-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ee38f3SI7hFENVC7/u2u+Dguf8pBbP2u1WoAlm1hSzhifG5cVWCtK7feIyIs12Ol gpgN/kZAE3kVfxh9c3eGKg== 0000889812-96-000132.txt : 19960216 0000889812-96-000132.hdr.sgml : 19960216 ACCESSION NUMBER: 0000889812-96-000132 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARK SOLUTIONS INC CENTRAL INDEX KEY: 0000807397 STANDARD INDUSTRIAL CLASSIFICATION: PREFABRICATED METAL BUILDINGS & COMPONENTS [3448] IRS NUMBER: 112684481 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17118 FILM NUMBER: 96518447 BUSINESS ADDRESS: STREET 1: 1515 BROAD ST STREET 2: PARKWAY TECHNICAL CENTER CITY: BLOOMFIELD STATE: NJ ZIP: 07003 BUSINESS PHONE: 2013688118 MAIL ADDRESS: STREET 1: 87 ROUTE 17 NORTH CITY: MAYWOOD STATE: NJ ZIP: 07607 FORMER COMPANY: FORMER CONFORMED NAME: SHOWCASE COSMETICS INC DATE OF NAME CHANGE: 19920703 10-Q 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: December 31, 1995 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 0-17118 Mark Solutions, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware 11-2864481 (State or Other Jurisdiction (I.R.S. Employer of Incorporation) Identification No.) Parkway Technical Center 1515 Broad Street Bloomfield, New Jersey 07003 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (201) 893-0500 87 Route 17 North Maywood, New Jersey 07607 Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report. Indicate by check whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date: Common Stock, $.01 par value: 12,848,770 shares outstanding as of February 13, 1996. MARK SOLUTIONS, INC. Form 10-Q for Quarter Ended December 31, 1995 Index Part I. Financial Information Page No. Item 1. Financial Statements Consolidated Balance Sheets as of December 31, 1995 and June 30,1995 ........ 3 Consolidated Statements of Operations for the Six Months and Three Months Ended December 31, 1995 and December 31, 1994 ..................... 5 Consolidated Statements of Cash Flows for the Six Months Ended December 31, 1995 and December 31, 1994 ................ 6 Notes to Consolidated Financial Statements . 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ............................... 9 Part II. Other Information Item 4. Submission of Matters to a Vote of Security-Holders ........................ 13 Item 6. Exhibits and Reports on Form 8-K ......... 13 Signatures 14 -2- Mark Solutions, Inc. and Subsidiaries Consolidated Balance Sheets
Assets December 31, 1995 June 30, 1995 Current Assets: Cash and cash equivalents $ 212,184 $ 116,704 Restricted cash 343,175 359,250 Accounts receivable 871,235 1,267,203 Costs and estimated earnings in excess of billings on contract in progress 360,227 66,485 Inventories 408,501 231,290 Other current assets 124,783 80,613 ---------- ---------- Total Current Assets $ 2,320,105 $ 2,121,545 Property and Equipment: Machinery and equipment 1,263,563 1,263,563 Demonstration equipment 356,893 337,319 Office furniture and equipment 190,120 188,873 Leasehold improvements 102,981 95,830 Vehicles 38,881 38,882 Property held under capital lease 109,357 56,325 ---------- ---------- Total 2,061,795 1,980,792 Less: Accumulated depreciation and amortization 1,715,357 1,662,301 ---------- ---------- Net Property and Equipment 346,438 318,491 Other Assets: Costs in excess of net assets of businesses acquired, less accumulated amortization of $1,555,150 and $1,295,966 at December 31, 1995 and June 30, 1995, respectively 1,036,680 1,295,864 Net assets of discontinued segment - - - 204,503 Other assets 112,334 37,980 ---------- ---------- Total Other Assets 1,149,014 1,538,347 ---------- ---------- Total Assets $ 3,815,557 $ 3,978,383 =========== ===========
The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -3- Mark Solutions, Inc. and Subsidiaries Consolidated Balance Sheets
Liabilities and Stockholders' Equity December 31, 1995 June 30, 1995 Current Liabilities: Accounts payable $ 1,177,673 $ 1,672,222 Current maturities of long-term debt 4,151 3,932 Current portion of obligations under capital lease 18,526 20,020 Due to related parties 52,059 206,923 Accrued liabilities 261,544 266,560 ------------ ------------- Total Current Liabilities $ 1,513,953 $ 2,169,657 Other Liabilities: Long-term debt excluding current maturities 2,250 4,382 Long-term portion of obligations under capital leases 57,114 15,283 ------------ ------------- Total Other Liabilities 59,364 19,665 Commitments and Contingencies - - - - - - Stockholders' Equity: Common stock, $.01 par value, 25,000,000 shares authorized, 12,819,472 and 11,734,801 shares issued and outstanding at December 31, 1995 and June 30, 1995, respectively 128,194 117,347 Additional paid-in capital 21,669,554 18,773,312 Retained earnings (deficit) (19,555,508) (17,101,598) ------------ ------------- Total Stockholders' Equity 2,242,240 1,789,061 ----------- ----------- Total Liabilities and Stockholders' Equity $ 3,815,557 $ 3,978,383 =========== ===========
