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# SECURITIES AND EXCHANGE COMMISSION

# Washington, D.C. 20549

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# FORM 10-KSB

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# [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30,
2002

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Commission file number 0-24001

# JVWEB, INC.

Incorporated pursuant to the Laws of Delaware

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Internal Revenue Service  Employer
Identification No. 76-0552098

10600 N. De Anza Boulevard, Cupertino, California 95014

(559) 222-2229

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

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

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

The issuer's revenues for the fiscal year ended June 30, 2002 were $98,148.

The aggregate market value
of the voting stock held by non-affiliates of the registrant on October 10,
2002 was $4,149,246. The number of shares outstanding of the
registrants Common Stock, $.01 par value, as of October 10, 2002 was
16,406,967.

Transitional Small Business Disclosure format (Check one): Yes [X]     No [  ]

INDEX

`Page Number
                                     PART I.

Items 1. & 2. Business and Properties.                                4

Item 3.       Legal Proceedings.                                         25

Item 4.       Submission of Matters to a Vote of Security Holders        25

                                    PART II.

Item 5.       Market for the Registrant's Common Equity and Related
                  Stockholder Matters.                                   26

Item 6.       Management's Plan of Operation.                            26

Item 7.       Financial Statements.                                      29

Item 8.       Changes in and Disagreements with Accountants on
                 Accounting and Financial Disclosure.                    29

                                    PART III.

Item 9.       Directors, Executive Officers, Promoters and Control
                 Persons; Compliance with Section 16(a) of the
                 Exchange Act.                                           30

Item 10.      Executive Compensation.                                    31

Item 11.      Security Ownership of Certain Beneficial Owners and
                  Management.                                            34

Item 12.      Certain Relationships and Related Transactions.            35

                                    PART IV.

Item 13.      Exhibits and Reports on Form 8-K.                          35`

# FORWARD-LOOKING
STATEMENTS

This
Annual Report on Form 10-KSB contains forward-looking statements within the
meaning of Section 24A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements appear in a number of places
including ITEMS 1 AND 2 BUSINESS AND PROPERTIES, These statements
regard our belief that the FACES technology will help solve the growing need for
effective crime and terrorism fighting tools as well as offering potential
applications relating to other industries; our belief that the BAC ID could
serve as the first international standard in the transmission of facial
recognition data; our belief that international markets represent a significant
market for our products and services; our belief that we have ample room to
penetrate further the public security/law enforcement agencies segment of the
market; our intention to compete vigorously in terms of price, product features,
product performance, ease of use, quality of support and service, and company
reputation; our belief regarding any termination or non-renewal of any lease;
our expectations regarding the sources from which we will finance our
operations; our expectations regarding the amount of funds we will need in the
future; our expectations regarding the focus of our revenue generation efforts
on our existing customers; our expectations regarding the amount of additional
development expenses needed to pursue our research and development strategy; our
expectations regarding the timing of the rollout, release or public availability
of any products of ours now or hereafter under development; our expectations
regarding our receipt of revenues from training users of our products; our
intentions and expectations regarding the future availability of now
undeterminable revenue opportunities arising out of our technology; our
expectations regarding the abilities and use in certain locations of our
FACESCAN technology; our intentions regarding the protection of our proprietary
information; our expectations and intentions regarding our ability to make
available the finest facial recognition technology on the market; our intentions
regarding the continued development and refinement of our existing products, and
the development and commercialization of various computer programs and products
using the BAC ID technology; our intentions regarding the increase in the
number of distributors of our products and continuation of our direct selling
efforts; and our intentions regarding our marketing, publicity, sales and
lobbying efforts. Such statements can be identified by the use of
forward-looking terminology such as believes, expects,
may, estimates, will, should,
plans or anticipates or the negative thereof or other
variations thereon or comparable terminology, or by discussions of strategy.
Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results could differ materially from those
projected in the forward-looking statements. Factors that could cause actual
results to differ materially include, but are not limited to, those discussed
under RISK FACTORS immediately below. As a result, these
forward-looking statements represent the Companys judgment as of the date
of this Annual Report. The Company does not express any intent or obligation to
update these forward-looking statements.

## ITEMS 1 and 2.  BUSINESS AND PROPERTIES.

# RECENT EVENTS

JVWeb,
Inc. (JVWeb) was incorporated on October 28, 1997 under the
laws of the State of Delaware. On May 20, 1998, JVWeb became publicly-held
through the distribution by a company now known as Junum, Inc.
(Junum) of certain of its shares of the JVWebs common stock
to Junums stockholders. JVWeb was formed for purposes of pursuing
electronic commerce opportunities. Because of certain reasons (including the
extreme declines in the electronic commerce markets and JVWebs
financial resources), JVWeb was largely unsuccessful in the pursuit of
electronic commerce opportunities. As a result, in the fall of 2000 JVWeb
began the active search for an appropriate merger candidate in a transaction
that would likely result in a change in the control and management of JVWeb.

On
March 22, 2002 (the Effective Time), a merger (the
Merger) of IQ Biometrix California, Inc., a California corporation
(IQB), with and into IQB Acquisition Corporation, a newly-formed,
wholly-owned Delaware subsidiary of JVWeb (the Subsidiary),
was consummated in accordance with the terms, provisions and conditions of an
Agreement and Plan of Merger dated as of February 27, 2002 (the Merger
Agreement) by and among JVWeb, the Subsidiary, IQB and Pierre Cote,
Sylvie Lariviere and Eric McAfee, each a shareholder of IQB (individually, a
Shareholder, and collectively, the Shareholders).
Pursuant to the Merger, IQB was merged with and into the Subsidiary, with the
Subsidiary being the surviving corporation and adopting the new corporate name
of I.Q. Biometrix Operations, Inc. Prior to the Merger, IQB was
engaged in the business of developing products for the facial imagery market and
enterprise-level solutions for the needs of law enforcement agencies and other
potential customers. As a result of the Merger, IQBs became the business
of the Subsidiary. The Subsidiary was formed just prior to the Merger, and had
no business operations at any time prior to the Merger.

In
consideration for the Merger, the former shareholders of IQB received one share
of JVWebs Common Stock for each 1.22566 shares of IQB common stock
then issued and outstanding (the Merger Consideration). As a result
thereof, the former shareholders of IQB beneficially owned immediately after the
Merger an aggregate of 13,369,232 shares of Common Stock, constituting
approximately 84.9% of the Common Stock outstanding immediately after the
Merger. JVWeb also assumed IQBs obligations under its stock plan,
thus obligating itself to issue up to 2,331,000] additional shares of
Common Stock pursuant to options or stock grants issued pursuant to the assumed
plan.

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 shell which
acquired all of the assets of IQB, for accounting purposes IQB was treated as the accountng acquiror and
the public company henceforth. For purposes hereof, the Company shall refer
to the publicly traded company after the Merger that is continuing the business of IQB.

In connection with the Merger, the following events occurred:

| | 2. | The number of directors  constituting  the Board of Directors of the Company was expanded  from two to four.
   While a couple of  individuals  have served on the Board of Directors on an interim  basis since the Merger,
   the current members of Board of Directors of the Company are Eric McAfee,  Greg J. Micek,  Morden C. Lazarus
   and Lewis Ball.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | The officers of the Company at the time of the Merger resigned from all of their
offices with the Company, and new officers were elected. While the persons
serving in particular offices have changed from time to time since the
Merger, the following persons are currently serving in the one or more offices
of the Company set forth opposite their respective names below:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

`Eric McAfee                        Chairman of the Board
        William Scigliano                  Chief Executive Officer
        Greg Micek                         President and Secretary
        Paul Schroeder                     Chief Financial Officer,
                                               Treasurer & Controller`

| | 3. | The Shareholders entered into a Voting Agreement (the Voting Agreement) in
favor of Greg J. Micek, pursuant to which they agreed, for two years after the
Merger, to use their best efforts to maintain the number of directors on the
Board at seven and to vote all of their shares of Common Stock to elect Mr.
Micek or his nominee to the Board. The Shareholders and Mr. Micek have also
agreed to elect certain other persons (some of which are specified and some of
which are to be agreed upon) to Board. Despite the Shareholders and Mr.
Miceks agreements regarding the number of directors on the Board and the
election of certain other persons to the Board, the Shareholders and Mr. Micek
have verbally agreed that the Board should be limited to four persons for the
time being and the persons serving as directors should be Eric McAfee, Greg J.
Micek, Morden C. Lazarus and William Scigliano.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | Lewis Ball agreed to resign from his seat on the Board of Directors of the
Company promptly after the Company has fully complied with Rule 14f-1 under the
Securities Exchange Act of 1934.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The Company now proposes to change its corporate name to "IQ Biometrix, Inc."
| | -- | -----------------------------------------------------------------------------

After
Mr. Ball resigns from his seat on the Board of Directors of the Company, the
Board of Directors of the Company expects to elect William Scigliano to fill the
vacancy created by such resignation. Like all of the Company directors, Mr.
Scigliano will (if so elected) serve as such until the next annual meeting of
the stockholders, and until his successor has been duly elected and qualified.
Mr. Scigliano has consented to serve as a director of the Company if so elected.

The
Company believes that, prior to the Merger, control of JVWeb resided
almost exclusively in Greg J. Micek, a director of the Company and (prior to the
Merger) the President of the Company and the holder of approximately 48.7% of
the Common Stock outstanding. The Company believes that (after the Merger)
control of the Company became dispersed among some of the Companys largest
stockholders who (to the best of the Companys knowledge) have not agreed
to act collectively as a group, except with regard to the election of certain
persons to the Companys Board of Directors as described herein. The
Companys largest stockholders among whom control is believed to be
dispersed include the persons listed immediately below, who respectively own
beneficially the percentage of the outstanding Common Stock indicated to the
immediate right of their respective names (the following percentages do not take
into account any shares that might in the future be acquired by the exercise of
outstanding stock options):

`Percentage Ownership of
         Stockholder                                 Outstanding Common Stock

         Clyde Berg                                          11.5%
         Greg J. Micek                                        7.3%
         Cagan McAfee Fund, a partnership                     6.1%
            under the control of Eric McAfee
         Eric McAfee                                          3.5%
         Morden C. Lazarus                                    2.0%`

The basis of the control of
the Company by the persons listed above (beyond their stock ownership) is
described above.

The headquarters
address of the Company is 10600 N. De Anza Boulevard, Suite 250, Cupertino, California and the Company has offices at 1630 East Shaw Avenue, Suite 192, Fresno, California 93710.
The Company's telephone number is (559) 222-2229. The Companys Web site
is located at http://www.iqbiometrix.com. Information contained in the
Companys Web site shall not be deemed to be a part of this Annual Report.

# RISK FACTORS

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

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

On
March 22, 2002, the merger (the Merger) of
IQ Biometrix California, Inc. (IQB) with and into a wholly-owned subsidiary
of JVWeb was completed. IQB
was the result of the combination of the original business of IQB with the
business of another company, CISystems, Inc. (CIS). IQB was
incorporated in July 2001 to continue the launch and development of a
proprietary software program named FACES, The Ultimate Composite
PictureTM. Development of this software began in 1988. A couple
of previous owners of this technology ultimately declared bankruptcy under the
laws of Canada, although management believes that their bankruptcies were not a
result of the merits of the technology. See ITEMS 1 AND 2. BUSINESS AND
PROPERTIES - BUSINESS - BAC IDkground. CIS was formed in July 2000 for
purposes of engaging in the business of developing a systems approach to the
communication of broadband data between widely dispersed locations, utilizing in
some cases two-way satellite connectivity. IQBs and CISs businesses
were combined on November 12, 2001. Neither business ever achieved
profitability. Because JVWeb had no significant assets or operations at the time of the Merger,
the Merger was treated for accounting purposes as a (reverse merger.) Prior to the Merger,
JVWeb had been dormant for over a year.

