SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB

[ X ]  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE  SECURITIES
        EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2007

[   ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(D) OF THE  SECURITIES
       EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER 000-29249

                              True Product ID, Inc.
             (Exact name of registrant as specified in its charter)

                Delaware                                     16-1499611
  (State or other jurisdiction of incorporation          (I.R.S. Employer
   or organization)                                       Identification No.)

                 1615 Walnut Street, 3rd Floor
                 Philadelphia, PA                              19103
                (Address of principal executive offices)    (Zip Code)

                  Registrant's telephone number, including area
                               code: 215-972-1601


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

                         Common Stock, $0.001 par value
                                (Title of Class)

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

As of February 2, 2008 there were 975,622,336 shares of the registrant's Common
Stock outstanding.

Indicated by check mark whether the registrant is a shell company (as defined by
Rule 12b-2 of the Exchange Act). Yes     No   X
                                     ---    ----

<PAGE>




TRUE PRODUCT ID, INC.

(A DELAWARE CORPORATION)

PHILADELPHIA, PENNSYLVANIA



TABLE OF CONTENTS
--------------------------------------------------------------------------------


Consolidated Balance Sheets at December 31, 2007 (Unaudited) and
June 30, 2007                                                               F-2

Consolidated Statements of Operations for the Three Months Ended
December 31, 2007 and 2006 (Unaudited)                                      F-3

Consolidated Statements of Cash Flows for the Six Months Ended
December 31, 2007 and 2006 (Unaudited)                                      F-4

Notes to Consolidated Financial Statements                                  F-5








<PAGE>

<TABLE>

<CAPTION>


TRUE PRODUCT ID, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Philadelphia, Pennsylvania
CONSOLIDATED BALANCE SHEETS
-------------------------------------------------------------------------- --------------------- --- ------------------
                                                                               (Unaudited)
                                                                               December 31,               June 30,
                                                                                   2007                    2007
-------------------------------------------------------------------------- --------------------- --- ------------------
<S>                                                                             <C>              <C> <C>

ASSETS

Current Assets
Cash and Cash Equivalents                                                          $    72,480            $    42,774
Accounts Receivable                                                                    173,956                 31,806
Other Current Assets                                                                     1,285                  2,933
-------------------------------------------------------------------------- --------------------- --- ------------------

Total Current Assets                                                                   247,721                 77,513

Fixed Assets - Net of Accumulated Depreciation                                         148,578                136,305
Interest Receivable - Related Party                                                     38,813                 30,188
Note Receivable - Related Party                                                        300,000                300,000
Intangible Assets - Net of Accumulated Amortization                                 17,601,098             17,601,191
Technology License - Net of Accumulated Amortization                                   491,620                521,566
-------------------------------------------------------------------------- --------------------- --- ------------------

Total Assets                                                                       $18,827,830            $18,666,763
-------------------------------------------------------------------------- --------------------- --- ------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts Payable and Accrued Expenses                                              $ 1,572,280            $ 1,345,642
Current portion of capital lease                                                        42,171                  7,351
Note Payable                                                                           246,836                219,410
-------------------------------------------------------------------------- --------------------- --- ------------------

Total Current Liabilities                                                            1,861,287              1,572,403

Other Liabilities
Note Payable - SSTY                                                                          -              1,095,590
Long-term portion of capital lease                                                           -                 35,989
Accrued Expenses - Related Party                                                       521,500                521,500
Due to Related Party                                                                   176,240                176,240

Convertible Debenture                                                                  500,000                500,000
-------------------------------------------------------------------------- --------------------- --- ------------------
Total Liabilities                                                                    3,059,027              3,901,722
-------------------------------------------------------------------------- --------------------- --- ------------------

Minority Interest                                                                     (212,741)              (124,466)

Stockholders' Equity
Common Stock:  $.001 Par; 1,000,000,000 Shares Authorized; 978,714,159
and 440,622,336
Shares Issued and Outstanding, respectively                                            978,714                440,622
Additional Paid-In Capital                                                          47,406,860             23,123,913
Accumulated Deficit                                                                (32,378,771)            (8,663,876)
-------------------------------------------------------------------------- --------------------- --- ------------------
                                                                                    15,944,239             14,900,659
Less: Stock Held in Trust                                                                1,500                  1,500
Accumulated other comprehensive loss                                                   (23,759)                (9,652)
-------------------------------------------------------------------------- --------------------- --- ------------------
Total Stockholders' Equity                                                          15,981,544             14,889,507

-------------------------------------------------------------------------- --------------------- --- ------------------
Total Liabilities and Stockholders' Equity                                         $18,827,830            $18,666,763
-------------------------------------------------------------------------- --------------------- --- ------------------

</TABLE>



                                      F-2
<PAGE>

<TABLE>

<CAPTION>


TRUE PRODUCT ID, INC. (formerly ONTV, Inc.)
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Philadelphia, Pennsylvania

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Cumulative
                                                    Three Months Ended December    Six Months Ended December 31,        Since
                                                                31,                                                Reorganization
                                                                                                                  (October 1, 2005
                                                                                                                   to December 31,
                                                             2007            2006            2007           2006        2007)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------
<S>                                                <C>             <C>             <C>             <C>            <C>

Revenues, Net of Returns                            $           -    $          -   $           -        $     -      $           -
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

Expenses
Amortization and depreciation                              23,020          14,973          46,011         29,946            128,373
Technology License Fee                                          -         225,000               -        450,000            637,500
Officer and Director Compensation                       8,390,000       5,092,248       9,157,500      5,292,248         15,213,081
Consulting fees                                        15,662,550               -      15,681,435         79,605         15,791,230
Other                                                     314,958          42,322         552,352         84,293            914,345
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------
Total Expenses                                         24,390,528       5,374,543      25,437,298      5,936,092         32,684,529
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

Loss Before Other Income and
 Provision for Income Taxes                          (24,390,528)     (5,374,543)    (25,437,298)    (5,936,092)       (32,684,529)

Other Income
Loss on Equity Investment                                      -               -               -              -            (65,513)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------
Interest Expense                                          (10,082)             -          (21,631)                          (40,827)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------
Interest Income - Related Party                             4,313           4,313           8,626         8,626              38,814
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------
Interest Income                                                 -               -                                               197
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------
Forgiveness of Liabilities                              1,583,753           4,313       1,583,753          8,626          1,583,753
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

Loss Before Provision for Income Taxes                (22,812,544)     (5,370,230)    (23,866,550)    (5,927,466)       (31,168,105)

Provision for Income Taxes                                      -               -               -              -                  -
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

Loss from Operations                                  (22,812,544)     (5,370,230)    (23,866,550)    (5,927,466)       (31,168,105)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------
Minority Interest                                          85,711                         151,655                           178,933
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

Discontinued Operations
Loss from Operations of Disposed Subsidiaries, Net              -               -               -              -            (10,245)
of Taxes
Loss from Disposal of Subsidiaries, Net of Taxes                -               -               -              -           (523,983)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

Loss from Discontinued Operations                               -               -               -              -           (534,228)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

Net Loss for the Period                              $(22,726,833)    $(5,370,230)   $(23,714,895)   $(5,927,466)      $(31,523,400)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

Other Comprehensive Loss:
Foreign Currency Translation Adjustment                   (10,484)              -         (14,107)             -            (23,759)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

Total Comprehensive Income                           $(22,737,317)    $(5,370,230)   $(23,729,002)   $(5,927,466)      $(31,547,159)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

EARNINGS PER SHARE
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

Weighted Average Number of Common Shares              764,979,363     300,956,702     605,246,502    279,746,960        978,714,159
Outstanding - Basic and Diluted

Earnings Per Common Share - Basic and Diluted
  Loss from Operations                              $      (0.03)      $   (0.02)      $   (0.04)     $   (0.02)      $       (0.03)
  Loss from Discontinued Operations                        (0.00)          (0.00)          (0.00)         (0.00)              (0.00)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------
Net Loss                                            $      (0.03)      $   (0.02)      $   (0.04)      $  (0.02)      $       (0.03)
-------------------------------------------------- --------------- --------------- --------------- -------------- ------------------

</TABLE>


                                      F-3
<PAGE>

<TABLE>

<CAPTION>


TRUE PRODUCT ID, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Philadelphia, Pennsylvania

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
----------------------------------------------------------------------------------- --------------------- -----------------------
                                                                                                               Cumulative
                                                                                                          Since Reorganization
                                                                                                            (October 1, 2005
Six Months Ended September 30,                                               2007                  2006   To December 31, 2007)
------------------------------------------------------------- --------------------- --------------------- -----------------------
<S>                                                           <C>                   <C>                   <C>

Cash Flows Used by Operating Activities

Net Loss for the Period                                              $(23,714,895)          $(5,927,466)           $(31,523,400)

Adjustments to Reconcile Net Loss for the Period To Net
Cash Flows from Operating Activities:

Depreciation and amortization                                              46,104                29,946                 128,466
Stock based compensation                                                8,925,000             4,892,248              13,927,248
Issuance of common stock for consulting fees                           15,600,000                62,500              15,662,500
Forgiveness of Liabilities                                             (1,583,753)                    -              (1,583,753)
Loss from Equity Investment                                                     -                     -                  65,513
Loss on Disposal of Subsidiaries                                                -                     -                 523,983
Loss from Operations of Disposed
Subsidiaries                                                                    -                     -                  10,245
Foreign Currency Translation                                              (14,107)                    -                 (23,759)
Minority Interest                                                        (151,655)                    -                (178,934)

Changes in Assets and Liabilities:
Accounts Receivable                                                      (142,150)                    -                (142,550)
Other Current Assets                                                        1,648                     -                     401
Interest Receivable - Related Party                                        (8,626)               (8,625)                (38,814)
Accounts Payable and Accrued Expenses                                     689,776               951,925               2,295,940
Accrued Expenses - Related Party                                                -                     -                  87,500
------------------------------------------------------------- --------------------- --------------------- -----------------------

Net Cash Flows Used by Operating Activities                              (352,658)                  528                (789,414)
------------------------------------------------------------- --------------------- --------------------- -----------------------

Cash Flows from Financing Activities
Proceeds from Sale of Convertible Debentures                                    -                     -                 500,000
Proceeds from Equity Financing by Chinese Venture                         158,450                     -                 204,464
Proceeds from Equity Financing                                            200,969                     -                 200,969
Proceeds from Line of Credit                                               52,451                     -                  52,451
Repayment of Debt                                                          (1,170)                    -                (102,886)
------------------------------------------------------------- --------------------- --------------------- -----------------------

Net Cash Flows From Financing Activities                                  410,700                     -                 854,998
------------------------------------------------------------- --------------------- --------------------- -----------------------

Cash Flows from Investing Activities
Cash and Cash Equivalents in Acquired Entity                                    -                     -                  43,423
Purchase of Fixed Assets                                                  (28,336)                    -                 (36,527)
Cash and Cash Equivalents in Disposed
Subsidiaries                                                                    -                     -                 (50,823)
------------------------------------------------------------- --------------------- --------------------- -----------------------

Net Cash Flows From Investing Activities                                  (28,336)                    -                 (43,927)
------------------------------------------------------------- --------------------- --------------------- -----------------------

Net Change in Cash and Cash Equivalents                                    29,706                   528                  21,657

Cash and Cash Equivalents - Beginning Year                                 42,774                     -                  50,823
------------------------------------------------------------- --------------------- --------------------- -----------------------

Cash and Cash Equivalents - End of Period                            $     72,480           $       528            $     72,480
------------------------------------------------------------- --------------------- --------------------- -----------------------

SUPPLEMENTAL DISCLOSURES
---------------------------------------------------------------- --------------------- ------------------ -----------------------
---------------------------------------------------------------- --------------------- ------------------ -----------------------

Interest Paid                                                        $        789           $         -            $      2,012
Income Taxes Paid                                                    $          -           $         -            $          -
---------------------------------------------------------------- --------------------- ------------------ -----------------------
---------------------------------------------------------------- --------------------- ------------------ -----------------------

</TABLE>



                                      F-4
<PAGE>

<TABLE>

<CAPTION>


TRUE PRODUCT ID, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Philadelphia, Pennsylvania


CONSOLIDATED STATEMENTS OF CASH FLOWS - continued
--------------------------------------------------------------------------------- ------------------ ----------------------------
-------------------------------------------------------------- ------------------ ------------------ ----------------------------
                                                                                                             Cumulative
                                                                                                        Since Reorganization
                                                                                                          (October 1, 2005
Six Months Ended December 31,                                               2007              2006      To December 31, 2007
-------------------------------------------------------------- ------------------ ------------------ ----------------------------
<S>                                                            <C>                <C>                <C>

NON-CASH INVESTING AND FINANCING ACTIVITIES
-------------------------------------------------------------- ------------------ ------------------ ----------------------------
-------------------------------------------------------------- ------------------ ------------------ ----------------------------

Issuance of Common Stock as Part of Consulting Agreement       $ 15,600,000       $     --           $ 15,662,500

Issuance of Common Stock and Notes Payable and Elimination     $       --         $     --           $ 17,597,500
of Accrued Royalty as Part of Acquisition of 60% Interest in
Chinese Joint Venture

Issuance of Common Stock to Executive Officers as Part of      $  8,325,000       $     --           $ 13,217,248
Services and Employment Agreements

Issuance of Common Stock to Director for Compensation for      $    600,000       $     --           $    710,000
His Services

Sale of Subsidiary via the Issuance of Note Receivable         $       --         $     --           $    300,000

Issuance of Common and Preferred Stock for Acquisition of      $       --         $     --           $    598,927
Technology License

Assets and Liabilities Transferred to Related Party
  in Connection with Sale of Subsidiaries:
  Cash and Cash Equivalents                                    $       --         $     --           $     50,823
  Inventory                                                    $       --         $     --           $    296,544
  Property and Equipment                                       $       --         $     --           $     54,189
  Accounts Receivable - Related Party                          $       --         $     --           $     37,850
  Deposits                                                     $       --         $     --           $      6,667
  Due from Officer                                             $       --         $     --           $     82,193
  Intangible Assets                                            $       --         $     --           $    260,542
  Investments in Affiliates                                    $       --         $     --           $    107,561
  Accounts Payable and Accrued Expenses                        $       --         $     --           $   (210,769)
  Debt                                                         $       --         $     --           $     (6,321)
  Due to Related Party                                         $       --         $     --           $    137,240
  Treasury Stock                                               $       --         $     --           $     17,709
-------------------------------------------------------------- ------------------ ------------------ ----------------------------

</TABLE>




                                      F-5
<PAGE>



TRUE PRODUCT ID, INC.

