UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

                For the quarterly period ended September 30, 2006


                              LISKA BIOMETRY, INC.
                              --------------------
        (Exact name of small business issuer as specified in its charter)


          Florida                                          06-1562447
          -------                                          ----------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)


                            100 Main Street Suite 230
                           Dover, New Hampshire, 03082
                    (Address of principal executive offices)


                                1 (877) 775-4752
                           (Issuer's telephone number)



              (Former name, former address and former fiscal year,
                          if changed since last report)

Check whether the registrant (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.
Yes |_| No |X|

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Securities Exchange Act of 1934) (check one): Yes |_| No |X|

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 70,578,869 shares of Common Stock, as
of November 17, 2006.

Transitional Small Business Disclosure Format (check one): Yes |_| No |X|
<PAGE>

                              LISKA BIOMETRY, INC.

                                      INDEX

                                                                        Page No.

PART I - Financial Information

Item 1.  Unaudited Financial Statements:

         Balance Sheet as of September 30, 2006 (unaudited)                    1

         Consolidated Statements of Operations for the Three Months
         and Nine Months Ended September 30, 2006 and
         September 30, 2005 (unaudited)                                        2

         Consolidated Statements of Cash Flows for the Nine Months
         Ended September 30, 2006 and September, 2005 (unaudited)              3

         Notes to Unaudited Financial Statements                               4

Item 2.  Management's Discussion and Analysis or Plan of Operation            17

Item 3.  Controls and Procedures                                              21

PART II.  Other Information                                                   23

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds          23

Item 6.  Exhibits                                                             23

Signature Page                                                                24
<PAGE>

                              Liska Biometry, Inc.
                           Consolidated Balance Sheet
                            as of September 30, 2006
                                   (Unaudited)

Assets

Current assets:
   Cash                                                          $      474,441
   Restricted cash                                                    2,281,133
   Trade accounts receivable                                            641,907
   Inventory                                                          1,061,120
   Other current assets                                                  49,018
                                                                 --------------
          Total Current Assets                                        4,507,619

Fixed assets, net                                                       668,440
Goodwill of companies acquired                                        6,209,525
Deferred financing costs, net                                           268,900
Note receivable                                                         125,000
Other non-current assets                                                 46,636
                                                                 --------------

                                                                 $   11,826,120
                                                                 ==============

Liabilities and stockholders' equity

Current liabilities:
   Accounts payable & accrued expenses                           $    1,980,944
   Customer advances                                                    162,470
   Notes payable, net of discount of $85,000                            215,000
   Current portion of convertible debt                                1,481,480
   Due to investors                                                     686,000
   Derivative liabilities                                             1,403,348
   Other current liabilities                                            150,000
                                                                 --------------

          Total current liabilities                                   6,079,242

Convertible debt, less current portion and net
  of discount of $1,786,135                                           1,732,385
                                                                 --------------
          Total liabilities                                           7,811,627
                                                                 --------------

Stockholders' equity:
   Preferred stock, no par value,
     10,000,000 shares authorized, none outstanding
   Common stock, no par value,
     100,000,000 shares authorized,
     69,796,869 shares issued and outstanding                        18,015,572
   Receivable for common stock                                       (1,375,000)
   Deferred compensation                                                (75,082)
   Additional paid in capital                                         1,016,834
   (Deficit) accumulated during the development stage               (13,476,331)
                                                                 --------------
                                                                      4,105,993
   Other comprehensive income:
     Currency translation adjustment                                    (91,500)
                                                                 --------------
          Total stockholders' equity                                  4,014,493
                                                                 --------------

                                                                 $   11,826,120
                                                                 ==============

      See the accompanying notes to the consolidated financial statements.


                                       1
<PAGE>

                              Liska Biometry, Inc.
                      Consolidated Statements of Operations
     for the Three Months and Nine Months Ended September 30, 2006 and 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     Three months      Three months       Nine months       Nine months
                                                         Ended             Ended             Ended             Ended
                                                       Sept 30,          Sept 30,          Sept 30,          Sept 30,
                                                         2006              2005              2006              2005
                                                    --------------    --------------    --------------    --------------
<S>                                                 <C>               <C>               <C>               <C>
Sales                                               $    3,220,925    $           --    $    3,972,374    $           --

Cost of goods sold                                       2,181,624                --         2,719,481                --
                                                    --------------    --------------    --------------    --------------

Gross profit                                             1,039,301                --         1,252,893                --
                                                    --------------    --------------    --------------    --------------

Operating expenses:
   Impairment of license                                        --                --                --                --
   Selling, general and administrative expenses -
     Non cash stock compensation                           532,768            59,083           965,018           815,545
   Selling, general and administrative expenses          1,334,505           473,669         2,313,593         1,053,740
                                                    --------------    --------------    --------------    --------------

                                                         1,867,273           532,752         3,278,611         1,869,285
                                                    --------------    --------------    --------------    --------------

(Loss) from operations                                    (827,972)         (532,752)       (2,025,718)       (1,869,285)
                                                    --------------    --------------    --------------    --------------

Other income (expense):
   Other income                                                 --                --                --                --
   Interest (expense)                                     (134,099)               --          (187,524)               --
   Amortization of debt discount                          (432,747)               --          (830,992)               --
   Change in value of derivative liabilities               837,768                --           660,148                --
   Penalty associated with late filing                          --                --                --                --
     of registration statement                            (150,000)               --          (150,000)               --
                                                    --------------    --------------    --------------    --------------

                                                           120,922                --          (508,368)               --
                                                    --------------    --------------    --------------    --------------

Income (loss) before taxes                                (707,050)         (532,752)       (2,534,086)       (1,869,285)
Income tax expense (benefit)
   Current                                                 (33,447)               --                --                --
   Deferred                                                     --                --                --                --
                                                    --------------    --------------    --------------    --------------

                                                           (33,447)               --                --                --
                                                    --------------    --------------    --------------    --------------

Net (loss)                                                (673,603)         (532,752)       (2,534,086)       (1,869,285)
Comprehensive income:
  Currency translation adjustment                          (13,469)           (9,769)          (62,138)          (16,037)
                                                    --------------    --------------    --------------    --------------

Comprehensive (loss)                                $     (687,072)   $     (542,521)   $   (2,596,224)   $   (1,885,322)
                                                    ==============    ==============    ==============    ==============

Per share information - basic and fully diluted:
  Weighted average shares outstanding                   68,415,958        26,058,726        50,162,235        25,376,716
                                                    ==============    ==============    ==============    ==============
  Net (loss) per share                              $        (0.01)   $        (0.02)   $        (0.05)   $        (0.07)
                                                    ==============    ==============    ==============    ==============
</TABLE>

      See the accompanying notes to the consolidated financial statements.


