UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)

        |X| QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES

                              EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2005

       |_| TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT

                         For the transition period from

                        Commission file number 000-24001

                               IQ BIOMETRIX, INC.


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



              Delaware                                      76-0552098
---------------------------------------------           -------------------
(State or other jurisdiction of incorporation             (IRS Employer
   or organization)                                     Identification No.)


        2000 Bridge Parkway, Suite 201, Redwood Shores, California 94065
                    (Address of principal executive offices)

                            (650) 551-5277 (Issuer's telephone number)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 13, 2005 the registrant had
9,977,642 shares of its common stock outstanding.

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

Transitional Small Business Disclosure Format (Check one): Yes |_|  No |X|

<PAGE>

                                TABLE OF CONTENTS

                               FORM 10-QSB REPORT

                                 March 31, 2005


                                                                          PAGE
PART I - FINANCIAL INFORMATION
   Item  1.  Interim  condensed financial  statements (unaudited)          3
     Balance Sheet March 31, 2005                                          3
     Statement of Operations for the three and nine
       months ended March 31, 2005 and 2004                                4
     Statement of Cash Flows for the nine
        months ended March 31, 2005 and 2004                               5
     Notes to Interim Financial Statements                                 6

   Item 2. Management's Discussion and Analysis or Plan of Operation       7
   Item 3. Controls and Procedures                                        22

PART II - OTHER INFORMATION
   Item 1. Legal Proceedings                                              23
   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds    23
   Item 6. Exhibits                                                       23

SIGNATURES

                                       2
<PAGE>
                          PART I. FINANCIAL STATEMENTS

Item 1. Financial Statements (unaudited)

                               IQ BIOMETRIX, INC.
                                  BALANCE SHEET
                                 March 31, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>

                                     ASSETS
<S>                                                                              <C>
Current assets
   Cash                                                                          $  1,904,429
   Accounts receivable, net of allowance for doubtful accounts of $6,000               39,013
   Inventory                                                                           11,705
   Prepaid expenses                                                                    64,918
                                                                                 ------------
      Total current assets                                                          2,020,065

Equipment, net of $12,127 of accumulated depreciation                                   2,340

Intellectual property, net of $146,068 accumulated amortization                        54,750
                                                                                 ------------
   Total assets                                                                  $  2,077,155
                                                                                 ============
   LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
   Convertible notes payable to investors, net
       of unamortized discount of $2,038,333                                     $  3,155,000
   Short term note payable                                                            100,000
   Accounts payable                                                                   159,343
   Accrued expenses                                                                   291,315
                                                                                 ------------
        Total current liabilities                                                   3,705,658
                                                                                 ------------
Commitments and contingencies                                                              --

Stockholders' Deficit:
  Preferred stock, $.01 par value; 10,000,000 shares authorized, none issued
     Common stock, $.01 par value; 50,000,000 shares authorized;                           --
     6,931,063 shares issued and oustanding                                            69,311
  Additional paid-in capital                                                       16,805,117
  Accumulated deficit                                                             (18,502,931)
                                                                                 ------------
     Stockholders' deficit                                                         (1,628,503)
                                                                                 ------------
     Total liabilities and stockholders' deficit                                 $  2,077,155
                                                                                 ============
</TABLE>

                                       3
<PAGE>

                               IQ BIOMETRIX, INC.
                            STATEMENTS OF OPERATIONS
              Three and Nine Months Ended March 31, 2005 and 2004
                                  (Unaudited)

<TABLE>
<CAPTION>

                                               Three Months                    Nine Months
                                           2005            2004            2005            2004
                                       -----------     -----------     -----------     -----------
<S>                                    <C>             <C>             <C>             <C>
Revenue - software sales               $    55,076     $    72,158     $   268,589     $   210,512
Operating expenses
      Cost of sales                          7,389          32,503          11,236          83,585
      Selling expense                       68,163         122,799         241,726         303,613
      General and administrative         1,466,094       2,376,315       3,008,401       4,644,848
      Research and development               5,917          21,750          20,117         171,918
      Interest expense                   1,775,356         383,561       2,179,190       1,108,009
      Impairment expense                        --              --              --          20,042
      Depreciation and amortization         10,719             993          37,751          50,689
                                       -----------     -----------     -----------     -----------
        Total operating expenses         3,333,638       2,937,921       5,498,421       6,382,703

                                       -----------     -----------     -----------     -----------
Net Loss                               $(3,278,562)    $(2,865,763)    $(5,229,832)    $(6,172,191)
                                       ===========     ===========     ===========     ===========

Basic and diluted loss per share       ($     0.48)    ($     0.52)    ($     0.79)    ($     1.17)
Weighted average shares
      outstanding                        6,864,676       5,556,269       6,616,795       5,292,941

</TABLE>

                                       4
<PAGE>

                               IQ BIOMETRIX, INC.
                            STATEMENTS OF CASH FLOWS
                    Nine Months Ended March 31, 2005 and 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                               2005             2004
                                                           ------------     ------------
<S>                                                        <C>              <C>
OPERATING ACTIVITIES:
Net loss                                                   $ (5,229,832)    $ (6,172,191)
Adjustments to reconcile net loss to
  net cash used in operating activities
    Depreciation and amortization                                37,750           50,689
    Option and warrant expense                                  112,127               --
    Common stock issued for services                          1,566,127        4,023,131
    Non cash compensation expense                                    --          479,234
    Amortization of debt discount                             2,038,333          894,668
     Changes in assets and liabilities:
        Accounts receivable                                     (18,758)         (28,460)
        Prepaid expenses                                            118         (111,927)
        Inventory                                               (10,678)           1,187
        Committed stock                                        (246,851)              --
        Accounts payable and accrued liabilities                (62,767)         140,819
                                                           ------------     ------------
Net cash used in operating activities                        (1,814,431)        (722,850)
                                                           ------------     ------------
 Investing activities
        Purchase of fixed assets                                     --           (1,845)
        Purchase of intellectual property                            --          (50,000)
        Note receivable                                              --           50,000
                                                           ------------     ------------
Net cash used in investing activities                                --           (1,845)
                                                           ------------     ------------
Financing activities
        Proceeds from exercise of warrants                       30,000               --
        Proceeds from exercise of options                        77,000           49,700
        Proceeds from convertible notes payable               3,505,000          700,000
        Payments on notes payable                                    --          (50,000)
        Proceeds from short term notes payable                  100,000               --
                                                           ------------     ------------
Net cash provided by financing activities                     3,712,000          699,700
                                                           ------------     ------------

Net change in cash                                            1,897,569          (24,995)

Cash, beginning of period                                         6,860           97,681
                                                           ------------     ------------

Cash, end of period                                        $  1,904,429     $     72,686
                                                           ============     ============

Non-cash:
    Stock issued for convertible debenture and interest    $    637,100     $         --
    Warrant exercise for retirement of short term note           50,000               --
    Stock issued for conversion of account payable                7,600               --

</TABLE>

                                       5
<PAGE>

                               IQ BIOMETRIX, INC.
                      NOTES TO INTERIM FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of IQ Biometrix, Inc.
(IQ Biometrix) have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission ("SEC"), and should be read in conjunction
with the audited financial statements and notes thereto contained in IQ
Biometrix's 2004 Annual Report filed with the SEC on Form 10-KSB. In the opinion
of management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year. Notes to the financial statements
which would substantially duplicate the disclosure contained in the audited
financial statements for 2004 as reported in the 10-KSB have been omitted.

STOCK BASED COMPENSATION:

IQ Biometrix accounts for its employee stock-based compensation plans under
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees. IQ Biometrix did not grant any options to purchase common stock to
employees in the nine months ending March 31, 2005, and therefore no expense was
recorded under the intrinsic value method for the nine months ending March 31,
2005.

During the nine months ended March 31, 2005, third party consultants were issued
options to purchase 27,500 shares of stock with a five year life and exercise
price of $.98 and $4.80 per share. Total non-cash expense of $112,127 based on
fair value using the Black Scholes method was recorded as of March 31, 2005.