(A DELAWARE CORPORATION)

PHILADELPHIA, PENNSYLVANIA

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION


The condensed  consolidated financial statements of True Product ID, Inc. ("TPID
US") and its  subsidiaries  (collectively,  the "Company")  included herein have
been prepared by the Company  pursuant to the rules and  regulations of the U.S.
Securities and Exchange  Commission (the "SEC").  Subsequent to TPID US' May 11,
2007  acquisition  of an additional  20%  ownership  interest in True Product ID
Technology  (Beijing)  Limited  (the  "Chinese  JV  Company")  raising  TPID US'
ownership  interest  in the Chinese JV Company to 60% and giving TPID US control
of the  Chinese JV  Company,  the  accounts  of the Chinese JV Company are fully
consolidated with the accompanying minority interest reflected. Prior to May 11,
2007 but  subsequent to TPID US'  acquisition of its January 5, 2007 initial 40%
ownership of the Chinese JV Company,  TPID US accounted for its investment under
the equity method of  accounting  whereby TPID US  recognized  its  proportional
share  of the  Chinese  JV  Company's  net  income  / loss on the  Statement  of
Operations  under  the  caption  "Loss  on  Equity  Investment".   All  material
inter-company  transactions have been eliminated in consolidation.  It is noted,
however,  MacKay Group  Limited  ("MKG") has agreed (1) to assign to TPID US the
rights MKG has regarding  the advances and loans in the amount of  approximately
US$1,000,000  which MKG made to the Chinese JV Company prior to November 7, 2007
(the "MKG $1 Million  Advance")  and (2) to forgiven any debt which MKG may have
directly  vis-a-vis  TPID US as a result of the MKG $1  Million  Advance  and/or
MKG's assignment to TPID US related thereto. Accordingly, any right that MKG may
have vis-a-vis the Chinese JV Company as a result of the MKG $1 Million  Advance
(whether in the form of repayment,  increased capital,  some combination of both
or  otherwise) , has been  assigned to TPID US and should be considered an asset
of TPID US. Similarly, as of November 16, 2007, MKG had forgiven any debt it may
be owed by TPID US as a result of the  above-mentioned  assignment  (whether the
rights  being  assigned  took the form of  additional  capital in the Chinese JV
Company or otherwise).

In preparing its consolidated  financial  statements,  the Company included only
expenses and other financial  information of the consolidated Chinese JV Company
from May 2007.  It was May 2007 when TPID US  acquired  majority  ownership  and
control of the Chinese JV Company.  TPID US did not  include  the  expenses  and
other financial information of the consolidated Chinese JV Company for the whole
entire fiscal year.  This method of  presentation  is consistent with Accounting
Research Bulletin (ARB) 51, including paragraph 11 thereof.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in conjunction with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations,  although
the Company  believes that the  disclosures are adequate to make the information
presented not misleading.  These  condensed  consolidated  financial  statements
should be read in  conjunction  with the annual audited  consolidated  financial
statements  and the notes thereto  included in the Company's  Form 10-KSB Annual
Report and other reports filed with the SEC.

The accompanying unaudited interim consolidated financial statements reflect all
adjustments  of a normal  and  recurring  nature  which are,  in the  opinion of
management,  necessary  to present  fairly the  financial  position,  results of
operations and cash flows of the Company for the interim periods presented.  The
results of  operations or these periods are not  necessarily  comparable  to, or
indicative  of, results of any other interim period or for the fiscal year taken
as a whole.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued Statement of Financial  Accounting  Standards No.
157 ("SFAS No.  157"),  "Fair Value  Measurements."  SFAS No. 157  defines  fair
value,  establishes a framework for measuring  fair value and requires  enhanced
disclosures about fair value  measurements.  SFAS No. 157 requires  companies to
disclose the fair value of its financial  instruments  according to a fair value
hierarchy.  Additionally,  companies are required to provide certain disclosures
regarding  instruments  within the hierarchy,  including a reconciliation of the
beginning and ending balances for each major category of assets and liabilities.
SFAS 157 is effective for the Company's  fiscal year beginning July 1, 2007. The
adoption of SFAS No. 157 did not have a material effect on the Company's results
of operations, cash flows, or financial condition.

On February 15,  2007,  the FASB issued FASB  Statement  No. 159, The Fair Value
Option for Financial  Assets and Financial  Liabilities - Including an Amendment


                                      F-6
<PAGE>

of FASB Statement No. 115. This standard  permits an entity to choose to measure
many financial  instruments  and certain other items at fair value.  Most of the
provisions  in  Statement  159 are  elective;  however,  the  amendment  to FASB
Statement  No.  115,  Accounting  for  Certain  Investments  in Debt and  Equity
Securities,   applies  to  all  entities  with  available-for-sale  and  trading
securities.  The FASB's stated objective in issuing this standard is as follows:
"to improve  financial  reporting by providing  entities with the opportunity to
mitigate  volatility in reported earnings caused by measuring related assets and
liabilities  differently  without  having  to  apply  complex  hedge  accounting
provisions."  The fair value option  established  by  Statement  159 permits all
entities to choose to measure eligible items at fair value at specified election
dates. A business  entity will report  unrealized  gains and losses on items for
which the fair value option has been elected in earnings (or another performance
indicator if the business  entity does not report  earnings) at each  subsequent
reporting  date.  The  fair  value  option:  (a) may be  applied  instrument  by
instrument,  with a few exceptions,  such as investments otherwise accounted for
by the equity method;  (b) is  irrevocable  (unless a new election date occurs);
and  (c)  is  applied  only  to  entire  instruments  and  not  to  portions  of
instruments.  Statement  159 is effective as of the  beginning of the  Company's
fiscal 2008 (July 1, 2007).  The adoption of FASB  Statement  159 did not have a
material effect on the Company's results of operations, cash flows, or financial
condition.

On December 4, 2007,  the FASB issued FASB  Statement  No. 141  (Revised  2007),
Business  Combinations.  Statement 141R will significantly change the accounting
for business  combinations.  Under Statement  141R, an acquiring  entity will be
required to  recognize  all the assets  acquired  and  liabilities  assumed in a
transaction  at  the  acquisition-date   fair  value  with  limited  exceptions.
Statement   141R  also   includes  a  substantial   number  of  new   disclosure
requirements.  Statement 141 applies  prospectively to business combinations for
which the  acquisition  date is on or after the  beginning  of the first  annual
reporting  period  beginning on or after December 15, 2008.  Earlier adoption is
prohibited.

On December 4, 2007,  the FASB issued  FASB  Statement  No. 160,  Noncontrolling
Interests  in  Consolidated  Financial  Statements - An Amendment of ARB No. 51.
Statement  160  establishes  new  accounting  and  reporting  standards  for the
noncontrolling  interest  in a  subsidiary  and  for  the  deconsolidation  of a
subsidiary.   Specifically,   this  statement  requires  the  recognition  of  a
noncontrolling  interest  (minority  interest)  as  equity  in the  consolidated
financial  statements and separate from the parent's equity.  Statement 160 also
includes expanding disclosure requirements regarding the interests of the parent
and its  noncontrolling  interest.  Statement 160 is effective for fiscal years,
and interim  periods  within those fiscal years,  beginning on or after December
15, 2008. Like Statement 141R discussed  above,  earlier adoption is prohibited.
The  adoption  of SFAS No.  160 could have a  material  effect on the  Company's
results of operations, cash flows and financial condition. The Company is in the
process of assessing the requirements of the Statement.

NOTE B - DISCONTINUED OPERATIONS


In September 2005, the stockholders of the Company approved the sale of the Seen
OnTV, Inc.  subsidiary,  along with all of the Company's assets  associated with
the operations of Seen OnTV, Inc., which included all of the other  wholly-owned
subsidiaries,  to Daniel M. Fasano, who was at that time the Company's president
and  chairman  of the board.  Included  among the  Company  assets sold were the
domain name, asseenontv.com, which the Company purchased on January 14, 2000 for
$5,000,000. In return, Mr. Fasano agreed to pay the Company $300,000,  through a
Note Receivable bearing interest at 5.75% annually, and assume responsibility of
all of the Company's liabilities, including all potential outstanding litigation
liabilities,  except for any amounts  owed to Mr.  Fasano for accrued and unpaid
compensation and amounts owed to Seen OnTV, Inc. by ONTV, Inc. In addition,  25%
of the net,  after-tax income from the operations of Seen OnTV, Inc will be paid
to ONTV, Inc. until the purchase price, plus accrued interest,  is paid in full.
As a result of this sale to Fasano,  which closed on September  30, 2005,  ONTV,
Inc.  was not  conducting  any  business  but was merely a shell.  In March 2006
Fasano,  then  president  and  chairman  of the board of the  Company,  sold the
majority interest in the Company to Sure Trace Security Corporation ("SSTY") for
a total monetary consideration of $500,000,  plus the global rights, by way of a
master  license,  to SSTY's  anti-counterfeiting  technology.  In January  2007,
pursuant to a  Restructuring  Agreement  and Amended  Pay  Agreement,  the total
monetary consideration (then $500,000) paid to Fasano was increased by 6 million
restricted shares of the Company's common stock (valued at $1,320,000 on January
6, 2007, the issue date of the stock).


NOTE C - CHANGE IN CONTROL

SSTY's Acquisition of Majority Interest in ONTV


On March 16, 2006, the Company  acquired a technology  license  ("License") from
SSTY  for an  initial  term of five  years,  with an  automatic  renewal  for an
additional  five years.  (The License has since been  terminated.  See below and
Note G). The License granted the Company the worldwide rights to manufacture and
sell products  using SSTY's  "anti-counterfeiting  technology".  In exchange for
this License,  the Company issued  52,349,249  shares of common stock and 16,000
shares of  preferred  stock,  valued in total at  $598,927.  The License will be


                                      F-7
<PAGE>

amortized as a charge to operations on a straight-line  method over the ten-year
term of the License.


Estimated  annual  amortization  expense for the five years succeeding March 31,
2007 is as follows:

             2007          2008            2009            2010            2011
   --------------- ------------- --------------- --------------- ---------------
          $59,893       $59,893         $59,893         $59,893         $59,893
   --------------- ------------- --------------- --------------- ---------------


As more fully  discussed in Note G, in January 2007,  the License was terminated
pursuant to terms in a Restructuring Agreement with SSTY, among others.


On March 21, 2006,  Daniel M.  Fasano,  the  Company's  former  president  and a
director, sold 20,000 shares of the Series A Preferred Stock owned and under his
control, to SSTY, a related party.

As a result of the above  transactions,  there  was a change in  control  of the
Company,  as SSTY owned and/or controlled 78.8% of the outstanding  common stock
voting rights of the Company as of March 21, 2006.

An additional  154,919,125 shares were issued for the purchase of the technology
license.

The Spin-off of the Company from SSTY

In May 2006,  to  effectuate  the spin off of the Company  from its then parent,
SSTY,  the  stockholders  of SSTY were issued a stock dividend of 1 share of the
Company  for every 19 shares of SSTY  that  each  SSTY  stockholder  owned.  The
Payable Date for these  dividend  shares was May 30, 2006.  The Payable Date was
the date the  Company's  transfer  agent  issued and  mailed the stock  dividend
certificates  to SSTY  shareholders  as of the May 25,  2006 Record  Date.  Upon
completion  of  the  dividend  and  delivery  of the  dividend  shares  to  SSTY
shareholder,  the Company became a separate  stand-alone entity independent from
its former parent, SSTY.

