UNITED STATES SECURITIES AND


EXCHANGE
COMMISSION


Washington,
D.C. 20549





FORM
10-Q





QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF


THE
SECURITIES EXCHANGE ACT OF 1934





For the
quarterly period ended March 31, 2009


Commission
File No: 000-29249





True Product ID,
Inc.


(Name of
registrant in its charter)





Delaware
            16-1499611(State
      of other jurisdiction of Incorporation or
    Organization)
            (Employer
      Identification Number)1615
      Walnut Street, 3 rd Floor, Philadelphia, PA
            19102(Address
      of principal executive offices)
            (Zip
      Code)








(215)
972-6999


(Registrant’s
telephone number, including area code)





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 30 days:Yes [X]    No [  ]





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes  [
]    No  [X]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of accelerated filer and large accelerated filer in Rule 12b-12 of
the Exchange Act (Check one):





Large Accelerated Filer
            
            [
      ]
            
            Accelerated Filer
            [
      ]Non-Accelerated
      Filer
            
            [
      ]
            
            Smaller Reporting Company
            [X]








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








AS
OF MAY 08, 2009, THERE WERE 38,064,390 SHARES OF COMMON STOCK ISSUED AND
OUTSTANDING.















TRUE
      PRODUCT ID, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      BALANCE SHEETSMarch
      31,
                                                      
                                                      
                                                      June
      30,ASSETS
                                                      
                                                      2009
                                                      
                                                      
                                                      2008(Unaudited)
                                                      
                                                      
                                                      (Audited)CURRENT
      ASSETS:Cash
      and cash equivalents
                                                      
                                                      $
                                                      52,587
                                                      
                                                      
                                                      $
                                                      32,171Restricted
      cash
                                                      
                                                      
                                                      1,750,000
                                                      
                                                      
                                                      
                                                      -Accounts
      receivable
                                                      
                                                      
                                                      298,844
                                                      
                                                      
                                                      
                                                      152,751Other
      current assets
                                                      
                                                      
                                                      29,560
                                                      
                                                      
                                                      
                                                      39,436Total
      current assets
                                                      
                                                      
                                                      2,130,991
                                                      
                                                      
                                                      
                                                      224,358PROPERTY
      AND EQUIPMENT - Net
                                                      
                                                      
                                                      132,958
                                                      
                                                      
                                                      
                                                      138,722Note
      receivable
                                                      
                                                      
                                                      300,000
                                                      
                                                      
                                                      
                                                      300,000Interest
      on note receivable
                                                      
                                                      
                                                      60,376
                                                      
                                                      
                                                      
                                                      47,438Intangible
      assets - net
                                                      
                                                      
                                                      416,754
                                                      
                                                      
                                                      
                                                      461,674Goodwill
                                                      
                                                      
                                                      13,301,191
                                                      
                                                      
                                                      
                                                      13,301,191TOTAL
      ASSETS
                                                      
                                                      $
                                                      16,342,270
                                                      
                                                      
                                                      $
                                                      14,473,383LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIES:Accounts
      payable and accrued expenses
                                                      
                                                      $
                                                      2,484,526
                                                      
                                                      
                                                      $
                                                      991,700Saddington
      advances
                                                      
                                                      
                                                      3,254,000
                                                      
                                                      
                                                      
                                                      -Current
      portion of capital lease
                                                      
                                                      
                                                      8,202
                                                      
                                                      
                                                      
                                                      8,202Notes
      payable
                                                      
                                                      
                                                      219,410
                                                      
                                                      
                                                      
                                                      219,410Accrued
      interest payable
                                                      
                                                      
                                                      85,099
                                                      
                                                      
                                                      
                                                      54,853Total
      current liabilities
                                                      
                                                      
                                                      6,051,237
                                                      
                                                      
                                                      
                                                      1,274,165NON-CURRENT
      LIABILITIES:Long-term
      portion of capital lease
                                                      
                                                      
                                                      26,788
                                                      
                                                      
                                                      
                                                      27,786Convertible
      debenture
                                                      
                                                      
                                                      500,000
                                                      
                                                      
                                                      
                                                      500,000Related
      party payable
                                                      
                                                      
                                                      776,462
                                                      
                                                      
                                                      
                                                      668,781TOTAL
      LIABILITIES
                                                      
                                                      
                                                      7,354,487
                                                      
                                                      
                                                      
                                                      2,470,732Minority
      interest
                                                      
                                                      
                                                      (797,205
                                                      )
                                                      
                                                      
                                                      (468,644
                                                      )Commitments
      and contingenciesSTOCKHOLDERS’
      EQUITY:Preferred
      Stock: $.001 Par value; 5,000,000 shares authorized; 0
                                                        shares issued and outstanding at March 31, 2009 and June
      30, 2008, respectively
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Class
      A common stock, $.001 par value; 800,000,000 shares
                                                        authorized; 38,064,390 shares issued and outstanding at
      March 31, 2009;
                                                        9,542,000 shares issued and 6,425,899 shares issuable at
      June 30, 2008
                                                      
                                                      
                                                      38,064
                                                      
                                                      
                                                      
                                                      15,968Class
      B common stock: $.001 par value; 200,000,000 shares
                                                        authorized; 0 shares issued and outstanding at March 31,
      2009 and
                                                        June 30, 2008, respectively
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Additional
      paid-in capital
                                                      
                                                      
                                                      58,113,897
                                                      
                                                      
                                                      
                                                      58,055,744Accumulated
      deficit during development stage
                                                      
                                                      
                                                      (48,245,918
                                                      )
                                                      
                                                      
                                                      (45,563,739
                                                      )Stock
      held in trust
                                                      
                                                      
                                                      (1,500
                                                      )
                                                      
                                                      
                                                      (1,500
                                                      )Foreign
      currency translation adjustment
                                                      
                                                      
                                                      (119,555
                                                      )
                                                      
                                                      
                                                      (35,178
                                                      )Total
      stockholders’ equity
                                                      
                                                      
                                                      9,784,988
                                                      
                                                      
                                                      
                                                      12,471,295TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                                                      
                                                      $
                                                      16,342,270
                                                      
                                                      
                                                      $
                                                      14,473,383




See notes to
      consolidated financial statements.





