10QSB/A 1 d50721_10qsb.txt AMENDMENT TO FORM 10-QSB/A U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB/A (Mark One) |X| Quarterly report pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2002 |_| Transition report pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _______________ to _______________ Commission File Number: 0-24431 LIL MARC, INC. (Exact Name of Small Business Issuer as Specified in Its Charter) Nevada 84-1417774 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 830 Third Avenue, New York, New York 10022 (Address of Principal Executive Offices) (Zip Code) 212-829-5800 (Issuer's Telephone Number, Including Area Code) -------------------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Check whether the issuer: (1) filed all reports required to be filed by Sections 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 |X| No |_| The number of shares outstanding of the Registrant's Common Stock, $.01 par value per share, as of May 10, 2002, was 2,668,666 shares. Transitional Small Business Disclosure Format (check one): Yes |_| No |X| LIL MARC, INC. INDEX TO FORM 10-QSB PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements 3 Balance Sheets as of March 31, 2002 (Unaudited) 4 and December 31, 2001 Statements of Operations (Unaudited) for the 5 Three Months Ended March 31, 2002 and 2001 and from Inception through March 31, 2002 Statements of Stockholders' Equity for the Three Months Ended 6 March 31, 2002 and from Inception through March 31, 2002 (Unaudited after December 31, 2001) Statements of Cash Flows (Unaudited) for the 7 Three Months Ended March 31, 2002 and 2001 and from inception through March 31, 2002 Notes to Financial Statements 8 Item 2. Management's Discussion and Analysis or Plan of Operation 9 PART II. OTHER INFORMATION 11 Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12 PART I. FINANCIAL INFORMATION Item 1. Financial Statements -3- Page 1 LIL MARC, INC. (A Development Stage Company) BALANCE SHEETS
March 31, December 31, 2002 2001 ------------- --------------- A S S E T S (Unaudited) Current assets: Cash and cash equivalents $ 223,120 $ 223,681 --------- --------- Total current assets $ 223,120 $ 223,681 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 14,602 $ -0- --------- --------- Total current liabilities 14,602 -0- --------- --------- Stockholders' equity: Common stock, $0.01 par value; 5,000,000 shares authorized; 2,668,666 shares issued and outstanding 26,686 26,686 Additional paid-in capital 267,671 267,671 Accumulated deficit during the development stage (85,839) (70,676) --------- --------- 208,518 223,681 --------- --------- $ 223,120 $ 223,681 ========= =========
See accompanying notes to financial statements. -4- Page 2 LIL MARC, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS (UNAUDITED) Period Three months ended April 22, 1997 March 31, (inception) to ------------------------------ March 31, 2 0 0 2 2 0 0 1 2 0 0 2 ---------------------------------------------- Sales $ -- $ -- $ 346 Cost of sales -- -- -- ----------- ----------- -------- Gross margin -- -- 346 ----------- ----------- -------- Operating expenses: General and administrative 16,175 16,351 106,921 Amortization -- -0- 17,191 ----------- ----------- -------- 16,175 16,351 124,112 ----------- ----------- -------- Loss from operations (16,175) (16,351) (123,766) ----------- ----------- -------- Other income (expense): Gain on sale of subsidiary -- -- 21,132 Interest expense -- -- (900) Interest income 1,012 3,402 17,695 ----------- ----------- -------- 1,012 3,402 37,927 ----------- ----------- -------- Net loss $ (15,163) $ (12,949) $(85,839) =========== =========== ======== Net loss per common share $ (.01) $ .00 =========== =========== Weighted average number of shares outstanding 2,668,666 2,668,666 =========== =========== See accompanying notes to financial statements. -5- Page 3 LIL MARC, INC. (A Development Stage Company) STATEMENTS OF STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 2002 AND PERIOD APRIL 22, 1997 (INCEPTION) TO MARCH 31, 2002 (UNAUDITED)
Accumulated deficit Additional during the Total Common stock paid-in development stockholders' Shares Amount capital stage equity ------------ ---------------- ---------------- --------------- -------------- Balance, April 22, 1997 -- $ -- $ -- $ -- $ -- Common stock issued for cash at $0.00 per share 666,666 6,666 (1,666) -- 5,000 Issuance of shares to acquire patent rights recorded at predecessor cost of $0.00 per share 400,000 4,000 (1,000) -- 3,000 Issuance of 540,000 shares of common stock at $0.10 per share 540,000 5,400 48,600 -- 54,000 Stock offering costs -- -- (8,843) -- (8,843) Net loss, December 31, 1997 -- -- -- (9,251) (9,251) ---------- -------- --------- -------- --------- Balance, December 31, 1997 1,606,666 16,066 37,091 (9,251) 43,906 Issuance of 75,000 shares of common stock at $0.10 per share 75,000 750 6,750 -- 7,500 Net loss, December 31, 1998 -- -- -- (21,560) (21,560) ---------- -------- --------- -------- --------- Balance, December 