UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2004
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Commission File Number: 000-25947
NORTH AMERICAN LIABILITY GROUP, INC.
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(Name of Small Business issuer in its Charter)
Florida 65-0386286
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
2929 East Commercial Boulevard, Suite 610, Ft. Lauderdale, FL 33308
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(Address of Principal Executive Offices) (Zip Code)
954-771-5500
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(Issuer's Telephone Number)
Securities registered under Section 12(b) of the Exchange Act:
NONE
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, no par value
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. [X] YES [ ] NO
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference or any amendment to
this Form 10-QSB. [ ]
The issuer is a developmental stage company, and as such has yet to
generate any substantial revenues.
As of June 30, 2004 the issuer had approximately 3,069,000 shares of
common stock outstanding.
Documents incorporated by reference: NONE
Transition Small Business Disclosure Format (check one):
YES [ ] NO [X]
NORTH AMERICAN LIABILITY GROUP, INC.
Form 10-QSB Index
Page
Part I: Financial Information 1
Item 1. Financial Statements (Unaudited) 1
Condensed Consolidated Balance Sheet - June 30, 2004
(Unaudited) 1
Condensed Consolidated Statements of Operations -
Three months ended June 30, 2004 and 2003 (Unaudited) 2
Condensed Consolidated Statements of Operations - Six
months ended June 30, 2004 and 2003 and cumulative
for the period from March 23, 1999 (inception) through
June 30, 2004 (Unaudited) 3
Condensed Consolidated Statements of Cash Flows - Six
months ended June 30, 2004 and 2003 and cumulative for
the period from March 23, 1999 (inception) through
June 30, 2004 (Unaudited) 4
Notes to Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis or Plan of
Operation 12
Part II: Other Information
Item 1. Legal Proceedings 13
Item 2. Change in Securities 13
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
NORTH AMERICAN LIABILITY GROUP, INC.
AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Balance Sheet
(Unaudited)
June 30, 2004
Assets
------
Current assets:
Cash $ 72,017
Undeposited Checks 171
-------------
Total current assets 72,188
Property and equipment, net 10,792
Other assets
Deposits for restricted common stock 174,400
Due from related parties 46,744
-------------
Total other assets 221,144
-------------
Total assets $ 304,124
=============
Liabilities and Stockholders' Deficiency
----------------------------------------
Current liabilities:
Accounts payable $ 182,513
Accrued expenses 565,702
Due to related parties 269,664
Notes payable 226,466
-------------
Total current liabilities 1,244,345
Stockholders' deficiency:
Series 2001 convertible preferred
stock 42,470
Series 2001A convertible preferred
stock -
Series 2001B convertible preferred
stock -
Class B preferred stock -
Common stock 3,605,609
Accumulated deficit (4,588,300)
-------------
Total stockholders' deficiency (940,221)
-------------
Total liabilities and stockholders'
deficiency $ 304,124
=============
See accompanying notes to the condensed consolidated financial statements.
NORTH AMERICAN LIABILITY GROUP, INC.
AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Statements of Operations
(Unaudited)
Three Three
Months Months
Ended Ended
June 30, 2004 June 30, 2003
------------- -------------
Gross revenues $ - $ -
Cost of sales - -
------------- -------------
Net revenue - -
Operating expenses 47,496 -
Other income(expenses):
Other income 52,122 -
Interest expense (18,420) (30,376)
------------- -------------
Total other income(expense) 33,702 (30,376)
------------- -------------
Net income(loss) (13,794) (30,376)
============= =============
Income(loss) per common share:
Basic and Diluted 0.00 (0.13)
============= =============
Weighted average common shares
outstanding:
Basic and Diluted 3,748,295 235,360
============= =============
See accompanying notes to the condensed consolidated financial statements.
NORTH AMERICAN LIABILITY GROUP, INC.
AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Statements of Operations
(Unaudited)
Cumulative for
Six Six the period from
Months Months March 23,1999
Ended Ended (inception) to
June 30,2004 June 30, 2003 June 30,2004
------------ ------------- ---------------
Gross revenues $ - $ - $ 45,744
Cost of sales - - 264
------------ ------------- --------------
Net revenue - - 45,480
Operating Expenses 223,051 - 3,775,904
Other income(expenses):
Other income 54,244 - 113,332
Interest expense (114,228) (59,703) (431,181)
Impairment of assets - - (315,027)
Provision for loss on
non-cancelable leases - - (225,000)
------------ ------------- --------------
Total other income(expense) (59,984) (59,703) (857,876)
------------ ------------- --------------
Net income(loss) $ (283,035) $ (59,703) $ (4,588,300)
============ ============= ==============
Income(loss) per common share:
Basic and Diluted (0.06) (0.25)
============ =============
Weighted average common shares
outstanding:
Basic and Diluted 4,706,984 235,315
============ =============
See accompanying notes to the condensed consolidated financial statements.
NORTH AMERICAN LIABILITY GROUP, INC.
AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Cumulative for
Six Six the period from
Months Months March 23,1999
Ended Ended (inception) to
June 30,2004 June 30, 2003 June 30,2004
------------ ------------- ---------------
Cashflows from operating activities
Net income(loss) $ (283,035) $ (59,703) $ (4,588,300)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities
Forgiveness of related party
note payable - - (59,088)
Depreciation and amortization 1,064 - 294,885
Loss on impairment of assets - - 315,027
Provision for loss on
non-cancelable leases - - 225,000
Common stock issued for
services - - 2,055,405
Increase(decrease) in cash
caused by changes in:
Other current assets 1,244 - (171)
Other assets 80,000 - 75,600
Accounts payable (9,642) - 182,513
Accrued expenses 143,094 25,194 568,209
Due from related parties (46,744) 34,509 474,261
------------ ------------- -------------
Net cash provided by (used in)
operating activities (114,019) - (456,659)
Cashflows from investing activities:
Acquisition of property and
equipment (9,359) - (286,358)
Cashflows from financing activities
Repayment of note payable to
related party - - (200,000)
Proceeds from issuance of
preferred stock - - 49,000
Proceeds from issuance of
capital stock 160,000 - 806,174
Due to related parties 7,747 - (391,606)
Repayment/proceeds of notes payable - - 551,466
------------ ------------- -------------
Net cash provided by financing
activities 167,747 - 815,034
------------ ------------- -------------
Net increase(decrease) in cash 44,369 - 72,017
Cash at beginning of period 27,648 - -
------------ ------------- -------------
Cash at end of period $ 72,017 $ - $ 72,017
============ ============= =============
See accompanying notes to the condensed consolidated financial statements.
NORTH AMERICAN LIABILITY GROUP, INC.
AND SUBSIDIARY
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Cumulative for
Six Six the period from
Months Months March 23,1999
Ended Ended (inception) to
June 30,2004 June 30, 2003 June 30,2004
------------ ------------- ---------------
Supplemental disclosure of cash flow
information:
Cash paid for interest $ - $ - $ 15,310
============ ============= =============
Non-cash activity:
Purchase of intangible assets from
related party $ - $ - $ 399,353
============ ============= =============
Reduction of capital lease
obligation upon abandonment of
assets $ - $ - $ 65,006
============ ============= =============
Satisfaction of notes payable and
accrued interest by related
party $ 487,500 $ 487,500
============ =============
Sale of restricted common stock,
proceeds of which are held
in trust $ 250,000 $ 250,000
============ =============
See accompanying notes to the condensed consolidated financial statements.
NORTH AMERICAN LIABILITY GROUP, INC.
AND SUBSIDIARY
(A Development Stage Company)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) Statement of Information Furnished
The accompanying unaudited condensed consolidated financial
statements as of June 30, 2004 and for the three and sixmonths ended
June 30, 2004 and 2003 and the cumulative period from March 23, 1999
(Inception) to June 30, 2004 have been prepared in accordance with
accounting principles generally accepted in the United States of America
for interim financial information and pursuant with the rules and
regulations of the Securities and Exchange Commission for Form 10-QSB.
Accordingly, the condensed consolidated financial statements do
not include all the information and notes to the financial statements
required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, the accompanying unaudited condensed consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) considered necessary for a fair presentation of North
American Liability Group, Inc. and Subsidiary's financial position,
results of operations, and cash flows for the periods presented. These
results have been determined on the basis of accounting principles
generally accepted in the United States of America and applied
consistently with those used in the preparation of the Company's 2003
financial statements.