2




TRUE
      PRODUCT ID, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF OPERATIONS (Unaudited)Period
      October 1,2005
      (Date ofFor
      the Three Months Ended
                                              
                                              
                                              For
      the Nine Months Ended
                                              
                                              
                                              Inception)
      ThroughMarch
      31,
                                              
                                              
                                              March
      31,
                                              
                                              
                                              March
      31, 20092009
                                              
                                              
                                              2008
                                              
                                              
                                              2009
                                              
                                              
                                              2008REVENUE,
      net of returns
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -EXPENSES:Consulting
      fees
                                              
                                              
                                              97,050
                                              
                                              
                                              
                                              84,015
                                              
                                              
                                              
                                              232,950
                                              
                                              
                                              
                                              15,765,450
                                              
                                              
                                              
                                              28,135,071Officer
      and director compensation
                                              
                                              
                                              233,635
                                              
                                              
                                              
                                              277,742
                                              
                                              
                                              
                                              634,564
                                              
                                              
                                              
                                              9,526,176
                                              
                                              
                                              
                                              11,715,145General
      and administrative
                                              
                                              
                                              1,582,302
                                              
                                              
                                              
                                              51,006
                                              
                                              
                                              
                                              2,068,989
                                              
                                              
                                              
                                              532,388
                                              
                                              
                                              
                                              4,957,393Amortization
      and depreciation
                                              
                                              
                                              18,307
                                              
                                              
                                              
                                              17,909
                                              
                                              
                                              
                                              57,441
                                              
                                              
                                              
                                              63,920
                                              
                                              
                                              
                                              238,814Technology
      license fee
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              637,500Total
      expenses
                                              
                                              
                                              1,931,294
                                              
                                              
                                              
                                              430,672
                                              
                                              
                                              
                                              2,993,944
                                              
                                              
                                              
                                              25,887,934
                                              
                                              
                                              
                                              45,683,923NET
      LOSS FROM OPERATIONS
                                              
                                              
                                              (1,931,294
                                              )
                                              
                                              
                                              (430,672
                                              )
                                              
                                              
                                              (2,993,944
                                              )
                                              
                                              
                                              (25,887,934
                                              )
                                              
                                              
                                              (45,683,923
                                              )OTHER
      INCOME (EXPENSE):Write
      down for impairment of goodwill
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (4,300,000
                                              )Forgiveness
      of debt
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              1,583,753
                                              
                                              
                                              
                                              1,583,753Interest
      income
                                              
                                              
                                              4,375
                                              
                                              
                                              
                                              3,647
                                              
                                              
                                              
                                              13,450
                                              
                                              
                                              
                                              12,273
                                              
                                              
                                              
                                              61,084Interest
      expense
                                              
                                              
                                              (10,082
                                              )
                                              
                                              
                                              (13,215
                                              )
                                              
                                              
                                              (30,246
                                              )
                                              
                                              
                                              (34,846
                                              )
                                              
                                              
                                              (104,296
                                              )Loss
      on equity investment
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (65,513
                                              )NET
      LOSS BEFORE MINORITY INTEREST AND
                                                DISCONTINUED
      OPERATIONS
                                              
                                              
                                              (1,937,001
                                              )
                                              
                                              
                                              (440,240
                                              )
                                              
                                              
                                              (3,010,740
                                              )
                                              
                                              
                                              (24,326,754
                                              )
                                              
                                              
                                              (48,508,895
                                              )MINORITY
      INTEREST
                                              
                                              
                                              97,145
                                              
                                              
                                              
                                              109,685
                                              
                                              
                                              
                                              328,561
                                              
                                              
                                              
                                              261,340
                                              
                                              
                                              
                                              797,205DISCONTINUED
      OPERATIONSLoss
      from operations of disposed subsidiaries, net of taxes
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (10,245
                                              )Loss
      from disposal of subsidiaries, net of taxes
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (523,983
                                              )Loss
      from discontinued operations
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              (534,228
                                              )NET
      LOSS
                                              
                                              
                                              (1,839,856
                                              )
                                              
                                              
                                              (330,555
                                              )
                                              
                                              
                                              (2,682,179
                                              )
                                              
                                              
                                              (24,065,414
                                              )
                                              
                                              
                                              (48,245,918
                                              )OTHER
      COMPREHENSIVE INCOME:Foreign
      currency translation adjustment
                                              
                                              
                                              (76,126
                                              )
                                              
                                              
                                              (56,863
                                              )
                                              
                                              
                                              (84,377
                                              )
                                              
                                              
                                              (70,970
                                              )
                                              
                                              
                                              (119,555
                                              )TOTAL
      COMPREHENSIVE LOSS
                                              
                                              $
                                              (1,915,982
                                              )
                                              
                                              $
                                              (387,418
                                              )
                                              
                                              $
                                              (2,766,556
                                              )
                                              
                                              $
                                              (24,136,384
                                              )
                                              
                                              $
                                              (48,365,473
                                              )NET
      LOSS PER SHARE:Basic
      and Diluted
                                              
                                              $
                                              (0.07
                                              )
                                              
                                              $
                                              (0.04
                                              )
                                              
                                              $
                                              (0.12
                                              )
                                              
                                              $
                                              (3.30
                                              )WEIGHTED-AVERAGE
      SHARES:Basic
      and Diluted
                                              
                                              
                                              27,016,145
                                              
                                              
                                              
                                              9,861,208
                                              
                                              
                                              
                                              23,803,195
                                              
                                              
                                              
                                              7,312,813




See notes to
      consolidated financial statements.







