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, 2005           Commission File Number 0-24001


                             WHERIFY WIRELESS, 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.)


                         2000 Bridge Parkway, Suite 201
                        Redwood Shores, California 94065
                               Tel: (650) 551-5277
               ---------------------------------------------------
               (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

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

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, 2005 were $300,801.

The aggregate market value of the voting stock held by non-affiliates of the
registrant on September 22, 2005 was approximately $180,943,216, based on the
closing price of such stock of $3.45 on such date. The number of shares
outstanding of the registrant's Common Stock, $.01 par value, as of September
22, 2005 was 52,447,309.

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

<PAGE>

                                     PART I

      ITEMS 1 AND 2. BUSINESS AND PROPERTIES.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

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

      Forward-looking  statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or achievements
to be materially different from any future results, performances or achievements
expressed or implied by the forward-looking statements. We discuss many of these
risks in this report in greater detail under the heading "Risk  Factors."  Given
these   uncertainties,   you  should   not  place   undue   reliance   on  these
forward-looking  statements.  Also,  forward-looking  statements  represent  our
management's  beliefs and  assumptions  only as of the date of this report.  You
should read this annual  report on Form  10-KSB and the  documents  that we have
filed as exhibits to this annual report  completely  and with the  understanding
that our actual future results may be materially different from what we expect.

      Except  as  required  by law,  we  assume no  obligation  to update  these
forward-looking  statements  publicly,  or to update the reasons  actual results
could  differ  materially  from  those  anticipated  in  these   forward-looking
statements, even if new information becomes available in the future.

      GENERAL

      Wherify Wireless, Inc. ("Wherify" or the "Company") is a leading developer
of patented  wireless  location  products  and  services  for family  safety and
communications,  and law  enforcement  and security  technology  solutions.  Our
portfolio of intellectual  property includes our proprietary  integration of the
US  Government's  Global  Positioning  System (GPS) and  wireless  communication
technologies;  our patented  back-end  location  service;  the Wherifone(TM) GPS
locator phone which provides  real-time  location  information and lets families
with pre-teens, seniors, or those with special medical needs, stay connected and
in contact with each other; and our FACES(TM)  industry-leading facial composite
technology, which is currently being used by thousands of public safety agencies
worldwide.  Our name,  Wherify  Wireless,  reflects  our mission and  objective:
verify the  location  of loved ones or  possessions  of value  through  wireless
technology.

      On April 14, 2004, Wherify (formerly known as IQ Biometrix, Inc.) a wholly
owned  subsidiary  of  Wherify,  and  Wherify  California,  Inc.,  a  California
corporation  (formerly known as Wherify Wireless,  Inc.) ("Wherify  California")
entered into an Agreement and Plan of Merger  pursuant to which the wholly owned
subsidiary  merged with and into Wherify  California,  with  Wherify  California
surviving  as a wholly  owned  subsidiary  of Wherify.  Both Wherify and Wherify
California received shareholder approval for the merger at special meetings held
on July 19, 2005,  and the merger was closed on July 21, 2005.  Upon the merger,
Wherify  (which  was then known as "IQ  Biometrix,  Inc.")  changed  its name to
"Wherify  Wireless,  Inc.", and shortly thereafter Wherify California (which was
then known as "Wherify Wireless, Inc.") changed its name to "Wherify California,
Inc." Wherify was originally  the result of a merger of JVWeb,  Inc., a Delaware
corporation, and IQ Biometrix California, Inc., a California corporation.  JVWeb
was  incorporated on October 28, 1997.  Wherify  California was  incorporated in
March of 1998,  and was founded to develop  products  and services to compete in
the wireless location-based services ("WLBS") market.

      Since the merger was  consummated,  we have operated  through two business
segments,  our wireless  location  products  business  and our facial  composite
software business. We operate part of our wireless location business through our
wholly-owned subsidiary, Wherify California. While our facial composite software
business  currently  accounts for most of our revenue,  this business segment is
not expected to constitute a significant part of the ongoing business operations
of the combined company.

             DESCRIPTION OF OUR WIRELESS LOCATION PRODUCTS BUSINESS

      GENERAL

      We have  developed a  comprehensive,  end-to-end  location  system,  which
includes  both a  wearable  locator  and hand  held  "cell  phone"  type  device
("Personal  Locators")  utilizing a proprietary  Location Service Center ("LSC")
for communications  with the Personal  Locators.  Our tested and proven location
system  enables   subscribers  to  obtain  accurate  location   information  for
loved-ones or valuable property directly through the Internet or over any phone,
24 hours-a-day,  seven days a week. Two-way voice communications  enabled in the
hand held unit will allow direct voice communication  between the subscriber and
a loved one or care giver.


                                       -2-
<PAGE>

      Our first hardware product,  a children's model GPS Locator,  combined the
power of  enhanced  GPS and  digital  personal  communications  service  ("PCS")
technologies. This product embedded a highly miniaturized location system within
a lightweight wrist-worn device.  Importantly, in addition to providing location
information  this device  could be used to send out a panic call in the event of
an emergency, as well as function as a pager and an accurate watch.

      Our  next  generation  product  combines  the  power of  enhanced  GPS and
tri-band GSM technologies.  This product allows a remote user to not only "ping"
the  device  to  receive  location  information,  but also to make a call to the
device to speak directly with the device user. In addition,  the device user can
make direct calls through the device and also call 911 in case of emergency.

      We can provide location and tracking information in real-time to customers
using the product for both routine and emergency  situations  through  Wherify's
24x7 Location  Service  Center and  carrier-class  automatic  call  distribution
equipment that is connected to existing telephony and internet  infrastructures.
Following  purchase and service  activation,  a  subscriber  may  determine  the
locations of the product either by telephoning a toll-free number or through the
Internet.

      The Location Service Center and automatic call distribution  equipment are
fully  equipped with an  off-the-shelf  database,  computer and  telephony  call
distribution and credit card billing application software.  Subscriber telephony
and Internet communications are routed through our-proprietary,  fault-tolerant,
carrier-class, and application-specific interface software.

      We intend to design and market a family of GPS  Locators  to address  five
major markets:  children, adults (Alzheimer's patients, senior, disabled, active
adults,  teenagers),  automotive/commercial/payload  tracking,  pet  owners  and
corrections  (electronic  offender  monitoring).  Following purchase and service
activation,  a subscriber  may determine the locations of the product  either by
telephoning a toll-free number or through the Internet.

      Our hardware  products are  essentially  enablers of our location  service
system. We expect that the majority of our gross margin after subscriber buildup
will come from recurring service revenues.  Our new handheld unit is expected to
retail for $149.  Monthly  recurring  service  revenues will vary based upon the
selected  monthly rate plans. We expect that standard rate plans will range from
$14.95 to $49.95 per month. Wherify California began selling its initial product
in May 2003, but discontinued this product in May 2005.

      Having built the first wearable GPS Personal Locator, we plan to integrate
this  technology  platform  into a wide  variety of  products  for the  emerging
location-based  services marketplace worldwide.  We have developed a GSM version
of our handheld locator ("Wherifone"),  which will allow us to further penetrate
the international market. This product is in production, has met the first steps
in  certification,  and is now  going to  mobile  operators  for  final  network
approval.  Additionally,  We have plans to develop a smaller, adjustable version
of  our  first  generation  children's  watch,  utilizing  GSM  technology.   We
discontinued  sales and support of our first  generation  watch in May 2005 (and
anticipate  switching  customers to the Wherifone after final carrier approval).
We expect the new GSM  versions of the watch to be  available  in 2006.  For our
next generation products,  we plan to partner with strategic "market makers" who
would work together with us to market and distribute  specific  products through
their channels.

      Additionally,   we  expect  that  the  Wherifone  will  allow  for  global
expansion.  We intend to distribute this product through international carriers.
For  international  expansion,  we would build Location  Service Centers in each
international region.

      INDUSTRY OVERVIEW

      The wireless  location-based services market is a relatively new industry.
Following is a brief description of some of its characteristics:

      o     Prices  of   enabling   "location"   technologies   (GPS,   wireless
            connectivity,   Internet)  and  products  are  falling  while  their
            capabilities are increasing;

      o     Availability  and  deployment of higher speed wireless data networks
            (GPRS, EDGE, WCDMA) and products are emerging;

      o     The Internet has provided the ability to host  application  services
            eliminating the technical infrastructure and management expense;

      o     Network  operators  and wireless  carriers  are seeking new,  higher
            margin services to offset declining voice access revenues; and

      o     Consumer  awareness and interest is increasing in personal  location
            safety, vehicle tracking, roadside safety and anti-theft services.


                                       -3-
<PAGE>

      OUR STRATEGY FOR OUR WIRELESS LOCATION PRODUCTS BUSINESS

      Our objective is to be the leading provider of wireless  location services
by pioneering the convergence of  state-of-the-art  enhanced global positioning,
wireless   communications   and  other  technologies  that  empower  people  and
businesses with the ability to locate  loved-ones or personal  property whenever
and wherever needed.

      We believe that our multi-pronged strategy to penetrate our target markets
can create significant barriers to entry.

      TARGET MULTIPLE APPLICATIONS

      Our planned  family of GPS Personal  Locators are targeted to address five
major markets:  children,  adults,  automotive/commercial/payload  tracking, pet
owners  and  corrections.  We  intend to use  strategic  pricing  and  promotion
programs to  initially  capture a  substantial  customer  base from the personal
safety segment of the emerging wireless  location-based services market. We also
intend to offer our Location Service Center services to non-Wherify products and
hardware  systems (i.e.  handsets,  personal  electronics) of major  electronics
manufacturers as such third-party products and systems become available.

      Children.  Due to the emotional nature of the benefit Wherify is offering,
we view  this  segment  as  having  the most  immediate  market  potential,  and
therefore  the locator watch was the first  product  launched.  The GPS Personal
Locator for Children was targeted  for  dual-income  and single  parents of 4-12
year old children.  At the lower end of this age range, children are starting to
gain more  independence from their parents and are more likely to be "out of the
parent's  sight" for a variety  of  reasons  (day  care;  school;  playing  with
friends;  etc).  We believe  that both parent and child  interest in the product
would  level off after age 12,  when a child's  range of freedom  and desire for
privacy increases dramatically. The service was positioned as "complementary" to
parent  supervision,  not a replacement for it. The Wherifone will be positioned
as a children's first cell phone, with the location features that a parent needs
to keep tabs on their 6-14 year old child.  This  product has  replaced  the GPS
Personal Locator for Children for this segment.

      Adults.  We  believe  the  demographic   segments  offering  the  greatest
opportunities  are Alzheimer's  patients,  other seniors (65+ years of age), and
active adults and teens. One primary  application is for "active adults":  those
people who participate in  recreational  activities  (such as boating,  jogging,
hiking,  camping) that could put them at risk of getting lost,  being injured or
becoming a victim to a violent  crime.  Other  potential  users include  working
women, teens,  couples and developmentally  challenged adults.  Wherify believes
that these people would be very interested in using the location  service during
an emergency situation,  as a combination location  service/notification  to law
enforcement  when a crime is in process  where a subscriber  is the victim,  and
simply as a means of communicating one's location to a friend or loved-one.  The
Wherifone will be marketed to this segment of the market.

      Automotive/Commercial/Payload Tracking. As competitive forces continue, we
believe that car and truck  dealers will continue to look for ways of increasing
their  profitability  through  value-added  services and after-market  sales. We
believe  that our  products  and  services  would  offer  dealers  this  type of
profit-building  opportunity.  The hand  held  unit  will be  positioned  as the
"OnStar" in your  pocket and out of the car.  Permanent  installation  for theft
recovery  applications would be simplified due to the miniaturized nature of the
hardware and the embedded  antenna  technology.  It could be placed in virtually
any car or truck the dealer sells.

      We are also  targeting  businesses  and  organizations  that use fleets of
vehicles.  We believe our products would be attractive to any business owner who
needs to know the location of their vehicles and/or payload(s).

      The Wherifone,  with accessories such as a cigarette lighter adapter and a
direct connection to the automobile battery and/or UBS system,  will be marketed
to this segment of the market.

      Pet Owners.  This market  segment would  utilize our  technology to locate
pets that have run away,  been stolen or become lost. The pet collar device will
be  of  a  clip  on  nature  and  will  utilize  the  same  location  (GPS)  and
communication  (cellular)  technologies  as the GPS Personal  Locator;  however,
since  it will not need  many of the  added  features  (watch  display,  paging,
wearer-triggered  alarm), we anticipate being able to produce it at a lower unit
cost.  We  intend  to use  the  Wherifone  core  technology,  wrapped  in a more
industrial,  water  resistant  package  that  will  attach  securely  on a pet's
existing collar, to market to this segment.

      Corrections.   Current  technologies  used  to  monitor  individuals  with
movement-restrictions  often do not meet the needs of law enforcement officials.
For  example,  house  arrest  systems  that utilize an "RF tether" to monitor an
individual's  presence  in his or her home will  alert  officials  if the person
leaves the house, but will not provide information on where the person has gone.
Wherify  believes the increase in  over-crowding in jails and prisons provides a
further incentive to utilize location and tracking products.


                                       -4-
<PAGE>

      We believe that the criminal justice system will have a strong interest in
a modified  version of the  Wherifone.  This version of the Wherifone  will only
incorporate the location (GPS) and communication (wireless) technologies, as the
justice  system will not have the same demands on appearance  and added features
that the consumer  has.  These  products will also most likely be leased in bulk
quantities.

      FORGE STRATEGIC RELATIONSHIPS

      Establishing  and building United States and  international  partnerships,
licensing agreements,  OEM, and carrier relationships with major market players,
utilizing our  technologies  will  facilitate  efficient entry into new markets.
Forging strategic partnerships including co-branding, distribution and marketing
with telecommunication  companies,  wireless carriers, national retailers, major
consumer  brand  companies  and mass media  will  align our sales and  marketing
efforts  with  established  sales  channels.   Our  locators  were  designed  by
Flextronics,  Inc.,  which also  provided  some  pre-production  services to us.
CalComp  Electronics  Public Company  Limited,  is currently  manufacturing  the
product. Both of these companies are respected contract manufacturers.

      LEVERAGE FIRST MOVER ADVANTAGE

      We believe we are the first company to  successfully  design and develop a
low-cost,  personal locator for the consumer and business markets using existing
wireless  and GPS "chip"  sets,  networks  and  technologies.  We  believe  that
leveraging existing third-party telephony,  contract manufacturing,  application
software packages and data/call center  infrastructures  will minimize our costs
and time-to-market.

      WIRELESS LOCATION SEGMENT PRODUCTS AND SERVICES

      We have  developed  a  comprehensive,  miniaturized,  end-to-end  personal
location  system,  which  includes  both a hand held  locator  (hardware)  and a
proprietary Location Service Center (software). Our tested and proven technology
will enable people to obtain  accurate  location  information  for loved-ones or
valuable   property  directly  through  the  Internet  or  over  any  phone,  24
hours-a-day,  seven  days a week.  Having  built  the  first  wearable  personal
location  system,  and developed  enhanced GPS with GSM  technology,  we plan to
integrate  this  technology  into a wide  variety of products  for the  emerging
location-based services marketplace around the world.

      Our  products  provide  real-time  information  on product  location  as a
service to  consumer  and  business  customers  in both  routine  and  emergency
situations.  This service  will be provided  through our 24x7  Location  Service
Centers housed in web co-hosting  data center  companies.  The Location  Service
Centers  use  our  proprietary   application-specific   interface  "thin-client"
software (patent pending) and carrier-class  Automatic Call Distribution ("ACD")
equipment that is connected to existing telephony and Internet infrastructures.

      The  key  features  of  our  initial   product  are   identification   and
communication  electronics  that have the ability to receive  commands  and send
responses  using a wireless  signal  initiated  either by a telephone call or an
Internet transaction. The product can determine its own location and communicate
this information  through  worldwide GSM networks to Wherify's  Location Service
Center.  The searching party will be given the user's exact location through the
Internet via a map interface on Wherify's web site or verbally by telephone.

      Additionally,  our Wherifone  technology  has  incorporated  two-way voice
communication  combined with location services.  We have developed the Wherifone
using  Siemen's  wireless GSM  technology,  which will allow for  deployment  in
Europe, Asia, Latin America and other GSM-centric markets around the world.

      WIRELESS LOCATION SEGMENT CURRENT AND PLANNED PRODUCT DESCRIPTIONS

      Our next  generation  technology  will first be  released in the form of a
slim,  small and  lightweight  GPS locator  phone.  The  Wherifone  has enhanced
features like two-way voice  communication  and tri-band GSM / GPRS  technology.
Additionally,  the Wherifone has a one-touch  Request 911 operation,  which will
connect the user  directly to a 911 operator for emergency  situations.  The 911
operators  will not  only be able to talk  with  the  user,  but will be able to
pinpoint  the  location of the user.  Other  features  include a one-touch  push
button for  concierge  services  and five  user-programmable  buttons for direct
calls,  LED display,  four day battery life, 2-3 hours of talk time and a global
footprint.  The  Wherifone  is  currently  in beta release and a full release is
scheduled for the fourth calendar quarter in 2005.

      Adult  Model  ("AM.1").  We intend to market  the  Wherifone  to the Adult
market,  then segue this market over to the next generation watch. The follow-up
generation  of the watch will  initially  take  advantage  of the  technological
advances resulting in a smaller,  more  sophisticated and fashionable  design. A
wide  variety  of color  combinations  will be offered to appeal to the range of
potential users.


                                       -5-
<PAGE>

      Electronic  Monitoring(EM)/Corrections (COR"). The planned EM/COR model is
based  upon an anklet  design,  and is  intended  to provide  the same  accurate
location determination  features as the Wherifone.  However, the EM/COR model is
expected to also have additional  features that will make it appropriate for use
by correctional  institutions as a tracking product for electronically monitored
felons.  It will be  structurally  more robust and rugged,  with a larger  power
source   for   continuous   tracking,    and   specially   designed   mechanical
attachment/controls for institutional installation and removal.

      We intend to design a separate  Wherify  proximity module to accompany the
EM/COR  model,   allowing   institutions  to  replace   existing  early  release
corrections program proximity-monitoring anklets, or electronic shackles, with a
Wherify  product,  which  will not only  verify  the unit is  within  range of a
specified monitoring area, but also generate location information. If the EM/COR
product should leave the pre-programmed monitoring radius, the proximity feature
will  generate an alarm to activate  the tracking  system at Wherify's  Location
Service  Center,  and will notify by telephone the  appropriate  personnel  (911
operators, police, parole officers) for response.

      As  currently  designed,  there is no method  for the wearer to trigger an
alarm  from  the  EM/COR  model.  It will be  attached  with a  tamper-resistant
mechanism to make the item exceptionally  difficult to remove without the proper
unlocking device,  which will remain in the ownership of the proper authorities.
Tampering with the device will trigger an alarm to activate the tracking  system
at Wherify's  Location  Service  Center.  This alarm will alert the  appropriate
personnel (parole officer, police) required to respond that the product has been
tampered  with.  Target user profile will be penal  institution  inmates.  Niche
market applications  include individuals that may be released early from jail or
prison.

      Automotive/Commercial/Payload.  We intend to market  the  Wherifone,  with
accessories such as a cigarette  lighter adapter and car battery adapter to this
channel.  This will allow for a small,  self-contained unit that attaches to any
number of  installation  points;  from a car's  rear view  mirror to a  delivery
truck's bumper,  or loaded into a pallet of cargo (payload) making  installation
simple at a dealer as an after-market product, or point of debarkation.  Because
the  product  can work  independently  of the  vehicle's  electrical  system and
operate off a long-life  rechargeable (from cigarette lighter) battery, it could
be easily installed in virtually any vehicle,  not requiring the dealer or fleet
manager  to take the car out of  service.  This same  system is also  capable of
being  tethered into the  electrical  system of any car or truck  allowing for a
uninterrupted power source and a more stealth mode of operation.

      Next  generation  vehicle  products  will  be  connected  directly  to the
automobile's  UBS  port,  allowing  the  device  to  record  and  send  out data
pertaining to vehicle diagnostics,  air bag deployment, and car lock and unlock,
among others.

      Pet Collar.  The pet collar model will provide the same accurate  location
determination  features as the Wherifone.  The primary target will be house pets
such as dogs (52 million in U.S.) and cats (59 million in U.S.),  but the collar
is expected to be adjustable to fit larger animals,  such as horses.  Additional
features  will be added to make the Pet Collar  water  resistant,  provide for a
longer battery life and make the housing more  industrial.  Other features found
in the  Wherifone  will not be  needed,  such as  two-way  voice  communication.
Wherify believes that this will enable it to produce and price the pet collar at
a level  acceptable  to pet  owners  nationwide,  in line  with  the cost of the
Wherifone  (estimate  $149 retail).  We intend to distribute  the product though
veterinary  offices  throughout  the U.S. and through major pet supply stores as
well as big box retail.

      International Products. We believe that there is a significant opportunity
for expanding our service into international markets.  Wherify has developed the
GSM  Wherifone,  which will support the Pacific Rim,  Asian,  South American and
European  markets.  In  addition,  specified  changes  to the  hardware  and the
Location  Service  Center  architecture  as well  as  country  specific  carrier
relationships  will  be  required  in  order  for  the  product  to  operate  on
international wireless networks.

      Our decision on when and how best to expand  internationally will be based
on a number  of  factors,  including  the size of the  market  opportunity,  the
technological ease of expansion, and local regulatory issues.

      LOCATION SERVICE CENTER OVERVIEW

      Wherify's  proprietary Location Service Center provides the complete array
of back-end services to subscribers.  Upon purchase of the product, selection of
a service  plan and  activation  of service,  customers  complete a profile that
identifies desired features (for example, user-triggered alarm capabilities), as
well as a detailed  physical  description  of the  primary  user of the  product
(optional).  A subscriber can have more than one product  included on his or her
account, and can set up individual profiles for each product.

      The  subscriber  initiates  requests for  information  on their  product's
location by telephone  (1-877-WHERIFY) or through the Internet via Wherify's web
site.  Wherify's  Location  Service  Center ("LSC")  automatically  contacts the
product via the local  cellular  communications  infrastructure,  requesting the
product's location.  The Wherifone utilizes GSM/GPRS technology and transmits on
a GSM network. The Wherifone locator utilizes tri-band GSM technology.


                                       -6-
<PAGE>

      The   product's  GPS   electronics,   utilizing   advanced   "weak  signal
server-enhanced"  technology,  will provide rapid location identification.  With
this technology, the most current satellite data ("Ephemeris data") is delivered
to the product  during the request  for  location.  This  greatly  enhances  GPS
performance in less-than-ideal  circumstances (i.e. urban canyons, deep building
interiors,.  and other difficult areas),  enabling the product to get a location
from GPS  satellites  ten times faster (10 seconds versus 100 seconds) than with
Standard  GPS.  The  cellular  tower ID is also  used to  augment  the  location
information provided.

      Having determined its location, the product then communicates the location
information to the Location  Service  Center.  The location  information is then
passed  to the  subscriber  via the  Internet  (with a map  and  closest  street
address)  or over the phone  (via live  operator).  In most  cases,  the  entire
process  takes  less  than 60  seconds.  A copy of the  event is  stored  in the
customer's files.

      The accuracy of the location information provided by Wherify products will
be  within a few feet in  optimum  conditions,  significantly  better  than that
required by FCC (accuracy to be within a radius of 150 feet 67% of the time).

      An emergency  response can be activated in two ways:  the  subscriber  can
request an emergency response by contacting our Location Service Center over the
phone,   or  the  user  can  request  an   emergency   response  by  pressing  a
pre-programmed  button on the product.  In both cases,  the user's  location and
direction of movement is determined,  and the information  passed to our trained
emergency operators. If required, Wherify's emergency operators will contact the
appropriate 911 Public Safety Answering Point who can dispatch local authorities
to the user's location.

      In addition to these  basic  location  reporting  and  emergency  response
capabilities,  the  Location  Service  Center  also  offers  several  additional
features to subscribers:

      Breadcrumbing.  The  subscriber  is able to get a report  on a  series  of
location  events  through  "breadcrumbing".  With  this  feature,  the  user can
determine the location history of the user. Parents may want to use this feature
to  confirm  the  whereabouts  of  their  child if he or she is in the care of a
guardian  and has  several  appointments  throughout  the day.  To utilize  this
feature,  the subscriber  predetermines the number of locations he or she wishes
to track, as well as the desired time interval between locations (i.e.  identify
a total  of 12  locations,  one  every  15  minutes).  Once  all  locations  are
identified,  a report will be  automatically  issued.  The  subscriber  can then
request a mapping of the desired locations.

      Paging.  Subscribers can send numeric pages to the user via the subscriber
screen on the web site. Both subscribers and  non-subscribers  can also page the
product directly over any phone.

      Temporary Guardians.  Through the Location Service Center, subscribers can
set-up a "temporary  guardian",  who will have access to location  features only
(no account  management  functions).  Parents may want to use this  feature when
their  child is  visiting  a  relative  and they want that  person to be able to
determine the child's location.

      Custom Installations.  Custom installations will be available to corporate
customers,  such as  amusement  parks and  corrections  facilities,  who want to
purchase independent  custom-designed systems to monitor and track their Wherify
products.

      TECHNOLOGY

      Our  wireless  products  are  wireless  location   technology-independent.
Consequently,  whether the various  wireless  operators  choose to use GPS, AOA,
TDOA,  adaptive  antenna  arrays  or  multipath  fingerprint  location  systems,
Wherify's product and Location Service Center is equally effective.  Our current
product design  utilizes  tri-band GSM telephony chip sets and can be adapted in
the  future to the then  prevalent  wireless  technology,  be it 2.5G or 3G. The
product's GPS  electronics,  utilizing  advanced  "weak signal  server-enhanced"
technology will provide rapid location identification.

      Each product is  programmed  with a unique I.D.  number and uses  standard
cellular frequencies to communicate its location. The product is also programmed
with a unique subscriber I.D. number.  This allows the owner to subscribe to the
service needed, such as 24-hour tracking or emergency only.

      We have developed a  "carrier-class"  architecture  and facility to create
and manage our proprietary  Location Service Center  (reliable to 99.999%).  The
Local Service Center runs on Tandem,  Non-Stop Himalaya model servers.  Tandem's
fault  tolerant  system  was chosen by Wherify  management  because of  Tandem's
position in the wireless  phone service  provisioning  market and its record for
building  scaleable  systems that have high  availability and performance.  This
enables cost-efficient expansion, without the need for application code changes.
NonStop   Himalaya   servers   are   used  by  most  of  the   world's   largest
telecommunications  companies  to deliver  an  aggressive  rollout  of  wireless
communications features and services, while maintaining "dial-tone" reliability.


                                       -7-
<PAGE>

      SALES AND MARKETING

      We anticipate  that our Wherifone  product will retail for less than $150,
with  monthly  service  plans  ranging  from $14.95 to $49.95.  We intend to use
several different sales channels for our products:

      Direct Sales Channel. We intend to sell our products  domestically through
direct and indirect sales channels and specialty markets.  Our initial sales and
distribution strategy is to establish product awareness and build volume through
a  distribution  strategy  comprised  of a  combination  of direct and  indirect
channels.

      Ongoing  inquiries  from  consumers  interested in purchasing  the product
directly  from us and  traffic to our web site  provide  strong  evidence of the
underlying  consumer  interest in acquiring  our product.  Capitalizing  on this
awareness we have been able to build traffic on our web site and our partnership
with  affinity  groups.  We  believe  that  this  "grassroots"   approach  is  a
cost-effective way of establishing us in the market.

      Direct-to-consumer  distribution channels include: e-commerce,  telesales,
partner  programs,  and possibly our own kiosks  located in high traffic  retail
locations.

      Retail Sales Channel. To achieve our volume and awareness goals, our sales
efforts are focused on gaining distribution through national consumer stores and
various security  companies,  as well as regional and local  retailers.  Wherify
intends that the Wherifone  product line will be distributed  through  strategic
partners to big box retail stores such as Best Buy,  Circuit  City,  RadioShack,
Staples,  Wal-Mart,  and  Target.  To  date,  we  have  entered  into  only  one
distribution agreement with such big box retailers.

      Additional  Sales Channels.  To build market share and  profitability,  we
plan to augment our sales  efforts  with  additional  channels,  including  OEM,
government,   and   business-to-business   channels.   We  believe  these  broad
distribution  channels,   along  with  the  retail  and  the  direct-to-consumer
channels,  will  create  opportunities  for us to  pursue  a  diverse  range  of
consumers throughout the United States.

      Within our partners program,  business-to-business or OEM channel, we also
plan to target  several  vertical  markets,  such as the  security  market,  the
automobile roadside assistance  channel,  and the cellular carrier's  subscriber
base. Security service firms, such as ADT, have an established base of consumers
with heightened  security  concerns,  and we believe these people will be highly
receptive to our product. Automobile roadside assistance companies, such as AAA,
have millions of subscribers  and huge upsale  potential.  We intend to leverage
their customer base for increased market share.

      Specialty Sales Channels.  Our strategic partners as well as our own sales
team  will  handle  sales to  specialty  market  outlets,  including  electronic
monitoring/corrections, automotive/commercial/payload, and pet care.

      For the electronic  monitoring/corrections  market,  we intend to build on
our relationships with key federal and regional law enforcement  agencies across
the  country.  WE will  continue  to work  with the  Office  of Law  Enforcement
Technology  Commercialization  ("OLETC"), which was formed to develop and refine
new strategies to accelerate the commercialization of innovative law enforcement
and corrections  ("LEC")  products.  We intend to work with OLETC to address law
enforcement and  corrections'  needs for a high-quality,  low-cost  product that
will enable law enforcement  and corrections  personnel to monitor and track the
location of people who are on supervised  release.  We intend that OLETC will be
our primary partner in providing introduction, implementation and endorsement of
the  correction  product  in both  federal  and  state  law  enforcement  groups
throughout the U.S. We intend to work with the L.A. County Sheriffs Office,  the
Florida State Police, and the Ohio State Prison Bureau during development of the
correction product and will be utilized for beta testing. The corrections market
will be offered  products  through lease  programs,  accompanied  by appropriate
monitoring and tracking services.  Most contracts are won by competitive bid and
will  vary  according  to need,  ranging  from  24-hour  tracking  to  parameter
monitoring.

      MANUFACTURING

      Presently,  we outsource all assembly,  testing and supply chain functions
in  order  to  reduce  fixed  overhead  and  personnel  costs,   thus  providing
flexibility in meeting market demand and to recognize  economies of scale that a
larger  manufacturing  organization can provide.  We contracted with Flextronics
for the design and  certain  pre-production  services of our  Wherifone  product
line. We have contracted with CalComp Electronics Public Company Limited for the
manufacturing  of our Wherifone  product  line. To date, we have received  5,200
units of our GSM Wherifone product from the  manufacturer.  We do not expect any
substantial modifications are necessary in order to bring the product to market.
We have started full production of our Wherifone  product and are in the process
of  finalizing  our strategic  partnerships  with  telecommunication  companies,
wireless carriers, and national retailers. Our manufacturer requires a letter of
credit  for  the  full  amount  of  the  goods  prior  to  the  commencement  of
manufacturing.


                                       -8-
<PAGE>

      COMPETITION

      The  wireless  location-based  services  market  is a  relatively  new and
immature  industry,  and we expect it to become  highly  competitive.  There are
substantial barriers to entry, but competition from existing competitors and new
market entrants will intensify in the future.  Current and potential competitors
in  our  markets  include,  but  are  not  limited  to  the  following:  uLocate
Communications,  Inc.,  Benefon OYJ, Global Pet Finder,  POMALS Inc., and LoJack
Corporation.

      We  believe  that  we  hold a  distinct  competitive  advantage  over  all
identified  potential  direct  competitors.  In addition to its smaller size and
superior  performance  and  features,  only the  Wherifone  is  designed to have
enhanced  GPS  with  GPS/  GPSR  technology  with  a  very  small  form  factor.
Additionally, the accuracy of the technology is estimated to be 1-20 meters. The
competing  technology  in GSM is estimated to give 100-300 meter  accuracy.  The
Wherifone  is also  designed to control the  outbound  call of the user which is
expected to give the company an advantage to other technologies.

INVENTORY, RAW MATERIALS, RIGHT OF RETURN AND SEASONALITY

      We expect to carry reasonable amounts of inventory in distribution centers
in order to meet customer  delivery  requirements  in a manner  consistent  with
industry  standards.  The  terms of each  strategic  partner  relationship  will
determine the payment terms that we will receive from our customers.  These will
likely vary by customer.