NOTE 2 - CONVERTIBLE NOTES PAYABLE

On January 11, 2005, IQ Biometrix received $3,300,000 for the issuance of
convertible debentures and warrants to qualified institutional buyers, and a
limited number of accredited individual and institutional investors. The
convertible debentures bear interest at an annual rate of 5% and mature on June
30, 2005. The debentures are convertible at any time at the election of the
holder into shares of IQ Biometrix common stock at a conversion price of $2.00
per share (the "Conversion Price"). On February 11, 2005, IQ Biometrix filed
with the SEC a resale registration statement relating to the common stock
issuable upon conversion of the notes and warrants (the "Resale Registration
Statement"). The debentures will automatically convert into shares of IQ
Biometrix common stock at the Conversion Price upon the effectiveness of the
Resale Registration Statement. In connection with the sale of the convertible
debentures, IQ Biometrix issued warrants to purchase an aggregate of 825,000
shares of IQ Biometrix common stock for an exercise price of $2.70 per share.
The conversion price of the debentures and the exercise price of the warrants
are subject to adjustment at any time as the result of any subdivision, stock
split and combination of shares or recapitalization or if IQ Biometrix sells any
common stock or rights to acquire common stock at purchase price less than the
conversion price of the debentures or the exercise price of the warrants. As
part of this financing, the convertible notes payable held by Forte Capital
Partners, LLC and John Micek, Jr, were converted to debentures containing the
same terms as the financing closed January 11, 2005 and warrants to purchase
66,497 shares of common stock. Proceeds from these notes totaled $255,000 of
which $50,000 was received in fiscal 2004. In connection with this financing,
cash fees of $327,500 were paid to Alpine Capital Partners and $100,000 to
Daniel McKelvey, one of IQ Biometrix s board of directors. In addition, Alpine
Capital Partners received 163,750 warrants to purchase common stock at an
exercise price of $2.00 per share.

Under generally accepted accounting principles, IQ Biometrix is required to
record the value of the beneficial conversion feature of these convertible
debentures as a debt discount. In addition, the value of the warrants using the
Black Scholes method is also recorded as a debt discount. The total debt
discount recorded on the sale of these convertible debentures during the quarter
ended March 31, 2005 was $3,505,000. This debt discount will be amortized over
the life of the notes. As of March 31, 2005, $2,038,333 was charged to interest
expense. In the event the investors convert the debentures prior to the maturity
of the agreements, then generally accepted accounting principles require IQ
Biometrix to expense the unamortized balance of the debt discount in full.

                                       6
<PAGE>


          Note balance at June 30, 2004             $ 1,766,667
          Add: additional note proceeds               3,505,000
          Less discounts:
                   Warrants attached to note         (2,222,008)
                   Beneficial conversion feature     (1,282,992)
          Less: payments on notes                      (650,000)
          Add: amortized discount                     2,038,333
                                                    -----------
          Note balance at March 31, 2005            $ 3,155,000
                                                    ===========

NOTE 3 - SHORT TERM NOTE PAYABLE

In November 2004, IQ Biometrix borrowed $100,000 from Wherify Wireless, Inc.
("Wherify"). The secured note bears interest at 5% and is due on demand. The
note is secured by all intellectual property including FACES, cash and cash
equivalents, receivables, inventory, prepaid, and fixed assets.


NOTE 4 - STOCK ISSUANCES

In the nine months ending March 31, 2005, IQ Biometrix issued 84,000 shares of
its common stock in connection with warrant and option exercises valued at
$164,600. IQ Biometrix received $107,000 in cash, $50,000 in retirement of short
term debt and $7,600 in retirement of accounts payable. There were no such
issuances for the three months ended March 31, 2005.

During the nine month period ended March 31, 2005, IQ Biometrix issued 422,913
shares of its common stock to consultants and employees for services related to
corporate development, marketing, investment banking, legal, investor relations,
bonuses and sales support valued at approximately $1,566,127.

During the nine months ended March 31, 2005, IQ Biometrix issued 248,852 shares
of its common stock in connection with the conversion of approximately $637,100
in outstanding principal and interest pursuant to three convertible debentures.


NOTE 5 - SUBSEQUENT EVENTS:

On April 1, 2005, IQ Biometrix entered into an agreement with Wherify to
sublease office space from Wherify Wireless, Inc. IQ Biometrix's former lease
expired January 31, 2005 and was renewed on a month to month basis. As of March
31, the space was no longer available on a month to month basis. IQ Biometrix
will not be integrated with the Wherify employees or computer systems, and will
run autonomously in its own separate area. The lease is for three months and can
be cancelled by either party with 30 days notice. IQ Biometrix will also
contract for technology support from Wherify as well.

On April 11, 2005, the SEC declared the Resale Registration Statement effective.
As a result, the debentures issued on January 11, 2005 automatically converted
into shares of IQB common stock at the Conversion Price. IQ Biometrix has also
elected to convert all accrued and unpaid interest related to these debentures
into shares of its common stock. On April 11, 2005, IQ Biometrix issued
1,808,054 shares in conversion of outstanding principal of $3,616,118 and
interest of $61,118 related to this debt.

On April 18, 2005, IQ Biometrix and Wherify entered into Amendment No. 4 to
Agreement and Plan of Merger to amend the condition to the merger that Wherify
obtain signed lock-up agreements from 90% of the Wherify stockholders who hold
0.5% or more of Wherify capital stock to require that Wherify obtain signed
lock-up agreements from only 66 2/3% of such stockholders.

On April 26, 2005, IQ Biometrix issued 234,813 shares of its common stock upon
conversion of outstanding principal and interest of $400,000 and $69,631,
respectively, under four convertible debentures. The debentures all had a
conversion rate of $2.00, and were originally issued in June, September and
December 2002, and June 2003.

                                       7
<PAGE>

On May 7, 2005, IQ Biometrix issued 151,787 shares of its common stock upon
conversion of outstanding principal and interest of $100,000 and $21,431,
respectively, under one convertible debenture. The debenture had a conversion
rate of $0.80, and was originally issued in April 2003.

On May 7, 2005, IQ Biometrix issued 165,565 shares of its common stock pursuant
to the cashless exercise of outstanding warrants, including 159,965 shares of
its common stock to Forte Capital Partners, LLC, whose managing partner is
Daniel McKelvey, one of IQ Biometrix s board of directors.

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

Forward-Looking Statements

In addition to historical information, this report contains predictions,
estimates and other forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act
of 1934 that relate to future events or our future financial performance. These
statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, levels of activity, performance or achievements to
be materially different from any future results, levels of activity, performance
or achievements expressed or implied by the forward-looking statements. These
risks and other factors include those listed under "Risk Factors" and elsewhere
in this Registration Statement, and some of which we may not know. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," "continue" or the negative of these terms or other
comparable terminology. In addition, these forward-looking statements include,
but are not limited to, statements regarding the following:

*     our belief that our FACESTM technology will help solve the growing need
      for effective tools to fight crime and terrorism as well as offering
      potential applications relating to other industries;

*     our belief that the FACES TM technology will help solve the growing need
      for effective technology solutions to support law enforcement and homeland
      security;

*     our belief that we have ample room to penetrate further the public
      security/law enforcement agencies segment of the market;

*     our intention to compete vigorously in terms of price, product features,
      product performance, ease of use, quality of support and service, and
      company reputation;

*     our expectations regarding the sources from which we will finance our
      operations;

*     our expectations regarding the amount of funds we will need in the future;

*     our expectations regarding the focus of our revenue generation efforts on
      our existing customers;

*     our expectations regarding the amount of additional development expenses
      needed to pursue our research and development strategy;

*     our expectations regarding the timing of the rollout, release or public
      availability of any products of ours now or hereafter under development;

*     our intentions and expectations regarding the future availability of now
      undeterminable revenue opportunities arising out of our technology;

*     our intentions regarding the protection of our proprietary information;

*     our expectations and intentions regarding our ability to make available
      the finest facial composite technology on the market;

*     our intentions regarding our marketing and sales efforts.

                                       8
<PAGE>

These statements are only predictions and are subject to risks and
uncertainties, including the following:

*     our ability to complete the proposed merger with Wherify;

*     the availability and timely distribution of governmental funding;

*     our ability to introduce and gain customer acceptance of new products on a
      timely basis;

*     risks associated with the potential integration of additional operations,
      the extent of management time and attention required and related costs and
      expenses associated with the proposed merger with Wherify;

*     the difficulty of forecasting revenues due to weakness and uncertainties
      related to general economic conditions and overall demand within our
      markets and among our current and prospective customers;

*     the failure to execute on our acquisition and partnering strategies and
      our expansion into potential new markets, which may prevent achievement of
      profitability in a timely manner;

*     our ability to introduce and gain customer acceptance of new products on a
      timely basis;

*     the protection of our proprietary technology;

*     unforeseen development delays for new products that limit our ability to
      generate revenues;


OVERVIEW

IQ Biometrix, Inc. ("We" or the "Company ") is a provider of facial composite
software to federal, state and local law enforcement agencies in the U.S. and
worldwide. The Company's headquarters are located at 2000 Bridge Parkway, Suite
201, Redwood Shores, CA 94065. The Company's telephone number is (650) 551-5277.
The Company's web site is http://www.iqbiometrix.com. Information contained in
the Company's web site shall not be deemed to be a part of this quarterly
report.

