cash Flows for the three months ended
              September 30, 2005 and 2004 (Unaudited).........................5

              Notes to Financial Statements (Unaudited).......................6

    Item 2.   Management's Discussion and Analysis or Plan of Operation.......9

    Item 3.   Controls and Procedures........................................25

PART II. OTHER INFORMATION

    Item 6.   Exhibits.......................................................26

    Signatures...............................................................26

EXHIBITS.....................................................................27


                                       -2-
<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

<TABLE>
<CAPTION>

                             Wherify Wireless, Inc.
                                  Balance Sheet
                               September 30, 2005
                                   Unaudited

                                     ASSETS
<S>                                                                                             <C>
CURRENT ASSETS:
         Cash and cash equivalents                                                              $          282,616
         Restricted certificates of deposit                                                              2,672,321
         Prepaid expenses                                                                                   99,086
         Accounts receivable, net of allowance for doubtful accounts of $13,200                              9,749
         Inventory                                                                                           8,565
                                                                                                 -----------------
           TOTAL CURRENT ASSETS                                                                          3,072,337
Goodwill                                                                                                 3,222,000
Intangible assets, net of accumulated amortization of $143,449                                           2,049,551
Property and equipment, net of accumulated depreciation of $1,156,207                                      478,111
Other long-term assets                                                                                     226,072
                                                                                                 -----------------
TOTAL ASSETS                                                                                     $       9,048,071
                                                                                                 =================

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:
         Accounts payable                                                                        $       3,949,897
         Accounts payable - related party                                                                3,936,668
         Accrued liabilities                                                                               336,435
         Accounts payable related to discontinued operating segment                                      2,606,514
                                                                                                 -----------------
                  TOTAL CURRENT LIABILITIES                                                             10,829,514
                                                                                                 -----------------
STOCKHOLDERS' DEFICIT
         Common stock, no par value:                                                                   121,422,531
         100,000,000 shares authorized, 52,521,546 shares issued and outstanding
         Deferred stock compensation                                                                      (713,592)
         Accumulated deficit                                                                          (122,490,382)
                                                                                                 -----------------
                  TOTAL STOCKHOLDERS' DEFICIT                                                          (1,781,443)
                                                                                                 -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                      $       9,048,071
                                                                                                 =================

</TABLE>

                 See accompanying notes to financial statements.


                                      -3-
<PAGE>
<TABLE>
<CAPTION>

                             Wherify Wireless, Inc.
                             Statement of Operations
                 Three Months Ended September 30, 2005 and 2004
                                   Unaudited

                                                                   Three Months September 30,
                                                              2005           2005            2004
                                                         (As Restated)   (As Reported)
                                                         ------------    ------------    ------------
<S>                                                      <C>             <C>             <C>
REVENUES:
    Sales Revenue                                        $     36,634     $     36,634    $         --
    Cost of Goods Sold                                          3,356            3,356              --
                                                         ------------     ------------    ------------
        NET REVENUES                                           33,278           33,278              --


    Goodwill impairment                                    64,308,022       64,308,022              --
    General and administrative                              2,334,425        2,334,425       1,213,432
    Rent expense payable to related party                     228,486          228,486              --
    Amortization and depreciation                             185,188          185,188          23,022
                                                         ------------     ------------    ------------
        TOTAL OPERATING EXPENSES                           67,056,121       67,056,121       1,236,454
                                                         ------------     ------------    ------------
    OPERATING LOSS                                        (67,022,843)     (67,022,843)     (1,236,454)

OTHER INCOME (EXPENSE)
    Interest expense                                           (6,583)          (6,583)         (9,123)
    Interest and other income                                  25,711           25,711          10,127
    State income tax                                               --               --          (3,232)
                                                         ------------     ------------    ------------
NET LOSS FROM CONTINUING OPERATIONS                       (67,003,715)     (67,003,715)     (1,238,682)


    (Loss) income from operations of discontinued segment     (42,930)         (42,930)         42,813
Deemed dividend on preferred stock                                 --       12,467,059              --
                                                         ------------     ------------    ------------
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS             $(67,046,645)    $(79,513,704)   $ (1,195,869)
                                                         ============     ============    ============

Basic and diluted net loss per share                     $      (1.55)    $      (1.55)   $      (0.05)
  from continuing operations
Basic and diluted net (loss) income per share            $      (0.00)    $      (0.00)   $       0.00
  from discontinued operations
Basic and diluted net loss per share                     $      (1.55)    $      (1.84)   $      (0.05)
  attributable to common shareholders
Weighted average number of shares outstanding              43,279,529       43,279,529      25,246,699

</TABLE>

                 See accompanying notes to financial statements.


                                      -4-
<PAGE>

                             Wherify Wireless, Inc.
                            Statements of Cash Flows
                 Three Months Ended September 30, 2005 and 2004
                                   Unaudited


                                                    Three Months   Three Months
                                                    September 30,  September 30,
                                                        2005          2004
                                                    -----------    -----------
NET CASH USED IN OPERATING ACTIVITIES               $(2,025,710)   $(1,511,258)
                                                    -----------    -----------
INVESTING ACTIVITIES:
    Increase in restricted certificates of deposit     (223,020)      (201,656)
    Purchase of property and equipment                  (29,678)       (10,970)
                                                    -----------    -----------
NET CASH USED IN INVESTING ACTIVITIES                  (252,698)      (212,626)
                                                    -----------    -----------
FINANCING ACTIVITIES:
    Proceeds from issuance of common stock            1,352,935             --
    Proceeds from issuance of preferred stock                --      3,355,338
                                                    -----------    -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES             1,352,935      3,355,338
                                                    -----------    -----------
CHANGE IN CASH AND CASH EQUIVALENTS                    (925,473)     1,631,454
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD       1,208,089        916,314
                                                    -----------    -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD           $   282,616    $ 2,547,768
                                                    ===========    ===========

                 See accompanying notes to financial statements.


                                      -5-
<PAGE>

                             WHERIFY WIRELESS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Wherify Wireless,
Inc. ("Wherify Wireless" or the "Company") have been prepared in accordance with
accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission ("SEC"). These financial
statements should be read in conjunction with the audited financial statements
and notes thereto contained in Wherify Wireless's Annual Report filed with the
SEC on Form 10-KSB for the year ended June 30, 2005. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year. We have omitted notes to the financial
statements that would substantially duplicate the disclosure contained in the
audited financial statements for the year ended June 30, 2005 as reported in the
Form 10-KSB.

NOTE 2 - RESTATEMENT

In connection with the Company's preparation of its unaudited interim financial
statements for the three and six months periods ended December 31, 2005, the
Company discovered a misstatement in its unaudited interim financial statements
for the three month period ended September 30, 2005. This misstatement, which
arose out of a clerical error, related to the accounting for a $12,467,059
deemed dividend on preferred stock. As a result of correcting this error, the
Company's reported net loss for the quarter decreased by $12,467,059 to a
restated net loss of $67,046,645 or ($1.55) per share versus the reported net
loss of $79,513,704 or ($1.84) per share. Because of this misstatement, the
Company's unaudited interim financial statements for the three months ended
September 30, 2005 are being restated to correct this misstatement.

