**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
        10-QSB/A**


AMENDMENT
        NO .1




x
            Quarterly
                Report Pursuant to Section 13 or 15(d)
                of the Securities Exchange Act of 1934 for the quarterly period ended
                December 31, 2005.




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
      February 6, 2006,
      there were 54,923,814 shares
      of common stock, no par value, outstanding.




Transitional
      Small Business Disclosure Format  o Yes  x  No









EXPLANATORY
          NOTE
 
 
 This
          quarterly report on Form 10-QSB/A ("Form 10-QSB/A") is being filed to amend
          our
          quarterly report on Form 10-QSB for the quarter ended December 31, 2005
          (the
          "Original Form 10-QSB"), which was originally filed with the Securities
          and
          Exchange Commission ("SEC") on February 14, 2006.  Pursuant to rule 12b-15
          under the Securities Exchange Act of 1934, as amended, the Form 10-QSB/A
          contains complete text of Item 3 of Part I, as amended, as well as currently
          dated certifications from the Principal Executive Officer and the Principal
          Financial Officer. In
          addition, this report also sets forth the remainder of the Items required
          by
          Form 10-QSB that have not been amended in this filing.
 
 In
          connection with the Company's preparation of its recent registration statements
          on Form SB-2, the Securities and E xchange
          Commission (“SEC”) through its comment letter process requested certain changes
          in the content and scope of our disclosure related to our controls and
          procedures disclosure in several of our periodic reports to the SEC, including
          our second quarter period
          ended December 31, 2005. As a result, the Company's quarterly report on
          Form
          10-QSB for the three and six months ended December 31, 2005 is being amended
          to
          correct these disclosure issues.
 
 The
          amendment contained herein reflects changes resulting from correction of
          the
          controls and procedures disclosure described above. We have not updated
          the
          information contained herein for events occurring subsequent to February
          14,
          2006, the filing date of the Form 10-QSB, except to reflect the amended
          controls
          and procedures disclosure for the period indicated above and to reflect
          the
          restatement of our financial statements as reflected in the Amended Form
          10-QSB
          for the three months ended September 30, 2005 filed on February 16, 2006.
          We
          recommend that this report be read in conjunction with our reports filed
          subsequent to February 16, 2006.











**WHERIFY
      WIRELESS, INC.**


**FORM
        10-QSB/A**


**FOR
      THE QUARTER ENDED** **DECEMBER** **31, 2005**




**TABLE
      OF CONTENTS**


PagePART
                  I
              
              FINANCIAL
                  INFORMATION
              
              3Item
                  1
              
              Financial
                  Statements
              
              3Condensed
                  Balance Sheet as of December 31, 2005 (Unaudited)
              
              3Condensed
                  Statements of Operations for the three months ended December 31,
                  2005 and
                  2004 (Unaudited)
              
              4Condensed
                  Statements of Operations for the six months ended December 31,
                  2005 and
                  2004 (Unaudited)
              
              5Condensed
                  Statements of Cash Flows for the six months ended December 31,
                  2005 and
                  2004 (Unaudited)
              
              6Notes
                  to Financial Statements (Unaudited)
              
              7Item
                  2
              
              Management's
                  Discussion and Analysis or Plan of Operation
              
              10Item
                  3
              
              Controls
                  and Procedures
              
              25PART
                  II
              
              OTHER
                  INFORMATION
              
              26Item
                  1
              
              Legal
                  Proceedings
              
              26Item
                  2
              
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              
              27Item
                  3
              
              Defaults
                  Upon Senior Securities
              
              28Item
                  4
              
              Submission
                  of Matters to a Vote of Security Holders
              
              28Item
                  5
              
              Other
                  Information
              
              28Item
                  6
              
              Exhibits
              
              28Signatures
              
              
              
              29EXHIBITS
              
              
              
              30




-2-




**PART
      I. FINANCIAL INFORMATION**





**Item
      1. Financial Statements**


**Wherify
      Wireless, Inc.**


**Condensed
      Balance Sheet**


**December
      31, 2005**


**Unaudited**





**ASSETS****CURRENT
                ASSETS:**Cash
                and cash equivalents
            
            $
            1,184,863Restricted
                certificates of deposit
            
            
            1,650,091Prepaid
                expenses
            
            
            140,225Accounts
                receivable
            
            
            22,247Inventory
            
            
            6,446**TOTAL
                CURRENT ASSETS**
            
            
            **3,003,872**Goodwill
            
            
            3,222,000Intangible
                assets, net of accumulated amortization of $326,199
            
