**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
      10-QSB**







x
            Quarterly
                Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
                Act of
                1934 for the quarterly period ended March 31,
                2006.







o
            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: 
      o




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


Yes: 
        o No: 
        x




**Applicable
      Only to Corporate Issuers:**




As
      of May
      8, 2006, there were 55,281,233 shares of common stock, $0.01 par value,
      outstanding.




Transitional
      Small Business Disclosure Format  o  Yes x No


-1-




**WHERIFY
      WIRELESS, INC.**


**FORM
      10-QSB**


**FOR
      THE QUARTER ENDED MARCH 31, 2006**




**TABLE
      OF CONTENTS**







PagePART
                I. FINANCIAL INFORMATIONItem
                1.
            Financial
                StatementsCondensed
                Balance Sheet as of March 31, 2006 (Unaudited)
            3Condensed
                Statements of Operations for the three months ended March 31, 2006
                and
                2005 (Unaudited)
            4Condensed
                Statements of Operations for the nine months ended March 31, 2006
                and 2005
                (Unaudited)
            5Condensed
                Statements of Cash Flows for the nine months ended March 31, 2006
                and 2005
                (Unaudited)
            6Notes
                to Financial Statements (Unaudited)
            7Item
                2.
            Management's
                Discussion and Analysis or Plan of Operation
            13Item
                3.
            Controls
                and Procedures
            36PART
                II. OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            39Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            39Item
                3.
            Defaults
                Upon Senior Securities
            39Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            39Item
                5.
            Other
                Information
            40Item
                6.
            Exhibits
            40Signatures
            43EXHIBITS




-2-


**PART
      I. FINANCIAL INFORMATION**





**Item
      1. Financial Statements**


**Wherify
      Wireless, Inc.**


**Condensed
      Balance Sheet**


**March
      31, 2006**


**Unaudited**




**ASSETS****CURRENT
                ASSETS:**Cash
                and cash equivalents
            
            $
            3,830,894Restricted
                certificates of deposit
            
            
            1,307,595Prepaid
                expenses
            
            
            80,602Accounts
                receivable
            
            
            8,275Inventory
            
            
            53,242Other
                current assets
            
            
            75,698**TOTAL
                CURRENT ASSETS**
            
            
            **5,356,306**Goodwill
            
            
            3,222,000Intangible
                assets, net of accumulated amortization of $508,949
            
            
            1,684,051Property
                and equipment, net of accumulated depreciation of
                $1,249,705
            
            
            442,699Other
                non-current asset
            
            
            543,200**TOTAL
                ASSETS**
            
            **$**
            **11,248,256****LIABILITIES
                AND STOCKHOLDERS' DEFICIT****CURRENT
                LIABILITIES:**Accounts
                payable
            
            $
            2,230,291Accounts
                payable - related party
            
            
            3,710,596Accrued
                liabilities
            
            
            797,934Accounts
                payable related to discontinued operating segment
            
            
            2,606,514Note
                payable
            
            
            1,000,000Current
                maturities of convertible debentures
            
            
            1,194,643Fair
                value of derivatives
            
            
            8,412,947**TOTAL
                CURRENT LIABILITIES**
            
            
            **19,952,925****STOCKHOLDERS'
                DEFICIT**Common
                stock, $0.01 par value, 100,000,000 shares authorized;
              55,196,914
                shares issued and outstanding
            
            
            551,969Additional
                paid-in capital
            
            
            124,125,454Accumulated
                deficit
            
            
            (133,382,092
            )**TOTAL
                STOCKHOLDERS' DEFICIT**
            
            
            **(8,704,669**
            **)****TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIT**
            
            **$**
            **11,248,256**




See
      accompanying notes to financial statements.


-3-


**Wherify
      Wireless, Inc.**


**Condensed
      Statement of Operations**


**Three
      Months Ended March 31, 2006 and 2005**


**Unaudited**




**ThreeMonths**
              **Ended**
              **March31,
                2006**
            
            **ThreeMonths**
              **Ended**
              **March31,
                2005****REVENUES:**Sales
                Revenue
            
            $
            25,181
            
            $
            –Cost
                of Goods Sold
            
            
            4,909
            
            
            –**NET
                REVENUES**
            
            
            **20,272**
            
            
            –**OPERATING
                EXPENSES:**General
                and administrative
            
            
            2,010,999
            
            
            3,631,721Rent
                expense
            
            
            353,004
            
            
            –Rent
                expense payable to related party
            
            
            –
            
            
            342,497Amortization
                and depreciation
            
            
            230,088
            
            
            30,769**TOTAL
                OPERATING EXPENSES**
            
            
            **2,594,091**
            
            
            **4,004,987****OPERATING
                LOSS**
            
            
            **(2,573,819**
            **)**
            
            **(4,004,987**
            **)****OTHER
                INCOME (EXPENSE)**Charge
                for fair value of derivatives
            
            
            (4,974,890
            )
            
            –Interest
                and other expense
            
            
            (96,817
            )
            
            (90,088
            )Interest
                and other income
            
            
            8,633
            
            
            37,090**NET
                LOSS FROM CONTINUING OPERATIONS**
            
            
            **(7,636,893**
            **)**
            
            **(4,057,985**
            **)****DISCONTINUED
                OPERATIONS**Loss
                from operations of discontinued segment
            
            
            –
            
            
            (42,813
            )**NET
                LOSS**
            
            
            **(7,636,893**
            **)**
            
            **(4,100,798**
            **)**Deemed
                dividend on preferred stock
            
            
            –
            
            
            (13,067,000
            )**NET
                LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS**
            
            **$**
            **(7,636,893**
            **)**
            **$**
            **(17,167,798**
            **)**Basic
                and diluted net loss per share from continuing operations
            
            $
            (0.14
            )
            $
            (1.37
            )Basic
                and diluted net loss per share from discontinued
                operations
            
            $
            –
            
            $
            (0.01
            )Basic
                and diluted net loss per share attributable to common
                shareholders
            
            $
            (0.14
            )
            $
            (5.81
            )Weighted
                average number of shares outstanding
            
            
            54,967,410
            
            
            2,955,726




See
      accompanying notes to financial statements.


-4-


**Wherify
      Wireless, Inc.**


**Condensed
      Statement of Operations**


**Nine
      Months Ended March 31, 2006 and 2005**


**Unaudited**




**Nine
                Months**
              **Ended**
              **March
                31, 2006**
            
            **NineMonths**
              **Ended**
              **March
                31, 2005****REVENUES:**Sales
                Revenue
            
            $
            125,180
            
            $
            –Cost
                of Goods Sold
            
            
            14,292
            
            
            –**NET
                REVENUES**
            
            
            110,888
            
            
            –**OPERATING
                EXPENSES:**Goodwill
                impairment
            
            
            64,308,022
            
            
            –General
                and administrative
            
            
            7,203,638
            
            
            6,796,210Rent
                expense
            
            
            1,038,461
            
            
            –Rent
                expense payable to related party
            
            
            –
            
            
            1,027,491Amortization
                and depreciation
            
            
            645,252
            
            
            77,849**TOTAL
                OPERATING EXPENSES**
            
            
            **73,195,373**
            
            
            **7,901,550****OPERATING
                LOSS**
            
            
            **(73,084,485**
            **)**
            
            **(7,901,550**
            **)****OTHER
                INCOME (EXPENSE)**Charge
                for fair value of derivatives
            
            
            (4,974,890
            )
            
            –Interest
                and other expense
            
            
            (106,559
            )
            
            (115,823
            )Interest
                and other income
            
            
            54,273
            
            
            53,820**NET
                LOSS FROM CONTINUING OPERATIONS**
            
            
            **(78,111,661**
            **)**
            
            **(7,963,553**
            **)****DISCONTINUED
                OPERATIONS**Loss
                from operations of discontinued segment
            
            
            (85,860
            )
            
            (128,439
            )**NET
                LOSS**
            
            
            **(78,197,521**
            **)**
            
            **(8,091,992**
            **)**Deemed
                dividend on preferred stock
            
            
            –
            
            
            (13,067,000
            )**NET
                LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS**
            
            **$**
            **(78,197,521**
            **)**
            **$**
            **(21,158,992**
            **)**Basic
                and diluted net loss per share from continuing operations
            
            $
            (1.53
            )
            $
            (2.69
            )Basic
                and diluted net loss per share from discontinued
                operations
            
            $
            (0.00
            )
            $
            (2.74
            )Basic
                and diluted net loss per share attributable to common
                shareholders
            
            $
            (1.53
            )
            $
            (7.16
            )Weighted
                average number of shares outstanding
            
            
            51,144,265
            
            
            2,955,726




See
      accompanying notes to financial statements.