      Energy necessary for the out-sourced  manufacturing facilities consists of
electricity,  natural gas and gasoline,  all of which are currently in generally
adequate supply.  The facilities contain  automation and,  therefore,  require a
reliable source of electrical power. Labor is generally  available in reasonable
proximity to the manufacturing facilities.  Difficulties in obtaining any of the
aforementioned  items  could  affect  our  results.  Our  manufacturer  requires
adequate  supplies of a large number of  components.  If sufficient  supplies of
these  components  are  not  available,  we may not be  able  to  manufacture  a
sufficient  number of the Wherifone  product to meet expected demand which could
have a significantly adverse affect on our business.

      We expect to permit returns under certain limited circumstances, generally
pursuant  to  warranties  which we believe  will be similar to current  industry
practice.

      The wireless communications industry typically experiences increased sales
in the fourth calendar  quarter and lower sales in the first calendar quarter of
each year. For example,  sales of wireless handsets,  two-way radios and related
products  increase  during the year-end  holiday  season.  We believe that it is
likely  that we will  experience  a similar  seasonality  in the  demand for the
Wherifone product.

RESEARCH AND DEVELOPMENT COSTS

      Research and  development  costs for fiscal year 2005 equaled $4.9 million
or 40% of our total expenses in that year.  Research and  development  costs for
fiscal year 2004 equaled $3.0 million or 32% of our total expenses in that year.
Research and development  costs for fiscal year 2003 equaled $2.4 million or 26%
of our total expenses in that year.

      INTELLECTUAL PROPERTY

      We rely on a combination of copyright,  trademark,  trade secret and other
intellectual  property  laws,  nondisclosure  agreements  and  other  protective
measures to protect our  proprietary  rights in our wireless  location  products
business.  Our first patent in this business  segment was approved by the United
States  Patent  Office on  December  7, 1998,  and was  issued on May 18,  1999.
Additional  patents have been issued on March 26, 2002 and May 14,  2002.  Other
patents,  filed in June 2003 and March 2005, are pending. We rely on third-party
licensors and other vendors for patented hardware and/or software license rights
in technology that are incorporated into and are necessary for the operation and
functionality of our products.

             DESCRIPTION OF OUR FACIAL COMPOSITE SOFTWARE BUSINESS

      OVERVIEW

      We are a provider of facial composite software to federal, state and local
law enforcement  agencies primarily in the U.S. and several European  countries.
The  FACES(TM)   technology  was  initially   developed  in  the  mid-1990's  by
Montreal-based  entrepreneur  Pierre Cote, the founder of InterQuest Inc., which
launched  FACES(TM)  version  1.0 in 1998.  InterQuest  subsequently  filed  for
bankruptcy in October 2000. In August 2001,  another  Canadian  company acquired
the FACES(TM) technology out of the bankruptcy proceedings on a deferred payment
basis.  When  this  acquirer  was  unable  to raise  funds to make the  deferred
payments,  it defaulted and filed for bankruptcy in September 2001.  Pierre Cote
and other former  InterQuest  management and  stockholders  founded IQ Biometrix
California,  Inc. acquired  ownership of all of the right, title and interest in
and to the FACES(TM)  business and intellectual  property,  including  software,
patents and trademarks,  the FACES(TM) library, inventory and other items out of
bankruptcy.


                                       -9-
<PAGE>

      On March  22,  2002,  IQ  Biometrix  California  merged  with and into IQB
Acquisition  Corporation,  a newly formed,  wholly-owned  Delaware subsidiary of
JVWeb and JVWeb  changed its name to "IQ  Biometrix,  Inc." 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 that acquired all of the assets of Wherify, for accounting
purposes Wherify was treated as the acquirer.

      INDUSTRY BACKGROUND

      Our management  believes that crime and homeland  security  remain a major
concern, and that there continues to be a strong interest in technology that can
help  identify  suspects  and  provide  front line  support  to fight  crime and
terrorism.  Among these  technologies,  facial composite and facial  recognition
technologies are segments of the biometric market.

      THE FACES(TM) SOLUTION

      The FACES(TM) product allows the user to create and re-create  billions of
human faces. Facial features selected from a database are automatically  blended
together to produce a photo-quality composite facial image. The technology helps
law enforcement agencies identify, track and apprehend suspects.

      FACES(TM) automatically generates a unique alphanumeric "InterCode"TM, for
each image. The digital  character of the InterCode(TM) and its small size allow
it to be transmitted  easily via any  telecommunications  network  (phone,  fax,
email).  The code also gives law  enforcement  agencies  greater  security  when
sharing facial composites relating to sensitive investigations.

      The  photo  quality  of  FACES(TM)  composites  allows  them  to  be  used
effectively with facial recognition technology.  For example, FACES(TM) has been
integrated  with  FACE  Plus  technology  from  Dataworks  Plus to allow  police
departments to include facial composite evidence in mugshot database systems and
to use the composites as a query to search these databases,  and return possible
matches for positive identification.

      STRATEGY

      We believe that we are well positioned in the "public  sector" market.  We
have the  contacts,  experience  and  knowledge,  strategies,  and  approach  to
capitalize  on  the  sales  opportunities   throughout  the  various  government
agencies.

      Even though we will continue to execute our sales strategy with respect to
the FACES(TM) product,  we do not expect that the FACES(TM) product line will be
a material factor in our business strategy in the future.

      We  believe  that the  limited  and  constrained  nature of  existing  law
enforcement  budgets  at the  county  and  local  levels,  coupled  with  budget
priorities that are focused elsewhere,  will significantly  limit our ability to
derive revenue from the facial composite market.

      While our inability to successfully commercialize our FACES(TM) technology
has  resulted  in  nominal  financial  results,  we  believe  that our  personal
relationships with  decision-makers in the government  sectors,  the strength of
our management and  experience in the crime and homeland  security  industry and
our  anticipated  continued  access to public policy  decision  makers that were
developed in connection with the facial  composite  software  business will be a
material factor in our ability to successfully  commercialize our other products
such as corrections  applications,  including  tracking of prisoners and persons
under surveillance.

      We will pursue a strategy to maximize the value of the  FACES(TM)  product
lines with the intent to sell or license them to a third  party,  or to create a
divested company to seek further  investment in and development of these assets.
At this  juncture,  however,  there are  extremely  limited  resources to pursue
further  commercialization of the FACES(TM)  technology,  which we believe would
likely require significant  additional capital and incur significant  additional
losses before profitability, if any, could be achieved.

      PRODUCTS

      FACES(TM)  is a  software  technology  that  allows  operators  to develop
accurate,  photo-like facial composite images.  The FACES(TM)  database includes
thousands  of facial  features;  selected  features  are  automatically  blended
together  to  provide  facial  images of either  gender  and any race.  A unique
alphanumeric ID code generated for each facial image can be transmitted over any
telecommunications channel (telephone,  email, fax) and provides police agencies
with additional  security when  exchanging  suspect images relating to sensitive
investigations.  FACES(TM) is both PC and  Mac-compatible  and can be run on any
standard desktop or portable computer. It can be operated in English, French and
Spanish.


                                      -10-
<PAGE>

      FACES(TM)  4.0,   launched  in  July  2003,   provided  several  important
advancements over prior versions,  including an expanded database, improved zoom
and position tools, new facial marking and aging elements,  and enhanced ability
to  export  composites  to  police  bulletins  and  websites.  FACES(TM)  4.0 is
available  in single  and multi  license  versions  with an add-on  subscription
product that  provides  extended  maintenance  and free  upgrades to new product
releases.  FACES(TM)  4.0 EDU,  designed  specifically  for  classroom  use, was
launched in May 2004, and includes a curriculum for middle and high school level
science learning objectives.

      PRODUCT DEVELOPMENT AND MANUFACTURING

      To date, the FACES(TM) products have been developed  primarily through the
use of outside  contractors.  Initial  versions of FACES(TM)  were  developed by
Enterprise  Cogniscience,  Inc., a privately-held  software development company,
using a proprietary programming  environment.  We are not dependent on any other
third party products or technology.

      We  outsource  the  manufacturing  and  packaging  of our software CDs and
supporting  documentation  of the  FACES(TM)  product.  There  are a  number  of
software  manufacturing and packaging  companies that are available in the event
our current vendor becomes  unavailable.  Quality  control tests are carried out
internally and selectively performed on finished products.

      MARKETING, SALES AND MARKETS

      Our marketing  strategy has to date aimed to penetrate two target markets:
public security/law enforcement agencies; and K-12 and post-secondary education.
We have  sold  FACES(TM)  technology  to  approximately  2,500  law  enforcement
agencies through direct sale and reseller  channels.  The effectiveness of these
channels has been restricted by lack of resources.

      We believe that the sale or licensing of the  FACES(TM) LE product line to
a partner  with an  established  presence  and  profile  in the law  enforcement
market,  well-funded sales and marketing  operations,  and complementary product
offerings,   could  result  in  substantially  expanded  sales,  and  that  such
transaction could provide proceeds or recurring license revenue.  Similarly,  we
are pursing opportunities for sale or licensing of the FACES(TM) EDU to a player
with deep experience and exposure in the domestic and international  educational
science supply market.

      Alternatively  we may seek to divest the  FACES(TM)  LE product  line to a
separate  company  which  can  seek   appropriate   investment  to  implement  a
strengthened sales and marketing plan.

      INTELLECTUAL PROPERTY

      We rely on a  combination  of patent  law,  trademark  law,  trade  secret
protection,  copyrights law and  confidentiality  and/or license agreements with
our employees, customers, partners and others to protect our proprietary rights.
We currently  has two United  States patent  applications  covering  "Method and
apparatus for creating facial images" and "InterCodeTM".

      COMPETITION

      Our current  competitors of the FACES(TM)  products include Identikit from
Smith & Wesson,  Suspect ID from  ImageWare,  COMPHOTOFIT  +COLOR from  Sirchie,
E-fit from  Aspley and  Facette  from  Identi.net.  We believe  that our 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.

                                    GENERAL

      FACILITIES

      Wherify's  headquarters is located in approximately  25,000 square feet in
one facility in Redwood Shores,  California  under leases that expire in October
2009. Our  headquarters  houses all of our employees as well as a pilot facility
and a small  production  facility.  There is also nearby  expansion  capacity of
100,000 square feet to house employees needed to support  operations if we elect
not to outsource the emergency operator function.

WORKING CAPITAL

      As of August 31, 2005, we had cash and cash  equivalents of  approximately
$920,000 and $2.5 million of restricted  certificates of deposits being utilized
as collateral to support our obligations under a letter of credit related to our
contract  manufacturer,  other  current  assets of  approximately  $200,000  and
current liabilities of approximately $10.0 million, including approximately $3.9
million in past due rent  obligations.  As a result, we do not expect to be able
to meet our working capital  requirements  without either achieving  significant
revenue  growth  in a short  period of time,  or by  finding  another  source of
financing.


                                      -11-
<PAGE>

RESCISSION OFFER OF WHERIFY CALIFORNIA

      During the period from  September  17,  2004 to January  19, 2005  Wherify
California sold 1,701,714 shares of Series C preferred stock to 83 investors for
proceeds totaling  approximately  $15.2 million.  In February 2005, the staff of
the Securities and Exchange  Commission advised Wherify California that in their
opinion,  there was  substantial  doubt as to the  availability  of the  private
placement  exemption  upon which  Wherify  California  relied for its  offering.
Wherify California strongly disagreed with the SEC staff's position and believes
that the offering was in full  compliance with the private  offering  exemption.
Nevertheless,  because of the importance of expediting  resolution of the issue,
Wherify  California  made a  rescission  offer on March 10,  2005 to each of the
investors who  participated  in the offering.  The rescission  offer was made in
reliance  upon the  exemption  set forth in Rule 506 of Regulation D promulgated
under the Securities Act of 1933, as amended and was exempt from registration or
qualification  requirements  under state law  pursuant  to the Federal  National
Securities  Markets  Improvement Act of 1996.  Under the terms of the rescission
offer,  Wherify  California offered to repurchase all of the shares purchased at
the original purchase price together with interest from the date of purchase. As
of April 11, 2005, all 83 investors responded. Eight investors elected to accept
the rescission offer and 75 investors elected to reject the rescission offer. On
April 11, 2005,  Wherify  California  repurchased a total of 221,507 shares from
the  eight  investors  accepting  the  offer  for  a  total  purchase  price  of
approximately $2.2 million.

      EMPLOYEES

      As of August 31, 2005,  we employed 29 people,  of whom 4 were employed in
engineering,  4 in manufacturing,  7 in information technology, and 14 in sales,
marketing,  finance,  management and administrative  services. Our employees are
not  represented  by a labor union.  We believe that our employee  relations are
good.

                                  RISK FACTORS

               RISKS RELATED TO WHERIFY'S BUSINESS AND THE MERGER

      Wherify's  business  is  subject  to  numerous  risks  and  uncertainties,
including risks and uncertainties relating to our limited operating history; our
recent  merger,  liquidity;  incurrence  of  net  losses;  lengthy  development,
manufacturing  and sales cycles;  competition;  product related risks; and other
risks as discussed below.

WE ARE THE PRODUCT OF A RECENT MERGER OF TWO DEVELOPMENT  STAGE COMPANIES,  HAVE
LIMITED REVENUES AND HAVE A LIMITED  OPERATING  HISTORY ON WHICH TO EVALUATE OUR
POTENTIAL FOR FUTURE SUCCESS.

      On July 21, 2005, we completed the merger with Wherify California. Wherify
and Wherify California have only limited operating  histories upon which you can
evaluate  our  business  and   prospects.   You  must  consider  the  risks  and
uncertainties  frequently  encountered by companies in situations  such as ours,
including  but not limited to the  ability to grow and prosper and finance  such
growth. If we are unsuccessful in addressing these risks and uncertainties,  our
business,  results of operations and financial  condition will be materially and
adversely affected.

      Wherify  California was  incorporated  in March 1998 and began selling its
initial  product in May 2003. To date,  sales of Wherify  California's  products
have been very limited. Wherify California's limited operating experience in the
wireless  location-based  services  market  makes it  difficult  to evaluate its
business.  Wherify California has never achieved  profitability,  and it may not
achieve  profitability  in the future.  The uncertainty of Wherify  California's
ability to execute on its  business  plan and the  uncertainties  regarding  the
acceptance of its products or its  competition  increase the risk that the value
of Wherify California may decline.

      Prior to the merger with Wherify California, we had generated very limited
revenues from the sale of our FACES software or any other products.  Our limited
revenue and limited operating history prior to the merger makes an evaluation of
the prospects of our facial recognition software extremely difficult.

      WE CURRENTLY LACK LIQUIDITY AND HAVE LIMITED REVENUES AND BOTH WHERIFY AND
      WHERIFY  CALIFORNIA HAD GOING-CONCERN  QUALIFICATIONS IN THEIR MOST RECENT
      AUDIT REPORTS

      As of August 31, 2005, we had cash and cash  equivalents of  approximately
$920,000 and $2.5 million of restricted  certificates  of deposit being utilized
as collateral to support our obligations under a letter of credit related to our
contract  manufacturer,  other  current  assets of  approximately  $200,000  and
current liabilities of approximately $10.0 million, including approximately $3.9
million in past due rent obligations.  There is a going concern qualification in
Wherify and Wherify California's most recent audit reports. Substantially all of
our cash has been  raised  through  capital  raising  transactions  rather  than
operations.  As we have  limited  revenues,  we will  need to  raise  additional
working  capital in the near future.  There is no assurance that we will be able
to raise  additional  working  capital at all or on terms favorable to us or our
stockholders. If we are unable to raise additional working capital, we will need
to reduce our costs,  which may require us to reduce  operations,  personnel and
overhead, which would have an adverse effect on our business.


                                      -12-
<PAGE>

      WE NEED TO RAISE  SUBSTANTIAL  ADDITIONAL  CAPITAL,  WHICH  MAY  RESULT IN
      SUBSTANTIAL DILUTION TO EXISTING STOCKHOLDERS.

      In order to  manufacture,  distribute and sell our products and to execute
on our business plan, we need substantial  additional  capital. We are currently
considering  possible  sources of this  additional  capital,  including  raising
capital through the issuance of equity securities.  Although the exact amount we
intend to raise has not yet been determined,  we are  contemplating an amount in
excess of $20 million.  There can be no assurance  that we will be able to raise
sufficient  additional  capital  at  all  or on  terms  favorable  to us or  our
stockholders. If we issue equity securities in order to raise additional capital
in  the  amounts  currently  contemplated,   the  stockholders  will  experience
immediate and substantial dilution in their ownership percentage of the combined
company.  In  addition,  to raise  the  capital  we  need,  we may need to issue
additional  shares at a discount to the current  market  price.  If the terms of
such financing are unfavorable to us or our  stockholders,  the stockholders may
experience  substantial  dilution in the net tangible book value of their stock.
In  addition,  any  new  equity  securities  may  have  rights,  preferences  or
privileges  senior to those of existing  holders of common  stock.  If we cannot
raise funds on  acceptable  terms,  we may not be able to develop or enhance our
products,  take  advantage  of future  opportunities  or respond to  competitive
pressures  or  unanticipated  requirements  all of which  could  have a material
adverse effect on us.

      THE  RELEASE  OF  SHARES  FROM  LOCK-UPS  AND  THE  POTENTIAL  SALE  OF  A
      SIGNIFICANT NUMBER OF SHARES MAY SIGNIFICANTLY NEGATIVELY AFFECT OUR STOCK
      PRICE.

      The former stockholders of Wherify California own approximately 80% of our
stock  calculated on a fully diluted basis.  Most of these shares are subject to
lock-up agreements that are scheduled to expire at various times during the next
year.  If these  stockholders  attempt  to sell a  significant  portion of their
shares  shortly  after such  shares are  released  from the  lock-ups,  or if we
release a significant  portion of the stockholders  from their obligations under
the lock-up  agreements prior to the expiration of the relevant lock-up periods,
our  stock  price  could  be  significantly  negatively  affected.  The  current
anticipated  release dates,  number of shares being released,  and corresponding
percentages of our outstanding shares, are summarized below.

<TABLE>
<CAPTION>
              RELEASE DATES                       NUMBER OF SHARES         PERCENTAGE OF OUTSTANDING
                                                                                 SHARES (1)
----------------------------------------------------------------------------------------------------
<S>                                                  <C>                          <C>
September 19, 2005 (60 days after the merger)        19,265,392                   36.7%
----------------------------------------------------------------------------------------------------

October 19, 2005 (90 days after the merger)          1,921,555                     3.7%
----------------------------------------------------------------------------------------------------

January 17, 2005 (180 days after the merger)         2,930,058                     5.6%
----------------------------------------------------------------------------------------------------

July 21, 2006 (1 year after the merger)              17,850,866                    34%
                                                     ----------                    ---
----------------------------------------------------------------------------------------------------

TOTAL                                                41,967,871                    80%
----------------------------------------------------------------------------------------------------
</TABLE>

(1) Based on a total of 52,434,101 shares outstanding.

      Notwithstanding the release of shares from the lock-up agreements,  shares
of Wherify  common stock  received by persons who were  "affiliates"  of Wherify
California at the time of the Wherify California special meeting of shareholders
at which the  merger  was  approved  may be resold  only in a  transaction  that
complies with the  requirements  of Rule 145 under the Securities Act of 1933 or
as  otherwise  permitted  under the  Securities  Act of 1933.  Persons  who were
"affiliates"  for this  purpose  include  Timothy  Neher  and Doug  Hajjar,  who
beneficially owned 9,639,610 shares and 2,788,800 shares,  respectively,  of our
common stock as of August 31, 2005. Although, as described above, the provisions
of Rule 145 would  limit the timing  and number of shares  that could be sold by
such  persons,  Wherify may  register for resale the shares held by such persons
prior to the time that such shares could otherwise be sold under Rule 145.

      POTENTIAL  GOODWILL  IMPAIRMENT AND WRITE-DOWN OF GOODWILL COULD ADVERSELY
      AFFECT STOCK PRICES.

      As a result of the merger,  the former  stockholders of Wherify California
acquired  approximately  80% of the stock of the combined entity calculated on a
fully diluted basis.  Applicable  accounting rules call this a "reverse merger",
and provide that the financial history and fiscal year-end of Wherify California
will  continue  as the  financial  history and fiscal  year-end of the  combined
company, except the capital structure,  which legally becomes that of the former
IQ Biometrix,  Inc.  ("IQB").  All prior financial  history of the former IQB is
effectively erased. As a reverse  acquisition,  Wherify California is treated as
the  acquirer  of  the  former  IQB  for  financial  reporting  purposes.  Under
applicable  accounting  rules,  the purchase price of the acquisition  (which is
determined based on the percentage of the combined company held by the former IQ
Biometrix,  Inc. stockholders and the stock price of the combined company on the
merger date) is allocated to identifiable  tangible and intangible  assets,  and
then the  excess of the  purchase  price  over the  amounts  allocated  to these
identifiable  assets is allocated to  goodwill.  Based upon a purchase  price of
$70.2  million  and  a  preliminary  determination  by us of  the  amount  to be
allocated  to  identifiable  assets,  $61.4  million  of the  purchase  price is
allocable to goodwill.  These allocations are based on our preliminary estimates
and are subject to change based upon the final values to be assigned  based upon
a third party appraiser's  calculation of the present value of discounted future
cash flows  associated with each asset.  The intangibles  including the goodwill
will be  subject to review  for  possible  impairment  at each  quarterly  audit
review.  Management has not yet decided whether to continue  efforts to sell and
improve the FACES software or whether this goodwill has been impaired.  However,
we expect  that there will be a  significant  impairment  of most or all of this
amount in the quarter ended  September  30, 2005.  This  write-off  could have a
material adverse impact on our stock price.


                                      -13-
<PAGE>

      WE HAVE ONLY RECENTLY BEGUN FULL PRODUCTION OF OUR WHERIFONETM PRODUCT AND
      MAY ENCOUNTER MANUFACTURING PROBLEMS DURING THE PRODUCTION PROCESS.

      Our  WherifoneTM  product  is a  new  product  and  we  have  discontinued
manufacturing  all of our other  products.  The  manufacture of our  WherifoneTM
product involves complex and precise  processes,  which we have subcontracted to
another  company.  To date, we have only initiated a limited  production of this
product and so we do not yet know whether we will encounter any serious problems
during the production  process in the  long-term.  Any  significant  problems in
manufacturing, assembling or testing of this product could delay the roll-out of
the  WherifoneTM  product  and  have  an  adverse  impact  on our  business  and
prospects.

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

      Complex  software  products such as those  associate with our  WherifoneTM
product  often  contain  latent  errors  or  defects,  particularly  when  first
introduced,  or  when  new  versions  or  enhancements  are  released.  We  have
experienced  errors and  defects  in our most  recent  release  of the  software
associated  with our WherifoneTM  product,  but do not believe these errors will
have a material negative effect on the functionality of the WherifoneTM product.
However, there can be no assurance that, despite testing, additional defects and
errors  will not be found in the  current  version,  or in any new  versions  or
enhancements  of this  software,  any of which  could  result  in  damage to our
reputation, the loss of sales, a diversion of our product development resources,
and/or a delay in market acceptance,  and thereby materially adversely affecting
our business, operating results and financial condition.  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. Any product liability insurance that we may carry could
be  insufficient  to protect us from all liability that may be imposed under any
asserted claims.

      WE HAVE NOT YET SIGNED A U.S. WIRELESS CARRIER FOR OUR WHERIFONETM PRODUCT
      AND THE TERMS OF ANY SUCH AGREEMENT ARE NOT YET KNOWN.

      We have not yet signed a definitive agreement with a U.S. wireless carrier
for our products. If we are unable to sign such an agreement on favorable terms,
this could adversely impact our costs and our business and prospects.

      WE DEPEND ON OUR KEY  PERSONNEL  TO MANAGE OUR BUSINESS  EFFECTIVELY  IN A
      RAPIDLY CHANGING MARKET. IF WE ARE UNABLE TO RETAIN OUR KEY EMPLOYEES, OUR
      BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE HARMED.

      Our future success depends to a significant degree on the skills,  efforts
and  continued  services of our  executive  officers and other key  engineering,
manufacturing,  operations,  sales,  marketing  and support  personnel  who have
critical industry experience and relationships.  If we were to lose the services
of one or more of our key executive officers and senior management  members,  we
may not be able to grow our  business  as we expect,  and our ability to compete
could be harmed, adversely affecting our business and prospects.

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

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

      o     Overall  demand for our  products;

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

      o     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;


                                      -14-
<PAGE>

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

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

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

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

      o     General economic conditions; and

      o     Customer   concentration;   most  of  our  current  and  prospective
            customers for our facial  recognition  software are local, state and
            federal law  enforcement  agencies,  many of which are  experiencing
            their worst budget crisis in years.

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

      OUR   MARKETS  ARE  HIGHLY   COMPETITIVE,   AND  OUR  FAILURE  TO  COMPETE
      SUCCESSFULLY  WOULD  LIMIT OUR ABILITY TO SELL OUR  PRODUCTS,  ATTRACT AND
      RETAIN CUSTOMERS AND GROW OUR BUSINESS.

      Competition  in the  wireless  location  services  market  and the  facial
composite  software  market  is  intense.  In  addition,  the  adoption  of  new
technology in the communications  industry likely will intensify the competition
for improved  wireless  location  technologies.  The wireless  location services
market has historically  been dominated by large  companies,  such as Siemens AG
and LoJack Corporation. In addition, a number of other companies such as Digital
Angel  Corporation  and  WebTech  Wireless  Inc.  have  announced  plans for new
products that are similar to our wireless location products, and new competitors
are emerging to compete with Wherify's wireless location services products.  Due
to the rapidly evolving markets in which we compete, additional competitors with
significant  market  presence and financial  resources may enter those  markets,
thereby further intensifying competition.

      OUR  WIRELESS  LOCATION  PRODUCT  AND  TECHNOLOGY  ARE  NEW AND MAY NOT BE
      ACCEPTED IN THE MARKET.

      We have had only a limited release of one of our planned  wireless locator
products in the market.  There can be no assurances  that  consumer  demand will
meet, or even approach, our expectations. In addition, our pricing and marketing
strategies may not be successful. Lack of customer demand, a change in marketing
strategy  and  changes  to our  pricing  models  could  dramatically  alter  our
financial results.

      STANDARDS IN WIRELESS  COMMUNICATIONS  INDUSTRY ARE IN FLUX, AND IF WE ARE
      UNABLE TO COMPLY  WITH THESE  INDUSTRY  STANDARDS,  OUR  BUSINESS  WILL BE
      HARMED.

      Standards  in the  wireless  communications  industry  are  evolving.  The
emergence  and broad  adoption of new  industry  standards  could  require us to
redesign  our  products.  If we are unable to design our products to comply with
these new  standards,  our products  would become  obsolete and consumers  would
instead purchase other  standard-compliant  products.  As a result, our business
could be harmed, and our financial  condition and results of operations could be
adversely affected.

      CHANGES IN THE GOVERNMENT  REGULATION OF OUR WIRELESS  LOCATION PRODUCT OR
      WIRELESS CARRIERS COULD HARM OUR BUSINESS.

      Our products,  wireless  carriers and other members of the  communications
industry  are  subject  to  domestic   government   regulation  by  the  Federal
Communications  Commission (the FCC) and international  regulatory bodies. These
regulatory  bodies  could enact  regulations  which  affect our  products or the
service  providers which distribute our products,  such as limiting the scope of
the service  providers'  market,  capping fees for services  provided by them or
imposing communication technology standards which impact our products.


                                      -15-
<PAGE>

      IF OUR WIRELESS LOCATOR PRODUCTS FAIL TO ACHIEVE BROAD MARKET  ACCEPTANCE,
      OUR BUSINESS RESULTS WILL BE HARMED.

      We have not begun selling our wireless location products for use by direct
purchase consumers or for resale by distributors.  If Wherify's products are not
widely  accepted by the market,  our business  results could be harmed.  Factors
that may affect the market  acceptance  of our  location  products  include  the
following:

      o     Price;

      o     Reliability;

      o     Performance;

      o     Technological innovation/enhancements;

      o     Network coverage;

      o     Ease of use; and

      o     Availability.

      If we fail to  perform  adequately  on the basis of each of these  factors
versus  competing  products  and  technologies,  our business  results  could be
harmed.

      OUR ABILITY TO COMPETE  COULD BE  JEOPARDIZED  AND OUR BUSINESS  SERIOUSLY
      COMPROMISED  IF WE  ARE  UNABLE  TO  PROTECT  OURSELVES  FROM  THIRD-PARTY
      CHALLENGES,  THE DEVELOPMENT AND MAINTENANCE OF THE PROPRIETARY ASPECTS OF
      WIRELESS LOCATION PRODUCTS AND TECHNOLOGY WE DEVELOP.

      Our products utilize a variety of proprietary  rights that are critical to
our  competitive  position.  Because the  technology and  intellectual  property
associated  with  our  wireless  location  products  are  evolving  and  rapidly
changing, our current intellectual property rights may not adequately protect us
in the future.  We rely on a  combination  of patent,  copyright,  trademark and
trade  secret laws and  contractual  restrictions  to protect  the  intellectual
property  utilized  in  our  products.   Despite  our  efforts  to  protect  our
proprietary rights, unauthorized parties may attempt to copy or otherwise obtain
and use our products or technology. In addition,  monitoring unauthorized use of
our products is difficult  and we cannot be certain the steps we have taken will
prevent unauthorized use of our technology. Also, it is possible that no patents
or  trademarks  will be issued from our  currently  pending or future  patent or
trademark  applications.  Because  legal  standards  relating  to the  validity,
enforceability  and scope of  protection  of patent  and  intellectual  property
rights  in new  technologies  are  uncertain  and  still  evolving,  the  future
viability or value of our intellectual  property rights is uncertain.  Moreover,
effective  patent,  trademark,  copyright and trade secret protection may not be
available  in  some   countries  in  which  we  distribute  or  may   anticipate
distributing  our  products.  Furthermore,  our  competitors  may  independently
develop similar  technologies that limit the value of our intellectual  property
or design around patents issued to Wherify.  If competitors  are able to use our
technology, our competitive edge would be reduced or eliminated.

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

      o     Significant litigation costs;

      o     Diversion of resources, including the attention of management;

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

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

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


                                      -16-
<PAGE>

      WE COULD BECOME  SUBJECT TO  LITIGATION  REGARDING  INTELLECTUAL  PROPERTY
      RIGHTS,  WHICH COULD  SERIOUSLY  HARM OUR BUSINESS AND REQUIRE US TO INCUR
      SIGNIFICANT COSTS.

      In recent  years,  there has been  significant  litigation  in the  United
States involving  patents and other  intellectual  property rights.  Any parties
asserting that our products infringe upon their  proprietary  rights would force
us to defend ourselves and possibly our customers or  manufacturers  against the
alleged  infringement.  These claims and any resulting  lawsuit,  if successful,
could  subject us to  significant  liability  for  damages and  invalidation  of
proprietary rights. These lawsuits,  regardless of their merits, would likely be
time-consuming  and  expensive to resolve and would divert  management  time and
attention. Any potential intellectual property litigation also could force us to
do one or more of the following:

      o     Stop  selling,  incorporating  or using  our  products  that use the
            challenged intellectual property;

      o     Obtain from the owner of the infringed intellectual property right a
            license to sell or use the relevant  technology,  which  license may
            not be available on reasonable terms, or at all; or

      o     Redesign those products that use such technology.

      If we are forced to take any of the  foregoing  actions,  our business and
prospects may be seriously harmed.

      THE  INTEGRATION  OF  WHERIFY  AND  WHERIFY  CALIFORNIA  MAY  DISRUPT  OUR
      BUSINESS.

      The integration of Wherify and Wherify California may disrupt the combined
company's  business.  The  combined  company  will need to overcome  significant
challenges in order to realize any benefits or synergies from the merger.

      OUR FAILURE TO MANAGE OUR GROWTH, IMPROVE EXISTING PROCESSES AND IMPLEMENT
      NEW SYSTEMS COULD RESULT IN LOST SALES OR DISRUPTIONS TO OUR BUSINESS.