NOTE D- THE MONIES OWED BY FASANO AS A RESULT OF THE SALE OF SEEN ON TV

In Fiscal Year 2007 there were also a note  receivable and interest  receivables
from a related party in the amounts of $300,000 and $30,188 respectively.  These
receivables  arose from the  September  2005 sale by the  Company to Dan Fasano,
then the president  and chairman of the board of the Company,  of all the shares
of  Seen  On TV and  other  assets  incidental  to the  business  of Seen On TV.
Included  in the sale was the domain  name,  asseenontv.com,  which the  Company
purchased in January 2000 for  $5,000,000.  In return for all the shares of Seen
On TV and other assets, including the domain name, asseenontv.com, Fasano agreed
to pay the Company $300,000 (the "Purchase Price") on the following terms:

o    25% of the net,  after-tax income from the operations of Seen On TV will be
     paid to the Company until the Purchase  Price,  plus accrued  interest,  is
     paid in full.

o    The unpaid amount of the Purchase  Price bears  interest at 5.75% per year.
     Interest will not be compounded.

o    Mr. Fasano may, at any time,  and in his sole  discretion,  elect to assume
     all or a certain  amount of the  Company's  liabilities,  in which case the
     Purchase Price will be reduced by the amount of any liabilities assumed.

o    Assume all of the Company's liabilities,  with the exception of any amounts
     owed to Mr. Fasano for accrued and unpaid compensation.

The sale was described in detail in the Company's Form 10-KSB filed November 11,
2005.  As a result of this sale to Fasano,  which closed on September  30, 2005,
ONTV, Inc. was not conducting any business but was merely a shell.


 In March 2006 Fasano,  then  president and chairman of the board of the Company
and owner of former  Company  assets,  Seen On TV and  Asseenontv.com,  sold the
majority  interest in the Company to SSTY for a total monetary  consideration of
$500,000,  plus  the  global  rights,  by way of a  master  license,  to  SSTY's
anti-counterfeiting  technology.  In January 2007,  pursuant to a  Restructuring
Agreement and Amended Pay  Agreement,  the total  monetary  consideration  (then
$500,000)  paid to Fasano was  increased by 6 million  restricted  shares of the
Company's  common stock (valued at $1,320,000 on January 6, 2007, the issue date
of the stock).


Contemporaneous with the January 2007 Restructuring Agreement, Fasano, SSTY, and



                                      F-8
<PAGE>

the Company  entered into an amendment to the March 21, 2007  agreement  between
SSTY and Fasano,  in which the Company agreed to assume the debt owed by SSTY to
Fasano in connection with the March 2006  acquisition by SSTY of the controlling
interest in the Company. The amendment, provided, inter alia:

                           6.  Subject  to the  terms  and  conditions  of  this
                  Amendment,  in  consideration of the payments and undertakings
                  described above and in further  consideration  which is hereby
                  acknowledged,  Fasano hereby  releases and forever  discharges
                  SSTY  and  TPID,  their  predecessors,   successors,  assigns,
                  affiliated companies, shareholders,  administrators, partners,
                  officers, directors,  employees, agents and attorneys from any
                  and all  claims  and  causes  of action  whatsoever,  known or
                  unknown,  foreseen or  unforeseen,  which any party has or may
                  have by  reason  of any  matter,  cause or  thing  whatsoever,
                  arising from the March 21, 2006 SSTY-Fasano  Agreement and the
                  ONTV  Acquisition,  from the beginning of the world to the day
                  of this  Agreement,  other  than those  obligations  set forth
                  herein.

                           7. This Amendment  contains the entire  Agreement and
                  understanding  between the Parties,  and  supersedes all prior
                  agreements and understandings between the Parties. . . .

On  October  31,  2007,  Fasano  filed  a pro  se  petition  for  the  statutory
appointment  of a receiver in the Delaware  Court of Chancery.  In his petition,
Fasano claims that the Company is insolvent  based, in part, due to in excess of
$900,000 he claims the Company owes him that remains  unpaid.  In its January 4,
2008 Answer to the Petition, the Company denied and continues to deny that it is
insolvent  and that the  appointment  of a receiver  is  required.  The  Company
explained  that  Fasano is a party to certain  agreements  pursuant to which the
Company  agreed to pay him certain monies that have not yet been fully paid. The
Company  went on to explain  that Fasano owes the Company in excess of $330,000,
which amount exceeds the amount which the Company believes Fasano is owed by the
Company pursuant to the aforementioned agreements. Specifically, in exchange for
acquiring from the Company its former subsidiary Seen on TV, Inc. ("Seen on TV")
and all of the assets of the Company associated therewith,  including the domain
name,  asseenontv.com,  Fasano,  then the president and chairman of the board of
the Company,  agreed in September 2005 to pay the Company a total of $300,000 by
paying the Company 25% of the net,  after-tax income from the operations of Seen
on TV, which amount would bear interest at 5.75% per year until it, plus accrued
interest,  was paid in full.  Fasano has never performed his  obligations  under
this contract.

This  litigation is being  vigorously  defended and the Company  believes it has
meritorious defenses.

NOTE E - EMPLOYMENT, CONSULTING AND SERVICE AGREEMENTS

Starting March 2006,  James MacKay  ("MacKay")  agreed to serve as the Company's
Chairman  of the  Board  of  Directors  for a  three-year  term  with an  annual
compensation  of $300,000.  As reported in the  Company's  Form  10-KSB/A  filed
November  13,  2006,  the Company and MacKay  entered  into a formal  consulting
agreement,  memorializing  their  arrangement  on November  11,  2006. A copy of
MacKay's November 11, 2006 Consulting  Agreement with the Company is attached as
an exhibit to the Company's  November 13, 2006 Form  10-KSB/A.  At September 30,
2007 Mr. MacKay was owed $462,500  representing all  compensation  earned by him
since he  joined  the  Company  (which,  as  discussed  below  MacKay  has since
forgiven).  On November  13, 2006 Mr.  MacKay  vested  39,559,961  shares of the
Company's common stock as part of the  aforementioned  Services  Agreement.  The
common  shares of the  Company's  stock  closed  trading on November 13, 2006 at
$0.07 per share  resulting in a valuation of  $2,769,197,  which was expensed in
the quarter ending  December 31, 2006. Mr.  MacKay's common shares vested to him
prior to the vesting of common shares to Mr. Bendis.

On March 12, 2007 James MacKay resigned as the interim Chairman of the Board and
a director of the Company.  The Company's Chief Executive Officer and President,
Richard A. Bendis,  replaced Mr. MacKay as the Chairman of the Board. Mr. MacKay
continued  to support  the  Company's  initiatives  in China and  elsewhere.  In
November  2007, the Company  reached an agreement,  which among other things Mr.
MacKay agreed to cancel in full the $462,500 of compensation  owed to him, among
other things.  See Form 8-K filed  November 15, 2007 and Note K - Forgiveness of
Liabilities.

In March 2006 the Company  entered into an Executive  Employment  Agreement with
Richard A. Bendis ("Bendis"), where Bendis will serve as the Company's President
and Chief Executive  Officer for a three-year term, with annual  compensation of
$500,000.  At  December  31,  2007 Mr.  Bendis  is owed  $708,333  and  $90,000,
respectively,  representing all compensation earned by him during his employment
with the Company and under his consulting  agreement with the Company subsequent
to his resignation from the Company respectively.  The aforementioned consulting
agreement  with Mr. Bendis was entered into on August 9, 2007 upon his voluntary


                                      F-9
<PAGE>

resignation  as the Company's  Chairman,  CEO, and  President.  In general,  the
consulting  agreement has a one-year term and provides  annual  compensation  of
$240,000.   Additionally,   accrued  liabilities  include  $64,911  for  Bendis,
representing  unreimbursed  expenditures  primarily for travel.  On November 13,
2006 Mr. Bendis vested  30,329,303  shares of the Company's common stock as part
of the aforementioned  Executive Employment Agreement.  The common shares of the
Company's stock closed trading on November 13, 2006 at $0.07 per share resulting
in a valuation of $2,123,051,  which was expensed in the quarter ending December
31, 2006.

On August 16, 2007 the Company  entered into an agreement  with Li Ning, the CEO
of the Chinese JV Company, to issue Li Ning ten million (10,000,000)  restricted
common  shares in return for his serving as a member of the  Company's  Board of
Directors and otherwise supporting the Company with regard to its initiatives in
China.  The common  shares of the Company's  stock closed  trading on August 16,
2007 at $0.06 per share resulting in a valuation of $600,000, which was expensed
in the first  fiscal  quarter  (September  30,  2007) of Fiscal  2008. A copy of
Registrant's  agreement  with Li Ning is attached to the Form 8-K (dated  August
17, 2007) as an exhibit.

On August  17,  2007 the  Company  announced  that to help best  facilitate  the
development of the Chinese markets,  (1) Richard A. Bendis voluntarily  resigned
as the Company's chairman,  CEO, and president and as a director of the Company;
(2) James MacKay  rejoined the Company as its chairman;  (3) Sergio Luz, who was
also involved in facilitating the development of the Chinese markets, joined the
Company as the Company's  president;  and (4) Li Ning, who is CEO of the Chinese
JV Company, joined the Company's Board.

On August 17, 2007 the Company's Board also approved that both Bendis and MacKay
shall have the right, but not the obligation,  to convert any monies (including,
but not limited to, wages,  consulting  fees, and expenses) they are owed by the
Company under their executive  employment and consulting  agreements into common
shares of the Company at a share price equal to the share price of the Company's
common stock at the close of the market on the date the Company  first  receives
funds  under the new MacKay  Group  Limited  line of credit.  On August 2, 2007,
US$12,500,  plus a US$35 wire fee, was  advanced by MacKay Group  Limited to the
Company.  The common shares of the Company's  stock closed  trading on August 2,
2007 at $0.05 per share.  The Board also authorizes the Company to amend Bendis'
and MacKay's  executive  employment and consulting  agreements  accordingly.  As
stated  above,  MacKay  has since  forgiven  compensation  owed to him under his
consulting agreement as of November 16, 2007.

On November 4, 2007 the Company's Board entered into an employment agreement and
appointed   William  R.  Dunavant  as  the  Company's  CEO.  James  MacKay  also
voluntarily  relinquished  his position as Chairman of the Board to Mr. Dunavant
who was  appointed  the new Chairman of the Board.  See the  Company's  Form 8-K
filed November 7, 2007 and attached employment agreement for Mr. Dunavant. Under
his employment  agreement with the Company,  Mr.  Dunavant is to receive,  among
other  things,  an  annual  salary  of  $240,000  and  two  million  (2,000,000)
restricted  shares of the Company's  common stock post reverse  split,  which is
anticipated to be closed in the next 30-90 days at a ratio of 100:1 (200 million
shares on a pre reverse split basis).  The common shares of the Company's  stock
closed trading on November 4, 2007 at $0.031 per share  resulting in a valuation
of  $6,200,000,  which was expensed in the second fiscal  quarter  (December 31,
2007) of Fiscal Year 2008.

On November 12, 2007 the Company's  Board  entered into an employment  agreement
and appointed Wilson W. Hendricks III as the Company's Chief Operating  Officer.
See the  Company's  Form 8-K filed  November  15, 2007 and  attached  employment
agreement for Mr.  Hendricks.  Under his employment  agreement with the Company,
Mr.  Hendricks is to receive,  among other things,  an annual salary of $150,000
and two hundred  fifty  thousand  (250,000)  restricted  shares of the Company's
common stock post reverse  split which is  anticipated  to be closed in the next
30-90 days at a ratio of 100:1 (25 million share son a pre reverse split basis).
The common shares of the Company's  stock closed trading on November 12, 2007 at
$0.085 per share  resulting in a valuation of $2,125,000,  which was expensed in
the second fiscal quarter (December 31, 2007) of Fiscal Year 2008.

Effective  November  8,  2007,  the  board of  directors  appointed  Michael  J.
Antonoplos as the Company's Secretary.

Effective  November  15,  2007,  the board also  authorized  the division of the
Office of the  President  into two separate  designations,  "China" and "US", so
that,  effective  immediately,  Sergio Luz became the  "President-China"  of the
Company.

On November 7, 2007 the  Company's  Board voted to retain Rene Hamouth  (Hamouth
Family  Trustee) to consult and assist the  Company in market  matters.  See the
Company's Form 8-K filed November 7, 2007. Hamouth is to receive,  three million
(3,000,000)  restricted shares of the Company's common stock post reverse split,
which is  anticipated  to be closed in the next  30-90  days at a ratio of 100:1
(300 million  shares on a pre reverse  split  basis).  The common  shares of the
Company's stock closed trading on November 7, 2007 at $0.052 per share resulting
in a valuation of  $15,600,000,  which was expensed in the second fiscal quarter
(December 31, 2007) of Fiscal Year 2008.


                                      F-10
<PAGE>


NOTE F - EQUITY MATTERS

On May 4, 2006, the Company amended the articles of  incorporation to change the
name of the Corporation to True Product ID, Inc. (formerly ONTV, Inc.).

On May 4, 2006,  the Company  also  amended the  articles  of  incorporation  to
increase   the   authorized   shares  of  common  stock  from   100,000,000   to
1,000,000,000,  of  which  800,000,000  shares  are  designated  as  Class A and
200,000,000 shares are designated as Class B.

On May 8,  2006,  the  Company  declared  a 2 for 1 forward  stock  split of the
Company's common stock, to be effective on May 23, 2006.

On November 7, 2007 the Company  filed a Form 8-K  reporting  that its Board had
voted to effect a 30:1  reverse  split of the  Company's  common  stock and then
passed a resolution to effectuate  the reverse split  immediately  in accordance
with all applicable rules and regulations  pertaining thereto. See the Company's
Form 8-K filed  November 7, 2007.  On November 29, 2007 the  Company's  Board of
Directors voted to amend the ratio to 100:1. This action was then authorized and
approved by the holders of a majority of the  outstanding  common  shares of the
Company authorized to vote. See the Company's Form 8-K filed December 6, 2007.