The results of operations for the interim periods ended June
30, 2004 and 2003 are not necessarily indicative of the results to be
expected for the full year. These interim financial statements should
be read in conjunction with the December 31, 2003 financial statements
and related notes included in the Company's Annual Report on Form 10-KSB
for the year ended December 31, 2003.
(2) Loss Per Share
Basic income or loss per common share amounts are based on
the weighted average shares outstanding of 4,706,984 and 235,315 for
the six months ended June 30, 2004 and 2003, respectively and 3,748,295
and 235,360 for the three months ended June 30, 2004 and 2003,
respectively. Diluted income per common share amounts reflect the
potential dilution that could occur if convertible preferred shares are
converted into common stock. No conversion is assumed if such conversion
would have an anti-dilutive effect on diluted loss per common share
amounts.
(3) Recent Financial Accounting Standards
In January 2003, the FASB issued FIN No. 46, "Consolidation of
Variable Interest Entities," ("FIN 46"). FIN 46 clarifies the
application of Accounting Research Bulletin No. 51, "Consolidated
Financial Statements," to certain entities in which equity investors
do not have the characteristics of a controlling financial interest
or do not have sufficient equity at risk for the entity to finance
its activities without additional subordinated financial support from
other parties. FIN 46 applies immediately to variable interest
entities (VIE's) created after January 31, 2003, and to variable
interest entities in which an enterprise obtains an interest after
that date. It applies in the first fiscal year or interim period
beginning after June 15, 2003, to variable interest entities in which
an enterprise holds a variable interest that it acquired before
February 1, 2003.
The Company has not identified any VIE's for which it is the
primary beneficiary or has significant involvement.
In December 2003, the FASB issued FIN No. 46 (revised December
2003), "Consolidation of Variable Interest Entities" ("FIN 46-R") to
address certain FIN 46 implementation issues. The effective dates and
impact of FIN 46 and FIN 46-R are as follows:
(i) For special purpose entities (SPE's) created prior to February 1,
2003, the Company must apply either the provisions of FIN 46 or early
adopt the provisions of FIN 46-R at the end of the first interim
or annual reporting period ending after December 15, 2003.
(ii) For non-SPE's created prior to February 1, 2003, the Company is
required to adopt FIN 46-R at the end of the first interim or annual
reporting period ending after March 15, 2004.
(iii) For all entities, regardless of whether a SPE, that were created
subsequent to January 31, 2003, the provisions of FIN 46 were applicable
for variable interests in entities obtained after January 31, 2003. The
Company is required to adopt FIN 46-R at the end of the first interim or
annual reporting period ending after March 31, 2004.
The adoption of the provisions applicable to SPE's and all
other variable interests obtained after January 31, 2003 did not have
a material impact on the Company's consolidated financial statements.
The Company is currently evaluating the impact of adopting FIN 46-R
applicable to non-SPE's created prior to February 1, 2003, but does not
expect a material impact.
(4) Capitalization
(A) COMMON STOCK
During the first quarter of 2004, shareholders were issued
1,176,800 shares of common stock in a conversion of 35,304,000 shares of
Series 2001A Preferred stock.
Also during the first quarter, the Company's Chairman, Bradley
Wilson, contributed capital in the amount of $160,000 in exchange for
5,333 shares of restricted common stock.
During the second quarter, the Company issued 16,666 shares of
common stock, restricted under Rule 144, to an investor who
contributed$250,000 in cash, proceeds of which are held in trust. Also
during the quarter, the Company cancelled 1,124,040 common shares that
had been issued improperly.
In July 2004, the Company made a 1 for 30 reverse split of its
common stock. These financial statements give effect to the reverse
stock split.
At June 30, 2004 and 2003, the Company had outstanding
approximately 3,069,000 and 235,000 shares of common stock,
respectively.
(B) PREFERRED STOCK
During the first quarter of 2004, shareholders converted
35,304,000 shares of Series 2001A Preferred stock for 1,176,800 shares
of common stock.
