UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





Form
      10-KSB





(Mark
      One)





[x]
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      fiscal year ended December 31, 2005





[
                ]
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      transition period from ________to________





Commission
      file number: 000-30011





Total
      Identity Corp.


(Name
      of
      small business issuer in its charter)





Florida
            
            65-0309540(State
                or other jurisdiction
            
            (I.R.S.
                Employerof
                incorporation or organization No.)
            
            Identification
                )1007
                N. Federal Highway, Suite D-6Fort
                Lauderdale, Florida
            
            33304(Address
                of principal executive offices)
            
            (Zip
                Code)





Issuer's
      telephone number 561-208-8101


Securities
      registered under Section 12(b) of the Exchange Act:





Title
                of each class
            Name
                of each exchange on which registeredNone
            not
                applicable(Title
                of each class)





Securities
      registered under Section 12(g) of the Exchange Act:





common
      stock, par value $0.01 per share


(Title
      of
      class)





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. [ ]





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





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of the registrant's knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-KSB
      or any amendment to this Form 10-KSB. [ ]





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





State
      issuer's revenues for its most recent fiscal year. $ 0 for the fiscal year
      ended
      December 31, 2005.





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked prices of such common equity, as of a
      specified date within the past 60 days. The aggregate market value of the common
      equity held by non-affiliates computed at the closing price of the registrant’s
      common stock on September 12, 2006 is approximately $129,529.





On
      August
      31, 2006 27,392,510 shares of common stock are issued and
      outstanding **.**








TOTAL
      IDENTITY CORP.


ANNUAL
      REPORT ON FORM 10-KSB


FOR
      THE
      YEAR ENDED DECEMBER 31, 2005





TABLE
      OF
      CONTENTS





Documents
                Incorporated by Reference
            3Forward
                Looking Statements
            3PART
                IItem
                1.
            Description
                of Business
            4Item
                2.
            Description
                of Property
            12Item
                3.
            Legal
                Proceedings
            12Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            13PART
                IIItem
                5.
            Market
                Price for Common Equity, Related Stockholder Mattersand
                Small Business Issuer Purchases of Equity Securities
            13Item
                6.
            Management’s
                Discussion and Analysis or Plan of Operation
            14Item
                7.
            Financial
                Statements
            20Item
                8.
            Changes
                in and Disagreements with Accountants on Accounting
              and
                Financial Disclosures
            20Item
                8A
            Controls
                and Procedures
            20Item
                8B.
            Other
                Information
            20PART
                IIIItem
                9.
            Directors,
                Executive Officers, Promotors and Control Persons, Compliance with
                Section 16(a) of the
              Exchange
                Act
            20Item
                10.
            Executive
                Compensation
            22Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            27Item
                12.
            Certain
                Relationships and Related Matters
            27Item
                13.
            Exhibits
            29Item
                14.
            Principal
                Accountant Fees and Services
            31SIGNATURES
            
            32














2







DOCUMENTS
      INCORPORATED BY REFERENCE





If
      the
      following documents are incorporated by reference, briefly describe them and
      identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which
      the document is incorporated: (1) any annual report to security holders; (2)
      any
      proxy or information statement; and (3) any prospectus filed pursuant to Rule
      424(b) of the Securities Act of 1933 ("Securities Act"). Not
      Applicable.





Transitional
      Small Business Disclosure Form (check one): Yes  No
      X





**CERTAIN
      CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING
      INFORMATION**





Certain
      statements in this annual report on Form 10-KSB contain or may contain
      forward-looking statements that are subject to known and unknown risks,
      uncertainties and other factors which may cause actual results, performance
      or
      achievements to be materially different from any future results, performance
      or
      achievements expressed or implied by such forward-looking statements. These
      forward-looking statements were based on various factors and were derived
      utilizing numerous assumptions and other factors that could cause our actual
      results to differ materially from those in the forward-looking statements.
      These
      factors include, but are not limited to, economic, political and market
      conditions and fluctuations, government and industry regulation, interest rate
      risk, U.S. and global competition, and other factors. Most of these factors
      are
      difficult to predict accurately and are generally beyond our control. You should
      consider the areas of risk described in connection with any forward-looking
      statements that may be made herein. Readers are cautioned not to place undue
      reliance on these forward-looking statements, which speak only as of the date
      of
      this report. Readers should carefully review this annual report in its entirety,
      including but not limited to our financial statements and the notes thereto.
      Except for our ongoing obligations to disclose material information under the
      Federal securities laws, we undertake no obligation to release publicly any
      revisions to any forward-looking statements, to report events or to report
      the
      occurrence of unanticipated events.





Unless
      otherwise indicated, the terms "Total Identity," the "Company," " we," "our,"
      and "us" refers to Total Identity Corp. a Florida corporation, and our
      subsidiaries Total Identity Systems, Inc., a New York corporation ("TISC"),
      Total Digital Communications, Inc., a Florida corporation formerly known as
      Total Digital Displays, Inc. (“Total Digital”), Yard Sale Drop Off, Inc., a
      Florida corporation formerly known as Total Identity Group, Inc. (“Yard Sale
      Drop Off”) and Sovereign Research, LLC, a Florida limited liability
      company.























3


**PART
      I**





**ITEM
      1.**  **DESCRIPTION
      OF BUSINESS**





We
      have
      in the past and intend to continue to acquire assets and/or businesses that
      we
      believe are undervalued, and generally to operate those assets and businesses
      through our subsidiaries. During the fiscal years ended December 31, 2003,
      2004
      and 2005, and from December 31, 2005 through the date of this report, our
      operations have consisted of the following:





**Sovereign
      Research** .
      In May,
      2006 we formed Sovereign Research LLC as a Florida limited liability company
      to
      provide research reports and annual reports, primarily to small cap public
      companies. We have not yet commenced formal operations through our Sovereign
      Research subsidiary, nor have we entered into any binding agreements to provide
      research reports for any third party.





**Yard
      Sale Drop Off** .
      From
      January 2005 through March 2006, we operated an “eBay” service business that
      assisted eBay sellers in listing and selling their merchandise on the eBay
      auction website. We sold our interest in Yard Sale Drop Off in May,
      2006.





**Total
      Identity Systems** .
      From
      October 13, 2003 through November 30, 2004, we operated a Rochester, New
      York-based manufacturer of custom sign manufacturer servicing local, regional
      and national accounts. See below and “Item 2. Legal Proceedings.” We
      discontinued our operation of Total Identity Systems effective November 30,
      2004.





**Kina’ole
      Development** .
      From
      January 31, 2003 until September 30, 2003, we operated a Hawaii-based
      manufacturer of prefabrication homes. Effective September 30, 2003, we divested
      ourselves of our interest in Kina’ole Development.





**Hi*Tech
      Electronic Displays** .
      From
      October 2003 until December 2003 we operated an LED (light emitting diode)
      sign
      business in connection with our acquisition of assets from Hi*Tech. As described
      later in this section, in February 2004, we rescinded our purchase of the assets
      relating to these operations.





Each
      of
      these business operations, as well as other matters that have materially
      affected us during the period covered by this Report, are described
      below.





**Sovereign
      Research**





In
      May,
      2006 we formed Sovereign Research LLC as a Florida limited liability company
      to
      provide research reports and annual reports, primarily to small cap public
      companies. It is anticipated that the reports will be prepared for us by third
      parties with whom we contract, and that the reports will provide the investment
      community with information about the companies’ operations, the industry in
      which the company operates, competitive factors in the industry, marketing
      statistics, marketing trends and source references. Information contained in
      the
      reports will be provided by the companies, as well as publicly available
      information gathered by the third party with whom we contract. Reports will
      be
      commissioned by the public companies desiring our reports and the companies
      for
      whom we prepare the reports will be required to release us from liability
      including for any information in our report obtained in the public domain.
      We do
      not intend to provide recommendations relating to the purchase or sale of any
      securities or as to the value of any security. We have not yet commenced formal
      operations through our Sovereign Research subsidiary, nor have we entered into
      any binding agreements to provide research reports for any third
      party.





**Yard
      Sale Drop Off**





In
      January 2005, we commenced operations of our Yard Sale Drop Off, Inc. (“YSDO”)
      subsidiary. YSDO is a trading assistant and “power seller” that assists others
      to list and sell items through on-line auctions on the eBay website. In a
      typical consignment sale arrangement, an eBay seller brings his or her
      merchandise to the YSDO location where YSDO personnel take pictures of the
      item,
      work with the seller to get a detailed and accurate description of the item
      to
      be sold, compose the auction description, determine the best category under
      which to list the item for sale and answer questions that the seller may have.
      YSDO then assists the seller to list the item and if the item is purchased
      in
      the auction, YSDO packs and ships the item and receives a percentage of the
      sales price for its services.


4


In
      March
      2006, we entered into an agreement to sell all of the assets of our YSDO
      subsidiary to Mr. Mike Phillips, an unrelated third party, and discontinue
      the
      operations of this subsidiary. The purchase price for the assets was $8,000
      in
      cash and payment was received in four installments of $2,000 each, with the
      last
      payment made in May 2006 at which time we released all of the assets to the
      purchaser.





**Total
      Identity Systems**





In
      October 2003, we entered into a series of agreements with Total Identity Systems
      Corporation, a New York corporation (“TISC”) and Robert David, its sole officer,
      director and principal shareholder, to acquire TISC for a purchase price of
      approximately $1.8 million and certain other concessions to the seller in the
      form of an employment agreement and the assumption of leasehold obligations
      to
      an entity owned by Mr. David.





On
      February 23, 2004, we entered into a series of agreements with Robert David
      that
      (a) amended the stock purchase agreements and related documents dated October
      13, 2003 and (b) settled certain disputes that had arisen in connection with
      the
      October 13, 2003 agreements, including an arbitration initiated by the Company
      to resolve those disputes. Among the modifications to the initial agreement
      were
      a reduction in the purchase price from $1.8 million to $1.2 million, and a
      change in Robert David’s status with TISC, from an employee to a consultant. At
      the time the agreements were entered into, the arbitration we commenced to
      resolve the differences that arose between the parties was also
      discontinued.





On
      July
      22, 2004, we terminated our consulting agreement with Robert David on the
      grounds that Mr. David had breached the, as well as his fiduciary duties to
      the
      Company, by improperly attempting to dispose of Company assets. On or about
      July
      26, 2004, Robert David commenced two arbitrations against the Company and TISC
      with the American Arbitration Association, alleging that (a) the Company had
      improperly terminated his consulting agreement and (b) the Company was in
      default of certain payment obligations under the agreements to acquire
      TISC.





A
      central
      focus of the arbitration was our contention that information provided to us
      by
      Mr. David concerning TISC’s banking relationship with Mercantile and Trader’s
      Trust Company, a bank that had made loans to TISC, was materially inaccurate.
      The bank had previously noticed a default against TISC under the promissory
      note
      and other loan agreements between TISC and Mercantile and Trader's Trust
      Company.





On
      or
      about November 24, 2004, Mercantile and Trader's Trust Company exercised certain
      rights granted under the loan documents and had “swept” TISC’s accounts
      aggregating approximately $200,000 maintained at the bank, and applied the
      proceeds to the outstanding indebtedness of TISC to the bank. In addition,
      Mercantile and Trader's Trust Company notified the United States Post Office
      that it was exercising its rights under the loan documents to take control
      over
      all mail directed to us and the bank changed the locks at TISC’s Rochester, New
      York facility, and was seeking to take control over TISC’s assets in order to
      satisfy TISC’s indebtedness to Mercantile and Trader's Trust
      Company.





In
      exercising these rights, the Mercantile and Trader's Trust Company assumed
      control over TISC and prevented TISC from conducting and funding its day-to-day
      operations. In light of the actions taken by the bank, including our loss of
      control over TISC’s records and operations and the prospect that our registered
      public accounting firm would thereafter be unable to audit TISC’s books and
      records, we treated the operations of TISC as discontinued operations as of
      November 30, 2004, and, accordingly, our financial statements for the quarter
      ended September 30, 2004 reflect the impact of discontinuing the operations
      of
      TISC. As noted under FASB 5 paragraph 11 we presented the discontinued
      operations of TISC to keep the financial statements from being
      misleading.





As
      a
      result of all of the above and the failure of the parties to pay fees to the
      American Arbitration Association, in April 2006, the arbitration that was
      pending before the American Arbitration Association was dismissed.





TISC
      operated as a vertically integrated custom manufacturer of signs and awnings
      headquartered in Rochester, NY, with in-house marketing, sales, design,
      engineering, manufacturing, and installation capabilities. The core
      manufacturing business consisted of custom on-premise identity products such
      as
      neon, channel letters, cabinet signs, and commercial awnings. TISC also designed
      and manufactured highly custom “theme” signage for customers such as Hard Rock
      Cafe, Gibson Guitars, and Walt Disney World.


5


**Total
      Digital Communications**





On
      December 15, 2004, Total Digital Communications, Inc., formerly known as Total
      Digital Displays, Inc. (which was, at the time, our wholly owned subsidiary)
      acquired certain assets from Leonard Lightman, including the seller’s rights
      under a purported license agreement with Major League Baseball. The purchase
      price for the assets was paid by the issuance of 10,000,000 shares of Total
      Digital’s common stock to the seller. The 10,000,000 shares represented
      approximately 93% of Total Digital’s outstanding common stock at the time of
      issuance.





On
      December 29, 2004, we distributed to our shareholders of record on December
      15,
      2004 as a dividend, an aggregate of 804,929 shares, constituting all of the
      common stock of Total Digital then owned by us. One share of Total Digital
      was
      distributed for each 20 shares of our common stock held on the record date.
      The
      dividend was paid without registration under the Securities Act of 1933, as
      amended ("Securities Act"), in reliance upon an opinion of counsel that the
      transaction did not require registration under the Securities Act.





On
      January 11, 2005, we determined that the seller of the assets had misrepresented
      its ownership of the assets and, on January 11, 2005, we asserted claims against
      the seller, and demanded rescission of the asset purchase agreement, including
      its return of the 10,000,000 shares of Total Digital paid as consideration
      for
      the assets. The seller failed to comply with our demands, and we filed suit
      against the seller in Broward Circuit Court. In August 2005 the court awarded
      us
      a default against the seller for failure to file an answer to our complaint
      within the prescribed timeframe; however, in September 2005 the default was
      set
      aside.





We
      have
      been advised that the opinion of counsel upon which the distribution to our
      shareholders was based has been withdrawn. Therefore, we are treating the shares
      of Total Digital that were distributed to our shareholders as restricted
      securities. However, in light of the uncertainty of the effect that our claims
      against the seller have upon ownership of the 10,000,000 shares that were issued
      to the seller, we cannot predict whether we have any control over the future
      activities of Total Digital. At this time, we do not believe that Total Digital
      has any assets and are not aware of any market for the shares of Total Digital.
      In addition, we have been advised that Total Digital was administratively
      dissolved on September 16, 2005 by the State of Florida resulting from its
      failure to file its annual report.





**Settlement
      of Dispute with Former Director**





On
      May
      13, 2004, we and Scott Siegel, one of our director, entered into an agreement
      resolving certain disputes that had arisen relating to the ownership of
      1,050,000 shares of our common stock and 250,000 shares of our Series A
      preferred stock that were the subject of a stock purchase agreement dated
      February 21, 2003. The primary terms of the agreement are that (a) Mr. Siegel
      retained 250,000 shares of common stock (the “Retained Shares”), (b) 800,000
      shares of common stock issued to Mr. Siegel under the February 21, 2003 stock
      purchase agreement were surrendered to us and have been canceled, (c) we agreed
      to pay Mr. Siegel the sum of $35,265, plus $7,000 less an amount equal to our
      legal fees in settlement of this matter, (d) the Series A preferred stock has
      been surrendered to us and canceled; and (e) Mr. Siegel resigned as a director
      effective May 13, 2004.





**Kina’ole
      Development**





On
      January 31, 2003, we acquired 100% of the assets and outstanding stock of
      Kina’ole Development Corporation, a Hawaii corporation. Kina’ole engages in the
      manufacture and sale of prefabricated homes. Effective September 30, 2003,
      we
      agreed with the former owners of Kina’ole to exchange all of our shares of
      Kina’ole for (a) the 500,000 shares of our Series B Preferred Stock, (b) the
      issuance of 120,000 shares of our common stock to the former shareholders of
      Kina’ole in connection with the January 2003 acquisition, and (c) $13,500 paid
      to such shareholders. As a result of this exchange, we divested ourselves of
      the
      prefabricated home manufacturing operations conducted by Kina’ole.





**Hi*Tech
      Electronic Displays**





On
      October 13, 2002 we entered into an agreement with Hi*Tech Electronic Displays,
      Inc., a Florida corporation, and purchased the assets of Hi*Tech’s Factory
      Automation Division. As consideration for the asset purchase, we issued Hi*Tech
      Electronic Displays, Inc. 250,000 shares of our common stock valued at $152,500.
      Following the closing of the transaction until December 2003, we operated an
      LED
      sign business offering signs which were fabricated for us by Hi*Tech. However,
      as a result of the failure of the seller to cooperate in the completion of
      an
      audit related to the assets and the unwillingness to turn over the assets
      purchased, on February 27, 2004, we entered into a rescission agreement with


6


Hi*Tech
      Electronic Displays, Inc. to rescind our purchase of the Hi*Tech assets. Under
      the rescission agreement, we delivered the assets we acquired from Hi*Tech;
      however, Hi*Tech has failed and continues to refuse to deliver the 250,000
      shares of our common stock that we paid to Hi*Tech as consideration for its
      assets. As a result of our limited financial resources we are unable at this
      time to retain counsel to pursue a return of those shares.





**Status
      as a “Shell Company”**





Under
      rules and regulations adopted by the Securities and Exchange Commission, a
      “shell company” is a company, other than an asset-based issuer, with no or
      nominal operations and either no or nominal assets, assets consisting solely
      of
      cash and cash equivalents or assets consisting of any amount of cash and cash
      equivalents and nominal other assets. At the present time, we believe that
      we
      are a “shell company” within the meaning of these rules and
      regulations.





We
      intend
      to seek to acquire assets or shares of an entity actively engaged in business
      which generates revenues, in exchange for our securities. Our purpose is to
      seek, investigate and, if such investigation warrants, acquire an interest
      in
      business opportunities presented to us by persons or firms who or which desire
      to seek the perceived advantages our company may offer. We will not restrict
      our
      search to any specific business, industry, or geographical location and we
      may
      participate in a business venture of virtually any kind or nature. This
      discussion of the proposed business is purposefully general and is not meant
      to
      be restrictive of our virtually unlimited discretion to search for and enter
      into potential business opportunities. Management anticipates that it may be
      able to participate in only one potential business venture because we have
      nominal assets and limited financial resources. This lack of diversification
      should be considered a substantial risk to our shareholders because it will
      not
      permit us to offset potential losses from one venture against gains from
      another.





We
      may
      seek a business opportunity with entities which have recently commenced
      operations, or which wish to utilize the public marketplace in order to raise
      additional capital in order to expand into new products or markets, to develop
      a
      new product or service, or for other corporate purposes. We may acquire assets
      and establish wholly-owned subsidiaries in various businesses or acquire
      existing businesses as subsidiaries. We anticipate that the selection of a
      business opportunity in which to participate will be complex and extremely
      risky. Due to general economic conditions, rapid technological advances being
      made in some industries and shortages of available capital, management believes
      that there are numerous firms seeking the perceived benefits of a publicly
      registered corporation. These perceived benefits may include facilitating or
      improving the terms on which additional equity financing may be sought,
      providing liquidity for incentive stock options or similar benefits to key
      employees, providing liquidity (subject to restrictions of applicable statutes),
      for all shareholders and other factors. Potentially, available business
      opportunities may occur in many different industries and at various stages
      of
      development, all of which will make the task of comparative investigation and
      analysis of such business opportunities extremely difficult and
      complex.





The
      analysis of new business opportunities will be undertaken by, or under the
      supervision of, Mr. Matthew Dwyer, our CEO, who may not be considered a
      professional business analyst. Mr. Dwyer will be the key person in the search,
      review and negotiation with potential acquisition or merger candidates. We
      intend to concentrate on identifying preliminary prospective business
      opportunities that may be brought to our attention through present associations
      of our officers and directors, or by our shareholders. In analyzing prospective
      business opportunities, we will consider such matters as the available
      technical, financial and managerial resources; working capital and other
      financial requirements; history of operations, if any; prospects for the future;
      nature of present and expected competition; the quality and experience of
      management services which may be available and the depth of that management;
      the
      potential for further research, development, or exploration; specific risk
      factors not now foreseeable but which then may be anticipated to impact our
      proposed activities; the potential for growth or expansion; the potential for
      profit; the perceived public recognition of acceptance of products, services,
      or
      trades; name identification; and other relevant factors. We will not acquire
      or
      merge with any company for which audited financial statements cannot be obtained
      within the time period prescribed by applicable rules of the Securities and
      Exchange Commission which is presently four business days from the closing
      date
      of the transaction. This requirement for readily available audited financial
      statement may require us to preclude a transaction with a potential candidate
      which might otherwise be beneficial to our shareholders.