3


TRUE
      PRODUCT ID, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF CASH FLOWS (Unaudited)Period
      October 1,Nine
      Months Ended
                                
                                
                                2005
      (Date ofMarch
      31,
                                
                                
                                Inception)
      Through2009
                                
                                
                                2008
                                
                                
                                March
      31, 2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                                
                                $
                                (2,682,179
                                )
                                
                                $
                                (24,065,414
                                )
                                
                                $
                                (48,180,334
                                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                                
                                
                                57,441
                                
                                
                                
                                63,920
                                
                                
                                
                                238,814Stock
      based compensation
                                
                                
                                80,249
                                
                                
                                
                                9,055,589
                                
                                
                                
                                11,160,830Issuance
      of common stock for consulting fees
                                
                                
                                -
                                
                                
                                
                                15,765,450
                                
                                
                                
                                27,902,121Forgiveness
      of debt
                                
                                
                                -
                                
                                
                                
                                (1,583,753
                                )
                                
                                
                                (1,583,753
                                )Write
      off of goodwill
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                4,300,000Loss
      from equity investment
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                65,513Loss
      on disposal of subsidiaries
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                523,983Loss
      from operations of disposed subsidiaries
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                10,245Minority
      interest
                                
                                
                                (328,561
                                )
                                
                                
                                (152,245
                                )
                                
                                
                                (797,205
                                )Changes
      in operating assets and liabilities:
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                -Accounts
      receivable
                                
                                
                                (146,093
                                )
                                
                                
                                (157,105
                                )
                                
                                
                                (298,844
                                )Other
      current assets
                                
                                
                                9,876
                                
                                
                                
                                (1,606
                                )
                                
                                
                                (29,560
                                )Interest
      on note receivable
                                
                                
                                (12,938
                                )
                                
                                
                                (12,938
                                )
                                
                                
                                (60,376
                                )Accounts
      payable and accrued expenses
                                
                                
                                1,492,826
                                
                                
                                
                                174,960
                                
                                
                                
                                3,291,235Accrued
      expenses - related party
                                
                                
                                -
                                
                                
                                
                                488,164
                                
                                
                                
                                87,500Accrued
      interest payable
                                
                                
                                30,246
                                
                                
                                
                                -
                                
                                
                                
                                85,099Net
      cash used in operating activities
                                
                                
                                (1,499,133
                                )
                                
                                
                                (424,978
                                )
                                
                                
                                (3,284,732
                                )CASH
      FLOWS FROM INVESTING ACTIVITIES:Investment
      in acquired entity
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                43,422Purchase
      of fixed assets
                                
                                
                                (6,757
                                )
                                
                                
                                (24,713
                                )
                                
                                
                                (189,599
                                )Cash
      and cash equivalents in disposed subsidiaries
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (50,823
                                )Net
      cash used in investing activities
                                
                                
                                (6,757
                                )
                                
                                
                                (24,713
                                )
                                
                                
                                (197,000
                                )CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      of cash restricted
                                
                                
                                (1,750,000
                                )
                                
                                
                                -
                                
                                
                                
                                (1,750,000
                                )Proceeds
      from related parties
                                
                                
                                107,681
                                
                                
                                
                                -
                                
                                
                                
                                776,462Proceeds
      from saddington advances
                                
                                
                                3,254,000
                                
                                
                                
                                -
                                
                                
                                
                                3,254,000Proceeds
      from issuance of common stock for cash
                                
                                
                                -
                                
                                
                                
                                450,000
                                
                                
                                
                                500,968Proceeds
      from convertible debt
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                500,000Proceeds
      from financing
                                
                                
                                -
                                
                                
                                
                                288,903
                                
                                
                                
                                489,862Repayment
      of capital lease obligation
                                
                                
                                (998
                                )
                                
                                
                                -
                                
                                
                                
                                (15,702
                                )Repayment
      of debt
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                (101,716
                                )Net
      cash provided by financing activities
                                
                                
                                1,610,683
                                
                                
                                
                                738,903
                                
                                
                                
                                3,653,874FOREIGN
      CURRENCY TRANSLATION
                                
                                
                                (84,377
                                )
                                
                                
                                (70,970
                                )
                                
                                
                                (119,555
                                )NET
      INCREASE IN CASH AND CASH EQUIVALENTS
                                
                                
                                20,416
                                
                                
                                
                                218,242
                                
                                
                                
                                52,587BEGINNING
      OF PERIOD
                                
                                
                                32,171
                                
                                
                                
                                42,774
                                
                                
                                
                                -END
      OF PERIOD
                                
                                $
                                52,587
                                
                                
                                $
                                261,016
                                
                                
                                $
                                52,587Supplementary
      disclosure of cash flow information:Cash
      paid for interest
                                
                                $
                                -
                                
                                
                                $
                                789
                                
                                
                                $
                                1,223Cash
      paid for taxes
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -


See notes to
      consolidated financial statements.




4






TRUE
      PRODUCT ID, INC.(A
      DEVELOPMENT STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF CASH FLOWS (Unaudited) - continued
                                                            
                                                            Period
      October 1,Nine
      Months Ended
                                                            
                                                            
                                                            2005
      (Date ofMarch
      31,
                                                            
                                                            
                                                            Inception)
      Through2009
                                                            
                                                            
                                                            2008
                                                            
                                                            
                                                            March
      31, 2009NON-CASH
      INVESTING AND FINANCING ACTIVITIESIssuance
      of common stock and notes payable and elimination of accrued royalty
      as
                                                              part
      of acquisition of 60% interest in chinese joint venture
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            17,597,500Sale
      of subsidiary via the issuance of note receivable
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            300,000Issuance
      of common and preferred stock for acquisition of technology
      license
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            598,927Issuance
      of common stock for retirement of debt
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            443,848Adjustment
      to restructuring agreement
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            697,740Assets
      and liabilities transferred to related party in connection with sale
      of
                                                              subsidiaries:Cash
      and cash equivalents
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            50,823Inventory
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            296,544Property
      and equipment
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            54,189Accounts
      receivable - related party
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            37,850Deposits
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            6,667Due
      from officer
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            82,193Intangible
      assets
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            260,542Investments
      in affiliates
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            107,561Accounts
      payable and accrued expenses
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            (210,769
                                                            )Debt
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            (6,321
                                                            )Due
      to related party
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            137,240Treasury
      stock
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            -
                                                            
                                                            
                                                            $
                                                            17,709






See notes to
      consolidated financial statements.







5




TRUE
PRODUCT ID, INC.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
A - BASIS OF PRESENTATION





True
Product ID, Inc. (the “Company” or the “Corporation”) produces integrated
anti-counterfeiting and security surveillance
applications and is a provider of tracking devices. The financial statements are
presented on the basis that the Company is a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal
course of business over a reasonable length of time. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.  The Company has incurred operating losses since its
inception. The Company’s ability to continue as a going concern is dependent
upon the Company’s ability to continue to raise sufficient working
capital.


