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

                                   FORM 10-KSB

               [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  onSeptember  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

         This Annual Report on Form 10-KSB contains  forward-looking  statements
within the meaning of Section 24A of the  Securities Act of 1933 and Section 21E
of the Securities  Exchange Act of 1934. These statements  appear in a number of
places  including  ITEMS 1 AND 2 "BUSINESS  AND  PROPERTIES."  These  statements
regard:

         *        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 InterCodeTM (a automatically  generated ID
                  Code) is a  breakthrough  feature  that can serve as the first
                  international   standard   in  the   transmission   of  facial
                  recognition data. Each InterCodeTM is unique with respect to a
                  particular face, just a fingerprints 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 belief  regarding any  termination  or  non-renewal of any
                  lease

         *        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 InterCodeTM technology

         *        our  intentions  regarding  the  continuation  of  our  direct
                  selling efforts

         *        our intentions regarding our marketing,  publicity,  sales and
                  lobbying efforts.

Such statements can be identified by the use of forward-looking terminology such
as "believes,"  "expects,"  "may,"  "estimates,"  "will,"  "should,"  "plans" or
"anticipates" or the negative thereof or other variations  thereon or comparable
terminology,  or by discussions of strategy. Readers are cautioned that any such
forward-looking  statements are not guarantees of future performance and involve
significant  risks and  uncertainties,  and that  actual  results  could  differ
materially from those projected in the forward-looking statements.  Factors that
could cause actual results to differ materially include, but are not limited to,
those  discussed  under "RISK FACTORS"  immediately  below.  As a result,  these
forward-looking  statements  represent the Company's  judgment as of the date of
this Annual  Report.  The Company does not express any intent or  obligation  to
update these forward-looking statements.


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<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.  As a result,  in the fall of 2000 JVWeb 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.

         IQB was formed in July 2001 for the purpose of engaging in the business
of developing  products for the facial composite market.  The FACESTM 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  FACESTM  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  13,354,232  shares of JVWeb Common Stock (after taking
into account certain  post-closing  adjustments) shares of JVWeb's Common Stock,
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  FACESTM
business, the FACESTM software, two pending patent applications, trademarks, the
FACESTM library, FACESTM 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

          In  addition  to the other  information  in this  Annual  Report,  the
following  risk  factors,  among  others,  should  be  considered  carefully  in
evaluating the Company and its business.  Unless the context requires otherwise,
the terms "we",  "us" and "ours" (as used in these Risk  Factors)  refers to the
Company.





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

         On  March  22,  2002,   the  merger  (the  "Merger")  of  IQ  Biometrix
California,  Inc.  ("IQB") with and into a wholly owned  subsidiary of JVWeb was
completed.  IQB  was  incorporated  in July  2001 to  continue  the  launch  and
development  of a  proprietary  software  program  named  "FACES,  The  Ultimate
Composite  PictureTM."  Development of this software began in 1995. Two previous
corporate  owners of this technology  ultimately  declared  bankruptcy under the
laws of Canada,  although management believes that their bankruptcies were not a
result of the merits of the  technology.  See  "BUSINESS."  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."  Prior to the Merger,
JVWeb had not been operational for more than a year.

         In  view of the  preceding,  our  current  business  has had a  limited
operating history.  Accordingly, we cannot be certain that this business will be
successful.  Because  of this  limited  operating  history,  we cannot  forecast
operating expenses based on our historical results because they are limited, and
we are required to forecast expenses in part on future revenue projections. Most
of our  expenses  are fixed in the short  term and we may not be able to quickly
reduce  spending if our revenue is lower than we had  projected;  therefore  net
losses in a given  quarter  would be greater than  expected.  In  addition,  our
ability to forecast  accurately our quarterly revenue is limited due to a number
of factors described in detail below, making it difficult to predict the quarter
in which  sales  will  occur.  You must  consider  the  risks  and  difficulties
frequently  encountered  by early stage  companies  in new and rapidly  evolving
markets such as ours, including:

         *        Our  complete  dependence  on  our  current  facial  composite
                  software   products  and  other   products  and   applications
                  developed from them; we expect to derive  substantially all of
                  our revenues  from such  products,  and such products have had
                  limited market acceptance to date

         *        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 need to expand our distribution capability

         *        Our ability to respond to competitive developments

         *        The market's acceptance of our products

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

         *        Our ability to develop and increase our customer base

         *        Our ability to implement and successfully execute our business
                  and marketing strategy

         *        Our  ability to provide  superior  customer  service and order
                  fulfillment

         There can be no assurance  that we will be  successful  in  undertaking
such activities.  Our failure to address successfully our risks could materially
and adversely affect our business, prospects, financial condition and results of
operations.