We
      will
      not restrict our search for any specific kind of company, but may acquire a
      venture that is in its preliminary or development stage, which is already in
      operation, or in essentially any stage of its corporate life. It is impossible
      to predict at this time the status of any business in which we may become
      engaged, in that such business may need to seek additional capital, may desire
      to have its shares publicly traded, or may seek other perceived advantages
      which
      we may offer. However, we do not intend to obtain funds in one or more private
      placements to finance the operation of any


7


acquired
      business opportunity until such time as we have successfully consummated such
      a
      merger or acquisition.





We
      anticipate that we will incur nominal expenses in the implementation of our
      business plan described herein. Because we have no capital with which to pay
      these anticipated expenses, these expenses will be paid by Mr. Dwyer with his
      personal funds as interest-free loans. However, the only opportunity to have
      these loans repaid will be from a prospective merger or acquisition candidate.
      Repayment of any loans made on our behalf will not impede, or be made
      conditional in any manner, to consummation of a proposed
      transaction.





In
      implementing a structure for a particular business acquisition, we may become
      a
      party to a merger, consolidation, reorganization, joint venture, or licensing
      agreement with another corporation or entity. We may also acquire stock or
      assets of an existing business. On the consummation of a transaction, it is
      probable that our present management and shareholders will no longer be in
      control of our company. In addition, our directors may, as part of the terms
      of
      the acquisition transaction, resign and be replaced by new directors without
      a
      vote of our shareholders or may sell their stock. Any terms of sale of the
      shares presently held by officers and/or directors will be also afforded to
      all
      other shareholders on similar terms and conditions. Any and all such sales
      will
      only be made in compliance with federal and applicable state securities
      laws.





We
      anticipate that any securities issued in any such reorganization would be issued
      in reliance upon exemption from registration under applicable federal and state
      securities laws. In some circumstances, however, as a negotiated element of
      a
      transaction, we may agree to register all or a part of such securities
      immediately after the transaction is consummated or at specified times
      thereafter. If such registration occurs, of which there can be no assurance,
      it
      will be undertaken by the surviving entity after we have successfully
      consummated a merger or acquisition and we are no longer considered a "shell"
      company. Until such time as this occurs, we will not attempt to register any
      additional securities. The issuance of substantial additional securities and
      their potential sale into any trading market which may develop in our securities
      may have a depressive effect on the value of our securities in the future,
      if
      such a market develops, of which there is no assurance.





**Employees**





As
      of
      August 31, 2006, we had one full-time employee, Mr. Matthew Dwyer, our Chief
      Executive Officer. Our employee is not covered by collective bargaining
      agreements, and we believe our relationship with our employee to be
      good.





**RISK
      FACTORS**





Before
      you invest in our securities, you should be aware that there are various risks.
      You should consider carefully these risk factors, together with all of the
      other
      information included in this annual report before you decide to purchase our
      securities. If any of the following risks and uncertainties develop into actual
      events, our business, financial condition or results of operations could be
      materially adversely affected.





***Our
      auditors have raised substantial doubts as to our ability to continue as a
      going
      concern.***





Our
      consolidated financial statements have been prepared assuming we will continue
      as a going concern. Since inception we have experienced recurring losses from
      operations, which losses have caused an accumulated deficit of $10,761,697
      as of
      December 31, 2005. In addition, for the year ended December 31, 2005 we reported
      a net loss of $505,383. We had a working capital deficit of $658,366 at December
      31, 2005 and cash overdraft of $213. These factors, among others, raise
      substantial doubt about our ability to continue as a going concern. Our
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty. We anticipate that we will continue to incur losses
      in future periods and we will need to raise substantial amounts of capital
      to
      pay our current obligations and implement our business model. No assurances
      can
      be given that adequate financing can be obtained to meet our capital needs.
      If
      we are unable to generate profits and unable to continue to obtain financing
      to
      meet our working capital requirements, we may have to curtail our business
      sharply or cease operations altogether. Our continuation as a going concern
      is
      dependent upon our ability to generate sufficient cash flow to meet our
      obligations on a timely basis, to obtain additional financing, and, ultimately,
      to attain profitability. Should any of these events not occur, the accompanying
      financial statements will be adversely effected and we may have to cease
      operations.


8


***We
      have no current business operations and are dependent upon identifying an
      operating business to acquire in order to generate revenues and pay our
      operating expenses.***





As
      a
      result of actions taken by an institutional lender, the operations of TISC
      have
      ceased. In addition, in May 2006 we discontinued the operations of Yard Sale
      Drop Off and, while we have recently formed a new subsidiary to engage in the
      preparation and marketing of research reports, we currently engage in no
      revenue-producing activities. At this time, our operating expenses are being
      paid through loans from our affiliates. There is no assurance that our
      affiliates will be able to continue to fund our operating expenses. Accordingly,
      we are dependent on identifying and acquiring an operating business in order
      to
      generate revenues to fund operating expenses. If we are unable to acquire an
      operating business or otherwise fund our operating expenses, we may be required
      to cease operations.





***Our
      continued issuance of shares of common stock in payment of management
      compensation and consulting fees is dilutive to our existing
      shareholders.***





Due
      to
      our lack of revenues and income, we have historically paid compensation to
      our
      Chief Executive Officers and certain other officers and consultants through
      the
      issuance of options shares of our common stock, including shares issued and
      issuable upon the exercise of options. In some cases, the shares have been
      issued, including upon the exercise of options, at less than fair market value.
      The issuance of these shares is dilutive to the equity ownership of our shares
      by other shareholders and the issuance of shares at less than fair market value
      is dilutive to the book value of our common stock. Our lack of revenues may
      require that we continue to dilute shareholders through the issuance of our
      shares to management and consultants.





***There
      is uncertainty concerning the status of shares of our subsidiary that were
      distributed to our shareholders.***





We
      previously distributed shares of our former subsidiary, Total Digital Displays,
      to our shareholders. Subsequent to the distribution, we determined that the
      assets that were acquired by our subsidiary prior to the distribution did not
      exist and that we and Total Digital Displays have asserted that we had been
      fraudulently induced to purchase the assets. As a result, we notified the seller
      of claims we have against it, and demanded rescission of the asset purchase
      agreement, including its return of the 10,000,000 shares of Total Digital
      Displays issued to the seller under the asset purchase agreement. To date,
      the
      seller has not complied with our demands and has denied wrongdoing, and we
      have
      filed suit against the seller in Broward Circuit Court. The court awarded
      summary judgment in our favor and we are evaluating whether to seek a default
      judgment against the seller. In light of the foregoing, the opinion of counsel
      that caused the shares of Total Digital Display to be issued without legend
      has
      been withdrawn, and we are treating the shares of Total Digital Display that
      were distributed to our shareholders as restricted securities. At this time,
      it
      is our understanding that Total Digital Display has no assets and there is
      no
      market for the shares of Total Digital Display. At this time, we cannot
      determine whether we will reacquire Total Digital Display as a subsidiary,
      the
      legal status of the shares of Total Digital Display that were distributed to
      our
      shareholders, or otherwise predict the impact that the foregoing facts will
      have
      on our operations.





***Start-up
      expenses and future losses will adversely affect our
      operations.***





Because
      of significant up-front expenses required to enter into new businesses, we
      anticipate that we may incur losses until revenues are sufficient to cover
      our
      operating costs. Future losses are likely before our operations become
      profitable. As a result of our lack of operating history, you will have no
      basis
      upon which to accurately forecast our:





- Total
      assets,
      liabilities, and equity;


- Total
      revenues;


- Gross
      and
      operating margins; and


- Labor
      costs.





Accordingly,
      any subsequent business plans may not either materialize or prove successful,
      and we may never be profitable.





***Our
      management may be unable to effectively integrate future acquisitions and to
      manage our growth, and we may be unable to fully realize any anticipated
      benefits of any acquisition.***


9


Our
      business strategy includes growth through acquisition and internal development.
      We are subject to various risks associated with our growth strategy, including
      the risk that we will be unable to identify and recruit suitable acquisition
      candidates in the future or to integrate and manage the acquired companies.
      Acquired companies’ histories, geographical locations, business models and
      business cultures can be different from ours in many respects. If we should
      consummate one or more acquisitions, our directors and senior management will
      face a significant challenge in their efforts to integrate our business and
      the
      business of the acquired companies or assets, and to effectively manage our
      continued growth. There can be no assurance that our efforts to integrate the
      operations of any acquired assets or companies acquired in the future will
      be
      successful, that we can manage our growth or that the anticipated benefits
      of
      these proposed acquisitions will be fully realized. The dedication of management
      resources to these efforts may detract attention from our day-to-day business.
      There can be no assurance that there will not be substantial costs associated
      with these activities or of the success of our integration efforts, either
      of
      which could have a material adverse effect on our operating
      results.





***Our
      strategy of seeking joint ventures or strategic alliances may be
      unsuccessful.***





We
      may
      also choose to expand our operations by entering into joint ventures or other
      strategic alliances with other parties. Any such transaction would be
      accompanied by the risks commonly encountered in such transactions. These
      include, among others, the difficulty of assimilating the operations and
      personnel and other various factors. There can be no assurance should we enter
      into any strategic alliance with a third party that we will be successful in
      overcoming these risks or any other problems encountered in connection with
      joint ventures or other strategic alliances.





***We
      depend on the continued services of our executive officers and on our ability
      to
      attract and maintain other qualified employees.***





Our
      future success depends on the continued services of our executive officers.
      The
      loss of their services would be detrimental to us and could have a material
      adverse effect on our business, financial condition and results of operations.
      We do not currently maintain key-man insurance on his life. Our future success
      is also dependent on our ability to identify, hire, train and retain other
      qualified managerial and other employees. Competition for these individuals
      is
      intense and increasing. We may not be able to attract, assimilate, or retain
      qualified technical and managerial personnel and our failure to do so could
      have
      a material adverse effect on our business, financial condition and results
      of
      operations.





***Our
      common stock is thinly traded and an active and visible trading market for
      our
      common stock may not develop.***





Our
      common stock is currently quoted on a limited basis on the Pink Sheets under
      the
      symbol “TIDC.” The quotation of our common stock on the Pink Sheets does not
      assure that a meaningful, consistent and liquid trading market currently exists.
      We cannot predict whether a more active market for our common stock will develop
      in the future. In the absence of an active trading market:





- investors
      may
      have difficulty buying and selling or obtaining market quotations;


- market
      visibility for our common stock may be limited; and


- a
      lack of
      visibility for our common stock may have a depressive effect on the market
      price


for
      our
      common stock.





***The
      sale of shares eligible for future sale could have a depressive effect on the
      market price for our common stock; Rule 144 is not currently available for
      resales of our common stock.***





As
      of
      August 31, 2006, there are 27,392,510 shares of common stock issued and
      outstanding. Of the currently issued and outstanding shares, approximately
      3,779,734 restricted shares of common stock have been held for in excess of
      one
      year and are currently available for public resale pursuant to Rule 144
      promulgated under the Securities Act ("Rule 144"). Unless registered on a form
      other than Form S-8, the resale of our shares of Common Stock owned by officers,
      directors and affiliates is subject to the volume limitations of Rule 144.
      In
      general, Rule 144 permits our shareholders who have beneficially owned
      restricted shares of common stock for at least one year to sell without
      registration, within a three-month period, a number of shares not exceeding
      one
      percent of the then outstanding shares of common stock. Furthermore, if such
      shares are held for at least two years by a person not affiliated with us (in
      general, a person who is not one of our executive officers, directors or
      principal shareholders during the three-month period prior to resale), such
      restricted shares can be sold without any volume limitation. Sales of our common
      stock under Rule 144 or pursuant to such registration statement may have a
      depressive effect on the market price for our common stock.


10


Rule
      144
      is not currently available to permit resales of our common stock because, at
      this time, we are not current in our reporting obligations under the Securities
      Exchange Act of 1934 (the “Exchange Act”). At such time, if any, as we have
      filed all reports that we are required to file under the Exchange Act, holders
      of our common stock who meet the requirements for resales under Rule 144 will
      be
      able to do so if they so desire.





***We
      currently do not have an operating business, but also do not intend to pursue
      a
      course of complete liquidation and dissolution, and accordingly, the value
      of
      your shares may decrease.***





We
      currently do not have any operating business. We continue to incur operating
      expenses while we consider alternative operating plans. These plans may include
      business combinations with or investments in other operating companies, or
      entering into a completely new line of business. We have not yet identified
      any
      such opportunities, and thus, you will not be able to evaluate the impact of
      such a business strategy on the value of your stock. In addition, we cannot
      assure you that we will be able to identify any appropriate business
      opportunities. Even if we are able to identify business opportunities that
      our
      Board deems appropriate, we cannot assure you that such a strategy will provide
      you with a positive return on your investment, and it may in fact result in
      a
      substantial decrease in the value of your stock. These factors will
      substantially increase the uncertainty, and thus the risk, of investing in
      our
      shares.





***We
      may not be able to identify or fully capitalize on any appropriate business
      opportunities.***





We
      have
      not yet identified any appropriate business opportunities, and, due to a variety
      of factors outside of our control, we may not be able to identify or fully
      capitalize on any such opportunities. These factors include:





• competition
      from other potential acquirers and partners of and investors in potential
      acquisitions, many of whom may


have
      greater financial resources than we do;


• in
      specific
      cases, failure to agree on the terms of a potential acquisition, such as the
      amount or price of our acquired interest,


or
      incompatibility between us and management of the company we wish to acquire;
      and


• the
      possibility that we may lack sufficient capital and/or expertise to develop
      promising opportunities.





Even
      if
      we are able to identify business opportunities that our Board deems appropriate,
      we cannot assure you that such a strategy will provide you with a positive
      return on your investment, and may in fact result in a substantial decrease
      in
      the value of your stock. In addition, if we enter into a combination with a
      business that has operating income, we cannot assure you that we will be able
      to
      utilize all or even a portion of our existing net operating loss carryover
      for
      federal or state tax purposes following such a business combination. If we
      are
      unable to make use of our existing net operating loss carryover, the tax
      advantages of such a combination may be limited, which could negatively impact
      the price of our stock and the value of your investment. These factors will
      substantially increase the uncertainty, and thus the risk, of investing in
      our
      shares.





***Because
      our stock currently trades below $5.00 per share, and is quoted on the Pink
      Sheets, our stock is considered a "penny stock" which can adversely affect
      its
      liquidity.***





For
      so
      long as the trading price of our common stock is less than $5.00 per share,
      our
      common stock is considered a "penny stock," and trading in our common stock
      is
      subject to the requirements of Rule 15g-9 under the Securities Exchange Act
      of
      1934. Under this rule, broker/dealers who recommend low-priced securities to
      persons other than established customers and accredited investors must satisfy
      special sales practice requirements. The broker/dealer must make an
      individualized written suitability determination for the purchaser and receive
      the purchaser's written consent prior to the transaction.





SEC
      regulations also require additional disclosure in connection with any trades
      involving a "penny stock," including the delivery, prior to any penny stock
      transaction, of a disclosure schedule explaining the penny stock market and
      its
      associated risks. These requirements severely limit the liquidity of securities
      in the secondary market because few broker or dealers are likely to undertake
      these compliance activities. In addition to the applicability of the penny
      stock
      rules, other risks associated with trading in penny stocks could also be price
      fluctuations and the lack of a liquid market. Finally, as a penny stock we
      may
      not be entitled to the protections provided by the Private Securities Litigation
      Reform Act of 1995.


11


***Provisions
      of our articles of incorporation and bylaws may delay or prevent a take-over
      which may not be in the best interests of our
      shareholders.***





Provisions
      of our articles of incorporation and bylaws may be deemed to have anti-takeover
      effects, which include when and by whom special meetings of our shareholders
      may
      be called, and may delay, defer or prevent a takeover attempt. In addition,
      certain provisions of the Florida Business Corporations Act also may be deemed
      to have certain anti-takeover effects which include that control of shares
      acquired in excess of certain specified thresholds will not possess any voting
      rights unless these voting rights are approved by a majority of a corporation's
      disinterested shareholders.





In
      addition, our articles of incorporation authorize the issuance of up to
      1,250,000 shares of preferred stock with such rights and preferences as may
      be
      determined from time to time by our board of directors, of which no shares
      are
      presently issued and outstanding. Our board of directors may, without
      stockholder approval, issue preferred stock with dividends, liquidation,
      conversion, voting or other rights that could adversely affect the voting power
      or other rights of the holders of our common stock.





***It
      is not possible to foresee all risks that may affect us. Moreover, we cannot
      predict whether we will successfully effectuate our current business plan.
      Each
      prospective purchaser is encouraged to carefully analyze the risks and merits
      of
      an investment in the shares and should take into consideration when making
      such
      analysis, among others, the Risk Factors discussed
      above.***





**ITEM
      2.**  **DESCRIPTION
      OF PROPERTY**





We
      maintain a mailing address at 1007 N. Federal Highway, Suite D-6, Fort
      Lauderdale, Florida 33304. Mr. Matthew Dwyer, our sole officer and director,
      provides our company with office space at his primary residence at no cost
      to
      us.





**ITEM
      3.**  **LEGAL
      PROCEEDINGS**





*Stephen
      E. Webster v. Richard Dwyer, Matthew P. Dwyer, Phillip Mistretta, Total Digital
      Displays, Inc., Leslie W. Kernan, Jr., Lacy Katzen LLP, et al, case number
      2005-211 in the Supreme Court of the State of New York* .
      We were
      a defendant in this proceeding in which the plaintiff, Stephen E. Webster,
      sought repayment of a $125,000 debenture we issued to the plaintiff by alleging
      that he was fraudulently induced to purchase the debenture. We filed various
      motions in our defense, however, in September 2005 a judgment was grant against
      our company and other parties for $125,000 plus 9% interest per annum. In March
      2006 our attorneys filed a motion to withdraw as counsel which was granted,
      and
      as August 31, 2006 the default judgment against us in the amount of $125,000
      remains outstanding.. As a result of our limited financial means, we are unable
      to appeal the judgment. Even if we had sufficient funds to hire counsel to
      commence an appeal, we do not know at this time if sufficient grounds exist
      for
      an appeal of the default judgment.





*Total
      Identity Corp. v. Argilus, LLC, American Arbitration Association Case No.
      154590070504* .
      ArgiIus
      LLC was hired to raise the capital and/or secure financing to purchase TISC.
      In
      August 2004 we filed a claim against ArgiIus LLC for breach of its fiduciary
      duty as a result of ArgiIus' failure to perform its agreement. A demand for
      arbitration was filed with American Arbitration Association in August 2004,
      and
      to date there have been no hearings or proceedings in the matter other than
      the
      filing of the initial demand and Argilus’ response in October 2004 together with
      counterclaims demanding $150,000 and 1,000,000 shares of our common stock.
      By
      letter dated August 22, 2006 from the American Arbitration Association we were
      advised that as it had not received communication from either party to the
      matter in response to an earlier letter, that it was their intent to close
      its
      file absent advice from either party on or before August 29, 2006. By letter
      dated August 25, 2006 from counsel to Argilus to the American Arbitration
      Association, Argilus agreed to withdraw its counterclaim. In a subsequent dated
      August 31, 2006 from the American Arbitration Association, we were advised
      that
      unless it was advised to the contrary by September 7, 2006, the arbitration
      would be considered withdrawn. Our ability to pursue the matter is limited
      as a
      result of our limited financial resources. While we believe we have meritorious
      claims, even if we had sufficient funds to hire counsel and pursue this claim,
      we are unable at this time to predict the outcome of the matter.





*Robert
      David v. Total Identity Corp. and Total Identity Systems, Inc., American
      Arbitration Association Case No. 1516859104* .
      This
      legal proceeding relates to a series of agreements we entered into in October
      2003 with TISC and Mr. Robert David, its sole officer, director and principal
      shareholder, as described in Item 1. Description of Business - Total Identity
      Systems Corp. appearing earlier in this report.


12


*Total
      Identity Corp. vs Leonard Lightman, case number 05008931 in the Circuit Court
      of
      the 17th Judicial Circuit in and for Broward County, Florida* .
      In June
      2005 we brought a lawsuit against Mr. Leonard Lightman alleging that he had
      made
      numerous fraudulent misrepresentations with regards to various licenses and
      rights that he had to market certain Major League Baseball and NASCAR
      franchises. As a result, we incurred various expenses and costs to purchase
      ownership in the non-existent asset. The court awarded us a default in August
      2005 as a result of the defendant's failure to answer our complaint within
      the
      prescribed timeframe; however, in September 2005 the court set aside the default
      and as of August 31, 2006 the case remains pending. However, in view of our
      understanding that the defendant has no assets and the cost and expense that
      we
      will incur in pursuing this claim, we have made the business decision to not
      proceed in the collection of the judgment.





*The
      Lebrecht Group, APC vs. Total Identity Corp., case number 03CC12717 in the
      Superior Court for Orange County, California* .
      We were
      a defendant in a lawsuit seeking to collect legal fees and costs totaling
      $46,286 together with accrued interest, attorney's fees and court costs. On
      May
      4, 2004 a judgment in the amount of $50,714 was awarded to the plaintiff with
      interest at the rate of 10% per annum. A total of $58,703 is included in our
      accounts payable at December 31, 2005 in the consolidated financial statements
      appearing elsewhere in this report. The judgment remains outstanding as of
      the
      date of this report.