NOTE 3 - RESTATEMENT OF STOCK-BASED COMPENSATION

Wherify Wireless accounts for its employee stock-based compensation plans under
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees. During the quarter ended September 30, 2005, Wherify Wireless
granted its employees options to purchase 1,371,068 shares of common stock. The
options vest over a four year period and expire ten years from the grant date.

Since the exercise price of the options was equal to the market value of the
stock on the grant date, Wherify Wireless did not record any compensation
expense. The following table illustrates the effect on net loss and net loss per
share as if Wherify Wireless had recorded compensation expense equal to the fair
value of the options on the grant date.


                                    Three Months Ended
                                        September 30,
                             2005          2005            2004
                        (As Restated)  (As Reported)
                        ------------   ------------    -----------
Net loss as reported    $(67,046,645)  $(79,513,704)   $(1,195,869)
Less: option expense
    Under fair value
    method                   (99,694)       (99,694)      (284,583)
                        ------------   ------------    -----------

Pro forma net loss      $(67,146,399)  $(79,613,398)   $(1,480,407)
Basic and diluted net
loss per common share:

    As reported         $      (1.55)  $      (1.84)   $      (.05)
    Pro forma           $      (1.55)  $      (1.84)   $      (.06)


NOTE 4 - BUSINESS COMBINATION

On July 21, 2005, Wherify Wireless (formerly IQ Biometrix, Inc.) merged with
Wherify California, Inc. ("Wherify California"). Pursuant to the terms of the
Agreement and Plan of Merger, Wherify issued 41,893,797 shares of common stock
in exchange for all of the outstanding common and preferred shares of Wherify
California. As a result of the merger, Wherify expects that it will be able to
accelerate the sales cycle of new product offerings it is in the process of
developing and marketing to government agencies.

For accounting purposes, the merger has been treated as reverse acquisition of
Wherify Wireless by Wherify California. Accordingly, the financial results
presented for all periods prior to the merger date are those of Wherify
California. As of the merger date, the financial statements include the combined
operating results, assets and liabilities of Wherify Wireless and Wherify
California. The former business operations of Wherify Wireless, consisting
primarily of the sale of FACES software and related services to law enforcement
agencies and the security industry, is not expected to constitute a significant
part of the ongoing business of the combined company.

The aggregate purchase price of the business combination was $70,213,189, which
was calculated by multiplying the total outstanding shares of Wherify Wireless
(12,339,750) by the closing price on the date of the merger ($5.69).

The following table summarizes the estimated fair values of the assets that
Wherify California acquired and the liabilities that it assumed from Wherify
Wireless on the date of the acquisition.


                                      -6-
<PAGE>

Current Assets                              $1,131,654
Fixed Assets                                     1,968
Goodwill                                    67,530,022
Intangible Assets                            2,193,000
                                           -----------
Total Assets Acquired                      $70,856,644

Accounts Payable                              (383,266)
Accrued Expense                                (60,189)
Convertible Debt                              (200,000)
                                           -----------
Total Liabilities Assumed                     (643,455)

Net Assets Acquired                        $70,213,189

The intangible assets of $2,193,000 relate primarily to customer lists, which
will be amortized on a straight-line basis over their estimated useful life of 3
years. None of the amount allocated to goodwill is expected to be deductible for
tax purposes

Assuming the merger occurred on July 1, 2005, the Company's pro-forma revenues
and net income would not differ materially from the actual amounts reported in
the Statement of Operations. The following table presents unaudited pro-forma
information for the three months ended September 30, 2004, as if the merger had
occurred on July 1, 2004.

                             As Reported      Pro-Forma

Revenues                  $          --    $     269,724

Net Loss                  $  (1,195,869)   $  (9,629,825)

Loss Per Share            $        (.05)   $        (.14)

NOTE 5 - GOODWILL

The Company periodically reviews its goodwill for impairment. If the fair market
value of the goodwill is deemed to be less than the carrying value, the
difference is recorded in the Statement of Operations as an expense.

With the assistance of a third party, the Company concluded that the implied
fair market value of the goodwill was $3,222,000 as of September 30, 2005.
Therefore, an impairment of $64,308,022 was recorded during the quarter. When
estimating the fair market value, we used an income approach that was based on
pro-forma financial projections for fiscal years 2006 through 2008, discounted
at a rate of 29.2%. The calculation of the projections and the discount rate
includes numerous assumptions made by management. If actual results of
operations are worse than projected or our market outlook changes, we could have
additional impairments of goodwill and identified intangible assets in future
periods, which, in turn, could have a material adverse effect on our results of
operations.


                                      -7-
<PAGE>

NOTE 6 - DISCONTINUED OPERATIONS

During the quarter ended June 30, 2005, Wherify California discontinued the
marketing of its only product line, which consisted of wristwatches with GPS
functionality. All revenues and expenses relating this product line have been
classified in the Statement of Operations as discontinued operations. In
addition, the accounts payable relating to this product has been segregated on
the balance sheet.

NOTE 7 - EQUITY

During the quarter ended September 30, 2005, the Company issued 43,138 shares of
common stock in exchange for $200,000 of convertible debt securities. In
addition, the Company issued 106,250 shares of common stock for options and
warrants exercised during the quarter and received cash proceeds of $272,000.

In connection with the business combination discussed in Note 4, the Company
issued 41,893,897 shares of common stock in exchange for all of the outstanding
preferred and common shares of Wherify California.

NOTE 8 - INVENTORY

Wherify Wireless recognizes impairment losses on its inventory when there is
evidence that the value of the goods will be less than the costs. During the
year ended June 30, 2005, Wherify Wireless contracted with an external party to
manufacture 15,000 units of its Wherifone product. When we executed the
agreement, a successful prototype of the product had not yet been developed, and
the limited marketing campaigns conducted to that point had not yet indicated
that the product would have a resale value. Due to the substantial doubts
regarding the product's functionality and salability, the Company recognized an
impairment of approximately $2.1 million during the year ended June 30, 2005.
(The impairment was included as part of research and development expenses.)
Since that time, Wherify Wireless has concluded that the product can be
manufactured successfully and sold at or above cost. Therefore, the Company
expects that any future additions of the product to inventory will be recorded
at cost unless new circumstances arise.


                                      -8-
<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation

      The following discussion and analysis of financial condition and results
of operations should be read in conjunction with our financial statements and
related notes included elsewhere in this report. This discussion contains
forward-looking statements that involve risks, uncertainties and assumptions.
Our actual results could differ materially from those anticipated in the
forward-looking statements as a result of various factors including those
discussed in the section entitled "Forward Looking Statements" elsewhere in this
report.

      Wherify's auditor has included a going concern paragraph in its latest
audit report. Wherify's auditor has reported that Wherify has suffered net
operating losses in the past two fiscal years and has significant working
capital deficits that raise substantial doubt about the company's ability to
continue as a going concern.

      1. Introduction

      On July 21, 2005, Wherify California, Inc., a California corporation
(formerly known as Wherify Wireless, Inc.) ("Wherify California") was merged
with a special purpose subsidiary of Wherify Wireless, Inc., a Delaware
corporation (formerly known as IQ Biometrix, Inc.) ("Wherify"or the "Company").
As a result of the merger, Wherify California became a wholly owned subsidiary
of Wherify. Accordingly, our current business operations include the business
operations of both Wherify California and Wherify, although as discussed below
the former business operations of Wherify, consisting primarily of the sale of
FACES software and related services to law enforcement agencies and the security
industry, is not expected to constitute a significant part of the ongoing
business operations of the combined company.