         WE HAVE A HISTORY OF LOSSES,  WE EXPECT FUTURE  LOSSES,  AND WE MAY NOT
ACHIEVE OR MAINTAIN PROFITABILITY.

                                       5
<PAGE>

         We have incurred net losses since  inception,  and we have not achieved
profitability.   As  of  June  30,  2003,  we  had  an  accumulated  deficit  of
approximately   $4,871,956.   We  expect  we  will  need  to  continue  spending
substantial  financial and other  resources on expanding our sales and marketing
activities and developing and introducing  new products and  enhancements to our
existing  products.  As a result,  we need to  generate  significant  revenue to
achieve  and  maintain  profitability.  We expect  that our sales and  marketing
expenses and our research and development  expenses will continue to increase in
absolute  dollars and may increase as percentages of revenue for the foreseeable
future. If we do achieve profitability, we cannot be certain that we can sustain
ongoing future losses.

         QUARTERLY,   SEASONAL  AND  OTHER  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.  We do not control many of these factors.  These factors
include the following:

         *        Our  product is reliant on local and state  governments  which
                  are experiencing their worst budget crisis in years

         *        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  difficulties  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

         *        Timing of revenue recognition for sales of products

         *        General economic conditions.


         Any of the  foregoing  factors may cause our  operating  expenses to be
disproportionately high or cause our revenue and operating results to fluctuate.
As a consequence,  our business, financial condition and operating results could
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.  We also expect that we may experience  seasonality in our
businesses in the future.  Due to all of the foregoing  factors,  in some future
quarter our operating  results may fall below the  expectations of investors and
any securities  analysts who follow our Common Stock. 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.

         OUR MARKET IS IN  DEVELOPMENT,  AND OUR PRODUCT MAY NOT ACHIEVE  MARKET
ACCEPTANCE.

         The market for our products is relatively new and rapidly evolving. Our
growth plan assumes that our products will gain  widespread  market  acceptance.
However,  widespread  market  acceptance of our products remains  uncertain.  In
addition,  market growth depends on other factors,  including factors not within
our control,  such as international  market expansion and replacement cycles for
products  currently in use. If products  such as ours are not widely  adopted by
our target markets and such markets do  materialize  and grow, our business will
suffer.

         We do not have a long  history of selling our products and will have to
devote substantial resources to educate prospective customers about the benefits
of our products.  Our efforts to educate  potential  customers may not result in
our products' achieving market acceptance. Furthermore, even if our products are
effective, our target customers may not choose them for technical, cost, support

                                       6
<PAGE>

or other  reasons.  If the market for our  products  fails to grow or grows more
slowly than we anticipate, our business could suffer.

         The  September 11, 2001  terrorist  attacks have created an increase in
demand for products such as ours. However, we are uncertain whether the level of
demand will be as high as  anticipated.  Additionally,  it is uncertain what, if
any,  solutions  will be adopted as a result of the  terrorism  and  whether our
products  will be a part of the  ultimate  solution.  Additionally,  should  our
products be  considered as a part of the security  solution,  it is unclear what
the level and how  quickly  funding  may be made  available.  These  factors may
adversely  impact us and  create  unpredictability  in  revenues  and  operating
results.

         In addition,  from time to time, facial recognition and other biometric
technologies  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 facial
recognition products may be adversely affected.

         Finally, the software industry has historically experienced significant
periodic downturns, often in connection with, or in anticipation of, declines in
general economic  conditions.  Such a downturn could result in reduced purchases
of our  products  from levels  that  otherwise  might  occur.  As a result,  our
business,  operating  results and financial  condition may in the future reflect
substantial  fluctuations  from  period  to period  as a  consequence  of buying
patterns and general economic conditions in the software industry.

         IF WE FAIL TO  PROMOTE  OUR  BRAND  NAMES  SUCCESSFULLY  OR IF WE INCUR
SIGNIFICANT  EXPENSES  PROMOTING AND MAINTAINING  OUR BRAND NAMES,  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
time limited  opportunity  for us to achieve and maintain a  significant  market
share.  Developing and  maintaining  awareness of our brand names 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 our products  increases.  Successfully  promoting and positioning our brands
will depend largely on the effectiveness of our marketing  efforts,  our ability
to develop reliable and useful products at competitive  prices,  and our ability
to achieve and maintain a position as a leader in providing  high quality facial
imagery software  products and enterprise  -level solutions for the needs of law
enforcement  agencies  and other  potential  customers.  To  attract  and retain
customers  and to promote and  maintain  our brands in  response to  competitive
pressures,  we may need to increase our  marketing  and  advertising  budgets or
otherwise to increase  substantially  our  financial  commitment to creating and
maintaining  brand loyalty among  vendors and  consumers.  We expect to derive a
substantial  majority of our revenue  from a limited  number of products for the
foreseeable future. Our business,  results of operations and financial condition
could be materially adversely affected if any of the following events occur:

