UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
Commission File No. 333-94265
LISKA BIOMETRY, INC.
(Exact name of small business issuer as specified in its charter)
Florida 06-1562447
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6066 Vineyard Drive, Ottawa, Ontario Canada K1C 2M5
(Address of principal executive offices)
(613)837-1909
(Issuer's telephone number)
State whether Registrant 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: Yes [ ] No [X]; and has been subject to such filing
requirements for the past 90 days: Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
On May 27, 2003, we had 9,898,275 shares of our common stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheets (Unaudited).................................3
Consolidated Statements of Operations (Unaudited).......................4
Consolidated Statements of Cash Flows (Unaudited).......................5
Notes to Financial Statements..........................................6-7
Item 2 - Management's Discussion and Analysis or Plan of Operations........8
Item 3 - Controls and Procedures..........................................10
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings................................................10
Item 2 - Changes in Securities............................................10
Item 3 - Default Upon Senior Securities...................................10
Item 4 - Submission of Matters to a Vote of Security Holders..............11
Item 5 - Other Information................................................11
Item 6 - Exhibits and Reports on Form 8-K.................................11
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PART I - FINANCIAL INFORMATION
Financial Statements.
Liska Biometry, Inc.
(A Development Stage Company)
Consolidated Balance Sheet
June 30, 2002
(Unaudited)
Assets
Current assets:
Cash $ 165
===========
Liabilities and stockholders' (deficit)
Current liabilities:
Accounts payable and accrued expenses $ 133,506
Due to investors 35,000
-----------
Total current liabilities 168,506
-----------
Stockholders' (deficit):
Preferred stock, no par value,
10,000,000 shares authorized
Common stock, no par value, -
100,000,000 shares authorized,
9,898,275 shares issued and outstanding 646,177
Additional paid in capital 1,051,490
(Deficit) accumulated during the development stage (1,866,008)
-----------
(168,341)
-----------
$ 165
===========
See the accompanying notes to the consolidated financial statements.
-3-
Liska Biometry, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
Three Months and Six Months Ended June 30, 2001 and 2002 and
Inception (August 1, 2000) to June 30, 2002
(Unaudited)
Three Months Three Months Six Months Six Months Inception
Ended Ended Ended Ended to
June 30, 2001 June 30, 2002 June 30, 2001 June 30, 2002 June 30, 2002
------------- ------------- ------------- ------------- -------------
Sales $ - $ - $ 8,000 $ - $ 8,000
Cost of goods sold - - 892 - 892
------------- ------------- ------------- ------------- -------------
Gross profit - - 7,108 - 7,108
Operating expenses:
Impairment of license - - 58,812 - 58,812
Selling, general and
administrative expenses 165,269 1,500 1,792,137 12,007 1,814,554
------------- ------------- ------------- ------------- -------------
165,269 1,500 1,850,949 12,007 1,873,366
------------- ------------- ------------- ------------- -------------
(Loss) from operations (165,269) (1,500) (1,843,841) (12,007) (1,866,258)
------------- ------------- ------------- ------------- -------------
Other income (expense):
Other income - - - - 250
------------- ------------- ------------- ------------- -------------
Net (loss) $ (165,269) $ (1,500) $ (1,843,841) $ (12,007) $ (1,866,008)
============= ============= ============= ============= =============
Per share information -
basic and fully diluted:
Weighted average shares
outstanding 552,034 9,898,275 555,972 9,898,275 1,294,070
============= ============= ============= ============= =============
Net (loss) per share $ (0.30) $ (0.00) $ (3.32) $ (0.00) $ (1.44)
============= ============= ============= ============= =============
See the accompanying notes to the consolidated financial statements.
-4-
Liska Biometry, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2001 and 2002 and
Inception (August 1, 2000) to June 30, 2002
(Unaudited)
Six Months Six Months Inception
Ended Ended to
June 30, 2001 June 30, 2002 June 30, 2002
------------- ------------- -------------
Cash flows from operating activities:
Net cash (used in) operating activities $ (41,964) $ - $ (78,000)
------------- ------------- -------------
Cash flows from investing activities:
Net cash (used in) investing activities - - (50,000)
------------- ------------- -------------
Cash flows from financing activities:
Net cash provided by financing activities 42,000 165 128,165
------------- ------------- -------------
Net increase (decrease) in cash 36 165 165
Beginning - cash balance - - -
------------- ------------- -------------
Ending - cash balance $ 36 $ 165 $ 165
============= ============= =============
Supplemental cash flow information:
Cash paid for income taxes $ - $ - $ -
============= ============= =============
Cash paid for interest $ - $ - $ -
============= ============= =============
Non cash investing and financing activities:
Common stock issued for license $ - $ - $ 47,500
============= ============= =============
License acquired in exchange for payable $ - $ - $ 1,450,000
============= ============= =============
Write off of license and related payable $ - $ - $ 1,450,000
============= ============= =============
Common stock issued to settle investor loans $ - $ - $ 205,200
============= ============= =============
See the accompanying notes to the consolidated financial statements.