-5-




**Wherify
      Wireless, Inc.**


**Condensed
      Statements of Cash Flows**


**Unaudited**




**Nine
                Months**
              **Ended**
              **March
                31, 2006**
            
            **Nine
                Months**
              **Ended**
              **March 31,
                2005****NET
                CASH USED IN OPERATING ACTIVITIES**
            
            $
            (8,386,470
            )
            $
            (6,979,628
            )**INVESTING
                ACTIVITIES:**Decrease
                (Increase) in restricted certificates of deposit
            
            
            1,141,706
            
            
            (834,683Purchase
                of property and equipment
            
            
            (102,230
            )
            
            (246,074
            )Loan
                to another entity
            
            
            –
            
            
            (100,000
            )**NET
                CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES**
            
            
            1,039,476
            
            
            (1,180,757
            )**FINANCING
                ACTIVITIES:**Proceeds
                from convertible debenture, net
            
            
            4,585,000
            
            
            –Proceeds
                from note payable
            
            
            1,000,000
            
            
            –Proceeds
                from issuance of common stock
            
            
            4,384,799
            
            
            –Proceeds
                from issuance of convertible preferred stock, net
            
            
            –
            
            
            13,041,681Proceeds
                from issuance of preferred stock
            
            
            –
            
            
            2,182,553**NET
                CASH PROVIDED BY FINANCING ACTIVITIES**
            
            
            9,969,799
            
            
            15,224,234**CHANGE
                IN CASH AND CASH EQUIVALENTS**
            
            
            2,622,805
            
            
            7,063,849**CASH
                AND CASH EQUIVALENTS - BEGINNING OF PERIOD**
            
            
            1,208,089
            
            
            916,315**CASH
                AND CASH EQUIVALENTS - END OF PERIOD**
            
            $
            3,830,894
            
            $
            7,980,164




See
      accompanying notes to financial statements


-6-




**WHERIFY
        WIRELESS, INC.**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **(Unaudited)**
  **NOTE
        1 - BASIS OF PRESENTATION**
  The
        accompanying unaudited interim financial statements of Wherify Wireless,
        Inc. ("
        Wherify " 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 ' 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 - STOCK-BASED COMPENSATION**
  Prior
        to
        January 1, 2006 we accounted for stock based compensation under Statement
        of
        Financial Accounting Standards No. 123 Accounting for Stock−Based Compensation
        (FAS 123). As permitted under this standard, compensation cost was recognized
        using the intrinsic value method described in Accounting Principles Board
        Opinion No. 25, Accounting for Stock Issued to Employees (APB 25). Effective
        January 1, 2006, the Company has adopted Statement of Financial Accounting
        Standards No. 123 (Revised 2004), Share−Based Payment (FAS 123R) and applied the
        provisions of the Securities and Exchange Commission Staff Accounting Bulletin
        No. 107 using the modified−prospective transition method. Prior periods were not
        restated to reflect the impact of adopting the new standard. As a result
        of the
        adoption of FAS 123R, stock−based compensation expense recognized  during
        the quarter ended March 31, 2006 includes compensation expense for all
        share−based payments granted on or prior to, but not yet vested as of January 1,
        2006, based on the grant date fair value estimated in accordance with the
        original provisions of FAS 123, and compensation cost for all share−based
        payments granted on or subsequent to January 1, 2006, based on the grant
        date
        fair value estimated in accordance with the provisions of FAS 123R.
  APB
        25
        did not require any compensation expense to be recorded in the financial
        statements if the exercise price of the award was not less than the market
        price
        on the date of grant. Since all options granted by the Company had exercise
        prices equal or greater than the market price on the date of grant, no
        compensation expense was recognized for stock option grants prior to January
        1,
        2006.
  During
        the quarter ended March 31, 2006, the Company recognized stock−based
        compensation expenses of $0.3 million related to outstanding stock options
        according to the provisions of FAS 123R, using the modified−prospective
        transition method.
  Prior
        to
        the adoption of FAS 123R and for the nine months ended December 31, 20056,
        no
        tax benefits from the exercise of stock options has been recognized. Any
        future
        excess tax benefits derived from the exercise of stock options will be recorded
        prospectively and reported as cash flows from financing activities in accordance
        with FAS 123R.
  -7-
  The
        Company did not grant any options to purchase common stock to employees in
        the
        nine months ending March 31, 2005, and therefore no expense was recorded
        under the intrinsic value method for the nine months ending March 31, 2005.
        During the nine months ended March 31, 2005, third party consultants were
        issued
        options to purchase 27,500 shares of common stock with a five year life and
        exercise prices of $0.98 and $4.80 per share. Total non-cash expense of $112,127
        based on fair value using the Black-Scholes method was recorded as of March
        31,
        2005.
  During
        the nine months ended March 31, 2005,the risk free interest rate used in
        the
        Black−Scholes option pricing model (the Model) was 3.5%. The expected volatility
        used in the model was 0.01%.
  A
        summary
        of the options issued by the Company for the three months ended March 31,
        2006
        is as follows:
  **Options**
              
              **Weighted−**
                **Average**
                **Exercise
                  Price per Share**
              
              **Weighted−**
                  **Average****Remaining
                    Expected**
                **Term
                  (in years)**
              
              **Weighted−**
                **Average**
                **Aggregate**
                **Intrinsic
                  Value**Outstanding
                  on December 31, 2005
              
              
              4,930,592
              
              $
              0.75
              
              
              2.7
              
              $
              0Granted
              
              
              535,000
              
              $
              1.51
              
              
              3.9
              
              $
              0Exercised
              
              
              19,375
              
              $
              1.50Forfeited/Canceled
              
              
              32,263
              
              $
              6.00Outstanding
                  on March 31, 2006
              
              
              5,413,954
              
              $
              0.69
              
              
              2.5
              
              $
              0Exercisable
                  on March 31, 2006
              
              
              2,762,670
              
              $
              0.51
              
              
              
              
              $
              0
 
 The
        weighted−average grant−date fair value during the three months ended March 31,
        2006 and March 31, 2005 was $0.68/share and $0/share, respectively.
        Additionally, 51,638 and 0 options were exercised and 283,107 and 197,280
        options vested during the periods ended March 31, 2006 and March 31, 2005,
        respectively. The unrecognized share based compensation cost related to stock
        option expense at March 31, 2006 is $4,376,176 and will be recognized over
        a
        weighted average of 3.9 years.
  In
        accordance with APB 25, the Company recorded compensation expense for restricted
        stock awards based on the fair market value on the date of grant. The fair
        value
        was recorded as deferred compensation in a separate component of shareholders'
        equity and expensed over the vesting period. In accordance with FAS 123R,
        during
        the quarter ended March 31, 2006, the deferred compensation balance of
        approximately $0.6 million was reclassified to additional paid−in−capital.
  -8-
  **NOTE
        3 - BUSINESS COMBINATION**
  On
        July
        21, 2005, Wherify (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.
  For
        accounting purposes, the merger has been treated as reverse acquisition of
        Wherify 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 and Wherify California. 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 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 of 12,339,750
        shares by the closing price on the date of the merger of $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 on the
        date
        of the acquisition.
  