         *        We  are  unable  to  provide  high  quality  facial  composite
                  software products and enterprise-level solutions for the needs
                  of law enforcement agencies and other potential customers

         *        We otherwise fail to promote and maintain our brands

         *        We are unable to achieve or maintain a leading position in our
                  market

         *        We incur  significant  expenses  in  attempting  to achieve or
                  maintain  a leading  position  in the our market or to promote
                  and maintain our brands

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

         We believe that our success will depend on the continued  growth of our
customer base and the retention of our customers. We presently have over 160,000
seat licenses  distributed to law enforcement  agencies in the United States. We
expect to focus a large part of our revenue  generation  efforts on our existing
customers.  If we fail to generate repeat and expanded business from our current
and future  customers,  our  operating  results would be seriously  harmed.  Our
ability to attract new customers will depend on a variety of factors,  including

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<PAGE>

the  reliability  and  cost-effectiveness  of our  products  and our  ability to
effectively  market our products.  If a customer has a positive  experience with
our products, the customer may purchase additional licenses to expand the use of
our products in its organization or license additional products from us. However
there is no assurance  that our  customers  will expand their current use of our
products in this way.

         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 and  unmarketable.  We also expect
that these  changes and  introductions  will require us to adapt our products to
remain competitive. 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.  We cannot assure you that we will  successfully  develop
these types of products and product enhancements.  In addition,  there can be no
assurance that the  announcement  or  introduction  of new products by us or our
competitors  or any change in industry  standards  will not cause  customers  to
defer or cancel purchases of existing products, which could materially adversely
affect our business,  operating results and financial condition.  As a result of
the complexities  inherent in facial composite software,  major new products and
product  enhancements  can require long  development and testing  periods.  As a
result,  significant delays in the general  availability of such new releases or
significant problems in the implementation of such new releases could materially
adversely affect our business,  operating results and financial  condition.  Our
failure to develop  successfully,  on a timely and cost effective basis, product
enhancements  or new products  that respond to  technological  change,  evolving
industry standards or customer  requirements or of such new products and product
enhancements  to achieve  market  acceptance  would have a materially  adversely
affect our business, operating results and financial condition.

         WE RELY ON A NUMBER OF THIRD PARTIES, AND SUCH RELIANCE EXPOSES US TO A
NUMBER OF RISKS.

         Our  operations  depend on a number of third  parties.  We have limited
control over these third parties. We may not have many long-term agreements with
many of them. For example,  we market our products and services  through various
distributors and other  cooperative  relationships  with third parties.  In many
cases,  the sale of our products  depends on the  effectiveness of their selling
efforts on behalf of our products and in executing on their own responsibilities
under agreements with customers in a timely manner.  At times,  such third party
distributors  may offer products of our  competitors as well. The failure of the
third  parties  with  which  we have  contracted  to  fulfill  adequately  their
contractual   obligations  could  materially   adversely  affect  our  business,
operating results and financial condition.

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

         Software  products  as  complex as those  that we offer  often  contain
errors or defects,  particularly  when first  introduced,  when new  versions or
enhancements are released and when configured to individual  customer  computing
systems. We currently have no known errors and defects in our products. 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

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<PAGE>

through our license  agreements with customers we will 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.

         IF WE GROW  OUR  BUSINESS  AS  PLANNED,  WE MAY  NOT BE ABLE TO  MANAGE
PROPERLY OUR GROWTH,  AND WE EXPECT  OPERATING  EXPENSES TO INCREASE,  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 improve on a timely basis existing and implement new operational,
financial and inventory systems, procedures and controls,  including improvement
of our financial and other internal management systems; and to 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  quarterly 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.

These  additional  costs  and  expenses  could  delay  our  ability  to  achieve
profitability.

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

         Our future success  depends upon our  proprietary  technology.  We have
protected  our  proprietary  information  through the use of patent,  copyright,
trademark,   trade  secret  laws,  confidentiality  procedures  and  contractual
provisions. Nonetheless,  notwithstanding our efforts to protect our proprietary
rights,  policing unauthorized use or copying of its proprietary  information is
difficult,  unauthorized use or copying occurs from time to time, and litigation
to enforce  intellectual  property rights could result in significant  costs and
diversion  of  resources.   Any  patents  we  obtained  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  affect  our  business,  financial
condition and operating results.

         In addition,  in the future third parties may claim certain  aspects of
our business  infringe  their  intellectual  property  rights.  While we are not
currently  subject to 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 certain royalty and licensing arrangements

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.


