UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A

               |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

     For the Fiscal Year Ended June 30, 2003 Commission File Number 0-24001

                               IQ BIOMETRIX, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

                                    Delaware
         --------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                   76-0552098
                      ------------------------------------
                      (I.R.S. Employer Identification No.)

                      39111 Paseo Padre Parkway, Suite 304
                            Fremont, California 94538
                                 (510) 795-2900
               ---------------------------------------------------
               (Address, including zip code, and telephone number,
                      including area code, of registrant's
                          principal executive offices)

               Securities registered pursuant to Section 12(b) of
                 the Act: NONE Securities registered pursuant to
                            Section 12(g) of the Act:

                               Title of Each Class
                          Common Stock, $.01 Par Value

Indicate by check mark whether registrant (1) has filed all reports to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.                                                 YES |X| NO |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. |_|

The issuer's revenues for the fiscal year ended June 30, 2003 were $105,800.

The aggregate market value of the voting stock held by non-affiliates of the
registrant on September 10, 2003 was approximately $11,992,035, based on the
closing price of such stock on such date. The number of shares outstanding of
the registrant's Common Stock, $.01 par value, as of September 10, 2003 was
20,912,708.

Transitional Small Business Disclosure format (Check one): YES |_|  NO |X|

<PAGE>

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Annual Report on Form 10-KSB (Annual
Report) contains predictions, estimates and other forward-looking
statementswithin 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 Annual Report, 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 the FACES technology will help solve the growing need
for effective crime and terrorism fighting tools as well as offering potential
applications relating to other industries;

      * our belief that the InterCode(TM) (an automatically generated ID Code)
is a breakthrough feature that can serve as the first international standard in
the transmission of facial recognition data. Each InterCode(TM) is unique with
respect to a particular face, just as fingerprints are to a person;

      * our belief that international markets represent a significant market for
our products and services;

      * 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 expectations regarding our receipt of revenues from training users
of our products;

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

      * our expectations regarding the abilities and use in certain locations of
our FACE SEARCH technology;

      * our intentions regarding the protection of our proprietary information;

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

      * our intentions regarding the continued development and refinement of our
existing products, and the development and commercialization of various computer
programs and products using the InterCode(TM) technology;

      * our intentions regarding our marketing and sales efforts.
<PAGE>

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

      * 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;

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

      * the availability and timely distribution of governmental funding;

      * our ability to obtain additional debt or equity financing at all or on
reasonable terms;

      * 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;


<PAGE>

ITEMS 1 AND 2. BUSINESS AND PROPERTIES.

                                  INTRODUCTION

IQ Biometrix, Inc., a Delaware corporation (the "Company") is a developer of
products for the facial composite software market and solutions for the needs of
law enforcement agencies and security industry customers. The headquarters
address of the Company is 39111 Paseo Padre Parkway, Suite 304, Fremont, CA
94538. The Company's telephone number is 510-795-2900. 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 Annual Report.

The Company is the successor to a merger involving JVWeb, Inc., a Delaware
corporation ("JVWeb"), and IQ Biometrix California, Inc., a California
corporation ("IQB"). JVWeb was incorporated on October 28, 1997 under the laws
of the State of Delaware. JVWeb was formed for purposes of pursuing electronic
commerce opportunities. Because of certain reasons (including the extreme
declines in the electronic commerce markets and JVWeb's financial resources),
JVWeb was largely unsuccessful in the pursuit of electronic commerce
opportunities. When JVWeb was unsuccessful in pursuing its business plan, JVWeb
discontinued its operation and began the active search for an appropriate merger
candidate in a transaction that would likely result in a change in the control
and management of JVWeb. JVWeb and IQ Biometrix were introduced by Eric McAfee,
who was a shareholder of CISystems, Inc. a company whose assets were acquired by
IQ Biometrix California prior to the Merger. Greg Micek was the President and
Chief Executive Officer of JVWeb and Greg Micek and Lewis Ball were members of
the Board of Directors of JVWeb.

IQB was formed in July 2001 for the purpose of engaging in the business of
developing products for the facial composite market. The FACES(TM) technology
was initially developed in the mid-1990's by Montreal-based entrepreneur Pierre
Cote, the founder of InterQuest Inc. ("InterQuest"). Cote is currently a
significant shareholder of ours. Investing more than US $4 million from
institutional and individual investors, InterQuest completed the product
development of the FACES technology, resulting in two patents applications and a
proprietary library of facial images built by taking studio photos of more than
4,000 people. In 1998, InterQuest launched FACES(TM) version 1.0, a desktop
software product that was eventually distributed to more than 150,000 licensees
worldwide, including approximately 5,000 police departments. In early 2000,
Pierre Cote and several other management members left InterQuest due to a
disagreement with InterQuest's largest shareholder about the timing of a public
offering by the company and other issues, and InterQuest subsequently filed for
bankruptcy in October 2000. In August 2001, another Canadian company acquired
the FACES technology out of the bankruptcy proceedings on a deferred payment
basis. When this acquiror was unable to raise funds to make the deferred
payments, it defaulted and filed for bankruptcy in September 2001. We believe
that this acquiror never commenced the exploitation of the FACES technology in
any meaningful manner. IQB was co-founded by Pierre Cote and other former
InterQuest management and shareholders.

On March 22, 2002, a merger (the "Merger") of IQB with and into IQB Acquisition
Corporation, a newly formed, wholly owned Delaware subsidiary of JVWeb (the
"Subsidiary"), was consummated in accordance with the terms, provisions and
conditions of an Agreement and Plan of Merger dated as of February, 27, 2002 by
and among JVWeb, the Subsidiary, IQB and Pierre Cote, Sylvie Lariviere and Eric
McAfee, each a shareholder of IQB. Pursuant to the Merger, IQB was merged with
and into the Subsidiary, with the Subsidiary's being the surviving corporation
and adopting the new corporate name of "I.Q.
Biometrix Operations, Inc."

In consideration for the Merger, the former shareholders of IQB received an
aggregate of 12,854,231 shares of JVWeb Common Stock (after taking into account
certain post-closing adjustments) valued at $22,109,277, constituting
approximately 85.51% of the Common Stock outstanding immediately after the
Merger. JVWeb also assumed IQB's obligations under its stock plan, thus
obligating itself to issue up to 1,738,160 additional shares of common stock
pursuant to options or stock grants issued pursuant to the assumed plan (after
taking into account certain post-closing adjustments). In connection with the
Merger, the Company acquired for $110,000 on March 27, 2002, ownership from the
secured lender of all of the right, title and interest to the FACES(TM)
business, the FACES(TM) software, two pending patent applications, trademarks,
the FACES(TM) library, FACES(TM) inventory and other items.

Because JVWeb had no significant assets or operations at the time of the Merger,
the Merger was treated for accounting purposes as a "reverse merger." Although
JVWeb was at the time a public company which acquired all of the assets of IQB,
for accounting purposes IQB was treated as the accounting acquiror and the
public company henceforth. For purposes hereof, the "Company" shall refer to the
publicly traded company after the Merger that is continuing the business of IQB.


                                       4
<PAGE>

                                  RISK FACTORS

THE SECURITIES COVERED BY THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK.
ACCORDINGLY, THEY SHOULD BE CONSIDERED EXTREMELY SPECULATIVE. YOU SHOULD READ
THE ENTIRE PROSPECTUS AND CAREFULLY CONSIDER, AMONG THE OTHER FACTORS AND
FINANCIAL DATA DESCRIBED HEREIN, THE FOLLOWING RISK FACTORS:

                     RISKS RELATED TO OUR FINANCIAL RESULTS

WE CURRENTLY LACK LIQUIDITY AND WE WILL NEED TO RAISE ADDITIONAL EQUITY OR DEBT
FINANCING TO FUND OUR OPERATIONS.

To date, we have had no meaningful revenues and there is a "Going Concern"
reservation in our auditor's opinion for the year ended June 30, 2003. We have
heretofore financed our business through the procurement of capital investments.
At September 30, 2003, we had cash, cash equivalents and short-term investments
of $534,000; our accounts payable were approximately $132,000; and we had
accrued expenses of $456,000. In September and October 2003 we raised an
additional $700,000 through the issuance of convertible debentures, which mature
in 2004. In order to address our immediate liquidity issues, we are seeking
additional debt or equity financing. We currently do not have any credit
arrangements. We may not be able to obtain additional debt or equity financing.
If successful in raising additional financing, we 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 our financial performance and stock price and require us to implement
certain cost reduction initiatives and curtail our operations.

In addition, any financing arrangement may have potentially adverse effects on
us or our stockholders. Debt financing (if available and undertaken) may involve
restrictions limiting our operating flexibility. Moreover, if we issue equity
securities to raise additional funds, the following results may occur:

      * The percentage ownership of our existing stockholders will be reduced;

      * Our stockholders may experience additional dilution in net book value
per share;

      * The new equity securities may have rights, preferences or privileges
senior to those of the holders of our common stock.

We are seeking to increase our revenues by increasing sales of our existing
products through the expansion of our marketing program and our sales force. We
are also exploring the development of new products that are synergistic to our
existing business and actively seeking out acquisition and partnering prospects
that would complement our existing product offerings, augment our market
coverage, or enhance our technological capabilities. There can be no assurance
that we will be successful in increasing sales of our existing products,
developing or locating new products, or consummating any acquisitions or
partnering transactions. Even if we 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 our business, results of operations
and financial condition would be materially and adversely affected. 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.

OUR LIMITED OPERATING HISTORY MAKES AN EVALUATION OF US AND OUR FUTURE EXTREMELY
DIFFICULT.

We have only recently begun selling our FACES(TM) 4.0 product, and we have
generated very limited revenues from its sale. See "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS" and "BUSINESS."
Because we have only recently begun to generate revenues, we are unable to
accurately forecast what the level of our revenues will be, and we have limited
meaningful historical financial data upon which to plan future operating
expenses. Given our extremely limited revenues to date and our current limited
cash resources, if our revenues in any period are lower than we project, our
business, results of operations and financial condition would be materially and
adversely affected. In addition, our ability to forecast accurately our
quarterly revenue and expenses is limited due to a number of factors, including:


                                       5
<PAGE>

      * The fact that we currently derive substantially all of our revenues from
sales of our FACES (TM) software product and our expectation that we will
continue to derive substantially all of our revenues from this product for the
foreseeable future;

      * The market's limited acceptance of our product to date;

      * Our ability to develop and increase our customer base;

      * Our need to expand our distribution capability;

      * Our ability to implement and successfully execute our sales and
marketing strategy;

      * Our need to introduce new products and services to respond to
technological and competitive developments and customer needs;

      * Our ability to manage the growth we are seeking to realize;

      * Our ability to respond to competitive developments;

      * Our dependence on our current executive officers and key employees;

      * Our 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 our failure to do so could materially and adversely affect our
business, prospects, financial condition and results of operations.

WE HAVE A HISTORY OF LOSSES AND DO NOT KNOW WHEN WE MAY BECOME PROFITABLE OR IF
WE DO BECOME PROFITABLE WHETHER WE CAN SUSTAIN PROFITABILITY.

We have incurred net losses of $6,806,144 since inception. As of September 30,
2003, we had an accumulated stockholder deficit of $694,295 and we expect to
continue to incur net losses for the foreseeable future. We also expect to incur
significant product development, sales and marketing and general and
administrative expenses. As a result, we will need to generate increased
revenues to achieve profitability and we may not be able to generate sufficient
revenues to achieve profitability. To increase our revenues, we must increase
sales of our existing products and introduce new products that we have either
developed internally or acquired through other arrangements. While we believe we
can grow our revenues from our existing product through internal actions, the
rate of growth will most likely not allow us to achieve our breakeven quarterly
revenue level in a timely manner. Therefore, we continue to evaluate business
combinations and partnering arrangements in our core business areas that would
improve our market share position, increase our revenue, improve on our net loss
position and accelerate our ability to reach profitability. While we are seeking
acquisitions that we believe would improve our financial results, a completed
acquisition may not provide the anticipated financial results, thus leading to
continuing net losses. Even if we achieve profitability, we may not be able to
sustain or increase profitability on a quarterly or annual basis. We are seeking
to increase our revenues by increasing the sales of our existing products
through the expansion of our marketing program and our sales force. We are also
exploring the development of new products that are synergistic to our existing
business and actively seeking out acquisition and partnering prospects that
would complement our existing product offerings, augment our market coverage, or
enhance our technological capabilities. There can be no assurance that we will
be successful in increasing sales of our existing products or in developing or
locating new products. Even if we 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 our business, results of operations and
financial condition would be materially and adversely affected.

FLUCTUATIONS IN OUR BUSINESS AND OPERATING RESULTS MAY MATERIALLY AND ADVERSELY
AFFECT THE TRADING PRICE OF OUR COMMON STOCK.

We expect that our operating results will fluctuate in the future due to a
number of factors many of which are outside of our control. These factors
include the following:

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

      * Budgetary cycles of governmental agencies;

      * Overall demand for our products;

      * Our ability to attract new customers at a steady rate;

      * The rate at which we or our competitors introduce new products, the rate
at which these products acquire market acceptance, and the cost required to
develop these products;

      * Technical defects in our products that could delay product shipments or
increase the costs of introducing new products;

      * Changes in the pricing of our products or those of our competitors;

      * The amount and timing of capital expenditures and other costs relating
to the expansion of our operations;

      * Costs relating to our marketing programs and our business in general;

      * General economic conditions.


                                       6
<PAGE>

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

                          RISKS RELATED TO OUR BUSINESS

OUR BUSINESS WILL NOT GROW UNLESS THE MARKET FOR BIOMETRIC SOLUTIONS EXPANDS
BOTH DOMESTICALLY AND INTERNATIONALLY.

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

      o the cost, performance and reliability of our 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 our products and services; and

      o marketing efforts and publicity regarding these products and services.

IF WE FAIL TO GENERATE REPEAT OR EXPANDED BUSINESS FROM OUR CURRENT AND
PROSPECTIVE CUSTOMERS, OUR BUSINESS WILL BE SERIOUSLY HARMED.

We believe that our success will depend on the continued growth of our customer
base as well as the sale of new and enhanced products to our existing customers.
Over 150,000 licenses to pre-4.0 versions of our FACES(TM) product have been
distributed to law enforcement agencies in the United States and we expect to
focus a large part of our sales and marketing efforts with respect to our new
products on these existing customers. If we are to be successful in generating
sales from our existing customers, we will need to convince them that our new
products provide them with additional benefits. In addition, our ability to
attract new customers will depend on a variety of factors, including the
reliability and cost-effectiveness of our products and our ability to
effectively market our products. If we fail to generate repeat and expanded
business from our current and prospective customers, our operating results will
be seriously harmed.

IF WE FAIL TO PROMOTE OUR BRAND NAME SUCCESSFULLY OR IF WE INCUR SIGNIFICANT
EXPENSES PROMOTING AND MAINTAINING OUR BRAND NAME, OUR BUSINESS COULD BE HARMED.

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


                                       7
<PAGE>

OUR REVENUES ARE DEPENDENT UPON THE AVAILABILITY AND TIMELY DISTRIBUTION OF
GOVERNMENTAL FUNDING.

Many of our prospective customers are local, state and federal law enforcement
and other governmental and quasi-governmental agencies. The ability of these
prospective customers to purchase our 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 our 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 OUR MARKET COULD CAUSE OUR PRODUCTS TO BECOME
OBSOLETE OR REQUIRE US TO REDESIGN OUR PRODUCTS.

We expect that our 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. We believe that our future success will
depend in large part on our 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 our 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 we or our competitors announce
or introduce new products our current or prospective customers may defer or
cancel purchases of our products, which could materially adversely affect our
business, operating results and financial condition. Our 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 our business,
operating results and financial condition.

IF WE LOSE ANY KEY PERSONNEL, OR FAIL TO ATTRACT AND RETAIN ADDITIONAL
PERSONNEL, WE MAY BE UNABLE TO CONTINUE DEVELOPING OUR BUSINESS AND PRODUCT
LINE.

The loss of the services of one or more of our key personnel could materially
adversely affect our business, operating results and financial condition. We
cannot guarantee that we will be able to retain our key personnel. Our future
success also depends on our 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 we can attract,
assimilate or retain necessary personnel in the future.

FAILURE TO EXPAND OUR SALES AND DISTRIBUTION CHANNELS AND MANAGE OUR SALES AND
DISTRIBUTION RELATIONSHIPS COULD SIGNIFICANTLY REDUCE OUR REVENUES.

We sell our products through a network of distributors and resellers. Our
success will depend on our ability to manage relationships with our existing
network of distributors and resellers and to expand our network of resellers and
distributors. The sale of our products by our distributors and resellers depends
on the effectiveness of their selling efforts and their ability to meet their
own responsibilities under agreements with customers in a timely manner. At
times, our distributors and resellers may also offer products of our competitors
and our agreements with them have no minimum purchase commitments. We cannot
assure you that we will be able to expand our distribution channels, manage our
distribution relationships successfully or that our distributors and resellers
will market and sell our products effectively. Our failure to manage
successfully our distribution relationships or the failure of our distributors
and resellers to sell our products could reduce our revenues and have a material
adverse effect on business, results of operations and financial conditions.

OUR FINANCIAL PERFORMANCE MAY BE ADVERSELY AFFECTED BY COMPETITION.

The market for our products is characterized by significant and increasing
competition. Most of our current and potential competitors have longer operating
histories and significantly greater financial, technical and marketing resources
than we do. We expect 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 we offer. Such a development
could result in price reductions or displacement of our products, which could
materially adversely affect our business, results of operations and financial
condition.


                                       8
<PAGE>

IF THE USE OF OUR PRODUCTS IS DEEMED TO BE AN INVASION OF PERSONAL PRIVACY
RIGHTS OUR BUSINESS MAY SUFFER.

From time to time, biometric products such as ours 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 products such as ours may be adversely
affected.

IF WE GROW OUR BUSINESS AS PLANNED, WE MAY NOT BE ABLE TO MANAGE PROPERLY OUR
GROWTH, WHICH MAY IMPEDE OUR ABILITY TO ACHIEVE PROFITABILITY.

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

      * The expansion of our sales force and distribution channels;

      * The expansion of our product and services offerings;

      * Development of relationships with strategic business partners;

      * The expansion of management and infrastructure;

      * Brand development, marketing and other promotional activities.

Costs associated with these activities could delay our ability to achieve or
maintain profitability.

OUR ACQUISITION STRATEGY MAY BE UNSUCCESSFUL, WHICH MAY HARM OUR ABILITY TO GROW
REVENUES.

We believe that our future success depends on our ability to introduce and
market new products and services that we have either developed internally or
acquired through strategic combinations or partnering relationships. We intend
to actively seek out acquisition and partnering prospects that would complement
our existing product offerings, augment our market coverage, or enhance our
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.

WE WILL FACE TECHNICAL, OPERATIONAL AND STRATEGIC CHALLENGES THAT MAY PREVENT US
FROM SUCCESSFULLY INTEGRATING BUSINESSES WE MAY ACQUIRE IN THE FUTURE.

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

      * Use of cash resources that would reduce our financial reserves;

      * Issuance of stock that would dilute our current stockholders' percentage
ownership;

      * Incurrence of debt;

      * Assumption of liabilities;

      * Increased operational and administrative complexity of our business;

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

      * 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.


                                       9
<PAGE>

Furthermore, acquisitions involve numerous operational risks, including:

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

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

      * Unanticipated costs or liabilities;

      * Diversion of management's attention from our core business;

      * Diversion of resources from our existing business, products or
technologies;

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

      * Risks associated with entering markets in which we have no or limited
prior experience; and

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

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

                    RISKS RELATED TO DEVELOPING OUR PRODUCTS

SUBSTANTIALLY ALL OF THE SOFTWARE DEVELOPMENT FOR OUR FACES(TM) 4.0 PRODUCT WAS
OUTSOURCED TO A THIRD PARTY. IF WE CONTINUE TO USE THIRD PARTY DEVELOPERS FOR
FUTURE PRODUCT RELEASES WE MAY IN THE FUTURE BE SUBJECT TO DELAYS IN PRODUCT
RELEASES, ENHANCEMENTS AND UPGRADES AS WELL AS QUALITY CONTROL ISSUES.

We outsourced the development of our FACES(TM) 4.0 software to Entreprise
Cogniscience, Inc. an independent software developer. Although, FACES(TM) 4.0
was commercially released in 2003, we have discovered and we may continue to
discover errors and defects in FACES(TM) 4.0. The fact that we do not directly
control the development of our product subjects us to the risk that we may
experience delays in issuing error corrections or enhancements to our most
recent release. Recently, Entreprise Cogniscience was acquired by a third party.
While, the agreement between us and Entreprise Cogniscience is binding upon any
successor-in-interest to Entreprise Cogniscience, we cannot guarantee that the
acquiror will devote as many resources to fulfilling the agreement as Entreprise
Cogniscience did before the acquisition or that the quality of their work will
meet our specifications. If the successor-in-interest fails to devote as many
resources to our product or if the quality of their work does not meet our
specification, it could lead to delays in releasing any error corrections or bug
fixes. In addition, if we continue to use Entreprise Cogniscience or another
independent software developer to develop future releases or products, we 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
our business, results of operations and financial condition.


                                       10
<PAGE>

WE DEPEND ON THIRD-PARTY TECHNOLOGY FOR THE DEVELOPMENT OF OUR SOFTWARE. IF WE
WERE TO TERMINATE OUR RELATIONSHIP WITH SUCH THIRD PARTY PROVIDER, WE COULD
EXPERIENCE DELAYS IN FUTURE PRODUCT RELEASES AND IMPROVEMENTS.

Entreprise Cogniscience, the third party software developer that assisted us in
the development of FACES(TM) 4.0, used a proprietary environment based on LISP
to develop our software. If we were to bring our software development in-house
or if our relationship with Entreprise Cogniscience were otherwise to terminate,
we would need to port our source code to a new development environment, which
may cause us 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 our business, results of operations and
financial condition.

OUR SOFTWARE PRODUCTS ARE COMPLEX AND MAY CONTAIN UNKNOWN DEFECTS THAT COULD
RESULT IN NUMEROUS ADVERSE CONSEQUENCES.