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 Securities and Exchange
Commission (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.





SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES




Principals
of Consolidation




The
consolidated financial statements include the accounts of the Company and any
wholly owned subsidiaries. All material inter-company transactions and balances
have been eliminated in consolidation.





Use
of Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statement and the reported amounts of revenues and
expenses during the reporting period. Estimates that are critical to the
accompanying financial statements arise from the determination of the fair value
of the Company’s investment. Because such determination involves subjective
judgment, it is at least reasonably possible that the Company’s estimates could
change in the near term with respect to this matter.





Fair
Value of Financial Instruments





Cash and
cash equivalents, prepaid expenses and other current assets, accounts payable
and accrued expenses, as reflected in the consolidated financial statements,
approximate fair value because of the short-term maturity of these instruments.
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.





Net
Loss Per Share





Basic and
diluted net losses per common share are presented in accordance with Statement
of Financial Accounting Standards (“SFAS”) No.128, “Earning Per Share", for all
periods presented. Stock subscriptions, options and warrants have been excluded
from the calculation of the diluted loss per share for the periods presented in
the statements of operations, because all such securities were anti-dilutive.
The net loss per share is calculated by dividing the net loss by the weighted
average number of shares outstanding during the periods.





Reclassification





Certain
amounts in the prior year consolidated financial statements have been
reclassified for comparative purposes to conform to the presentation in the
current year consolidated financial statements.








6







RECENT
ACCOUNTING PRONOUNCEMENTS





In April
2009, the Financial Accounting Standard Board (“FASB”) issued three Final Staff
Positions on Financial Accounting Standards (“FAS”) to provide additional
guidance and disclosures regarding fair value measurements and impairments of
securities. These three FSPs are effective for interim and annual periods ending
after June 15, 2009.





FSP FAS
157-4, “Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly”, provides guidance for estimating fair value when the
volume and level of activity for an asset or liability have significantly
decreased. The Company does not expect that FSP FAS 157-4 will have a material
impact on the Company’s consolidated financial statements.





FSP FAS
115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary
Impairments”, amends the other-than-temporary impairment guidance for debt
securities to make the guidance more operational and to improve the presentation
and disclosure of other-than-temporary impairments on debt and equity securities
in financial statements. The Company does not expect that FSP FAS 115-2 and FAS
124-2 will have a material impact on the Company’s consolidated financial
statements.





FSP FAS
107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial
Instruments”, requires disclosure about fair value of financial instruments for
interim reporting periods of publicly traded companies as well as in annual
financial statements. The Company will review the requirements of FSP FAS 107-1
and comply with its requirements.





On
January 12, 2009, the FASB issued FSP  99-20-1, “Amendments to the
Impairment Guidance of EITF Issue No. 99-20”. FASB FSP 99-20-1 amends the
impairment guidance in EITF No. 99-20, “Recognition of Interest Income and
Impairment on Purchased Beneficial Interests and Beneficial Interests that
Continue to be Held by a Transferor in Securitized Financial Assets”. The intent
of the FSP is to reduce complexity and achieve more consistent determinations as
to whether other-than-temporary impairments of available for sale or held to
maturity debt securities have occurred. The FSP is effective for interim and
annual reporting periods ending after December 15, 2008. The adoption of this
FSP did not have an impact on the Company’s consolidated financial
statements.





Employers’
Disclosures about Postretirement Benefit Plan Assets





In
December 2008, the FASB issued FSP FAS No. 132(R)-1, “Employers’ Disclosures
about Postretirement Benefit Plan Assets.”  This FSP amends FASB
Statement No. 132(R) (“SFAS No. 132(R)”), “Employers’ Disclosures about Pensions
and Other Postretirement Benefits,” to provide guidance on an employer’s
disclosures about plan assets of a defined benefit pension or other
postretirement plan.  FSP FAS No. 132(R)-1 also includes a technical
amendment to SFAS No. 132(R) that requires a nonpublic entity to disclose net
periodic benefit cost for each annual period for which a statement of income is
presented.  The required disclosures about plan assets are effective
for fiscal years ending after December 15, 2009.  The technical
amendment was effective upon issuance of FSP FAS No. 132(R)-1.  The
adoption of the technical amendment of FSP FAS No. 132(R)-1 had no impact on its
consolidated financial position and results of operations.





Effective
Date of FASB Interpretation No. 48 for Certain Nonpublic
Enterprises





In
December 2008, the FASB issued FSP No. 48-3, “Effective Date of FASB
Interpretation No. 48 for Certain Nonpublic Enterprises.”  FSP FIN No.
48-3 defers the effective date of FIN No. 48, “Accounting for Uncertainty in
Income Taxes,” for certain nonpublic enterprises as defined in SFAS No. 109,
“Accounting for Income Taxes.”  However, nonpublic consolidated
entities of public enterprises that apply U.S. generally accepted accounting
principles (GAAP) are not eligible for the deferral.  FSP FIN No. 48-3
was effective upon issuance.  The impact of adoption was not material
to the Company’s consolidated financial condition or results of
operations.





Disclosures
by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities





In
December 2008, the FASB issued FSP FAS No. 140-4, “Disclosures by Public
Entities (Enterprises) about Transfers of Financial Assets and Interests in
Variable Interest Entities.”  This FSP amends SFAS No. 140,
“Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities,” to require public entities to provide additional disclosures
about transfers of financials assets.  FSP FAS No. 140-4 also
amends FIN No. 46(R)-8, “Consolidation of Variable Interest Entities,” to
require public enterprises, including sponsors that have a variable interest
entity, to provide additional disclosures about their involvement with
a variable interest entity.  FSP FAS No. 140-4 also requires
certain additional disclosures, in regards to variable interest entities, to
provide greater transparency to financial statement users.  FSP FAS
No. 140-4 is effective for the first reporting period (interim or annual) ending
after December 15, 2008, with early application encouraged.  The
adoption of FSP FAS No. 140-4 had no impact on its consolidated financial
position and results of operations.








