<PAGE>   1

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly period ended   June 30, 1999
                                                --------------------------------
or

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the transition period from _______ to _______

Commission File Number              000-26696
                       ---------------------------------------------------------

                            BIOMETRIC SECURITY CORP.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


        Wyoming                                                  98-0204725
------------------------------                              --------------------
State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization                               Identification No.)


Suite 1940, 400 Burrard Street, Vancouver, British Columbia, Canada    V6c 3A6
-------------------------------------------------------------------   ----------
        (Address of Principal Executive Offices)                      (Zip Code)


Registrant's telephone number, including area code   (604) 687-4144
                                                  ------------------------------

         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 and 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 [ ] NO [X]

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

         Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

         Not Applicable


                    APPLICABLE ONLY TO CORPORATE REGISTRANTS

         The number of outstanding shares of the Registrant's common stock on
July 30, 1999 was 57,153,294




<PAGE>   2
CURRENCY AND EXCHANGE RATES

         All dollar amounts set forth in this report are in Canadian dollars,
except where otherwise indicated. The following table sets forth (i) the rates
of exchange for the Canadian dollar, expressed in U.S. dollars, in effect at the
end of each of the periods indicated; (ii) the average of the exchange rates in
effect on the last day of each month during such periods; (iii) the high and low
exchange rate during such periods, in each case based on the noon buying rate in
New York City for cable transfers in Canadian dollars as certified for customs
purposes by the Federal Reserve Bank of New York.

<TABLE>
<CAPTION>
                                 Six months       Years ending December 31,
                                   ended    -------------------------------------
                                  6/30/99     1998     1997      1996      1995
                                  -------   -------   -------   -------   -------
<S>                               <C>       <C>       <C>       <C>       <C>

Rate at end of Period             $0.6787   $0.6504   $0.6999   $0.7301   $0.7323
Average Rate During Period        $0.6648    0.6740    0.7197    0.7333    0.7285
High Rate                         $0.6891    0.7105    0.7487    0.7513    0.7527
Low Rate                          $0.6535    0.6341    0.6945    0.7245    0.7023
</TABLE>

         On July 29, 1999, the noon buying rate in New York City for cable
transfer in Canadian dollars as certified for customs purposes by the Federal
Reserve Bank of New York was $0.6629 U.S. = $1.00 Canadian.

         FORWARD-LOOKING STATEMENTS

         This Form 10-Q contains statements that plan for or anticipate the
future. The Company believes that some of these statements are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and other applicable laws or regulatory policies. Forward-looking
statements include statements that use words like "anticipate," "plan,"
"believe," "expect," and "estimate." Because such forward-looking statements
involve future risks and uncertainties, there are factors, including those
discussed below, that could cause actual results to differ materially from those
expressed or implied. The Company has attempted to identify the major factors
that could cause differences between actual and planned or expected results, but
the Company may not have identified all of those factors. Accordingly, readers
should not place undue reliance on forward-looking statements. The Company has
no obligation to update publicly any forward-looking statements made in this
Form 10-Q.




<PAGE>   3
                                TABLE OF CONTENTS

PART I   FINANCIAL INFORMATION

Item 1   Financial Statements

         Consolidated Balance Sheets as at June 30, 1999, December 31, 1998 and
            June 30, 1998
         Consolidated Statements of Operations and Deficit for the Three Month
            and Six Month periods ended June 30, 1999 and 1998
         Consolidated Statements of Cash Flows for Six Month period ended
            June 30, 1999 and 1998
         Notes to Consolidated Financial Statements

Item 2   Management's Discussion and Analysis of Financial Condition and
         Results of Operations

Item 3   Quantitative and Qualitative Disclosures about Market Risk

PART II  OTHER INFORMATION

Item 1   Legal Proceedings

Item 2   Changes in Securities and Use of Proceeds

Item 3   Defaults upon Senior Securities

Item 4   Submission of Matters to a Vote of Security Holders

Item 5   Other Information

Item 6   Exhibits and Reports on Form 8-K








<PAGE>   4
PART I -- FINANCIAL INFORMATION

ITEM 1    FINANCIAL STATEMENTS.

BIOMETRIC SECURITY CORP.
CONSOLIDATED BALANCE SHEET
(Expressed in Canadian Dollars)
(unaudited)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                           June 30,       December 31,    June 30,
                                             1999            1998           1998
                                         ------------    ------------    -----------
<S>                                      <C>             <C>             <C>

ASSETS

CURRENT ASSETS
   Cash                                  $    277,403    $    245,182    $ 1,655,323
   Accounts receivable                         43,265          55,076         17,062
   Prepaid expenses and deposits                5,976           9,257         13,406
                                         ------------    ------------    -----------
                                              326,644         309,515      1,685,791
Equipment and leasehold improvements           65,046          60,758        116,262
Investment (Note 4)                         5,644,134       3,637,219      1,837,500
                                         ------------    ------------    -----------
                                         $  6,035,824    $  4,007,492    $ 3,639,553
                                         ============    ============    ===========
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                      $    250,356    $    148,262    $   405,294
   Loan payable                                    --         150,775             --
                                         ------------    ------------    -----------
                                              250,356         299,037        405,294
CONTINGENT LIABILITY
   (Notes 1 and 7(b))                         657,052              --             --