                                       2
<PAGE>

                              Liska Biometry, Inc.
                      Consolidated Statements of Cash Flows
           for the Nine Months Ended September 30, 2006 and 2005, and
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     Nine Months       Nine Months
                                                        Ended             Ended
                                                       Sept 30,          Sept 30,
                                                         2006              2005
                                                    --------------    --------------
<S>                                                 <C>               <C>
Cash flows from operating activities:

Net cash (used in) operating activities             $   (1,365,678)   $     (836,541)

Cash flows from investing activities:
  Cash paid for acquisitions                            (1,516,000)               --
  Net cash in acquired companies                           169,675                --
  Deposit on acquisition                                   100,000                --
  Note receivable                                         (125,000)               --
  Purchase of fixed assets                                      --           (44,322)
                                                    --------------    --------------
Net cash (used in) investing activities                 (1,371,325)          (44,322)
                                                    --------------    --------------

Cash flows from financing activities:
  Proceeds from convertible notes                        5,000,000                --
  Proceeds allocated to restricted cash                 (2,281,133)               --
  Common shares issued and subscriptions for cash          175,000           674,500
  Proceeds from notes payable                              425,000                --
  Repayment of notes payable                              (125,000)               --
  Proceeds (repayment) investor loans                       46,000           (27,552)
                                                    --------------    --------------
Net cash provided by financing activities                3,239,867           646,948
                                                    --------------    --------------

Net increase (decrease) in cash                            502,864          (233,915)

Effect of currency translation on cash                     (62,138)               --

Beginning - cash balance                                    33,715           245,641
                                                    --------------    --------------

Ending - cash balance                               $      474,441    $       11,726
                                                    ==============    ==============

Supplemental cash flow information:
  Cash paid for income taxes                        $           --    $           --
                                                    ==============    ==============
  Cash paid for interest                            $           --    $           --
                                                    ==============    ==============
</TABLE>

      See the accompanying notes to the consolidated financial statements.


                                       3
<PAGE>

                              LISKA BIOMETRY, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               September 30, 2006
                                   (UNAUDITED)

(1)   Summary of Significant Accounting Policies

Basis of Presentation. The accompanying unaudited consolidated financial
statements of Liska Biometry, Inc. and Subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles (GAAP) for
interim financial information and Item 310(b) of Regulation S-B. They do not
include all of the information and footnotes required by GAAP for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) considered necessary for a fair
presentation have been included.

The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the financial statements of the Company as of December 31,
2005, and for the two years then ended, and the period from inception (August 1,
2000) to December 31, 2005, including notes thereto included in the Company's
Form 10-KSB. The company was considered a development stage company through June
5, 2006, when it completed a series of mergers (See footnote 9 - Acquisitions).
Effective June 5, 2006, the Company commenced its planned operations.

Consolidation. On June 1, 2006 Liska Biometry, Inc. and Digital Card Systems
merged. On June 5, 2006 the company acquired substantially all of the operating
assets of Markow Photo Properties in Phoenix, Arizona, consisting of the
companies Al-Cor Identification Systems, Colormark Inc. and Photomark Inc. The
Phoenix location will serve as the operations center for Liska Biometry, Inc. in
the United States. We intend to optimize the core competencies of ID System
sales, retail sales, service, support, national and international distribution
to support the entire corporation in the US and abroad.

Inventory. Inventory is valued at the lower of cost or market on a first-in,
first-out basis. Substantially all of the inventory is comprised of finished
goods.

Contract Revenue. Software Related Services - Software related services include
services to customize or enhance the software so that the software performs in
accordance with specific customer requirements. As these services are essential
to provide the required functionality, revenue from these arrangements is
recognized in accordance Statement of Position (SOP) 81-1, "Accounting for
Certain Construction Type and Certain Production Type Contracts, using either
the percentage-of-completion method or the completed contract method. The
percentage-of-completion method is used when the required services are
quantifiable, based on the estimated number of labor hours necessary to complete
the project, and under that method revenues are recognized using labor hours
incurred as the measure of progress towards completion but is limited to revenue
that has been earned by the attainment of any milestones included in the
contract. The completed contract method is used when the required services are
not quantifiable, and under that method revenues are recognized only when we
have satisfied all of our product and/or service delivery obligations to the
customer.


                                       4
<PAGE>

For contracts of shorter duration, revenue is generally recognized when services
are performed. Contractual terms may include the following payment arrangements:
fixed fee, full-time equivalent, milestone, and time and material. In order to
recognize revenue, the following criteria must be met:

      o     Signed agreement -- The agreement must be signed by the customer.

      o     Fixed Fee -- The signed agreement must specify the fees to be
            received for the services.

      o     Delivery has occurred -- Delivery is substantiated by time cards and
            where applicable, supplemented by an acceptance from the customer
            that milestones as agreed in the statement have been met.

      o     Collectibility is probable -- The Company conducts a credit review
            for significant transactions at the time of the engagement to
            determine the credit-worthiness of the customer. Collections are
            monitored over the term of each project, and if a customer becomes
            delinquent, the revenue may be deferred.

Due to Investors. Due to investors includes certain loans made by the founders
of DCS to the entity before the merger with Liska Biometry. Under the terms of
the definitive agreement, the Company assumed the liabilities of DCS and its
subsidiaries, including the loans made by the founders of DCS. The DCS loans
aggregated $576,000 as of September 30, 2006. The remainder of the balance in
due to investors represents loans to Liska provided by certain officers,
directors, and employees. The amounts due to investors do not bear interest and
do not have any scheduled repayment terms.

Foreign Currency Translation. The Company maintains its accounts in United
States dollars for US operations, in Canadian dollars for Canadian-based
subsidiaries, and in Euros for German-based subsidiaries. The financial
statements have been translated into United States dollars in accordance with
SFAS No. 52, Foreign Currency Translation.

All balance sheet accounts have been translated using the exchange rates in
effect at the balance sheet date. Statements of operations amounts have been
translated using the average exchange rate for the year. The gains and losses
resulting from the changes in exchange rates from year to year have been
reported separately as a component of comprehensive income. The gain and losses
resulting from any inter-company balances with different functional currencies
are recognized in statement of operations.

Goodwill. Goodwill is evaluated for potential impairment on an annual basis or
whenever events or circumstances indicate that an impairment may have occurred.
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets", ("SFAS No. 142") requires that goodwill be tested for
impairment using a two-step process. The first step of the goodwill impairment
test, used to identify potential impairment, compares the estimated fair value
of the reporting unit containing goodwill with the related carrying amount. If
the estimated fair value of the reporting unit exceeds its carrying amount, the
reporting unit's goodwill is not considered to be impaired and the second step
of the impairment test is unnecessary. If the reporting unit's carrying amount
exceeds its estimated fair value, the second step test must be performed to
measure the amount of the goodwill impairment loss, if any. The second step test
compares the implied fair value of the reporting unit's goodwill, determined in
the same manner as the amount of goodwill recognized in a business combination,
with the carrying amount of such goodwill. If the carrying amount of the
reporting unit's goodwill exceeds the implied fair value of the goodwill so
calculated, an impairment loss is recognized in an amount equal to the excess.