      Our ability to  successfully  sell our products and implement our business
plan in a rapidly evolving market requires an effective  planning and management
process. In order to manage our growth, we must:

      o     Retain existing personnel;

      o     Hire,  train,  manage and  retain  additional  qualified  personnel,
            including engineers and research and development personnel;

      o     Manage our manufacturing operations, controls and reporting systems,
            and location service centers;

      o     Effectively  manage  multiple   relationships  with  our  customers,
            suppliers and other third parties; and

      o     Implement additional  operational controls,  reporting and financial
            systems and procedures.

      If we are unable to implement adequate control systems in an efficient and
timely  manner,  our  business  and  prospects  could  be  materially  adversely
affected.

      WE CURRENTLY  DEPENDS UPON ONE MANUFACTURER FOR OUR PRINCIPAL  PRODUCT AND
      IF WE  ENCOUNTERS  PROBLEMS WITH THIS  MANUFACTURER  THERE IS NO ASSURANCE
      THAT WE COULD OBTAIN PRODUCTS FROM OTHER MANUFACTURERS WITHOUT SIGNIFICANT
      DISRUPTIONS TO OUR BUSINESS.

      We  expect  that  our  principal  product  will  be  manufactured  to  our
specifications  by one  manufacturer.  Although  we could  arrange  for  another
manufacturer  to supply the product,  there is no assurance  that we could do so
without undue cost, expense and delay.

      WE EXPECT TO RELY HEAVILY ON A FEW CUSTOMERS.

      Our  revenues  in the next  several  years could be heavily  dependent  on
contracts with a limited number of major market makers in each business segment.
The loss of, or a significant  reduction  in, orders from these major  customers
could have a material  adverse effect on our financial  condition and results of
operations.


                                      -17-
<PAGE>

      FLUCTUATIONS IN OPERATING  RESULTS COULD ADVERSELY AFFECT THE MARKET PRICE
      OF OUR COMMON STOCK.

      Our revenues and operating  results are likely to fluctuate  significantly
in the future. The timing of order placement, size of orders and satisfaction of
contractual customer acceptance  criteria,  as well as order delays or deferrals
and shipment delays and deferrals, may cause material fluctuations in revenue.

      Delays or deferrals in purchasing decisions may increase as we develop new
or enhanced products.  The current and anticipated  dependence on a small number
of customers increases the revenue impact of each customer's actions relative to
these factors. Our expense levels in the future will be based, in large part, on
our expectations  regarding  future revenue,  and as a result net income for any
quarterly period in which material orders are delayed could vary significantly.

      Because  of  these  and  other  factors,  investors  should  not  rely  on
quarter-to-quarter  comparisons  of our  results of  operations,  our results of
operations  or the pro forma  financial  information  as an indication of future
performance.  It is possible that, in future periods, results of operations will
differ from the  estimates  of public  market  analysts  and  investors.  Such a
discrepancy  could  cause  the  market  price of our  common  stock  to  decline
significantly.

      OUR BUSINESS  AND FUTURE  OPERATING  RESULTS MAY BE ADVERSELY  AFFECTED BY
      EVENTS OUTSIDE OF OUR CONTROL.

      Our business and operating  results will be vulnerable to  interruption by
events  outside  of  our  control,  such  as  earthquakes,   fire,  power  loss,
telecommunications  failures,  political  instability,   military  conflict  and
uncertainties  arising out of  terrorist  attacks,  including a global  economic
slowdown,  the economic consequences of additional military action or additional
terrorist  activities and associated  political  instability,  and the effect of
heightened security concerns on domestic and international travel and commerce.

      DELAYS,  DISRUPTIONS OR QUALITY CONTROL  PROBLEMS IN  MANUFACTURING  COULD
      RESULT IN DELAYS IN SHIPMENTS OF PRODUCTS TO CUSTOMERS AND COULD ADVERSELY
      AFFECT OUR BUSINESS.

      We might experience delays, disruptions or quality control problems in the
manufacturing  operations  of our  subcontractors.  As a result,  we could incur
additional  costs  that  would  adversely  affect  gross  margins,  and  product
shipments  to our  customers  could be  delayed  beyond the  shipment  schedules
requested  by  our  customers,  which  would  negatively  affect  our  revenues,
competitive position and reputation.  Furthermore, even if we are able to timely
deliver products to our customers,  we may be unable to recognize  revenue based
on our  revenue  recognition  policies.  Any  disruptions  in the  future  could
adversely affect the combined company's  revenues,  gross margins and results of
operations.  We may experience  manufacturing  delays and reduced  manufacturing
yields  upon  introducing  new  products  to our  manufacturing  lines  or  when
integrating acquired products.

      IF WE CAN NOT SUCCESSFULLY  MARKET AND SELL OUR WHERIFONETM  PRODUCT,  OUR
      BUSINESS WILL NOT GROW UNLESS THE MARKET FOR BIOMETRIC  SOLUTIONS  EXPANDS
      BOTH DOMESTICALLY AND INTERNATIONALLY.

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

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

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

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

      o     Public   perceptions   regarding  the   confidentiality  of  private
            information;

      o     Proposed or enacted legislation related to privacy of information;

      o     Customers' satisfaction with our products and services; and

      o     Marketing  efforts  and  publicity   regarding  these  products  and
            services.


                                      -18-
<PAGE>

      IF WE FAIL TO GENERATE  REPEAT OR EXPANDED  BUSINESS  FROM OUR CURRENT AND
      PROSPECTIVE FACESTM CUSTOMERS, OUR FACIAL COMPOSITE SOFTWARE BUSINESS WILL
      BE SERIOUSLY HARMED AND OUR OPERATING RESULTS MAY BE SERIOUSLY HARMED.

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

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

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

      RAPID  TECHNOLOGICAL  CHANGE IN OUR MARKET  COULD  CAUSE OUR  PRODUCTS  TO
      BECOME OBSOLETE OR REQUIRE US TO REDESIGN OUR PRODUCTS.

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

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

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

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

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

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

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


                                      -19-
<PAGE>

      o     The expansion of our sales force and distribution channels;

      o     The expansion of our product and services offerings;

      o     Development of relationships with strategic business partners;

      o     The expansion of management and infrastructure; and

      o     Brand development, marketing and other promotional activities.

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

      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.

              RISKS RELATED TO WHERIFY CALIFORNIA RESCISSION OFFER

      WE MAY HAVE LIABILITY  UNDER  APPLICABLE  SECURITIES  LAWS WITH RESPECT TO
      CERTAIN SHARES SOLD BY WHERIFY CALIFORNIA EVEN AFTER WHERIFY  CALIFORNIA'S
      COMPLETION OF ITS RESCISSION OFFER.

      Wherify  California's  offering of 1,701,714  shares of Series C Preferred
Stock sold during the period from September 17, 2004 to January 19, 2005 may not
have been exempt from the  registration  and  qualification  requirements  under
applicable  securities laws. In order to address this issue,  Wherify California
made a rescission  offer to all purchasers of such shares.  The rescission offer
was completed on April 11, 2005,  and eight  investors  accepted the  rescission
offer and 75 rejected the  rescission  offer.  The staff of the  Securities  and
Exchange  Commission,  however,  takes the position that a rescission offer does
not  extinguish a holder's right to rescind the issuance of shares that were not
registered or exempt from the registration requirements under the Securities Act
of 1933, as amended.  Consequently,  Wherify  California  and Wherify may remain
liable under applicable  securities laws to Wherify California  stockholders who
rejected the  rescission  offer for the  purchase  price of the shares that were
subject to the  rescission  offer,  plus  applicable  interest  and costs.  This
liability,  if realized,  could  imperil  Wherify  California's  ability and the
ability of Wherify,  to operate the business as  contemplated  or to continue in
business.  In addition,  if it is  determined  that Wherify  California  offered
securities without properly  registering them under applicable  securities laws,
or securing an exemption from  registration,  regulators  could impose  monetary
fines or other sanctions as provided under these laws.

                 RISKS RELATED TO DEVELOPING THE FACESTM PRODUCT

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

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


                                      -20-
<PAGE>

      OUR  REVENUES  RELATED  TO OUR  FACESTM  PRODUCT  ARE  DEPENDENT  UPON THE
      AVAILABILITY AND TIMELY DISTRIBUTION OF GOVERNMENTAL FUNDING.

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

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

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

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

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

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

      Complex software products such as our FACESTM product often contain latent
errors or defects,  particularly  when first  introduced,  when new  versions or
enhancements are released and when configured for a specific  customer.  We have
experienced  errors and  defects  in our most  recent  release.  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,  and/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.  Any product liability insurance
that we may carry could be  insufficient  to protect us from all liability  that
may  be  imposed  under  any  asserted  claims.  Although  through  our  license
agreements  with  customers we try to include  provisions  designed to limit our
exposure to potential claims, such limitation of liability provisions may not be
effective  as a result  of  existing  or  future  laws or  unfavorable  judicial
decisions.


                                      -21-
<PAGE>

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

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

                RISKS RELATED TO WHERIFY'S INTELLECTUAL PROPERTY

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

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

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

      o     Significant litigation costs;

      o     Diversion of resources, including the attention of management;

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

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

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

                  RISKS RELATED TO CORPORATE AND STOCK MATTERS

      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.  To date,  no
shares of  preferred  stock have been issued.  The  authorized  preferred  stock
constitutes what is commonly  referred to as "blank check" preferred stock. This
type of preferred  stock  allows the Board of Directors to divide the  preferred
stock into series, to designate each series, to fix and determine separately for
each series any one or more relative  rights and preferences and to issue shares
of any series without further stockholder  approval.  Preferred stock authorized
in series  allows 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.  In  addition,  the  market  price  of our  common  stock  could  be
materially and adversely affected by the existence of the preferred stock.

OUR COMMON STOCK HAS A LIMITED AND VOLATILE TRADING HISTORY.

      Our  common  stock  trades in the  United  States on the  Over-the-Counter
Electronic  Bulletin Board  (OTCBB).  The number of shares traded daily has been
extremely limited and the prices at which Wherify's common stock has traded have
fluctuated  fairly  widely.  See "Market  for the  Registrant's  Common  Equity,
Related  Stockholder  Matters and Small Business Issuer Purchase of Securities."
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:

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

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

      o     General economic and market conditions; and

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


                                      -22-
<PAGE>

      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.

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

      o     As of August 31, 2005,  approximately  185,000  shares of our common
            stock  were  available  for  issuance  to  outside   consultants  to
            compensate them for services provided;

      o     Options to  purchase  approximately  4,663,771  shares of our common
            stock were outstanding as of August 31, 2005;

      o     Debentures,  convertible  into  approximately  101,000 shares of our
            common stock, had been issued as of August 31, 2005; and

      o     Warrants to purchase  approximately 1.3 million shares of our common
            stock were outstanding as of August 31, 2005.

      The options,  warrants and convertible  debentures  described above permit
the  holders to  purchase  shares of common  stock at  specified  prices.  These
purchase  prices may be less than the then  current  market  price of 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 Wherify's common
stock. Thus, the percentage ownership of existing stockholders may be diluted if
we issue additional shares in the future.  Future issuances of additional shares
could cause immediate and substantial dilution to the net tangible book value of
shares  of  common  stock  issued  and  outstanding   immediately   before  such
transaction.  Any future  decrease in the net tangible book value of such issued
and outstanding shares could materially and adversely affect the market value of
these shares.

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

      The trading  price of our common stock has  frequently  traded below $5.00
per share.  During the  period(s)  that our stock trades below 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 Wherify's  common stock could be severely  limited by these
regulatory requirements.


                                      -23-
<PAGE>

      STOCKHOLDERS SHOULD HAVE NO EXPECTATION OF ANY DIVIDENDS.

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

      ITEM 3. LEGAL PROCEEDINGS

      On October 15, 2004, Venture Corporation Limited, a Singapore  corporation
("Venture  Corporation")  filed  suit in the  Southern  District  of  California
against Wherify.  The complaint  asserts causes of action for breach of contract
and fraud and asserts that Venture  Corporation has suffered  approximately $3.5
million in damages. The claims relate to Venture  Corporation's  assertions that
Wherify failed to pay, when due, certain amounts owed to Venture Corporation for
the  manufacturing  of a component  of the  Children's  Model  personal  locater
("CM1").  Wherify answered Venture Corporation's complaint on November 16, 2004.
Additionally,  Wherify filed a cross-complaint alleging that the goods delivered
by Venture  Corporation were non-conforming and alleging damages in an amount in
excess  of $90  million.  Discovery  between  the two  sides  is  continuing.  A
mediation  between the parties recently ended without a resolution of the issues
and trial began on October 4, 2005 and is ongoing. Wherify denies any wrongdoing
and plans to continue to vigorously  defend itself in this  litigation  and seek
damages  against  Venture  Corporation for the injury caused by their failure to
produce the product as promised.

      We have become a party to litigation in the Superior  Court for the County
of Fresno,  State of California.  The original complaint in the matter was filed
on April 29,  2005.  The  amended  complaint  was filed on August 5,  2005.  The
principal  parties are Wherify and persons formerly  affiliated with or employed
by IQB,  including Sylvie  Lariviere,  Robert Rios, Toni Lange,  Fernand Beland,
Frederic Serre and Roland Vroye. The amended complaint alleges that Wherify owes
stock options to the  plaintiffs  in  accordance  with the terms of alleged oral
and/or written  agreements  entered in or about 2002. The amended complaint also
alleges fraud causes of action surrounding the alleged breach of agreement.  The
complaint seeks to recover damages,  including punitive damages, and/or an award
of options  entitling  the  plaintiffs  to purchase  Wherify  stock at favorable
price.

      In June 2005,  Zoltar  Satellite  Systems,  Inc., a Delaware  corporation,
filed suit in the United States District Court in the Eastern  District of Texas
alleging that Wherify  California and ten other named  defendants,  including LG
Electronics,   Inc.,  Motorola,  Inc.,  Sanyo  Electric  Co.,  Ltd.  and  Sprint
Corporation, infringed certain patents as a result of the manufacture, use, sale
and/or offer for sale of cellular  telephones  equipped with emergency  location
determination  technology.  On September 29, 2005, Zoltar voluntarily  dismissed
its claims against the Company without prejudice.

      In September 2005,  William Prevost,  the former CEO of Wherify  Wireless,
Inc.  filed suit in the  Superior  Court for the  County of San Mateo,  State of
California  alleging  that the  Company  failed  to pay Mr.  Prevost  the sum of
$45,000.00  plus interest due owed to him pursuant to a Severance  Agreement and
General  Release of All Claims  dated March 7, 2002.  In addition,  Mr.  Prevost
alleges that the Company  improperly  and in bad faith failed to issue him a new
stock certificate for approximately  44,717 shares of common stock which did not
contain any  restrictions on transfer.  The complaint seeks to recover  damages,
including  consequential  and  punitive  damages,  and  declaratory  relief with
respect to the issuance of a new share  certificate  without any restrictions on
transfer.

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

      On July 19, 2005 we held a special meeting of  stockholders.  Our board of
directors solicited proxies in connection with the special meeting, at which our
stockholders approved each of the following proposals:

      1.    A proposal to approve the principal  terms of the Agreement and Plan
            of Merger,  dated April 14, 2004, as amended,  by and among Wherify,
            Wherify  Acquisition,  Inc. (a wholly-owned  subsidiary of Wherify),
            and Wherify California, and the merger of Wherify Acquisition,  Inc.
            with and into  Wherify  California  and the  issuance  of  shares of
            Wherify common stock to Wherify California  stockholders pursuant to
            the merger agreement.

      2.    A proposal to amend the certificate of  incorporation of the Company
            to change the Company's name to "Wherify  Wireless,  Inc." effective
            upon the closing of the merger;

      3.    A proposal to amend the certificate of  incorporation of the Company
            to increase the authorized shares of common stock from 50,000,000 to
            100,000,000 shares;

      4.    A proposal to adopt the 2004 Stock Plan and reserve 2,000,000 shares
            for issuance under the plan.


                                      -24-
<PAGE>

The following votes were tabulated for each matter described above:

<TABLE>
<CAPTION>
---------------|--------------------------------------------------------------------------------------
  PROPOSALS    |        FOR            AGAINST         ABSTAIN        BROKER NON-VOTE      % FOR
---------------|--------------------------------------------------------------------------------------
<S>                 <C>               <C>              <C>                  <C>           <C>
      1        |    6,901,597.00          159.00        1,075.00            0             68.35
      2        |    6,901,597.00          159.00        1,075.00            0             68.35
      3        |    6,874,482.00       12,324.00       16,025.00            0             68.08
      4        |    6,713,109.00      142,972.00       46,750.00            0             66.48
</TABLE>

                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS
        AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.

      Our common stock is traded on the  Over-The-Counter  Bulletin  Board under
the symbol "WFYW.OB". As of September 22, 2005, we had approximately 710 holders
of record.  Presented  below are the high and low bid  information of our common
stock for the periods indicated.  The source of the following information is MSN
Money. These quotations  reflect  inter-dealer  prices,  without retail mark-up,
mark-down or commission and may not represent actual transactions. The following
historical stock  information  takes into account the one for four reverse split
of the  outstanding  shares of Wherify  common  stock  effective on November 29,
2004.

                                                             COMMON STOCK
                                                             ------------
                                                           HIGH        LOW
                                                           ----        ---
FISCAL YEAR ENDING June 30, 2005:
     First Quarter.................................        $5.04      $2.44
     Second Quarter................................        $6.05      $1.64
     Third Quarter.................................        $6.35      $3.60
     Fourth Quarter................................        $4.90      $2.97

FISCAL YEAR ENDING June 30, 2004:
     First Quarter.................................        $5.84      $2.20
     Second Quarter................................        $5.76      $3.20
     Third Quarter.................................        $9.88      $4.44
     Fourth Quarter................................        $9.20      $3.68

FISCAL YEAR ENDING June 30, 2003:
     First Quarter.................................        $3.80      $2.04
     Second Quarter................................        $3.60      $0.80
     Third Quarter.................................        $4.26      $0.80
     Fourth Quarter................................        $6.24      $2.20


      Wherify has never paid cash dividends, and we have no intentions of paying
cash dividends in the foreseeable future.

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

      The following  discussion and analysis of financial  condition and results
of operations  should be read in conjunction  with our financial  statements and
related  notes  included  elsewhere in this  report.  This  discussion  contains
forward-looking  statements that involve risks,  uncertainties  and assumptions.
Our  actual  results  could  differ  materially  from those  anticipated  in the
forward-looking  statements  as a result of certain  factors  discussed in "RISK
FACTORS" and elsewhere in this report.

      Wherify's  and  Wherify  California's  auditor  has issued  going  concern
opinions  with  respect to each  company.  Wherify's  and  Wherify  California's
auditor has reported that Wherify and Wherify  California have both suffered net
operating  losses  in the past two  fiscal  years and have  significant  working
capital deficits that raises  substantial  doubt about each company's ability to
continue as a going concern.


                                      -25-
<PAGE>

A. INTRODUCTION

      On July 21, 2005,  Wherify  California,  Inc.,  a  California  corporation
(formerly known as Wherify  Wireless,  Inc.) ("Wherify  California")  was merged
with a  special  purpose  subsidiary  of  Wherify  Wireless,  Inc.,  a  Delaware
corporation  (formerly known as IQ Biometrix,  Inc.) ("Wherify",  the "Company",
"we"  or  "us").  As a  result  of  the  merger,  Wherify  California  became  a
wholly-owned subsidiary of Wherify.  Accordingly,  since the merger our business
operations have included the business  operations of both Wherify California and
Wherify. However, as discussed below, the former business operations of Wherify,
consisting  primarily of the sale of FACES software and related  services to law
enforcement agencies and the security industry,  is not expected to constitute a
significant part of the ongoing business operations of the combined company.

      The merger  and  related  transactions  are  described  in Section B below
entitled  "Recent  Developments."  Also included in Section B is a discussion of
the expected  future  business and  operations  of the combined  company,  and a
discussion  of the current  liquidity  and  capital  resources  of the  combined
company.  Certain pro-forma financial information regarding the combined company
is set forth under "Pro Forma Consolidated Financial Information" on page F-26.

      A discussion and analysis of financial condition and results of operations
of Wherify California for the years ended June 30, 2005 and 2004 is set forth in
Section C below entitled "Wherify California."

      A discussion and analysis of financial condition and results of operations
of Wherify  for the years ended June 30, 2005 and 2004 is set forth in Section D
below entitled "Wherify."

B. RECENT DEVELOPMENTS

      1. MERGER

      On April 14, 2004,  Wherify  entered into an Agreement  and Plan of Merger
with  Wherify  California  pursuant  to which  the  parties  agreed  to a merger
transaction  involving the merger of a  wholly-owned  subsidiary of Wherify with
and into Wherify California, with Wherify California surviving as a wholly-owned
subsidiary  of  Wherify.  The merger  agreement  was  approved  by the boards of
director of both companies in April 2004, and the respective shareholder of both
companies  approved the merger on July 19, 2005.  The merger  closed on July 21,
2005.

      Upon the  completion  of the merger,  shareholders  of Wherify  California
received  4.8021  shares  of  Wherify  common  stock for each  share of  Wherify
California common or preferred stock, and Wherify  California stock options were
assumed by Wherify and  converted  into options to acquire a number of shares of
Wherify common stock equal to the number of shares of Wherify  California common
stock underlying each such option multiplied by the exchange ratio of 4.8021. As
a result,  Wherify  issued or  reserved  for future  issuance  an  aggregate  of
approximately 46 million shares of its common stock in consideration  for all of
the outstanding shares, options and warrants issued by Wherify California, which
represents  approximately  78.8% of the total number of shares of Wherify common
stock calculated on a fully-diluted  basis.  Also upon completion of the merger,
Wherify changed its name from "IQ Biometrix,  Inc." to "Wherify Wireless,  Inc."
and  shortly  thereafter  Wherify  California  changed  its name  from  "Wherify
Wireless, Inc." to "Wherify California, Inc."

      The merger was treated as a reverse acquisition, pursuant to which Wherify
California  was  treated as the  acquirer  of Wherify  for  financial  reporting
purposes. Consequently, following the consummation of the merger, the historical
financial  statements of Wherify  California  serve as the principal  historical
financial statements of the combined company.

      Under applicable  accounting  rules, the purchase price of the acquisition
(which is determined based on the percentage of the combined company held by the
pre-merger Wherify  stockholders and the stock price of the combined company) is
allocated to identifiable tangible and intangible assets, and then the excess of
the  purchase  price over the amounts  allocated to these assets is allocated to
goodwill.  Based  upon a  preliminary  determination  by us of the  identifiable
assets,  approximately  $61.4  million of the  purchase  price is  allocable  to
goodwill.  Under our preliminary  estimates,  we currently  expect to realize an
amortization  expense on identifiable  intangible  assets of approximately  $2.7
million in the pro forma  statement of operations for the 12-month  period ended
June  30,  2005.  As  mentioned  above,  these  allocations  are  based  on  our
preliminary estimate and are subject to change based upon the final values to be
assigned based upon a third party  appraiser's  calculation of the present value
of discounted  future cash flows  associated with each asset. We will review our
intangible  assets  including   goodwill  on  a  quarterly  basis  for  possible
impairment.  Management has not yet decided whether to continue  efforts to sell
and  improve  the FACES  software.  However,  we  expect  that  there  will be a
significant  impairment  in the near future of most or all of the portion of the
purchase  price that was  allocated to goodwill and other  intangible  assets in
connection with the merger.


                                      -26-
<PAGE>

      2. FUTURE BUSINESS AND OPERATIONS

      We anticipate that our principal business activity post-merger will be the
business of Wherify California, consisting primarily of the development and sale
of wireless  location  products and  services.  The former  business of Wherify,
consisting  primarily of the sale of security  software and services,  including
facial  composite  software,  to law  enforcements  agencies  and  the  security
industry,  is not  expected  to  constitute  a  significant  part of the ongoing
business operations of the combined company.  Accordingly,  historical financial
information  relating to the former business of Wherify is expected to have only
minimal significance to the future business of the combined company.

      3. LIQUIDITY AND CAPITAL RESOURCES

      As of June 30, 2005, (a) Wherify  California had cash and cash equivalents
of  approximately  $1.2 million and $2.5 million of restricted  certificates  of
deposit being utilized as collateral to support our  obligations  under a letter
of  credit  related  to our  contract  manufacturer,  other  current  assets  of
approximately  $120,000 and current  liabilities of approximately  $9.9 million,
including $3.9 million in past due rent  obligations to a related party, and (b)
Wherify had cash and cash  equivalents  of  approximately  $1.3  million,  other
current assets of approximately $79,000 and current liabilities of approximately
$596,000.

      As of August 31, 2005, we had cash and cash  equivalents of  approximately
$920,000 and $2.5 million of restricted  certificates  of deposit being utilized
as collateral to support our obligations under a letter of credit related to our
contract  manufacturer,  other  current  assets of  approximately  $200,000  and
current liabilities of approximately $10.0 million, including approximately $3.9
million  in past due rent  obligations.  We expect  that the  ongoing  cash flow
requirements of Wherify will be approximately $1.1 million per month.

      The  following  table sets forth an  adjustment to Wherify's net loss that
Wherify feels is important in understanding  the ongoing cash flow  requirements
("Cash Burn") of Wherify over the next twelve months.  The most  comparable GAAP
financial  measure to Cash Burn is Net Loss. In order to arrive at the Cash Burn
rate,  we have removed from Net Loss  non-cash  items such as  depreciation  and
amortization and significant  one-time items that are not expected to reoccur in
the next 12-18 months. We also eliminated items that are duplicative between the
pre-merger   companies,   leaving  the  costs  representing  the  ongoing  costs
associated with the merged company.  We believe this adjusted  monthly Cash Burn
rate of  approximately  $1.1  million  more fairly  represents  the ongoing cash
requirement over the next 12 months.

                                                          Year Ended
                                                           6/30/2005
                                                          ----------
                                                          (thousands)
      Net Loss
               Wherify California (pre-merger)            $   12,404
               Wherify (pre-merger)                            8,303
                                                          ----------
                                                              20,707
      Adjustments
               Qualcomm (a)                                     (625)
               Business consulting (b)                          (311)
               Legal services (c)                               (536)
               Accounting services (d)                           (56)
               Debenture interest (e)                         (3,840)
               Depreciation   and  amortization (f)             (167)
               Flextronics (g)                                (1,700)
                                                          ----------
               Total Adjustments                              (7,235)
                                                          ----------
      Normalized cash used                                $   13,472
                                                          ==========
      NORMALIZED MONTHLY CASH BURN                        $    1,123


                                      -27-
<PAGE>

NOTES
-----

(a)   Wherify has no future  obligation  to pay  Qualcomm  licensing  or royalty
      payments.

(b)   Services of Daniel McKelvey (investment banking and business  consulting),
      and Westminster  Securities  (business  consultants)  have been cancelled.
      Seven Hills is currently  acting as our investment  banker and future fees
      will be paid to them for a successful close of financing.

(c)   Wherify and Wherify  California used separate counsel prior to the merger.
      We believe that costs of separate counsel after the merger are duplicative
      and that part of those costs can be  eliminated.  We also  believe  that a
      significant  portion of the fees that were incurred in connection with the
      merger are one-time  expenses and can be eliminated.  We have not adjusted
      for intellectual property legal costs or other miscellaneous legal costs.

(d)   Costs for accounting  services have been  duplicative.  We have eliminated
      Wherify California's costs since they were not the public entity.

(e)   Prior  to  the  merger  Wherify  raised  money  through  the  issuance  of
      debentures.  The beneficial conversion and interest costs are not expected
      to be duplicated in the current year going forward.  All  debentures  have
      been converted.

(f)   Depreciation and amortization are not a cash item.

(g)   These costs consist of  Flextronics  one-time  design and set up costs for
      the Wherifone  product.  We subsequently  moved  manufacturing  to CalComp
      Electronics Public Company Limited.

      Neither Wherify nor Wherify  California  currently has any credit facility
available to it, and each has financed its operations to date primarily  through
the issuance of an aggregate of approximately $56 million of shares.  There is a
"going concern" paragraph in both Wherify's and Wherify  California's  auditor's
report  dated  August 24,  2005.  We are in the  process of  locating  financing
sources to meet our liquidity shortfall.  Adequate funds may not be available on
terms  acceptable to us. If additional  funds are raised through the issuance of
equity securities,  dilution to existing  stockholders may result. If funding is
insufficient  at any time in the future,  we may be unable to develop or enhance
our products or services, take advantage of business opportunities or respond to
competitive pressures,  any of which could have a material adverse effect on our
financial  position,  results of operations and cash flows.  We have no material
commitments  for  capital  expenditures  and there are no  anticipated  material
capital  expenditures that are reasonably  expected to have a material impact on
us.

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

      We have worked out an  arrangement  with our  landlord  and are  currently
paying rent.  We have entered into an agreement  with the landlord that provides
that we will begin  paying back due rent as well as paying for certain  back due
expenses covered by the landlord.  Under this agreement,  upon the completion of
additional  financing  following  the  merger,  we will settle our debt with the
landlord,  which was approximately $3.9 million as of June 30, 2005. There is no
guarantee that additional financing will be found to settle this obligation.


                                      -28-
<PAGE>

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

C. WHERIFY CALIFORNIA (FORMERLY KNOWN AS "WHERIFY WIRELESS, INC.")

      1. GENERAL

      Wherify  California  is a developer  and  provider  of  wireless  location
products  and  services.  Its  products and services are designed to be used for
child safety,  parental supervision,  personal protection,  Alzheimer and memory
loss  supervision,  law enforcement,  animal  identification  and location,  and
personal  property  tracking.  The  proprietary   integration  of  communication
technologies  enables  customers to obtain  real-time  location  information for
individuals and property directly through the internet or any phone.

      Wherify  California  has stopped  marketing  and promoting its GPS Locator
watch product and is currently  developing a second generation product which was
beta released in the third calendar  quarter of 2005, with a full release due in
the fourth calendar quarter of 2005.

      Wherify  California's  cost  of  revenues  currently  consists  of  actual
manufacturing costs.

      Sales and marketing  expenses consist  primarily of salaries,  commissions
and related  expenses for  personnel  engaged in  marketing,  sales and customer
support,  as well as costs  associated with  promotional  activities and related
travel expenses.

      General and  administrative  expense  consists  primarily  of salaries and
related expenses for executive,  finance,  accounting,  information  technology,
facilities, and human resources personnel. These expenses increased through July
2005 in the areas of legal,  accounting  and  outside  services  as the  company
prepared  filings  and other  information  in  connection  with the merger  with
Wherify.

      Research  and  development  expense  consists  primarily  of salaries  and
related  personnel  expense and  expenses  related to the  design,  development,
testing and  enhancement  of products.  Currently  we are focusing  attention on
further development our Wherifone product.

      2. RESULTS OF OPERATIONS

      Year Ended June 30, 2005 Compared To Year Ended June 30, 2004

      Revenues for 2005 decreased by 30.4% from approximately $169,000 in fiscal
2004 to approximately $119,000 for fiscal 2005. 100% of revenues for fiscal 2005
were  derived  from  subscription  services  related  to the  sales  of  Wherify
California's  first generation product while revenues for 2004 consisted of both
hardware and subscription sales. Revenues dropped  substantially  primarily as a
result of the elimination of hardware sales.

      Gross margins increased by $207,000 from a loss of $271,000 in fiscal 2004
to a loss of $64,000  in fiscal  2005.  Gross  margin  includes  the cost of the
location  services,  which is a fixed  cost.  Wherify  California's  revenues in
fiscal 2005 were solely from  subscriber  services.  As a result,  there were no
product costs associated with the gross margin,  only fixed costs. Gross margins
in fiscal 2004 also were  affected by a one-time  charge to cost of sales for an
inventory allowance for defective product, which Wherify California is currently
disputing with its manufacturer.

      As a result of  discontinuing  sales of our first  generation  GPS Locator
Watch,  Revenues,  Cost of Goods  Sold and Gross  Margin  are shown as under one
segment, Discontinued Operations.

      General and administrative  expenses increased by 32% or $1.5 million from
$4.2  million in fiscal 2004 to $6.5  million in fiscal  2005.  The  increase of
general and  administrative  expenses is due  primarily  to an increase in legal
fees related to  miscellaneous  and merger costs of approximately  $705,000,  an
increase in insurance premiums of approximately  $270,000,  an increase in labor
costs in finance of $150,000,  an increase in contract labor costs in finance of
approximately $180,000, an increase in accounting and audit services of $65,000,
an increase in patents  and  trademarks  expenses  related to the  Wherifone  of
approximately   $180,000,  an  increase  in  finance  charges  of  approximately
$200,000,  and  an  increase  in  executive  travel  expenses  of  approximately
$100,000.