In November 2007, the Company raised  $200,969 as a result of the sale of equity
units  consisting  of one share of the  Company's  common stock and a warrant to
purchase 1/2 share of common stock at an exercise price of $0.10 per share for a
period of one year  subsequent to the purchase of the equity unit,  The price of
the units was $0.065 per share resulting in the issuance of 3,091,823  shares of
the  Company's  common stock and the issuance of 1,545,912  warrants to purchase
the Company's common stock. The proceeds were wired to the Chinese JV Company to
fund China operations.

NOTE G - RESTRUCTURING AGREEMENT


The  Company  acquired a 60%  ownership  interest in the Chinese JV Company as a
result of two separate transactions.  The first transaction was the January 2007
acquisition  of  40%  of  the  Chinese  JV  Company  from  Sure  Trace  Security
Corporation  and  affiliates,  which  is  described  in this  Note.  The  second
transaction was the May 2007  acquisition of an additional 20% of the Chinese JV
Company from Sichuan Valencia Trading Limited, which is described in Note H.


On January 4, 2007 the Company entered into a Restructuring  Agreement with Sure
Trace  Security  Corporation  ("SSTY"),  Sure Trace Asia  Limited  ("STA"),  and
William Chan ("Chan") (the "Restructuring  Agreement");  and (2) an Amendment to
the March 21, 2006 SSTY-Fasano Agreement entered into on January 4, 2007 between
the Company, SSTY, and Fasano, (the "Amended Payment Agreement"). These material
events were  reported in the  Company's  Form 8-K filed on January 10, 2007,  to
which a copy of the  Restructuring  Agreement and Amended Payment Agreement were
attached as exhibits.


Pursuant to the  Restructuring  Agreement,  the Company acquired a 40% ownership
interest in the Chinese JV Company,  held by SSTY,  STA, and Chan. The remaining
60%  ownership  interest in the  Chinese JV Company  was then held by  unrelated
Chinese entities.

Under the Restructuring Agreement:

(a) SSTY agreed:

(i) To terminate in its entirety the March 16, 2006 licensing  agreement between
SSTY and the Company (then known as ONTV,  Inc.),  wherein SSTY licensed to TPID
certain  contractual rights of SSTY in exchange for, inter alia, a royalty,  and
certain  payments to SSTY and others and  repayment,  so that the Company has no
liability (past,  present, and future) thereunder (accrued royalties of $637,500
were therefore eliminated as part of the accounting for this transaction); and

(ii) To strike and negate in its entirety  Article I and Article V, Section 5.02
(the "Stricken  Provisions")  of the March 17, 2006 Agreement to Issue Stock for
Technology  License  between  SSTY and the Company  (then  known as ONTV,  Inc.)
("March  17  Agreement"),so  that as of  January 4,  2007,  the  Company  has no
obligation  (past,  present,  and future) under the March 17, 2006  Agreement to
issue  shares of the  Company to SSTY in addition to the shares SSTY had already
received and had distributed to its shareholders as a dividend.


                                      F-11
<PAGE>


(b) The Company agreed:

(i) To pay SSTY a royalty  in the amount of 2% of its gross  receipts  which the
Company actually  receives and collects from customers outside China, Hong Kong,
and Macau for a period of 2 years  commencing as of January 4, 2007. As the were
no gross  receipts  through  March 31,  2007,  no royalty was  recorded for this
period;

(ii) To pay SSTY all  reasonable,  direct  out-of-pocket  expenses SSTY incurred
and/or  paid  on the  Company's  behalf  after  the  Registrant  ceased  being a
subsidiary of SSTY,  provided that such post-spinout  expenses are substantiated
by original invoices and other proper documentation;

(iii) To assume,  pursuant to the Amended  Payment  Agreement,  all  outstanding
payments owed by SSTY to the former control block holder of ONTV, Inc. (Fasano),
which relates to the  acquisition  of ONTV. As of August 2006,  SSTY owed Fasano
$285,000, excluding certain interest and penalties, plus 6 million common shares
of the Company, which SSTY had previously agreed post-SSTY's acquisition of ONTV
but pre-spinout,  in return for, inter alia, Fasano agreeing to waive $85,000 of
the balance owed by SSTY and all interest  and  penalties on the $85,000.  Under
the Amended Payment Agreement, the Company has agreed [a] to pay Fasano $100,000
by January 31, 2007;  $185,000 by March 31, 2007;  and interest and penalties by
June 30,  2007 and [b] to assume  SSTY's  obligation  to issue  Fasano 6 million
common shares of the  Registrant  (valued at $1,320,000 on January 6, 2007,  the
issue date of the stock).  If the Company made timely payments under the Amended
Payment Agreement, the amount of such penalties and interest was $34,410; in the
event that the Company failed to make timely  payments under the Amended Payment
Agreement,  interest  accrues on the unpaid  portions at 25% simple interest per
annum. A note payable of $319,410 was recorded to reflect this assumed liability
and a $100,000 payment was made in January 2007 against this note payable.  TPID
is  currently  in default of the  payments due March 31, 2007 and June 30, 2007,
therefore,  interest  has been  accrued at 25% simple  interest per annum on the
unpaid  balance.  The Company  plans to make the  required  payment  from future
financing received by TPID.

(iv) Pay SSTY, on an interest-free  basis,  within 3 years of the effective date
of the  Restructuring  Agreement  $1,130,000,  minus the amount of penalties and
interest TPID must pay the former control block holder under the Amended Payment
Agreement (the "Subject Payment").  TPID is also obligated to make the following
prepayments  towards the Subject Payment:  (a) $50,000 upon receipt of the first
$1 million of investment  raised by TPID after  January 4, 2007;  and (b) 25% of
any  investment  raised by TPID after the  initial $1  million  investment.  The
obligations  of SSTY to make the  Subject  Payment  are  secured  by a  security
interest in the Registrant's  ownership interest in Chinese JV Company until the
Subject  Payment is paid in full.  SSTY is  authorized  to file the  appropriate
UCC-1  financing   statements  to  perfect  such  a  security  interest  in  all
appropriate  jurisdictions.  A note  payable  of  $1,095,590  note  payable  was
recorded to reflect this  obligation.  The recorded amount is net of the $34,410
of  penalties  and  interest  reflected  in the note  payable  discussed  in the
previous paragraph.


In November 2007 SSTY agreed to cancel the amount due to it by the Company under
the Restructuring  Agreement ($1,068,164 as of September 30, 2007). See Note L -
Forgiveness of  Liabilities.  In return the Company has agreed to grant SSTY, or
its assignee or designee, the exclusive worldwide Licensing Rights in and to any
home   consumer   applications   of  the   Company's   anti-counterfeiting   and
authentication  technologies intended for  self-application/use  by the consumer
solely on his/her  personal  items,  including,  but not limited  to,  S-DNA and
related  technologies  that exist and as they may be developed in the future, in
all  channels  of direct  response  and  consumer  distribution.  Subject to the
Company and SSTY reaching mutually acceptable terms in the manner and form to be
mutually  agreed upon by the  parties  within 30 days of the date of this letter
agreement.  SSTY shall also be granted  the right to  sub-license  others to air
and/or sell through  broadcast  and cable  television  media via  telemarketing,
direct  mail,  package  inserts,  syndication  and  any  other  direct  response
marketing media and via catalogue,  internet and related  electronic  marketing,
retail  sales  and any  other  means  and  the  non-exclusive  right  to use the
copyrights,  trademarks,  patents,  service  marks and trade names in connection
with their sales thereof.


Under the  Restructuring  Agreement,  SSTY and the Company  further  agreed,  to
non-competition  provisions  in which (1) SSTY in general  agreed not to compete
with the Registrant in the  anti-counterfeiting  and/or  product  authentication
business;  and (2) the Company agreed in general not to compete with SSTY in the
geo-tracking-related business or any business related to All-in-One-Key.

The Effective Date of the Restructuring Agreement is the earlier of (a) February
18,  2007,  (b)  upon  the  conclusion  of  aspects,  if  any,  of  the  ongoing
investigation by the Securities and Exchange  Commission  relating to SSTY which
may affect the transactions contemplated in the Restructuring Agreement. The SEC
commenced a formal  investigation of SSTY in August 2005, which remained ongoing
during the period when SSTY acquired and owned the  controlling  interest in the
Registrant  and delivered the shares it held in the  Registrant as a dividend to
SSTY stockholders.  As part of the  investigation,  the SEC Staff has questioned
whether the delivery of the shares to SSTY  shareholders  required  registration
with the SEC. The Effective Date of the Restructuring Agreement was subsequently
determined to be February 18, 2007.


                                      F-12
<PAGE>


The total value of the  transaction is $2,097,500 and is recorded on the balance
sheet as investment  in the Chinese JV Company.  During the four months that the
Company  owned a 40%  ownership  interest  in the Chinese  Venture,  the Company
recognized  an equity loss of $65,513,  which was 40% of the loss  recognized by
the Chinese Venture during that period.

NOTE H - BRIDGE FINANCING

On January  17,  2007 the  Company  closed an initial  bridge  financing  with a
private  investor for $500,000;  a portion of these proceeds went to the Chinese
JV Company for China operations and to help fulfill existing orders in China.

The financing took the form of a convertible  note with an 8% interest rate, and
is referenced in the above balance sheet as a "Convertible  Debenture".  For the
sake of clarity, the reference to Convertible Debenture in the Company's balance
sheets  means  the  bridge  financing  described  in  this  Note.  Additionally,
investors  will  receive  warrants to purchase  additional  shares of  Company's
common  stock at a price  per share  equal to the price per share of the  shares
issued in the First Equity  Financing,  with 20% warrant  coverage if the bridge
converts within 4 months;  35% warrant  coverage if the bridge converts within 8
months;  and 50% warrant  coverage if the bridge  converts  after 8 months.  The
"First Equity Financing" is defined as the first financing following the date of
Closing in which the Company sells  preferred  stock or other equity  securities
and obtains net proceeds  (including debt conversion) in an amount not less than
$2 million  (including  the  conversion of the Debt).  The warrants shall have a
seven-year exercise period.

The Debt  (including  accrued  interest)  shall  automatically  convert into the
Company's  preferred  stock issued in  connection  with the closing of the First
Equity  Financing  at 100% of the price per share paid to the  Company  for such
securities.

If the Debt does not convert in connection  with a First Equity  Financing on or
before  the  Maturity  Date,  the Debt  shall be  converted  into  shares of the
Company's  common stock at a price equal to the average  closing price per share
for the 30day period preceding the Maturity Date.

The  maturity  date is the  earliest  to occur of (i) the date of closing of the
First  Equity  Financing,   (ii)  the  date  of  the  closing  of  a  merger  or
reorganization of the Company with or into any other entity, or a sale of all or
substantially all of the assets of the corporation,  or any other transaction or
series of related transactions in which the Company's  stockholders  immediately
prior to such transaction(s) own immediately after such transaction(s) less than
fifty percent (50%) of the equity securities of the surviving corporation or its
parent or (iii) any time after the second anniversary of the date of Closing.

NOTE I - ACQUISITION OF ADDITIONAL 20% OF CHINESE VENTURE

On May  11,  2007  the  Company  entered  into  an  acquisition  agreement  (the
"Acquisition  Agreement")  with Sichuan  Valencia  Trading Limited  ("SVTL"),  a
Chinese  limited  liability  company.  As set  forth  in  Note L,  prior  to the
Acquisition  Agreement with SVTL, the Company had acquired 40% of the Chinese JV
Company from other entities.

Immediately prior to the execution of the Acquisition Agreement,  SVTL owned 20%
of the total interests, rights, assets, shares, and/or other ownership interests
of the  Chinese JV  Company  (the "SVTL 20%  Chinese  JV  Interest").  Under the
Acquisition Agreement, SVTL sold to the Company the SVTL 20% Chinese JV Interest
in return for 100 million  restricted  common  shares of the Company,  valued at
$15,500,000.  As set forth in more detail in the Acquisition Agreement and prior
SEC filings,  the 100 million shares was less than 50% of the  approximately 209
million shares provided as a dividend to shareholders of TPID US' former parent,
SSTY, which resulted in TPID US' being a separate independent entity entitled to
receive  approximately 42.5% of the revenues of the Chinese JV Company. With its
January 2007 acquisition of 40% of the Chinese JV Company and the acquisition of
the SVTL  20%  Chinese  JV  Interest,  the  Company  now  owns 60% of the  total
ownership  interests  of the Chinese JV Company,  allowing the Company to, among
other  things,  recognize  100% of the  revenues  of the  Chinese  JV Company in
accordance with applicable consolidation,  revenue recognition,  accounting, and
other principles, guidelines and standards.

Under the Acquisition Agreement, SVTL representative,  Sergio Luz, was appointed
to the Company's Board, and SVTL agreed to, inter alia, standard non-competition
and confidentiality provisions.

The  operations  of the  Chinese  JV  Company  were  included  in the  Company's
operations  subsequent to May 1, 2007.  During the three months ended  September
30,  2007 there were no revenues  recognized  relative to the Chinese JV Company
and $164,858 of expense was  recognized  with a  compensating  $65,943  minority
interest  recognized  for the 40% portion of the Chinese JV Company not owned by
the Company.