During the quarter ended March 31, 2005 we derived nearly 70% of our revenues
from sales of our FACES TM 4.0 product. There were over 30 new customers who
purchased FACES TM 4.0 for the first time during the three months ended March
31, 2005. FACES TM 4.0, is the Company's full functioning composite software,
used by security and law enforcement officials. In July, 2004, we launched FACES
TM EDU, a classroom version of our composite image software. FACES TM EDU is
intended primarily to support middle and high school science subjects and give
students hands-on experience in interviewing witnesses and developing electronic
composites. FACESTM EDU has lower pricing and more limited features than FACESTM
4.0. In September 2004, the Company entered into a contract with Wards Natural
Science, a division of VWR International, a worldwide provider of integrated law
enforcement and security solutions. The contract launched a joint initiative to
develop forensic kits based on FACES TM EDU technology, designed for the
education industry. The products are being marketed and sold through Ward's
sales channels including an existing client base of more than 1,400,000
teachers. In the nine months ending March 31, 2005, Wards accounted for 38% of
our revenues, other than Wards, no customer was responsible for more than 3% of
our recognized revenues for the nine month period ending March 31, 2005.

We market and sell our products both directly through our own sales force as
well as indirectly through resellers and distributors in the United States. To
date, most of our sales have been in North America; however, we are seeking
relationships with international distributors and resellers to sell our products
internationally. We are continually reviewing our sales and distribution
strategy to seek ways to increase sales of our product and revenues.

Cost of revenues currently consists of inventory, product shipping and packaging
costs.

Sales and marketing expenses consist primarily of salaries, commissions and
related expenses for personnel engaged in marketing, sales and customer support,
as well as costs associated with promotional activities and travel expenses. We
intend to expand our sales and marketing operations and efforts for our
products, both domestically and internationally, in order to increase market
awareness and to generate increased sales of our products. Although, we cannot
be certain that any increased expenditures will result in higher revenues, we
believe that continued investment in sales and marketing is critical to our
success and expect these expenses to increase in absolute dollars in the future
and as a percent of revenue.

                                       9
<PAGE>

General and administrative expense consists primarily of salaries and related
expenses for executive, finance, accounting, legal, information technology,
facilities, and human resources personnel. We expect that these expenses will
stabilize in the next six to twelve months as we meet our immediate staffing
needs.

Research and development expense consists primarily of salaries and related
personnel expense, fees paid to consultants and outside service providers, and
other expenses related to the design, development, testing and enhancement of
our products. We have begun the planning and development process for the next
generation of our FACES(TM) product. We also continue to seek other products and
intellectual property that could be used to enhance our current product and/or
product line. We expense our research and development costs as they are
incurred.

On April 15, 2004, the Company and Wherify jointly announced the signing of a
definitive agreement under which the Company and Wherify would merge. Under the
proposed transaction, the Company is currently expected to issue to Wherify
shareholders approximately 44 million newly issued shares of the Company common
stock and the shareholders of Wherify are currently expected to hold
approximately 77% of the combined company. The proposed transaction has been
unanimously approved by our board of directors and the board of directors of
Wherify and is subject to certain terms and conditions, including approval by
both the stockholders of the Company and the shareholders of Wherify. Assuming
completion of the transaction, for every share of Wherify capital stock held as
of the record date, each Wherify stockholder is currently expected to receive
approximately 4.76 shares of the Company's common stock. If either party
terminates the proposed merger under circumstances specified in the merger
agreement the terminating party will be required to pay the other party a
termination fee of $500,000.

RESULTS OF OPERATIONS

Revenues increased 28% from $210,512 in the nine months ended March 31, 2004 to
$268,589 in the nine months ended March 31, 2005. Revenues decreased 24% from
$72,158 for the three months ended March 31, 2004 to $55,076 for the three
months ended March 31, 2005. Revenue increase year to date is primarily due to
the purchase by Wards of $100,000 of our product. The Company booked this sale
in the quarter ended September 30, 2004, and recognized revenues from this sale
in the quarter ended December 31, 2004. Sales of our FACESTM EDU product
represented approximately 26% and 59% of revenues for the three and nine months
ended March 31, 2005, respectively. The sale to Wards, of FACESTM EDU
represented approximately 38% of revenues for the nine months ended March 31,
2005. Sales of FACESTM 4.0 represented approximately 69% and 37% of revenues for
the three and nine months ended March 31, 2005, respectively.

Selling expense decreased 20% to $241,726 for the nine months ended March 31,
2005 from $303,613 for the nine months ended March 31, 2004. Of these expenses,
$181,000 were paid with shares of the Company's common stock. In the three
months ended March 31, 2005, selling expense decreased 44% to 68,163 from
$122,799 for the three months ended March 31, 2004. The decrease in selling
expense in the nine and three months ended March 31, 2005 was primarily due to
reduction of one salesperson compared to the same period in the previous fiscal
year. The Company also eliminated one of its marketing consultants at the end of
the previous quarter. The combined savings of this reduction in personnel was
approximately $52,500 and $22,500 for the nine and three month periods,
respectively.

General and administrative expense decreased 36% to $3,008,401 for the nine
months ended March 31, 2005 from $4,644,848 for the nine months ended March 31,
2004. The decrease in spending was primarily due to reduced legal fees of
$546,554, business consulting fees of $506,729 and investor relations fees of
$646,263. Of these expenses, approximately $1,421,000 was paid in shares of the
Company's common stock. In the three months ended March 31, 2005, general and
administrative expense decreased 38% to $1,466,094 compared to $2,376,315 for
the three months ended March 31, 2004. The decrease in general and
administrative expense, was primarily a result of lower professional fees.
Although the Company incurred increased investment banking fees of $442,165,
primarily as a result of the convertible debt offering the Company undertook in
January 2005, this was offset by lower legal fees of $304,027, business
consulting fees of $249,877, and investor relations fees of $755,219. In the
three month period ended March 31, approximately $501,000 of these expenses were
paid with shares of the Company's common stock.

                                       10
<PAGE>

Research and development expense decreased 88% to $20,117 for the nine months
ended March 31, 2005 from $171,918 for the nine months ended March 31, 2004.
Research and development expense decreased 73% to $5,917 for the nine months
ended March 31, 2005 from $21,750 for the three months ended March 31, 2004. The
decrease in research and development costs are primarily due to the fact that
the Company has not yet begun development of its next generation product, as
well as a decrease in personnel of one employee. We currently anticipate
research and development expense for the next generation of FACESTM to increase
beginning in late summer to early fall of 2005 as the Company begins the
development of its next generation product.

Interest expense increased 97% to $2,179,190 for the nine months ended March 31,
2005 from $1,108,009 for the nine months ended March 31, 2004. Interest expense
increased 363% to $1,775,356 for the three months ended March 31, 2005 from
$383,561 for the three months ended March 31, 2004. For both the nine and three
month periods, the increase is attributable to the amortization on beneficial
conversion price and warrant discounts related to the financing the Company
completed on January 11, 2005.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2005, we had cash and cash equivalents of approximately
$1,904,000. Net cash used in operations was approximately $1,814,000 for the
nine months ended March 31, 2005 as compared with approximately $723,000 for the
nine months ended March 31, 2004. The cash used by operations consisted of a net
loss of approximately $5,230,000 primarily offset by noncash expenses of
approximately $3,754,000, consisting of option and warrant expenses of
approximately $112,000, stock issued for services of approximately $1,566,000,
amortization of debt discount of approximately $2,038,000 and depreciation and
amortization expense of approximately $38,000. The remaining offset was
primarily related to committed stock issued for approximately $246,000 and pay
down of accounts payable of approximately $63,000.

Net cash provided by financing activities was $3,712,000 and $699,700 for the
nine months ended March 31, 2005 and 2004, respectively. Both periods included
cash received from option and warrant exercises of $107,000 in 2005 and $49,700
in 2004. The balance was made up of cash received from the issuance of short
term convertible debentures in 2005 and long term convertible debentures in
2004.

From our inception, we have financed our operations primarily through private
sales of common stock and convertible debentures. We have negative working
capital totaling approximately $1,686,000 which consists primarily of
approximately $3,155,000 of short term convertible debentures, which is net of
debt discounts (for price discounts and warrant issuances) totaling
approximately $2,038,333 and is exclusive of accrued interest of approximately
$275,000, all offset by current assets of approximately $2,020,000.

There is a "Going Concern" reservation in our auditor's opinion for the year
ended June 30, 2004. In order to address our liquidity issues, we sold an
aggregate of $3,300,000 in convertible debentures on January 11, 2005. At May 5,
2005, we had cash of approximately $1,675,000, accounts payable of approximately
$79,000, and accrued liabilities, excluding interest of approximately $2,000. If
all remaining debentures are converted into common stock, the Company believes
it has sufficient cash to operate until the merger with Wherify is completed or
in the event the merger is not completed, to operate the Company for twelve to
fifteen months.

At March 31, 2005, the Company had $3,025,348 in outstanding principal and
accrued interest pursuant to outstanding convertible debentures. Of this amount
$1,075,755 are due and payable upon the earlier of the completion of the merger
with Wherify or March 31, 2005. The convertible debentures issued on January 11,
2005 automatically convert into shares of the Company's common stock at the
Conversion Price upon the effectiveness of the Resale Registration Statement,
which occurred on April 11, 2005. On April 11, 2005, the Company issued
1,808,054 shares in conversion of a total of $3,616,118 in principal and $60,118
of interest related to these debentures.