Complex software products such as ours often contain latent errors or defects,
particularly when first introduced, when new versions or enhancements are
released and when configured for a specific customer. We currently have
experienced errors and defects in our 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 our products after
commencement of commercial shipments, any of which could result in damage to our
reputation, the loss of sales, a diversion of our product development resources,
or a delay in market acceptance, and thereby materially adversely affecting our
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 our 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 our products will meet all of the expectations and demands of our
customers. The failure of our 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. We do not currently maintain any general liability insurance. Any
general liability insurance that we may carry could be insufficient to protect
us from all liability that may be imposed under any asserted claims. Although
through our license agreements with customers we try to include provisions
designed to limit our 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.

WE OUTSOURCED THE PACKAGING OF OUR FACES(TM) 4.0 PRODUCT TO A SINGLE THIRD PARTY
CONTRACTOR. IF WE CONTINUE TO USE THIRD PARTIES FOR THE PACKAGING OF OUR
PRODUCTS, WE MAY EXPERIENCE IN THE FUTURE DELAYS OR DISRUPTIONS IN THE
DISTRIBUTION OF OUR PRODUCTS OR QUALITY CONTROL ISSUES.

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

                   RISKS RELATED TO OUR INTELLECTUAL PROPERTY

OUR SUCCESS DEPENDS ON OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY.

Our future success depends upon our proprietary technology. We are protecting
our proprietary information through the use of patent, copyright, trademark,
trade secret laws, confidentiality procedures and contractual provisions.
Notwithstanding our efforts to protect our proprietary technology, policing
unauthorized use or copying of our 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 we obtain in the future may be circumvented, challenged,
invalidated or designed around by other companies. Despite our efforts, we may
be unable to prevent third parties from infringing upon or misappropriating our
intellectual property. Moreover, the laws of some foreign jurisdictions do not
afford the same degree of protection to our 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 our products are
distributed. Furthermore, our competitors may independently develop similar
technology that substantially limits the value of our intellectual property. Our
inability to protect adequately our intellectual property for these or other
reasons could materially and adversely affect our business, financial condition
and operating results.


                                       11
<PAGE>

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

      * Significant litigation costs;

      * Diversion of resources, including the attention of management;

      * Our agreement to pay certain royalty and/or licensing fees; and

      * Cessation of our rights to use, market, or distribute such technology.

Any of these developments could materially and adversely affect our business,
results of operations and financial condition. In the future, we may also need
to file lawsuits to enforce our intellectual property rights, to protect our
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 our business, results of operations and
financial condition.

                    RISKS RELATED TO OUR CORPORATE GOVERNANCE

OUR AUTHORIZED PREFERRED STOCK EXPOSES STOCKHOLDERS TO CERTAIN RISKS.

Our Certificate of Incorporation authorizes the issuance of up to 10,000,000
shares of preferred stock, par value $.01 per share. No shares of preferred
stock have been issued to date. 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 our Board of Directors to hinder or discourage an attempt to gain control
of the Company by a merger, tender offer at a control premium price, proxy
contest or otherwise. Consequently, the preferred stock could entrench our
management. In addition, the market price of our common stock could be
materially and adversely affected by the existence of the preferred stock.

OUR COMMON STOCK HAS A LIMITED AND VOLATILE TRADING HISTORY.

Our 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 our common stock has traded have fluctuated
fairly widely. See "PRICE RANGE OF COMMON STOCK." There can be no assurance as
to the prices at which our common stock will trade in the future, although they
may continue to fluctuate significantly. Prices for our common stock will be
determined in the marketplace and may be influenced by many factors, including
the following:

      * The depth and liquidity of the markets for our common stock;

      * Investor perception of us and the industry in which we operate;

      * General economic and market conditions; and

      * The effect that of any of the events highlighted in these Risk Factors
may have on our business should they occur.

WE HAVE THE ABILITY AND THE OBLIGATION TO ISSUE ADDITIONAL SHARES OF COMMON
STOCK IN THE FUTURE, AND SUCH FUTURE ISSUANCE MAY MATERIALLY ADVERSELY AFFECT
STOCKHOLDERS.

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

      * Approximately 300,000 registered shares of our common stock are
available for issuance to outside consultants to compensate them for services
provided;

      * Options to purchase approximately 250,000 shares of our common stock
were outstanding as of October 31, 2003;

      * Warrants to purchase approximately 450,000 shares of common stock were
outstanding as of October 31, 2003;

      * Debentures, convertible into 4,600,000 shares of common stock had been
issued as of October 31, 2003


                                       12
<PAGE>

The options and warrants 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 our 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 we could obtain additional capital during the life of these
options, warrants or convertible debentures may be adversely affected because of
such potential dilution. Finally, we may issue additional shares in the future
other than as listed above. There are no preemptive rights in connection with
our common stock. Thus, the percentage ownership of existing stockholders may be
diluted if we issue additional shares in the future. For issuances of shares and
grants of options to consultants, our Board of Directors will determine the
timing and size of the issuances and grants, and the consideration or services
required thereof. Our Board of Directors intends to use its reasonable business
judgment to fulfill its fiduciary obligations to our then existing stockholders
in connection with any such issuance or grant. Nonetheless, 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 the shares.

SALES OF OUR COMMON STOCK, INCLUDING THOSE SHARES COVERED BY THIS PROSPECTUS
(WHICH UPON EFFECTIVENESS OF THIS REGISTRATION STATEMENT MAY BE SOLD AT ANY
PRICE AND AT ANY TIME), COULD REDUCE THE PRICE OF OUR COMMON STOCK.

After the registration statement has become effective, the holders of the shares
covered by this prospectus may sell the shares registered pursuant to this
registration statement at any price and at any time determined by them without
limitation. The price of our common stock may be adversely affected upon the
sale of the shares registered hereby.

THE TRADING PRICE OF OUR COMMON STOCK ENTAILS ADDITIONAL REGULATORY
REQUIREMENTS, WHICH MAY NEGATIVELY AFFECT SUCH TRADING PRICE.

The trading price of our common stock is currently below $5.00 per share. As a
result of this price level, trading in our 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 our common stock
affected. As a consequence, the market liquidity of our common stock could be
severely limited by these regulatory requirements.

STOCKHOLDERS HAVE NO GUARANTEE OF DIVIDENDS.

The holders of our common stock are entitled to receive dividends when, as and
if declared by the Board of Directors out of funds legally available therefore.
To date, we have not declared nor paid any cash dividends. The 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 our business
operations.

FOR ALL OF THE AFORESAID REASONS AND OTHERS SET FORTH HEREIN, THE SHARES COVERED
BY THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD BE AWARE OF THESE
AND OTHER FACTORS SET FORTH IN THIS PROSPECTUS.


                                       13
<PAGE>

                                    BUSINESS

INDUSTRY BACKGROUND

Management believes that terrorism and violent crime have become a major global
concern, and terrorism and crime prevention is a top priority in many countries.
Management also believes that police agencies have taken steps to develop
crime-analysis mechanisms, directives and training programs to promote
prevention as an efficient and pro-active way of fighting crime, and are
currently seeking additional tools to use in this effort. Cooperation between
law enforcement agencies, authorities, organizations and citizens seems to show
a growing desire for crime prevention and a recognition of the need for new
tools to combat lawlessness and effectively determine a person's identity.

The attacks on the World Trade Center and Pentagon on September 11, 2001 seem to
have heightened the need for the development of products that can prevent crime
generally and international terrorism specifically. September 11th has brought a
surge of interest in facial-recognition technology and facial recognition is
expected to be one of the fastest-growing segments of the biometric market
during the next two to three years. The possible uses for facial-recognition
technology include airport screening, controlling access to computer systems,
restricted areas, entitlement benefits and the nation's borders. The Defense
Department is researching its possible use for computer network security, and
the State Department is considering ways to use biometrics to aid in passport
processing. The Enhanced Border and Visa Security Act of 2002 mandates that
every person coming into the U.S. using a visa have a multiple biometric
machine-readable visa by October 2004. The proposal could be worth $3.8 billion
and would establish the U.S. as the de facto global identity regulator. On a
global basis, the biometric ID market could exceed $12 billion once the U.S.
program is fully established in five to ten years.

Facial recognition is a biometric technology that identifies people based on
their facial features. Facial recognition systems are built on computer programs
that take a facial image, measure characteristics such as the distance between
the eyes, the length of the nose, and the angle of the jaw, and create a unique
file called a "template." Using templates, the software then compares that image
with another image and produces a score that measures how similar the images are
to each other. Typical sources of images for use in facial recognition include
video camera signals and pre-existing photos such as those in driver's license
databases.

THE IQB SOLUTION

In connection with the Merger, the Company acquired the FACES(TM) composite
technology. Management believes that this technology will help solve the growing
need for effective crime and terrorism fighting tools as well as offering
potential applications relating to other industries. The FACES technology allows
the easy creation and re-creation of billions of human faces through an
exhaustive database of facial features, the distribution of these composite
facial images, and the rapid search of facial image databases based upon
proprietary biometric algorithm processes. The FACES software not only creates
composite pictures with remarkable ease and speed, but also automatically
converts the composite into unique InterCodes(TM).

The InterCode(TM) algorithm is the digital imprint of the face, as represented
by the unique combination of facial features from our proprietary library. Every
InterCode(TM) is unique with respect to a particular face, just as fingerprints
or DNA are to a particular person. Because of the digital character of the
InterCode(TM) and the small size of the code itself (less than 250 characters in
length), the InterCode(TM) can be transferred anywhere in the world via any
telecommunications network (phone, fax, Internet) and can instantaneously
reproduce high quality facial composites in the receiving location using the
FACES software. The FACES technology can help law enforcement to identify and
capture terrorists and criminals quickly, by assisting in determining a person's
identity based upon facial features.

The FACES solution is based upon technology covered by two pending patent
applications, the InterCode(TM) and our proprietary library:

*     FACES Software: Creates facial images through the use of our proprietary
      library of more than 4,000 facial images that has been logged by facial
      component. The software automatically converts the composite facial image
      into a unique, proprietary Biometric Alphanumeric Code. There are more
      than 160,000 licenses of the FACES software, including more than 5,000
      police, military, FBI and CIA installations.


*     FACES/TRAK Solution: "TRAK - Technology to Recover Abducted Kids," is a
      computer software system that was originally designed to help law
      enforcement agencies locate and recover abducted children. The Company has
      entered into a nonbinding strategic alliance agreement with SocialTech,
      Inc., a privately held company and the developer of the Trak notification
      software system, to integrate the Company's FACES technology with TRAK. By
      integrating the FACES software with the TRAK software solution from
      SocialTech, (used by 1400 police departments in the U.S. to notify local
      authorities of missing persons or suspects in a crime), enables police
      departments to place a composite image in the one-page TRAK notification.
      This notification is then faxed, emailed or posted for local authorities
      as a rapid and effective method of notifying law enforcement of a
      suspect's facial appearance, name and criminal history. Without the FACES
      component or a photo image from a video camera or other source, the TRAK
      solution often is restricted to a general description of the suspect, e.g.
      male, 6' tall, brown hair. This description is believed to be much less
      effective in identifying suspects than the FACES composite image. To date,
      the Company has received no revenues from its agreement with SocialTech.

*     FACES Search: By applying the InterCode(TM) to databases of mug shots such
      as the iMug database of more than three million images, FACES Search
      enables the quick sorting of facial images based upon their similarity to
      the FACES composite image. This technology replaces the current method of
      facial search at police departments in which the victim or witness looks
      through binders of mug shot photos in search of the suspect.



                                       14
<PAGE>

The FACES software first gained public recognition through its use in the
capture of criminals by the highly-rated "America's Most Wanted" television
series, and its endorsement by host John Walsh. The first time the FACES
software was used on the show, it helped law enforcement capture a serial rapist
of young girls within 48 hours of the show's airing when the mother of the
criminal recognized her son and called the show's 800 number. John Walsh and his
television producer Lance Heflin have subsequently become shareholders of the
company, and John Walsh is a supporter of the Company's products. The key
component of the Company's solution to the need for crime and terrorism
prevention products is the continued refinement and development of flexible,
affordable and effective facial composite software products and enterprise-level
solutions that address identification and security markets worldwide, that
enable the crime solving, prevention and security sectors to track down and
identify suspects rapidly, and that establish a world standard for the
comparison of facial images.

STRATEGY

Our goal is to become a leader in the field of facial composite software. We
plan to strive for this goal through the following key strategies:


      * Maintain the FACES technology as the industry leader: One of our
strategies is to posture the FACES software as a state-of-the-art, easy to use,
efficient product. Management believes that the FACES software represents a
significant leap forward in simplicity of design and usability, revolutionizing
the criminal identification and capture process. It can assist anti-terrorism,
law enforcement, security and public safety personnel to identify terrorists and
criminals, and to solve crimes, both by its standardized coding system of all
facial elements and by its ability to exchange information more quickly and
efficiently between agencies.

      * Build strong brand recognition: Our strategy is to develop, promote,
advertise and increase the brand equity and visibility of the FACES software,
FACES/TRAK, FACES Search, and our other products and services through excellent
product and service offerings, and a variety of marketing and promotional
techniques using a variety of media and conducting an ongoing public relations
campaign. To help build strong brand recognition and lay the foundation for
sales of enhanced products developed in the future, 150,000 copies of the FACES
CD-ROM were donated to police departments across North America in 1998 and 1999.
This undertaking resulted in endorsements from a number of major law enforcement
organizations, and management believes that the FACES products was well received
by the recipients of these copies.

      * Development of new products: We intend to seek to continue to develop
and refine our existing products, and to develop and commercialize various
computer programs and products using the technology and our facial image
library. Our research and development strategy is to leverage this technology at
all levels of development in order to translate it into a high-contribution,
recurrent revenue stream. We do not expect to require a significant amount of
additional development expenses to pursue this strategy. We commenced the market
rollout of FACES Version 4.0 (the latest version of the software) in July of
2003. In addition, we are extending the FACES technology to produce a facial
recognition software application using the InterCode(TM) technology to verify
and authenticate identities for security purposes. This software, called FACE
SEARCH, is discussed in greater detail herein. We also plan on developing
additional applications for the FACES technology in a number of specific
markets.


      * Position the InterCode(TM) technology as an international standard: Our
strategy includes the ultimate goal of positioning the InterCode(TM) technology
as an international standard for law enforcement that will unite the public and
law enforcement agencies in a common and interactive action against crime. In a
global environment, the adoption of a common system on a worldwide basis would
enhance information sharing and therefore would contribute to facilitating crime
prevention and solving. InterCode(TM), the unique morphological coding of the
FACES software, has made setting an industry standard possible for the first
time. Our software is being developed with a view to setting a standard
throughout the world for the production of realistic facial images on a uniform
platform, and management believes that the InterCode(TM) could serve as the
first international standard in the transmission of facial recognition data.

      *     Continue to receive valuable endorsements, recognition and product
            use. The FACES technology has been endorsed by John Walsh, host of
            the Fox Network television series "America's Most Wanted," which is
            viewed by 15 million people every week, and "Americas Most Wanted"
            has adopted the FACES software as a crime-solving tool. We will
            continue to seek endorsements from groups such as these.

                                       15
<PAGE>


      * Maintain a strong commitment to customer satisfaction: We understand
that, in order for it to be successful, our customers must be satisfied with our
products. We are committed to customer satisfaction throughout our organization.
In order to accomplish this, we will invest substantial time and effort in
testing our products and working closely with our customers to quickly address
any issues that arise. We will focus on providing our customers with the
technical assistance and capabilities required to ensure a satisfactory
experience with our products. Customers are able to access support, via e-mail
and telephone during normal business hours. We supplement our telephone support
with Web-based support services. In addition, the Company offers, primarily
through certified training partners, classes and training programs for its
products. The Company is also negotiating a strategic relationship with a
national law enforcement training organization to provide a training and
certification program throughout the U.S. and Canada. This program is designed
to train FACES(TM) users in witness interviewing techniques and advanced uses of
the FACES(TM) technology, such as age progression, creating virtual lineups and
integrating composites with video and photo enhancement technology, to produce
more accurate composites and maximize the potential of the FACES(TM) technology.


      * Continue to develop a strong network of strategic partners: We have
developed a number of formal and informal strategic relationships with persons
whose services are necessary to develop and implement our business strategy. We
are entering into a new phase of research and development in which we are
strategically aligning ourselves with partners in the scientific and university
communities to ensure rapid development of new FACES applications. For instance,
in 2002 we entered into a long-term partnership with the California State
University Fresno whereby we will receive a broad range of support from various
departments of this university.

      * Expand sales and distribution channels: We intend to address a broader
market for our products by seeking to increase the number of distributors of our
products as well continuing our direct selling efforts. Distributors will be
chosen carefully, with regard to vertical and geographic focus, as we diligently
work with each distributor to generate sales. In addition, we believe that
international markets represent a significant market for our products and
services, and we have established an early marketing, sales and support presence
in selected international markets, including targeted European and Asian
countries, to enhance our long-term competitive advantage in these regions. When
appropriate, we will implement localized versions of our software.

      * Pursue incremental revenue opportunities: We intend to leverage our
FACES technology to broaden our presence and develop additional revenue
opportunities. Future revenue opportunities are expected to grow out of our
technology, although the exact nature of these can not now be determined.
Nevertheless, we will also maintain a vigilant lookout for such opportunities.

      * Attract and retain exceptional employees: We believe that versatile and
experienced employees provide significant advantages in the rapidly evolving
market in which we will compete. We are committed to building a talented
employee base and to attracting an experienced management team.

FACES OVERVIEW

The FACES technology is a revolutionary tool that allows the creation and
re-creation of billions of human faces. This advanced technology can used by any
agency or organization whose responsibility lies in the public safety and
security arena.

The first phase of developing the FACES technology consisted of gathering a
large number of photographs from people with varied facial elements. The
Research and Development team headed by Rajesh Venkatachalam and featuring
computer graphic artists proceeded to adjust the facial elements to create a
"universal skin" (patent pending) and a central database of facial features.
Once these results were obtained, a group of external and internal programmers
created the software which has since become the core of the FACES product. The
exhaustive database of facial features comprising this software allows the easy
creation and re-creation of billions of human faces. As an illustration, FACES
4.0 can generate a number of different faces equal to 38 to the 64th power.


                                       16
<PAGE>

A key element of the FACES software is the Biometric Alphanumeric Code
(InterCode(TM)), a system whereby each composite picture generates a unique
alphanumeric code. The InterCode(TM) is a digital imprint of the face. Every
InterCode(TM) is as unique with respect to a particular face just as
fingerprints or DNA are to a particular person. The greatest advantage of this
technical feature is that it allows users to send perfect quality composites
across the world in just a few seconds. InterCode(TM) can be sent via any
telecommunications network (phone, fax, Internet). Once the code is typed into
the Enter InterCode(TM) dialog box, the corresponding composite picture is
automatically generated on the user's screen. Not only does the InterCode(TM)
make the electronic transmission of graphic data unnecessary, but it also
resolves network and device compatibility problems since the only tool required
to exchange composites is the FACES software. The transfer of coded data through
the Internet can be done in a fraction of a second while the transmission of
conventional images is usually quite lengthy, complicated and unreliable.

The FACES product helps law enforcement to identify and capture criminals
quickly and efficiently. This product transforms the identification process into
a quick, two step procedure that can be performed by anyone with access to a
computer using the FACES software. Originally designed for the law enforcement
community, the InterCode(TM) specialized coding technology could result in
dozens of secondary applications. In addition, the unique morphological coding
of the FACES database has created for the first time the possibility of an
industry standard for comparing facial images from law enforcement agencies,
private security and businesses at risk throughout the world.

PRODUCT DEVELOPMENT, MANUFACTURING AND FULFILLMENT

To date, our products have been developed primarily through the use of outside
contractors. On May 31, 2002, we entered into an agreement with Entreprise
Cogniscience, Inc., a privately-held software development company, to develop
our latest product FACES(TM) 4.0. However, we plan to bring the development
process in house, which we believe will enable us to maintain closer technical
control over our products and give us the freedom to designate which
modifications and enhancements are most important and when they should be
implemented. Product documentation is generally created internally. We believe
that a crucial factor in the success of a new product is getting it to market
quickly to respond to new user needs or advances in hardware, without
compromising product quality. We strive to maintain our relationship with our
customers so that we can become informed at the earliest possible time about
changing usage patterns and hardware advances that may affect software design.

Entreprise Cogniscience used a proprietary environment based on LISP to develop
our software. If we were to bring our software development in-house or if our
relationship with Entreprise Cogniscience were otherwise to terminate, we would
need to port our source code to a new development environment, which may cause
us 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 our business, results of operations and financial
condition. We are not dependent on any other third party products or technology.

We outsource the packaging of our product, which consists of transferring our
FACES(TM) software onto compact discs, quality control testing and packaging the
CDs and manuals, Stephen Gould Corporation in Sacramento, CA. There are a number
of software packaging companies that we could use in the event our current
vendor becomes unavailable. We have multiple sources for compact discs. Quality
control tests are selectively performed on finished products. We also outsource
our product fulfillment to OnFulfillment Inc. of Newark, CA, which stores
inventory, packages and ships orders.

We presently manage all our own information processing, vendor management,
logistics services, licensing, and related supporting functions from our
Fremont, California office.

FACES PRODUCTS

FACES requires no special training, allowing even those with limited computer
skills to become fully competent in use of the product in a minimal amount of
time. Unlike other composite-picture tools on the market, FACES is remarkably
efficient. By simply clicking on the easy-to-find features with the mouse, the
average user can create a complete picture in fewer than 10 minutes. Containing
these facial features and a wide range of accessories, the FACES database allows
the creation of more than one billion combinations of photo-like adult faces
(ages 17 to 60) of either sex and of any race. The FACES CD-ROM is PC and
Mac-compatible and can be run on any standard desktop or portable computer with
a CD-ROM drive, making it fully adaptable to any working environment. About 700
MB of memory is needed on a system's hard drive to install FACES or the software
can be run directly from the CD-ROM drive. Each FACES CD-ROM comes in three
languages: English, French and Spanish. This product is also available in
German. The FACES technology now has approximately 160,000 licenses worldwide.