SHAREHOLDERS' EQUITY
   Share capital (Note 1)                  16,176,836      13,128,263     12,947,609
   Shares subscribed                               --         660,592             --
Deficit                                   (11,048,420)    (10,080,400)    (9,713,350)
                                         ------------    ------------    -----------
                                            5,128,416       3,708,455      3,234,259
                                         ------------    ------------    -----------
                                         $  6,035,824    $  4,007,492    $ 3,639,553
                                         ============    ============    ===========
</TABLE>



On Behalf of the Board of Directors



/s/ Robert M. Kamm                               /s/ Wayne Johnstone
-------------------------------                  -------------------------------
Director                                         Director


<PAGE>   5
BIOMETRIC SECURITY CORP.
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
(Expressed in Canadian Dollars)
(unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                For the Three Months Ended        For the Six Months Ended
                                                ---------------------------     ---------------------------
                                                   June 30,       June 30,        June 30,       June 30,
                                                    1999           1998             1999          1998
                                                ------------    -----------     ------------    -----------
<S>                                             <C>             <C>             <C>             <C>

REVENUE
   Interest (Note 4)                            $      3,207    $    34,147     $     60,161    $    65,603
                                                ------------    -----------     ------------    -----------
EXPENSES
   Professional fees and registration costs          426,768        234,524          532,268        246,113
   Business consultants                               54,244         10,850           97,394         23,600
   Amortization                                        2,519          2,500            4,902          9,427
   Finder's fee (Note 4)                              37,568         53,668           61,183         53,668
   Foreign exchange                                  130,934        (12,354)         179,315        (12,354)
   Interest and bank charges                             520            398            1,195            687
   Management fees                                    32,100         30,000           64,200         60,000
   Offices expenses                                   34,758         20,887           68,604         36,734
   Listing costs                                      30,585         33,276           42,334         35,570
   Salaries, wages and administration                 27,267         22,706           49,326         37,671
   Travel and accommodation                           61,893         53,318           92,315         58,070
                                                ------------    -----------     ------------    -----------
                                                     839,156        449,773        1,193,036        549,186
                                                ------------    -----------     ------------    -----------
                                                    (835,949)      (415,626)      (1,132,875)      (483,583)
WRITE-OFF OF RESOURCE PROPERTIES                          --     (4,805,477)              --     (4,805,477)
GAIN ON SALE OF PROPERTIES                                --             --          164,855             --
LOSS ON DISPOSAL OF ASSETS                                --         (9,861)              --        (27,587)
                                                ------------    -----------     ------------    -----------
NET LOSS FOR THE PERIOD                             (835,949)    (5,230,964)        (968,020)    (5,316,647)

DEFICIT, BEGINNING OF PERIOD                     (10,212,471)    (4,482,386)     (10,080,400)    (4,396,703)
                                                ------------    -----------     ------------    -----------
DEFICIT, END OF PERIOD                          $(11,048,420)   $(9,713,350)    $(11,048,420)   $(9,713,350)
                                                ============    ===========     ============    ===========
LOSS PER SHARE                                  $      (0.02)   $     (0.30)    $      (0.03)   $     (0.31)
                                                ============    ===========     ============    ===========

</TABLE>




<PAGE>   6
BIOMETRIC SECURITY CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in Canadian Dollars)
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(unaudited)
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                       1999              1998
                                                    -----------      -----------
<S>                                                 <C>              <C>

OPERATIONS
   Loss for the period                              $  (968,020)     $(5,316,647)
   Items not involving cash:
      Depreciation                                        4,902            9,427
      Loss on disposal of assets                             --           27,587
      (Gain) Write-off of mineral properties           (164,855)       4,805,477
      Changes in non-cash working capital items         117,186          116,975
      Accrued interest on investment                    (55,922)              --
      Non-cash fees                                      61,183           53,668
                                                    -----------      -----------
                                                     (1,005,526)        (303,513)
                                                    -----------      -----------
FINANCING
   Issue of common shares, net                        2,983,850          506,250
   Repayment of loan                                   (150,775)              --
                                                    -----------      -----------
                                                      2,833,075          506,250
                                                    -----------      -----------
INVESTMENTS
   Capital assets                                        (9,190)         (13,054)
   Mineral properties                                   164,855         (134,961)
   Proceeds on disposal of fixed assets                      --          107,991
   Increase in investment (Note 4)                   (1,950,993)      (1,837,500)
                                                    -----------      -----------
                                                     (1,795,328)      (1,877,524)
                                                    -----------      -----------
CHANGE IN CASH                                           32,221       (1,674,787)
CASH, BEGINNING OF PERIOD                               245,182        3,330,110
                                                    -----------      -----------
CASH, END OF PERIOD                                 $   277,403      $ 1,655,323
                                                    ===========      ===========

</TABLE>









<PAGE>   7

BIOMETRIC SECURITY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(unaudited)
--------------------------------------------------------------------------------