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

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

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

| | * | Our ability to manage the growth we are seeking to realize
| | - | ----------------------------------------------------------

| | * | Our need to expand our distribution capability
| | - | ----------------------------------------------

| | * | Our ability to respond to competitive developments
| | - | --------------------------------------------------

| | * | The market's acceptance of our products
| | - | ---------------------------------------

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

| | * | Our ability to develop and increase our customer base
| | - | -----------------------------------------------------

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

| | * | Our ability to provide superior customer service and order fulfillment
| | - | ----------------------------------------------------------------------

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

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

The
Company has incurred net losses since inception, and has not achieved
profitability. As of June 30, 2002, the Company had an
accumulated deficit of approximately $984,265. We expect we will need
to continue spending substantial financial and other resources on expanding our
sales and marketing activities and developing and introducing new products and
enhancements to our existing products. As a result, we need to generate
significant revenue to achieve and maintain profitability. We expect that our
sales and marketing expenses and our research and development expenses will
continue to increase in absolute dollars and may increase as percentages of
revenue for the foreseeable future. If we do achieve profitability, we cannot be
certain that we can sustain on-going future losses.

WE
EXPECT TO HAVE FUTURE CAPITAL NEEDS, AND THE PROCUREMENT OF ADDITIONAL FINANCING
TO MEET THESE NEEDS IS UNCERTAIN.

We
currently have no meaningful flow of revenues. To date, we have been unable to
fund our operations from cash generated by our business and have funded
operations primarily by selling securities. Our future liquidity and capital
requirements will depend upon numerous factors, including the success of our
current and future products. We anticipate that during fiscal 2003 we will need
to raise additional funds through public or private financing, strategic
relationships or other arrangements. There can be no assurance that such
additional funding (if needed) will be available on terms acceptable to us.
Furthermore, debt financing (if available and undertaken) may involve
restrictions limiting our operating flexibility. Moreover, if we issue equity
securities to raise additional funds, the following results will or may occur:

| | * | The percentage ownership of our existing stockholders will be reduced
| | - | ---------------------------------------------------------------------

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

| | * | The new equity securities may have rights, preferences or privileges senior to
those of the holders of our Common Stock.
| | - | ------------------------------------------------------------------------------------------------------------------------

We can not now predict our
additional capital requirements because of the uncertainty of our actual capital
requirements. However, to pursue our business plan as desired, we believe that
our future capital requirements will exceed our current financial position. We
expect to finance our operations for fiscal 2003 through cash flow from
operations and the private placement of our equity securities. We are looking
for sources of additional capital. However, there can be no assurance that we
will find such sources. If funds are not available on acceptable terms, we may
be prevented from pursing our current business plan and responding to
competitive pressures. Our failure to pursue our current business plan or
respond properly to competitive pressures could materially and adversely affect
our business, results of operations and financial condition. As a worst case,
our failure to procure required financing could cause us to cease operations
either temporarily or permanently.

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

We
expect that our operating results will fluctuate in the future due to a number
of factors. We do not control many of these factors. These factors include the
following:

| | * | Demand for our products
| | - | -----------------------

| | * | Our ability to attract new customers at a steady rate
| | - | -----------------------------------------------------

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

| | * | Technical  difficulties  in our  products  that could  delay  product  shipments  or  increase  the costs of
                  introducing new products
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | * | Changes in the pricing of our products or those of our competitors
| | - | ------------------------------------------------------------------

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

| | * | Costs relating to our marketing programs and our business in general
| | - | --------------------------------------------------------------------

| | * | Timing of revenue recognition for sales of products
| | - | ---------------------------------------------------

| | * | General economic conditions.
| | - | ----------------------------

Any of the foregoing
factors may cause our operating expenses to be disproportionately high or cause
our revenue and operating results to fluctuate. As a consequence, our business,
financial condition and operating results could be adversely affected. In
addition, to respond to changes in our competitive environment, we may
occasionally make certain decisions from which we may benefit in the long run.
However, in the short run, such decisions could materially and adversely affect
our quarterly results of operations and financial condition. We also expect that
we may experience seasonality in our businesses in the future. Due to all of the
foregoing factors, in some future quarter our operating results may fall below
the expectations of investors and any securities analysts who follow our Common
Stock. In such event, the trading price of our Common Stock could be materially
adversely affected. Further, we believe that period-to-period comparisons of our
financial results may not be very meaningful. Accordingly, you should not
conclude that such comparisons indicate future performance.

OUR
MARKET IS IN AN EARLY STAGE OF DEVELOPMENT, AND OUR PRODUCTS (INCLUDING OURS)
MAY NOT ACHIEVE MARKET ACCEPTANCE.

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

We
do not have a long history of selling our products and will have to devote
substantial resources to educate prospective customers about the benefits of our
products. Our efforts to educate potential customers may not result in our
products achieving market acceptance. Furthermore, even if our products
are effective, our target customers may not choose them for technical, cost,
support or other reasons. If the market for our products fails to grow or grows
more slowly than we anticipate, our business could suffer.

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

In
addition, from time to time, facial recognition and other biometrics
technologies have been the focus of organizations and individuals seeking to
curtail or eliminate the use of these technologies on the grounds that these
technologies may be used to diminish personal privacy rights. In the event that
such initiatives result in restrictive legislation, the market for facial
recognition products may be adversely affected.

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

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

Due
in part to the emerging nature of the market for our products and the
substantial resources available to some of our competitors, there may be a
time-limited opportunity for us to achieve and maintain a significant market
share. Developing and maintaining awareness of our brand names is critical to
achieving widespread acceptance of our products. Furthermore, we believe that
the importance of brand recognition will increase as competition in the market
for our products increases. Successfully promoting and positioning our brands
will depend largely on the effectiveness of our marketing efforts, our ability
to develop reliable and useful products at competitive prices, and our ability
to achieve and maintain a position as a leader in providing high quality facial
imagery software products and enterprise-level solutions for the needs of law
enforcement agencies and other potential customers. To attract and retain
customers and to promote and maintain our brands in response to competitive
pressures, we may need to increase our marketing and advertising budgets or
otherwise to increase substantially our financial commitment to creating and
maintaining brand loyalty among vendors and consumers. We expect to derive a
substantial majority of our revenue from a limited number of products for the
foreseeable future. Our business, results of operations and financial condition
could be materially adversely affected if any of the following events occur:

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

| | * | We otherwise fail to promote and maintain our brands
| | - | ----------------------------------------------------

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

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

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

We
believe that our success will depend on the continued growth of our customer
base and the retention of our customers. We presently have over 150,000 seat licenses distributed to
law enforcement agencies in the United States. We
expect to focus a large part of our revenue generation efforts on our existing
customers. If we fail to generate repeat and expanded business from our current
and future customers, our operating results would be seriously harmed. Our
ability to attract new customers will depend on a variety of factors, including
the reliability and cost-effectiveness of our products and our ability to
effectively market our products. If a customer has a positive experience with
our products, the customer may purchase additional licenses to expand the use of
our products in its organization or license additional products from us. However
there is no assurance that our customers will expand their current use of our
products in this way.

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

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

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

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

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

Software
products as complex as those that we offer often contain errors or defects,
particularly when first introduced, when new versions or enhancements are
released and when configured to individual customer computing systems. We
currently have no known errors and defects in our products. However, there can
be no assurance that (despite testing) defects and errors will not be found in
current versions, new versions or enhancements of our products after
commencement of commercial shipments, any of which could result in damage our
reputation, the loss of sales, a diversion of our product development resources,
or a delay in market acceptance and thereby materially adversely affecting our
business, operating results and financial condition. The computer hardware
environment is characterized by a wide variety of non-standard configurations
that make pre-release 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 general liability insurance that we may carry could be
insufficient to protect us from all liability that may be imposed under any
asserted claims. Although through our license agreements with customers we will
try to include provisions designed to limit our exposure to potential claims,
such limitation of liability provisions may not be effective as a result of
existing or future laws or unfavorable judicial decisions.

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

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

| | * | The expansion of our sales force and distribution channels
| | - | ----------------------------------------------------------

| | * | The expansion of our product and services offerings
| | - | ---------------------------------------------------

| | * | Development of relationships with strategic business partners
| | - | -------------------------------------------------------------

| | * | The expansion of management and infrastructure
| | - | ----------------------------------------------

| | * | Brand development, marketing and other promotional activities.
| | - | --------------------------------------------------------------

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

OUR
SUCCESS DEPENDS TO A GREAT EXTENT ON OUR ABILITY TO PROTECT OUR INTELLECTUAL
PROPERTY.

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

In
addition, in the future third parties may claim certain aspects of our business
infringe their intellectual property rights. While we are not currently subject
to any such claim, any future claim (with or without merit) could result in one
or more of the following:

| | * | Significant litigation costs
| | - | ----------------------------

| | * | Diversion of resources, including the attention of management
| | - | -------------------------------------------------------------

| | * | Our agreement to certain royalty and licensing arrangements
| | - | -----------------------------------------------------------

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

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

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

OUR
 FINANCIAL PERFORMANCE MAY BE ADVERSELY AFFECTED BY COMPETITION

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

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

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

INCUMBENT
MANAGEMENT OWNS A SIGNIFICANT PERCENTAGE OF OUR OUTSTANDING STOCK, AND
CUMULATIVE VOTING IS NOT AVAILABLE TO STOCKHOLDERS.

Our
management owns approximately 19.9% of the outstanding Common Stock (considered
on an undiluted basis). Cumulative voting in the election of Directors is not
provided for. Accordingly, the holder or holders of a majority of our
outstanding shares of Common Stock may elect all of our Board of Directors.
Managements large percentage ownership of our outstanding Common Stock
helps enable it to maintain their positions as such and thus control of our
business and affairs.

OUR
AUTHORIZED PREFERRED STOCK EXPOSES STOCKHOLDERS TO CERTAIN RISKS.

Our
Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares
of Preferred Stock, par value $.01 per share. No shares of Preferred Stock were
issued as of June 30, 2002. The authorized Preferred Stock constitutes what is
commonly referred to as blank check preferred stock. This type of
preferred stock allows the Board of Directors to divide the Preferred Stock into
series, to designate each series, to fix and determine separately for each
series any one or more relative rights and preferences and to issue shares of
any series without further stockholder approval. Preferred stock authorized in
series allows our Board of Directors to hinder or discourage an attempt to gain
control of us by a merger, tender offer at a control premium price, proxy
contest or otherwise. Consequently, the Preferred Stock could entrench our
management. The market price of our Common Stock could be materially and
adversely affected by the existence of the Preferred Stock.

OUR
COMMON STOCK HAS A LIMITED TRADING MARKET.

