**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C.  20549**





**FORM
      10-QSB**





**x**
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                OF 1934****For
                the quarterly period ending September 30, 2007**




or




**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
                or other jurisdiction of*
            *(I.R.S.
                Employer**incorporation
                or organization)*
            *Identification
                Number)*




**901
      Mariners Island Boulevard, San Mateo, California
      94404-1592**


*(Address
      of principal executive offices)*




**(650) 524-3000**


*(Issuer’s
      telephone number)*




63
      Bovet
      Road, #521, San Mateo, California 94402-3104


*(Former
      mailing address)*




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
      (or
      for such shorter periods 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





There
      were 75,289,793 shares of the issuer’s common stock, $.01 par value, outstanding
      as of November 15, 2007





Transitional
      Small Business Disclosure Format:      Yes o     No x







**WHERIFY
      WIRELESS, INC.**


**FORM
      10-QSB**


**QUARTER
      ENDED SEPTEMBER 30, 2007**





**Table
      of Contents**




PagePART
                I. FINANCIAL INFORMATIONItem
                1. Financial Statements
            
            
            3Balance
                Sheets as of September 30, 2007 and June 30, 2007
                (unaudited)
            
            
            3Statements
                of Operations for the three months ended September 30, 2007 and 2006
                (unaudited)
            
            
            4Statements
                of Condensed Cash Flows for the three months ended September 30,
                2007 and
                2006 (unaudited)
            
            
            5Notes
                to Financial Statements (unaudited)
            
            
            6Item
                2. Management’s Discussion and Analysis or Plan of
                Operation
            
            
            9Item
                3. Controls and Procedures
            
            
            15PART
                II. OTHER INFORMATIONItem
                6. Exhibits
            
            
            16Signatures
            
            
            17EXHIBITS




2




**PART
      I – FINANCIAL INFORMATION**





**Item
      1. Financial Statements**





**Wherify
      Wireless, Inc.**


**Balance
      Sheets**


**(Unaudited)**




**September 30,**
            
            **June
                30,****2007**
            
            **2007****ASSETS****Current
                Assets:**Cash
                and cash equivalents
            
            $
            664,137
            
            $
            2,056,580Restricted
                cash
            
            
            9,071
            
            
            9,071Accounts
                receivable, net of allowance for bad debt
            
            
            645,978
            
            
            109,864Inventory
            
            
            1,710,813
            
            
            2,260,991Prepaid
                expenses
            
            
            67,265
            
            
            93,476Security
                deposit
            
            
            336,190
            
            
            336,190Total
                current assets
            
            
            3,433,454
            
            
            4,866,172Intangible
                assets, net of accumulated amortization
            
            
            12,059
            
            
            15,809Property
                and equipment, net of accumulated amortization of $1,476,519 and
                $1,439,831, respectively
            
            
            234,862
            
            
            271,550Other
                non-current assets
            
            
            845,678
            
            
            973,024**Total
                Assets**
            
            **$**
            **4,526,053**
            
            **$**
            **6,126,555****LIABILITIES
                AND STOCKHOLDERS' DEFICIT****Current
                Liabilities:**Accounts
                payable
            
            $
            6,820,452
            
            $
            7,063,554Accounts
                payable - related party
            
            
            3,105,750
            
            
            3,105,750Accrued
                liabilities
            
            
            2,919,699
            
            
            3,528,072Deferred
                revenues
            
            
            80,563
            
            
            76,852Notes
                payable - related parties
            
            
            2,000,000
            
            
            2,000,000Convertible
                notes
            
            
            3,362,418
            
            
            2,872,665Fair
                value of derivatives
            
            
            -
            
            
            3,525,896Total
                current liabilities
            
            
            18,288,882
            
            
            22,172,789Commitments
                and contingencies
            
            
            -
            
            
            -**Stockholders
                Deficit:**Preferred
                stock, $0.01 par value 10,000,000 Shares authorized:Series
                A Preferred stock, 7,500 shares issued and outstanding
            
            
            75
            
            
            75Series
                B Preferred stock, 1,129 shares issued and outstanding
            
            
            11
            
            
            -Common
                stock, $0.01 par value 200,000,000 shares authorized; 75,289,793
                and
                75,225,277 issued and outstanding, respectively
            
            
            752,898
            
            
            752,253Additional
                paid-in capital
            
            
            141,339,709
            
            
            136,859,523Accumulated
                deficit
            
            
            (155,855,522
            )
            
            (153,658,085
            )Total
                stockholders' deficit
            
            
            (13,762,829
            )
            
            (16,046,234
            )**Total
                liabilities and stockholders' deficit**
            
