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 March 31, 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
        North 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 MARCH 31, 2005
 
 INDEX
 PART
                  I - FINANCIAL INFORMATION
              PageItem
                  1. Consolidated Financial Statements (Unaudited)Consolidated
                  Balance Sheet (Unaudited) as of March, 31, 2005
              3Consolidated
                  Statements of Operations (Unaudited)
              5for
                  the three months ended March 31, 2005 and 2004Consolidated
                  Statements of Cash Flows (Unaudited)
              8for
                  the three months ended March 31, 2005 and 2004Notes
                  to Consolidated Financial Statements
              10Item
                  2. Management's Discussion and Analysis or Plan of
                  Operation
              18Item
                  3. Controls and Procedures
              23PART
                  II - OTHER INFORMATION
              24Item
                  1. Legal Proceedings
              24Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              24Item
                  3 Default upon Senior Securities
              24Item
                  4 Submission of Matters to a Vote of Security Holders
              24Item
                  5. Other Information
              24Item
                  6. Exhibits
              24SIGNATURES
              25
 
 **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
 
 March
                  31,
              
              December
                  31,2005
              
              2004(Unaudited)CURRENT
                  ASSETSCash
              
              $
              383
              
              $
              2,824Prepaid
                  expenses
              
              
              3,204
              
              
              4,080Total
                  Current Assets
              
              
              3,587
              
              
              6,904ASSETS
                  FROM DISCONTINUED OPERATIONS (Note 3)
              
              
              3,646
              
              
              -TOTAL
                  ASSETS
              
              $
              7,233
              
              $
              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)
 
 March
                  31,
              
              December
                  31,2005
              
              2004(Unaudited)CURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              146,139
              
              $
              142,644Accounts
                  payable- related party (Note 4)
              
              
              26,323
              
              
              47,174Accrued
                  expenses
              
              
              38,563
              
              
              1,500Convertible
                  debenture
              
              
              125,000
              
              
              125,000Notes
                  payable
              
              
              25,000
              
              
              25,000Notes
                  payable- related party (Note 4)
              
              
              100,452
              
              
              100,452Total
                  Current Liabilities
              
              
              461,477
              
              
              441,770LIABILITIES
                  FROM DISCONTINUED OPERATIONS (Note 3)
              
              
              27,316
              
              
              -TOTAL
                  LIABILITIES
              
              
              488,793
              
              
              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
              
              
              9,811,837
              
              
              9,667,977Accumulated
                  deficit
              
              
              (10,473,321
              )
              
              (10,256,314
              )Total
                  Stockholders’ Equity (Deficit)
              
              
              (481,560
              )
              
              (434,866
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS’EQUITY
                  (DEFICIT)
              
              $
              7,233
              
              $
              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 EndedMarch
                  31,2005
              
              2004REVENUE
              
              $
              -
              
              $
              -COST
                  OF SALES
              
              
              -
              
              
              -GROSS
                  MARGIN
              
              
              -
              
              
              -EXPENSESConsulting
                  and professional fees
              
              
              35,279
              
              
              103,418Salaries
                  and wages
              
              
              57,000
              
              
              -Selling,
                  general and administrative
              
              
              1,491
              
              
              15,467Total
                  Expenses
              
              
              93,770
              
              
              118,885LOSS
                  FROM OPERATIONS
              
              
              (93,770
              )
              
              (118,885
              )OTHER
                  INCOME (EXPENSE)Interest
                  expense
              
              
              (3,375
              )
              
              (10,188
              )Other
                  income
              
              
              1
              
              
              -Total
                  Other Income (Expense)
              
              
              (3,374
              )
              
              (10,188
              )LOSS
                  BEFORE DISCONTINUED OPERATIONS
              
              
              (97,144
              )
              
              (129,073
              )GAIN
                  (LOSS) ON DISCONTINUED OPERATIONS (Note 3)
              
              
              (119,863
              )
              
              128,272NET
                  LOSS
              
              $
              (217,007
              )
              $
              (801
              )BASIC
                  INCOME (LOSS) PER SHARELoss
                  per share before discontinued operations
              
              $
              (0.00
              )
              $
              (0.01
              )Income
                  (loss) per share on discontinued operations
              