            
            1,866,801Property
                and equipment, net of accumulated depreciation of
                $1,203,432
            
            
            475,010Other
                long-term assets
            
            
            226,072**TOTAL
                ASSETS**
            
            **$**
            **8,793,755****LIABILITIES
                AND STOCKHOLDERS' DEFICIT****CURRENT
                LIABILITIES:**Accounts
                payable
            
            $
            3,719,573Accounts
                payable - related party
            
            
            3,936,668Accrued
                liabilities
            
            
            472,137Accounts
                payable related to discontinued operating segment
            
            
            2,606,514**TOTAL
                CURRENT LIABILITIES**
            
            
            **10,734,892****STOCKHOLDERS'
                DEFICIT**Common
                stock, no par value:100,000,000
                shares authorized,54,785,121sharesissued
                and outstanding as of December 31, 2005
            
            
            124,417,408Deferred
                stock compensation
            
            
            (613,088
            )Accumulated
                deficit
            
            
            (125,745,457
            )**TOTAL
                STOCKHOLDERS' DEFICIT**
            
            
            (1,941,137
            )**TOTAL
                LIABILITIES AND STOCKHOLDERS' DEFICIT**
            
            **$**
            **8,793,755**




See
      accompanying notes to financial statements.




-3-




**Wherify
      Wireless, Inc.**


**Condensed
      Statement of Operations**


**Three
      Months Ended December 31, 2005 and 2004**


**Unaudited**





**Three
                Months EndedDecember 31,****2005**
            
            **2004****REVENUES:**Sales
                Revenue
            
            $
            64,364
            
            $
            17,442Cost
                of Goods Sold
            
            
            6,027
            
            
            67,245**NET
                REVENUES**
            
            
            **58,337**
            
            
            **(49,803**
            **)****OPERATING
                EXPENSES:**General
                and administrative
            
            
            2,761,979
            
            
            2,331,410Rent
                expense
            
            
            342,728
            
            
            -Rent
                expense payable to related party
            
            
            -
            
            
            342,497Amortization
                & depreciation
            
            
            229,975
            
            
            24,122**TOTAL
                OPERATING EXPENSES**
            
            
            **3,334,682**
            
            
            **2,698,029****OPERATING
                LOSS**
            
            
            **(3,276,345**
            **)**
            
            **(2,747,832**
            **)****OTHER
                INCOME (EXPENSE)**Interest
                expense
            
            
            (3,160
            )
            
            (16,612
            )Interest
                and other income
            
            
            19,929
            
            
            6,603**NET
                LOSS FROM CONTINUING OPERATIONS**
            
            
            **(3,259,576**
            **)**
            
            **(2,757,841**
            **)****DISCONTINUED
                OPERATIONS******Loss
                from operations of discontinued segment
            
            
            (
                42,930
            )
            
            (42,813
            )**NET
                LOSS**
            
            **$**
            **(3,302,506**
            **)**
            **$**
            **(2,800,654**
            **)**Basic
                and diluted net loss per sharefrom
                continuing operations
            
            $
            (0.06
            )
            $
            (0.93
            )Basic
                and diluted net loss per share
            
            $
            (0.00
            )
            $
            (0.01
            )from
                discontinued operationsBasic
                and diluted net loss per share
            
            $
            (0.06
            )
            $
            (0.95
            )Weighted
                average number of shares outstanding
            
            
            53,005,324
            
            
            2,955,726




See
      accompanying notes to financial
      statements.





-4-




**Wherify
      Wireless, Inc.**


**Condensed
      Statement of Operations**


**Six
      Months Ended December 31, 2005 and 2004**


**Unaudited**





**Six
                Months Ended**
              **December
                31,****2005**
            
            **2004****REVENUES:**Sales
                Revenue
            
            $
            100,000
            
            $
            61,963Cost
                of Goods Sold
            
            
            9,383
            
            
            106,436**NET
                REVENUES**
            
            
            **90,617**
            
            
            **(44,473**
            **)****OPERATING
                EXPENSES:**Goodwill
                impairment
            
            
            64,308,022
            
            
            -General
                and administrative
            
            
            5,096,404
            
            
            3,202,345Rent
                expense
            
            
            685,457
            
            
            -Rent
                expense payable to related party
            
            
            -
            
            
            684,994Amortization
                & depreciation
            
            
            415,164
            
            
            47,144**TOTAL
                OPERATING EXPENSES**
            
            
            **70,505,047**
            
            
            **3,934,483****OPERATING
                LOSS**
            
            
            **(70,414,430**
            **)**
            
            **(3,978,956**
            **)****OTHER
                INCOME (EXPENSE)**Interest
                expense
            
            
            (9,742
            )
            