Our
Common Stock trades in the United States only in the over-the-counter market on
the OTC Electronic Bulletin Board. Public trading of our Common Stock commenced
on June 30, 1998. Recently, the number of shares traded has been extremely
limited. Moreover, thus far the prices at which our Common Stock has traded have
fluctuated fairly widely on a percentage basis. See ITEM 5. MARKET FOR THE
REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. There can
be no assurance as to the prices at which our Common Stock will trade in the
future, although they may continue to fluctuate significantly. Prices for our
Common Stock will be determined in the marketplace and may be influenced by many
factors, including the following:

| | * | The depth and liquidity of the markets for our Common Stock
| | - | -----------------------------------------------------------

| | * | Investor perception of us and the industry in which we participate
| | - | ------------------------------------------------------------------

| | * | General economic and market conditions
| | - | --------------------------------------

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

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

| | * | Approximately 950,000 registered  shares of our Common Stock are  available  for issuance to outside
                  consultants to compensate them for services provided
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | * | Options to purchase approximately 360,000 registered shares of our Common Stock  had been granted as of October 10,
2002
| | - | ------------------------------------------------------------------------------------------------------------------------

| | * | Options to purchase an additional 3,961,000  unregistered shares had been granted as of October 10,
                  2002
| | - | --------------------------------------------------------------------------------------------------------------------------

| | * | Warrants to purchase approximately 1,030,000 unregistered shares of Common Stock had been
issued as of October 10, 2002
| | - | -----------------------------------------------------------------------------------------------------------------------

| | * | Debentures, convertible into between
130,000 and 400,000 unregistered shares of
                  Common Stock  (depending on the price of the common stock at the time of conversion),  had been issued as of
                  October 10, 2002
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The options and warrants
described above permit the holders to purchase shares of Common Stock at
specified prices. These purchase prices may be less than the then current market
price of our Common Stock. Any shares of Common Stock issued pursuant to these
options or warrants (or the convertible debentures described above) would
further dilute the percentage ownership of existing stockholders. The terms on
which we could obtain additional capital during the life of these options,
warrants or convertible debentures may be adversely affected because of such
potential dilution. Moreover, we may register in the future some or all of the
unregistered shares list above, thus accelerating the date after which these
shares may be legally sold. Finally, we may issue additional shares in the
future other than as listed above. There are no preemptive rights in connection
with our Common Stock. Thus, the percentage ownership of existing stockholders
may be diluted if we issue additional shares in the future. For issuances of
shares and grants of options to consultants, our Board of Directors will
determine the timing and size of the issuances and grants, and the consideration
or services required therefor. Our Board of Directors intends to use its
reasonable business judgment to fulfill its fiduciary obligations to our then
existing stockholders in connection with any such issuance or grant.
Nonetheless, future issuances of additional shares could cause immediate and
substantial dilution to the net tangible book value of shares of Common Stock
issued and outstanding immediately before such transaction. Any future decrease
in the net tangible book value of such issued and outstanding shares could
materially and adversely affect the market value of the shares.

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

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

STOCKHOLDERS
HAVE NO GUARANTEE OF DIVIDENDS.

The
holders of our Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefore. To
date, we have paid no cash dividends. The Board of Directors does not intend to
declare any dividends in the foreseeable future, but instead intends to retain
all earnings, if any, for use in our business operations. If we obtain
additional financing, our ability to declare any dividends will probably be
limited contractually.

# BUSINESS

# BAC ID Background

IQ Biometrix California, Inc. (IQB) was formed in
July 2001 for purposes of engaging in the business of developing products for
the facial imagery market. The FACES technology was initially developed by
InterQuest Inc. (InterQuest), a Canadian company founded by Pierre
Cote, currently the Companys largest stockholder. InterQuest launched the
FACES technology near the end of 1998. However, InterQuest was eventually
declared bankrupt under Canadian bankruptcy law on October 30, 2000. A member of
the Companys management familiar with InterQuest has expressed the strong
belief that InterQuests failure was due to dissension and fighting among
certain InterQuest stockholders and not due to the merits of the FACES
technology. On August 13, 2001, another undercapitalized Canadian company
acquired the FACES technology in the bankruptcy proceeding on a deferred payment
basis. When this acquirer was unable to raise funds to meet the deferred
payments, it defaulted and filed for bankruptcy on September 6, 2001. Management
believe that this acquirer never commenced the exploitation of the FACES
technology in any meaningful manner. After this second bankruptcy, the secured
lender reassumed control over the rights to the FACES technology. This lender
completed the outright sale of the rights to the FACES technology to a subsidiary of the Company on March
27, 2002 for a cash purchase price of $110,000.

Prior
to the Merger, IQB had combined its original facial recognition software
business with the business of CISystems, Inc. (CIS), a Delaware
corporation. CIS was formed in July 2000 by Eric McAfee, the Companys
Chairman of the Board, for purposes of engaging in the business of developing a
systems approach to the communication of broadband data between widely dispersed
locations, utilizing in some cases two-way satellite connectivity. A principal
application of this system enabled developers of content to transmit their
content to remote persons. For example, employers could develop training
materials and then transmit these material to employees working from home.
CISs software and the connectivity provided by third party vendors enabled
CISs customers to provide tese solutions. Recognizing the need to integrate proprietary content
into its system, CIS acquired the exclusive rights to several software solutions
and content sources during 2001. After the September 11, 2001 terrorist attacks,
CIS focused its content and software solutions on the security market, largely
changing the direction in which its business had previously been directed.

The
management of IQB and the management of CIS became acquainted with each other
during the summer of 2001. After they became acquainted and as events developed
through the following autumn, the management of IQB and the management of CIS
came to believe that the combination of their respective businesses could enable
enterprise-level solutions for the needs of law enforcement agencies and other
potential customers, a result that IQB could not achieve on its own. They also
believed that such solutions could be justifiably pursued by means of a publicly
traded company. Thus, the management of IQB and the management of CIS decided to
combine their respective businesses by means of IQBs acquisition of all of
the assets of CIS in exchange for shares of IQBs common stock. This
acquisition was completed on November 12, 2001. After this transaction, the
original stockholders of IQB (as a group) and the former stockholders of CIS (as
a group) each owned approximately one-half of the shares of IQBs common
stock outstanding after the transaction. IQB subsequently entered into the
Merger so that its business could thereafter be undertaken through a publicly
traded entity.

# Industry
BAC ID Background

Management
believes that increasing violence and crime have become a major global concern,
and crime prevention is a top priority in many countries. Management also
believes that police agencies have taken steps to develop crime-analysis
mechanisms, directives and training programs to promote prevention as an
efficient and pro-active way of fighting crime, and are currently seeking
additional tools to use in this connection. Cooperation between law enforcement
agencies, authorities, organizations and citizens
seems to show a growing desire for crime prevention and a recognition of the
need for new tools to combat lawlessness and effectively determine a
persons identity. The attacks on the World Trade Center and Pentagon on
September 11, 2001 seem to have heightened greatly the need for the development
of products that can prevent crime generally and international terrorism
specifically.

# The IQB
Solution

In
connection with the Merger, the Company acquired the proprietary FACES
technology. Management believes that this technology will help solve the growing
need for effective crime and terrorism fighting tools as well as offering
potential applications relating to other industries. The FACES technology allows
the easy creation and re-creation of billions of human faces through an
exhaustive database of facial features. The FACES software not only creates
composite pictures with remarkable ease and speed, but also automatically
converts the composite into unique BioMetric Alphanumerical Codes or BAC IDs.

The
 BAC ID is the digital imprint of the face. Every BAC ID is
as unique with respect to a particular face just as fingerprints or DNA are to a
particular person. Because of the digital character of the BAC IDs, they can
be transferred anywhere in the world via any telecommunications network (phone,
fax, Internet) and can instantaneously reproduce high quality facial composites
in the receiving location. The FACES technology can help law enforcement to
identify and capture criminals quickly and efficiently. It can also be used to
assist in determining a persons identity.

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

# Strategy

The
Companys goal is to become a leader in the field of facial imagery. The
Company plans to strive for this goal through the following key strategies:

| | * | Establish and maintain the FACES  software as an industry  leader.  One of the  Company's  strategies is to
         posture the FACES  software as a  state-of-the-art,  easy to use,  efficient  product.  Management  believes that the
         FACES  software  represents a significant  leap forward in simplicity of design and  usability,  revolutionizing  the
         criminal  identification  and capture process.  It can assist  anti-terrorism,  law enforcement,  security and public
         safety personnel to identify  terrorists and criminals,  and to solve crimes,  both by its standardized coding system
         of all facial elements and by its ability to exchange  information  more quickly and efficiently  between agencies in
         comparison to the previous form of graphical  exchange.  To maintain the  technological  leadership  that the Company
         believes it has, the Company plans to continue to devote significant  resources to research and development  efforts.
         The Company intends to make available the finest facial recognition  technology on the market to anti-terrorism,  law
         enforcement, security and public safety personnel.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | * | Build strong brand recognition.  The Company's strategy is to develop, promote,  advertise and increase the
         brand equity and visibility of the FACES software and its other products and services through  excellent  product and
         service offerings,  and a variety of marketing and promotional techniques using a variety of media, and conducting an
         ongoing  public  relations  campaign.  To help build strong brand  recognition  and lay the  foundation  for sales of
         enhanced  products  developed in the future,  50,000  copies of the FACES  CD-ROM were donated to police  departments
         across  North  America  in 1998 and  1999.  This  undertaking  resulted  in  endorsements  from a number of major law
         enforcement  organizations,  and  management  believes that the FACES products was well received by the recipients of
         these copies.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | * | Development  of new  products.  The Company  intends to seek to continue to develop and refine its existing
         products,  and to develop and commercialize  various computer  programs and products using the BAC ID  technology.
         The Company's research and development  strategy is to leverage this technology at all levels of development in order
         to  translate  it into a  high-contribution,  recurrent  revenue  stream.  The  Company  does not expect to require a
         significant amount of additional  development  expenses to pursue this strategy.  The Company expects to commence the
         market  rollout of FACES  Version 4.0 (the latest  version of the  software)  in January of 2003.  In  addition,  the
         Company is extending the FACES technology to produce a facial  recognition  software  application using the BAC ID
         technology to verify and authenticate  identities for security purposes.  This software, called FACESCAN,
         is discussed in greater detail herein.  The Company also plans on developing  additional  applications  for the FACES
         technology in a number of specific markets.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| | * | Maintain
a strong commitment to customer satisfaction. The Company understands that (in
order for it to be successful) its customers must be satisfied with the
Companys products. The Company is committed to customer satisfaction
throughout its organization. In order to accomplish this, the Company will
invest substantial time and effort in testing its products and working closely
with its customers to quickly address any issues that arise. The Company will
focus on providing its customers with the technical assistance and capabilities
required to ensure a satisfactory experience with the Companys products.
Customers are able to access support, via e-mail and telephone during normal
business hours. The Company supplements its telephone support with Web-based
support services. In addition, the Company offers, primarily through certified
training partners, classes and training programs for its products.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | * | Continue
to develop a strong network of strategic partners. The Company has developed a
number of formal and informal strategic relationships with persons whose
services are necessary to develop and implement the Companys business
strategy. The Company is entering into a new phase of research and development
in which it is strategically aligning itself with partners in the scientific and
university communities to ensure rapid development of new FACES applications.
For instance, the Company just recently entered into a long-term partnership
with the California State University whereby the Company will receive a broad
range of support from various departments of this university.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | * | Pursue
incremental revenue opportunities. The Company intends to leverage its FACES
technology to broaden its presence and develop additional revenue opportunities.
For instance, the Company expects to receive meaningful revenues from training
users of the Companys software, primarily over the Internet. Future
revenue opportunities are expected to grow out of the Companys technology,
although the exact nature of these can not now be determined. Nevertheless, the
Company will also maintain a vigilant lookout for such opportunities.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | * | Attract
and retain exceptional employees. The Company believes that versatile and
experienced employees provide significant advantages in the rapidly evolving
market in which it will compete. The Company is committed to building a talented
employee base and to attracting an experienced management team.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Certain
Characteristics of the Software Industry

The
market for the Companys products is characterized by rapid technological
change, frequent new product introductions and enhancements, uncertain product
life cycles, changing customer demands and evolving industry standards, any of
which can render existing products obsolete and unmarketable. The Company
believes that its future success will depend in large part on its ability to
timely develop new products that achieve market acceptance, to maintain
technological competitiveness and to meet a changing range of customer
requirements and expectations. There can be no assurance that the announcement
or introduction of new products by the Company or its competitors or any change
in industry standards will not cause customers to defer or cancel purchases of
existing products, which could materially adversely affect the Companys
business, operating results and financial condition. Major new products and
product enhancements can require long development and testing periods. In
addition, customers may delay their purchasing decisions in anticipation of the
general availability of new or enhanced versions of the Companys products.
As a result, significant delays in the general availability of such new releases
or significant problems arising during customer use of such new releases could
materially adversely affect the Companys business, operating results and
financial condition. Any failure by the Company to develop successfully, on a
timely and cost effective basis, product enhancements or new products that
respond to technological change, evolving industry standards or customer
requirements or expectations, or of such new products and product enhancements
to achieve market acceptance could materially adversely affect the
Companys business, operating results and financial condition.

