10KSB/A 1 d52071_10ksb-a.txt FORM 10KSB/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 2 TO FORM 10-KSB/A (Mark One) |X| ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2001 OR |_| TRANSITION REPORT UNDER SECTION 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. (Name of small business issuer 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) Issuer's telephone number, including area code: (212) 829-5800 Securities registered under Section 12(b) of the Exchange Act: Title of each class Name of each exchange on which registered N/A N/A Securities registered under Section 12(g) of the Exchange Act: Common Stock (Title of class) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-B that is not contained in this form, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] The issuer's revenues for its most recent fiscal year are $0. As of March 26, 2002 the aggregate market value of the issuer's shares of common stock held by non-affiliates was approximately $74,920. The issuer's number of shares outstanding of Common Stock, $.01 par value per share, as of March 26, 2002, was 2,668,666. PART II ITEM 7. FINANCIAL STATEMENTS See the financial statements annexed to this Report. PART III ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following exhibits are being filed with this Report: 99.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this Amendment to Report to be signed on its behalf by the undersigned, thereunto duly authorized. LIL MARC, INC. By: /s/ Keith Rosenbloom ----------------------------- Keith Rosenbloom President (Principal Executive Officer) September 30, 2002 In accordance with the Exchange Act, this Amendment to Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date --------- ----- ---- /s/ Keith Rosenbloom President and Director September 30, 2002 --------------------- (Principal Executive Officer) Keith Rosenbloom /s/ Joseph P. Wynne Chief Financial Officer, September 30, 2002 --------------------- Secretary and Director (Principal Joseph P. Wynne Financial and Accounting Officer) LIL MARC, INC. (A Development Stage Company) FINANCIAL STATEMENTS DECEMBER 31, 2001 LIL MARC, INC. (A Development Stage Company) TABLE OF CONTENTS YEARS ENDED DECEMBER 31, 2001 AND 2000 AND PERIOD APRIL 22, 1997 (INCEPTION) TO DECEMBER 31, 2001 Page ---- Independent Auditors' Report 1 Balance Sheet 2 Statements of Operations 3 Statements of Stockholders' Equity 4 Statements of Cash Flows 5 Notes to Financial Statements 6-11 BERENSON & COMPANY LLP Certified Public Accountants 135 West 50th Street New York, NY 10020 (212) 977-6800 INDEPENDENT AUDITORS' REPORT Board of Directors Lil Marc, Inc. (A Development Stage Company) New York, NY We have audited the accompanying balance sheet of Lil Marc, Inc. (a development stage company) as of December 31, 2001, and the related statements of operations, stockholders' equity and cash flows for the years ended December 31, 2001 and 2000 and the period April 22, 1997 (inception) to December 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Lil Marc, Inc. as of December 31, 2001, and the results of its operations and its cash flows for the years ended December 31, 2001 and 2000 and the period April 22, 1997 (inception) to December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. /s/ Berenson & Company LLP New York, NY January 24, 2002 (except for note 8 as to which the date is August 14, 2002) Page 2 LIL MARC, INC. (A Development Stage Company) BALANCE SHEET DECEMBER 31, 2001 (Restated) A S S E T S Current assets: Cash and cash equivalents $ 223,681 --------- Total current assets $ 223,681 ========= STOCKHOLDERS' EQUITY Stockholders' equity: Common stock, $0.01 par value; 5,000,000 shares authorized; 2,668,666 shares issued and outstanding $ 26,686 Additional paid-in capital 288,803 Accumulated deficit during the development stage (91,808) --------- 223,681 --------- $ 223,681 ========= The accompanying notes are an integral part of the financial statements. Page 3 LIL MARC, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS Period April 22, 1997 Years ended (inception) to December 31, December 31, ---------------------------- -------------- 2 0 0 1 2 0 0 0 2 0 0 1 ----------- ----------- -------------- (Restated) (Restated) Sales $ -- $ -- $ 346 Cost of sales -- -- -- ----------- ----------- --------- Gross margin -- -- 346 ----------- ----------- --------- Operating expenses: General and administrative 30,085 24,996 90,746 Amortization -- 1,433 17,191 ----------- ----------- --------- 30,085 26,429 107,937 ----------- ----------- --------- Loss from operations (30,085) (26,429) (107,591) ----------- ----------- --------- Other income (expense): Interest expense -- -- (900) Interest income 9,341 7,342 16,683 ----------- ----------- --------- 9,341 7,342 15,783 ----------- ----------- --------- Net loss $ (20,744) $ (19,087) $ (91,808) =========== =========== ========= Net loss per common share $ (.01) $ (.01) =========== =========== Weighted average number of shares outstanding 2,668,666 2,328,392 =========== =========== The accompanying notes are an integral part of the financial statements. Page 4 LIL MARC, INC. (A Development Stage Company) STATEMENTS OF STOCKHOLDERS' EQUITY YEAR ENDED DECEMBER 31, 2001 (RESTATED) AND PERIOD APRIL 22, 1997 (INCEPTION) TO DECEMBER 31, 2001 (RESTATED)
Accumulated deficit Common stock Treasury stock Additional during the Total --------------------- -------------------- paid-in development stockholders' Shares Amount 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 Repurchase of 100,000 shares of common stock at $0.25 per share -- -- 100,000 (25,000) 21,132 -- (3,868) Cancellation of treasury stock (100,000) (1,000) (100,000) 25,000 (24,000) -- -- Common stock issued for cash at $0.25 per share 1,000,000 10,000 -- -- 240,000 -- 250,000 Net loss, December 31, 2000, as restated -- -- -- -- -- (19,087) (19,087) Balance, December 31, 2000 2,668,666 26,686 -- -- 288,803 (71,064) 244,425 --------- -------- -------- -------- --------- -------- --------- Net loss, December 31, 2001 -- -- -- -- -- (20,744) (20,744) --------- -------- -------- -------- --------- -------- --------- Balance, December 31, 2001 2,668,666 $ 26,686 -- $ -- $ 288,803 $(91,808) $ 223,681 ========= ======== ======== ======== ========= ======== =========
The accompanying notes are an integral part of the financial statements. Page 5 LIL MARC, INC. (A Development Stage Company) STATEMENTS OF CASH FLOWS
Period April 22, 1997 Years ended (inception) to December 31 December 31, -------------------------- -------------- 2 0 0 1 2 0 0 0 2 0 0 1 --------- --------- -------------- (Restated) (Restated) Cash flows from operating activities: Net loss $ (20,744) $ (19,087) $ (91,808) Adjustments to reconcile net loss to net cash used by operating activities: Amortization -- 1,433 17,191 Common stock issued for services -- -- 8,700 Changes in assets and liabilities: Increase (decrease) in accounts payable (1,117) 8,317 8,700 --------- --------- --------- Net cash used by operating activities (21,861) (9,337) (57,217) --------- --------- --------- Cash flows used by investing activities: Cash included pursuant to sale of subsidiary -- (1,109) (1,109) Purchase of patent rights -- -- (28,650) --------- --------- --------- Net cash used by investing activities -- (1,109) (29,759) --------- --------- --------- Cash flows from financing activities: Stock offering costs -- -- (5,843) Common stock issued for cash -- 250,000 316,500 --------- --------- --------- Net cash provided by financing activities -- 250,000 310,657 --------- --------- --------- Net increase (decrease) in cash and cash equivalents (21,861) 239,554 223,681 Cash and cash equivalents, beginning of period 245,542 5,988 -- --------- --------- --------- Cash and cash equivalents, end of period $ 223,681 $ 245,542 $ 223,681 ========= ========= ========= Supplemental cash flow information: Cash paid during the period for: Interest $ -- $ -- $ -- Income taxes 704 100 804 Noncash financing and investing activities: Patent rights and deferred interest acquired for common stock and assumption of note payable $ -- $ -- $ 30,000 Sale of non cash assets of subsidiary: Book value of patent 11,459 -- 11,459 Account payable assumed 8,700 -- 8,700 Common stock acquired for treasury 25,000 -- 25,000 Treasury stock cancelled 25,000 -- 25,000 Increase in additional paid in capital 21,132 -- 21,132