7







Determination
of the Useful Life of Intangible Assets





In April
2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of
Intangible Assets,” which amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
intangible assets under FASB 142 “Goodwill and Other Intangible Assets”. 
The intent of this FSP is to improve the consistency between the useful life of
a recognized intangible asset under SFAS No.142 and the period of the expected
cash flows used to measure the fair value of the asset under SFAS No. 141
(revised 2007) “Business Combinations” and other U.S. generally accepted
accounting principles. FSP FAS No. 142-3 is effective for the first reporting
period (interim or annual) ending after December 15, 2008, with early
application encouraged. The adoption of FSP FAS No. 142-3 had no impact on its
consolidated financial position and results of operations





Disclosure
about Derivative Instruments and Hedging Activities





In March
2008, the FASB issued SFAS No. 161, “Disclosure about Derivative Instruments and
Hedging Activities,” an amendment of FASB Statement No. 133, (SFAS No. 161).
This statement requires that objectives for using derivative instruments be
disclosed in terms of underlying risk and accounting designation. The Company
was required to adopt SFAS No. 161 on January 1, 2009. The adoption of SFAS No.
161 had no impact on the Company’s consolidated financial
statements.







Delay
in Effective Date




In
February 2008, the FASB issued FSP FAS No. 157-2, “Effective Date of FASB
Statement No. 157”. This FSP delays the effective date of SFAS No. 157 for
all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually)
to fiscal years beginning after November 15, 2008, and interim periods
within those fiscal years. The impact of adoption was not material to the
Company’s consolidated financial condition or results of
operations.





NOTE
B - FOREIGN OPERATIONS





Since May
2007, the majority of the Company’s operating activities have been in
China.  The functional currency of the Chinese affiliate is the Yuan
and the financial statements of the Chinese affiliate have been converted from
Yuan to U.S. Dollars at the exchange rate in effect.  For the nine
months ended March 31, 2009, there was $84,377 of foreign currency
translation losses included in the March 31, 2009 statement of
operations.  The cumulative foreign currency translation adjustment of
$119,555 is included as a component of shareholders’ equity at March 31, 2009,
to reflect the change in value of assets and liabilities in the Chinese
affiliate’s balance sheet.





NOTE
C - NATIONAL CONTRACT WITH THE PEOPLE’S REPUBLIC OF CHINA





In August
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.





On
November 3, 2008, the Company entered into several definitive agreements with
Saddington Limited (“Saddington”), a British Virgin Island company, which has
resulted in, among other things, funding for the Chinese National Gas Tank
Contract with the State General Administration for Quality Supervision,
Inspection and Quarantine of the People's Republic of China (“AQSIQ”)
(collectively, the “Saddington Agreements”).





Under the
Saddington Agreements, Saddington has secured and will provide the funding
needed to immediately roll out and maintain the rights to the AQSIQ Chinese
National Gas Tank Contract. The Company will receive a 5% share of the net
operating profits before taxes for the first two and a half years, and 5% of the
gross revenues thereafter, from the AQSIQ National Gas Tank Project and any
other projects and contracts with AQSIQ under AQSIQ’s 2007 Official National
Special Equipment Security Standard Circular to anti-counterfeit other Chinese
special equipment (medical gas tanks, elevator parts, automobile manufacturing
equipment, amusement park apparatus, cell phone batteries), the Chinese National
Car and Motorcycle Part Contract with the China Federation of Industry and
Commerce Auto & Motorbike Parts articles for Use Chamber of Commerce, the
Chinese Painting and Calligraphy Contract with the Beijing & Calligraphy
Collector Association, and the Chinese Pharmaceutical Contract with Helida
(Xinyang) Pharmaceuticals Co., Ltd.
 
 In
return, Saddington will receive the all rights to the intellectual property of
the Company, including all trademarks, patents, marks, and logos; all rights to
all contracts with AQSIQ, including the AQSIQ Gas Tank Contract; the AQSIQ
Gas Tank Joint Venture; and any and all other contracts in Asia; all of the
Company’s fixed assets and business in Asia, including the right to use the
business name of TPID in Asia; the Company’s interest in TPID Beijing; and the
entire share capital of TPID Hong Kong.  Saddington will license back
to the Company the rights to exploit the intellectual property in the rest of
the world outside Asia in return for the payment of specified
royalties.




8






Approximately
$3.3 million in funding has already been received from Saddington, of which
$1.75 million is currently classified on the balance sheet as restricted cash
for the funding and operations of the Chinese National Gas Tank Contract.
 As of March 31, 2009 Saddington was still engaged in their final due
diligence and the transaction had not yet closed.  The transaction is
expected to close during the fourth quarter of fiscal year
2009.




NOTE
D- RELATED PARTY PAYABLE





During
the current fiscal year, the officers and executives of the Company provided
significant amount of loans to the Beijing operation on various occasions. Total
related party loan payables as of March 31, 2009 is approximately
$776,462.





NOTE
E - SUBSEQUENT EVENTS





On April
7, 2009, David Bruce Hong resigned as a director of the Company to pursue other
interests.  Mr. Hong’s resignation was not the result of a
disagreement with the Company or management.






















9




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 the Annual Report on Form
10-KSB.





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 March 31, 2009 and 2008





During
the three months ended March 31, 2009 ("Fiscal 2009"), 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 March 31, 2008 ("Fiscal
2008"), there were no revenues.





The
Company had operating expenses of $2,210,398 for the third fiscal quarter of
fiscal 2009 with the majority of the expense related to accrual of legal
expense; stock compensation of employees and consultants, as compared to
operating expenses of $430,672 for the third fiscal quarter of fiscal 2008, with
the majority of the expense related to stock compensation of an employee and
consultant.  The increase of operating expenses in the third fiscal
quarter of Fiscal 2009 from the third fiscal quarter of Fiscal 2008 is
attributable to expenses related to the Gas Tank Contract with AQSIQ and
additional expense related to legal expenses and stock compensation of employees
and consultants.
 
 The
Company reported a loss before minority interest of approximately $2,161,382 for
the three months ended March 31, 2009, compared to a loss before minority
interest of approximately $440,240 for the three months ended March 31, 2008, an
increase of approximately $1,721,142, mostly attributed to acrrued legal
expenses, including consultation related to the Gas Tank Contract with AQSIQ and
to stock compensation of employees and consultants.
 