# Products

## Overview

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

The
first phase of developing the FACES technology consisted of gathering a large
number of photographs from people with varied facial elements. The Research and
Development team headed by Pierre Cote and featuring computer graphic artists
proceeded to adjust the facial elements to create a universal skin
(patent pending) and a central database of facial features. Once these results
were obtained, a group of external and internal programmers created the software
which has since become the core of the FACES product. The exhaustive database of
facial features comprising this software allows the easy creation and
re-creation of billions of human faces. As an illustration, FACES 3.0 (the
current version publicly available) can generate a number of different faces
equal to 38 to the 64th power.

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

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

## Product
Development, Manufacturing and Fulfillment

Generally,
the Companys software products are developed internally with some
assistance from outside contractors. This development process enables the
Company to maintain close technical control over its products and gives the
Company the freedom to designate which modifications and enhancements are most
important and when they should be implemented. Product documentation is
generally created internally. The Company believes that a crucial factor in the
success of a new product is getting it to market quickly to respond to new user
needs or advances in hardware, without compromising product quality. The Company
strives to become informed at the earliest possible time about changing usage
patterns and hardware advances that may affect software design.

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

The
Company manages all product fulfillment, information processing, vendor
management, logistics services, licensing, and related supporting functions from
its Fresno, California location.

## Current FACES
Products

FACES
3.0. User-friendly, FACES 3.0 requires no special training, allowing even
those with limited computer skills to become fully competent in use of the
product in little time. Unlike other composite-picture tools on the market,
FACES is remarkably efficient. By simply clicking on the easy-to-find features
with the mouse, the average user can create a complete picture in fewer than 10
minutes. Containing these facial features and a wide range of accessories, the
FACES database allows the creation of more than one billion combinations of
photo-like adult faces (ages 17 to 60) of either sex and of any race. The FACES
CD-ROM is PC and Mac-compatible and can be run on any standard desktop or
portable computer with a CD-ROM drive, making it fully adaptable to any working
environment. About 700 MB of memory is needed on a systems hard drive to
install FACES or the software can be run directly from the CD-ROM drive. Each
FACES CD-ROM comes in three languages: English, French and Spanish. This product
is also available in German. The FACES technology now has approximately 160,000
licenses worldwide.

## FACES Products
under Development

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

FACES,
Version 4.0. Version 4.0 contains a more attractive interface for general
applications by untrained users. It also contains various tools that allow for
easier browsing and searching of facial features. While FACES Version 3.0
includes approximately 4,000 facial features, FACES Version 4.0 will include
approximately 5,000 facial features, including many more ethnic facial elements
and hairstyle gathered through photograph sessions held in Fresno, California
with the participation of the California State University. Perhaps most
importantly, FACES Version 4.0 will include an enterprise-level component to it,
extending the utility of this product beyond a single desktop user. This product
is currently in beta release and is expected to be released for full shipment in January, 2003.

FACES,
Version 5.0. This version will include expanded features such as child faces and senior citizens
(toddler to 90 years old and more). This sophisticated version will include a
new BAC ID that will be compatible with the FACESCAN technology that is
currently under development and that is discussed below. This product is
expected to be released some time during 2004.

## FACESCAN

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

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

This system could substantially
decrease identification fraud, one of the areas of high crime activity in the
United States, and be a useful tool at ports of entry for the apprehension of
suspected terrorists. Although an early 2003 release date for this product was
originally scheduled, the Company has determined further development of this
product is required, and no revised release date or range of release dates for
this product is currently set. The expected enterprise-level component of FACES
Version 4.0 is expected to address some of the functionality that the FACESCAN
was expected to provide.

# User Training

The
Company initially established a certification program conducted through a
16-hour seminar managed by certified trainers throughout the U.S. and Canada.
This program enabled FACES users to improve their abilities to produce proper
composites so as to maximize the potential of the FACES technology. As of
October 10, 2002, the Company had already trained and certified 14
instructors in the states of Texas, Alabama, Indiana, Illinois, Florida,
Wisconsin, Colorado and California. The Company receives a portion of the amount
charged to participants at the seminars. To train users in the future, the
Company now plans on focusing primarily on an Internet-based e-learning
initiative to offer law enforcement agencies a continuous education program on a
monthly subscription basis that will bring the Company a recurrent revenue
stream. In this connection, the Company recently entered into a partnership with
Fresno State University for that institution to develop an e-learning
curriculum. The e-learning approach will be scalable and greatly reduce the need
for human interaction. The Company expects that the certified trainers in the
seminars will eventually become on-line tutors as part of the e-learning
initiative. The Company expects that the on-line training will take
approximately 16 hours and will focus on cognitive interviewing, and that the
Company will charge approximately $250 for each participant in the training.

# Market and
Marketing

The
Companys marketing strategy aims to penetrate strongly the three following
target markets:

| | * | Public security/law enforcement agencies.
| | - | -----------------------------------------

| | * | General public
| | - | --------------

| | * | Private security/businesses at risk
| | - | -----------------------------------

The
public security/law enforcement agencies segment of the market in North America,
Europe and Asia is approximately 1,000,000, 1,274,000 and 1,559,000
(respectively) potential end users, primarily police officers. To date, about
4,500 police departments and/or law enforcement agencies have already received a copy of FACES.
The Company believes that it has reached a small portion of
the market thus far and has ample room to penetrate this market further.

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

Approximately 15,000
copies of the FACES software has been sold to the general public and schools. As of October, 2002, the
Company has re-seller relationships with over 25 distributors. These distributors market to a variety
of retail customers, primarily targeting education and law enforcement.

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

| | * | 50% to the public security/law enforcement agencies
| | - | ---------------------------------------------------

| | * | 45% to general public
| | - | ---------------------

| | * | 5% to private security/businesses at risk
| | - | -----------------------------------------

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

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

| | * | Phase
II - will aim at building strong sales channels to answer the demand created for
the Companys products and in achieving the Companys ultimate goal of
having the FACES technology become an international standard for facial
recognition and comparison. This phase will strategically involve the previously
announced relationship with SocialTech of Redwood City, California. SocialTech has developed a program called TRAK -
Technology to Recover Abducted Kids,, a computer software system
that was originally designed to help law enforcement agencies locate and recover abducted children.
The TRAK system is used by more than 1400 police departments and is currently implemented
at all 600 police departments in the State of New Jersey. TRAK has been used in countless types of cases, assisting law enforcement in the
process of communicating important visual information. This system allows any police
officer to quickly and efficiently create high-resolution photo bulletins and share them
electronically with other law enforcement jurisdictions, the media, and the community,
when they deem it appropriate.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

| | * | Numerous articles in newspapers and magazines around the world
| | - | --------------------------------------------------------------

| | * | Broadcast of FACES success stories
| | - | ----------------------------------

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

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

| | * | Recognition through prizes and awards
| | - | -------------------------------------

| | * | Positive critical reviews in consumers buyers guides
| | - | ----------------------------------------------------

| | * | Promotion and contests through our Web site
| | - | -------------------------------------------

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

| | * | Free  advertising  through  the use of FACES on  America's  Most  Wanted  show and
                           articles in newspapers and other publications
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------

| | * | Direct mailing response program to law enforcement agencies
| | - | -----------------------------------------------------------

| | * | Selective advertising in law enforcement and security publications
| | - | ------------------------------------------------------------------

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

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

Conventional  Distributors  and/or  Licensing  Agreements.

Among the distribtors that the Company has entered
an agreement with include the U.S. Calvary, Career Institute and Wards Natural Science.
The Company intends to use the following channels for selling its products:

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

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

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

Internet.
The Internet is a significant component in the Companys marketing
strategy. The Company is presently developing an advertising program for major
national publicity agencies to sell advertising on the Americas Most
Wanted (AMW) Web site. The Company has the exclusive rights to host
and manage the site until 2004. As part of the agreement to manage and host this
Web site, the Company will receive 40% of the net revenues from products sold
through the site. Products sold will include AMW paraphernalia, personal
security products and various books and magazines, as well as the FACES
software. In 2002, the Company is exploring the possible installation of a
portal on Americas Most Wanted Web site providing their viewers with free
e-mail addresses and services. This will allow the Company to create a huge
database of e-mail users interested in crime-solving and prevention products.
The Company also has its own Web site, through which sells its products.

# Intellectual
Property

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

The
Company currently has no issued United States or foreign patents, although it
has applied for three United States and Canadian patents covering Method
and apparatus for creating facial images and  BAC ID. Conceivably, no
patents will issue from the Companys currently pending patent applications
and the Companys potential future patents may be found invalid or
unenforceable, or otherwise be successfully challenged. Furthermore, any patent
issued to the Company may not provide the Company with any competitive
advantages, the Company may not develop future proprietary products or
technologies that are patentable, and the patents of others may seriously limit
the Companys ability to do business. In this regard, the Company has not
performed any comprehensive analysis of patents of others that may limit the
Companys ability to do business.

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

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

# Competition

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

| | * | Visionics Corporation and Viisage Technology, Inc., each of which is a publicly traded company
| | - | ----------------------------------------------------------------------------------------------

| | * | Smith and Wesson, whose product is Identi-Kit
| | - | ---------------------------------------------

| | * | C.R.I.M.E.S.,  whose product is comprised of various  modules such as Suspect ID, Face ID, Crime Lab,  Crime
                  Capture System and Vehicle ID
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | * | Strey Consulting, whose products includes MUGsearch, FACEsearch, PRINTsearch,
FACEkit and MUGsearch Plus
| | - | --------------------------------------------------------------------------------------------------------

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

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

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

# Employees

As
of October 10, 2002, the Company had seven full-time employees and a varying number of consultants and part-time employees ranging up to
a total of approximately 10 persons. Although the competition for employees is at times intense due to market conditions,
the Company does not now foresee problems in hiring additional
qualified employees to meet its labor needs. The Companys employees are
not covered by a collective bargaining agreement and relations with them are
considered to be good.