              
              (0.01
              )
              
              0.01NET
                  LOSS PER SHARE
              
              $
              (0.01
              )
              $
              (0.00
              )WEIGHTED
                  AVERAGE NUMBER OF SHARES OUTSTANDING
              
              
              16,186,120
              
              
              14,741,893
 
    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
              
              
              72,000
              
              
              -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
              
              
              -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
              
              $
              (10,256,314Stock
                  options issued for salary - unaudited
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              12,000
              
              
              -Consolidated
                  net loss forthe
                  three months ended March31,
                  2005 - unaudited
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (217,007
              )Balance,
                  March 31, 2005-
                  unaudited
              
              
              -
              
              $
              -
              
              
              17,992,506
              
              $
              179,924
              
              $
              9,811,837
              
              $
              (10,473,321
              )
 
 
  The
              accompanying notes are an integral part of these consolidated financial
              statements.
 7
 **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Consolidated
        Statements of Cash Flows
 (Unaudited)
 For
                    the Three Months EndedMarch
                    31,2005
                
                2004CASH
                    FLOWS FROM OPERATINGACTIVITIESNet
                    loss
                
                $
                (217,007
                )
                $
                (801
                )Adjustments
                    to reconcile net loss to netcash
                    used by operating activities:Depreciation
                    and amortization - discontinued
                
                
                -
                
                
                72,454Stock
                    issued for services, salary and interest
                
                
                80,000
                
                
                281,500Stock
                    options issued for salary
                
                
                12,000
                
                
                9,375Stock
                    warrants issued for services
                
                
                15,000
                
                
                157,000Changes
                    in assets and liabilities:(Increase)
                    in receivables - discontinued
                
                
                -
                
                
                (371,055
                )(Increase
                    in inventory - discontinued
                
                
                -
                
                
                (57,893
                )Decrease
                    in prepaid and other assets
                
                
                876
                
                
                -(Increase)
                    decrease in other assets - discontinued
                
                
                (590
                )
                
                47,458Increase
                    (decrease) in accounts payable andaccounts
                    payable related party - discontinued
                
                
                43,084
                
                
                (308,031
                )Increase
                    in accounts payable and accounts payable-
                    related parties
                
                
                5,189
                
                
                40,486Increase
                    in customer deposit payable - discontinued
                
                
                -
                
                
                521,733(Decrease)
                    in accrued expenses - discontinued
                
                
                -
                
                
                (48,214
                )Increase
                    (Decrease) in accrued expenses andexpenses
                    - related
                
                
                37,063
                
                
                -Net
                    Cash Provided (Used) by Operating Activities
                
                
                (24,385
                )
                
                344,012CASH
                    FLOWS FROM INVESTING ACTIVITIESPurchase
                    of property and equipment - discontinued
                
                
                (2,568
                )
                
                -Net
                    Cash (Used) by Financing Activities
                
                
                (2,568
                )
                
                -CASH
                    FLOWS FROM FINANCING ACTIVITIESProceeds
                    from issuance of stock
                
                
                25,000
                
                
                -Payment
                    on bank overdraft - discontinued
                
                
                -
                
                
                (12,074
                )Payment
                    on notes payable - discontinued
                
                
                -
                
                
                (148,405
                )Proceeds
                    from notes payable and related party notes
                
                
                -
                
                
                -Net
                    Cash Provided (Used) by Financing Activities
                
                
                25,000
                
                
                (160,479
                )INCREASE
                    (DECREASE) IN CASH
                
                
                (1,953
                )
                
                183,533CASH
                    AT BEGINNING OF PERIOD
                
                
                2,824
                
                
                -Cash
                    from continuing operations
                
                
                383
                
                
                2,824Cash
                    from discontinued operations
                
                
                488
                
                
                180,709CASH
                    AT END OF PERIOD
                
                $
                871
                
                $
                183,533
 The
              accompanying notes are an integral part of these consolidated financial
              statements.
 8
   **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Consolidated
        Statements of Cash Flows (Continued)
 (Unaudited)
 For
                    the Three Months EndedMarch
                    31,2005
                