1.   SHARE CAPITAL

a)   Authorized: Unlimited (1998 - 100,000,000) common shares without par value.

b)   Issued:

<TABLE>
<CAPTION>
                                                         Shares         Amount
                                                       ----------    -----------
<S>                                                    <C>           <C>

     Balance, December 31, 1997                        16,448,962    $12,387,691
     Issued during the year for cash by way of:
        Private placements                              4,035,000        605,250
        Exercise of options                               100,000         23,000
     Issued during the year for finder's fee              250,450         75,135
                                                       ----------    -----------
                                                       20,834,412     13,091,076
     Allotted during the year for:
        Finder's fee (Note 4)                              82,292         24,687
        Carrying charges (Note 5)                          65,789         12,500
                                                       ----------    -----------
     Balance, December 31, 1998                        20,982,493     13,128,263
     Issued during the period for cash by way of:
        Private placements                             11,666,666      1,750,000
        Exercise of warrants                              100,000         15,000
                                                       ----------    -----------
                                                       32,749,159     14,893,263
     Private placement                                 11,666,665      1,750,000
     Exercise of warrants                               2,885,551        462,833
                                                       ----------    -----------
                                                       47,301,375     17,106,096
     Allotted during the period for:
        Finder's fee (Note 4)                             203,941         61,183
     Less:  share issue costs                                           (333,391)
                                                       ----------    -----------
                                                       47,505,316     16,833,888
     Less: Contingent Liability (Note 7(b))            (3,285,260)      (657,052)
                                                       ----------    -----------
     Balance, June 30, 1999                            44,220,056    $16,176,836
                                                       ==========    ===========

</TABLE>




<PAGE>   8
BIOMETRIC SECURITY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(unaudited)
--------------------------------------------------------------------------------


1.    SHARE CAPITAL (continued)

     c)   During the three month period ended March 31, 1999 the Company
          completed brokered and non-brokered private placements that totalled
          11,666,666 units at $0.15 per unit for gross proceeds of $1,750,000.
          Each unit consisted of one common share and one non-transferable share
          purchase warrant exercisable at $0.15 per share in the first year and
          $0.17 per share in the second year. The agent for the brokered private
          placement was paid a 10% commission totalling $100,000 and 1,000,000
          broker warrants exercisable at $0.15 per share in the first year and
          $0.17 per share in the second year.

     d)   Private Placement:

          During the three month period ended June 30, 1999 the Company
          completed a brokered private placement of 11,666,665 units at $0.15
          per unit to raise gross proceeds of up to $1,750,000. Each unit
          consisted of one common share and one non-transferable share purchase
          warrant exercisable at $0.15 per share in the first year and $0.17 per
          share in the second year. The agent was paid a 10% commission, payable
          in cash, and 1,600,000 broker warrants exercisable at $0.15 per share
          in the first year and $0.17 per share in the second year.

     e)   At June 30, 1999 the company reserved in respect of options and
          warrants:

          Options:

<TABLE>
<CAPTION>
              Number of Shares          Exercise Price            Expiry Date
              ----------------          --------------            -----------
              <S>                           <C>                <C>

                    750,000                 $0.22                April 16, 2001
                  1,180,000                 $0.23              January 28, 2001
                     50,000                 $0.32                  July 6, 2000
                    100,000                 $0.20               August 28, 2000
                  ---------
                  2,080,000
                  =========

          Warrants:

<CAPTION>
              Number of Shares          Exercise Price            Expiry Date
              ----------------          --------------            -----------
              <S>                           <C>                <C>

                  1,775,000                 $0.17                March 31, 2000
                    660,000                 $0.15            September 10, 1999
                                            $0.17            September 10, 2000
                 11,281,115                 $0.15              January 29, 2000
                                                               January 29, 2001
                 13,266,665                 $0.15                April 15, 2000
                                            $0.17                April 15, 2001
                 ----------
                 26,982,780
                 ==========
</TABLE>



<PAGE>   9
BIOMETRIC SECURITY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(unaudited)
--------------------------------------------------------------------------------

2.   RELATED PARTY TRANSACTIONS

     Fees of $138,750 (1998 - $72,500; 1997 - $142,228) were charged by
     directors or companies affiliated with them for management, consulting and
     administrative services.

3.   DIRECTORS

      Mr. R. Kamm
      Mr. W. Rand
      Mr. C. Idziszek
      Mr. W. Johnstone

4.   INVESTMENT

       Investment, at cost ........................................   $5,508,223
          Accrued interest receivable .............................      135,911
                                                                      ----------
                                                                      $5,644,134
                                                                      ==========

     During 1998 the company entered into an agreement to purchase convertible
     debentures entitling the Company to acquire up to a 45% interest in
     Biometric Identification Inc. ("BII"), a private California-based company
     in the business of developing, manufacturing and marketing fingerprint
     recognition technology. Under the terms of the agreement, the company has
     the right to acquire up to US $5,000,000 of convertible debentures to be
     issued by BII. If all such debentures are acquired and converted into
     shares of BII, the Company will hold approximately 45% of the issued shares
     of BII.