                                       5
<PAGE>

Derivative Financial Instruments. In connection with the sale of debt or equity
instruments, the Company may sell warrants to purchase common stock. The Company
may also issue warrants to non-employees in connection with consulting or other
services they provide. In certain circumstances, these warrants may be
classified as derivative liabilities, rather than as equity. Additionally, debt
or equity instruments may contain embedded derivative instruments, such as
conversion options, which in certain circumstances may be required to be
bifurcated from the associated host instrument and accounted for separately as a
derivative liability.

The Company reviews the terms of convertible debt, if any, and equity
instruments, to determine whether there are embedded derivative financial
instruments, including the embedded conversion rights that are required to be
bifurcated and accounted for separately as a derivative financial instrument. In
circumstances where the convertible instrument contains more than one embedded
derivative financial instrument, including the conversion right, that is
required to be bifurcated, the bifurcated derivative financial instruments are
accounted for as a single, compound derivative financial instrument.

In connection with the issue of convertible debt (see Note 5) in 2006, the
Company issued freestanding Warrants and a right to receive shares of common
stock (the embedded conversion feature). Although the terms of the Warrants or
issuance of common stock does not provide for net-cash settlement, in certain
circumstances, physical or net-share settlement is deemed to be outside the
control of the Company and, accordingly, the Company is required to account for
these freestanding Warrants as derivative liabilities, rather than as equity. In
these cases, the Company deducts the initial fair value of the derivative
financial instrument from the proceeds of sales of the convertible debt,
resulting in the debt being recorded at a discount. This discount is then
amortized over the life of the debt, using the effective interest method.

The identification of, and accounting for, derivative financial instruments is
extremely complex. Derivative financial instruments are initially measured at
their fair value. The Company's derivative liabilities are re-valued at each
reporting date, with changes in the estimated fair value reported as charges or
credits to income, in the period in which the changes occur. For warrants and
bifurcated conversion options that are accounted for as derivative liabilities,
the Company determines the fair value of these instruments using the
Cox-Ross-Rubinstein binomial option pricing model. That model requires
assumptions related to the remaining term of the instruments and risk-free rates
of return, the Company's current common stock price and expected dividend yield,
and the expected volatility of its common stock price over the life of the
instrument based upon certain historical measurements. The identification of,
and accounting for, derivative financial instruments and the assumptions used to
value them can significantly affect the Company's financial statements.


                                       6
<PAGE>

The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is re-assessed at the end of
each reporting period. Derivative instrument liabilities are classified in the
balance sheet as current or non-current based on whether or not net-cash
settlement of the derivative instrument could be required within 12 months of
the balance sheet date. The Company does do not use derivative instruments to
hedge exposures to cash flow, market, or foreign currency risks.

Stock Option Plans. Effective January 1, 2006, the Company implemented SFAS 123,
"Accounting for Stock-Based Compensation," requiring the Company to provide
compensation costs for the Company's stock option plans determined in accordance
with the fair value based method prescribed in SFAS 123. The Company estimates
the fair value of each stock option at the grant date by using the Black-Scholes
option-pricing model and provides for expense recognition over the service
period, if any, of the stock option.

Prior to January 1, 2006, the Company applied APB Opinion 25, "Accounting for
Stock Issued to Employees," and related interpretations in accounting for all
stock option plans. Under APB Opinion 25, no compensation cost was recognized
for stock options issued to employees as the exercise price of the Company's
stock options granted equaled or exceeded the market price of the underlying
common stock on the date of grant.

Fair Value of Financial Instruments. SFAS 107, "Disclosures About Fair Value of
Financial Instruments," requires disclosure of fair value information about
financial instruments. Fair value estimates discussed herein are based upon
certain market assumptions and pertinent information available to management as
of September 30, 2006.

The respective carrying value of certain on-balance-sheet financial instruments
approximate their fair values. These financial instruments include cash,
restricted cash, trade accounts receivables, accounts payable, accrued expenses,
notes payable and due to investors. Fair values were assumed to approximate
carrying values for these financial instruments since they are short term in
nature and their carrying amounts approximate fair value or they are receivable
or payable on demand. The carrying value of the Company's long-term debt
approximates fair values of similar debt instruments.

(2)   Basis of Reporting

The Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business.

The Company has experienced a significant loss from operations as a result of
its investment necessary to achieve its operating plan, which is long-range in
nature. For the nine months ended September 30, 2006. The Company incurred a net
loss of $2,534,086 and has a working capital deficit of $1,571,623 at September
30, 2006.


                                       7
<PAGE>

The Company's ability to continue as a going concern is contingent upon its
ability to attain profitable operations and secure financing. In addition, the
Company's ability to continue as a going concern must be considered in light of
the problems, expenses and complications frequently encountered by entrance into
established markets and the competitive environment in which the Company
operates.

The Company is pursuing equity financing for its operations. Failure to secure
such financing or to raise additional capital or borrow additional funds may
result in the Company depleting its available funds and not being able pay its
obligations.

The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.

(3)   Note Receivable

The note receivable represents a loan to Sogedex of Paris, France denominated as
100,000 Euros. The note receivable bears interest at 4.5%. The note is
convertible into common stock of Sogedex. In connection with the loan, the
Company also received an option to purchase 80% of the outstanding stock of
Sogedex for approximately 2,400,000 Euros. The initial term of the option
expired on July 31, 2006, but can be extended through December 31, 2006 by
providing additional funds to Sogedex in the amount of 200,000 Euros. If the
note is not converted into Sogedex common stock or the option to purchase
additional stock is not exercised, the note is due in 20 quarterly installments
commencing in 2007 and ending in 2012. As of November 10, 2006 the Company has
not provided the additional funds to extend the note, however the Company does
plan to extend the option to purchase Sogedex.

(4)   Notes Payable

In February 2006, a bridge loan of $300,000 was received from CAMOFI Master LDC,
an affiliate of Centrecourt Asset Management LLC ("CAMOFI"). The note bears
interest at 8% and was originally due on April 30, 2006. The CAMOFI bridge loan
was secured by the assets of the Company and by a pledge of 3,300,000 shares of
the Company's common stock owned by the Company's president. As additional
consideration for the loan, the Company issued 500,000 shares of common stock
and 300,000 warrants. The Company has valued the stock at $150,000, which was
recorded as additional paid in capital and debt discount. The Company has valued
the warrants at $83,631 using the Black-Scholes option pricing model and
recorded the amount as additional paid in capital and debt discount. The
aggregate debt discount of $233,631 was amortized to interest expense over the
three-month term of the loan. On April 30, 2006, the Company extended the term
of the note to July 31, 2006 by issuing 833,333 shares of common stock, which
were valued at $150,000, based upon the market value of the common stock on
April 30, 2006. The Company amortized the cost of $150,000 to interest expense
over the three month term of the extension. As of July 31, 2006 the company
extended the term of the note to October 31, 2006 by issuing 1,500,000 shares of
common stock, which were valued at $255,000, based upon the market value of the
common stock on July 31, 2006. The company amortized the cost of the $255,000 to
interest expense over the three month term of the extension, which resulted in
charges of $170,000 during the period ended September 30, 2006. The company is
currently negotiating a possible extension and/or other payment options in
regard to the bridge financing.