 Current
                  Assets
              
              $
              1,131,654Fixed
                  Assets
              
              
              1,968Goodwill
              
              
              67,530,022Intangible
                  Assets
              
              
              2,193,000Total
                  Assets Acquired
              
              $
              70,856,644Accounts
                  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 and nine months ended March 31, 2005, as if the
        merger
        had occurred on July 1, 2004.
  -9-
  (in
        $
        thousands except Loss Per Share amounts)
  Three
        Months ended March 31, 2005:
  As
                Reported
              
              Pro-
                FormaRevenues
              
              $
              0
              
              $
              126Net
                  Loss
              
              
              ($4,101
              )
              
              ($13,095
              )Loss
                  Per Share
              
              
              ($1.39
              )
              
              ($.24
              )
  Nine
        Months ended March 31, 2005:
  **As
                  Reported**
              ****
              ****
              **Pro-**
                **Forma**Revenues
              
              $
              0
              
              $
              396Net
                  Loss
              
              
              ($8,092
              )
              
              ($16,789
              )Loss
                  Per Share
              
              
              ($2.74
              )
              
              ($0.52
              )
  **NOTE
        4 - 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, the Company 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 the Company's market outlook changes,
        the
        Company could have additional impairments of goodwill and identified intangible
        assets in future periods, which, in turn, could have a material adverse effect
        on the Company's results of operations. As of March 31, 2006, goodwill remained
        at $3,222,000.
  **NOTE
        5 - DISCONTINUED OPERATIONS**
  During
        the quarter ended June 30, 2005, Wherify California discontinued the sale
        of its
        product line that consisted of wristwatches with GPS functionality. All revenues
        and expenses relating this product line have been classified in the Statement
        of
        Operations as loss from operations of discontinued segment. In addition,
        the
        accounts payable relating to this product has been segregated on the balance
        sheet.
  -10-
  **NOTE
        6 - EQUITY**
  During
        the nine months ended March 31, 2006, the Company issued 255,000
        shares of common stock in exchange for investor services. In addition, the
        Company issued 244,862 shares of common stock for options exercised during
        the
        quarter and received cash proceeds of $108,360. The Company issued 276,595
        shares of common stock as a commitment fee in accordance with the Standby
        Equity
        Distribution Agreement with Cornell Capital Partners, LP and 7,092 shares
        of
        common stock as a place agent fee related to the Standby Equity Distribution
        Agreement.
  **NOTE
        7 - INVENTORY**
  The
        Company 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, the Company contracted with an external party to manufacture
        15,000 units of its Wherifone product. When the Company 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 prototype 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, the Company has concluded that the product can be manufactured
        successfully and sold at or above cost.
  **NOTE
        8 -** **NOTE PAYABLE**
  During
        February 2006, the Company borrowed $1,000,000 from a related party to finance
        ongoing operating costs. The unsecured loan carries an interest rate of 7.5%
        per
        annum and is payable upon demand any time after August 22, 2006.
  **NOTE
        9 - CONVERTIBLE DEBENTURES AND WARRANTS LIABILITY**
 
 On
        January 11, 2005 the Company sold convertible debentures and warrants to
        qualified institutional investors, and a limited number of accredited individual
        and institutional investors, for gross proceeds of $3,300,000. The convertible
        debentures bore an interest rate of 5% per annum (the January Debentures).
        The
        warrants are exercisable over a five year term for 825,000 shares of common
        stock at an exercise price of $2.70 per share and included a rachet down
        provision in the event of an anti-dilutive adjustments (the Warrants). At
        its
        inception, we recorded a beneficial conversion feature on the January Debentures
        and Warrants in the amount of $3,505,000 accounted for as a note discount
        to be
        amortized over the life of the loan.
  Following
        the March 2006 issuance of $5 million of secured convertible debentures,
        as
        discussed below, and by application of anti−dilution provisions, the exercise
        price of the Warrants was reduced to $2.6053 per share, and the number of
        warrants shares is unchanged.
  On
        March
        10, 2006, we sold secured convertible debentures and warrants for gross proceeds
        of $2,500,000. The secured convertible debentures have an aggregate principal
        amount of $2,500,000 and are convertible into 1,785,714 shares of our common
        stock, based upon an initial conversion price of $1.40 per share, which is
        subject to anti−dilution adjustments. The warrants are exercisable for 1,250,000
        shares of our common stock over a five-year period with an initial exercise
        price of $2.00 per share. On March 14, 2006, we sold secured convertible
        debentures and warrants for gross proceeds of $2,500,000. The secured
        convertible debentures have an aggregate principal amount of $2,500,000 and
        are
        convertible into 1,785,714 shares of our common stock, based upon an initial
        conversion price of $1.40 per share, which is subject to anti−dilution
        adjustments. The warrants are exercisable for 1,250,000 shares of our common
        stock over a five-year period with an initial exercise price of $2.25 per
        share.
        The exercise prices of the warrants are subject to anti−dilution adjustments. We
        agreed to register the resale of the shares of common stock issuable upon
        conversion of the aforementioned secured convertible debentures and exercise
        of
        the warrants. The registration rights agreement contains a liquidated damages
        provision that has been determined to be uneconomic.
  -11-
  As
        a
        result, we have determined that the conversion feature of the secured
        convertible debentures and the warrants issued with the secured convertible
        debentures are embedded derivative instruments pursuant to SFAS No. 133,
        Accounting for Derivative Instruments and Hedging Activities, as amended.
        Under
        the provisions of EITF Issue No. 00−19, Accounting for Derivative Financial
        Instruments Indexed to, and Potentially Settled in, a Company's Own Stock,
        the
        accounting treatment of these derivative financial instruments requires that
        the
        Company record the derivatives at their fair values as of the inception date
        of
        the note agreements and at fair value as of each subsequent balance sheet
        date
        as a liability. Any change in fair value is recorded as non−operating, non−cash
        income or expense at each balance sheet date. The Company estimates fair
        value
        using the Black−Scholes option pricing model. This model requires the use of
        estimates such as the expected holding period, the expected future volatility
        of
        the company's common stock and the risk−free rate of return over the holding
        period. These estimates directly affect the reported amounts of the derivative
        instrument liabilities. At March 31, 2006, the Company estimated the fair
        value
        of the conversion feature and warrant liability and related expense at $8.4
        million
   -12-


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




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.




The
      auditor for Wherify and its wholly-owned subsidiary, Wherify California, Inc.,
      has included going concern paragraphs in the audit reports for the respective
      companies for the fiscal years ended June 30, 2004 and 2005, and has reported
      that both companies have suffered net operating losses in the past two fiscal
      years and have 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 was merged with a special purpose subsidiary of
      Wherify. 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.




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. During the quarter ended September 30, 2005, the Company, with the
      assistance of an independent third party, completed the purchase price
      allocation and concluded that the value of the identifiable intangible assets
      was $2.2 million and the total amount of goodwill was $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 periodically for possible impairment.




**2.**  **Future
      Business and Operations**




We
      anticipate that our principal business activity on an ongoing basis 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 enforcement 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.


-13-




**3.**  **Liquidity
      and Capital Resources**




We
      have
      incurred operating losses from continuing operations, excluding goodwill
      impairment, of approximately $8.8 million during the nine months ended March
      31,
      2006 and $7.9 million during the nine months ended March 31, 2005. For the
      nine
      months ended March 31, 2006 net losses from continuing operations, excluding
      goodwill impairment, were $13.8 million and $8.0 million during the comparable
      nine months ended March 31, 2005. Net cash used for operating activities during
      the nine months ended March 31, 2006 was $8.4 million and $7.0 million was
      used
      during the comparable nine months ended March 31, 2005. We have an accumulated
      deficit of $133.4 million as of March 31, 2006. These conditions, among others,
      raise questions about our ability to fund our cash requirements from operations
      in the future or to continue operations as a going-concern.




As
      of
      March 31, 2006, Wherify had cash and cash equivalents of approximately $3.8
      million, restricted certificates of deposit of approximately $1.3 million which
      were being utilized as collateral to support our obligations under a letter
      of
      credit related to our contract manufacturer, other current assets of
      approximately $0.2 million and current liabilities, excluding the non-cash
      portion of fair value of derivatives, of approximately $11.6 million, including
      approximately $3.7 million in past due rent obligations to our former landlord.
      Wherify also has a liability related to the non-current payable portion of
      the
      convertible debenture of approximately $3.3 million The increase in cash and
      cash equivalents during the nine months ended March 31, 2006 is primarily due
      to
      receiving net proceeds of approximately $4.3 million from a private placement
      of
      common stock and warrants, receiving net proceeds of approximately $4.6 million
      from the issuance of convertible debentures, and issuance of a promissory note
      for proceeds of $1.0 million, plus an $1.1 million decrease in restricted
      certificates of deposit related to our contract manufacturer, mostly offset
      by
      net cash used in operating activities of $8.4 million. Our average net cash
      used
      in operations during the nine months ended March 31, 2006 was approximately
      $0.9
      million per month.