We currently have no borrowings available to us under any credit arrangement,
and we will look for additional debt and equity financings should current cash
and cash provided from operations be insufficient to support our debt
obligations and our ongoing operations of the business. Adequate funds may not
be available on terms acceptable to us. If additional funds are raised through
the issuance of equity securities, dilution to existing stockholders may result.
If funding is insufficient at any time in the future, we may be unable to
develop or enhance our products or services, take advantage of business
opportunities or respond to competitive pressures, any of which could have a
material adverse effect on our financial position, results of operations and
cash flows. The Company has no material commitments for capital expenditures and
there are no anticipated material capital expenditures that are reasonably
expected to have a material impact on the Company.

                                       11
<PAGE>

Even with financing, there can be no assurance that we will achieve
profitability. Due to these factors, we believe that period-to-period
comparisons of our results of operations are not necessarily a good indication
of future performance. The results of operations in some future periods may be
below the expectations of analysts and investors.

We expect operating losses and negative operating cash flows to continue for at
least the next twelve months, because of expected increases in expenses related
to brand development; marketing and other promotional activities; increases in
personnel; the expansion of infrastructure and customer support services;
strategic relationship development; and potential acquisitions of related
complementary businesses. We believe the expenses incurred here will help us to
build the infrastructure necessary to increase revenues both through organic
growth and through acquisitions, which we believe hold the key to our future
revenue growth. We feel it will take additional products, either created in
house or acquired through acquisitions, to help us increase revenue, and
ultimately to reach profitability. However, we can make no assurances that these
activities will achieve the desired results of increased revenues, nor that any
increase in revenues will be enough to bring the company to profitability and
positive cash flow.


RECENT EVENTS

On April 1, 2005, IQ Biometrix entered into an agreement with Wherify to lease
office space from Wherify. IQ Biometrix's former lease expired January 31, 2005
and was renewed on a month to month basis. As of March 31, the space was no
longer available on a month to month basis. IQ Biometrix will not be integrated
with the Wherify employees or computer systems, and will run autonomously in its
own separate area. The lease is for three months and can be cancelled by either
party with 30 days notice. IQ Biometrix will also contract for technology
support from Wherify as well.

On April 11, 2005, the SEC declared the Resale Registration Statement effective.
As a result, the convertible debentures issued by the Company on January 11,
2005 automatically converted into shares of IQB common stock at the conversion
price of $2.00 per share. IQ Biometrix, at its option, also converted the
accrued interest related to these debentures into shares of its common stock.
Thus, on April 11, 2005, IQ Biometrix issued 1,808,054 shares of its common
stock in conversion of $3,616,118 in principal and $60,118 of interest.

On April 18, 2005, IQ Biometrix and Wherify entered into Amendment No. 4 to
Agreement and Plan of Merger to amend the condition to the merger that Wherify
obtain signed lock-up agreements from 90% of the Wherify stockholders who hold
0.5% or more of Wherify capital stock to require that Wherify obtain signed
lock-up agreements from only 66 2/3% of such stockholders.

On April 26, 2005, IQ Biometrix issued 234,813 shares of its common stock upon
conversion of outstanding principal and interest of $400,000 and $69,631,
respectively, under four convertible debentures. The debentures all had a
conversion rate of $2.00, and were originally issued in June, September and
December 2002, and June 2003.

On May 7, 2005, IQ Biometrix issued 151,787 shares of its common stock upon
conversion of outstanding principal and interest of $100,000 and $21,431,
respectively, under one convertible debenture. The debenture had a conversion
rate of $0.80, and was originally issued in April 2003.

On May 7, 2005, IQ Biometrix issued 165,565 shares of its common stock pursuant
to the cashless exercise of outstanding warrants, including 159,965 shares of
its common stock to Forte Capital Partners, LLC, whose managing partner is
Daniel McKelvey, one of IQ Biometrix s board of directors.

CRITICAL ACCOUNTING POLICIES

INTANGIBLE ASSETS

Our intangible assets consist of a customer list acquired in the JVWEB / IQ
Biometrix acquisition in March 2002 and purchased software code. We recorded the
cost of the software and amortize the cost over the estimated useful life of 3
years. We review the value of our intangible assets quarterly and determine its
value. At March 31, 2005 we had a net carrying value for our intangible assets
of $54,750.

                                       12
<PAGE>

REVENUE RECOGNITION

We adopted revenue recognition policies to comply fully with the guidance in
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements." Revenue consists of shipped customer orders and completed services.
We have an increasing sale order backlog, however those orders are not
considered revenue until the order is shipped and services are rendered.

We account for the licensing of software in accordance with American Institute
of Certified Public Accountants (AICPA) Statement of Position (SOP) 97-2,
Software Revenue Recognition. The application of SOP 97-2 requires judgment,
including whether a software arrangement includes multiple elements, and if so,
whether vendor-specific objective evidence (VSOE) of fair value exists for those
elements. Changes to the elements in a software arrangement, the ability to
identify VSOE for those elements, the fair value of the respective elements, and
changes to a product's estimated life cycle could materially impact the amount
of earned and unearned revenue. Judgment is also required to assess whether
future releases of certain software represent new products or upgrades and
enhancements to existing products.

INFLATION

In our opinion, inflation has not had a material effect on our operations.

                              RISKS RELATED TO IQB
                    RISKS RELATED TO IQB'S FINANCIAL RESULTS

IQB Currently Lacks Liquidity.

      To date, IQB has not had any meaningful revenue and there is a "Going
Concern" reservation in its auditor's opinion for the year ended June 30, 2004.
IQB has heretofore financed its business through the sale of securities. The
proceeds from its January 11, 2005 financing have been and will continue to be
used for working capital purposes, research and development and sales and
marketing activities. As of May 5, 2005, IQB had cash and cash equivalents of
approximately $1.675 million and current liabilities of approximately $1.173
million consisting primarily of convertible debentures and accrued interest. IQB
expects the remaining convertible debentures to convert to common stock upon
completion of the merger. However, if a substantial portion of these debentures
do not convert, this would negatively impact the ability of IQB and the combined
company to meet its working capital requirements and IQB's and the combined
company's current cash and cash equivalents may not be sufficient to meet their
anticipated cash needs for working capital and capital expenditures for the next
twelve months.

      IQB currently does not have any credit arrangements. IQB may not be able
to obtain additional debt or equity financing, if the need for additional
financing should arise. If successful in raising additional financing, IQB may
not be able to do so on terms that are not excessively dilutive to existing
stockholders or less costly than existing sources of financing. Failure to
secure additional financing in a timely manner and on favorable terms in the
future could have a material adverse impact on IQB's financial performance and
stock price and require IQB to implement certain cost reduction initiatives and
curtail its operations.

IQB's Limited Operating History Makes An Evaluation Of IQB And Its Future
Extremely Difficult.

      IQB has generated very limited revenues from the sale of its FACES
software. Given IQB's extremely limited revenues to date and IQB's current
limited cash resources, if IQB's revenues in any period are lower than IQB
projects, IQB's business, results of operations and financial condition would be
materially and adversely affected. In addition, IQB's ability to forecast
accurately IQB's quarterly revenue and expenses is limited due to a number of
factors, including:

o     The fact that IQB currently derive substantially all of its revenues from
      sales of IQB's FACES(TM) software product and IQB's expectation that swill
      continue to derive substantially all of IQB's revenues from this product
      for the foreseeable future;

o     The market's limited acceptance of its product to date;

o     IQB's ability to develop and increase its customer base;

o     IQB's need to expand its distribution capability;

                                       13
<PAGE>

o     IQB's ability to implement and successfully execute its sales and
      marketing strategy;

o     IQB's need to introduce new products and services to respond to
      technological and competitive developments and customer needs;

o     IQB's ability to manage the growth it is seeking to realize;

o     IQB's ability to respond to competitive developments;

o     IQB's dependence on its current executive officers and key employees; and

o     IQB's ability to provide superior customer service and order fulfillment.

      There can be no assurance that we can successfully address some or all of
these risks but IQB's failure to do so could materially and adversely affect its
business, prospects, financial condition and results of operations.

IQB Has A History Of Losses And Does Not Know When It May Become Profitable Or
If It Does Become Profitable Whether It Can Sustain Profitability.