                                      F-13
<PAGE>


The composition of the purchase price and the related allocation is as follows:

Purchase of Initial 40% interest in Chinese JV Company:

Common Stock of the Company issued for the initial 40% ownership interest
(6,000,000 shares at $0.22 per share)                               $ 1,320,000

Note payable - Fasano                                                   319,410

Note payable - SSTY                                                   1,095,590

Less Royalty payment forgiven                                          (637,500)
                                                                    -----------

Net Consideration                                                   $ 2,097,500

Purchase of Additional 20% interest in Chinese JV Company:

Common Stock of the Company issued for the additional
20% ownership
interest (100,000,000 shares at $0.155 per share)                   $15,500,000
                                                                    ------------

Total Consideration                                                 $17,597,500
                                                                    ============

An internal  valuation  was  performed  to allocate the  purchase  price,  which
determined  that all of the  purchase  price  should be  allocated  to  Customer
Contacts and Contracts  with an  amortization  period of five years.  During the
first six months of fiscal  2008 no  amortization  expense  was  recorded as the
contracts to which the excess purchase price was allocated have not commenced.

NOTE J - FOREIGN OPERATIONS:

Subsequent to the  acquisition  of the additional 20% interest in the Chinese JV
Company by the Company raising its ownership to 60% of the Chinese JV Company on
May 11, 2007, the majority of the Company's  operating  activities  have been in
China.  The  functional  currency  of the  Chinese  Venture  is the Yuan and the
financial  statements of the Chinese JV Company have been converted from Yuan to
U.S.  Dollars at the  exchange  rate in effect.  There were no foreign  currency
gains or losses  included in the September 30, 2007 Statement of  Operations.  A
Foreign Currency Translation  Adjustment of $3,623 is included as a component of
Shareholders'  Equity at  September  30,  2007 to reflect the change in value of
assets and liabilities in the Chinese JV Company's balance sheet.

Accounts Receivable

There was $173,956 US in accounts  receivable at December 31, 2007, all from the
Chinese JV Company.  These  arose in part from  customer  purchases  of taggant,
scanners and other equipment and materials  associated with trial and pilot runs
associated with the Company's securing Chinese  contracts.  The Company believes
that these accounts  receivable will be collected in China in due course,  given
the fairly  recent  nature of the  accounts  receivable  (at least  according to
Chinese  standards),  the  ongoing  nature of  certain  trial or pilot  runs and
relationship  with  Chinese  customers,   the  relationships  involving  Chinese
government entities,  and the significance of the Chinese JV Company's continued
efforts towards certain Chinese government-related initiatives.

At December 31, 2007,  the assets of the Chinese JV Company were $355,398 US and
the  liabilities  of the Chinese JV Company were  $830,141 US. For the three and
six months ended September 30, 2007, no revenues were recognized relative to the
Chinese JV Company and  $214,275  and  $379,138,  respectively,  of expenses was
recognized  resulting in a net loss of $214,275 and $379,138,  respectively,.  A
compensating  $85,711 and $151,655,  respectively,  minority interest recognized
for the 40%  portion of the  Chinese JV Company not owned by the Company for the
three and six months ended September 30, 2007.

NOTE K - FINANCING / FUNDING

The MKG Line of Credit

MacKay  Group  Limited  (MKG) agreed on August 15, 2007 to provide the Company a
line of  credit  in the  amount  of up to  US$150,000  in  accordance  with  the
following terms and conditions:


                                      F-14
<PAGE>


o    Repayment Term: one (1) year commencing from the receipt of each tranche of
     --------------
     Funds (the "Repayment Term");
o    Interest: 12% compound interest per annum;
     --------
o    Prepayment: no prepayment without MKG's approval
     ----------
o    Convertibility:
     --------------

o    At anytime  during the  Repayment  Term,  MKG has the right to convert  the
     entire  amount of principal  and accrued  interest or any portions  thereof
     into the  Company's  common  stock at a share price equal to the lesser of:
     (a) the 70% of the share  price at the close of the market as of receipt of
     funds;  or (b) the terms extended by the Company to a funder making a total
     equity  investment  of at  least  US$2  million  or in  connection  with  a
     merger/acquisition or change in control (the "Convert Rate");

o    Warrants: The Company shall issue to MKG without additional  consideration,
     warrants to purchase  that number of shares of the  Company's  common stock
     equal to the  principal  amounts  advanced by MKG,  exercisable  at a share
     exercise  price equal to the Convert Rate.  The term for the warrants shall
     be five (5) years;.

At September 30, 2007 $52,451 had been borrowed  against the line of credit.  In
November  2007 an  agreement  was reached in which MKG forgave the total  amount
borrowed  and  related  interest  under  the MKG  line of  credit.  See Note L -
Forgiveness of Liabilities.

The MKG Advances to the Company and the Chinese JV Company  Prior to November 7,
2008

MKG also executed on August 15, 2007 a memorandum of understanding  ("MOU") with
the Company, in which upon MKG's request, the Company will repay MKG for monies,
which MKG  advanced to or for the Company or the Chinese JV Company  between May
30, 2006 and August 1, 2007,  to help  support the Chinese JV Company  (the "MKG
Advanced China Funds").  To qualify for repayment,  the MKG Advanced China Funds
must be  properly  documented,  must have been used  solely  for the  Chinese JV
Company  and its  operations  related  to the field of  anti-counterfeiting  and
product authentication, and are subject to other requirements.

Under the MOU,  MKG and the  Company  shall work in good faith to agree upon the
repayment  terms and  conditions,  which shall be  memorialized  in a definitive
written  agreement(s).  The parties agree that the repayment  arrangement  shall
come in the form of a convertible note with appropriate  compound  interest with
warrants.  The terms and conditions shall be, at a minimum,  comparable to those
the Company has given to funders as of August 1, 2007.  In the event that MKG is
provided repayment terms by the Company, which are more advantageous than those,
extended to other funders as of August 1, the Company's  arrangement  with other
funders as of August 1, 2007 should be  modified  to provide  the other  funders
with the same terms and  conditions  given by the  Company to MKG. A copy of the
memorandum  of  understanding  between the  Company  and MKG was  attached as an
Exhibit to its August 17, 2007 Form 8-K filing.  According to financial  records
relating  to the  Chinese  JV  Company,  as of  August  2007  MKG  had  advanced
approximately   US$1   million  to  or  for  the  Chinese  JV  Company  and  its
anti-counterfeiting/ product authentication operations.


In  November  2007,  MKG  agreed  (1) to  assign to TPID US the  rights  MKG has
regarding  the  advances and loans in the amount of  approximately  US$1,000,000
which MKG made to the Chinese JV Company  prior to November 7, 2007 (the "MKG $1
Million  Advance")  and (2) to  forgiven  any debt  which MKG may have  directly
vis-a-vis  TPID  US as a  result  of the MKG $1  Million  Advance  and/or  MKG's
assignment to TPID US related thereto.  See Note L - Forgiveness of Liabilities.
Accordingly,  any right that MKG may have  vis-a-vis the Chinese JV Company as a
result  of the  MKG $1  Million  Advance  (whether  in the  form  of  repayment,
increased capital, some combination of both or otherwise) , has been assigned to
TPID US and should be considered an asset of TPID US. Similarly,  as of November
16, 2007, MKG had forgiven any debt it may be owed by TPID US as a result of the
above-mentioned  assignment  (whether the rights being assigned took the form of
additional capital in the Chinese JV Company or otherwise).  The amounts due MKG
by the Chinese JV Company remain  recorded upon the financial  statements of the
Chinese  JV  Company  and as such  are  recorded  in the  attached  consolidated
financial statements of the Company at December 31, 2007.


NOTE L - FORGIVENESS OF LIABILITIES

As discussed herein and as reported in the Company's Form 8-K filed November 15,
2007,  certain  liabilities  of the Company  were  forgiven in November  2007 as
follows:

Compensation due James MacKay                          $  462,500
Borrowings on line of credit provided by MKG               52,451
Accrued interest on line of credit                            638
Note payable to SSTY                                    1,068,164
                                                       ----------

Total                                                  $1,583,753
                                                       ==========




                                      F-15
<PAGE>

 The total  amount  forgiven was  recorded as a component  of Other  Income.  In
November  2007, MKG agreed (1) to assign to TPID US the rights MKG has regarding
the MKG $1  Million  Advance  and (2) to  forgive  any debt  which  MKG may have
directly  vis-a-vis  TPID US as a result of the MKG $1  Million  Advance  and/or
MKG's assignment to TPID US related thereto. Accordingly, any right that MKG may
have vis-a-vis the Chinese JV Company as a result of the MKG $1 Million  Advance
(whether in the form of repayment,  increased capital,  some combination of both
or  otherwise) , has been  assigned to TPID US and should be considered an asset
of TPID US. Similarly, as of November 16, 2007, MKG had forgiven any debt it may
be owed by TPID US as a result of the  above-mentioned  assignment  (whether the
rights  being  assigned  took the form of  additional  capital in the Chinese JV
Company or  otherwise).  The amounts  due MKG by the  Chinese JV Company  remain
recorded upon the financial statements of the Chinese JV Company and as such are
recorded in the attached  consolidated  financial  statements  of the Company at
December 31, 2007.



NOTE M - SUBSEQUENT EVENTS

AQSIQ Contract


On January 29, 2008, the State General  Administration for Quality  Supervision,
Inspection  and  Quarantine  of the  People's  Republic  of China,  the  Chinese
counterpart to the U.S.  Consumer Product Safety Commission  ("AQSIQ"),  further
formalized  its  partnership  with the Company by issuing  official  commitments
known as "Red Hat"  documents.  The Red Hat  Documents  are the  initial  set of
official  documents to be filed by AQSIQ to form the new joint  venture with the
Company.  They  officially  confirm  AQSIQ's  commitment  to form the new  joint
venture the Company and to implement  the AQSIQ  national LNG tank contract with
the Company.  The new joint venture will be called China Inspection True Product
Technology Inc. Limited. The Company and AQSIQ are proceeding with the remaining
steps to register the new joint venture.


Appointment of Former AQSIQ Liaison, KeKe Wang, as the Company's New President

As reported  in its Form 8-K filed  January  18,  2008,  on January 14, 2008 the
Company  hired former AQSIQ  liaison for  manufacturers  and  exporters in North
America, KeKe Wang, as its new president.  Bi-lingual and educated both in China
and the U.S., Wang has been posted for weeks at a time in Beijing to oversee the
Company's rollout of its Gas Tank Contract with AQSIQ.

Under the terms of his  employment  agreement  with the  Company,  Mr. Wang will
serve as our president for a period of three years. As president,  Mr. Wang will
report solely and directly to our Chief Executive Officer,  William R. Dunavant,
and our Board of Directors.  During his term of employment, Mr. Wang will earn a
base salary of no less than $150,000 per year.  In addition to base salary,  Mr.
Wang may be paid an annual bonus as our Compensation Committee determines in its
sole  discretion.  Mr. Wang will be entitled  to  participate  in and be covered
under all welfare benefit plans or programs  maintained for executive  officers.
We also  agreed to  maintain a term life  insurance  policy  for Mr.  Wang in an
amount  not less than  $150,000  during the term of his  employment.  The policy
shall pay 75% of its face value to Mr.  Wang's  estate with the remaining 25% to
be paid to us. A copy of  Wang's  employment  agreement  is  attached  hereto as
Exhibit 10.1.

Wang worked with AQSIQ in 2004,  several  years before AQSIQ issued its Official
Government   Circular   this   summer   mandating   the  use  of  TPID's   S-DNA
anti-counterfeiting  and KMACK product safety monitoring  technology for all gas
tanks,  other  pressurized  tanks, and other special  equipment in China.  After
AQSIQ passed its initial set of product safety regulations for special equipment
in 2003, in conjunction  with the Chinese  Consulate in New York, Wang organized
two delegations of AQSIQ officials to the U.S. in 2004, whereupon Wang was asked
by AQSIQ's Center of Boiler and Pressure Vessel  Inspection and Research to help
disseminate  AQSIQ's Import Boiler and Pressure Vessel Safety Quality  Licensing
requirements to  manufacturers  and exporters in the U.S. and Canada and to help
work with North  American  manufacturers  and  exporters  to secure the required
product  safety and  licensing  certifications  for import  into  China.  Wang's
relationship  with AQSIQ and  experience  with AQSIQ's  pressure  vessel quality
safety  initiatives  should be invaluable as TPID rolls out the initial phase of
TPID's gas tank  contract  with AQSIQ in six  provinces  and districts in China.
Similarly,  Wang's  interaction on AQSIQ's behalf with North American  companies
should help when TPID expands its operational  basis, which initially focuses on
China, to North America.