                                       17
<PAGE>

FACES PRODUCTS UNDER DEVELOPMENT

The Company is actively involved in the development of new products. However,
the Company's new products may not be released on the anticipated schedule, and
they may not achieve market acceptance or adequately address the changing needs
of the marketplace on a timely basis, despite the dedication of significant
resources to the development of the products. Any such failure could result in
the Company's having little or no return on its investment of significant
resources, which could adversely affect the Company's business. The following is
a discussion of some of the products currently under development.

FACES, Version 4.0. Version 4.0 contains a more attractive interface for general
applications by untrained users. It also contains various tools that allow for
easier browsing and searching of facial features. While FACES Version 3.0
includes approximately 4,000 facial features, FACES Version 4.0 will include
approximately 5,000 facial features, including many more ethnic facial elements
and hairstyle gathered through photograph sessions held in Fresno, California
with the participation of the California State University Fresno.

FACES, Version 5.0. The company is developing an enterprise version of FACES
Version 4.0, extending the utility of this product beyond a single desktop user.

FACES, Version 6.0. This version will include expanded features such as child
faces and senior citizens (toddler to 90 years old and more). This sophisticated
version will include a new IntercodeTM that will be compatible with the FACE
SEARCH technology that is currently under development and that is discussed
below.

FACE SEARCH, The facial recognition FACE SEARCH technology is an outgrowth of
the FACES technology. The unique features of the FACE SEARCH technology have
been under development since 2000. The FACE SEARCH technology uses the
InterCode(TM) technology to address identity verification and authentication
needs for security purposes. This technology is intended (upon completion of its
development) to enable users to generate in seconds composite pictures and
InterCode(TM) from digitized photographs, which may include captured video
images. This capability is expected to find use in airports, border control and
other locations to identify suspected criminals and terrorists.

Using FACE SEARCH, a security agent, customs official or police officer will be
able to compare the InterCode(TM) for the face of a particular person to similar
pictures in a database in an attempt to determine a person's identity. The FACE
SEARCH algorithm will allow different searches through one facial feature or a
combination of facial features. Moreover, the FACE SEARCH technology could be
used to secure credit cards, ATM Cards, Medicare cards, passports, building
access cards and driver's licenses by integrating the user's encrypted
InterCode(TM) on the magnetic band of the card for a visual authentication
before any transaction approval.

TRAINING


We initially established a certification program conducted through a 16 hour
seminar managed by certified trainers throughout the U.S. and Canada. This
program enabled FACES users to improve their abilities to produce proper
composites so as to maximize the potential of the FACES technology. The Company
is also negotiating a strategic relationship with a national law enforcement
training organization to provide a training and certification program throughout
the U.S. and Canada. This program is designed to train FACES(TM) users in
witness interviewing techniques and advanced uses of the FACES(TM) technology,
such as age progression, creating virtual lineups and integrating composites
with video and photo enhancement technology, to produce more accurate composites
and maximize the potential of the FACES(TM) technology. We are also developing
an Internet-based e-learning initiative to offer law enforcement agencies a
continuous education program. We are offering this service on a monthly
subscription basis that should generate an additional reoccurring revenue
stream. In this connection, we recently entered into a partnership with
California State University Fresno for that institution to develop an e-learning
curriculum. The e-learning approach will be scalable and greatly reduce the need
for human interaction. We expect that the certified trainers in the seminars
will eventually become on-line tutors as part of the e-learning initiative. We
expect that the on-line training will take approximately 16 hours and will focus
on cognitive interviewing, and that we will charge approximately $350 for each
participant in the training.



                                       18
<PAGE>

MARKET AND MARKETING

Our marketing strategy aims to penetrate strongly the three following target
markets:

      * Public security/law enforcement agencies

      * General public

      * Private security/businesses at risk

The public security/law enforcement agencies segment of the market in North
America, Europe and Asia is approximately 1,200,000, 1,274,000 and 1,559,000
(respectively) potential end users, primarily police officers. To date, about
5,000 police departments and/or law enforcement agencies have already received a
copy of FACES. The Company believes that it has reached a small portion of the
market thus far and has ample room to penetrate this market further.

The private security/businesses at risk segment of the market is strongly
dominated by security agents and investigators (with 60% of the market) and
alarm companies (with 25% of the market), with the remainder of the market being
comprised of security consultants, armored car services and other persons. With
over 15,000 companies in the United States, the security agents and
investigators market represents up to $41.1 billion and approximately 1.3
million employees. The number of personnel in this segment of the market in
North America, Europe and Asia are approximately 1,300,000, 1,284,000 and
392,000. Businesses at risk include banks, convenient stores, liquor stores, and
corporate buildings.

Approximately 20,000 copies of the FACES software has been sold to the general
public and schools. As of September 30, 2003, the Company has re-seller
relationships with over 50 distributors. These distributors market to a variety
of retail customers, primarily targeting education and law enforcement.

Historically, sales of our products (as a percentage of the total sales of the
Company's products) have been approximately as follows:

      * 50% to the public security/law enforcement agencies

      * 45% to education and student market;

      * 5% to private security/businesses at risk

The Company's marketing strategy involves the following three phases:


      * Phase I - will aim at validating FACES through its adoption by law
enforcement and security professionals and at building a brand name and product
awareness in these industries. This phase emphasized communications, public
relations, a widely spread public relations campaign, hundreds of articles in
major magazines, coverage on TV and radio on major American TV shows, in trade
shows, promotion and advertising. This phase is largely completed.

      * Phase II - will aim at building strong sales channels to answer the
created for the Company's products and in achieving the ultimate goal of having
the FACES technology become an international standard for facial recognition and
comparison. For example, we have entered into a nonbinding strategic alliance
agreement with SocialTech, Inc. the developer of the TRAK software system.
SocialTech has developed a program called "TRAK - Technology to Recover Kids,",
a computer software system that was originally designed to help law enforcement
agencies locate and recover abducted children. The TRAK system is used by more
than 1,400 police and is currently implemented at all 600 police departments in
the State of New Jersey. TRAK has been used in countless types of cases,
assisting law enforcement in the process of communicating important visual
information. This system allows any police officer to quickly and efficiently
create high-resolution bulletins and share them electronically with other law
enforcement jurisdictions, the media, and the community, when they deem it
appropriate. To date, we have received no revenues from our agreement with
SocialTech.


      * Phase III - will aim at developing enterprise-level solutions for the
needs of law enforcement agencies and other potential customers. For example, a
search engine could be developed that matches FACES composite pictures
represented by InterCode(TM) and existing pictures filed in databases to
facilitate the apprehension of criminals.


                                       19
<PAGE>

The Company intends to use the following approaches in connection with its
marketing efforts:

Public relations and Communications. The Company intends to use the following
techniques to ensure a strong exposure for FACES:

      * A regular flow of press releases and public relations with the media

      * Numerous articles in newspapers and magazines around the world

      * Broadcast of FACES success stories

      * Comments on various news shows with respect to FACES and its usefulness
in apprehending criminals

      * Appearances by Company personnel (including stockholder John Walsh) on
various TV and radio shows to talk about FACES, plus interviews with journalists

      * Recognition through prizes and awards

      * Positive critical reviews in consumers buyers guides

      * Promotion and contests through our Web site

Advertising. Although advertising is an important component of the Company's
marketing strategy, the Company has heretofore primarily used media and public
relations as support to brand awareness because of its limited financial
resources. The Company has planned the following advertising:

      * Advertising through the use of FACES on America's Most Wanted show and
articles in newspapers and other publications

      * Direct mailing response program to law enforcement agencies

      * Selective advertising in law enforcement and security publications


                                       20
<PAGE>

Trade Shows. Fairs and trade shows are another source of publicity that will be
used to create awareness of the FACES name.

Lobbying. The Company intends to lobby United States congressmen, senators and
international organizations, National Institute of Justice and governments for
the official approval of FACES as the new protocol of communication in composite
pictures.

Conventional Distributors and/or Licensing Agreements. Among the distributors
that the Company has entered an agreement with include the U.S. Cavalry, Career
Institute and Wards Natural Science. The Company intends to use the following
channels for selling its products:

Resellers Partnership Program. The Company has developed an International
Reseller Partnership program which includes resellers in many European
countries, Australia and among integrators and/or small distributors. These
distributors sell FACES on a non-exclusive basis. The Company has signed up
approximately 25 new resellers. This program was officially launched on June 12,
2001, and the Company is now recruiting resellers in the United States, Asia
(Pakistan and Unified Arab Emirates) and South Africa.

Web stores. The Company has developed a channel of distribution through Web and
on-line stores, giving to the Company the possibility to reach virtual and
on-line shoppers.

Catalogues. The Company uses catalogues to develop sales in Canada, the United
States and internationally. The Company has signed several agreements with
catalogue distributors to cover different market sectors.

Internet. The Internet is a significant component in the Company's marketing
strategy. The Company is presently developing an advertising program for major
national publicity agencies to sell advertising on the America's Most Wanted
("AMW") Web site. The Company has the exclusive rights to host and manage the
site until 2004. We are exploring the possible installation of a portal on
America's Most Wanted Web site providing their viewers with free e-mail
addresses and services. This will allow the Company to create a huge database of
e-mail users interested in crime-solving and prevention products. We have our
own Web site, through which sells its products.

INTELLECTUAL PROPERTY

The Company regards its technology, patent applications, service marks,
trademarks, trade dress, trade secrets, copyrights and similar intellectual
property as critical to its success, and relies on a combination of patent law,
trademark law, trade secret protection, copyrights law and confidentiality
and/or license agreements with its employees, customers, partners and others to
protect its proprietary rights. For example, the Company licenses its software
pursuant to shrink-wrap or signed license agreements, which impose certain
restrictions on licensees' ability to utilize the software. In addition, the
Company pursues the registration of its trademarks and logos in the United
States and Canada, and has received registrations of certain of its trademarks
and logos in the United States and Canada.

The Company currently has two United States patent applications covering "Method
and apparatus for creating facial images" and "InterCode(TM) " Conceivably the
Company's patents may not be granted, or (if granted) may subsequently be found
invalid or unenforceable, or otherwise be successfully challenged. Furthermore,
any patent issued to the Company may not provide the Company with any
competitive advantages, the Company may not develop future proprietary products
or technologies that are patentable, and the patents of others may seriously
limit the Company's ability to do business.


                                       21
<PAGE>

Despite the Company's efforts to protect its proprietary rights, unauthorized
parties may attempt to copy aspects of the Company's products or to obtain and
use information that the Company regards as proprietary. Policing unauthorized
use of the Company's products is difficult, and while the Company is unable to
determine the extent to which piracy of the Company's software products has
occurred or will hereafter occur, software piracy can be expected to be a
potential problem. In addition, effective patent, trademark, service mark,
copyright and trade secret protection may not be available in every country in
which the Company's products are sold. There can be no assurance that the steps
taken by the Company to protect its proprietary rights will be adequate or that
third parties will not infringe or misappropriate the Company's technology,
patent applications, trademarks, trade dress and similar proprietary rights.

In addition, while the Company is not aware of its products, trademarks or other
proprietary rights infringing the proprietary rights of third parties, there can
be no assurance that other parties will not assert infringement claims against
the Company in the future based on current or future products. The Company may
be subject to legal proceedings and claims from time to time in the ordinary
course of its business, including claims of alleged infringement of the patents,
trademarks and other intellectual property rights of third parties by the
Company and its licensees. Such claims, even if not meritorious, could result in
the expenditure of significant financial and managerial resources. In addition,
parties making these claims may be able to obtain an injunction, which could
prevent the Company from selling its products in the United States or abroad.
Any of these results could harm the Company's business. The Company may
increasingly be subject to infringement claims as the number of products and
competitors in the Company's industry grow and functionalities of products
overlap. Furthermore, former employers of the Company's current and future
employees may assert that the Company's employees have improperly disclosed
confidential or proprietary information to the Company.

COMPETITION

The software industry is intensely competitive and subject to rapid
technological change. The Company's success will depend significantly on its
ability to adapt to a changing competitive environment, to develop more advanced
products more rapidly and less expensively than its competitors, and to educate
potential customers as to the benefits of its products relative to those of its
competitors. The Company's current competitors include:

      * Visionics Corporation, a subsidiary of Identix Incorporated (a publicly
traded company), whose provide facial recognition technology (Identix'
FaceIt(R)) powers ABIS, is a recognized leader in the facial recognition market
as proven in independent government evaluations, and is also believed to be one
of the most widely deployed facial recognition technology among governments and
corporations across the globe.

      * Viisage Technology, Inc., a publicly traded company

      * Smith and Wesson, whose product is Identi-Kit

      * Imageware Inc., whose product is comprised of various modules such as
Suspect ID, Face ID, Crime Lab, Crime Capture System and Vehicle ID

      * Asplay Limited, whose product is E-fit.

      * The SIRCHIE Group, which produces a variety of criminal investigation
equipment and supplies.


We believe that the principal competitive factors in its markets are price,
product features, product performance, ease of use, quality of support and
service, company reputation. We intend to compete vigorously in all of these
aspects. We believe that its product offering is superior to competing products
in terms of price, ease of use, depth and extent of data bank, and data transfer
capacity. Nevertheless, most of our current and potential competitors have
longer operating histories, greater brand recognition, larger customer bases and
significantly greater financial, marketing and other resources than we do. Such
competitors may be able to respond more quickly to new or emerging technologies
and changes in customer requirements or devote greater resources to the
development, promotion and sales of their products than we do. Also, most
current and potential competitors have greater name recognition. Some could
possess the ability to leverage significant installed customer bases. These
companies could integrate their software with their widely accepted products
which would result in a loss of market share for our company. Moreover, current
and potential competitors may make strategic acquisitions or establish
cooperative relationships among themselves or with third parties, thereby
increasing their ability to address the needs of our company's prospective
customers. Our company's current or future vendors may in the future establish
cooperative relationships with current or potential competitors of our company,
thereby limiting our ability to sell its products through particular
distribution channels. Accordingly, new competitors or alliances among current
and new competitors could emerge and rapidly gain significant market share. Such
competition could materially adversely affect our ability to sell its products.



                                       22
<PAGE>

We expect additional competition as other established and emerging companies
enter into the facial composite software market and new products and
technologies are introduced. Our company's future and existing competitors could
introduce products with superior features, scalability and functionality at
lower prices than our company's products. Increased competition could result in
price reductions, fewer customer orders, reduced gross margins, longer sales
cycles and loss of market share, any of which would materially adversely affect
our company's business, operating results and financial condition. Our company
may not be able to compete successfully against current and future competitors,
and the failure to do so would result in our company's business being materially
and adversely affected.

EMPLOYEES

As of September 30, 2003, our company had two full-time employees and 10
actively engaged consultants and part-time employees for a total of 12 persons.
Although the competition for employees is at times intense due to market
conditions, our company does not now foresee problems in hiring additional
qualified employees to meet its labor needs. Our company's employees are not
covered by a collective bargaining agreement and relations with them are
considered to be good.

FACILITIES

We lease our principal executive offices at 39111 Paseo Padre Parkway, Suite
304, Fremont CA 94538. We have no reason to believe that the landlord under the
lease has any intention to terminate or otherwise not renew such lease. In
addition, the Company believes that adequate, alternative premises could be
located if such lease were ever terminated or otherwise not renewed.

ITEM 3. LEGAL PROCEEDINGS

None.

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

None.

PART II.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.


The Company's common stock (the "Common Stock") is traded on the OTC Bulletin
Board under the symbol "IQBM.OB". As of September 30, 2003, the Company had
approximately 180 holders of record. Presented below are the high and low bid
information of our common stock for the periods indicated. The source of the
following information is MSN Money. These quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.



                                       23
<PAGE>

                                            High              Low
                                            ----              ----

Fiscal year ending June 30, 2003:

Fourth Quarter                              $1.56             $ .55

Third Quarter                               $1.07             $ .20

Second Quarter .                            $0.90             $ .20

First Quarter .                             $0.95             $ .51

Fiscal year ending June 30, 2002:

Fourth Quarter                              $2.00             $ .55

Third Quarter                               $2.85             $ .20

Second Quarter                              $0.30             $ .09

First Quarter                               $0.18             $ .12

The Company has never paid cash dividends, and has no intentions of paying cash
dividends in the foreseeable future.


In June 2003, the Company issued to two investors its 10% secured convertible
debentures in the aggregate original principal amount of $400,000. In addition
to their conversion feature, these debentures permit the holder to purchase
additional shares of common stock whose number depends on the amount of
outstanding principal and accrued interest on the debentures at the relevant
time. The issuances of these debentures are claimed to be exempt, and the
issuance of the common stock underlying or purchasable pursuant to these
debentures will be claimed to be exempt, pursuant to Sections 4(2) and 4(6) of
the Securities Act of 1933.

In April 2003, the Company issued to two investors its 10% secured convertible
debentures in the aggregate original principal amount of $400,000. In the event
the Company repays at least 75% of the principal of the note prior to maturity,
the holder of the note has the right to purchase a number of shares of the
Company's common stock equal to 25% of the aggregate principal and interest at
$0.20 per share . These debentures also entitle the holder to receive warrants
to purchase additional shares of common stock whose number depends on the amount
of outstanding principal and accrued interest on the debentures at the relevant
time. The issuances of these debentures are claimed to be exempt, and the
issuance of the common stock underlying or purchasable pursuant to these
debentures and the issuance of the warrants and of the common stock underlying
the warrants will be claimed to be exempt, pursuant to Sections 4(2) and 4(6) of
the Securities Act of 1933.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

GENERAL

IQ Biometrix, Inc. is a provider of security software and services primarily to
law enforcement agencies and the security industry, headquartered in Fremont,
California. IQ Biometrix markets, distributes and sells a facial composite
software tool called FACES(TM) to federal, state and local law enforcement
agencies and the security industry in the United States and abroad.

During fiscal year 2003 we derived substantially all of our revenues from sales
of our FACES(TM) 3.0 product. In July 2003, we launched FACES(TM) 4.0. FACES(TM)
4.0 contains significant enhancements and new features over FACES(TM) 3.0,
including the ability to use the TRAK service offered by Social Tech, Inc.,
which allows any police officer to create high-resolution photo bulletins and
share them electronically with other law enforcement jurisdictions, the media,
and the community where appropriate. Revenues in fiscal year 2002 and 2003 were
derived from a diverse customer base sold mainly in units of 1 to 50. No
customer was responsible for more than 2% of revenues and 90% of our revenues
came from sales to new customers.


                                       24
<PAGE>

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 recently began
to seek relationships with international distributors and resellers to sell our
products internationally.

Cost of revenues currently consists of inventory 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 substantially for our
products, both domestically and internationally, in order to increase market
awareness and to generate 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.

General and administrative expenses consist primarily of salaries and related
expenses for executive, finance, accounting, information technology, facilities,
and human resources personnel. We expect these expenses to increase as we
continue to add personnel and incur additional costs related to the growth of
our business and our operations as a public company. In addition for the fiscal
year ended June 30, 2003, general and administrative expenses included the
issuance of approximately 1.4 million shares of our common stock to consultants
and other service providers.

Research and development expenses increased 7% from $138,000 for the twelve
months ended June 30, 2002 to $147,000 for the twelve months ended June 30, 2003
primarily related to the development of FACES(TM) 4.0. Research and development
expenses consist primarily of salaries and related personnel expenses, fees paid
to consultants and outside service providers, and other expenses related to the
design, development, testing and enhancements of our products. We expense our
research and development costs as they are incurred. We believe that a
significant level of investment for product research and development is required
to remain competitive. Accordingly, we expect to continue to devote substantial
resources to product research and development, and we expect our research and
development expenses to continue to increase in the future.

                         LIQUIDITY AND CAPITAL RESOURCES

From our inception in 2002 we have financed our operations primarily through
private sales of common stock and convertible debentures. At June 30, 2003 we
had negative working capital of approximately $935,000 which consisted of
convertible debentures in the amount of $538,000 and $168,000 owed to members of
our board of directors.

As of June 30, 2003, we had a liquidity shortfall and there is a "Going Concern"
reservation in our auditor's opinion for the year ended June 30, 2003. However,
we believe we have sufficient cash and cash flow to meet our current operating
cash flow requirements for the next four to six months. At June 30, 2003 we had
cash of $97,680, accounts payable of approximately $143,000 and accrued expenses
of approximately $401,700 of which $168,000 was owed to members of the Company's
board of directors.

Net cash used in operations was approximately $981,000 in the fiscal year ended
June 30, 2003 as compared to $889,000 in the period of July 10 (inception) to
June 30, 2002. Primarily attributable to the increase were general and
administrative expenses of $400,000, sales and marketing expenses of $150,000
offset by increased accrued liabilities of $400,000 related mainly to accrued
salaries of $110,000, accrued stock rights of $168,000 and expenses due the
Company's officers of $51,000, and increased accounts payable due to timing of
vendor payments. Our expenditures for capital equipment were minimal in fiscal
year ended June 30, 2003. We expect that our capital expenditures will continue
to be minimal in fiscal 2004. We have reduced our monthly net cash used to
approximately $75,000 from $110,000, and are continuing to seek cost reductions.
Also the shipping of product will reduces our need for outside funding
requirements. Our internal cash flow model indicates we can break even with our
current cost structure with approximately $1.0 Million in revenue.


                                       25
<PAGE>

In addition, we are continuing our efforts to locate sources of funding. We make
no assurance that financing can be achieved. Should we fail to meet our
obligations, both past and as they come due, through additional financing or
increased revenue, we will not be able to remain a viable entity. We expect
operating losses and negative operating cash flows to continue for at least the
next twelve months, because of operating costs and expenses related to brand
development; marketing and other promotional activities; hiring of management,
sales and other personnel; the expansion of infrastructure and customer support
services; strategic relationship development; and potential acquisitions of
related complementary businesses,

However 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. However, as a result of the capital raised during the
first and second quarters of fiscal 2004, we expect our available funds,
combined with cash generated from existing operations and new customers, will be
sufficient to meet our anticipated working capital needs through September 30,
2004 assuming that all of the outstanding convertible debentures are converted
into our common stock. However, we can make no assurances that the debentures
will be converted and to the extent that the debentures are not converted and we
are unable to fund operations with increases in revenue, we may not have
sufficient cash and cash flow to meet our future operating cash flow
requirements.