      As of March 31, 2005, IQB had incurred net losses of $18.5 million since
inception. As of March 31, 2005, IQB had an accumulated stockholder deficit of
$1.6 million and expects to continue to incur net losses for the foreseeable
future. IQB also expects to incur significant ongoing product development, sales
and marketing and general and administrative expenses. As a result, IQB will
need to generate increased revenues to achieve profitability, which IQB may not
be able to do. To increase its revenues, IQB must increase sales of its existing
products and introduce new products that it has either developed internally or
acquired through other arrangements. While IQB believes it can grow its revenues
from its existing products through internal actions, the rate of growth will
most likely not allow it to achieve profitability in a timely manner. Therefore,
it continues to evaluate business combinations and partnering arrangements in
IQB's core business areas that would improve IQB's market share position,
increase IQB's revenue, improve on IQB's net loss position and accelerate IQB's
ability to reach profitability. While IQB is seeking acquisitions that it
believes would improve its financial results, a completed acquisition may not
provide the anticipated financial results, thus leading to continuing net
losses. Even if IQB achieves profitability, it may not be able to sustain or
increase profitability on a quarterly or annual basis. IQB is seeking to
increase its revenues by increasing the sales of IQB's existing products through
the expansion of its marketing program and sales force. IQB is also exploring
the development of new products that are synergistic to its existing business
and actively seeking out acquisition and partnering prospects that would
complement its existing product offerings, augment its market coverage, or
enhance its technological capabilities. There can be no assurance that it will
be successful in increasing sales of its existing products or in developing or
locating new products. Even if IQB were able to develop or acquire new products,
there can be no assurance that sales of these new products would result in
increased revenues, in which case IQB's business, results of operations and
financial condition would be materially and adversely affected.

Fluctuations In IQB's Business And Operating Results May Materially And
Adversely Affect The Trading Price Of IQB's Common Stock.

      IQB expects that its operating results will fluctuate in the future due to
a number of factors many of which are outside of IQB's control. These factors
include the following:

o     Customer concentration; most of IQB's current and prospective customers
      are local, state and federal law enforcement agencies, many of which are
      experiencing their worst budget crisis in years;

o     Budgetary cycles of governmental agencies;

o     Overall demand for IQB's products;

o     IQB's ability to attract new customers at a steady rate;

o     The rate at which IQB or its competitors introduce new products, the rate
      at which these products acquire market acceptance, and the cost required
      to develop these products;

                                       14
<PAGE>

o     Technical defects in IQB's products that could delay product shipments or
      increase the costs of introducing new products;

o     Changes in the pricing of IQB's products or those of its competitors;

o     The amount and timing of capital expenditures and other costs relating to
      the expansion of IQB's operations;

o     Costs relating to IQB's marketing programs and its business in general;
      and

o     General economic conditions.

      Any of the foregoing factors may cause IQB's operating expenses to be
disproportionately high or cause IQB's revenue and operating results to
fluctuate causing IQB's business, financial condition and operating results to
be adversely affected. In addition, to respond to changes in IQB's competitive
environment, it may occasionally make certain decisions from which it may
benefit in the long run. However, in the short run, such decisions could
materially and adversely affect IQB's quarterly results of operations and
financial condition. Due to all of the foregoing factors, in some future quarter
IQB's operating results may fall below IQB's expectations and those of IQB's
stockholders. In such event, the trading price of IQB's common stock could be
materially adversely affected. Further, IQB believes that period-to-period
comparisons of its financial results may not be very meaningful. Accordingly,
you should not conclude that such comparisons indicate future performance.

                         RISKS RELATED TO IQB'S BUSINESS

IQB's Business Will Not Grow Unless The Market For Biometric Solutions Expands
Both Domestically And Internationally.

      IQB's revenues are derived from the sale of biometric products. Biometric
solutions have not gained widespread commercial acceptance. IQB cannot
accurately predict the future growth rate, if any, or the ultimate size of the
biometric technology market. The expansion of the market for IQB's products and
services depends on a number of factors including without limitation:

o     The cost, performance and reliability of IQB's products and services and
      the products and services of competitors;

o     Customers' perception of the perceived benefit of biometric solutions;

o     Public perceptions of the intrusiveness of these solutions and the manner
      in which firms are using the information collected;

o     Public perceptions regarding the confidentiality of private information;

o     Proposed or enacted legislation related to privacy of information;

o     Customers' satisfaction with IQB's products and services; and

o     Marketing efforts and publicity regarding these products and services.

If IQB Fails To Generate Repeat Or Expanded Business From Its Current And
Prospective Customers, Its Business Will Be Seriously Harmed.

      IQB believes that its success will depend on the continued growth of its
customer base as well as the sale of new and enhanced products to its existing
customers. Over 150,000 licenses to pre-4.0 versions of IQB's FACES(TM) product
have been distributed to law enforcement agencies in the United States and IQB
expects to focus a large part of its sales and marketing efforts with respect to

                                       15
<PAGE>

new products on these existing customers. If IQB is to be successful in
generating sales from its existing customers, it will need to convince them that
its new products provide them with additional benefits. In addition, IQB's
ability to attract new customers will depend on a variety of factors, including
the reliability and cost-effectiveness of its products and its ability to
effectively market its products. If IQB fails to generate repeat and expanded
business from current and prospective customers, its operating results will be
seriously harmed.

If IQB Fails To Promote Its Brand Name Successfully Or If It Incurs Significant
Expenses Promoting And Maintaining Its Brand Name, Its Business Could Be Harmed.

      Due in part to the emerging nature of the market for IQB's products and
the substantial resources available to some of IQB's competitors, there may be a
limited time opportunity for IQB to achieve and maintain a significant market
share. Developing and maintaining awareness of IQB's brand name is critical to
achieving widespread acceptance of IQB's products. Furthermore, IQB believes
that the importance of brand recognition will increase as competition in the
market for products such as IQB's increases. Successfully promoting and
positioning IQB's brand will depend largely on the effectiveness of its
marketing efforts. To attract and retain customers and to promote and maintain
IQB's brands in response to competitive pressures, IQB may need to increase its
marketing budget or otherwise to increase substantially its financial commitment
to creating and maintaining brand loyalty among vendors and consumers. If IQB is
unable for financial reasons to increase its sales and marketing budget or if it
is unable to successfully promote its brand, its business will suffer.

IQB's Revenues Are Dependent Upon The Availability And Timely Distribution Of
Governmental Funding.

      Many of IQB's prospective customers are local, state and federal law
enforcement and other governmental and quasi-governmental agencies. The ability
of these prospective customers to purchase IQB's products are heavily dependent
on the availability or continued availability of federal, state or local
government funds or grants and general tax funding, including funding by the
Office of Homeland Security. Such funding may not be approved or, if approved,
it may not be available for the purchase of IQB's products or solutions, and
even if such funding is approved and available, such funds may be subject to
termination at any time at the sole discretion of the government body providing
or receiving such funds.

Rapid Technological Change In IQB's Market Could Cause Its Products To Become
Obsolete Or Require It To Redesign Its Products.

      IQB expects that its market will be characterized by rapid technological
change, frequent new product introductions and enhancements, uncertain product
life cycles, changing customer demands and evolving industry standards, any of
which can render existing products obsolete. IQB believes that its future
success will depend in large part on its ability to develop new and effective
products in a timely manner and on a cost effective basis. As a result of the
complexities inherent in its product, major new products and product
enhancements can require long development and testing periods, which may result
in significant delays in the general availability of new releases or significant
problems in the implementation of new releases. In addition, if IQB or its
competitors announce or introduce new products IQB's current or prospective
customers may defer or cancel purchases of IQB's products, which could
materially adversely affect its business, operating results and financial
condition. IQB's failure to develop successfully, on a timely and cost effective
basis, new products or new product enhancements that respond to technological
change, evolving industry standards or customer requirements would have a
material adverse affect on IQB's business, operating results and financial
condition.

If IQB Loses Any Key Personnel, Or Fails To Attract And Retain Additional
Personnel, It May Be Unable To Continue Developing Its Business And Product
Line.

      The loss of the services of one or more of IQB's key personnel could
materially adversely affect its business, operating results and financial
condition. IQB cannot guarantee that it will be able to retain its key
personnel. IQB's future success also depends on its continuing ability to
attract, assimilate and retain highly qualified sales, technical and managerial
personnel. Competition for these individuals is intense and there can be no
assurance that IQB can attract, assimilate or retain necessary personnel in the
future.

Failure To Expand IQB's Sales And Distribution Channels And Manage Its Sales And
Distribution Relationships Could Significantly Reduce Its Revenues.

      IQB sells its products through a network of distributors and resellers.
IQB's success will depend on its ability to manage its relationships with, and
expand its existing network of distributors. The sale of IQB's products by
distributors and resellers depends on the effectiveness of the selling efforts
of these distributors and resellers and their ability to meet their own
responsibilities under agreements with customers in a timely manner. At times,
IQB's distributors and resellers may also offer products of IQB's competitors


                                       16
<PAGE>

and IQB's agreements with them have no minimum purchase commitments. IQB cannot
assure you that it will be able to expand its distribution channels, manage its
distribution relationships successfully or that its distributors and resellers
will market and sell its products effectively. IQB's failure to manage
successfully its distribution relationships or the failure of IQB's distributors
and resellers to sell IQB's products could reduce IQB's revenues and have a
material adverse effect on its business, results of operations and financial
condition.

If The Use Of IQB's Products Is Deemed To Be An Invasion Of Personal Privacy
Rights, IQB's Business May Suffer.

