UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





Form
      10-QSB





(Mark
      One)





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





For
      the
      quarter ended September 30, 2005





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





For
      the
      transition period from ________ to __________








Commission
      File Number: 000-30011





TOTAL
      IDENTITY CORP.


(Exact
      name of small business issuer as specified in charter)





FLORIDA
            65-0309540(State
                or other jurisdiction of
              incorporation
                or organization)
            (I.R.S.
                Employer I.D. No.)





1007
      N.
      Federal Highway, Suite D-6


Fort
      Lauderdale, Florida 33304


(Address
      of principal executive offices





(561)
      208-8101


(Issuer's
      telephone number, including area code)





N/A


(Former
      name or former address, if changed since last report)





Check
      whether the Issuer (1) has 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]





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
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: 27,392,510 shares at August 31,
      2006





Transitional
      Small Business Disclosure Format (Check one): Yes [ ] No [x]








TOTAL
      IDENTITY CORP. AND SUBSIDIARIES


FORM
      10-QSB


QUARTERLY
      PERIOD ENDED SEPTEMBER 30, 2005





INDEX


PART
                I - FINANCIAL INFORMATION
            PageItem
                1. Consolidated Financial Statements (Unaudited)Consolidated
                Balance Sheet (Unaudited) as of September 30, 2005
            3Consolidated
                Statements of Operations (Unaudited)
            5for
                the nine months ended September 30, 2005 and
                2004Consolidated
                Statements of Cash Flows (Unaudited)
            8for
                the nine months ended September 30, 2005 and
                2004Notes
                to Consolidated Financial Statements
            10Item
                2. Management's Discussion and Analysis or Plan of
                Operation
            18Item
                3. Controls and Procedures
            25PART
                II - OTHER INFORMATION
            25Item
                1. Legal Proceedings
            25Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            25Item
                3 Default upon Senior Securities
            26Item
                4 Submission of Matters to a Vote of Security Holders
            26Item
                5. Other Information
            26Item
                6. Exhibits
            26SIGNATURES
            27





**CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING INFORMATION**





Certain
      statements in this quarterly report on Form 10-QSB 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 quarterly 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.











2


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Balance Sheets








ASSETS





September
                30,
            
            December
                31,2005
            
            2004(Unaudited)CURRENT
                ASSETSCash
            
            $
            -
            
            $
            2,824Prepaid
                expenses
            
            
            646
            
            
            4,080Total
                Current Assets
            
            
            646
            
            
            6,904ASSETS
                FROM DISCONTINUED OPERATIONS (Note 3)
            
            
            14,526
            
            
            -TOTAL
                ASSETS
            
            $
            15,172
            
            $
            6,904





The
            accompanying notes are an integral part of these consolidated financial
            statements.
 3


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Balance Sheets (Continued)





LIABILITIES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)





September
                30,
            
            December
                31,2005
            
            2004(Unaudited)CURRENT
                LIABILITIESCash
                overdraft
            
            $
            173
            
            $
            -Accounts
                payable
            
            
            166,352
            
            
            142,644Accounts
                payable- related party (Note 4)
            
            
            37,930
            
            
            47,174Accrued
                expenses
            
            
            133,175
            
            
            1,500Convertible
                debenture
            
            
            125,000
            
            
            125,000Notes
                payable
            
            
            25,000
            
            
            25,000Notes
                payable- related party (Note 4)
            
            
            100,452
            
            
            100,452Total
                Current Liabilities
            
            
            588,082
            
            
            441,770LIABILITIES
                FROM DISCONTINUED OPERATIONS (Note 3)
            
            
            74,107
            
            
            -TOTAL
                LIABILITIES
            
            
            662,189
            
            
            441,770STOCKHOLDERS’
                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 and 15,347,171 shares issuedand
                outstanding, respectively
            
            
            179,924
            
            
            153,471Additional
                paid-in capital
            
            
            9,837,837
            
            
            9,667,977Accumulated
                deficit
            
            
            (10,664,778
            )
            