      2. Merger

      On April 14, 2004, Wherify entered into an Agreement and Plan of Merger
with Wherify California pursuant to which the parties agreed to a merger
transaction involving the merger of a wholly owned subsidiary of Wherify with
and into Wherify California, with Wherify California surviving as a wholly owned
subsidiary of Wherify. The boards of directors of both companies approved the
merger agreement in April 2004, and the respective shareholder of both companies
approved the merger on July 19, 2005. The merger closed on July 21, 2005.

      Upon the completion of the merger, shareholders of Wherify California
received 4.8021 shares of Wherify common stock for each share of Wherify
California common or preferred stock, and Wherify California stock options were
assumed by Wherify and converted into options to acquire a number of shares of
Wherify common stock equal to the number of shares of Wherify California common
stock underlying each such option multiplied by the exchange ratio of 4.8021. As
a result, Wherify issued or reserved for future issuance an aggregate of
approximately 46 million shares of its common stock in consideration for all of
the outstanding shares, options and warrants issued by Wherify California, which
represents approximately 78.8% of the total number of shares of Wherify common
stock calculated on a fully-diluted basis. Also upon completion of the merger,
Wherify changed its name from "IQ Biometrix, Inc." to "Wherify Wireless, Inc."
and shortly thereafter Wherify California changed its name from "Wherify
Wireless, Inc." to "Wherify California, Inc."


                                       -9-
<PAGE>

      The merger was treated as a reverse acquisition, pursuant to which Wherify
California was treated as the acquirer of Wherify for financial reporting
purposes. Consequently, following the consummation of the merger, the historical
financial statements of Wherify California serve as the principal historical
financial statements of the combined company.

      Under applicable accounting rules, the purchase price of the acquisition
(which is determined based on the percentage of the combined company held by the
pre-merger Wherify stockholders and the stock price of the combined company) is
allocated to identifiable tangible and intangible assets, and then the excess of
the purchase price over the amounts allocated to these assets is allocated to
goodwill. The Company, with the assistance of an independent third party,
completed the purchase price allocation and concluded that the value of the
recently identifiable intangible assets is $2.2 million and the total amount of
goodwill is $67.5 million. Following the finalization of the purchase price
allocation, the Company concluded that the implied fair value of goodwill was
$3.2 million resulting in an indicated impairment of $64.3 million, which was
recorded by the Company in the quarter ended September 30, 2005. We will
continue to review our intangible assets including goodwill on a quarterly basis
for possible impairment.

      3. Future Business and Operations

      We anticipate that our principal business activity post-merger will be the
business of Wherify California, consisting primarily of the development and sale
of wireless location products and services. The former business of Wherify,
consisting primarily of the sale of security software and services, including
facial composite software, to law enforcements agencies and the security
industry, is not expected to constitute a significant part of the ongoing
business operations of the combined company. Accordingly, historical financial
information relating to the former business of Wherify is expected to have only
minimal significance to the future business of the combined company.

      4. Liquidity and Capital Resources

As of September 30, 2005, Wherify had cash and cash equivalents of approximately
$283,000, restricted certificates of deposit of approximately $ 2.7 million
which are being utilized as collateral to support our obligations under a letter
of credit related to our contract manufacturer, other current assets of
approximately $117,000 and current liabilities of approximately $10.8 million,
including approximately $3.9 million in past due rent obligations. As of
November 11, 2005, Wherify had cash and cash equivalents of approximately $1.0
million and restricted certificates of deposit of approximately $1.6 million
which are being utilized as collateral to support our obligations under a letter
of credit related to our contract manufacturer.

      Wherify currently does not have any credit facility available to it, and
has financed its operations to date primarily through the issuance of an
aggregate of approximately $53 million of shares. There is a "going concern" in
Wherify's auditor's report dated August 24, 2005. We are in the process of
locating financing sources to meet our liquidity shortfall. Adequate funds may
not be available on terms acceptable to us. If additional funds are raised
through the issuance of equity securities, dilution to existing stockholders may
result. If funding is insufficient at any time in the future, we may be unable
to develop or enhance our products or services, take advantage of business
opportunities or respond to competitive pressures, any of which could have a
material adverse effect on our financial position, results of operations and
cash flows. We have no material commitments for capital expenditures and there
are no anticipated material capital expenditures that are reasonably expected to
have a material impact on us.


                                      -10-
<PAGE>

      Even with financing, there can be no assurance that we will achieve
profitability. Due to these factors, we believe that period-to-period
comparisons of our results of operations are not necessarily a good indication
of future performance. The results of' operations in some future periods may be
below the expectations of analysts and investors.

      We have worked out an arrangement with our landlord and are currently
paying rent. We have entered into an agreement with the landlord that provides
that we will begin paying back due rent as well as paying for certain back due
expenses covered by the landlord. Under this agreement, upon the completion of
additional financing following the merger, we will settle our debt with the
landlord, which was approximately $3.9 million as of September 30, 2005. There
is no guarantee that additional financing will be found to settle this
obligation.

      We expect operating losses and negative operating cash flows to continue
for at least the next twelve months, because of expected increases in expenses
related to brand development; marketing and other promotional activities;
increases in personnel; the expansion of infrastructure and customer support
services; strategic relationship development; and potential acquisitions of
related complementary businesses. We believe the expenses incurred during that
period will help us to build the infrastructure necessary to increase revenues
both through organic growth and through acquisitions, which we believe hold the
key to our future revenue growth. We believe it will take additional products,
either created in house or acquired through acquisitions, to help us increase
revenue, and ultimately to reach profitability. However, we can make no
assurances that these activities will achieve the desired results of increased
revenues, or that any increase in revenues will be enough to bring the Company
to profitability and positive cash flow.

      Wherify is currently considering a number of different financing
opportunities in order to meet its short term cash flow needs. Adequate funds
may not be available on terms acceptable to us. If additional funds are raised
through the issuance of equity securities, dilution to existing stockholders may
result. If funding is insufficient at any time in the future, we may be unable
to develop or enhance our products or services, take advantage of business
opportunities or respond to competitive pressures, any of which could have a
material adverse effect on our financial position, results of operations and
cash flows.

      5. General

      Wherify is a developer and provider of wireless location products and
services. Its products and services are designed to be used for child safety,
parental supervision, personal protection, Alzheimer and memory loss
supervision, law enforcement, animal identification and location, and personal
property tracking. The proprietary integration of communication technologies
enables customers to obtain real-time location information for individuals and
property directly through the internet or any phone.


                                      -11-
<PAGE>

      Wherify's cost of revenues currently consists of actual manufacturing
costs.

      Sales and marketing expenses consist primarily of salaries, commissions
and related expenses for personnel engaged in marketing, sales and customer
support, as well as costs associated with promotional activities and related
travel expenses.

      General and administrative expense consists primarily of salaries and
related expenses for executive, finance, accounting, information technology,
facilities, and human resources personnel. These expenses increased through July
2005 in the areas of legal, accounting and outside services as the Company
prepared filings and other information in connection with the merger between
Wherify and Wherify California.