**ITEM
      4.**  **SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS**





None.





**PART
      II**





**ITEM
      5.**  **MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**





Our
      common stock is quoted on the Pink Sheets under the symbol "TIDC." The following
      table sets forth the high and low closing sale prices for our common stock
      as
      reported on the Pink Sheets and for the last two fiscal years and the subsequent
      interim period. These prices do not include retail mark-ups, markdowns or
      commissions, and may not necessarily represent actual transactions.





High
            
            
            LowFiscal
                2004First
                quarter ended March 31, 2004
            
            
            $0.56
            
            
            $0.15Second
                quarter ended June 30, 2004
            
            
            $0.31
            
            
            $0.10Third
                quarter ended September 30, 2004
            
            
            $0.19
            
            
            $0.08Fourth
                quarter ended July 31, 2004
            
            
            $0.19
            
            
            $0.05Fiscal
                2005First
                quarter ended March 31, 2005
            
            
            $0.19
            
            
            $0.03Second
                quarter ended June 30, 2005
            
            
            $0.19
            
            
            $0.02Third
                quarter ended September 30, 2005
            
            
            $0.10
            
            
            $0.02Fourth
                quarter ended December 31, 2005
            
            
            $0.06
            
            
            $0.01Fiscal
                2006First
                quarter ended March 31, 2006
            
            
            $0.03
            
            
            $0.01Second
                quarter ended June 30, 2006
            
            
            $0.15
            
            
            $0.009





On
      September 7, 2006, the last reported sale price of the common stock on Pink
      Sheets was $0.0095 per share. As of August 31, 2006 there were approximately
      189
      shareholders of record of the common stock.


13


**Dividend
      Policy**





We
      have
      never paid cash dividends on our common stock. We intend to keep future
      earnings, if any, to finance the expansion of our business. Payment of dividends
      and distributions is subject to certain restrictions under the Florida Business
      Corporations Act, including the requirement that after making any distribution
      we must be able to meet our debts as they become due in the usual course of
      our
      business. We do not anticipate that any cash dividends will be paid in the
      foreseeable future.





**Recent
      Sales of Unregistered Securities**








None.





**Securities
      Authorized for Issuance Under Equity Compensation Plans**





The
      following table sets forth securities authorized for issuance under equity
      compensation plans, including individual compensation arrangements, by us under
      our 2003 Omnibus Securities Plan and our 2003 Non-Qualified Stock Option and
      Grant Plan and any compensation plans not previously approved by our
      shareholders as of December 31, 2005 which includes our 2004 Equity Compensation
      Plan.





Number
                of securities to
            Weighted
                average
            Number
                of securitiesbe
                issued upon exercise
            exercise
                price of
            remaining
                available forof
                outstanding options,
            outstanding
            future
                issuance underwarrants
                and rights
            options,
                warrants
            equity
                compensationand
                rights
            plans
                (excludingsecurities
                reflected incolumn
                (a)Plan
                category(a)
            (b)
            (c)Plans
                approved by our shareholders:2003
                Omnibus Securities Plan
            0
            n/a
            175,0002003
                Non-Qualified Stock Option andGrant
                Plan
            0
            n/a
            100,000Plans
                not approved by our shareholders:2004
                Equity Compensation Plan
            0
            n/a
            1,000,000





**ITEM
      6.**  **MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**





The
      following analysis of our results of operations and financial condition should
      be read in conjunction with the accompanying consolidated financial statements
      for the year ended December 31, 2005 and notes thereto appearing elsewhere
      in
      this annual report.





***Overview***





During
      fiscal 2003 our operations were those of our TISC and Kina'ole Development
      Corporation subsidiaries. TISC operated as a vertically integrated custom
      manufacturer of signs and awnings headquartered in Rochester, NY, with in-house
      marketing, sales, design, engineering, manufacturing, and installation
      capabilities. Kina'ole Development Corporation planned to sell manufactured
      homes to retail customers. We acquired 100% of the capital stock of Kina'ole
      Development Corporation in January 2003 and we acquired 100% of TISC in October
      2003. Effective September 30, 2003, we agreed with the former owners of Kina’ole
      Development Corporation to exchange all of our shares of Kina’ole for the
      500,000 shares of our Series B Preferred Stock, the issuance of 120,000 shares
      of our common stock to the former


14


shareholders
      of Kina’ole in connection with the January 2003 acquisition, and $13,500 paid to
      such shareholders. As a result of this exchange, we divested ourselves of the
      prefabricated home manufacturing operations conducted by Kina’ole. The operating
      results of Kina'ole Development Corporation were included in discontinued
      operations as of December 31, 2003 in the financial statements appearing in
      our
      annual report on Form 10-KSB for the year ended December 31, 2003 as previously
      filed with the Securities and Exchange Commission.





During
      fiscal 2004 our operations were those of our TISC subsidiary. As described
      elsewhere herein during November 2004, we learned that Mercantile and Trader's
      Trust Company had exercised certain rights granted under the loan documents
      and
      had “swept” TISC’s accounts aggregating approximately $200,000 maintained at the
      bank, and applied the proceeds to the outstanding indebtedness of TISC to the
      bank. In addition, Mercantile and Trader's Trust Company notified the United
      States Post Office that it was exercising its rights under the loan documents
      to
      take control over all mail directed to us and the bank had changed the locks
      at
      TISC’s Rochester, New York facility, and was seeking to take control over TISC’s
      assets in order to satisfy TISC’s indebtedness to Mercantile and Trader's Trust
      Company. In exercising these rights, the Mercantile and Trader's Trust Company
      assumed control over TISC and prevented TISC from conducting and funding its
      day-to-day operations. In light of the actions taken by the bank, including
      our
      loss of control over TISC’s records and operations and the prospect that our
      registered public accounting firm would thereafter be unable to audit TISC’s
      books and records, we treated the operations of TISC as discontinued operations
      as of November 30, 2004, and, accordingly, our financial statements for the
      fiscal years ended December 31, 2004contained elsewhere herein reflect the
      impact of discontinuing the operations of TISC.





While
      we
      incurred expenses related to the operations of Kina'ole Development Corporation
      in fiscal 2003, it did not generate any revenues. Revenues for TISC for fiscal
      2004 as well as costs of sale and expenses related to TISC's operations have
      been included in discontinued operations for fiscal 2004 in the financial
      statements appearing elsewhere in this annual report.





During
      March 2006 we entered into an agreement to sell all of the assets of our YSDO
      subsidiary to an individual for $8,000 and discontinue its operations. Revenues
      from YSDO as well as cost of sales and expenses related to YSDO's operations
      have been included in discontinued operations for fiscal 2005 in the financial
      statements appearing elsewhere in this annual report.





As
      described earlier in this annual report we intend to seek to acquire assets
      or
      shares of an entity actively engaged in business which generates revenues,
      in
      exchange for our securities. Our ability to continue as a going concern is
      dependent on our ability to identify and close a business combination with
      an
      operating entity. We have not yet identified any such opportunities, and we
      cannot assure you that we will be able to identify any appropriate business
      opportunities, or, if identified, that we will be able to close a transaction
      which is inevitably beneficial to our shareholders. In addition, as it is likely
      that if we enter into a business combination the structure of the transaction
      will be such that the approval of our shareholders is not necessary before
      the
      transaction is closed. As such, our shareholders are relying entirely upon
      the
      judgment of our management in structuring a transaction which provides some
      benefit to our shareholders.





***Results
      of Operations***





***Fiscal
      year ended December 31, 2005 ("Fiscal 2005") as compared to the fiscal year
      ended December 31, 2004 ("Fiscal 2004")***







Increase/
            
            Increase/Fiscal
                2005
            
            Fiscal
                2004
            
            (Decrease)
            
            (Decrease)$
                2005 vs 2004
            
            %
                2005 vs 2004Revenue
            
            $
            0
            
            $
            0
            
            
            0
            
            
            n/aCost
                of sales
            
            
            0
            
            
            0
            
            
            0
            
            
            n/aGross
                margin
            
            
            0
            
            
            0
            
            
            0
            
            
            n/aExpensesConsulting
                fees
            
            
            82,515
            
            
            659,136
            
            
            (576,621
            )
            
            (87.5
            )%Salaries
                and wages
            
            
            230,000
            
            
            264,375
            
            
            (34,375
            )
            
            (13.0
            )%Selling,
                general and
            
            
            13,476
            
            
            111,380
            
            
            (97,904
            )
            
            (87.9
            )%


15


administrativeTotal
                  expenses
              
              
              325,991
              
              
              1,034,891
              
              
              (708,900
              )
              
              (68.5
              %)Loss
                  from operations
              
              
              (325,991
              )
              
              (1,034,891
              )
              
              (708,900
              )
              
              (68.5
              )%Other
                  income (expense)Interest
                  expense
              
              
              (18,571
              )
              
              (74,518
              )
              
              (55,947
              )
              
              (75.1
              )%Gain
                  (loss) on extinguishment of debt
              
              
              
              
              
              70,000
              
              
              (70,000
              )
              
              (100
              )%Total
                  other income (expense)
              
              
              (18,571
              )
              
              (4,518
              )
              
              14,053
              
              
              311
              %Loss
                  before discontinued operations
              
              
              (344,562
              )
              
              (1,039,409
              )
              
              (694,848
              )
              
              (66.7
              )%Gain
                  (loss) on discontinued operations
              
              
              (160,821
              )
              
              515,472
              
              
              (676,293
              )
              
              129
              %Net
                  loss
              
              $
              (505,383
              )
              $
              (523,937
              )
              
              (18,554
              )
              
              (3.5
              )%




**Total
      expenses**





Our
      total
      expenses for fiscal were $325,991, a decline of $708,900, or approximately
      69%,
      from our total expenses of $1,034,891 for fiscal 2004. Included in this decrease
      were the following:





▪ For
      fiscal
      2005 consulting fees declined $576,621, or approximately 88%, to $82,515 from
      $659,136 for fiscal 2004. Consulting fees included approximately $67,515 of
      cash
      paid under the terms of various consulting agreements and approximately $15,000
      representing the value of shares of our common stock which we issued as
      compensation for business consulting services rendered to us. This decline
      in
      consulting fees reflects the discontinuation of our operations during fiscal
      2005,





▪ For
      fiscal
      2005 salaries and wages decreased $34,375, or approximately 13%, to $230,000
      from $264,375 for fiscal 2004. This decrease is primarily attributable
      to stock option expense descreases, and





▪ Selling,
      general and administrative expense decreased $97,904, or approximately 88%,
      to
      $13,476 for fiscal 2005 from $111,380 for fiscal 2004 and reflects the
      discontinuation of our remaining operations during fiscal 2005.





**Other
      income (expense)**





Overall,
      total other expense declined substantially for fiscal 2005 from fiscal 2004
      as a
      result of the following:





▪ Interest
      expense decreased $55,947 for fiscal 2005 from fiscal 2004, an approximate
      75%
      decrease. This decreased interest expense is primarily related to reduced
      borrowings during fiscal 2005 as compared to fiscal 2004, and





▪ For
      fiscal
      2004 we recognized a gain on extinguishment of debt of $70,000 and we did not
      have a comparable transaction during fiscal 2005.





**Discontinued
      operations**





As
      described earlier in this section, in fiscal 2004 we discontinued the operations
      of TISC and in fiscal 2005 we discontinued the operations of YSDO. For
      fiscal 2004 we reported a gain on discontinued operations of $515,472 which
      is
      related to TISC and for fiscal 2005 we reported a loss on discontinued
      operations of $160,821 which is related to YSDO.





***Liquidity
      and Capital Resources***





Liquidity
      is the ability of a company to generate funds to support its current and future
      operations, satisfy its obligations and otherwise operate on an ongoing basis.
      At December 31, 2005 we had cash overdraft of $213 and a working
      capital deficit of $658,366.


16


At
      December 31, 2005 we had total assets of $15,377 which consisted of
      $646 prepaid expenses and $14,731 of assets from our discontinued
      operations which represented the YSDO assets which were subsequently sold during
      fiscal 2006. Our total liabilities at December 31, 2005 were $747,313, which
      included a cash overdraft of $213, $ 226,797 of accounts payable and accounts
      payable - related party, $181,550 of accrued expenses and an aggregate of
      $250,452 in convertible debentures and notes payable, including $100,452 of
      notes payable - related parties. In fiscal 2006 approximately $70,000 of these
      obligations were converted to equity as described elsewhere herein. We do not
      have sufficient working capital to satisfy the remaining amounts of these
      obligations.





Net
      cash
      used by operating activities for fiscal 2005 was $13,254 as compared to net
      cash
      provided by operating activities of $220,701 for fiscal 2004. The principal
      changes in cash (used) provided by operating activities from period to period
      which are unrelated to our discontinued operations include:





▪ a
      decrease of
      $18,554 in our net loss for fiscal 2005 from fiscal 2004,





▪ a
      one time
      gain of $70,000 on extinguishments of debt in fiscal 2004 for which there was
      no
      comparable transaction in fiscal 2005,





▪ the
      expense
      related to stock, options and warrants issued for services, salary and interest
      decreased $505,375 from fiscal 2004 to fiscal 2005,





▪ an
      increase
      of $215,883 in accounts payable and accounts payable - related party,
      and





▪ an
      increase
      of $198,463 in accrued expenses and expenses - related parties.





Net
      cash
      used by investing activities for fiscal 2005 was $14,713 as compared to $2,678
      for fiscal 2004. The change is primarily related to our purchase of various
      equipment to operate YSDO, net of our disposal of equipment related to our
      discontinued operations.





Net
      cash
      provided by financing activities for fiscal 2005 was $25,143 as compared to
      $215,199 for fiscal 2004. The principal changes which are unrelated to our
      discontinued operations include  an
      increase of $25,000 in proceeds from the sale of our stock in fiscal 2005 which
      was offset by a decrease in proceeds of notes payable and related party notes,
      net of repayments, of $79,556 during fiscal 2004.





At
      December 31, 2005 we had an accumulated deficit of $10,761,697. The report
      from
      our independent registered public accounting firm on our audited financial
      statements at December 31, 2005 contains an explanatory paragraph regarding
      doubt as to our ability to continue as a going concern as a result of our losses
      and working capital deficit. As discussed earlier in this report, we have
      discontinued our operations and are now seeking to acquire assets or shares
      of
      an entity actively engaged in business which generates revenues, in exchange
      for
      our securities. We cannot predict when, if ever, we will be successful in this
      venture and, accordingly, we may be required to cease operations at any time.
      We
      do not have sufficient working capital to pay our operating costs for the next
      12 months and we will require additional funds to pay our legal, accounting
      and
      other fees associated with our company and its filing obligations under federal
      securities laws, as well as to pay our other accounts payable generated in
      the
      ordinary course of our business. We have no commitments from any party to
      provide such funds to us. If we are unable to obtain additional capital as
      necessary until such time as we are able to conclude a business combination,
      we
      will be unable to satisfy our obligations and otherwise continue to meet our
      reporting obligations under federal securities laws. In that event, our ability
      to consummate a business combination with upon terms and conditions which would
      be beneficial to our existing shareholders would be adversely
      affected.





***Critical
      Accounting Policies***





Our
      financial statements and accompanying notes are prepared in accordance with
      generally accepted accounting principles in the United States. Preparing
      financial statements requires management to make estimates and assumptions
      that
      affect the reported amounts of assets, liabilities, revenue and expenses. These
      estimates and assumptions are affected by management's applications of
      accounting policies. Critical accounting policies for our company include the
      following:


17


*Fixed
      assets* .
      Fixed
      assets are recorded at cost. Major additions and improvements are capitalized.
      Minor replacements, maintenance and repairs that do not increase the useful
      life
      of the assets are expensed as incurred. Depreciation of property and equipment
      is determined on a straight-line basis over the expected useful lives. The
      cost
      and related accumulated depreciation of equipment retired or sold are removed
      from the accounts and any differences between the undepreciated amount and
      the
      proceeds from the sale are recorded as gain or loss on sale of equipment. All
      of
      our fixed assets were repossessed to pay secured debt during November 2004
      (see
      Note 3 of the Notes to Consolidated Financial Statements appearing elsewhere
      in
      this report.)





*Long-Lived
      Assets* We
      adopted Statement of Financial Accounting Standards No. 144 (SFAS 144),
      "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 144
      develops one accounting model (based on the model in SFAS 121) for long-lived
      assets that are to be disposed of by sale and addresses the principal
      implementation issues. SFAS 144 requires that long-lived assets that are to
      be
      disposed of by sale be measured at the lower of book value or fair value less
      cost to sell. This requirement eliminates the previous (APB30) requirement
      that
      discontinued operations be measured at net realizable value or that entities
      include under discontinued operations in the financial statements amounts for
      operating losses that have not yet occurred. Additionally, SFAS 144 expands
      the
      scope of discontinued operations to include all components of an entity with
      operations that (1) can be distinguished from the rest of the entity and (2)
      will be eliminated from the ongoing operations of the entity in a disposal
      transaction.





***New
      Accounting Standards***





On
      December 16, 2004 the Financial Accounting Standards Board (FASB) issued SFAS
      No. 123(R), “Share-Based Payment” (SFAS 123(R)), which is an amendment to SFAS
      No. 123, “Accounting for Stock- Based Compensation”. SFAS 123(R) eliminates the
      ability to account for share-based compensation transactions using Accounting
      Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to
      Employees”, and generally requires such transactions to be accounted for using a
      fair-value based method with the resulting cost recognized in the financial
      statements. SFAS 123(R) is effective for awards that are granted, modified
      or
      settled in cash during the first annual period beginning after June 15, 2005,
      or
      the year ending December 31, 2006 for our company. In addition, this new
      standard will apply to unvested options granted prior to the effective date.
      The
      effect of adoption of SFAS 123(R) is not anticipated to have a material impact
      on our company.





In
      November 2004, the FASB issued SFAS No. 151, “Inventory Costs - an amendment of
      ARB No. 43, Chapter 4” (SFAS 151). This Statement amends the guidance in ARB No.
      43, Chapter 4, "Inventory Pricing" to clarify the accounting for abnormal
      amounts of idle facility expense, freight, handling costs, and wasted material
      (spoilage). This Statement requires that certain items be recognized as
      current-period charges and requires that allocation of fixed production
      overheads to the costs of conversion be based on the normal capacity of the
      production facilities. SFAS 151 is effective for inventory costs incurred during
      fiscal years beginning after June 15, 2005, or the year ending December 31,
      2006
      for our company. The effect of adoption of SFAS 151 is not anticipated to have
      a
      material impact on our company.





In
      December 2004, the FASB issued SFAS No. 152, “Accounting for Real Estate
      Time-sharing Transactions” (SFAS 152), which amends FASB statement No. 66,
“Accounting for Sales of Real Estate”, to reference the financial accounting and
      reporting guidance for real estate time-sharing transactions that is provided
      in
      AICPA Statement of Position 04-2, “Accounting for Real Estate Time-Sharing
      Transactions” (SOP 04-2). SFAS 152 also amends FASB Statement No. 67,
“Accounting for Costs and Initial Rental Operations of Real Estate Projects”, to
      state that the guidance for (a) incidental operations and (b) costs incurred
      to
      sell real estate projects does not apply to real estate time-sharing
      transactions. The accounting for those operations and costs is subject to the
      guidance in SOP 04-2. SFAS 152 is effective for financial statements for fiscal
      years beginning after June 15, 2005, or the year ending December 31, 2006 for
      our company. The effect of adoption of SFAS 152 is not anticipated to have
      a
      material impact on our company.





In
      December 2004, the FASB issued SFAS No.153, “Exchange of Nonmonetary Assets”
(SFAS 153). This Statement addresses the measurement of exchanges of nonmonetary
      assets. The guidance in APB Opinion No. 29, “Accounting for Nonmonetary
      Transactions” (APB 29), is based on the principle that exchanges of nonmonetary
      assets should be measured based on the fair value of the assets exchanged.
      The
      guidance in APB 29 included certain exceptions to that principle and SFAS 153
      amends APB 29 to eliminate the exception for nonmonetary exchanges of similar
      productive assets and replaces it with a general exception for exchanges of
      nonmonetary assets that do not have commercial substance. A nonmonetary exchange
      has commercial substance if the future cash flows of the entity are expected
      to
      change


18


significantly
      as a result of the exchange. SFAS 153 is effective for financial statements
      for
      fiscal years beginning after June 15, 2005, or the year ending December 31,
      2006
      for our company. The effect of adoption of SFAS 151 is not anticipated to have
      a
      material impact on our company.





In
      March
      2005, the Securities and Exchange Commission (SEC) released Staff Accounting
      Bulletin No. 107, "Share-Based Payment" (SAB 107), which provides interpretive
      guidance related to the interaction between SFAS 123(R) and certain SEC rules
      and regulations. It also provides the SEC staff's views regarding valuation
      of
      share-based payment arrangements. In April 2005, the SEC amended the compliance
      dates for SFAS 123(R), to allow companies to implement the standard at the
      beginning of their next fiscal year, instead of the next reporting period
      beginning after June 15, 2005. The effect of adoption of SAB 107 is not
      anticipated to have a material impact on our company.





