-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, W0tF37GXsXYLuXFzBt2GVqDIzhXE2+JjAmf8l9NfWZV5hRfMDx/d72QIT/Wq9rAl qA4fdpD8efKpDWEgNGdzfg== 0001213900-04-000287.txt : 20040617 0001213900-04-000287.hdr.sgml : 20040617 20040617104802 ACCESSION NUMBER: 0001213900-04-000287 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20040617 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANSCOTT INDUSTRIES INC CENTRAL INDEX KEY: 0001047733 STANDARD INDUSTRIAL CLASSIFICATION: ADHESIVES & SEALANTS [2891] IRS NUMBER: 113331350 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-28513 FILM NUMBER: 04867682 BUSINESS ADDRESS: STREET 1: 16929 E. ENTERPRISE DRIVE STREET 2: #206 CITY: FOUNTAIN HILLS STATE: AZ ZIP: 85268 BUSINESS PHONE: 4808166140 MAIL ADDRESS: STREET 1: 16929 ENTERPRISE DRIVE STREET 2: #206 CITY: FOUNTAIN HILLS STATE: AZ ZIP: 85268 FORMER COMPANY: FORMER CONFORMED NAME: LIQUIDIX INC DATE OF NAME CHANGE: 20011010 FORMER COMPANY: FORMER CONFORMED NAME: LEARNERS WORLD INC DATE OF NAME CHANGE: 19991207 10KSB/A 1 f10ksba12003_anscott.txt AMENDMENT NO. 1 TO FORM 10-KSB FOR 2003 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 to FORM 10-KSB Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Fiscal Year Ended March 31, 2003 Commission File # 333-69686 ANSCOTT INDUSTRIES, INC. ------------------------ (Exact name of registrant as specified in its charter) Florida ------- (State or other jurisdiction of incorporation or organization) 86-0000714 ---------- (IRS Employer Identification Number) 26 Haynes Drive, Wayne, New Jersey 07470 ---------------------------------------- (Address of principal executive offices ) (Zip Code) (973)696-7575 ------------- (Registrant's telephone no., including area code) ---------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.0001 par value 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 not contained in this form, and no disclosure will be contained, to the best of the 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. ( ) Revenues for year ended March 31, 2003: $2,480,727. Aggregate market value of the voting common stock held by non-affiliates of the registrant as of July 14, 2003, was: $6,237,482. Number of shares of the registrant's common stock outstanding as of July 14, 2003 was: 45,685,806 Transfer Agent as of July 14, 2003: Standard Register and Transfer Company 12528 South 1840 East Draper, Utah 84020 PART I ------ Item 1. Description of Business Business Development. We were formed in New York on June 28, 1996 under the name Learners World, Inc. with the intent to own and operate facilities for the care, education and recreation of children. On September 26, 2001 (the "Effective Date"), pursuant to a Stock Purchase Agreement and Share Exchange between Learners World, Inc. ("Learners World"), a Florida corporation and Liquidics, Inc. ("Liquidics") a Nevada corporation, Learners World, Inc. acquired all of the shares of Advanced Fluid Systems, Inc. ("Advanced Fluid") from Liquidics. Pursuant to the terms of the Agreement, Liquidics sold Advanced Fluid to Learners World and paid $400,000 to Learners World in consideration for the issuance of 27,000,000 Learners World shares to the Liquidics shareholders. Pursuant to the Agreement, Advanced Fluid became a wholly owned subsidiary of the Company. In addition, we changed our name to Liquidix, Inc. and redomesticated in the State of Florida. Pursuant to this Agreement, through Advanced Fluid we were principally engaged in developing, manufacturing and marketing ferrofluids and products based on or derived from its ferrofluid technology. Ferrofluids are stable magnetic liquids that can be precisely positioned or controlled with a magnetic force. Ferrofluids consist of molecular-sized magnetic particles that are surface treated so that they can be dispersed in various fluids, usually a synthetic low vapor pressure oil. Ferrofluids are designed to have a choice of properties such as viscosity, magnetic strength and vapor pressures to perform numerous specific function which is sealing. We currently sell our industrial products to the semiconductor, optical, thin film coating and the vacuum industry. On April 15, 2003, pursuant to a Stock Purchase Agreement and Share Exchange between us AFS Seals, Inc and Anscott Industries, Inc., we acquired all of the shares of Anscott from the Anscott shareholders in consideration for the issuance of a total of 45,000,000 shares of our common stock to the Anscott board of directors and the transfer of all of our current assets and liabilities to AFS. Pursuant to the Agreement, Anscott became a wholly owned subsidiary of the Company and we filed articles of amendment in the state of Florida changing our name to Anscott Industries, Inc. We maintain our principal offices at 26 Haynes Drive, Wayne, New Jersey 07470 and our telephone number is (973)696-7575. We have not been involved in any bankruptcy, receivership or similar proceeding. We have not been involved in any material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business. We changed accountants on February 16, 2004 from Sellers & Anderson, LLC to our current accountants, Madsen & Associates, CPA's Inc. Section 102 of the Sarbanes-Oxley Act of 2002 makes it unlawful after October 22, 2003 for any person that is not a registered public accounting firm (i.e., registered with the PCAOB) to prepare or issue, or to participate in the preparation or issuance of any report with respect to an issuer. Sellers & Anderson, LLC is not registered with the PCAOB, but issued a draft audit opinion dated July 11, 2003 that was incorporated into our original Form 10-K, dated July 14, 2003. Although registration with PCAOB was not required for public accounting firms on the filing date of the Form 10-K, the accountant labeled the financial statements as a "draft". Therefore, we have had our new accountants, Madsen & Associates, CPA's Inc. re-audit the financial statements in this Amendment No. 1 to Form 10-K. At no time has there been any disagreements with such accountants regarding any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. 1 Business of Issuer. Based on the Agreement and spin off of our assets, we adopted the business plan of Anscott Industries, Inc. Therefore, currently our principal activity is to manufacture and sell specialty chemicals, cleaning agents, odor eliminators, water and stain repellents, treatments, purification and decontamination processes for the commercial laundry and cleaning industries. Our business is conducted through three segments: chemical & additive technology for cleaning and coatings of textiles; filtration & equipment that extends the life traditional cleaning chemicals through a recycling process; commercialization venture leveraging aerospace technology and distribution in order to move from laboratory to commercial products quickly, extending the company's knowledge to deliver solutions to protect people, property and the environment. We have our operations in New Jersey and Quebec. We sell to over 100 distributors and 4,000 end-users worldwide. Chemicals & Additives products accounted for 80% of Anscott Industries, Inc. (subsidiary) 2002 revenues; Filtration & Equipment, 20%; Commercialization, 0%. We were established in 1960 and are a leading manufacturer servicing the laundry and dry cleaning industry. We manufacture chemicals and filter equipment that clean clothes professionally. We sell our products and services through an established distribution network of local warehouses nationwide. We maintain a dedicated force of chemical technicians that provide service throughout the US and Canada. The following sets forth some of our products: We have recently acquired the rights to a method of non-hazardous dry cleaning called the "DryWash Cleaning Process". DryWash replaces "PERC", a probable carcinogen and hazardous material by utilizing liquid carbon dioxide and aerospace technology. DryWash has revolutionized the commercial dry cleaning industry by providing a low cost alternative without toxic chemicals such as perchloroethylene (perc) or petroleum. We are a specialty chemical company with a product line of disposable filters & delivery systems adding in the sales of its chemical business. We have one of the largest technical