            (10,256,314Total
                Stockholders’ Equity (Deficit)
            
            
            (647,017
            )
            
            (434,866
            )TOTAL
                LIABILITIES AND STOCKHOLDERS’EQUITY
                (DEFICIT)
            
            $
            15,172
            
            $
            6,904


The
            accompanying notes are an integral part of these consolidated financial
            statements.
 4


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Statements of Operations


(Unaudited)





For
                the Three Months Ended
            
            For
                the Nine Months EndedSeptember
                30,
            
            September
                30,2005
            
            2004
            
            2005
            
            2004REVENUE
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -COST
                OF SALES
            
            
            -
            
            
            -
            
            
            -
            
            
            -GROSS
                MARGIN
            
            
            -
            
            
            -
            
            
            -
            
            
            -EXPENSESConsulting
                and professional
            
            
            10,510
            
            
            22,392
            
            
            71,531
            
            
            386,042Salaries
                and wages
            
            
            51,000
            
            
            80,000
            
            
            173,000
            
            
            80,000Selling,
                general and administrative
            
            
            7,376
            
            
            116,139
            
            
            10,399
            
            
            342,133Total
                Expenses
            
            
            68,886
            
            
            218,531
            
            
            254,930
            
            
            808,175LOSS
                FROM OPERATIONS
            
            
            (68,886
            )
            
            (218,531
            )
            
            (254,930
            )
            
            (808,175
            )OTHER
                INCOME (EXPENSE)Interest
                expense
            
            
            (3,375
            )
            
            (3,230
            )
            
            (10,125
            )
            
            (139,306
            )Other
                income
            
            
            6,000
            
            
            61,500
            
            
            8,001
            
            
            61,500Total
                Other Income (Expense)
            
            
            2,625
            
            
            58,270
            
            
            (2,124
            )
            
            (77,806
            )LOSS
                BEFORE DISCONTINUEDOPERATIONS
            
            
            (66,261
            )
            
            (160,261
            )
            
            (257,054
            )
            
            (885,981
            )GAIN
                (LOSS) ON DISCONTINUEDOPERATIONS
                (Note 3)
            
            
            (24,383
            )
            
            (105,485
            )
            
            (151,410
            )
            
            (148,381
            )NET
                LOSS
            
            $
            (90,644
            )
            $
            (265,746
            )
            $
            (408,464
            )
            $
            (1,034,362
            )BASIC
                INCOME (LOSS) PER SHARELoss
                per share before discontinuedoperations
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.05
            )Loss
                per share ondiscontinued
                operations
            
            
            (0.00
            )
            
            (0.01
            )
            
            (0.01
            )
            
            (0.01
            )NET
                LOSS PER SHARE
            
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.02
            )
            $
            (0.06
            )WEIGHTED
                AVERAGE NUMBEROF
                SHARES OUTSTANDING
            
            
            17,992,506
            
            
            17,153,838
            
            
            17,936,994
            
            
            16,004,440


The
            accompanying notes are an integral part of these consolidated financial
            statements.
 5


**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
            
            
            72,000Common
                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
                - unaudited
            
            
            -
            
            
            -
            
            
            500,000
            
            
            5,000
            
            
            20,000
            
            
            -Common
                stock issued forwarrant
                exercise - unaudited
            
            
            -
            
            
            -
            
            
            750,000
            
            
            7,500
            
            
            15,000
            
            
            -Common
                stock issued forservices
                - unaudited
            
            
            -
            
            
            -
            
            
            1,000,000
            
            
            10,000
            
            
            70,000
            
            
            -Common
                stock issued forrelated
                party debt - unaudited
            
            
            -
            
            
            -
            
            
            395,335
            
            
            3,953
            
            
            11,860
            
            
            -Stock
                warrants issued for services-
                unaudited
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            15,000
            
            
            -Balance
                forward
            
            
            -
            
            $
            -
            
            
            17,992,506
            
            $
            179,924
            
            $
            9,799,837
            
            $
            (10,256,314
            )