            **$**
            **4,526,053**
            
            **$**
            **6,126,555**




3


**Wherify
      Wireless, Inc.**


**Statements
      of Operations**


**Three
      months ended September 30, 2007 and 2006**


**(Unaudited)**




**2007**
            
            **2006****Revenues**
            
            **$**
            **785,583**
            
            **$**
            **184,321****Cost
                of revenues**
            
            
            **554,225**
            
            
            **4,610****Gross
                profit**
            
            
            **231,358**
            
            
            **179,711****Operating
                expenses:**General
                and administrative
            
            
            1,507,787
            
            
            3,454,551Rent
                expense
            
            
            41,370
            
            
            371,355Amortization
                and depreciation
            
            
            167,783
            
            
            79,822**Total
                operating expenses**
            
            
            **1,716,940**
            
            
            **3,905,728****Operating
                Loss**
            
            
            **(1,485,582**
            **)**
            
            **(3,726,017**
            **)****Other
                income (expense):**Derivative
                gain (loss)
            
            
            -
            
            
            (11,456,804
            )Interest
                and other expense
            
            
            (716,480
            )
            
            (517,272
            )Interest
                and other income
            
            
            4,628
            
            
            12,501**Net
                loss**
            
            
            **(2,197,434**
            **)**
            
            **(15,687,592**
            **)**Less:
                deemed dividend - beneficial conversion feature
            
            
            (607,878
            )
            
            -**Net
                loss attributable to common stock shareholders**
            
            **$**
            **(2,805,312**
            **)**
            **$**
            **(15,687,592**
            **)**Basic
                and diluted net loss per share
            
            $
            (0.03
            )
            $
            (0.27
            )Basic
                and diluted net loss per share attributable to common
                shareholders
            
            
            (0.04
            )
            
            (0.27
            )Weighted
                average number of shares outstanding - basic and diluted
            
            
            75,256,132
            
            
            57,415,399





4


**Wherify
      Wireless, Inc.**


**Statements
      of Condensed Cash Flows**


**Three
      months ended September 30, 2007 and 2006**


**(Unaudited)**




**2007**
            
            **2006****Net
                Cash Used in Operating Activities**
            
            **$**
            **(2,248,922**
            **)**
            **$**
            **(1,727,260**
            **)****Cash
                Flows from Investing Activities:**Proceeds
                from sales of certificates of deposit
            
            
            -
            
            
            (12,330
            )Purchases
                of property, plant and equipment
            
            
            -
            
            
            (4,255
            )**Net
                Cash Used in Investing Activities**
            
            
            **-**
            
            
            **(16,585**
            **)****Cash
                Flows from Financing Activities:**Proceeds
                from sale of preferred stock, net of offering costs
            
            
            856,480Proceeds
                from sale of common stock, net of offering costs
            
            
            
            
            
            1,504,642**Net
                Cash Provided by Financing Activities**
            
            
            **856,480**
            
            
            **1,504,642****Change
                in Cash and Cash Equivalents**
            
            
            **(1,392,442**
            **)**
            
            **(239,203**
            **)****Cash
                and Cash Equivalents - Beginning Period**
            
            
            **2,056,579**
            
            
            **524,722****Cash
                and Cash Equivalents - End of Period**
            
            **$**
            **664,137**
            
            **$**
            **285,519**




5


**WHERIFY
      WIRELESS, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**




**NOTE
      1 – BASIS
      OF
      PRESENTATION**





The
      accompanying unaudited interim financial statements of Wherify Wireless, Inc.
      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. 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, 2007.
      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, 2007 as reported in the Form 10-KSB.




**NOTE
      2 – GOING CONCERN**





Wherify’s
      financial statements have been prepared on a going concern basis, which
      contemplates the realization of assets and settlement of liabilities and
      commitments in the normal course of business for the foreseeable future. Since
      inception, the Company has accumulated losses aggregating to $155,855,522 and
      has insufficient working capital to meet its current operating needs and is
      dependent on successful new financings to continue its operations, all of which
      raise substantial doubt about Wherify’s ability to continue as a going
      concern.





Management’s
      plans for Wherify’s continued existence include selling additional stock or
      borrowing additional funds to pay overhead expenses while proceeding with its
      current business plan to launch and market its new GPS enabled wireless location
      products.





Wherify’s
      future success is dependent upon its ability to achieve profitable operations,
      generate cash from operating activities and obtain additional financing. There
      is no assurance that Wherify will be able to generate sufficient cash from
      operations, sell additional shares of common stock or borrow additional
      funds.





Should
      Wherify be unable to obtain additional cash this will have a material adverse
      effect on its financial position, results of operations and its ability to
      continue in existence. The consolidated financial statements do not include
      any
      adjustments that might result from the outcome of this uncertainty.




**NOTE
      3 – CONVERTIBLE DEBENTURES AND DERIVATIVE LIABILITY**





In
      March
      2006, Wherify borrowed $5,000,000 under two secured convertible debentures
      and
      issued common stock warrants to its investors. Wherify determined that the
      conversion feature of the secured convertible debentures and the warrants issued
      with the secured convertible debentures are embedded instruments pursuant to
      SFAS No. 133. Accounting for Derivative Instruments and Hedging Activities,
      as
      amended. Under the provision of the EITF Issue No. 00-19, Accounting for
      Derivative Financial Instruments indexed to, and Potentially Settled in, a
      Company’s Own Stock, the accounting treatment of these derivative financial
      instruments requires that Wherify record the derivatives at their fair values
      as
      of the inception date of the note agreements and at fair value as of each
      subsequent balance sheet date as a liability. Any change in fair value recorded
      is recorded as a non-operating, non-option pricing model. This model requires
      the use of estimates such as the expected holding period, the expected future
      volatility of Wherify’s common stock and the risk-free interest of return over
      the holding period. These estimates directly affect the reported amounts of
      the
      derivative instrument liabilities.