The accompanying notes are an integral part of the financial statements. Page 6 LIL MARC, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 1. Organization and description of business: Lil Marc, Inc. (a development stage company) (the "Company") was incorporated under the laws of the State of Nevada on April 22, 1997. The Company was organized to engage in the marketing of the "Lil Marc" training urinal. The Company is considered a development stage company as defined in Statement of Financial Accounting Standards Number 7 ("SFAS No. 7"). LILM, Inc. was incorporated as a wholly-owned subsidiary of the Company under the laws of the State of Nevada on December 30, 1999. LILM, Inc. was organized to continue with the product development and sales of the "Lil Marc" training urinal. On May 19, 2000, the Board of Directors approved a proposal to change the stated purpose of the corporation as stated in Article III of the Articles of Incorporation to a general purpose. 2. Summary of significant accounting policies: a. Principles of consolidation: The financial statements previously included the accounts of a wholly-owned subsidiary of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. The wholly-owned subsidiary was sold in May, 2000. b. Net income (loss) per common share: The computation of net income (loss) per share of common stock is based on the weighted average number of shares outstanding during the period of the financial statements. Warrants have not been included in the computation of net income (loss) per share of common stock because to do so would have been antidilutive. However, these warrants could have potentially dilutive effects in the future. c. Cash and cash equivalents: For cash flow purposes, the Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Page 7 LIL MARC, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 2. Summary of significant accounting policies: (Continued) c. Cash and cash equivalents: (Continued) The Company maintains its cash accounts in a commercial bank located in New York. The balance in the bank is insured by the Federal Deposit Insurance Corporation (FDIC) up to $100,000. d. Patents: During 1997, the Company purchased the patent for the "Lil Marc" training urinal. Amortization was computed on the straight-line method over the estimated five year life of the patent. Amortization expense for the years ended December 31, 2001 and 2000 was $-0- and $1,433, respectively. On February 3, 2000, the Company assigned the rights of the patent for the "Lil Marc" training urinal to its subsidiary, LILM, Inc. The patent rights for the "Lil Marc" training urinal were sold as part of the Stock Sale Agreement (note 7). e. Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. f. Revenue recognition: A revenue recognition policy will be established when planned principal operations commence. Page 8 LIL MARC, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 2. Summary of significant accounting policies: (Continued) g. Stock offering costs: Costs incurred in connection with the Company's stock offering have been capitalized and were charged to the proceeds of the offering upon its completion. h. Fair value of financial instruments: The carrying amounts of cash and cash equivalents approximate fair value due to the short maturity of these instruments. 3. Related party transactions: In 1997, the Company issued 400,000 shares of its common stock to its stockholders for the acquisition of the patent rights to the "Lil Marc" training urinal. In 1999, the Company issued 87,000 shares of its common stock at $0.10 per share to its stockholders for gross services valued at $8,700. 4. Income taxes: The total of the deferred tax asset is as follows: 2 0 0 1 2 0 0 0 -------- ------- Deferred tax asset $ 22,000 $ 8,000 Valuation allowance (22,000) (8,000) -------- ------- Net deferred tax asset $ -- $ -- ======== ======= The deferred tax asset is the book vs. tax difference from net operating loss carryforwards. The Company has available, at December 31, 2001, unused operating loss carryforwards of approximately $71,000 for federal and state tax purposes that may be applied against future taxable income and begin to expire in December 2012. Page 9 LIL MARC, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 5. Forward stock split: On September 4, 1997, the stockholders' meeting approved a 2-for-1 forward stock split. The forward stock split is reflected in these financial statements on a retroactive basis. 