                                       8
<PAGE>

(5)   Long-term Debt and Derivative Liabilities

On June 5, 2006, the Company entered into a long term financing arrangement with
CAMOFI. Under the arrangement, Liska issued CAMOFI two convertible promissory
notes, one for $3,000,000 and a second for $2,000,000 (collectively "Convertible
Notes"). The Convertible Notes will each mature on May 31, 2009. The Convertible
Notes bear an interest rate of 10% per annum. The Convertible Notes are
convertible into shares of Liska common stock at $0.40 per share and $0.60 per
share respectively. Liska granted to CAMOFI a priority security interest in our
assets. Terms of the Convertible Notes further require a certain portion of the
proceeds be placed in an escrow account pending satisfaction of certain
conditions. As of September 30, 2006, $2,000,000 was held in escrow. (The terms
of the purchase agreement with Markow also required that the Company deposit
certain amounts in an escrow account pending satisfaction of certain conditions.
As of September 30, 2006, the amount remaining in that escrow account was
$281,133, resulting in total restricted cash balances of $2,281,133.

In addition to the Convertible Notes and pursuant to the financing arrangement,
Liska issued CAMOFI Master LDC a warrant to purchase up to 12,500,000 shares of
our common stock ("Warrant"). The Warrant has a five year term and an exercise
price of $0.40 per share.

The Company has agreed to use its best efforts to register the shares of common
stock underlying the Convertible Notes and the Warrant. The company must file
the registration statement within 90 days and become effective within 180 days.
In addition, the Company must maintain effectiveness of the registration
statement. In the event that these requirements are not met the Company is
required to pay cash penalties of 1.5% per month of the face value of the notes.
The Company was unable to file a registration statement within the prescribed
time and has accrued penalties in the amount of $150,000, representing a
delinquency of two months as of September 30, 2006. The company is presently
negotiating with lender to waive or modify these requirements.

Under applicable accounting rules, the Company accounted for the Convertible
Notes and Warrant using derivative instrument accounting. The derivative
accounting was required by certain provisions in the financing documents which
provided for adjustments in the amount of common stock which could be issued
upon conversion of the derivative instruments in certain events, as described in
Emerging Issue Task Force (EITF) 00-19. Under the relevant provisions in such
documents as originally constituted, if the Company issued rights, options or
warrants to subscribe for or purchase common stock at a price per share which
was less than the conversion or exercise price, the amount of common stock
issueable upon conversion of the convertible notes would be adjusted upward
under a formula. Further, since the Company has a maximum number of authorized
common shares and theoretically might not have sufficient common stock available
to satisfy such adjustments, the Company could be forced to settle such
adjustments in cash. This possibility, even though remote, required derivative
instrument accounting.


                                       9
<PAGE>

In connection with the sale of the Convertible Notes, the Company issued
freestanding Warrants and a right to receive common stock (the embedded
conversion feature). Although the terms of the Convertible Notes or Warrants do
not provide for net-cash settlement, in certain circumstances, physical or
net-share settlement is deemed to be outside the Company's control and,
accordingly, the Company accounted for these freestanding Warrants and the
embedded conversion feature as derivative financial instrument liabilities,
rather than as equity.

In addition, the Company agreed that, during the term of the Notes, CAMOFI has
the right (at its sole option) to require the Company to issue to CAMOFI
additional notes in an aggregate principal amount of up to $2,500,000 on the
same terms and conditions (including, without limitation, the same interest
rate, conversion price then in effect (using the lowest conversion price of all
of the Notes issued pursuant to the Agreement with CAMOFI), proportionate
warrant coverage (at the same exercise prices) and amortization schedule. The
Company has valued its derivative instrument liability for this Additional
Investment Right based on the fair value of the underlying common stock and
warrants that may be obtained by CAMOFI if it exercises its Right

When derivative accounting is required, the Company deducts the fair value of
the derivative instrument from the proceeds of sales of the related instrument.
For derivative financial instruments that are accounted for as liabilities, the
derivative instrument is re-valued at each reporting date, with changes in the
fair value reported as charges or credits to income. The Company uses the
Cox-Ross-Rubinstein binomial option pricing model to value the Warrants and the
embedded conversion right components of any bifurcated embedded derivative
instruments that are recorded as derivative liabilities.

In valuing the Warrants and the embedded conversion right components at the time
they were issued and at September 30, 2006, the Company used the market price of
our common stock on the date of valuation, an expected dividend yield of 0%, the
remaining period to the expiration date of the warrants or convertible notes,
and an expected volatility of our common stock over the remaining life of the
warrants or convertible notes of 50%. The risk-free rates of return used at
September 30, 2006, applicable to the remaining life of the Warrants were 5.11%
based on constant maturity rates published by the U.S. Federal Reserve.

<TABLE>
<CAPTION>
Description                                               6/06/06       9/30/2006
----------------------------------------------------------------------------------
<S>                                                    <C>            <C>
Derivative liability - embedded - Convertible Note 1        262,231        144,403

Derivative liability - embedded - Convertible Note 2         60,288         28,500

Derivative liability - warrants                           1,014,968        725,576

Derivative liability - additional investment right          726,010        504,869
                                                       ---------------------------

Derivative liabilities - total                            2,063,496      1,403,348
                                                       ---------------------------

Convertible Note 1 - carrying amount                      1,693,183      1,866,354

Convertible Note 2 - carrying amount                      1,243,321      1,347,511
                                                       ---------------------------

                                                          2,936,504      3,213,865
                                                       ---------------------------
</TABLE>


                                       10
<PAGE>

(6)   Stockholders' Equity

During the nine months ended September 30, 2006, the Company issued a total of
35,655,606 shares of common stock. In connection with the acquisition of DCS
(Note 9), 25,000,000 shares of common stock were issued effective June 1, 2006.
The share purchase agreement with DCS provides that the shares of common stock
issued to DCS shareholders are restricted and will not be registered under the
Securities Act of 1933, or the securities laws of any state, and absent an
exemption from registration contained in such laws, cannot be transferred,
hypothecated, sold or otherwise disposed of until; (i) a registration statement
with respect to such securities is declared effective under the Securities Act
of 1933, or (ii) Liska receives an opinion of counsel for Liska that an
exemption from the registration requirements of the Securities Act is available.