                                       9
<PAGE>

         WE NEED TO EXPAND OUR SALES AND DISTRIBUTION CHANNELS,  AND, IF WE FAIL
TO DO SO, OUR GROWTH COULD BE LIMITED.

         We will need to  significantly  expand our direct  and  indirect  sales
operations in order to increase market awareness of our products and to generate
increased  revenue.  New sales personnel will require  training and take time to
achieve full  productivity.  There is strong  competition  for  qualified  sales
personnel  in our  business,  and we may  not be  able  to  attract  and  retain
sufficient new sales personnel to expand our operations. In addition, we believe
that our future  success  depends upon  expansion  of our indirect  distribution
channel, which consists of our relationships with a variety of distributors.  To
date, we have  relationships  with only a limited number of these  partners.  We
cannot  be  certain  that  we  will be  able  to  establish  relationships  with
additional  distribution  partners on a timely  basis,  or at all, or that these
distribution partners will devote adequate resources to promoting or selling our
products.  In addition,  we may also face potential conflicts between our direct
sales force and third party reselling efforts.

         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.

         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.

         FUTURE ACQUISITIONS COULD EXPOSE US TO NUMEROUS RISKS.

         As  part  of  our  business  strategy,  we  may  acquire  complementary
companies,   products,  services  or  technologies.  Any  acquisition  would  be
accompanied  by the risks  commonly  encountered  in a  transaction.  Such risks
include the following:

         *        Difficulty of assimilating the operations and personnel of the
                  acquired companies

         *        Potential disruption of our ongoing business

         *        Inability  of   management   to  maximize  our  financial  and
                  strategic  position  through the successful  incorporation  of
                  acquired businesses and technologies

         *        Additional  expenses  associated with amortization of acquired
                  intangible assets

         *        Maintenance  of uniform  standards,  controls,  procedures and
                  policies

         *        Impairment of relationships with employees, customers, vendors
                  and  advertisers  as  a  result  of  any  integration  of  new
                  management personnel

         *        Potential   unknown   liabilities   associated  with  acquired
                  businesses

         There can be no assurance  that we would be  successful  in  overcoming
these  risks  or  any  other  problems   encountered  in  connection  with  such
acquisitions. Due to all of the foregoing, any future acquisition may materially
and adversely affect our business,  results of operations,  financial  condition
and cash flows.  Although we do not expect to use cash for acquisitions,  we may
be  required  to  obtain  additional  financing  if we choose to use cash in the
future.  There can be no  assurance  that such  financing  will be  available on
acceptable  terms.  In  addition,  if we issue  stock  to  complete  any  future
acquisitions, existing stockholders will experience further ownership dilution.


                                       10
<PAGE>

         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 were issued as of September 30, 2003. 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 us by a merger,  tender offer at a control premium
price,  proxy contest or  otherwise.  Consequently,  the  Preferred  Stock could
entrench  our  management.  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).  Recently,  the number of shares traded has
been extremely limited and volatile.  Moreover, thus far the prices at which our
Common Stock has traded have fluctuated fairly widely on a percentage basis. 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
                  participate

         *        General economic and market conditions

         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  988,000  registered  shares of our Common Stock
                  are   available  for  issuance  to  outside   consultants   to
                  compensate them for services provided as of September 30, 2003

         *        Options  to  purchase  approximately  3,880,885  shares of our
                  Common Stock had been granted as of September 30, 2003

         *        Warrants to purchase approximately  1,000,000 shares of Common
                  Stock had been issued as of September 30, 2003

         *        Debentures,  convertible into 4,600,000 shares of Common Stock
                  had been issued as of September 30, 2003

         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

                                       11
<PAGE>

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.

         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 has been 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 paid no 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.  If
we obtain  additional  financing,  our  ability to declare  any  dividends  will
probably be limited contractually.

                                    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

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<PAGE>

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  FACESTM
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 InterCodesTM.

         The  InterCodeTM  algorithm  is the  digital  imprint  of the face,  as
represented by the unique  combination of facial  features from our  proprietary
library.  Every InterCodeTM 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  InterCodeTM  and the  small  size of the  code  itself  (less  than  250
characters in length),  the InterCodeTM 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 InterCodeTM 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:  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),  the  FACES/TRAK
                  solution 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.  white male, 6' tall,  brown
                  hair.  This  description is believed to be much less effective
                  in  identifying  suspects  than  the  FACES  composite  image.
                  Funding by the state of New Jersey and  federal  sources,  the
                  FACES/TRAK  Solution  is  being  installed  in all 600  police
                  departments  in New  Jersey,  with  statewide  deployments  in
                  negotiation for Ohio, Texas, Florida and other states.

         *        FACES Search:  By applying the InterCodeTM to databases of mug
                  shots such as the iMug database of more than 3 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.