We
      have
      financed our operations through private offerings of our common stock, issuance
      of debt and private borrowings. On February 22, 2006, we borrowed $1.0 million
      from Stephen J. Luczo and issued to Mr. Luczo a promissory note that is
      repayable on demand at any time after August 22, 2006. Between March 10, 2006
      and March 14, 2006, we received a total of $4.6 million (after deduction of
      fees) from the issuance of convertible debentures to Cornell Capital Partners.
      On March 10, 2006 we also entered into a Standby Equity Distribution Agreement
      with Cornell Capital Partners pursuant to which we may periodically issue and
      sell to Cornell Capital Partners shares of common stock for up to a total
      purchase price of $40 million during the period commencing on the effectiveness
      of the registration statement registering such shares and terminating 24 months
      thereafter. Material terms and conditions of the Standby Equity Distribution
      Agreement are described in Note 9 in this report. On March 15, 2006 we
      filed a registration statement with the Securities and Exchange Commission
      (File
      No. 333-132460) to register 11,823,201 shares of our common stock to be
      sold by certain persons who are stockholders of Wherify, including up to
      5,000,000 shares which may be issued under the Standby Equity Distribution
      Agreement. Also on March 15, 2006, we filed a registration statement with
      the Securities and Exchange Commission (File No. 333-132461) to register 10
      million shares of our common stock to be sold by us in a direct offering.


-14-






Wherify
      currently does not have any credit facility available to it. Wherify has
      financed its operations to date primarily through the issuance of an aggregate
      of approximately 55 million shares of common stock and convertible debentures.
      There are a "going concern" paragraphs in Wherify's and Wherify California's
      auditor's reports for the fiscal years ended June 30, 2004 and 2005. We continue
      in the process of locating financing sources to meet our financing needs and
      to
      provide us greater flexibility and certainty with respect to our financing
      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, or we may be unable to continue
      operations. We have no capital leases or material commitments for capital
      expenditures and there are no anticipated capital leases or material capital
      expenditures that are reasonably expected to have a material impact on us.
      We
      have worked out an arrangement with our prior landlord that provides that we
      will begin paying back-due rent as well as paying for certain back-due expenses
      covered by the prior landlord. As of March 31, 2006, we were current with our
      rent payments to our new landlord. Under the agreement, upon achieving adequate
      financing, we are required to settle our debt with the prior landlord, which
      was
      approximately $3.7 million as of March 31, 2006. We intend to settle our
      remaining debt with the prior landlord through cash currently on-hand, the
      proceeds raised from the future sales of common stock and/or cash proceeds
      from
      future operations.




We
      expect
      operating losses and negative operating cash flows to continue for at least
      the
      next six-to-twelve months on the assumption that we continue on our business
      plan to successfully launch our Wherifone product in both North America and
      internationally during calendar 2006. Dates for launch of our Wherifone product
      in the various markets are contingent on a number of factors, including
      establishing a distribution agreement in that country or territory with a
      qualified distributor, signing-up a carrier to support the subsequent
      subscribers using our patented GPS-enabled locator services, arranging to
      produce adequate numbers of Wherifone products through our contract
      manufacturer, and the market’s general acceptance of our Wherifone product in a
      highly competitive and evolving marketplace for GPS-enabled locator services,
      including through cell phone-like devices. During this time we expect our
      operating costs to increase 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 in addition to the working capital
      requirements needed to initially fill our Wherifone product pipeline from our
      contract manufacturer to our final customers. During our third quarter of fiscal
      2006 and continuing to-date, we have begun to announce contracts with certain
      distributors outside North America which we expect to develop into active
      distribution channels for our Wherifone product and related subscriber services
      during the remainder of calendar 2006.




As
      of May
      8, 2006, Wherify had cash and cash equivalents of approximately $0.8 million
      and
      restricted certificates of deposit of approximately $1.3 million. We believe
      that our current cash balance will be adequate to continue our current business
      plan into June 2006. We intend to fund our future operations with a combination
      of sales of common stock under our Standby Equity Distribution Agreement, public
      and private offerings of common stock and proceeds from operations. We expect
      that during the second half of calendar 2006 product sales will begin to provide
      cash, and that the subscriber services will start to contribute to our ongoing
      funding requirements. Neither product sales nor subscriber services are expected
      to make significant contributions to our funding requirements until later in
      calendar 2006. As a result we are carefully controlling our spending and
      managing our investment in our infrastructure pending the closing of our next
      financing. As part of our Wherifone product launch plan, we are developing
      a
      company budget that specifically allocates resources to those activities that
      in
      the judgment of management best support the success of our product and services
      launches in North America and internationally. While there is no assurance
      that
      our Wherify product and services will launch over the next twelve months, or
      if
      launched that they will achieve the market success we have targeted, we believe
      that the amount of capital necessary for the company to achieve a positive
      cash
      flow and develop into a profitable enterprise before the end of the next
      twelve-month period will likely range from between $13 million to $18
      million.


-15-




We
      believe the expenses incurred during that period will help us to build the
      infrastructure necessary to initiate and increase revenues both through organic
      growth and later through possible acquisitions, which we believe hold the key
      to
      our future long-term revenue growth opportunities. 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
      Wherify 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, including the issuance of stock under the Standby Equity
      Distribution Agreement, dilution to existing stockholders may result. If funding
      is insufficient at any time in the future, we may be unable to successfully
      launch our Wherifone product and subscriber services in the North American
      or
      international markets, develop or enhance our products or services, take
      advantage of business opportunities or respond to competitive pressures, or
      meet
      our current obligations, any of which could have a material adverse effect
      on
      our financial position, results of operations and cash flows. In the event
      that
      funding is insufficient at any time in the future the company will be forced
      to
      take significant steps to curtail on-going spending, including but not limited
      to the elimination of some or all of our operations and any or all plans for
      expansion of operations.




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.




**4.**  **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.


-16-




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




General
      and administrative expense includes general administrative, manufacturing,
      research and development, and sales and marketing expenses. General
      administrative expense consists primarily of salaries and related expenses
      for
      executive, finance, accounting, information technology, facilities, and human
      resources personnel. 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 of our Wherifone product. 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.







**5.**  **Results
      of Operations for the Three Months Ended March 31, 2006**




Quarter
      ended March 31, 2006 compared to quarter ended March 31, 2005





Net
      revenues for the quarter ended March 31, 2006 were $20,272 and were primarily
      generated by the sales of FACES products. Net revenues for the period ended
      March 31, 2005 have been reclassed to loss from operations of discontinued
      segment related to the child locator watch product which was discontinued as
      of
      fiscal year ended June 30, 2005.





Operating
      expenses for the quarter ended March 31, 2006 were $2.6 million as compared
      to
      $4.0 for the quarter ended March 31, 2005.





General
      and administrative expenses, excluding rent, amortization and depreciation
      expenses, decreased by $1.6 million from $3.6 million in the quarter ended
      March
      31, 2005 to $2.0 million in the quarter ended March 31, 2006. The higher costs
      in the prior year’s period are primarily due to $1.3 million cost associated
      with the write-off of the investment in early prototype production of the GPS
      locator phones, $0.2 million related to trade shows expense, and $0.4 million
      related to finance charges and legal fees, partially offset in the quarter
      ended
      March 31, 2006 by $0.3 million stock option non-cash expense related to the
      implementation of SFAS 123R “Share-Based Payment”.





Amortization
      and depreciation expense increased by $0.2 million from the prior year period
      due to the amortization of intangibles related to the merger of Wherify and
      Wherify California on July 21, 2005.





Other
      Income and expense increased by approximately $5.0 million from the prior year
      period amount due to the initial non-cash derivative expense recognition related
      to the liability associated with the conversion provisions of the convertible
      debentures and warrants issued during March 2006, plus the affect of
      remeasurement of the change in fair value of such issuances as of the period
      ended March 31, 2006, in accordance with SFAS No. 133 “Accounting for Derivative
      Instruments and Hedging Activities”. In addition, other expense increased
      $47,751 for the non-cash accretion of the discount on convertible debentures
      related to the embedded derivatives for the period between the grant date and
      March 31, 2006.


-17-





**6.
      Results of Operations for the nine months ended March 31,
      2006**







Nine
      months ended March 31, 2006 compared to nine months ended March 31,
      2005





Net
      revenues for the nine months ended March 31, 2006 were $110,888 and were
      primarily generated by the sales of FACES products. Net revenues for the period
      ended March 31, 2005 have been reclassed to loss from operations of discontinued
      segment related to the child locator watch product which was discontinued as
      of
      fiscal year ended June 30, 2005.





Operating
      expenses for the nine months ended March 31, 2006 were $73.2 million versus
      $7.9
      million for the nine months ended March 31, 2005. The increase in expenses
      is
      primarily due to a $64.3 million goodwill impairment as of September 30, 2005,
      as discussed in Footnote 4 - Goodwill.