The total of 35.655,606 also includes 1,069,273 previously subscribed shares
that were issued pursuant to a Form S-8 filed on December 30, 2005. In private
transactions, the Company sold 1,750,000 shares of common stock for cash
proceeds of $175,000. The Company also issued 5,003,000 shares for services
rendered pursuant to employment and consulting contracts. The shares were valued
at their fair market value of $1,040,100, the allocable portion charged to
non-cash compensation expense during the nine months was $965,018, $75,082 was
deferred and will be recognized as an expense in future periods. The Company
issued 2,833,333 shares as additional consideration pursuant to the note payable
agreement with CAMOFI (see note 4). The aggregate value of these shares was
$905,000 (based upon quoted market value on the loan agreement date). The value
of these shares is being amortized as debt discount over the term of the
agreements. As of September 30, 2006, $820,000 had been amortized and a balance
of $85,000 remained to be amortized in the fourth quarter.

During the nine months ended September 30, 2006, the Company issued 300,000
warrants as additional consideration pursuant to the note payable agreement with
CAMOFI. Each warrant entitles the holder to purchase one share of common stock
at an exercise price of $0.33 and all warrants expire on July 31, 2009.

During the nine months ended September 30, 2006, the Company granted options to
purchase 150,000 shares of common stock at an exercise price of $.20. The
options were valued at $9,800 using the Black-Scholes pricing model.

The following table summarizes information about fixed-price stock options at
September 30, 2006:

<TABLE>
<CAPTION>
                                   Outstanding
                   Weighted         Weighted        Weighted-               Exercisable
                    Average          Average         Average        -----------------------------
  Exercise          Number         Contractual      Exercise          Number          Exercise
   Prices        Outstanding          Life            Price         Exercisable         Price
------------     ------------     ------------     ------------     ------------     ------------
<S>              <C>              <C>              <C>              <C>              <C>
$.20                  150,000         10 years             $.20               --             $.20
$.32                  295,000         10 years             $.32               --             $.32
$.39                  650,000         10 years             $.39               --             $.39
$.61                   30,000         10 years             $.61               --             $.61
$.64                  350,000          9 years             $.64          350,000             $.65
</TABLE>


                                       11
<PAGE>

(7)   Earnings Per Share

The Company calculates net income (loss) per share as required by Statement of
Financial Accounting Standards (SFAS) 128, "Earnings per Share." Basic earnings
(loss) per share is calculated by dividing net income (loss) by the weighted
average number of common shares outstanding for the period. Diluted earnings
(loss) per share is calculated by dividing net income (loss) by the weighted
average number of common shares and dilutive common stock equivalents
outstanding. During periods when they would be anti-dilutive common stock
equivalents, if any, are not considered in the computation. During the period
ending September 30, 2006, common stock equivalents of 14,125,000 were excluded
because they would have been anti-dilutive.

(8)   Commitments and Contingencies

During the periods covered by these financial statements the Company issued
shares of common stock without registration under the Securities Act of 1933.
Although the Company believes that the sales did not involve a public offering
of its securities and that the Company did comply with the "safe harbor"
exemptions from registration, it could be liable for rescission of the sales if
such exemptions were found not to apply and this could have a material negative
impact on the Company's financial position and results of operations. In
addition, the Company issued shares of common stock pursuant to Form S-8
registration statements. The Company believes that it complied with the
requirements of Form S-8 in regard to these issuances, however if it were
determined that there were violations of the provisions of Form S-8 the Company
could be subject to enforcement proceedings.

During the periods covered by these financial statements the Company entered
into several employment, consulting and other agreements with third parties.
Although the Company obtained settlement releases from a majority of the
parties, settlement releases were not entered into with some of these parties or
the settlement releases were verbal agreements. Future contingencies, which
cannot be estimated by management, may exist for the above matters including but
not limited to issuance of capital stock and other financial obligations and may
have a material negative impact on the Company's financial position and results
of operations.

At September 30, 2006 the Company had entered into consulting contracts of
varying terms ending from October through December, 2006 with various employees
and consultants for varying fees depending upon services rendered. The company
is committed to paying $9500.00 per month for these services, these payments can
be made with cash or equity.


                                       12
<PAGE>

(9)   Acquisition of Digital Card Systems and Markow Photo Properties

Effective June 1, 2006, the Company acquired all of the outstanding equity
interests of Digital Card Systems, Inc., a Delaware corporation, and its
affiliates, DCS Europe, Inc., and Cosmo ID GmbH (collectively "DCS"). The
aggregate consideration paid to the DCS shareholders was 25,000,000 shares of
common stock. The share purchase agreement with DCS provides that the shares of
common stock issued to DCS shareholders are restricted and will not be
registered under the Securities Act of 1933, or the securities laws of any
state, and absent an exemption from registration contained in such laws, cannot
be transferred, hypothecated, sold or otherwise disposed of until; (i) a
registration statement with respect to such securities is declared effective
under the Securities Act of 1933, or (ii) Liska receives an opinion of counsel
for Liska that an exemption from the registration requirements of the Securities
Act is available.

With offices in Boston and Germany, DCS is a developer of security and ID
management solutions for government credentials including passports, driver's
licenses, voter cards, national IDs, military and police IDs, and commercial IDs
for hospitals, private industry, schools and airports.

DCS has sophisticated .NET software positioned as "middleware", which
incorporates digital imaging, biometrics, smart chips, and related proprietary
capture and output hardware to offer full security ID solutions that comply with
the latest ISO and ICAO standards. DCS develops programs which integrate and
optimize fingerprint and facial recognition algorithms with smart chips and 2D
bar codes, and from its German office presents smart chip seminars and
conferences for government and industry. The acquisition of DCS will provide
significant international growth opportunities and further diversification of
product and service offerings.

The aggregate purchase price of DCS was determined to be $5,000,000, based upon
the issuance of 25,000,000 shares of Liska common stock valued at the average
trading price during the four day period commencing two days before the merger.
The operating results of DCS are included in the consolidated results commencing
on June 1, 2006.

Effective June 5, 2006, DCS acquired certain operating assets (primarily
comprised of capital equipment and inventory) of Markow Photo Properties, Inc.,
an Arizona corporation ("Markow"). The acquired assets were placed into a new
wholly owned subsidiary called Liska Imaging, Inc. Liska Imaging is a
Phoenix-based provider of all major aspects of the Identity Management market
and operates under the trade names of Al-Cor Identification Systems, Colormark
Inc., and Photomark, Inc.

Al-Cor Identification Systems sells Identification Management solutions to
Arizona and Nevada organizations including regional and state education systems,
law enforcement, and small and large corporations. These solutions include
hardware for image and information capture, database management, credential
design and printing, and supplies for continued support of systems sold.

Photomark Inc. sells and services photographic equipment for the professional
and high-end consumer. Its retail operations focus on the sales of brand-name
cameras, software and photographic accessories. Photomark also provides seminars
and classes on all aspects of the photographic arts.


                                       13
<PAGE>

Colormark Inc. is focused on the processing of images, both digital and analog,
and the printing of these images on a variety of materials from simple
photographic paper to specialty papers to canvas in small and very large format.
The company serves the consumer and business markets with customers ranging from
households to national restaurant chains requiring high quality images for menu
boards, banners and signs.