# Facilities

The
Companys principal executive offices are located in Cupertino, California
with engineering and marketing offices in Fresno, California where the Company leases approximately 3,000 square feet under a fairly
short-term lease. The Company has no reason to believe that the landlord under
the lease has any intention to terminate or otherwise not renew such lease. In
addition, the Company believes that adequate, alternative premises could be
located if such lease were ever terminated or otherwise not renewed. The Company
also leases space of approximately 1,000 square feet in Houston, Texas for various administrative personnel.

## ITEM 3. LEGAL
PROCEEDINGS

None.

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

None.

# PART II.

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

The
Companys common stock (the Common Stock) is traded on the OTC
Bulletin Board under the symbol JVWW.OB. As of October 10, 2002,
the Company had approximately 171 holders of record. Presented below
are the high and low closing prices of the Common Stock for the periods
indicated:

`High(1)          Low(1)

         Fiscal year ending June 30, 2002:

         Fourth Quarter                                  $1.95            $ 0.60

         Third Quarter                                   $2.35            $ 0.20

         Second Quarter                                  $ .30            $ 0.09

         First Quarter                                   $ .12            $ 0.18


         Fiscal year ending June 30, 2001:

         Fourth Quarter                               $ 0.3438            $ 0.17

         Third Quarter                                $ 0.9844          $ 0.2188

         Second Quarter                                $1.3125          $ 0.2188

         First Quarter                                 $2.4062           $1.3125`

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

## ITEM 6.  MANAGEMENT'S PLAN OF OPERATION.

## Summary

IQ Biometrix, Inc. is a
security software and services company headquartered in Cupertino, California
with offices in Fresno, California and Houston, Texas. The Company is one of the
leading provider of facial composite software to police and government agencies
in North America, with more than 160,000 licenses of its FACESTMsoftware in approximately in 5,000 police departments, the US military, the
Central Intelligence Agency and the FBI.

The FACES technology is a
revolutionary tool that allows the creation and re-creation of billions of human
faces. This advanced technology can be used by any agency or organization whose
responsibility lies in the public safety and security arena. The unique
morphological coding of the FACES database of approximately 4,000
facial features has made it possible, for the first time, to set an industry
standard for the comparison of facial images from law enforcement agencies,
private security and businesses. Available now in beta form, FACES version 4.0
includes approximately 6,000 facial features.

The Companys plan of
operations for the next 12 months are centered around two main objectives:

o The
launching of Faces 4.0, and related services, for which initial product delivery
of the e-learning component is scheduled for late fall, and

o
Development of an enterprise solution, which is currently in the design stage,
with an anticipated product delivery date in the first quarter of year 2003.

The launching of Faces 4.0
is anticipated to include a suite of related services. The bundle of services
will be offered separately, or as an integrated product/service offering. The
array of services to be offered within this service package will include:

o The Faces 4.0 product,
scheduled for release early in the first quarter of calendar year 2003,

o An
e-learning course, to be centered around cognitive interviewing techniques for
the law enforcement community which use the Faces product as a key component, scheduled for a late fall 2002 release

o A standardization
and authentication certification process for graduates of the e-learning course,

o Academic accreditation
for the course, and

o An on-line community
where law enforcement professionals, as well as interested civilians can congregate to share information,
techniques, and success stories.

In planning for the launch
of the Faces 4.0 integrated service package, the company intends to utilize a
broad-based marketing and media campaign. The company has two key leverage
points:

o A previously
announced relationship with TRAK - Technology
to Recover Abducted Kids,, a computer software system that was originally designed to help law enforcement agencies
locate and recover abducted children. It has since been used in countless types
of cases, assisting law enforcement in the process of communicating important
visual information. This system allows any police officer to quickly and
efficiently create high-resolution photo bulletins and share them electronically
with other law enforcement jurisdictions, the media, and the community, when
they deem it appropriate. Learn more at http://socialtech.trak.org/.

o  A strategic
relationship with the Fox Network television series Americas Most Wanted, (AMW) which is viewed by 15 million
people every week. AMW has adopted the FACES software as an official crime-solving tool. The host of the series, John Walsh, is the official
spokesperson for the FACES software.

The FACESCAN enterprise
solution: The facial recognition FACESCAN technology is an outgrowth of the
FACES technology. The FACESCAN technology uses the BAC ID technology to
address identity verification and authentication needs for security purposes.
This technology will (upon completion of its development) enable users to
generate composite pictures and BAC IDs from digitized
photographs, which may include captured video images. This anticipated
capability is expected to find use in airports, border control and other
locations to identify suspected criminals and terrorists.

The Company anticipates it
will require additional financing, estimated at approximately $2.5 million, to
complete the launching of its two new products. The sources of funding are
anticipated to come primarily from the exercise of previously issued warrants
($1 million), a private placement of up to $1.5 million, and from sales of its
Faces 4.0 product group beginning in the winter
of 2002. There is no assurance that the company will be successful in attaining
its funding objectives, and will need to scale back operations to the extent
full funding is not attained.

A significant item to note
involves the existing inventory of Faces 3.0 product. During the Merger of
IQBiometrix and JVWeb, Inc., the Faces 3.0 inventory was deemed obsolete by
management. As a result, no value for this inventory is represented on our
balance sheet. Subsequently, management has explored market applications for our
3.0 product that will add material longevity to its market potential. Although
this cannot be represented on our balance sheet, management estimates this
renewed role for Faces 3.0 has a revenue value of approximately $2 million.

## Financial
Information

The
gross revenue by the Company in fiscal 2002 was exclusively generated by the
license revenue of Faces 3.0 software. Gross revenue for the period was $98,148.
Since the reverse merger of JVWeb Inc., and IQ Biometrix California Inc.
occurred in third quarter of the Companys fiscal year, there is no
relevance to prior fiscal years comparisons.

To
accomplish its planned revenue growth, the Company has started an aggressive sales and marketing
campaign to institutionalize the use of the software in law enforcement.
Concurrently, the Company is pursuing contracts among, but not exclusively with,
the casino industry, local, state, and national citizen alerts associations, and
original equipment manufacturers in the computer industry.

Revenue
from fiscal year 2002 was from a diverse customer base sold mainly on retail in
units of 1 to 50. No customer made up more than 2% of gross revenue. Gross
profit margin for the period was 29%. A one time shipping charge to move
inventory from Montreal, Canada to Fresno, California totaling $19,118, decreased the
gross profit margin from 51%.

Operating
expenses for the initial period ending June 30, 2002 are $1,082,413.

Sales
and marketing expense for 2002 were $95,681, or 109% of gross revenue. The
majority of the expense is related to personnel-related costs, and costs
associated with public relations. A sales and marketing survey was instituted by
the Company for a total cost of $7,030. A limited amount of retail advertising
was purchased for a total of $12,366. The Company expects sales and marketing to
be 14 to 16 percent of total revenue for fiscal 2003.

General
and administrative expenses for fiscal 2002 were $711,251 or 811% of gross
revenue. The majority of general and administrative expense is due primarily to
personnel-related costs and professional services. The Company maintains
offices in Cupertino; Fresno, California; and Houston, Texas. At fiscal year end 2002, the Company employed 7
full time people, and had various independent contactors to provide marketing product feasibility, fundraising, and employee relations, among other
services. The total personnel expense including advisors was $312,674 or 44% of
total general and administrative expense, and 33% of total expenses. Travel and
entertainment costs total $78,374 as the Company set forth its best effort to
gain a foothold in an extremely competitive marketplace. The combination of
greatly increased revenue in fiscal 2003 and the already established position of
the Company, the percentage of general and administrative costs to gross revenue
are expected to decrease to 22 to 24 percent.

Research and development expenses for fiscal 2002 were $153,796 or 175% of gross revenue.
The total is due to contracted and internal work associated with the development
costs of producing Faces 4.0, the next marketable product for the Company. A
beta version has already been established with a market feasibility delivery
date of the final version occurring between December 2002 and January 2003. The
Company anticipates fiscal year 2003 expenses of $75,000 to complete the Faces
4.0 software platform. The Company is actively pursuing other engineering and
development opportunities to create a suite of products and services to
compliment and enhance the Faces 4.0 software. The Company expects engineering
and development costs to be 11 to 13 percent in fiscal 2003. No software
development costs were capitalized in fiscal 2002.

Non-recurring
charges for the year ending June 30, 2002 were not material and exclusively related to the
merger of JVWeb Inc., and IQ Biometrix California Inc.

Interest
expense was non-existent in fiscal 2002. The Company began issuing its
convertible subordinated debentures having an aggregate primcipal amount up to $1,000,000 beginning in first quarter
of fiscal 2003. These debentures bear interest at the rate of six percent
(6%) per annum from the issue date through the maturity date. The notes will be
payable August 1, 2003. The Company shall pay such interest in cash on the
maturity date; however, if the Company elects to redeem the debenture prior to
the maturity date, the Company may pay the interest due upon redemption. The
Company will also pay bonus interest on the issue date of the principal amount of the debentures in the form of shares of its Common
Stock, $.001 par value per share , at the rate of 10,000 shares for every
$100,000 principal amount of the debentures. No fractional shares of Common
Stock will be issued in connection with the payment of such bonus interest.

The Company
made no provisions of income taxes in fiscal 2002.

The
Company incurred a net loss of $984,265, or $0.06 per share loss for the year
ending June 30, 2002

## ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The
report of Companys Independent Auditors appear at Page F-1 hereof, and the
Financial Statements of the Company appear at Page F-2 through F-9 hereof.

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

Not applicable.

# PART III.

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

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

`Name                               Age               Positions

         Eric McAfee                        39                Chairman of the Board
         Greg Micek                         47                Director, President & Secretary
         Morden C. Lazarus                  61                Director
         Lewis Ball                         71                Director
         William Scigliano                  42                Chief Executive Officer
         Paul Schroeder                     39                Chief Financial Officer,
                                                                Treasurer & Controller`

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

Greg
J. Micek has served as a Director of the Company since inception. He also has
served as a Director and the President of JVWeb from inception until the Merger. During March 2002,
Mr. Micek was elected as an Executive Vice President and the Chief Financial
Officer of the Company. During July 2002, he was elected President of the
Company again (and relinquished the office of Executive Vice President and Chief
Financial Officer). Since 1983, Mr. Micek has been a principal of The Micek
Group, a business consulting firm. Mr. Micek received a bachelor of Arts and a
Doctorate of Jurisprudence from Creighton University.

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

Lewis
E. Ball has served as a director of the Company since the Merger. He also has
served as a Director and the Treasurer and Secretary of JVWeb from August 1998 until
the
Merger. He has been a financial consultant to a number of companies since 1993.
Mr. Ball earned a bachelor of Business Administration in Finance from the
University of Texas at Austin, followed by post-graduate studies in accounting
at the University of Houston. He is a Certified Public Accountant and a
Certified Management Accountant. Mr. Ball has agreed to resign from his seat on
the Board of Directors of the Company promptly after the Company has fully
complied with Rule 14f-1 under the Securities Exchange Act of 1934.

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

Paul
Schroeder has served as Treasurer and Controller of the Company since March
2002. During July 2002, he was also elected Chief Financial Officer. Mr.
Schroeder served as Controller of IQB from January 2002 until the Merger. From
September 2000 through the present, he has served as Controller at the Berg
McAfee Companies and Cagan McAfee Capital Partners, both of Cupertino,
California. In December 1983, Mr. Schroeder co-founded Schroeders, a
retail service company that grew to a high of seventeen outlets and 150
employees. He continued to operate this company until June 2000. Mr. Schroeder
is a graduate of San Jose State University with a bachelor of Science in
Finance.