      Research and development expense consists primarily of salaries and
related personnel expense and expenses related to the design, development,
testing and enhancement of products. Currently we are focusing attention on
further development our Wherifone product.

      6. Results Of Operations

      Quarter Ended September 30, 2005 Compared To Quarter Ended September 30,
2004

      Revenues for the quarter ended September 30, 2005 were $33,000. Revenues
in the quarter ended September 30, 2005 have been generated by the sales of
FACES product. Wherify discontinued the sale of its child locater watch in the
year-ended June 30, 2005 and sales of Wherify's new product have not yet begun.

      Operating expenses for the quarter-ended September 30, 2005 were $67
million versus $1.2 million operating expenses for the quarter-ended September
30, 2004. The $67 million dollars of operating expenses was primarily made up of
$64.3 million of goodwill impairment and $2.3 million of General and
Administrative expenses. With the assistance of a third party, the Company
concluded that the implied fair market value of the goodwill was $3,222,000 as
of September 30, 2005. Therefore, an impairment of $64.3 million out of a total
of $67.5 million of goodwill was recorded during the quarter.

      General and administrative expenses increased by $1.1 million from $1.2
million in the quarter ended September 30, 2004 to $2.3 million in the quarter
ended September 30, 2005. The increase in general and administrative expenses is
due primarily to costs associated with the merger between Wherify and Wherify
California and expenses related to our Wherifone product. The largest component
of these expenses was legal fees, which increased by approximately $650,000 due
to costs associated with the merger, investor relations and government filings.
Expenses related to the filing of patent and trademark protection for the
Wherifone product and travel and transportation expenses associated with the
marketing of the product generated $160,000 of this increase. Finally,
accounting and audit fees increased by approximately $60,000.

      During the quarter ended June 30, 2005, Wherify discontinued the sale of
its only product line that consisted of wristwatches with the GPS functionality.
Accounts payable directly related to the sale of the wrist watches are recorded
separately on the balance sheet as accounts payable related to discontinued
operating segment in the amount of $2.6 million.

      7. Recent Events

      On September 17, 2005 Wherify entered into an international supply and
distribution agreement with American Network Computadores based in Sao Paulo,
Brazil. Under the terms of the agreement, Wherify appointed American Network
Computadores as Wherify's non-exclusive, authorized distributor in Brazil to
promote, market service, support, distribute and sell Wherify's products and
services. Products and services distributed under this agreement will be
distributed by American Network Computadores directly to end-users or through
sub-distributors.


                                      -12-
<PAGE>

      On September 28, 2005, Wherify entered into a supply agreement with Oriant
Australia Pty Ltd. relating to the appointment of Oriant as an exclusive
distributor of the Wherifone product in Australia and New Zealand.

      Wherify currently has its products being reviewed in over twenty
countries. Positive results could lead to contracts for the distribution and
sales of Wherify's products and services in these countries. Wherify intends to
negotiate contracts in these countries that would generate revenues of between
$4 and $6 per month per subscriber.

      During the period between November 9, 2005 and November 11, 2005, Wherify
raised approximately $1.1 million in a private placement of restricted stock.
Wherify intends to continue to seek sources of financing for its operations.

                           FORWARD LOOKING STATEMENTS

      The statements contained in this Report that are not historical facts are
"forward-looking statements" (as such term is defined in Section 27A of the
Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934),
which can be identified by the use of forward-looking terminology such as
"estimated," "projects," "anticipated," "expects," "intends," "believes," or the
negative thereof or other variations thereon or comparable terminology, or by
discussions of strategy that involve risks and uncertainties. These
forward-looking statements, such as the Company's plans concerning the
availability of additional financing, and other statements contained in this
Report regarding matters that are not historical facts, are only estimates or
predictions and cannot be relied upon. No assurance can be given that future
results will be achieved; actual events or results may differ materially as a
result of risks facing the company or actual results differing from the
assumption underlying such statements. Such risks and assumptions include, but
are not limited to, those factors described below, as well as regulatory,
legislative, and judicial developments that could cause actual results to vary
materially from the future results indicated, expressed or implied in such
forward-looking statements. All written and oral forward-looking statements made
in connection with this Report which are attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the "Factors
Affecting Future Operating Results" and other cautionary statements included
herein. The Company disclaims any obligation to update information contained in
any forward-looking statement.

      FACTORS AFFECTING FUTURE OPERATING RESULTS

      The following important factors, among others, could cause actual results
to differ materially from those contained in forward-looking statements made in
this report or presented elsewhere by management from time to time.


                                      -13-
<PAGE>

      We Are The Product Of A Recent Merger Of Two Development Stage Companies,
Have Limited Revenues And Have A Limited Operating History On Which To Evaluate
Our Potential For Future Success.

      On July 21, 2005, we completed the merger with Wherify California. Wherify
and Wherify California have only limited operating histories upon which you can
evaluate our business and prospects. You must consider the risks and
uncertainties frequently encountered by companies in situations such as ours,
including but not limited to the ability to grow and prosper and finance such
growth. If we are unsuccessful in addressing these risks and uncertainties, our
business, results of operations and financial condition will be materially and
adversely affected.

      Wherify California was incorporated in March 1998 and began selling its
initial product in May 2003. To date, sales of Wherify California's products
have been very limited. Wherify California's limited operating experience in the
wireless location-based services market makes it difficult to evaluate its
business. Wherify California has never achieved profitability, and it may not
achieve profitability in the future. The uncertainty of Wherify California's
ability to execute on its business plan and the uncertainties regarding the
acceptance of its products or its competition increase the risk that the value
of Wherify California may decline.

      Prior to the merger with Wherify California, we had generated very limited
revenues from the sale of our FACES software or any other products. Our limited
revenue and limited operating history prior to the merger makes an evaluation of
the prospects of our facial recognition software extremely difficult.

      We Currently Lack Liquidity and Have Limited Revenues and Both Wherify and
Wherify California Had Going-Concern Qualifications in Their Most Recent Audit
Reports

      As of September 30, 2005, we had cash and cash equivalents of
approximately $283,000, restricted certificates of deposit of approximately $2.7
million which are being utilized as collateral to support our obligations under
a letter of credit related to our contract manufacturer, other current assets of
approximately $117,000 and current liabilities of approximately $10.8 million,
including approximately $3.9 million in past due rent obligations. There is a
going concern paragraph in Wherify and Wherify California's most recent audit
reports. Substantially all of our cash has been raised through capital raising
transactions rather than operations. As we have limited revenues, we will need
to raise additional working capital in the near future. There is no assurance
that we will be able to raise additional working capital at all or on terms
favorable to our stockholders or us. If we are unable to raise additional
working capital, we will need to reduce our costs, which may require us to
reduce operations, personnel and overhead, which would have an adverse effect on
our business.

      We Need To Raise Substantial Additional Capital, Which May Result In
Substantial Dilution To Existing Stockholders.