In
      March
      2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional
      Asset Retirement Obligations" (FIN 47). FIN 47 provides guidance relating to
      the
      identification of and financial reporting for legal obligations to perform
      an
      asset retirement activity. The Interpretation requires recognition of a
      liability for the fair value of a conditional asset retirement obligation when
      incurred if the liability's fair value can be reasonably estimated. FIN 47
      also
      defines when an entity would have sufficient information to reasonably estimate
      the fair value of an asset retirement obligation. FIN 47 is effective no later
      than the end of fiscal years ending after December 15, 2005. Our adoption of
      FIN
      47 had no impact on our company.





In
      May
      2005, the FASB issued FASB Statement No. 154, "Accounting Changes and Error
      Corrections” (SFAS 154). SFAS 154 replaces APB Opinion No. 20, "Accounting
      Changes” and FASB Statement No. 3, “Reporting Accounting Changes in Interim
      Financial Statements" and represents another step in the FASB's goal to converge
      its standards with those issued by the IASB. Among other changes, SFAS 154
      requires that a voluntary change in accounting principle be applied
      retrospectively with all prior period financial statements presented on the
      new
      accounting principle, unless it is impracticable to do so. SFAS 154 also
      provides that (1) a change in method of depreciating or amortizing a long-lived
      non- financial asset be accounted for as a change in estimate (prospectively)
      that was effected by a change in accounting principle, and (2) correction of
      errors in previously issued financial statements should be termed a
      "restatement." The new standard is effective for accounting changes and
      correction of errors made in fiscal years beginning after December 15, 2005.
      The
      effect of adoption of SFAS 154 is not anticipated to have a material impact
      on
      our company.





In
      February of 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
      Financial Instruments" (SFAS 155), which is intended to simplify the accounting
      and improve the financial reporting of certain hybrid financial instruments
      (i.e., derivatives embedded in other financial instruments). The statement
      amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging
      Activities", and SFAS No. 140, "Accounting for Transfers and Servicing of
      Financial Assets and Extinguishments of Liabilities a replacement of FASB
      Statement No. 125." SFAS 155 is effective for all financial instruments issued
      or acquired after the beginning of an entity's first fiscal year that begins
      after September 15, 2006. The effect of adoption of SFAS 155 is not anticipated
      to have a material impact on our company.





In
      March
      of 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial
      Assets, an amendment of FASB Statement No. 140” (SFAS 156). SFAS 156 amends SFAS
      140, "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities a replacement of FASB Statement No. 125," with
      respect to the accounting for separately recognized servicing assets and
      servicing liabilities. SFAS 156 requires an entity to recognize a servicing
      asset or servicing liability each time it undertakes an obligation to service
      a
      financial asset by entering into a servicing contract in any of the following
      situations: (a) a transfer of the servicer’s financial assets that meets the
      requirements for sale accounting, (b) a transfer of the servicer’s financial
      assets to a qualifying special-purpose entity


in
      a
      guaranteed mortgage securitization in which the transferor retains all of the
      resulting securities and classifies them as either available-for-sale securities
      or trading securities, and (c) an acquisition or assumption of an obligation
      to
      service a financial asset that does not relate to financial assets of the
      servicer or its consolidated affiliates. SFAS 156 is effective for all servicing
      assets and liabilities as of the beginning of an entity's first fiscal year
      that
      begins after September 15, 2006. The effect of adoption of SFAS 156 is not
      anticipated to have a material impact on our company.





In
      July
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes (FIN 48) - an interpretation of FASB Statement No. 109, Accounting
      for Income Taxes (SFAS No. 109)” (FIN 48). FIN 48 clarifies the accounting for
      uncertainty in income taxes recognized in accordance with SFAS No. 109 and
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a return. Guidance is also provided on de-recognition, classification,
      interest and penalties,


19


accounting
      in interim periods, disclosure and transition. FIN 48 is effective for fiscal
      years beginning after December 15, 2006. The effect of adoption of FIN 48 is
      not
      anticipated to have a material impact on our company.





**ITEM
      7.**  **FINANCIAL
      STATEMENTS**





Our
      financial statements are contained in pages F-1 through F-24, which appear
      at
      the end of this annual report.





**ITEM
      8.**  **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





None.





**ITEM
      8A.**  **CONTROLS
      AND PROCEDURES**





As
      required by Rule 13a-15 under the Securities Exchange Act of 1934, as of
      December 31, 2005, the end of the period covered by this annual report, our
      management concluded its evaluation of the effectiveness of the design and
      operation of our disclosure controls and procedures. Disclosure controls and
      procedures are controls and procedures designed to reasonably assure that
      information required to be disclosed in our reports filed under the Securities
      Exchange Act of 1934, such as this annual report, is recorded, processed,
      summarized and reported within the time periods prescribed by SEC rules and
      regulations, and to reasonably assure that such information is accumulated
      and
      communicated to our management, including our President, to allow timely
      decisions regarding required disclosure.





As
      of the
      evaluation date, our CEO who is our sole management and sole employee, concluded
      that we maintain disclosure controls and procedures that are effective in
      providing reasonable assurance that information required to be disclosed in
      our
      reports under the Securities Exchange Act of 1934 is recorded, processed,
      summarized and reported within the time periods prescribed by SEC rules and
      regulations, and that such information is accumulated and communicated to our
      management to allow timely decisions regarding required disclosure.





There
      have been no changes in our internal control over financial reporting that
      has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.





**ITEM
      8B.**  **OTHER
      INFORMATION**





None.





**PART
      III**





**ITEM
      9.**  **DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16(A)
      OF THE EXCHANGE ACT**





**Executive
      Officers and Directors**





Name
            
            Age
            
            
            PositionMatthew
                P. Dwyer
            
            41
            
            
            Chief
                Executive Officer, Chief Financial Officerand
                sole director








Matthew
      P. Dwyer has been a member of our board of directors since January 12, 2004.
      He
      has served as Chief Executive Officer and Chief Financial Officer since April
      22, 2004 and. He served as a Vice President and Secretary from January 12,
      2004
      to April 22, 2004. From October 2002 until January 2004, he served as a
      full-time consultant for Kina’ole Development Corporation, a Hawaii corporation.
      Mr. Dwyer provided advice to Kina’ole in connection with our acquisition of
      Kina’ole in January 2003, and, thereafter, continued to provide consulting
      services to Kina’ole in connection


20


with
      potential acquisitions and financings. From May 2002 until October 2004, Mr.
      Dwyer was self-employed as a business consultant. In April 1999, Mr. Dwyer
      founded Wallstreet-Review, Inc. (“WALS.pk”), a financial consulting firm. He
      served as Chairman and Chief Executive Officer of Wallstreet-Review until
      November 2001, and, from November 2001 until May 2002, provided consulting
      services to it.





Our
      officers are elected annually at the first board of directors meeting following
      the annual meeting of shareholders, and hold office until their respective
      successors are duly elected and qualified, unless sooner displaced.





**Directors'
      Compensation**





We
      do not
      have an established compensation policy for our directors.





**Director
      independence, Audit Committee of the Board of Directors and Audit Committee
      financial expert**





As
      our
      Board of Directors is comprised of only one individual who also serves as our
      sole officer, we do not have any directors who are “independent” within the
      meaning of definitions established by the Securities and Exchange Commission.
      We
      anticipate that if we are successful in closing a business combination with
      an
      operating entity, our future Board of Directors may include members who are
      independent. We do not currently have any committees of our Board of Directors.
      We are not currently subject to any law, rule or regulation requiring that
      all
      or any portion of our Board of Directors include “independent” directors, nor
      are we required to establish or maintain an Audit Committee of our Board of
      Directors.





Our
      sole
      director is not an “audit committee financial expert” within the meaning of Item
      401(e) of Regulation S-B. In general, an “audit committee financial expert” is
      an individual member of the audit committee or Board of Directors
      who:





▪ understands
      generally accepted accounting principles and financial statements,


▪ is
      able to
      assess the general application of such principles in connection with accounting
      for estimates, accruals and reserves,


▪ has
      experience preparing, auditing, analyzing or evaluating financial statements
      comparable to the breadth and complexity to


our
      financial statements,


▪ understands
      internal controls over financial reporting, and


▪ understands
      audit committee functions.





**Code
      of Ethics**





We
      have
      not yet adopted a Code of Ethics applicable to our Chief Executive Officer,
      principal financial and accounting officers and persons performing similar
      functions. A Code of Ethics is a written standard designed to deter wrongdoing
      and to promote:





▪ honest
      and
      ethical conduct,


▪ full,
      fair,
      accurate, timely and understandable disclosure in regulatory filings and public
      statements,


▪ compliance
      with applicable laws, rules and regulations,


▪ the
      prompt
      reporting violation of the Code, and


▪ accountability
      for
      adherence to the Code.





We
      are
      not currently subject to any law, rule or regulation requiring that we adopt
      a
      Code of Ethics. If and to the extent that we adopt a Code of Ethics, we will
      file a copy of the Code of Ethics with the Securities and Exchange Commission,
      and will provide a copy, without charge, to any person desiring a copy of the
      Code of Ethics, by written request to the our company at its principal offices.
      Inasmuch as our operations are managed by our sole officer and director, and
      there are, therefore, no effective checks and balances relative to the decisions
      made and actions taken by our sole officer and director, we do not believe
      that
      a Code of Ethics would provide a meaningful element of security to our security
      holders. We may adopt a Code of Ethics in the future as we expand our management
      structure to add additional employees.


21


**Compliance
      With Section 16(a) of the Exchange Act**





Based
      solely upon a review of Forms 3 and 4 and amendments thereto furnished to us
      under Rule 16a-3(d) of the Securities Exchange Act of 1934, as amended, during
      the fiscal year ended December 31, 2004 and Forms 5 and amendments thereto
      furnished to us with respect to the fiscal year ended December 31, 2005, as
      well
      as any written representation from a reporting person that no Form 5 is
      required, we are aware that the above Board members failed to file on a timely
      basis, as disclosed in the aforementioned Forms, reports required by Section
      16(a) of the Securities Exchange Act of 1934 during the fiscal year ended
      December 31, 2005.





**ITEM
      10.**  **EXECUTIVE
      COMPENSATION**





The
      following table summarizes all compensation recorded by us in each of the last
      three fiscal years for our Chief Executive Officer and each other executive
      officers serving as such (the “Named Executive Officers”) whose annual
      compensation exceeded $100,000.





**Summary
      Compensation Table**





Annual
                Compensation
            
            
            
            Long-term
                compensationName
                and principal
            
            
            
            
            
            
            
            Other
            
            
            
            Securities
            
            
            
            All
                otherposition
            
            
            
            
            
            
            
            Annual
            
            Restricted
            
            underlying
            
            LTIP
            
            Compen-Fiscal
            
            Salary
            
            Bonus
            
            Compen-
            
            stock
            
            options/
            
            payouts
            
            sationYear
            
            ($)
            
            ($)
            
            sation
                $)
            
            awards($)
            
            SARs
                (#)
            
            ($)
            
            ($)Matthew
                P. Dwyer1
            
            
            2005
            
            $
            180,000
            
            $
            0
            
            $
            6,000
            
            $
            0
            
            
            800,000
            
            $
            0
            
            $
            02004
            
            $
            165,000
            
            $
            0
            
            $
            6,000
            
            $
            0
            
            
            662,500
            
            $
            0
            
            $
            02004
            
            $
            75,000
            
            $
            0
            
            $
            0
            
            $
            0
            
            
            0
            
            $
            0
            
            $
            0





1 Mr.
      Matthew
      P. Dwyer has served as our Chief Executive Officer, Chief Financial Officer
      and
      a director since April 22, 2004. We paid Mr. Dwyer $8,500 of his 2005 salary
      in
      cash payments and the balance of $171,500 has been accrued at December 31,
      2005
      and is included on our balance sheet at that date which appears elsewhere herein
      as an accrued expense. During fiscal 2005 we granted Mr. Dwyer options to
      purchase an aggregate of 800,000 shares of our common stock, of which 200,000
      are exercisable at $0.03 per share, 200,000 are exercisable a $0.06 per share,
      200,000 are exercisable at $0.07 per share and the remaining 200,000 are
      exercisable at $0.10 per share. Mr. Dwyer's 2004 salary was paid to him through
      a combination of cash payments totaling $96,000 and the issuance of 375,000
      shares of our common stock valued at $69,000. Other annual compensation paid
      to
      Mr. Dwyer in fiscal 2004 represents an expense allowance of $500 per month.
      During fiscal 2004 we granted Mr. Dwyer options to purchase a total of 662,500
      shares of our common stock, of which 262,500 options were exercisable at $0.03
      per share, 200,000 options were exercisable at $0.19 per share and the remaining
      200,000 options were exercisable at $0.08 per share.





**Employment
      Agreements**





On
      February 23, 2004, we entered into an Employment Agreement with Matthew P.
      Dwyer
      covering Mr. Dwyer’s services to us as our Vice President. The agreement, which
      is for an initial term expiring on January 1, 2007, provides for the payment
      of
      compensation to Mr. Dwyer of $120,000 for the first year, $136,000 for the
      second year and $149,600 for the third year. Salary payments to Mr. Dwyer,
      at
      his election, may be made through the issuance of shares of our common stock
      that have been registered for resale on Form S-8. Mr. Dwyer has advised us
      that
      he intends to exercise this election and receive his salary in common stock.
      The
      agreement also grants Mr. Dwyer five-year options to purchase 500,000 shares
      of
      our common stock at $.03 per share, 62,500 of which have vested, with the
      balance vesting on quarterly basis. Mr. Dwyer is also entitled to (a) an annual
      bonus in an amount equal to 1% of our post-tax profits, but not more than 50%
      of
      his then current salary, (b) a car allowance not to exceed $500 per month and
      (c) other benefits made available to all of our employees as a group. In the
      event of Mr. Dwyer’s death, we are required to pay his base salary to his estate
      for the remaining term of the employment agreement. In the event we undergo
      a
      change in control, Mr. Dwyer is entitled to terminate the agreement and, in
      such
      event, we are required to pay Mr. Dwyer an amount equal to approximately three
      times his average annual salary during the preceding three years. The agreement
      contains provisions protecting the confidentiality of our proprietary
      information and provides that Mr. Dwyer may not compete with us during the
      term
      of the agreement and for two years thereafter.


22


During
      May 2004, our CEO resigned and we amended the employment agreement of the Vice
      President to promote him to CEO and Chief Financial Officer. In recognition
      of
      the increased responsibilities undertaken his salary was increased from $120,000
      per year to $180,000 per year and his stock options were increased from 62,500
      shares per quarter to 200,000 shares per quarter. The options are fully vested,
      issued at the beginning of the quarter, exercisable for five year at the market
      price on the first day of the quarter.





During
      fiscal 2004 we issued a total of 375,000 shares of common stock in lieu of
      cash
      salary under the employment agreement valued at $69,000. In addition, we issued
      662,500 shares of common stock for the exercise of all stock options related
      to
      the above employment agreement in conversion of related party payables totaling
      $60,875. During fiscal 2005 we paid Mr. Dwyer $8,500 in salary and accrued
      $171,500 in wages payable to him which is reflected on our balance sheet at
      December 31, 2005 appearing elsewhere herein within accrued
      expenses.





**Consulting
      Agreement**





On
      February 2, 2004, we entered into a consulting agreement with Richard R. Dwyer,
      our former Chief Executive Officer. The agreement was for an initial term of
      one
      year, subject to a six-month renewal term. Mr. Dwyer provided consulting
      services to us in the areas of corporate development, acquisitions and strategic
      planning. For his services, Mr. Dwyer received fully vested and exercisable
      two-year warrants to purchase 1,100,000 shares of our common stock at an
      exercise price of $.03 per share, plus warrants to purchase an additional
      750,000 shares in the event the renewal term of the agreement becomes
      effective). The agreement contains provisions protecting the confidentiality
      of
      our proprietary information. The warrants to purchase 1,100,000 shares of our
      common stock granted as compensation under the initial term of the agreement
      were exercised by Mr. Dwyer through the conversion of accrued compensation
      totaling $33,000 due him for his services as President and CEO from August
      2003
      until November 2003. We recognized $157,000 in consulting expense in fiscal
      2004
      related to the grant of these warrants. In February 2005 we extended the term
      of
      the consulting agreement with Mr. Dwyer and as consideration granted him
      warrants to purchase an additional 750,000 shares of our common stock at an
      exercise price of $0.03 per share. Mr. Dwyer exercised the warrants in February
      2005. The agreement expired in August 2005 pursuant to its terms.





**Stock
      Option Information**




The
      following table sets forth certain information with respect to stock options
      granted in fiscal 2005 to the Named Executive Officers.





**Option
      Grants in Year Ended December 31, 2005**


**(individual
      grants)**




Name
            No.
                of Securities Underlying Options/SARs Granted
            %
                of Total Options/SARs Granted to Employees in Fiscal Year
            Exercise
                Price
            Expiration
                DateMatthew
                P. Dwyer
            800,000
            100%
            (1)
            (1)





(1) Includes
      five
      year options to purchase 200,000 shares of our common stock with an exercise
      price of $0.03 per share granted on January 1, 2005, options to purchase 200,000
      shares of our common stock with an exercise price of $0.06 per share granted
      on
      April 1, 2005, options to purchase 200,000 shares of our common stock with
      an
      exercise price of $0.10 per share granted on July 1, 2005 and options to
      purchase 200,000 shares of our common stock with an exercise price of $0.07
      per
      share granted on October 1, 2005.





The
      following table sets forth certain information regarding stock options held
      as
      of December 31, 2005 by the Named Executive Officers.


23


**Aggregate
      Option Exercises in Year Ended December 31, 2005**


**and
      Year-End Option Values**





Name
            Shares
            Value
            No.
                of Securities Underlying
            Value
                of Unexercised In-The-Acquired
            Received
            Unexercised
                Options at
            Money
                Options atOn
                Exercise
            $
            December
                31, 2005
            December
                31, 2005(1)Exercisable
            Unexercisable
            Exercisable
            UnexercisableMatthew
                Dwyer
            0
            n/a
            800,000
            0
            (2)
            n/a





(1) The
      value of
      unexercised in the money options at December 31, 2005 is calculated by
      determining the difference between the fair market value of the securities
      underlying the options and the exercise price of the options at fiscal year-end,
      respectively. At December 31, 2005 the closing price of our common stock as
      reported on the Pink Sheets was $0.03 per share.





(2) During
      fiscal
      2005 we granted Mr. Dwyer options to purchase an aggregate of 800,000 shares
      of
      our common stock, of which 200,000 are exercisable at $0.03 per share, 200,000
      are exercisable a $0.06 per share, 200,000 are exercisable at $0.07 per share
      and the remaining 200,000 are exercisable at $0.10 per share. Accordingly,
      none
      of these options were in the money options at December 31, 2005.





**Stock
      Option Plans**





**2004
      Equity Compensation Plan** .
      On June
      15, 2004, our Board of Directors authorized our 2004 Equity Compensation Plan
      (the "2004 Plan"). We have currently reserved 2,500,000 of our authorized but
      unissued shares of common stock for issuance under the 2004 Plan, and a maximum
      of 2,500,000 shares may be issued, unless the 2004 Plan is subsequently amended
      (subject to adjustment in the event of certain changes in our capitalization),
      without further action by our Board of Directors and shareholders, as required.
      Subject to the limitation on the aggregate number of shares issuable under
      the
      2004 Plan, there is no maximum or minimum number of shares as to which a stock
      grant or plan option may be granted to any person. Shares used for stock grants
      and plan options may be authorized and unissued shares or shares reacquired
      by
      us, including shares purchased in the open market. Shares covered by plan
      options which terminate unexercised will again become available for grant as
      additional options, without decreasing the maximum number of shares issuable
      under the 2004 Plan, although such shares may also be used by us for other
      purposes.





Under
      the
      2004 Equity Compensation Plan the following types of stock-based awards may
      be
      made:





• non-qualified
      stock options;


• stock
      grants;
      and


• stock
      appreciation rights.





In
      addition, the 2004 Plan allows for the inclusion of a reload option provision,
      which permits an eligible person to pay the exercise price of the option with
      shares of common stock owned by the eligible person and receive a new option
      to
      purchase shares of common stock equal in number to the tendered shares. The
      term
      of each plan option and the manner in which it may be exercised is determined
      by
      the Board of Directors or the committee, provided that no option may be
      exercisable more than 10 years after the date of its grant.





The
      2004
      Plan provides that, if our outstanding shares are increased, decreased,
      exchanged or otherwise adjusted due to a share dividend, forward or reverse
      share split, recapitalization, reorganization, merger, consolidation,
      combination or exchange of shares, an appropriate and proportionate adjustment
      shall be made in the number or kind of shares subject to the plan or subject
      to
      unexercised options and in the purchase price per share under such options.
      Any
      adjustment, however, does not change the total purchase price payable for the
      shares subject to outstanding options.





All
      2004
      Plan options are nonassignable and nontransferable, except by will or by the
      laws of descent and distribution, and during the lifetime of the optionee,
      may
      be exercised only by such optionee, except as provided by the board of the
      Committee. Options are also subject to termination by the Committee or the
      Board
      under certain conditions.