      Selling expenses increased by 35% from $396,000 in fiscal 2004 to $931,000
in fiscal  year  2005.  The  increase  in selling  expense  is due to  increased
spending on promoting  and  marketing  Wherify  California's  second  generation
product,  the Wherifone and an $150,000 expense related to the exercise of stock
options by Wherify's former Chairman of the Board of Directors.

      Research and  development  expenses  increased by 76% or $2.0 million from
$2.8  million in fiscal 2004 to $4.6  million in fiscal  2005.  The increase was
primarily  due  to  the  costs   associated  with  the  development  of  Wherify
California's second generation product, the Wherifone.


                                      -29-
<PAGE>

      3. LIQUIDITY AND CAPITAL RESOURCES

      As of June 30, 2005,  Wherify  California had cash and cash equivalents of
approximately  $1.2  million  and $2.5  million of  restricted  certificates  of
deposit being utilized as collateral to support our  obligations  under a letter
of  credit  related  to our  contract  manufacturer,  other  current  assets  of
approximately  $120,000 and current  liabilities of approximately  $9.9 million,
including $3.9 million in past due rent obligations to a related party. There is
a "going concern" paragraph in Wherify California's auditor's report.

      4. RECENT EVENTS

      On July 21, 2005,  Wherify  California,  Inc.,  a  California  corporation
(formerly known as Wherify  Wireless,  Inc.) ("Wherify  California")  was merged
with a  special  purpose  subsidiary  of  Wherify  Wireless,  Inc.,  a  Delaware
corporation  (formerly known as IQ Biometrix,  Inc.) ("Wherify",  the "Company",
"we"  or  "us").  As a  result  of  the  merger,  Wherify  California  became  a
wholly-owned subsidiary of Wherify. Accordingly, our current business operations
include the business operations of both Wherify California and Wherify, although
as  discussed  below the  former  business  operations  of  Wherify,  consisting
primarily  of the sale of security  software  and  services  to law  enforcement
agencies and the security industry,  is not expected to constitute a significant
part of the ongoing business operations of the combined company.

      The merger  and  related  transactions  are  described  in Section B above
entitled  "Recent  Developments."  Also included in Section B is a discussion of
the expected  future  business and  operations  of the combined  company,  and a
discussion  of the current  liquidity  and  capital  resources  of the  combined
company.  Certain pro-forma financial information regarding the combined company
is set forth under "Pro Forma Consolidated Financial Information" on page F-26.

D. WHERIFY (FORMERLY KNOWN AS "IQ BIOMETRIX, INC.")

      1. GENERAL

      Wherify  (formerly  known as "IQ  Biometrix  Inc.) is a provider of facial
composite software to federal,  state and local law enforcement  agencies in the
U.S. and worldwide.

      During the year ended June 30, 2005  Wherify  derived all of its  revenues
from sales of its FACES(TM) 4.0 product. In September 2004, Wherify entered into
a contract  with Wards  Natural  Science,  a division  of VWR  International,  a
worldwide  provider of integrated law  enforcement and security  solutions.  The
contract launched a joint initiative to develop forensic kits based on FACES(TM)
EDU, designed for the education industry. The products will be marketed and sold
through  Ward's sales  channels  including an existing  client base of more than
1,400,000  teachers.  Wherify's revenues to date have been derived from sales of
its products mainly in units of 1 to 25 to a diverse  customer base.  During the
year ended June 30, 2005,  one customer was  responsible  for 42.4% of Wherify's
revenues.

      Wherify has  historically  marketed  and sold its products  both  directly
through  its own  sales  force  as  well as  indirectly  through  resellers  and
distributors in the United States. To date, most of Wherify's sales have been in
North America.  Although as discussed  below the former  business  operations of
Wherify,  consisting  primarily of the sale of security software and services to
law  enforcement  agencies  and  the  security  industry,  is  not  expected  to
constitute a significant part of the ongoing business operations of the combined
company.

      Wherify's  cost of  revenues  currently  consists  of  inventory,  product
shipping and packaging costs.

      Sales and marketing  expenses consist  primarily of salaries,  commissions
and related  expenses for  personnel  engaged in  marketing,  sales and customer
support,  as well as costs  associated  with  promotional  activities and travel
expenses

      General and  administrative  expense  consists  primarily  of salaries and
related expenses for executive,  finance,  accounting,  information  technology,
facilities, and human resources personnel.

      Research  and  development  expense  consists  primarily  of salaries  and
related  personnel  expense,  fees  paid  to  consultants  and  outside  service
providers,  and other expenses related to the design,  development,  testing and
enhancement of Wherify's products. Wherify expenses its research and development
costs as they are incurred.


                                      -30-
<PAGE>

      2. RESULTS OF OPERATIONS

      Year Ended June 30, 2005 Compared To Year Ended June 30, 2004

      Revenues  increased 11% from $270,000 for the twelve months ended June 30,
2004 to $301,000  for the twelve  months  ended June 30,  2005.  The increase in
revenues  for the year ended June 30, 2005 was due  primarily  to an increase in
unit pricing.  2005 revenues were derived  primarily  from the sale of FACES(TM)
4.0 at full sales price  while  revenues  from the FACES EDU product  were at an
introductory  discounted sales price. Revenue for both years were from a diverse
retail customer base sold mainly in units of 1 to 50.

      Gross  profit  margin was 89% for the twelve  months  ended June 30,  2005
compared to 82% for the twelve months ended June 30, 2004. The increased  margin
was due to an increase in sales price of Wherify's  product,  with little change
in the cost of producing the software and its packaging.

      Selling and marketing  expense  decreased 13% from $374,000 for the twelve
months  ended June 30, 2004 to  $324,000  for the twelve  months  ended June 30,
2005.  The  decrease  in selling and  marketing  expenses  was due to  decreased
promotion and marketing  expenses  compared to the previous  fiscal year when we
incurred additional expenses in conjunction with the release of FACES(TM) 4.0.

      General and  administrative  expense decreased 35% from approximately $6.7
million for the twelve months ended June 30, 2004 to approximately  $4.3 million
for the twelve  months ended June 30,  2005.  These  general and  administrative
expenses  were  incurred  primarily  in  the  areas  of  investor  relations  of
approximately $750,000, investment banking fees of $115,000, business consulting
fees of $550,000, legal and audit fees of approximately  $1,029,000.  The use of
these  services  was  related  to  Wherify's  search for  additional  sources of
capital,   merger  and  acquisition   related  expenses,   patent  research  and
applications  and  creating  the  corporate  infrastructure  needed  in a public
company.

      Research  and  development  expense  decreased  88% from  $172,000 for the
twelve  months  ended June 30, 2004 to $20,000 for the twelve  months ended June
30, 2005. The decrease in expenditures  occurred because no product  development
costs were  expensed in fiscal year 2005  compared with fiscal year 2004 when we
incurred  significant costs associated with the development of FACES(TM) 4.0 and
FACES(TM)  EDU.  Wherify  has not to date  incurred  any  significant  costs for
development of any future product releases.

      Interest  expense  increased  186% from $1.3 million for the twelve months
ended June 30, 2004 to  approximately  $3.8 million for the twelve  months ended
June 30, 2005.  Most of this  expense,  approximately  $2.5 million was non-cash
amortization of debt and warrant discounts related to the issuances of Wherify's
convertible debentures.

      3. LIQUIDITY AND CAPITAL RESOURCES

      As  of  June  30,  2005,   Wherify  had  cash  and  cash   equivalents  of
approximately  $1,325,000.   Net  cash  used  in  operations  was  approximately
$2,400,000  for  the  twelve  months  ended  June  30,  2005  as  compared  with
approximately  $908,000 for the twelve months ended June 30, 2004. The cash used
by  operations  consisted of a net loss of  approximately  $8,303,000  primarily
offset by non-cash expenses of approximately $6,000,000

      From its  inception,  Wherify  financed its operations  primarily  through
private sales of common stock and convertible  debentures.  As of June 30, 2005,
Wherify had working  capital  totaling  approximately  $807,000,  which consists
primarily of cash of $1,325,000  received primarily from the exercise of options
and warrants.

      There is a "Going Concern"  paragraph in Wherify's  auditor's  opinion for
the  years  ended  June 30,  2005 and June 30,  2004.  In order to  address  its
liquidity  issues,  Wherify  sold an  aggregate  of  $3,300,000  in  convertible
debentures on January 11, 2005.

      4. RECENT EVENTS

      In July 2005,  IQB paid cash  bonuses to William  Scigliano  for  reaching
bonus  milestones in his  employment  agreement for completion of the merger and
relocation of the company totaling $45,000.  He also received a bonus of $50,000
cash and  30,000  restricted  shares  as an added  bonus for  completion  of the
merger.

      On July 21, 2005,  Wherify  California  was merged with a special  purpose
subsidiary of Wherify.  As a result of the merger,  Wherify  California became a
wholly-owned subsidiary of Wherify. Accordingly, our current business operations
include the business operations of both Wherify California and Wherify, although
as  discussed  above the  former  business  operations  of  Wherify,  consisting
primarily of the sale of the FACES software  product and related services to law
enforcement agencies and the security industry,  is not expected to constitute a
significant part of the ongoing business operations of the combined company.


                                      -31-
<PAGE>

      The merger  and  related  transactions  are  described  in Section B above
entitled  "Recent  Developments."  Also included in Section B is a discussion of
the expected  future  business and  operations  of the combined  company,  and a
discussion  of the current  liquidity  and  capital  resources  of the  combined
company.  Certain pro-forma financial information regarding the combined company
is set forth under "Pro Forma Consolidated Financial Information" on page F-26.

E. GENERAL

      1. CRITICAL ACCOUNTING POLICIES

      Intangible Assets.  Wherify's intangible assets consist of a customer list
acquired in the JVWEB / Wherify (then known as IQ Biometrix,  Inc.)  acquisition
in March 2002 and  purchased  software  code.  Wherify  recorded the cost of the
software  and  amortized  the cost over the  estimated  useful  life of 3 years.
Wherify reviews the value of its intangible  assets quarterly and determines its
value.  At June 30, 2005,  Wherify had a net carrying  value for its  intangible
assets of $44,750.

      Revenue  Recognition.  Wherify  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.  Wherify has an increasing  sale order  backlog,
however those orders are not  considered  revenue until the order is shipped and
services are rendered.

      Wherify accounts 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.

      Wherify  California  has  two  types  of  revenue:  hardware  revenue  and
subscription  revenue.  Hardware  revenue is  recognized  at  shipment  date and
subscription revenue is recognized at completion of performance.

      2. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Interest Rate Risk.  Changes in United States' interest rates would affect
the  interest  earned  on our cash and cash  equivalents.  Based on our  overall
interest rate exposure at June 30, 2005, a near-term  change in interest  rates,
based on historical  movements,  would not  materially  affect the fair value of
interest rate sensitive instruments.

      3. OFF-BALANCE SHEET ARRANGEMENTS

      We do no  have  any  off-balance  sheet  arrangements  that  have  or  are
reasonably likely to have a current or future effect on our financial condition,
changes in financial  condition,  revenues or expenses,  results of  operations,
liquidity,  capital  expenditures or capital  resources that are material to our
investors.

      4. RECENT ACCOUNTING PRONOUNCEMENTS

      In December 2004,  FASB issued SFAS No. 123R,  Share Based  Payments.  The
statement  requires public companies to measure the cost of employee services in
exchange for an award of equity  instruments to be based on the grant-date  fair
value  of the  award  as  determined  by using  an  option-pricing  model.  This
statement  eliminates the alternative to use APB No. 25's intrinsic value method
of accounting that was provided in Statement No. 123 as originally issued. Under
Opinion  No. 25,  issuing  stock  options to  employees  generally  resulted  in
recognition  of no  compensation  cost.  This  Statement  requires  entities  to
recognize  the cost of employee  services  received  in  exchange  for awards of
equity  instruments  based on the  grant-date  fair value of those  awards.  The
statement  also  clarifies and expands  Statement No. 123's  guidance in several
areas,  including  measuring fair value,  classifying an award as equity or as a
liability, and attributing compensation cost to reporting periods. The Statement
is effective as of the beginning of the first interim or annual reporting period
that  begins  after  June  15,  2005  for  entities  that do not file as a small
business  issuer.  For entities  that do file as a small  business  issuer,  the
effective  date is of the  beginning  of the first  interim or annual  reporting
period that begins after  December 15, 2005. We are currently  using SFAS 123 to
calculate the cost of employee service in exchange for an award of equity.


                                      -32-
<PAGE>

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

      The report of Company's  Independent  Auditor appears at Page F-1 and page
F-13 hereof, the Financial Statements of Wherify appear at Page F-2 through F-13
hereof and the Financial  Statements of Wherify  California  appear at Page F-14
through F-25 hereof.

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

      Not applicable.

ITEM 8A. CONTROLS AND PROCEDURES

      Wherify maintains  disclosure controls and procedures that are designed to
ensure that information  required to be disclosed in its 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 its  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-15(e).  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,  Wherify  carried
out an  evaluation,  under the  supervision  and with the  participation  of its
management,  including its Chief Financial Officer,  of the effectiveness of the
design and operation of Wherify's disclosure controls and procedures. Based upon
the foregoing,  Wherify's  Chief Executive  Officer and Chief Financial  Officer
concluded  that, as of June 30, 2005, the disclosure  controls and procedures of
Wherify  were not  effective  to  ensure  that the  information  required  to be
disclosed in Wherify's Exchange Act reports was recorded, processed,  summarized
and reported on a timely basis.

      In connection with the completion of its audit of, and the issuance of its
report on the financial  statements of Wherify  (formerly known as IQ Biometrix,
Inc.)  for the  year  ended  June  30,  2005,  Malone &  Bailey,  PC  identified
deficiencies in Wherify's  internal controls related to expense  recognition and
disclosure control deficiencies  related to transactions  involving issuances of
Wherify's  stock and stock  options.  The adjustment to expense and the footnote
disclosure  deficiencies  were  detected  in the  audit  process  and have  been
appropriately  recorded and disclosed in this Form 10-KSB. We are in the process
of improving our internal controls in an effort to remediate these  deficiencies
through  implementing  certain of the  controls and  procedures  used at Wherify
California  and  improved  supervision  and  training of our  accounting  staff.
Additional  effort is  needed  to fully  remedy  these  deficiencies  and we are
continuing  our efforts to improve and  strengthen  our  control  processes  and
procedures. Our management and directors will continue to work with our auditors
and other  outside  advisors  to ensure that our  controls  and  procedures  are
adequate and effective.

      There were no changes in internal  controls over financial  reporting that
occurred  during the fiscal  quarter ended June 30, 2005,  that have  materially
affected,  or are reasonably likely to materially  affect,  our internal control
over financial reporting.

ITEM 8B. OTHER INFORMATION

      None

                                    PART III

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


                                      -33-
<PAGE>

      The  following  table  sets  forth the names,  ages and  positions  of our
directors and executive officers:

NAME                      AGE    POSITION
----                      ---    --------
William B.G. Scigliano    45     Chairman and President of Governmental Services
Timothy Neher             39     Director and Chief Executive Officer
Wade Fenn                 45     Director
John Micek III            52     Director
Reginald Brown            47     Director
Gerald Parrick            56     President
John Davis                49     Chief Financial Officer and Secretary

      Each  Director  will  hold  office  until  the  next  annual   meeting  of
stockholders and until his successor has been elected and qualified.

      WILLIAM  B.G.  SCIGLIANO  has served as a Director  of the  Company  since
November  2002 and  served  as  Chief  Executive  Officer  of the  Company  from
September  2002 until July 2005.  From 1991 until  September  2002, he served as
Executive  Director of the Corporate and Public Issues  Division of the Ministry
of the Attorney General of British Columbia.  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.

      TIMOTHY J. NEHER, the current Chief Executive Officer of Wherify,  founded
Wherify California in 1998 after more than a decade of experience developing and
marketing new consumer products. He served as Chief Executive Officer of Wherify
California from 1998 to July 2005 and has served as Chief Executive  Officer and
a Director of the Company since July 2005. Mr. Neher is responsible  for leading
Wherify's vision,  executive team and overall company growth and strategy. Prior
to launching  Wherify  California,  Mr.  Neher  served as the Vice  President of
Marketing and Sales for CTH Consumer Plastic,  Inc. where he worked from 1992 to
1998.  From 1988 to 1992,  Mr. Neher was Vice  President of Operations for Windy
City Product Development.

      WADE R. FENN has served as a Director of the Company  since July 2005.  He
has over two decades of retail electronics experience. From 1980-2002, he worked
at Best Buy Co.,  Inc. in a number of  positions,  most recently as President of
Entertainment and Strategic Business  Development of Best Buy Co., Inc. Mr. Fenn
joined Best Buy in 1980.  Prior to serving as  President  of  Entertainment  and
Strategic  Business  Development,  Mr. Fenn held the position of Executive  Vice
President--Marketing, where he was responsible for all marketing, merchandising,
advertising,  and inventory  teams.  After receiving his degree in economics and
history  from  Williams  College in 1980,  Mr.  Fenn  joined Best Buy as a sales
person and served in various  operating  roles,  including Senior Vice President
Retail,  Vice President  Sales,  district  manager and store  manager.  Mr. Fenn
currently is the  President of Navvo,  a start-up  company,  which is developing
several  voice  applications  for the  consumer  market.  Mr.  Fenn is also  the
managing partner of Retail Masters, a consulting company.

      JOHN MICEK III has served as a Director of the Company since July 2005. He
is  Managing   Director  of  Silicon   Prairie   Partners,   LP,  a  Palo  Alto,
California-based  family-owned  venture fund.  Before  founding  Silicon Prairie
Partners,  Mr.  Micek  was  President  of JAL,  Inc.,  a  family-owned  group of
insurance-related  companies  in Omaha,  Nebraska,  which  markets and  services
financial products  nationwide to financial  institutions and credit unions. Mr.
Micek is a member of the Boards of several technology-based  companies including
UTEK (a university  technology  transfer  company) and Enova  Systems  (enabling
technology for fuel cell and distributed  power  management).  He is a cum laude
graduate of Santa Clara  University,  and the University of San Francisco School
of  Law,  where  he was  Senior  Articles  Editor  of the  Law  Review.  He is a
practicing California attorney specializing in financial services.

      REGINALD BROWN has served as a Director of the Company since July 2005. He
has over twenty-three years of business and financial experience,  most recently
with Microsoft  Corporation  where he was  responsible  for  Microsoft's  Senior
Leadership Group Business Education. Prior to eight years at Microsoft, he was a
Vice President of Finance,  Publishing  Group at A.H. Belo Corporation from 1990
to 1996.  Mr. Brown held various  positions with Albimar  Communications,  Inter
Urban Group,  General  Electric Capital  Corporation,  and Peat Marwick and Main
from  1979 to 1990.  He  holds a BS,  cum  laude,  from  the  University  of San
Francisco and MBA from Stanford University.

      GERALD  PARRICK has served as President and acting Vice President of Sales
and Marketing of the Company since July 2005. Prior to joining the Company,  Mr.
Parrick was President of Wherify California from November 29, 2004 to July 2005.
Mr.  Parrick  has more than two  decades of  experience  in the  networking  and
communications  industry,  most  recently as founder,  Chairman and CEO of Yipes
Communications,  Inc. from 1999 to August 2002, and Chairman and Chief Executive
Officer  of  Diamond  Lane  Communications,   Inc.  from  1997  to  1999.  Yipes
Communications,  Inc. filed for bankruptcy protection in March 2002. Mr. Parrick
holds  a BA  from  California  State  University  Northridge  and a  Masters  in
Management Science from Stanford University.

      JOHN DAVIS,  has served as Chief  Financial  Officer of the Company  since
July 2005.  Prior to joining  the  Company,  Mr.  Davis was the Chief  Financial
Officer of Wherify  California  from July 27 2004 to July 2005.  Mr.  Davis is a
certified  public  accountant,  and served as Chief Operating  Officer and Chief
Financial Officer for Connectcom Solutions from 1998 to 2003. From 1997 to 1998,
he served as Vice President and Corporate Controller for Southwall Technologies.
From 1995 to 1997,  he served as Vice  President and  Corporate  Controller  for
Ecosys.  He holds a BS  (Accounting)  degree from CUNY Baruch School of Business
and an MBA from San Jose State University.


                                      -34-
<PAGE>

      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.

      DIRECTOR COMPENSATION

      We pay each of our non-employee directors $3,000 per calendar quarter plus
an  additional  $2,000  per  meeting  for each of the first  five  meetings  the
director  attends and annually  grant each of them an option to purchase  10,000
shares of our common stock. The options vest in equal monthly  installments over
the  following 12 months.  In addition,  we reimburse  our  directors  for their
reasonable out-of-pocket expenses incurred in connection with attending meetings
of our board of directors or our committees.

      SECTION 16(A) OF THE EXCHANGE ACT

      Section 16(a) of the Securities  Exchange Act of 1934 (the "Exchange Act")
and the rules of the Securities and Exchange Commission  promulgated  thereunder
require  Wherify's  directors  and  executive  officers to file reports of their
ownership  and changes in  ownership  of common  stock with the  Securities  and
Exchange Commission.  Based solely on information  provided to Wherify,  Wherify
believes  that during the last fiscal year,  the following  reports  required by
Section  16(a) of the Exchange Act to be filed by its  Directors  and  executive
officers  were  not  timely  filed.  Daniel  McKelvey  was  late  reporting  one
transaction  on a Form 4 and  Austin  Marks and David M.  Greenhouse,  were late
reporting one transaction on Form 4.

      CODE OF BUSINESS CONDUCT AND ETHICS

      We have adopted a code of business  conduct and ethics that applies to our
officers,  directors and employees.  Our code of business conduct and ethics, as
applied to our Chief Executive  Officer,  senior executive  officers,  principal
accounting officer, controller and other senior financial officers complies with
the requirements of Section 406 of the Sarbanes-Oxley  Act. Our code of business
conduct and ethics is  available on our website at  www.wherifywireless.com.  In
addition,  a copy of the code of  business  conduct  and ethics will be provided
without  charge upon request to us. We intend to timely  disclose any amendments
to or waivers of certain  provisions of our code of business  conduct and ethics
on our  website  within  5  business  days of such  amendment  or  waiver  or as
otherwise required by the SEC.


                                      -35-
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION.

EXECUTIVE COMPENSATION

      The  following  Summary  Compensation  Tables shows  certain  compensation
information for each of the Company's chief executive officer and the four other
highest paid executive officers (the "Named Executive  Officers").  Compensation
data is shown for the fiscal  years  ended June 30,  2005,  2004 and 2003.  This
information includes the dollar value of base salaries, bonus awards, the number
of stock options granted and certain other compensation, if any, whether paid or
deferred.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                   LONG-TERM
                                              ANNUAL COMPENSATION             COMPENSATION AWARDS
                                        ----------------------------------------------------------------
                                                                 OTHER          RESTRICTED                             ALL OTHER
                               FISCAL                            ANNUAL           STOCK                      LTIP     COMPENSATION
NAME AND PRINCIPAL POSITION    YEAR     SALARY (a)   BONUS    COMPENSATION        AWARDS    OPTIONS/ SARS   PAYOUTS        (b)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>       <C>       <C>             <C>        <C>            <C>               <C>      <C>
Timothy Neher (b)              2005      $200,000       --                        --         1,543,279(g)      --       --

William Scigliano (c)          2005      $172,700  $30,000         --             --                --         --       --
                               2004      $133,967       --         --             --            50,000         --       --
                               2003      $130,000       --         --             --           200,000         --       --

John Davis(d)                  2005      $161,538       --         --             --           336,147(g)      --       --

Gerald Parrick(e)              2005      $117,404       --         --             --           480,210(g)      --       --

Michael Walsh(f)               2005      $111,667       --         --         10,416                --         --       --

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)   Amounts  shown include cash  compensation  earned with respect to the year
      shown above.

(b)   Mr. Neher began serving as Chief Executive  Officer of the Company on July
      25, 2005.

(c)   Mr. Scigliano served as Chief Executive Officer of the Company from August
      1, 2003 until July 25,  2005.  He  currently  serves as  President  of the
      Governmental Affairs division for the Company.

(d)   Mr. Davis began serving as Chief Financial  Officer of the Company on July
      25, 2005.

(e)   Mr. Parrick began serving as President of the Company on July 25, 2005.

(f)   Mr.  Walsh  served as CFO of Wherify  until July 21,  2005 when the merger
      became effective and began serving as Corporate  Controller of the Company
      on July 25, 2005. He resigned from the Company on September 1, 2005.

(g)   These options were granted by Wherify California pre-merger. In accordance
      with the merger  agreement,  we have assumed  these  options at a ratio of
      4.8021 shares of Wherify per share of Wherify California.


                                      -36-
<PAGE>

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

      The table below set forth information  pertaining to stock options granted
to the Named  Executive  Officers during the fiscal year ended June 30, 2005. No
SARs of any kind were granted.

<TABLE>
<CAPTION>
                                   NUMBER OF      % OF TOTAL                                   POTENTIAL REALIZABLE VALUE
                                     SHARES        OPTIONS                                      AT ASSUMED ANNUAL RATES OF
                                   UNDERLYING     GRANTED TO      EXERCISE                      STOCK PRICE APPRECIATION
                                    OPTIONS      EMPLOYEES IN       PRICE      EXPIRATION         FOR OPTION TERM (1)
NAME                                GRANTED       FISCAL YEAR     PER SHARE      DATE                5%            10%
---------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>               <C>           <C>           <C>           <C>           <C>
John Davis                          336,147           18%           $0.31         7/27/14        $1,607,976    $1,864,406
Gerald Parrick                      480,210           24%           $0.31        11/29/14        $2,297,109    $2,663,437
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Pursuant  to the rules of the  Securities  and  Exchange  Commission,  the
      dollar  amounts set forth in these columns are the result of  calculations
      based on the set rates of 5% and 10%,  and  therefore  are not intended to
      forecast possible future appreciation,  if any, of the price of the Common
      Stock

                  OPTION EXERCISES/VALUE OF UNEXERCISED OPTIONS

      During  the  fiscal  year  ended  June 30,  2005,  no stock  options  were
exercised by any Named Executive Officers.  As of July 31, 2005, Wherify had not
granted any SARs of any kind. The table below sets forth information  pertaining
to the value of unexercised  stock options held by the Named Executive  Officers
as of June 30, 2005.

                       AGGREGATED OPTION EXERCISES IN LAST
                  FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
                                                                NUMBER OF SHARES UNDERLYING               VALUE OF UNEXERCISED
                                                                    UNEXERCISED OPTIONS                  IN-THE-MONEY OPTIONS AT
                                                                   AT FISCAL YEAR-END (#)                FISCAL YEAR-END ($) (1)
                                                            ----------------------------------------------------------------------
          NAME            SHARES ACQUIRED       VALUE          EXERCISABLE       UNEXERCISABLE       EXERCISABLE      UNEXERCISABLE
                          ON EXERCISE (#)    REALIZED ($)
----------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>               <C>              <C>                  <C>             <C>               <C>
Timothy Neher                 --                --               1,543,279(2)              --         $6,790,427                --
Gerald Parrick                --                --                  70,030            410,179           $308,128        $1,804,792
John Davis                    --                --                  77,033            259,113           $338,954        $1,140,088
William Scigliano             --                --                 250,000                 --         $1,100,000                --
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Based on the June 30, 2005 closing price of Wherify  common stock of $4.40
      per share.

(2)   Includes  568,651  shares of common stock subject to a right of repurchase
      in favor of Wherify as of June 30, 2005.

                   COMPENSATION AGREEMENTS WITH KEY PERSONNEL

Employment Agreement with William Scigliano

      Effective  January 1, 2004, we entered into an employment  agreement  with
Mr.  Scigliano.  Under  the  agreement,  Mr.  Scigliano  agreed  to serve as our
President  and Chief  Executive  Officer  at an annual  salary of  $142,700.  In
addition,  we granted Mr.  Scigliano an option to purchase  50,000 shares of our
common  stock at an  exercise  price of $6.00  per  share.  In  addition  to the
compensation  described above, we also agreed to award Mr. Scigliano  additional
cash  bonuses in the event we achieved  certain  milestones  as described in the
agreement ("Milestone Bonuses"). Mr. Scigliano also receives a housing allowance
of $1,500  per month and an  automobile  allowance  of  $1,000  per  month.  Mr.
Scigliano is also entitled to participate in any and all employee  benefit plans
hereafter  established  for our  employees  and is entitled to standard  expense
reimbursements.

      On March 2, 2004,  the Company and Mr.  Scigliano  amended his  employment
agreement,  effective  upon the  closing of the  merger.  Under Mr.  Scigliano's
amended  employment  agreement,  we agreed to establish,  as soon as practicable
after the closing of the merger,  a public  sector  business  unit for which Mr.
Scigliano will be responsible.

      In  addition,  as long as Mr.  Scigliano  is  employed by us, our board of
directors  agrees to nominate him to serve as a member of the board of directors
and so long as Mr. Scigliano  continues to be elected to our board of directors,
the board of directors agrees to elect him as chairman of the board.


                                      -37-
<PAGE>

Mr. Scigliano is entitled to the following severance benefits:

      o     If Mr. Scigliano's employment is terminated as a result of his death
            or disability,  his estate is entitled to receive his monthly salary
            plus 1/12th of any bonus to which Mr.  Scigliano  is entitled  for a
            period  equal  to  the  greater  of  one  (1)  year  following  such
            termination or the remainder of the term of the agreement.

      o     If Mr. Scigliano's employment is terminated for Cause (as defined in
            the agreement),  Mr. Scigliano is entitled to receive his salary and
            any bonus payable through the date of his termination.

      o     If Mr. Scigliano's employment is terminated without Cause, or if Mr.
            Scigliano  terminates  his employment for Good Reason (as defined in
            the agreement), Mr. Scigliano is entitled to receive: (a) all salary
            and other  benefits to which he would be entitled for the  remainder
            of the term of the  agreement;  plus (b) a lump sum  payment  at the
            effective  date of  termination  of an amount equal to all Milestone
            Bonuses payable under the agreement. Additionally, all stock options
            granted to Mr.  Scigliano,  which are unvested as of the termination
            date,  shall fully vest and shall be exercisable for a period of one
            year after the date of termination.

      o     If Mr. Scigliano's  employment is terminated without Cause or if Mr.
            Scigliano  terminates  his  employment  for Good  Reason  within six
            months  following a Change in Control (as defined in the  agreement,
            which  would  include  the  Merger),  Mr.  Scigliano  is entitled to
            receive:  (a)  his  base  salary  and  other  benefits  through  and
            including the date of such  termination;  and (b) an amount equal to
            (i) three  times his base  salary at the  annual  base  salary  then
            currently  in effect  and (ii) three  times the total  amount of all
            Milestone  Bonuses  payable under the agreement.  Additionally,  all
            stock options to purchase IQB stock granted to Mr. Scigliano,  which
            are unvested as of such termination,  shall  automatically  vest and
            shall be exercisable for a period of one year.

      On May 19,  2005,  the Company  and Mr.  Scigliano  entered  into a second
amendment  to his  employment  agreement  that  provided  that  Mr.  Scigliano's
employment agreement terminates on the second anniversary date of the closing of
the Merger,  unless automatically  extended for an additional 24 month period or
otherwise terminated as provided in the agreement;  provided,  however,  that if
the merger has not been consummated by December 31, 2005, the initial expiration
date would be December 31, 2007.  It was also agreed  that,  if Mr.  Scigliano's
employment  is  terminated  Without  Cause or if Mr.  Scigliano  terminates  his
employment  for Good Reason within six months  following a Change in Control (as
defined in the  agreement,  which would  include the Merger),  Mr.  Scigliano is
entitled  to  received:  (a) his base  salary  and other  benefits  through  and
including  the date of such  termination;  and (b) an amount  equal to (i) three
times his base salary at the annual base  salary  then  currently  in effect and
(ii)  three  times  the total  amount of  Milestone  Bonuses  payable  under the
agreement.  Additionally,  the clause which  previously  provided that all stock
options to purchase IQB stock granted to Mr. Scigliano, which are unvested as of
such termination, shall automatically vest and shall be exercisable for a period
of one year was eliminated from his employment agreement.