The acquisition of Markow will significantly expand the Company's range of
biometric and secure identity solutions and provide extensive domestic growth
opportunities.

The purchase price of Markow was cash consideration of $1,516,000. The source of
financing was the $5,000,000 Convertible Note arrangement with CAMOFI (See Note
5). The results of operations of Markow are included in the Company's
consolidated results commencing June 5, 2006.

The Company has allocated the aggregate purchase prices of the DCS and Markow
acquisitions to the assets acquired and liabilities assumed at estimated fair
values. The allocation process has not been completed and the amounts presented
below are subject to future revision, which may include potential charges to the
statement of operations. The excess of the aggregate purchase price over the net
amounts allocated to the fair values of assets acquired and liabilities assumed
is recorded as goodwill.

      Purchase Price Allocation

         Current assets                                        $  1,945,475
         Property, plant and equipment                              595,000
         Goodwill                                                 6,209,525
         Liabilities assumed                                     (2,234,000)
                                                               ------------
         Total purchase price                                  $  6,516,000
                                                               ============

      Pro-forma Results

The following unaudited pro-forma financial information presents the combined
results of operations of the Company and DCS and Markow as if the acquisitions
had occurred on January 1, 2006 and 2005, respectively. The pro-forma financial
information is not intended to represent or be indicative of the Company's
consolidated results of operations or financial condition that would have been
reported had the acquisitions been completed as of the beginning of the periods
presented and should not be taken as indicative of the Company's future
consolidated results of operations or financial condition.


                                       14
<PAGE>

<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED             NINE MONTHS ENDED
                                              SEPTEMBER 30,                   SEPTEMBER 30,
                                          2006            2005            2006            2005
                                       ----------      ----------      ----------      ----------
<S>                                    <C>             <C>             <C>             <C>
Revenues ($000)                        $    3,221      $    2,729      $    8,057      $    7,595
Net (loss) ($000)                      $     (749)     $   (1,231)     $   (3,605)     $   (3,703)
(Loss) per share - basic and diluted   $    (0.01)     $    (0.02)     $    (0.06)     $    (0.07)
</TABLE>

Adjustments to historical results that were used to prepare the pro-forma
results include an increase in the number of weighted average shares outstanding
consistent with the 25,000,000 shares issued to the DCS shareholders and an
increase in interest expense consistent with the Convertible Note arrangement.
The pro forma results include estimates and assumptions which management
believes are reasonable. However, pro forma results do not include the
realization of cost savings from operating efficiencies, synergies or other
effects resulting from the merger, and are not necessarily indicative of the
actual consolidated results of operations had the merger occurred on the date
assumed, nor are they necessarily indicative of future consolidated results of
operations.

(10)  Segments and Geographic Information

Prior to the 2006 acquisitions, the Company operated in one segment and all
activity was located within the United States and Canada. Effective with the
merger, the Company organized itself into three reportable operating segments
plus corporate

The following tables present segment and geographic information for the three
months and nine months ended September 30, 2006.

LISKA BIOMETRY

SEGMENTS

<TABLE>
<CAPTION>
                                Imaging       Domestic      International                    Combined
                                Systems      ID Systems      ID Systems      Corporate        Total
                             ------------   ------------    ------------   ------------    ------------
<S>                          <C>            <C>             <C>            <C>             <C>
Three months
ended September 30, 2006
     Net Sales               $  2,253,014   $     29,696    $    938,215   $         --    $  3,220,925
     Net Earnings (Losses)   $     94,877   $   (290,558)   $    211,869   $   (764,873)   $   (748,685)
     Fixed Assets            $    571,300   $     10,459    $     50,809   $     35,872    $    668,440

Nine months
ended September 30, 2006
     Net Sales               $  2,880,575   $     29,696    $  1,062,103   $         --    $  3,972,374
     Net Earnings (Losses)   $    114,361   $   (372,320)   $    173,088   $ (2,524,297)   $ (2,609,168)
     Fixed Assets            $    571,300   $     10,459    $     50,809   $     35,872    $    668,440
</TABLE>


                                       15
<PAGE>

Net Sales and long lived assets can be identified geographically, as follows:

<TABLE>
<CAPTION>
                                           United States       Europe
                                             and Canada       and Other      Combined
                                            ------------    ------------   ------------
<S>                                         <C>             <C>            <C>
Net sales for the three months
ended September 30, 2006                    $  2,282,710    $    938,215   $  3,220,925
Net sales for the nine months
ended September 30, 2006                    $  2,910,271    $  1,062,103   $  3,972,374
Long-lived assets as of 9/30/06             $    617,631    $     50,809   $    668,440
</TABLE>

(11)  Subsequent Events

On November 1st, 2006 the company entered into an agreement to receive bridge
funding of $200,000. As per the terms of the note the company must pay the note
back within 120 days, the annual interest is 12%. In addition the company is to
issue 400,000 unregistered shares and 200,000 warrants exercisable at $0.20.

From October 1, 2006 to Date the Company issued an additional 782,000 shares to
various consultants for services rendered.


                                       16
<PAGE>

Item 2.  Management's Discussion and Analysis or Plan of Operation

              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains "forward-looking" statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 and is subject to the safe harbor created by those sections. We intend
to identify forward-looking statements in this report by using words such as
"believes," "intends," "expects," "may," "will," "should," "plan," "projected,"
"contemplates," "anticipates," "estimates," "predicts," "potential," "continue,"
or similar terminology. These statements are based on the Company's beliefs as
well as assumptions the Company made using information currently available to
us. The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events, or otherwise. Because these statements reflect the Company's current
views concerning future events, these statements involve risks, uncertainties,
and assumptions. Actual future results may differ significantly from the results
discussed in the forward-looking statements. These risks include changes in
demand for the Company's products, changes in the level of operating expenses,
changes in general economic conditions that impact consumer behavior and
spending, product supply, the availability, amount, and cost of capital for the
Company and the Company's use of such capital, and other risks discussed in this
report. Additional risks that may affect our performance are discussed under
"Risk Factors Associated with Our Business" in our Form 10-KSB for the fiscal
year ended December 31, 2005. Readers are cautioned not to place undue reliance
on the forward-looking statements contained in this report. We disclaim any
obligation to update forward-looking statements. All references to "we", "our",
"us", of refer to Liska Biometry, Inc., and it predecessors, operating
divisions, and subsidiaries.

CRITICAL ACCOUNTING POLICIES

There were no changes to the Company's critical accounting policies in the first
nine months of 2006. Critical accounting policies are those applications of
accounting principles or practices that require considerable judgment,
estimation, or sensitivity analysis by management.

PLAN OF OPERATIONS

We plan to complete our current Plan of Operations over a period of six to 12
months. At the present time we do not have sufficient cash resources to complete
our Plan of Operations. We have not had sufficient cash resources to conduct our
Plan of Operations since we adopted our new business plan of developing
fingerprint encoding and authentication technology. Therefore, full
implementation of our Plan of Operations is contingent upon receiving adequate
financing to meet the remaining costs of estimated at $1,883,500. At present the
company does have $2,281,133 in restricted cash, which will be released by
meeting certain criteria. Additionally the Company acquired two operating
businesses, the Company, based on historical results, assumes that these
acquisitions will help to finance the plan of operations.