We currently have no borrowings available to us under any credit arrangement,
and we will look for additional debt and equity financing's should cash provided
from operations be insufficient to support the 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.


                                       26
<PAGE>

RECENT EVENTS


In March, April and May 2003, IQ Biometrix completed the issuance of $400,000 in
10% secured convertible debentures due April 1, 2004. Interest is payable in
cash or common stock, assuming full conversion and no early retirement as of
June 30, 2003, these debentures were convertible into 1.6 million shares of the
Company's common stock excluding interest.


In May 2003, IQ Biometrix entered into a "Letter of Intent" (LOI) to acquire
Network Storage Solutions, Inc. (NSS) of Chantilly, VA. The LOI was subsequently
cancelled in August 2003.

In June 2003, IQ Biometrix completed the issuance of $400,000 in 10% secured
convertible debentures in connection with the NSS LOI. We in turn lent these
funds to NSS in exchange for a fully secured $400,000 note. Upon the
cancellation of our LOI we mutually agreed upon a repayment plan of which NSS
has made its first two payments. However, NSS did not make the scheduled payment
in September and does not appear to have the ability to repay the note.
Therefore, we recorded an allowance for doubtful note receivable totaling
$350,000 at June 30, 2003.

In September 2003, we completed the issuance of $500,000 in 6% secured
convertible debentures due in September 2004.

RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 2003 AND 2002

Revenues increased 8% from $98,000 to $106,000 for twelve months ended June 30,
2002 and 2003 respectively, primarily as a result of the increase in sales to
new customers. Gross Revenues were the sale of Faces 3.1 and Faces LE software.
Revenue from our latest quarter was from a diverse retail customer base sold
mainly in units of 1 to 50. No customer made up more than 2% of gross revenue
and 90% of our revenue came from new customers.

Gross profit margin for the period was 68% compared to 76% for twelve months
ended June 31, 2002 and 2003 respectively. Product cost in 2002 was low due to
the value assigned to inventory as part of the purchase price allocation and our
running off old inventory prior to start of selling Faces 4.0.

Selling and marketing expense increased 128% from $114,000 to $260,000 for the
twelve months ended June 30, 2002 and 2003 respectively. The increase in selling
expenses in fiscal 2003 was due to increase in sales personnel and public
relations related to the presale and pending release of Faces 4.0. In fiscal
2002 there was a ramp up for the release of Faces 3.1 and Faces LE.

General and administrative expenses increased 266% from $776,000 for the twelve
months ended June 30, 2002 to $2,897,000 for the twelve months ended June 30,
2003. The increase in general and administrative expenses was due to increases
in administrative personnel as well as expenses related to our fundraising
efforts, including investor relations expenses of approximately $697,000,
business consulting expenses of approximately $283,000, investment banking fees
of approximately $233,000, legal and audit fees of approximately $321,000 and
payroll and travel expenses of approximately $525,000. Of these expenses
$1,379,000 were paid in the form of our common stock.

Research and development expenses increased 266% from $138,000 to $147,000 for
the twelve months ended June 30, 2002 and 2003. These expenditures are
associated with the development of producing Faces 4.0. We anticipate
development expenses for fiscal 2004 to approach $250,000 for the development of
Faces 5.0 software.

A provision for uncollectible note receivable consists of an allowance on a note
receivable due from NSS, which we are still trying to collect.

Interest expense for the twelve months for the twelve months ended June 30, 2003
was $282,000 which is related to the issuance of debentures $1,200,000.

CRITICAL ACCOUNTING POLICIES

Intangible Assets


                                       27
<PAGE>

Intangibles consist of software, including purchased software, and development
of new software products and enhancements to existing software products. Until
technological feasibility is established, costs associated with software
development, including costs associated with the acquisition of intellectual
property relating to software development, is expensed as incurred. After
technological feasibility is established and until the products are available
for sale, software development costs are capitalized and amortized over the
greater of the amount computed using (a) the ratio that current gross revenue
for the product bears to the total of current and anticipated future gross
revenue for that product or (b) the straight line method over the estimated
economic life of the product including the period being reported on. The
amortization period has been determined as the life of the product, which is
three years. During fiscal 2002 and 2003, the Company's software costs were
amortized straight-line over three years resulting in $26,939 of amortization in
fiscal 2003, which is included in cost of goods sold in our accompanying
statement of operations. The Company estimates amortization expense of
approximately $48,000 in fiscal 2004, $26,000 in fiscal 2005 and $21,000 in
fiscal 2006. At June 30, 2003 we had a net carrying value for our intangible
assets of $94,000.

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.

RISK FACTORS AND CAUTIONARY STATEMENTS

Forward-looking statements in this report are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. We wish to
advise readers that actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
expressed in or implied by the statements, including, but not limited to, the
following: our ability to meet our cash and working capital needs, our ability
to successfully market our product, and other risks detailed in our periodic
report filings with the Securities and Exchange Commission.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The report of Company's Independent Auditors appear at Page F-1 hereof, and the
Financial Statements of the Company appear at Page F-2 through F-13 hereof.

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

Not applicable.


                                       28
<PAGE>

ITEM 8A. CONTROLS AND PROCEDURES


The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer/Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based closely on the definition of "disclosure
controls and procedures" in Rule 13a-14(c). In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures. The Company maintains that the
controls and procedures in place do provide reasonable assurance that all
necessary disclosures are communicated as required.

At the end of the period covered by this Annual Report, the Company carried out
an evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer/Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures. Based on the foregoing, the Company's Chief
Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures were effective to ensure that all material
information required to be filed in this Annual Report has been made known to
them in a timely fashion.


There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the internal controls subsequent
to the date the Company completed its evaluation.

PART III.

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

The directors and executive officers of the Company are as follows:

Name                       Age           Positions

William Scigliano          42            Director and Chief Executive Officer
Greg Micek                 47            Director, VP of Corporate Development
Morden C. Lazarus          61            Director
Eric McAfee                40            Director
Seth Horn                  47            Chief Financial Officer, Treasurer &
                                         Controller

William Scigliano has served a Director of the Company since November 2002 and
as Chief Executive Officer of the Company since September 2002. Prior to that
time, he had served as Executive Director of the Corporate and Public Issues
Division of Ministry of the Attorney General of British Columbia since 1991. Mr.
Scigliano received a Bachelors Degree from the University of Victoria and a
Masters Degree from the Graduate School of Business Administration of the
University of Oregon.

Greg J. Micek has served as a Director of the Company since inception. In
addition, from March to September 2003, Mr. Micek served as the Company's Vice
President of Corporate Development. From July 2002 until March 2003, Mr. Micek
served as the Company's President. From March 2002 until July 2002, Mr. Micek
served as the Company's Executive Vice President and Chief Financial Officer.
Since 1983, Mr. Micek has been a principal of The Micek Group, a consulting
firm. Mr. Micek received a Bachelor of Arts and a Doctorate of Jurisprudence
from Creighton University.

Morden C. Lazarus has served as a director of the Company since July 2002. Mr.
Lazarus has served as a principal of the Montreal law firm of Lazarus,
Charbonneau since 1967. He is a member of the Board of Directors of DPC
Biosciences Corporation (a company whose shares are traded on the Canadian
Venture Stock Exchange), and Anchor Gaming (Canada) Inc. and United Tote
(Canada) Inc. (subsidiaries of International Game Technology, a NYSE-traded
company). Mr. Lazarus is also Chairman and Chief Executive Officer of ISee3D
Inc., company whose shares are publicly traded on the TSX Venture Exchange (a
subsidiary of the Toronto Stock Exchange). He received his law degree from
McGill University in Montreal.


                                       29
<PAGE>

Eric McAfee has served as a director since March 2002 and was formerly the
Chairman of the Board of the Company. In January 1998, he founded and became a
principal of the Berg McAfee Companies, a venture capital partnership based in
Cupertino, California, with investments in Internet, software and
telecommunications companies. Mr. McAfee remains a principal of the Berg McAfee
Companies. From May 1995 until January 1998, he operated McAfee Capital, a
venture capital firm. Mr. McAfee is a graduate of Fresno State University with a
B.S. in Management (with an emphasis in statistics) and the Stanford Graduate
School of Business Executive Program.

Seth Horn was elected Chief Financial Officer in March 2003; concurrently, he is
the Chief Financial Officer of The Players Network since October 1999. From
November 2001 to January 2003 he was Chief Financial Officer of Global Business
Services, Inc. From August 1997 to October 1999 he was a financial consultant to
Powerine Oil Company. From August 1995 to August 1997 he was Chief Financial
Officer and Controller of International Vinyl Products. Mr. Horn spent ten years
in investment and corporate banking, and five years in public accounting. Mr.
Horn graduated with a BS in Accounting from the Pennsylvania State University in
1976 and has been a CPA since 1980.


The authorized number of directors of our Company is presently fixed at five.
The Board of Directors is contemplating its expansion as well-qualified
additional persons can be persuaded to serve on the Board. The timing of any
expansion and the identity of any person who will be elected as an additional
director to fill the newly-created vacancies are not known at this time.


Currently, our directors receive no remuneration for their services as such, but
the Company will reimburse the directors for any expenses incurred in attending
any directors' meeting.

There are no family relationships, or other arrangements or understandings
between or among any of the directors, executive officers or other person
pursuant to which such person was selected to serve as a director or officer,
other than for a voting agreement in favor of Greg J. Micek, pursuant to which
Pierre Cote, Sylvie Lariviere and Eric McAfee agreed until March 22, 2004 to
vote all of their shares of common stock in the Company to elect Mr. Micek or
his nominee to the Company's Board of Directors.

SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires that the Company's officers and directors, and person who own
more than ten percent of a registered class of the Company's equity securities,
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and furnish the Company with copies of all such Section
16(a) forms. The following officers and directors failed to file the following
Forms (on a timely basis) for the fiscal year ending June 30, 2003: (1) with
regard to William Scigliano, the following filings were not made: an initial
Form 3 upon the grant of an option, a Form 4 regarding a subsequent option and a
Form 5 required to report the transactions that should have been reported on the
Form 3 and the Form 4; (2) with regard to Greg Micek, the following filing was
not made: a Form 4 regarding an option grant (this Form was subsequently filed);
(3) with regard to Morden C. Lazarus, the following filing was not made: an
initial Form 3 when Mr. Lazarus became a director (this Form was subsequently
filed) and a Form 4 regarding a subsequent stock grant to an entity in which Mr.
Lazarus holds an ownership interest and a Form 5 required to report the
transactions that should have been reported on the Form 4; (4) with regard to
Seth Horn, , the following filings were not made: an initial Form 3 regarding a
stock grant option and a Form 5 required to report the transaction that should
have been reported on the Form 3; and (5) with regard to Riley Repko (who served
briefly as a director), the following filings were not made: an initial Form 3
regarding a stock grant option and a Form 5 required to report the transaction
that should have been reported on the Form 3. In addition, the Company has
reason to suspect, but is not in a position to confirm, that Pierre Cote (a
holder during fiscal 2003 of more than 10% of the Company's outstanding shares)
may have failed during fiscal 2003 to file one or more Form 4's and a Form 5 to
report one or more transactions that should have been reported on a Form 4.
Based solely on its review of written representations from certain reporting
person, the Company believes that, during fiscal 2003, each of its officers,
directors and greater than ten percent stockholders complied with all such
applicable filing requirements.


                                       30
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION.

                           SUMMARY COMPENSATION TABLE

The following table sets forth the compensation paid by the Company to its Chief
Executive Officer for services in all capacities to the during the fiscal years
ended June 30, 2003 and 2002 (no other executive officer of the Company had
total annual salary and bonus for the fiscal years ended June 30, 2003 or 2002
exceeding $100,000) (for purposes hereof, the Chief Executive Officer of the
Company is referred to herein as the "Named Executive Officer").

                         SUMMARY COMPENSATION TABLE (1)

                             ANNUAL                                 LONG-TERM
                             COMPENSATION                           COMPENSATION

(A)                          (B)                 (C)                    (F)
                             FISCAL
NAME AND                     YEAR                                   RESTRICTED
PRINCIPAL POSITION           ENDED              SALARY              STOCK AWARDS

William Scigliano            6/30/03           $130,000(2)             $0
Chief Executive
Officer

Richard Thompson             6/30/02           $ 43,333(3)           $90,000(4)
Chief Executive
Officer

----------
(1) The Columns designated by the Commission for the reporting of certain
bonuses, other annual compensation, securities underlying options/SARs, long
term incentive plan payouts, and all other compensation, have been eliminated as
no such bonuses, other annual compensation, underlying securities, payouts or
compensation were awarded to, earned by, paid to or outstanding with respect to
any specified person during any fiscal year covered by the table.

(2) Mr. Scigliano became Chief Executive Officer in July, 2002.

(3) Mr. Thompson became Chief Executive Officer on March 23, 2002. He ceased
serving as the Company's Chief Executive Officer on July 17, 2002.

(4) In connection with the Merger, the Company assumed a grant of 500,000
restricted shares made by IQB to Mr. Thompson on April 1, 2001. These restricted
shares are subject to vesting. Of these shares, 200,000 vested on the date of
the grant, and 25,000 shares were to vest every three months thereafter. The
figure in the table is based on the 500,000 restricted shares granted multiplied
by $.18, the most recent closing price of the Company's stock prior to the date
of grant. Mr. Thompson's employment with the Company ceased on July 17, 2002. By
that time, 250,000 of the restricted shares had vested. Mr. Thompson and the
Company agreed that he would be entitled to retain these 250,000 shares, but
that the remaining 250,000 unvested restricted shares would be forfeited. These
250,000 restricted shares had a value of $212,500 as of June 30, 2003, based on
the $.85 closing price of the Company's stock on that date.

                               STOCK OPTION GRANTS

The table below set forth information pertaining to stock options granted to the
Named Executive Officer during the fiscal year ended June 30, 2003. No SAR's of
any kind were granted.


                                       31
<PAGE>

                      OPTION GRANTS IN THE LAST FISCAL YEAR

<TABLE>
<CAPTION>
(A)                        (B)              (C)                        (D)        (E)
                           NUMBER OF
                           SECURITIES       PERCENTAGE OF TOTAL
                           UNDERLYING       OPTIONS GRANTED
                           OPTIONS          TO EMPLOYEES               EXERCISE   EXPIRATION
NAME                       GRANTED(1)       IN FISCAL YEAR             PRICE      DATE
----------------------------------------------------------------------------------------------
<S>                        <C>              <C>                        <C>        <C>
William Scigliano          600,000(1)       36%                        $ .50(2)   7/31/07
                           200,000(1)       12%                        $1.10      4/ 2/08
</TABLE>
----------
(1) This option vests with respect to 25,000 options shares every month after
the grant until the option become fully vested.

(2) The closing price of the Company's common stock was $.85 on July 29, 2002,
the last day on which such common stock traded preceding this option grant. The
closing price of the Company's common stock was $.54 on August 2, 2002, the next
day on which such common stock traded after this option grant.

                  OPTION EXERCISES/VALUE OF UNEXERCISED OPTIONS

During the fiscal year ended June 30, 2003, no stock options were exercised by
the Named Executive Officer of the Company. As June 30, 2003, the Company had
not granted any SAR's of any kind. The table below set forth information
pertaining to the value of unexercised stock options held by the Named Executive
Officer as of June 30, 2003.

                       AGGREGATED OPTION EXERCISES IN LAST
                FISCAL YEAR AND FISCAL YEAR END OPTION VALUES (1)

<TABLE>
<CAPTION>
(A)                       (D)                                    (E)

                          NUMBER OF SECURITIES
                          UNDERLYING UNEXERCISED                  VALUE OF UNEXERCISED
                          OPTIONS AT JUNE 30, 2003                IN-THE-MONEY OPTIONS AT
                          (NUMBERS OF SHARES)                     JUNE 30, 2003(2)
NAME                      EXERCISABLE       UNEXERCISABLE         EXERCISABLE      UNEXERCISABLE
----                      -----------       -------------         -----------      -------------
<S>                        <C>               <C>                   <C>              <C>
William Scigliano          350,000           450,000               $ 96,250         $113,750
Chief Executive
Officer
</TABLE>

----------
(1) The Columns designated by the U.S. Securities and Exchange Commission for
the reporting of the number of shares acquired upon exercise and the value
realized have been eliminated as no options were exercised by any specified
person during any fiscal year covered by the table.

(2) Based on the June 30, 2003 closing price of the Company's common stock of
$.85 per share.


                                       32
<PAGE>

                   COMPENSATION AGREEMENTS WITH KEY PERSONNEL

Our company has entered into an employment agreement (the "Scigliano Employment
Agreement") with William Scigliano, the Chief Executive Officer of the Company.
The Scigliano Employment Agreement has a term of two years and will expire in
accordance with its terms at the end of July 2004, subject to an earlier
termination upon the occurrence of certain customary events. Under the Scigliano
Employment Agreement, Mr. Scigliano is to receive an annual salary of $130,000.
He also received a $25,000 signing bonus upon execution of the Scigliano
Employment Agreement. Mr. Scigliano is also entitled to participate in any and
all employee benefit plans hereafter established for the employees of the
Company and to receive an expense reimbursement of up to $5,000 per month.

The Scigliano Employment Agreement does not contain any covenant not to compete.
Moreover, pursuant to an agreement between the Company and Mr. Scigliano, the
Company granted to Mr. Scigliano options to purchase 600,000 shares of Common
Stock at a per-share purchase price of $.50. These options vest over time so
that options to purchase 25,000 shares will vest on each of month until fully
vested. Unexercised options will expire on August 1, 2007, unless they expire
earlier upon the occurrence of certain customary events.

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

                           BENEFICIAL STOCK OWNERSHIP

The following table sets forth as of October 11, 2003 information regarding the
beneficial ownership of Common Stock (i) by each stockholder who is known by the
Company to own beneficially in excess of 5% of the outstanding Common Stock;
(ii) by each director; (iii) by each executive officer; and (iv) by all
executive officers and directors as a group. Except as otherwise indicated, all
persons listed below have (i) sole voting power and investment power with
respect to their shares of Common Stock, except to the extent that authority is
shared by spouses under applicable law, and (ii) record and beneficial ownership
with respect to their shares of Common Stock.


Name and Address of                        Beneficial Ownership(1)
Beneficial Owner                           Number of Shares           Percent
----------------                           ----------------           -------
Pierre Cote                                  1,719,549(2)               8.2%
2555 W. Bluff #179
Fresno, California 93711

Forte Capital Partners LLC                   1,650,000(3)               7.7%
4 Embarcadero Center, Suite 1590
San Francisco, CA 94111

Daniel McKelvey                              1,650,000 (4)              7.7%
4 Embarcadero Center, Suite 1590
San Francisco, CA 94111

Marcos Santos                                1,650,000 (5)              7.7%
4 Embarcadero Center, Suite 1590
San Francisco, CA 94111

Special Equity IV, LP                        1,650,000(6)               7.7%
4 Embarcadero Center, Suite 1590
San Francisco, CA 94111

Clyde Berg                                   1,724,145(7)               9.4%
10600 N. De Anza Boulevard
Cupertino, California 95014


Eric McAfee                                  1,676,350(8)               8.0%
10600 N. De Anza Boulevard
Cupertino, California 95014

Greg J. Micek                                1,526,428(9)               7.2%
5444 Westheimer, Suite 2080
Houston, Texas 77056

Sylvie Lariviere                             1,415,420(10)              6.7%
293 Cahungea Street
Fresno, California 93035

Cagan McAfee Fund                            1,000,000(11)              5.4%
10600 N. De Anza Boulevard
Cupertino, California 95014

Bill Scigliano                               550,000(12)                2.6%
39111 Paseo Parkway, Suite 304
Fremont, Ca 94538

Morden C. Lazarus                            336,355(13)                1.6%
759 Square Victoria, Suite 200
Montreal, QC
CANADA  H2Y 2J7

Seth Horn                                     67,000                     *
39111 Paseo Parkway, Suite 304
Fremont, Ca 94538

All directors and officers
as a group (five persons)                    4,156,133(14)              18.9%


----------
*     Less than one percent


                                       33
<PAGE>

(1) Includes shares of Common Stock beneficially owned pursuant to options and
warrants exercisable on October 11, 2003 or within 60 days thereafter.

(2) In a Schedule 13D and a Form 3 both filed with the Commission on June 2,
2002, Mr. Cote reported his direct ownership of 3,163,549 shares. Subsequently,
the Company believes that Mr. Cote has sold 1,445,000 shares since that time.

(3) Includes 1,650,000 shares beneficially owned by Special Equity IV, LP (Forte
Capital Partners LLC serves as the general partner of Special Equity IV, LP and
thus may be deemed to beneficially own shares beneficially owned by Special
Equity IV, LP; the foregoing 1,650,000 shares are also reflected in the table
for the beneficial ownership figures for Special Equity IV, LP); does not
include an indeterminable number of shares into which a convertible debenture
may be converted more than 60 days after October 11, 2003, and an indeterminable
number of shares that may be acquired pursuant to warrants to be issued in the
future as origination fees relating to a convertible debenture.

(4) Includes 1,650,000 shares beneficially owned by Forte Capital Partners LLC
(Mr. McKelvey serves as a manager of Forte Capital Partners LLC and thus may be
deemed to beneficially own shares beneficially owned by Forte Capital Partners
LLC); the foregoing 1,650,000 shares are also reflected in the table for the
beneficial ownership figures for Forte Capital Partners LLC and Marcos Santos.

(5) Includes 1,650,000 shares beneficially owned by Forte Capital Partners LLC
(Mr. Santos serves as a manager of Forte Capital Partners LLC and thus may be
deemed to beneficially own shares beneficially owned by Forte Capital Partners
LLC); the foregoing 1,650,000 shares are also reflected in the table for the
beneficial ownership figures for Forte Capital Partners LLC and Daniel McKelvey.

(6) Includes 1,200,000 shares owned outright and 450,000 shares beneficially
owned pursuant to warrants exercisable within 60 days after October 11, 2003;
does not include 150,000 shares that may be acquired pursuant to warrants not
exercisable within 60 days after October 11, 2003; the foregoing 1,650,000
shares are also reflected in the table for the beneficial ownership figures for
Forte Capital Partners LLC, Daniel McKelvey and Marcos Santos.