Wang has worked  closely with,  and has helped form a bridge  between,  U.S. and
Chinese  governments  and  industry  for over 15  years.  Wang was  asked by the
Commonwealth  of  Pennsylvania  and its Department of Commerce in 1993 to create


                                      F-16
<PAGE>

Pennsylvania's  first  trade  office in China  and to  conduct  its first  trade
mission to China,  and in 1996 to represent the  Commonwealth of Pennsylvania in
Tianjin  (China's  4th  largest  city).  In  2002,  Wang was  appointed  by then
Philadelphia  Mayor  John  Street  to form and run the  China  Trade  Center  of
Philadelphia,  an  organization  which  works in  coordination  with the City of
Philadelphia   and  its  Commerce   Department   to  promote   trade  and  other
opportunities  between  Philadelphia and China. In 2001 and 2006, Wang organized
the first and second trade missions for the City of  Philadelphia  to China.  In
2006, Wang was appointed to be the executive director, China operations, for The
Splendor of China(TM), a significant trade, business,  government,  and cultural
initiative  and event  between  China and  Pennsylvania/Philadelphia,  which has
worked with the Chinese  Ministry of Commerce  and the Chinese  Consulate in New
York and plans to bring together in Philadelphia Chinese and U.S. manufacturers,
exporters/importers, and government organizations, among others.

In addition to AQSIQ,  Wang has forged  close and  critical  relationships  with
other leading Chinese  Government  entities and industries,  including,  but not
limited to, the Ministry of Commerce,  the Ministry of Culture (and its cultural
antiquity preservation division),  the Ministry of Agriculture,  the Ministry of
Education, the Tourism Administration,  the Sports Administration,  and Overseas
Chinese Affairs Office, the Association of Chinese Mayors,  the  city/provincial
governments of Beijing,  Shanghai,  Tianjin,  Xiamen,  Nantong,  and Dalian, the
provincial  governments  of Anhui and  Liaoning  Province,  and leading  Chinese
companies as Air China,  China Southern  Airline,  Jian Nan Chun (one of China's
leading  liquor  manufacturers),  Chery  Automobiles  (one  of  China's  leading
automobile manufacturers),  the Chinese Basketball Association,  and Nike China.
Many of these  relationships  of Wang will help TPID's  ongoing  initiatives  in
China related to such  applications  as sports tickets,  agricultural  products,
auto parts,  aviation parts,  liquor bottles,  and sports apparel,  all of which
have recently faced challenges  related to counterfeiting  and quality assurance
and safety.

Fluent in Chinese and English,  Wang obtained his undergraduate  degree from the
Foreign Language Department at Guangxi Normal University in Guilin,  China. Upon
moving to the U.S.  and  becoming a U.S.  citizen in the  1980s,  Wang  earned a
Master's degree from the New School for Social Research. With university degrees
from  schools  located  in  China  and  the  U.S.,  Wang  is  asked  by  leading
universities in the U.S. and China to facilitate academic  exchanges,  including
MBA, LLM and training/certification  programs at U.S. universities,  for Chinese
Government officials, judges and executives.

Funding

In  January  2008,  the  Company  received  another  $450,000  from  one  of the
accredited investors,  who helped fund the Company in November 2007, in the form
of the sale of  additional  equity  units at $0.05 per share plus an  equivalent
number of warrants with an exercise price of $0.085 per share.


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with, and is qualified in
its entirety by, our audited financial  statements and notes thereto,  and other
financial information included elsewhere in this Annual Report on Form 10-QSB.

Certain statements  contained in this  "Management's  Discussion and Analysis of
Financial  Condition and Results of Operations" and elsewhere in this report are
forward-looking   statements  that  involve  risks  and   uncertainties.   These
statements relate to future events or our future financial performance.  In some
cases,  forward-looking  statements  can be  identified by  terminology  such as
"may", "will", "should",  "expect",  "anticipate",  "intend", "plan", "believe",
"estimate",  "potential",  or  "continue",  the negative of these terms or other
comparable  terminology.   These  statements  involve  a  number  of  risks  and
uncertainties.   Actual  events  or  results  may  differ  materially  from  any
forward-looking  statement  as a result  of  various  factors,  including  those
described above under "Risk Factors".

RESULTS OF OPERATIONS

Three Months Ended December 31, 2007 and 2006

During the three months ended December 31, 2007 ("Fiscal 2008"), the Company had
no revenues,  as the operations of the Chinese JV Company had not begun customer
sales,  except for certain  trial runs  conducted  by the Chinese JV Company for
Chinese  customers.  In the three months ended December 31, 2006 ("Fiscal 2007")
there were no revenues.

The  Company had  operating  expenses  of $24.4  million  for the second  fiscal
quarter  of Fiscal  2008  with the  majority  of the  expense  related  to stock
compensation of employees and consultants,  as compared to operating expenses of
$5.4 million for the second  fiscal  quarter of fiscal 2007 with the majority of
the expense related to stock compensation of an employee and consultant.  During
the second quarter of fiscal 2008,  525 million  shares of the Company's  common
stock were issued  resulting in a charge of $23.9 million based upon the closing
price of the Company's common stock on the date the respective  shares issuances


                                       17
<PAGE>

were   authorized  by  the  Company's   Board  of  Directors,   as  compared  to
approximately 70 million shares of the Company's common stock were issued during
the second  quarter of Fiscal 2007,  resulting in a charge of $4.9 million based
upon the closing price of the Company's  common stock on the date the respective
shares  issuances  were  authorized  by the Company's  Board of  Directors.  The
increase of operating  expenses from the second fiscal quarter of Fiscal 2008 to
the second fiscal quarter of Fiscal 2007 is attributable to expenses  related to
the Gas Tank  Contract  with  AQSIQ  and  additional  expense  related  to stock
compensation  of  employees  and  consultants,  when the Company  brought in new
management  and  personnel  (a new  chief  executive  officer,  chief  operating
officer,  and  consultant)  in November 2007 to help  implement and fund the Gas
Tank Contract with AQSIQ.

The Company  reported a loss before other income and  provision for income taxes
of $24.4 million for the three months ended December 31, 2007 compared to a loss
before other income and provision for income taxes of $5.4 million for the three
months ended  December 31, 2006, a increase of $19 million as a direct result of
the factors discussed above, including the additional expense related to the Gas
Tank Contract with AQSIQ and to stock compensation of employees and consultants,
when the Company  brought in new management and personnel (a new chief executive
officer,  chief  operating  officer,  and  consultant)  in November 2007 to help
implement and fund the Gas Tank Contract with AQSIQ


Other income in the current fiscal quarter included  approximately  $1.6 million
for the  forgiveness  of  liabilities  as discussed  previously in Note L to the
financial statements.  There were no significant  components of other income for
the prior fiscal  quarter.  As discussed in Note L, in November 2007, MKG agreed
(1) to assign to TPID US the rights MKG has regarding the MKG $1 Million Advance
and (2) to forgive any debt which MKG may have directly  vis-a-vis  TPID US as a
result of the MKG $1 Million Advance and/or MKG's  assignment to TPID US related
thereto.  See Note L - Forgiveness of Liabilities.  Accordingly,  any right that
MKG may have  vis-a-vis the Chinese JV Company as a result of the MKG $1 Million
Advance (whether in the form of repayment,  increased capital,  some combination
of both or otherwise) , has been assigned to TPID US and should be considered an
asset of TPID US. Similarly,  as of November 16, 2007, MKG had forgiven any debt
it may be owed by TPID US as a result of the above-mentioned assignment (whether
the rights being assigned took the form of additional  capital in the Chinese JV
Company or  otherwise).  The amounts  due MKG by the  Chinese JV Company  remain
recorded upon the financial statements of the Chinese JV Company and as such are
recorded in the attached  consolidated  financial  statements  of the Company at
December 31, 2007.



During the current and prior fiscal  quarters  there was no provision for income
taxes due to the loss in the respective  quarter and that no deferred income tax
credit was  recognized  as the  realization  was no assured due to the Company's
history of losses and that the Company remains a "Development  Stage Enterprise"
and as such to date has not had any revenues.

Minority  interest for the current  fiscal quarter was a credit of $0.1 million.
The add back of minority  interest  represents the 40% portion of the Chinese JV
Company loss not owned by the Company as the Company only owns a 60% interest in
the Chinese JV Company. There was no comparable amount as the Company only began
consolidating  the  results of the  Chinese JV Company in the fourth  quarter of
fiscal 2006 when they increased their ownership interest to 60%

Therefore,  for the quarter  ended  December  31, 2007 the Company had a loss of
$22.7 million  compared to a loss of $5.4 million for the quarter ended December
31, 2006,  attributed to, inter alia, the additional  expense related to the Gas
Tank Contract with AQSIQ and to stock compensation of employees and consultants,
when the Company  brought in new management and personnel (a new chief executive
officer,  chief  operating  officer,  and  consultant)  in November 2007 to help
implement and fund the Gas Tank Contract with AQSIQ

Six Months Ended December 31, 2007 and 2006

During the six months ended December 31, 2007 the Company's had no revenues,  as
the  operations of the Chinese JV Company had not begun customer  sales,  except
for certain trial runs the Chinese JV Company  conducted for Chinese  customers.
In the six months  ended  December 31, 2006 there were also sales by the Chinese
JV Company.

The Company had operating  expenses of $25.4 million for the first six months of
fiscal 2008 with the majority of the expense  ($24.5  million)  related to stock
compensation  of employees and  consultants,  compared to operating  expenses of
$5.9  million for the first six months of fiscal  2007 with the  majority of the
expense  ($5.0  million)  related  to  stock  compensation  of an  employee  and
consultant.  During the second quarter of fiscal 2008, 525 million shares of the
Company's  common stock were issued resulting in a charge of $23.9 million based
upon the closing price of the Company's  common stock on the date the respective
shares  issuances were authorized by the Company's Board of Directors,  compared
to  approximately  70 million shares of the Company's common stock issued during
the second  quarter of fiscal 2007,  resulting in a charge of $4.9 million based
upon the closing price of the Company's  common stock on the date the respective
shares  issuances  were  authorized  by the Company's  Board of  Directors.  The
increase of operating  expenses from the second fiscal quarter of Fiscal 2008 to


                                       18
<PAGE>

the second fiscal quarter of Fiscal 2007 is attributable  to additional  expense
related  to the Gas  Tank  Contract  with  AQSIQ  and to stock  compensation  of
employees  and  consultants,  when the  Company  brought in new  management  and
personnel  (a  new  chief  executive  officer,   chief  operating  officer,  and
consultant)  in November  2007 to help  implement and fund the Gas Tank Contract
with AQSIQ.

The Company  reported a loss before other income and  provision for income taxes
of $25.4  million for the six months ended  December 31, 2007 compared to a loss
before other income and  provision  for income taxes of $5.9 million for the six
months ended  December 31, 2006, a increase of $19.5  million as a direct result
of the factors discussed above,  including the additional expense related to the
Gas  Tank  Contract  with  AQSIQ  and  stock   compensation   of  employees  and
consultants,  when the Company  brought in new  management  and personnel (a new
chief executive officer,  chief operating  officer,  and consultant) in November
2007 to help implement and fund the Gas Tank Contract with AQSIQ


Other income in the current period included  approximately  $1.6 million for the
forgiveness of  liabilities  as discussed  previously in Note L to the financial
statements.  There were no significant  components of other income for the prior
fiscal  period.  As  discussed  in Note L, in November  2007,  MKG agreed (1) to
assign to TPID US the rights MKG has  regarding  the MKG $1 Million  Advance and
(2) to  forgive  any debt  which MKG may have  directly  vis-a-vis  TPID US as a
result of the MKG $1 Million Advance and/or MKG's  assignment to TPID US related
thereto.  See Note L - Forgiveness of Liabilities.  Accordingly,  any right that
MKG may have  vis-a-vis the Chinese JV Company as a result of the MKG $1 Million
Advance (whether in the form of repayment,  increased capital,  some combination
of both or otherwise) , has been assigned to TPID US and should be considered an
asset of TPID US. Similarly,  as of November 16, 2007, MKG had forgiven any debt
it may be owed by TPID US as a result of the above-mentioned assignment (whether
the rights being assigned took the form of additional  capital in the Chinese JV
Company or  otherwise).  The amounts  due MKG by the  Chinese JV Company  remain
recorded upon the financial statements of the Chinese JV Company and as such are
recorded in the attached  consolidated  financial  statements  of the Company at
December 31, 2007.


During the current and prior fiscal  periods  there was no provision  for income
taxes due to the loss in the respective  quarter and that no deferred income tax
credit was  recognized  as the  realization  was no assured due to the Company's
history of losses and that the Company remains a "Development  Stage Enterprise"
and as such to date has not had any revenues.

Minority  interest  for the current  fiscal  period was a credit of $0.2 million
credit.  The add back of  minority  interest  represents  the 40% portion of the
Chinese JV loss not owned by the Company as the Company only owns a 60% interest
in the  Chinese JV.  There was no  comparable  amount as the Company  only began
consolidating the results of the Chinese JV in the fourth quarter of fiscal 2006
when they increased their ownership interest to 60%

Therefore,  for the six-months ended December 31, 2007 the Company had a loss of
$23.7  million  compared  to a loss of $5.9  million  for the  six-months  ended
December 31, 2006,  attributed to, inter alia, the additional expense related to
the Gas Tank  Contract  with AQSIQ and to stock  compensation  of employees  and
consultants,  when the Company  brought in new  management  and personnel (a new
chief executive officer,  chief operating  officer,  and consultant) in November
2007 to help implement and fund the Gas Tank Contract with AQSIQ

FINANCIAL CONDITION

Liquidity and Capital Resources

During the six months ended December 31, 2007, the Corporation's  cash increased
by $0.03 million to $0.07 million.