 Minority
interest for the current fiscal quarter was a credit of approximately $152,944.
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 March 31, 2009 the Company had a loss of approximately
$2,090,000, compared to a loss of approximately $387,000, for the quarter ended
March 31, 2008, attributed to, the additional expense related to the Gas Tank
Contract with AQSIQ and to stock compensation of employees and
consultants.


Nine
Months Ended March 31, 2009 and 2008





During
the nine months ended March 31, 2009, 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 nine months ended March 31, 2008, there were also
no sales by the Chinese JV Company.
 
 The
Company had operating expenses of $3.1 million for the first nine months of
fiscal 2009, with the majority of the expense ($1.2 million) related to accrued
legal expenses and stock compensation of employees and consultants, compared to
operating expenses of $25.6 million for the first nine months of fiscal 2008,
with the majority of the expense ($25.3 million) related to stock compensation
of an employee and consultant.  All other expenses remained relatively
constant.  During the first three quarters of fiscal 2009, 1.5 million
shares of the Company’s common stock were issued for services, resulting in a
charge of $38,065 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 538 million shares of the Company’s
common stock issued for services, during the third fiscal quarter of fiscal
2008, resulting in a charge of $25.3 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
Company reported a loss before minority interest of approximately $3.0 million
for the nine months ended March 31, 2009, compared to a loss before other income
and provision for income taxes of $24.3 million for the nine months ended March
31, 2008, a decrease of $21.3.






10







Minority
interest for the current fiscal period was a credit of approximately $328,561.
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 nine-months ended March 31, 2009, the Company had a loss of $2.8million,
compared to a loss of $24.1 million for the nine-months ended March 31,
2008.


FINANCIAL
CONDITION





Liquidity
and Capital Resources





During
the nine months ended March 31, 2009, the Company's cash increased by $20,416 to
$1,802,587, of which $1,750,000 is restricted for the funding and operations of
the Chinese National Gas Tank contract.





Cash used
by operating activities totaled $1,499,133 for the nine months ended March 31,
2009.  Cash outflows included the $2,682,179 net loss for the period,
$328,561 for minority interest which was also non-cash in nature, an increase in
accounts receivable of $146,093, and an increase in interest on notes receivable
of $12,938; offset in part by an increase in other current assets of
$9,876,  an increase in accounts payable and accrued expenses of
$1,492,826, an increase in accrued interest payable of $30,246, stock based
compensation expenses of $80,249 and $57,441 for depreciation and
amortization.





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
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 pronouncements, it
remains to be seen 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 World Trade
Organization, 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 and the Administration for Quality
Supervision, Inspection and Quarantine of the People's Republic of
China  “AQSIQ” Gas Tank Project.  There is no guarantee that
the Chinese Government may not 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, including the AQSIQ Gas Tank Project.






11





RISK
FACTORS:  RISKS RELATED TO THE COMPANY’S CONTINUED EFFORTS IN
NON-CHINA MARKETS





As stated
above, the Company's immediate priority has been the focus on China,
implementing its China contracts, especially the AQSIQ Contract, and generating
revenues from its China contracts.  In the future, the Company plans
to focus its efforts to penetrate markets outside China.





With
respect to the United States, the Company is refining its initial business plan
and intends to 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, Canada and the Middle East.  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.





There can
be no assurance that the Company’s marketing plan and efforts outside China will
be successful.





RISK
FACTORS:  RISKS RELATED TO CURRENT WORLD FINANCIAL
MARKETS





While the
Company has obtained financing from Saddington Limited, the current difficulties
in world markets could adversely affect Saddington, and accordingly, there can
be no assurance that Saddington will be able to fully perform under the
Saddington Agreements.








ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





Not
Applicable





ITEM
4T. CONTROLS AND PROCEDURES





Our
President and Chief Accounting Officer (the “Certifying Officers”) are
responsible for establishing and maintaining disclosure controls and procedures
for our company and our subsidiary. Such officers have concluded (based upon his
evaluation of these controls and procedures as of the end of the period covered
by this report) that our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in this report is
accumulated and communicated to management, including our principal executive
officers as appropriate, to allow timely decisions regarding required
disclosure.





The
Certifying Officers have also indicated that there were no significant changes
in our internal controls or other factors that could significantly affect such
controls subsequent to the date of this evaluation, and there were no corrective
actions with regard to significant deficiencies and material
weaknesses.


Our
management, including the Certifying Officers, does not expect that our
disclosure controls or our internal controls will prevent all error and all
fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. In addition, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within a company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by management
override of the control. The design of any systems of controls also is based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Because of these inherent limitations in
a cost-effective control system, misstatements due to error or fraud may occur
and not be detected.








12





CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING





As
required by Rule 13a-15(d), the Company's President and Chief Accounting
Officer, also conducted an evaluation of the Company’s internal controls over
financial reporting to determine whether any changes occurred during
the third fiscal quarter that have materially affected, or are reasonably
likely to materially affect, the Company's internal control over financial
reporting. During the preparation of the Company's financial statements as of
and for the year ended June 30, 2008, the Company concluded that the then
current system of disclosure controls and procedures needed improvement, partly
due to the transition to new management, facilities, and auditors. As a result
of this conclusion, the Company initiated changes in internal control. It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable, and not absolute, assurance that the objectives of the
system will be met. In addition, the design of any control system is based in
part upon certain assumptions about the likelihood of future
events.




















13




PART
II
 
 ITEM
1.     LEGAL PROCEEDINGS
 
 The
Company is subject to disputes and litigation in the ordinary course of
business. The Company is not aware of any pending or threatened litigation that
it believes is reasonably likely to have a material adverse effect on the
financial statement or results of operations, based upon the information
available at this time.  No material developments in the litigation
matters disclosed in the Company’s 10Q for the quarter ended December 31, 2009,
have occurred since the filing of that 10Q.
 