            (25,735
            )Interest
                and other income
            
            
            45,639
            
            
            16,730State
                income Tax
            
            
            -
            
            
            (3,232
            )**NET
                LOSS FROM CONTINUING OPERATIONS**
            
            
            **(70,378,533**
            **)**
            
            **(3,991,193**
            **)****DISCONTINUED
                OPERATIONS******Loss
                from operations of discontinued segment
            
            
            (85,860
            )
            
            (85,626
            )**NET
                LOSS**
            
            **$**
            **(70,464,393**
            **)**
            **$**
            **(4,076,819**
            **)**Basic
                and diluted net loss per sharefrom
                continuing operations
            
            $
            (1.46
            )
            $
            (1.35
            )Basic
                and diluted net loss per share
            
            $
            (0.00
            )
            $
            (0.03
            )from
                discontinued operationsBasic
                and diluted net loss per share
            
            $
            (1.46
            )
            $
            (1.38
            )Weighted
                average number of shares outstanding
            
            
            48,143,070
            
            
            2,955,726




See
      accompanying notes to financial statements.




-5-




**Wherify
      Wireless, Inc.**


**Condensed
      Statements of Cash Flows**


**Unaudited**




**Six
                Months Ended December 31,****2005**
            
            **2004**NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            **(5,070,368**
            **)**
            
            **(2,276,421**
            **)**INVESTING
                ACTIVITIES
              Decrease
                (Increase) in restricted certificates of deposit
            
            
            **799,210**
            
            
            **(204,360**
            **)**Purchase
                of property and equipment
            
            
            (88,268
            )
            
            (22,276
            )Loan
                to another entity
            
            
            0
            
            
            (100,000
            )NET
                CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
            
            
            **710,942**
            
            
            **(326,636**
            **)**FINANCING
                ACTIVITIES:Proceeds
                from issuance of common stock
            
            
            4,336,200
            
            
            -Proceeds
                from issuance of preferred stock
            
            
            0
            
            
            5,159,466NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            **4,336,200**
            
            
            **5,159,466**CHANGE
                IN CASH AND CASH EQUIVALENTS
            
            
            (23,226
            )
            
            2,556,409CASH
                AND CASH EQUIVALENTS - BEGINNING OF PERIOD
            
            
            1,208,089
            
            
            916,314CASH
                AND CASH EQUIVALENTS - END OF PERIOD
            
            
            **1,184,863**
            
            
            **3,472,723**




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**




We
        apply
        the intrinsic value method of accounting for employee stock-based compensation
        plans in accordance with Accounting Principles Board Opinion No. 25,
        "Accounting for Stock Issued to Employees" (APB No. 25).
  The
        Financial Accounting Standards Board issued SFAS No. 123R, "Share-Based
        Payment" (SFAS No. 123R), which requires that we account for employee
        share-based transactions using a fair value based method. SFAS No. 123R is
        effective for us for all share-based transactions initiated on or after
        January 1, 2006. We will apply this statement using a modified version of
        prospective application. We will recognize compensation cost for the unvested
        portion of awards granted prior to the effective date, based on the grant-date
        fair value of those awards used in the pro forma disclosures below. We have
        assessed the impact that the adoption of this statement will have on our
        consolidated financial statements to the extent possible. The impact with
        respect to variable instruments is dependent on our stock price on the date
        of
        implementation.
  If
        employee stock-based compensation costs had been expensed based on the fair
        value (determined using the Black-Scholes model) method of accounting applied
        to
        all stock-based awards, our pro forma results would be:


Three
                  Months Ended December 31,
              
              Six
                  Months Ended December 31,2005
              
              2004
              
              2005
              
              2004Net
                  loss as reported
              
              
              (3,302,506
              )
              
              (2,800,654
              )
              
              (70,464,393
              )
              
              (4,076,819
              )Add:
                  Stock-based employee/director compensation included in net loss
                  determined
                  under APB No. 25, net of related tax effects
              
              
              50,252
              
              
              -
              
              
              100,504
              
              
              -Deduct:
                  Stock-based employee/director compensation expense determined under
                  the
                  fair-value method for all awards, net of related tax effects
              