     This investment was initiated by a related party which assigned its
     interest to the Company in exchange for a fee up to US $145,000, plus
     reimbursement of its expenses. The related party elected to take this fee
     in the form of 715,575 common shares as a deemed price of $0.30 per share.
     These shares will be issued in pro-rata tranches on the same basis the
     debentures are purchased by the Company. The debentures have a term of five
     years from the date of the closing of the first acquisition and bear
     interest at the lowest interest rate imputed under the U.S. Internal
     Revenue Code. As of April 1, 1999 the Company ceased accruing interest
     on the debentures.

     At June 30, 1999 the Company had acquired debentures of BII totalling US
     $3,750,000 in accordance with the terms of the agreement and had issued
     250,450 shares and allotted 286,233 shares at a total value of Cdn
     $161,005, to the related party. Additional debenture acquisitions and share
     issuances for finders fees under the terms of the original agreement are
     scheduled as follows:

                                                       Debenture
     Dates                                            Amount (US $)     Shares
     -----                                            ------------      ------
     July 22, 1999                                    1,250,000         178,892

     Subsequent to June 30, 1999 the debenture acquisition scheduled to be made
     on July 22, 1999 was made.


<PAGE>   10
BIOMETRIC SECURITY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(unaudited)
--------------------------------------------------------------------------------

5.   LOAN PAYABLE

     During 1998, a company affiliated with a director loaned the Company a
     total of $250,000. The loan was unsecured, non-interest bearing and was due
     on December 26, 1998. A total of $99,225 of the loan was repaid on December
     29, 1999, and the balance of the loan of $150,775 was repaid subsequent to
     December 31, 1998. The Company allotted 65,789 shares at a deemed price of
     $0.19 per share at December 31, 1998, as allowed for under the rules of the
     Vancouver Stock Exchange, as consideration for the loan.

6.   MINERAL PROPERTIES

     During the year ended December 31, 1998 the Company changed its principal
     business activity from mineral exploration to the development of
     fingerprint identification systems and wrote-off its mineral exploration
     expenditures.

<TABLE>
<CAPTION>
                                                         1999        1998           1997
                                                        -----     -----------    -----------
<S>                                                     <C>          <C>           <C>

ACQUISITION COSTS                                       $  --        $     --      $  80,321
                                                        -----     -----------    -----------
EXPLORATION AND DEVELOPMENT EXPENDITURES
   Access costs                                            --             772         17,929
   Assays                                                  --           2,882         31,690
   Communication                                           --             332         15,802
   Contract drilling, excavation and trenching             --              --      1,203,872
   Contract labour and supervision                         --           3,289        105,178
   Data acquisition and analysis                           --           1,537         44,367
   Equipment and field supplies                            --           5,417        168,674
   Field administration                                    --          16,895         73,192
   Field car rental and transportation                     --           3,499         58,966
   Geological and geophysical                              --          69,281        311,192
   Insurance                                               --           5,762         18,523
   Legal and other                                         --          23,936         52,871
   Travel and accommodation                                --           1,359         74,553
                                                        -----     -----------    -----------
                                                           --         134,961      2,176,809
                                                        -----     -----------    -----------
                                                           --         134,961      2,257,130
MINERAL PROPERTIES, BEGINNING OF PERIOD                    --       4,670,516      3,115,311
                                                        -----     -----------    -----------
                                                           --       4,805,477      5,372,441
LESS:  AMOUNTS WRTTEN--OFF                                 --      (4,805,477)    (1,002,218)
                                                        -----     -----------    -----------
MINERAL PROPERTIES, END OF PERIOD                       $  --     $        --    $ 4,370,223
                                                        =====     ===========    ===========
</TABLE>



<PAGE>   11
BIOMETRIC SECURITY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(unaudited)
--------------------------------------------------------------------------------


     The Company continues to hold several Argentine properties and has entered
     into an agreement to grant Inlet Resources Ltd. ("Inlet) an option to
     purchase up to a 100% interest in these properties. Under the terms of the
     agreement, the Company granted Inlet an option to purchase up to 90% of the
     properties, over a three year period, with a buyout of the remaining 10%
     for US $2,000,000. During the first year the agreement required Inlet to
     pay the Company US $150,000 in stages, issue the Company 100,000 shares and
     complete a US $650,000 work program to earn a 50% interest in the
     properties. During the second and third years the agreement provides that
     Inlet will pay the Company a total of US $600,000 in stages, issue 200,000
     shares and complete work commitments totalling US $1,500,000 to earn an
     additional 40% interest in the properties. To June 30, 1999 the Company had
     received US $150,000 and 100,000 shares relating to the option agreement.