The
            accompanying notes are an integral part of these consolidated financial
            statements.
 6


**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
            
            $
            9,799,837
            
            $
            (10,256,314
            )Stock
                options issued for salary-
                unaudited
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            38,000
            
            
            -Consolidated
                net loss forthe
                nine months ended September30,
                2005 - unaudited
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (408,464
            )Balance,
                September 30, 2005-
                unaudited
            
            
            -
            
            $
            -
            
            
            17,992,506
            
            $
            179,924
            
            $
            9,837,837
            
            $
            (10,664,778
            )





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


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Statements of Cash Flows


(Unaudited)





For
                the Nine Months EndedSeptember
                30,2005
            
            2004CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss
            
            $
            (408,464
            )
            
            (1,034,362
            )Adjustments
                to reconcile net loss to netcash
                used by operating activities:Depreciation
                and amortization - discontinued
            
            
            214
            
            
            229,475Stock
                issued for services, salary and interest
            
            
            80,000
            
            
            394,000Stock
                options issued for salary
            
            
            38,000
            
            
            99,375Stock
                warrants issued for services
            
            
            15,000
            
            
            157,000Changes
                in assets and liabilities:(Increase)
                decrease in receivables - discontinued
            
            
            -
            
            
            (269,956
            )Decrease
                in inventory - discontinued
            
            
            -
            
            
            142,847Decrease
                in prepaid and other assets
            
            
            3,434
            
            
            -(Increase)
                decrease in prepaid and other assets - discontinued
            
            
            (590
            )
            
            88,801Increase
                in accounts payable and accounts payable related party -
                discontinued
            
            
            89,920
            
            
            225,945Increase
                in accounts payable and accounts payable - related parties
            
            
            36,964
            
            
            94,881Increase
                (decrease) in customer deposit payable - discontinued
            
            
            -
            
            
            315,850Increase
                (Decrease) in accrued expenses
            
            
            131,675
            
            
            (13,500
            )Net
                Cash Provided (Used) by Operating Activities
            
            
            (13,847
            )
            
            429,886CASH
                FLOWS FROM INVESTING ACTIVITIESPurchase
                of property and equipment - discontinued
            
            
            (4,167
            )
            
            (2,678
            )Net
                Cash (Used) by Financing Activities
            
            
            (4,167
            )
            
            (2,678
            )CASH
                FLOWS FROM FINANCING ACTIVITIESProceeds
                from issuance of stock
            
            
            25,000
            
            
            -Proceeds
                from bank overdraft
            
            
            173
            
            
            -Payment
                on bank overdraft - discontinued
            
            
            -
            
            
            32,996Payment
                on notes payable - discontinued
            
            
            -
            
            
            (320,235
            )Proceeds
                from notes payable and related party notes
            
            
            -
            
            
            210,000Payment
                on notes payable and related party notes
            
            
            -
            
            
            (100,444
            )Net
                Cash Provided (Used) by Financing Activities
            
            
            25,173
            
            
            (243,675
            )INCREASE
                (DECREASE) IN CASH
            
            
            7,159
            
            
            183,533CASH
                AT BEGINNING OF PERIOD
            
            
            2,824
            
            
            -Cash
                (deficit) from continuing operations
            
            
            (173
            )
            
            2,824Cash
                from discontinued operations
            
            
            9,983
            
            
            180,709CASH
                AT END OF PERIOD
            
            $
            9,810
            
            $
            183,533


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


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Consolidated
      Statements of Cash Flows (Continued)


(Unaudited)





For
                the Nine Months EndedSeptember
                30,2005
            
            2004SUPPLEMENTAL
                DISCLOSURES OFCASH
                FLOW INFORMATION:CASH
                PAID FOR:Interest
            
            $
            2,813
            
            $
            160,490Income
                taxes
            
            $
            -
            
            $
            -SCHEDULE
                OF NON-CASH FINANCINGACTIVITIES:Stock
                issued for services, salary andinterest
            