              
              (893,428
              )
              
              -
              
              
              (1,065,191
              )
              
              (30,783
              )Pro
                  forma net loss
              
              
              (4,145,682
              )
              
              (2,800,654
              )
              
              (71,429,080
              )
              
              (4,107,602
              )Basic
                  and diluted net loss per share:As
                  reported
              
              
              (0.06
              )
              
              (0.95
              )
              
              (1.46
              )
              
              (1.38
              )Pro
                  forma
              
              
              (0.08
              )
              
              (0.95
              )
              
              (1.48
              )
              
              (1.39
              )Weighted
                  average number of shares
              
              
              53,005,324
              
              
              2,955,726
              
              
              48,143,070
              
              
              2,955,726




**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.




-7-




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 six months ended December
        31,
        2004, as if the merger had occurred on July 1, 2004.
  Three
        Months ended December 31, 2004:
 As
                  Reported
              
              Pro-FormaRevenues
              
              $
              17,442
              
              $
              269,724Net
                  Loss
              
              
              ($2,800,654
              )
              
              ($3,693,652
              )Loss
                  Per Share
              
              
              ($0.95
              )
              
              ($0.38
              )
  Six
        Months ended December 31, 2004:
 As
                  Reported
              
              Pro-FormaRevenues
              
              $
              61,963
              
              $
              275,476Net
                  Loss
              
              
              ($4,076,819
              )
              
              ($5,942,463
              )Loss
                  Per Share
              
              
              ($1.35
              )
              
              ($0.63
              )




**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 December 31, 2005, 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 discontinued operations. In addition, the accounts payable relating to this
      product has been segregated on the balance sheet.




-8-




**NOTE
      6 - EQUITY**




During
      the quarter ended December 31, 2005, the Company issued 185,000 shares of common
      stock in exchange for investor services. In addition, the Company issued 186,756
      shares of common stock for options exercised during the quarter and received
      cash proceeds of $ 59,761 . The
      Company issued  108,742
      shares of common stock for warrants exercised during the quarter in the form
      of
      a cashless exercise.




In
      addition, in November 2005 the
      Company received proceeds of $ 2.7
      million in connection with the
      issuance of 1,801,002 shares of common stock in
      a
      private placement transaction.




**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 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. Therefore, the Company expects that any future additions of the product
      to
      inventory will be recorded at cost unless new circumstances arise.




**NOTE
      8 - SUBSEQUENT EVENTS**




On
      February 9, 2006, Wherify entered into a $35 Million Investment Agreement with
      Dutchess Private Equities Fund, L.P. ("Dutchess"). Pursuant to the terms of
      the
      Investment Agreement, over the next two years Wherify may at its discretion
      periodically sell (or "put") to Dutchess shares of its common stock having
      an
      aggregate purchase price of up to $35 million. For each share of common stock
      sold under the Investment Agreement, Dutchess agreed to pay Wherify 95% of
      the
      lowest closing bid price of Wherify's common stock during the 5 trading days
      immediately following the applicable put notice date. Wherify may elect not
      to
      sell any shares to Dutchess at a price that is less than 95% of the closing
      bid
      price on the trading day immediately preceding the applicable put notice date.




Under
      the
      terms of the Investment Agreement Wherify may, every 7 trading days, sell to
      Dutchess common stock with a value equal to the greater of $500,000 or 200%
      of
      the average daily trading volume of the common stock for the 10 trading days
      prior to the applicable put notice date multiplied by the average of the three
      daily closing bid prices immediately preceding the put notice date. Dutchess's
      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 Investment Agreement.




-9-




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




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




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




**1.**  **Introduction**




On
      July
      21, 2005, Wherify California, Inc., a California corporation (formerly known
      as
      Wherify Wireless, Inc.) ("Wherify California") was merged with a special purpose
      subsidiary of Wherify (formerly
      known as IQ Biometrix, Inc. ).
      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 December 31, 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.