         The  FACES  Search  system  is being  integrated  with  the  FACES/TRAK
solution  for  deployment  on a  monthly  recurring  license  basis  in the 1400
existing  TRAK  police  departments,  as  well  as  in  current  FACES  licensee
departments.


                                       13
<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 in comparison to the
                  previous form of graphical exchange

         *        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 its 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 its 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  InterCodeTM  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  InterCodeTM   technology  as  an  international
                  standard   Our  strategy   includes   the  ultimate   goal  of
                  positioning  the  InterCodeTM  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

                                       14
<PAGE>

                  prevention and solving.  InterCodeTM, 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 InterCodeTM
                  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 many
                  organizations  (including the FBI Academy in Quantico) and has
                  won  numerous  awards and  recognitions  all around the world.
                  Additional endorsements have been received from Crime Stoppers
                  International,    Pennsylvania   Law   Enforcement    Officers
                  Association,  Child Find, the Our Missing Children division of
                  the Royal Canadian Mounted Police, and Victims of Violence for
                  Missing  Children.  The FBI  Academy in  Quantico  has adopted
                  FACES as an official training tool for FBI agents and uses the
                  product to give seminars in foreign countries.  In addition to
                  the  endorsements  received  from  professional  organizations
                  accrediting  the product as an effective and reliable tool for
                  law-enforcement,  the Fox Network television series "America's
                  Most Wanted," which is viewed by 15 million people every week,
                  has  adopted the FACES  software as an official  crime-solving
                  tool.  The host of the series,  John Walsh,  is a supporter of
                  the FACES software.

         *        Maintain a strong  commitment  to  customer  satisfaction:  We
                  understand  that  (in  order  for  it  to be  successful)  its
                  customers  must  be  satisfied  with  our  products.   We  are
                  committed   to   customer    satisfaction    throughout    its
                  organization.  In order to  accomplish  this,  we will  invest
                  substantial  time and  effort  in  testing  its  products  and
                  working  closely  with its  customers  to quickly  address any
                  issues that arise.  We will focus on providing  its  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 supplements 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.

         *        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 it is
                  strategically  aligning itself 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 its  products by seeking to  increase  the
                  number of  distributors  of its products as well continuing it
                  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 its 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 its software.

         *        Pursue  incremental  revenue   opportunities:   We  intend  to
                  leverage  our FACES  technology  to broaden its  presence  and
                  develop additional  revenue  opportunities.  For instance,  we
                  expect to receive  meaningful  revenues from training users of
                  our  software,  primarily  over the Internet.  Future  revenue

                                       15
<PAGE>

                  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 it 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.

         A key element of the FACES software is the Biometric  Alphanumeric Code
(InterCodeTM  ), a system  whereby  each  composite  picture  generates a unique
alphanumeric  code.  The  InterCodeTM  is a digital  imprint of the face.  Every
InterCodeTM 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.  InterCodeTM can be sent via any telecommunications
network  (phone,  fax,  Internet).  Once  the  code  is  typed  into  the  Enter
InterCodeTM  dialog box, the  corresponding  composite  picture is automatically
generated  on the  user's  screen.  Not  only  does  the  InterCodeTM  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 InterCodeTM  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

         Generally,  our software  products are developed  internally  with some
assistance  from outside  contractors.  This  development  process enables us to
maintain close  technical  control over our products and gives 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.  Our company  strives to become  informed at the
earliest  possible time about changing usage patterns and hardware advances that
may affect software design.

         We contract out most of its  manufacturing  activity to third  parties.
There are other custom  manufacturers  that we could use in the event outsourced
manufacturing becomes unavailable from current vendors. We have multiple sources
for  raw  materials,   supplies,  and  components.  Quality  control  tests  are
occasionally performed on finished products.

                                       16
<PAGE>

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

                        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
InterCodeTM 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
InterCodeTM 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 InterCodeTM  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
InterCodeTM on the magnetic band of the card for a visual  authentication before
any transaction approval.


                                       17
<PAGE>

                                    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.  To train
users  in the  future,  we are in  serious  discussions  with  an  international
training organization, which will sponsor the curriculum into the various states
mandatory  CEC  training  for  law  enforcement.   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.

                              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

                                       18
<PAGE>

                  spread  public  relations  campaign,  hundreds  of articles in
                  major magazines, coverage on TV and radio on major American TV
                  shows,   participation   in   trade   shows,   promotion   and
                  advertising. This phase is largely completed.