(7) Includes 1,629,570 shares held directly; includes 94,575 shares held by the
Berg McAfee Companies, a partnership in which Mr. Berg holds a partnership
interest (such 94,575 shares are also included in the table in the figure of
shares beneficially owned by Eric McAfee).

(8) Includes 581,775 shares held directly; includes 1,000,000 shares held by the
Cagan McAfee Fund, a partnership in which Mr. McAfee holds a partnership
interest (such 1,000,000 shares are also included in the table in the figure of
shares beneficially owned by the Cagan McAfee Fund); includes 94,575 shares held
by the Berg McAfee Companies, a partnership in which Mr. McAfee holds a
partnership interest (such 94,575 shares are also included in the table in the
figure of shares beneficially owned by Clyde Berg).

(9) Includes 1,206,428 shares held directly, 275,000 shares beneficially owned
pursuant to stock options currently exercisable, and 45,000 shares beneficially
owned pursuant to warrants currently exercisable; does not include an
indeterminable number of shares that may be acquired pursuant to warrants to be
issued in the future as a consequence of the Company's failure to pay an
outstanding promissory note.

(10) Includes 1,265,420 shares held directly and 150,000 shares beneficially
owned pursuant to stock options currently exercisable.

(11) These shares are also included in the table in the figure of shares
beneficially owned by Eric McAfee.

(12) Includes 550,000 shares beneficially owned pursuant to warrants that are
vested or are expected to vest within 60 days after October 11, 2003 and that
are either currently exercisable or will be immediately exercisable upon
vesting; does not include 50,000 shares that may be acquired pursuant to
warrants that will not vest within 60 days after October 11, 2003.

(13) Includes 156,355 shares held directly; 180,000 shares beneficially owned
pursuant to stock options currently exercisable.

(14) Includes 2,011,558 shares held directly; includes 1,094,575 shares held by
affiliated entities; and 1,050,000 shares beneficially owned pursuant to stock
options and warrants that are vested or are expected to vest within 60 days
after October 11, 2003 and that are either currently exercisable or will be
immediately exercisable upon vesting; does not include 50,000 shares that may be
acquired pursuant to warrants that will not vest within 60 days after October
11, 2003.


                                       34
<PAGE>

                            EQUITY COMPENSATION PLANS

The Company has three equity compensation plans for its employees, Directors and
consultants pursuant to which options, rights or shares may be granted or
issued. These plans include the Company's Year 2003 Consultant Compensation
Plan, the Company's 2000 Non-Qualified Stock Option Plan and the IQ Biometrix
California, Inc. 2001 Stock Plan. Further information on the material terms of
these plans is given below.

The following table provides information as of June 30, 2003 with respect to our
compensation plans (including individual compensation arrangements), under which
securities are authorized for issuance aggregated as to (i) compensation plans
previously approved by stockholders, and (ii) compensation plans not previously
approved by stockholders:

                      EQUITY COMPENSATION PLAN INFORMATION

             EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                                                               NUMBER OF SECURITIES
                                                                               REMAINING AVAILABLE
                                                                               FOR FUTURE ISSUANCE UNDER
                           NUMBER OF SECURITIES TO       WEIGHTED-AVERAGE      EQUITY COMPENSATION
                           BE ISSUED UPON EXERCISE       EXERCISE PRICE OF     PLANS (EXCLUDING
                           OF OUTSTANDING OPTIONS,       OUTSTANDING OPTIONS,  SECURITIES REFLECTED IN
                           WARRANTS AND RIGHTS           WARRANTS AND RIGHTS   COLUMN (A))
PLAN CATEGORY                      (A)                        (B)                       (C)
<S>                                <C>                        <C>                  <C>
Equity compensation
plans approved by                  -0-                        -0-                       -0-
security holders

Equity compensation
plans not approved by              3,880,885(1)               $.403(1)             908,517(2)
security holders

TOTAL                              3,880,885 (1)              $.403(1)             908,517(2)
</TABLE>

(1) Of these options, warrant and rights, 1,738,160 were assumed by the Company
in connection with its merger involving IQ Biometrix California, Inc. The
weighted-average exercise price of the assumed options, warrant and rights was
$.325.

(2) Of these securities, 275,316 were available for issuance as of June 30, 2003
pursuant to the Company's Year 2002 Consultant Compensation Plan, other than
upon the exercise of an option, a warrant or a right. Subsequent to June 30,
2003, all of these 275,316 shares of common stock have been issued.

                COMPANY'S YEAR 2003 CONSULTANT COMPENSATION PLAN

The following is a description of the material features of the Company's
Consultant Plan (the "Consultant Plan").

GENERAL. On July 17, 2003, the Company's Board of Directors approved the
Consultant Plan. The Consultant Plan provides for the grant of shares of the
Company's Common Stock to certain outside consultants of the Company who assist
in the development and success of the business of the Company to reward them for
their services and to encourage them to continue to provide services to the
Company.

ADMINISTRATION. The Consultant Plan is administered by a committee (the
"Committee") of not less than two directors of the Company selected by, and
serving at the pleasure of, the Company's Board of Directors.

ELIGIBILITY. The Committee has substantial discretion pursuant to the Consultant
Plan to determine the persons to whom shares of Common Stock are awarded and the
amounts and restrictions imposed in connection therewith. Under the Consultant
Plan, awards may be made only to individuals who are outside consultants, or
directors, officers, partners or employees of outside consultants, of the
Company or a subsidiary. The number of consultants employed by the Company
varies.


                                       35
<PAGE>

SHARES SUBJECT TO THE CONSULTANT PLAN. Two million (2,000,000) shares of Common
Stock are authorized to be awarded pursuant to the Consultant Plan. Any shares
awarded and later forfeited are again subject to award or sale under the
Consultant Plan. Awards may be made pursuant to the Consultant Plan until no
further shares are available for issuance or until July 17, 2013, whichever
occurs first.

PREVIOUS AWARDS. The Company has awarded 1,012,000 shares of Common Stock
pursuant to the Consultant Plan as of September 30, 2003.

RESTRICTIONS. The Board may, in its discretion, place restrictions and
conditions in connection with any particular award of shares pursuant to the
Consultant Plan. Shares awarded subject to a condition are, in general,
non-assignable until the condition is satisfied.

CHANGE IN CONTROL. All restrictions imposed on restricted stock grants lapse
upon a change in control of the Company. For these purposes, a change of control
in the Company is generally deemed to have occurred at such time as (a) any
person acquires 30% or more of the combined voting power of the Company's
outstanding securities; or (b) incumbent directors cease to constitute at least
a majority of the Company's Board of Directors, unless the change in directors
was approved by at least a majority of the incumbent directors; or (c) merger,
consolidation, share exchange, or sale of all or substantially all the assets of
the Company occurs, unless such merger or consolidation shall have been
affirmatively recommended to the Company's stockholders by a majority of the
incumbent board.

ANTI-DILUTION. The Consultant Plan carries certain anti-dilution provisions
concerning stock dividends, stock splits, consolidations, mergers,
recapitalizations and reorganizations.

AMENDMENT AND TERMINATION. The Company's Board of Directors may terminate or
amend the Consultant Plan in any respect at any time, except no action of the
Company's Board of Directors, the Committee or the Company's stockholders,
however, may, without the consent of a participant, alter or impair such
participant's rights under any restricted shares previously granted.

TERM. The Consultant Plan shall expire on July 17, 2013 unless sooner terminated
except as to restricted share grants outstanding on that date.

FEDERAL INCOME TAX CONSEQUENCES. The following brief summary of the principal
Federal income tax consequences of transactions under the Consultant Plan is
based on current Federal income tax laws. This summary is not intended to
constitute tax advice and, among other things, does not address possible state
or local tax consequences. Accordingly, a participant in the Consultant Plan
should consult a tax advisor with respect to the tax aspects of transactions
under the Consultant Plan.

Unrestricted Stock Grants. The tax consequences of other stock or cash-based
awards will depend on the specific terms of each award.

Restricted Stock Grants. Upon receipt of restricted stock, a participant
generally will recognize taxable ordinary income when the shares cease to be
subject to restrictions in an amount equal to the fair market value of the
shares at such time. However, no later than 30 days after a participant receives
the restricted stock, the participant may elect to recognize taxable ordinary
income in an amount equal to the fair market value of the shares at the time of
receipt. Provided that the election is made in a timely manner, when the
restrictions on the shares lapse, the participant will not recognize any
additional income. If the participant forfeits the shares to the Company (e.g.,
upon the participant's termination prior to expiration of the restriction
period), the participant may not claim a deduction with respect to the income
recognized as a result of the election. Dividends paid with respect to shares of
restricted stock generally will be taxable as ordinary income to the participant
at the time the dividends are received.

Tax Consequences to the Company. The Company generally will be entitled to a
deduction at the same time and in the same amount as a participant recognizes
ordinary income, subject to the limitations imposed under Section 162(m).

Tax Withholding. The Company has the right to deduct withholding taxes from any
payments made pursuant to the Consultant Plan or to make such other provisions
as it deems necessary or appropriate to satisfy its obligations to withhold
federal, state or local income or other taxes incurred by reason of payment or
the issuance of Common Stock under the Consultant Plan or the lapse of
restrictions on grants upon which restrictions have been place.


                                       36
<PAGE>

                 COMPANY'S 2000 NON-QUALIFIED STOCK OPTION PLAN

The following is a description of the material features of the Company's 2000
Non-Qualified Stock Option Plan (the "Non-Qualified Plan").

GENERAL. On August 15, 1999, the Company's Board of Directors approved the
Non-Qualified Plan. The Non-Qualified Plan provides for the grant of options
("Non-Qualified Options") that do not qualify as incentive stock options under
the Internal Revenue Code of 1986, as amended (the "Code"). The grants of
Non-Qualified Options are available to employees, consultants and directors so
as to encourage them to improve operations and increase the profits of the
Company, to accept or continue employment or association with the Company, and
to increase their interest in the Company's welfare through participation in the
growth in value of the common stock of the Company.

ADMINISTRATION. The Non-Qualified Plan is now administered by a committee (the
"Committee") of not less than two directors of the Company selected by, and
serving at the pleasure of, the Company's Board of Directors.

ELIGIBILITY. The Committee has substantial discretion pursuant to the
Non-Qualified Plan to determine the persons to whom Non-Qualified Options may be
granted or authorized and also to determine the amounts, time, price, exercise
terms, and restrictions imposed in connection therewith. Non-Qualified Options
may be granted to any consultant, non-employee director, or full-time employee
(which may include officers and directors who are also employees) of the Company
or of any Affiliate. The term "Affiliate" as used in the Plan means a parent or
subsidiary corporation as defined in the applicable provisions of the Code. The
Company currently has two employees and four directors. The number of
consultants varies.

SHARES SUBJECT TO THE NON-QUALIFIED PLAN. Pursuant to the Non-Qualified Plan,
714,286 shares of Common Stock are authorized to be issued. If a Non-Qualified
Option expires or becomes unexercisable for any reason without having been
exercised in full, the unpurchased shares that were subject thereto shall become
available for future grants under the Non-Qualified Plan.

OUTSTANDING OPTIONS. Options to purchase 81,085 shares of Common Stock pursuant
to the Non-Qualified Plan were outstanding as of September 30, 2003.

EXERCISE PRICE. The exercise price of an Non-Qualified Option shall equal the
fair market value of the Common Stock subject to the Non-Qualified Option on the
date of grant. However, the exercise price of any the Non-Qualified Option
granted to any person owning stock possessing more than 10% of the total
combined voting power of all classes of stock in the Company and subsidiaries (a
"Ten Percent Holder") shall in no event be less than 110% of the fair market
value of the Common Stock covered by the Non-Qualified Option at the time such
option is granted.

EXPIRATION; VESTING. Each Non-Qualified Option expires not more than ten years
from the date of grant. Options may expire earlier as determined by the
Committee. The Committee may determine vesting provisions in its discretion;
provided, however, that the right to exercise a Non-Qualified Option must vest
at the rate of at least 20% per year over five years from the date the
Non-Qualified Option was granted.

TERMINATION OF OPTIONS. Generally, when an optionee ceases to be an employee,
officer, director or consultant to the Company or an Affiliate other than by
reason of death, disability or cause, an optionee's Non-Qualified Options shall
terminate within three months after the termination date (or within such shorter
time period, not less than 30 days after the termination date, or such longer
time period not exceeding five years after the termination date as may be
determined by the Committee), but in any event, no later than the expiration
date of the Non-Qualified Options. If an optionee's employment is terminated by
reason of death or disability, an optionee's Non-Qualified Options shall
terminated within 12 months after the termination date (or within such shorter
time period, not less than six months after the termination date, or such longer
time period not exceeding five years after the termination date as may be
determined by the Committee), but in any event, no later than the expiration
date of the Non-Qualified Options. In the case of termination for cause, an
optionee's Non-Qualified Options shall terminate on the termination date or at
such later time and on such conditions as are determined by the Committee.

RESTRICTIONS. Options are, in general, non-assignable. The Company may reserve a
right to repurchase shares acquired upon the exercise of a Non-Qualified Option
following the related optionee's termination (i.e. the ceasing for any reason
ceased to provide services as an employee, officer, director or consultant to
the Company or an Affiliate), at any time within 90 days after such termination,
at the optionee's exercise price for the shares, provided, that such right to
repurchase shares at the exercise price shall lapse at the rate of at least 20%
per year over five years from the date of grant of the Non-Qualified Option. To
enforce any restrictions on an optionee's shares acquired upon exercise of a
Non-Qualified Option (including, without limitation, a right of repurchase), the
Committee may require the optionee to deposit all certificates representing the
shares acquired, together with stock powers or other instruments of transfer
approved by the Committee, appropriately endorsed in blank, with the Company or
an agent designated by the Company to hold in escrow until such restrictions
have lapsed or terminated, and the Committee may cause a legend or legends
referencing such restrictions to be placed on the certificates.


                                       37
<PAGE>

CORPORATE TRANSACTIONS. In the event of (i) a dissolution or liquidation of the
Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation (other than a merger or consolidation with a wholly-owned
subsidiary, a reincorporation of the Company in a different jurisdiction, or
other transaction in which there is no substantial change in the shareholders of
the Company or their relative stock holdings and the Non-Qualified Options
granted under the Non-Qualified Plan are assumed, converted or replaced by the
successor or acquiring corporation, which assumption, conversion or replacement
will be binding on all optionees), (iii) a merger in which the Company is the
surviving corporation but after which the shareholders of the Company
immediately prior to such merger (other than any shareholder which merges with
the Company in such merger, or which owns or controls another corporation which
merges, with the Company in such merger) cease to own their shares or other
equity interests in the Company, or (iv) the sale of all or substantially all of
the assets of the Company, any or all outstanding Non-Qualified Options may be
assumed, converted or replaced by the successor or acquiring corporation (if
any), which assumption, conversion or replacement will be binding on all
optionees. In the alternative, the successor or acquiring corporation may
substitute equivalent options or provide substantially similar consideration to
optionees as was provided to shareholders (after taking into account the
existing provisions of the Non-Qualified Options). In the event such successor
or acquiring corporation (if any) does not assume or substitute options, then
notwithstanding any other provision in the Non-Qualified Plan to the contrary,
the vesting of such Non-Qualified Options will accelerate and the Non-Qualified
Options will become exercisable in full prior to the consummation of such event
at such times and on such conditions as the Committee determines, and if such
Non-Qualified Options are not exercised prior to the consummation of the
corporate transaction, they shall terminate upon the consummation of such
corporate transaction.

ANTI-DILUTION. Non-Qualified Options carry certain anti-dilution provisions
concerning stock dividends, stock splits, consolidations, mergers,
recapitalizations and reorganizations.

AMENDMENT AND TERMINATION. The Company's Board of Directors may at any time
amend, alter, suspend or discontinue the Non-Qualified Plan, but no amendment,
alteration, suspension or discontinuation shall be made that would materially
and adversely affect the rights of any holder of any Non-Qualified Option under
any outstanding grant, without his or her consent.

TERM. The Non-Qualified Plan became effective on August 2, 2000 and shall remain
in effect until terminated by the Board of Directors. However, no Non-Qualified
Options may be granted more than ten years after the effective date of the
Non-Qualified Plan.

FEDERAL INCOME TAX CONSEQUENCES. The following brief summary of the principal
Federal income tax consequences of transactions under the Non-Qualified Plan is
based on current Federal income tax laws. This summary is not intended to
constitute tax advice and, among other things, does not address possible state
or local tax consequences. Accordingly, a participant in the Non-Qualified Plan
should consult a tax advisor with respect to the tax aspects of transactions
under the Non-Qualified Plan.

A participant will not recognize taxable income upon the grant of a
Non-Qualified Option. Upon the exercise of a Non-Qualified Option, a participant
will recognize taxable ordinary income equal to the difference between the fair
market value of the shares on the date of exercise and the option exercise
price. When a participant sells the shares, the participant will have short-term
or long-term capital gain or loss, as the case may be, equal to the difference
between the amount the participant received from the sale and the tax basis of
the shares sold. The tax basis of the shares generally will be equal to the
greater of the fair market value of the shares on the exercise date or the
option exercise price.

As a condition of the exercise of an Non-Qualified Option granted under the
Non-Qualified Plan, the participant (or in the case of the participant's death,
the person exercising the Non-Qualified Option) shall make such arrangements as
the Committee may require for the satisfaction of any applicable federal, state,
local or foreign withholding tax obligations that may arise in connection with
the exercise of the Non-Qualified Option and the issuance of shares. In certain
circumstances, the Committee may allow withholding obligations to be satisfied
by the retention by the Company of shares that have a fair market value
determined as of the applicable date equal to the amount required to be
withheld.


                                       38
<PAGE>

                  IQ BIOMETRIX CALIFORNIA, INC. 2001 STOCK PLAN

The following is a description of the material features of the IQ Biometrix
California, Inc. 2001 Stock Plan (the "2001 Plan").

GENERAL. On July 26, 2001, the Board of Directors and a majority of the
outstanding shares of IQ Biometrix California, Inc. approved the 2001 Plan. In
connection with the merger of IQ Biometrix California, Inc. with and into the
Company, the Company assumed the 2001 Plan. Under the 2001 Plan, the grants
described below are available to employees, consultants and directors so as to
attract and retain the best available personnel for positions of substantial
responsibility and to provide additional incentive and to promote the success of
the Company's business.

TYPES OF AWARDS. The 2001 Plan provides for the grant of incentive stock options
("ISO's") qualifying under the Internal Revenue Code of 1986, as amended (the
"Code"), nonqualified options ("Non-Qualified Options"), and opportunities to
make purchases of stock in the Company ("Purchase Rights") (ISO's and
Non-Qualified Options are referred to hereinafter from time to time as
"Options").

ADMINISTRATION. The 2001 Plan is now administered by the Company's Board of
Directors.

ELIGIBILITY. The Board of Directors has substantial discretion pursuant to the
2001 Plan to determine the persons to whom ISO's, Non-Qualified Options and
Purchase Rights may be granted or authorized and also to determine the amounts,
time, price, exercise terms, and restrictions imposed in connection therewith.
Non-Qualified Options and Purchase Rights may be granted only to employees and
consultants of the Company and any of its subsidiary or affiliates, and to
directors of the Company. ISO's may be granted only to employees and directors
of the Company. The Company currently has two employees and four directors. The
number of consultants varies.

SHARES SUBJECT TO THE 2001 PLAN. Two million (2,000,000) shares of Common Stock
are authorized to be issued pursuant to the 2001 Plan. If an award expires or
becomes unexercisable for any reason without having been exercised in full, the
unpurchased shares that were subject thereto shall become available for future
grant under the 2001 Plan. In addition, any shares which are retained by the
Company upon exercise of an award in order to satisfy the exercise or purchase
price for such award or any withholding taxes due with respect to such exercise
or purchase shall be treated as not issued and shall continue to be available
under the 2001 Plan.

OUTSTANDING OPTIONS AND PURCHASE RIGHTS. The Company has made all available
awards under the 2001 Plan, and the Plan is not expected to be amended so that
further awards can be made.

EXERCISE PRICE. Certain statutory requirements with respect to ISO's are set
forth in the 2001 Plan. These requirements provide that the exercise price per
share in connection with ISO's shall be not less than the fair market value of
Common Stock on the date of the grant, and with respect to an ISO granted to a
person owning stock possessing more than 10% of the total combined voting power
of all classes of stock in the Company and subsidiaries (a "Ten Percent
Holder"), shall be not less than 110% of the fair market value per share of
Common Stock on the date of grant. In addition, an employee may be granted ISO's
under the 2001 Plan and any other incentive stock option plans of the Company
and its subsidiaries only to the extent that such ISO's do not become
exercisable for the first time by such employee during any calendar year in a
manner which would entitle the employee to purchase more than $100,000 in fair
market value (determined at the time the ISO's were granted) of Common Stock in
that year.

In the cases of Nonqualified Options, the exercise price will depend on whether
or not the Nonqualified Option is granted before the Company's common stock
becomes listed on a national stock exchange or NASDAQ (i.e. a "Listed Security")
and whether or not the Non-Qualified Option is granted to a Ten Percent Holder.
If a Non-Qualified Option is granted before the Company's common stock becomes a
Listed Security, then the exercise price shall be 110% of the fair market value
of the Company's common stock if the Non-Qualified Option is granted to a Ten
Percent Holder or 85% of the fair market value of the Company's common stock if
the Non-Qualified Option is granted to someone other than a Ten Percent Holder.
If a Non-Qualified Option is granted after the Company's common stock becomes a
Listed Security, then the exercise price shall be as determined by the Board of
Directors, provided that if the grant is to the Company's Chief Executive
Officer or one of the other four most highly compensated executives, then
exercise price shall be at least 100% of the fair market value of the Company's
common stock in certain circumstances.