General
      and administrative expenses, excluding rent, amortization and depreciation
      expenses, increased by $0.4 million from $6.8 million in the nine months ended
      March 31, 2005 to $7.2 million in the nine months ended March 31, 2006. The
      increase in these expenses is due primarily to $1.1 million higher legal fees
      associated with the merger, government filings and litigation costs, $0.5
      million higher investor relation costs, the $0.3 million stock option non-cash
      expense related to the implementation of FAS 123R, and $0.4 higher engineering
      and manufacturing salaries expense, partially offset in the nine months ended
      March 31, 2005 by $2.1 million cost associated with the write-off of the
      investment in early production prototypes of the GPS locator phones plus higher
      operating expenses.





Amortization
      and depreciation expense increased by approximately $0.5 million due the
      amortization of intangibles related to the merger of Wherify and Wherify
      California on July 21, 2005.





Other
      Income and expense increased by approximately $5.0 million from the prior year
      period amount due to the initial non-cash derivative expense recognition related
      to the liability associated with the conversion provisions of the convertible
      debentures and warrants issued during March 2006, plus the affect of
      remeasurement of the change in fair value of such issuances as of the period
      ended March 31, 2006, in accordance with SFAS No. 133 “Accounting for Derivative
      Instruments and Hedging Activities”. In addition, other expense increased
      $47,751 for the non-cash accretion of the discount on convertible debentures
      related to the embedded derivatives for the period between the grant date and
      March 31, 2006.






**7.**  **Registration
      Statements**




On
      March 15, 2006 we filed a registration statement with the Securities and
      Exchange Commission (File No. 333-132460) to register 11,823,201 shares of
      our common stock to be sold by certain persons who are stockholders of Wherify,
      including Cornell Capital Partners. Cornell Capital Partners intends to sell
      up
      to 11,816,109 shares of common stock, including up to 5 ,000,000 shares which
      may be issued under a Standby Equity Distribution Agreement, dated
      March 10, 2006, between Wherify and Cornell Capital
      Partners.


-18-




Pursuant
      to the Standby Equity Distribution Agreement, we may, at our discretion,
      periodically issue and sell to Cornell Capital Partners shares of common stock
      for a total purchase price of $40 million during the period commencing on the
      effectiveness of the registration statement registering such shares for resale
      and terminating 24 months thereafter. Material terms and conditions of the
      Standby Equity Distribution Agreement are described elsewhere in this report
      and
      in such registration statement.




On
      March 15, 2006, we filed a registration statement with the Securities and
      Exchange Commission (File No. 333-132461) to register 10 million shares of
      our common stock to be sold by us in a direct offering. We intend to sell these
      shares from time to time over the 12 month period beginning on the effective
      date of such registration statement. These price at which the shares being
      registered will be offered and sold will be determined prior to the sale of
      any
      shares under such registration statement.






**FORWARD
      LOOKING STATEMENTS**




In
      addition to historical information, this report contains predictions, estimates
      and other forward-looking statements that relate to future events or our future
      financial performance. These statements involve known and unknown risks,
      uncertainties and other factors that may cause our actual results, levels of
      activity, performance or achievements to be materially different from any future
      results, levels of activity, performance or achievements expressed or implied
      by
      the forward-looking statements. These risks and other factors include those
      listed under "Risk Factors" and elsewhere in this Form 10-QSB, and some of
      which
      we may not know. In some cases, you can identify forward-looking statements
      by
      terminology such as "may," "will," "should," "expects," "plans," "anticipates,"
      "believes," "estimates," "predicts," "potential," "continue" or the negative
      of
      these terms or other comparable terminology.




Forward-looking
      statements involve known and unknown risks, uncertainties and other factors
      that
      may cause our actual results, performance or achievements to be materially
      different from any future results, performances or achievements expressed or
      implied by the forward-looking statements. We discuss many of these risks in
      this report in greater detail under the heading "Risk Factors." Given these
      uncertainties, you should not place undue reliance on these forward-looking
      statements. Also, forward-looking statements represent our management's beliefs
      and assumptions only as of the date of this report. You should read this report
      and the documents that we reference in this report, completely and with the
      understanding that our actual future results may be materially different from
      what we expect.




Except
      as
      required by law, we assume no obligation to update these forward-looking
      statements publicly, or to update the reasons actual results could differ
      materially from those anticipated in these forward-looking statements, even
      if
      new information becomes available in the future.


-19-




**RISK
      FACTORS**




**RISKS
      RELATED TO OUR PROPOSED DIRECT OFFERING OF COMMON STOCK**




**The
      Offering Price In Our Proposed Direct Offering Could Negatively Affect Our
      Stock
      Price** .




We
      recently filed a registration statement covering the sale of up to 10,000,000
      shares of common stock without the use of an underwriter. Our Board of Directors
      has not yet determined the offering price for the shares of common stock to
      be
      offered pursuant to such registration statement. If the offering price is
      significantly less than the price at which the common stock currently trades,
      our stock price may be negatively affected.




**We
      Have Not Engaged An Underwriter And May Not Sell All Of The Shares Offered
      In
      The Proposed Offering.**




We
      intend
      for the direct offering to be self-underwritten, that is, we do not intend
      to
      engage the services of an underwriter to sell the shares. As a result, we can
      provide no assurance that we will sell all or any of the shares that may be
      offered. We intend to sell the shares through our officers and directors who
      will offer the shares to current shareholders and other business acquaintances;
      however, there is no guarantee that they will be able to sell any of the
      shares.




**RISKS
      RELATED TO FUTURE STOCK SALES**




**Future
      Sales By Us and Our Stockholders May Adversely Affect Our Stock Price And Our
      Ability to Raise Funds In New Stock Offerings** .




Sales
      of
      our common stock could lower the market price of our common stock. Sales may
      also make it more difficult for us to sell equity securities or equity-related
      securities in the future at a time and price that our management deems
      acceptable or at all. Of the 55,281,233 shares of common stock outstanding
      as of
      May 8, 2006, approximately 22.1 million, shares are, or will be, freely tradable
      without restriction, unless held by our "affiliates." Of the remaining shares,
      approximately 17.9 million shares are subject to lock-up agreements that are
      scheduled to expire on July 21, 2006 and approximately 15.0 million shares
      are
      "restricted securities" and may be resold in the public market only if sold
      pursuant to an effective registration statement or pursuant to an exemption
      from
      registration including pursuant to Rule 144. We currently have two registration
      statements covering the resale by certain selling stockholders of up to
      9,658,619 shares of common stock, one registration statement that was filed
      on March 15, 2006 for the registration of 11,823,201 million shares of common
      stock to be sold by Cornell Capital Partners and Newbridge Securities
      Corporation and one registration statement that was filed on March 15, 2006
      for
      the registration of 10 million shares to be sold by us in a direct offering.
      In
      addition, we expect to register for resale additional shares of common stock
      that are currently “restricted securities.”


-20-




**RISKS
      RELATED TO THE CORNELL CAPITAL TRANSACTION**


**AND
      STANDBY EQUITY DISTRIBUTION AGREEMENT**




**Sales
      Of Shares Under The Standby Equity Distribution Agreement Will Be At A Price
      Less Than The Then-Prevailing Market Price Of Our Common Stock, Which Could
      Cause The Price Of Our Common Stock To Decline.**




On
      March
      10, 2006, Wherify entered into a Standby Equity Distribution Agreement with
      Cornell Capital Partners, LP. Pursuant to the Standby Equity Distribution
      Agreement, Wherify may, at its discretion, periodically sell to Cornell Capital
      Partners shares of common stock for a total purchase price of up to $40 million
      during the two year period commencing on the effective date of the registration
      statement registering such shares. The amount of each advance is subject to
      a
      maximum amount of $1,000,000, and we may not submit an advance within five
      trading days of a prior notice of advance. For each share of common stock
      purchased under the Standby Equity Distribution Agreement, Cornell Capital
      Partners will pay 93% of, or a 7% discount to, the volume weighted average
      price
      of our common stock on the Over-the-Counter Bulletin Board or other principal
      market on which our common stock is traded for the five trading days immediately
      following the notice date. Notwithstanding the foregoing, the lowest price
      (before taking into account the 7% discount) that Wherify is required to sell
      any shares after we give notice of an advance is 95% of the closing bid price
      of
      the common stock on the trading day immediately preceding the day such notice
      is
      given. Cornell Capital Partners' obligation to purchase shares of Wherify's
      common stock is subject to certain conditions, including Wherify obtaining
      an
      effective registration statement for shares of common stock to be sold under
      the
      Standby Equity Distribution Agreement. The discounted sales under the Standby
      Equity Distribution Agreement could cause the price of our common stock to
      decline.