7.   CONTINGENCIES:

     a)   Uncertainty due to the Year 2000 Issue:

          The Year 2000 issue arises because many computerized systems use two
          digits rather than four to identify a year. Date-sensitive systems may
          recognize the year 2000 as 1900 or some other date, resulting in
          errors when information using year 2000 dates is processed. In
          addition, similar problems may arise in some systems which use certain
          dates in 1999 to represent something other than a date. The effect of
          the Year 2000 Issue may be experienced before, on, or after January 1,
          2000, and, if not addressed, the impact on operations and financial
          reporting may range from minor errors to significant systems failure
          which could affect an entity's ability to conduct normal business
          operations. It is not possible to be certain that all aspects of the
          Year 2000 Issue affecting the Company, including those related to the
          efforts of investees, suppliers or other third parties, will be fully
          resolved.

     b)   Contingent Liability

          The Company continued its jurisdiction of incorporation from British
          Columbia to the State of Wyoming, effective November 10, 1998, and has
          proposed to continue from Wyoming back into British Columbia in 1999.
          In the course of their review of the Company's proposal, the United
          States Securities and Exchange Commission (the "SEC") had advised the
          Company that they believe the original continuance to Wyoming was an
          event that would have required the filing of a registration statement
          with the SEC. As a result, the Company appears to have been in
          technical violation of the U.S. Securities Act of 1933 (the "Act") and
          holders of shares of the Company, at the time of the original
          continuance to Wyoming may have common law remedies under the Act. The
          Company complied with applicable Canadian disclosure requirements at
          the time of transfer and offered all shareholders the right to dissent
          and no shareholders exercised this right. In May 1999 the Company
          filed a registration statement with the SEC offering U.S. holders of
          shares of the Company, at the time of continuance, the right to have
          their shares repurchased by the Company at their fair market value at
          the time of the original continuance. A provision for the contingent
          liability has been recorded in these accounts as a reduction of share
          capital. Any amount not repurchased by the Company on expiry of the
          repurchase offer will be reclassified to share capital.



<PAGE>   12

BIOMETRIC SECURITY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(unaudited)
--------------------------------------------------------------------------------

8.   SUBSEQUENT EVENTS

     c)   Corporate Continuance

          During the period the Company announced an extraordinary general
          meeting of the shareholders of the Company to be held on April 12,
          1999, at which time the shareholders were to vote on the Company's
          proposal to continue the Company to the Province of British Columbia
          and to consolidate the Company's share capital on the basis of one
          post-consolidated share for each five pre-consolidated shares. The
          meeting was subsequently postponed and has been scheduled for
          October 8, 1999.

     d)   Private Placement:

          Subsequent to June 30, 1999 the Company completed a brokered private
          placement of 10,000,000 units at $0.20 per unit for gross proceeds of
          $2,000,000. Each unit consisted of one common share and one
          non-transferable share purchase warrant exercisable at $0.20 per share
          in the first year and $0.23 per share in the second year. The agent
          was paid a 10% commission, payable in cash, and 1,500,000 broker
          warrants exercisable at $0.20 per share in the first year and $0.23
          per share in the second year.

9.   SEGMENTED INFORMATION

     During 1998, the Company adopted the accounting standards related to
     segment disclosures recently approved by the accounting standard-setting
     bodies in the United States and Canada. The information presented below is
     consistent with these standards. The Company has not allocated general and
     administrative expenses from the corporate segment.

     a)   Operating Segments:

          The Company has determined its operating segments to be mineral
          exploration and development, and corporate which includes holding
          investments, based on the way management organizes and manages its
          business.

<TABLE>
<CAPTION>
                                            Mineral
                                          Exploration
                                              and
                                          Development      Corporate         Total
                                          -----------     -----------       ---------
<S>                                        <C>            <C>                  <C>
     1999
     ----
     Revenue                               $      --      $    60,161          60,161
     General and administrative                   --        1,193,036       1,193,036
     Gain on sale of assets                  164,855               --         164,855
                                           ---------      -----------       ---------
     (Loss) Gain for the period            $ 164,855      $(1,132,875)       (968,020)
                                           =========      ===========       =========
     Capital expenditures                  $(164,855)     $ 1,960,183       1,795,328
                                           =========      ===========       =========
     Identifiable assets                   $      --      $ 6,035,824       6,035,824
                                           =========      ===========       =========


</TABLE>










<PAGE>   13

BIOMETRIC SECURITY CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(unaudited)
--------------------------------------------------------------------------------

9.   SEGMENTED INFORMATION (con't)

<TABLE>
<CAPTION>
                                             Mineral
                                           Exploration
                                               and
                                           Development      Corporate         Total
                                           -----------      ----------      -----------
    <S>                                    <C>              <C>             <C>
     1998
     ----

     Revenue                               $        --      $   65,603      $    65,603
     General and administrative                     --         549,186          549,186
     Write-off of resource properties       (4,805,477)             --       (4,805,477)
     Loss on sale of assets                         --         (27,587)         (27,587)
                                           -----------      ----------      -----------
     (Loss) Gain for the period            $(4,805,477)     $ (511,170)     $(5,316,647)
                                           ===========      ==========      ===========
     Capital expenditures (recoveries)     $   134,961      $1,742,563      $ 1,877,524
                                           ===========      ==========      ===========
     Identifiable assets                   $        --      $3,639,553      $ 3,639,553
                                           ===========      ==========      ===========