Employment Agreement with Timothy Neher

      In November 2002, Wherify California entered into an employment  agreement
with Timothy Neher  pursuant to which Mr. Neher agreed to serve as the President
and Chief  Executive  Officer of Wherify  California  until  November 2007 at an
annual base salary of  $200,000  (as  adjusted  pursuant to the  agreement).  In
addition,  in November 2002,  Wherify  California granted Mr. Neher an option to
purchase  1,200,525 shares of its common stock at an exercise price of $0.34 per
share. In addition to the compensation  described above, Wherify California also
agreed  to award  Mr.  Neher  additional  cash  bonuses,  in the  event  Wherify
California achieved certain milestones as described in the employment agreement.
Mr. Neher is also entitled to participate  in any and all employee  benefit plan
hereafter  established  for Wherify  California  employees and is entitled to an
automobile  allowance  of $2,000 per month.  Wherify  has agreed to assume  this
agreement from Wherify California.

      Under the terms of the employment agreement,  Mr. Neher is entitled to the
following  severance  benefits:

      o     If Mr. Neher's  employment is terminated  other than for "Cause" (as
            defined  in  the  agreement),  or if he  resigns  as a  result  of a
            "Constructive  Termination" then Mr. Neher is entitled,  in exchange
            for a release of all claims,  a lump sum severance  payment equal to
            12 months base  salary,  as then  determined,  plus 50% of his prior
            year's  bonus,  if  any.   Additionally,   Mr.  Neher  will  receive
            accelerated  vesting with respect to 240,105 shares purchasable upon
            exercise of the option granted to him by Wherify California.

Employment Agreement with Gerald Parrick

      In December 2004, Wherify California entered into an employment  agreement
with Mr. Parrick. Under this agreement, Mr. Parrick agreed to serve as President
and acting VP of Sales and Marketing of Wherify California,  at an annual salary
of $185,000.  In addition,  in December  2004,  Wherify  California  granted Mr.
Parrick an option to purchase 480,210 shares,  at an exercise price of $0.31 per
share.  One sixteenth of the shares vest after 3 months of  employment,  and the
remainder vest at 1/48th per month over the following  four-year  period.  Under
the  employment  agreement,  Mr.  Parrick is  entitled  to a lump sum  severance
payment  equal to four months base  salary in the event he is  terminated  other
than for cause, or if he terminates his employment as a result of a constructive
termination (as defined in the agreement).


                                      -38-
<PAGE>

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

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The  following  tables set forth  information  as of  September  22,  2005
regarding the beneficial  ownership of common stock by (a) each  stockholder who
is known by Wherify to own beneficially in excess of 5% of Wherify's outstanding
common stock;  (b) each director;  (c) by the Company's Chief Executive  Officer
and the four  other  highest  paid  executive  officers  (the  "Named  Executive
Officers");  and (d) the 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.

      The percentage of beneficial  ownership is based upon 52,447,309 shares of
common stock outstanding,  as of September 22, 2005. Unless otherwise indicated,
the address of the following  stockholders  is c/o Wherify  Wireless,  Inc. 2000
Bridge Parkway, Suite 201, Redwood Shores, California, 94065.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS(A)

Name and Address of            Number of Shares              % of Outstanding
Beneficial Owner               of Common Stock                Common Stock(b)
--------------------------------------------------------------------------------
Doug Hajjar                      2,788,800                       5.3%
Harvey Miller                    2,959,992                       5.6%
Timothy Neher(c)                10,161,103                      19.4%

(a)   Security  ownership  information  for  beneficial  owners  is  taken  from
      statements filed with the Securities and Exchange  Commission  pursuant to
      Sections 13(d), 13(g) and 16(a) and information made known to the Company.

(b)   Based on 52,447,309  shares of Common Stock  outstanding  on September 22,
      2005.

(c)   Includes  1,543,279 shares issuable  pursuant to stock options that are/or
      will become  exercisable  within 60 days of September  22, 2005,  of which
      492,930  shares are subject to a right of  repurchase  in favor of Wherify
      within 60 days of September 22, 2005.

     SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

                                                     Beneficial     Percent of
Title of Class   Name of Beneficial Owner            Ownership (a)    Class(b)
-------------------------------------------------------------------------------
Common           Reginald Brown                             0          *
Common           John Davis                           105,045 (c)      *
Common           Wade Fenn                             93,040 (d)      *
Common           John Micek III                        12,500 (e)      *
Common           Timothy Neher                     10,161,103 (f)    19.4%
Common           Gerald Parrick                       110,048 (g)      *
Common           William Scigliano                    250,000 (h)      *
                                                   ----------------------------

 All Directors and Executive Officers as a Group   10,731,736        20.5%

* Does not exceed 1% of the referenced class of securities.

(a)   Ownership is direct unless indicated otherwise.

(b)   Calculation  based on 52,447,309  shares of Common Stock outstanding as of
      September 22, 2005.

(c)   All shares  issuable  pursuant  to stock  options  that are/or will become
      exercisable within 60 days of September 22, 2005.

(d)   Includes 21,009 shares issuable pursuant to stock options that are/or will
      become exercisable within 60 days of September 22, 2005.

(e)   Includes 12,500 shares issuable pursuant to stock options that and/or will
      become exercisable within 60 days of September 22, 2005.

(f)   Includes  1,543,279 shares issuable  pursuant to stock options that are/or
      will become  exercisable  within 60 days of September  22, 2005, of which,
      492,930  shares are subject to a right of  repurchase  in favor of Wherify
      within 60 days of September 22, 2005.

(g)   All shares  issuable  pursuant  to stock  options  that are/or will become
      exercisable within 60 days of September 22, 2005.

(h)   Includes  250,000  shares  issuable  pursuant  to stock  options  that are
      exercisable within 60 days of September 22, 2005.


                                      -39-
<PAGE>

EQUITY COMPENSATION PLANS

      Wherify has two 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 2005 Consultant  Compensation  Plan, and the IQ
Biometrix,  Inc. 2004 Stock Plan.  Further  information on the material terms of
these plans is given below.

      In connection  with the merger,  we assumed stock options issued under the
Wherify  Wireless  1999 Stock  Option Plan.  We have not adopted this plan,  and
Wherify California does not plan to issue any shares under this plan.

      The following table provides  information as of June 30, 2005 with respect
to our compensation  plans  (including  individual  compensation  arrangements),
under  which  securities  are  authorized  for  issuance  aggregated  as to  (i)
compensation  plans previously  approved by stockholders,  and (ii) compensation
plans not previously approved by stockholders

                      EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                                                                                   NUMBER OF SECURITIES REMAINING
                                  NUMBER OF SECURITIES TO BE                                       AVAILABLE FOR FUTURE ISSUANCE
                                   ISSUED UPON EXERCISE OF         WEIGHTED-AVERAGE EXERCISE      UNDER EQUITY COMPENSATION PLANS
                                OUTSTANDING OPTIONS, WARRANTS     PRICE OF OUTSTANDING OPTIONS,   (EXCLUDING SECURITIES REFLECTED
                                          AND RIGHTS                   WARRANTS AND RIGHTS                  IN COLUMN (A))
PLAN CATEGORY                                (A)                              (B)                                 (C)
---------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                             <C>                                <C>
Equity compensation plans                3,653,600                        $0.37
approved by security holders

Equity compensation plans not              705,353(1)                     $3.33(1)                          185,455(2)
approved by security holders

TOTAL                                    1,424,459(1)                     $0.85(1)                          185,455(2)
</TABLE>

(1)   Of these  options,  warrant and rights,  5,357 were  assumed by Wherify in
      connection with our merger with Wherify California.  The  weighted-average
      exercise price of the assumed options, warrant and rights was $7.00.

(2)   Of these  securities,  185,455 were  available for issuance as of June 30,
      2005 pursuant to the 2005 Consultant Compensation Plan.

                        2005 CONSULTANT COMPENSATION PLAN

      PURPOSE.

      The 2005 Consultant  Compensation Plan (the "Plan") is intended to promote
the  interests  of  Wherify  and  its   subsidiaries  by  offering  its  outside
consultants  who assist in its  development  and  success,  the  opportunity  to
participate  in a  compensation  plan designed to reward them for their services
and to encourage them to continue to provide services to Wherify.

      ADMINISTRATION.

      The Plan is  administered  by the Board of  Directors or by a committee of
not less than two directors of the Wherify Board.


                                      -40-
<PAGE>

      ELIGIBILITY.

      Only  individuals  who are outside  consultants,  or directors,  officers,
partners or employees of outside may participate in the plan.

      NUMBER OF SHARES OF COMMON STOCK AVAILABLE UNDER THE PLAN.

      A total of 250,000 shares of Wherify  common stock are currently  reserved
for issuance under this plan.  Any shares awarded and later  forfeited are again
subject to award or sale under the Plan.

      TERM AND AMENDMENT OF PLAN.

      This Plan expires on December 31, 2005 . The Board may  terminate or amend
the Plan in any respect at any time,  except no action of the  Wherify  Board or
any committee thereof may, without the consent of a Participant, alter or impair
such Participant's rights under any shares previously granted.

                                 2004 STOCK PLAN

The following is a description of the material features of the 2004 Stock Plan.

      GENERAL

      The  purpose of the 2004 Stock Plan is to  increase  stockholder  value by
attracting  and  retaining  the  best  available   personnel  for  positions  of
substantial  responsibility,  providing  additional  incentive to our employees,
directors and consultants and promoting the success of our business. Options and
stock purchase rights may be granted under the 2004 Stock Plan.  Options granted
under  the  2004  Stock  Plan  may  be  either   "incentive  stock  options"  or
"nonstatutory stock options."

      Two million  shares of Wherify  common stock are  reserved  under the 2004
Stock Plan,  all of which may be issued upon the  exercise  of  incentive  stock
options  granted under the Plan.  The number of shares  reserved  under the 2004
Stock  Plan  (including  shares  reserved  for  issuance  upon the  exercise  of
incentive stock options granted under the Plan)  automatically  increases on the
first day of each fiscal year during the term of the Plan (beginning in 2005) by
an amount equal to the lesser of (i) 200,000 shares,  (ii) 5% of the outstanding
shares on that date or (iii) a lesser amount determined by the Board;  provided,
however,  in no event shall the aggregate number of shares reserved for issuance
under the Plan  (including  shares  reserved for  issuance  upon the exercise of
incentive stock options granted under the Plan), as adjusted for all such annual
increases, exceed 4,000,000 shares.

      ADMINISTRATION

      The  2004  Stock  Plan is  administered  by the  board of  directors  or a
committee appointed by the board of directors.  The administrator determines the
terms of the options and stock purchase rights  granted,  including the exercise
price,  number of shares subject to the options and stock purchase  rights,  and
the  exercisability.  All  questions of  interpretation  are  determined  by the
administrator  and its  decisions  are final and binding upon all  participants.
Directors  receive no additional  compensation  for their services in connection
with the administration of the 2004 Stock Plan.

      ELIGIBILITY

      Nonstatutory  stock options and stock purchase rights may be granted under
the 2004 Stock Plan to our directors, employees and consultants. Incentive stock
options may be granted only to  employees.  The 2004 Stock Plan provides a limit
of $100,000 on the aggregate fair market value (determined on the date of grant)
of shares subject to all incentive  stock options that are  exercisable  for the
first time by an optionee in any one calendar  year. The  administrator,  in its
discretion,  selects the persons to whom options and stock  purchase  rights are
granted,  the time or times at which such options and stock purchase  rights are
granted,  and the exercise  price or purchase price and number of shares subject
to each such grant.

      OPTION GRANT LIMITATIONS

      Section 162(m) of the Internal Revenue Code limits the  deductibility  for
federal  income tax purposes of  compensation  paid to certain of our  executive
officers. In order to preserve our ability to deduct the compensation associated
with  options  granted to such  persons,  the 2004 Stock Plan  provides  that no
employee or director  may be granted,  in any fiscal  year,  options to purchase
more than one million shares of common stock.


                                      -41-
<PAGE>

      TERMS AND CONDITIONS OF OPTIONS

      Each option is evidenced by a stock option  agreement  between Wherify and
the optionee, and is subject to the following terms and conditions:

      (a) Exercise  Price.  The  administrator  determines the exercise price of
options at the time the options are granted.  The exercise price of an incentive
stock  option may not be less than 100% of the fair  market  value of the common
stock on the date such option is granted;  provided,  however, that the exercise
price of an incentive stock option granted to a ten percent  stockholder may not
be less than 110% of the fair  market  value on the date the option is  granted.
The 2004 Stock Plan provides that if we desire to preserve our ability to deduct
the  compensation  associated  with  options  granted  under the 2004 Stock Plan
pursuant to Section 162(m) of the Internal Revenue Code, the exercise price of a
nonstatutory  stock option may not be less than 100% of the fair market value of
the common  stock on the date such option is granted.  The fair market  value of
the common  stock is  generally  determined  with  reference to the closing sale
price for the common stock on the last market  trading day prior to the date the
option is granted.

      (b)  Exercise  of  Option;   Form  of  Consideration.   The  administrator
determines when options become exercisable and may accelerate the vesting of any
outstanding  option.  The means of payment for shares issued upon exercise of an
option is specified in each option agreement. As determined by the administrator
and subject to all applicable  laws,  the 2004 Stock Plan permits  payment to be
made by cash, check, promissory note, other shares of our common stock, pursuant
to a cashless exercise procedure,  a reduction in the amount of any liability of
Wherify  to the  individual,  any  other  form  of  consideration  permitted  by
applicable law, or any combination thereof.

      (c) Term of Option.  The term of an incentive  stock option may be no more
than ten years from the date of grant; provided, however, that in the case of an
incentive  stock option  granted to a ten percent  stockholder,  the term of the
option may be no more than five  years from the date of grant.  No option may be
exercised after the expiration of its term.

      (d) Termination of Service. If an optionee's service  relationship with us
terminates for any reason (excluding death or disability), then the optionee may
exercise the option within a period of time as  determined by the  administrator
to the extent that the option is vested on the date of  termination,  (but in no
event later than the  expiration  of the term of such option as set forth in the
option  agreement).  In  the  absence  of a  specified  time  determined  by the
administrator  or set forth in the  option  agreement,  the option  will  remain
exercisable for three months following the termination of the optionee's service
relationship.  If an  optionee's  service  relationship  terminates  due  to the
optionee's  disability,  the optionee may exercise the option within a period of
time as determined by the  administrator  to the extent the option was vested on
the date of  termination  (but in no event later than the expiration of the term
of such  option as set  forth in the  option  agreement).  In the  absence  of a
specified  time  determined  by the  administrator  or set  forth in the  option
agreement,  the option will remain  exercisable for the twelve months  following
the  termination of the optionee's  service due to disability.  If an optionee's
service  relationship  terminates  due to the optionee's  death,  the optionee's
estate or the person who acquires the right to exercise the option by bequest or
inheritance may exercise the option within a period of time as determined by the
administrator  to the  extent the option was vested on the date of death (but in
no event  later than the  expiration  of the term of such option as set forth in
the option  agreement).  In the absence of a specified  time  determined  by the
administrator  or set forth in the  option  agreement,  the option  will  remain
exercisable for twelve months following the optionee's death.

      (e)  Nontransferability  of Options.  Unless  otherwise  determined by the
administrator,  options and stock  purchase  rights granted under the 2004 Stock
Plan  are  not  transferable  other  than by will  or the  laws of  descent  and
distribution,  and may be exercised  during the optionee's  lifetime only by the
optionee.

      (f) Other Provisions.  The stock option agreement may contain other terms,
provisions and conditions  not  inconsistent  with the 2004 Stock Plan as may be
determined by the administrator.

      STOCK PURCHASE RIGHTS

      In the case of stock purchase rights, unless the administrator  determines
otherwise,  the  restricted  stock  purchase  agreement  will  grant  Wherify  a
repurchase  option with respect to any  unvested  shares,  exercisable  upon the
voluntary or involuntary  termination of the purchaser's employment with Wherify
for any reason,  including  death or  disability.  The purchase price for shares
repurchased  pursuant to the  restricted  stock  purchase  agreement will be the
original  price paid by the  purchaser  and may be paid by  cancellation  of any
indebtedness of the purchaser to Wherify.  The repurchase option will lapse at a
rate determined by the  administrator.  To the extent restricted stock is issued
in  consideration  for a  participant's  services  without  payment of any other
consideration by the participant and the  participant's  services are terminated
(voluntarily or involuntarily),  the administrator shall have the right to cause
the  participant to forfeit any unvested  shares held by the  participant on the
participant's termination date to Wherify for no consideration from Wherify.


                                      -42-
<PAGE>

      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

      If Wherify's  capitalization changes by reason of any stock split, reverse
stock split,  stock  dividend,  combination,  reclassification  or other similar
change effected without the receipt of  consideration,  appropriate  adjustments
will be made in the  number  and class of shares  of stock  subject  to the 2004
Stock  Plan,  the  maximum  number of shares  by which the share  reserve  shall
increase in each fiscal year,  the maximum  number and class of shares for which
any employee or prospective employee may be granted options per fiscal year, the
number  and class of shares of stock  subject  to any  option or stock  purchase
right  outstanding under the 2004 Stock Plan, and the exercise price of any such
outstanding option or stock purchase right.

      In the event of a liquidation or dissolution,  any unexercised options and
stock  purchase  rights  will  terminate.  The  administrator  may,  in its sole
discretion,  provide that each  optionee  will have the right to exercise all or
any part of the optionee's  options and stock purchase  rights,  including those
not otherwise  exercisable.  In addition, the administrator may provide that any
repurchase  or  forfeiture  right  held  by  Wherify  applicable  to any  shares
purchased upon exercise of an option or shares of restricted stock will lapse as
to all such shares.

      In connection with any merger of Wherify with or into another  corporation
or the  sale  of all  or  substantially  all of  the  assets  of  Wherify,  each
outstanding  option and stock  purchase  right will be assumed or an  equivalent
option or stock purchase right substituted by the successor corporation.  If the
successor  corporation refuses to assume the options or stock purchase rights or
to substitute  substantially  equivalent  options or stock purchase rights,  the
participant  will have the right to exercise the option or stock purchase rights
as to all the stock  subject to the option or stock  purchase  right,  including
shares not otherwise  vested or exercisable.  In such event,  the  administrator
will notify the  participant  that the option or stock  purchase  right is fully
exercisable  for  fifteen  (15) days from the date of such  notice  and that the
option or stock purchase right  terminates  upon  expiration of such period.  In
addition, the administrator shall have the discretionary  authority to structure
one or more  options  or  restricted  stock  grants so that the  shares of stock
subject to such grants shall  automatically  vest, in whole or in part, upon the
"involuntary   termination"   (as  defined  in  the  2004  Stock  Plan)  of  the
participant's service with Wherify (or a parent or subsidiary of Wherify) within
a designated period (not to exceed eighteen (18) months) following the effective
date of any  change  in  control  of  Wherify  in which  such  shares  would not
otherwise vest.

      AMENDMENT AND TERMINATION OF THE 2004 STOCK PLAN

      The board of directors  may amend,  alter,  suspend or terminate  the 2004
Stock  Plan at any  time  and for  any  reason.  However,  Wherify  must  obtain
stockholder  approval  for any  amendment  to the 2004  Stock Plan to the extent
necessary  or  desirable  to comply with  applicable  law. No such action by the
board of  directors  or  stockholders  may alter or impair  any  option or stock
purchase right previously  granted under the 2004 Stock Plan without the written
consent of the participant.  Unless terminated earlier, the 2004 Stock Plan will
terminate in 2014.

      FEDERAL INCOME TAX CONSEQUENCES OF INCENTIVE STOCK OPTIONS

      An optionee  who is granted an incentive  stock option does not  recognize
taxable income for regular income tax purposes at the time the option is granted
or upon its exercise.  However,  the excess, if any, of the fair market value of
the option shares over the exercise  price of the option on the date of exercise
is an adjustment item for  alternative  minimum tax purposes and may subject the
optionee to the  alternative  minimum tax. Upon a disposition of the shares more
than two years  after  grant of the option and one year  after  exercise  of the
option,  any gain or loss is  treated as  long-term  capital  gain or loss.  Net
capital  gains on shares held more than twelve  months may be taxed at a maximum
federal rate of 15%.  Capital  losses are allowed in full against  capital gains
and up to  $3,000  against  other  income.  If  these  holding  periods  are not
satisfied,  the optionee  recognizes  ordinary income at the time of disposition
equal to the difference between the exercise price and the lower of (i) the fair
market  value of the shares at the date of the option  exercise or (ii) the sale
price of the shares. Any gain or loss recognized on such a premature disposition
of the shares in excess of the amount  treated as ordinary  income is treated as
long-term  or  short-term  capital  gain or loss,  depending  on the  optionee's
holding  period for the shares.  Unless  limited by Section  162(m),  Wherify is
entitled to a deduction in the same amount as the ordinary income  recognized by
the optionee.

      NONSTATUTORY STOCK OPTIONS

      An optionee does not recognize any taxable income at the time he or she is
granted a  nonstatutory  stock option.  Upon exercise,  the optionee  recognizes
taxable income generally measured by the excess of the then fair market value of
the shares over the exercise price. Any taxable income  recognized in connection
with an option  exercise by an employee of IQB is subject to tax  withholding by
Wherify. Unless limited by Section 162(m), Wherify is entitled to a deduction in
the same  amount as the  ordinary  income  recognized  by the  optionee.  Upon a
disposition  of such shares by the  optionee,  any  difference  between the sale
price and the optionee's exercise price, to the extent not recognized as taxable
income as provided above, is treated as long-term or short-term  capital gain or
loss,  depending on the optionee's  holding  period for the shares.  Net capital
gains on shares held more than twelve  months may be taxed at a maximum  federal
rate of 15%.  Capital losses are allowed in full against capital gains and up to
$3,000 against other income.


                                      -43-
<PAGE>

      STOCK PURCHASE RIGHTS

      Stock  purchase  rights  will  generally  be taxed in the same  manner  as
nonstatutory  stock options.  However,  restricted stock is generally  purchased
upon the exercise of a stock purchase right. At the time of purchase, restricted
stock is subject to a  "substantial  risk of  forfeiture"  within the meaning of
Section 83 of the Internal Revenue Code because Wherify may repurchase the stock
when the purchaser  ceases to provide  services to Wherify.  As a result of this
substantial risk of forfeiture, the purchaser will not recognize ordinary income
at the time of purchase.  Instead,  the purchaser will recognize ordinary income
on the dates  when the  stock is no  longer  subject  to a  substantial  risk of
forfeiture  (i.e., when Wherify's right of repurchase  lapses).  The purchaser's
ordinary income is measured as the difference between the purchase price and the
fair  market  value of the stock on the date the stock is no longer  subject  to
right of repurchase.

      The  purchaser  may  accelerate  to  the  date  of  purchase  his  or  her
recognition  of ordinary  income,  if any,  and begin his or her  capital  gains
holding  period by timely  filing an election  pursuant to Section  83(b) of the
Internal  Revenue Code, which must be filed by the participant with the Internal
Revenue  Service  within 30 days of the  acquisition  of shares by a participant
under the 2004 Stock Plan. In such event,  the ordinary  income  recognized,  if
any, is  measured as the  difference  between  the  purchase  price and the fair
market value of the stock on the date of purchase,  and the capital gain holding
period commences on such date. The ordinary income recognized by a purchaser who
is an employee will be subject to tax withholding by Wherify.

      The foregoing is only a summary of the effect of federal  income  taxation
upon  optionees  and  Wherify  with  respect to the grant of  options  and stock
purchase  rights  under the 2004 Stock Plan.  It does not purport to be complete
and  does  not  discuss  the tax  consequences  of the  optionee's  death or the
provisions of the income tax laws of any municipality,  state or foreign country
in which the employee may reside.

      PARTICIPATION IN THE 2004 STOCK PLAN

      The grant of  options  under the 2004 Stock  Plan to  executive  officers,
including the officers named in the Summary  Compensation  Table,  is subject to
the discretion of the  administrator.  As of the date of this report,  there has
been no determination by the  administrator  with respect to future awards under
the 2004  Stock  Plan.  Accordingly,  future  awards are not  determinable.  The
Summary  Compensation  Tables  under  "Compensation  of  Executive  Officers and
Directors of Wherify"  provide  information with respect to the grant of options
to the persons  named in the Summary  Compensation  Tables during the last three
fiscal  years.  During  fiscal  2005,  no executive  officers or employees  were
granted options to purchase shares pursuant to the 2004 Stock Plan.

      As of June 30 ,2005,  no options to purchase  shares of common  stock were
outstanding under the 2004 Stock Plan.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      In April 2003,  Wherify  issued to Forte Capital  Partners LLC $300,000 in
10% secured  convertible  debentures and warrants to purchase  300,000 shares of
Wherify common stock at an exercise  price of $.80 per share.  Within 30 days of
maturity (or, in the event of  prepayment  in full prior to maturity,  within 30
days of such  prepayment  date) the holder  may elect to  convert  the note into
shares of Wherify  common  stock at a  conversion  price of $0.80 per share.  In
addition,  if Wherify pays, on or before the maturity  date, at least 75% of the
outstanding  principal and accrued interest under the note, the holder will have
the right to  purchase a number of  additional  shares of Wherify  common  stock
equal to the quotient of 25% of the  principal  amount under the note divided by
$0.80 at a purchase price of $0.80 per share.  Mr. McKelvey serves as a managing
member of Forte Capital  Partners LLC and thus may be deemed to beneficially own
shares owned by Forte Capital  Partners  LLC. Mr.  McKelvey was appointed to the
Wherify  board of  directors  in March  2004 and ceased  being a  Director  upon
consummation of the merger with Wherify California on July 21, 2005.

      Wherify  entered  into  a  consulting  agreement  (the  "Repko  Consulting
Agreement")  with M. Riley  Repko,  the former  Chairman of  Wherify's  board of
directors.  The Repko Consulting  Agreement terminated on September 17, 2003. As
compensation for services provided under the Repko Consulting Agreement prior to
termination, Wherify paid Mr. Repko $4,761.92 in cash and issued Mr. Repko 3,696
shares of Wherify common stock.

      As part of the merger with  JVWeb,  Wherify  assumed an existing  advisory
agreement (the "McAfee  Advisory  Agreement")  between IQ Biometrix  California,
Inc.  and Eric A.  McAfee,  a former  director of Wherify.  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 Wherify and to receive
an  expense  reimbursement  for  office  rent of $2,800  per  month.  The McAfee
Advisory  Agreement  did not contain  any  covenant  not to compete.  The McAfee
Advisory  Agreement was terminated as of March 31, 2003.  Mr. McAfee  received a
total of $48,000  under the  agreement  in advisory  fees and $30,800 in expense
reimbursements prior to termination.  On November 11, 2003, Wherify entered into
a settlement agreement with Mr. McAfee in connection with the termination of the
McAfee  Advisory  Agreement.  Under the settlement  agreement,  Wherify paid Mr.
McAfee  $24,000 on November 15, 2003, and agreed to pay Mr. McAfee an additional
$50,000 at such time as  Wherify  raised  financing  in an  aggregate  amount of
$2,000,000.  In  addition,  Wherify  released Mr.  McAfee from his  agreement to
deliver  175,000  shares held by Mr.  McAfee to Wherify in  connection  with the
MVION Note described below.


                                      -44-
<PAGE>

      In connection  with a financing  transaction  with Special Equity IV, L.P.
("SEIVLP"),  Wherify acquired from SEIVLP a Secured Convertible  Promissory Note
having a face  amount of a $2.2  million  dollars  (the  "MVION  Note") due from
MVION, Inc., a technology company also known as KachinaGuide.  Eric A. McAfee, a
former  Director of Wherify,  is the sole director and officer of MVION.  Daniel
McKelvey, a selling stockholder,  is a managing member of Forte Capital Partners
LLC,  the  general  partner  of  SEIVLP.  The  KachinaGuide,   was  a  real-time
interactive  tool used to conduct highly refined  searches across  heterogeneous
data sources.  MVION's business  failed,  and the MVION Note was in default when
Wherify  acquired the MVION Note. The MVION Note is secured by a lien on MVION's
assets,  which in the event MVION defaulted on the Note would entitle the holder
thereof to acquire all of the assets, including the intellectual property assets
of MVION. When Wherify acquired the Note from SEIVLP,  management  believed that
MVION's assets,  particularly its intellectual  property assets,  were worth the
approximately  $178,000  value of the stock and  warrants  issued to SEIVLP.  In
addition,  Eric McAfee agreed that if the intellectual  property assets of MVION
were later  determined to be worth less than the value of the stock and warrants
issued to SEIVLP,  he would return a number of shares of Wherify's  common stock
held by him, up to 175,000 shares, to Wherify.  At the time Wherify entered into
the  transaction,  very little due  diligence  was performed on the value of the
note or the  technology  securing  the note  based  upon Mr.  McAfee's  personal
assertions  of the value of the Mvion  technology  and his  pledge of stock.  As
stated above,  Wherify later  released Mr. McAfee from his  obligation to return
shares to Wherify in connection  with a settlement  agreement  entered into with
Mr.  McAfee in November 2003 in connection  with the  termination  of the McAfee
Advisory  Agreement.  Wherify  has  subsequently  determined  that  the  cost of
perfecting  any patent work and  subsequent  incorporation  of the  intellectual
property of MVION into the FACES software was too costly and, therefore, has not
foreclosed  on the Note.  However,  Wherify has  recently  begun  exploring  the
possibility of exercising  its rights as a secured  creditor with respect to the
MVION assets securing the MVION Note. However, Wherify can give no assurances as
to its ability to collect on MVION Note, its efforts to exercise its rights with
respect to the MVION Note,  or the benefit of the assets  securing  such note in
the event that Wherify eventually acquires ownership of them.

      In August 2003,  Wherify  entered into a consulting  agreement with Daniel
McKelvey.  Under the agreement Mr. McKelvey (i) provided general  management and
counseling  in the areas of financial  management  and business  planning,  (ii)
advised and  assisted  in  identifying,  evaluating,  negotiating  and  securing
sources of funding,  merger or acquisition  prospects or other opportunities and
(iii) performed such other services as requested by the chief executive  officer
and/or board of directors.  Under  Section 2 of the  consulting  agreement,  Mr.
McKelvey  received  $10,000 per month in cash or shares of Wherify  common stock
and a warrant for 50,000  shares of common stock with a purchase  price of $2.00
per share.  Twenty-five  percent of the shares  issuable  upon  exercise  of the
warrant vested on the first day of each quarter  beginning August 1, 2003 and is
exercisable  any time  before  midnight  July 31,  2008 in cash or pursuant to a
cashless exercise provision. As of the date of this prospectus,  this warrant is
fully  vested.  In addition,  the  agreement  provided that in the event Wherify
raised  additional  financing  and Mr.  McKelvey  provided  the only  investment
banking  services with respect to the financing,  Mr. McKelvey would be entitled
to cash  compensation  equal to 6% of the funds raised and a warrant for Wherify
common stock equal to 10% of the funds raised.  If  investment-banking  services
from other sources were used as well, the agreement  provided that Mr.  McKelvey
would be entitled to a cash payment of $100,000.  Mr.  McKelvey is entitled to a
cash  payment for a success fee of $250,000  upon the  completion  of the merger
with Wherify.  As of August 15,  $25,000 was paid in cash and the Company agreed
to issue  Mr.  McKelvey  50,000  shares  of  stock  under  the  2005  Consultant
Compensation  Plan,  pending  board  approval.  In August 2004,  Wherify and Mr.
McKelvey entered into the Consulting  Agreement Addendum,  pursuant to which the
parties  agreed to extend the  consulting  agreement for an additional 6 months,
through  January  31,  2005 on the same  terms and  conditions  as the  original
consulting agreement except that Section 1 of the Addendum provides that Wherify
will issue Mr.  McKelvey a warrant to  purchase  25,000  shares with an exercise
price of $3.00.  Fifty  percent  of the shares  issuable  upon  exercise  of the
warrant vested on the first day of each quarter  beginning August 1, 2004 and is
exercisable  any time  before  midnight  July 31,  2009 in cash or pursuant to a
cashless exercise provision. As of the date of this prospectus,  this warrant is
fully  vested.  Upon  completion  of the  financing  completed in January  2005,
Wherify paid Mr. McKelvey $100,000.