At June 30, 2004, 27,946,000 shares of Series 2001 A Convertible
Preferred stock were issued and outstanding.
On February 2, 2004, the Company cancelled 5,266,666 shares of
its Common stock. The cancelled shares were held by Bradley Wilson,
Chairman of the Company and a non-related party, each canceling
2,633,333 shares. In consideration of canceling their shares,
30,000,000 and 20,000,000 shares of Class B Preferred stock were issued
to Mr. Wilson and the non-related party, respectively. Shares of Class
B Preferred stock carry 10 votes per share and cannot be converted into
common stock prior to September 1, 2005.
At June 30, 2004 there were 50,000,000 outstanding Class B
Preferred shares.
During May, 2004, the Company cancelled 1,124,373 common shares
that had been issued improperly.
(5) Related Party Transactions
In February, 2004 the Company issued three notes totaling
$42,000 to a related party, FJW Pendylum, Inc., in which the majority
shareholder of the Company is the majority shareholder of FJW Pendylum,
Inc. The notes bear interest at 6% and are due in February 2005. At
June 30, 2004, $42,000 is due on the notes and included in due from
related parties in the accompanying consolidated financial statements.
The president, current and former principal stockholders, and
certain employees from time to time made advances to the Company. The
advances have been made for financing and working capital purposes. At
June 30, 2004 and 2003 respectively, the total of such advances and
accrued interest was $269,664 and $485,677.
The Company has an agreement with KIWI Network Solutions, Inc to
share space in the Company's executive offices. Under the terms of this
agreement the Company receives back 50% of the rent paid under its lease
agreement for the Ft. Lauderdale office space. At June 30, 2004,
approximately $4,400 is owed to the Company relating to this agreement
and is included in due from related parties in the accompanying
consolidated financial statements.
The Company leased an apartment for one member of its Board of
Directors and the apartment served as the Company's office in the
Washington, D.C. area. During the second quarter the Director resigned
his position on the Board. The Company is seeking to sublet the
apartment to the former Director. The lease for the apartment is non-
cancelable and expires November 30, 2004. Rent and fees paid in total
at June 30, 2004 amount to $12,858. Rent paid in the quarter ended June
30, 2004 amounted to $4,710. Rent remaining to be paid is $6,280, all
of which is due to be paid in 2004.
The Company has a Consulting Agreement with James Jarboe, which
pays him $1,000 per week for his services as President of the Company.
In the quarter ended June 30, 2004, the Company paid Jarboe $4,000 and
accrued an additional $1,600. Also, through its wholly-owned subsidiary
North American Liability Corporation ("the Subsidiary"), the Company has
an Agreement with Jarboe to serve as Consultant and Director. Under
that agreement, which is for a term of two years, Jarboe is to receive
base annual compensation of $24,000 plus a bonus to be paid in cash and
stock of 10% of any debt or equity capital raised. No bonus has been
paid for capital raising in the quarter ended June 30, 2004. A bonus
will also be paid for the procurement of business at the Group or Policy
level for a fair commercial market fee to be determined at the time the
business is completed with the Subsidiary. No bonus has been paid for
business procurement in the quarter ended June 30, 2004. The Subsidiary
was also to grant, immediately upon execution of the Consulting
Agreement, 66,666 hares of common stock, subject to Rule 144. No shares
have been issued by the Subsidiary under this Consulting Agreement.
The Subsidiary had an Employment Agreement with its Chairman and
CEO Harold Fischer. Mr. Fischer resigned his position with the Company
effective May 3, 2004, terminating the Employment Agreement.
The Subsidiary had a Consulting Agreement with David Tews as
Consultant and Director. Mr. Tews resigned his position with the
Company effective May 3, 2004, terminating the Consulting Agreement.
In December 2003, the Company settled its note payable to the
former controlling shareholder. With principal and accumulated
interest, the debt amounted to $444,088. In the settlement, the Company
paid $200,000, the current controlling shareholder contributed $185,000,
and $59,088 was forgiven.
During April, 2004, common stock held as collateral against
secured notes payable and accrued interest were used to repay
theseliabilities which amounted to $487,500.