The increase in cash and cash equivalents  during the first six months of fiscal
2008 is attributable to cash inflows of $0.41 million from financing activities.
These cash inflows were  partially  offset by outflows from  operations of $0.35
million and cash outflows of $0.03 million associated with investing activities.

Financing  activities cash inflows  consisted of $0.16 million proceeds from the
sale of equity by the Company in November 2007, $0.2 million of equity financing
received by the Chinese  Venture and $0.05  million of borrowings on the line of
credit provided by MKG.


Cash  utilized by operating  activities  totaled $0.35 million in the six months
ended December 31, 2007. Cash outflows included,  the $23.7 million loss for the
period,  the $1.6  million  forgiveness  of  liabilities  which was  non-cash in
nature,  the $0.15 million credit for minority  interest which was also non-cash
in nature  and a $0.14  million  increase  in  accounts  receivable.  These cash
outflows were partially  offset by cash inflows  including $8.9 million of stock
based  compensation,  $15.6  million  for  the  issuance  of  common  stock  for
consulting  fees,  $0.05 million of depreciation  and  amortization  and a $0.69
million increase in accounts payable and accrued expenses.  As discussed in Note
L, in  November  2007,  MKG  agreed  (1) to assign to TPID US the rights MKG has


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<PAGE>

regarding  the MKG $1 Million  Advance and (2) to forgive any debt which MKG may
have directly vis-a-vis TPID US as a result of the MKG $1 Million Advance and/or
MKG's  assignment  to TPID US  related  thereto.  See  Note L -  Forgiveness  of
Liabilities.  Accordingly,  any right that MKG may have vis-a-vis the Chinese JV
Company  as a  result  of the MKG $1  Million  Advance  (whether  in the form of
repayment,  increased capital, some combination of both or otherwise) , has been
assigned to TPID US and should be considered an asset of TPID US. Similarly,  as
of November 16,  2007,  MKG had forgiven any debt it may be owed by TPID US as a
result of the above-mentioned assignment (whether the rights being assigned took
the form of  additional  capital in the  Chinese JV Company or  otherwise).  The
amounts due MKG by the Chinese JV Company  remain  recorded  upon the  financial
statements  of the Chinese JV Company and as such are  recorded in the  attached
consolidated financial statements of the Company at December 31, 2007.



Investing  activities  cash outflows  included $0.03 million for the purchase of
property, plant and equipment.

During the six months ended  December 31, 2006,  the Company's cash increased by
$0.001 million to $0.001 million.

The increase in cash during the first six months of fiscal 2007 is  attributable
to cash inflows of $0.001 million from operating activities.  There were no cash
flow activities associated with investing and financing activities.

Cash provided by operating  activities  totaled $0.001 million in the six months
ended  December 31,  2006.  Cash  inflows  included  $4.9 million of stock based
compensation,  $0.06  million for the  issuance of common  stock for  consulting
fees,  $0.03  million  of  depreciation  and  amortization  and a $0.95  million
increase in accounts  payable and accrued  liabilities.  These cash inflows were
partially offset by the $5.9 million loss for the period.

The Company's Current Strategy and Priorities

The Company current  priority is to continue to solidify its strategic  position
and  opportunities in China.  Many of the goods in the world are manufactured in
China. That includes both Chinese manufacturers and multinational  corporations.
That includes goods  manufactured in China for both the domestic  Chinese market
and for export.  As such,  China and its government and industries  face many of
the more  significant  challenges  associated  with  counterfeiting  and product
safety,  which the Company seeks to address through its technology.  It is China
where the  Company  and its  Chinese  joint  venture  affiliate  have earned the
respect of government and industry.  As reported on the website sponsored by the
Association of Chinese Anti-Counterfeiting  Technology,  www.21cata.com.cn,  our
technology was recently recognized by representatives  from the Chinese Ministry
of Public Security.  As reported on TPID Beijing's website,  our technology also
received a favorable initial assessment from the Chinese Ministry of Science and
Technology.  It is  China  where  the  Company  and its  Chinese  joint  venture
affiliate   are  working   with   government   and   industry   on   significant
anti-counterfeiting,  safety,  and other  initiatives  and  where the  Company's
technology has been  designated  and/or  registered as an exclusive or preferred
technology in connection with those  initiatives.  It is China where the Company
through  its Chinese  joint  venture  affiliate  has  entered  into  significant
contracts.   The  Company's  immediate  priority  is  to  begin  fulfilling  and
generating revenues from China contracts.

The National Contract with AQSIQ To Mark Chinese Liquefied Natural Gas Container
and Special Equipment

As reported in its press  release on August 27, 2007,  the Company,  through its
Chinese  joint  venture  affiliate,  entered  into a contract  with the National
Quality  Inspection  Department of the State General  Administration for Quality
Supervision,  Inspection  and  Quarantine  of the  People's  Republic  of  China
("AQSIQ"),  to develop a national  safety/security  system for China's liquefied
natural gas and other pressurized canisters and other special equipment.

According   to  its   website   (www.aqsiq.gov.cn),   AQSIQ  is  a   ministerial
administrative  organ directly under the State Council of the People's  Republic
of  China  in  charge  of  national  quality,  metrology,  entry-exit  commodity
inspection,   entry-exit   health   quarantine,   entry-exit  animal  and  plant
quarantine,   import-export   food  safety,   certification  and  accreditation,
standardization, as well as administrative law-enforcement.  AQSIQ is considered
the Chinese counterpart to the United States Consumer Product Safety Commission.
See The  U.S.  Consumer  Product  Safety  Commission-AQSIQ  Joint  Statement  on
Enhancing  Consumer  Product  Safety  dated  September  11,  2007,  available at
http://www.cpsc.gov/cpscpub/prerel/prhtml07/07305.pdf.

The AQSIQ  Contract  follows an AQSIQ  Circular to every  quality and  technical
supervision bureau in all provinces, autonomous regions and municipalities under
the control of the Chinese  Central  Government.  The AQSIQ  Circular sets out a
5-year  AQSIQ  National  Security/Safety  Plan to protect  against  the  illegal
production,  circulation,  and use of certain "special  equipment" (the "Plan").
AQSIQ's mission in the Circular is, among other things, to protect public safety


                                       20
<PAGE>

from safety  accidents  and other risks caused by  counterfeit  and  substandard
"special  equipment."  Among the  "special  equipment"  referenced  in the AQSIQ
Circular are liquefied gas tanks, oxygen tanks, and other pressurized containers
and pipes,  elevators,  lift  machinery;  and  equipment  at large  recreational
facilities and automobile plants.

In its Circular,  AQSIQ has explicitly designated our technology and our Chinese
joint venture  company  affiliate as the  exclusive  technology  and  technology
provider  to  help  AQSIQ   develop,   implement  and  administer  its  National
Security/Safety  Plan.  Under the AQSIQ Circular,  TPID Beijing is to help AQSIQ
develop  national  special  equipment  security  identification  standards  (the
"standards"), a special equipment identification information security management
system (the "management system"),  and a special equipment  security/safety logo
(the "logo").

As a result of the  Circular,  AQSIQ  has  entered  into a  Project  Cooperation
Agreement with the Company's Chinese joint venture company  affiliate  (Contract
No. 0076180).  ASQIQ subsequently  entered into supplementary  provisions to the
Project  Cooperation  Agreement in connection  with the initial phase of AQSIQ's
National Security/Safety Plans relating to liquefied natural gas containers (the
"LNG Contract").

Under the LNG Contract,  TPID Beijing is to provide and apply a security logo to
all LNG containers in China.  According to Chinese  government  statistics,  the
total number of LNG  containers  in China is  currently  over 130 million and is
expected to increase in quantity by 10% every year. Under the LNG Contract, TPID
Beijing is to receive a fixed  taggant  price per LNG  container.  The  specific
taggant  price per LNG container is not being  disclosed due to its  proprietary
nature.

Under the LNG  Contract,  TPID Beijing is to provide  50,000 units of one of its
highly  proprietary   scanners  and  15,000  units  of  another  of  its  highly
proprietary  scanners to approximately  20,000 LNG gas stations,  30,000 special
equipment  manufacturers,  and  40,000  "platforms"  in  China.  Under  the  LNG
Contract, TPID Beijing is to receive a fixed price per scanner, with a different
fixed  price for each type of  scanner.  The  specific  price per scanner is not
being disclosed due to its proprietary nature.

Finally,  under the LNG  Contract,  TPID  Beijing  is to  establish  a  security
management  information system for 50,000  enterprises.  Under the LNG Contract,
TPID Beijing is to receive a fixed price per enterprise.  The specific price per
enterprise is not being  disclosed due to its proprietary  nature.  According to
AQSIQ,  among such enterprises and platforms include 5,016 enterprises in charge
of  manufacturing  LNG  containers  and  other  pressurized  containers,  14,995
enterprises in charge of charging LNG containers, 8,747 enterprises in charge of
manufacturing,  installing, reequipping and repairing boilers, and approximately
1,823 institutes in the Chinese state quality  inspection system which check LNG
containers.

Since AQSIQ's  Circular,  Project  Cooperation  Agreement and LNG Contract,  the
Company  (including the Company's CEO, William  Dunavant,  and its new President
and former AQSIQ liaison,  KeKe Wang) has met and continue to meet with AQSIQ on
a routine  basis to develop,  coordinate,  and implement the roll out of AQSIQ's
National  Safety/Security  Plan and in particular as the Plan initially pertains
to LNG containers.


Since AQSIQ's  Circular,  Project  Cooperation  Agreement and LNG Contract,  the
Company has  developed a roll out plan and budget to implement the initial phase
of AQSIQ's  National  Safety/Security  Plan pertaining to LNG containers and the
initial designated areas of Beijing, Zhejiang,  Shenzhen,  Chongqing,  Liaoning,
and Yunnan Province.

Since AQSIQ's  Circular,  Project  Cooperation  Agreement and LNG Contract,  the
Company  has  completed  the  development  of  a  fully  operational   automated
production  facility to mark  China's LNG tanks,  which AQSIQ has  reviewed  and
approved,  and  which  pursuant  to  AQSIQ's  Circular  and  mandate,  LNG  tank
manufacturers  and LNF refilling  stations will be required to purchase from the
Company.

On December 1, 2007,  AQSIQ conducted  critical  discussions in Beijing with key
Chinese  national,  provincial,  and industry  leaders  regarding  the Company's
Synthetic  DNA and  KMACK  anti-counterfeiting  and  product  safety  monitoring
technology  and the AQSIQ  Contract.  Attending  the  official  conference  that
evening  were   leaders  from  AQSIQ,   each   provincial   quality   inspection
administration,  China Special  Equipments  Inspection  Association and each LNG
tank  factory,  gas  station,  gas  tank  inspection  station,  as well as other
enterprises.  The  Honorable  Cui  Gang,  Deputy  Director  of  AQSIQ's  Special
Equipment Security Supervision Bureau, addressed the conference.  Earlier in the
day, TPID Beijing held seminars at its new offices to discuss  implementation of
the S-DNA Special  Equipment  Security Taggant  Information  Supervision  System
Project  mandated in AQSIQ's  Circular.  The seminar was hosted by the Honorable
Huang Xiaohu, Director of AQSIQ's Credit Committee. Mr. Zuo Lie, Vice Manager of
TPID Beijing, presented a specific implementation plan for AQSIQ's S-DNA Special
Equipment  Security  Taggant  Information  Management  System and  Project.  The
seminar  was  attended  by  leaders  and  enterprises  from  Beijing,  Shanghai,


                                       21
<PAGE>

Guangdong,  Hubei,  Zhejiang  and  Liaoning  Provinces,  all of whom agreed with
AQSIQ's   endorsement   of  TPID's   technology   and   provided   comments   on
implementation.

The Company's new chairman and CEO, William Dunavant, subsequently met privately
with AQSIQ's senior  leadership,  including its Director  General and Secretary.
The Company's new president, KeKe Wang, who has been posted in Beijing for weeks
at a time to oversee the AQSIQ Contract,  has also met routinely with AQSIQ. The
Company's  chief operating  officer and a former KMPG executive for China,  will
soon leave for China to implement a roll out plan,  and to  coordinate a team of
Western  experts  knowledgeable  both in good  manufacturing  practices and with
China, for the AQSIQ Contract.


The plan is to for the  Company to form a new joint  venture  company in Beijing
with AQSIQ and/or its affiliates. The new joint venture will be only with the US
parent, True Product ID, Inc. ("TPID US"), rather than TPID Beijing, and will be
owned 70% TPID US,  30%  AQSIQ.  The first step will be to begin the roll out of
AQSIQ's National Security/ Safety Plan in six provinces and cities designated by
AQSIQ  within  approximately  six months.  Upon  successful  completion  of this
initial six month roll out, AQSIQ will enact additional national laws specifying
the details of the continued roll out of the Company's SDNA and KMACK technology
in the  remaining  provinces  and  cities  in  China.  AQSIQ  has also  proposed
extending its mandate to use the Company's technology to applications other than
LNG tanks,  including,  but not limited to,  elevator parts,  other  pressurized
containers,  amusement park equipment,  automobile  manufacturing equipment, and
cellphone batteries.