At
      each
      of December 31, 2005 and August 31, 2006, options covering 1,500,000 shares
      have
      been granted under the 2004 Plan.


24


**Total
      Identity Corp. 2003 Omnibus Securities Plan** .
      On May
      2, 2003, our Board of Directors approved the Total Identity Corp. 2003 Omnibus
      Securities Plan (the "2003 Omnibus Securities Plan"). On May 2, 2003, the 2003
      Omnibus Securities Plan was approved by written consent of holders of a majority
      of our voting stock, and ratified on June 17, 2003. On January 12, 2004, our
      Board of Directors increased the number of shares available for issuance under
      the 2003 Omnibus Securities Plan from 140,000 to 800,000.





Under
      the
      2003 Omnibus Securities Plan the following types of stock-based awards may
      be
      made:





· stock
      options (including incentive stock options and non-qualified stock
      options);


·  restricted
      stock awards;


·  unrestricted
      stock awards; and


·  performance
      stock awards.





Our
      employees and those of any subsidiary are eligible to be granted awards under
      the 2003 Omnibus Securities Plan at the discretion of the Board of Directors.
      The 2003 Omnibus Securities Plan is currently administered by the Board of
      Directors. In the future, the Board of Directors may form a Compensation
      Committee to administer the 2003 Omnibus Securities Plan. The plan administrator
      has discretion to:





·  select
      the persons to whom awards will be granted;


·  grant
      Awards under the 2003 Omnibus Securities Plan;


·  determine
      the number of shares to be covered by each Award;


·  determine
      the nature, amount, pricing, timing and other terms of the Award;


·  interpret,
      construe and implement the provisions of the 2003 Omnibus Securities Plan
      (including the authority to adopt rules


and
      regulations for carrying out the purposes of the plan); and


·  terminate,
      modify or amend the 2003 Omnibus Securities Plan.





In
      general, awards under the 2003 Omnibus Securities Plan will be proportionately
      adjusted for any increase or decrease in the number of issued shares of common
      stock resulting from an increase, decrease or exchange in the outstanding shares
      of common stock or additional shares or new or different shares are distributed,
      through merger, consolidation, sale or exchange of all or substantially all
      of
      our assets, reorganization, recapitalization, reclassification, stock dividend,
      stock split, reverse stock split, spin-off or other distribution with respect
      to
      such shares.





Under
      the
      2003 Omnibus Securities Plan, the Board of Directors may grant either incentive
      stock options or nonqualified stock options. The exercise price for each stock
      option is to be determined by the Board of Directors. Stock options must have
      an
      exercise price of at least 85% (100% in the case of incentive stock options,
      or
      at least 110% in the case of incentive stock options granted to certain
      employees owning more than 10% of the outstanding voting stock) of the fair
      market value of the common stock on the date the stock option is granted. Under
      the 2003 Omnibus Securities Plan, fair market value of the common stock for
      a
      particular date is generally the average of the closing bid and asked prices
      per
      share for the stock as quoted on the OTC Bulletin Board on such
      date.





No
      stock
      option may be exercised after the expiration of ten years from the date of
      grant
      (or five years in the case of incentive stock options granted to certain
      employees owning more than 10% of the outstanding voting stock). Restricted
      and
      unrestricted stock may also be awarded under the 2003 Omnibus Securities Plan,
      subject to such terms, conditions and restrictions as the administering body
      deems appropriate.





At
      each
      of December 31, 2005 and August 31, 2006, awards covering 625,000 shares had
      been made under the 2003 Omnibus Securities Plan.





**Total
      Identity Corp. 2003 Non-Qualified Stock Option and Grant
      Plan** .
      On May 2, 2003, our Board of Directors approved, declared it advisable and
      in
      our best interests and directed that there be submitted to the holders of a
      majority of our voting stock the Total Identity Corp. 2003 Non-Qualified Stock
      Grant and Option Plan (the "2003 Non-Qualified Securities Plan"). On May 2,
      2003, the Board of Directors approval of the 2003 Non-Qualified Securities
      Plan
      was ratified by written consent of a majority of our voting stock On November
      14, 2003, the Board of Directors increased


25


the
      number of shares available for issuance under the 2003 Non-Qualified Securities
      Plan to 3,000,000 shares, and on January 12, 2004 increased the number of shares
      available for issuance to 5,200,000 shares.





Under
      the
      2003 Non-Qualified Securities Plan, the following types of stock-based
      awards:





·  stock
      options (non-qualified stock options); and


·  stock
      awards (restricted, unrestricted or performance-based).





Our
      key
      employees (including employees who are also directors or officers), directors
      and consultants are eligible to be granted awards under the 2003 Non-Qualified
      Securities Plan at the discretion of the Board of Directors. Selected
      consultants may participate in the 2003 Non-Qualified Securities Plan
      if:





·  the
      consultant renders bona fide services to us or one of our
      subsidiaries;


·  the
      services rendered by the consultant are not in connection with the offer or
      sale
      of securities in a capital-raising


transaction
      and do not
      directly or indirectly promote or maintain a market for our securities;
      and


·  the
      consultant is a natural person who has contracted directly with us or a
      subsidiary to render such services.





The
      2003
      Non-Qualified Securities Plan currently is administered by our Board of
      Directors, but at the Board’s election, a committee may be appointed by the
      Board of Directors. The Board of Directors or any committee appointed by the
      Board of Directors has full authority, in its discretion, to:





·  select
      the persons to whom awards will be granted;


·  grant
      awards under the 2003 Non-Qualified Securities Plan;


·  determine
      the number of shares to be covered by each award;


·  determine
      the nature, amount, pricing, timing and other terms of the award;


·  interpret,
      construe and implement the provisions of the 2003 Non-Qualified Securities
      Plan
      (including the authority to adopt


rules
      and regulations for
      carrying out the purposes of the plan); and


·  terminate,
      modify or amend the 2003 Non-Qualified Securities Plan.





In
      general awards under the 2003 Non-Qualified Securities Plan will be
      proportionately adjusted for any increase or decrease in the number of issued
      shares of common stock resulting from an increase, decrease or exchange in
      the
      outstanding shares of common stock or additional shares or new or different
      shares through merger, consolidation, sale or exchange of all or substantially
      all of our assets, or our reorganization, recapitalization, reclassification,
      stock dividend, stock split, reverse stock split, spin-off or other distribution
      with respect to our shares.





Under
      the
      2003 Non-Qualified Securities Plan, the Board of Directors may grant
      non-qualified stock options. Non-qualified stock options may be granted for
      such
      number of shares of common stock as the Board of Directors determines, so long
      as such number of shares does not exceed the amount permitted under the plan.
      The exercise price for each stock option is determined by the Board of
      Directors. No stock option may be exercised after the expiration of ten years
      from the date of grant. Subject to the foregoing and the other provisions of
      the
      2003 Non-Qualified Securities Plan, stock options may be exercised at such
      times
      and in such amounts and be subject to such restrictions and other terms and
      conditions, if any, as determined by the Board of Directors. Restricted stock
      may also be awarded by the Board of Directors subject to such terms, conditions
      and restrictions, if any, as it deems appropriate.





At
      each
      of December 31, 2005 and August 31, 2006, awards covering 5,100,000 shares
      had
      been made under the 2003 Non-Qualified Securities Plan.











**ITEM
      11.**  **SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
      MATTERS**





At
      August
      31, 2006, there were 27,392,510 shares of our common stock issued and
      outstanding. The following table sets forth, as of that date information known
      to us relating to the beneficial ownership of these shares by:


26


- each
      person
      who is the beneficial owner of more than 5% of the outstanding shares of the
      class of stock;


- each
      director;


- each
      executive officer; and


- all
      executive
      officers and directors as a group.





Unless
      otherwise indicated, the business address of each person listed is in care
      of
      1007 North Federal Highway, Suite D-6, Fort Lauderdale, Florida 33304. We
      believe that all persons named in the table have sole voting and investment
      power with respect to all shares beneficially owned by them. Under securities
      laws, a person is considered to be the beneficial owner of securities he owns
      and that can be acquired by him within 60 days from August 31, 2006 upon the
      exercise of options, warrants, convertible securities or other understandings.
      We determine a beneficial owner's percentage ownership by assuming that options,
      warrants or convertible securities that are held by him, but not those held
      by
      any other person and which are exercisable within 60 days of that date have
      been
      exercised or converted.








Name
                of
            
            Amount
                and Nature of
            
            PercentageBeneficial
                Owner
            
            Beneficial
                Ownership
            
            of
                ClassMatthew
                P. Dwyer13
            
            
            6,407,835
            
            
            22.3%All
                officers and directors asa
                group (one person)1 3
            
            
            6,407,835
            
            
            22.3%Cindy
                Dolgin 2
            
            
            5,750,000
            
            
            21.0%Manny
                Losada
            
            
            1,650,000
            
            
            6.0%Dr.
                Martin Peskin 3
            
            
            3,000,000
            
            
            11.0%





*  represents
      less than 1%





1  Includes
      options to purchase an aggregate of 1,400,000 shares of our common stock with
      exercise prices ranging from $0.01 to $0.10 per share granted to him pursuant
      to
      the terms of his employment agreement, 1,862,500 shares owned by AFAB, Inc.
      and
      145,335 shares owned by Wall Street Review. Mr. Dwyer has voting and dispositive
      control over securities held by these entities.





2  Excludes
      500,000 shares owned by Mr. Neil Dolgin, the spouse of Mrs. Cindy Dolgin. Mr.
      Dolgin was an executive officer and director of our company from April 2003
      until November 2004.





3  Mr.
      Dwyer
      has entered into an agreement with Dr. Peskin to sell him 3,000,000 shares
      of
      common stock held by Mr. Dwyer.





**ITEM
      12.**  **CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS**





On
      January 31, 2003, we acquired 100% of the outstanding stock of Kina'ole
      Development Corporation, a Hawaiian corporation, from William Michael Sessions
      and John W. Meyers, both of whom were officers and directors of our company
      at
      the time of the transaction. In exchange for Kina'ole's shares, we issued Mr.
      Sessions and Mr. Meyers each 250,000 shares of our Series B Convertible
      Preferred Stock. On September 30, 2003 we entered into an agreement with Messrs.
      Sessions and Meyers to exchange the 500,000 shares of Series B Convertible
      Preferred Stock for 100% of the securities of Kina'ole Development Corporation.
      In addition, upon settlement of a then pending lawsuit we agreed to issue an
      additional 120,000 shares of our common stock to Messrs. Sessions and Meyers
      and
      to pay certain obligations to these individuals in the amount of $13,500. All
      operations of Kina'ole Development Corporation were included in discontinued
      operations as of December 31, 2003.




On
      February 21, 2003, we entered into a Stock Purchase Agreement with Messrs.
      Sessions and Meyers, and Mr. Scott Siegel, whereby we agreed to issue 1,050,000
      shares of our common stock to Mr. Siegel, and Mr. Sessions and Mr. Meyers
      transferred 250,000 shares of Series A Preferred Stock to Mr. Siegel, all in
      exchange for Mr. Siegel agreeing to pay approximately $72,500 of our outstanding
      liabilities and $150,000 for outstanding amounts owed by Mr. Sessions and Mr.
      Meyers to Marc Douglas. On March 5, 2003, Mr. Sessions and Mr. Meyers resigned
      as directors of our company and Mr. Siegel, who was not a related party to
      our
      company at the time of the transaction, became an officer and
      director.


27


On
      May
      13, 2004, we entered into an agreement with Mr. Siegel resolving certain
      disputes that had arisen relating to the ownership of 1,050,000 shares of our
      common stock and 250,000 shares of our Series A Preferred Stock. Under the
      terms
      of the agreement:





·  Mr.
      Siegel retained 250,000 shares of common stock originally acquired by him on
      February 21, 2003, at an agreed upon purchase price of $.03 per share and
      800,000 shares of common stock issued to Mr. Siegel under the February 21,
      2003
      stock purchase agreement were surrendered to us and canceled. The Series A
      Preferred Stock was surrendered to us and canceled;





·  We
      agreed
      to pay Mr. Siegel $35,265, plus $7,000 less an amount equal our legal fees
      in
      settlement of this matter. As our legal fees in this matter exceeded $7,000,
      the
      amount payable to Mr. Siegel at each of December 31, 2004 and 2005 was $35,265.
      The amount payable to Mr. Siegel was to be paid (a) one-third for each million
      dollars in financing raised by us after June 27, 2004 or (b) pro-rata to the
      extent that our other officers or directors receive repayment of indebtedness
      from third-party financing obtained by us subsequent June 27, 2004;
      and





·  Mr.
      Siegel resigned as a director effective May 13, 2004.





In
      October 2003 we issued a $150,000 principal amount 12% secured debenture to
      Argilus Capital, LLC which was due on January 10, 2004. The funds to satisfy
      the
      debenture were to be provided to us from the net proceeds of a $1,000,000
      private placement. The terms of this debenture provided that as additional
      consideration we were to issue or cause to be issued to Argilus Capital, LLC
      400,000 freely tradeable shares of our common stock. If the debenture was not
      paid when due because of a failure to complete the private offering, the 400,000
      shares of our common stock would be used by the holder to satisfy our
      obligations under the debenture and thereafter release us from any obligation
      related thereto. Mr. Matthew Dwyer, who was then a shareholder of our company,
      transferred 400,000 shares of our common stock that he owned to Argilus Capital,
      LLC pursuant to this requirement. The private offering was never completed
      and
      as a result Argilus Capital, LLC was entitled to the 400,000 shares. In March
      2004 we issued Mr. Dwyer, who was then an officer and director of our company,
      400,000 shares valued at $76,000, in replacement of the shares he had
      transferred to Argilus Capital, LLC on our behalf.





On
      January 16, 2004 we borrowed $50,000 from Mrs. Cindy Dolgin, the wife of Mr.
      Neil Dolgin who was then an officer and director of our company. The funds
      were
      used by us for working capital. As an inducement to loan us the money we issued
      Mrs. Dolgin 250,000 shares of our common stock valued at $45,000. The note
      carried a 45 day term with interest at 8% per annum and contained a penalty
      cause requiring us to issue 5,000 shares of our common stock per day from the
      due date of February 28, 2004 of the note until such time as the note is paid
      in
      full. In addition, the note provided that should Mrs. Dolgin elect to convert
      the note into equity and invest an additional $200,000 into our company prior
      to
      the due date of the note, the note would be convertible at $0.25 per share.
      No
      such election was ever made. On October 26, 2004 we made a $10,000 payment
      to
      Mrs. Dolgin. At December 31, 2005 we owed Mrs. Carol Dolgin, presently a
      principal shareholder of our company, $40,000 under the note. In March 2006
      the
      note was converted into 4,000,000 shares of our common stock at a conversion
      rate of $0.01 per share. We issued Mrs. Dolgin an additional 1,500,000 shares
      of
      our common stock valued at $13,650 as a penalty for failure to pay the note
      when
      due.





During
      fiscal 2004 we issued Mr. Matthew Dwyer, our President and CEO, options to
      purchase 262,500 shares of our common stock with an exercise price of $0.03
      per
      share, options to purchase 200,000 shares of our common stock with an exercise
      price of $0.19 per share and options to purchase 200,000 shares of our common
      stock with an exercise price of $0.08 per share as additional compensation
      under
      this employment agreement. Mr. Dwyer exercised these options through the
      conversion of working capital advances he had made us totaling $60,875 as
      described below.





During
      each of fiscal 2003 and fiscal 2004 from time to time Mr. Matthew Dwyer has
      lent
      our company funds for working capital. Generally the loans do not bear interest
      and there is no fixed term for repayment. During fiscal 2003 he lent us a total
      of $180,937, all of which was outstanding at December 31, 2003. During fiscal
      2004 he lent us an additional $15,906. During fiscal 2004 we repaid Mr. Dwyer
      approximately $92,402 and he utilized an additional $60,875 due him for working
      capital advances as payment for the exercise price of options granted under
      his
      employment agreement as described above. During fiscal 2005 Mr. Dwyer lent
      us an
      additional $20,495. At December 31, 2005 we owned him approximately $39,560,
      net
      of repayments to him during the year of approximately $24,500. On June 23,
      2006,
      $30,000 of related party accounts payable due by us to Mr. Matthew Dwyer, our
      CEO, was converted into 3,000,000 shares of common stock at a market price
      of
      $0.01 per share.


28


In
      February 2005, we issued 500,000 shares of our common stock to Wall
      Street-Review Financial Services, Inc., an affiliate of our CEO Mr. Dwyer,
      for
      an aggregate purchase price of $25,000. The shares were valued at $0.05 per
      share which was the fair market value of our common stock on the date of
      issuance. In February 2005 we also issued 393,335 shares of our common stock
      to
      Wall Street Review Financial Services, Inc. in satisfaction of debt of
      $15,813.





On
      April
      7, 2006 we borrowed $40,000 from Mr. Manny Losada, a principal shareholder
      of
      our company, under the terms of a note bearing interest at 2% per month which
      is
      due on September 30, 2006. As additional consideration for the loan, in June
      2006 we issued Mr. Losada 800,000 shares of our common stock valued at $8,000.
      We granted Mr. Losada piggy back registration rights covering these
      securities.





In
      June
      2006 we borrowed an additional $25,000 from Mr. Losada which bears interest
      at
      12% per annum and was due on July 31, 2006. As additional consideration for
      the
      loan we issued Mr. Losada 100,000 shares of our common stock valued at $1,000.
      The amount of the loan remains outstanding as of August 31, 2006.





**PART
      IV**





**ITEM
      13.**  **EXHIBITS**





The
      following documents are filed as a part of this report or are incorporated
      by
      reference to previous filings, if so indicated:





EXHIBIT
            NO.DESCRIPTION





3.1.1
              Amended
                  and Restated Articles of Incorporation (1)3.1.2
              Statement
                  of Designation of Series A Preferred Stock (2)3.2
              Amended
                  and Restated By-Laws (3)3.3
              Articles
                  of Amendment filed June 30, 2004. (23)3.4
              Articles
                  of Amendment filed July 1, 2004 (24)3.5
              Articles
                  of Amendment dated June 25, 2004 (28)3.6
              Articles
                  of Amendment dated June 25, 2004 (29)10.1
              2003
                  Omnibus Securities Plan, as amended (4) **10.2
              2003
                  Non-Qualified Stock Grant and Option Plan, as amended (5)
                  **10.3
              Stock
                  Purchase Agreement dated October 13, 2003 by and between Total
                  Identity
                  Corp. and Total Identity Systems Corp. (6)10.4
              Stock
                  Purchase Agreement dated October 13, 2003 by and between Total
                  Identity
                  Corp. and Robert David (7)10.5
              Employment
                  Agreement dated October 13, 2003 by and between Charles Finzer
                  and Total
                  Identity Corp. (8)**10.6
              Employment
                  Agreement dated October 13, 2003 by and between Robert David and
                  Total
                  Identity Corp. (9)**10.7
              Promissory
                  Note dated October 13, 2003 from Total Identity Systems Corp. to
                  Robert
                  David (10)10.8
              Pledge
                  Agreement dated October 13, 2003 by and between Total Identity
                  Corp. and
                  Robert David (11)10.9
              Lease
                  Agreement dated October 13, 2003 by and between Total Identity
                  Systems
                  Corp. and 2340 Townline Road Corporation (12)10.10
              Amendment
                  No. 1 to the Common Stock Purchase Agreement dated February 23,
                  2004 by
                  and between Total Identity Corp., Total Identity Systems Corp.
                  and Robert
                  David (13)10.11
              Amendment
                  No. 1 to Common Stock Purchase Agreement dated February 23, 2004
                  by and
                  between Total Identity Corp. and Robert David (14)10.12
              Amended
                  and Restated Promissory Note dated February 23, 2004
                  (15)10.13
              Amended
                  and Restated Pledge Agreement dated February 23, 2004
                  (16)10.14
              Lease
                  Agreement dated February 23, 2004 (17)10.15
              Consulting
                  Agreement dated February 23, 2004 by and between Total Identity
                  Corp. and
                  Robert David (18)**10.16
              Amended
                  and Restated Pledge Agreement dated February 23, 2004 by and between
                  Total
                  Identity Corp., Robert David and Shapiro, Rosenbaum, Liebschultz
                  and
                  Nelson, LLP (19)10.17
              Employment
                  Agreement dated February 23, 2004 with Matthew P. Dwyer
                  (20)**10.18
              Consulting
                  Agreement dated February 2, 2004 with Richard R. Dwyer (21)
                  **
 29
 