     1997
     ----
     Revenue                               $        --      $  102,341      $   102,341
     General and administrative                     --         470,599          470,599
     Write-off of resource properties       (1,002,218)             --       (1,002,218)
     Gain on sale of properties                     --              --               --
                                           -----------      ----------      -----------
     (Loss) Gain for the period            $(1,002,218)     $ (368,258)     $(1,370,476)
                                           ===========      ==========      ===========
     Capital expenditures (recoveries)     $ 2,257,130      $  (58,892)     $ 2,198,238
                                           ===========      ==========      ===========
     Identifiable assets                   $ 4,370,223      $4,922,280      $ 9,292,503
                                           ===========      ==========      ===========

</TABLE>


b)   Geographic Information:

     All of the Company's mineral exploration and development activities during
     1997 through 1999 were in Argentina.

     Except for the Company's investment in BII and related accrued interest
     income and foreign exchange loss, substantially all of the Company's
     corporate activities during 1997 through 1999 were in Canada.



<PAGE>   14

ITEM 2   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

         OVERVIEW

         On June 12, 1998, the Company entered into an agreement (the "BII
Agreement") to acquire up to US$5,000,000 of convertible debentures to be issued
by Biometric Identification, Inc. ("BII"), a private California corporation. The
Company's principal business now consists of its investment in BII.

         BII is currently controlled by Arete Associates ("Arete") which is also
a private California corporation. Arete has been a Department of Defense
research and development contractor for over 20 years specializing in sensor
systems and pattern recognition software development. Many of Arete's
mathematicians and physicists helped develop the BII fingerprint identification
technology. This technology has been exclusively licensed to BII by Arete.
Pursuant to the BII Agreement, the Company was able to invest up to US$5,000,000
in convertible debentures to be issued by BII. As of July 31, 1999, the Company
has purchased US$5,000,000, of the convertible debentures of BII pursuant to the
BII Agreement.

         The convertible debentures bear interest at the lowest interest rate
imputed under the U.S. Internal Revenue Code and, if not converted, will become
payable five years after the closing date of the first acquisition, which was
June 12, 1998.

         The Company may exercise its rights of conversion at any time. The
convertible debentures will automatically be converted on the earlier of an
initial public offering by BII or the acquisition of BII by a third party. If
all rights of conversion are exercised, the Company will be entitled to receive
45% percent of the issued common stock of BII.

         While the Company is not legally obligated to exercise its rights of
conversion, the Company's intention is, in due course, if business conditions
warrant, to exercise all of the conversion rights. If all rights of conversion
are exercised, the Company will ultimately hold 45% of the issued shares of the
common stock of BII. The interest of the Company may be subject to dilution
resulting from the issuance of shares on exercise of options granted under BII's
stock incentive plan and may be subject to additional dilution resulting from
future grants of stock options or under certain additional financings which may
be undertaken by BII.

         The parties have also agreed that BII may be merged into or acquired by
the Company. The parties have agreed to examine this from a tax, securities and
commercial perspective to determine the best structure for this potential
merger.

         CURRENT CAPITAL RESOURCES AND LIQUIDITY

         Since inception, the Company's capital resources have been limited.
Since cash generated from operations has been nominal, the Company has had to
rely upon the sale of equity and debt securities for cash required for
investments and operations, among other things. As at June 30, 1999, the Company
had working capital of approximately $76,288.


<PAGE>   15

         Since the Company is unlikely to have cash flow in the near future, the
Company will have to continue to rely upon equity and debt financing during such
period. There can be no assurance that financing, whether debt or equity, will
always be available to the Company in the amount required at any particular time
or for any particular period or, if available, that it can be obtained on terms
satisfactory to the Company. Other than in respect of the BII acquisition, the
Company does not have any commitments for material capital expenditures over
either the near or long term and none are presently contemplated over normal
operating requirements.

THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998

RESULTS OF OPERATIONS

         For the three and six-month periods ended June 30, 1999 the Company
incurred net losses of $835,949 and $968,020 resulting in losses per share of
$0.02 and $0.03 respectively. The losses for the three and six-month periods
ended June 30, 1999 result from cash and short term investment earnings of
$3,207 and $60,161 less expenses of $839,156 and $1,193,036 respectively. In
addition, the Company realized mineral property recoveries of $164,855 in the
six-month period ended June 30, 1999. This is compared to net losses for the
three and six-month periods ended June 30, 1998 of $5,230,964 and $5,316,647 and
losses per share of $0.30 and $0.31. The losses for the three and six month
periods ended June 30, 1998 resulted from cash and short term investment
earnings of $34,147 and $65,603 less expenses of $449,773 and $549,186 and
losses on the disposal of equipment of $9,861 and $27,587 respectively. In
addition, the Company wrote-off mineral property costs totalling $4,805,477
which increased the loss for both the three and six-month periods ended June 30,
1998.

         Effective April 1, 1999, the Company ceased accruing interest on the
BII debentures.

         Administrative costs in the three and six-month periods ended June 30,
1999 increased 86.6% and 117% respectively over 1998 primarily as a result of
the Company incurring increased professional fees, finders fees and foreign
exchange.