6




In
      December 2006, the FASB issued FASB Staff Position No. EITF 00-19-2, Accounting
      for Registration Payment Arrangements (EITF 00-19-2). EITF 00-19-2 addresses
      an
      issuer's accounting for registration payment arrangements. It specifies that
      the
      contingent obligation to make future payments or otherwise transfer
      consideration under a registration payment arrangement, whether issued as a
      separate agreement or included as a provision of a financial instrument or
      other
      agreement, should be separately recognized and measured in accordance with
      FASB
      Statement No. 5, Accounting for Contingencies. The guidance in EITF 00-19-2
      amends FASB Statements No. 133, Accounting for Derivative Instruments and
      Hedging Activities, and No. 150, Accounting for Certain Financial Instruments
      with Characteristics of both Liabilities and Equity, and FASB Interpretation
      No.
      45, Guarantor's Accounting and Disclosure Requirements for Guarantees, including
      Indirect Guarantees of Indebtedness of Others, to include scope exceptions
      for
      registration payment arrangements. EITF 00-19-2 also requires additional
      disclosure regarding the nature of any registration payment arrangements,
      alternative settlement methods, the maximum potential amount of consideration
      and the current carrying amount of the liability, if any. This EITF is effective
      immediately for registration payment arrangements and the financial instruments
      subject to those arrangements that are entered into or modified subsequent
      to
      the date of issue of this EITF. For registration payment arrangements and
      financial instruments subject to those arrangements that were entered into
      prior
      to the issuance of this EITF, this is effective for financial statements issued
      for fiscal years beginning after December 15, 2006, and interim periods within
      those fiscal years.





Wherify evaluated the application of EITF 00-19-2 for all its financial instruments
      and
      determined that the conversion feature of the convertible note and the warrants
      to purchase common stock issued by Wherify associated with the secured
      convertible debentures in March 2006 no longer qualified to be classified as
      derivative liabilities. The
      impact of implementing EITF 00-19-2 for the first quarter resulted in a
      cumulative effect of a change in accounting principle with a decrease in the
      derivative liability of $3,525,896 and a decrease to beginning retained earnings
      of $2,578,493 and a reclassification of the original fair value recorded to
      equity of $6,104,389.




**NOTE
      4 – EQUITY**





***Common
      Stock***





During
      the quarter ended September 30, 2007, Wherify issued 64,516 shares of its common
      stock to its consultants for their services. These shares were recorded at
      their
      fair value of $10,322.





***Preferred
      Stock***





In
      August
      2007, Wherify sold an aggregate of 1,129 shares of Series B Convertible
      Preferred Stock for $1,129,000. These preferred stock are convertible into
      Wherify' s common stock at $0.16 per share. In the same offering, Wherify
      granted 1,764,063 warrants to its investors. Wherify
      has determined that the conversion feature of the preferred stock and the
      warrants are not derivative instruments pursuant to SFAS No. 133, Accounting
      for
      Derivatives, as amended. Because of the effective conversion price was less
      than
      the market price on the date of sale, a beneficial conversion feature was
      created under the guidance of EITF 98-5 and EITF 00-27. Wherify recorded
      $607,878 discount as deemed dividend to the preferred stock on the date of
      issuance.





Wherify
      incurred $272,520 offering costs related to the sale of these preferred shares.
      Wherify also granted 706,625 warrants to its placement agent as
      commission.




**NOTE
      5 – OPTIONS AND WARRANTS**





***Common
      Stock Purchase Options***





During
      the quarter ended September 30, 2007, Wherify issued 1,954,000 options to
      purchase its common stock to its employees. These options are for a term of
      ten
      years, have exercise price range from $0.11 to $0.20 and vest over four years.
      Fair value of $150,015 was calculated using the Black-Scholes Model. Variables
      used in the Black-Scholes option-pricing model include (1) discount rate range
      from 4.13% to 4.90%, (2) option life is the expected term of the options; (3)
      expected volatility range from 168.57% to 279.29%, and (4) zero expected
      dividends.





During
      the quarter ended September 30, 2007, Wherify recognized option expense of
      approximately $88,000 related to the outstanding stock options according to
      the
      provisions of SFAS 123R, using the modified-prospective transition
      method.





7




***Common
      Stock Purchase Warrants***





The
      1,764,063 warrants granted by Wherify to its investors under the Series B
      Convertible Stock offering are for a term of five years, have an exercise price
      of the greater of 1) $0.16 or 2) 80% of the 10-days average trading prices
      immediately preceding the conversion date, but not more than $0.20 per share.
      Fair value of $301,759 was calculated using the Black-Scholes Model. Variables
      used in the Black-Scholes option-pricing model include (1) discount rate range
      from 4.25% to 4.6%, (2) warrant life is the contractual term of the warrants
      (five years); (3) expected volatility of 174.87%, and (4) zero expected
      dividends. The relative fair value of $238,064 was considered in the beneficial
      conversion feature calculation to determine the deemed dividend.