                                       39
<PAGE>

EXPIRATION; VESTING. Each Option expires not more than ten years from the date
of grant in the case of Non-Qualified Options, ten years from the date of grant
in the case of most ISO's, and five years from the date of grant in the case of
ISO's granted to a Ten Percent Holder. Options may expire earlier as determined
by the Board. The Board may determine vesting provisions in its discretion;
provided however that, if required by the applicable laws, any Option granted
prior to the date, if any, upon which the Common Stock becomes a Listed Security
shall become exercisable at the rate of at least 20% per year over five years
from the date the Option is granted. In the event that any of the shares issued
upon exercise of an Option (which exercise occurs prior to the date, if any,
upon which the Company's common stock becomes a Listed Security) should be
subject to a right of repurchase in the Company's favor, such repurchase right
shall, if required by the applicable laws, lapse at the rate of at least 20% per
year over five years from the date the Option is granted.
TERMINATION OF OPTIONS. Generally, when an optionee ceases to be an employee or
consultant of the Company or any of its subsidiary or affiliates, or a director
of the Company, other than by reason of death, disability or for cause, an
optionee's Options shall terminate 30 days following the date on which such
optionee's status as such ceases. If an optionee's employment is terminated by
reason of disability, the optionee may exercise his Option at any time prior to
the earlier of the specified expiration date of the Option or six months from
the date of the termination of employment. In the case of death, an optionee's
Options may be exercised by his estate, personal representative or beneficiary
at any time prior to the earlier of the specified expiration date of the Option
or 12 months days from the date of the optionee's death. In the case of
termination for cause, an optionee's Options shall terminate on the date that
notice of termination is first given. In such event, the Company shall also have
the right to purchase all vested shares acquired upon exercise of an Option
granted prior to the date, if any, within 90 days of termination of the
terminated optionee for a purchase price equal to the fair market value of the
shares as of the date of termination.

PURCHASE RIGHTS. The Board of Directors determines, in its sole discretion, the
terms, conditions, restrictions, number of shares, the price to be paid, and the
time within which a purchase must occur with respect to each Purchase Right. In
the case of a Purchase Right granted prior to the date, if any, on which the
Company's common stock becomes a Listed Security and if required by the
applicable laws at that time, the purchase price of shares subject to a Purchase
Right shall not be less than 85% of the fair market value of the shares as of
the date of the offer, or, in the case of a Ten Percent Holder, the price shall
not be less than 100% of the fair market value of the shares as of the date of
the offer. If the applicable laws do not impose the requirements set forth in
the preceding sentence and with respect to any Purchase Rights granted after the
date, if any, on which the Company's common stock becomes a Listed Security, the
purchase price of Shares subject to Purchase Rights shall be as determined by
the Board of Directors. Unless the Board of Directors determines otherwise, each
Purchase Right is subject to a repurchase option in favor of the Company, at the
original purchase price paid by the purchaser, upon the voluntary or involuntary
termination of the purchaser's employment with the Company for any reason
(including death or disability). The repurchase option shall lapse at such rate
as the Board of Directors may determine, provided that with respect to a
Purchase Right granted prior to the date, if any, on which the Company's common
stock becomes a Listed Security to a purchaser who is not an officer, director
or consultant of the Company or any subsidiary of the Company, it shall lapse at
a minimum rate of 20% per year if required by the applicable laws.

RESTRICTIONS. Options and Purchase Rights are, in general, non-assignable. The
Board of Directors may place any restrictions on Options and Purchase Rights
that it believes are appropriate, in its discretion.

CORPORATION TRANSACTION. In the event of a sale of all or substantially all of
the Company's assets, or a merger, consolidation or other capital reorganization
of the Company with or into another corporation, each outstanding Option or
Purchase Right shall be assumed or an equivalent option or right shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation (the "Successor Corporation"), unless the Successor
Corporation does not agree to assume the award or to substitute an equivalent
option or right, in which case such Option or Purchase Right shall terminate
upon the consummation of the transaction.

CHANGE IN CONTROL. Notwithstanding the above, in the event (i) of a Change of
Control, and (ii) a participant holding an Option or Purchase Right assumed or
substituted by the Successor Corporation in the Change of Control, or holding
restricted stock issued upon exercise of an Option or Purchase Right with
respect to which the Successor Corporation has succeeded to a repurchase right
as a result of the Change of Control, is involuntarily terminated by the
Successor Corporation without cause in connection with, or within sixty (60)
days following consummation of, the transaction, then any assumed or substituted
Option or Purchase Right held by the terminated participant at the time of
termination shall accelerate and become exercisable as to the number of shares
that would otherwise have vested and been exercisable as of the date thirty (30)
days from the date of termination, and any repurchase right applicable to any
shares shall lapse as to the number of shares as to which the repurchase right
would otherwise have lapsed as of the date thirty (30) days from the date of
termination, in each case assuming the participant remained in Continuous
Service Status for such period. "Change of Control" means a sale of all or
substantially all of the Company's assets, or any merger or consolidation of the
Company with or into another corporation other than a merger or consolidation in
which the holders of more than 50% of the shares of capital stock of the Company
outstanding immediately prior to such transaction continue to hold (either by
the voting securities remaining outstanding or by their being converted into
voting securities of the surviving entity) more than 50% of the total voting
power represented by the voting securities of the Company, or such surviving
entity, outstanding immediately after such transaction.
ANTI-DILUTION. The 2001 Plan carries certain anti-dilution provisions concerning
stock dividends, stock splits, consolidations, mergers, recapitalizations and
reorganizations.


                                       40
<PAGE>

OTHER MATTERS. Unless otherwise provided by the Board of Directors, each Option
and Purchase Right will terminate in the event of dissolution or liquidation of
the Company.

AMENDMENT AND TERMINATION. The Company's Board of Directors may at any time
amend, alter, suspend or discontinue the 2001 Plan, but no amendment,
alteration, suspension or discontinuation shall be made that would materially
and adversely affect the rights of any holder of an Option or a Purchase Right
under any outstanding grant, without his or her consent.

TERM. The 2001 Plan shall expire on July 25, 2011 unless sooner terminated.

FEDERAL INCOME TAX CONSEQUENCES. The following brief summary of the principal
Federal income tax consequences of transactions under the 2001 Plan is based on
current Federal income tax laws. This summary is not intended to constitute tax
advice and, among other things, does not address possible state or local tax
consequences. Accordingly, a participant in the 2001 Plan should consult a tax
advisor with respect to the tax aspects of transactions under the 2001 Plan.

Non-Qualified Options. A participant will not recognize taxable income upon the
grant of a Non-Qualified Option. Upon the exercise of a Non-Qualified Option, a
participant will recognize taxable ordinary income equal to the difference
between the fair market value of the shares on the date of exercise and the
option exercise price. When a participant sells the shares, the participant will
have short-term or long-term capital gain or loss, as the case may be, equal to
the difference between the amount the participant received from the sale and the
tax basis of the shares sold. The tax basis of the shares generally will be
equal to the greater of the fair market value of the shares on the exercise date
or the option exercise price.

ISO's. A participant will not recognize taxable income upon the grant of an ISO.
If a participant exercises an ISO during employment or within three months after
his or her employment ends (12 months in the case of disability), the
participant will not recognize taxable income at the time of exercise (although
the participant generally will have taxable income for alternative minimum tax
purposes at that time as if the option were a Non-Qualified Option). If a
participant sells or exchanges the shares after the later of (i) one year from
the date the participant exercised the option and (ii) two years from the grant
date of the option, the participant will recognize long-term capital gain or
loss equal to the difference between the amount the participant received in the
sale or exchange and the option exercise price. If a participant disposes of the
shares before these holding period requirements are satisfied, the disposition
will constitute a disqualifying disposition, and the participant generally will
recognize taxable ordinary income in the year of disposition equal to the
excess, as of the date of exercise of the option, of the fair market value of
the shares received over the option exercise price (or, if less, the excess of
the amount realized on the sale of the shares over the option exercise price).
Additionally, the participant will have long-term or short-term capital gain or
loss, as the case may be, equal to the difference between the amount the
participant received upon disposition of the shares and the option exercise
price increased by the amount of ordinary income, if any, the participant
recognized.

With respect to both Non-Qualified Options and ISO's, special rules apply if a
participant uses shares already held by the participant to pay the exercise
price or if the shares received upon exercise of the option are subject to a
substantial risk of forfeiture by the participant.

Purchase Rights. The tax consequences of other stock or cash-based awards will
depend on the specific terms of each award. Upon receipt of restricted stock, a
participant generally will recognize taxable ordinary income when the shares
cease to be subject to restrictions in an amount equal to the fair market value
of the shares at such time. However, no later than 30 days after a participant
receives the restricted stock, the participant may elect to recognize taxable
ordinary income in an amount equal to the fair market value of the shares at the
time of receipt. Provided that the election is made in a timely manner, when the
restrictions on the shares lapse, the participant will not recognize any
additional income. If the participant forfeits the shares to the Company (e.g.,
upon the participant's termination prior to expiration of the restriction
period), the participant may not claim a deduction with respect to the income
recognized as a result of the election. Dividends paid with respect to shares of
restricted stock generally will be taxable as ordinary income to the participant
at the time the dividends are received.


                                       41
<PAGE>

Tax Consequences to the Company. The Company generally will be entitled to a
deduction at the same time and in the same amount as a participant recognizes
ordinary income, subject to the limitations imposed under Section 162(m).

Tax Withholding. As a condition of the exercise of an Option or Purchase Right
granted under the 2001 Plan, the participant (or in the case of the
participant's death, the person exercising the Option or Purchase Right) shall
make such arrangements as the Board of Directors may require for the
satisfaction of any applicable federal, state, local or foreign withholding tax
obligations that may arise in connection with the exercise of the Option or
Purchase Right and the issuance of shares. The Company shall not be required to
issue any shares under the 2001 Plan until such obligations are satisfied. In
certain circumstances, the Board of Directors may allow withholding obligations
to be satisfied by the retention or surrendering to the company of shares that
have a fair market value determined as of the applicable date equal to the
amount required to be withheld.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Prior to the Merger, Greg J. Micek loaned $100,000 to IQB pursuant to a
Convertible Secured Promissory Note, which provided for the automatic conversion
of the promissory note into 100,000 shares of Common Stock. This promissory note
was automatically converted into 100,000 shares of Common Stock upon the Merger
in accordance with its terms.

In addition, in connection with the Merger, the Company entered into a Sale and
Purchase Agreement with Greg J. Micek, pursuant to which the Company sold to Mr.
Micek the Company's dormant electronic commerce assets in consideration of the
forgiveness of outstanding debt the Company owed to Mr. Micek of $30,000, which
was the Board's good faith determination of the fair market value of the assets.
The Sale and Purchase Agreement was not the result of arms-length negotiations.
However, Eric McAfee, the Company's non-interested director considered the
previous history of losses relating to these assets, their extended period of
inactivity, their lack of reasonable prospects for future exploitation, the
amount of indebtedness to be forgiven in connection with the sale, and the
requirement imposed by IQB as a condition to the closing of the Merger that the
Company's dormant electronic commerce assets be disposed of prior to the Merger.
After such consideration, Mr. McAfee concluded that the sale of the Company's
dormant electronic commerce assets would be in the Company's best interests. The
dormant electronic commerce assets sold included (a) all of the outstanding
capital stock owned by the Company in each of Dadandme, Inc., Ihomeline.com,
Inc., Ihomeline.co.uk, Inc., Eonthestreet, Inc., National Sweepstakes Show,
Inc., and Beddis International, Ltd. a/k/a "LinksXpress.com, Inc.," and (b) all
right, title and interest of the Company in and to the "JVWeb.com,"
"Ihomeline.com," "Homeline Talk Radio," "National Sweepstakes Show,"
"Sweepstakes News," "Crisis-Communications," and "Dadandme" registered
trademarks. Closings of the sale of these assets will take place from time to
time as necessary consents are obtained and appropriate documents are prepared
and filed.


As part of the Merger, the Company assumed the existing advisory agreement (the
"McAfee Advisory Agreement") between IQ Biometrix California, Inc. and Eric A.
McAfee, a director of the Company. The McAfee Advisory Agreement had a term of
two years and was to expire in accordance with its term at the end of April
2004, subject to earlier termination upon the occurrence of certain events.
Under the McAfee Advisory Agreement Mr. McAfee was to receive $9,600 per month.
Mr. McAfee was also entitled to participate in any and all employee benefit
plans established for the employees of the Company and to receive an expense
reimbursement for Cupertino office rent of $2,800 per month. The McAfee Advisory
Agreement did not contain any covenant not to compete. The McAfee Advisory
Agreement was terminated as of March 31, 2003. Mr. McAfee received a total of
$48,000 under the agreement in advisory fees and $30,800 in expense
reimbursements prior to termination. On November 11, 2003, Mr. McAfee stepped
down from the Company's board of directors and the Company entered into a
settlement agreement with Mr. McAfee in connection with the termination of the
McAfee Advisory Agreement. Under the settlement agreement, the Company paid Mr.
McAfee $24,000 on November 15, 2003, and agreed to pay Mr. McAfee an additional
$50,000 at such time as the Company raises financing in an aggregate amount of
$2,000,000. In addition, the Company released Mr. McAfee from his agreement to
deliver up to 700,000 shares of IQ Biometrix common stock held by Mr. McAfee to
the Company in connection with the MVION Note described below.

In connection with a financing transaction with Special Equity IV, L.P.
("SEIVLP") involving warrants, the Company acquired from SEIVLP a Secured
Convertible Promissory Note having a face amount of a $2.5 million dollar (the
"MVION Note") due from MVION, Inc., a technology company known as KachinaGuide.
Eric A. McAfee, a director of the Company, is the sole director and officer of
MVION. Daniel McKelvey, a selling stockholder, is a managing member of Forte
Capital Partners LLC, the general partner of SEIVLP. The KachinaGuide, was a
realtime interactive tool to conduct highly refined searches across
heterogeneous data sources. KachinaGuide's searching technology uses patented
algorithms that processed queries in the users' own words leading customers to
specific data (i.e. products and services) or suggests alternatives based on the
users' preferences. MVION's business failed, and the MVION Note was in default
at the time of the Company's acquisition of it. The MVION Note is secured by a
lien on MVION's assets, which in the event MVION defaulted on the Note would
entitle the holder thereof to acquire all of the assets, including the
intellectual property assets of MVION. When the Company acquired the Note from
SEIVLP, management believed that MVION's assets, particularly its intellectual
property assets, were worth the approximately $168,000 value of the stock and
warrants issued to SEIVLP. In addition, Eric McAfee agreed that if the
intellectual property assets of MVION were later determined to be worth less
than the value of the stock and warrants issued to SEIVLP, he would return a
number of shares of the Company's common stock held by him, up to 700,000
shares, to the Company. At the time the Company entered into the transaction,
very little due diligence was performed on the value of the MVION Note or the
technology securing the MVION Note based upon Mr. McAfee's personal assertions
of the value of the MVION technology and his pledge of stock. As stated above,
the Company later released Mr. McAfee from his obligation to return shares to
the Company in connection with a settlement agreement entered into with Mr.
McAfee in November 2003 in connection with the termination of the McAfee
Advisory Agreement. The Company has subsequently determined that the cost of
perfecting any patent work and subsequent incorporation of the intellectual
property of MVION into the FACES software was too costly and, therefore, has not
foreclosed on the MVION Note. However, the Company has recently begun exploring
the possibility of exercising its rights as a secured creditor with respect to
the MVION assets securing the MVION Note, however, the Company can give no
assurances as to its ability to collect on MVION Note, its efforts to exercise
its rights with respect to the MVION Note, or the benefit of the assets securing
such note in the event that the Company eventually acquires ownership of them.


Conflict of Interest Policy

We believe that all transactions with affiliates described above were made on
terms no less favorable to us than could have been obtained from unaffiliated
third parties. Our policy is to require that a majority of the independent and
disinterested non-employee directors on the Board approve all transactions
between the Company and its officers, directors, principal stockholders and
their affiliates. Such transactions will continue to be on terms no less
favorable to us than we could obtain from unaffiliated third parties.

All transactions between us and our officers, directors, principal stockholders
and their affiliates will be approved by a majority of the Board, including a
majority of the independent and disinterested non-employee directors, or, if
required by law, a majority of disinterested stockholders and will continue to
be on terms no less favorable to us than could be obtained from unaffiliated
third parties.


                                       42
<PAGE>

PART IV.

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) Documents filed as part of this report:

(i) Consolidated Financial Statements:

<TABLE>
<CAPTION>
<S>                                                                                                   <C>
Report of Independent Auditors .......................................................................F-1

Consolidated Balance Sheets as of June 30, 2003 ..................................................... F-2

Consolidated Statements of Income for the years ended June 30, 2003 and 2002  ....................... F-3

Consolidated Statements of Stockholders' Equity for the years ended June 30, 2003 and 2002 ...........F-4

Consolidated Statements of Cash Flows for the years ended June 30, 2003 and 2002  ................... F-5

Notes to Consolidated Financial Statements ...........................................................F-6
</TABLE>

(ii) Financial Statement Schedules:

                 Schedule II - Valuation and Qualifying Accounts

(iii) Exhibits:

The following exhibits are filed with this Annual Report or are incorporated
herein by reference:

Exhibit No.   Description
-----------   -----------

3.01          Certificate of Incorporation of the Company is incorporated herein
              by reference from the Company's Registration Statement on Form
              SB-2 (SEC File No. 333-41635) filed December 29, 1997, Item 27,
              Exhibit 3.01.

3.02          Bylaws of the Company is incorporated herein by reference from the
              Company's Registration Statement on Form SB-2 (SEC File No.
              333-41635) filed December 29, 1997, Item 27, Exhibit 3.02.

3.03          Certificate of Amendment to Certificate of Incorporation of the
              Company is incorporated herein by reference rom the Company's (SEC
              File No. 0-24001) Quarterly Report on Form 10-QSB filed with the
              SEC on February 20, 2001, Item 6(a), Exhibit 3.03.

4.01          Specimen Common Stock Certificate is incorporated herein by
              reference from the Company's Registration Statement on Form SB-2
              (SEC File No. 333-41635) filed December 29, 1997, Item 27, Exhibit
              4.01.

9.01          Voting Agreement dated as of February 27, 2002 by Pierre Cote,
              Sylvie Lariviere and Eric McAfee in favor of Greg J. Micek is
              incorporated herein by reference from the Company's (SEC File No.
              0-24001) Current Report on Form 8-K filed with the SEC on April 8,
              2002, Item 7(c), Exhibit 9.1.

10.01         Agreement and Plan of Merger, dated as of February 27, 2002 (the
              "Merger Agreement"), by and among (a) JVWeb, Inc., a Delaware
              corporation, (b) IQB Acquisition Corporation, a newly-formed,
              wholly-owned Delaware subsidiary of JVWeb, Inc., (c) IQ Biometrix
              California, Inc., a California corporation, and (d) Pierre Cote,
              Sylvie Lariviere and Eric McAfee is incorporated herein by
              reference from the Company's (SEC File No. 0-24001) Current Report
              on Form 8-K filed with the SEC on April 8, 2002, Item 7(c),
              Exhibit 10.1.


                                       43
<PAGE>

10.02         Sale and Purchase Agreement dated as of February 27, 2002 by and
              between JVWeb, Inc., a Delaware corporation, and Greg J. Micek is
              incorporated herein by reference from the Company's (SEC File No.
              0-24001) Current Report on Form 8-K filed with the SEC on April 8,
              2002, Item 7(c), Exhibit 10.3.

10.03         Agreement dated May 31, 2002 between IQ Biometrix California, Inc.
              and Entreprises Cogniscience, Inc. is incorporated herein by
              reference from the Company's (SEC File No. 0-24001) Annual Report
              on Form 10-KSB filed with the SEC on October 15, 2002, Item
              13(a)(iii), Exhibit 10.03.

10.04         Memorandum of Understanding between the University Business Center
              and IQ Biometrix dated August 1, 2002 between the Company and the
              University Business Center of Fresno State Letter of Intent -
              University is incorporated herein by reference from the Company's
              (SEC File No. 0-24001) Annual Report on Form 10-KSB filed with the
              SEC on October 15, 2002, Item 13(a)(iii), Exhibit 10.04.

10.05         Master Service Agreement dated September 20, 2002 between the
              Company and Robert Rios & Associates, Inc. is incorporated herein
              by reference from the Company's (SEC File No. 0-24001) Annual
              Report on Form 10-KSB filed with the SEC on October 15, 2002, Item
              13(a)(iii), Exhibit 10.05.

10.06         Asset Purchase Agreement dated November 12, 2001 between IQ
              Biometrix California, Inc. and CISystems, Inc. is incorporated
              herein by reference from the Company's (SEC File No. 0-24001)
              Annual Report on Form 10-KSB filed with the SEC on October 15,
              2002, Item 13(a)(iii), Exhibit 10.06.

10.07         Agreement dated July 12, 2002 between the Company and GoNow
              Financial Network, Inc. is incorporated herein by reference from
              the Company's (SEC File No. 0-24001) Annual Report on Form 10-KSB
              filed with the SEC on October 15, 2002, Item 13(a)(iii), Exhibit
              10.07.

10.08         Advisory Agreement dated March 10, 2002 between IQ Biometrix
              California, Inc. and Fernand Beland is incorporated herein by
              reference from the Company's (SEC File No. 0-24001) Annual Report
              on Form 10-KSB filed with the SEC on October 15, 2002, Item
              13(a)(iii), Exhibit 10.08.

10.09         Executive Employment Agreement dated effective as of August 1,
              2002 by and between the Company and William Scigliano is
              incorporated herein by reference from the Company's (SEC File No.
              0-24001) Annual Report on Form 10-KSB filed with the SEC on
              October 15, 2002, Item 13(a)(iii), Exhibit 10.09.

10.10         Memorandum of Agreement regarding stock options dated August 1,
              2002 by and between the Company and William Scigliano is
              incorporated herein by reference from the Company's (SEC File No.
              0-24001) Annual Report on Form 10-KSB filed with the SEC on
              October 15, 2002, Item 13(a)(iii), Exhibit 10.10.

10.11         Executive Employment Agreement dated effective as of September 25,
              2002 by and between the Company and Greg J. Micek is incorporated
              herein by reference from the Company's (SEC File No. 0-24001)
              Annual Report on Form 10-KSB filed with the SEC on October 15,
              2002, Item 13(a)(iii), Exhibit 10.11.

10.12         Memorandum of Agreement regarding stock options dated August 1,
              2002 by and between the Company and Greg J. Micek is incorporated
              herein by reference from the Company's (SEC File No. 0-24001)
              Annual Report on Form 10-KSB filed with the SEC on October 15,
              2002, Item 13(a)(iii), Exhibit 10.12.