The Company has filed suit seeking monetary damages from a
current shareholder, alleging the shareholder failed to cancel certain
shares of Company stock as promised.
(6) Accrued Expenses
Accrued expenses at June 30, 2004 consisted of the following:
2004
----------
Accrued lease obligations 309,718
Accrued interest 153,218
Accrued salaries 102,766
----------
565,702
==========
(7) Subsequent Transactions
In July, 2004 the Company made a 1 for 30 reverse split of its
common stock for shareholders of record on July 5, 2004, which it
expected would leave approximately 3,000,000 shares issued and
outstanding. The split was made as a necessary step towards the
Company's acquisition of 100% of the stock of Grupo Industria N.K.S.,
S.A., de CV ("NKS"), a Mexican corporation. NKS is the owner of a steel
mill foundry and other assets in Las Cardenas, Mexico. Pending the
outcome of an audit of NKS, the Company expects it will issue
approximately 500,000,000 shares of NALG Convertible Preferred Stock to
the shareholders of NKS.
On July 14, 2004 the Company assigned a new trading symbol to
its common stock. The new symbol is OTCBB: NOAL and became effective
immediately.
(8) Going Concern Matters
The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. Due to
its past financial difficulties, the Company has accumulated debts,
including judgments, and accrued interest of approximately $1,100,000
relating to its former line of business and maintains these on its
balance sheet as current liabilities. Interest on these balances is
accruing at a rate of approximately $13,000 per quarter as of June 30,
2004. The Company is continuing in its efforts to resolve these
obligations and others through settlements. However, there is no
assurance that the Company will be able to settle in terms agreeable to
the Company and if it does not do so, this will have a material adverse
affect on the ability of the Company to operate properly in the future.
As shown in the financial statements, the Company has incurred
cumulative losses of approximately $4,600,000 during its development
stage and has classified all of its debt as current at June 30, 2004.
These factors among others may dictate that theCompany will be unable to
continue as a going concern for areasonable period of time.
Item 2. Management Discussion and Analysis or Plan of Operation
-------------------------------------------------------
All statements contained herein that are not historical facts,
including but not limited to, statements regarding the anticipated
impact of future capital requirements and future development plans
are based on current expectations. These statements are forward
looking in nature and involve a number of risks and uncertainties.
Actual results may differ materially. Among the factors that could
cause actual results to differ materially are the following: amount
of revenues earned by the Company's operations; the availability of
sufficient capital to finance the Company's business plan on terms
satisfactory to the Company; general business and economic conditions;
and other risk factors described in the Company's reports filed from
time to time with the Commission. The Company wishes to caution
readers not to place undue reliance on any such forward
looking statements, which statements are made pursuant to the
Private Securities Litigation Reform Act of 1995 and, as such, speak
only as of the date made.
Results of Operations
---------------------
Six Months Ended June 30, 2004 Compared with Six Months Ended
June 30, 2003.
-------------------------------------------------------------
We had no revenues for the six months ended June 30, 2004 and
2003. There is no assurance that we will any have revenues in fiscal
2004.
As we had no sales in this quarter, we had no cost of sales for
the quarters.
Operating expenses for the six months ended June 30, 2004 were
$223,051 as opposed to no operating expenses for the six months ended
June 30, 2003. The increase is due to the launch of our new business.
Other expenses for the six months ended June 30, 2004 was $59,984
as compared to expense of $59,703 for the six months ended June 30,
2003. This increase was due primarily to interest expense of $114,228
offset by other income of $54,244, which resulted primarily from a
settlement with our former CEO.
The Company's net loss for the six months ended June 30, 2004 was
$283,035 as compared to $59,703 for the six months ended June 30, 2003,
an increase of approximately $223,332 or 374%. This increase in net loss
was primarily due to the increase in operating and other expenses as
referenced above.
Three Months Ended June 30, 2004 compared with Three Months
Ended June 30, 2003
-----------------------------------------------------------
The Company's net loss for the three months ended June 30, 2004
was $13,794 as compared to $30,376 for the three months ended June 30,
2003, a decrease of approximately $16,582 or 55%. This decrease in net
loss was primarily due to the decrease in interest expense as aresult of
the repayment of our secured loans in April, 2004.