      In order to manufacture, distribute and sell our products and to execute
on our business plan, we need substantial additional capital. We are currently
considering possible sources of this additional capital, including raising
capital through the issuance of equity securities. Although the exact amount we
intend to raise has not yet been determined, we are contemplating an amount in
excess of $20 million. There can be no assurance that we will be able to raise
sufficient additional capital at all or on terms favorable to our stockholders
or us. If we issue equity securities in order to raise additional capital in the
amounts currently contemplated, the stockholders will experience immediate and
substantial dilution in their ownership percentage of the combined company. In
addition, to raise the capital we need, we may need to issue additional shares
at a discount to the current market price. If the terms of such financing are
unfavorable to us or our stockholders, the stockholders may experience
substantial dilution in the net tangible book value of their stock. In addition,
any new equity securities may have rights, preferences or privileges senior to
those of existing holders of common stock. If we cannot raise funds on
acceptable terms, we may not be able to develop or enhance our products, take
advantage of future opportunities or respond to competitive pressures or
unanticipated requirements all of which could have a material adverse effect on
us.


                                      -14-
<PAGE>

      The Release of Shares From Lock-ups and the Potential Sale of a
Significant Number of Shares May Significantly Negatively Affect Our Stock
Price.

      The former stockholders of Wherify California own approximately 80% of our
stock calculated on a fully diluted basis. Most of these shares are subject to
lock-up agreements that are scheduled to expire at various times during the next
year. If these stockholders attempt to sell a significant portion of their
shares shortly after such shares are released from the lock-ups, or if we
release a significant portion of the stockholders from their obligations under
the lock-up agreements prior to the expiration of the relevant lock-up periods,
our stock price could be significantly negatively affected.

      We Have Only Recently Begun Full Production of Our Wherifone(TM) Product
and May Encounter Manufacturing Problems During the Production Process.

      Our Wherifone(TM) product is a new product and we have discontinued
manufacturing all of our other products. The manufacture of our Wherifone(TM)
product involves complex and precise processes, which we have subcontracted to
another company. To date, we have only initiated a limited production of this
product and so we do not yet know whether we will encounter any serious problems
during the production process in the long-term. Any significant problems in
manufacturing, assembling or testing of this product could delay the roll-out of
the Wherifone(TM) product and have an adverse impact on our business and
prospects.

      Our Software Products Are Complex And May Contain Unknown Defects That
Could Result In Numerous Adverse Consequences.

      Complex software products such as those associated with our Wherifone(TM)
product often contain latent errors or defects, particularly when first
introduced, or when new versions or enhancements are released. We have
experienced errors and defects in our most recent release of the software
associated with our Wherifone(TM) product, but do not believe these errors will
have a material negative effect on the functionality of the Wherifone(TM)
product. However, there can be no assurance that, despite testing, additional
defects and errors will not be found in the current version, or in any new
versions or enhancements of this software, any of which could result in damage
to our reputation, the loss of sales, a diversion of our product development
resources, and/or a delay in market acceptance, and thereby materially adversely
affecting our business, operating results and financial condition. Furthermore,
there can be no assurance that our products will meet all of the expectations
and demands of our customers. The failure of our products to perform to customer
expectations could give rise to warranty claims. Any of these claims, even if
not meritorious, could result in costly litigation or divert management's
attention and resources. Any product liability insurance that we may carry could
be insufficient to protect us from all liability that may be imposed under any
asserted claims.


                                      -15-
<PAGE>

      We Have Not Yet Signed a U.S. Wireless Carrier for our Wherifone(TM)
Product and the Terms of Any Such Agreement are Not Yet Known.

      We have not yet signed a definitive agreement with a U.S. wireless carrier
for our products. If we are unable to sign such an agreement on favorable terms,
this could adversely impact our costs and our business and prospects.

      We Depend On Our Key Personnel To Manage Our Business Effectively In A
Rapidly Changing Market. If We Are Unable To Retain Our Key Employees, Our
Business, Financial Condition And Results Of Operations Could Be Harmed.

      Our future success depends to a significant degree on the skills, efforts
and continued services of our executive officers and other key engineering,
manufacturing, operations, sales, marketing and support personnel who have
critical industry experience and relationships. If we were to lose the services
of one or more of our key executive officers and senior management members, we
may not be able to grow our business as we expect, and our ability to compete
could be harmed, adversely affecting our business and prospects.

      Fluctuations In Our Business And Operating Results May Materially And
Adversely Affect The Trading Price Of Our Common Stock.

      We expect that our operating results will fluctuate in the future due to a
number of factors many of which are outside of our control. These factors
include the following:

      o     Overall demand for our products;

      o     Our ability to attract new customers at a steady rate;

      o     The rate at which we or our competitors introduce new products, the
            rate at which these products acquire market acceptance, and the cost
            required to develop these products;

      o     Technical defects in our products that could delay product shipments
            or increase the costs of introducing new products;

      o     Changes in the pricing of our products or those of our competitors;

      o     The amount and timing of capital expenditures and other costs
            relating to the expansion of our operations;


                                      -16-
<PAGE>

      o     Costs relating to our marketing programs and our business in
            general;

      o     General economic conditions; and

      Any of the foregoing factors may cause our operating expenses to be
disproportionately high or cause our revenue and operating results to fluctuate
causing our business, financial condition and operating results to be adversely
affected. In addition, to respond to changes in our competitive environment, we
may occasionally make certain decisions from which we may benefit in the long
run. However, in the short run, such decisions could materially and adversely
affect our quarterly results of operations and financial condition. Due to all
of the foregoing factors, in some future quarter our operating results may fall
below our expectations and those of our stockholders. In such event, the trading
price of our common stock could be materially adversely affected. Further, we
believe that period-to-period comparisons of our financial results may not be
very meaningful. Accordingly, you should not conclude that such comparisons
indicate future performance.

      Our Markets Are Highly Competitive, And Our Failure To Compete
Successfully Would Limit Our Ability To Sell Our Products, Attract And Retain
Customers And Grow Our Business.

      Competition in the wireless location services market and the facial
composite software market is intense. In addition, the adoption of new
technology in the communications industry likely will intensify the competition
for improved wireless location technologies. The wireless location services
market has historically been dominated by large companies, such as Siemens AG
and LoJack Corporation. In addition, a number of other companies such as Digital
Angel Corporation and WebTech Wireless Inc. have announced plans for new
products that are similar to our wireless location products, and new competitors
are emerging to compete with Wherify's wireless location services products. Due
to the rapidly evolving markets in which we compete, additional competitors with
significant market presence and financial resources may enter those markets,
thereby further intensifying competition.

      Our Wireless Location Product And Technology Are New And May Not Be
Accepted In The Market.

      We have had only a limited release of one of our planned wireless locator
products in the market. There can be no assurances that consumer demand will
meet, or even approach, our expectations. In addition, our pricing and marketing
strategies may not be successful. Lack of customer demand, a change in marketing
strategy and changes to our pricing models could dramatically alter our
financial results.

      Standards In Wireless Communications Industry Are In Flux, And If We Are
Unable To Comply With These Industry Standards, Our Business Will Be Harmed.

      Standards in the wireless communications industry are evolving. The
emergence and broad adoption of new industry standards could require us to
redesign our products. If we are unable to design our products to comply with
these new standards, our products would become obsolete and consumers would
instead purchase other standard-compliant products. As a result, our business
could be harmed, and our financial condition and results of operations could be
adversely affected.


                                      -17-
<PAGE>

      Changes In The Government Regulation Of Our Wireless Location Product Or
Wireless Carriers Could Harm Our Business.