The
      705,625 warrants granted by Wherify to its placement agent under the Series
      B
      Convertible Stock offering are for a term of five years, have an exercise price
      of the greater of 1) $0.16 or 2) 80% of the 10-days average trading prices
      immediately preceding the conversion date, but not more than $0.20 per share.
      Fair value of $120,703 was calculated using the Black-Scholes Model. Variables
      used in the Black-Scholes option-pricing model include (1) discount rate range
      from 4.25% to 4.6%, (2) warrant life is the contractual term of the warrants
      (five years); (3) expected volatility of 174.87%, and (4) zero expected
      dividends.




8


**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. The 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 certain factors discussed in “Risk
      Factors” and elsewhere in this report.





Wherify’s
      auditor included a going concern paragraph in its audit report on Wherify’s
      financial statements for each of last two fiscal years. Wherify’s auditor has
      reported that Wherify has suffered net losses in the last two fiscal years
      and
      has a significant capital deficit that raises substantial doubt about its
      ability to continue as a going concern.





**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 business operations include the business operations of both
      Wherify California and Wherify, although as discussed below, the former business
      operations of Wherify, consisting primarily 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 on-going business operations
      of
      the combined company. Following is a summary of topics covered in this
“Management Discussion and Analysis of Financial Conditions and Results of
      Operation”.





A.
            Section
                1 entitled “Merger” provides a general discussion regarding the
                merger.B.
            Section
                2 entitled “Management’s Discussion and Analysis of Financial Condition
                and Results of Operations” provides a discussion and analysis of financial
                condition and results of operation of Wherify for the three months
                ending
                September 30, 2007 and 2006.


C.
            Section
                3 entitled “General” includes a discussion of certain accounting policies
                and other matters of general
                applicability.





**1.**
            **Merger**





As
      noted
      above, on July 21, 2005, Wherify California was merged with a
      transitory special purpose subsidiary of Wherify and as a result Wherify
      California became a wholly owned subsidiary of Wherify. Upon the completion
      of
      the merger, shareholders of Wherify California received 4.8021 shares of Wherify
      common stock for each share of Wherify California common or preferred stock,
      and
      Wherify California stock options were assumed by Wherify and converted into
      options to acquire a number of shares of Wherify common stock equal to the
      number of shares of Wherify California common stock underlying each such option
      multiplied by the exchange ratio of 4.8021. As a result, Wherify issued or
      reserved for the future issuance an aggregate of approximately 46 million shares
      of its common stock in consideration for all the outstanding shares, options
      and
      warrants issued by Wherify California, which represented approximately 78.8
      % of
      the total number of shares of Wherify common stock calculated on a fully-diluted
      basis. Also subsequent to the merger, Wherify changed its name from “IQ
      Biometrix, Inc.” to “Wherify Wireless, Inc.” and shortly thereafter Wherify
      California changed its name from “Wherify Wireless, Inc.” to “Wherify
      California, Inc.”





The
      merger was treated as a reverse merger 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 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 those assets is allocated to
      goodwill. During the quarter December 31, 2005, Wherify, with the assistance
      of
      a third party, completed the purchase price allocation and concluded that the
      value of the identifiable assets was $2.2 million and the total amount of
      goodwill was $67.5 million. Following the finalization of the purchase price
      allocation, Wherify 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 Wherify in the quarter ended September 30, 2005. As of June 30,
      2006, we concluded that annual test of goodwill for impairment. As a result
      we
      determined that the carrying value of the goodwill at June 30, 2006 had become
      impaired and the remaining balance was written-off.




9




Our
      principal business activity consists 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 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 an only minimal significance
      to
      the future business of the combined company.





**2.**
            **Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations**





***A.***
            ***General***





Wherify
      Wireless, Inc. (“Wherify” or the “Company”) is a pioneering developer of
      patented wireless location products and services for family safety and business
      communications. Our portfolio of intellectual property includes our proprietary
      integration of the US Government’s Global Positioning System (GPS) and wireless
      communication technologies; our patented back-end location service; the
      WherifoneTM GPS locator phone which provides real-time location information and
      lets families with pre-teens, seniors, or those with special medical needs,
      stay
      connected and in contact with each other **** Our
      name,
      Wherify Wireless, reflects our mission and objective: verify the location of
      loved ones or possessions of value through wireless technology.





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





General
      and administrative expense includes general administrative, manufacturing,
      research and development, 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 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 consists
      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.





***B.***
            ***Liquidity
                and Capital Resources***




Wherify
      has incurred operating losses from continuing operations of approximately $1.5
      million for the three months ended September 30, 2007 and $3.7 million for
      the
      three months ended September 30, 2006. For the three months ended September
      30,
      2007 the net losses from operations were $2.2 million and $15.7 million during
      the comparable three month period ended September 30, 2006. Net cash used for
      operating activities during the three months ended September 30, 2007 and 2006
      was $2.2 million and $1.7 million, respectively. We have accumulated deficit
      of
      $155.9 million as of September 30, 2007. These conditions, among others, raise
      questions about our ability to fund our cash requirements from operations in
      the
      future or to continue operations as a going-concern.