10.13         Notice of Stock Option Grant and Stock Option Agreement dated
              December 1, 2001 between IQ Biometrix California, Inc. and Morden
              Lazarus is incorporated herein by reference from the Company's
              (SEC File No. 0-24001) Annual Report on Form 10-KSB filed with the
              SEC on October 15, 2002, Item 13(a)(iii), Exhibit 10.13.

10.14         Notice of Stock Option Grant and Stock Option Agreement dated
              December 1, 2001 between IQ Biometrix California, Inc. and Paul
              Schroeder is incorporated herein by reference from the Company's
              (SEC File No. 0-24001) Annual Report on Form 10-KSB filed with the
              SEC on October 15, 2002, Item 13(a)(iii), Exhibit 10.14.

10.15         Asset Purchase Agreement dated February 11, 2003 by and between
              Special Equity IV, L.P. and the Company is incorporated herein by
              reference from the Company's (SEC File No. 0-24001) Quarterly
              Report on Form 10-QSB filed with the SEC on February 19, 2003,
              Item 6(a), Exhibit 10.01

10.16         Stock Purchase Agreement dated February 11, 2003 by and between
              Special Equity IV, L.P. and the Company is incorporated herein by
              reference from the Company's (SEC File No. 0-24001) Quarterly
              Report on Form 10-QSB filed with the SEC on February 19, 2003,
              Item 6(a), Exhibit 10.02


                                       44
<PAGE>

10.17         Warrant Agreement dated February 11, 2003 issued by the Company in
              favor of Special Equity IV, L.P. is incorporated herein by
              reference from the Company's (SEC File No. 0-24001) Quarterly
              Report on Form 10-QSB filed with the SEC on February 19, 2003,
              Item 6(a), Exhibit 10.03

10.18         Bill of Sale and Assignment dated February 11, 2003 executed by
              Special Equity IV, L.P. in favor of the Company is incorporated
              herein by reference from the Company's (SEC File No. 0-24001)
              Quarterly Report on Form 10-QSB filed with the SEC on February 19,
              2003, Item 6(a), Exhibit 10.06

10.19         Purchase and Sale Agreement dated February 11, 2003 between the
              Company and Special Equity IV, L.P. is incorporated herein by
              reference from the Company's Registration Statement on Form SB-2
              (SEC File No. 333-107570) filed August 1, 2003, Item 27, Exhibit
              10.19.

10.20         Bill of Sale and Assignment of Interest dated February 11, 2003
              between the Company and Special Equity IV, L.P. is incorporated
              herein by reference from the Company's Registration Statement on
              Form SB-2 (SEC File No. 333-107570) filed August 1, 2003, Item 27,
              Exhibit 10.20.

10.21         Warrant to Purchase Common Stock dated February 11, 2003 between
              the Company and Special Equity IV, L.P. is incorporated herein by
              reference from the Company's Registration Statement on Form SB-2
              (SEC File No. 333-107570) filed August 1, 2003, Item 27, Exhibit
              10.21.

10.22         Stock Purchase Agreement dated February 11, 2003 between the
              Company and Special Equity IV, L.P. is incorporated herein by
              reference from the Company's Registration Statement on Form SB-2
              (SEC File No. 333-107570) filed August 1, 2003, Item 27, Exhibit
              10.22.

10.23         Security Agreement dated March 31, 2003 between the Company and
              Lenders is incorporated herein by reference from the Company's
              Registration Statement on Form SB-2 (SEC File No. 333-107570)
              filed August 1, 2003, Item 27, Exhibit 10.23.

10.24         Warrant to Purchase Common Stock Issued to Holder is incorporated
              herein by reference from the Company's Registration Statement on
              Form SB-2 (SEC File No. 333-107570) filed August 1, 2003, Item 27,
              Exhibit 10.24.

10.25         10% Secured Convertible Debenture dated May 28, 2003 between the
              Company and John J. Micek, Jr. is incorporated herein by reference
              from the Company's Registration Statement on Form SB-2 (SEC File
              No. 333-107570) filed August 1, 2003, Item 27, Exhibit 10.25.

10.26         10% Secured Convertible Debenture dated May 28, 2003 between the
              Company and Neil Morris is incorporated herein by reference from
              the Company's Registration Statement on Form SB-2 (SEC File No.
              333-107570) filed August 1, 2003, Item 27, Exhibit 10.26.

10.27         10% Secured Convertible Debenture dated May 28, 2003 between the
              Company and Elisa Micek and Forte Capital Partners, LLC is
              incorporated herein by reference from the Company's Registration
              Statement on Form SB-2 (SEC File No. 333-107570) filed August 1,
              2003, Item 27, Exhibit 10.27.

10.28         10% Secured Promissory Note between the Company and Network
              Storage Systems, Inc. dated May 4, 2003 is incorporated herein by
              reference from the Company's Registration Statement on Form SB-2
              (SEC File No. 333-107570) filed August 1, 2003, Item 27, Exhibit
              10.28.

10.29         Security Agreement between the Company the the Lenders dated May
              4, 2003 is incorporated herein by reference from the Company's
              Registration Statement on Form SB-2 (SEC File No. 333-107570)
              filed August 1, 2003, Item 27, Exhibit 10.29.

10.30         Assignment of Rights and Consent to Assignment between the Company
              and Network Storage Systems, Inc, dated May 14, 2003 is
              incorporated herein by reference from the Company's Registration
              Statement on Form SB-2 (SEC File No. 333-107570) filed August 1,
              2003, Item 27, Exhibit 10.30.

10.31         Assignment of Accounts Receivable between the Company and Network
              Storage Systems, Inc, dated May 14, 2003 is incorporated herein by
              reference from the Company's Registration Statement on Form SB-2
              (SEC File No. 333-107570) filed August 1, 2003, Item 27, Exhibit
              10.31.

10.32         6% Secured Convertible Debenture dated September 19, 2003 between
              the Company and Platinum Partners Value Arbitrage Fund, LP

10.33         6% Secured Convertible Debenture dated September 19, 2003 between
              the Company and Platinum Partners Value Macro Fund, LP

10.34         Warrant to Purchase Common Stock Issued to Platinum Partners Value
              Arbitrage Fund, LP

10.35         Warrant to Purchase Common Stock Issued to Platinum Partners Macro
              Fund, LP

23.01         Consent of Malone & Baily, PLLC.

31.1          Sarbanes Oxley Section 302 Certification.

32.1          Sarbanes Oxley Section 906 Certification

99.01         The Company's Year 2002 Consultant Compensation Plan is
              incorporated herein by reference from the ompany's Registration
              Statement on Form S-8 (SEC File No. 333-96873) filed July 7, 2002,
              Item 8, Exhibit 4.02.


                                       45
<PAGE>

99.02         The Company's Year 2003 Consultant Compensation Plan is
              incorporated herein by reference from the Company's Registration
              Statement on Form S-8 (SEC File No. 333-107447) filed July 28,
              2003, Item 8, Exhibit 4.02.

99.03         The Company's 2000 Non-Qualified Stock Option Plan is incorporated
              herein by reference from the Company's Registration Statement on
              Form S-8 (SEC File No. 333-43884) filed August 16, 2000, Item 8,
              Exhibit 4.02.

99.04         IQ Biometrix California, Inc. 2001 Stock Plan is incorporated
              herein by reference from the Company's (SEC File No. 0-24001)
              Annual Report on Form 10-KSB filed with the SEC on October 15,
              2002, Item 13(a)(iii), Exhibit 99.03.

(b) Reports on Form 8-K

The Registrant did not file any Current Report on Form 8-K during its quarter
ending June 30, 2003.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Malone & Bailey, PLLC, Certified Public Accountants, are the Company's
independent auditors to examine the financial statements of the Company for the
fiscal years ended June 30, 2002 and June 30, 2003. Malone & Bailey, PLLC has
performed the following services and has been paid the following fees for these
fiscal years.

AUDIT FEES

Malone & Bailey, PLLC was paid aggregate fees of approximately $20,000 for the
fiscal year ended June 30, 2002 and approximately $35,000 for the fiscal year
ended June 30, 2003 for professional services rendered for the audit of the
Company's annual financial statements and for the reviews of the financial
statements included in Company's quarterly reports on Form 10QSB during these
fiscal years.

AUDIT -RELATED FEES

Malone & Bailey, PLLC was not paid any additional fees for the fiscal year ended
June 30, 2002 and June 30, 2003 for assurance and related services reasonably
related to the performance of the audit or review of the Company's financial
statements.

TAX FEES

Malone & Bailey, PLLC was not paid any aggregate fees for the fiscal years ended
June 30, 2002 and June 30, 2003 for professional services rendered for tax
compliance, tax advice and tax planning.

OTHER FEES

Malone & Bailey, PLLC was paid no other fees for professional services during
the fiscal years ended June 30, 2002 and June 30, 2003.


                                       46
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders IQ Biometrix, Inc. Fremont,
California

We have audited the accompanying consolidated balance sheet of IQ Biometrix,
Inc. as of June 30, 2003 and the related statements of operations, stockholders'
deficit and cash flows for the year then ended and the period from July 10, 2001
(inception) through June 30, 2002. These financial statements are the
responsibility of IQ Biometrix's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IQ Biometrix, Inc.
as of June 30, 2003 and the results of its operations and its cash flows for the
year then ended and the period from July 10, 2001 (inception) through June 30,
2002., in conformity with accounting principles generally accepted in the United
States.

The accompanying financial statements have been prepared assuming that IQ
Biometrix will continue as a going concern. As shown in the financial
statements, IQ Biometrix incurred net losses of $3,887,691 and $984,265 in
fiscal 2003 and 2002, respectively, and has a working capital deficiency of
$934,908 and a stockholders' deficit of $832,939 as of June 30, 2003. These
conditions raise substantial doubt about IQ Biometrix ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.


MALONE & BAILEY, PLLC
Houston, Texas

September 30, 2003


                                      F-1
<PAGE>

                               IQ BIOMETRIX, INC.
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2003

                                     ASSETS

<TABLE>
<CAPTION>
<S>                                                                                <C>
CURRENT ASSETS:
   Cash                                                                            $     97,681

   Trade accounts receivable, net of allowance for doubtful accounts of $0                5,973
   Note receivable, net of allowance of $350,000                                         50,000
   Inventory                                                                              6,008
   Prepaid expenses                                                                      37,882
                                                                                   ------------
                         Total current assets                                           197,544

INTANGIBLES, net                                                                         94,265

OFFICE EQUIPMENT, net                                                                     7,704
                                                                                   ------------

                         Total assets                                              $    299,513
                                                                                   ============

                          LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
   Convertible debentures, net of discount                                         $    537,820
   Note payable                                                                          50,000
   Accounts payable                                                                     142,920
   Accrued expenses                                                                     401,712
                                                                                   ------------
                         Total current liabilities                                    1,132,452
                                                                                   ------------

COMMITMENTS

STOCKHOLDERS' DEFICIT:
   Preferred stock, .01 par value; 10,000,000 shares authorized, none issued -
   Common stock, .01 par value; 50,000,000 shares authorized; 18,905,885 shares
     outstanding                                                                        189,059
   Additional paid-in capital                                                         3,849,958
   Accumulated deficit                                                               (4,871,956)
                                                                                   ------------
                         Total stockholders' deficit                                   (832,939)
                                                                                   ------------
                         Total liabilities and stockholders' deficit               $    299,513
                                                                                   ============
</TABLE>


See accompanying summary of accounting policies and notes to financial
statements.


                                      F-2
<PAGE>

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    YEAR ENDED JUNE 30, 2003 AND PERIOD FROM
                 JULY 10, 2001 (INCEPTION) THROUGH JUNE 30, 2002



                                                      2003            2002
                                                 ------------    ------------
REVENUES                                         $    105,772    $     98,148

OPERATING EXPENSES:
   Cost of sales                                       52,790          31,431
   Selling                                            260,477         114,003
   General and administrative                       2,896,509         776,345
   Research and development                           147,562         138,185
   Provision for uncollectible note receivable        350,000               -
   Depreciation and amortization                        3,664          22,449
                                                 ------------    ------------
                                                    3,711,002       1,082,413
                                                 ------------    ------------
         Operating loss                            (3,605,230)       (984,265)

OTHER EXPENSE:
   Interest expense                                  (282,461)             --
                                                 ------------    ------------

NET LOSS                                         $ (3,887,691)   $   (984,265)
                                                 ============    ============

BASIC AND DILUTED LOSS PER SHARE:                $       (.23)   $       (.06)
                                                 ============    ============

BASIC AND DILUTED WEIGHTED AVERAGE SHARES:         16,928,344      15,547,000
                                                 ============    ============


See accompanying summary of accounting policies and notes to financial
statements.


                                      F-3
<PAGE>

                               IQ BIOMETRIX, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

          PERIOD FROM JULY 10, 2001 (INCEPTION) THROUGH JUNE 30, 2002
                          AND YEAR ENDED JUNE 30, 2003

<TABLE>
<CAPTION>
                                                     Common Stock               Additional
                                            --------------------------------     Paid In         Accumulated
                                                Shares           Amount          Capital           Deficit             Total
                                            ---------------   --------------  ---------------  -----------------  ---------------
<S>                                            <C>            <C>             <C>              <C>                <C>
   Shares issued to founders                   12,854,231     $     128,542   $    (113,962)   $            --    $      14,580
   Merger, IQB - California and JV Web          2,341,553            23,416        (118,726)                --          (95,310)
   Sale of common stock for cash                1,100,001            11,000       1,077,492                 --        1,088,492
   Shares issued for services                     115,000             1,150          85,100                 --           86,250

   Shares issued for debt                          43,500               435          40,565                 --           41,000
   Net loss                                            --                --              --           (984,265)        (984,265)
                                            -------------     -------------   -------------    ---------------    -------------

Balances, June 30, 2002                        16,454,285           164,543         970,469           (984,265)         150,747

   Sale of common stock for cash                  500,000             5,000         195,000                 --          200,000

   Shares issued for exercise of options          103,000             1,030           9,270                 --           10,300
   Shares issued for services                   1,848,600            18,486       1,588,387                 --        1,606,873
   Options issued to consultants                       --                --         184,630                 --          184,630
   Debt discount, convertible debentures               --                --         879,641                 --          879,641
   Debt discount, note payable                         --                --          22,561                 --           22,561
   Net loss                                            --                --              --         (3,887,691)      (3,887,691)
                                            -------------     -------------   -------------    ---------------    -------------
Balances, June 30, 2003                        18,905,885     $     189,059   $   3,849,958    $    (4,871,956)   $    (832,939)
                                            =============     =============   =============    ===============    ==============
</TABLE>


See accompanying summary of accounting policies and notes to financial
statements.


                                      F-4
<PAGE>

                               IQ BIOMETRIX, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEAR ENDED JUNE 30, 2003 AND PERIOD FROM
                 JULY 10, 2001 (INCEPTION) THROUGH JUNE 30, 2002

<TABLE>
<CAPTION>
                                                                                        2003               2002
                                                                                  ------------------ ---------------
<S>                                                                               <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                       $    (3,887,691)   $      (984,265)
   Adjustments to reconcile net loss to net cash used in operating
      activities:
      Depreciation and amortization                                                        30,603             22,449
      Stock  and options issued for services                                            1,791,503            100,830
      Amortization of debt discount                                                       240,022                 --
      Provision of doubtful notes receivable                                              350,000                 --
   Change in assets and liabilities:
         Trade accounts receivable                                                         (5,973)                --
         Prepaid expenses and other current assets                                        (11,603)                --
         Inventory                                                                         24,952            (31,000)
         Accounts payable                                                                  85,806              2,804
         Accrued liabilities                                                              401,712                 --
                                                                                  ---------------    ---------------
Net cash used in operating activities                                                    (980,669)          (889,182)
                                                                                  ---------------    ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of intangible asset                                                           (63,002)           (80,818)
   Advance to IQ Entertainment                                                                 --            (26,279)
   Advance to NSS                                                                        (400,000)                --
   Purchase of office equipment                                                           (11,161)                --
                                                                                  ---------------    ---------------
Net cash used in investing activities                                                    (474,163)          (107,097)
                                                                                  ---------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from sale of common stock                                                     200,000          1,088,492
   Stock options exercised                                                                 10,300                 --
   Sale of convertible debentures                                                       1,200,000                 --
   Proceeds from note payable                                                              50,000                 --
                                                                                  ---------------    ---------------
Net cash provided by financing activities                                               1,460,300          1,088,492
                                                                                  ---------------    ---------------

NET INCREASE  IN CASH                                                                       5,468             92,213

CASH AND CASH EQUIVALENTS, beginning of year                                               92,213                 --
                                                                                  ---------------    ---------------

CASH AND CASH EQUIVALENTS, end of year                                            $        97,681    $        92,213
                                                                                  ===============    ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Payment of interest                                                            $            --    $            --
                                                                                  ===============    ===============
   Payment of taxes                                                               $            --    $            --
                                                                                  ===============    ===============

NONCASH DISCLOSURES
   Common stock issued to pay debt                                                $            --    $        41,000
                                                                                  ===============    ===============
</TABLE>

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


                                      F-5
<PAGE>

                               IQ BIOMETRIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS


IQ Biometrix, Inc. ("IQ Biometrix") is a security software and services company
headquartered in Fremont, California. IQ Biometrix is a provider of facial
composite software to local and national law enforcement agencies, the US
military and other government agencies across North America.


The FACES technology is a software tool that allows the creation and re-creation
of billions of human faces. FACES replaces the need for a human sketch artist.
This advanced technology can be used by any agency or organization whose
responsibility lies in the public safety and security arena. The morphological
coding of the FACES database of approximately 6,000 facial features has made it
possible to set an industry standard for the comparison of facial images from
law enforcement agencies, private security and businesses.

IQ Biometrix California, Inc. ("IQB - California") was formed July 10, 2001 as a
California corporation to purchase certain software-related assets from a
Canadian bankruptcy court from a former Canadian company named InterQuest, Inc.
("InterQuest"). The software was developed in Canada beginning in 1988. The
software was completed and marketing was begun in 1998. In 2000, InterQuest
filed for bankruptcy protection in a Canadian court and went dormant. IQB -
California arranged for purchase of the software, and various packaging supplies
in 2001 and paid $118,818 in early 2002. The purchase price was allocated as
follows: $80,818 to software and $38,000 to supplies inventory..

On March 22, 2002, IQB - California agreed to a reorganization with JVWeb, an
inactive publicly-traded Delaware company. Pursuant to this acquisition, IQ
Biometrix - California shareholders agreed to exchange all of their shares for
12,854,231 shares of JVWeb. JVWeb also formed a new wholly-owned subsidiary, IQB
Acquisition Corporation, which was renamed at the merger date to IQ Biometrix
Operations, Inc., a Delaware company. IQB - California was merged into IQ
Biometrix Operations, Inc. which remains a wholly-owned subsidiary of JVWeb.
This reorganization is accounted for as a "reverse merger" with IQ Biometrix -
California (now IQB Operations, Inc.) treated as the acquiror which purchased
JVWeb and accounted for the acquisition using the purchase method. IQ Biometrix
officially changed its name to IQ Biometrix, Inc. in October 2002.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of IQ Biometrix, Inc.
and its subsidiary IQB Operations after the elimination of inter-company
accounts and transactions.

CASH AND CASH EQUIVALENTS

IQ Biometrix considers all highly liquid debt instruments with original
maturities not exceeding three months to be cash equivalents. At June 30, 2003,
IQ Biometrix did not hold any cash equivalents.

INVENTORIES

Inventories are valued at the lower of cost (first-in, first-out method) or
market. IQ Biometrix periodically reviews for obsolete and slow-moving inventory
based on historical usage, and future requirements. At June 30, 2003, inventory
consisted of packaging materials related to the FACES 4.0 software.


                                      F-6
<PAGE>

                               IQ BIOMETRIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OFFICE EQUIPMENT

Equipment is stated at cost. Depreciation is computed using the straight-line
method over 3 years.

INTANGIBLES

Intangibles consist of software, including purchased software, and development
of new software products and enhancements to existing software products. Until
technological feasibility is established, costs associated with software
development, including costs associated with the acquisition of intellectual
property relating to software development, is expensed as incurred. After
technological feasibility is established and until the products are available
for sale, software development costs are capitalized and amortized over the
greater of the amount computed using (a) the ratio that current gross revenue
for the product bears to the total of current and anticipated future gross
revenue for that product or (b) the straight line method over the estimated
economic life of the product including the period being reported on. The
amortization period has been determined as the life of the product, which is
three years.


During fiscal 2002 and 2003, IQ Biometrix's software costs were amortized using
the straight-line method over three years resulting in $26,939 of amortization
in fiscal 2003, which is included in cost of goods sold in the accompanying
statement of operations. The Company estimates its amortization expense to be
approximately $48,000 in fiscal 2004, $26,000 in fiscal 2005 and $21,000 in
fiscal 2006.


The following summarizes intangible assets at June 30, 2003:



Original software cost                               $  80,818
FACES 4.0 upgrade                                       62,002
                                                     ---------
                                                       143,820
Less: accumulated amortization                          49,555
                                                     ---------
                                                     $  94,265
                                                     =========

REVENUE RECOGNITION

IQ Biometrix follows the provisions of the statement of position "SOP" 97-2,
Software Revenue Recognition as amended by SOP 98-9, Modification of SOP 97-2
Software Revenue Recognition, with Respect to Certain Transactions. Generally,
IQ Biometrix recognizes revenue when it is realized or realizable and earned. IQ
Biometrix considers revenue realized or realizable and earned when persuasive
evidence of an arrangement exists, the product has been shipped or the services
have been provided to the customer, the sales price is fixed or determinable and
collectibility is reasonably assured. IQ Biometrix reduces revenue for estimated
customer returns, rotations and sales rebates when such amounts are estimable.
When not estimable, IQ Biometrix defers revenue until the product is sold to the
end customer. As part of its product sales price, IQ Biometrix provides
telephone support, which is generally utilized by the customer shortly after the
sale. The cost of the phone support is not significant but is accrued in the
financial statements. To date, IQ Biometrix has not had any product returns.