      In May and June 2004,  Wherify issued a $50,000 short-term note to Greg J.
Micek, a former member of Wherify's board of directors, and a $50,000 short term
note to Forte  Capital  Partners,  LLC.  Daniel  McKelvey,  a former  member  of
Wherify's board of directors,  is a managing partner of Forte Capital  Partners,
LLC.  The notes bore  interest  at the  annual  rate of 6% and were due July 31,
2004. In July 2004, Mr. Micek assigned his note to a third party.  In July 2004,
Wherify issued a secured convertible  promissory note in the principal amount of
$180,000 to Forte Capital Partners LLC, which included $50,000 in principal from
the note issued in June 2004.  The debenture was due on December 31, 2004.  This
note bore  interest  at the annual  rate of 10% and the  principal  and  accrued
interest thereon was convertible into the securities issued in the next round of
financing of $1,500,000  or more.  In connection  with the issuance of this note
Wherify issued to Forte Capital Partners LLC warrants to purchase 90,000 Wherify
common shares. The warrant has a 5 year term with an exercise price of $2.00 per
shares.  As part of Wherify's  January 11, 2005,  financing,  Wherify  issued to
Forte Capital  Partners LLC a convertible  debenture in the principal  amount of
$187,777 in  consideration  for  cancellation of all  outstanding  principal and
accrued  interest under this note. In connection  with this  financing,  Wherify
issued to Forte Capital a warrant to purchase  46,944  shares of Wherify  common
stock at an  exercise  price of $2.70 per  share.  In  addition,  Forte  Capital
invested an  additional  $25,000 in  Wherify's  January 11, 2005  financing  and
received a convertible debenture in the principal amount of $25,000 and warrants
to purchase 6,250 shares of Wherify common stock at $2.70 per share.


                                      -45-
<PAGE>

      On January  11,  2005,  Wherify  issued an  aggregate  of $3.3  million in
convertible  debentures and warrants to qualified  institutional  buyers,  and a
limited  number of accredited  individual  and  institutional  investors.  Forte
Capital  Partners,  LLC, of which Daniel McKelvey,  a former member of Wherify's
board of directors, is a managing partner,  purchased $25,000 of the convertible
debentures. The convertible debentures bear interest at an annual rate of 5% and
mature on June 30,  2005.  The  debentures  are  convertible  at any time at the
election of the holder into shares of Wherify common stock at a conversion price
of $2.00  per  share.  The  debentures  automatically  convert  into  shares  of
Wherify's  common stock at the conversion  price upon the  effectiveness of this
registration   statement.  In  connection  with  the  sale  of  the  convertible
debentures,  Wherify issued  warrants to purchase an aggregate of 825,000 shares
of its common  stock for an exercise  price of $2.70 per share.  The  conversion
price of the  debentures  and the exercise  price of the warrants are subject to
adjustment  at any  time as the  result  of any  subdivision,  stock  split  and
combination of shares or  recapitalization  or if Wherify sells any common stock
or rights to acquire  common stock at a purchase  price less than the conversion
price of the debentures or the exercise price of the warrants.

      On January 12, 2005, Wherify issued bonuses to Greg Micek, a former member
of its board of directors and to Mike Walsh, its former Chief Financial Officer.
Mr.  Micek  received a cash payment of $50,000 and 10,416  restricted  shares of
Wherify common stock and Mr. Walsh received 20,833  restricted shares of Wherify
common stock.

      On January 24,  2005,  Wherify  extended  the due date on the  convertible
debenture issued to Forte Capital Partners, LLC, from March 31, 2005 to June 30,
2005. The face value of the debenture was $300,000.  Daniel  McKelvey,  a former
member of Wherify's board of directors,  is a managing  partner of Forte Capital
Partners,  LLC. This  debenture and its accrued  interest were  converted in May
2005 into 454,547 shares of Wherify common stock.

      In July 2005,  Wherify paid cash bonuses to William Scigliano for reaching
bonus  milestones in his employment  agreement for financing,  completion of the
merger and relocation of the company totaling $45,000.  He also received a bonus
of $50,000 cash and 30,000 restricted shares as an added bonus for completion of
the merger.

      In July  of  1999,  Wherify  California  loaned  Timothy  Neher  $100,000.
Pursuant to the terms of the  promissory  note,  on July 18, 2009,  the maturity
date of the note,  Mr.  Neher is required to repay the entire  principal  sum of
$100,000 plus simple interest on the unpaid principal balance from issuance date
at the annual rate of 3.0%.

      In  April  of 2000,  Wherify  California  loaned  Timothy  Neher  $26,170.
Pursuant to the terms of the  promissory  note, on April 10, 2009,  the maturity
date of the note,  Mr.  Neher is  required  to pay the entire  principal  sum of
$26,170 plus simple interest on the unpaid principal  balance from issuance date
at the annual rate of 3.0%.

      CONFLICT OF INTEREST POLICY

      Our  policy  is  to  require  that  a  majority  of  the  independent  and
disinterested  non-employee  directors  on the Board  approve  all  transactions
between Wherify and its officers,  directors,  principal  stockholders and their
affiliates. We believe that such transactions will be on terms no less favorable
to us than we could obtain from unaffiliated third parties.

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

                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

      (A)   DOCUMENTS FILED AS PART OF THIS REPORT:

            (I)   CONSOLIDATED FINANCIAL STATEMENTS:

                             WHERIFY WIRELESS, INC.
<TABLE>
<CAPTION>
<S>                                                                             <C>
      Report of Independent Registered Public Accounting Firm ..................F-1

      Balance Sheet as of June 30, 2005.........................................F-2

      Statements of Operations--Years ending June 30, 2005 and 2004.............F-3

      Statements of Stockholders' Equity--Years ending June 30, 2005 and 2004...F-4
</TABLE>


                                      -46-
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                             <C>
      Statements of Cash Flows--Years ending June 30, 2005 and 2004.............F-5

      Notes to Financial Statements.............................................F-6

                            WHERIFY CALIFORNIA, INC.

      Report of Independent Registered Public Accounting Firm...................F-13

      Balance Sheet as of June 30, 2005.........................................F-14

      Statements of Operations--Years ending June 30, 2005 and 2004.............F-15

      Statements of Stockholders' Deficit--Years ending June 30, 2005 and 2004..F-16

      Statements of Cash Flows--Years ending June 30, 2005 and 2004.............F-17

      Notes to Financial Statements.............................................F-18

                  PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

      Balance Sheet as of June 30, 2005.........................................F-27

      Statement of Operations for the Twelve Months Ended June 30, 2005.........F-28
</TABLE>

            (II)  FINANCIAL STATEMENT SCHEDULES:

                  None

            (III) INDEX OF EXHIBITS:

EXHIBIT NO.                          DESCRIPTION
-----------                          -----------

2.01  Agreement  and Plan of Merger dated as of April 14, 2004,  by and among IQ
      Biometrix,  Inc.,  Wherify  Acquisition,  Inc. and Wherify Wireless,  Inc.
      (included as Appendix A to the joint proxy  statement/prospectus  which is
      part of the Registration Statement on Form S-4/A filed on June 30, 2005).

2.02  Amendment  No. 1 to  Agreement  and Plan of Merger  dated as of August 13,
      2004 by and  among IQ  Biometrix,  Inc.,  Wherify  Acquisition,  Inc.  and
      Wherify  Wireless,  Inc.  (included  as  Appendix  B to  the  Joint  Proxy
      Statement/Prospectus  which is part of the Registration  Statement on Form
      S-4/A filed on June 30, 2005).

2.03  Amendment  No. 2 to Plan of  Merger  dated as of  December  7, 2004 by and
      among IQ Biometrix, Inc., Wherify Acquisition,  Inc. and Wherify Wireless,
      Inc. (included as Appendix C to the joint proxy statement/prospectus which
      is part of the  Registration  Statement  on Form  S-4/A  filed on June 30,
      2005).

2.04  Amendment  No. 3 to  Agreement  and Plan of Merger dated as of January 13,
      2005 by and  among IQ  Biometrix,  Inc.,  Wherify  Acquisition,  Inc.  and
      Wherify  Wireless,  Inc.  (included  as  Appendix  D to  the  joint  proxy
      statement/prospectus  which is part of the Registration  Statement on Form
      S-4/A filed on June 30, 2005).

2.05  Amendment No. 4 to Agreement and Plan of Merger dated as of April 18, 2005
      by and among IQ Biometrix,  Inc.,  Wherify  Acquisition,  Inc. and Wherify
      Wireless,   Inc.   (included   as   Appendix   E  to   the   joint   proxy
      statement/prospectus  which is part of the Registration  Statement on Form
      S-4/A filed on June 30, 2005).

3.01  Bylaws are  incorporated  herein by reference from Wherify's  Registration
      Statement on Form SB-2 (SEC File No. 333-41635) filed December 29, 1997.

3.02  Amended and Restated Articles of Incorporation of Wherify Wireless, Inc.*

3.02  Amendment to Amended and  Restated  Articles of  Incorporation  of Wherify
      Wireless, Inc.*

4.01  Specimen Common Stock Certificate*

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

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


                                      -47-
<PAGE>

EXHIBIT NO.                          DESCRIPTION
-----------                          -----------

10.03 Warrant to Purchase  Common Stock dated  February 11, 2003 between IQB and
      Special Equity IV, L.P. is incorporated herein by reference from Wherify's
      (SEC File No. 0-24001)  Quarterly Report on Form 10-QSB filed with the SEC
      on February 19, 2003.

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

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

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

10.24 Form of Warrant to Purchase  Common Stock Issued to Holders  dated May 28,
      2003 is  incorporated  herein by  reference  from  Wherify's  Registration
      Statement on Form SB-2 (SEC File No. 333-107570) filed August 1, 2003.

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

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

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

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

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

10.31 Severance  and  Mutual  release  between  Wherify  and  Greg  Micek  dated
      September 30, 2003.

10.32 6% Secured Convertible  Debenture dated September 18, 2003 between Wherify
      and Platinum  Partners  Value  Arbitrage  Fund is  incorporated  herein by
      reference  from  Wherify's  Annual  Report  on Form  10-KSB  (SEC File No.
      000-24001) filed October 14, 2003.

10.33 6% Secured Convertible  Debenture dated September 18, 2003 between Wherify
      and Platinum  Partners  Global Macro Fund,  LP is  incorporated  herein by
      reference  from  Wherify's  Annual  Report  on Form  10-KSB  (SEC File No.
      000-24001) filed October 14, 2003.

10.34 Warrant  to  Purchase  Common  Stock  Issued to  Platinum  Partners  Value
      Arbitrage Fund, LP 2003 is incorporated herein by reference from Wherify's
      Annual  Report on Form 10-KSB (SEC File No.  000-24001)  filed October 14,
      2003.

10.35 Warrant to Purchase Common Stock Issued to Platinum  Partners Global Macro
      Fund, LP 2003 is  incorporated  herein by reference from Wherify's  Annual
      Report on Form 10-KSB (SEC File No. 000-24001) filed October 14, 2003.

10.36 6% Secured  Convertible  Debenture  dated October 30, 2003 between Wherify
      and William  Ritger is  incorporated  herein by reference  from  Wherify's
      Annual Report on Form 10-QSB (SEC File No.  000-24001)  filed November 14,
      2003.

10.37 6% Secured Convertible Debenture dated October 8, 2003 between Wherify and
      Jacob Engel is  incorporated  herein by reference  from  Wherify's  Annual
      Report on Form 10-QSB (SEC File No.  000-24001)  filed  November 14, 2003.

10.38 Warrant to Purchase  Common Stock Issued to William Ritger is incorporated
      herein by reference from Wherify's  Annual Report on Form 10-QSB (SEC File
      No. 000-24001) filed November 14, 2003.

10.39 Warrant to Purchase  Common  Stock  Issued to Jacob Engel is  incorporated
      herein by reference from Wherify's  Annual Report on Form 10-QSB (SEC File
      No. 000-24001) filed November 14, 2003.

10.40 Amendment to Employment Agreement between Wherify and William B. Scigliano
      dated April 13, 2004 is  incorporated  herein by reference  from Wherify's
      Annual  Report on Form 10-KSB (SEC File No.  000-24001)  filed  October 1,
      2004.

10.41 Consulting  Agreement  between Wherify and Daniel P. McKelvey dated August
      1, 2003 is incorporated  herein by reference from Wherify's  Annual Report
      on Form 10-KSB (SEC File No. 000-24001) filed October 1, 2004.


                                      -48-
<PAGE>

EXHIBIT NO.                          DESCRIPTION
-----------                          -----------

10.42 Warrant to Purchase  Common Stock Issued to Daniel  McKelvey  dated August
      2003.*

10.43 6% Secured Convertible Debenture dated August 18, 2004 between Wherify and
      John Micek, Jr. and Forte Capital Partners,  LLC is incorporated herein by
      reference  from  Wherify's  Annual  Report  on Form  10-KSB  (SEC File No.
      000-24001) filed October 1, 2004.

10.44 Warrant to Purchase  Common Stock Issued to Forte  Capital  Partners,  LLC
      dated July 2004 is incorporated  herein by reference from Wherify's Annual
      Report on Form 10-KSB (SEC File No. 000-24001) filed October 1, 2004.

10.45 Warrant to Purchase Common Stock Issued to John Micek, Jr. dated July 2004
      is incorporated  herein by reference from Wherify's  Annual Report on Form
      10-KSB (SEC File No.  000-24001) filed October 1, 2004. 10.46 Amendment to
      consulting  agreement  between Wherify and Daniel McKelvey dated August 1,
      2004 is incorporated  herein by reference from Wherify's  Annual Report on
      Form 10-KSB (SEC File No. 000-24001) filed October 1, 2004.

10.47 Warrant to Purchase  Common Stock Issued to Forte  Capital  Partners,  LLC
      dated August 17, 2004 is  incorporated  herein by reference from Wherify's
      Annual  Report on Form 10-KSB (SEC File No.  000-24001)  filed  October 1,
      2004.

10.48 Warrant to Purchase  Common Stock  Issued to John Micek,  Jr. dated August
      17, 2004 is incorporated  herein by reference from Wherify's Annual Report
      on Form 10-KSB (SEC File No. 000-24001) filed October 1, 2004.

10.49 Warrant to Purchase  Common Stock Issued to Forte  Capital  Partners,  LLC
      dated October 13, 2004.*

10.50 Wherify's 2000 Non-Qualified  Stock Option Plan is incorporated  herein by
      reference from Wherify's  Registration Statement on Form S-8 (SEC File No.
      333-43884) filed August 16, 2000.

10.51 IQ Biometrix  California,  Inc. 2001 Stock Plan is incorporated  herein by
      reference  from  Wherify's  (SEC File No.  0-24001)  Annual Report on Form
      10-KSB filed with the SEC on October 15, 2002.

10.52 Wherify's Year 2002 Consultant Compensation Plan is incorporated herein by
      reference from Wherify's  Registration Statement on Form S-8 (SEC File No.
      333-96873) filed July 7, 2002.

10.53 Wherify's Year 2003 Consultant Compensation Plan is incorporated herein by
      reference from Wherify's  Registration Statement on Form S-8 (SEC File No.
      333-107447) filed July 28, 2003.

10.54 Wherify's Year 2004 Consultant Compensation Plan is incorporated herein by
      reference from Wherify's  Registration Statement on Form S-8 (SEC File No.
      333-112937) filed February 18, 20041.

10.55 Purchase and  Registration  Rights  Agreement  dated  January 11, 2005 are
      incorporated herein by reference from Wherify's Current Report on Form 8-K
      (SEC File No. 000-24001) filed January 11, 2005.

10.56 Amendment  to  Consulting  Agreement  Between IQB and  Liviakis  Financial
      Communications,  Inc.  dated  January  1, 2005 is  incorporated  herein by
      reference  from  Wherify's  Quarterly  Report on Form 10-QSB (SEC File NO.
      000.24001) filed February 10, 2005

10.57 Consulting Agreement with Alpine Capital Partners dated January 2004.*

10.58 5% Convertible Debenture issued to Austin Lewis dated January 10, 2005.*

10.59 Warrant to Purchase  Common Stock Issued to Austin Lewis dated January 10,
      2005.*

10.60 5% Convertible Debenture issued to Briarwood Investments dated January 10,
      2005.*

10.61 Warrant to Purchase  Common Stock Issued to  Briarwood  Investments  dated
      January 10, 2005.*

10.62 5% Convertible  Debenture  issued to Enable Capital Partners dated January
      10, 2005.*

10.63 Warrant to Purchase  Common Stock Issued to Enable Capital  Partners dated
      January 10, 2005.*

10.64 5%  Convertible  Debenture  issued  to Forte  Capital  Partners  LLC dated
      January 10, 2005.*

10.65 Warrant to Purchase  Common  Stock  Issued to Forte  Capital  Partners LLC
      dated January 10, 2005.*

10.66 5%  Convertible  Debenture  issued to Meadowbrook  Opportunity  Fund dated
      January 10, 2005.*

10.67 Warrant to Purchase  Common Stock Issued to Meadowbrook  Opportunity  Fund
      dated January 10, 2005.*

10.68 5% Convertible Debenture issued to Ron Nash dated January 10, 2005.*

10.69 Warrant to  Purchase  Common  Stock  Issued to Ron Nash dated  January 10,
      2005.*

10.70 5% Convertible Debenture issued to Nite Capital dated January 10, 2005.*

10.71 Warrant to Purchase  Common Stock Issued to Nite Capital dated January 10,
      2005.*

10.72 5% Convertible  Debenture  issued to Schottenfeld  Group LLC dated January
      10, 2005.*

10.73 Warrant to Purchase  Common Stock Issued to  Schottenfeld  Group LLC dated
      January 10, 2005.*


                                      -49-
<PAGE>

EXHIBIT NO.                          DESCRIPTION
-----------                          -----------

10.74 5% Convertible Debenture issued to Special Situations Private Equity Fund,
      L.P. dated January 10, 2005.*

10.75 Warrant to Purchase  Common  Stock  Issued to Special  Situations  Private
      Equity Fund, L.P. dated January 10, 2005.*

10.76 5% Convertible  Debenture  issued to Special  Situations  Technology Fund,
      L.P. dated January 10, 2005.*

10.77 Warrant to Purchase Common Stock Issued to Special  Situations  Technology
      Fund, L.P. dated January 10, 2005.*

10.78 5% Convertible  Debenture issued to Special Situations Technology Fund II,
      L.P. dated January 10, 2005.*

10.79 Warrant to Purchase Common Stock Issued to Special  Situations  Technology
      Fund II, L.P. dated January 10, 2005.*

10.80 Warrant to Purchase  Common Stock Issued to Daniel  McKelvey  dated August
      2004.*

10.81 Employment  Agreement  between  Timothy Neher and Wherify  Wireless,  Inc.
      dated as of November 14, 2002. *

10.82 Second  Amendment to Employment  Agreement  between  William B.  Scigliano
      dated May 19,  2005 is  incorporated  herein by  reference  from the Joint
      Proxy Statement/Prospectus on Form S-4/A filed on June 30, 2005.

10.83 Employment  Agreement  between Gerald Parrick and Wherify dated as of July
      21, 2005.*

10.84 EMS  Agreement  between  Wherify and CalComp  Electronics  Public  Company
      Limited dated as of January 7, 2005.*

10.85 Lease between Westport Joint Venture and World Tracking Technologies, Inc.
      dated as of September 3, 1999.*

10.86 IQ  Biometrix,  Inc. 2004 Stock Plan is  incorporated  herein by reference
      from Wherify's joint proxy  statement/prospectus on Form S-4/A as filed on
      June 30, 2005.

10.87 Amended and Restated 1999 Stock Option Plan of Wherify Wireless, Inc.*

10.88 2005 Consultant Compensation plan is hereby incorporated by reference from
      Wherify's  Registration  Statement  on Form S-8 (SEC File No.  333-123145)
      filed March 4, 2005.

10.89 International  Supply  And  Distribution  Agreement  between  Wherify  and
      American Network Computadores. +

14.01 Code of Business Conduct and Ethics.*

21.01 Company's subsidiaries*

23.01 Consent of Malone & Bailey, P.C. +

31.01 Chief  Executive  Officer   Certification  of  Periodic  Financial  Report
      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. +

31.02 Chief  Financial  Officer   Certification  of  Periodic  Financial  Report
      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. +

32.01 Chief Executive Officer Certification  Pursuant to 18 U.S.C. Section 1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. +

32.02 Chief Financial Officer Certification  Pursuant to 18 U.S.C. Section 1350,
      as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. +

---------------------------
*     Incorporated herein by reference from Wherify's  Registration Statement on
      Form SB-2 (SEC File No. 333-122710) filed September 13, 2005

+     Filed herewith

      (B)   REPORTS ON FORM 8-K

      The Company did not file any reports on Form 8-K during the quarter  ended
      June 30, 2005.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

      Malone  &  Bailey,  PC,  Certified  Public   Accountants,   are  Wherify's
independent  auditors engaged to examine the financial statements of Wherify for
the fiscal  years ended June 30, 2004 and June 30, 2005.  Malone & Bailey,  P.C.
has performed the  following  services and has been paid the following  fees for
these fiscal years:

      AUDIT FEES

      Malone & Bailey, P.C. was paid aggregate fees of approximately $36,000 for
the fiscal  year ended June 30,  2004 and  approximately  $37,000 for the fiscal
year ended June 30, 2005 for  professional  services  rendered  for the audit of
Wherify  California's  annual  financial  statements  and for the reviews of the
financial statements included in Wherify's registration  statements during these
fiscal years.


                                      -50-
<PAGE>

      Malone & Bailey,  PC was paid aggregate fees of approximately  $44,000 for
the fiscal  year ended June 30,  2004 and  approximately  $78,000 for the fiscal
year ended June 30, 2005 for  professional  services  rendered  for the audit of
Wherify's  annual  financial  statements  and for the  reviews of the  financial
statements included in Wherify's registration  statements,  quarterly and annual
reports on Form 10-KSB and Form 10-QSB during these fiscal years.

      AUDIT-RELATED FEES

      Malone & Bailey,  PC was not paid any additional  fees for the fiscal year
ended  June 30,  2004 and June 30,  2005  for  assurance  and  related  services
reasonably  related  to the  performance  of the audit or  review  of  Wherify's
financial statements.

      TAX FEES

      Malone & Bailey,  PC was not paid any aggregate  fees for the fiscal years
ended June 30, 2004 and June 30, 2005 for professional services rendered for tax
compliance, tax advice and tax planning.

      OTHER FEES

      Malone  &  Bailey,  PC was paid no other  fees for  professional  services
during the fiscal years ended June 30, 2004 and June 30, 2005.


                                      -51-
<PAGE>

            REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
 Wherify Wireless, Inc.
 (Formerly known as IQ Biometrix, Inc.)
 Fremont, California

We have  audited  the  accompanying  balance  sheet of  Wherify  Wireless,  Inc.
(formerly  known as IQ Biometrix,  Inc.) (the "Company") as of June 30, 2005 and
the related statements of operations,  stockholders'  equity, and cash flows for
each of the years in the two-year  period ended June 30, 2005.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We  conducted  our audit in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). 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  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of the Company,  as of June 30,
2005, and the results of its operations and its cash flows for each of the years
in the  two-year  period  ended  June 30,  2005  described  in  conformity  with
accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has suffered recurring losses from operations
and has insufficient working capital to meet operating needs for the next twelve
months,  which raises substantial doubt about its ability to continue as a going
concern.  Management's  plans regarding these matters also are described in Note
2. The  financial  statements do not include any  adjustments  that might result
from the outcome of this uncertainty.


MALONE & BAILEY, PC
www.malone-bailey.com
Houston, Texas

August 24, 2005


                                       F-1
<PAGE>

                             WHERIFY WIRELESS, INC.
                     (FORMERLY KNOWN AS IQ BIOMETRIX, INC.)
                                  BALANCE SHEET
                                  JUNE 30, 2005

                                     ASSETS
<TABLE>
<CAPTION>
<S>                                                                                              <C>
CURRENT ASSETS:
  Cash........................................................................................     $1,324,889
  Trade accounts receivable, net of allowance for doubtful accounts of $5,000.................         20,030
  Inventory...................................................................................          7,609
  Prepaid expenses............................................................................         50,960
                                                                                                 ------------
  Total current assets........................................................................      1,403,488
INTANGIBLES, net of accumulated amortization of $156,068......................................         44,750
OFFICE EQUIPMENT, net of accumulated depreciation of $12,445..................................          2,022
                                                                                                 ------------
  Total assets................................................................................     $1,450,260
                                                                                                 ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Convertible debentures......................................................................       $200,000
  Note payable................................................................................        100,000
  Accounts payable............................................................................        261,222
  Accrued expenses............................................................................         34,972
                                                                                                 ------------
  Total current liabilities...................................................................        596,194
                                                                                                 ------------

COMMITMENTS AND CONTINGENCIES                                                                              --

STOCKHOLDERS' EQUITY
  Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued.................             --
  Common stock, $0.01 par value; 50,000,000 shares authorized; 10,188,381 shares outstanding..        101,884
  Additional paid-in capital..................................................................     22,317,902
  Accumulated deficit.........................................................................   (21,565,720)
                                                                                                 ------------
  Total stockholders' equity                                                                          854,066
                                                                                                 ------------
  Total liabilities and stockholders' equity                                                       $1,450,260
                                                                                                 ============

             See accompanying summary of accounting policies and notes to financial statements.
</TABLE>


                                      F-2
<PAGE>

                             WHERIFY WIRELESS, INC.
                     (FORMERLY KNOWN AS IQ BIOMETRIX, INC.)
                            STATEMENTS OF OPERATIONS
                       YEARS ENDED JUNE 30, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                                       2005             2004
                                                                                       ----             ----
<S>                                                                             <C>              <C>
Revenue--software sales.......................................................  $    300,801     $    269,724
Operating expenses
  Cost of sales...............................................................        34,154           49,748
  Selling expense.............................................................       323,649          373,606
  General and administrative..................................................     4,337,846        6,650,535
  Research and development....................................................        20,117          171,918
  Interest, net...............................................................     3,839,586        1,349,090
  Depreciation and amortization...............................................        48,070           65,970
                                                                                ------------------------------
  Total operating expenses....................................................     8,603,422        8,660,867
                                                                                ------------------------------
Net Loss......................................................................  $(8,302,621)     $(8,391,143)
                                                                                ==============================
Basic and Diluted loss per share..............................................  $     (1.15)     $     (1.53)
Weighted average shares outstanding...........................................     7,226,011        5,494,918

             See accompanying summary of accounting policies and notes to financial statements.
</TABLE>

                                      F-3
<PAGE>

                             WHERIFY WIRELESS, INC.
                     (FORMERLY KNOWN AS IQ BIOMETRIX, INC.)
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                       YEARS ENDED JUNE 30, 2005 AND 2004

<TABLE>
<CAPTION>
                                                  COMMON
                                                  SHARES       AMOUNT           CAPITAL             EARNINGS              TOTAL
                                                  ------       ------           -------             --------              -----
<S>                                             <C>            <C>            <C>                 <C>                  <C>
Balances, June 30, 2003....................     4,726,471      $47,265        $3,991,753          $(4,871,956)         $(832,938)
Shares for stock payable...................       190,000        1,900           225,595                    --            227,495
Options and warrants exercised.............       163,210        1,632            68,068                    --             69,700
Shares issued for services.................     1,030,429       10,304         5,082,581                    --          5,092,885
Shares for accrued expenses................        47,410          474           174,941                    --            175,415
Shares for intangibles.....................        17,778          178            54,817                    --             54,995
Discount--convertible debt..................           --           --           700,000                    --            700,000
Option expense.............................            --           --           518,000                    --            518,000
Net loss...................................            --           --                --           (8,391,143)        (8,391,143)
                                               ----------     --------       -----------         -------------        -----------
Balances, June 30, 2004....................     6,175,298       61,753        10,815,755          (13,263,099)        (2,385,591)

Options and warrants exercised.............       440,571        4,406           160,194                    --            164,600
Shares issued for services.................       525,413        5,254         1,883,837                    --          1,889,091
Shares for convertible debt and accrued                                                                     --
expenses...................................     3,047,099       30,471         5,475,488                                5,505,959
Option/warrant and discount expense on                 --           --                                      --
convertible debt...........................                                    3,505,000                                3,505,000
Option and warrant expense.................            --           --           477,628                    --            477,628
Net loss...................................            --           --                --           (8,302,621)        (8,302,621)
                                               ----------------------------------------------------------------------------------
Balances, June 30, 2005                        10,188,381     $101,884       $22,317,902         $(21,565,720)           $854,066
                                               ==================================================================================

             See accompanying summary of accounting policies and notes to financial statements.
</TABLE>


                                      F-4
<PAGE>

                             WHERIFY WIRELESS, INC.
                     (FORMERLY KNOWN AS IQ BIOMETRIX, INC.)
                            STATEMENTS OF CASH FLOWS
                       YEARS ENDED JUNE 30, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                                            2005            2004
                                                                                            ----            ----
OPERATING ACTIVITIES:
<S>                                                                                 <C>              <C>
  Net loss......................................................................     $(8,302,621)    $(8,391,143)
  Adjustments to reconcile net loss to net cash used in operating activities
    Depreciation and amortization...............................................          48,070          65,970
    Provision for bad debt......................................................           2,756           8,496
    Option and Warrant Expense..................................................         477,628         518,000
    Common stock issued for services............................................       1,889,091       5,092,885
    Amortization of debt discount...............................................       3,688,333       1,178,847
    Changes in assets and liabilities:
      Accounts receivable.......................................................          (2,532)        (22,778)
      Prepaid expenses..........................................................          14,076         (27,154)
      Inventory.................................................................          (6,582)          4,981
      Accrued liabilities.......................................................         106,657         230,472
      Committed stock...........................................................        (246,851)        246,851
      Accounts payable..........................................................         (59,996)        185,897
      Other.....................................................................          (2,000)             --
                                                                                     ---------------------------
  Net cash used in operating activities.........................................      (2,393,971)       (908,676)
  Investing activities
      Purchase of fixed assets..................................................              --          (1,845)
      Collection of advance to NSS..............................................              --          50,000
                                                                                     ---------------------------
  Net cash used in investing activities.........................................              --          48,155
                                                                                     ---------------------------
  Financing activities
      Proceeds from exercise of options.........................................         107,000          69,700
      Proceeds from new convertible notes payable...............................       3,605,000         700,000
      Payments on short term notes payable......................................              --       (100,000)
      Proceeds from short term notes payable....................................              --         100,000
                                                                                     ---------------------------
  Net cash provided by financing activities.....................................       3,712,000         769,700
                                                                                     ---------------------------
  Net increase (decrease) in cash...............................................       1,318,029         (90,821)
  Cash, beginning of year.......................................................           6,860          97,681
                                                                                     ---------------------------
  Cash, end of year.............................................................      $1,324,889          $6,860
                                                                                     ===========================
  Non-cash:
    Stock for intangibles.......................................................             $--         $54,996
    Stock issued for convertible debentures.....................................       5,205,000              --
    Stock for accrued expenses..................................................         300,959         175,414
    Discount on convertible debt................................................       3,505,000              --
    Warrant exercise for retirement of short term note..........................          50,000              --
    Option exercise for retirement of payable...................................           7,600              --

             See accompanying summary of accounting policies and notes to financial statements.
</TABLE>


                                      F-5
<PAGE>

                             WHERIFY WIRELESS, INC.
                     (FORMERLY KNOWN AS IQ BIOMETRIX, INC.)
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

      Wherify  Wireless,  Inc.  (formerly  known  as  IQ  Biometrix,   Inc.)(the
"Company"  or   "Wherify")   is  a  security   software  and  services   company
headquartered  in Redwood  Shores,  California.  Wherify is a provider of facial
composite  software  to local and  national  law  enforcement  agencies,  the US
military and other government agencies across North America.

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

      IQ Biometrix California, Inc. ("IQB--California") was formed July 10, 2001
as a California corporation to purchase certain  software-related  assets from a
Canadian bankruptcy court from a former Canadian company named InterQuest,  Inc.
("InterQuest").  The software was  developed  in Canada  beginning in 1988.  The
software was completed and marketing started in 1998. In 2000,  InterQuest filed
for bankruptcy protection in a Canadian court and went dormant.  IQB--California
arranged for purchase of the software and various packaging supplies in 2001 and
paid  $118,818 in early  2002.  The  purchase  price was  allocated  as follows:
$80,818 to  software  and  $38,000 to  supplies  inventory.  IQB-California  has
changed its name to Wherify Wireless, Inc. See note 14 for further details.

CASH AND CASH EQUIVALENTS

      Wherify  considers  all  highly  liquid  debt  instruments  with  original
maturities not exceeding three months to be cash equivalents.  At June 30, 2005,
Wherify did not hold any cash equivalents.