-5-
LISKA BIOMETRY, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(UNAUDITED)
(1) Basis Of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles (GAAP) for interim financial
information and Item 310(b) of Regulation S-B. They do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the financial statements of the Company as of December 31,
2001, and for the year then ended, and the period from inception (August 1,
2000) to December 31, 2000 and 2001, including notes thereto included in the
Company's Form 10-KSB.
(2) Earnings Per Share
The Company calculates net income (loss) per share as required by Statement of
Financial Accounting Standards (SFAS) 128, "Earnings per Share." Basic earnings
(loss) per share is calculated by dividing net income (loss) by the weighted
average number of common shares outstanding for the period. Diluted earnings
(loss) per share is calculated by dividing net income (loss) by the weighted
average number of common shares and dilutive common stock equivalents
outstanding. During periods when anti-dilutive commons stock equivalents are not
considered in the computation.
(3) Income Taxes
The Company accounts for income taxes under SFAS 109, which requires use of the
liability method. SFAS 109 provides that deferred tax assets and liabilities are
recorded based on the differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes,
referred to as temporary differences. Deferred tax assets and liabilities at the
end of each period are determined using the currently enacted tax rates applied
to taxable income in the periods in which the deferred tax assets and
liabilities are expected to be settled, or realized.
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to income before provision for income taxes.
The sources and tax effects of the differences are as follows:
Income tax provision at
the federal statutory rate 34 %
Effect of operating losses (34)%
------
-
As of June 30, 2002, the Company has a net operating loss carryforward of
approximately $1,800,000 subject to any restrictions because of the change in
ownership described in Note 5). This loss will be available to offset future
taxable income. If not used, this carryforward will expire through 2022. The
deferred tax asset of approximately $600,000 relating to the operating loss
carryforward has been fully reserved at June 30, 2002.
-6-
(4) Commitments and Contingencies
During the periods covered by these financial statements the Company issued
shares of common stock without registration under the Securities Act of 1933.
Although the Company believes that the sales did not involve a public offering
of its securities and that the Company did comply with the "safe harbor"
exemptions from registration, it could be liable for rescission of the sales if
such exemptions were found not to apply and this could have a material negative
impact on the Company's financial position and results of operations.
During the periods covered by these financial statements the Company entered
into several employment, consulting and other agreements with third parties.
Although the Company obtained settlement releases from a majority of the
parties, settlement releases were not entered into with some of these parties or
the settlement releases were verbal agreements. Future contingencies which
cannot be estimated by management, may exists for the above matters including
but not limited to issuance of capital stock and other financial obligations and
may have a material negative impact on the Company's financial position and
results of operations.
(5) Stockholders' (Deficit)
During March 2002 the Company issued 9,000,000 shares of its common stock for
services valued at $9,000 to a significant shareholder. In addition, the Company
issued 2,404 shares of its common stock for services valued at $2 to a director.
At the time of issuance there was no market for the Company's common shares and
they were valued at management's estimate of the fair market value of the
shares, which approximated the fair market value of the services provided.
During March 2002 this significant shareholder sold the 9,000,000 common
shares representing a 91% interest in the Company to Kojon Biometrics, Inc.
resulting in a change of control of the Company.
(6) Basis of Reporting
The Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.
The Company has experienced a significant loss from operations as a result of
its investment necessary to achieve its operating plan, which is long-range in
nature. For the period ended June 30, 2002 and the period from inception to June
30, 2002, the Company incurred a net losses of $12,077 and $1,866,008 and has
working capital and stockholder deficits of $168,341 at June 30, 2002. In
addition, the Company has no revenue generating operations.
The Company's ability to continue as a going concern is contingent upon its
ability to attain profitable operations and secure financing. In addition, the
Company's ability to continue as a going concern must be considered in light of
the problems, expenses and complications frequently encountered by entrance into
established markets and the competitive environment in which the Company
operates.