      From time to time, biometric products such as IQB's have been the focus of
organizations and individuals seeking to curtail or eliminate the use of these
technologies on the grounds that these technologies may be used to diminish
personal privacy rights. In the event that such initiatives result in
restrictive legislation, the market for IQB's products may be adversely
affected.

If IQB Grows Its Business As Planned, IQB May Not Be Able To Manage Properly Its
Growth, Which May Impede Its Ability To Achieve Profitability.

      If IQB is successful in growing its business as planned, its operations
may expand rapidly and significantly. Any rapid growth could put a significant
strain on its management, and its operational and financial resources. In order
to manage the growth of IQB's operations, it will be required to expand existing
operations, to implement new operational, financial and inventory systems,
procedures and controls, including improvement of its financial and other
internal management systems, and to hire, train, manage and expand its employee
base. If IQB is unable to manage growth effectively, its business, results of
operations and financial condition will be materially adversely affected. In
addition, if IQB is successful in growing its business as planned, it expects
operating expenses to increase, and as a result, it will need to generate
increased revenue to achieve and maintain profitability. In particular, as IQB
grows its business, IQB will incur additional costs and expenses related to:

o     The expansion of its sales force and distribution channels;

o     The expansion of its product and services offerings;

o     Development of relationships with strategic business partners;

o     The expansion of management and infrastructure; and

o     Brand development, marketing and other promotional activities.

      Costs associated with these activities could delay IQB's ability to
achieve or maintain profitability.

IQB's Acquisition Strategy May Be Unsuccessful, Which May Harm Its Ability To
Grow Revenues.

      IQB believes that its future success depends on its ability to introduce
and market new products and services that it has either developed internally or
acquired through strategic combinations or partnering relationships. IQB intends
to actively seek out acquisition and partnering prospects that would complement
its existing product offerings, augment its market coverage, or enhance its
technological capabilities. This strategy is subject to inherent risks
associated with the potential integration of additional operations, the extent
of management time and attention required, and related costs and expenses
associated with the execution of this strategy.

IQB Will Face Technical, Operational And Strategic Challenges That May Prevent
It From Successfully Integrating Businesses That It May Acquire In The Future.

      Execution of IQB's acquisition and partnering strategy could result in a
number of financial consequences, including without limitation:

o     Use of cash resources that would reduce IQB's financial reserves;

o     Issuance of stock that would dilute IQB's current stockholders' percentage
      ownership;

                                       17
<PAGE>

o     Incurrence of debt;

o     Assumption of liabilities;

o     Increased operational and administrative complexity of IQB's business;

o     Higher fixed expenses, which require a higher level of revenues to
      maintain gross margins; and

o     Incurrence of expenses related to in-process research and development and
      the possible impairment of goodwill and other intangible assets, which
      could result in large one-time write-offs.

      Furthermore, acquisitions involve numerous operational risks, including:

o     Problems related to the integration and management of acquired technology,
      products, operations, information systems and personnel of the acquired
      company;

o     Problems completing product development programs of the acquired company
      and consolidating research and development efforts;

o     Unanticipated costs or liabilities;

o     Diversion of management's attention from IQB's core business;

o     Diversion of resources from IQB's existing business, products or
      technologies;

o     Adverse effects on existing business relationships with suppliers and
      customers;

o     Risks associated with entering markets in which IQB has no or limited
      prior experience; and

o     Potential loss of key employees, particularly those of the acquired
      organizations.

      The integration of businesses that IQB may acquire could be a complex,
time consuming and expensive process. IQB must operate as a combined
organization utilizing common information and communication systems, operating
procedures, financial controls and human resources practices to be successful.
IQB cannot guarantee that any future acquisitions will result in sufficient
revenues or earnings to recover IQB's investment in, or expenses related to,
these acquisitions or that any synergies will develop. If IQB is not successful
in integrating acquired businesses or if expected earnings or synergies do not
materialize, IQB could be forced to attempt to resell or cease operations of
acquired businesses. In either event, IQB would likely incur significant
expenses as well as non-cash charges to write-off acquired assets, which could
seriously harm IQB's financial condition and operating results.

IQB's Financial Performance May Be Adversely Affected By Competition.

      The market for IQB's products is characterized by significant and
increasing competition. Most of IQB's current and potential competitors have
longer operating histories and significantly greater financial, technical and
marketing resources than IQB does. IQB expects competition to intensify in the
future as new companies enter the market on a regular basis. There can be no
assurance that existing or future competitors will not develop or offer products
that provide significant performance, price or other advantages over those IQB
offers. Such a development could result in price reductions or displacement of
IQB's products, which could materially adversely affect IQB's business, results
of operations and financial condition.

                   RISKS RELATED TO DEVELOPING IQB'S PRODUCTS

Substantially All Of The Software Development For IQB's FACES(TM) 4.0 Product
Was Outsourced To A Third Party. If IQB Continues To Use Third Party Developers
For Future Product Releases, It May In The Future Be Subject To Delays In
Product Releases, Enhancements And Upgrades As Well As Quality Control Issues.

                                       18
<PAGE>

IQB outsourced the development of its FACES(TM) 4.0 software to Enterprise
Cogniscience, Inc. an independent software developer. Although, FACES(TM) 4.0
was commercially released in 2003, IQB has discovered and may continue to
discover errors and defects in FACES(TM) 4.0. The fact that IQB does not
directly control the development of its product subjects it to the risk that it
may experience delays in issuing error corrections or enhancements to its most
recent release. Recently, Enterprise Cogniscience was acquired by a third party.
While, the agreement between IQB and Enterprise Cogniscience is binding upon any
successor-in-interest to Enterprise Cogniscience, IQB cannot guarantee that the
acquirer will devote as many resources to fulfilling the agreement as Enterprise
Cogniscience did before the acquisition or that the quality of their work will
meet IQB's specifications. If the successor-in-interest fails to devote as many
resources to IQB's product or if the quality of their work does not meet IQB's
specification, it could lead to delays in releasing any error corrections or bug
fixes. In addition, if IQB continues to use Enterprise Cogniscience or another
independent software developer to develop future releases or products, IQB may
experience delays in future product releases, enhancements and upgrades, as well
as difficulties in maintaining quality control, which may lead to higher than
expected error and defect rates, all of which could have an adverse effect on
IQB's business, results of operations and financial condition.

IQB Depends On Third-Party Technology For The Development Of Its Software. If
IQB Were To Terminate Its Relationship With Such Third Party Provider, It Could
Experience Delays In Future Product Releases And Improvements.

Enterprise Cogniscience, the third party software developer that assisted IQB in
the development of FACES(TM) 4.0, used a proprietary environment based on LISP
to develop IQB's software. If IQB were to bring its software development
in-house or if IQB's relationship with Enterprise Cogniscience were otherwise to
terminate, IQB would need to port its source code to a new development
environment, which may cause it to experience delays in future product releases,
enhancements and upgrades, as well as higher than expected error and defect
rates, all of which could have an adverse effect on IQB's business, results of
operations and financial condition.

IQB's Software Products Are Complex And May Contain Unknown Defects That Could
Result In Numerous Adverse Consequences.

Complex software products such as IQB's often contain latent errors or defects,
particularly when first introduced, when new versions or enhancements are
released and when configured for a specific customer. IQB currently has
experienced errors and defects in its most recent release. However, there can be
no assurance that despite testing, defects and errors will not be found in
current versions, new versions or enhancements of its products after
commencement of commercial shipments, any of which could result in damage to its
reputation, the loss of sales, a diversion of its product development resources,
or a delay in market acceptance, and thereby materially adversely affecting its
business, operating results and financial condition. The computer hardware
environment is characterized by a wide variety of non-standard configurations
that make prerelease testing for programming or compatibility errors very
difficult and time consuming. Despite IQB's testing, errors may still be
discovered in some new products or enhancements after the products or
enhancements are delivered to customers. Furthermore, there can be no assurance
that IQB's products will meet all of the expectations and demands of IQB's
customers. The failure of IQB's products to perform to customer expectations
could give rise to warranty claims. Any of these claims, even if not
meritorious, could result in costly litigation or divert management's attention
and resources. IQB does not currently maintain any general liability insurance.
Any general liability insurance that IQB may carry could be insufficient to
protect it from all liability that may be imposed under any asserted claims.
Although through IQB's license agreements with customers it tries to include
provisions designed to limit IQB's exposure to potential claims, such limitation
of liability provisions may not be effective as a result of existing or future
laws or unfavorable judicial decisions.

IQB Outsourced The Packaging Of Its FACES(TM) 4.0 Product To A Single Third
Party Contractor. If IQB Continues To Use Third Parties For The Packaging Of Its
Products, It May Experience In The Future Delays Or Disruptions In The
Distribution Of Its Products Or Quality Control Issues.

      IQB outsources the packaging of its products to a third party contractor.
Packaging consists of transferring IQB's software onto compact discs, quality
control testing and packaging the CDs and manuals. Although to date, IQB has not
experienced any packaging delays or quality control issues, if IQB continue to
use a third party contractor to package its products, IQB may experience delays,
disruptions or quality control problems, which could result in delays in
shipments of its products to its customers, which would negatively affect IQB's
revenues, competitive position and reputation.