      Our products, wireless carriers and other members of the communications
industry are subject to domestic government regulation by the Federal
Communications Commission (the FCC) and international regulatory bodies. These
regulatory bodies could enact regulations which affect our products or the
service providers which distribute our products, such as limiting the scope of
the service providers' market, capping fees for services provided by them or
imposing communication technology standards which impact our products.

      If Our Wireless Locator Products Fail To Achieve Broad Market Acceptance,
Our Business Results Will Be Harmed.

      We have not begun selling our wireless location products for use by direct
purchase consumers or for resale by distributors. If Wherify's products are not
widely accepted by the market, our business results could be harmed. Factors
that may affect the market acceptance of our location products include the
following: Price; Reliability; Performance; Technological
innovation/enhancements; Network coverage; Ease of use; and Availability.

      If we fail to perform adequately on the basis of each of these factors
versus competing products and technologies, our business results could be
harmed.

      Our Ability To Compete Could Be Jeopardized And Our Business Seriously
Compromised If We Are Unable To Protect Ourselves From Third-Party Challenges,
The Development And Maintenance Of The Proprietary Aspects Of Wireless Location
Products And Technology We Develop.

      Our products utilize a variety of proprietary rights that are critical to
our competitive position. Because the technology and intellectual property
associated with our wireless location products are evolving and rapidly
changing, our current intellectual property rights may not adequately protect us
in the future. We rely on a combination of patent, copyright, trademark and
trade secret laws and contractual restrictions to protect the intellectual
property utilized in our products. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy or otherwise obtain
and use our products or technology. In addition, monitoring unauthorized use of
our products is difficult and we cannot be certain the steps we have taken will
prevent unauthorized use of our technology. Also, it is possible that no patents
or trademarks will be issued from our currently pending or future patent or
trademark applications. Because legal standards relating to the validity,
enforceability and scope of protection of patent and intellectual property
rights in new technologies are uncertain and still evolving, the future
viability or value of our intellectual property rights is uncertain. Moreover,
effective patent, trademark, copyright and trade secret protection may not be
available in some countries in which we distribute or may anticipate
distributing our products. Furthermore, our competitors may independently
develop similar technologies that limit the value of our intellectual property
or design around patents issued to Wherify. If competitors are able to use our
technology, our competitive edge would be reduced or eliminated.


                                      -18-
<PAGE>

      In addition, third parties may at some point claim certain aspects of our
business infringe their intellectual property rights. While we are not currently
subject to nor is aware of any such claim, any future claim (with or without
merit) could result in one or more of the following:

      o     Significant litigation costs;

      o     Diversion of resources, including the attention of management;

      o     Our agreement to pay certain royalty and/or licensing fees; and

      o     Cessation of our rights to use, market, or distribute such
            technology.

      Any of these developments could materially and adversely affect our
business, results of operations and financial condition. In the future, we may
also need to file lawsuits to enforce our intellectual property rights, to
protect our trade secrets, or to determine the validity and scope of the
proprietary rights of others. Whether successful or unsuccessful, such
litigation could result in substantial costs and diversion of resources. Such
costs and diversion could materially and adversely affect our business, results
of operations and financial condition.

      We Could Become Subject To Litigation Regarding Intellectual Property
Rights, Which Could Seriously Harm Our Business And Require Us To Incur
Significant Costs.

      In recent years, there has been significant litigation in the United
States involving patents and other intellectual property rights. Any parties
asserting that our products infringe upon their proprietary rights would force
us to defend ourselves and possibly our customers or manufacturers against the
alleged infringement. These claims and any resulting lawsuit, if successful,
could subject us to significant liability for damages and invalidation of
proprietary rights. These lawsuits, regardless of their merits, would likely be
time-consuming and expensive to resolve and would divert management time and
attention. Any potential intellectual property litigation also could force us to
do one or more of the following:

      o     Stop selling, incorporating or using our products that use the
            challenged intellectual property;

      o     Obtain from the owner of the infringed intellectual property right a
            license to sell or use the relevant technology, which license may
            not be available on reasonable terms, or at all; or

      o     Redesign those products that use such technology.

      If we are forced to take any of the foregoing actions, our business and
prospects may be seriously harmed.

      We Currently Depend Upon One Manufacturer For Our Principal Product And If
We Encounters Problems With This Manufacturer There Is No Assurance That We
Could Obtain Products From Other Manufacturers Without Significant Disruptions
To Our Business.


                                      -19-
<PAGE>

      We expect that our principal product will be manufactured to our
specifications by one manufacturer. Although we could arrange for another
manufacturer to supply the product, there is no assurance that we could do so
without undue cost, expense and delay.

      We Expect To Rely Heavily On A Few Customers.

      Our revenues in the next several years could be heavily dependent on
contracts with a limited number of major market makers in each business segment.
The loss of, or a significant reduction in, orders from these major customers
could have a material adverse effect on our financial condition and results of
operations.

      Fluctuations In Operating Results Could Adversely Affect The Market Price
Of Our Common Stock.

      Our revenues and operating results are likely to fluctuate significantly
in the future. The timing of order placement, size of orders and satisfaction of
contractual customer acceptance criteria, as well as order delays or deferrals
and shipment delays and deferrals, may cause material fluctuations in revenue.

      Delays or deferrals in purchasing decisions may increase as we develop new
or enhanced products. The current and anticipated dependence on a small number
of customers increases the revenue impact of each customer's actions relative to
these factors. Our expense levels in the future will be based, in large part, on
our expectations regarding future revenue, and as a result net income for any
quarterly period in which material orders are delayed could vary significantly.

      Because of these and other factors, investors should not rely on
quarter-to-quarter comparisons of our results of operations, our results of
operations or the pro forma financial information as an indication of future
performance. It is possible that, in future periods, results of operations will
differ from the estimates of public market analysts and investors. Such a
discrepancy could cause the market price of our common stock to decline
significantly.

      Delays, Disruptions Or Quality Control Problems In Manufacturing Could
Result In Delays In Shipments Of Products To Customers And Could Adversely
Affect Our Business.

      We might experience delays, disruptions or quality control problems in the
manufacturing operations of our subcontractors. As a result, we could incur
additional costs that would adversely affect gross margins, and product
shipments to our customers could be delayed beyond the shipment schedules
requested by our customers, which would negatively affect our revenues,
competitive position and reputation. Furthermore, even if we are able to timely
deliver products to our customers, we may be unable to recognize revenue based
on our revenue recognition policies. Any disruptions in the future could
adversely affect the combined company's revenues, gross margins and results of
operations. We may experience manufacturing delays and reduced manufacturing
yields upon introducing new products to our manufacturing lines or when
integrating acquired products.


                                      -20-
<PAGE>

      Rapid Technological Change In Our Market Could Cause Our Products To
Become Obsolete Or Require Us To Redesign Our Products.

      We expect that our markets will be characterized by rapid technological
change, frequent new product introductions and enhancements, uncertain product
life cycles, changing customer demands and evolving industry standards, any of
which can render existing products obsolete. We believe that our future success
will depend in large part on our ability to develop new and effective products
in a timely manner and on a cost effective basis. As a result of the
complexities inherent in our product, major new products and product
enhancements can require long development and testing periods, which may result
in significant delays in the general availability of new releases or significant
problems in the implementation of new releases. In addition, if we or our
competitors announce or introduce new products our current or prospective
customers may defer or cancel purchases of our products, which could materially
adversely affect our business, operating results and financial condition. Our
failure to develop successfully, on a timely and cost effective basis, new
products or new product enhancements that respond to technological change,
evolving industry standards or customer requirements would have a material
adverse affect on our business, operating results and financial condition.