As
      of
      September 30, 2007, Wherify had cash and cash equivalents of approximately
      $0.6
      million, restricted cash of $9,071 being utilized to cover letters of credit
      for
      a supplier, net receivables in the amount of $0.6 million, and other non-current
      assets for $0.8 million.





We
      have
      financed our operations through private offerings of our common stock, preferred
      stock, and debt borrowings.





On
      August
      1, 2007 and August 31, 2007 we sold an aggregate of 1,129 shares of Series
      B
      Convertible Adjustable Preferred Stock which is convertible into 7,056,250
      shares of common stock. In connection with this transaction we granted warrants
      to purchase 2,469,688 shares of common stock at a minimum exercise price of
      $0.16; but not greater than $0.20 at the conversion which, as of October 15,
      2007, has not accused. As a result of these financings Wherify received net
      proceeds of approximately $857,000.




We
      intend
      to pursue various sources of public and private financing to provide us greater
      flexibility and certainty with respect to our financing needs.




10




In
      order
      for the Company to continue operations and to properly execute the business
      model it has on hand, the Company has to raise money very quickly in order
      to
      cover its expenses and its obligations to creditors.





Wherify
      currently does not have any credit facility available to it. Wherify has
      financed its operations to date primarily through the issuance of shares of
      common and preferred stock and convertible debentures. There is going concern
      in
      auditors’ reports for the fiscal year ended June 30, 2007 and 2006. We continue
      in the process of locating financing sources to meet our financial needs and
      to
      provide a greater flexibility and certainty to our financing needs. Adequate
      funds may not be available on terms acceptable to us. If additional funds are
      raised through the issuance equity securities, we will need to amend our
      certificate of incorporation and increase the number of authorized shares of
      common stock. If funding is insufficient at any time in the future, we may
      be
      unable to continue the development of our products or services, take advantage
      of business opportunities or respond to competitive pressures, any of which
      could have material adverse effect on our financial position, results of
      operations and cash flows, or we may be unable to continue operations.





We
      do not
      have material capital leases or material commitments for capital expenditures
      but we have anticipated payments to note holders and contractual arrangements
      made to vendors and third parties for payments of services that are substantial
      thus impacting our cash position severely.





We
      expect
      operating losses and negative operating cash flows to continue for at least
      the
      next-nine to twelve months on the assumption that we continue our business
      plan
      to successfully sell our Wherifone product in both North America and
      internationally during the calendar year 2008. During October 2006, we launched
      our Wherifone product in the various markets are contingent on a number of
      factors, including establishing the distribution agreement in that country
      or
      territory with a qualified distributor, singing-up carrier to support the
      subsequent subscribers using our patented GPS-enabled locator services,
      arranging to produce adequate numbers of Wherifone through or contract
      manufacturer, and the market’s general acceptance of our Wherifone in a highly
      competitive and evolving market place for GPS-enabled locator services,
      including through cell phone-like devices. During this time leading up to new
      product launches we expect our operating costs to increase because of expected
      new product launch expenses not previously incurred that are related to new
      product brand development, marketing and other promotional activities; targeted
      increases in personnel to support our critical new development launch
      activities; the expansion of our billing and collections infrastructure and
      customer support services concurrent with our growth in new product sales and
      subscriber sign-ups, strategic relationship development with our distributors
      and resellers and the working capital requirements needed to initially fill
      out
      our Wherifone product pipeline from our contract manufacturer to our final
      customers.





As
      of
      November 15, **** 2007 **,** we
      had
      cash and cash equivalents of approximately $0.1 million **.** We
      believe that our cash balance will be adequate to continue our current business
      plan into December 2007.





We
      require additional capital in order to successfully operate our business.
      Significant additional funding will be required throughout 2007 and 2008 to
      continue operations. There is no guarantee that we will be able to obtain
      future funding or if we do obtain future funds they will be adequate to
      continue our operations.




**Results
      of Operations**





*Three
      Months Ended September 30, 2007 Compared to Three Months Ended September 30,
      2006*




Net
      revenues for the three months ended September 30, 2007 were $785,583 and were
      primarily generated by Wherifone and related products of $744,295 and $41,288
      for FACES. Net revenues for three months ended September 30, 2006 was $184,321
      which included $134,001 of WherifoneTM product
      sales and $50,320 of sales related to the FACES products.





Operating
      expenses for the three months ended September 30, 2007 were $1.7 million versus
      $3.9 million for the three months ended September 30, 2006. The decrease in
      expenses were caused by the following:





·
            The
                Company recognized more stock-based compensation expense under the
                implementation of SFAS 123R in the quarter ended September 30,
                2006;


·
            Decreased
                marketing expenses;






11




·
            Decreased
                sales and administrative salaries, government filing fees and cost
                associated with customer service management;


·
            Significant
                inventory adjustment was recorded in 2006;
                and


·
            Engineering
                and development expenses were approximately $0.1 million for the
                three
                months ended September 30, 2007 versus approximately $0.4 million
                for the
                three months ended September 30, 2006. In 2006, the Company spent
                more in
                product development and preparation for the product launch ofWherifoneTMproducts.