-10-




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




As
      of
      December 31, 2005, Wherify had cash and cash equivalents of approximately
      $ 1.2
      million, restricted certificates of deposit of approximately $1.7 million, which are
      being utilized as collateral to support our obligations under a letter of credit
      related to our contract manufacturer, other current assets of approximately
      $0.2
      million and current
      liabilities of
      approximately $ 10.7
      million, including approximately $3.9 million in past due rent
      obligations. Wherify
      currently does not have any credit facility available to it, and has financed
      its operations to date primarily through the issuance of an aggregate of
      approximately 54 million
      shares. There is a "going concern" paragraph in Wherify's auditor's report
      dated
      August 24, 2005. In addition to our $35 million Investment Agreement (as
      discussed under “Recent Events”), we continue in the process of locating
      financing sources to meet our liquidity shortfall. Adequate funds may not be
      available on terms acceptable to us. If additional funds are raised through
      the
      issuance of equity securities, dilution to existing stockholders may result.
      If
      funding is insufficient at any time in the future, we may be unable to develop
      or enhance our products or services, take advantage of business opportunities
      or
      respond to competitive pressures, any of which could have a material adverse
      effect on our financial position, results of operations and cash flows. We
      have
      no material commitments for capital expenditures and there are no anticipated
      material capital expenditures that are reasonably expected to have a material
      impact on us.




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




We
      have
      worked out an arrangement with our landlord and are currently paying rent.
      We
      have entered into an agreement with the landlord that provides that we will
      begin paying back due rent as well as paying for certain back due expenses
      covered by the landlord. Under this agreement, upon achieving adequate
      financing, we will settle our debt with the landlord, which was approximately
      $3.9 million as of December 31, 2005. There is no guarantee that additional
      financing will be found to settle this obligation.




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




-11-




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




**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.




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** **December 31, 2005**




Quarter
      Ended December 31, 2005 Compared To Quarter Ended December 31,
      2004




Net
      revenues for the quarter ended December 31, 2005 were $  58,337
      versus
      $(49,803) for the quarter ended December 31, 2004. Sales revenues in the current
      quarterwere generated by the sales of FACES product. Sales
      revenues in the quarter ended December 31, 2004 were generated by the sales
      of
      the Wherify child locator watch. Wherify discontinued the sale of its child
      locator watch as of its fiscal year ended June 30, 2005.




Operating
      expenses for the quarter ended
      December 31, 2005 were $3.3 million versus $2.7 million for the quarter ended
      December 31, 2004.




General
      and administrative expenses, excluding rent expense payable to related party,
      increased by $0.3 million from $2.3 million in the quarter ended December 31,
      2004 to $2.7 million in the quarter ended December 31, 2005. The
      increase in these expenses is due primarily to higher legal fees of $0.5
      million due to
      costs associated with the merger, government filings and litigation costs,
      $0.3
      million in higher investor relations costs, and $0.1 million in higher sales
      and
      marketing costs, partially offset by $0.3 million in lower research and
      development costs.




-12-




Amortization
      and depreciation expense increased by $0.2 million from $24,122 in the quarter
      ended December 31, 2004 to $0.3 million in the quarter ended December 31, 2005.
      The increase in these expenses is due to the amortization of the intangible
      asset that resulted from the merger of Wherify Wireless, Inc. and Wherify
      California, Inc.




**6.**  **Results
      Of Operations for the** **Six
      Months Ended** **December 31, 2005**




Six
      months ended December 31, 2005 compared to six months ended December 31,
      2004




Net
      revenues for the six months ended December 31, 2005 were $90,617. Sales Revenue
      in this
      period w as generated by the sales of FACES. Sales Revenues for the six months ended
      December 31, 2004 were generated by the sales of the Wherify child locator
      watch. Wherify discontinued the sale of its child locator watch as of its fiscal
      year ended
      June 30, 2005.




Operating
      expenses for the six months ended December 31, 2005 were $70.5 million versus
      $3.9 million for the six months ended December 31, 2004. This is primarily
      due
      to recognizing a $64.3 million goodwill impairment as of September 30, 2005,
      as
      discussed in Footnote 4 - Goodwill.




General
      and administrative expenses, excluding rent expense payable to related party,
      increased by $1.9 million from $3.2 million in the six months December 31,
      2004
      to $5.1 million in the six months ended December 31, 2005. The
      increase in these
      expenses is due primarily to higher legal fees of $1.1 million due to costs
      associated with the merger, government filings and litigation costs, $0.3
      million in higher investor relations costs, $0.2 million in higher patents
      and
      trademarks expenses, and $0.2 million in higher other administrative costs. Sales
      and
      marketing expenses also increased by $0.2  million.




Research,
      development and manufacturing expenses decreased by $0.7 million during the
      six
      months ending December 31, 2005 from $1.5 million in the six months ending
      December 31, 2004. Manufacturing expenses decreased by $0.9 million related
      to
      the Wherifone product, partially offset by higher engineering and manufacturing
      salaries that increased by $0.2 million during the six months ended December 31, 2005.