      If We Lose Any Key Personnel, Or Fail To Attract And Retain Additional
Personnel, We May Be Unable To Continue Developing Our Business And Product
Line.

      The loss of the services of one or more of our key personnel could
materially adversely affect our business, operating results and financial
condition. We cannot guarantee that we will be able to retain our key personnel.
Our future success also depends on our continuing ability to attract, assimilate
and retain highly qualified sales, technical and managerial personnel.
Competition for these individuals is intense and there can be no assurance that
we can attract, assimilate or retain necessary personnel in the future.

      We May Have Liability Under Applicable Securities Laws With Respect To
Certain Shares Sold by Wherify California Even After Wherify California's
Completion Of Its Rescission Offer.

      Wherify California's offering of 1,701,714 shares of Series C Preferred
Stock sold during the period from September 17, 2004 to January 19, 2005 may not
have been exempt from the registration and qualification requirements under
applicable securities laws. In order to address this issue, Wherify California
made a rescission offer to all purchasers of such shares. The rescission offer
was completed on April 11, 2005, and eight investors accepted the rescission
offer and 75 rejected the rescission offer. The staff of the Securities and
Exchange Commission, however, takes the position that a rescission offer does
not extinguish a holder's right to rescind the issuance of shares that were not
registered or exempt from the registration requirements under the Securities Act
of 1933, as amended. Consequently, Wherify California and Wherify may remain
liable under applicable securities laws to Wherify California stockholders who
rejected the rescission offer for the purchase price of the shares that were
subject to the rescission offer, plus applicable interest and costs. This
liability, if realized, could imperil Wherify California's ability and the
ability of Wherify, to operate the business as contemplated or to continue in
business. In addition, if it is determined that Wherify California offered
securities without properly registering them under applicable securities laws,
or securing an exemption from registration, regulators could impose monetary
fines or other sanctions as provided under these laws.


                                      -21-
<PAGE>

      Our Success Depends On Our Ability To Protect Our Intellectual Property.

      Our future success depends upon our proprietary technology. We protect our
proprietary information through the use of patent, copyright, trademark, trade
secret laws, confidentiality procedures and contractual provisions.
Notwithstanding our efforts to protect our proprietary technology, policing
unauthorized use or copying of our proprietary information is difficult,
unauthorized use or copying occurs from time to time, and litigation to enforce
intellectual property rights could result in significant costs and diversion of
resources. Any patents we obtain in the future may be circumvented, challenged,
invalidated or designed around by other companies. Despite our efforts, we may
be unable to prevent third parties from infringing upon or misappropriating our
intellectual property. Moreover, the laws of some foreign jurisdictions do not
afford the same degree of protection to our proprietary rights as do the laws of
the United States, and effective trademark, copyright, and trade secret
protection may not be available in every country in which our products are
distributed. Furthermore, our competitors may independently develop similar
technology that substantially limits the value of our intellectual property. Our
inability to adequately protect our intellectual property for these or other
reasons, could materially and adversely affect our business, financial condition
and operating results.

      In addition, third parties may at some point claim certain aspects of our
business infringe their intellectual property rights. While we are not currently
subject to nor are aware of any such claim, any future claim (with or without
merit) could result in one or more of the following:

      o     Significant litigation costs;

      o     Diversion of resources, including the attention of management;

      o     Our agreement to pay certain royalty and/or licensing fees; and

      o     Cessation of our rights to use, market, or distribute such
            technology.

      Any of these developments could materially and adversely affect our
business, results of operations and financial condition. In the future, we may
also need to file lawsuits to enforce our intellectual property rights, to
protect our trade secrets, or to determine the validity and scope of the
proprietary rights of others. Whether successful or unsuccessful, such
litigation could result in substantial costs and diversion of resources. Such
costs and diversion could materially and adversely affect our business, results
of operations and financial condition.

      Our Authorized Preferred Stock Exposes Stockholders To Certain Risks.

      Our Certificate of Incorporation authorizes the issuance of up to
10,000,000 shares of preferred stock, par value $.01 per share. To date, no
shares of preferred stock have been issued. The authorized preferred stock
constitutes what is commonly referred to as "blank check" preferred stock. This
type of preferred stock allows the Board of Directors to divide the preferred
stock into series, to designate each series, to fix and determine separately for
each series any one or more relative rights and preferences and to issue shares
of any series without further stockholder approval. Preferred stock authorized
in series allows our Board of Directors to hinder or discourage an attempt to
gain control of us by a merger, tender offer at a control premium price, proxy
contest or otherwise. Consequently, the preferred stock could entrench our
management. In addition, the market price of our common stock could be
materially and adversely affected by the existence of the preferred stock.


                                      -22-
<PAGE>

      Our Common Stock Has A Limited And Volatile Trading History.

      Our common stock trades in the United States on the Over-the-Counter
Electronic Bulletin Board (OTCBB). The number of shares traded daily has been
extremely limited and the prices at which Wherify's common stock has traded have
fluctuated fairly widely. There can be no assurance as to the prices at which
our common stock will trade in the future, although they may continue to
fluctuate significantly. Prices for our common stock will be determined in the
marketplace and may be influenced by many factors, including the following:

      o     The depth and liquidity of the markets for our common stock;

      o     Investor perception of us and the industry in which we operates;

      o     General economic and market conditions; and

      o     The effect that of any of the events highlighted in these Risk
            Factors may have on our business should they occur.

      We Have The Ability And The Obligation To Issue Additional Shares Of
Common Stock In The Future, And Such Future Issuance May Materially Adversely
Affect Stockholders.

      Wherify has various abilities and obligations to issue additional shares
of common stock in the future. These abilities and obligations include the
following:

      o     Options to purchase approximately 5,773,334 shares of our common
            stock were outstanding as of September 30, 2005;

      o     Debentures, convertible into approximately 101,000 shares of our
            common stock, had been issued as of September 30, 2005; and

      o     Warrants to purchase approximately 1.1 million shares of our common
            stock were outstanding as of September 30, 2005.

      The options, warrants and convertible debentures described above permit
the holders to purchase shares of common stock at specified prices. These
purchase prices may be less than the then current market price of our common
stock. Any shares of common stock issued pursuant to these options or warrants
(or the convertible debentures described above) would further dilute the
percentage ownership of existing stockholders. The terms on which we could
obtain additional capital during the life of these options, warrants or
convertible debentures may be adversely affected because of such potential
dilution. Finally, we may issue additional shares in the future other than as
listed above. There are no preemptive rights in connection with Wherify's common
stock. Thus, the percentage ownership of existing stockholders may be diluted if
we issue additional shares in the future. Future issuances of additional shares
could cause immediate and substantial dilution to the net tangible book value of
shares of common stock issued and outstanding immediately before such
transaction. Any future decrease in the net tangible book value of such issued
and outstanding shares could materially and adversely affect the market value of
these shares.


                                      -23-
<PAGE>

      The Trading Price Of Our Common Stock Entails Additional Regulatory
Requirements, Which May Negatively Affect Such Trading Price.