31, 1998 1,681,666 16,816 43,841 (30,811) 29,846 Issuance of 87,000 shares of common stock at $0.10 per share 87,000 870 7,830 -- 8,700 Net loss, December 31, 1999 -- -- -- (21,166) (21,166) ---------- -------- --------- -------- --------- Balance, December 31, 1999 1,768,666 17,686 51,671 (51,977) 17,380 Cancellation of treasury stock (100,000) (1,000) (24,000) -- (25,000) Common stock issued for cash at $0.25 per share 1,000,000 10,000 240,000 -- 250,000 Net income, December 31, 2000 -- -- -- 2,045 2,045 ---------- -------- --------- -------- --------- Balance, December 31, 2000 2,668,666 26,686 267,671 (49,932) 244,425 Net loss, December 31, 2001 -- -- -- (20,744) (20,744) ---------- -------- --------- -------- --------- Balance, December 31, 2001 2,668,666 26,686 267,671 (70,676) 223,681 Net loss, three months ended March 31, 2002 -- -- -- (15,163) (15,163) ---------- -------- --------- -------- --------- Balance, March 31, 2002 2,668,666 $ 26,686 $ 267,671 $(85,839) $ 208,518 ========== ======== ========= ======== =========
See accompanying notes to financial statements. -6- Page 4 LIL MARC, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS (UNAUDITED)
Period April 22, 1997 Three months ended (inception) to March 31, March 31, 2 0 0 2 2 0 0 1 2 0 0 2 ------------- ------------ ------------ Cash flows from operating activities: Net loss $ (15,163) $(12,949) $ (85,839) Adjustments to reconcile net loss to net cash used by operating activities: Amortization -- -- 17,191 Gain on sale of subsidiary -- -- (21,132) Common stock issued for services -- -- 8,700 Changes in assets and liabilities: Increase in accounts payable and accrued expenses 14,602 9,730 23,302 --------- -------- --------- Net cash used by operating activities (561) (3,219) (57,778) --------- -------- --------- Cash flows used by investing activities: Cash included pursuant to sale of subsidiary -- -- (1,109) Purchase of patent rights -- -- (28,650) --------- -------- --------- Net cash used by investing activities -- -- (29,759) --------- -------- --------- Cash flows from financing activities: Stock offering costs -- -- (5,843) Common stock issued for cash -- -- 316,500 --------- -------- --------- Net cash provided by financing activities -- -- 310,657 --------- -------- --------- Net increase (decrease) in cash and cash equivalents (561) (3,219) 223,120 Cash and cash equivalents, beginning of period 223,681 245,542 -- --------- -------- --------- Cash and cash equivalents, end of period $ 223,120 $242,323 $ 223,120 ========= ======== ========= Supplemental cash flow information: Cash paid during the period for: Interest $ -- $ -- $ -- Income taxes 939 555 1,743 Noncash financing activities: Patent rights and deferred interest acquired for common stock and assumption of note payable $ -- $ -- $ 30,000 Sale of noncash net assets of subsidiary Book value of patent $ -- $ -- $ 11,459 Accounts payable assumed -- -- 8,700 Common stock acquired for treasury -- -- 25,000 Treasury stock cancelled -- -- 25,000
See accompanying notes to financial statements. -7- Page 5 LIL MARC, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS MARCH 31, 2002 AND 2001 1. The Company and basis of presentation: The financial statements presented herein as of March 31, 2002 and for the three months ended March 31, 2002 and 2001 and the period April 22, 1997 (inception) to March 31, 2002 are unaudited and, in the opinion of management, include all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of financial position and results of operations. Such financial statements do not include all of the information and footnote disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles. The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB. The results of operations for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for any other interim period or the full year ending December 31, 2002. 2. Net loss per common share: Net loss per common share for the three months ended March 31, 2002 and 2001 is based on 2,668,666 of weighted average common shares outstanding. -8- Item 2. Management's Discussion and Analysis or Plan of Operation This document includes statements that may constitute forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company would like to caution readers regarding certain forward-looking statements in this document and in all of its communications to shareholders and others, press releases, securities filings, and all other communications. Statements that are based on management's projections, estimates and assumptions are forward-looking statements. The words "believe," "expect," "anticipate," "intend," and similar expressions generally identify forward-looking statements. While the Company believes in the veracity of all statements made herein, forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies and known and unknown risks. Many of the uncertainties and contingencies can affect events and the Company's actual