         *        Phase II - will  aim at  building  strong  sales  channels  to
                  answer the demand  created for the  Company's  products and in
                  achieving  the  Company's  ultimate  goal of having  the FACES
                  technology   become  an  international   standard  for  facial
                  recognition  and  comparison.  This phase  will  strategically
                  involve the previously announced  relationship with SocialTech
                  of  Redwood  City,  California.  SocialTech  has  developed  a
                  program called "TRAK - Technology to Recover  Abducted 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
                  departments  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   photo   bulletins  and  share  them
                  electronically with other law enforcement  jurisdictions,  the
                  media, and the community, when they deem it appropriate.

         *        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
                  InterCodeTM  and  existing  pictures  filed  in  databases  to
                  facilitate the apprehension of criminals.

         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


                                       19
<PAGE>

         *        Selective   advertising  in  law   enforcement   and  security
                  publications

         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.  As part of the agreement to manage and host this Web site,
the Company will receive 40% of the net revenues  from products sold through the
site.  Products sold will include AMW paraphernalia,  personal security products
and various books and magazines, as well as the FACES software. 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  "InterCodeTM "
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.


                                       20
<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

                                       21
<PAGE>

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.

         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  ____ holders of record.  Presented below are the high and low
closing prices of the Common Stock for the periods indicated:


                                       22
<PAGE>

                                                        High(1)      Low(1)

         Fiscal year ending June 30, 2003:

                  Fourth Quarter                        $1.50        $ .68

                  Third Quarter                         $1.00        $ .20

          Second Quarter                                $ .90        $ .20

          First Quarter                                 $1.10        $ .52

         Fiscal year ending June 30, 2002:

         Fourth Quarter                                 $1.95        $ .60

         Third Quarter                                  $2.35        $ .20

         Second Quarter                                 $ .30        $ .09

         First Quarter                                  $ .12        $ .18

         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 debenture 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 debenture in the aggregate original principal amount of $400,000. In
addition to their  conversion  feature,  these  debentures  permit the holder to
purchase up to 275,000  additional shares of common stock. 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.

OVERVIEW

IQ Biometrix,  Inc. is a security software and services company headquartered in
Fremont,  California,  and Houston,  Texas. We are a leading  provider of facial
composite  software  to local and  national  law  enforcement  agencies,  the US
Military and other governmental 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 4.0 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.

In July 2003, we launched Faces 4.0 an enterprise solution, and related training
services.   We  began  an   aggressive   sales   and   marketing   campaign   to
institutionalize  the use of our software in law enforcement.  Concurrently,  we
are pursuing  contracts among government  agencies,  in light of the emphasis in
Homeland  Security;  the gaming  industry;  local,  state,  and national citizen
alerts  associations,  and  original  equipment  manufacturers  in the  computer
industry.

Our enterprise  solutions capability has been launched to take fullest advantage
of both our  intellectual  property  and our  position in the  marketplace.  Our
enterprise  solutions  practice will seek to acquire a greater percentage of the
business  customer's budget for security  technology-related  projects,  and the
funds available through the Homeland Security Act.

The  objective of our  enterprise  strategy is to tailor  solutions  rather than
build  products.  The  solutions  may  include  one or more  product  along with
processes.  The  solutions are not only geared to address  current  problems but
takes into consideration future needs.

Our  efforts in this area will be to focus on those  organizations  that want to
purchase  affordable standard products to fulfill specific needs and not require
costly  professional  system  integration  service or  training  to utilize  the
product.  The  inexperience  with  technology  and  changing  priorities  set by
security concerns often diminishes the value of customized information systems.

LIQUIDITY AND CAPITAL RESOURCES

We have a negative  working  capital  $935,00 of which  consists of  convertible
$538,000 of investor notes and $168,000 is owed to directors.

Technically we have a liquidity shortfall, however we believe we have sufficient
cash and cash flow to meet service our current  operating cash flow requirements
in the near term.  At our fiscal year end, June 30, 2003 we had cash of $97,680;
our accounts  payable were about $143,000,  and accrued  expenses of $401,700 of
which $168,000 is owed to directors.

                                       23

<PAGE>

We have reduced our monthly burn rate to  approximately  $75,000 from  $110,000,
and are  continuing  to seek cost  reductions.  We are  maintaining a consistent
effort to locate  sources  of  additional  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.

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.

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.

RECENT EVENTS

In 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 common
shares,  assuming full  conversion  and no early  retirement,  these  debentures
including  interest  payments,  may convert  into 1.6  million  shares of common
stock.

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 UCC-1  secured  $400,000  note.  Upon the
cancellation of our LOI we mutually agree upon a repayment plan of which NSS has
made its first two payments. We believe we will collect the full balance due us,
however we did impair the balance for financial statement purposes.

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

                                       24
<PAGE>

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.  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.