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<PAGE>

                  RISKS RELATED TO IQB'S INTELLECTUAL PROPERTY

IQB's Success Depends On Its Ability To Protect Its Intellectual Property.

      IQB's future success depends upon its proprietary technology. IQB protects
its proprietary information through the use of patent, copyright, trademark,
trade secret laws, confidentiality procedures and contractual provisions.
Notwithstanding IQB's efforts to protect its proprietary technology, policing
unauthorized use or copying of its proprietary information is difficult,
unauthorized use or copying occurs from time to time, and litigation to enforce
intellectual property rights could result in significant costs and diversion of
resources. Any patents IQB obtains in the future may be circumvented,
challenged, invalidated or designed around by other companies. Despite its
efforts, IQB may be unable to prevent third parties from infringing upon or
misappropriating its intellectual property. Moreover, the laws of some foreign
jurisdictions do not afford the same degree of protection to IQB's proprietary
rights as do the laws of the United States, and effective trademark, copyright,
and trade secret protection may not be available in every country in which IQB's
products are distributed. Furthermore, IQB's competitors may independently
develop similar technology that substantially limits the value of IQB's
intellectual property. IQB's inability to adequately protect it's intellectual
property for these or other reasons, could materially and adversely affect IQB's
business, financial condition and operating results.

      In addition, third parties may at some point claim certain aspects of
IQB's business infringe their intellectual property rights. While IQB is not
currently subject to nor is aware of any such claim, any future claim (with or
without merit) could result in one or more of the following:

o     Significant litigation costs;

o     Diversion of resources, including the attention of management;

o     IQB's agreement to pay certain royalty and/or licensing fees; and

o     Cessation of IQB's rights to use, market, or distribute such technology.

      Any of these developments could materially and adversely affect IQB's
business, results of operations and financial condition. In the future, IQB may
also need to file lawsuits to enforce its intellectual property rights, to
protect its trade secrets, or to determine the validity and scope of the
proprietary rights of others. Whether successful or unsuccessful, such
litigation could result in substantial costs and diversion of resources. Such
costs and diversion could materially and adversely affect IQB's business,
results of operations and financial condition.

                   RISKS RELATED TO IQB'S CORPORATE GOVERNANCE

IQB's Authorized Preferred Stock Exposes Stockholders To Certain Risks.

      IQB's Certificate of Incorporation authorizes the issuance of up to
10,000,000 shares of preferred stock, par value $.01 per share. To date, no
shares of preferred stock have been issued. The authorized preferred stock
constitutes what is commonly referred to as "blank check" preferred stock. This
type of preferred stock allows the Board of Directors to divide the preferred
stock into series, to designate each series, to fix and determine separately for
each series any one or more relative rights and preferences and to issue shares
of any series without further stockholder approval. Preferred stock authorized
in series allows IQB's Board of Directors to hinder or discourage an attempt to
gain control of IQB by a merger, tender offer at a control premium price, proxy
contest or otherwise. Consequently, the preferred stock could entrench IQB's
management. In addition, the market price of IQB's common stock could be
materially and adversely affected by the existence of the preferred stock.

IQB's Common Stock Has A Limited And Volatile Trading History.

      IQB's common stock trades in the United States on the Over-the-Counter
Electronic Bulletin Board (OTCBB). The number of shares traded daily has been
extremely limited and the prices at which IQB's common stock has traded have
fluctuated fairly widely. See "MARKET PRICE DATA--IQB." There can be no
assurance as to the prices at which IQB's common stock will trade in the future,
although they may continue to fluctuate significantly. Prices for IQB's common
stock will be determined in the marketplace and may be influenced by many
factors, including the following:

o     The depth and liquidity of the markets for IQB's common stock;

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<PAGE>

o     Investor perception of us and the industry in which IQB operates;

o     General economic and market conditions; and

o     The effect that of any of the events highlighted in these Risk Factors may
      have on IQB's business should they occur.

IQB Has The Ability And The Obligation To Issue Additional Shares Of Common
Stock In The Future, And Such Future Issuance May Materially Adversely Affect
Stockholders.

IQB has various abilities and obligations to issue additional shares of common
stock in the future. These abilities and obligations include the following:

We have various abilities and obligations to issue additional shares of common
stock in the future. These abilities and obligations include the following:

o     as of May 8, 2005, approximately 235,455 shares of the Company's common
      stock were available for issuance to outside consultants to compensate
      them for services provided;

o     options to purchase approximately 702,602 shares of our common stock were
      outstanding as of May 8, 2005;

o     warrants to purchase approximately 1,348,603 shares of common stock were
      outstanding as of May 8, 2005; and

o     debentures and accrued interest, convertible into 704,186 shares of common
      stock are issued and outstanding as of May 8, 2005.

      The options, warrants and convertible debentures described above permit
the holders to purchase shares of common stock at specified prices. These
purchase prices may be less than the then current market price of IQB's common
stock. Any shares of common stock issued pursuant to these options or warrants
(or the convertible debentures described above) would further dilute the
percentage ownership of existing stockholders. The terms on which IQB could
obtain additional capital during the life of these options, warrants or
convertible debentures may be adversely affected because of such potential
dilution. Finally, IQB may issue additional shares in the future other than as
listed above. There are no preemptive rights in connection with IQB's common
stock. Thus, the percentage ownership of existing stockholders may be diluted if
IQB issues additional shares in the future. Future issuances of additional
shares could cause immediate and substantial dilution to the net tangible book
value of shares of common stock issued and outstanding immediately before such
transaction. Any future decrease in the net tangible book value of such issued
and outstanding shares could materially and adversely affect the market value of
these shares.

The Trading Price Of IQB's Common Stock Entails Additional Regulatory
Requirements, Which May Negatively Affect Such Trading Price.

The trading price of IQB's common stock has traded below $5.00 per share. If
IQB's stock trades below this price level, trading in IQB's common stock is
subject to the requirements of certain rules promulgated under the Securities
Exchange Act of 1934. These rules require additional disclosure by broker
dealers in connection with any trades generally involving any non-NASDAQ equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. Such rules require the delivery, before any "penny stock"
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must determine the suitability of the penny
stock for the purchaser and receive the purchaser's written consent to the
transaction before sale. The additional burdens imposed upon broker dealers by
such requirements may discourage broker-dealers from effecting transactions in
IQB's common stock affected. As a consequence, the market liquidity of IQB's
common stock could be severely limited by these regulatory requirements.

                                       21
<PAGE>

Stockholders Have No Guarantee Of Dividends.

      The holders of IQB's common stock are entitled to receive dividends when,
as and if declared by the IQB board of directors out of funds legally available
therefore. To date, IQB has not declared nor paid any cash dividends. The IQB
board of directors does not intend to declare any dividends in the foreseeable
future, but instead intends to retain all earnings, if any, for use in IQB's
business operations.

            RISKS RELATED TO THE MERGER

While IQB's Share Price Has Been Volatile In Recent Periods, The Merger Exchange
Ratio Is Fixed And No Adjustment To The Exchange Ratio Will Be Made As A Result
Of Fluctuations In The Market Price Of IQB's Common Stock.

      IQB's share price has been volatile in the past and may continue to be
volatile in the future. During the 12 month period ended March 31, 2005, the
closing price of IQB common stock ranged from $1.64 to $6.35. Upon completion of
the merger, each share of Wherify capital stock will be converted into the right
to receive approximately 4.76 shares of IQB common stock. The exchange ratio
will not change even if the market price of the IQB common stock fluctuates. In
addition, neither party may withdraw from the merger or resolicit the vote of
its stockholders solely because of changes in the market price of IQB common
stock. The specific dollar value of IQB common stock that Wherify stockholders
will receive upon completion of the merger will depend on the market value of
IQB common stock at that time. Wherify stockholders will not know the exact
value of IQB common stock to be issued pursuant to the merger at the time of the
Wherify special meeting of stockholders.

Wherify Stockholders May Be Limited In Their Ability To Sell, Transfer Or Pledge
Shares They Receive In The Merger For Certain Periods Of Time.

      Wherify has agreed to use its best efforts to obtain lock-up agreements
from all its stockholders. In addition, a condition to the merger is that 66
2/3% of the Wherify stockholders holding 0.5% or more of Wherify capital stock
must execute lock-up agreements. By executing the Lock-Up Agreement, a
stockholder agrees that, with respect to shares of IQB common stock received in
exchange for shares of Wherify capital stock acquired prior to December 20,
2004, the stockholder will not sell or otherwise dispose of such shares for a
period of 60 days after the consummation of the merger and will not sell or
otherwise transfer more than 50% of such shares until the date that is one year
after the consummation of the merger. The Lock-Up Agreement, however, does not
apply to shares of IQB issuable upon exercise of stock options held by those
employees who were not officers or directors of Wherify prior to the merger or
of the combined company immediately after the merger. However, the combined
company may, in its sole discretion, and at any time, consent to the sale of
shares by the former Wherify stockholders.