 10.19
                  Settlement
                      Agreement dated May 13, 2004 between Scott Siegel and Total
                      Identity Corp.
                      (22)10.20
                  Employment
                      Agreement with Jeffrey Hoffman (25)**10.21
                  2004
                      Equity Compensation Plan (26)**10.22
                  Agreement
                      dated June 17, 2005 between Total Identity Corp. and WallStreet-Review
                      Financial Services, Inc. (27) **10.23
                  8%
                      Note in the principal amount of $50,000 dated January 16, 2004
                      issued to
                      Ms. Cindy Dolgin *10.24
                  Note
                      in the principal amount of $40,000 dated April 7, 2006 issued
                      to Mr.
                      Manuel B. Losada *10.25
                  Note
                      in the principal amount of $72,031 dated May 11, 2006 issue
                      to Tripp
                      Scott, P.A. *21.1
                  Subsidiaries
                      of the registrant *31.1
                  Section
                      302 Certificate of Chief Executive Officer *31.2
                  Section
                      302 Certificate of Chief Financial Officer *32.1
                  Section
                      906 Certificate of Chief Executive Officer **
                  filed
                      herewith**
                  compensatory
                      agreement(1)
                  Incorporated
                      by reference to Exhibit 3.1 to the registration statement on
                      Form SB-2
                      filed on April 14, 2000.(2)
                  Incorporated
                      by reference to Exhibit 4.1 to the registration statement on
                      Form SB-2
                      filed on April 14, 2000.(3)
                  Incorporated
                      by reference to Exhibit 3.2 to the registration statement on
                      Form SB-2
                      filed on April 14, 2000.(4)
                  Incorporated
                      by reference to Exhibit 10.1 to the annual report on Form 10-KSB
                      for the
                      fiscal year ended December 31, 2003.(5)
                  Incorporated
                      by reference to Exhibit 10.2 to the annual report on Form 10-KSB
                      for the
                      fiscal year ended December 31, 2003.(6)
                  Incorporated
                      by reference to Exhibit 10.1 to the Current Report on Form
                      8-K filed on
                      October 28, 2003.(7)
                  Incorporated
                      by reference to Exhibit 10.2 to the Current Report on Form
                      8-K filed on
                      October 28, 2003.(8)
                  Incorporated
                      by reference to Exhibit 10.3 to the Current Report on Form
                      8-K filed on
                      October 28, 2003.(9)
                  Incorporated
                      by reference to Exhibit 10.4 to the Current Report on Form
                      8-K filed on
                      October 28, 2003.(10)
                  Incorporated
                      by reference to Exhibit 10.5 to the Current Report on Form
                      8-K filed on
                      October 28, 2003.(11)
                  Incorporated
                      by reference to Exhibit 10.6 to the Current Report on Form
                      8-K filed on
                      October 28, 2003.(12)
                  Incorporated
                      by reference to Exhibit 10.7 to the Current Report on Form
                      8-K filed on
                      October 28, 2003.(13)
                  Incorporated
                      by reference to Exhibit 10.1 to the Current Report on Form
                      8-K filed on
                      February 24, 2004.(14)
                  Incorporated
                      by reference to Exhibit 10.2 to the Current Report on Form
                      8-K filed on
                      February 24, 2004.(15)
                  Incorporated
                      by reference to Exhibit 10.3 to the Current Report on Form
                      8-K filed on
                      February 24, 2004.(16)
                  Incorporated
                      by reference to Exhibit 10.4 to the Current Report on Form
                      8-K filed on
                      February 24, 2004.(17)
                  Incorporated
                      by reference to Exhibit 10.5 to the Current Report on Form
                      8-K filed on
                      February 24, 2004.(18)
                  Incorporated
                      by reference to Exhibit 10.6 to the Current Report on Form
                      8-K filed on
                      February 24, 2004.(19)
                  Incorporated
                      by reference to Exhibit 10.7 to the Current Report on Form
                      8-K filed on
                      February 24, 2004.(20)
                  Incorporated
                      by reference to Exhibit 10.17 to the annual report on Form
                      10-KSB for the
                      fiscal year ended December 31, 2003.(21)
                  Incorporated
                      by reference to Exhibit 10.18 to the annual report on Form
                      10-KSB for the
                      fiscal year ended December 31, 2003.(22)
                  Incorporated
                      by reference to Exhibit 10.1 to the Current Report on Form
                      8-K filed on
                      May 20, 2004.(23)
                  Incorporated
                      by reference to Exhibit 3.1 to the Current Report on Form 8-K
                      filed on
                      September 24, 2004.(24)
                  Incorporated
                      by reference to Exhibit 3.2 to the Current Report on Form 8-K
                      filed on
                      September 24, 2004.(25)
                  Incorporated
                      by reference to Exhibit 10.1 to the Current Report on Form
                      8-K filed on
                      September 24, 2004.(26)
                  Incorporated
                      by reference to Exhibit 10.1 to the registration statement
                      on Form S-8
                      filed on February 11, 2005.(27)
                  Incorporated
                      by reference to Exhibit 10.1 to the Current Report on Form
                      8-K filed on
                      July 7, 2005.(28)
                  Incorporated
                      by reference to Exhibit 3.1 to the quarterly report on Form
                      10-QSB/A for
                      the period ended June 30, 2004.(29)
                  Incorporated
                      by reference to Exhibit 3.2 to the quarterly report on Form
                      10-QSB/A for
                      the period ended June 30, 2004.(30)
                  Incorporated
                      by reference to Exhibit 10.23 to the annual report on Form
                      10-KSB for the
                      period ended December 31, 2004.(31)
                  Incorporated
                      by reference to Exhibit 10.24 to the annual report on Form
                      10-KSB for the
                      period ended December 31, 2004.(32)
                  Incorporated
                      by reference to Exhibit 10.25 to the annual report on Form
                      10-KSB for the
                      period ended December 31,
                      2004.


30


(33)
              Incorporated
                  by reference to Exhibit 21.1 to the annual report on Form 10-KSB
                  for the
                  period ended December 31,
                  2004.




**ITEM
      14.** **P** **RINCIPAL
      ACCOUNTANT FEES AND SERVICES**





HJ
&
      Associates, LLC. served as our independent registered public accounting firm
      for
      fiscal 2005 and fiscal 2004. The following table shows the fees that were billed
      for the audit and other services provided by this firm for the 2005 and 2004
      fiscal years.





Fiscal
                2005
            Fiscal
                2004Audit
                Fees
            $7,500
            $12,500Audit-Related
                Fees
            0
            2,500Tax
                Fees
            0
            0All
                Other Fees
            2,500
            4,000TOTAL
            $10,000
            $19,000





*Audit
      Fees* —
This
      category includes the audit of our annual financial statements, review of
      financial statements included in our Form 10-QSB Quarterly Reports and services
      that are normally provided by the independent auditors in connection with
      engagements for those fiscal years. This category also includes advice on audit
      and accounting matters that arose during, or as a result of, the audit or the
      review of interim financial statements.





*Audit-Related
      Fees* —
This
      category consists of assurance and related services by the independent auditors
      that are reasonably related to the performance of the audit or review of our
      financial statements and are not reported above under “Audit Fees.” The services
      for the fees disclosed under this category include consultation regarding our
      correspondence with the SEC and other accounting consulting.





*Tax
      Fees* —
This
      category consists of professional services rendered by our independent auditors
      for tax compliance and tax advice. The services for the fees disclosed under
      this category include tax return preparation and technical tax advice.





*All
      Other Fees* —
This
      category consists of fees for other miscellaneous items.





Our
      Board
      of Directors has adopted a procedure for pre-approval of all fees charged by
      the
      our independent auditors. Under the procedure, the Board approves the engagement
      letter with respect to audit, tax and review services. Other fees are subject
      to
      pre-approval by the Board, or, in the period between meetings, by a designated
      member of Board. Any such approval by the designated member is disclosed to
      the
      entire Board at the next meeting. The audit and tax fees paid to the auditors
      with respect to fiscal year 2004 were pre-approved by the Board of Directors.











31







In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





Total
                Identity Corp.September
                13, 2006
            
            
            By:/s/ Matthew P. DwyerMatthew
                P. Dwyer, CEO, CFO and President, principal executive officer and
                principal financial and accounting
                officer





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.





Signature
            
            Title
            
            Date/s/
                Matthew P. Dwyer
            
            CEO,
                Chief Financial Officer,
            
            September
                13, 2006Matthew
                P. Dwyer
            
            President
                and director













32























































**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**





**CONSOLIDATED
      FINANCIAL STATEMENTS**





**December
      31, 2005**  **and
      2004**

















Contents


Report
                  of Independent Registered Public Accounting Firm
              3Consolidated
                  Balance Sheet
              F4Consolidated
                  Statements of Operations
              F6Consolidated
                  Statements of Stockholders’ Equity (Deficit)
              F7Consolidated
                  Statements of Cash Flows
              F9Notes
                  to the Consolidated Financial Statements
              F11










F2


REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  The
        Board
        of Directors
 Total
        Identity Corporation and Subsidiaries
 Fort
        Lauderdale, Florida
  We
        have
        audited the accompanying consolidated balance sheet of Total Identity
        Corporation and Subsidiaries as of December 31, 2005, and the related
        consolidated statements of operations, stockholders' equity (deficit) and
        cash
        flows for the years ended December 31, 2005 and 2004.  These consolidated
        financial statements are the responsibility of the Company's management. 
Our responsibility is to express an opinion on these consolidated financial
        statement based on our audits.
  We
        conducted our audits in accordance with the standards of the Public Company
        accounting Oversight Board (United States).  Those standards require that
        we plan and perform the audit to obtain reasonable assurance about whether
        the
        consolidated financial statements are free of material misstatements.  An
        audit includes examining, on a test basis, evidence supporting the amounts
        and
        disclosures in the consolidated financial statements.  An audit also
        includes assessing the accounting principles used and significant estimates
        made
        by management, as well as evaluating the overall consolidated financial
        statement presentation.  We believe that our audits provide a reasonable
        basis for our opinion.
  In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of Total Identity
        Corporation and Subsidiaries as of December 31, 2005 and the results of their
        operations and their cash flows for the years ended December 31, 2005 and
        2004,
        in conformity with U.S. generally accepted accounting principles.
  The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern.  As discussed in Note 7 to
        the consolidated financial statements, the Company's deficit in working capital
        and losses raises substantial doubt about its ability to continue as a going
        concern.  Management’s plans concerning these matters are also described in
        Note 7.  The consolidated financial statements do not include any
        adjustments that might result from the outcome of this uncertainty.
  /s/
        HJ
& Associates, LLC
 HJ
&
        Associates, LLC
 Salt
        Lake
        City, Utah











F3


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Balance Sheet





ASSETS


December
                31,2005CURRENT
                ASSETSPrepaid
                expenses
            
            $
            646Total
                Current Assets
            
            
            646ASSETS
                FROM DISCONTINUED OPERATIONS (NOTE 3)
            
            
            14,731TOTAL
                ASSETS
            
            $
            15,377



























The
              accompanying notes are an integral part of these consolidated financial
              statements.
 F4


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Balance Sheet (Continued)





LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)





December
                31,2004CURRENT
                LIABILITIESCash
                overdraft
            
            $
            213Accounts
                payable
            
            
            185,641Accounts
                payable- related party (Note 5)
            
            
            41,156Accrued
                expenses
            
            
            181,550Convertible
                debenture (Note 5)
            
            
            125,000Notes
                payable (Note 5)
            
            
            25,000Notes
                payable- related party (Notes 5)
            
            
            100,452Total
                Current Liabilities
            
            
            659,012LIABILITIES
                FROM DISCONTINUED OPERATIONS (NOTE 3)
            
            
            88,301TOTAL
                LIABILITIES
            
            
            747,313STOCKHOLDERS’
                EQUITY (DEFICIT)Preferred
                stock, Series “A” $0.01 par value,1,500,000
                shares authorized; -0- sharesissued
                and outstanding
            
            
            -Preferred
                stock, Series “B” $0.01 par value,500,000
                shares authorized; -0- issued and outstanding
            
            
            -Common
                stock, $0.01 par value, 30,000,000 sharesauthorized;
                17,992,506 shares issued and outstanding
            
            
            179,924Additional
                paid-in capital
            
            
            9,849,837Accumulated
                deficit
            
            
            (10,761,697
            )Total
                Stockholders’ Equity (Deficit)
            
            
            (731,963
            )TOTAL
                LIABILITIES AND STOCKHOLDERS’EQUITY
                (DEFICIT)
            
            $
            15,377











The
              accompanying notes are an integral part of these consolidated financial
              statements.
 F5


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Statements of Operations





For
                the Years EndedDecember
                31,2005
            
            2004REVENUE
            
            $
            -
            
            $
            -COST
                OF SALES
            
            
            -
            
            
            -GROSS
                MARGIN
            
            
            -
            
            
            -EXPENSESConsulting
                and professional fees
            
            
            82,515
            
            
            659,136Salaries
                and wages
            
            
            230,000
            
            
            264,375Selling,
                general and administrative
            
            
            13,476
            
            
            111,380Total
                Expenses
            
            
            325,991
            
            
            1,034,891LOSS
                FROM OPERATIONS
            
            
            (325,991
            )
            
            (1,034,891
            )OTHER
                INCOME (EXPENSE)Interest
                expense
            
            
            (18,571
            )
            
            (74,518
            )Gain
                (Loss) on extinguishments of debt
            
            
            -
            
            
            70,000Total
                Other Income (Expense)
            
            
            (18,571
            )
            
            (4,518
            )LOSS
                BEFORE DISCONTINUED OPERATIONS
            
            
            (344,562
            )
            
            (1,039,409
            )GAIN
                (LOSS) ON DISCONTINUED OPERATIONS
            
            
            (160,821
            )
            
            515,472NET
                LOSS
            
            $
            (505,383
            )
            $
            (523,937
            )BASIC
                INCOME (LOSS) PER SHARELoss
                per share before discontinued operations
            
            $
            (0.02
            )
            $
            (0.06
            )Income
                (loss) per share on discontinued operations
            
            
            (0.01
            )
            
            0.03NET
                LOSS PER SHARE
            
            $
            (0.03
            )
            $
            (0.03
            )WEIGHTED
                AVERAGE NUMBER OF SHARES OUTSTANDING
            
            
            17,547,096
            
            
            15,229,431




The
              accompanying notes are an integral part of these consolidated financial
              statements.
 F6


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Statements of Stockholders’ Equity (Deficit)





AdditionalPreferred
                Stock
            
            Common
                Stock
            
            Paid-in
            
            AccumulatedShares
            
            Amount
            
            Shares
            
            Amount
            
            Capital
            
            DeficitBalance,
                December 31, 2003
            
            250,000
            
            $2,500
            
            12,459,671
            
            $124,596
            
            $8,770,102
            
            $(9,732,377)Series
                B preferred stockretired
                in settlement
            
            
            (250,000
            )
            
            (2,500
            )
            
            -
            
            
            -
            
            
            2,500Common
                stock issued forconsulting
                services
            
            
            -
            
            
            -
            
            
            1,700,000
            
            
            17,000
            
            
            263,000
            
            
            -Common
                stock issued forsalaries
            
            
            -
            
            
            -
            
            
            375,000
            
            
            3,750
            
            
            65,250
            
            
            -Common
                stock issued asincentive
                for loan toCompany
            
            
            -
            
            
            -
            
            
            250,000
            
            
            2,500
            
            
            42,500
            
            
            -Common
                stock issued forpurchase
                of subsidiary
            
            
            -
            
            
            -
            
            
            200,000
            
            
            2,000
            
            
            28,000
            
            
            -Common
                stock issued forconversion
                of debt
            
            
            -
            
            
            -
            
            
            400,000
            
            
            4,000
            
            
            72,000
            
            
            -Common
                stock issued forwarrant
                exercise
            
            
            -
            
            
            -
            
            
            1,100,000
            
            
            11,000
            
            
            22,000
            
            
            -Common
                stock issued foroption
                exercise
            
            
            -
            
            
            -
            
            
            662,500
            
            
            6,625
            
            
            54,250
            
            
            -Common
                stock cancelled
            
            
            -
            
            
            -
            
            
            (1,800,000
            )
            
            (18,000
            )
            
            18,000
            
            
            -Stock
                warrants issued for services
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            157,000
            
            
            -Stock
                options issued for salary
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            99,375
            
            
            -Contribution
                of capital
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            74,000
            
            
            -Consolidated
                net loss forthe
                year ended December31,
                2004
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (523,937
            )Balance,
                December 31, 2004
            
            
            -
            
            
            -
            
            
            15,347,171
            
            
            153,471
            
            
            9,667,977
            
            
            (10,256,314
            )Common
                stock issued forCash
            
            
            -
            
            
            -
            
            
            500,000
            
            
            5,000
            
            
            20,000
            
            
            -Common
                stock issued forwarrant
                exercise
            
            
            -
            
            
            -
            
            
            750,000
            
            
            7,500
            
            
            15,000
            
            
            -Common
                stock issued forServices
            
            
            -
            
            
            -
            
            
            1,000,000
            
            
            10,000
            
            
            70,000
            
            
            -Common
                stock issued forRelated
                party debt
            
            
            -
            
            
            -
            
            
            395,335
            
            
            3,953
            
            
            11,860
            
            
            -Stock
                warrants issued for services
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            15,000
            
            
            -Stock
                options issued for salary
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            50,000
            
            
            -Balance
                forward
            
            
            -
            
            $
            -
            
            
            17,992,506
            
            $
            179,924
            
            $
            9,849,837
            
            $
            (10,256,314
            )


The
              accompanying notes are an integral part of these consolidated financial
              statements.
 F7


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Statements of Stockholders’ Equity (Deficit) (Continued)




AdditionalPreferred
                Stock
            
            Common
                Stock
            
            Paid-in
            
            AccumulatedShares
            
            Amount
            
            Shares
            
            Amount
            
            Capital
            
            DeficitBalance
                forward
            
            
            -
            
            $
            -
            
            
            17,992,506
            
            $
            179,924
            
            $
            9,849,837
            
            $
            (10,256,314
            )Consolidated
                net loss forthe
                year ended December31,
                2005
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (505,383
            )Balance,
                December 31, 2005
            
            
            -
            
            $
            -
            
            
            17,992,506
            
            $
            179,924
            
            $
            9,849,837
            
            $
            (10,761,697
            )













































The
              accompanying notes are an integral part of these consolidated financial
              statements.
 F8


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Statements of Cash Flows




For
                the Years EndedDecember
                31,2005
            
            2004CASH
                FLOWS FROM OPERATINGACTIVITIESNet
                loss
            
            $
            (505,383
            )
            $
            (523,937
            )Adjustments
                to reconcile net loss to netcash
                used by operating activities:Depreciation
                and amortization
            
            
            642
            
            
            229,475(Gain)
                on extinguishments of debt
            
            
            -
            
            
            (70,000
            )Loss
                on extinguishments of debt - discontinued
            
            
            -
            
            
            45,453Stock
                issued for services, salary and interest
            
            
            80,000
            
            
            394,000Stock
                options issued for salary
            
            
            50,000
            
            
            99,375Stock
                warrants issued for services
            
            
            15,000
            
            
            157,000(Gain)
                on discontinued operations
            
            
            -
            
            
            (663,852
            )Changes
                in assets and liabilities:(Increase)
                in receivables - discontinued
            
            
            -
            
            
            (231,005
            )Decrease
                in inventory - discontinued
            
            
            -
            
            
            142,847(Increase)
                decrease in prepaid and other assets
            
            
            2,844
            
            
            (4,080
            )Decrease
                in other assets - discontinued
            
            
            -
            
            
            88,801Increase
                in accounts payable - discontinued
            
            
            -
            
            
            236,618Increase
                (decrease) in accounts payable andaccounts
                payable - related parties
            
            
            157,593
            
            
            (58,290
            )Increase
                in customer deposit payable - discontinued
            
            
            -
            
            
            190,509Increase
                in accrued expenses - discontinued
            
            
            -
            
            
            200,200Increase
                (Decrease) in accrued expenses andexpenses
                - related
            
            
            186,050
            
            
            (12,413
            )Net
                Cash Provided (Used) by Operating Activities
            
            
            (13,254
            )
            
            220,701CASH
                FLOWS FROM INVESTING ACTIVITIESPurchase
                of property and equipment - discontinued
            
            
            -
            
            
            (2,678
            )Purchase
                of property and equipment
            
            
            (14,713
            )
            
            -Net
                Cash (Used) by Financing Activities
            
            
            (14,713
            )
            
            (2,678
            )CASH
                FLOWS FROM FINANCING ACTIVITIESProceeds
                from issuance of stock
            
            
            25,000
            
            
            -Increase
                in bank overdraft
            
            
            143
            
            
            -Payment
                on bank overdraft - discontinued
            
            
            -
            
            
            25,480Payment
                on notes payable - discontinued
            
            
            -
            
            
            (320,235
            )Proceeds
                from notes payable and related party notes
            
            
            -
            
            
            210,000Payment
                of notes payable and related party notes
            
            
            -
            
            
            (130,444
            )Net
                Cash Provided by Financing Activities
            
            
            25,143
            
            
            215,199INCREASE
                (DECREASE) IN CASH
            
            
            (2,824
            )
            
            2,824CASH
                AT BEGINNING OF PERIOD
            
            
            2,824
            
            
            -CASH
                AT END OF PERIOD
            
            $
            -
            
            $
            2,824





The
              accompanying notes are an integral part of these consolidated financial
              statements.
 F10


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Statements of Cash Flows




For
                the Years EndedDecember
                31,2005
            
            2004SUPPLEMENTAL
                DISCLOSURES OF CASH FLOWINFORMATION:CASH
                PAID FOR:Interest
            
            $
            4,950
            
            $
            160,490Income
                taxes
            
            $
            -
            
            $
            -SCHEDULE
                OF NON-CASH FINANCING ACTIVITIES:Stock
                issued for services, salary and interest
            
            $
            80,000
            
            $
            394,000Stock
                options issued for salary
            
            $
            52,000
            
            $
            99,375Stock
                warrants issued for services
            
            $
            15,000
            
            $
            157,000Stock
                issued for debt
            
            $
            38,312
            
            $
            199,875






















The
              accompanying notes are an integral part of these consolidated financial
              statements.
 F11


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      1   ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





a.  Organization





Total
      Identity Corporation (the “Company”), was organized in the State of Florida on
      July 22, 1991 for the purpose of managing the operations of retail thrift stores
      which offered for sale new and used articles of clothing, furniture,
      miscellaneous household items and antiques. Through its wholly owned
      subsidiaries, the Company operated six retail thrift stores that offered new
      and
      used articles of clothing, furniture, miscellaneous household items and
      antiques, and an Internet subsidiary which operated a business-to-consumer
      site
      that offered collectibles, art and antiques on a limited basis, until August
      27,
      2001, when the sale of these business units to the Company’s President and
      principal stockholder was complete.