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

Each
director serves for a term of one year that expires at the following annual
stockholders meeting. Each officer serves at the pleasure of the Board of
Directors and until a successor has been qualified and appointed. Currently,
directors of the Company receive no remuneration for their services as such, but
the Company will reimburse the directors for any expenses incurred in attending
any directors meeting.

There
are no family relationships, or other arrangements or understandings between or
among any of the directors, executive officers or other person pursuant to which
such person was selected to serve as a director or officer, other than for the
Voting Agreement described in the section captioned CHANGE OF CONTROL OF
THE COMPANY above.

Section
16(a) of the Securities Exchange Act of 1934, as amended (the Exchange
Act), requires that the Companys officers and directors, and person
who own more than ten percent of a registered class of the Companys equity
securities, file reports of ownership and changes in ownership with the
Securities and Exchange Commission and furnish the Company with copies of all
such Section 16(a) forms. Based solely on its review of written representations
from certain reporting person, the Company believes that, during fiscal 2002,
each of its officers, directors and greater than ten percent stockholders
complied with all such applicable filing requirements.

## ITEM 10.  EXECUTIVE COMPENSATION.

# Summary
Compensation Table

The
following table sets forth the compensation paid by the Company to its Chief
Executive Officer for services in all capacities to the during the fiscal year
ended June 30, 2002.

`Annual                 Long-Term
                                    Compensation           Compensation

   (a)                         (b)               (c)           (f)
                             Fiscal
   Name and                   Year                           Restricted
   Principal Position        Ended             Salary       Stock Awards
   ------------------        -----             ------      -------------

   Richard Thompson         6/30/02        $43,333(2)          $90,000(3)
   Chief Executive
   Officer
         _________________`

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

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

(3)      In connection with the Merger,  the Company assumed a grant of 500,000  restricted shares made by IQB to Mr. Thompson
                  on December 1, 2001. These restricted shares are subject to vesting.  Of these shares,  200,000 vested on the date of
                  the grant,  and 25,000  shares were to vest every three  months  thereafter.  The figure in the table is based on the
                  500,000  restricted shares granted  multiplied by $.18, the most recent closing price of the Company's stock prior to
                  the date of grant.  These 500,000  restricted  shares had a value of $475,000 as of June 30, 2002,  based on the $.95
                  closing price of the Company's  stock on that date.  Mr.  Thompson's  employment  with the Company ceased on July 17,
                  2002. By that time,  250,000 of the restricted  shares had vested.  Mr. Thompson and the Company agreed that he would
                  be entitled to retain these  250,000  shares,  but that the remaining  250,000  unvested  restricted  shares would be
                  forfeited.

# Stock Option Grants

During the fiscal year ended June 30,  2002,  the Company did not grant any stock  options to any person  named in the Summary
Compensation Table.

# Option Exercises/Value of Unexercised Options

During the fiscal year ended June 30, 2002, no person named in the Summary  Compensation  Table exercised any stock options to
acquire shares of the Company's  stock. As of June 30, 2002, no person named in the Summary  Compensation  Table held any stock options
to acquire shares of the Company's stock.

# Compensation Agreements with Key Personnel

The Company has entered into an employment agreement (the "Scigliano Employment  Agreement") with William Scigliano,  the Chief
Executive  Officer of the Company.  The Scigliano  Employment  Agreement has a term of two years and will expire in accordance with its
terms at the end of July  2004,  subject  to an  earlier  termination  upon the  occurrence  of  certain  customary  events.  Under the
Scigliano  Employment  Agreement,  Mr.  Scigliano is to receive an annual salary of $130,000.  He also received a $25,000 signing bonus
upon execution of the Scigliano  Employment  Agreement.  Mr.  Scigliano is also entitled to participate in any and all employee benefit
plans hereafter  established for the employees of the Company and to receive an expense  reimbursement  of up to $5,000 per month.  The
Scigliano  Employment  Agreement does not contain any covenant not to compete.  Moreover,  pursuant to an agreement between the Company
and Mr.  Scigliano,  the Company granted to Mr. Scigliano  options to purchase  600,000 shares of Common Stock at a per-share  purchase
price of $.50.  These options vest over time so that options to purchase  150,000 shares will vest on each of February 1, 2003,  August
1, 2003,  February 1, 2004 and August 1, 2003.  Unexercised  options will expire on August 1, 2007, unless they expire earlier upon the
occurrence of certain customary events.

As a part of the Merger, the Company assumed the existing advisory agreement (theMcAfee Advisory Agreement) between IQ Biometrix
California, Inc. and Eric A. McAfee, a director and the Chairman of the Board of the Company. The McAfee Advisory Agreement has a term of two years
and will expire in accordance with its terms at the end of December 2004, subject to earlier termination upon the occurrence of certain events. Under
the McAfee Advisory Agreement, Mr. McAfee receives a fee of $9,600 per month. Mr. McAfee is also entitled to participate in any and all
employee benefit plans hereafter established for the employees of the Company and to receive an expense reimbursement for Cupertino office rent
of $2,800 per month. The McAfee Advisory Agreement does not contain any covenant not to compete.

The Company has entered into a consulting  agreement (the "Lazarus  Consulting  Agreement") with Morden C. Lazarus, a director
of the  Company.  The Lazarus  Consulting  Agreement  has a term of one year,  subject to the right of either  party to  terminate  the
agreement upon 14 days' written notice to the other.  As compensation  for services  provided under the Lazarus  Consulting  Agreement,
the Company  granted to Mr. Lazarus  options to purchase  180,000 shares of Common Stock at a per-share  purchase price of $0.10.  These
options vest over time at a rate of 15,000 shares per month,  commencing  with December 1, 2001 and continuing on the first day of each
of the next 11 months  thereafter.  Unexercised  options  will expire on  November  30,  2006,  unless  they  expire  earlier  upon the
occurrence of certain customary events.

Pending Board of Directors approval,
the management of the Company entered into an employment agreement (the Schroeder Employment Agreement)with Paul Schroeder,  the Chief Financial  Officer,  Treasurer and Controller
of the Company. The Schroeder Employment Agreement has a term of two years and will expire in accordance with its terms at the end of July 2004,
subject to an earlier termination upon the occurrence of certain customary events. Under the Schroeder Employment Agreement, Mr. Schroeder is to
receive a monthly salary of $6,000 per month. Mr. Schroeder is also entitled  to participate in any and all
employee benefit plans hereafter established for the employees of the Company and to receive an expense reimbursement of reasonable business expenses.
The Schroeder Employment Agreement does not contain any covenant not to compete. Moreover, pursuant to a pre-Merger December, 2001 agreement  between  the Company  and Mr.  Schroeder,  the  Company  granted to Mr.
Schroeder, Mr. Schroeder received Options to purchase 50,000 shares vested on December 1, 2001 (the "Vesting  Commencement  Date"), and options to purchase 10,000 shares
will vest every three  months  after the Vesting  Commencement  Date until all options  have become  vested.  Unexercised  options will
expire on November 30, 2006, unless they expire earlier upon the occurrence of certain customary events.

## ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The  following  table sets forth as of June 30, 2002  information  regarding the  beneficial  ownership of Common Stock (i) by
each  stockholder  who is known by the  Company to own  beneficially  in excess of 5% of the  outstanding  Common  Stock;  (ii) by each
director;  (iii) by each  executive  officer;  and (iv) by all  executive  officers  and  directors  as a group.  Except  as  otherwise
indicated,  all persons  listed below have (i) sole voting  power and  investment  power with respect to their shares of Common  Stock,
except to the extent that authority is shared by spouses under  applicable  law, and (ii) record and beneficial  ownership with respect
to their shares of Common Stock.

`Name and Address of                         Beneficial Ownership(1)
         Beneficial Owner                      Number of Shares         Percent
         ----------------                      --------------------------------

         Pierre Cote                             3,163,549(2)              19.3%
         2555 W. Bluff #179
         Fresno, California 93711

         Clyde Berg                              1,889,145(3)              11.5%
         10600 N. De Anza Boulevard
         Cupertino, California 95014

         Eric McAfee                             1,676,349(4)              10.2%
         10600 N. De Anza Boulevard
         Cupertino, California 95014

         Sylvie Lariviere                        1,415,420(5)               8.5%
         293 Cahungea Street
         Fresno, California 93035

         Greg J. Micek                           1,201,428                  7.3%
         5444 Westheimer, Suite 2080
         Houston, Texas 77056

         Cagan McAfee Fund                       1,000,000(6)               6.1%
         10600 N. De Anza Boulevard
         Cupertino, California 95014

         Morden C. Lazarus                         496,355(7)               3.0%
         759 Square Victoria, Suite 200
         Montreal, QC
         CANADA  H2Y 2J7

         Paul Schroeder                            136,745(8)                *
         10600 N. De Anza Boulevard
         Cupertino, California 95014

         Lewis E. Ball                              17,142                    *
         6122 Valley Forge
         Houston, Texas 77057

         All directors and officers
         as a group (five persons)               3,528,019(9)              21.2%

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

(1)
Includes shares of Common Stock beneficially owned pursuant to options and
warrants exercisable on October 11, 2002 or within 60 days thereafter.

(2)
In a Schedule 13D and a Form 3 both filed with the SEC on April 2, 2002, Mr.
Cote reported that his direct ownership of 3,163,549 shares.

(3)
Includes 1,794,570 shares held directly; includes 94,575 shares held by the Berg
McAfee Companies, a partnership in which Mr. Berg holds a partnership interest
(such 94,575 shares are also included in the table in the figure of shares
beneficially owned by Eric McAfee).

(4)
Includes 581,774 shares held directly; includes 1,000,000 shares held by the
Cagan McAfee Fund, a partnership in which Mr. McAfee holds a partnership
interest (such 1,000,000 shares are also included in the table in the figure of
shares beneficially owned by the Cagan McAfee Fund); includes 94,575 shares held
by the Berg McAfee Companies, a partnership in which Mr. McAfee holds a
partnership interest (such 94,575 shares are also included in the table in the
figure of shares beneficially owned by Clyde Berg).

(5)
Includes 1,265,420 shares held directly; includes 150,000 shares beneficially
owned pursuant to stock options currently exercisable.

(6)
These shares are also included in the table in the
figure of shares beneficially owned by Eric McAfee.

(7)
Includes 316,355 shares held directly; 180,000 shares beneficially owned
pursuant to stock options currently exercisable or that become exercisable
within the next 60 days.

(8)
Includes 56,745 shares held directly; 80,000 shares beneficially owned pursuant
to stock options currently exercisable; does not include 90,000 shares subject
to options that will not become exercisable within the next 60 days.

(9)
Includes 2,173,444 shares directly owned; 260,000 shares beneficially owned
pursuant to stock options currently exercisable or becoming exercisable within
the next 60 days; and 1,094,575 shares beneficially owned indirectly through
affiliated entities.

## ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

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

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

# PART IV.

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

(a) Documents filed as part of this report:

`(i) Consolidated Financial Statements:

       Report of Independent Auditors .......................................F-1

       Consolidated Balance Sheets as of June 30, 2002 ..................... F-2

       Consolidated Statements of Income for the years ended
                June 30, 2002 and 2001  .................................... F-3

       Consolidated Statements of Stockholders' Equity for
                the years ended June 30, 2002 and 2001 ......................F-4

       Consolidated Statements of Cash Flows for the years
                ended June 30, 2002 and 2001  .............................. F-5

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

(ii) Financial Statement Schedules:

None

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

`Exhibit No.       Description

3.01              Certificate of Incorporation of the  Company  is  incorporated
                  herein by  reference from the Company's Registration Statement
                  on Form SB-2 (SEC File No. 333-41635) filed  December 29, 1997,
                  Item 27,  Exhibit 3.01.
3.02              Certificate of Amendment to Certificate of Incorporation of the
                  Company
3.03              Bylaws of the Company is incorporated herein by reference from
                  the Company's  Registration Statement on Form SB-2 (SEC File
                  No. 333-41635) filed December 29, 1997, Item 27, Exhibit 3.02.
4.01              Specimen  Common Stock  Certificate  is  incorporated  herein
                  by reference  from the Company's  Registration Statement on
                  Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
                  Item 27, Exhibit 4.01.
9.01              Voting Agreement dated as of February 27, 2002 by Pierre Cote,
                  Sylvie Lariviere and Eric McAfee in favor of Greg J. Micek is
                  incorporated  herein by reference from the Company's (SEC File
                  No.  0-24001)  Current Report on Form 8-K filed with the SEC
                  on April 8, 2002, Item 7(c), Exhibit 9.1.
10.01             Agreement  and Plan of  Merger,  dated as of  February  27,
                  2002  (the  "Merger  Agreement"),  by and among (a) JVWeb,
                  Inc., a Delaware corporation, (b) IQB Acquisition Corporation,
                  a newly-formed,  wholly-owned  Delaware subsidiary  of JVWeb,
                  Inc.,  (c) IQ  Biometrix  California,  Inc., a  California
                  corporation,  and (d) Pierre Cote, Sylvie  Lariviere  and Eric
                  McAfee is  incorporated herein by reference from the Company's
                 (SEC File No.  0-24001) Current Report on Form 8-K filed with
                  the SEC on April 8, 2002, Item 7(c), Exhibit 10.1.
10.02             Sale  and  Purchase  Agreement  dated as of  February  27,
                  2002 by and  between  JVWeb,  Inc.,  a  Delaware corporation,
                  and Greg J. Micek is incorporated herein by reference from the
                  Company's (SEC File No. 0-24001) Current Report on Form 8-K
                  filed with the SEC on April 8, 2002, Item 7(c), Exhibit 10.3.
10.03             Agreement dated May 31, 2002 between IQ Biometrix California,
                  Inc. and Entreprises Cogniscience, Inc.
10.04             Memorandum of Understanding between the University Business
                  Center and IQ Biometrix dated August 1, 2002 between the
                  Company and the University Business Center of Fresno Sstate
                  Letter of Intent - University
10.05             Master Service Agreement dated September 20, 2002 between the
                  Company and Robert Rios & Associates, Inc.
10.06             Asset Purchase Agreement dated November 12, 2001 between IQ
                  Biometrix California, Inc. and CISystems, Inc.
10.07             Agreement dated July 12, 2002 between the Company and GoNow
                  Financial Network, Inc.
10.08             Advisory Agreement dated March 10, 2002 between IQ Biometrix
                  California, Inc. and Fernand Beland.
10.09             Executive Employment Agreement dated effective as of August 1,
                  2002 bt and between the Company and William Scigliano.
10.10             Memorandum of Agreement regarding stock options dated August 1,
                  2002 by and between the Company and William Scigliano.
10.11             Executive Employment Agreement dated effective as of September
                  25, 2002 bt and between the Company and Greg J. Micek.
10.12             Memorandum of Agreement regarding stock options dated August 1,
                  2002 by and between the Company and Greg J. Micek.
10.13             Notice of Stock Option Grant and Stock Option Agreement dated
                  December 1, 2001 between IQ Biometrix California, Inc. and
                  Morden Lazarus.
10.14             Notice of Stock Option Grant and Stock Option Agreement dated
                  December 1, 2001 between IQ Biometrix California, Inc. and
                  Paul Schroeder.
99.01             The  Company's  Year 2002  Consultant  Compensation  Plan is
                  incorporated  herein by  reference  from the  Company's
                  Registration Statement on Form S-8 (SEC File No. 333-96873)
                  filed July 7, 2002, Item 8, Exhibit 4.02.
99.02             The Company's 2000  Non-Qualified  Stock Option Plan is
                  incorporated  herein by reference from the Company's
                  Registration Statement on Form S-8 (SEC File No. 333-43884)
                  filed August 16, 2000, Item 8, Exhibit 4.02.
99.03             IQ Biometrix California, Inc. 2001 Stock Plan
99.04             Certifications  pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002
(b)      Reports on Form 8-K

                  The  Registrant  filed a Current  Report on Form 8-K dated
                  April 8, 2002  reporting  on a change in control  and the
                  merger  of IQ  Biometrix  California,  Inc.,  a  California
                  corporation  ("IQB"),  with  and  into  IQB  Acquisition
                  Corporation, a newly-formed, wholly-owned Delaware subsidiary
                  of the Registrant.

                  The Registrant  filed a amendment dated June 6, 2002 to its
                  Current Report on Form 8-K dated April 8, 2002 filing the
                  required financial statements regarding business acquired.`

# INDEPENDENT AUDITORS REPORT

To the Board of Directors and Stockholders
          JVWeb, Inc.
          Cupertino, California

We have audited the
accompanying consolidated balance sheet of JVWeb, Inc. as of June 30, 2002, and
the related consolidated statements of operations, stockholders, equity,
and cash flows for the period from July 10, 2001 (Inception), through June 30,
2002. These financial statements are the responsibility of JVWebs
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

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

In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of JVWeb, Inc. as of June 30, 2002,
and the results of their operations and cash flows for the period then ended in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying
consolidated financial statements have been prepared assuming that JVWeb will
continue as a going concern. JVWeb has suffered recurring losses from
operations, which raises substantial doubt about its ability to continue as a
going concern. Managements plans are described in Note 2 to the
consolidated financial statements. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

Malone & Bailey, PLLC
www.malone-bailey.com
Houston, Texas

August 23, 2002

# F-1

`JVWEB, INC.
                           CONSOLIDATED BALANCE SHEET
                                  June 30, 2002



ASSETS
  Cash                                                                 $  92,213
  Inventory - supplies                                                    31,000
  Advance receivable from IQ Entertainment, Inc.                          26,279
                                                                       ---------
    Total Current Assets                                                 149,492
                                                                       ---------

Intangible assets, net of $22,449 accumulated amortization                58,369
                                                                       ---------

    TOTAL ASSETS                                                       $ 207,861
                                                                       =========



LIABILITIES
  Accounts payable                                                     $  57,114


STOCKHOLDERS' EQUITY
  Common stock, no par value, 50,000,000 shares authorized,
      16,454,285 shares issued and outstanding                         1,135,012
  Accumulated deficit                                                  ( 984,265)
                                                                       ---------
     Total Stockholders' Equity                                          150,747
                                                                       ---------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $ 207,861
                                                                       =========






                 See accompanying summary of accounting policies
                       and notes to financial statements.
                                      F-2`

`JVWEB, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                  For the Period from July 10, 2001 (Inception)
                              Through June 30, 2002



Revenues from software product sales                                  $   98,148
Operatin expenses
  Cost of sales                                                           31,431
  Selling expense                                                        114,003
  General and administrative expenses                                    776,345
  Research and development                                               138,185
  Amortization                                                            22,449
                                                                      ----------
    Total operating expenses                                           1,082,413
                                                                      ----------
    Net loss                                                          $( 984,265)
                                                                      ==========


Basic and diluted loss per share                                           $(.06)
Weighted average shares                                               15,547,000











                 See accompanying summary of accounting policies
                       and notes to financial statements.
                                      F-3`

`JVWEB, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                  For the Period from July 10, 2001 (Inception)
                              Through June 30, 2002


                                      -  Common Stock  -   Accumulated
                                     Shares       Amount     Deficit       Totals
                                   ----------   ----------  ---------    ----------
Shares issued to
  founding shareholders            12,854,231  $   14,580               $   14,580

Merger between IQB - California
  and JVWeb                         2,341,553     (95,310)                 (95,310)

Shares for cash                     1,100,001   1,088,492                1,088,492

Shares for services                   115,000      86,250                   86,250

Shares issued in exchange
  for debt                             43,500      41,000                   41,000

Net loss                                                     $(984,265)   (984,265)
                                    ----------  ----------   ---------   ----------


Balances, June 30, 2002            16,454,285  $1,135,012    $(984,265)  $ 150,747
                                   ==========  ==========    =========   ==========













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

                                      F-4`

`JVWEB, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                  For the Period from July 10, 2001 (Inception)
                              Through June 30, 2002



CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
  Net loss                                                           $ (984,265)
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Amortization                                                         22,449
    Stock issued for services                                           100,830
  Change in cash from:
    Inventory                                                          ( 31,000)
    Accounts payable                                                      2,804
                                                                      ----------
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES                        (889,182)
                                                                      ----------

CASH FLOWS USED IN INVESTING ACTIVITIES
  Purchase of intangible assets                                        ( 80,818)
  Advance to IQ Entertainment                                          ( 26,279)
                                                                      ----------
NET CASH FLOWS USED IN INVESTING ACTIVITIES                            (107,097)
                                                                      ----------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
  Sale of common stock                                                1,088,492
                                                                      ----------

NET INCREASE IN CASH and balance at end of period                    $   92,213
                                                                      ==========


NONCASH DISCLOSURES
  Common stock issued to pay debt                                    $   41,000












                 See accompanying summary of accounting policies
                       and notes to financial statements.
                                      F-5`

# JVWEB, INC.

# NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

# NOTE 1 - ACCOUNTING POLICIES

Nature of business. 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 is called Faces 3.0 and
is an artists aid for computer digital creation of facial composite
pictures for identification purposes.

The software was developed
in Canada beginning in 1988. The software was completed and marketing was begun
in 1998. In 2000, Interquest filed for bankruptcy protection in a Canadian court
and went dormant. IQB - California arranged for purchase of the customer list
and software, and various packaging supplies in 2001 and paid $118,818 in early
2002. The purchase price was allocated among supplies inventory and intangible
assets at their fair market values.

On March 22, 2002, IQB -
California agreed to a reorganization with JVWeb, Inc., an inactive
publicly-traded Delaware company. Pursuant to this acquisition, IQ Biometrix -
California shareholders agreed to exchange all of their shares for 11,578,590
shares of JVWeb. JVWeb agreed to cancel 23,478 shares of stock held by its
founder and $582,191 in amounts due the founder in exchange for transfer of all
inactive subsidiaries to that founder. JVWeb also formed a new wholly-owned
subsidiary, IQB Acquisition Corporation, which was renamed at the merger date to
IQ Biometrix Operations, Inc., a Delaware company. IQB - California was merged
into IQ Biometrix Operations, Inc. which remains a wholly-owned subsidiary of
JVWeb. This reorganization is accounted for as a reverse merger with
IQ Biometrix - California (now IQ Operations, Inc.) treated as the acquiror
which purchased JVWeb and accounted for the acquisition using the purchase
method.

Basis of Presentation. The
consolidated financial statements include the accounts of JVWeb and its
subsidiary IQB Operations after the elimination of intercompany transactions.
All references to JVWeb include the transactions of IQB Operations
since inception and the liabilities of JVWeb as of the March 22, 2002 merger
date and the operations of JVWeb since that date accounted for on a consolidated
basis.