**The
      Sale Of Our Stock Under The Standby Equity Distribution Agreement Could
      Encourage Short Sales By Third Parties, Which Could Contribute To the Further
      Decline Of Our Stock Price.**




The
      significant downward pressure on the price of our common stock caused by the
      sale of material amounts of common stock under the Standby Equity Distribution
      Agreement could encourage short sales by third parties. Such an event could
      place further downward pressure on the price of our common stock.




**Our
      Common Stock Has Been Relatively Thinly Traded And We Cannot Predict The Extent
      To Which A Trading Market Will Develop.**




Our
      common stock is traded on the Over-the-Counter Bulletin Board. Our common stock
      is thinly traded compared to larger more widely known companies. Thinly traded
      common stock can be more volatile than common stock trading in an active public
      market. We cannot predict the extent to which an active public market for our
      common stock will develop or be sustained.




**We
      May Not Be Able To Access Sufficient Funds Under the Standby Equity Distribution
      Agreement When Needed.**




We
      are
      dependent on external financing to fund our operations. No assurances can be
      given that funds will be available in sufficient amounts or at all when needed.
      Our ability to raise funds under the Standby Equity Distribution Agreement
      is
      limited by a number of factors, including the fact that the amount of each
      advance is subject to a maximum advance amount of $1 million, we may not submit
      any request for an advance within five trading days of a prior request, we
      may
      have concerns about the impact of an advance on the stock price, and we may
      not
      be able to use the facility because we are in possession of material nonpublic
      information.


-21-




**We
      May Be Limited In The Amount We Can Raise Under The Standby Equity Distribution
      Agreement Because Of Concerns About Selling More Shares Into The Market Than
      The
      Market Can Absorb Without A Significant Price Adjustment.**




We
      will
      want to avoid placing more shares into the market than the market's ability
      to
      absorb the increased without a significant downward pressure on the price of
      our
      common stock. This potential adverse impact on the stock price may limit our
      willingness to use the Standby Equity Distribution Agreement. Until there is
      a
      greater trading volume, it seems unlikely that we will be able to access the
      maximum amount we can draw without an adverse impact on the stock
      price.




**We
      Will Not Be Able To Use The Standby Equity Distribution Agreement When We Are
      In
      Possession Of Material Nonpublic Information.**




Whenever
      we are issuing shares to Cornell Capital Partners, we will be deemed to be
      involved in an indirect primary offering. We cannot engage in any offering
      of
      securities without disclosing all information that may be material to an
      investor in making an investment decision. Accordingly, we may be required
      to
      either disclose such information in our registration statement or refrain from
      using the facility.




**We
      Will Not Be Able To Use The Standby Equity Distribution Agreement If The Shares
      To Be Issued In Connection With An Advance Would Result In Cornell Capital
      Partners Owning More Than 9.9% Of Our Outstanding Common
      Stock.**




Under
      the
      terms of the Standby Equity Distribution Agreement, we may not request advances
      if the shares to be issued in connection with such advances would result in
      Cornell Capital Partners and its affiliates owning more than 9.9% of our
      outstanding common stock. As of March 13, 2006, Cornell Capital Partners’
beneficial ownership of Wherify common stock (including its ownership of 276,595
      shares acquired as a commitment fee, its right to acquire 3,424,658 shares
      upon
      conversion of convertible debentures, and its right to acquire 2,500,000 shares
      upon exercise of warrants) was 4.99% taking into consideration the 4.99%
      ownership limitation contained in the convertible debentures (without taking
      into consideration this 4.99% ownership limitation, Cornell Capital Partner's
      beneficial ownership would be approximately 10.1%. We will be permitted to
      make
      limited draws on the Standby Equity Distribution Agreement so long as Cornell
      Capital Partners’ beneficial ownership of our common stock (taking into account
      such 4.99% ownership limitation) remains lower than 9.9%. A possibility exists
      that Cornell Capital Partners and its affiliates may own more than 9.9% of
      Wherify’s outstanding common stock (whether through open market purchases,
      retention of shares issued under the Standby Equity Distribution Agreement,
      or
      otherwise) at a time when we would otherwise plan to obtain an advance under
      the
      Standby Equity Distribution Agreement.


-22-




**Cornell
      Capital Partners May Sell Shares Of Its Common Stock After We Deliver An Advance
      Notice During The Pricing Period, Which Could Cause Our Stock Price To
      Decline.**




Cornell
      Capital Partners is deemed to beneficially own the shares of common stock
      corresponding to a particular advance on the date that we deliver an advance
      notice to Cornell Capital Partners, which is prior to the date the shares are
      delivered to Cornell Capital Partners. Cornell Capital Partners may sell such
      shares any time after we deliver an advance notice. Accordingly, Cornell Capital
      Partners may sell such shares during the pricing period. Such sales may cause
      our stock price to decline and if so would result in a lower volume weighted
      average price during the pricing period, which would result in us having to
      issue a larger number of shares of common stock to Cornell Capital Partners
      in
      respect of the advance.




**The
      Standby Equity Distribution Agreement Will Restrict Our Ability To Engage In
      Alternative Financings.**




Because
      of the structure of standby equity distribution transactions, we will be deemed
      to be involved in a near continuous indirect primary public offering of our
      securities. As long as we are deemed to be engaged in a public offering, our
      ability to engage in a private placement will be limited because of integration
      concerns.




**The
      Pricing Is Relatively Expensive If Only A Small Part Of The Facility Is Ever
      Used.**




We
      have
      has not decided how much of the commitment amount under the Standby Equity
      Distribution Agreement we will use. The pricing (commitment fee of $400,000
      plus
      7% discount) is relatively expensive if only a small part of the facility is
      ever used.




**We
      May Not Be Able To Access the Full Commitment Amount under the Standby Equity
      Distribution Agreement Without Shareholder Approval.**




Depending
      on the price of our common stock, the number of shares issued and reserved
      for
      issuance, and the authorized shares of common stock, we may need to obtain
      stockholder approval to increase the authorized shares of common stock to access
      the full commitment amount under the Standby Equity Distribution
      Agreement.




**Cornell
      Capital Partners Intends To Sell Its Shares of Common Stock In The Public Market
      And Has An Incentive Under The Standby Equity Distribution Agreement To Do So
      Quickly, Which Sales May Cause Our Stock Price To Decline.**




Cornell
      Capital Partners intends to sell the shares of common stock issued to them
      under
      the Standby Equity Distribution Agreement in the public market. In addition,
      Cornell Capital Partners has an incentive to sell shares received under the
      equity line quickly, because in doing so they can ensure that they will recover
      the discount to market price at which they acquire those shares. The sales
      may
      cause out stock price to decline.


-23-




**Private
      Equity Lines Are Relatively New Concepts And It Is Not Clear How The Courts
      And
      The SEC Will Treat Them.**




Private
      equity lines of credit are relatively recent creations and differ in significant
      ways from traditional PIPE financing transactions. The staff of the SEC's
      Division of Corporate Finance has taken the position that, as long as certain
      criteria are met, the staff will not recommend enforcement action with respect
      to the private equity lines of credit or the related "resale" registration
      statement. It should be noted however, that the staff's position, although
      significant, is not a definitive interpretation of the law and is not binding
      on
      courts. According, there is a risk that a court may find this type of financing
      arrangement, or the manner in which it is implemented, to violate securities
      laws.




**RISKS
      RELATED TO WHERIFY'S BUSINESS**




Wherify's
      business is subject to numerous risks and uncertainties, including risks and
      uncertainties relating to our limited operating history; liquidity; incurrence
      of net losses; lengthy development, manufacturing and sales cycles; competition;
      product related risks; and other risks as discussed below.




**We
      Are The Product Of A 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
      March 31, 2006, Wherify had cash and cash equivalents of approximately $3.8
      million, restricted certificates of deposit of approximately $1.3 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 $0.2 million and current liabilities, excluding the non-cash
      portion of fair value of derivatives, of approximately $11.6 million,
      including approximately $3.7 million in past due rent obligations to our former
      landlord. Wherify also has a liability related to the non-current payable
      portion of the convertible debenture of approximately $3.3 million. As of May
      8,
      2006, Wherify had cash and cash equivalents of approximately $0.8 million and
      restricted certificates of deposit of approximately $1.3 million. There is
      a
      going concern paragraph in Wherify and Wherify California's audit reports for
      the respective fiscal years ended June 30, 2004 and 2005. 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 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, or
      discontinue operations.