Amortization
      and depreciation expense increased by approximately $0.3 million from $47,144
      in
      the six months ended December 31, 2004 to $0.4 million in the six months ended
      December 31, 2005. The increase in these expenses is due intangible asset that
      resulted from the merger of Wherify Wireless, Inc and Wherify California,
      Inc.




**7.**  **Recent
      Events**




On
      February 9, 2006, Wherify entered into a $35 Million Investment Agreement with
      Dutchess Private Equities Fund, L.P. ("Dutchess"). Pursuant to the terms of
      the
      Investment Agreement, over the next two years Wherify may at its discretion
      periodically sell (or "put") to Dutchess shares of its common stock having
      an
      aggregate purchase price of up to $35 million. For each share of common stock
      sold under the Investment Agreement, Dutchess agreed to pay Wherify 95% of
      the
      lowest closing bid price of Wherify's common stock during the 5 trading days
      immediately following the applicable put notice date. Wherify may elect not
      to
      sell any shares to Dutchess at a price that is less than 95% of the closing
      bid
      price on the trading day immediately preceding the applicable put notice date.




-13-




Under
      the
      terms of the Investment Agreement Wherify may, every 7 trading days, sell to
      Dutchess common stock with a value equal to the greater of $500,000 or 200%
      of
      the average daily trading volume of the common stock for the 10 trading days
      prior to the applicable put notice date multiplied by the average of the three
      daily closing bid prices immediately preceding the put notice date. Dutchess's
      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 Investment Agreement.




**FORWARD
      LOOKING STATEMENTS**




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




**FACTORS
      AFFECTING FUTURE OPERATING RESULTS**




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




-14-




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




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




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




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




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




As
      of
      December 31, 2005, Wherify had cash and cash equivalents of approximately
      $ 1.2
      million, restricted certificates of deposit of approximately $1.7 million, which are
      being utilized as collateral to support our obligations under a letter of credit
      related to our contract manufacturer, other current assets of approximately
      $0.2
      million and
      current liabilities of approximately $10.7 million, including approximately
      $3.9
      million in past due rent obligations. As
      of
      January 31, 2006, Wherify had cash and cash equivalents of approximately $0.5
      million and restricted certificates of deposit of approximately $1.5
      million.  There
      is
      a going concern paragraph in Wherify and Wherify California's most recent audit
      reports. Substantially all of our cash has been raised through capital raising
      transactions rather than operations. As we have limited revenues, we will need
      to raise additional working capital in the near future. There is no assurance
      that we will be able to raise additional working capital at all or on terms
      favorable to our stockholders or us. If we are unable to raise additional
      working capital, we will need to reduce our costs, which may require us to
      reduce operations, personnel and overhead, which would have an adverse effect
      on
      our business.




-15-




**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 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 financings are
      unfavorable to us or our stockholders, the stockholders may experience
      substantial dilution and/or a significant decrease in the 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 ,
      market 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.**




The
      former stockholders of Wherify California own approximately 80% of our stock
      calculated on a fully diluted basis. Approximately 30% of these shares are
      subject to lock-up agreements that are scheduled to expire on July 21, 2006.
      If
      these stockholders attempt to sell a significant portion of their shares shortly
      after such shares are released from the lock-ups, or if we release a significant
      portion of the stockholders from their obligations under the lock-up agreements
      prior to the expiration of the relevant lock-up periods, our stock price could
      be significantly negatively affected.




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




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




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




-16-




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




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




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




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




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




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




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




●
            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;




-17-




●
            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;




●
            General
                economic conditions; and




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




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




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




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




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




-18-




**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.




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




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




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




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




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




-19-




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




●
            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.




**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.




-20-




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
      Encounter 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.




**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.




-21-




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




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




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




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




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




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




-22-




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




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




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




●
            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.




-23-




**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:




●
            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
      December 31, 2005:




●
            Options
                to purchaseapproximately5.3
                millionshares of our common stock;and




●
            Warrants
                and convertible debt to purchase or acquire approximately 1.1 million
                shares of our common stock.