Amortization
      and depreciation increased by approximately $0.1 million due to the amortization
      of deferred financing costs related to the debt financing.





We evaluated the application of EITF 00-19-2 for all its financial instruments
      and
      determined that certain warrants to purchase common stock issued by Wherify
      associated with the secured convertible debentures in March 2006 no longer
      qualified to be classified as derivative liabilities. No derivative gain or
      loss
      was recorded in the quarter ended September 30, 2007.





Interest
      and other expense increased by approximately $0.2 million from the prior
      quarterly period amount primarily due to costs and interest charges related
      to
      secured debentures of $5.0 million issued in March 2006 and for the Notes
      Payable issued in February and June 2006 for an aggregate total of $2.0 million.
      Interest expense accrued on the $2.0 million loan to-date is approximately
      $0.3
      million.





**3.**
            **General**





***A.***
            ***Critical
                Accounting Policies***





***Long-Lived
      Intangible Assets***





The
      Company accounts for long-lived assets under SFAS No. 144, “Accounting for the
      Impairment or Disposal of Long-Lived Assets” which requires the Company to
      review for impairment of long-lived assets whenever events or changes in
      circumstances indicate that the carrying amount of an asset might not be
      recoverable. When such an event occurs, management determines whether there
      has
      been impairment by comparing the anticipated undiscounted future net cash flows
      to the related asset’s carrying value. If an asset is considered impaired, the
      asset is written down to fair value, which is determined based on discounted
      cash flows or appraised value, depending on the nature of the
      asset.





Long-lived
      intangible assets consist of acquired customer lists and acquired software
      and
      software intellectual property, and development of new software products and
      enhancements to existing software products. Until technological feasibility
      is
      established, costs associated with software development, including costs
      associated with the acquisition of intellectual property relating to software
      development is expensed as incurred. After technological feasibility is
      established computer software costs that are then incurred are capitalized
      in
      accordance with the provisions of SFAS No. 86 “Accounting for the Costs of
      Computer Software to be Sold, Leased or Otherwise Marketed”. Amortization of
      these capitalized costs is provided using the greater of the ratio of revenues
      generated in the period over total future revenues of the product, or the
      straight-line method over the estimated market life of the related products,
      generally three years, commencing when the product becomes generally available
      to customers. For the *Software
      Revenue Recognition* .
      Revenue
      is recognized when persuasive evidence of an fiscal year ended June 30, 2007,
      technical feasibility and consumer availability had not yet been established
      for
      the Company’s product.





***Revenue
      Recognition***





Wherify
      adopted revenue recognition policies to comply with the guidance of Staff
      Accounting Bulletin (“SAB”) No. 104, *Revenue
      Recognition* ,
      SAB
      Topic 13, *Revenue
      Recognition,* FASB’s
      Emerging Issues Task Force (“EITF”) Issue -00-21, *Revenue
      Arrangements With Multiple Deliverables* ,
      and
      AICPA Statement of Position (“SOP”) 97-2, arrangement exists, the delivery and
      acceptance of the equipment has occurred or services have been
      rendered, the price is fixed or determinable, and the collectibility of payment
      is reasonably assured. The application of this guidance requires management
      to
      exercise judgment in evaluating these factors in light of the terms and
      conditions of its customer contracts and other existing facts and circumstances
      to determine appropriate revenue recognition. Application of 97-2 requires
      determining whether a software arrangement includes multiple elements, and
      if
      so, whether vendor -specific objective evidence (VSOE) of fair value exists
      for
      those elements. Change to the elements in a software arrangement, the ability
      to
      identify VSOE for those elements, the fair value of the respective elements,
      and
      changes in a product’s estimated life cycle, could materially impact the amount
      of earned and unearned revenue, Judgment is also required to assess whether
      future releases of certain software represent new products or upgrades and
      enhancements to existing products. Applications of EITF 00-21 requires
      determining whether a revenue arrangements includes multiple revenue-generating
      activities, such as product sale and services, and if so whether allocation
      of
      the arrangement’s consideration is required to more than one unit of
      accounting.




12




Wherify
      has two types of revenue: hardware revenue and subscription revenue and consists
      of shipped customer orders and completed services. Hardware revenue is
      recognized at the later of shipment date or upon satisfying contractual
      requirements or obligations under the sales contract, whichever is later.
      Subscription revenue is recognized at completion of performance. Prior to
      September 2006, the Company recognized revenues primarily from the sale of
      FACES
      software and subscription. Starting in September 2006 recognized revenues are
      primarily from the sale of wireless location devices and services. Revenues
      are
      also offset with a reserve for any price refunds and consumer rebates consistent
      with the EITF Issue 01-09. *Accounting
      for Consideration Given by a Vendor to a Customer* ,
      as
      appropriate.