INVENTORIES

      Inventories are valued at the lower of cost (first-in,  first-out  method)
or market.  Wherify periodically reviews for obsolete and slow-moving  inventory
based on historical usage, and future requirements.  At June 30, 2005, inventory
consisted of packaging materials related to the FACES 4.0 software.

OFFICE EQUIPMENT

      Equipment  is  stated  at  cost.   Depreciation   is  computed  using  the
straight-line method over 3 to 10 years.

INTANGIBLES

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

REVENUE RECOGNITION

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

                                       F-6
<PAGE>

      Wherify  recognizes  revenue  for  training  on the date the  training  is
performed. Wherify has only recognized approximately $20,000 related to training
revenue since inception.

INCOME TAXES

      The asset and  liability  approach is used to account for income  taxes by
recognizing  deferred tax assets and  liabilities  for the  expected  future tax
consequences of temporary  differences  between the carrying amounts and the tax
bases of assets and liabilities. Wherify 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 2005 and 2004,
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

      Wherify  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.

RECENT ACCOUNTING PRONOUNCEMENTS

      In December 2004, the FASB issued SFAS No. 123R,  "Share-Based Payment" to
revise SFAS No. 123. SFAS No. 123R establishes  standards for the accounting for
transactions  in which an entity  exchanges its equity  instruments for goods or
services.  This statement  focuses  primarily on accounting for  transactions in
which an entity obtains employee services in share-based  payment  transactions.
SFAS No.  123R  requires  that the fair  value  of such  equity  instruments  be
recognized  as expense in the  historical  financial  statements as services are
performed.  Prior to SFAS No. 123R,  only certain pro forma  disclosures of fair
value were required. SFAS No. 123R shall be effective for small business issuers
as of the beginning of the first interim or annual  reporting period that begins
after December 15, 2005. The adoption of this new  accounting  pronouncement  is
not  expected  to have a  material  impact on the  financial  statements  of the
Company during fiscal year 2006.

NOTE 2--GOING CONCERN

      Wherify's  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, Wherify has accumulated losses aggregating
$21,565,720 and has insufficient working capital to meet operating needs for the
next twelve months,  as of June 30, 2005, all of which raise  substantial  doubt
about Wherify's ability to continue as a going concern.

      Management's  plans for  Wherify'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.

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

      Wherify'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.

                                      F-7
<PAGE>

NOTE 3--INTANGIBLES

      Wherify's  intangibles were amortized using the straight-line  method over
three years  resulting in $44,824 and $61,689 of amortization in fiscal 2005 and
2004,   respectively.   Wherify   estimates  its  amortization   expense  to  be
approximately $44,750 in fiscal 2006.

      The following summarizes intangible assets at June 30, 2005:

<TABLE>
<CAPTION>
<S>                                                                              <C>
Original software cost.......................................................... $80,818
FACES 4.0 upgrade............................................................... 120,000
                                                                                --------
                                                                                 200,818
Less: accumulated amortization..................................................(156,068)
                                                                                --------
                                                                                 $44,750
                                                                                ========
NOTE 4--OFFICE EQUIPMENT
Computer equipment--3 yrs....................................................... $13,467
Furniture & fixtures--10 yrs....................................................   1,000
                                                                                --------
                                                                                  14,467
Less: accumulated depreciation.................................................. (12,445)
                                                                                --------
                                                                                  $2,022
                                                                                ========
NOTE 5--ACCRUED EXPENSES
      Accrued expenses consisted of the following at June 30, 2005:
Accrued interest................................................................ $29,011
Accrued commissions.............................................................   4,258
Accrued taxes...................................................................   1,703
                                                                                --------
                                                                                 $34,972
                                                                                ========
</TABLE>

NOTE 6--NOTE PAYABLE

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

NOTE 7--CONVERTIBLE DEBENTURES

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

      Under generally  accepted  accounting  principles,  Wherify is required to
record  the value of the  beneficial  conversion  feature  of these  convertible
debentures as a debt discount. In addition,  the value of the warrants using the
Black  Scholes  method is also  recorded  as a debt  discount.  The  total  debt
discount recorded on the sale of these convertible debentures during the quarter
ended March 31, 2005 was  $3,505,000.  This debt discount was amortized over the
life of the notes.  As of June 30,  2005,  $3,505,000  was  charged to  interest
expense.

                                      F-8
<PAGE>

     Note balance at June 30, 2004                      $ 1,766,667
     Add:  additional note proceeds                       3,505,000
     Less discounts:
             Warrants attached to note                   (2,222,008)
             Beneficial conversion feature               (1,282,992)
     Less:  payments on notes                            (5,255,000)
     Add:  amortized discount
                                                          3,688,333
                                                         ----------
     Note balance at June 30, 2005                       $  200,000
                                                         ==========

      In September 2002, Wherify sold a convertible  debenture with a face value
of  $100,000 to an  individual.  The  debenture  is  convertible  into shares of
Wherify's common stock at the option of the holder at 80% of the average closing
price as of the date of conversion,  with a minimum  conversion  amount of $2.56
and a maximum  conversion  amount  of $6.00 per  share.  The  debenture  accrues
interest  at 6% per annum and was due on August 1, 2003,  but was not paid.  The
conversion  price of the debenture is subject to  adjustments at any time as the
result  of  any   subdivision,   stock  split,  and  combination  of  shares  of
recapitalization.  The debenture  holder  should have received  10,000 shares of
common stock per $100,000 loaned as an origination  fee. As of June 30, 2005, no
shares have been issued.

      In  October  2003,  Wherify  issued  a 6%  convertible  debenture  due  on
September  18,  2004  in  the  aggregate  principal  amount  of  $100,000  to an
accredited  investor.  The debenture is convertible anytime at the option of the
holder into  Wherify's  common stock at $2.00 per share.  In  addition,  Wherify
issued  warrants to the holder of the  debenture to purchase up to 20,000 shares
of the common stock of Wherify at a per share exercise price of $5.00.

NOTE 8--CAPITAL STOCK

      During fiscal 2005,  consultants  exercised  options/warrants  to purchase
84,000  shares of common  stock.  Wherify  received  cash  proceeds of $107,000,
retired debt of $50,000 and retired a payable of $7,600.  Another 356,571 shares
were  issued  pursuant  to  cashless   exercise   provisions   provided  in  the
option/warrant agreements, no cash proceeds were received.

      During fiscal 2005,  Wherify  issued 525,413 shares of its common stock to
various non-employees for consulting services valued at $1,889,091. Wherify also
issued  3,047,099  shares valued at  approximately  $5,505,959 for retirement of
debt and related accrued interest.  The stock was valued using the closing price
of Wherify's common stock on the date issued and expensed  immediately  because,
in  general,  the  consultants  had fully  performed  the  services.  This is in
accordance  with EITF 00-18,  Accounting  Recognition  for Certain  Transactions
involving  Equity  Instruments  Granted to Other Than Employees,  which requires
recognizing  equity  instruments when issued if no obligation to earn the equity
instrument exists.

NOTE 9--STOCK COMPENSATION

      Wherify  applies APB No. 25 in accounting  for its stock option plans and,
accordingly,  $62,000 of  compensation  cost has been  recognized  in  Wherify's
financial  statements  for stock  options that on the date of grant the exercise
price  per  share  was less than the fair  value  per  share.  Wherify  has also
recorded  compensation  cost  recognized  for  warrants  and options  granted to
non-employees for services provided in the amount of $415,628.  If under FAS No.
123, Wherify  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>
                                                                                                      2005           2004
                                                                                                      ----           ----
<S>                                                                                           <C>            <C>
Net loss
  As Reported........................................................                         $(8,302,621)   $(8,391,143)
  Deduct:  total stock based employee  compensation expense determined under fair value
method...............................................................                            (475,362)      (228,072)
  Add: total stock based  employee  compensation  expense  determined  under  intrinsic
value method.........................................................                               62,000        108,967
                                                                                              ---------------------------

  Pro forma..........................................................                         $(8,715,983)   $(8,510,248)

Basic and diluted loss per share
  As reported........................................................                              $(1.15)        $(1.53)
  Pro forma..........................................................                              $(1.21)        $(1.55)
</TABLE>

                                      F-9
<PAGE>

      The weighted  average fair value of each option  granted  under  Wherify's
employee  option plans during fiscal 2005 and 2004 was  approximately  $4.50 and
$5.20,  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 2005 and 2004. The expected
volatility  was based on the historic  stock  prices.  The  expected  volatility
ranged from 84% to 157%, and from 130% to 212% for 2005 and 2004,  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 ranged  from 2.0% to 2.5% in 2005 and 1.5% to 3.5% in 2004.  The
expected life of the options was estimated to be between two and 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.

NOTE 10--STOCK OPTIONS AND WARRANTS

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

      The following table summarizes stock option activity:

Outstanding July 1, 2003........................................... 1,000,960
Granted............................................................   247,875
Canceled or expired................................................  (375,643)
Exercised..........................................................  (145,710)
                                                                    ----------
Outstanding June 30, 2004..........................................   727,482
                                                                    ==========

Exercisable June 30, 2004..........................................   435,272
                                                                    ==========

Weighted average option price of options granted during the year...     $5.20
                                                                    ==========

Average remaining years of contractual life........................         4
                                                                    ==========

Outstanding July 1, 2004...........................................   727,482
Granted............................................................    42,500
Canceled or expired................................................    (5,500)
Exercised..........................................................   (52,500)
                                                                    ----------
Outstanding June 30, 2005..........................................   711,982
                                                                    ==========
Exercisable June 30, 2005..........................................   663,086
                                                                    ==========
Weighted average option price of options granted during the year...     $4.50
                                                                    ==========
Average remaining years of contractual life........................         3
                                                                    ==========

      Included  in the options  issued  during  fiscal 2005 were 42,500  options
issued to third party consultants. During fiscal 2005, Wherify expensed $114,825
related to the fair value of the options issued to these  consultants.  The fair
value was determined using the Black Scholes pricing model, which values options
based on the stock price at the grant date, the expected life of the option, the
estimated volatility of the stock,  expected dividend payments and the risk-free
interest rate over the expected life of the option. The dividend yield was zero.
The  expected  volatility  ranged from 84% to 157% and was based on the historic
stock prices.  The risk-free interest rate was the rate available on zero coupon
U.S.  government  issues with a term equal to the remaining term for each grant.
The  risk-free  rate ranged from 2.0% to 2.5% in 2005.  The expected life of the
options was  estimated  to be between two and five years.  The  following  table
summarizes stock warrant activity:

                                      F-10
<PAGE>

Outstanding July 1, 2003............................................  430,000
Granted.............................................................  470,300
Canceled or expired................................................. (250,000)
Exercised...........................................................  (17,500)
                                                                    -----------
Outstanding June 30, 2004...........................................  632,800
                                                                    ===========
Exercisable June 30, 2004...........................................  632,800
                                                                    ===========
Weighted average exercise price.....................................    $2.12
                                                                    ===========
Outstanding July 1, 2004............................................  632,800
Granted.............................................................1,278,580
Canceled or expired.................................................        -
Exercised........................................................... (541,944)
                                                                    -----------
Outstanding June 30, 2005...........................................1,369,436
                                                                    ===========
Exercisable June 30, 2005...........................................1,369,436
                                                                    ===========
Weighted average exercise price.....................................    $2.71
                                                                    ===========

      In July, August and October 2004, Wherify issued warrants  exercisable for
127,500  shares of Wherify's  common stock to investors in  connection  with the
issuance of  short-term  notes in the amount of $255,000.  Wherify  valued these
warrants  using the Black  Scholes  pricing  model and amortized the cost of the
warrants over the term of the debentures and included these costs as part of the
debt discount.

      In January 2005, Wherify issued warrants exercisable for 891,497 shares of
Wherify's  common stock to investors in  connection  with a sale of  convertible
debentures in the amount of $200,000.  Wherify  valued these  warrants using the
Black Scholes  pricing model and will amortize the cost of the warrants over the
term of the  debentures  and  will  include  these  costs  as  part of the  debt
discount.  There  was also a grant of  163,750  warrants  to a third  party as a
finder's fee for the  financing.  Wherify  valued these warrants using the Black
Scholes pricing model and expensed the cost in the quarter ended March 31, 2005.

      The fair value of the  warrants  was  determined  using the Black  Scholes
pricing model, which values warrants based on the stock price at the grant date,
the  expected  life of the  warrant,  the  estimated  volatility  of the  stock,
expected  dividend  payments and the  risk-free  interest rate over the expected
life of the option.  The dividend  yield was zero in 2005 and 2004. The expected
volatility was based on Wherify's historic stock prices. The expected volatility
ranged from 131% to 157% for all warrants issued in 2005. 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 ranged from 2.0%
to 2.5% in 2005  and the  expected  life of the  warrants  was  estimated  to be
between two and five years.

NOTE 11--INCOME TAXES

      Income  taxes  are  not  due  since  Wherify  has  incurred  a loss  since
inception.   Wherify  has  deductible  net  operating  losses  of  approximately
$11,660,000 at June 30, 2005.  These expire 20 years after incurred.  Components
of deferred tax assets and liabilities at June 30, 2005 are as follows:

Deferred tax asset...........................  $  3,964,000
Valuation allowance..........................    (3,964,000)
                                               ------------

Net deferred tax asset.......................  $         --
                                               ============

      Wherify 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,  2005 is  approximately  $3,964,000.  The net change in the total  valuation
allowance  for the  years  ended  June 30,  2005 and  2004  was an  increase  of
$2,164,000 and $906,000, respectively.

NOTE 12--COMMITMENTS AND CONTINGENCIES

      We have become a party to litigation in the Superior  Court for the County
of Fresno,  State of California.  The original complaint in the matter was filed
on April 29,  2005.  The  amended  complaint  was filed on August 5,  2005.  The
principal  parties are Wherify and persons formerly  affiliated with or employed
by Wherify ,  including  Sylvie  Lariviere,  Robert  Rios,  Toni Lange,  Fernand
Beland,  Frederic  Serre and Roland Vroye.  The amended  complaint  alleges that
Wherify owes stock options to the  plaintiffs  in  accordance  with the terms of
alleged oral and/or  written  agreements  entered in or about 2002.  The amended
complaint also alleges fraud causes of action  surrounding the alleged breach of
agreement.  The complaint seeks to recover damages,  including punitive damages,
and/or an award of options entitling the plaintiffs to purchase Wherify stock at
favorable price. Wherify intends to vigorously defend this complaint.

                                      F-11
<PAGE>

NOTE 13--RELATED PARTY TRANSACTIONS

      In July 2004, Greg Micek, one of Wherify's board of directors,  assigned a
short-term  note to his father,  John Micek,  Jr. In July,  August and  October,
Wherify  issued a  convertible  debenture  for  $255,000  to a John  Micek,  Jr.
($75,000) and Forte Capital  Partners,  LLC  ($180,000).  A short-term note from
Forte  Capital  Partners,  LLC,  and  ($50,000)  was  rolled  into this note and
included in the $180,000  balance.  This debenture carried a 10% annual interest
rate and was  convertible  on the same  terms  as the next  round of  financing.
Warrants  were issued to both parties in  conjunction  with this  debenture.  On
January 11, the notes were rolled into a private placement completed by Wherify.
Please refer to Note 7.

      In June 2005,  Wherify paid a $30,000 cash bonus to William  Scigliano for
reaching a bonus  milestone in his  employment  agreement for  completion of the
financing on January 11, 2005.

NOTE 14--SUBSEQUENT EVENTS

ACQUISITION

      On July 21, 2005, Wherify (formerly IQ Biometrix, Inc.) completed a merger
with Wherify California,  Inc., a California  corporation ("Wherify California")
(formerly Wherify Wireless, Inc.). In connection with the merger, Wherify issued
or reserved for future issuance, an aggregate of approximately 46 million shares
of its common stock in consideration for all of the outstanding shares of equity
securities  of Wherify  California.  The 46 million  shares of Wherify's  common
stock issued or reserved for issuance in  connection  with the merger  represent
approximately  78.8% of the total  number of shares of common  stock of  Wherify
calculated on a fully-diluted  basis. Prior to the merger, there were 12,339,750
shares  outstanding.  As a result of the  merger,  Wherify  California  became a
wholly-owned subsidiary of Wherify.

      Also in connection  with the merger,  Wherify  amended its  certificate of
incorporation  on July 22,  2005 to change its name from IQ  Biometrix,  Inc. to
Wherify  Wireless,  Inc.  and to increase  its  authorized  common stock from 50
million shares to 100 million shares.

      Following the merger,  we anticipate that our principal  business activity
will  be  the  business  of  Wherify  California,  consisting  primarily  of the
development  and sale of wireless  location  products and  services.  The former
business of Wherify,  consisting  primarily of the sale of security software and
services,  including its FACES facial  composite  software,  to law enforcements
agencies and the security industry,  is not expected to constitute a significant
part of the ongoing business operations of Wherify. Furthermore, Wherify has not
yet  decided  whether to  continue  efforts  to sell  and/or  improve  the FACES
software.

      The merger  will be treated as a reverse  acquisition,  pursuant  to which
Wherify  California  will be treated as the  acquirer of Wherify  for  financial
reporting purposes. Consequently,  following the consummation of the merger, the
historical  financial  statements  of  Wherify  California  will  serve  as  the
principal historical financial statements of Wherify.

      This  treatment  means that the purchase price is calculated as the shares
outstanding of Wherify  immediately  prior to the merger.  The purchase price is
the 12,339,750  shares valued at the closing price of $5.69 on July 21, 2005, or
$70,213,189.  The purchase price is allocated as follows based on Wherify's June
30,  2005  balance  sheet:  Cash  $1.3  million,  Accounts  Receivable  $20,000,
Inventory $8,000, Prepaids $51,000, Fixed Assets (net) $2,000, Intangibles (net)
$45,000, less Convertible notes payable $200,000,  accounts payable $296,000 and
a note payable of $100,000.  Identifiable intangibles are made up of software $1
million,  branding $1 million and intellectual  property of $6 million for total
intangibles of $8 million.  The identified  intangibles have an estimated useful
life of 3  years.  The  remainder  of the  unallocated  purchase  price of $61.4
million is allocated to goodwill, none of which is expected to be deductible for
tax purposes.  This purchase  price  allocation  is  preliminary  and subject to
change based on the completion of a third party  appraisal.  However,  we expect
that there will be a  significant  impairment in the near future of most, if not
all, of the purchase  price that was allocated to goodwill and other  intangible
assets in connection with the merger. The intangibles,  including goodwill, will
be subject to review for possible impairment on a quarterly basis.

OTHER

      In July 2005,  Wherify paid cash bonuses to William Scigliano for reaching
bonus  milestones in his  employment  agreement for completion of the merger and
relocation of the company totaling $45,000.  He also received a bonus of $50,000
cash and 30,000 restricted shares of common stock valued at $160,500 as an added
bonus for completion of the merger.

                                      F-12
<PAGE>

      In July 2005,  Wherify  issued  55,000 shares of common stock for services
valued at $294,250.  Consultants and employees exercised the options/warrants to
purchase 10,688 shares of common stock for proceeds of $41,897.  Another 172,078
shares of common  stock were  issued  pursuant to  cashless  exercise  provision
provided with the options/warrants.

      In August 2005, an employee  exercised  their  options to purchase  12,266
shares of common  stock on a cashless  basis  pursuant  to a  cashless  exercise
provision  provided with the option.  A consultant  exercised  their warrants to
purchase 10,000 shares of common stock for a total proceeds of $50,000.

      In September  2005,  $100,000 of debt and $10,433 of accrued  interest was
converted into 43,138 shares of common stock.

                                      F-13
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors
  Wherify California, Inc.
  (formerly known as Wherify Wireless, Inc.)
  Redwood City, California


We have  audited the  accompanying  balance  sheet of Wherify  California,  Inc.
(formerly known as Wherify Wireless,  Inc.)(the "Company"),  as of June 30, 2005
and the related statements of operations,  stockholders' deficit, and cash flows
for the years in the  two-year  period  ended  June 30,  2005.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We  conducted  our audit in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). 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  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of the Company,  as of June 30,
2005, and the results of its operations and its cash flows for each of the years
in the  two-year  period  ended  June 30,  2005 in  conformity  with  accounting
principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has suffered recurring losses from operations
and has a working capital  deficiency,  which raises substantial doubt about its
ability to continue  as a going  concern.  Management's  plans  regarding  these
matters also are  described in Note 2. The  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.

MALONE & BAILEY, PC
www.malone-bailey.com
Houston, Texas

August 24, 2005

                                      F-14
<PAGE>

                            WHERIFY CALIFORNIA, INC.
                   (FORMERLY KNOWN AS WHERIFY WIRELESS, INC.)
                                  BALANCE SHEET
                                  JUNE 30, 2005

<TABLE>
<CAPTION>
                                     ASSETS

CURRENT ASSETS:
<S>                                                                     <C>
    Cash and cash equivalents                                           $1,208,089
    Restricted certificates of deposit                                   2,449,301
    Note receivable from IQ Biometrix, Inc.                                102,931
    Prepaid expenses                                                        15,808
                                                                        ----------
      TOTAL CURRENT ASSETS                                               3,776,129

Property and equipment, net of accumulated depreciation of $1,101,970      488,204
Other assets                                                               227,320
                                                                        ----------
TOTAL ASSETS                                                            $4,491,653
                                                                        ==========

                    LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
    Accounts payable                                                    $2,849,317
    Accounts payable related party                                       3,892,448
    Accrued liabilities                                                    572,511
    Accounts payable related to discontinued operating segment           2,606,514
                                                                        ----------
      TOTAL CURRENT LIABILITIES                                          9,920,790
                                                                        ----------
Commitments and contingencies
STOCKHOLDERS' DEFICIT
    Series A, convertible, no par value:
     1,143,756 shares authorized, 1,143,756 issued and outstanding       8,553,413
    Series B, convertible, no par value:
     555,383 shares authorized, issued and outstanding                   5,137,284
    Series C, convertible, no par value:
     4,200,000 shares authorized, 3,979,647 shares issued
     and outstanding                                                    34,763,735
    Common stock, no par value:
     12,000,000 shares authorized, 3,060,726 shares
     issued and outstanding                                              2,024,153
    Deferred stock compensation                                           (713,592)
    Accumulated deficit                                                (55,194,130)
                                                                        ----------
      TOTAL STOCKHOLDERS' DEFICIT                                       (5,429,137)
                                                                        ----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                             $4,491,653
                                                                        ==========
</TABLE>

                  SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                         AND NOTES TO FINANCIAL STATEMENTS

                                      F-15
<PAGE>

                            WHERIFY CALIFORNIA, INC.
                   (FORMERLY KNOWN AS WHERIFY WIRELESS, INC.)
                            STATEMENTS OF OPERATIONS
                       YEARS ENDED JUNE 30, 2005 AND 2004

<TABLE>
<CAPTION>
                                                             2005               2004
                                                        -------------      -------------
OPERATING EXPENSES:
<S>                                                      <C>               <C>
    General and administrative                            $10,727,273         $6,284,775
    Rent expense payable to related party                   1,362,936          1,436,341
    Depreciation expense                                      118,951            248,687
                                                        -------------      -------------
      TOTAL OPERATING EXPENSES                             12,209,160          7,969,803
                                                        -------------      -------------
    OPERATING LOSS                                        (12,209,160)        (7,969,803)
OTHER INCOME (EXPENSE)
    Interest expense                                         (110,240)          (132,043)
    Interest and other income                                  86,994             19,117
                                                        -------------      -------------

NET LOSS FROM CONTINUING OPERATIONS                       (12,232,406)        (8,082,729)
DISCONTINUED OPERATIONS
    Loss from operations of discontinued
      business segment                                       (171,251)          (426,501)
NET LOSS                                                  (12,403,657)        (8,509,230)
                                                        -------------      -------------
Deemed dividend on preferred stock                         12,467,059         13,004,245
                                                        =============      =============
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS             $(24,870,716)     $(21,513,475)
Basic and diluted net loss per share
  from continuing operations                                   $(4.08)            $(2.74)
Basic and diluted net loss per share
  from discontinued operations                                 $(0.06)            $(0.14)
Basic and diluted net loss per share                           $(4.13)            $(2.89)

Weighted average number of shares outstanding               3,001,548          2,949,318
</TABLE>

                     SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                           AND NOTES TO FINANCIAL STATEMENTS

                                      F-16
<PAGE>


                            WHERIFY CALIFORNIA, INC.
                   (FORMERLY KNOWN AS WHERIFY WIRELESS, INC.)
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                       YEARS ENDED JUNE 30, 2004 AND 2005

<TABLE>
<CAPTION>
                                 CONVERTIBLE PREFERRED STOCK


                                                              COMMON STOCK            DEFERRED                      TOTAL
                                                                                       STOCK       ACCUMULATED   STOCKHOLDERS'
                                 SHARES        AMOUNT        SHARES        AMOUNT   COMPENSATION      DEFICIT       DEFICIT
                                --------------------------------------------------------------------------------------------------
<S>                            <C>           <C>             <C>        <C>           <C>             <C>            <C>
 June 30, 2003, balances        2,871,636     $27,794,222     2,944,726    $611,673    $       -       $(34,281,243)  $(5,875,348)
 Issuance of Series C
   Convertible Preferred
   Stock for cash               1,191,108       6,372,000                                                               6,372,000
 Conversion of note payable
   and interest for Series C
   Convertible Preferred
   Stock                          139,466       1,045,995                                                               1,045,995
 Beneficial conversion
   feature embedded in
   preferred stock                                                                                       13,004,245    13,004,245
 Deemed dividend on
   preferred stock                                                                                      (13,004,245)  (13,004,245)
 Conversion of invoice
   payable and interest for
   Series C Convertible
   Preferred Stock                 13,369         200,535                                                                 200,535
 Issuance of Common Stock
   for services                                                  11,000      16,500                                        16,500
                                ---------------------------------------------------------------------------------------------------
 Net loss                                                                                                (8,509,230)   (8,509,230)
 June 30, 2004, balances        4,215,579      35,412,752     2,955,726     628,173                     (42,790,473)   (6,749,548)
 Issuance of Series C
   Convertible Preferred
   Stock for cash               1,463,207      13,041,680                                                              13,041,680
 Beneficial conversion
   feature embedded in
   preferred stock                                                                                       12,467,059    12,467,059
 Deemed dividend on
   preferred stock                                                                                      (12,467,059)  (12,467,059)
 Exercise of common stock
   options                                                      105,000       7,500                                         7,500
 Stock option expense                                                     1,388,480     (713,592)                         674,888
 Net loss                                                                                               (12,403,657)  (12,403,657)
                                ---------------------------------------------------------------------------------------------------
 June 30, 2005, balances        5,678,786     $48,454,432     3,060,726  $2,024,153    $(713,592)      $(55,194,130)  $(5,429,137)
                                ==================================================================================================

                                           SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                                                AND NOTES TO FINANCIAL STATEMENTS
</TABLE>


                                      F-17
<PAGE>



                            WHERIFY CALIFORNIA, INC.
                   (FORMERLY KNOWN AS WHERIFY WIRELESS, INC.)
                            STATEMENTS OF CASH FLOWS
                       YEARS ENDED JUNE 30, 2005 AND 2004
<TABLE>
<CAPTION>
                                                                         2005             2004
                                                                     -------------     -----------
OPERATING ACTIVITIES:
<S>                                                                   <C>              <C>
    Net loss                                                          $(12,403,657)    $(8,509,230)
    Adjustments to reconcile net loss to
      net cash used in operating activities:
      Depreciation                                                         118,951         248,687
      Write off note receivable - related party                                  -         144,337
      Common stock issued for services                                           -          16,500
      Preferred stock issued for interest                                        -          45,995
      Stock option expense                                                 674,888               -
    Changes in assets and liabilities:
      Accounts receivable                                                   98,470         (22,561)
      Interest receivable from note
        receivable due from IQ Biometrix, Inc.                              (2,932)              -
      Write-off of inventory                                                21,800               -
      Inventory                                                                  -          28,200
      Prepaid expenses and other current assets                              4,320         (30,754)
      Accounts payable and accrued expenses                              1,261,967       2,567,604
                                                                       -----------      ----------
NET CASH USED IN OPERATING ACTIVITIES                                  (10,226,193)     (5,511,222)
                                                                       -----------      ----------
INVESTING ACTIVITIES:
    Increase in restricted certificates of deposit                      (2,191,557)         (6,596)
    Purchase of property and equipment                                    (264,083)        (63,570)
    Disposal of property and equipment                                      25,459               -
    Note receivable from IQ Biometrix, Inc.                               (100,000)              -
                                                                       -----------      ----------
NET CASH USED IN INVESTING ACTIVITIES                                   (2,530,181)        (70,166)
                                                                       -----------      ----------
FINANCING ACTIVITIES:
    Proceeds from sale of convertible preferred stock, net              13,041,680       6,372,000
    Proceeds for the exercise of options                                     7,500               -
                                                                       -----------      ----------
NET CASH FROM FINANCING ACTIVITIES                                      13,049,180       6,372,000
                                                                       -----------      ----------
CHANGE IN CASH AND CASH EQUIVALENTS                                        292,806         790,612
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                            916,314         125,702
                                                                       -----------      ----------
CASH AND CASH EQUIVALENTS - END OF PERIOD                               $1,209,120        $916,314
                                                                       ===========      ==========
Supplemental disclosures of non-cash activities
    Issuance of preferred stock for accounts payable                    $        -        $200,535
    Issuance of preferred stock for short term note                              -       1,000,000

                 SEE ACCOMPANYING SUMMARY OF ACCOUNTING POLICIES
                        AND NOTES TO FINANCIAL STATEMENTS
</TABLE>

                                      F-18
<PAGE>

                            WHERIFY CALIFORNIA, INC.
                   (FORMERLY KNOWN AS WHERIFY WIRELESS, INC.)
                          NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS.

Wherify  California,  Inc.  (formerly known as Wherify Wireless,  Inc.)("Wherify
California")  was  incorporated  in the State of  California  on March 28, 1998.
Wherify  California  develops  technology  and the  related  hardware to provide
location-tracking services using Global Positioning Satellite technology in real
time for people and their property.

Since  inception,  Wherify  California has primarily been involved in conducting
research and development, business planning and capital-raising activities.

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  statement of expenses.  Actual  results  could
differ from those estimates.

CASH AND CASH EQUIVALENTS.

For purposes of the statement of cash flows,  Wherify  California  considers all
highly liquid investments purchased with an original maturity of three months or
less to be cash equivalents.

REVENUE RECOGNITION.

Wherify California recognizes revenue when persuasive evidence of an arrangement
exists,  services have been rendered,  the sales price is fixed or determinable,
and collectibility is reasonably assured. This typically occurs when the product
is shipped.

ALLOWANCE FOR DOUBTFUL ACCOUNTS.

Bad debt expense is recognized  based on management's  estimate of likely losses
per year, based on past experience and an estimate of current year uncollectible
amounts. There was $0 allowance for doubtful accounts as of June 30, 2005.

INVENTORIES.

Inventories  are  valued  at the lower of  first-in,  first-out  (FIFO)  cost or
market.

PROPERTY AND EQUIPMENT.

Property  and  equipment  is  valued  at cost.  Additions  are  capitalized  and
maintenance and repairs are charged to expense as incurred.  Gains and losses on
dispositions of equipment are reflected in operations.  Depreciation is provided
using the  straight-line  method over the estimated  useful lives of the assets,
which are three to seven years.

IMPAIRMENT OF LONG-LIVED ASSETS.

Wherify  California reviews the carrying value of its long-lived assets annually
or whenever  events or changes in  circumstances  indicate  that the  historical
cost-carrying value of an asset may no longer be appropriate. Wherify California
assesses  recoverability  of the carrying  value of the asset by estimating  the
future net cash flows  expected  to result  from the asset,  including  eventual
disposition.  If the future net cash flows are less than the  carrying  value of
the asset,  an impairment  loss is recorded equal to the difference  between the
asset's carrying value and fair value.

INCOME TAXES

Wherify  California  recognizes  deferred  tax assets and  liabilities  based on
differences  between  the  financial  reporting  and tax  bases  of  assets  and
liabilities  using the  enacted  tax rates and laws that are  expected  to be in
effect when the  differences  are expected to be recovered.  Wherify  California
provides a valuation  allowance  for  deferred  tax assets for which it does not
consider realization of such assets to be more likely than not.