forces in the industry. Currently servicing over 5,000 businesses in more than 40 cities and we expect to service over 10,000 businesses within the next two years. We develop products that are unique and satisfy a specific need. The DryWash Cleaning Process has been commercialized through a joint venture with Itochu Aviation, a Japanese aerospace trader. Other development partners include Raytheon Systems, Los Alamos National Laboratory and Unilever. We have recently acquired the rights to a method of non-hazardous dry cleaning called the "DryWash Cleaning Process". DryWash replaces "PERC", a probable carcinogen and hazardous material by utilizing liquid carbon dioxide and aerospace technology. DryWash is in position to revolutionize the cleaning industry by providing a low cost alternative without toxic chemicals such as perchloroethylene (perc) or petroleum. We manufactures chemicals and disposable filters that clean clothes professionally. Our technology arm is the exclusive licensee of Raytheon Systems Company (formally HUGHES AIRCRAFT) for the DryWash Cleaning Process. We have expanded our exclusive role to include a sub-licensing program. To date the technology has been sub-licensed to eight of the industries largest manufacturers. The licensing group of companies has collectively invested over $200 million into the development of the DryWash Cleaning process. EPA, DOE and DOD have also contributed directly and through Los Alamos National Laboratory. We sell our products and services through an established distribution network of local warehouses nationwide. We maintain a dedicated force of chemical technicians that provide service throughout the US and Canada. The following sets forth some of our products: 2 o Flame Fighter is an approved fire retardant that protects Drapes, Clothes and Textiles. It's perfect for Hotels, Office Buildings and Homes. o XPel Fabric Protector is a barrier coating that protects against all sorts of fluids such as blood that carries HIV or Hepatitis, Formulated for Hospital Scrubs, Police Uniforms and Protective Gear for professionals. o Smoke Out Odor Neutralizer removes all type of foul odors. It was specially formulated to remove Smoke, Pet and Musty Smells. o Rx is the prescription to clean hard to remove Paint, Oil and Grease Stains. Professionally formulated to be safe and effective. o NuTouch is an advanced Cleaning Detergent that is Better, Whitener and Softer than other products. o HyPur Filters Recycle Chemicals and Improve Cleaning Performance. We manage the following three specific areas of business: Caled Chemical, established 1953, is a leading manufacturer of traditional cleaning products. The products for existing cleaning methods include a full line of brand name detergents, spotting agents and XPel Fabric Protection. Caled has developed specially formulated additives for DryWash technology. Unilever Corporation and Raytheon have been working closely with Caled and currently hold over twenty (20) worldwide patents for cleaning with carbon dioxide. o All the chemical products translate 43 years of cleaning knowledge and experience into practical cleaning applications customized for the specialized needs of the market. o Caled's products are practical and easy to use, developed by Ph.D. chemists on staff. The chemists explain the basic use of the products in unusually clear and easy-to-understand terms. HyPur Equipment, established 1971, currently manufacturers filter equipment for existing dry cleaning machines. o High quality and technical service is the key to HyPur's long-standing customer base. o HyPur has been innovative and aggressive in new product development. 3 Tech Services, is a self-standing field service division that has 22 technical service representatives. Tech Services is the only national service network that serves professional dry cleaners and laundries. It currently represents three product lines and is in the process of adding additional line needing technical service at the field level. Tech Services has constructed a promotional site for new technology. The promotional site will be used to showcase different pieces of equipment. The site is located less than 30 min. from New York City and will also act as a training facility for distributors on a worldwide basis. Employees We currently employ a total of 32 full time and 8 part time employees in the following manner: 22 field technicians and 18 headquarters personnel. None of our employees are covered by a collective bargaining agreement and we believe we have good relations with our employees. Item 2. Description of Property We own the property located at 26 Haynes Drive, Wayne, New Jersey 07470. We have a 20 year term mortgage with a 1.75 % over prime with CIT as the lender. This property is our headquarters and is comprised of 41,000 square feet with 4,000 square feet of office space and laboratory and the rest is warehouse for our products. Item 3. Legal Proceedings None. To the best of our knowledge there is no litigation current or pending against us. The lawsuits set forth in the financial statements are not against Anscott Industries, Inc. Item 4. Submission of Matters to a Vote of Security Holders None 4 PART II ------- Item 5. Market for Registrants's Common Equity and Related Stockholder Matters On July 14, 2003, we had 568 shareholders of record of our common stock. Our common stock is available for trading through electronic trading services via the OTC Bulletin Board. Our common stock is currently traded on the OTC Bulletin Board under the symbol "ASCT." The following charts indicate the high and low sales price for the common stock for each fiscal quarter between September 2000 and March 2003, as quoted on the OTC Bulletin Board. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. Price $ Quarter Ended High Low - ------------- ---- --- September 2000 0.97 0.38 December 2000 0.56 0.03 March 2001 0.06 0.02 June 2001 0.03 0.01 September 2001 0.90 0.01 December 2001 4.43 1.74 March 2002 2.33 1.20 June 2002 1.51 0.35 September 2002 0.45 0.13 December 2002 0.27 0.10 March 31, 2003 0.17 0.05 Dividends We currently intend to retain future earnings, if any to support our growth. Any payment of cash dividends in the future will be dependent upon: the amount of funds legally available therefore; our earnings; financial condition; capital requirements; and other factors which our Board of Directors deems relevant. Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations INTRODUCTION The following discussion should be read in conjunction with our financial statements and related notes included herein. Certain statements are not based on historical facts, but are forward-looking statements that are based upon assumptions about our future conditions that could prove to be inaccurate. Actual events, transactions and results may materially differ from the anticipated events, transactions or results described. Our ability to consummate transactions and achieve events or results is subject to certain risks and uncertainties, which include, but are not limited to, the existence of demand for and acceptance of our products, regulatory approvals and developments, economic conditions, the impact of competition and pricing, and other factors affecting our business that are beyond our control. We undertake no obligation and do not intend to update, revise or otherwise publicly release the result of any revisions to forward-looking statements that may be made to reflect future events or circumstances. YEAR ENDED MARCH 31, 2003 COMPARED TO THE YEAR ENDED MARCH 31, 2002 Revenues for the year ended March 31, 2003 were $2,480,727 as compared to $2,312,579 for the year ended March 31, 2002. Sales remained stable even with the continuing downturn in the market. Cost of sales for the year ended March 31, 2003 were $1,421,889 as compared to $1,336,082 in 2002. As of percentage of sales, cost of sales decreased 1% for 2003. This was due to the stability of sales and prices. 