 ITEM
1A Risk Factors
 
 We Expect to Continue to
Incur Significant Operating Losses Which Endangers our Viability as a
Going-Concern
 
 The
Company has never established adequate sources of operating revenue and had
incurred net operating losses since our inception.  At March 31, 2009,
we had an accumulated deficit of approximately $9.8 million.  These
losses have resulted principally from general and administrative costs
associated with our operations. We expect operating losses to
continue.  Our continuing losses have caused our independent
accountants to qualify their audit report regarding our use of "going concern"
basis of accounting in preparation of our 2008 consolidated financial
statements.  There can be no reasonable assurances, however, that the
Company will be to establish predictable and scalable sources of
revenue.
 
 Our Cash Flow Problems Have
Caused Us to be Delinquent in Payments to Vendors and Other
Creditors
 
 Our
lack of financial resources has caused us to delay payment of our obligations as
they became due in the ordinary course of our business.  Such delays
have damaged some of our vendor and professional relationships, and have caused
us to incur additional expenses in the payment of late charges and
penalties.  As of March 31, 2009, we had a working capital deficiency
of approximately $3.9 million and accounts payable, primarily to service
providers and vendors, aggregating approximately $1.8 million, substantially all
of which are past due. At March 31, 2009, we have accrued expenses, primarily to
Officers and Consultants for service providers, aggregating approximately $0.7
million, substantially all of which are past due.
 
 
 We Will Require Significant
Additional Capital to Continue Operations Which May Not be
Available
 
 Our continued losses and operational plan require us
to secure substantial equity financing to continue in business.  As a
result of our weak financial position, lack of operating history, and inherent
risk, the cost of obtaining new finance will continue to be very high, and if
arrangements involve issuance of shares, the future dilution could be
significant.  There can be no reasonable assurances that equity
financing, if available, can be obtained when needed or on terms favorable to
the Company or the existing holders of our equity
securities.
 
 We Have a Limited Operating
History
 
 We
have had a limited history of operations. Consequently, we have little
experience in manufacturing, marketing and selling our products and no
meaningful history upon which you can evaluate the likelihood of our ultimate
success.  There can be no reasonable assurances, the Company will be
successful.
  We Face 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
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 pronouncements, it
remains to be seen 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.
   14
   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 World Trade
Organization, 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 and the Administration for
Quality Supervision, Inspection and Quarantine of the People's Republic of
China  “AQSIQ” Gas Tank Project.  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, including the AQSIQ Gas Tank Project.
 
 We Face Risks Related To Our
Continued Efforts In Non-China Markets
 
 The
Company's immediate priority has been the focus on China, implementing its China
contracts, especially the AQSIQ Contract, and generating revenues from its China
contracts.  In the future, the Company plans to focus its efforts to
penetrate markets outside China.
 
 With
respect to the United States, the Company is refining its initial business plan
and intends to 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, Canada and the Middle East.  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.
     15
 
 There can
be no assurance that the Company’s marketing plan and efforts outside China will
be successful.
 
 We Face Risks Related To
Current World Financial Markets
 
 While
the Company believes the transactions with Saddington Limited, will close later
this fiscal year, the current difficulties in world markets could adversely
affect Saddington, and accordingly, there can be no assurance that Saddington
will be able to fully perform under the Saddington
Agreements.




FASANO
LITIGATION





There are
certain claims between the Company and Daniel M. Fasano (Fasano), the former
president and chairman of the Company’s predecessor, OnTV, Inc.  In
April 2006, TPID’s former parent, Sure Trace Security Corporation (“SSTY”)
acquired the controlling interest of OnTV from Fasano.  OnTV then spun
off from SSTY and became a separate and independent company (renamed True
Product ID, Inc.) as a result of a dividend to SSTY shareholders effective June
1, 2006.





Monies
owed the Company by Fasano as a Result of His 2005 Purchase of All Assets of the
Company’s Subsidiary Seen OnTV





In
September 2005, Fasano (then the Company’s president and chairman) purchased of
all the shares of the Company’s subsidiary, Seen OnTV, and other assets
incidental to the business of Seen OnTV, including the domain name, trademark,
and trade name “AsSeenOnTV.com”.  As reported in the Company’s Form
10SB12G filed January 31, 2000, the Company purchased the domain name
“AsSeenOnTv.com” in January 2000 for approximately $5
million.  Pursuant to a written agreement, Fasano owes the Company
$300,000, plus interest at 5.75% per year (since September 2005).  As
of the date of this filing, no monies have been received for this purchase.
Total amount due, including principal and interest, to the Company as of March
31, 2009 is $360,376.


Outstanding
Monies owed by the Company to Fasano from the 2006 SSTY Acquisition of
ONTV





The
Company entered into an amended pay agreement regarding the monies owed to
Fasano from the 2006 SSTY acquisition of OnTV.  Pursuant to the
amended pay agreement, the Company agreed to pay Fasano (1) $100,000 by March
31, 2007; (2) $185,000 by June 30, 2007; and (3) $34,410 in interest and
penalties by June 30, 2007.  Any and all unpaid portions of any
payments due under the amended pay agreement shall accrue simple annual interest
at twenty-five percent (25%), simple, annual interest (or the highest
permissible interest rate allowed in Pennsylvania, New York, Delaware, and/or
Florida).





The
Company remitted the first $100,000 payment but has not yet made the other two
payments totaling $219,410 due June 30, 2007 or any accrued interest thereon
(the “Outstanding ONTV Acquisition Balance”). Total amount due, including
principal and interest, to Fasano by the Company as of March 31, 2009 is
$316,926.





Litigation
Filed By Fasano





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.  Unless the matter can be resolved, a hearing on will likely
be scheduled for the second half of fiscal 2009.  A prerequisite to
Fasano maintaining his action in Delaware is that TPID be
insolvent.  Although the Company disputes that it was ever insolvent
based upon its recent contract with Saddington Limited, TPID clearly is not
insolvent under Delaware law.  The Company expects to prevail in this
litigation.





Around
the same time, the SEC commenced a review of aspects of the SSTY Acquisition of
OnTV concerning the dividend of unregistered shares of the Company to SSTY
shareholders which resulted in the spin off of the Company from
SSTY.  There was a concern that the SEC would rescind the entire
acquisition.  However, the SEC chose not to rescind the dividend or
the acquisition but instead filed a consent complaint against SSTY and certain
of its executives in September 2007 stating that SSTY failed to register the
spin off of OnTV in violation of Section 5 of the 1933 Securities
Act.