      Shares purchased after December 20, 2004 are subject to different lock-up
terms. Shares of IQB common stock received in exchange for shares of Wherify
Series C preferred stock purchased between December 20, 2004 and January 12,
2005 cannot be sold or otherwise disposed of for a period of 60 days after the
consummation of the merger and then are freely transferable. Shares of IQB
common stock received in exchange for shares of Wherify Series C preferred stock
purchased during the period from January 13 to January 19, 2005 cannot be sold
for 90 days after the merger and then no more than 50% of such shares can be
sold until the date that is 180 days after the date of the merger.

      The Lock-Up Agreement also provides that, notwithstanding the foregoing,
if at any time prior to the first anniversary of the merger agreement, Mr.
Scigliano or his successor on the IQB board of directors determines in his or
her reasonable judgment that IQB has suffered a material adverse effect, as
defined in the merger agreement, then the terms of any of the lock-up periods
that have not expired shall be extended by a period equal to the period during
which such material adverse effect is continuing.

A Significant Number Of Shareholders May Exercise Dissenter's Rights In
Connection With The Merger, Resulting In A Significant Cash Drain On The
Combined Company.

      Under Section 1300 of the California Corporations Code, holders of IQB and
Wherify common stock are entitled to dissenters' rights in the event they do not
vote in favor of the merger and they properly exercise their dissenters' rights.
If a significant number of IQB stockholders elect to exercise dissenters'
rights, the combined company could be required to make cash payments to those
stockholders as and when the company has sufficient legally available funds
therefor, resulting in a drain on the combined company's cash reserves in an
amount constituting a material adverse effect upon the combined company.

                                       22
<PAGE>

The Merger Could Cause IQB Or Wherify To Lose Key Personnel, Which Could
Materially Affect The Combined Company's Business And Require The Companies To
Incur Substantial Costs To Recruit Replacements For Lost Personnel.

      As a result of the announcement of the merger agreement, current and
prospective IQB and Wherify employees could experience uncertainty about their
future roles. This uncertainty may adversely affect the ability of the combined
company to attract and retain key management, sales, marketing and technical
personnel. IQB and Wherify employees may be concerned about the strategic focus
and direction of the combined company, and seek to find employment elsewhere.
Any failure to attract and retain key personnel prior to and after the
consummation of the merger could have a material adverse effect on the business
of the combined company.

Some Of IQB's And Wherify's Officers And Directors May Have Conflicts Of
Interest That May Influence Them To Support Or Approve Adoption Of The Merger
Agreement.

      Some officers and directors of IQB and Wherify participate in arrangements
that provide them with interests in the merger that are different from yours,
including, among others, the continued service as an officer or director of the
combined company, acceleration of stock and stock option vesting, retention and
severance benefits, continued indemnification and the potential ability to sell
an increased number of shares of the combined company due to acceleration of the
vesting periods for certain stock and stock options. These potential interests,
among others, may influence the officers and directors of IQB and Wherify to
support or approve adoption of the merger agreement. For a more detailed
discussion of these potential interests see "The Merger--Interests of Directors
and Officers of IQB and Wherify in the Merger" on page 55.

Failure To Complete The Merger May Result In IQB Or Wherify Paying A Termination
Fee To The Other Party And Could Harm The Trading Price Of IQB's Common Stock
And IQB's And Wherify's Respective Future Business And Operations.

      If the merger is not completed, IQB and Wherify may be subject to the
following risks:

o     If the merger agreement is terminated under specified circumstances, IQB
      will be required to pay Wherify a termination fee of $500,000;

o     If the merger agreement is terminated under specified circumstances,
      Wherify will be required to pay IQB a termination fee of $500,000;

o     The trading price of IQB common stock may decline;

o     Costs related to the merger, such as legal, accounting and fairness
      opinion fees, must be paid even if the merger is not completed; and

o     IQB and Wherify may be required to seek alternate sources of capital in
      the near term.

      In addition, if the merger agreement is terminated and either IQB's or
Wherify's board of directors determines to seek another merger or business
combination, there can be no assurance that IQB or Wherify will be able to find
a partner willing to pay an equivalent or more attractive price than the price
to be paid in the merger.

The Merger May Be Completed Even Though Material Adverse Changes May Result From
Industry-Wide Changes And Other Causes Subsequent To The Announcement Of The
Merger Agreement.

      In general, either party can refuse to complete the merger if there is a
material adverse change affecting the other party between April 14, 2004, and
the closing. However, some types of adverse changes, events, circumstances or
developments will not prevent the merger from going forward, even if they would
have a material adverse effect on IQB or Wherify, including adverse changes,
events, circumstances or developments resulting from:

                                       23
<PAGE>

o     General economic conditions or conditions generally affecting the markets
      for each of the company's products, except to the extent that IQB or
      Wherify is materially disproportionately affected;

o     The announcement or pendency of the merger or any other transactions
      contemplated by the merger agreement;

o     Compliance with the express terms and conditions of the merger agreement;

o     Any change in the stock price or trading volume of IQB or Wherify;

o     Any change in accounting requirements or principles or any change in
      applicable laws, rules or regulations or the interpretation thereof; or

o     The continued incurrence of losses by IQB or Wherify.

      If such adverse changes occur and the merger is completed, IQB's stock
price may suffer. This in turn may reduce the value of the merger to Wherify
stockholders.

Accounting Rules Applicable To The Combined Company Could Adversely Affect
Valuation.

      The name of the surviving entity of this business combination will be
Wherify Wireless, Inc. After the combination, the former stockholders of Wherify
will own approximately 77% of the stock of the combined entity calculated on a
fully diluted basis including all outstanding convertible securities. SEC
accounting rules call this a "reverse merger" whereby the financial history and
fiscal year-end of Wherify continue as the financial history and fiscal year-end
of the combined company excepting the capital structure, which legally becomes
that of IQB. All prior financial history of IQB is erased. The approximate 23%
of the combined entity remaining with the IQB shareholders will be valued based
upon the current stock price and all tangible and intangible assets of IQB
revalued to an amount equal to the product of the stock price multiplied by the
shares held by the former IQB stockholders plus IQB's total liabilities. The
excess of IQB's total valuation less identifiable assets and liabilities will be
accounted for as goodwill. All goodwill of IQB as of the date of the merger,
which at March 31, 2005 was estimated to be approximately $32 million, will be
written off on the closing of the merger.

      The goodwill and any identifiable intangibles recorded in the merger
transaction is reviewed annually and must be written down to its estimated fair
value based on management's view of the present value of future estimated cash
flows. Should IQB's products not prove successful in the market place, the value
of these products may be impaired, which would materially and adversely affect
the operating results of the combined company.

Item 3. CONTROLS AND PROCEDURES

In accordance with the Securities and Exchange Act of 1934, as amended, we
carried out an evaluation, under the supervision and with the participation of
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of our disclosure controls and procedures as of the end of
the period covered by this report. Based on this evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and
procedures were effective as of March 31, 2005, to provide reasonable assurance
that information required to be disclosed in our reports filed or submitted
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission's rules and
forms. There has been no change in our internal controls over financial
reporting that occurred during the three months ended March 31, 2005, that has
materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting


                                       24
<PAGE>


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

IQB anticipates it may become involved in pending litigation in the Superior
Court for the County of Fresno, State of California. The complaint in the matter
was filed on April 29, 2005. The principal parties are IQB and persons formerly
affiliated with or employed by IQB, including Sylvie Lariviere, Robert Rios,
Toni Lange, Fernand Beland, Frederic Serre and Roland Vroye. The complaint
alleges that IQB owes stock options to the plaintiffs in accordance with the
terms of alleged oral agreements entered in or about 2001. The complaint seeks
to recover damages and/or an award of options entitling the plaintiffs to
purchase IQB stock at a favorable price.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

RECENT SALES OF UNREGISTERED SECURITIES

On March 31, 2005 and April 1, 2005(,) respectively, the Company issued 50,000
and 25,000 shares of restricted stock to two firms engaged as consultants by the
Company for investor relations purposes. Both consultants are accredited
investors and the issuance of the common stock is claimed to be exempt from
registration pursuant to Sections 4(2) and 4(6) of the Securities Act of 1933.

ITEM 6. EXHIBITS

Exhibit No. Description

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

31.2  Certification of Chief Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.

32.1  Certification of Chief Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.

32.2  Certification of Chief Financial Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.


                                       25
<PAGE>


                                   SIGNATURES

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

                               IQ BIOMETRIX, INC.
                               ------------------
                                  (Registrant)





Date May 16, 2005                      /s/ William Scigliano
                                           ----------------------------
                                           President & CEO

Date May 16, 2005                      /s/ Michael Walsh
                                           ----------------------------
                                           Chief Financial Officer


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