5 General and administrative expenses were $1,599,787 for 2002 as compared to $1,915,803 for 2003. As of percentage of sales, general and administrative expenses increased from 69% for 2002 to 77% for 2003. The increase was primarily due to a one-time charge from the issuance of common stock for consulting services and additional personnel in the United Kingdom and rent for a larger facility. For the year ended March 31, 2003, we incurred a net operating loss of $925,133 or $1.38 per share compared to net operating loss of $1,139,529 or $1.79 per share for the year ended March 31, 2002. The net loss resulted primarily from stagnant business operations. IMPACT OF INFLATION We do not believe that inflation will have any material impact on its commercial activities for the ensuing year, as our products do not fall under categories that are traditionally affected. LIQUIDITY AND CAPITAL RESERVES The primary roadblock facing our plans for growth is our need for capital. We are actively seeking additional capital resources through the sale of equity. With additional capital resources we expect to be able to expand our services and products. At the present time we have adequate working capital for our immediate business. Additional capital is needed for any and all expansion. We have no long-term debt, which assists in not needing additional immediate working capital. Historically, the Company's primary source of cash has been from operations and debt financing by related parties. Cash provided by operating activities during 2003 declined by (708,578) primarily the result of increases in accounts receivable in the amount of $107,622 and a decrease in accrued liabilities and accrued expenses of $231,727. Cash provided by operating activities during 2002 amounted to $252,212, primarily the result of increases in accounts receivables and inventory of $413,490 and 100,360 respectively. Cash received in financing activities during 2003 amounted to $397,000 related primarily to an increase in notes payable. Cash used by financing activities during 2002 amounted to $21,686 related primarily to the prepayment of debt from the prior year. PLAN OF OPERATIONS FOR FISCAL YEAR 2003 We anticipate that as sales increase we will achieve profitability during fiscal year 2003. Future activities will be directed towards expanding existing markets for our products and penetrating new markets. We currently have operations in the United States and in Great Britain. Future expansion plans will move us into the Pacific Rim. Advanced Fluid Systems, Ltd., our subsidiary has received a patent in Europe and the United States for its controllable fluid damper. This special damper acts as a shock absorber. Instead of using a metal coil spring, it uses the controllable fluid to soften the jolting effect felt now with a conventional shock absorber. Prototypes and some additional testing are needed before this product is marketable. Discussions have been held with a major manufacturer to joint venture the final developing. We do not manufacture our own magnetic fluid or controllable fluid for production. Our present supplier of fluid has approached us with the possibility of purchasing their company. The purchase of this company would eliminate any probability of the loss of a critical part of our production process. We are in active talks with our fluid supplier and terms should be worked out for the purchase before the end of the year. The damper and purchase of our fluid supplier will be put into operation if adequate funding is received. We have sufficient cash flow to manage the day-to-day operations of completing all ongoing orders. We have agreed upon terms with a private investor for funding. In addition, we have entered into various consulting agreements to advise and consult with the Company on certain business and financial matters in foreign markets and for business development advisory services. 6 Item 7. Financial Statements and Supplementary Data The financial statements of the Company, together with the report of auditors, are as follows: LIQUIDIX, INC. TABLE OF CONTENTS Independent Accountant's Report F1 Madsen & Associates, CPA's, Inc. Independent Accountant's Report F2 Certified Public Accountans Consolidated Balance Sheet F3 Consolidated Statement of Operations F4 Consolidated Statement of Changes in Stockholder's Equity F5 Consolidated Statements of Cash Flows F6-F7 Notes to Consolidated Statements F8-F17 INDEPENDENT ACCOUNTANTS' REPORT ------------------------------- To the Stockholders and Board of Directors of Liquidix, Inc. and Subsidiary We have audited the accompanying consolidated balance sheet of Liquidix, Inc. and Subsidiary ("Liquidix, Inc.," or "the Company") for the year ended March 31, 2003, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's Management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board ("PCAOB"). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe 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 Liquidix, Inc. and Subsidiary as of March 31, 2003 and the results of its operations, changes in stockholders' equity, and its cash flows for the year 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 the Company will continue as a going concern. The Company does not have the necessary working capital to service its debt and for its planned activity, which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding these matters are described in the notes to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Madsen & Associates, CPA's, Inc. Madsen & Associates CPA's, Inc. Certified Public Accountants Murray, Utah May 25, 2004 F1 INDEPENDENT ACCOUNTANTS' REPORT ------------------------------- To the Stockholders and Board of Directors of Liquidix, Inc. (formerly Learner's World, Inc.) (A Subsidiary of Liquidics, Inc.) We have audited the accompanying consolidated statements of operations, changes in stockholders' equity, and cash flows of Liquidix, Inc. (formerly Learner's World, Inc.) (a Subsidiary of Liquidics, Inc.) for the year ended March 31, 2002. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. 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 consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations, changes in stockholders' equity, and cash flows of Liquidix, Inc. (formerly Learner's World, Inc.) (a Subsidiary of Liquidics, Inc) for the year ended March 31, 2002 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 11 to the financial statements, the Company has a net loss in the current year and an accumulated deficit. This condition raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Certified Public Accountants Phoenix, Arizona July 1, 2002 F2 LIQUIDIX, INC. & SUBSIDIARY CONSOLIDATED BALANCE SHEET March 31, 2003 ASSETS
Current Assets Cash and cash equivalents $ 96,521 Accounts receivable 553,312 Inventory 411,036 ----------------- Total Current Assets 1,060,869 ----------------- Property and Equipment, net 182,814 ----------------- Other Assets Acquisition costs, net 192,346 All other assets 16,500 ----------------- Total Other Assets 208,846 ----------------- Total Assets $ 1,452,529 ================= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 678,738 Notes payable 587,446 Accrued liabilities 35,642 Allowance for contingencies 50,000 ----------------- Total Current Liabilities 1,351,826 ----------------- Minority interest 566 ----------------- Stockholders' Equity Common stock - $.001 par value, 75,000, 000 shares authorized (684,269 Shares issued and outstanding) 684 Paid in Capital 3,543,648 Accumulated (deficit) (3,590,299) Foreign currency translation adjustment 146,104 ----------------- Total Stockholders' Equity 100,137 ----------------- Total Liabilities and Stockholders' Equity $ 1,452,529 =================
The Accompanying Notes are an Integral Part of the Consolidated Financial Statements F3 LIQUIDIX, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended March 31, 2003 and 2002
2003 2002 ---------------------- ------------------ Sales $ 2,460,727 $ 2,312,579 Cost of Sales 1,421,699 1,336,082 ---------------------- ------------------ Gross Profit 1,039,028 976,497 General and Administrative Expenses 1,816,803 1,599,787 ---------------------- ------------------ (Loss) from Operations (777,775) (623,290) ---------------------- ------------------ Other Income (Expenses) Interest income 386 1,121 Interest expense (48,902) (20,067) Impairment of license agreement - (500,000) Provision for contingencies (50,000) - ---------------------- ------------------ Total Other Income (Expense) (98,516) (518,946) Minority Interest 876 2,707 ---------------------- ------------------ Net (Loss) $ (875,415) $ (1,139,529) ====================== ================== Basic and Diluted (Loss) per Common Share $ (1.31) $ (0.81) ====================== ================== Weighted-Average Number of Common Shares Outstanding: Basic and Diluted 668,223 1,411,082 ====================== ==================