            $
            80,000
            
            $
            394,000Stock
                options issued for salary
            
            $
            38,000
            
            $
            99,375Stock
                warrants issued for services
            
            $
            15,000
            
            $
            157,000Stock
                issued for debt
            
            $
            38,312
            
            $
            221,000





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


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


September
      30, 2005 and December 31, 2004





NOTE
      1   BASIS
      OF
      FINANCIAL STATEMENT PRESENTATION




The
      condensed financial statements presented are those of Total Identity Corp (the
      Company). The accompanying unaudited condensed financial statements have been
      prepared by the Company pursuant to the rules and regulations of the Securities
      and Exchange Commission. Certain information and footnote disclosures normally
      included in financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America have been
      condensed or omitted in accordance with such rules and regulations. The
      information furnished in the interim condensed financial statements include
      normal recurring adjustments and reflects all adjustments, which, in the opinion
      of management, are necessary for a fair presentation of such financial
      statements. Although management believes the disclosures and information
      presented are adequate to make the information not misleading, it is suggested
      that these interim condensed financial statements be read in conjunction with
      the Company’s most recent audited financial statements. Operating results for
      the nine months ended September 30, 2005 are not necessarily indicative of
      the
      results that may be expected 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. In August of 2006 a default
      judgment was granted against the Company.  The
      Company's current resources may not permit it to appeal or otherwise contest
      the
      default judgment.


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 Septemeber 30, 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.


10


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


September
      30, 2005 and December 31, 2004





NOTE
      3   DISCONTINUED
      OPERATIONS





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 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.


11


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


September
      30, 2005 and December 31, 2004





NOTE
      3   DISCONTINUED
      OPERATIONS (CONTINUED)





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, operations have ceased. All
      operating results of TIS are included in discontinued operations as of September
      30, 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 TIS:


For
                theNine
                Months EndedSeptember
                30, 2005REVENUE
            
            $
            8,042,602COST
                OF SALES
            
            
            4,991,771GROSS
                MARGIN
            
            
            3,050,831EXPENSESAmortization
                and depreciation
            
            
            72,454Selling,
                general and administrative expense
            
            
            3,104,988Total
                Expenses
            
            
            (3,177,442
            )








12


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


September
      30, 2005 and December 31, 2004





NOTE
      3   DISCONTINUED
      OPERATIONS (CONTINUED)





Acquisition
      of Total Identity Systems Corporation (Continued)




LOSS
                FROM OPERATIONSOTHER
                INCOME (EXPENSE)
            
            
            (126,611
            )Interest
                expense
            
            
            (93,084
            )Other
                income
            
            
            71,314Total
                Other Income (Expense)
            
            
            (21,770
            )NET
                LOSS FROM DISCONTINUED OPERATIONS
            
            $
            (148,381
            )





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
      September 30, 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
                theNine
                Months EndedSeptember
                30, 2005REVENUE
            
            $
            11,158COST
                OF SALES
            
            
            41,124GROSS
                DEFICIT
            
            
            (29,966
            )EXPENSESDepreciation
            
            
            428Selling,
                general and administrative expense
            
            
            121,016Total
                Expenses
            
            
            (121,444
            )NET
                LOSS FROM DISCONTINUED OPERATIONS
            
            $
            (151,410
            )





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


13


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


September
      30, 2005 and December 31, 2004





Sale
      of Total Digital Displays (Continued)





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. To date, the seller has not complied
      with our demands and has denied any wrongdoing and at this time Total Digital
      has no assets or liabilities.  In
      addition, the Company has 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.





During
        2005 the Company filed suit in Broward County, Florida circuit court and
        was
        awarded 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.  In light of the foregoing, the opinion of
        counsel





NOTE
      4   RELATED
      PARTY TRANSACTIONS





Accounts
      and Notes Payable





As
      of
      September 30, 2005, the Company owed three related parties $100,452 for amounts
      loaned to the Company for operating expenses.





As
      of
      September 30, 2005, the Company has accounts payable to officers and former
      officers totaling $37,930.