      The trading price of our common stock has frequently traded below $5.00
per share. During the period(s) that our stock trades below this price level,
trading in our common stock is subject to the requirements of certain rules
promulgated under the Securities Exchange Act of 1934. These rules require
additional disclosure by broker dealers in connection with any trades generally
involving any non-NASDAQ equity security that has a market price of less than
$5.00 per share, subject to certain exceptions. Such rules require the delivery,
before any "penny stock" transaction, of a disclosure schedule explaining the
penny stock market and the risks associated therewith, and impose various sales
practice requirements on broker dealers who sell penny stocks to persons other
than established customers and accredited investors (generally institutions).
For these types of transactions, the broker-dealer must determine the
suitability of the penny stock for the purchaser and receive the purchaser's
written consent to the transaction before sale. The additional burdens imposed
upon broker dealers by such requirements may discourage broker-dealers from
effecting transactions in our common stock affected. As a consequence, the
market liquidity of Wherify's common stock could be severely limited by these
regulatory requirements.

      Stockholders Should have No Expectation Of Any Dividends.

      The holders of our common stock are entitled to receive dividends when, as
and if declared by the board of directors out of funds legally available
therefore. To date, we have not declared nor paid any cash dividends. The board
of directors does not intend to declare any dividends in the foreseeable future,
but instead intends to retain all earnings, if any, for use in our business
operations.


                                      -24-
<PAGE>

Item 3. Controls and Procedures


      (a) Evaluation of Disclosure Controls and Procedures. Based on an
evaluation of the effectiveness of Wherify's disclosure controls and procedures
(as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of
1934 (the "Exchange Act") as of the end of the period covered by this report,
our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are not effective to ensure that information
required to be disclosed by us in reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.

      During the period covered by this report and in connection with the
completion of its audit of, and the issuance of its report on the financial
statements of Wherify for the fiscal year ended June 30, 2005, Malone & Bailey,
PC identified deficiencies in Wherify's internal controls related to expense
recognition and disclosure control deficiencies related to transactions
involving issuances of Wherify's stock and stock options. The adjustment to
expense and the footnote disclosure deficiencies were detected in the audit
process and were appropriately recorded and disclosed in the Annual Report on
Form 10-KSB for the fiscal year ended June 30, 2005. Following a review of the
deficiencies identified by Malone & Bailey, PC, management determined that we
had incorrectly accounted for a number of equity-related transactions, several
of which were related to the then pending merger of Wherify Wireless California
and Wherify, that included various stock option transactions and stock option
awards for services. Management further determined that we had incorrectly
omitted expense recognition for various expenses incurred in the year just
ended. As a result, management concluded that our disclosure controls and
procedures were not effective as of our fiscal year ended June 30, 2005, as
follows:

      o     we did not have adequate transaction controls over the accounting,
            review and processing of certain unusual or complex transactions;

      o     we did not have a systematic and documented program of internal
            controls and procedures over our accounting and financial reporting
            process to ensure that unusual or complex transactions are recorded,
            processed, summarized and reported on a timely basis in our
            financial disclosures; and

      o     there is a need for the improved supervision and training of our
            accounting staff.

The Audit Committee of the Board of Directors discussed the matters disclosed in
this filing with the Company's independent registered public accountants, Malone
& Bailey, PC. In response to the continued identified deficiencies, management
intends to improve its disclosure controls and procedures requirements with the
goal to strengthen its disclosure controls and procedures by implementing
certain of the controls and procedures used at Wherify California and by
improved supervision and training of our accounting staff. Management recognizes
the importance of internal control to prevent the recurrence of the
circumstances that our disclosure controls and procedures are not effective to
ensure that information required to be disclosed by us in reports that we file
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms. To correct the identified deficiencies in disclosure controls and
procedures and internal controls, management, in consultation with its outside
auditors, intends to identify, design and implement those procedures deemed
necessary to correct these identified deficiencies as promptly as possible.



                                      -25-

<PAGE>


Steps planned to be taken during the remainder of our 2006 fiscal year:

      1.    Management to perform its assessment of its identified internal
            control deficiencies with a goal of addressing and remediating such
            deficiencies, by implementing certain of the controls and procedures
            used at Wherify California;

      2.    Identify remedial actions to address and resolve our identified
            internal control deficiencies over unusual or complex accounting
            transactions;

      3.    Determine and establish appropriate systems of internal controls
            over unusual or complex accounting transactions; and

      4.    Strengthen the staff accounting skills and improve supervision
            controls over accounting processes including unusual or complex
            accounting transactions.

Our management and directors will continue to work with our auditors and other
outside advisors to develop and then ensure that our controls and procedures are
adequate and effective. We believe that with a properly planned, designed and
implemented system of internal controls over financial reporting, our disclosure
controls and procedures will be effective.

On February 13, 2006, based on an internal management review of our quarterly
filings for fiscal 2006, our management and the Audit Committee of the Board of
Directors concluded that a misstatement had occurred on our previously reported
unaudited interim financial statements for the three month period ended
September 30, 2005, which resulted in the restatement of the unaudited interim
financial statements for the quarter ended September 30, 2005, as described in
Note 2 to the Notes to Financial Statements of our Form 10-QSB/A for the
unaudited quarter ended September 30, 2005, and as further described in our
concurrently filed Form 8-K on this matter. Specifically, the restatement of the
Company's previously issued financial statement for the three month period ended
September 30, 2005 was to correct a misstatement relating to the accounting for
a $12,467,059 deemed dividend on preferred stock from our June 30, 2005
financial statements which had incorrectly been included as a first quarter
fiscal 2006 deemed dividend on preferred stock. As a result of correcting this
error, our reported net loss for the quarter decreased by $12,467,059 to a
restated loss of $67,046,645 or ($1.55) per share versus the reported loss of
$79,513,704 or ($1.84) per share. This restatement had no impact on any other
previously reported financial results.

      (b) Changes in Internal Control Over Financial Reporting.

During our first fiscal quarter ending September 30, 2005, no changes were
affected in our system of internal control over financial reporting or in other
factors that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.



                                      -26-
<PAGE>

PART II. OTHER INFORMATION

Item 6. Exhibits.

  Exhibit No.     Description
  -----------     -----------

     10.1         International Supply And Distribution Agreement between
                  Wherify and American Network Computadores, is incorporated
                  herein by reference from Wherify's Registration Statement on
                  Form SB-2 (SEC File No. 333-122710) filed September 13, 2005.

     31.1         Chief Executive Officer Certification of Periodic Financial
                  Report Pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002. (+)

     31.2         Chief Financial Officer Certification of Periodic Financial
                  Report Pursuant to Section 302 of the Sarbanes-Oxley Act of
                  2002. (+)

     32.1         Chief Executive Officer Certification Pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002. (+)

     32.2         Chief Financial Officer Certification Pursuant to 18 U.S.C.
                  Section 1350, as adopted, pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002. (+)

-------------------------------
(+) Filed herewith


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



June 26, 2006                    /s/ Timothy Neher
                                 -----------------------------------------------
                                 Timothy Neher, Chief Executive Officer
                                 (Principal Executive Officer)

June 26, 2006                    /s/ Mark Gitter
                                 -----------------------------------------------
                                 Mark Gitter, Chief Financial Officer, Treasurer
                                 (Principal Accounting Officer)



                                      -27-