The Company is pursuing equity financing for its operations. Failure to secure
such financing or to raise additional capital or borrow additional funds may
result in the Company depleting its available funds and not being able pay its
obligations.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
-7-
Plan of Operations
We have no cash resources from which to conduct any operations or pursue a
prospective business plan. As of June 30, 2002, we had not determined what
business we would engage in and, as a result, we cannot determine what our
capital expenditures will be over the next 12 months. As of June 30, 2002 and as
of May 27, 2003, we had $0 of cash; accordingly, we will be unable to fund any
potential operations from our current cash position, which is $0. Although our
President plans to loan us funds to conduct our operations, we have no agreement
with our President to do so and our President is under no obligation to loan us
funds. Accordingly, there are no assurances that we will receive loans from our
President. Moreover, there are no assurances that our President will have
sufficient funds to make these loans. In addition, we have no compensation
agreements to our President in connection with any loans he may provide to us.
If our President is unable or unwilling to make loans to us necessary to
implement our Plan of Operations, we will need additional financing through
traditional bank financing or a debt or equity offering; however, because we are
a development stage company with no operating history and a poor financial
condition, we may be unsuccessful in obtaining such financing or the amount of
the financing may be minimal and therefore inadequate to implement our Plan of
Operations. In addition, if we only have nominal funds by which to conduct our
operations, we may have to curtail any potential Plan of Operations which would
negatively impact development of any potential brand name and reputation. In the
event that we do not receive financing or our financing is inadequate to enable
us to conduct potential operations, we may have to liquidate our business and
undertake any or all of the following actions:
o Sell or dispose of our assets, if any;
o Pay our liabilities in order of priority, if we have available cash to
pay such liabilities;
o If any cash remains after we satisfy amounts due to our creditors,
distribute any remaining cash to our shareholders in an amount equal
to the net market value of our net assets;
o File a Certificate of Dissolution with the State of Florida to
dissolve our corporation and close our business;
o Make the appropriate filings with the Securities and Exchange
Commission so that we will no longer be required to file periodic and
other required reports with the Securities and Exchange Commission,
if, in fact, we are a reporting company at that time; and/or
o Make the appropriate filings with the National Association of Security
Dealers to affect a delisting of our common stock from the OTC
Bulletin Board.
Based upon our current assets, however, we will not have the ability to
distribute any cash to our shareholders.
If we have any liabilities that we are unable to satisfy and we qualify for
protection under the U.S. Bankruptcy Code, we may voluntarily file for
reorganization under Chapter 11 or liquidation under Chapter 7. Our creditors
may also file a Chapter 7 or Chapter 11 bankruptcy action against us. If our
creditors or we file for Chapter 7 or Chapter 11 bankruptcy, our creditors will
take priority over our shareholders. If we fail to file for bankruptcy under
Chapter 7 or Chapter 11 and we have creditors, such creditors may institute
proceedings against us seeking forfeiture of our assets, if any.
We do not know and cannot determine which, if any, of these actions we may be
forced to take.
-8-
OUR OPERATIONS FROM OUR INCEPTION TO JUNE 30, 2002:
We are a development stage company that was formed to engage in the business of
selling mortgage related products on the Internet. After a period of inactivity,
in approximately late April 2001, we changed our business plan to engage in the
marketing of a cleaning process for large-scale water and fluid treatment,
filtering, and storage facilities. On August 1, 2000, we licensed the marketing,
sale, and distribution rights from Floran Technologies, Inc., the owner of
certain technologies used in the cleaning processes for large-scale water and
fluid treatment, filtering, and storage facilities. On April 30, 2001, Floran
Technologies, Inc. notified us that it was terminating the license agreement due
to our default on payments we were required to make to it. As a result of the
license termination, we became inactive.
We do not expect to generate any meaningful revenue or incur any significant
operating expenses until such time that we begin meaningful operations; however,
we will continue to incur expenses pertaining to our periodic and other
reporting obligations with the Securities and Exchange Commission.
LIQUIDITY AND CAPITAL RESOURCES:
As of June 30, 2002, we had limited cash resources of $165 and as of May 27,
2003, we had limited cash resources of $0. We do not have any other internal
sources of working capital. As of May 27, 2003, all required administrative
expenses are being paid by our President.
We did not receive any revenues during the 12 months ended June 30, 2002. We
do not anticipate earning revenues, if any, until such time as we formulate and
accomplish our Plan of Operations in the fingerprint encoding and authentication
business. Our Plan of Operations will be subject to receiving substantial
financing, which we may be unable to obtain.