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 $38,000
      in compensation expense related to the issuance of the options, paid $8,500
      in
      salary in cash and accrued $126,500 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


14


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


September
      30, 2005 and December 31, 2004





NOTE
      4  RELATED
      PARTY TRANSACTIONS (CONTINUED)





Consulting
      Agreements (Continued)





On
      February 2, 2005, the Company extended the agreement and issued warrants to
      purchase 750,000 shares of common 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 period ended September 30, 2005.





NOTE
      5   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
      $0.04
      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 a one year consulting agreement with an
      individual for jewelry consulting related to the business of the Company’s
      wholly-owned subsidiary, Yard Sale Drop Off, Inc. The agreement called for
      an
      up-front one-time payment of 250,000 fully earned shares and commissions on
      an
      on-going basis based on sales.





During
      March 2005, the Company entered into a six month consulting agreement with
      an
      individual for consulting related to the business of the Company’s wholly-owned
      subsidiary, YSDO. The agreement called for an up front one-time payment of
      750,000 fully earned shares.





Stock
      Options and Warrants





On
      January 1, 2005, the Company issued 200,000 options to purchase its common
      stock
      to an officer exercisable at a price of $0.06 per share. The Company recognized
      $12,000 in compensation expense related to the issuance of the
      options.





On
      February 2, 2005, the Company extended the agreement and issued warrants to
      purchase 750,000 shares of common stock, which were subsequently exercised
      at a
      price of $0.03 per share. The Company recognized $15,000


15


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


September
      30, 2005 and December 31, 2004





NOTE
      5   COMMON
      STOCK AND EQUITY INSTRUMENTS (CONTINUED)





in
      expense associated with the grant of the warrants.





On
      April
      1, 2005, the Company issued 200,000 options to purchase its common stock to
      an
      officer exercisable at a price of $0.10 per share. The Company recognized
      $20,000 in compensation expense related to the issuance of the
      options.





On
      July
      1, 2005, the Company issued 200,000 options to purchase its common stock to
      an
      officer exercisable at a price of $0.03 per share. The Company recognized $6,000
      in compensation expense related to the issuance of the options.





NOTE
      6   GOING
      CONCERN





The
      Company's unaudited 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, 2005.
      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 unaudited
      consolidated financial statements do not include any adjustments that might
      be
      necessary if the Company is unable to continue as a going concern.





NOTE
      7   SUBSEQUENT
      EVENTS





On
      October 1, 2005, the Company issued 200,000 options to purchase its common
      stock
      to an officer exercisable at a price of $0.07 per share. The Company recognized
      $12,000 in compensation expense related to the issuance of the
      options.


16


**TOTAL
      IDENTITY CORPORATION AND SUBSIDIARIES**


Notes
      to
      the Consolidated Financial Statements


September
      30, 2005 and December 31, 2004





NOTE
      7   SUBSEQUENT
      EVENTS





On
      January 1, 2006, the Company granted its CEO and Chief Financial Officer 200,000
      options to purchase common stock at $0.02 per share in accordance with an
      employment agreement.





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.





During
      April 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.





During
      June 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.





During
      June 2006, $30,000 of a related party note payable was converted into 3,000,000
      shares of common stock at $0.01 per share.





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.








17


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





**Overview**





The
      following analysis of our results of operations and financial condition should
      be read in conjunction with the accompanying consolidated financial statements
      for the period ended September 30, 2005 and notes thereto appearing elsewhere
      in
      this quarterly report.


During
        fiscal 2004 our operations were those of our TISC subsidiary. 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, 2004 and 2003 contained in our annual report on
        Form
        10-KSB as prevoiusly filed with the Securities and Exchange Commisison reflect
        the impact of discontinuing the operations of TISC. 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 the
        respective periods in the financial statements.


In
      January 2005, we commenced operations of our Yard Sale Drop Off, Inc. (“YSDO”)
      subsidiary. YSDO operated as a trading assistant and “power seller” that
      assisted others to list and sell items through on-line auctions on the eBay
      website.  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 the nine months ended
      September 30, 2005 in the financial statements appearing elsewhere in this
      report.