These operations and description of these businesses are as follows: Effective
June 1, 2006, the Company acquired all of the outstanding equity interests of
Digital Card Systems, Inc., a Delaware corporation, and its affiliates, DCS
Europe, Inc., and Cosmo ID GmbH.(collectively "DCS"). The aggregate
consideration to the DCS shareholders was 25,000,000 shares of common stock. The
share purchase agreement with DCS provides that the shares of common stock
issued to DCS shareholders are restricted and will not be registered under the
Securities Act of 1933, or the securities laws of any state, and absent an
exemption from registration contained in such laws, cannot be transferred,
hypothecated, sold or otherwise disposed of until; (i) a registration statement
with respect to such securities is declared effective under the Securities Act
of 1933, or (ii) Liska receives an opinion of counsel for Liska that an
exemption from the registration requirements of the Securities Act is available.

With offices in Boston and Germany., DCS is a developer of security and ID
management solutions for government credentials including passports, driver's
licenses, voter cards, national IDs, military and police IDs, and commercial IDs
for hospitals, private industry, schools and airports.


                                       17
<PAGE>

DCS has sophisticated .NET software positioned as "middleware", which
incorporates digital imaging, biometrics, smart chips, and related proprietary
capture and output hardware to offer full security ID solutions that comply with
the latest ISO and ICAO standards. DCS develops programs which integrate and
optimize fingerprint and facial recognition algorithms with smart chips and 2D
bar codes, and from its German office presents smart chip seminars and
conferences for government and industry. The acquisition of DCS will provide
significant international growth opportunities and further diversification of
product and service offerings.

Effective June 5, 2006, DCS acquired certain operating properties, this was
limited to the capital equipment and inventory, of Markow Photo Properties,
Inc., an Arizona corporation ("Markow"). The acquired assets were placed into a
new wholly owned subsidiary called Liska Imaging, Inc. Liska Imaging, Inc, is a
Phoenix-based provider of all major aspects of the Identity Management market.
Comprised of Al-Cor Identification Systems, Colormark Inc., and Photomark, Inc.

Al-Cor Identification Systems sells Identification Management solutions to
Arizona and Nevada organizations including regional and state education systems,
law enforcement, and small and large corporations. These solutions include
hardware for image and information capture, database management, credential
design and printing, and supplies for continued support of solutions sold.

Photomark Inc. sells and services photographic equipment for the professional
and high-end consumer focusing retail operations on the sales of brand-name
cameras, software and photographic accessories. Photomark also provides seminars
and classes on all aspects of the photographic arts.

Colormark Inc. is focused on the processing of images, both digital and analog,
and the printing of these images on a variety of materials from simple
photographic paper to specialty papers to canvas in small and very large format.
The company serves the consumer and business markets with customers ranging from
households to national restaurant chains requiring high quality images for menu
boards, banners and signs.

The acquisition of Markow will significantly expand the Company's range of
biometric and secure identity solutions and provide extensive domestic growth
opportunities.

Our estimates of the estimated costs and timing set forth in our plan of
operations are based upon the experience of our management. Although we believe
our estimates are reasonable, unexpected circumstances, such as difficulties in
fielding and testing our software products, could increase the costs and
timeliness of getting our products ready for marketing. The actual results may
therefore differ from our estimates.

Our Plan of Operations for the Next 12 Months:

CONSOLIDATING OPERATIONS

On June 1, 2006 Liska Biometry, Inc. and Digital Card Systems merged. On June 5,
2006 the company acquired substantially all of the operating assets of Markow
Photo Properties in Phoenix Arizona, consisting of the companies Al-Cor
Identification Systems, Colormark Inc. and Photomark Inc. The Phoenix location
will serve as the operations center for Liska Biometry, Inc. in the United
States. We intend to optimize the core competencies of ID System sales, retail
sales, service, support, national and international distribution to support the
entire corporation in the US and abroad over this period. Our Sr. Vice President
of Operations will relocate to Phoenix to plan and implement the activities and
systems required for consolidated domestic and international operations and
growth.

SOFTWARE DEVELOPMENT

The merger of Liska Biometry, Inc. and Digital Card Systems has brought
complimentary software subsystems together that we believe form a marketable
product offering for existing Digital Card Systems and Al-Cor ID Systems
customers, as well as with new customers we intend to pursue. A structured
software development methodology has been defined and, upon application for all
software development across the merged companies, we believe will increase
efficiency and reduce time to market and costs under the leadership of our Chief
Technology Officer. During this period the biometric software developed by Liska
Biometry, Inc. and the ID card and passport software developed by Digital Card
Systems are intended to be integrated, tested and fielded.


                                       18
<PAGE>

GENERAL & ADMINISTRATIVE EXPENSES

We intend to expend funds for general and administrative expenses such as:
insurance expense, payroll tax, rent expense, legal expenses, professional fees,
telephony and internet access, supply chain management, travel & entertainment,
payroll expenses, professional fees and offices expenses. We have merged the
companies and are centralizing corporate management in New Hampshire and are
focusing all engineering personnel on product development and release.

The remaining estimated annual costs associated with these expenditures is
approximately $625,000.

MARKETING AND SALES GROWTH

We believe that our merged and acquired companies will bring an expertise and an
existing customer base to the corporation allowing us to focus new product
introduction and upgrades in existing, well established and well understood
markets. Through this period we plan to have fielded and tested a total ID
management solution, from enrollment to ID card printing, including biometrics
and best-in-class software, although there can be no assurance that we will
successfully or timely do so. Our marketing activity is intended to be centered
on three focused, core activities:

      o     Continuing to serve and grow each company's traditional markets with
            existing products and services while introducing the new
            capabilities of the corporation;

      o     Marketing our newly developed and integrated solutions to new
            customers in established and new territories; and

      o     The printing of an Al-Cor ID products catalog and its distribution
            across the US, and an associated WWW catalog offering the same
            products.

The existing markets on which we will continue to focus our expanding efforts:

      o     Arizona and Las Vegas ID Management markets, and expanding our
            markets outward; and
      o     International drivers license, passport and other ID-based markets.

We plan to market any new solution across the US and internationally by a
growing sales organization, as well as by distributors and resellers.

The annual cost associated with this marketing effort is approximately $375,000.