Since our inception, our operating expenses have exceeded our revenues, which
has been $0. At the present time, we have insufficient working capital to fund
our planned growth and ongoing operating expenses. As a result, we expect to
continue to experience significant negative operating cash flow for the
foreseeable future. Our existing working capital will not be sufficient to fund
the continued implementation of our future Plan of Operations and to meet our
general operating expenses. We are unable to predict at this time the exact
amount of additional working capital we will require; however, in order to
provide any additional working capital which we may require, in all likelihood
we will be required to raise additional capital through the sale of equity
securities. We currently have no commitments to provide us with any additional
working capital. If we do not have sufficient working capital, it is likely that
we will have to cease operations.
RESULTS OF OPERATIONS:
We have never had revenues from operations. The losses accumulated since our
inception were incurred for our formation and operating expenses. As of June
30, 2002, we had no business plan. As of approximately March 2002, in connection
with our change of control, we decided to pursue a business plan consisting of
providing fingerprint encoding and authentication services; however, to date, we
have not accomplished any steps towards developing this business plan.
-9-
Controls and Procedures
The Company's Chief Executive Officer and Chief Financial Officer evaluated the
Company's disclosure controls and procedures within the 90 days preceding the
filing date of this quarterly report. Based upon this evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in ensuring that material
information required to be disclosed is included in the reports that it files
with the Securities and Exchange Commission.
There were no significant changes in the Company's internal controls or, to the
knowledge of the management of the Company, in other factors that could
significantly affect these controls subsequent to the evaluation date.
Part II. OTHER INFORMATION
Legal Proceedings
Lyndell Parks, our former President and Director, is a defendant in a civil
action brought by the United Sates Securities and Exchange Commission, in the
United States District Court, Central District of Illinois, Springfield
Division, SEC v Gorsek et al., Case No. 99-3072 (1999). On or about April 23,
2001, in connection with this matter, Mr. Parks, without admitting or denying
the allegations contained in the Complaint, consented to an order enjoining him
from violating the anti-fraud provisions of the federal securities laws,
specifically, Section 17(b) of the Securities Act of 1933 and Section 10(b) and
Rule 10(b) 5 of the Securities Exchange Act of 1934. On September 9, 2002, the
Court ordered Mr. Parks to pay $105,000 in disgorgement of profits, plus
prejudgment interest of $35,000 and a civil penalty of $10,000.
Changes in Securities
None
Defaults Upon Senior Securities
None
-10-
Submission of Matters to a Vote of Security Holders
None
Other Information
None
Exhibits and Reports on Form 8-K
(a) Exhibits and Index of Exhibits
None
(b) Reports on Form 8-K
We filed a Form 8-K on April 2, 2002 in connection with Item 1, Changes in
Control of Registrant, Item 5, Other Events and Regulation FD Disclosure, and
Item 6, Resignations of Registrant's Directors, to disclose the March 26, 2002
resignation of Lyndell Parks, the Company's President and Director, and Audra
Parks, the Company's Secretary, Treasurer and Director, and the appointment of
Lam Ko Chau as our President and Director to fill the vacancies As a result, Lam
Ko Chau became our sole Officer and Director.
We filed a Form 8-K on April 5, 2002 in connection with Item 4, Changes in
Registrant's Certifying Accountant, with an attached exhibit, Exhibit 16 -
Letter from Salberg & Company, P.A. dated April 4, 2002, to disclose that on
April 4, 2002, we changed accountants from Salberg & Company, P.A. to Stark
Winter Schenkein & Co., LLP.
We filed a Form 8-K on April 19, 2002 in connection with Item 5, Other Events
and Regulation FD Disclosure, to disclose on March 28, 2002, our Board of
Directors approved a change of our name from FTLA, Inc. to Liska Biometry, Inc.,
and that our trading symbol had changed to "LSKA".
-11-
SIGNATURES
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.
Dated: May 27, 2003 Liska Biometry, Inc.
By: /s/ Lam Ko Chau
Lam Ko Chau, President
Chief Financial Officer,
and Principal Accounting Officer
-12-
CERTIFICATION ACCOMPANYING PERIODIC REPORT PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Lam Ko Chau, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Liska Biometry, Inc.;
2. Based on my knowledge, this quarterly 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 quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 27, 2003
/s/ Lam Ko Chau
Lam Ko Chau
Chief Financial Officer and Principal Accounting Officer
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