18


***Nine
      months ended September 30, 2005 as compared to the Nine months ended September
      30, 2004***





Increase/
            
            Increase/Nine
                  Months Ended
            
            (Decrease)
            
            (Decrease)9/30/2005
            
            9/30/2004
            
            $
                2005 vs 2004
            
            %
                2005 vs 2004Revenue
            
            
            -
            
            
            -
            
            
            -
            
            
            -Cost
                of sales
            
            
            -
            
            
            -
            
            
            -
            
            
            -Gross
                margin
            
            
            -
            
            
            -
            
            
            -
            
            
            -ExpensesConsulting
                fees
            
            
            71,531
            
            
            386,042
            
            
            (314,511
            )
            
            -81
            %Salaries
                and wages
            
            
            173,000
            
            
            80,000
            
            
            93,000
            
            
            116
            %Selling,
                general and administrative
            
            
            10,399
            
            
            342,133
            
            
            (331,734
            )
            
            -97
            %Total
                expenses
            
            
            254,930
            
            
            808,175
            
            
            (553,245
            )
            
            -68
            %Loss
                from operations
            
            
            (254,930
            )
            
            (808,175
            )
            
            553,245
            
            
            -68
            %Other
                income (expense)Interest
                expense
            
            
            (10,125
            )
            
            (139,306
            )
            
            129,181
            
            
            -93
            %Other
                income
            
            
            8,001
            
            
            61,500
            
            
            (53,499
            )
            
            -87
            %Total
                other income (expense)
            
            
            (2,124
            )
            
            (77,806
            )
            
            75,682
            
            
            -97
            %Loss
                before discontinued operations
            
            
            (257,054
            )
            
            (885,981
            )
            
            628,927
            
            
            -71
            %Discontinued
                operations
            
            
            (151,410
            )
            
            (148,381
            )
            
            (3,029
            )
            
            2
            %Net
                loss
            
            
            (408,464
            )
            
            (1,034,362
            )
            
            625,898
            
            
            -61
            %





NM
      =  not
      material





**Total
      expenses**




*For
      the Nine Months Ended September 30, 2005 vs. September 30,
      2004*





Our
      total
      expenses for the nine months ended September 30, 2005 were $254,930, a decline
      of $553,245, or approximately 68%, from our total expenses of $808,175 for
      the
      nine months ended September 30, 2004. Included in this decrease were the
      following:





▪  for
      the
      nine months ended September 30, 2005 consulting fees declined $314,511, or
      approximately 81%, to $71,531 from $386,042 for the nine months ended September
      30, 2004. Consulting and professional fees included $56,531 of cash paid and
      accounts payable due under the terms of various consulting agreements and
      $15,000 representing the value of warrants to purchase our common stock which
      we
      issued as compensation for business consulting services rendered to us.


▪  Salaries
        and wages increased $93,000, or approximately 116%, to $173,000 for the nine
        months ended September 30, 2005 from $80,000 for the nine months ended September
        30, 2004 This increase is primarily attributable to expenses related to the
        employment agreement for our CEO, and
 
 ▪  Selling,
        general and administrative expense decreased $331,734, or approximately 97%,
        to
        $10,399 for the nine months ended September 30, 2005 from $342,133 for the
        nine
        months ended September 30, 2004, which reflects our reduced operations in
        the 2005 period.


20


**Total other
      income (expense)**





*For
      the Nine Months Ended September 30, 2005 vs. September 30,
      2004*





Overall,
      total other expense (income) $75,682 for the nine months ended September
      30, 2005 from the nine months ended September 30, 2004 as a result of the
      following:





▪  Interest
      expense decreased $129,181 for the nine months ended September 30, 2005 from
      the
      nine months ended September 30, 2004, an approximate 93% decrease. This
      decreased interest expense is primarily related to the reduction of
      debt.