The Accompanying Notes are an Integral Part of the Consolidated Financial Statements F4 LIQUIDIX, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY For the Years Ended March 31, 2003 and 2002 ---------------------------------------------------------------------------
Additional Cumulative Total Common Stock Paid-In Accumulated Translation Stockholders' Shares Amount Capital Deficit Account Equity --------- ----------- ----------- ----------- ----------- ----------- Balance at March 31, 2001 1,350,000 $ 1,350 $ 2,031,523 $(1,575,355) $ 41,406 $ 498,924 Merger with Learner's World, Inc. and recapitalization of equity 5,000 5 (5) -- -- -- Issuance of common stock for services 117,500 118 305,382 -- -- 305,500 Capital contribution -- -- 903,014 -- -- 903,014 Translation adjustment -- -- -- -- (30,180) (30,180) Loss for the year ended March 31, 2002 -- -- -- (1,139,529) -- (1,139,529) --------- ----------- ----------- ----------- ----------- ----------- Balance at March 31, 2002 1,472,500 1,473 3,239,914 (2,714,884) 11,226 537,729 Cancellation issued stock for non performance (12,500) (13) (25,013) (25,026) Issuance of stock for conversion of debt 33,107 33 52,938 52,971 Stock issued for services 13,750 13 274,987 275,000 Translation adjustment -- -- -- -- 134,878 134,878 Cancellation of treasury stock (822,588) (822) 822 -- Loss for the period ended March 31, 2003 -- -- -- (875,415) -- (875,415) --------- ----------- ----------- ----------- ----------- ----------- Balance at March 31, 2003 684,269 $ 684 $ 3,543,648 $(3,590,299) $ 146,104 $ 100,137 ========= =========== =========== =========== =========== ===========
The Accompanying Notes are an Integral Part of the Consolidated Financial Statements F5 LIQUIDIX, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended March 31, 2003 and 2002
2003 2002 ----------------- ----------------- Cash flows from operating activities: Net Income (Loss) ($875,415) ($1,139,529) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 49,284 100,482 Stock issued for services 275,000 305,500 Stock issued for debt 52,971 - Cancellation of issued stock for non performance (25,026) - Net assets acquired in acquisition - 155,154 Impairment of license agreement - 500,000 Minority Interest (876) (2,707) Changes in Assets and Liabilities: Accounts receivable (114,335) 413,491 Inventory (4,722) 100,363 Other assets 32,245 47,223 Accounts payable 128,951 (166,937) Accrued liabilities (231,737) (60,826) Allowance for contingencies 50,000 - ----------------- ----------------- Net cash provided (used) by operating activities (663,660) 252,214 ----------------- ----------------- Cash flows from investing activities: Minority Interest (16,070) 20,219 Purchase of fixed assets (138,388) (6,498) ----------------- ----------------- Net cash provided (used) by investing activities (154,458) 13,271 ----------------- ----------------- Cash flows from financing activities: Repayment of capital lease - (11,850) Proceeds from (repayment of) debt, net 334,071 (9,836) ----------------- ----------------- Net cash provided (used) by financing activities 334,071 (21,686) ----------------- ----------------- Effect of exchange rate changes on cash and intercompany accounts 134,878 (30,180) ----------------- ----------------- Net increase (decrease) in cash and cash equivalents (349,169) 214,069 Cash and cash equivalents at beginning of period 445,690 231,621 ----------------- ----------------- Cash and cash equivalents at end of period $ 96,521 $445,690 ================= =================
The Accompanying Notes are an Integral Part of the Consolidated Financial Statements F6 LIQUIDIX, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) For the Year Ended March 31, 2003 and 2002
2003 2002 ----------------- ----------------- Supplemental disclosure of cash flow information: Interest paid $ 48,902 $ 20,067 ================= ================= Income taxes paid $ - $ - ================= ================= Non-cash investing and financing activities: Capital contribution - $ 903,014 ================= ================= Stock issued for services $ 275,000 $ 305,500 ================= ================= Debt converted to stock $ 52,971 - ================= ================= Cancellation of issued stock for non performance $ 25,026 - ================= =================
The Accompanying Notes are an Integral Part of the Consolidated Financial Statements F7 LIQUIDIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 - -------------------------------------------------------------------------------- Note 1 Nature of Operations and History - -------------------------------------------------------------------------------- Organization Liquidix, Inc. (formerly Learner's World, Inc., and now known as Anscott Industries, Inc.) (the "Company") is a Florida corporation in the business of developing, manufacturing and marketing ferrofluids and products based on or derived from its ferrofluid technology. The Company sells its industrial products throughout the world. Learner's World, Inc. ("LWI") was formed as a state of New York corporation on June 28, 1996. On August 15, 2001, the state of Domicile was changed to Florida by formation of a new entity and merger of the old company of the same name. Effective September 26, 2001, LWI acquired one hundred percent (100%) of the outstanding common stock of Advanced Fluid Systems, Inc. ("AFS, Inc.") owned by its parent company, Liquidics, Inc. ("Liquidics"), which was approximately 93% of the total shares issued and outstanding. The transaction was accounted for as a recapitalization with Liquidics as the accounting acquirer in a reverse merger. The restricted common stock received by Liquidics, Inc. in LWI was then issued to the Shareholders of Liquidics , making these shareholders the majority owners of LWI. The Company has 75,000,000 common shares authorized at a par value of $.001 per share. In conjunction with the merger, LWI changed its name to Liquidix, Inc During the year ended March 31, 2003 the Company changed the par value of its common stock from a par value of $0.0001 to a par value of $0.001. On March 30, 2003 the Company approved a common stock consolidation for a reverse stock split of twenty (20) old shares for one (1) new share. Both of these changes are recognized retroactively in these financial statements to inception. For the year ended March 31, 2003, the method of computing the foreign currency translation differences was changed to the simplified method whereas the presentation for the year ended March 31, 2002 was computed on a more complex method. Both methods are generally accepted methods of accounting. Refer to note "Change in Accounting Method." - -------------------------------------------------------------------------------- Note 2 Summary of Significant Accounting Policies and Use of Estimates - -------------------------------------------------------------------------------- Principles of Consolidation The consolidated financial statements include the accounts of the Company and its ninety-nine percent (99%) owned subsidiary, Advanced Fluid Systems, Ltd. (based out of Great Britain). All significant intercompany transactions and accounts are eliminated in consolidation. Revenue Recognition Revenues for sales of products and services are recognized when the related products are sold and shipped, or services are performed. F8 LIQUIDIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2003 - -------------------------------------------------------------------------------- Note 2 (continued) Summary of Significant Accounting Policies and Use of Estimates - -------------------------------------------------------------------------------- Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents For financial accounting purposes, cash equivalents include cash in banks and all highly liquid investments with an initial maturity of three months or less. Accounts Receivable The Company provides for potentially uncollectible accounts receivable by use of the allowance method. The allowance is provided based upon a review of the individual accounts outstanding, and the Company's prior history of uncollectible accounts receivable. As of March 31, 2003 and 2002, a provision for uncollectible accounts receivable in the amounts of $ 22,181 and $25,016, respectively, had been established. Inventory Inventory consists primarily of raw materials and finished goods. Inventory is stated at the lower of cost, using the first-in, first-out (FIFO) method, or market. Reserves and writedowns are established against Company-owned inventory for excess, slow moving, and obsolete items where the estimated net realizable value is less than the carrying value. Property and Equipment Property and equipment are recorded at cost. Depreciation is provided for on the straight-line method over the estimated useful lives of the assets. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Betterments or renewals are capitalized when incurred. For the years ended March 31, 2003 and March 31, 2002 depreciation expense was $49,284 and $51,372 respectively. The estimated useful lives of the assets are as follows: Furniture and fixtures 5 years Machinery and equipment 5 years Office equipment 3 years Leasehold improvements 5-10 years The Company leased equipment under a capital lease agreement that expired November, 2001. The asset and liability under the capital lease agreement were recorded at the lower of the present value of the minimum lease payments or the fair market value of the asset. The asset was depreciated over the lower of its related lease term or its estimated productive life. Depreciation of the asset under the capital lease agreement is included in depreciation expense, as noted above, for the years ended March 31, 2003 and March 31, 2002. F9 LIQUIDIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 2003 - -------------------------------------------------------------------------------- Note 2 (Continued) Summary of Significant Accounting Policies and Use of Estimates (Continued) - -------------------------------------------------------------------------------- Intangible Assets (Acquisition Costs) The Financial Accounting Standards Board (FASB) issued FASB "Goodwill and Other ------------------ Intangible Assets" effective for the fiscal years beginning after December 15, - ----------------- 2001. According to this FASB, goodwill and other intangible assets should not be amortized. Instead, they should be reviewed for impairment at least annually and charged to earnings only when their recorded values exceed their implied fair value. Acquisition costs represent costs incurred in relation to a Stock Purchase Agreement. Acquisition costs are amortized ratably over five (5) years through March 31, 2002. Amortization expense for the year ended March 31, 2002 is 49,110. For the year ended March 31, 2003 management evaluated acquisition costs and determined the implied fair value exceeds its recorded value; therefore, no adjustment was made. Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected measured by the amount by which the carrying amount of the assets exceeded the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the year ended March 31, 2002, the Company recorded impairment in relation to a licensing agreement in the amount of $500,000 as the fair market value of the agreement would be less than the carrying value of the long-lived asset. For the year ended March 31, 2003, there were no additional impairments of long-lived assets belonging to the company or subsidiary as fair market value of the assets were determined by management to be greater than their book values. Income Taxes Deferred income taxes are provided on an asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, there is uncertainty of the utilization of the operating losses in future periods. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Basic and Diluted (Loss) per Common Share Basic (loss) per common share is computed based on weighted average shares outstanding and excludes any potential dilution from stock options, warrants and other common stock equivalents. Basic (loss) per share is computed by dividing loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted (loss) per common share reflects potential dilution from the exercise or conversion of securities into common stock or from other contracts to issue common stock. As of March 31, 2003 and 2002 there are no common stock equivalents. A loss would make common stock equivalents anti-dilutive and would not be included anyway. F10 LIQUIDIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 2003 - -------------------------------------------------------------------------------- Note 2 (Continued) Summary of Significant Accounting Policies and Use of Estimates (Continued) - -------------------------------------------------------------------------------- Foreign Currency Translation Account balances and transactions denominated in foreign currencies and the accounts of the Company's foreign operations have been translated into United States funds, under a "simple" method of accounting for the year ended March 31, 2003 and under a "complex" method of accounting for the year ended March 31, 2002. This is a change in accounting method. Management determined the change is immaterial for reporting purposes; therefore, no restatement is made to the financial statements. Refer to the Note on "Change In Accounting Method. The net foreign currency translation adjustments for the years ended March 31, 2003 and for March 31, 2002 are an increase of $134,878 and a decrease of $30,180 respectively. Stock-Based Compensation The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and the related interpretations in accounting for its employee stock options. Under APB 25, because the exercise price of employee stock options equals or exceeds the market price of the underlying stock on the date of grant, no compensation expense is recorded. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS No. 123). During the fiscal year ended March 31, 2002, the company did pay stock-Based compensation to employees. During the fiscal year ended March 31, 2003 there was no stock based compensation paid by the company under stock option plans. Fair Value of Financial Instruments Accounts receivable, notes receivable, accounts payable, notes payable, lease obligation and accrued liabilities are substantially current or bear reasonable interest rates. As a result, the carrying values of these financial instruments approximate fair value. Advertising Costs The Company's advertising costs are expensed when incurred. Advertising costs for the years ended March 31, 2003 and 2002 were not material in amount. Reclassification and Restatements Certain amounts in the year end March 31, 2002 have been reclassified or restated to conform to the current financial statement presentation. Other Recent Accounting Pronouncements The Company does not expect that the adoption of other recent accounting pronouncements to have any material impact on its financial statements. F11 LIQUIDIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 2003 - -------------------------------------------------------------------------------- Note 3 License Agreement - -------------------------------------------------------------------------------- The Company has an agreement that gives the right to process silicon wafers in a method that will reduce size, weight, and heat generation. The license will be amortized over the term of the license agreement. The agreement commenced February, 2000 and remains in full force and effect for a period of fifteen years from the date of execution. The agreement also provides for royalty payments to be made to the licensor based on the number of silicon wafers produced. As of March 31, 2002, the Company had yet to commence production of the product and determined that the technology related to the agreement had been superseded; therefore, impairment in the amount of $500,000, the full value of the license agreement, was recorded for the fiscal year ended March 31, 2002. As of March 31, 2003 nothing has been done with the license agreement and management is considering seeking remedies to recover all or part of the $500,000 investment paid by the company for the agreement. - -------------------------------------------------------------------------------- Note 4 Property and Equipment - -------------------------------------------------------------------------------- Property and equipment as of March 31, 2003 and 2002 consists of the following:
2003 2002 ---- ---- Furniture and fixtures 19,305 17,052 Machinery and equipment 369,348 297,115 Office equipment 96,961 47,480 Leasehold improvements 68,033 49,817 -------- -------- 553,647 411,464 (Less) accumulated depreciation (370,833) (317,754) -------- -------- $182,814 $ 93,710 ======== ========
- -------------------------------------------------------------------------------- Note 5 Concentration of Credit Risk - -------------------------------------------------------------------------------- The Company maintains cash balances at a London financial institution. As of March 31, 2003 and 2002, the Company had uninsured cash of approximately $93,907 and $228,000, respectively. - -------------------------------------------------------------------------------- Note 6 Related Party Transactions - -------------------------------------------------------------------------------- Notes Payable At March 31, 2003 the related party, including shareholders, notes payable, in the aggregate amount of $580,904, consist of various notes to shareholders, an officer and a related entity, with interest rates ranging from ten percent (10%) to ten and one-half percent (10.5%) per annum. The notes require payments of accrued interest and principal at maturity. Various notes, in the aggregate of $580,904 matured during the year ended March 31, 2003 and remain unpaid as of March 31, 2003. These notes are in default and are due on demand. Also see following Note 7 on convertible debt. F12 LIQUIDIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 2003 - -------------------------------------------------------------------------------- Note 7 Notes Payable - -------------------------------------------------------------------------------- Convertible Debt In May, 2002, the Company issued a convertible note payable in the amount of $300,000. The convertible note payable accrues interest at eight percent (8%) per annum and matures May 9, 2004. The note is convertible into shares of common stock at sixty percent (60%) of the trading price prior to the conversion, or $0.73 per share, whichever is lower. The Company issued 37,650 common stock warrants with the convertible note payable. The warrants have an exercise price of the lesser of $0.73 or sixty percent (60%) of the trading price prior to the conversion and a term of five (5) years. Pursuant to the convertible debt agreement, the Company has filed on Form SB-2 a registration statement with the Securities and Exchange Commission, registering 441,967 shares of common stock. Concurrent with the filing of the Form SB-2, the Company has entered into a convertible note payable in the amount of $250,000. The terms of the agreement include the conversion of the debt into shares of common stock for the lesser of sixty percent (60%) of the trading price prior to conversion or $0.73. The Registration Statement registered two hundred percent (200%) of the shares of common stock needed should the aggregate of $550,000 of convertible debt be converted. During the year ended March 31, 2003 a total of $52,971 of this debt was converted into 33,107 shares of common stock of the corporation. The remaining debt was assumed by the transferee of all the Liquidix assets and liabilities subsequent to the balance sheet date. Kazi Management, to whom the Company owes the convertible debt, agreed to be paid $497,000, set aside the conversion option and warrants related to the debt, and agreed to the transferee payment of the debt. (See Note on Subsequent Events 11) As of March 31, 2003 this convertible note payable is included in the amount due of $580,904 related party notes payable discussed in the Note "Related Party Transactions." The remaining $6,542 balance due for notes payable is for financing leases with an interest rate of approximately 12%. This gives a total notes payable of $587,446, all reported as current liabilities. - -------------------------------------------------------------------------------- Note 8 Income Taxes - -------------------------------------------------------------------------------- As of March 31, 2003 and 2002, deferred tax assets consist of the following:
2003 2002 ------------------ ------------------- Net operating loss carryforwards $ 259,549 $ 307,500 Less: valuation allowance (258,549) (307,500) ------------------ ------------------- Net deferred tax asset $ - $ - ================== ===================
At March 31, 2003 and 2002, the Company established a valuation allowance equal to the full amount of the deferred tax asset due to the uncertainty of the utilization of operating losses in the future. At March 31, 2003 and 2002, the Company had federal net operating loss carry forwards in the approximate amount of $904,000 available to offset future taxable income through 2022. F13 LIQUIDIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 2003 - -------------------------------------------------------------------------------- Note 8 Income Taxes (Continued) - -------------------------------------------------------------------------------- The deferred tax assets and net operating loss carry forwards exclude the activity of the Company's foreign operations. Subsequent to March 31, 2003 the Company changed majority ownership and management. Management believes the Company has undergone an ownership change as defined in Section 382 of the internal Revenue Code. If this is the case, then the Company's tax net operating loss carry forwards as generated prior to the ownership change will be subject to an annual limitation which could reduce, eliminate, or defer the utilization of these losses. - -------------------------------------------------------------------------------- Note 9 Commitments and Contingencies - -------------------------------------------------------------------------------- Office Lease Commitments The Company is obligated under a long-term operating lease for an office facility through the year 2005. As of March 31, 2003, future minimum lease payments due under the non-cancelable operating lease agreement is as follows: Year ending March 31, Amount ----------- =============== 2004 $ 93,028 2005 86,028 --------------- Total $ 179,056 =============== In addition, the Company rents office facilities through December, 2003 and month to month thereafter. Rent expense under the aforementioned operating leases and rents was approximately $ 25,766 and $109,375 for the years ended March 31, 2003 and March 31, 2002, respectively. Litigation In the normal course of business, the Company is subject to certain contractual obligations and litigation. An unsettled legal claim filed December 30, 2002 against the Company of approximately $202,000 plus interest for a breach of the lease on a location in Scottsdale, Arizona remains unsettled as of March 31, 2003. The Company intends to defend vigorously against this claim if the need arises. As of March 31, 2003 no discovery has been done on this case. At March 31, 2002, a claim was filed in the amount of $30,908, which remains unsettled as of March 31, 2003. The company feels that it has adequate defenses against this claim and intends to defend vigorously. Although the company does not feel that it has liability in either of the two claims noted above, it has accrued a contingent liability in the amount of $50,000 and has reported it as an allowance for contingencies on the balance sheet as part of current liabilities. F14 LIQUIDIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 2003 - -------------------------------------------------------------------------------- Note 10 Equity - -------------------------------------------------------------------------------- Stock Issued for Services During the year ended March 31, 2003, the Company issued 13,750 shares of common stock for consulting