On
      October 13, 2003, the Company purchased all of the outstanding stock of Total
      Identity Systems Corporation (“TIS”) (Note 7). TIS was incorporated on February
      16, 1982 in the state of New York, under the name of Total Energy Services
      Corporation. On August 23, 1996, the Company changed its name to Total Identity
      Systems Corporation. On October 20, 1999, the Company began also operating
      under
      the name of Empire/Forster Sign & Awning. The Company designed,
      manufactured, and installed custom awnings and signs until November 24, 2004,
      when Mercantile and Trader’s Trust Company (M&T Bank), exercised rights
      given to it in a promissory note and other loan agreements, sweeping TIS’s
      accounts and applying them to the outstanding indebtedness of TIS to the M&T
      Bank, taking control of all mail to TIS, and taking control of all assets at
      TIS’s Rochester, New York facility to satisfy TIS’s indebtedness to M&T
      Bank. As a result of actions by M&T, TIS’s operations have ceased and its
      results of operations are treated as discontinued operations as of November
      30,
      2004.





During
      February 2005, the Company
      entered into a lease for 2,920 square feet of store front space in Pompano
      Beach, Florida for its wholly-owned subsidiary, Yard Sale Drop Off, Inc., formerly
      known as Total Identity Group, Inc., (YSDO)
      to begin principle operations of providing an internet based auction service.
      During May 2006, the Company sold all of the assets of YSDO and discontinued
      operations. As such, the results
      of operations for YSDO are treated as discontinued operations for the year
      ended
      December 31, 2005 (see Note 3) and the Company returned to the development stage
      on July 1, 2006.





b.  Basis
      of
      Presentation





The
      Company uses the accrual method of accounting for financial purposes and has
      elected December 31 as its year-end.





c.  Principles
      of Consolidation





The
      consolidated financial statements as of December 31, 2005 include those of
      Total
      Identity Corporation and its wholly-owned subsidiaries Total Identity Systems
      Corporation, Total Digital Communications, Inc. and Yard Sale Drop Off, Inc.
      All
      significant inter-company accounts and transactions have been
      eliminated.





d.  Use
      of
      Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect certain reported amounts and disclosers.
      Accordingly, actual results could differ from those estimates.





e.  Fixed
      Assets





Fixed
      assets are recorded at cost. Major additions and improvements are capitalized.
      Minor replacements, maintenance and repairs that do not increase the useful
      life
      of the assets are expensed as incurred. Depreciation of property and equipment
      is determined on a straight-line basis over the expected useful
      lives.





The
      cost
      and related accumulated depreciation of equipment retired or sold are removed
      from the accounts and any differences between the undepreciated amount and
      the
      proceeds from the sale are recorded as gain or loss on sale of
      equipment.


F12


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      1  ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





Depreciation
      expense totaled $642 during the year ending December 31, 2005 and is included
      in
      the loss from discontinued operations amount (see Note 3).





f.  Long-Lived
      Assets





The
      Company adopted Statement of Financial Accounting Standards No. 144 (SFAS 144),
      "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS 144
      develops one accounting model (based on the model in SFAS 121) for long-lived
      assets that are to be disposed of by sale, and addresses the principal
      implementation issues. SFAS 144 requires that long-lived assets that are to
      be
      disposed of by sale be measured at the lower of book value or fair value less
      cost to sell. This requirement eliminates APB30's requirement that discontinued
      operations be measured at net realizable value or that entities include under
      discontinued operations in the financial statements amounts for operating losses
      that have not yet occurred. Additionally, SFAS 144 expands the scope of
      discontinued operations to include all components of an entity with operations
      that (1) can be distinguished from the rest of the entity and (2) will be
      eliminated from the ongoing operations of the entity in a disposal transaction.





g.  Fair
      Value of Financial Instruments





The
      carrying amounts of the Company’s financial instruments, including cash,
      accounts payable, and accrued liabilities, approximate fair value due to their
      short maturities.





h.  Revenue





The
      Company records revenue on the accrual basis when all goods and services have
      been performed and delivered, the amounts are readily determinable, and
      collection is reasonably assured





i.  Advertising





The
      Company follows the policy of charging the costs of advertising to expense
      as
      incurred. Advertising expense for the years ended December 31, 2005 and 2004
      was
      $2,500 and $-0-, respectively. All of the advertising expense for the year
      ended
      December 31, 2005 is included in the loss from discontinued operations (see
      Note
      3).





j.  Recent
      Accounting Pronouncements




On
      December 16, 2004 the FASB issued SFAS No. 123(R), “Share-Based Payment” (SFAS
      123(R)), which is an amendment to SFAS No. 123, “Accounting for Stock- Based
      Compensation”. SFAS 123(R) eliminates the ability to account for share-based
      compensation transactions using Accounting Principles Board Opinion (APB) No.
      25, “Accounting for Stock Issued to Employees”, and generally requires such
      transactions to be accounted for using a fair-value based method with the
      resulting cost recognized in the financial statements. SFAS 123(R) is effective
      for awards that are granted, modified or settled in cash during the first annual
      period beginning after June 15, 2005, or the year ending December 31, 2006
      for
      the Company. In addition, this new standard will apply to unvested options
      granted prior to the effective date. The effect of adoption of SFAS 123(R)
      is
      not anticipated to have a material impact on the Company.




In
      November 2004, the FASB issued SFAS No. 151, “Inventory Costs - an amendment of
      ARB No. 43, Chapter 4” (SFAS 151). This Statement amends the guidance in ARB No.
      43, Chapter 4, "Inventory Pricing" to clarify the accounting for abnormal
      amounts of idle facility expense, freight, handling costs, and wasted material
      (spoilage). This Statement requires that certain items be recognized as
      current-period charges and requires that allocation of fixed production
      overheads to the costs of conversion be based on the normal capacity of the
      production facilities. SFAS 151 is effective for inventory costs incurred during
      fiscal years beginning after June 15, 2005, or the year ending December 31,
      2006
      for the Company. The effect of adoption of SFAS 151 is not anticipated to have
      a
      material impact on the Company.




In
      December 2004, the FASB issued SFAS No. 152, “Accounting for Real Estate
      Time-sharing Transactions” (SFAS 152), which amends FASB statement No. 66,
“Accounting for Sales of Real Estate”, to reference the financial accounting and
      reporting guidance for real estate time-sharing transactions that is provided
      in
      AICPA Statement of Position 04-2,


F13


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      1  ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




“Accounting
      for Real Estate Time-Sharing Transactions” (SOP 04-2). SFAS 152 also amends FASB
      Statement No. 67, “Accounting for Costs and Initial Rental Operations of Real
      Estate Projects”, to state that the guidance for (a) incidental operations and
      (b) costs incurred to sell real estate projects does not apply to real estate
      time-sharing transactions. The accounting for those operations and costs is
      subject to the guidance in SOP 04-2. SFAS 152 is effective for financial
      statements for fiscal years beginning after June 15, 2005, or the year ending
      December 31, 2006 for the Company. The effect of adoption of SFAS 152 is not
      anticipated to have a material impact on the Company.




In
      December 2004, the FASB issued SFAS No.153, “Exchange of Nonmonetary Assets”
(SFAS 153). This Statement addresses the measurement of exchanges of nonmonetary
      assets. The guidance in APB Opinion No. 29, “Accounting for Nonmonetary
      Transactions” (APB 29), is based on the principle that exchanges of nonmonetary
      assets should be measured based on the fair value of the assets exchanged.
      The
      guidance in APB 29 included certain exceptions to that principle and SFAS 153
      amends APB 29 to eliminate the exception for nonmonetary exchanges of similar
      productive assets





l.  Recent
      Accounting Pronouncements (Continued)





and
      replaces it with a general exception for exchanges of nonmonetary assets that
      do
      not have commercial substance. A nonmonetary exchange has commercial substance
      if the future cash flows of the entity are expected to change significantly
      as a
      result of the exchange. SFAS 153 is effective for financial statements for
      fiscal years beginning after June 15, 2005, or the year ending December 31,
      2006
      for the Company. The effect of adoption of SFAS 151 is not anticipated to have
      a
      material impact on the Company.




In
      March
      2005, the Securities and Exchange Commission (SEC) released Staff Accounting
      Bulletin No. 107, "Share-Based Payment" (SAB 107), which provides interpretive
      guidance related to the interaction between SFAS 123(R) and certain SEC rules
      and regulations. It also provides the SEC staff's views regarding valuation
      of
      share-based payment arrangements. In April 2005, the SEC amended the compliance
      dates for SFAS 123(R), to allow companies to implement the standard at the
      beginning of their next fiscal year, instead of the next reporting period
      beginning after June 15, 2005. The effect of adoption of SAB 107 is not
      anticipated to have a material impact on the Company.




In
      March
      2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional
      Asset Retirement Obligations" (FIN 47). FIN 47 provides guidance relating to
      the
      identification of and financial reporting for legal obligations to perform
      an
      asset retirement activity. The Interpretation requires recognition of a
      liability for the fair value of a conditional asset retirement obligation when
      incurred if the liability's fair value can be reasonably estimated. FIN 47
      also
      defines when an entity would have sufficient information to reasonably estimate
      the fair value of an asset retirement obligation. FIN 47 is effective no later
      than the end of fiscal years ending after December 15, 2005. The Company’s
      adoption of FIN 47 had no impact on the Company.




In
      May
      2005, the FASB issued FASB Statement No. 154, "Accounting Changes and Error
      Corrections” (SFAS 154). SFAS 154 replaces APB Opinion No. 20, "Accounting
      Changes” and FASB Statement No. 3, “Reporting Accounting Changes in Interim
      Financial Statements" and represents another step in the FASB's goal to converge
      its standards with those issued by the IASB. Among other changes, SFAS 154
      requires that a voluntary change in accounting principle be applied
      retrospectively with all prior period financial statements presented on the
      new
      accounting principle, unless it is impracticable to do so. SFAS 154 also
      provides that (1) a change in method of depreciating or amortizing a long-lived
      non- financial asset be accounted for as a change in estimate (prospectively)
      that was effected by a change in accounting principle, and (2) correction of
      errors in previously issued financial statements should be termed a
      "restatement." The new standard is effective for accounting changes and
      correction of errors made in fiscal years beginning after December 15, 2005.
      The
      effect of adoption of SFAS 154 is not anticipated to have a material impact
      on
      the Company.




In
      February of 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
      Financial Instruments" (SFAS 155), which is intended to simplify the accounting
      and improve the financial reporting of certain hybrid financial instruments
      (i.e., derivatives embedded in other financial instruments). The statement
      amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging
      Activities", and SFAS No. 140, "Accounting for Transfers and Servicing of
      Financial Assets and Extinguishments of Liabilities a replacement of FASB
      Statement No. 125." SFAS 155 is effective for all financial


F14


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      1  ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




instruments
      issued or acquired after the beginning of an entity's first fiscal year that
      begins after September 15, 2006. The effect of adoption of SFAS 155 is not
      anticipated to have a material impact on the Company.





l.  Recent
      Accounting Pronouncements (Continued)




In
      March
      of 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial
      Assets, an amendment of FASB Statement No. 140” (SFAS 156). SFAS 156 amends SFAS
      140, "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities a replacement of FASB Statement No. 125," with
      respect to the accounting for separately recognized servicing assets and
      servicing liabilities. SFAS 156 requires an entity to recognize a servicing
      asset or servicing liability each time it undertakes an obligation to service
      a
      financial asset by entering into a servicing contract in any of the following
      situations: (a) a transfer of the servicer’s financial assets that meets the
      requirements for sale accounting, (b) a transfer of the servicer’s financial
      assets to a qualifying special-purpose entity




in
      a
      guaranteed mortgage securitization in which the transferor retains all of the
      resulting securities and classifies them as either available-for-sale securities
      or trading securities, and (c) an acquisition or assumption of an obligation
      to
      service a financial asset that does not relate to financial assets of the
      servicer or its consolidated affiliates. SFAS 156 is effective for all servicing
      assets and liabilities as of the beginning of an entity's first fiscal year
      that
      begins after September 15, 2006. The effect of adoption of SFAS 156 is not
      anticipated to have a material impact on the Company.





In
      July
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes (FIN 48) - an interpretation of FASB Statement No. 109, Accounting
      for Income Taxes (SFAS No. 109)” (FIN 48) *.* FIN 48
      clarifies the accounting for uncertainty in income taxes recognized in
      accordance with SFAS No. 109 and prescribes a recognition threshold and
      measurement attribute for the financial statement recognition and measurement
      of
      a tax position taken or expected to be taken in a return. Guidance is also
      provided on de-recognition, classification, interest and penalties, accounting
      in interim periods, disclosure and transition. FIN 48 is effective for fiscal
      years beginning after December 15, 2006. The effect of adoption of FIN 48 is
      not
      anticipated to have a material impact on the Company.





m.  Basic
      Loss Per Share





The
      computation of basic loss per share of common stock is based on the weighted
      average number of shares outstanding during the period of the consolidated
      financial statements as follows:





For
                the Years EndedDecember
                31,2005
            
            2004Loss
                before discontinued operations
            
            $
            (344,562
            )
            $
            (1,039,409
            )Discontinued
                operations
            
            
            (160,821
            )
            
            515,472Net
                loss
            
            $
            (505,383
            )
            $
            (523,937
            )Weighted
                average number of shares outstanding
            
            
            17,547,096
            
            
            15,229,431Loss
                per share before discontinued operations
            
            $
            (0.02
            )
            $
            (0.06
            )Income
                (Loss) per share on discontinued operations
            
            
            (0.01
            )
            
            0.03Total
                loss per share
            
            $
            (0.03
            )
            $
            (0.03
            )











F15


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      1  ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





m.  Basic
      Loss Per Share (Continued)





Net
      loss
      per share is computed in accordance with SFAS No. 128, “Earning Per Share”, by
      dividing the net loss allocable to common stockholders by the weighted average
      number of shares of common stock outstanding. During each year presented the
      Company has outstanding equity instruments which have not been used in the
      calculation of diluted net loss per share allocable to common stockholders
      because to do so would be anti-dilutive.





n.  Provision
      for Taxes





Deferred
      taxes are provided on a liability method whereby deferred tax assets are
      recognized for deductible temporary differences and operating loss and tax
      credit carryforwards and deferred tax liabilities are recognized for taxable
      temporary differences. Temporary differences are the differences between the
      reported amounts of assets and liabilities and their tax bases. Deferred tax
      assets are reduced by a valuation allowance when, in the opinion of management,
      it is more likely than not that some portion or all of the deferred tax assets
      will not be realized. Deferred tax assets and liabilities are adjusted for
      the
      effects of changes in tax laws and rates on the date of enactment.





Net
      deferred tax assets and liabilities consist of the following components as
      of
      December 31, 2005:


2005Deferred
                  tax assets:NOL
                  carryover
              
              $
              1,627,100Related
                  party wages and interest
              
              
              70,800Deferred
                  tax liabilities:
              
              
              -Valuation
                  allowance
              
              
              (1,697,900
              )Net
                  deferred tax assets and liabilities
              
              $
              -




The
      income tax provision differs from the amount of income tax determined by
      applying the U.S. federal and state income tax rates of 39% to pretax income
      from continuing operations for the year ended December31, 2005 due to the
      following:


2005Book
                  income (loss)
              
              $
              (197,100
              )Stock
                  for services/options expense
              
              
              56,550Other
              
              
              250Valuation
                  allowance
              
              
              140,300$
              -


At
      December 31, 2005, the Company had net operating loss carryforwards of
      approximately $4,100,000 that may be offset against future taxable income from
      the year 2005 through 2025. No tax benefit has been reported in the December
      31,
      2005 consolidated financial statements since the potential tax benefit is offset
      by a valuation allowance of the same amount.





n.  Provision
      for Taxes





Due
      to
      the change in ownership provisions of the Tax Reform Act of 1986, net operating
      loss carryforwards for Federal income tax reporting purposes are subject to
      annual limitations. Should a change in ownership occur, net operating loss
      carryforwards may be limited as to use in future years.


F16


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      1  ORGANIZATION
      AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





o.  Change
      in
      Authorized Shares and Par Value





On
      May 2,
      2003, the Company amended its Articles of Incorporation and increased its
      authorized shares from 1,500,000 to 30,000,000 and changed its par value to
      $0.01 from $0.10. The consolidated financial statements have been retroactively
      adjusted for the change in par value.





p.
      Reclassification of Prior Year Balances





The
      classification of certain balances within the consolidated financial statements
      for the year ended December 31, 2004 have been changed to be consistent with
      the
      classification of the consolidated financial statements for the year ending
      December 31, 2005.





NOTE
      2  COMMITMENTS
      AND CONTINGENCIES





Litigation





During
      February 2005, a lawsuit was commenced in the Supreme Court of the State of
      New
      York, County of Monroe, under the caption Stephen E. Webster v. Richard Dwyer,
      Matthew P. Dwyer, Phillip Mistretta, Total Digital Displays, Inc., Leslie W.
      Kernan, Jr., Lacy Katzen LLP, et al. The plaintiff, Stephen E. Webster,
      previously purchased a $125,000 debenture from Total Identity Corporation and
      is
      seeking payment of the convertible debenture by alleging that he was
      fraudulently induced to purchase the debenture. The Company has filed various
      motions in its defense and in September 2005 a judgment was grant against the
      Company and other parties for $125,000 plus 9% interest per annum. In February
      of 2006 the judgment was vacated. In March of 2006 the Company’s attorneys filed
      a motion to withdraw as counsel, which was granted. As of this time the Company
      has not retained new counsel and is not sure if it will be able to adequately
      defend itself due to its lack of resources. The convertible debenture is
      recorded as a current liability as of December 31, 2005.


On
      May 4,
      2004 a judgment was granted against the Company in a lawsuit filed in the
      Superior Court for Orange County, California. The suit sought collection of
      legal fees and costs totaling $$50,714 including accrued interest at the rate
      of
      10% per annum, attorney’s fees and court costs. A total of $58,703 is included
      in accounts payable at December 31, 2005.





Consulting
      Agreements





During
      March 2005, the Company entered into two one-year consulting agreements with
      individuals for consulting related to the business of the Company’s wholly-owned
      subsidiary, YSDO. The agreements call for up front one-time payments of 250,000
      and 750,000 fully earned shares, or a total of 1,000,000 shares valued at a
      market price of $0.08 on the date of issue totaling $80,000.





Operating
      Leases





During
      February 2005, the Company entered into a lease for 2,920 square feet of store
      front space in Pompano Beach, Florida for its wholly-owned subsidiary, Yard
      Sale
      Drop Off, Inc. The term of the lease is 60 months and calls for total payments
      of $147,275 plus sales and property tax and assessments and utilities. The
      lease
      was subsequently terminated in October 2005 at no penalty.





NOTE
      3  SALES
      AND
      ACQUISITIONS AGREEMENTS





Acquisition
      of Total Identity Systems Corporation





In
      October 2003 the Company acquired all of the outstanding shares of stock of
      TIS.
      The acquisition was to take place in two parts. In the first part the Company
      purchased newly issued shares of TIS totaling 60% interest for $150,000 cash
      and
      a note for $475,000 payable in five equal monthly installments of $95,000
      starting in March 2004. In the second part, the Company was to acquire the
      remaining 40% by purchasing remaining shares for $500,000 payable in eight


F17


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      3  SALES
      AND
      ACQUISITIONS AGREEMENTS (CONTINUED)




Acquisition
      Total Identity Systems Corporation
      (Continued)


quarterly
      payments of $50,000 each starting in January 2005 and the balance of $100,000
      by
      issuing 200,000 shares of the Company’s common stock. The acquisition was
      accounted for using the purchase method of accounting and the results of
      operations of TIS for November and December 2003 were included in





the
      results of operations of the Company’s operations for the year ending December
      31, 2003.





In
      connection with February 2004 amendments to the purchase agreements, the Company
      entered into a consulting agreement with the former owner and President of
      TIS,
      Robert David. Mr. David was formerly employed by the Company and served as
      a
      Vice President from October 2003, when the original acquisition of TIS took
      place, until February 2004, when the acquisition agreements were amended. On
      July 22, 2004, TIS terminated the consulting agreement with Mr. David on the
      grounds that he had breached the consulting agreement as well as his fiduciary
      duties to TIS by improperly attempting to dispose of Company assets.