-24-




**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.




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




Approximately
      17.8 million shares of our common stock are subject to lock-up agreements
      entered into in connection with the merger that are scheduled to expire on
      July
      21, 2006. If the stockholders subject to these lockup agreements 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.




Notwithstanding
      the release of shares from the lock-up agreements, shares of Wherify common
      stock received by persons who were "affiliates" of Wherify California at the
      time of the Wherify California special meeting of stockholders at which the
      merger was approved may be resold only in a transaction that complies with
      the
      requirements of Rule 145 under the Securities Act of 1933 or as otherwise
      permitted under the Securities Act of 1933. Persons who were "affiliates" for
      this purpose include Timothy Neher and Doug Hajjar, who beneficially owned
      9,639,610 shares and 2,792,624 shares, respectively, of our common stock as
      of
      March 1, 2006. Although, as described above, the provisions of Rule 145 would
      limit the timing and number of shares that could be sold by such persons,
      Wherify may register for resale the shares held by such persons prior to the
      time that such shares could otherwise be sold under Rule 145.


-25-




**We
      Have Only Recently Begun 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. The willingness of
      manufacturers to make the product or lack of availability of manufacturing
      capacity may have an adverse impact on our ability to go to market, and as
      a
      result 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.




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




Complex
      software products such as those associate 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.




**We
      Have Not Yet Signed a National 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 national 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.


-26-




**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:


- Overall
          demand for our products;
- Our
          ability to attract new customers at a steady rate;
- 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;
- Technical
          defects in our products that could delay product shipments or increase
          the
          costs of introducing new products;
- Changes
          in the pricing of our products or those of our competitors;
- The
          amount and timing of capital expenditures and other costs relating to the
          expansion of our operations;
- Costs
          relating to our marketing programs and our business in general;
          and
- General
          economic conditions

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.


-27-




**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 Verizon, FireFly,
      Disney, Mattel, Digital Angel Corporation and WebTech Wireless Inc. have either
      announced plans for new products or have commenced selling 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. All competitors in the wireless location services
      market rely on retail distributors to sell their products to consumers.
      Additional competitors in this market may limit the availability or interest
      of
      retail distributors to carry our wireless location services product and launch
      it into the market. These issues may have an adverse impact on our ability to go
      to market, and as a result 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.




**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.




**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.


-28-




**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 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.




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 we aware of any such claim, any future claim (with or
      without merit) could result in one or more of the following:


- Significant
          litigation costs;

- Diversion
          of resources, including the attention of management;

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

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

-29-




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:


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

- 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

- 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.**




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.


-30-




**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.




**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.


-31-




**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.




**RISKS
      RELATED TO WHERIFY CALIFORNIA RESCISSION OFFER**




**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.




**RISKS
      RELATED TO WHERIFY'S INTELLECTUAL PROPERTY**




**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.


-32-




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:


- Significant
          litigation costs;

- Diversion
          of resources, including the attention of management;

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

- 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.




**RISKS
      RELATED TO CORPORATE AND STOCK MATTERS**




**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.




**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:


-33-




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

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

- General
          economic and market conditions; and

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 as of
      March
      31, 2006 (including the obligation to issue shares upon conversion of the
      debentures or exercise of the warrants issued to Cornell Capital Partners and
      Newbridge Securities Corporation):


- Options
          to purchase approximately 10.7 million shares of our common stock;
          and
- Warrants
          and convertible debentures to purchase or acquire approximately 7.1 million
          shares of our common stock.

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, warrants or convertible
      debentures 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.




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




We
      are
      currently subject to the "penny stock" rules promulgated under the Securities
      Exchange Act of 1934. During the period(s) that our stock trades below $5.00
      per
      share, as it currently does, trading in our common stock is subject to the
      requirements of the "penny stock" rules. 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.


-34-




**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.




-35-




**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 Rules 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 were 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.




In
      connection with the completion of its audit of, and the issuance of its report
      on the financial statements of Wherify for the 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 have been appropriately recorded and disclosed in this
      Form 10-KSB.




As
      a
      result 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 we had deficiencies in our system of internal
      controls and that the design of our disclosure controls and procedures to
      provide reasonable assurance of achieving their objectives had not been
      effective at a reasonable assurance level, as follows:


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

- 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

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

On
      February 13, 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 for the unaudited
      quarter ended September 30, 2005, and as further described in our concurrently
      filed Form 8-K on this matter. In response to the identified weaknesses, the
      Company intends to redesign and take additional steps to strengthen its
      disclosure controls and procedures and internal control to prevent the
      recurrence of the circumstances that resulted in its determination to restate
      the financial statements. To correct the identified weaknesses in disclosure
      controls and procedures and internal controls, management, in consultation
      with
      its outside auditors, will design and implement those procedures deemed
      necessary to correct these identified weaknesses as promptly as
      possible.


-36-




We
      are in
      the process of improving our internal controls in an effort to remediate these
      deficiencies through developing and implementing controls and procedures,
      including improved supervision and training of our accounting
      staff.




Steps
      taken to date during our 2006 fiscal year:




During
      the period from July 1, 2005 to the initial filing date of our Annual Report
      on
      Form 10-KSB on October 13, 2005, management:




1.
            Took
                preliminary steps to assess its identified internal control deficiencies
                with a goal of addressing and remediating such deficiencies during
                the
                upcoming fiscal year; and




2.
            Adopted
                a charter for the Audit Committee.




During
      the period from the initial filing date of our Annual Report on Form 10-KSB
      on
      October 13, 2005 to May 15, 2006, management has taken the following steps
      to
      address and remediate its identified internal control deficiencies:




1.
            Hired
                a new Chief Financial Officer and Treasurer effective February 13,
                2006;




2.
            Established
                Audit Committee review and approval for quarterly filing of the Form
                10-QSB for the quarters ended December 31, 2005 and March 31,
                2006;




3.
            Implemented
                accounting close processes enhancing internal control procedures
                and
                documentation;




4.
            Designed
                a plan to implement a systematic program of company policies and
                procedures over accounting and financial reporting;
                and




5.
            Drafted
                initial corporate governance policies for the CEO’s
                consideration.




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




1.
            Complete
                management’s assessment of its identified internal control deficiencies
                with a goal of addressing and remediating such
                deficiencies;




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




3.
            Implement
                our plan for a systematic program of company policies and procedures
                over
                accounting and financial
                reporting;


-37-




4.
            Determine
                and establish appropriate systems of internal controls over accounting
                and
                financial reporting processes, including over unusual or complex
                accounting transactions; and




5.
            Strengthen
                the staff accounting skills and improve supervision controls over
                accounting processes.




Additional
      effort is needed to fully remedy these deficiencies and we are continuing our
      efforts to improve and strengthen our control processes and procedures. 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 properly planned, designed and implemented changes to our
      system of internal controls, our disclosure controls and procedures will be
      adequate to provide reasonable assurance that the information required to be
      disclosed in our Exchange Act reports will be recorded, processed, summarized
      and reported within the time periods specified in the SEC’s rules and forms, and
      that such information will be accumulated and communicated to our management,
      including our Chief Executive Officer and our Chief Financial Officer, as
      appropriate, to allow timely decisions regarding required disclosure. However,
      because of the inherent limitations in all control systems, no evaluation of
      controls can provide absolute assurance that all control issues have been
      detected. In designing and evaluating the disclosure controls and procedures,
      management recognized that any controls and procedures, no matter how well
      designed and operated, can provide only reasonable assurance of achieving the
      desired control objectives, and management necessarily was required to apply
      its
      judgment in evaluating the cost-benefit relationship of possible controls and
      procedures. 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.




(b)  *Changes
      in internal control over financial reporting* .
      During
      the fourth quarter of fiscal 2005, there were no changes in our 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.




During
      the six month period ending December 31, 2005, there were no changes in our
      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.




During
      the three month period ending March 31, 2006, the following 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:




1.
            Hired
                a new Chief Financial Officer and Treasurer effective February 13,
                2006;




2.
            Established
                Audit Committee review and approval for quarterly filing of the Form
                10-QSB as of the period ended December 31, 2005 and thereafter;
                and




3.
            Implemented
                accounting close processes enhancing internal control
                procedures.