6. Public offering: In 1997, the Company offered to the public 1,000,000 shares of its authorized common stock at $0.10 per share. The costs of the offering of $8,843 have been charged to the proceeds of the offering. 540,000 shares were issued for a total of $54,000. 7. Stock transactions and warrants: On May 25, 2000, pursuant to a Stock Purchase Agreement dated May 19, 2000, a new stockholder acquired a controlling interest in the Company by purchasing 1,194,166 shares of common stock from its stockholders for an aggregate purchase price of $315,000. In addition, the Company sold 1,000,000 shares of its authorized common stock at $0.25 per share to this new stockholder for $250,000 cash. Subsequently, and pursuant to a Stock Sale Agreement dated May 19, 2000, the Company sold all of the outstanding shares (1,000,000 shares) of its wholly-owned subsidiary LILM, Inc. to one of its stockholders for 100,000 shares of that stockholder's common stock. These 100,000 shares of the Company's treasury stock have been canceled. 8. Restatement: The Company's financial statements have been restated to reflect the correction of an error in accounting for the sale of its wholly-owned subsidiary LILM, Inc. to one of its stockholders for 100,000 shares of that stockholder's common stock. These shares were canceled during 2000. The Company had previously recorded a gain on the sale of its wholly-owned subsidiary. In accordance with APB 9, the sale should have been reflected as a capital transaction. Page 10 LIL MARC, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 8. Restatement: (Continued) The effect of this restatement for 2001 and 2000 is as follows for the years ended December 31:
2 0 0 1 2 0 0 0 ---------------------------- ----------------------------- As previously As previously reported As restated reported As restated ------------- ----------- ------------- ----------- Balance sheet: Additional paid in capital $ 267,671 $ 288,803 $ 267,671 $ 288,803 Accumulated deficit (70,576) (91,808) (49,932) (70,064) Statement of operations: Gain on sale of subsidiary -- -- 21,132 -- Net income (loss) (20,744) (20,744) 2,045 (19,087) Net income (loss) per common share (0.01) (0.01) 0.00 (0.01)
The effect of this restatement for 2000 is as follows for the quarters ended June 30 and September 30:
Three months ended Six months ended June 30, 2000 June 30, 2000 ---------------------------- ----------------------------- As previously As previously reported As restated reported As restated ------------- ----------- ------------- ----------- Balance sheet: Additional paid in capital $ 292,671 $ 288,803 $ 292,671 $ 288,803 Accumulated deficit (69,357) (65,489) (69,357) (65,489) Statement of operations: Loss on sale of subsidiary (2,411) -- (2,411) -- General and administrative expenses 2,735 1,278 13,536 12,079 Net loss (5,146) (1,278) (17,380) (13,512) Net loss per common share 0.00 0.00 (0.01) (0.01)
Page 11 LIL MARC, INC. (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 8. Restatement: (Continued)
Three months ended Nine months ended September 30, 2000 September 30, 2000 ---------------------------- ----------------------------- As previously As previously reported As restated reported As restated ------------- ----------- ------------- ----------- Balance sheet: Additional paid in capital $ 292,671 $ 288,803 $ 292,671 $ 288,803 Accumulated deficit (66,876) (63,008) (66,876) (63,008) Statement of operations: Loss on sale of subsidiary -- -- (2,411) -- General and administrative expenses 1,022 1,022 14,588 13,131 Net income (loss) 2,481 2,481 (14,899) (11,031) Net income (loss) per common share 0.00 0.00 (0.01) (0.01)
Accumulated deficit as of January 1, 2001, as well as the net loss for the period April 22, 1997 (inception) to December 31, 2001 has been increased by $21,132 for the effects of the restatement for the year ended December 31, 2000.