On January 29, 2008,  AQSIQ further  formalized its partnership with the Company
by formally issuing official written  commitments  known as "Red Hat" documents.
The Red Hat Documents are the initial set of official  documents  filed by AQSIQ
to form the new joint venture with the Company.  They officially confirm AQSIQ's
commitment  to form the new joint  venture with the Company and to implement the
LNG  Contract  with the  Company.  The new joint  venture  will be called  China
Inspection  True  Product  Technology  Inc.  Limited.  The Company and AQSIQ are
proceeding with the remaining steps to register the new joint venture.


The latest  revenue  projections  for only the LNG component of the 5-year AQSIQ
Contract is over US$2 Billion gross and over US$1 Billion net.


Chinese JV Company Outgrows Old Office and Moves to New Larger Office

To keep pace with its  growth and  development,  and to help  better  enable the
Chinese JV Company to fulfill  Chinese  contracts,  on  September  28,  2007 the
Chinese JV Company  moved into a new larger office  located at 11th floor,  Jade
Palace Hotel, 76 Zhichun Road, Haidian District,  Beijing 100086. The Chinese JV
Company  occupies  the entire  11th floor of the Jade  Palace  Hotel,  a new and
leading  commercial and hotel complex in Beijing,  which is located in a special
economic  zone (SEZ) and thus allows the Chinese JV Company to continue to enjoy
the same tax and other  SEZ-related  incentives it had at the old office.  While
the rent is actually  less  expensive,  the new office is over 1.5 times  larger
than the old office and is able to house,  in one  building,  certain  divisions
which  previously were located in different  locations.  The new office will now
house the Chinese JV Company's administrative,  sales, marketing, and accounting
departments  and will also allow the Company to make  taggant and to enlarge the
ability to conduct  research and  development.  The larger space has allowed the
Chinese JV Company to bring one more  personnel,  especially  for the Chinese JV
Company's  burgeoning  sales and marketing  department.  The move to the new and
larger office was funded by MKG.

Also,  in August  2007,  our Chinese  joint  venture  affiliate  entered into an
agreement with the Beijing China Printing & Calligraphy Collector Association to
apply taggant  information  technology to calligraphy and painting  artworks and
jointly establish the service platform for the authentication  management system
of the calligraphy and painting  artworks in China. The agreement  extends until
April 12, 2012.

RISK FACTORS:  RISKS RELATED TO OPERATING A BUSINESS IN THE PEOPLE'S REPUBLIC OF
CHINA ("PRC")

Joint ventures such as TPID Beijing are subject to general risks of operating in
the PRC.  These  include  risks  associated  with  the  political  and  economic
environment,  foreign  currency  exchange  and the legal  system in the PRC. The
economy of the PRC  differs  significantly  from the  economies  of the  western
industrialized  nations in such  respects as  structure,  level of  development,
growth  rate,   capital   reinvestment,   repatriation,   resource   allocation,
self-sufficiency,  rate of  inflation  and balance of payment  positions,  among
others. The PRC government  encourages  substantial private economic activities,
but this has only been the case since the early 1990's. Recent pronouncements in
the PRC were enacted to facilitate  foreign  investment  in certain  segments of
Chinese  industries which to date were primarily  reserved for  Chinese-owned or


                                       22
<PAGE>

Chinese state-owned enterprises. Moreover, recent pronouncements were enacted to
facilitate the ability of Western entities to either hold a majority interest in
a  Chinese  joint  venture  company  or to  form  a  wholly-owned  foreign-owned
enterprise. Given the recent nature of these pronouncement, it remains to be see
how uniformly they will be enforced and interpreted  throughout China.  Further,
despite  the  recent  pronouncements,  when a  western  entity  is  involved  in
significant  Chinese  government-related  initiatives  as the Company is,  there
remains  advantages to forming a Sino-Western joint venture to build the type of
relationships   needed  to  secure  and   effectuate   such   government-related
initiatives.

The  Chinese  economy has  experienced  significant  growth in the past  several
years,  but such growth has been uneven among various sectors of the economy and
geographic  regions.  On one hand, China's development and growth have presented
opportunities for the Company. The Company and its Chinese joint venture company
affiliate have been designated to help Chinese  government and industry  address
issues and challenges  precipitated by such development and growth. On the other
hand,  such  development  and growth may present  risks to entities  operating a
business in the PRC such as the Company and its Chinese  joint  venture  company
affiliate and their contracts and other  opportunities in China.  Because of the
challenges  created by such growth,  the PRC  government has indicated and taken
certain steps to control such growth and address such challenges. Actions by the
PRC  government to control  inflation,  for example,  have  restrained  economic
expansion  in the recent past across  several  industrial  sectors.  Similar and
continued  actions by the PRC  government in the future could have a significant
adverse effect on domestic economic condition in the PRC.

While there have been  tremendous  strides since its admission into the WTO, the
PRC's  comprehensive  system  of laws is  still  developing  and  evolving,  and
enforcement  of  existing  laws  at  many  different  government  levels  may be
uncertain,  sporadic, and not uniform. There have been many laws and regulations
promulgated in recent years dealing with economic matters in general and foreign
investment in general.

There is no  guarantee  that there will not be any  changes  respecting  Chinese
government, economy, laws, and regulation which may adversely affect the Company
and its Chinese  joint venture  company  affiliate.  There is no guarantee  that
Chinese  Government  may in the future  enact  regulatory,  legal,  economic and
political  regulations or policies which would adversely  affect the Company and
its Chinese joint venture company  affiliate and the contracts and opportunities
in China.

The Company's Continued Efforts in Non-China Markets

As stated above, the Company's immediate priority is to focus on solidifying its
foothold  in China,  implementing  its  China  contracts,  especially  the AQSIQ
Contract,  and generating  revenues from its China contracts.  Nonetheless,  the
Company continues its efforts to penetrate markets outside China.

With  respect to the United  States,  the  Company  has  completed  its  initial
business plan and will target  certain  strategic  industries  and  applications
where the Company has already successfully demonstrated and tested in the United
States or China, often with  multinational  companies based in the United States
which manufacture their goods in China. Those industries include,  among others,
packaging,  pharmaceutical/ biotech (blister packs and bottles), cosmetics, toys
and consumer products, pressurized tanks, and sports and lottery tickets.

Its current strategy for non-China markets outside the United States is to enter
into strategic relationships (whether in the form of a joint venture,  licensing
or other  arrangement)  with leading companies in certain markets outside China,
which have developed their own technologies complimentary to the Company's, have
established  significant  distribution  networks in those  markets,  and/or have
expressed  an interest  in  distributing  the  Company's  technologies  in those
markets.  To that end,  the  Company  has met with and  received  interest  from
companies  with  significant  networks  in  India,  the  Philippines,  Malaysia,
Indonesia,  Europe,  the United States, and Canada. The Company's strategy is to
benefit from those  companies'  already  established  distribution  networks and
operational  capabilities in those markets,  while  minimizing the resources the
Company  itself  would need to  distribute  and  operate in those  markets.  The
Company  has  also  met  and  generated  significant  interest  from  a  leading
multinational company in the inspection, certification, and testing field.

The Company's Funding Efforts

On January  17,  2007,  we closed an  initial  bridge  financing  with a private
investor for $500,000;  a portion of these  proceeds  went to fulfill  orders in
China and to enhance our ability and our Chinese joint venture partner and their
facilities  and staff to address  growing  opportunities  for our  products  and
services in China and elsewhere.

Through November 7, 2007, other than the above bridge financing, funding for the
Company's China and US operations have  predominantly come from MKG. As reported
in the Company's Form 8-K filed August 17, 2007,  according to financial records


                                       23
<PAGE>

relating to TPID Beijing, as of August 2007 MKG had advanced  approximately US$1
million  to  or  for  TPID   Beijing   and  its   anti-counterfeiting/   product
authentication  operations  ("MKG $1 Million  Advance").  In November  2007, MKG
assigned the rights  vis-a-vis TPID Beijing  associated  with the MKG $1 Million
Advance to the Company,  and forgave any debt  vis-a-vis the Company  associated
with the MKG $1 Million Advance to the Company.

As reported in the Company's  August 17, 2007 Form 8-K, on August 15, 2007,  MKG
executed a binding term sheet to provide the Company with a line of credit of up
to One Hundred Fifty Thousand Dollars  (US$150,000) to help fund the initiatives
and  operations in China and the U.S. The terms and  conditions  were  described
above  and in the  Company's  August  17,  2007  Form 8-K.  As  reported  in the
Company's  Form 8-K filed  November 15, 2007, in November  2007, MKG forgave the
repayment of all amounts relative to the line of credit agreement.

After  William  Dunavant  was  appointed  CEO and  Chairman  of the Board of the
Company on November 7, 2007,  MKG advanced  additional  funds to TPID Beijing in
excess of $150,000 for China  operations,  and has also paid certain expenses of
the Company.

In  November  2007,  the  Company  raised  $200,969  through  the  sale  to four
accredited  investors of equity units, each unit of which consisted of one share
of  restricted  common  stock at $0.065 per share and a warrant to purchase  1/2
share of common  stock at an  exercise  price of $0.10 per share for a period of
one year  subsequent  to the  purchase of the equity  unit.  As a result of this
transaction,  3,091,823  restricted  shares of the  Company's  common  stock and
1,545,912  warrants were collectively  issued to the four accredited  investors.
These proceeds were wired to the Chinese JV Company to fund its operations.

In  January  2008,  the  Company  received  another  $450,000  from  one  of the
accredited investors,  who helped fund the Company in November 2007, in the form
of the sale of  additional  equity  units at $0.05 per share plus an  equivalent
number of warrants with an exercise price of $0.085 per share.


ITEM 3.  CONTROLS AND PROCEDURES

William R.  Dunavant,  the  Company's  Chief  Executive  Officer  and  Principal
Financial Officer,  has evaluated the effectiveness of the Company's  disclosure
controls and  procedures as of the end of the period  covered by this report and
in his opinion,  the Company's  disclosure  controls and procedures  ensure that
material  information  relating  to the  Company is made known to them by others
within those  entities,  particularly  during the period in which this report is
being prepared,  so as to allow timely decisions regarding required  disclosure.
To the knowledge of Mr.  Dunavant there has not been any change in the Company's
internal controls over financial reporting during the quarter ended December 31,
2007 that has materially affected, or is reasonably likely to materially affect,
the Company's controls.

PART III

ITEM 1. LEGAL PROCEEDINGS

On October 31, 2007,  Daniel Fasano -- a shareholder and creditor of the Company
-- filed a pro se petition for the  statutory  appointment  of a receiver in the
Delaware Court of Chancery. In his petition,  Mr. Fasano claims that the Company
is insolvent  based, in part, due to in excess of $900,000 he claims the Company
owes him that remains unpaid. In its January 4, 2008 Answer to the Petition, the
Company  denied  and  continues  to  deny  that it is  insolvent  and  that  the
appointment of a receiver is required.  The Company explained that Mr. Fasano is
a party to certain  agreements  pursuant to which the Company  agreed to pay him
certain monies that have not yet been fully paid. The Company went on to explain
that Mr. Fasano owes the Company in excess of $330,000, which amount exceeds the
amount which the Company  believes Fasano is owed by the Company pursuant to the
aforementioned  agreements.  Specifically,  in exchange for  acquiring  from the
Company  its  former   subsidiary   Seen  on  TV,  Inc.,   d/b/a,   inter  alia,
AsSeenOnTV.com  ("Seen on TV") and all of the assets of the  Company  associated
therewith,  Fasano  agreed  in  September  2005 to pay the  Company  a total  of
$300,000  by  paying  the  Company  25% of the net,  after-tax  income  from the
operations of Seen on TV, d/b/a,  inter alia,  as  AsSeenOnTV.com,  which amount
would bear  interest at 5.75% per year until such debt,  plus accrued  interest,
was  paid in full.  Fasano  has  never  performed  his  obligations  under  this
contract.

This  litigation is being  vigorously  defended and the Company  believes it has
meritorious defenses.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K FILED DURING FISCAL QUARTER ENDED
        DECEMBER 31, 2007

 (a) Exhibits



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<PAGE>


Number       Title

 10.1        Employment Agreement between True Product ID, Inc. and KeKe Wang
             dated January 14, 2008

  31         Rule 13a-14(a) Certifications

  32         Section 1350 Certifications


 (b) Reports on Form 8-K filed during Fiscal Quarter Ended December 31, 2007

Form 8-K filed  November 7, 2007,  announcing,  inter alia,  the  appointment of
William R. Dunavant as chief  executive  officer and chairman of the board,  the
resignation  of James  MacKay as  chairman,  the  engagement  of Rene Hamouth as
consultant, and the vote of the board to effectuate a 30:1 reverse split

Form 8-K filed  November  8,  2007,  announcing  the  appointment  of Michael J.
Antonoplos  as secretary  Form 8-K filed  November 15, 2007,  announcing,  inter
alia, the appointment of Wilson W. Hendricks III as chief operating  officer and
the forgiveness of debt

Form 8-K filed November 29, 2007, announcing,  inter alia, the vote of the board
to amend the ratio for the reverse  split to 100:1 Form 8-K filed Jan 14,  2008,
announcing the appointment of KeKe Wang as president.










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<PAGE>




                                   SIGNATURES





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



                                           True Product ID, Inc.

February 13, 2008                          By: /s/ William R. Dunavant
                                             ---------------------------

                                           William R. Dunavant
                                           Chief Executive Officer and Principal
                                           Financial Officer
















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