In
February 2008, Fasano filed a separate lawsuit, pro se, in Broward County,
Florida against the Company for damages in the amount of approximately
$900,000.  The Company responded to the lawsuit by filing a Motion to
Dismiss on jurisdictional grounds. The Company believes the lawsuit is without
merit and, if the matter cannot be amicably resolved, intends to vigorously
defend it.








16





In the
course of the litigation, the Company learned from Fasano that part of his
claims against the Company related to deferred salary he was purportedly owed by
the Company prior to the closing of SSTY’s Acquisition of OnTV amounting to
approximately $500,000 as of September 30, 2005.  The Company’s
position is that these types of pre-acquisition expenses, as agreed, would be
extinguished post closing.  Moreover, the Company believes that
Fasano’s claims were released by section 6 of the January 2007 amended pay
agreement, which provides:





“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.”





In net
terms, Fasano is not a creditor of TPID.  The Company expects to
prevail in this litigation.





EUROPLAN
LITIGATION





In July
2008, Europlan Financial Services Ltd., as Trustee for Ormond Trust and Deborah
Richdale, filed suit against the Company, Rene Hamouth, Hamouth Family Trust,
William R. Dunavant, Richard Specht and Wilson W. Hendricks, III, for an
unspecified amount of damages and injunctive relief.  The plaintiffs allege
that certain consultants or representatives of the Company made
misrepresentations regarding, among other things, the prospective share price of
the Company’s stock, which the plaintiffs allegedly relied upon to purchase our
stock on the open market.  The Company believes that the claims
against it are without merit.  Plaintiffs agreed to extend the time
for the Company to file a responsive pleading to explore possible settlement
negotiations.  If the matter cannot be amicably resolved, the Company
intends to defend the matter vigorously.





DUNAVANT
LITIGATION




In
January 2009, the Company filed suit seeking injunctive relief against William R
Dunavant for violations of certain terms of Mr. Dunavant’s employment agreement
with the Company.








ITEM
5.    OTHER INFORMATION




In August
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.
 
 On
November 3, 2008, the Company entered into several definitive agreements with
Saddington Limited (“Saddington”), a British Virgin Island company, which has
resulted in, among other things, funding for the Chinese National Gas Tank
Contract with the State General Administration for Quality Supervision,
Inspection and Quarantine of the People's Republic of China (“AQSIQ”)
(collectively, the “Saddington Agreements”).
 
 Under the
Saddington Agreements, Saddington has secured and will provide the funding
needed to immediately roll out and maintain the rights to the AQSIQ Chinese
National Gas Tank Contract. The Company will receive a 5% share of the net
operating profits before taxes for the first two and a half years, and 5% of the
gross revenues thereafter, from the AQSIQ National Gas Tank Project and any
other projects and contracts with AQSIQ under AQSIQ’s 2007 Official National
Special Equipment Security Standard Circular to anti-counterfeit other Chinese
special equipment (medical gas tanks, elevator parts, automobile manufacturing
equipment, amusement park apparatus, cell phone batteries), the Chinese National
Car and Motorcycle Part Contract with the China Federation of Industry and
Commerce Auto & Motorbike Parts articles for Use Chamber of Commerce, the
Chinese Painting and Calligraphy Contract with the Beijing & Calligraphy
Collector Association, and the Chinese Pharmaceutical Contract with Helida
(Xinyang) Pharmaceuticals Co., Ltd.




On
November 3, 2008, the Company entered into several definitive agreements with
Saddington Limited (“Saddington”), a British Virgin Island company, which has
resulted in, among other things, funding for the Chinese National Gas Tank
Contract with the State General Administration for Quality Supervision,
Inspection and Quarantine of the People's Republic of China (“AQSIQ”)
(collectively, the “Saddington Agreements”).





Under the
Saddington Agreements, Saddington has secured and will provide the funding
needed to immediately roll out and maintain operations of the AQSIQ Chinese
National Gas Tank Contract  and the Company will receive a 5% share of
the revenues from the AQSIQ National Gas Tank Project and any other project and
contract with AQSIQ under AQSIQ’s 2007 Official National Special Equipment
Security Standard Circular to anti-counterfeit other Chinese special equipment
(medical gas tanks, elevator parts, automobile manufacturing equipment,
amusement park apparatus, cell phone batteries), the Chinese National Car and
Motorcycle Part Contract with the China Federation of Industry and Commerce Auto
& Motorbike Parts articles for Use Chamber of Commerce, the Chinese Painting
and Calligraphy Contract with the Beijing & Calligraphy Collector
Association, and the Chinese Pharmaceutical Contract with Helida (Xinyang)
Pharmaceuticals Co., Ltd.





In
return, Saddington will receive the all rights to the intellectual property of
the Company, including all trademarks, patents, marks, and logos; all rights to
all contracts with AQSIQ, including the AQSIQ Gas Tank Contract; the AQSIQ
Gas Tank Joint Venture; and any and all other contracts in Asia; all of the
Company’s fixed assets and business in Asia, including the right to use the
business name of TPID in Asia; the Company’s interest in TPID Beijing; and the
entire share capital of TPID Hong Kong.  Saddington will license back to
the Company the rights to exploit the intellectual property in the rest of the
world outside Asia in return for the payment of specified
royalties.




Approximately
$3.3 million in funding has already been received from Saddington, of which
$1.75 million is currently classified on the balance sheet as restricted cash
for the funding and operations of the Chinese National Gas Tank Contract.
 As of March 31, 2009 Saddington was still engaged in their final due
diligence and the transaction had not yet closed.  The transaction is
expected to close during the fourth quarter of fiscal year 2009.








17






ITEM
6.    EXHIBITS AND REPORTS ON FORM 8-K FILED DURING QUARTER
ENDED MARCH 31, 2009





(a)
Exhibits





Number                                Title





31                                Rule
13a-14(a) Certification





32                                Section
1350 Certification












































18





SIGNATURES








Pursuant
to 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.By:   /s/Michael J. AntonoplosMichael
      J. AntonoplosPresidentBy:   /s/Charles A. RufaiCharles
      A. RufaiChief
      Accounting OfficerDate: 
      May 20, 2009










19