IQ Biometrix recognizes revenue for training on the date the training is
performed. IQ Biometrix has only recognized approximately $10,000 related to
training revenue since inception.

INCOME TAXES

The asset and liability approach is used to account for income taxes by
recognizing deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
bases of assets and liabilities. IQ Biometrix records a valuation allowance to
reduce the deferred tax assets to the amount that is more likely than not to be
realized.

LOSS PER COMMON SHARE

The basic net loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding.

Diluted net loss per common share is computed by dividing the net loss, adjusted
on an "as if converted" basis, by the weighted average number of common shares
outstanding plus potential dilutive securities. For fiscal 2003 and 2002,
potential dilutive securities had an anti-dilutive effect and were not included
in the calculation of diluted net loss per common share.

USE OF ESTIMATES

In preparing financial statements, management makes estimates and assumptions
that affect the reported amounts of assets and liabilities in the balance sheet
and revenue and expenses in the income statement. Actual results could differ
from those estimates.

STOCK BASED COMPENSATION

IQ Biometrix adopted the disclosure requirements of Financial Accounting
Standard No. 123, Accounting for Stock-Based Compensation (FAS No. 123) and FAS
No. 148 with respect to pro forma disclosure of compensation expense for options
issued. For purposes of the pro forma disclosures, the fair value of each option
grant is estimated on the grant date using the Black-Scholes option-pricing
model. Had IQ Biometrix recorded compensation expense for the fair value of
stock options, net loss and loss per share would have been affected as indicated
by the pro forma amounts below.

IQ Biometrix applies APB No. 25 in accounting for its stock option plans and,
accordingly, no compensation cost has been recognized in IQ Biometrix's
financial statements for stock options under any of the stock plans which on the
date of grant the exercise price per share was equal to or exceeded the fair


                                      F-7
<PAGE>

                               IQ BIOMETRIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

value per share. However, compensation cost has been recognized for warrants and
options granted to non-employees for services provided. If under FAS No. 123, IQ
Biometrix determined compensation cost based on the fair value at the grant date
for its stock options, net loss and loss per share would have been increased to
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                   2003             2002
                                                               -----------      -----------
<S>                                                            <C>              <C>
Net loss
   As reported                                                 $(3,887,691)     $  (984,265)
   Deduct: total stock based employee compensation expense
   determined under fair value method                             (466,340)              --
                                                               -----------      -----------

   Pro forma                                                   $(4,354,031)     $  (984,265)
                                                               ===========      ===========

Basic and diluted loss per share
   As reported                                                 $      (.23)     $      (.06)
                                                               ===========      ===========
   Pro forma                                                   $      (.26)     $      (.06)
                                                               ===========      ===========
</TABLE>


The weighted average fair value of each option granted under IQ Biometrix's
employee option plans during fiscal 2003 and 2002 was approximately $.75 and $0,
respectively. These amounts were determined using the Black Scholes pricing
model, which values options based on the stock price at the grant date, the
expected life of the option, the estimated volatility of the stock, expected
dividend payments and the risk-free interest rate over the expected life of the
option. The dividend yield was zero in 2003 and 2002. The expected volatility
was based on the historic stock prices. The expected volatility was 133%, and
..001% for 2003 and 2002, respectively. The risk-free interest rate was the rate
available on zero coupon U.S. government issues with a term equal to the
remaining term for each grant. The risk-free rate was 3.5% in 2003 and 5% in
2002. The expected life of the options was estimated to be five years.


The effects of applying FAS 123 on providing pro-forma disclosures are not
necessarily likely to be representative of the effects on reported net income
for future years

RECENT ACCOUNTING PRONOUNCEMENTS

IQ Biometrix does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on its results of operations,
financial position or cash flow.

NOTE 2 - GOING CONCERN

IQ Biometrix's consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and settlement of
liabilities and commitments in the normal course of business for the foreseeable
future. Since inception in July 2001, IQ Biometrix has accumulated losses
aggregating $4,871,956, has a negative working capital of $934,908; and negative
stockholders' equity of $832,939 as of June 30, 2003 all of which all raise
substantial doubt about IQ Biometrix's ability to continue as a going concern


Management's plans for IQ Biometrix's continued existence include selling
additional stock or borrowing additional funds to pay overhead expenses while
current marketing efforts continue to raise its sales volume. In July 2003, IQ
Biometrix started shipping FACES(TM) 4.0.



                                      F-8
<PAGE>

                               IQ BIOMETRIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

IQ Biometrix's future success is dependent upon its ability to achieve
profitable operations, generate cash from operating activities and obtain
additional financing. There is no assurance that IQ Biometrix will be able to
generate sufficient cash from operations, sell additional shares of common stock
or borrow additional funds.

IQ Biometrix's inability to obtain additional cash could have a material adverse
effect on its financial position, results of operations and its ability to
continue in existence. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

NOTE 3 -NOTE RECEIVABLE

IQ Biometrix loaned a private company $400,000 as part of a Letter of Intent
(the "LOI") dated May 2, 2003 between IQ Biometrix and the private entity
whereby IQ Biometrix would acquire the private company. The transaction was
terminated and the private company signed a note receivable bearing interest at
10%, secured by the private company's accounts receivable. The private company
defaulted under the original agreement and signed a revised note on September
19, 2003 with various payments due through December 31, 2003, at which time a
final $150,000 payment is due.

In September 2003 the private entity made payments totaling $50,000, however,
they did not make the entire payment due under the agreement on September 30,
2003. Due to the uncertainty of collectibility, IQ Biometrix recorded a
provision for uncollectible notes receivable totaling $350,000 in fiscal 2003.

NOTE 4 - ACCRUED EXPENSES

Accrued expenses consisted of the following at June 30, 2003


Accrued stock rights                          $  168,000
Accrued salaries                                 109,647
Reimbursable expenses due to officers             51,024
Accrued interest                                  36,573
Accrued insurance premium                         20,321
Other                                             16,147
                                              ----------
                                              $  401,712
                                              ==========

NOTE 5 - NOTE PAYABLE

On December 1, 2002, IQ Biometrix received $50,000 for a 10% unsecured demand
note payable from a former officer and current director. The note balance at
June 30, 2003 is $50,000. In connection with the note, IQ Biometrix issued
40,000 warrants at $.01 exercisable anytime for 5 years. These shares were
recorded as interest expense at their estimated fair value of $19,112. In
addition, the director receives an additional 5,000 warrants per month until the
debt is paid in full. At June 30, 2003, the director earned an additional 20,000
warrants exercisable at $.01 per share. IQ Biometrix recorded additional
interest expense totaling $22,561 related to the fair value of the warrants
issued.


                                      F-9
<PAGE>

                               IQ BIOMETRIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - CONVERTIBLE DEBENTURES

In August and September 2002, IQ Biometrix sold convertible debentures with a
face value of $350,000 to various individuals. The debentures are convertible
into shares of IQ Biometrix at the option of the holder at 80% of the average
closing price as of date of conversion, with a minimum conversion amount of $.50
and a maximum conversion amount of $1.50 per share. The debentures accrue
interest at 6% per annum and were due on August 1, 2003, but were not paid. The
conversion price of the debentures is subject to adjustment at any time as the
result of any subdivision, stock split, and combination of shares or
recapitalization. These notes were registered as part of IQ Biometrix SB-2
registration statement filed August 1, 2003. Each debenture holder should have
received 10,000 shares of common stock per $100,000 loaned as an origination
fee. As of June 30, 2003, no shares have been issued.


In March, April, and May 2003, IQ Biometrix sold convertible debentures with a
face value of $400,000 and warrants to acquire up to 1,600,000 shares of common
stock to two investors. The debentures are convertible into shares of IQ
Biometrix at $.20 per share at maturity or upon prepayment of at least 75% of
the face amount at the option of the holder. The debentures are due on April 1,
2004 and accrue interest at 10% per annum payable at maturity. At the option of
the holder, the interest can be paid in either cash or additional shares of
common stock. Warrants exercisable for 400,000 shares of IQ Biometrix common
stock were issued upon the closing of this transaction and additional warrants
exercisable for 400,000 shares of IQ Biometrix common stock are issued every
quarter until the debentures mature. The warrants are exercisable for a period
of five years from the date of issuance. The conversion price of the debentures
and 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. These notes were registered as part of IQ Biometrix SB-2
registration statement filed August 1, 2003.

In May and June 2003, IQ Biometrix sold convertible debentures with a face value
of $400,000 and warrants exercisable for up to 320,000 shares of IQ Biometrix
common stock to two investors. The debentures are convertible into shares of IQ
Biometrix at $.30 to $.50 per share at maturity or upon prepayment of at least
75% of the face amount at the option of the holder. The debentures are due on
June 1, 2004 and accrue interest at 10% per annum payable at maturity. At the
option of the holder, the interest can be paid in either cash or additional
shares of common stock. The warrants are exercisable at $.50 per share for a
period of five years from the date of issuance. The conversion price of the
debentures and 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. These notes were registered as part of IQ Biometrix's SB-2
registration statement filed August 1, 2003.

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 pricing method is also recorded as a debt discount. The total debt
discount recorded on the sales of convertible debentures during fiscal 2003 was
approximately $879,000. This debt discount will be amortized and charged to
interest expense over the terms of the respective debentures. 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.

Through June 30, 2003, $223,084 has been recorded as non-cash interest expense
on the Company's income statement relative to the amortization of debt discount
on these convertible debentures. Going forward, IQ Biometrix will incur non-cash
interest expense of approximately $664,000 through June 30, 2004.

Accrued and unpaid interest on these notes was $33,604 at June 30, 2003.



                                      F-10
<PAGE>

                               IQ BIOMETRIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7 - CAPITAL STOCK

The total number of shares of capital stock which IQ Biometrix has the authority
to issue is 60,000,000 shares. This included 10,000,000 shares of $.01 par value
preferred stock and 50,000,000 share of $.01 par value common stock. The board
of directors is authorized to create the preferred stock and designate the
powers, preferences and rights of the preferred stock.


On November 15, 2002, IQ Biometrix entered into an agreement with Special Equity
IV, L.P. to sell 500,000 shares of IQ Biometrix common stock to Special Equity
IV, L.P. at a purchase price of $.40 per share. The closing price of IQ
Biometrix common stock on November 15, 2002 was $.41 per share. The purchase of
the shares was made in two tranches of $100,000, the first occurring on November
15, 2002 and the second occurring on December 15, 2002.


During fiscal 2003, consultants exercised options to purchase 103,000 shares of
common stock. IQ Biometrix received proceeds of $10,300. As of June 30, 2003,
these shares have not been issued by the transfer agent but are shown as issued
and outstanding in the accompanying financial statements.


During fiscal 2003, IQ Biometrix issued 1,848,600 shares of its common stock to
various non-employees for consulting services. The stock was valued using the
closing price of the Company's common stock on the date issued and expensed
immediately because, in general, the consultants had fully performed the
services. This is in accordance with EITF 00-18, Accounting Recognition for
Certain Transactions involving Equity Instruments Granted to Other Than
Employees, which requires recognizing equity instruments when issued if no
obligation to earn the equity instrument exists.


NOTE 8 - STOCK OPTIONS AND WARRANTS

IQ Biometrix's 2001 Stock Option Plan provides for the grant of both qualified
and non-qualified stock options to directors, employees and consultants. The
option grants are administered by the Board of Directors, who have substantial
discretion to determine which persons, amounts, time, price, exercise terms, and
restrictions, if any.

The following table summarizes stock option activity:


Outstanding, July 10, 2001( Inception)                                       --
Granted                                                               3,190,162
Canceled or expired                                                    (880,000)
Exercised                                                                    --
                                                                     ----------
Outstanding, June 30, 2002                                            2,310,162
                                                                     ==========
Exercisable at June 30, 2002                                          1,569,000
                                                                     ==========
Weighted-average option price for
   options granted during the year                                   $      .10
                                                                     ==========

Outstanding, July 1, 2002                                             2,310,162
Granted                                                               1,855,000
Canceled or expired                                                     (58,320)
Exercised                                                              (103,000)
                                                                     ----------
Outstanding, June 30, 2003                                            4,003,842
                                                                     ==========
Exercisable at June 30, 2003                                          2,738,871
                                                                     ==========
Weighted-average option price for
   options granted during the year                                   $      .32
                                                                     ==========
Average remaining years of contractual life                                   4
                                                                     ==========


                                      F-11
<PAGE>

                               IQ BIOMETRIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Included in the 1,855,000 options issued during fiscal 2003 were 330,000 options
issued to third party consultants. During fiscal 2003, IQ Biometrix expensed
$184,630 related to the fair value of the options issued to these consultants.
The fair value was determined using the Black Scholes pricing model, which
values options based on the stock price at the grant date, the expected life of
the option, the estimated volatility of the stock, expected dividend payments
and the risk-free interest rate over the expected life of the option. The
dividend yield was zero. The expected volatility of 133% was based on the
historic stock prices. The risk-free interest rate was the rate available on
zero coupon U.S. government issues with a term equal to the remaining term for
each grant. The risk-free rate was 3.5% in 2003. The expected life of the
options was estimated to be five years.

The amount the Company expensed in fiscal year 2003 related to options
outstanding in fiscal 2003 and was calculated based on the vesting period of the
options. As of June 30, 2003, 220,000 shares underlying outstanding options were
vested leaving 110,000 shares unvested. The fair value of the unvested options
will be measured using the Black Scholes pricing model at the end of each future
reporting period and the fair value of the shares vesting during that period
will be expensed.


The following table summarizes stock warrant activity:


Outstanding, July 1, 2002                                                     --
Granted                                                                1,720,000
Canceled or expired                                                           --
Exercised                                                                     --
                                                                       ---------
Outstanding, June 30, 2003                                             1,720,000
                                                                       =========
Exercisable at June 30, 2003                                           1,720,000
                                                                       =========
Weighted-average exercise price                                        $     .74
                                                                       =========


In June 2003, IQ Biometrix issued warrants exercisable for 320,000 shares of the
Company's common stock to investors in connection with a sale of convertible
debentures in the amount of $400,000. IQ Biometrix valued these warrants using
the Black Scholes pricing model and will amortize the cost of the warrants over
the term of the debentures and will include these costs as part of the debt
discount.

In April 2003, IQ Biometrix issued 400,000 warrants to investors in connection
with a sale of convertible debentures in the amount of $400,000. IQ Biometrix
valued these warrants using the Black Scholes pricing model and will amortize
the cost of the warrants over the term of the debentures and will include these
costs as part of the debt discount. In addition to these warrants, the debenture
holders will be issued 400,000 additional warrants each quarter until maturity
of the debentures unless IQ Biometrix pays the debt prior to maturity.


In December 2002, IQ Biometrix issued warrants to acquire 1,000,000 shares of IQ
Biometrix common stock in connection with the purchase of a note receivable from
a related party (see note 11).

The fair value of the warrants was determined using the Black Scholes pricing
model, which values warrants based on the stock price at the grant date, the
expected life of the warrant, the estimated volatility of the stock, expected
dividend payments and the risk-free interest rate over the expected life of the
option. The dividend yield was zero in 2003 and 2002. The expected volatility
was based on the Company's historic stock prices. The expected volatility was
138% for all warrants issued in 2003. The risk-free interest rate was the rate
available on zero coupon U.S. government issues with a term equal to the
remaining term for each grant. The risk-free rate was 3.5% in 2003 and the
expected life of the warrants was estimated to be five years.

NOTE 9 - INCOME TAXES

Income taxes are not due since IQ Biometrix has incurred a loss since inception.
IQ Biometrix has deductible net operating losses of approximately $2,300,000 at
June 30, 2003. These expire in 2022 and 2023.

Components of deferred tax assets and liabilities at June 30, 2003 are as
follows:


Deferred tax liabilities                                              $      --
Deferred tax assets:
   Allowance for doubtful accounts                                      120,000
   Net operating loss carryforward                                      774,000
                                                                      ---------
                                                                        894,000
Valuation allowance                                                    (894,000)
                                                                      ---------
   Net deferred tax asset                                             $      --
                                                                      =========


IQ Biometrix has recorded a full valuation allowance against its deferred tax
asset since it believes it is more likely than not that such deferred tax asset
will not be realized. The valuation allowance for deferred tax assets as of June
30, 2003 is approximately $894,000. The net change in the total valuation
allowance for the years ended June 30, 2003 and 2002 was an increase of $588,000
and $306,000, respectively.


                                      F-12
<PAGE>

                               IQ BIOMETRIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 - COMMITMENTS


IQ Biometrix signed an office space lease effective February 1, 2003 and
expiring January 31, 2004. The rent amount is $935 per month. During the period
ended June 30, 2003, rent expense was $91,808.


NOTE 11 - RELATED PARTY TRANSACTIONS


In connection with a financing transaction with Special Equity IV, L.P.
("SEIVLP"), the Company acquired from SEIVLP all of SEIVLP's interest in a
Secured Convertible Promissory Note having a face amount of a $2.5 million
dollars (the "MVION Note") issued to SEIVLP by MVION, Inc., a technology company
also known as KachinaGuide in consideration for 700,000 shares of the Company's
common stock (the "SEIVLP Shares") and a warrant exercisable for 1,000,000
shares of the Company's common stock at a per share exercise price of $1.25 per
share (the "SEIVLP Warrants"). Eric A. McAfee, a former Director of the Company,
is the sole director and officer of MVION. Daniel McKelvey, a selling
stockholder, was appointed to the Company's Board of Directors on March 26, 2004
and is a managing member of Forte Capital Partners LLC, the general partner of
SEIVLP. The KachinaGuide, was a real-time interactive tool used to conduct
highly refined searches across heterogeneous data sources. MVION's business
failed, and the MVION Note was in default when the Company acquired the MVION
Note. The MVION Note is secured by a lien on MVION's assets, which in the event
MVION defaulted on the Note would entitle the holder thereof to acquire all of
the assets, including the intellectual property assets of MVION. When the
Company acquired the Note from SEIVLP, management believed that MVION's assets,
particularly its intellectual property assets, were worth the approximately
$168,000 value of the stock and warrants issued to SEIVLP. In addition, Eric
McAfee agreed that if the intellectual property assets of MVION were later
determined to be worth less than the value of the stock and warrants issued to
SEIVLP, he would return a number of shares of the Company's common stock held by
him, up to 700,000 shares, to the Company. At the time the Company entered into
the transaction, very little due diligence was performed on the value of the
MVION Note or the technology securing the MVION Note based upon Mr. McAfee's
personal assertions of the value of the MVION technology and his pledge of
stock. As stated above, the Company later released Mr. McAfee from his
obligation to return shares to the Company in connection with a settlement
agreement entered into with Mr. McAfee in November 2003 in connection with
amounts owed to Mr. McAfee pursuant to the termination of the McAfee Advisory
Agreement. The Company has subsequently determined that the cost of perfecting
any patent work and subsequent incorporation of the intellectual property of
MVION into the FACES software was too costly and, therefore, has not foreclosed
on the MVION Note. However, the Company has recently begun exploring the
possibility of exercising its rights as a secured creditor with respect to the
MVION assets securing the MVION Note, however, the Company can give no
assurances as to its ability to collect on the MVION Note, its efforts to
exercise its rights with respect to the MVION Note, or the benefit of the assets
securing such note in the event that the Company eventually acquires ownership
of them.

As of June 30, 2003, the SEIVLP Shares had not been issued During 2003, the
Company recorded a liability of $168,000 based on the stock price on the date of
the agreement. The amount recorded is included in accrued liabilities in the
accompanying balance sheet.

The exercisability of the SEIVLP Warrants lapses over time as follows: 100,000
in July 2003 and 150,000 shares per month from August 2003 through January 2004.



NOTE 12 - SUBSEQUENT EVENTS

Subsequent to June 30, 2003, IQ Biometrix issued 2,638,669 shares of its common
stock to various consultants. IQ Biometrix recorded $2,382,431 in expense based
on the closing price of the stock on the date issued.


In October 2003, IQ Biometrix issued to two investors 6% convertible
debentures in the aggregate principal amount of $200,000 due in one year, and
convertible anytime by the holder into IQ Biometrix common stock at a conversion
price of $.64 per share. In connection with this transaction, IQ Biometrix
issued to the investors warrants exercisable for 160,000 shares of IQ Biometrix
common stock at an exercise price of $1.25 per share.

In September 2003, IQ Biometrix sold to investors convertible debentures with a
face value of $500,000 and warrants to acquire up to 400,000 shares of IQ
Biometrix at $1.25 per share. The debentures are convertible into shares of IQ
Biometrix at $.64 per share.


In September 2003, IQ Biometrix issued 80,000 shares of common stock and
warrants to acquire 40,000 shares of common stock at $1.25 per share to an
individual for consulting services. The Company recorded expense totaling
$68,000 for the stock issued based on the closing market price on the date
issued. The fair value of the warrants totaled $14,400 and was determined using
the Black Scholes pricing model, which values warrants based on the stock price
at the grant date, the expected life of the warrant, the estimated volatility of
the stock, expected dividend payments and the risk-free interest rate over the
expected life of the option. The dividend yield was zero, the expected
volatility was 138% and the risk-free interest rate was 3.5% and the expected
life of the warrants was estimated to be five years.


                                      F-13
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, IQ Biometrix, Inc. has duly caused this annual report on Form
10-KSB/A to be signed on its behalf by the undersigned, thereunto duly
authorized.


March 31, 2004                               IQ BIOMETRIX INC.



                                             By: /s/ William Scigliano
                                               -------------------------------
                                                     William Scigliano,
                                                     Chief Executive Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.



<TABLE>
<CAPTION>
Name                                                 Title                              Date

<S>                                         <C>                                 <C>
/s/William Scigliano                        Chief Executive Officer             March 31, 2004
----------------------------                (Principal Executive Officer)
William Scigliano


/s/ Greg. J. Micek                          Director                            March 31, 2004
----------------------------
Greg J. Micek


/s/ Daniel P. McKelvey                      Director                            March 31, 2004
----------------------------
Daniel P. McKelvey


/s/Michael Walsh                            Chief Financial Officer,            March 31, 2004
----------------------------                Treasurer & Controller
Michael Walsh                               (Principal Financial Officer
                                            and Principal Accounting
                                            Officer)
</TABLE>



                                       47


<PAGE>