                2004SUPPLEMENTAL
                    DISCLOSURES OF CASH FLOWINFORMATION:CASH
                    PAID FOR:Interest
                
                $
                2,813
                
                $
                35,400Income
                    taxes
                
                $
                -
                
                $
                -SCHEDULE
                    OF NON-CASH FINANCING ACTIVITIES:Stock
                    issued for services, salary and interest
                
                $
                80,000
                
                $
                281,500Stock
                    options issued for salary
                
                $
                12,000
                
                $
                9,375Stock
                    warrants issued for services
                
                $
                15,000
                
                $
                157,000Stock
                    issued for debt
                
                $
                38,312
                
                $
                200,000
 The
              accompanying notes are an integral part of these consolidated financial
              statements.
 9
 **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Notes
        to
        the Consolidated Financial Statements
 March
        31,
        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 three months ended March 31, 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 March 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.
 
  10
 **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Notes
        to
        the Consolidated Financial Statements
 March
        31,
        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.
 
  
  11
 **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Notes
        to
        the Consolidated Financial Statements
 March
        31,
        2005 and December 31, 2004
 
 NOTE
        3 SALES
        AND
        ACQUISITIONS AGREEMENTS (CONTINUED)
 
 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, operations have ceased. All
        operating results of TIS are included in discontinued operations as of March
        31,
        2005. No tax benefit has been attributed to discontinued
        operations.
  
  
   12
 **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Notes
        to
        the Consolidated Financial Statements
 March
        31,
        2005 and December 31, 2004
 
 NOTE
        3 SALES
        AND
        ACQUISITIONS AGREEMENTS (CONTINUED)
 
  Acquisition
        Total Identity Systems Corporation (Continued)
  
  The
        following is an unaudited summary of the loss from discontinued operations
        resulting from the disposal of TIS:
  For
                  theThree
                  Months EndedMarch
                  31, 2005REVENUE
              
              $
              2,703,515COST
                  OF SALES
              
              
              1,219,967GROSS
                  MARGIN
              
              
              1,483,548EXPENSESAmortization
                  and depreciation
              
              
              72,454Selling,
                  general and administrative expense
              
              
              1,206,435Total
                  Expenses
              
              
              (1,278,889
              )LOSS
                  FROM OPERATIONS
              
              
              204,659OTHER
                  INCOME (EXPENSE)Interest
                  expense
              
              
              (38,297
              )Other
                  income
              
              
              649Other
                  expense
              
              
              (38,739
              )Total
                  Other Income (Expense)
              
              
              (76,387
              )NET
                  INCOME FROM DISCONTINUED OPERATIONS
              
              $
              128,272
 
 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 March
        31, 2005. No tax benefit has been attributed to discontinued
        operations.
   13
 **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Notes
        to
        the Consolidated Financial Statements
 March
        31,
        2005 and December 31, 2004
 
 NOTE
        3 SALES
        AND
        ACQUISITIONS AGREEMENTS (CONTINUED)
 
  Discontinued
        Operations of Yard Sale Drop Off (Continued)
  
 The
        following is an unaudited summary of the loss from discontinued operations
        resulting from the disposal of YSDO:
  For
                  theThree
                  Months EndedMarch
                  31, 2005REVENUE
              
              $
              388COST
                  OF SALES
              
              
              29,872GROSS
                  DEFICIT
              
              
              (29,484
              )EXPENSESSelling,
                  general and administrative expense
              
              
              90,379Total
                  Expenses
              
              
              (90,379
              )NET
                  LOSS FROM DISCONTINUED OPERATIONS
              
              $
              (119,863
              )
 
 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. 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 the
          shares of Total Digital continued to be shown as distributed to the Company’s
          shareholders as restricted securities.
 
 
  14
 **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Notes
        to
        the Consolidated Financial Statements
 March
        31,
        2005 and December 31, 2004
 
 NOTE
        4 RELATED
        PARTY TRANSACTIONS
 
 Accounts
        and Notes Payable
 
 As
        of
        March 31, 2005, the Company owed three related parties $100,452 for amounts
        loaned to the Company for operating expenses.
 
 As
        of
        March 31, 2005, the Company has accounts payable to former officers totaling
        $26,323.
  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 $12,000
        in compensation expense related to the issuance of the options, paid $8,500
        in
        salary in cash and accrued $36,500 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.
 
 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 March 31, 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.
 