Hardware
      sales currently consist principally or revenues from the sale of GPS-enabled
      wireless location devices, primarily Wherify’s handsets plus accessories to new
      subscribers and to agents and other third-party distributors. The revenue and
      related expenses associated with the sale of wireless handsets and accessories
      through our indirect sales channels are recognized when the products from the
      sales channels are recognized when the products are delivered and accepted
      by
      the agent or third party distributor, as this is considered to be a separate
      earnings process from the sale of wireless services and the probability of
      collection is likely. Shipping and handling costs for wireless handsets sold
      to
      agents and to other third-party distributors are classified as costs of
      equipment sales.





Subscription
      revenues are earned by providing to Wherify’s wireless GPS-enable location
      services network (activation revenue) and for usage of its wireless
      telecommunications system enhanced GPS-enabled locates (airtime revenue).
      Activation revenue from postpaid subscribers is billed either in advance or
      arrears and recognized ratably over the service period. Airtime revenue,
      including locates, call time, roaming revenue and long-distance revenue, is
      billed in arrears based on minutes of use and is recognized when the service
      is
      rendered. Prepaid airtime sold to subscribers and revenue collected from pay-in
      advance subscribers is recorded as deferred revenue prior to the commencement
      of
      services, and revenue is recognized when airtime is used or expires. Activation
      and airtime services provided are billed throughout the month according to
      the
      bill cycle in which a particular subscriber is placed. As a result of bill
      cycle
      cut-off times, the Company is required to make estimates for service
      revenues earned but not yet billed at the end of each month, and or advanced
      billings. Estimates for activation revenues are based upon the most current
      bill
      cycle revenues. Estimates for airtime revenues are based upon historical minutes
      of use.





The
      Company launched its North American wireless location services in October 2006.
      The Company’s North American subscribers’ rate plan include a feature whereby a
      subscriber’s monthly usage is automatically charged at the most advantageous
      rate plan then in effect for the minutes used. For prepaid plans, the Company
      defers revenue based on an estimate of the portion of unused minutes expected
      to
      be utilized prior to expiration. As the Company lacks historical subscriber
      usage patterns for its specialized services, the Company must apply judgment
      to
      estimate the number of unused minutes to be utilized, as well as those which
      are
      likely to expire or be forfeited. No deferral of revenue is recorded for the
      minutes expected to expire or to be forfeited, as no future performance is
      expected to be required by the Company, nor is there any obligation to refund
      or
      redeem for the value expired minutes. The balance of the deferred phone sales
      and activation fees as of September 30, 2007 and June 30, 2007 was $80,563
      and
      $76,852 respectively, and has been included in deferred revenue in the
      consolidated balance sheets. When available, revenues for enhanced services
      and
      optional features would be recognized as earned. Service revenues also include
      billings to our subscribers for Universal Service fund (USF) and other
      regulatory fees.





The
      Company has determined that the sale of wireless services through its direct
      sales channels with an accompanying handset constitutes a revenue arrangement
      with multiple deliverables in accordance with EITF No.00-21, *Accounting
      for Revenue Arrangements With Multiple Deliverables* .
      The
      Company accounts for these arrangements as separate units of accounting,
      including the wireless service and handset. Arrangement consideration received
      for the handset is recognized as equipment sales when the handset is delivered
      and accepted by the subscriber. Arrangement consideration received for the
      wireless service is recognized a service revenues when earned. As the
      non-refundable, up-front activation fee charged to the subscriber does not
      meet
      the criteria as a separate unit of accounting, the Company allocates the
      additional arrangement consideration received from the activation fee to the
      handset (then delivered item) to the extent that the aggregate handset and
      activation fee proceeds do not exceed the fair value of the handset. Any
      activation fees not allocated to the handset would be deferred upon activation
      and recognized as service revenue on a straight-line basis over the expected
      customer relationship period. The Company determined that the sale of wireless
      services through direct channels (agents) does not constitute a revenue
      arrangement with multiple deliverables. For indirect channel sales, the Company
      continues to defer non-refundable, up-front activation fees and costs to the
      extent of the related revenues in accordance with SAB No. 104, *Revenue
      Recognition* .
      These
      deferred fees and costs are amortized on a straight-line basis over the
      estimated customer relationship period, the contract period.




13




***Stock
      Based Compensation***





Prior
      to
      January 1, 2006, the Company accounted for stock based compensation under
      Statement of Financial Accounting Standards No. 123 Accounting for Stock-Based
      Compensation (“FAS 123”). As permitted under this standard, compensation cost
      was recognized using the intrinsic value method described in Accounting
      Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB
      25”). Effective January 1, 2006, the Company has adopted Statement of Financial
      Accounting Standards No. 123 (Revised 2004), Share-Based Payment (“FAS 123R”)
      and applied the provisions of the Securities and Exchange Commission Staff
      Accounting Bulletin No. 107 using the modified-prospective transition method.
      Prior periods were not restated to reflect the impact of adopting the new
      standard. As a result of the adoption of FAS 123R, stock-based compensation
      expense recognized during the six months ended June 30, 2006 includes
      compensation expense for all share-based payments granted on or prior to, but
      not yet vested as of January 1, 2006, based on the grant date fair value
      estimated in accordance with the original provisions of FAS 123, and
      compensation cost for all share-based payments granted on or subsequent to
      January 1, 2006, based on the grant date fair vale estimated in accordance
      with
      the provisions of FAS 123R .