-24-




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




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




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




**Stockholders
      Should have No Expectation Of Any Dividends.**




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




**Item
      3. Controls and Procedures**





(a)  *Evaluation
          of Disclosure Controls and Procedures* .
          Based
          on an evaluation of the effectiveness of Wherify’s disclosure controls and
          procedures (as defined in Rule 13a-15(e) promulgated under the Securities
          Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by
          this report, our Chief Executive Officer and Chief Financial Officer concluded
          that our disclosure controls and procedures are not effective to ensure
          that
          information required to be disclosed by us in reports that we file or submit
          under the Exchange Act is recorded, processed, summarized and reported
          within
          the time periods specified in Securities and Exchange Commission rules
          and
          forms.
  In
          connection with the completion of its audit of, and the issuance of its
          report
          on the financial statements of Wherify for the fiscal year ended June 30,
          2005,
          Malone & Bailey, PC identified deficiencies in Wherify's internal controls
          related to expense recognition and disclosure control deficiencies related
          to
          transactions involving issuances of Wherify's stock and stock options.
          The
          adjustment to expense and the footnote disclosure deficiencies were detected
          in
          the audit process and were appropriately recorded and disclosed in the
          Annual
          Report on Form 10-KSB for the fiscal year ended June 30, 2005. Following
          a
          review of the deficiencies identified by Malone & Bailey, PC, management
          determined that we had incorrectly accounted for a number of equity-related
          transactions, several of which were related to the then pending merger
          of
          Wherify Wireless California and Wherify, that included various stock option
          transactions and stock option awards for services. Management further determined
          that we had incorrectly omitted expense recognition for various expenses
          incurred in the year just ended. As a result, management concluded that
          our
          disclosure controls and procedures were not effective as of our fiscal
          year
          ended June 30, 2005, as follows:
  •
                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.
  During
            the period covered by this report management reviewed its controls and
            procedures in a series of assessment meetings between the Chief Financial
            Officer and the Chairman of the Audit Committee. In addition, efforts
            were
            planned to address the various specific deficiencies as identified in
            the course
            of the fiscal year end audits of the two pre-merger corporations, Wherify
            California, Inc. and Wherify. Concurrent with these reviews was the on-going
            post-merger integration activities of Wherify California, Inc. into Wherify,
            including instituting certain pre-existing accounting controls and procedures
            at
            Wherify California, Inc., including new documentary controls over check
            signing
            reviews and approvals over the cash disbursement
            process.
  On
          February 13, 2006, based on an internal management review of our quarterly
          filings for fiscal 2006, our management and the Audit Committee of the
          Board of
          Directors concluded that a misstatement had occurred on our previously
          reported
          unaudited interim financial statements for the three month period ended
          September 30, 2005, which resulted in the restatement of the unaudited
          interim
          financial statements for the quarter ended September 30, 2005, as described
          in
          Note 2 to the Notes to Financial Statements of our Form 10-QSB/A for the
          unaudited quarter ended September 30, 2005, and as further described in
          our
          concurrently filed Form 8-K on this matter. Specifically, the restatement
          of the
          Company’s previously issued financial statement for the three month period ended
          September 30, 2005 was to correct a misstatement relating to the accounting
          for
          a $12,467,059 deemed dividend on preferred stock from our June 30, 2005
          financial statements which had incorrectly been included as a first quarter
          fiscal 2006 deemed dividend on preferred stock. As a result of correcting
          this
          error, our reported net loss for the quarter decreased by $12,467,059
          to a restated loss of $67,046,645 or ($1.55) per share versus the reported
          loss of $79,513,704 or ($1.84) per share. This restatement had no impact
          on any
          other previously reported financial results. Management has determined
          that the
          deficiencies as identified by Malone & Bailey, PC 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, do continue to
          exist and
          that no further disclosure controls and procedure control deficiencies
          had been
          identified as of December 31, 2005.
  The
            Audit
            Committee of the Board of Directors discussed the matters disclosed in
            this
            filing with the Company's independent registered public accountants,
            Malone
& Bailey, PC. In response to the continued identified deficiencies,
            management intends to improve its disclosure controls and procedures
            requirements with the goal to strengthen
            its disclosure controls and
            procedures by implementing certain of the controls and procedures used
            at
            Wherify California and by improved supervision and training of our accounting
            staff. Management recognizes the importance of internal controls to prevent
            the
            recurrence of the circumstances that our disclosure controls and procedures
            are
            not effective to ensure that information required to be disclosed by
            us in
            reports that we file under the Exchange Act is recorded, processed, summarized
            and reported within the time periods specified in Securities and Exchange
            Commission rules and forms. To correct the identified deficiencies in
            disclosure
            controls and procedures and internal controls, management, in consultation
            with
            its outside auditors, intends to identify, design and implement those
            procedures
            deemed necessary to correct these identified deficiencies as promptly
            as
            possible.
  Steps
          planned to be taken during the remainder of our 2006 fiscal
          year:
  1.
                Management
                    to perform its assessment of its identified internal control
                    deficiencies
                    with a goal of addressing and remediating such deficiencies,
                    by
                    implementing certain of the controls and procedures used at Wherify
                    California;
  2.
                Identify
                    remedial actions to address and resolve our identified internal
                    control
                    deficiencies over unusual or complex accounting
                    transactions;
  3.
                Determine
                    and establish appropriate systems of internal controls over unusual
                    or
                    complex accounting transactions;
                    and
  4.
                Strengthen
                    the staff accounting skills and improve supervision controls
                    over
                    accounting processes including unusual or complex accounting
                    transactions.
  Our
          management and directors will continue to work with our auditors and other
          outside advisors to develop and then ensure that our controls and procedures
          are
          adequate and effective. We believe that with a properly planned, designed
          and
          implemented system of internal controls over financial reporting, our disclosure
          controls and procedures will be effective.
  (b)  *Changes
          in Internal Control Over Financial Reporting* .
  During
          our second fiscal quarter ending December 31, 2005, no changes were affected
          in
          our system of internal control over financial reporting or in other factors
          that
          have materially affected, or are reasonably likely to materially affect,
          our
          internal controls over financial reporting.