 
  15
 **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Notes
        to
        the Consolidated Financial Statements
 March
        31,
        2005 and December 31, 2004
 
 NOTE
        5 COMMON
        STOCK AND EQUITY INSTRUMENTS (CONTINUED)
 
 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 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.
 
 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 in expense associated
        with the grant of the warrants.
 
 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.
 
 
  16
 **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Notes
        to
        the Consolidated Financial Statements
 March
        31,
        2005 and December 31, 2004
 
 NOTE
        6 GOING
        CONCERN (Continued)
 
 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
        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.
 
 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.
 
 On
        January 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.
 
 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
 
 
  17
 **TOTAL
        IDENTITY CORPORATION AND SUBSIDIARIES**
 Notes
        to
        the Consolidated Financial Statements
 March
        31,
        2005 and December 31, 2004
 
 NOTE
        7 SUBSEQUENT
        EVENTS (CONTINUED)
 
 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.
 
 
  18
 **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 March 31, 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 previously
          filed with the Securities and Exchange Commission 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 three months ended
        March
        31, 2005 in the financial statements appearing elsewhere in this
        report.
 
 ***Results
        of Operations***
 
 ***Three
        months ended March 31, 2005 as compared to the three months ended March 31,
        2004***
 
 Increase/
              
              Increase/Three
                  Months Ended
              
              (Decrease)
              
              (Decrease)3/31/2005
              
              3/31/2004
              
              $
                  2005 vs 2004
              
              %
                  2005 vs 2004Revenue
              
              -
              
              -
              
              -
              
              -Cost
                  of sales
              
              -
              
              -
              
              -
              
              -Gross
                  margin
              
              -
              
              -
              
              -
              
              -ExpensesConsulting
                  fees
              
              
              35,279
              
              
              103,418
              
              
              (68,139
              )
              
              -65.9
              %Salaries
                  and wages
              
              
              57,000
              
              
              -
              
              
              57,000
              
              
              100.0
              %Selling,
                  general and administrative
              
              
              1,491
              
              
              15,467
              
              
              (13,976
              )
              
              -90.4
              %Total
                  expenses
              
              
              93,770
              
              
              118,885
              
              
              (25,115
              )
              
              -21.1
              %Loss
                  from operations
              
              
              (93,770
              )
              
              (118,885
              )
              
              25,115
              
              
              -21.1
              %Other
                  income (expense)Interest
                  expense
              
              
              (3,375
              )
              
              (10,188
              )
              
              6,813
              
              
              -66.9
              %Other
                  income
              
              
              1
              
              
              -
              
              
              1
              
              
              100.0
              %Total
                  other income (expense)
              
              
              (3,374
              )
              
              (10,188
              )
              
              6,814
              
              
              -66.9
              %Loss
                  before discontinued operations
              
              
              (97,144
              )
              
              (129,073
              )
              
              31,929
              
              
              -24.7
              %Discontinued
                  operations
              
              
              (119,863
              )
              
              128,272
              
              
              (248,135
              )
              
              -193.4
              %Net
                  loss
              
              
              (217,007
              )
              
              (801
              )
              
              (216,206
              )
              
              26992.0
              %
 19
 **Total
        expenses**
 
 Our
        total
        expenses for the three months ended March 31, 2005 were $93,770, a decline
        of
        $25,115, or approximately 21%, from our total expenses of $118,885 for the
        three
        months ended March 31, 2004. Included in this decrease were the
        following:
 
 ▪  For
        the
        three months ended March 31, 2005 consulting and professional fees declined
        $68,139, or approximately 66%, to $35,279 from $103,418 for the three months
        ended March 31, 2004. Consulting fees included approximately $20,279 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 $57,000, or 100%, to $57,000 for the three months ended
        March 31, 2005 from $0 for the three months ended March 31, 2004.  This
        increase is primarily attributable to expenses related to the employment
        agreements for our CEO and CFO, and
 
 ▪  Selling,
        general and administrative expense decreased $13,976, or approximately 90%,
        to
        $1,491 for the three months ended March 31, 2005 from $15,467 for the three
        months ended March 31, 2004 as a result of an overall reduction in our
        operations in the fiscal 2005 period.
 