***Derivative
      Financial Instruments***





The
      Company does not use derivative instruments to hedge exposures to cash flow,
      market, or foreign currency risks. The Company evaluates all of it financial
      instruments to determine if such instruments are derivatives or contain features
      that qualify as embedded derivatives. For derivative financial instruments
      that are accounted for as liabilities, the derivative instrument is initially
      recorded at its fair value and is then re-valued at each reporting date, with
      changes in the fair value reported as charges or credits to income. For
      option-based derivative financial instruments, the Company uses the
      Black-Scholes Option-pricing Model to value the derivative instruments at
      inception and subsequent valuation dates. The classification of derivative
      instruments, including whether such instruments should be recorded as
      liabilities or as equity, is re-assessed at the end of each reporting period.
      Derivative instrument liabilities are classified in the balance sheet as current
      or non-current based on whether or not net-cash settlement of the derivative
      instrument could be required within 12 months of the balance sheet
      date.





***B.***
            ***Quantitative
                and Qualitative Disclosures About Market
                Risk***





Not
      applicable.





***C.***
            ***Off-Balance
                Sheet Arrangements***





We
      do not
      have any off-balance sheet arrangements that have or are reasonably likely
      to
      have a current or future effect on our financial condition, changes in financial
      condition, revenues or expenses, results of operations, liquidity, capital
      expenditures or capital resources that are material to our
      investors.




14


**Item
      3. Controls and Procedures**





We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed in our Exchange Act reports is recorded,
      processed, summarized, and reported within the time periods specified in the
      Securities and Exchange Commission’s rules and forms, and that such information
      is accumulated and communicated to our management, including our Chief Executive
      Officer and Chief Accounting Officer, as appropriate, to allow timely decisions
      regarding required disclosure based on the definition of “disclosure controls
      and procedures” in Rule 13a-15(e). In designing and evaluating the disclosure
      controls and procedures, our management recognized that any controls and
      procedures, no matter how well designed and operated, can provide only
      reasonable assurance of achieving the desired control objectives, and management
      necessarily was required to apply its judgment in evaluating the cost-benefit
      relationship of possible controls and procedures.





At
      the
      end of the period covered by this Quarterly Report on Form 10-QSB, we carried
      out an evaluation, under the supervision and with the participation of our
      management, including our Chief Executive Officer and Chief Accounting Officer,
      of the effectiveness of the design and operation of our disclosure controls
      and
      procedures. Based on the foregoing, our Chief Executive Officer and our Chief
      Accounting Officer concluded that our disclosure controls and procedures were
      not effective to ensure that all material information required to be disclosed
      in this Quarterly Report on Form 10-QSB has been made known to them in a timely
      fashion. In connection with the completion of its audit of, and the issuance
      of
      its report on, our financial statements for the quarter ended September 30,
      2007, Malone & Bailey, PC identified deficiencies that existed in the design
      or operation of our internal control over financial reporting that it considers
      to be “material weaknesses.” The Public Company Accounting Oversight Board has
      defined a material weakness as a “significant deficiency or combination of
      significant deficiencies that results in more than a remote likelihood that
      a
      material misstatement of the annual or interim financial statements will not
      be
      prevented or detected.”





The
      deficiencies in our internal control related to inventory observation, expense
      recognition, derivative instruments valuation and disclosure control
      deficiencies related to transactions involving stock-based compensation and
      income taxes. These deficiencies have been disclosed to our Board of Directors
      and Audit Committee Members. Additional effort is needed to fully remedy these
      deficiencies and we are continuing our efforts to improve and strengthen our
      control processes and procedures. We are in the process of improving our
      internal control over financial reporting in an effort to remediate these
      deficiencies by improving supervision and increasing training of our accounting
      staff with respect to generally accepted accounting principles, providing
      additional training to our management regarding use of estimates in accordance
      with generally accepted accounting principles, increasing the use of contract
      accounting assistance, adding additional accounting personnel to assist in
      inventory and financial instrument valuations, and increasing the frequency
      of
      internal financial statement review.





***Changes
      in Internal Controls Over Financial Reporting***





During
      the fiscal quarter ending September 30, 2007, there were no changes in internal
      controls over financial reporting that have materially affected, or are
      reasonably likely to materially affect, our internal controls over financial
      reporting.




15


PART
      II
–OTHER
      INFORMATION





**Item
      6. Exhibits**





Exhibit
                No.
            
            Description31.1
            
            Principal
                Executive Officer Certification Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200231.2
            
            Principal
                Financial Officer Certification Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 200232.1
            
            Principal
                Executive Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                200232.2
            
            Principal
                Financial Officer Certification Pursuant to 18 U.S.C. Section 1350,
                as
                adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002




16




**SIGNATURES**





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





WHERIFY
                WIRELESS, INC.Date
                November 19, 2007
            /s/
                Vincent SheeranVincent
                Sheeran, Chief Executive Officer(Principal
                Executive Officer)Date
                November 19, 2007
            /s/
                Edna CarterEdna
                Carter, Chief Accounting Officer and Controller(Principal
                Financial Officer)





17