▪  Other
      income decreased $53,499 for the nine months ended September 30, 2005 from
      the
      nine months ended September 30, 2004, an approximate 87% decrease.  During
      the 2004 period we recorded a gain on extinguishment of debt for which there
      was
      no comparable transaction during the 2005 period.




**Discontinued
      operations**





*For
      the Nine Months Ended September 30, 2005 vs. September 30,
      2004*





We
      reported discontinued operations for the nine months ended September 30, 2005
      of
      a loss of $151,410 related to the operations of YSDO. For the nine months ended
      September 30, 2004 we reported a loss on discontinued operations of $148,381
      related to the operations of TISC.





***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 September 30, 2005, we had no cash on hand and a working capital deficit
      of
      $587,436.





At
      September 30, 2005 we had total assets of $15,172 which consisted of $646 of
      prepaid expenses and $14,526 of assets from discontinued operations. Our total
      liabilities at September 30, 2005 were $662,189, which included cash overdraft
      $173, $204,282 of accounts payable and accounts payable - related party,
      $133,175 of accrued expenses, an aggregate of $250,452 in convertible debentures
      and notes payable, including $100,452 of










21


notes
      payable - related parties and $74,107 in liabilities from discontinued
      operations. We do not have sufficient working capital to satisfy these
      obligations.





Net
      cash
      used by operating activities for the nine months ended September 30, 2005 was
      $13,847 as compared to net cash provided by operating activities of $429,886
      for
      the nine months ended September 30, 2004. The principal changes in cash provided
      by (used in) operating activities from period to period which are unrelated
      to
      our discontinued operations include:





▪
            a
                decrease of $625,898 in our net loss,
                and





▪
            the
                expense related to stock, options and warrants issued for services,
                salary
                and interest decreased $517,375,
                and





▪
            an
                increase of $57,917 in accounts payable and accounts payable - related
                party, and





▪ an
      increase of $145,175 in accrued expenses.





Net
      cash
      used by investing activities for the nine months ended September 30, 2005 was
      ($4,167) as compared to ($2,678) for the nine months ended September 30, 2004.
      The change is related to increased asset purchases of our subsidiary
      YSDO.





Net
      cash
      provided by financing activities for the nine months ended September 30, 2005
      was $25,173 as compared to net used in financing activities of ($243,675) for
      the nine months ended September 30, 2004. The principal changes in cash provided
      (used) by financing activities from fiscal the nine months ended September
      30,
      2005 to the nine months ended September 30, 2004 which are unrelated to our
      discontinued operations include:





▪  an
      increase of $25,000 in proceeds to us from the issuance of stock,
      and





▪ a
      decrease of $109,556 in proceeds from notes payable and related part notes,
      net
      of repayments.





At
      September 30, 2005, we had an accumulated deficit of $10,664,778. The report
      from our independent registered public accounting firm on our audited financial
      statements at December 31, 2004 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 of TISC and YSDO 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:





*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


22


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 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.


23


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 had no material
      effect based upon period contained in the particular Q.




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, 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.


24


**ITEM
      3.**  **CONTROLS
      AND PROCEDURES**





As
      required by Rule 13a-15 under the Securities Exchange Act of 1934, as
      of September 30, 2005, the end of the period covered by this quarterly
      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 quarterly 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.





**PART
      II - OTHER INFORMATION**





**Item
      1.**   **Legal
      Proceedings**





None





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




None







25


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





None.





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





None.





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





None.


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





31.1
            Certification
                of the Chief Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002


31.2
            Certification
                of the principal financial and accounting officer pursuant to Section
                302
                of the Sarbanes-Oxley Act of 2002


32.1
            Certification
                of Chief Executive Officer and principal financial and accounting
                officer
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


26





**SIGNATURES**





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





Total
                Identity Corp.September
                21, 2006
            
            
            By:/s/
                Matthew P. DwyerMatthew
                P. Dwyer, CEO, CFO and President, principal executive officer and
                principal financial and accounting
                officer















27