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 to $2,897,000
for the twelve months ended June 30, 2002 and 2003 respectively. The increase in
general and administrative  expenses, was due to increases in investor relations
of $696,000,  business  consulting $283,00,  investment banking $233,000,  legal
fees  $321,000,  payroll  $272,000  and travel of  $155,000.  Of these  expenses
$1,607,000 were paid in 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

Our  Intangible  assets  consists of a customer  list acquired in the JVWEB / IQ
Biometrix acquisition in March 2002 and purchased software code. We recorded the
cost the  software and  amortize  the cost over the  estimated  useful life of 3
years. We review the value of our intangible  assets quarterly and determine its
value. At June 30, 2003 we had a net carrying value for our intangible assets of
$94,000.

                                       25
<PAGE>

Revenue Recognition

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

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


INFLATION

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

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.

                                       26
<PAGE>

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-___
hereof.

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

         Not applicable.

ITEM 8A.    CONTROLS AND PROCEDURES


                                       27
<PAGE>

         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.

         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:

<TABLE>
<CAPTION>
         Name                       Age              Positions

<S>      <C>                       <C>               <C>
         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
</TABLE>

         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
and is currently active as the VP of Corporate  Development.  He also has served
as a Director and the President of JVWeb from inception until the Merger. During
March 2002,  Mr. Micek was elected as an Executive  Vice President and the Chief
Financial Officer of the Company.  During July 2002, he was elected President of
the Company again (and  relinquished  the office of Executive Vice President and
Chief  Financial  Officer).  Since 1983,  Mr.  Micek has been a principal of The
Micek Group, a business  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.

                                       28
<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
four. 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.

                                       29
<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").

<TABLE>
<CAPTION>
                                           SUMMARY COMPENSATION TABLE (1)

                                            ANNUAL                                      LONG-TERM
                                            COMPENSATION                                COMPENSATION

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

<S>      <C>                                <C>               <C>                           <C>
         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
         -----------------

</TABLE>

         (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.

                                       30
<PAGE>

<TABLE>
<CAPTION>
                      OPTION GRANTS IN THE LAST FISCAL YEAR

(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>  <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.

                   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.

                                       31
<PAGE>

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


                                       32
<PAGE>

         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
         ---------------------

(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.


                                       33
<PAGE>

(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.

                            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:

<TABLE>
<CAPTION>
                      EQUITY COMPENSATION PLAN INFORMATION

                                                                                        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>


                                       34
<PAGE>

(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.

         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.

                                       35
<PAGE>

         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.

                 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.

                                       36
<PAGE>

         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.

         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

                                       37
<PAGE>

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.

                  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.


                                       38
<PAGE>

         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.

         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.


                                       39
<PAGE>

         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.


                                       40
<PAGE>

         ANTI-DILUTION.  The 2001 Plan carries certain anti-dilution  provisions
concerning   stock   dividends,   stock   splits,    consolidations,    mergers,
recapitalizations and reorganizations.

         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 is
obligated to sell to Mr. Micek the Company's dormant electronic  commerce assets
in  consideration  of the  forgiveness  of $30,000 in  indebtedness  owed by the
Company to Mr.  Micek.  The Sale and  Purchase  Agreement  was not the result of
arms-length   negotiations.   However,  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,  the  Company's  non-interested
director  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.

         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 $2.2 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.  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  management

                                       42
<PAGE>

believes may be beneficial to the Company's  business.  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.  The Company has no
assurances as to the outcome of its investment in 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.

                                    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>

CURRENT ASSETS:
<S>                                                                                <C>
   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                                       25,851          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                       30,603          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.  We are 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 customer list and software,  and various
packaging  supplies in 2001 and paid $118,818 in early 2002.  The purchase price
was  allocated  among  supplies  inventory and  intangible  assets at their fair
market values.

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
11,578,590 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

Intangible  assets are stated at cost.  Those with limited  lives are  amortized
using the  straight-line  method over their estimated useful lives. IQ Biometrix
performs  reviews for the  impairment of long-lived  assets  whenever  events or
changes in  circumstances  indicate that the carrying amount of an asset may not
be recoverable. The intangible assets purchased in fiscal 2003 and 2002 totaling
$63,002 and $80,818,  respectively, are being amortized straight-line over three
years.

REVENUE RECOGNITION

Revenue  from the sale of products and services is  recognized  when  persuasive
evidence of an arrangement exists,  delivery has occurred,  the selling price is
fixed and  collectibility  is reasonably  assured.  Warranty claims and training
requests are insignificant. There have been no warranty claims.