LIQUIDITY AND CAPITAL RESOURCES

         Cash flow from operations has not to date satisfied all of the
Company's operational requirements and cash commitments. With working capital of
approximately $76,288 as at June 30, 1999, the Company must rely on sales of
debt and equity securities to meet its cash requirements to the extent that they
exceed cash flow from operations. If the Company cannot raise the necessary
financing directly by way of debt, equity or other means, it may be forced to
curtail its operating activities. At this time, the Company is seeking but does
not have specific arrangements to obtain the additional financing. There is no
assurance that the Company will be successful in obtaining any such financing.

         During the three month period ended June 30, 1999, the Company:

         a)       Completed a Private Placement on April 15, 1999, which had
                  been announced on February 2, 1999. The private placement
                  consisted of a best efforts brokered private placement of
                  11,666,665 units at $0.15 per unit for total proceeds of
                  $1,750,000. Each unit consisted of one common share and one
                  two-year, non-transferable share purchase warrant. Each
                  warrant is exercisable at a price of $0.15 per share in the
                  first year and $0.17 per share in the second year.
                  Remuneration paid to the broker for acting as agent consisted
                  of a $160,000 commission payable in cash and a two year
                  broker's warrant exercisable into 1,600,000 shares of the
                  Company. The


<PAGE>   16

                  broker's warrants are exercisable at a price of $0.15 per
                  share in the first year and $0.17 per share in the second
                  year.

         b)       Announced a $2,000,000 Private Placement on June 10, 1999,
                  which was completed July 22, 1999. The private placement
                  consisted of 10,000,000 units, brokered on a best efforts
                  basis, at a price of $0.20 per unit for total proceeds of
                  $2,000,000. Each unit consisted of one common share and one
                  two-year non-transferable share purchase warrant. Each warrant
                  is exercisable at a price of $0.20 per share in the first year
                  and $0.23 per share in the second year. Remuneration paid
                  to the broker for acting as agent consisted of a $186,000
                  commission payable in cash and a two year broker's warrant
                  exercisable into 1,500,000 shares of the Company. The broker's
                  warrants are exercisable at a price of $0.20 per share in the
                  first year and $0.23 per share in the second year.

         c)       Invested an additional US$875,000 in BII debentures.

         d)       Announced an extraordinary general meeting to the shareholders
                  of the Company to be held on April 12, 1999, at which time the
                  shareholders would vote on the Company's proposal to consider
                  continuing to the Province of British Columbia and to
                  consolidate the Company's share capital on the basis of one
                  post-consolidated share for each five pre-consolidated shares.
                  The meeting date was subsequently postponed to October 8,
                  1999. (See Part II, Item 1 -- Legal Proceedings regarding
                  certain U.S. securities matters and the Company's current
                  plans to continue back to British Columbia).

         BALANCE SHEETS

         Total cash and short-term investments at June 30, 1999, were $277,403
as compared to $245,182 at December 31, 1998 and $1,655,323 at June 30, 1998,
and working capital was $76,288 as at June 30, 1999, compared to $10,478 at
December 31, 1998 and $1,280,497 at June 30, 1998.

         In May 1999 the Company filed a registration statement with the SEC
offering U.S. holders of shares of the Company, at the time of continuance, the
right to have their shares repurchased by the Company at their fair market value
at the time of the original continuance.

         A provision for the contingent liability has been recorded in these
accounts as a reduction of share capital. Any amount not repurchased by the
Company on expiry of the repurchase offer will be reclassified to share capital.
See Part II, Item 1 -- Legal Proceedings.

         As at June 30, 1999, a total of $5,644,134 (US $3,750,000) including
accrued interest of $135,911 had been invested in debentures of BII.

         RISK OF YEAR 2000 NONCOMPLIANT SYSTEMS

         The Year 2000 issue refers to possible negative impacts on business
systems that could be caused by the arrival of the new millennium. Best known is
the possible inability of computer software to recognize the year 2000 as a
date. Unless the software is fixed, date sensitive systems may begin to fail
prior to January 1, 2000. Failures may range from relatively minor processing
inaccuracies to catastrophic system malfunctions. Failures may affect not only
hardware and software used to process every day business information but also
the imbedded computers that control plant machinery, robotics, office equipment,
elevators and building climate and security systems.

         The Company does not expect to experience significant Year 2000 issues,
because it utilizes commercial programs and systems that have been designed or
upgraded to comply with requirements imposed by the transition to the new
millenium. The Company is contacting its main suppliers to make sure that they
are also Year 2000 compliant, a process the Company expects to complete by the
third quarter of 1999.


<PAGE>   17

         BII has also evaluated the products and services that BII offers, as
well as its information technology infrastructure, and has determined that they
are Year 2000 compliant. BII's business involves integrating its products with
those of original equipment managers and value added resellers. If any of those
companies is not Year 2000 compliant, their product sales, and consequently,
BII's sales, could drop. Such a drop in BII's sales could have a negative impact
on the Company's stock.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not Applicable

PART II -- OTHER INFORMATION

ITEM 1   LEGAL PROCEEDINGS

         Other than as disclosed below, no material legal proceedings are
pending to which the Company is a party or of which any of its properties is the
subject.