-38-




**PART
      II. OTHER INFORMATION**




**Item
      1. Legal Proceedings**




*Venture
      Corporation Limited, a Singapore Corporation v. Wherify Wireless, Inc, a
      California Corporation*




On
      October 15, 2004, Venture Corporation Limited, a Singapore corporation
      ("Venture"), filed suit against Wherify California, in the United States
      District Court, Central District of California. The complaint sought
      approximately $5 million in damages for breach of contract, fraud and common
      counts alleging that Wherify California failed to pay certain amounts owed
      for
      the manufacture of the children's model personal locater ("CM1"). Wherify
      California answered Venture's complaint on November 16, 2004 and filed a
      cross-complaint alleging that Venture failed to timely deliver conforming goods.
      A court trial concluded on November 4, 2005, and on December 27, 2005 the
      District Court's judgment awarding Venture approximately $1.7 million in damages
      (including costs) was entered. On January 26, 2006, a Notice of Appeal was
      filed
      with the United States Court of Appeals for the Ninth Circuit. Venture has
      commenced collection procedures.




*Lariviere,
      et al. v. I.Q. Biometrix, Inc., a Delaware Corporation, et al.*




On
      August
      5, 2005, plaintiffs Sylvie Lariviere, Robert Rios, Toni Lange, Fernand Beland,
      Frederic Serre and Roland Vroye, filed their first amended complaint against
      I.Q. Biometrix, Inc., a Delaware corporation, in Fresno County Superior Court,
      State of California. Plaintiffs' complaint alleges causes of action for breach
      of contract and fraud for a failure to issue stock options pursuant to an
      alleged oral and/or written agreement. The complaint seeks to recover damages,
      including punitive damages, and/or an award of stock options. On October 25,
      2005, Wherify demurred on behalf of itself, Greg Micek and William Scigliano
      and
      on January 4, 2005, the demurrer was sustained on several grounds. This matter
      has been set for trial on January 18, 2007.




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




During
      the quarter ended March 31, 2006, Wherify issued 51,250 shares of common stock
      to Liviakis Financial Communications, Inc. and 25,000 shares of common stock
      to
      Redwood Consultants, LLC. The Company issued these shares pursuant to Section
      4(2) of the Securities Act of 1933, as amended, and the rules promulgated
      thereunder, in consideration for services rendered.




**Item
      3. Defaults Upon Senior Securities.**




None.




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




None.


-39-






**Item
      5. Other Information.**




As
      previously reported, in July 1999 Wherify California loaned Timothy Neher
      $100,000. In accordance with the terms of the related promissory note,
      Mr. Neher was required to repay the entire principal balance of this loan,
      plus interest at 3.0% per annum, on July 18, 2009. Also as previously reported,
      in April 2000 Wherify California loaned Mr. Neher $26,170. In accordance with
      the terms of the related promissory note, Mr. Neher was required to repay
      the entire principal balance of this loan, plus accrued interest at 3.0% per
      annum, on April 10, 2009. During June 2004, Wherify California wrote off both
      these loans. On May 11, 2006 Wherify’s Board of Directors reached an
      understanding to formally forgive these loans. The aggregate amount forgiven
      (approximately $151,000) will be reported as compensation paid to Mr.
      Neher.






**Item
      6.****Exhibits.**




**(a)**  **Exhibits**


Exhibit
                No.
            
            Description10.1
            
            Consulting
                Agreement between Wherify and W. Douglas Hajjar dated January 12,
                2006 is
                hereby incorporated by reference from Wherify's Registration Statement
                on
                Form SB 2 (SEC File No. 333-132461) filed April 24,
                2006.10.2
            
            Letter
                Agreement between Wherify and W. Douglas Hajjar dated January 13,
                2006 is
                hereby incorporated by reference from Wherify's Registration Statement
                on
                Form SB 2 (SEC File No. 333-132461) filed April 24,
                2006.10.3
            
            Employment
                Agreement with Mark E. Gitter dated January 24, 2006 is hereby
                incorporated by reference from Wherify's Registration Statement on
                Form SB
                2 (SEC File No. 333-132461) filed April 24, 2006.10.4
            
            Promissory
                Note between Wherify and Stephen J. Luczo dated February 22, 2006
                is
                hereby incorporated by reference from Wherify's Registration Statement
                on
                Form SB 2 (SEC File No. 333-132461) filed April 24,
                2006.10.5
            
            Placement
                Agent Agreement between Wherify and Newbridge Securities Corporation
                dated
                March 10, 2006 is hereby incorporated by reference from Wherify's
                Registration Statement on Form SB 2 (SEC File No. 333-132461) filed
                April
                24, 2006.10.6
            
            Investment
                Agreement dated as of February 9, 2006 between Wherify and Dutchess
                Private Equities Fund, L.P. is incorporated herein by reference from
                Wherify's Current Report on Form 8-K filed February 9, 2006 is hereby
                incorporated by reference from Wherify's Registration Statement on
                Form SB
                2 (SEC File No. 333-132461) filed April 24,
                2006.





-40-





Exhibit
                No.
            
            Description10.7
            
            Securities
                Purchase Agreement between Wherify and Cornell Capital Partners,
                LP dated
                March 10, 2006 is hereby incorporated by reference from Wherify's
                Registration Statement on Form SB 2 (SEC File No. 333-132461) filed
                April
                24, 2006.10.8
            
            Standby
                Equity Distribution Agreement between Wherify and Cornell Capital
                Partners, LP dated March 10, 2006 is hereby incorporated by reference
                from
                Wherify's Registration Statement on Form SB 2 (SEC File No. 333-132461)
                filed April 24, 2006.10.9
            
            Investor
                Registration Rights Agreement between Wherify and Cornell Capital
                Partners, LP dated March 10, 2006 is hereby incorporated by reference
                from
                Wherify's Registration Statement on Form SB 2 (SEC File No. 333-132461)
                filed April 24, 2006.10.10
            
            Security
                Agreement between Wherify and Cornell Capital Partners, LP dated
                March 10,
                2006 is hereby incorporated by reference from Wherify's Registration
                Statement on Form SB 2 (SEC File No. 333-132461) filed April 24,
                2006.10.11
            
            Secured
                Convertible Debenture between Wherify and Cornell Capital Partners,
                LP
                dated March 10, 2006 is hereby incorporated by reference from Wherify's
                Registration Statement on Form SB 2 (SEC File No. 333-132461) filed
                April
                24, 2006.10.12
            
            Secured
                Convertible Debenture between Wherify and Cornell Capital Partners,
                LP
                dated March 14, 2006 is hereby incorporated by reference from Wherify's
                Registration Statement on Form SB 2 (SEC File No. 333-132461) filed
                April
                24, 2006.10.13
            
            Pledge
                and Escrow Agreement among Wherify, Cornell Capital Partners, LP
                and David
                Gonzalez, Esq. dated March 10, 2006 is hereby incorporated by reference
                from Wherify's Registration Statement on Form SB 2 (SEC File No.
                333-132461) filed April 24, 2006.10.14
            
            Warrant
                to Purchase Common Stock (No. CCP-001) issued to Cornell Capital
                Partners,
                LP dated March 10, 2006 is hereby incorporated by reference from
                Wherify's
                Registration Statement on Form SB 2 (SEC File No. 333-132461) filed
                April
                24, 2006.10.15
            
            Warrant
                to Purchase Common Stock (No. CCP-002) issued to Cornell Capital
                Partners,
                LP dated March 10, 2006 is hereby incorporated by reference from
                Wherify's
                Registration Statement on Form SB 2 (SEC File No. 333-132461) filed
                April
                24, 2006.





-41-





Exhibit
                No.
            
            Description10.16
            
            Amendment
                to Secured Convertible Debentures between Wherify and Cornell Capital
                Partners dated April 21, 2006 is hereby incorporated by reference
                from
                Wherify's Registration Statement on Form SB 2 (SEC File No. 333-132461)
                filed April 24, 2006.10.17
            
            Letter
                Agreement between Wherify and Michael D. Dingaman, Jr. dated March
                27,
                2006 is hereby incorporated by reference from Wherify’s
                Registration Statement on Form SB-2 (SEC File No. 333-132461) filed
                April
                24, 2006.10.18
            
            Master
                Purchase/Reseller Agreement dated March 22, 2006 between Wherify
                and
                Siemens AG, Communications, Wireless Module. (+)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





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**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.






May
                15, 2006
            
            /s/
               Timothy NeherTimothy
              Neher, Chief Executive Officer(Principal
                Executive Officer)




May
                15, 2006
            
            /s/ Mark
              E.
              GitterMark
              E. Gitter, Chief Financial Officer,
              Treasurer(Principal
                Accounting Officer)




-43-