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
option-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 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 obtaining
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 collectiblity, 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 $400,000 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  spit,  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  individuals.  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
IQ Biometrix,  the interest can be paid in either cash or  additional  shares of
common  stock.  The warrants  are granted  400,000  shares upon  issuance of the
debenture  and 400,000  shares every quarter  until  maturity.  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  spit,  and
combination of shares or  recapitalization.  These notes were registered as part
of IQ Biometrix SB -2 registration statement filed August 1, 2003

In June 2003,  IQ Biometrix  sold  convertible  debentures  with a face value of
$400,000  and  warrants to acquire up to 320,000  shares of common  stock to two
individuals.  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 he
Company,  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 spit, 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  method is also  recorded  as a debt  discount.  The  total  debt
discount  recorded on the  convertible  debenture  sales during  fiscal 2003 was
approximately  $879,000.  This debt  discount  will be amortized  and charged to
interest expense over the term of the respective  debenture  agreements.  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 IQ Biometrix 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 is $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   create  the  preferred   stock  series  and  set
designation, powers, preferences and rights.

In December  2002, IQ Biometrix  sold 500,000 shares of its common stock at $.40
per share in a private transaction. IQ Biometrix received proceeds of $200,000.

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 financials.

During  fiscal 2003,  IQ Biometrix  issued  1,848,600  shares of common stock to
various  consultants.  The stock was valued  using the market  price on the date
issued.


NOTE 8 - STOCK OPTIONS AND WARRANTS

IQ  Biometrix's  2001 Stock Option Plan provides for the grant of both qualified
and non-qualified  options to directors,  employees and consultants.  The option
and  warrant  issuance  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

        The following table summarizes stock warrant activity:

Outstanding, July 1, 2002                                          -
Granted                                                    1,560,000
Canceled or expired                                                -
Exercised                                                          -
                                                      --------------
Outstanding, June 30, 2003                                 1,560,000
                                                      ==============
Exercisable at June 30, 2003                               1,560,000
                                                      ==============
Weighted-average exercise price                       $          .74
                                                      ==============


In June 2003, IQ Biometrix  issued  320,000  warrants to investors in connection
with a sale of  convertible  debentures  in the  amount of  $400,000.  Biometrix
valued these  warrants using the Black Scholes Model wan will amortize the costs
as part of the debt discount over the term of the debentures.

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 Model and will amortize the costs
as part of the debt  discount  over the term of the  debentures.  In addition to
these warrants, the debenture holders will be issued 400,000 additional warrants
each quarter until  maturity of the debenture  unless IQ Biometrix pays the debt
prior to maturity.
In December 2002, IQ Biometrix issued warrants to acquire 1,000,000  warrants in
connection with the purchase of a note receivable from a related party (see note
11).

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. That rent amount is $935 per month. During the period
ended June 30, 2003, rent expense was $91,808.


NOTE 11 - RELATED PARTY TRANSACTIONS

On February 11, 2003, IQ Biometrix  purchased a note  receivable  from a private
equity fund which is a shareholder  of IQ Biometrix.  The equity fund had a note
receivable  totaling  $2,500,000 from a corporation which a shareholder and sole
director is also a director and shareholder of IQ Biometrix. IQ Biometrix issued
warrants  to  acquire  1,000,000  shares of common  stock at $1.00 and agreed to
issue 700,000 shares of IQ Biometrix common stock as consideration  for the note
receivable and underlying  collateral.  The common stock had a value of $168,000
on the date of the  agreement  and the  warrants  were  valued  at  $10,000.  IQ
Biometrix recorded an asset of $10,000 related to the agreement and expensed the
difference in the accompanying statement of operations.

As of June 30, 2003, the 700,000 shares of common stock have not been issued and
are reflected in accrued  expenses in the  accompanying  balance  sheet.  The IQ
Biometrix  director that is involved in the transaction agreed to return 700,000
shares of common  stock out of his  personal  holdings if the warrants are never
exercised.

The warrants  vest as follows:  100,000 in July 2003;  150,000  shares per month
from August 2003 through January 2004.


NOTE 12 - SUBSEQUENT EVENTS

Subsequent  to June 30, 2003,  IQ Biometrix  issued  1,470,000  share to various
consultants for services.

In September 2003, IQ Biometrix sold 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 a t $1.25 per share to an
individual for consulting services.




                                      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 to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

October 14, 2003                       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             October 14, 2003
--------------------
William Scigliano                           (Principal Executive Officer)

/S/ Greg. J. Micek                          Director                            October 14,  2003
--------------------------------
Greg J. Micek

/S/ Morden C. Lazarus                       Director                            October 14,  2003
---------------------
Morden C. Lazarus

                                            Director                            October 14,  2003
Eric A. McAfee

/S/Seth Horn                                Chief Financial Officer,            October 14,  2003
------------
Seth Horn                                   Treasurer & Controller
                                            (Principal Financial Officer
                                            and Principal Accounting
                                            Officer)


</TABLE>






                                       47