                                      F-19
<PAGE>

LOSS PER COMMON SHARE

Basic and diluted net loss per share  calculations  are  presented in accordance
with  Financial  Accounting  Standards  Statement 128, and are calculated on the
basis of the weighted  average  number of common shares  outstanding  during the
year. They include the dilutive effect of common stock equivalents in years with
net income.  Basic and diluted  loss per share is the same due to the absence of
common stock equivalents.

STOCK OPTIONS AND WARRANTS

Wherify  California  accounts for non-cash  stock-based  compensation  issued to
non-employees  in  accordance  with the  provisions of SFAS No. 123 and EITF No.
96-18,  Accounting for Equity  Investments That Are Issued to Non-Employees  for
Acquiring, or in Conjunction with Selling Goods or Services. Common stock issued
to  non-employees  and  consultants  is  based  upon the  value of the  services
received  or  the  quoted  market  price,   whichever   value  is  more  readily
determinable.  Wherify California accounts for stock options and warrants issued
to employees  under the  intrinsic  value  method.  Under this  method,  Wherify
California  recognizes  no  compensation  expense for stock  options or warrants
granted when the number of underlying  shares is known and the exercise price of
the option or warrant is greater  than or equal to the fair market  value of the
stock on the date of grant.  The following  table  illustrates the effect on net
loss and net loss per share if Wherify  California  had  applied  the fair value
provisions of FASB Statement No. 123,  Accounting for Stock-Based  Compensation,
to stock-based employee compensation.

                                                     2005              2004
                                                  ------------     -----------
Net loss as reported                              $(12,403,657)    $ (8,509,230)
Add:  stock based compensation determined
  under intrinsic value-based method                   674,888               --
Less:  stock based compensation determined
  under fair value-based method                       (787,298)        (143,986)
                                                  ------------     ------------
    Pro forma net loss                            $(12,516,067)    $ (8,653,216)
                                                  ============     ============

Basic and diluted net loss per common share:
    As reported                                   $      (4.13)    $      (2.89)
    Pro forma                                            (4.17)           (2.96)

The weighted  average fair value of the stock options granted during fiscal 2005
and 2004 was $4.82 and $.42,  respectively.  Variables used in the Black-Scholes
option-pricing  model  include  (1) 2.5% & 3.5%  risk-free  interest  rate,  (2)
expected option life is the actual remaining life of the options as of each year
end, (3) expected  volatility  ranged from 131% to 345%,  and (4) zero  expected
dividends.

Recently  issued  accounting  pronouncements.  In December 2004, the FASB issued
SFAS No.  123R,  "Share-Based  Payment" to revise  SFAS No.  123.  SFAS No. 123R
establishes  standards for the  accounting for  transactions  in which an entity
exchanges its equity  instruments for goods or services.  This statement focuses
primarily on accounting for  transactions  in which an entity  obtains  employee
services in share-based  payment  transactions.  SFAS No. 123R requires that the
fair value of such equity instruments be recognized as expense in the historical
financial  statements as services are  performed.  Prior to SFAS No. 123R,  only
certain pro forma  disclosures of fair value were required.  SFAS No. 123R shall
be effective for small business issuers as of the beginning of the first interim
or annual  reporting period that begins after December 15, 2005. The adoption of
this new accounting  pronouncement  is not expected to have a material impact on
the financial statements of the Company during fiscal year 2006.

NOTE 2 - GOING CONCERN

As shown in the accompanying  financial statements,  Wherify California incurred
recurring  net losses of  $12,403,657  and  $8,509,230  in fiscal 2005 and 2004,
respectively,  has an accumulated  deficit of $55,194,130  and a working capital
deficit  of  $6,144,661  as  of  June  30,  2005.  These  conditions  create  an
uncertainty as to Wherify  California's  ability to continue as a going concern.
Management  is trying to raise  additional  capital  through  sales of preferred
stock.  The financial  statements do not include any  adjustments  that might be
necessary if Wherify California is unable to continue as a going concern.

                                      F-20
<PAGE>

NOTE 3 - INVENTORY

Inventory consisted of one product line, which was discontinued as of May 1st,
2005. Please refer to Note 12 for more details.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at June 30, 2005:

                 DESCRIPTION             LIFE             AMOUNT
---------------------------------      ---------       -----------
Leasehold improvements                 10 years        $    78,462
Computer equipment                     3 years             807,107
Office furniture and equipment         7 years             140,290
Equipment                              7 years             339,716
Equipment located at data center       1-5 years           224,599
                                                       -----------
                                                         1,590,174
Less: accumulated depreciation                          (1,101,970)
                                                       -----------
                                                       $   488,204
                                                       ===========

Depreciation  expense  totaled  $118,951  and  $248,686 in fiscal 2005 and 2004,
respectively.

NOTE 5 - ACCRUED LIABILITIES TO RELATED PARTY

Wherify  California  leases office space under a ten year operating  lease which
began in September  1999 from a 5% shareholder  of Wherify  California.  Wherify
California  was required to pay a security  deposit  totaling  $226,072 which is
reflected in other assets on the balance  sheet as of June 30, 2005.  Basic rent
expense  charged to  operations  for  fiscal  2005 and 2004 was  $1,222,844  and
$1,192,016 respectively.

Future  minimum lease  payments under a  non-cancelable  operating  lease are as
follows:

            Year Ending June 30,
                    2006                                   1,254,000
                    2007                                   1,284,000
                    2008                                   1,315,000
                    2009                                   1,346,000
                 After 2010                                  452,000

As of June 30, 2005,  Wherify  California has recognized a liability relating to
unpaid rent totaling $3,892,448.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

LITIGATION

There are four (4) matters  being  litigated on behalf of Wherify  California by
the firm of Allen Matkins Leck Gamble & Mallory.

In the matter of Venture  Corporation  Limited vs. Wherify  California,  Venture
Corporation  Limited filed suit in the Central District of California on October
15, 2004 for five ($5) million dollars in damages  asserting  breach of contract
and fraud.  To date,  evidence  has only been  presented  to support one million
three hundred eighty thousand ($1.38M) dollars. It is management assessment that
a  potential  liability  of an amount up to one  million  six  hundred  thousand
dollars exists.  Therefore, the company has accrued an amount of one million six
hundred thousand dollars.

In the matter of Lariviere, et al vs. Wherify California, Lariviere, et al filed
suit  on  April  14,  2005   alleging   breach  of   contract,   fraud/negligent
misrepresentation,  fraud/intentional  misrepresentation and constructive fraud.
The  plaintiffs  are seeking the  imposition  of  constructive  trust,  specific
performance and damages based on their  allegations  that the company owes stock
options to the  plaintiffs in accordance  with the terms of alleged  agreements.
Wherify  California  has not yet filed a response to the complaint and has until
the deadline of October 25, 2005 to file such response. The company's management
feels that a reasonable  estimate  for  potential  liability  for the company is
somewhere  within a range of $0 to $500,000.  Management of the company has also
determined  that no amount within that range is a better estimate of a potential
liability  than any other  amount.  Therefore,  no amount has been set aside for
this contingent liability.

                                      F-21
<PAGE>

In the matter of Zoltar Satellite Systems,  Inc. vs. Wherify California,  Zoltar
Satellite  Systems,  Inc. filed suit in the United States  District Court in the
Eastern District of Texas in June 2005,  alleging that the company and ten other
named defendants including LG Electronics,  Inc., Motorola, Inc., Sanyo Electric
Co., Ltd. and Sprint  Corporation  infringed  certain patents as a result of the
manufacture, use sale and/or offer for sale of cellular telephones equipped with
emergency  location  determination  technology.  Unspecified  monetary  damages,
injunctive  relief and attorney fees are sought.  A dollar amount of loss in the
event of an  unfavorable  result,  our counsel is also unable to determine.  The
company's  management feels that a reasonable  estimate for potential  liability
for the company is somewhere  within a range of $0 to $5,000,000.  Management of
the company  has also  determined  that no amount  within that range is a better
estimate of a potential  liability than any other amount.  Therefore,  no amount
has been set aside for this contingent liability.

In the matter of William Prevost vs. Wherify  California,  William Prevost filed
suit in Superior Court for the County of San Mateo, State of California alleging
that the company failed to pay Mr. Prevost the sum of $45,000 plus interest owed
to him pursuant to a severance  agreement and general release of all claims. The
complaint seeks to recover damages including  consequential and punitive damages
and declaratory  relief with respect to the issuance of a new share  certificate
without any restrictions on transfer.  In a separate  communication  Mr. Prevost
has threatened litigation with respect to 849,073 shares of Wherify California's
common stock insisting that the company issue a new certificate for these shares
without restrictions or a lock-up. It is management  assessment that a potential
liability of an amount up to $45,000 exists.  Therefore, the company has accrued
an amount of $45,000.

OTHER

Wherify  California has agreed to several  payout plans for various  vendors for
old accounts payable. The payouts total approximately $120,012 and are scheduled
to be paid out through October 2005.

NOTE 7 - CONVERTIBLE PREFERRED STOCK

As of June 30, 2005, Preferred Stock consists of the following:

                                              ISSUED AND
                 AUTHORIZED SHARES        OUTSTANDING SHARES       BOOK VALUE
                 -----------------        -------------------     -----------
Series A             1,143,756                1,143,756           $ 8,553,413
Series B               555,383                  555,383             5,137,284
Series C             4,200,000                3,979,647            34,763,735

The holders of Convertible Preferred Stock have certain rights as follows:

Voting

Each  holder  of the  Series A, B and C Stock is  entitled  to a number of votes
equal to the number of shares of common  stock  into  which the shares  could be
converted. As of June 30, 2005, holders of Series A, B and C are entitled to one
vote for each share of Preferred A, B or C they hold.

Notwithstanding the provisions of the paragraph above, at each annual or special
meeting called for the purpose of electing directors, the holders of Series A, B
and C, all voting together as a single class on an as-converted  basis, shall be
entitled to elect two members of the Board of  Directors  and the holders of the
common stock, voting as a single class, shall be entitled to elect the remaining
members of the Board of Directors.

Dividends

Holders of Series A, B and C are entitled to a non-cumulative dividend, when and
if declared by the Board of Directors,  at the rate of $0.75 per share per annum
for  Series A,  $0.925 per share per annum for Series B, and $1.50 per share per
annum for Series C prior and in  preference  to any  distribution  on the common
stock. Through June 30, 2005 the Board of Directors has declared no dividends.

                                      F-22
<PAGE>

Liquidation

In the event of any liquidation, change in control, dissolution or winding up of
Wherify  California,  the  holders of the Series A, B and C shall be entitled to
receive,  prior and in  preference  to any  distribution  to the  holders of the
common  stock,  an amount per share equal to $7.50 per share for Series A, $9.25
per share for Series B and  $15.00 per share for Series C, plus an amount  equal
to all accrued but unpaid dividends on such shares.  Any amounts remaining after
such distribution shall be distributed ratably to the holders of common stock.

Conversion

Each share of Series A, B and C is convertible, at the option of the holder into
common  stock,  according  to a conversion  ratio,  subject to  adjustments  for
dividends,  splits, subdivisions,  combinations,  consolidation of common stock,
distributions, reclassification, exchange and substitution. As of June 30, 2005,
the each holder of Series A, B and C is  entitled  to one share of common  stock
for each  share of Series A, B or C they  hold.  Each share of Series A, B and C
automatically  converts  into the  number of shares of common  stock at the then
effective  conversion  rate  upon the  earlier  of:  (i) the  closing  of a firm
commitment  underwritten  public offering pursuant to an effective  registration
statement under Securities Act of 1933, as amended,  covering the offer and sale
of common  stock for the  account  of  Wherify  California  to the  public  with
aggregate  proceeds to Wherify  California in excess of $10,000,000 and (ii) the
affirmative  vote or written consent of a majority of the outstanding  shares of
such Series A, B and C.

At June 30, 2005 Wherify  California  reserved a total of  44,550,000  shares of
common  stock for the  conversion  of Series A, B, and C  Convertible  Preferred
Stock.

Issuance

Series A Convertible  Preferred  stock was sold from June 1999 through  February
2003 for $7.50 per share.

Series B Convertible  Preferred stock was sold from April 2000 through  December
2000 for $9.25 per share.

From August 2001 through January 2005,  Wherify  California issued shares of its
Convertible  Series C  Preferred  Stock at prices  between  $5.00 and $15.00 per
share.  These  shares are  convertible  upon  closing of the merger with Wherify
California  Wireless,  Inc.  (formerly known as IQ Biometrix,  Inc.) ("IQB") and
each common  share will then be exchanged  for 4.80 shares of IQB common  stock.
The  common  stock was  valued  using  Black-Scholes  using the price of the IQB
common stock on the date the  preferred  stock was issued.  The IQB stock ranged
between $0.64 and $6.20 per share. The beneficial  conversion feature related to
the Wherify California Series C Preferred shares was calculated at each issuance
date by taking the total Wherify California Series C shares sold and multiplying
it by 4.80 (the conversion ratio to be used to convert Wherify California shares
into IQB shares) and then  dividing  that number of shares  (total  shares to be
converted) into the total proceeds received for the Wherify  California Series C
shares. This resulted in the conversion price. The conversion price was compared
to  IQB's  common  stock  closing  trading  price  on each  issuance  date.  The
difference  between  the  conversion  price and the common  stock  price on each
issuance date was  multiplied by the number of shares to be converted  resulting
in an intrinsic value of approximately $12.5 million and $13.0 million in fiscal
2005 and 2004,  respectively.  This amount represents the beneficial  conversion
feature of the  preferred  stock and was deemed a dividend,  but there is no net
effect to the balance sheet or statement of stockholders deficit.

In fiscal 2004, Wherify California sold 1,191,108 shares of Series C Convertible
Preferred  stock for proceeds of  $6,372,000,  issued 139,466 shares of Series C
Convertible  Preferred  stock for a note payable and accrued  interest  totaling
$1,045,995, and issued 13,369 shares of Series C Convertible Preferred stock for
accounts payable totaling $200,535.

During  fiscal  2005,  Wherify  California  sold  1,463,207  shares  of  Wherify
California   Series  C  preferred  stock  to  investors  for  proceeds  totaling
$13,041,680.

NOTE 8 - COMMON STOCK

Wherify California has the right to repurchase, at the original issue price, the
unvested  portion of the common stock issued to  employees  in  connection  with
Wherify  California's  formation.  The vesting period is ratable over four years
and zero shares were subject to repurchase at June 30, 2005.

In fiscal 2004,  Wherify  California  issued  11,000  shares of common stock for
services valued at $16,500.

In fiscal 2005,  Wherify  California issued 5,000 shares of common stock for the
exercise of options for proceeds totaling $7,500.  An additional  100,000 shares
of common stock were issued for the  exercise of options with an exercise  price
of zero. The intrinsic value associated with the 100,000 options was $570,000.

                                      F-23
<PAGE>

NOTE 9 - STOCK OPTION PLAN

In 1999 Wherify  California adopted the 1999 Stock Option Plan ("the Plan"). The
Plan provides for the granting of stock options to employees and  consultants of
Wherify California. Options granted under the Plan may be either incentive stock
options or  nonqualified  stock options.  Incentive stock options ("ISO") may be
granted only to Company employees (including officers and directors who are also
employees).  Nonqualified  stock  options  ("NSO")  may be  granted  to  Company
employees and  consultants.  Wherify  California has reserved  900,000 shares of
common stock for issuance under the Plan.

Options  under the Plan may be granted  for periods of up to ten years and at an
exercise  price equal to the  estimated  fair value of the shares on the date of
grant as  determined  by the Board of  Directors,  provided,  however,  that the
exercise price of an ISO and NSO granted to a 10% shareholder  shall not be less
than 110% of the  estimated  fair value of the  shares on the date of grant.  To
date, options granted generally are exercisable  immediately as of the effective
date of the option agreement.

Summary information regarding options is as follows:

                                 OPTIONS         WEIGHTED AVERAGE
                                                   SHARE PRICE
                              ---------------    -----------------
Outstanding at
    June 30, 2003                 568,314            $2.57
Year ended June 30, 2004:
    Granted                       399,376             1.53
    Forfeited                    (273,356)            2.93
Outstanding at
    June 30, 2004                 694,334            $1.83
Year ended June 30, 2005:
    Granted                       239,000             1.50
    Exercised                    (105,000)             .07
Outstanding at
    June 30, 2004                 828,334            $1.78

Options outstanding and exercisable as of June 30, 2005:

                                 - - OUTSTANDING - -
                                                                  EXERCISABLE
                                                                   NUMBER OF
  EXERCISE PRICE    NUMBER OF SHARES     REMAINING LIFE              SHARES
  --------------    ----------------     --------------           -----------
$   1.50               461,000             5-9 years                 137,053
    1.65               321,376             7-9 years                 185,058
    3.00                 7,800             6 years                     7,800
    6.00                38,158             7 years                    31,029
                    ----------------     --------------           -----------
                       828,334                                       360,940
                    ================                              ===========

NOTE 10 - INCOME TAXES

Wherify  California  uses the liability  method,  where  deferred tax assets and
liabilities  are determined  based on the expected  future tax  consequences  of
temporary differences between the carrying amounts of assets and liabilities for
financial  and income  tax  reporting  purposes.  During  fiscal  2005 and 2004,
Wherify California incurred net losses and, therefore, has no tax liability. The
net  deferred  tax asset  generated  by the loss  carry-forward  has been  fully
reserved.  The  cumulative  net operating loss  carry-forward  is  approximately
$54,500,000 at June 30, 2005, and will expire in the years 2013 through 2025.

At June 30, 2005, deferred tax assets consisted of the following:

Deferred tax assets
    Net operating losses                             $ 18,500,000
    Less:  valuation allowance                        (18,500,000)
                                                     ------------
Net deferred tax asset                               $          0
                                                     ============

                                      F-24
<PAGE>

NOTE 11 - QUALCOMM LICENSE

In January 2003, Wherify California  purchased a license for CDMA communications
protocol technology from Qualcomm Corporation. The purchase price was $1 million
and  $250,000  was paid in fiscal 2003.  In fiscal  2004,  Wherify  California's
management determined that the CDMA technology would be only a temporary fix and
that the competing GSM technology was required for long-term product  viability.
Consequently,  the  remaining  balance of the license  cost,  or  $750,000,  was
written  off  in  fiscal  2004.  The  replacement  GSM  technology  for  Wherify
California's next generation product line scheduled for release in calendar 2005
is part of the products Wherify California is buying from its supplier.  In June
2004,  Wherify  California agreed to a modification of the licensing contract to
increase  the  remaining  balance due from  $500,000 to $625,000 in exchange for
extending the due date for payment to January 2005. As of June 2005, the balance
with Qualcomm has been settled in full.

NOTE 12 - DISCONTINUED OPERATION SEGMENT

In the fourth quarter of fiscal 2005, Wherify  California  discontinued the sale
of its  only  product  line  which  consisted  of  wrist  watches  with  the GPS
functionality.  Accounts  payable  directly  related  to the  sale of the  wrist
watches are recorded separately on the balance sheet as accounts payable related
to  discontinued  operating  segment in the amount of $2,606,514.  Revenues less
direct  costs  associated  with this segment  totaled  $171,251 and $426,501 for
fiscal 2005 and 2004,  respectively.  This  information  has been  classified as
discontinued operations in the statements of operations.

NOTE 13 - SUBSEQUENT EVENTS

Acquisition

On  July  21,  2005,  the  Wherify  Wireless,   Inc.   (formerly  IQ  Biometrix,
Inc.)(Wherify  Wireless)  completed a merger with  Wherify  California,  Inc., a
California corporation ("Wherify California") (formerly Wherify Wireless, Inc.).
In connection  with the merger,  Wherify  Wireless issued or reserved for future
issuance, an aggregate of approximately 46 million shares of its common stock in
consideration for all of the outstanding  shares of equity securities of Wherify
California.  The 46 million shares of Wherify  Wireless's common stock issued or
reserved  for issuance in  connection  with the merger  represent  approximately
78.8% of the  total  number  of  shares  of  common  stock of  Wherify  Wireless
calculated on a fully-diluted  basis. Prior to the merger, there were 12,339,750
shares  outstanding.  As a result of the  merger,  Wherify  California  became a
wholly-owned subsidiary of Wherify Wireless.

Following the merger,  Wherify Wireless  anticipates that its principal business
activity will be the business of Wherify California, consisting primarily of the
development  and sale of wireless  location  products and  services.  The former
business  of Wherify  Wireless,  consisting  primarily  of the sale of  security
software and services,  including its FACES facial  composite  software,  to law
enforcements agencies and the security industry, is not expected to constitute a
significant  part  of the  ongoing  business  operations  of  Wherify  Wireless.
Furthermore, Wherify Wireless has not yet decided whether to continue efforts to
sell and/or improve the FACES software.

The merger will be treated as a reverse  acquisition,  pursuant to which Wherify
California  will be treated as the acquirer of Wherify  Wireless  for  financial
reporting purposes. Consequently,  following the consummation of the merger, the
historical  financial  statements  of  Wherify  California  will  serve  as  the
principal historical financial statements of Wherify Wireless.

This  treatment  means  that the  purchase  price is  calculated  as the  shares
outstanding of Wherify Wireless  immediately  prior to the merger.  The purchase
price is the 12,339,750  shares valued at the closing price of $5.69 on July 21,
2005,  or  $70,213,189.  The purchase  price is  allocated  as follows  based on
Wherify  Wireless's  June 30, 2005 balance  sheet:  Cash $1.3 million,  Accounts
Receivable  $20,000,  Inventory  $8,000,  Prepaids  $51,000,  Fixed Assets (net)
$2,000,  Intangibles  (net) $45,000,  less Convertible  notes payable  $200,000,
accounts  payable  $296,000  and  a  note  payable  of  $100,000.   Identifiable
intangibles  are  made up of  software  $1  million,  branding  $1  million  and
intellectual  property of $6 million for total  intangibles  of $8 million.  The
identified  intangibles  have an estimated useful life of 3 years. The remainder
of the  unallocated  purchase  price of $61.4  million is allocated to goodwill,
none of which is expected to be deductible for tax purposes. This purchase price
allocation  is  preliminary  and subject to change based on the  completion of a
third  party  appraisal.  However,  we expect  that there will be a  significant
impairment  in the near future of most,  if not all, of the purchase  price that
was allocated to goodwill and other  intangible  assets in  connection  with the
merger.  The  intangibles,  including  goodwill,  will be  subject to review for
possible impairment on a quarterly basis.

                                      F-25
<PAGE>

Other

On August 18, 2005 Wherify was notified of the change of ownership of its leased
office space. It is now managed by Westport  Office Park,  LLC.  Effective as of
August 18, 2005 rents and other  payments due under the Lease are to be directed
to the new property management firm.

                                      F-26
<PAGE>

                                    PRO FORMA
                       CONSOLIDATED FINANCIAL INFORMATION
                                    UNAUDITED

IMPORTANT NOTICE:

The following  unaudited Pro Forma  financial  information of Wherify  Wireless,
Inc. ("Wherify") and Wherify California, Inc. ("Wherify California") set forth a
post  merger  snapshot  of the  combined  balance  sheet  at June  30,  2005 and
statement of operations  for the twelve months ended June 30, 2005 as though the
merger  had  occurred  as  of  the  beginning  of  the  period.  The  Pro  Forma
transactions  presented  are required by the merger  agreement or by  accounting
principles to be completed upon the completion of the reverse  acquisition.  The
transactions  cover  (i)  the  conversion  of  Wherify  convertible   debentures
outstanding at the time of the merger and required to be converted by the merger
agreement,  and (ii) the accounting  treatment of the goodwill  generated by the
reverse acquisition issuance of common stock.

                                      F-27
<PAGE>

                  PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
                             CONSOLIDATED PRO FORMA
                                  BALANCE SHEET
                                  JUNE 30, 2005
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                 Wherify              Adjustments                       Pro Forma
                                                Wherify         California               Debit               Credit      Combined
                                                -------         ----------               -----               ------      --------
<S>                                                <C>               <C>         <C>     <C>       <C>   <C>               <C>
Assets
Current assets
Cash & cash equivalents                            $1,325            $1,208                                                 $2,533
Restricted certificates of deposit                     -              2,449                                                  2,449
Accounts receivable                                    20                 -                                                     20
Note Receivable                                         -               103                                                    103
Inventory                                               8                 -                                                      8
Prepaid expenses                                       50                16                                                     66
                                                   ------            ------                                                -------
   Total Current Assets                             1,403             3,776                                                  5,179
                                                   ======            ======                                                =======
PP&E, net                                               2               488                                                    490
Other assets                                            -               227                                                    227
Goodwill                                                                         (2)     61,400                             61,400
Intangibles, net                                       45                 -      (2)      8,000    (2)       2,667           5,378
                                                   ------            ------             -------          ---------         -------
Total assets                                       $1,450            $4,491                                                $72,674
                                                   ======            ======                                                =======

Liabilities and Stockholders' Equity (Deficit)

Current liabilities
Convertible  notes  payable  to
investors                                            $200                 -      (1)        200                              $   -
Accounts payable                                      261             2,849                                                  3,110
Accrued liabilities to related party                    -             3,892                                                  3,892
Note Payable                                          100                 -                                                    100
Accrued expenses                                       35               573                                                    608
Accounts payable related   to
discontinued operating segment                          -             2,607                                                  2,607
                                                   ------            ------                                                -------
Total current liabilities                             596             9,921                                                 10,317
                                                   ------            ------                                                -------
Stockholders' deficit
Common stock and paid in capital                   22,420             2,024                        (1)         200
                                                                                                   (4)      48,454
                                                                                 (3)     21,566    (2)      69,400         120,932
Preferred Stock A                                       -             8,553      (4)      8,553                                  -
Preferred Stock B                                       -             5,137      (4)      5,137                                  -
Preferred Stock C                                       -            34,764      (4)     34,764                                  -
Deferred stock compensation                             -              (714)                                                  (714)
Accumulated deficit                               (21,566)          (55,194)     (2)      2,667    (3)      21,566         (57,861)
                                                   ------            ------                                                -------
Stockholders' equity (deficit)                        854            (5,430)                                                62,357
                                                   ------            ------                                                -------
Total  liabilities and  stockholders' equity       $1,450            $4,491             142,287          $ 142,287          72,674
                                                   ======            ======                                                =======
</TABLE>


Notes

(1)   Merger  agreement  calls for the  conversion  of all  Wherify  convertible
      debentures just prior to the closing of the merger.

(2)   The purchase price is the 12,339,750 shares valued at the closing price of
      $5.69 on July 21, 2005, or $70,213,189. The purchase price is allocated as
      follows based on Wherify Wireless's June 30, 2005 balance sheet: Cash $1.3
      million, Accounts Receivable $20,000,  Inventory $8,000, Prepaids $51,000,
      Fixed Assets (net) $2,000,  Intangibles  (net) $45,000,  less  Convertible
      notes payable  $200,000,  accounts  payable $296,000 and a note payable of
      $100,000.  Identifiable  intangibles  are made up of  software $1 million,
      branding  $1 million  and  intellectual  property  of $6 million for total
      intangibles of $8 million.  The identified  intangibles  have an estimated
      useful  life of 3 years.  Based on a useful  life of 3 years,  there would
      have been  amortization  expense of $2.667 million for the year ended June
      30, 2005. The remainder of the unallocated purchase price of $61.4 million
      is allocated to goodwill,  none of which is expected to be deductible  for
      tax purposes. This purchase price allocation is preliminary and subject to
      change based on the  completion of a third party  appraisal.  However,  we
      expect that there will be a  significant  impairment in the near future of
      most, if not all, of the purchase price that was allocated to goodwill and
      other  intangible  assets in connection with the merger.  The intangibles,
      including goodwill, will be subject to review for possible impairment on a
      quarterly basis.

(3)   As a result of the reverse merger  accounting,  the Wherify's  accumulated
      deficit is eliminated.

(4)   Wherify California  preferred stock will be converted into common stock of
      the merged company.

                                      F-28
<PAGE>

                                                CONSOLIDATED PRO FORMA
                                                STATEMENT OF OPERATIONS
                                           TWELVE MONTHS ENDED JUNE 30, 2005
                                                    (IN THOUSANDS)
                                                      (UNAUDITED)

<TABLE>
<CAPTION>
                                                     Wherify     Wherify California      Adjustments            Pro Forma
                                               --------------    ---------------         -------------     ----------------
<S>                                                     <C>               <C>       <C>         <C>                <C>
Revenue                                                  $301                 $-                                       $301
Cost of Goods Sold                                         34                  -                                         34
                                               --------------    ---------------                           ----------------
Gross Margin                                              267                  -                                        267

Operating expenses
Selling expense                                           324                  -                                        324
General and administrative                              4,338             10,727                                     15,065
Rent expense payable to related party                       -              1,363                                      1,363
Research and development                                   20                  -                                         20
Depreciation/Amortization                                  48                119    (1)          2,667                2,834
                                               --------------    ---------------                 -----     ----------------
Total operating expenses                                4,730             12,209                 2,667               19,606
                                               --------------    ---------------                 -----     ----------------

Operating loss                                         (4,463)           (12,209)               (2,667)             (19,339)

Other income (expense)
Interest expense                                       (3,840)              (110)                                    (3,950)
Interest and other income                                   -                 87                                         87
                                               --------------    ---------------                 -----     ----------------
Net loss from continuing operations                    (8,303)           (12,232)               (2,667)             (23,202)

Discontinued operations
  Loss from operations of discontinued
    business segment                                        -               (171)                                      (171)
                                               --------------    ---------------                            ----------------
Net Loss                                               (8,303)           (12,403)               (2,667)             (23,373)

Deemed dividend on preferred stock                          -             12,467                                     12,467
Net loss attributable to common
  shareholders                                        ($8,303)          ($24,870)               (2,667)            ($35,840)
                                               ==============    ===============                           ================

Basic & Diluted loss per share from
  continuing operations                                ($1.15)            ($4.08)                                    ($0.39)

Basic & diluted loss per share from
  discontinued operations                                  $-             ($0.06)                                    ($0.00)

Basic and diluted loss per share                       ($1.15)            ($4.13)                                    ($0.39)

Weighted average shares outstanding                     7,226              3,001                                     59,891
</TABLE>

Notes

(1)   The purchase price is the 12,339,750 shares valued at the closing price of
      $5.69 on July 21, 2005, or $70,213,189. The purchase price is allocated as
      follows based on Wherify Wireless's June 30, 2005 balance sheet: Cash $1.3
      million, Accounts Receivable $20,000,  Inventory $8,000, Prepaids $51,000,
      Fixed Assets (net) $2,000,  Intangibles  (net) $45,000,  less  Convertible
      notes payable  $200,000,  accounts  payable $296,000 and a note payable of
      $100,000.  Identifiable  intangibles  are made up of  software $1 million,
      branding  $1 million  and  intellectual  property  of $6 million for total
      intangibles of $8 million.  The identified  intangibles  have an estimated
      useful  life of 3 years.  Based on a useful  life of 3 years,  there would
      have been  amortization  expense of $2.667 million for the year ended June
      30, 2005. The remainder of the unallocated purchase price of $61.4 million
      is allocated to goodwill,  none of which is expected to be deductible  for
      tax purposes. This purchase price allocation is preliminary and subject to
      change based on the  completion of a third party  appraisal.  However,  we
      expect that there will be a  significant  impairment in the near future of
      most, if not all, of the purchase price that was allocated to goodwill and
      other  intangible  assets in connection with the merger.  The intangibles,
      including goodwill, will be subject to review for possible impairment on a
      quarterly basis.

                                      F-29
<PAGE>

SIGNATURES

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

October 13, 2005                         WHERIFY WIRELESS, INC.


                                         By: /s/ Timothy Neher
                                         ---------------------------------------
                                         Timothy Neher,
                                         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/ Timothy Neher                        Chief Executive Officer (Principal    October 13, 2005
------------------------------------     Executive Officer and Director)
Timothy Neher

/s/ William Scigliano                    Director (Chairman of the Board)      October 13, 2005
------------------------------------
William Scigliano

/s/ John Micek III                       Director                              October 13, 2005
------------------------------------
John Micek III

/s/ Wade Fenn                            Director                              October 13, 2005
------------------------------------
Wade Fenn

/s/ Reginald Brown                       Director                              October 13, 2005
------------------------------------
Reginald Brown

/s/ John Davis                           Chief Financial Officer, Treasurer    October 13, 2005
------------------------------------     (Principal Accounting Officer)
John Davis
</TABLE>