Liquidity and Capital Resources
-------------------------------
On June 30, 2004, the Company had a working capital deficit of
approximately $1,200,000. Since its inception, the Company has continued
to sustain losses. The Company's operations since inception have been
funded by the sale of common and preferred stock, and proceeds from
loans secured by the Company's common stock. These funds have been used
for working capital and capital expenditures and other corporate
purchases. The Company has had losses of approximately$4,600,000 since
inception. The Company is seeking financing throughequity financing.
There can be no assurance that the Company will be able to obtain
funding at terms acceptable to the Company. These factors indicate that
the Company may not be able to continue as a going concern.
Other Events
------------
In February 2004, we converted 35,304,000 of our of Series 2001 A
Preferred Stock into 1,176,800 shares of our common stock. Also in
February 2004, Bradley Wilson and Regency Financial Group, Inc.,
agreed to tender to us and we retired 5,266,666 shares of common
stock and they were collectively issued a total of 50,000,0000
shares of the Company's Class B Preferred Stock.
In May 2004, in return of contributing $160,000 to our
capital, we agreed to issue Bradley Wilson 5,333 shares of our common
stock. Also in May 2004, in return of contributing $250,000 to our
capital, we agreed to issue Terry Hunter 8,333 shares of our common
stock.
Off-Balance Sheet Arrangements
------------------------------
The Company does not maintain off-balance sheet arrangements nor
does it participate in non-exchange traded contracts requiring fair
value accounting treatment.
Item 3. Controls and Procedures
-----------------------
As of June 30, 2004, an evaluation was performed under the
supervision and with the participation of the Company's management,
including the Principal Executive Officer and the Principal Accounting
Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on that evaluation,
the Company's management, including the Principal Executive Officer and
the Principal Accounting Officer, concluded that the Company's
disclosure controls and procedures were effective as of June 30, 2004.
There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect internal
controls subsequent to June 30, 2004.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
Due to its financial difficulties, the Company is in default
on a number of debt and lease obligations as of June 30, 2004. The
Company and other parties to the obligations are in various stages of
negotiations. The Company has provided accruals in its financial
statements for all known contingencies. Except for any legal
proceedings related to these obligations, the Company is not aware of
any legal proceedings pending against it as of June 30, 2004.
The Company has filed suit seeking monetary damages from a
current shareholder, alleging the shareholder failed to cancel certain
shares of Company stock as promised.
Item 2. Change in Securities
--------------------
During the second quarter, the Company issued 16,666 shares of
common stock, restricted under Rule 144, to an investor who contributed
$250,000 in cash. Also during the quarter, the Company cancelled
1,124,040 common shares that had been issued improperly.
In February, 2004 the Company issued three notes totaling
$42,000 to a related party, FJW Pendylum, Inc., in which the majority
shareholder of the Company is the majority shareholder of FJW Pendylum,
Inc. The notes bear interest at 6% and are due in February 2005. At
June 30, 2004, $42,000 is due on the notes and included in due from
related parties in the accompanying consolidated financial statements.
In July, 2004 the Company made a 1 for 30 reverse split of
its common stock for shareholders of record on July 5, 2004, which it
expected would leave approximately 3,000,000 shares issued and
outstanding. The split was made as a necessary step towards the
Company's acquisition of 100% of the stock of Grupo Industria N.K.S.,
S.A., de CV ("NKS"), a Mexican corporation. NKS is the owner of a steel
mill foundry and other assets in Las Cardenas, Mexico. Pending the
outcome of an audit of NKS, the Company expects it will issue
approximately 500,000,000 shares of NALG Convertible Preferred Stock to
the shareholders of NKS.
On July 14, 2004 the Company assigned a new trading symbol to
its common stock. The new symbol is OTCBB: NOAL and became effective
immediately.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits and Index of Exhibits
31. Rule 13a-14(a)/15d-14(a) Certifications pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32. Section 1350 Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
No reports were filed on Form 8-K for the three months
ended June 30, 2004.
SIGNATURES
North American Liability Group, Inc.
By /s/ Bradley Wilson
----------------------------------
Bradley Wilson, President
Date: September 1, 2004