results and could cause its actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. The following discussion and analysis should be read in conjunction with the financial statements and related notes thereto which are included in the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2001 filed with the Securities and Exchange Commission. Plan of Operation Pursuant to a Stock Purchase Agreement dated as of May 19, 2000 (the "Purchase Agreement") by and among ComVest Capital Partners, LLC ("ComVest") and the Company, George I. Norman III, Laurie J. Norman, Alewine Limited Liability Company ("Alewine"), and Linda Bryson (the latter four parties, collectively the "Sellers"), on May 25, 2000 (the "Closing Date"), ComVest purchased 1,194,166 shares of the common stock of the Company (the "Common Stock") from the Sellers for an aggregate purchase price of $315,000. Also pursuant to the Purchase Agreement, ComVest purchased from the Company, for an aggregate purchase price of $250,000, (i) 1,000,000 newly issued shares of Common Stock and (ii) a warrant (the "Warrant") to purchase an additional 3,000,000 shares of Common Stock. In November 2001, the Warrant terminated without having been exercised. Subsequent to the Closing Date, pursuant to a stock sale agreement between the Company and Alewine, the Company sold all of the issued and outstanding capital stock of its wholly-owned subsidiary, LILM, Inc., to Alewine in exchange for 100,000 shares of Common Stock. The 100,000 shares became treasury stock and subsequently were cancelled. As a result of such transactions, the Company has no further interest in the business of its former subsidiary (the development, manufacture, and marketing of the Lil Marc training urinal). Subsequent to the above-referenced transactions, the Company's plan of operation has been to merge or effect a business combination with a domestic or foreign private operating entity. The Company's management believes that there are perceived benefits to being a -9- "reporting company" with a class of publicly-traded securities which may be attractive to private entities. Other than activities relating to attempting to locate such a candidate, the Company does not currently anticipate conducting any operations. Commonwealth Associates, L.P., an affiliate of ComVest, has entered into a letter of intent to act as the placement agent in connection with a proposed private placement of up to $6,000,000 (a minimum of $5,000,000) of financing for a company (the "Merger Candidate") that makes ink-based security products utilizing its proprietary inks. Contemporaneously with, and as a condition to, the closing of the financing, the Merger Candidate would merge with and into the Company so that the Company would be the surviving corporation. It is anticipated that the existing securities of the Merger Candidate would convert into such number of securities as would represent 90% of the outstanding securities of the surviving corporation. Definitive agreements have yet to be signed and there is no assurance that Commonwealth Associates, L.P. will act as placement agent for such an offering, that the offering will be successfully completed, that a merger will be consummated with the Company, or the terms of any such transactions. Liquidity and Capital Resources At March 31, 2002, the Company had cash and cash equivalents of $223,120 as contrasted to accounts payable of $14,602. As the Company's current operations are limited to seeking a merger or business combination candidate, the Company believes that its cash and cash equivalents will fund all operations until any such merger or combination is consummated. Although it does not currently plan to do so, the Company may in the future raise additional funds through the sale of its securities. Comparative Operations The Company did not generate any revenues from operations during the three months ended March 31, 2002 or 2001. General and administrative expenses (and the Company's loss from operations) decreased by 1.1% from 2001 to 2002 (an insignificant change). Interest income decreased from 2001 to 2002 by 70.3% because of lower interest rates and lower cash balances. Because the reduction in general and administrative expenses was exceeded by the reduction in interest income, the net loss during 2002 increased by 17.1% from 2001. -10- PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits No exhibits are being filed with this Report. (b) Reports on Form 8-K During the quarter ended March 31, 2002, the Company filed no Reports on Form 8-K. -11- SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LIL MARC, INC. Dated: As of May 15, 2002 By: /s/ Keith M. Rosenbloom ------------------------------------- Keith M. Rosenbloom President and a Director (Principal Executive Officer) Dated: As of May 15, 2002 By: /s/ Joseph P. Wynne ------------------------------------- Joseph P. Wynne Chief Financial Officer, Secretary, and a Director (Principal Financial and Accounting Officer) -12-