-25-






**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.
      Wherify's cross-complaint sought damages in excess of $90 million. A mediation
      between the parties ended without a resolution.




A
      court
      trial concluded on November 4, 2005, and on December 27, 2005 the District
      Court's judgment awarding Venture $1.2 million in damages was entered. As a
      result, on January 11, 2006, Wherify filed post-judgment motions seeking: (1)
      to
      alter/amend the judgment or make additional findings of fact; (2) for a new
      trial; and (3) for relief from judgment. In addition, on January 26, 2006,
      a
      Notice of Appeal was filed with the United States Court of Appeals for the
      Ninth
      Circuit.




-26-




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.




Zoltar
      Satellite Systems, Inc. v. Wherify California, Inc.




On
      June 2005, Zoltar Satellite Systems, Inc., a Delaware corporation, filed
      suit in the United States District Court, Eastern District of Texas alleging
      that Wherify California and ten other named defendants, including LG
      Electronics, Inc., Motorola, Inc., Sanyo Electric Co., Ltd. and Sprint
      Corporation, infringed certain patents as a result of the manufacture, use,
      sale
      and/or offer for sale of cellular telephones equipped with emergency location
      determination technology. On September 29, 2005, Zoltar voluntarily
      dismissed its claims against Wherify California without prejudice.




William
      Prevost v. Wherify




On
      September 15, 2005, William Prevost, the former CEO of Wherify, filed suit
      in
      San Mateo County Superior Court, State of California against Wherify and Timothy
      Neher. Prevost alleges that Wherify failed to pay him the sum of $45,000
      pursuant to a March 7, 2002 severance agreement. In addition, the plaintiff
      claims Wherify improperly and in bad faith failed to issue him a new
      unrestricted certificate for approximately 44,717 shares of common stock. The
      complaint seeks to recover consequential and punitive damages as well as
      declaratory relief for plaintiff's claims.




On
      January 19, 2006, the Company issued a check in the amount of $50,000 to Mr.
      Prevost. The parties continue to meet and confer in an effort to resolve this
      matter.




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




During
      the quarter ended December 31, 2005, Wherify issued135,000shares
      of common stock to Liviakis Financial Communications, Inc.and50,000
      shares of common stockto
      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.




-27-




During
      the period from November 9-14, 2005, Wherify
      issued 1,801,002 shares of common stock to various accredited investors for
      an
      aggregate consideration of $2.7 million. The Company issued these shares
      pursuant to Section 4(2) of the Securities Act, as amended, and the rules
      promulgated thereunder. The proceeds from this transaction were used for working
      capital purposes.




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




None.




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




None.




**Item** **5. Other Information.**




None.




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




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




**Exhibit
                No.**
            **Description**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





-28-







**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.


WHERIFY
                WIRELESS,
                INC.June
                  26, 2006
              /s/
                  Timothy Neher
                Timothy
                  Neher, Chief Executive Officer
                (Principal
                  Executive Officer)June
                  26,2006
              /s/
                  Mark Gitter
                  Mark
                  Gitter, Chief Financial Officer, Treasurer(Principal
                  Accounting Officer)




-29-