On
      or
      about July 26, 2004, Mr. David commenced two arbitrations against the Company
      and TIS with the American Arbitration Association, alleging that (a) the Company
      had improperly terminated his consulting agreement and (b) the Company was
      in
      default of certain payment obligations under the acquisition agreements. In
      his
      notice of default, Mr. David demanded that the Company’s promissory note in the
      amount of $400,000 be immediately due and payable. In his demands for
      arbitration, Mr. David sought $95,000 that is allegedly due and owning under
      the
      consulting agreement and damages in excess of $150,000 arising out of the
      Company’s alleged defaults under the acquisition agreements.




On
      December 13, 2004, we notified the escrow agent holding the shares of TISC
      we
      acquired from Mr. David and TISC that, without waiving any rights we have
      against Mr. David, the escrow agent may release the shares to Mr. David. We
      have
      received notice that Mr. David has disclaimed ownership of the shares and
      rejected delivery of the shares from the escrow agent.





On
      or
      about August 4, 2004, the Company responded to Mr. David’s demands for
      arbitration and denied that it had improperly terminated Mr. David’s consulting
      agreement. The Company also denied that it had defaulted under the acquisition
      agreements and asserted affirmative defenses and counterclaims for fraudulent
      inducement, fraud, failure to disclose material information, improper use of
      Company assets and breach of contract, including breach of Mr. David’s covenant
      not to interfere with the Company’s ability to repay indebtedness to various
      institutional lenders including Manufacturers and
      Traders Trust Company (M&T Bank). The Company alleges that Mr. David,
      through improprieties as a consultant and a former officer of the Company and
      as
      a participant in a conspiracy with others, improperly interfered with the
      Company’s ability to secure funding and otherwise meet its obligations to
      M&T Bank. Among the improper activities alleged against Mr. David were his
      unauthorized discussions with M&T Bank relating to TIS’s indebtedness and
      Mr. David’s guarantees of those debts. In its counterclaims, the Company seeks
      damages from Mr. David of in excess of $400,000, a determination that the
      termination of the consulting agreement was proper and that the Company is
      entitled to retain ownership of TIS stock.





Subsequently,
      during April 2006, all claims against the Company and counterclaims against
      Mr.
      David were dismissed.





As
      a
      result of the above disputes, M&T Bank exercised certain rights granted to
      it under a General Security Agreement and various related loan documents between
      TIS and M&T Bank. In connection


therewith,
      (a) on November 24, 2004, the Bank “swept” TIS’s accounts aggregating
      approximately $200,000 and applied the proceeds to the outstanding indebtedness
      of TIS, (b) on November 27, 2004, the Company learned that M&T Bank had
      notified the United States Post Office that it was exercising its rights under
      the loan documents to take control over all mail directed to TIS, and (c) on
      December 6, 2004, the Company learned that the Bank had changed the locks at
      TIS's Rochester, New York facility and took control over TIS's assets in order
      to satisfy TIS's indebtedness.





In
      exercising these rights, M&T prevented TIS from conducting and funding its
      day-to-day operations, and accordingly,


F18


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      3  SALES
      AND
      ACQUISITIONS AGREEMENTS (CONTINUED)




Acquisition
      Total Identity Systems Corporation
      (Continued)


operations
      have ceased. All operating results of TIS are included in discontinued
      operations as of December 31, 2004. No tax benefit has been attributed to
      discontinued operations.





The
      following is an unaudited summary of the loss from discontinued operations
      resulting from the disposal of TIS:




For
                theYear
                EndedDecember
                31, 2004REVENUE
            
            $
            8,042,602COST
                OF SALES
            
            
            4,991,771GROSS
                MARGIN
            
            
            3,050,831EXPENSESAmortization
                and depreciation
            
            
            229,475Selling,
                general and administrative expense
            
            
            2,947,966Total
                Expenses
            
            
            (3,177,441
            )LOSS
                FROM OPERATIONS
            
            
            (126,610
            )OTHER
                INCOME (EXPENSE)Interest
                expense
            
            
            (93,084
            )Other
                income
            
            
            71,314Gain
                on forgiveness of debt
            
            
            4,853,867Loss
                on disposal of assets
            
            
            (4,190,015
            )Total
                Other Income (Expense)
            
            
            642,082NET
                INCOME (LOSS) FROM DISCONTINUED OPERATIONS
            
            $
            515,472








F18


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      3  SALES
      AND
      ACQUISITIONS AGREEMENTS (CONTINUED)








Sale
      of Yard Sale Drop Off





During
      March 2006, the Company entered into an agreement to sell all of the assets
      of
      its wholly-owned subsidiary YSDO to an individual for $8,000 in cash and
      discontinue its operations. Payment was received in four installments of $2,000
      a piece, the last payment being in May 2006, when the Company released all
      assets to the purchaser. All
      operating results of YSDO are included in discontinued operations as of December
      31, 2005. No tax benefit has been attributed to discontinued
      operations.





The
      following is a summary of the loss from discontinued operations resulting from
      the disposal of YSDO:




For
                theYear
                EndedDecember
                31, 2005REVENUE
            
            $
            13,528COST
                OF SALES
            
            
            (43,636
            )GROSS
                DEFICIT
            
            
            (30,108
            )EXPENSESDepreciation
            
            
            642Consulting
                and professional fees
            
            
            88,066Selling,
                general and administrative expense
            
            
            42,005Total
                Expenses
            
            
            (130,713
            )NET
                LOSS FROM DISCONTINUED OPERATIONS
            
            $
            (160,821
            )





Sale
      of Total Digital Displays





On
      December 15, 2004, our wholly owned subsidiary Total Digital acquired certain
      assets from an individual, including the seller’s rights under a purported
      license agreement with Major League Baseball. The purchase price for the assets
      was paid by the issuance of 10,000,000 shares of Total Digital’s common stock to
      the seller. The 10,000,000 shares represented approximately 93% of Total
      Digital’s outstanding common stock at the time of issuance.





On
      December 29, 2004, the Company intended to distribute to its shareholders of
      record on December 15, 2004, as a dividend. On January 11, 2005, the Company
      determined that the seller of the assets had fraudulently misrepresented the
      ownership of the license from Major League Baseball when, in fact, the seller
      did not own any such license. As a result, on January 11, 2005, the Company
      notified the seller of claims it had against it and demanded rescission of
      the
      asset purchase agreement, including its return of the 10,000,000 shares of
      Total
      Digital. T he
      seller
      failed to comply with the Company’s demands, and the Company filed suit against
      the seller in Broward Circuit Court. In August 2005 the court awarded the
      Company a default against the seller for failure to file an answer to the
      complaint within the prescribed timeframe; however, in September 2005 the
      default was set aside. At this
      time, Total Digital has no assets and there is no market for the shares of
      Total
      Digital. In light of the foregoing, the opinion of counsel that caused the
      shares of Total Digital to be issued without legend has been withdrawn, and
      the
      Company is treating the shares of Total Digital that were distributed to its
      shareholders as restricted securities.











F19


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004


NOTE
      4  NOTES
      PAYABLE




Notes
                payable consist of the following amounts at December 31,
                2005:2005Notes
                payable to a related party individual, unsecured,due
                on demand
            
            40,000Notes
                payable to a former officer, unsecured,due
                on demand (Related party)
            
            35,265Note
                payable to a former director, unsecured,past
                due, interest at 6% (Related party)
            
            25,187Note
                payable to a corporation, unsecured,due
                on demand, interest at 12%
            
            25,000Convertible
                debenture payable to a corporation, unsecured,due
                on demand, interest at 12%, convertible at $0.25 per share
            
            125,000Total
                current notes payable
            
            $
            250,452





NOTE
      5  RELATED
      PARTY TRANSACTIONS





Accounts
      and Notes Payable





On
      January 16, 2004, the Company borrowed $50,000 from the wife of a former
      director of the Company. The loan is unsecured and due on demand. As an
      inducement for the loan, the Company issued 250,000 shares of common stock
      on
      March 1, 2004 valued at $45,000, or $0.18 per share, which was charged to
      interest expense. On March 31, 2006, the note was converted to common stock
      at
      $0.01 per share, or 4,000,000 shares. In addition, the Company issued an
      additional 1,500,000 shares per a penalty clause that entitled the holder to
      5,000 shares per day for everyday the note wasn’t paid.





As
      of
      December 31, 2005, the Company owed three related parties $114,430 for amounts
      loaned to the Company for operating expenses, of which $73,284 is included
      in
      liabilities of discontinued operations.





As
      of
      December 31, 2005, the Company has two notes payable to former officers totaling
      $60,452.





Employment
      Agreement





During
      2004, the Company entered into an employment agreement with an individual to
      act
      as Chief Executive and Finance Officer of the Company. The agreement calls
      for a
      salary of $180,000 per year and stock options of 200,000 shares per quarter,
      issued and fully vested on the first day of the quarter, exercisable for five
      years at the market price on the date of issue. The Company recognized $50,000
      in compensation expense related to the issuance of the options, paid $8,500
      in
      salary in cash and accrued $171,500 in wages payable.





Consulting
      Agreements





On
      February 2, 2004, the Company entered into a consulting agreement with Richard
      R. Dwyer, its former Chief Executive Officer. The agreement was for an initial
      term of one year, subject to a six-month renewal term. Mr. Dwyer provides
      consulting services in the areas of corporate development, acquisitions and
      strategic planning. For his services, Mr. Dwyer received fully vested and
      exercisable warrants to purchase 1,100,000 shares of our common stock at an
      exercise price of $.03 per share during 2004. By December 31, 2004, all
      1,100,000 warrants were exercised through the conversion of related party
      payables totaling $33,000. The Company recognized $157,000 in consulting expense
      related to the grant of these warrants.





On
      February 2, 2005, the Company extended the agreement and issued warrants to
      purchase 750,000 shares of common


F20


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      5  RELATED
      PARTY TRANSACTIONS (CONTINUED)





stock,
      which were subsequently exercised at a price of $0.03 per share. The Company
      recognized $15,000 in expense associated with the grant of the
      warrants.





Settlement
      Agreement




On
      May
      13, 2004, the Company and Scott Siegel, a former officer and director, entered
      into an agreement resolving certain disputes that had arisen relating to the
      ownership of 1,050,000 shares of the Company’s common stock and 250,000 shares
      of its Series A preferred stock that were the subject of a stock purchase
      agreement dated February 21, 2003. As a result of the terms of the settlement
      the Company has recorded a note payable of $35,265. The amount payable to Mr.
      Siegel is to be paid (a) one-third for each million dollars in financing raised
      by the Company after June 27, 2004 or (b) pro-rata to the extent that other
      officers or directors of the Company receive repayment of indebtedness from
      third-party financing obtained by the Company subsequent to June 27, 2004.
      No
      amounts were paid during the years ended December 31, 2005 and
      2004.




NOTE
      6  COMMON
      STOCK AND EQUITY INSTRUMENTS





Common
      Stock





During
      February 2005, the Company sold 500,000 shares of its common stock to Wall
      Street-Review Financial Services, Inc., a related party company, for an
      aggregate purchase price of $25,000 or $.05 per share. The sole officer and
      director of Wall Street-Review Financial Services, Inc. is also the sole officer
      and director of the Company. The $.05 per share purchase price was the closing
      bid price for the Company’s common stock on the date of purchase.





During
      February 2005, the Company issued 395,335 shares of its common stock to Wall
      Street-Review Financial Services, Inc. in exchange for debt of $15,813, or
      $.04
      per share, which was the closing bid price for the Company’s common stock on the
      date of issuance.





During
      March 2005, the Company entered into two one-year consulting agreements with
      individuals for consulting related to the business of the Company’s wholly-owned
      subsidiary, YSDO. The agreements call for up front one-time payments of 250,000
      and 750,000 fully earned shares, or a total of 1,000,000 shares valued at a
      market price of $0.08 on the date of issue totaling $80,000.





2003
      Omnibus Securities Plan





On
      May 2,
      2003, the Company approved the 2003 Omnibus Securities Plan (the Securities
      Plan) by written consent of the holders of a majority of its voting stock,
      and
      ratified on June 17, 2003. On January 12, 2004, the Company approved the
      increase of the number of shares available for issuance under the Securities
      Plan from 140,000 to 800,000. Under the Securities Plan, stock-based awards
      in
      the form of incentive and non-qualified stock options, restricted and restricted
      stock awards, and performance stock awards may be made. The Board of Directors
      of the Company or Securities Plan administrator has the discretion to select
      the
      persons to whom awards will be granted; grant awards under the Securities Plan;
      determine the number of shares to be covered by each award; determine the
      nature, amount, pricing, timing and other terms of the award; interpret,
      construe and implement the provisions of the Securities Plan; and terminate,
      modify or amend the Securities Plan. As of December 31, 2005, 625,000 shares
      have been issued under the Securities Plan.





2003
      Non-Qualified Stock Option and Grant Plan





On
      May 2,
      2003, the Company approved and ratified the 2003 Non-Qualified Stock Option
      and
      Grant Plan (the Option Plan) by written consent of a majority of its voting
      stock. On November 14, 2003, the Company approved the increase of the number
      of
      shares available for issuance under the Option Plan to 3,000,000 and on January
      12, 2004 increased the number of shares available for issuance to 5,200,000.
      Under the Option Plan, stock-based awards in the form of non-qualified stock
      options and


F21


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      6  COMMON
      STOCK AND EQUITY INSTRUMENTS (CONTINUED)





2003
      Non-Qualified Stock Option and Grant Plan (Continued)





restricted,
      unrestricted and performance-based stock awards may be made. The Board of
      Directors of the Company or Option Plan administrator has the discretion to
      select the persons to whom awards will be granted; grant awards under the Option
      Plan; determine the number of shares to be covered by each award; determine
      the
      nature, amount, pricing, timing and other terms of the award; interpret,
      construe and implement the provisions of the Option Plan; and terminate, modify
      or amend the Option Plan. As of December 31, 2005, awards covering 5,100,000
      shares have been made under the Option Plan.





2004
      Equity Compensation Plan





On
      June
      15, 2004, the Board of Directors initially authorized and approved the Total
      Identity Corp. 2004 Equity Compensation Plan (the Plan). The Company reserved
      a
      total of 2,500,000 shares of common stock for issuance upon the exercise of
      options and the grant of other awards under the Plan. Awards under the Plan
      must
      be issued only for bona fide services and may not be issued under the Plan
      for
      services in connection with the offer and sale of securities in a capital
      raising or capital promoting transaction. As of December 31, 2005, 1,500,000
      shares were issued under the plan.





Stock
      Options and Warrants





The
      Company applies SFAS 123 in accounting for the issuance of all equity
      instruments. Under SFAS 123, compensation cost is recognized in accordance
      with
      the fair value based method prescribed in SFAS 123 for stock based awards
      granted. The Company estimated the fair value of each stock As a result of
      applying SFAS 123, the Company incurred an additional expense of $15,000 and
      $157,000 for services rendered by non-employees and $50,000 and $99,375 for
      services rendered by employees for the years ended December 31, 2005 and 2004,
      respectively.





We
      estimated the fair value of the stock options at the grant date by using the
      Black-Scholes option pricing model based on the following
      assumptions:


For
                the YearEndedDecember
                31, 2005Risk
                free interest rates
            2.18%
                - 4.24%Expected
                lives
            1
                month - 5 yearsExpected
                volatilities
            117%
                - 481%Dividend
                yields
            0.00%








F22


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      6  COMMON
      STOCK AND EQUITY INSTRUMENTS (CONTINUED)




Stock
      Options and Warrants
      (Continued)


A
      summary
      of the status of the Company’s outstanding stock options and warrants as of
      December 31, 2005 and 2004 and changes during the years then ended is presented
      below:





2005
            
            2004Weighted
            
            
            
            WeightedAverage
            
            
            
            AverageExercise
            
            
            
            ExerciseShares
            
            Price
            
            Shares
            
            PriceOutstanding,
                beginningof
                year
            
            
            -
            
            $
            -
            
            
            -
            
            $
            -Granted
            
            
            1,550,000
            
            
            0.05
            
            
            1,762,500
            
            
            0.05Expired/Cancelled
            
            
            -
            
            
            -
            
            
            -
            
            
            -Exercised
            
            
            (750,000
            )
            
            (0.03
            )
            
            (1,762,500
            )
            
            (0.05
            )Outstanding
                end of year
            
            
            800,000
            
            $
            0.07
            
            
            -
            
            $
            -





NOTE
      7  GOING
      CONCERN





The
      Company's consolidated financial statements are prepared using Generally
      Accepted Accounting Principals applicable to a going concern that contemplates
      the realization of assets and liquidation of liabilities in the normal course
      of
      business. However, the Company does not have significant cash or other material
      assets, nor does it have an established source of revenues sufficient to cover
      its operating costs. Additionally, the Company has accumulated significant
      losses, has negative working capital, and a deficit in stockholders' equity.
      All
      of these items raise substantial doubt about its ability to continue as a going
      concern. Management's plans with respect to alleviating the adverse financial
      conditions that caused shareholders to express substantial doubt about the
      Company's ability to continue as a going concern are as follows:





Management
      believes that, based upon the current operating plan of divesting itself of
      discontinued operations of YSDO and pursuing the acquisition of another business
      entity with substantial assets, which produces cash flows from operations,
      should help alleviate the adverse financial condition of the Company. Investors
      should be aware the Company's existing working capital will not be sufficient
      to
      fund its ongoing expenses of a reporting company through December 31, 2006.
      If
      the Company is not successful in identifying and acquiring another business
      entity with substantial assets which produce positive cash flows from
      operations, the Company may be forced to raise additional equity or debt
      financing to fund its ongoing obligations, seek protection under existing
      bankruptcy laws or cease doing business. If additional funds are raised through
      the issuance of equity securities, the percentage ownership of the Company's
      then-current stockholders would be diluted.





If
      additional funds are raised through the issuance of debt securities, the Company
      will incur interest charges until the related debt is paid off.





There
      can
      be no assurance that the Company will be able to identify and acquire another
      business entity with substantial assets which produce positive cash flows from
      operations or raise any required capital necessary to achieve its current
      operating plan.





The
      ability of the Company to continue as a going concern is dependent upon its
      ability to successfully accomplish the plan described in the preceding paragraph
      and eventually attain profitable operations. The accompanying consolidated
      financial statements do not include any adjustments that might be necessary
      if
      the Company is unable to continue as a going concern.











F23


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


December
      31, 2005 and 2004





NOTE
      8  SUBSEQUENT
      EVENTS





On
      January 1, 2006, the Company granted its CEO and Chief Financial Officer 200,000
      options to purchase common stock at $0.03 per share in accordance with an
      employment agreement. The Company recognized $6,000 in compensation expense
      as a
      result of the issuance of these options.





On
      March
      31, 2006, a related party note payable in the amount of $40,000 was converted
      to
      common stock at $0.01 per share, or 4,000,000 shares. In addition, the Company
      issued 1,500,000 shares of common stock valued at a market price of $0.01 per
      share, or $15,000, for payment of past due penalties.





During
      March 2006, the Company entered into an agreement to sell the discontinued
      assets of its wholly-owned subsidiary Yard Sale Drop Off, Inc. to an individual
      for $8,000. The sale was completed upon receipt of the last payment on May
      10,
      2006.





On
      April
      1, 2006, the Company granted its CEO and Chief Financial Officer 200,000 options
      to purchase common stock at $0.01 per share in accordance with an employment
      agreement. The Company recognized $2,000 in compensation expense as a result
      of
      the issuance of these options.





On
      April
      19, 2006, the Company borrowed $40,000 from an individual. The note payable
      is
      due in six months, carries interest at 2% per month and is payable after three
      months without penalty. As inducement to issue the note, the Company issued
      800,000 shares of common stock.





On
      May
      11, 2006, the Company entered into a note payable for past due legal fees and
      accrued interest totaling $72,031. The note is secured by a second general
      security interest in the Company’s assets and must be paid at the time of sale
      of the Company or a change in control.





During
      May 2006, the Company formed a wholly-owned subsidiary, Sovereign Research,
      LLC.
      Sovereign Research, LLC has had no operations to-date.





On
      June
      23 2006, $30,000 of related party accounts payable was converted into 3,000,000
      shares of common stock at a market price of $0.01 per share.





On
      June
      28, 2006, the Company borrowed $25,000 from an individual. The note payable
      is
      due July 31, 2006 and carries interest at 12% per annum. As inducement to issue
      the note, the Company issued 100,000 shares of common stock valued at a market
      price of $0.01 per share, or $1,000.





During
      June 2006 the Company received a letter from an attorney representing a Dr.
      Martin Peskin, a former Officer and Director of the Company, disputing the
      amount of money owed to Dr. Peskin. No lawsuit has been filed or threatened
      at
      this time and the Company stands by the amount it claims it owes Dr. Peskin
      based on past filings made when Dr. Peskin was a Director of the
      Company.





On
      July
      1, 2006, the Company granted its CEO and Chief Financial Officer 200,000 options
      to purchase common stock at $0.01 per share in accordance with an employment
      agreement. The Company recognized $2,000 in compensation expense as a result
      of
      the issuance of these options.





F24