services valued at $275,000. During the current year 12,500 shares of common stock was returned to the company and cancelled for non performance under a contract. Treasury Stock During the year ended March 31, 2003, the company cancelled 822,588 shares of its' common stock that had been held in the treasury. It was the opinion of management that a reissue of stock in event of a need was preferable to holding the common stock in the treasury. - -------------------------------------------------------------------------------- Note 11 Going Concern - -------------------------------------------------------------------------------- The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a loss for the year ended March 31, 2003 and 2002 in the amounts of $875,415 and $1,139,529 respectively, and accumulated deficit at March 31, 2003 and 2002 in the amounts of $3,590,299 and $2,715,884 respectively. And, current liabilities exceed current assets. The Company does not have the necessary working capital to service its debt and for its planned activity, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The controlling shareholder continues to fund the company sufficiently to keep it going for the coming year. Management is also seeking additional financing through private and public offerings it plans in the near future. Also, see the note on subsequent events. - -------------------------------------------------------------------------------- Note 12 Minority Interest - -------------------------------------------------------------------------------- Minority Interest The Company has a ninety nine percent (99%) owned Subsidiary, Advanced Fluid System, Limited ("AFS, Ltd."). During fiscal year ending March 31, 2003, Liquid, Inc. offered the then 7% minority shareholders shares of Liquidix, Inc. in exchange for their shares in AFS, Ltd. By March 31, 2003, all but 51,120 shares (or 1%) of AFS, Ltd. stock were exchanged for 1,700,402 shares of Liquidix, Inc. common stock. and were paid out of the Company treasury stock. F15 LIQUIDIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 2003 - -------------------------------------------------------------------------------- Note 13 Change in Accounting Method - -------------------------------------------------------------------------------- Foreign Currency Translation For the year ended March 31, 2002 the account balances and transactions denominated in foreign currencies and the accounts of the Company's foreign operations are translated into United States funds as follows: (i) assets and liabilities at the rates of exchange prevailing at the balance sheet date; (ii) revenue and expenses at average exchange rates for the period in which the transaction occurred: (iii) exchange gains and losses arising from foreign currency transactions are included in the determination of net earnings for the period; and (iv) exchange gains and losses arising from the translation of the Company's foreign operations are deferred and included as a separate component of stockholders' equity. The foreign currency translation adjustment for the year ended March 31, 2002 is $11,226 with a net change for the year of $30,180 decrease. This method of accounting is generally accepted in the United States of America and is what Notes 1 and 2 referred to as a "complex" method of accounting. For the year ended March 31, 2003 the Company has chosen to change the method of accounting for foreign currency translation to what Notes 1 and 2 referred to as a "simple" method of accounting. This method of accounting also is generally accepted in the United States of America. In this "simple" method of accounting as used for the year ended March 31, 2003 the account balances and transactions denominated in foreign currencies and the accounts of the Company's foreign operations have been translated into United States funds as follows: (i) assets and liabilities at the rates of exchange prevailing at the balance sheet date; (ii) exchange gains and losses arising from the translation of the Company's foreign operations are deferred and included as a separate component of stockholders' equity. The foreign currency translation adjustment for the year ended March 31, 2003 is $146,104 with a net change for the year of $134,878 increase. Management determined the differences in the two methods of accounting were not material in amount comparing March 31, 2003 to March 31, 2002. Accordingly, the financial statements for the year ended March 31, 2002 are not restated to be comparable to the year ended March 31, 2003. - -------------------------------------------------------------------------------- Note 14 Subsequent Events - -------------------------------------------------------------------------------- Sale of the Liquidix Assets On March 30, 2003 the company entered into an agreement to consolidate the outstanding common stock by a factor of 20 old shares being equal to one new share. As previous discussed in Note 1, the financial statements give effect to the 1 for 20 reverse stock split for all periods presented. As an extension of this transaction, the company entered into an agreement to acquire the assets of Anscott Industries, Inc. ("Anscott") by the issuance of 45,000,000 shares of restricted capital stock. Each of the previous directors resigned. After this purchase of the assets and liabilities of Anscott Industries, Inc was completed, the new Board of Directors voted to divest itself of all the assets and liabilities that Liquidix, Inc. had prior to the acquisition of the assets of Anscott The sale of the assets and liabilities was completed during April 2003. There was no formal creditor approval of this transaction. Each party to the agreement indemnified the other party against all creditor claims. If either party is not financially able to satisfy creditor claims, then the other party could be held liable for any such creditor claims. F16 LIQUIDIX, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) MARCH 31, 2003 - -------------------------------------------------------------------------------- Note 15 Subsequent Events (unaudited) - -------------------------------------------------------------------------------- Subsequent to purchase and sale as described in Note 14, management of Anscott Industries, Inc. furnished the following information which has not been audited. ANSCOTT INDUSTRIES, INC. UNAUDITED BALANCE SHEET PROFORMA AS OF MARCH 31, 2003 ASSETS CURRENT ASSETS Cash $ 2,750 Accounts receivable 535,547 Inventory 489,819 Prepaid expenses 212,311 TOTAL CURRENT ASSETS 1,210,427 PROPERTY, PLANT AND EQUIPMENT AT COST, LESS DEPRECIATION 967,201 OTHER ASSETS 1,741,758 TOTAL ASSETS $ 3,919,386 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) LIABILITIES CURRENT LIABILITIES Accounts payable $ 887,498 Notes payable 1,501,642 TOTAL CURRENT LIABILITIES 2,389,140 LONG TERM LIABILITIES 2,633,537 TOTAL LIABILITIES 5,022,678 STOCKHOLDERS' EQUITY (DEFICIENCY) STOCKHOLDERS' EQUITY (DEFICIENCY) Common stock 724,135 Paid in Capital 305,056 Accumulated Earnings (Deficit) (2,132,483) TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) (1,103,292) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $ 3,919,386 -----------