 **Total
        other income (expense)**
 
 Total
        other expense decreased $6,813, or approximately 67%, for the three months
        ended
        March 31, 2005 from the comparable period in fiscal 2004 which reflects a
        reduction in interest expense as a result of our reduced borrowings in the
        fiscal 2005 period.
 
 **Discontinued
        operations**
 
 As
        described earlier in this section, in fiscal 2004 we discontinued the operations
        of TISC and we discontinued the operation of YSDO in fiscal 2006, of which
        the
        effect is shown retroactive. We reported discontinued operations for the
        three
        months ended March 31, 2005 of a loss of $119,863 related to the operations
        of
        YSDO. For the three months ended March 31, 2004 we reported income on
        discontinued operations of $128,272 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 March 31, 2005, we had cash on hand of $383 and a working capital deficit
        of
        $457,890.
 
 At
        March
        31, 2005 we had total assets of $7,233 which consisted of $383 of cash, $3,204
        of prepaid expenses and $3,646 of assets from discontinued operations. Our
        total
        liabilities at March 31, 2005 were $488,793, which included $172,462 of accounts
        payable and accounts payable - related party, $38,563 of accrued expenses,
        an
        aggregate of $250,452 in convertible debentures and notes payable, including
        $100,452 of notes payable - related parties and $27,316 in liabilities from
        discontinued operations. We do not have sufficient working capital to satisfy
        these obligations.
 
 Net
        cash
        used by operating activities for the three months ended March 31, 2005 was
        $24,385 as compared to net cash provided by operating activities of $344,012
        for
        the three months ended March 31, 2004. The principal changes in cash provided
        by
        (used in) operating activities from period to period which are unrelated
        to our
        discontinued operations include:
 
 ▪
              an
                  increase of $216,206 in our net
                  loss,
 
 ▪
              the
                  expense related to stock, options and warrants issued for services,
                  salary
                  and interest decreased $340,875,
 
 ▪
              a
                  decrease of $35,297 in accounts payable and accounts payable -
                  related
                  party, and
 20
 ▪  an
        increase of $37,063 in accrued expenses and expenses - related.
 
 Net
        cash
        used by investing activities for the three months ended March 31, 2005 was
        $2,568 as compared to none for the three months ended March 31, 2004. The
        change
        is related to the operations of our subsidiary YSDO.
 
 Net
        cash
        provided by financing activities for the three months ended March 31, 2005
        was
        $25,000 as compared to net used in financing activities of $160,479 for the
        three months ended March 31, 2004. The principal changes in cash provided
        (used)
        by financing activities from fiscal the three months ended March 31, 2005
        to the
        three months ended March 31, 2004, which are unrelated to our discontinued
        operations, reflects proceeds from the issuance of stock during the 2005
        period
        for which were was no comparable transaction during the 2004
        period.
 
 At
        March
        31, 2005, we had an accumulated deficit of $10,473,321. 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 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
 21
 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.
 
 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
 22
 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.
 
 **ITEM
        3** **CONTROLS
        AND PROCEDURES**
 
 As
        required by Rule 13a-15 under the Securities Exchange Act of 1934, as of
        March
        31, 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.
  23
 **PART
        II - OTHER INFORMATION**
 **Item
        1.**  **Legal
        Proceedings**
 
 None
 
 **Item
        2.**  **Unregistered
        Sales of Equity Securities and Use of Proceeds**
 
 
 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 provides consulting
        services in the areas of corporate development, acquisitions and strategic
        planning. On February 2, 2005, we 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. We recognized $15,000 in expense associated with
        the
        grant of the warrants.
 
 During
        February 2005, we sold 500,000 shares of our 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
        our company. The $.05 per share purchase price was the closing bid price
        for our
        common stock on the date of purchase.
 
 During
        February 2005, we issued 395,335 shares of our 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 our common stock on the date
        of
        issuance.
 
 During
        March 2005, we entered into two one-year consulting agreements with individuals
        for consulting related to the business of our wholly-owned subsidiary, YSDO.
        The
        agreements call for up front one-time payments of an aggregate of 1,000,000
        shares of our common stock, valued at a market price of $0.08 on the date
        of
        issue, totaling $80,000.
 
 **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
 
 
  24
  
 **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
 
         25