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.

Cash and cash equivalents.  For purposes of the cash flow statement, JVWeb considers cash on hand and cash in the bank as cash and
cash equivalents.

Revenue recognition.
Revenues are recognized when software is shipped. Warranty claims and training
requests are insignificant.

Long-lived assets.
Intangible assets are stated at cost. Those with limited lives are amortized
using the straight-line method over their estimated useful lives. JVWeb performs
reviews for the impairment of long-lived assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The customer list ($60,000) and software ($15,206) each have an
estimated useful life of 3 years.

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. IQB - California records a valuation allowance to reduce the
deferred tax assets to the amount that is more likely than not to be realized.

Earnings Per Common Share

Basic and diluted net loss per share excludes dilution and is computed by dividing net loss by the weighted average number of common
shares outstanding for the period presented

Recent Accounting Pronouncements

JVWeb does not expect the adoption of recently issued accounting pronouncements to have a significant impact on JVWeb's results of
operations, financial position or cash flows.

# NOTE 2 - GOING CONCERN

JVWebs consolidated
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and settlement of liabilities and
commitments in the normal course of business for the foreseeable future. Since
inception in July 2001, IQ Biometrix - California has accumulated losses
aggregating $984,265. JVWeb had positive working capital of $92,378 and
stockholders equity of $150,747 as of June 30, 2002. Managements
plans for JVWeb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.

JVWebs future success
is dependent upon its ability to achieve profitable operations and generate cash
from operating activities, and upon obtaining additional financing. There is no
assurance that JVWeb will be able to generate sufficient cash from operations or
through the sale of additional shares of common stock or borrow additional
funds.

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

# NOTE 3 - INCOME TAXES

Income taxes are not due
since JVWeb has incurred a loss since inception. JVWeb has deductible net
operating losses of $900,000 in the current period. These expire in 2022.

`Deferred tax assets                                  $ 306,000
                  Less: valuation allowance                             (306,000)
                                                                       ---------
                  Net deferred taxes                                   $       0
                                                                       =========`

# NOTE 4 - CORPORATE FORMATION

At inception, no shares
were issued. The agreement to issue shares was formalized on November 12, 2001,
when shares were issued to all founders and valued at nominal amounts. The
valuation was determined by management based on IQB - Californias lack of
operating history or funds. For the statement of operations, net loss per share
was computed as if all shares had been outstanding since inception.

# NOTE 5 - STOCK OPTIONS AND WARRANTS

JVWebs 2001 Stock
Option Plan provides for the grant of both qualified and non-qualified options
to directors, employees and consultants of IQB - California. The plans and
warrants issuance are administered by the Board of Directors, who have
substantial discretion to determine which persons, amounts, time, price,
exercise terms, and restrictions, if any.

JVWeb uses the intrinsic
value method of calculating compensation expense for employees, as described and
recommended by APB Opinion 25, and allowed by FASB Statement 123. In January
2002 3,331,000 options were granted to various employees and outside
consultants, with an exercise price of $.10. The intrinsic value compensation
cost for the options awarded to employees was $0. The fair value compensation
cost record for the options awarded to non-employees was also $0 based on the
Black-Scholes option pricing model as suggested by FASB Statement 123.

Had compensation cost for
the Companys stock-based compensation plan been determined based on the
fair value at the grant dates for awards under those plans consistent with the
Black-Scholes option-pricing model suggested by FASB Statement 123, JVWebs
net losses and loss per share would not have changed, as shown in the pro forma
amounts indicated below:

`Net loss available for
         common shareholders                - As reported             $(984,265)
                                            - Pro forma                (984,265)
      Net loss per share                    - As reported                $(0.06)
                                            - Pro forma                   (0.06)`

The weighted average fair
value of the stock options granted during 2002 was $0. Variables used in the
Black-Scholes option-pricing model include (1) 5.0% risk-free interest rate, (2)
expected option life is the actual remaining life of the options as of each year
end, (3) expected volatility is the actual historical stock price fluctuation
volatility, and (4) zero expected dividends.

Summary information regarding options is as follows:

`Weighted
                                                                       Average
                                                 Options             Share Price
                                                ----------            ----------

           Granted in January 2002               3,131,000                  $.10
           Forfeited in 2002                    (  880,000)                  .10
                                                 ----------
                                                 2,301,000                  $.10
                                                 ==========`

Options outstanding and exercisable as of May 19, 2002:

`- - Outstanding - -             Exercisable
                                   Number         Remaining           Number
     Exercise Price              of Shares          life             of Shares
                                 ---------      ---------           -----------
          $.10                   2,301,000         5 years             1,569,000`

# NOTE 6 - OPERATING LEASE

JVWeb signed an office
space lease effective May 1, 2002 and expiring November 30, 2002. That rent
amount is $4,537 per month. JVWeb also maintains subleased office space on a
month-to-month basis at $1,400 per month. During the period ended June 30, 2002,
rent expense was $34,349.

# SIGNATURES

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

Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.

JVWEB INC.

|By | /s/ William Scigliano
                 William Scigliano
Chief Executive Officer | 
|-- | -------------------------------------------------------------------------------- | 

Dated:  October 14, 2002

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.

`Name                                 Title                              Date

/S/ Eric A. McAfee          Chairman of the                     October 14, 2002
Eric A. McAfee              Board; Director

/s/ Greg. J. Micek          Director and President              October 14, 2002
Greg J. Micek

/S/ Lewis E. Ball           Director                            October 14, 2002
Lewis E. Ball

/S/ Morden C. Lazarus       Director                            October 14, 2002
Morden C. Lazarus

/S/William Scigliano        Chief Executive Officer             October 14, 2002
William Scigliano           (Principal Executive Officer)

/S/Paul Schroeder           Chief Financial Officer,            October 14, 2002
Paul Schroeder              Treasurer & Controller
                            (Principal Financial Officer
                            and Principal Accounting
                                Officer)`

# CERTIFICATIONS

I, William Scigliano, certify that:

1.I have reviewed this Annual Report on Form 10-KSB of JVWeb, Inc.;

2.
Based on my knowledge, this Annual Report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this Annual Report;
and

3.
Based on my knowledge, the financial statements, and other financial information
included in this Annual Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this Annual Report.

|By | /s/ William Scigliano
                 William Scigliano
Chief Executive Officer | 
|-- | -------------------------------------------------------------------------------- | 

Dated:  October 14, 2002

I, Paul Schroeder, certify that:

1.I have reviewed this Annual Report on Form 10-KSB of JVWeb, Inc.;

2.
Based on my knowledge, this Annual Report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this Annual Report;
and

3.
Based on my knowledge, the financial statements, and other financial information
included in this Annual Report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this Annual Report.

|By | /s/ Paul Schroeder
                 Paul Schroeder 
Chief Financial Officer | 
|-- | --------------------------------------------------------------------------- | 

Dated:  October 14, 2002

# EXHIBITS
INDEX

`Exhibit No.       Description

3.01              Certificate of Incorporation of the  Company  is  incorporated
                  herein by  reference from the Company's Registration Statement
                  on Form SB-2 (SEC File No. 333-41635) filed  December 29, 1997,
                  Item 27,  Exhibit 3.01.
3.02              Certificate of Amendment to Certificate of Incorporation of the
                  Company
3.03              Bylaws of the Company is incorporated herein by reference from
                  the Company's  Registration Statement on Form SB-2 (SEC File
                  No. 333-41635) filed December 29, 1997, Item 27, Exhibit 3.02.
4.01              Specimen  Common Stock  Certificate  is  incorporated  herein
                  by reference  from the Company's  Registration Statement on
                  Form SB-2 (SEC File No. 333-41635) filed December 29, 1997,
                  Item 27, Exhibit 4.01.
9.01              Voting Agreement dated as of February 27, 2002 by Pierre Cote,
                  Sylvie Lariviere and Eric McAfee in favor of Greg J. Micek is
                  incorporated  herein by reference from the Company's (SEC File
                  No.  0-24001)  Current Report on Form 8-K filed with the SEC
                  on April 8, 2002, Item 7(c), Exhibit 9.1.
10.01             Agreement  and Plan of  Merger,  dated as of  February  27,
                  2002  (the  "Merger  Agreement"),  by and among (a) JVWeb,
                  Inc., a Delaware corporation, (b) IQB Acquisition Corporation,
                  a newly-formed,  wholly-owned  Delaware subsidiary  of JVWeb,
                  Inc.,  (c) IQ  Biometrix  California,  Inc., a  California
                  corporation,  and (d) Pierre Cote, Sylvie  Lariviere  and Eric
                  McAfee is  incorporated herein by reference from the Company's
                 (SEC File No.  0-24001) Current Report on Form 8-K filed with
                  the SEC on April 8, 2002, Item 7(c), Exhibit 10.1.
10.02             Sale  and  Purchase  Agreement  dated as of  February  27,
                  2002 by and  between  JVWeb,  Inc.,  a  Delaware corporation,
                  and Greg J. Micek is incorporated herein by reference from the
                  Company's (SEC File No. 0-24001) Current Report on Form 8-K
                  filed with the SEC on April 8, 2002, Item 7(c), Exhibit 10.3.
10.03             Agreement dated May 31, 2002 between IQ Biometrix California,
                  Inc. and Entreprises Cogniscience, Inc.
10.04             Memorandum of Understanding between the University Business
                  Center and IQ Biometrix dated August 1, 2002 between the
                  Company and the University Business Center of Fresno Sstate
                  Letter of Intent - University
10.05             Master Service Agreement dated September 20, 2002 between the
                  Company and Robert Rios & Associates, Inc.
10.06             Asset Purchase Agreement dated November 12, 2001 between IQ
                  Biometrix California, Inc. and CISystems, Inc.
10.07             Agreement dated July 12, 2002 between the Company and GoNow
                  Financial Network, Inc.
10.08             Advisory Agreement dated March 10, 2002 between IQ Biometrix
                  California, Inc. and Fernand Beland.
10.09             Executive Employment Agreement dated effective as of August 1,
                  2002 bt and between the Company and William Scigliano.
10.10             Memorandum of Agreement regarding stock options dated August 1,
                  2002 by and between the Company and William Scigliano.
10.11             Executive Employment Agreement dated effective as of September
                  25, 2002 bt and between the Company and Greg J. Micek.
10.12             Memorandum of Agreement regarding stock options dated August 1,
                  2002 by and between the Company and Greg J. Micek.
10.13             Notice of Stock Option Grant and Stock Option Agreement dated
                  December 1, 2001 between IQ Biometrix California, Inc. and
                  Morden Lazarus.
10.14             Notice of Stock Option Grant and Stock Option Agreement dated
                  December 1, 2001 between IQ Biometrix California, Inc. and
                  Paul Schroeder.
99.01             The  Company's  Year 2002  Consultant  Compensation  Plan is
                  incorporated  herein by  reference  from the  Company's
                  Registration Statement on Form S-8 (SEC File No. 333-96873)
                  filed July 7, 2002, Item 8, Exhibit 4.02.
99.02             The Company's 2000  Non-Qualified  Stock Option Plan is
                  incorporated  herein by reference from the Company's
                  Registration Statement on Form S-8 (SEC File No. 333-43884)
                  filed August 16, 2000, Item 8, Exhibit 4.02.
99.03             IQ Biometrix California, Inc. 2001 Stock Plan
99.04             Certifications  pursuant to 18 U.S.C. Section 1350, as adopted
                  pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002`