F17 Item 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure We changed our accountant from Semple & Cooper, LLP in Arizona to Sellers & Andersen, LLC of Utah. We again changed accountants on February 16, 2004 from Sellers & Anderson, LLC to our current accountants, Madsen & Associates, CPA's Inc. Section 102 of the Sarbanes-Oxley Act of 2002 makes it unlawful after October 22, 2003 for any person that is not a registered public accounting firm (i.e., registered with the PCAOB) to prepare or issue, or to participate in the preparation or issuance of any report with respect to an issuer. Sellers & Anderson, LLC is not registered with the PCAOB, but issued a draft audit opinion dated July 11, 2003 that was incorporated into our original Form 10-K, dated July 14, 2003. Although registration with PCAOB was not required for public accounting firms on the filing date of the Form 10-K, the accountant labeled the financial statements as a draft. Therefore, we have had our new accountants, Madsen & Associates, CPA's Inc. re-audit the financial statements in this Amendment No. 1 to Form 10-K. At no time has there been any disagreements with such accountants regarding any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. 7 PART III -------- Item 9. Directors, Executive Officers, Promoters and Control Persons: Compliance With Section 16(a) of the Exchange Act Our directors and officers, as of July 14, 2003, are set forth below. The directors hold office for their respective term and until their successors are duly elected and qualified. Vacancies in the existing Board are filled by a majority vote of the remaining directors. The officers serve at the will of the Board of Directors. With Company Name Age Position - -------------------- --- ----------------------------- Jack Belluscio 41 President, Chief Financial Officer and Chairman of the Board Steven Hoh 55 Secretary Treasurer and Director Jack Belluscio has been the President, Chief Executive Officer, Chief Financial Officer and Chairman of our Board of Directors since April 15, 2003. He has been employed as the Chief financial Officer of our subsidiary, Anscott Industries, Inc., since 2000. From 1995 to 2000 Mr. Belluscio was employed by Global Technologies, El Segundo, Ca. as its President. From 1990 to 1995 he was President of Caled Chemical, Wayne, NJ. From 1987 to 1990 Mr. Belluscio was employed by Western Union, Upper Saddle River, NJ. From 1983 - 1987 he was employed by Citibank, New York, NY. Mr. Belluscio has an MBA with a concentration in finance and economics. He has held positions on the Board of Directors of the Textile Care Association and New York Military Academy. Steven Hoh has been our Secretary and Treasurer and Director since April 15, 2003. Mr. Hoh has been the Vice President of Operations of our subsidiary, Anscott Industries, Inc. since 1980. He has held several positions within Anscott Industries, Inc. and currently is responsible for manufacturing personnel coordination of materials throughout the company's worldwide distribution network. All officers and directors listed above will remain in office until the next annual meeting of our stockholders, and until their successors have been duly elected and qualified. There are no agreements with respect to the election of Directors. We have not compensated our Directors for service on our Board of Directors, any committee thereof, or reimbursed for expenses incurred for attendance at meetings of our Board of Directors and/or any committee of our Board of Directors. Officers are appointed annually by our Board of Directors and each Executive Officer serves at the discretion of our Board of Directors. We do not have any standing committees. Our Board of Directors may in the future determine to pay Directors' fees and reimburse Directors for expenses related to their activities. None of our Officers and/or Directors have filed any bankruptcy petition, been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past five (5) years. COMMITTEES OF THE BOARD We presently do not have any committees. Compliance with Section 16(a) of the Exchange Act None 8 Item 10. Executive Compensation The following table sets forth the annual and long-term compensation for services in all capabilities to the Company.
Name & Position Year Salary Bonus Other Annual Long Term Compensation Compensation -------------------------------------------------------------- Jack Belluscio 2003 $27,996 0 0 0 President and Director Steven Hoh 2003 $47,277 0 0 0 Secretary, Treasurer and Director
Our Directors do not receive compensation for their services as directors but may be reimbursed for their reasonable expenses for attending Board meetings. Item 11. Security Ownership of Certain Beneficial Owners and Management The following table sets forth as of July 14, 2003, information with respect to the beneficial ownership of the Company's Common Stock by (i) each person known by the Company to own beneficially 5% or more of such stock, (ii) each Director of the Company who owns any Common Stock, and (iii) all Directors and Officers as a group, together with their percentage of beneficial holdings of the outstanding shares. Number of Shares of Name of Beneficial Owner/ Common Stock % of Beneficial Identity of Group Beneficially Owned Ownership - -------------------------------------------------------------------------------- Jack Belluscio 44,000,000 (1) 96.31% Steven Hoh 0 0 DIRECTORS AND OFFICERS AS A GROUP 44,000,000 96.31% Item 12. Certain Relationships and Related Transactions. None. Item 13. Exhibits and Reports on Form 8-K (a) The following documents are filed as part of this report: 1. Financial statements; see index to financial statement and schedules immediately following the signature pages of this report. 2. Financial statement schedules; see index to financial statements and schedules immediately following the signature pages of this report. 3. Exhibits: The following exhibits are filed with this Form 10-KSB and are identified by the numbers indicated: see index to exhibits immediately following financial statements and schedules of this report. 3.1 Certificate of Incorporation, as amended (1) 3.2 Bylaws, as amended (1) 10.1 Stock Purchase Agreement and Share Exchange between the Company and Anscott Industries, Inc.(2) 9 (1) Incorporated by reference to the Registrant's Form 10-SB, filed on December 15, 1999 (SEC File No. (000-28513). (2) Incorporated by reference to the Registrant's Form 8-K filed with the SEC on April 29, 2003. (3) Reports on Form 8-K In April 2002 we filed a report on Form 8-K for a change in auditors. On April 29, 2003 we filed a report on Form 8-K for change in control and we filed an amendment thereto on July 3, 2003. On May 9, 2003 we filed a report on Form 8-K for a change in auditor and we filed an amendment thereto on May 27, 2003. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized. ANSCOTT INDUSTRIES, INC. By: /s/ Jack Belluscio ----------------------------- Jack Belluscio President and Director Dated: June 16, 2004 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/ Jack Belluscio President, CEO, CFO and Director June 16, 2004 - ------------------------ Jack Belluscio /s/ Steven Hoh - ------------------------ Secretary, Treasurer and Director June 16, 2004 Steven Hoh
10 EX-31 2 f10ksba12003ex31_anscott.txt CERTIFICATION OF CERTIFYING OFFICER CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Jack Belluscio, certify that: 1. I have reviewed this Amended Form 10-KSB of Anscott Industries, Inc.; 2. Based on my knowledge, this amended 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this amended report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods present in this amended report; 4. The small business issuers other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this amended report any change in the small business issuer's internal control over financing reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonable likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involved management or other employees who have a significant rile in the small business issuer's internal control over financial reporting. Date: June 16, 2004 /s/ Jack Belluscio ------------------------------------- Jack Belluscio Principal Executive Officer, Principal Financial Officer EX-32 3 f10ksba12003ex32_anscott.txt CERTIFICATION OF CERTIFYING OFFICER CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the accompanying Annual Report on Amendment No. 1 to Form 10-KSB of Anscott Industries, Inc. for the Period Ended March 31, 2003, Jack Belluscio, Principal Executive Officer and Principal Financial Officer of Anscott Industries, Inc. hereby Certifies Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that: 1. Such Annual Report on Amendment No. 1 of Form 10-KSB for the period ended March 31, 2003, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in such Annual Report on Amendment No. 1 to Form 10-KSB for the period ended March 31, 2003, fairly presents, in all material respects, the financial condition and results of operations of Anscott Industries, Inc. ANSCOTT INDUSTRIES, INC. By: /s/ Jack Belluscio ------------------------------------- Jack Belluscio Principal Executive Officer and Principal Financial Officer Dated: June 16, 2004 -----END PRIVACY-ENHANCED MESSAGE-----