         Effective as of November 10, 1998, in compliance with the
"continuation" procedure provided for under the Company Act (British Columbia),
the Company transferred its domicile into the State of Wyoming, where it is now
governed by the Wyoming Business Corporation Act. The Company's management is
considering transferring the Company's domicile back to British Columbia. In
order to solicit shareholder approval for this transfer, the Company filed on
March 5, 1999, as required by the Securities Exchange Act of 1934, a preliminary
proxy statement with the SEC which was reviewed by the SEC staff. Based on its
review, the staff informally advised the Company that the staff believes that
the Company's transfer to Wyoming was an event that would have required the
filing of a registration statement with the SEC, under the Securities Act of
1933.

         In response to the SEC's advice, on May 7, 1999, the Company filed a
registration statement under the Securities Act on Form S-4 for a repurchase
offer with respect to the shares deemed to have been offered in connection with
the transfer to Wyoming. Repurchase offerees may be able to sue the Company for
a possible violation of the registration requirement under the Securities Act.
The Company's exposure in that event is difficult to quantify because its
shareholders were provided with their statutory right of dissent under the
Company Act (British Columbia) to be paid the fair market value of their shares
if they dissented from the transfer to Wyoming. No shareholder exercised that
dissent right.

ITEM 2   CHANGES IN SECURITIES AND USE OF PROCEEDS

         UNREGISTERED SALES OF SECURITIES DURING THE LAST THREE MONTHS

         During the three month period ended June 30, 1999, the Company:

         a)       Completed a Private Placement on April 15, 1999, which had
                  been announced on February 2, 1999. The private placement
                  consisted of a best efforts brokered private placement of
                  11,666,665 units at $0.15 per unit for total proceeds of
                  $1,750,000. Each unit consisted of one common share and one
                  two-year, non-transferable share purchase warrant. Each
                  warrant is exercisable at a price of $0.15 per share in the
                  first year and $0.17 per share in the second year.
                  Remuneration paid to the broker for acting as


<PAGE>   18

                  agent consisted of a $160,000 commission payable in cash and a
                  two year broker's warrant exercisable into 1,600,000 shares of
                  the Company. The broker's warrants are exercisable at a price
                  of $0.15 per share in the first year and $0.17 per share in
                  the second year.

         b)       Announced a $2,000,000 Private Placement on June 10, 1999,
                  which was completed July 22, 1999. The private placement
                  consisted of 10,000,000 units, brokered on a best efforts
                  basis, at a price of $0.20 per unit for total proceeds of
                  $2,000,000. Each unit consisted of one common share and one
                  two-year non-transferable share purchase warrant. Each warrant
                  is exercisable at a price of $0.20 per share in the first year
                  and $0.23 per share in the second year. Remuneration paid
                  to the broker for acting as agent consisted of a $186,000
                  commission payable in cash and a two year broker's warrant
                  exercisable into 1,500,000 shares of the Company. The broker's
                  warrants are exercisable at a price of $0.20 per share in the
                  first year and $0.23 per share in the second year.

         Both offerings were effected in reliance upon the exemption from United
States securities law registration requirements provided by Regulation S under
the Securities Act of 1933, because none of the securities were offered or sold
in the United States or to "U.S. persons" other than "distributors" (as such
quoted terms are defined in Regulation S).

ITEM 3   DEFAULTS UPON SENIOR SECURITIES

         Not Applicable

ITEM 4   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not Applicable

ITEM 5   OTHER INFORMATION

         On May 31, 1999, Robert M. Kamm succeeded Patrick McCleery as the
President of the Company. Mr. Kamm is Chief Executive Officer of BII. On
July 29, 1999, Robert F. Chase became the Chief Financial Officer of the
Company. Both Mr. Kamm and Mr. Chase became Directors of the Company at the time
of their appointments.

ITEM 6   EXHIBITS AND REPORTS ON FORM 8-K

a.       Exhibits

         3.1    Registrant's Articles of Continuance into the State of
                Wyoming*

         3.2.   Registrant's By-Laws, as amended* 3.3 Registrant's Articles of
                Amendment re Authorized Stock* 10.1 BII Agreement, dated June
                12, 1998*

         10.2   Inlet Resources, Ltd. Agreement, dated January 21, 1998*

         27     Financial Data Schedule

         * Filed with the Company's Form 10-K on March 31, 1999

b.       No reports on Form 8-K have been filed during the quarter ended June
         30, 1999.




<PAGE>   19

                                   SIGNATURES


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



                                    BIOMETRIC SECURITY CORP.



Date: August 13, 1999               /s/ Robert M. Kamm
                                    -------------------------------------------
                                    Robert M. Kamm
                                    President and Director
                                    (duly authorized officer of registrant)



Date: August 13, 1999               /s/ Robert F. Chase
                                    -------------------------------------------
                                    Robert F. Chase
                                    Chief Financial Officer
                                    (principal financial officer of registrant)