SUMMARY OF ESTIMATED COSTS

--------------------------------------------------
CEO                                  $      50,000
CFO/President                               90,000
Capital Expenditures                        75,000
Sr. VP Operations                           90,000
VP Global Solutions                         80,000
Product Engineer                           100,000
VP Gov Sales                                50,000
Administration Manager                      40,000
Marketing effort                           375,000
General &
Administrative                             625,000
TOTAL                                $   1,575,000
--------------------------------------------------


                                       19
<PAGE>

REVENUES

We cannot determine whether our revenues, if any, will ever be sufficient to
produce a positive cash flow or result in net profits. You should carefully
consider the discussion appearing below under "Liquidity and Capital Resources".
We earned no revenues during Fiscal Year 2005 and $3,972,324 to date in Fiscal
Year 2006 in connection with our business plan of developing and selling
identification solutions. Our losses are expected to continue, principally as a
result of our estimated expenditures of $1,575,000, as reflected above.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2006 the company had cash resources of $474,441 but has a
working capital deficit of $1,571,625.

We have insufficient working capital to fund our planned growth and ongoing
operating expenses. As a result, we expect to continue to experience significant
negative operating cash flow for the foreseeable future. Our existing working
capital will not be sufficient to fund the continued implementation of our Plan
of Operations during the next 12 months and to meet our general operating
expenses. If we do not have sufficient working capital to implement our Plan of
Operations, we may have to cease operations.

We have no alternative Plan of Operations. In the event that we do not receive
financing, if our financing is inadequate or if we do not adequately implement
an alternative Plan of Operations that enables us to conduct operations without
having received adequate financing, we may have to liquidate our business and
undertake any or all of the following actions:

      o     Sell or dispose of our assets, if any;
      o     Pay our liabilities in order of priority, if we have available cash
            to pay such liabilities;
      o     If any cash remains after we satisfy amounts due to our creditors,
            distribute any remaining cash to our shareholders in an amount equal
            to the net market value of our net assets;
      o     File a Certificate of Dissolution with the State of Florida dissolve
            our corporation and close our business; and
      o     Make the appropriate filings with the Securities and Exchange
            Commission so that we will no longer be required to file periodic
            and other required reports with the Securities and Exchange
            Commission, if, in fact, we are a reporting company at that time

Based upon our current assets, however, we will not have the ability to
distribute any cash to our shareholders.

If we have any liabilities that we are unable to satisfy and we qualify for
protection under the U.S. Bankruptcy Code, we may voluntarily file for
reorganization under Chapter 11 or liquidation under Chapter 7. Our creditors
may also file a Chapter 7 or Chapter 11 bankruptcy action against us. If our
creditors or we file for Chapter 7 or Chapter 11 bankruptcy, our creditors will
take priority over our shareholders. If we fail to file for bankruptcy under
Chapter 7 or Chapter 11 and we have creditors, such creditors may institute
proceedings against us seeking forfeiture of our assets, if any.

We do not know and cannot determine which, if any, of these actions we will be
forced to take.

If any of these foregoing events occur, you could lose your entire investment in
our shares.


                                       20
<PAGE>

There is substantial doubt about our ability to continue as a going concern as
we have suffered recurring losses from operations and have no established source
of revenue. Accordingly, our independent auditors included an explanatory
paragraph in their report on our December 31, 2005 financial statements
regarding concerns about our ability to continue as a going concern. Our
financial statements contain additional note disclosures describing the
circumstances that lead to this disclosure by our independent auditors.

Item 3.  Controls and Procedures

We maintain and are currently undertaking actions to improve disclosure controls
and procedures designed to ensure that information required to be disclosed in
reports filed under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported within the specified time periods.
As of the end of the period covered by this report, the Corporation's Chief
Executive Officer ("CEO") evaluated the effectiveness of the Corporation's
disclosure controls and procedures. Based on the evaluation, our CEO has
discovered a potential material weakness in our disclosure controls as they
relate to the documents supporting the issuance of equity securities. Our CEO
believes that the weaknesses did not affect the reporting or disclosure in our
annual or quarterly reports due to controls put in place during the current
quarter and compensating controls, such as the detailed review of these areas
subsequent to the time at which the agreements were entered into and during the
preparation of our quarterly and annual reports.

These weaknesses are currently being addressed and actions are currently being
taken to improve our disclosure controls and procedures; and our CEO has
concluded that our disclosure controls and procedures, combined with
compensating controls are effective as of the end of the period covered by this
report in that information required to be disclosed in this 10QSB has been
recorded, processed, summarized and reported properly within the current fiscal
year. Although there was a change in our disclosure controls and procedures
during the quarter, there were no changes in our internal control over financial
reporting that occurred during our most recent six month period that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

The following is a summary of the weakness and deficiency that has been
identified and addressed:

      o     Deficiency related to the documentation, review and approval of
            certain sales under a Regulation S sale of securities by our
            authorized broker/dealer agents.

At our most recent year-end, we identified a deficiency in controls related to
documentation, review and approval of sales made under a series of Regulation S
transactions. Such deficiencies resulted in our inability to obtain supporting
documentation confirming the investor's intention to subscribe to the shares
sold despite having received the funds from the broker/agent and despite having
the certificates issued by our transfer agent. This deficiency did not exist for
the private placements affected during the year.

As a result of the findings above, we have implemented and will continue to
implement the following actions:

      o     We have appointed a part-time financial controller to support the
            preparation of financial statements and reports to be filed with the
            SEC.

      o     We are establishing procedures to improve our review and processing
            of non-accounting documentation and contracts, and specifically will
            require adequate documentation be provided concurrently with any
            future share subscriptions, regardless of type.

      o     We intend to periodically review our internal procedures and
            controls to ensure additional enhancements to our internal controls
            are installed as necessary to meet our operational needs. Outside
            consultants will be engaged to advise our management as areas of
            concern are identified.

      o     We intend to establish a Code of Ethics.

      o     We hired a CFO


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<PAGE>

Our management is committed to a sound internal control environment. We believe
we have committed adequate resources to the aforementioned reviews and remedies.
We believe that we have addressed the issue identified above, and we believe
that we are in the process of further improving our infrastructure, personnel,
processes and controls to help ensure that we are able to produce accurate
disclosures and financial statements with appropriate supporting documentation
on a timely basis.


                                       22
<PAGE>

                           PART II OTHER INFORMATION

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter ended September 30, 2006, the Company issued 2,953,000 shares
for services .

The Company issued 1,500,000 shares to CAMOFI Masters LTD. In accordance with
the terms of extending the $300,000 loan.

Item 6.  Exhibits and Reports on Form 8K

      (a)   Exhibits

            Exhibit No.      Description
            -----------      -----------

            31.1            Section 302 Certification of Chief Executive Officer

            31.2            Section 302 Certification of Chief Financial Officer

            32.1            Section 906 Certification pursuant of Chief
                            Executive Officer and Chief Financial Officer


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<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 12 of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

Dated: November 20, 2006                LISKA BIOMETRY, INC.


                                        By: /s/ Charles R. Benz
                                            ----------------------------
                                            Charles R. Benz,
                                            Chief Executive Officer


                                        By: /s/ Christopher J. LeClerc
                                            ----------------------------
                                            Christopher J. LeClerc,
                                            Chief Financial Officer


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