The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -4- Mark Solutions, Inc. and Subsidiaries Consolidated Statements of Operations
Six Months Ended Three Months Ended December 31 December 31 ----------------------- ---------------------- 1995 1994 1995 1994 Revenues: Sales $ 2,550,492 $ 1,429,819 $ 583,435 $ 717,385 ------------- ------------- ------------- ------------ Cost and Expenses: Cost of sales 2,929,219 1,211,960 820,327 619,563 Selling, general and administrative 1,977,745 1,749,099 975,098 860,521 Research and development - - - 3,938 - - - - - - ------------- ------------- ------------- ------------ Total Costs and Expenses 4,906,964 2,964,997 1,795,425 1,480,084 ------------- ------------- ------------- ------------ Operating (Loss) (2,356,472) (1,535,178) (1,211,990) (762,699) ------------- ------------- ------------- ------------ Other Income (Expenses): Interest earned 12,044 3,288 5,724 2,602 Interest expense (4,979) (1,192) (2,098) (537) Miscellaneous income - - - 3,537 - - - 74 ------------- ------------- ------------- ------------ Net Other Income 7,065 5,633 3,626 2,139 ------------- ------------- ------------- ------------ (Loss) From Continuing Operations (2,349,407) (1,529,545) (1,208,364) (760,560) ------------- ------------- ------------- ------------ Discontinued Operations: Loss on cosmetics segment (35,078) (88,487) - - - (54,367) Loss on disposal of cosmetics segment (69,425) - - - - - - - - - ------------- ------------- ------------- ------------ Loss From Discontinued Operations (104,503) (88,487) - - - (54,367) ------------- ------------- ------------- ------------ Net (Loss) $ (2,453,910) $ (1,618,032) $ (1,208,364) $ (814,927) ============= ============= ============= ============ (Loss) Per Share $ (.20) $ (.16) $ (.10) $ (.08) ============= ============= ============= ============ Weighted Average Shares Outstanding 12,290,665 10,331,762 12,700,914 10,283,501 ============= ============= ============= ============ Dividends Paid $ - 0 - $ - 0 - $ - 0 - $ - 0 - ============= ============= ============= ============
The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -5- Mark Solutions, Inc. and Subsidiaries Consolidated Statements of Cash Flows
Six Months Ended Six Months Ended December 31, 1995 December 31, 1994 Cash Flows From Operating Activities: Net (loss) $ (2,453,910) $ (1,618,032) Adjustments to reconcile net (loss) to net cash (used for) operating activities: Depreciation and amortization $ 312,600 $ 320,815 Net asset of discontinued segment - - - 88,488 Loss from discontinued operations 104,503 - - - (Increase) decrease in assets: Restricted cash 16,075 - - - Accounts receivable 395,968 (415,452) Costs and estimated earnings in excess of billings on contract in progress (293,742) - - - Inventories (177,211) 315,060 Other current assets (29,170) (35,112) Other assets (74,354) 1,718 Increase (decrease) in liabilities: Accounts payable and customer deposits (494,548) 118,371 Billings in excess of costs and estimated earnings on contract in progress - - - 47,167 Due to related parties (154,864) 19,375 Accrued liabilities (5,016) 141,399 ---------- ---------- Net adjustments to reconcile net (loss) to net cash (used for) operating activities (399,759) 601,829 ----------- ----------- Net Cash (Used for) Operating Activities (2,853,669) (1,016,203) Cash Flows From Investing Activities: Additions to property and equipment (28,334) - - - Proceeds from disposition of segment 85,000 - - - ---------- ---------- Net Cash Provided by Investing Activities 56,666 - - - Cash Flows From Financing Activities: Repayment of notes payable for equipment (14,605) (5,577) Payment of offering costs - - - (27,510) Proceeds from issuance of common stock 2,907,088 1,027,100 ---------- ---------- Net Cash Provided by Financing Activities 2,892,483 994,013 ----------- ----------- Net Increase (Decrease) in Cash 95,480 (22,190) Cash at Beginning of Year 116,704 39,757 ----------- ----------- Cash at End of Period $ 212,184 $ 17,567 =========== ===========
The Accompanying Notes are an Integral Part of These Consolidated Financial Statements. -6- Mark Solutions, Inc. and Subsidiaries Notes to Consolidated Financial Statements Note 1 - Financial Statement Presentation: In the opinion of management, the accompanying consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the financial position of Mark Solutions, Inc. and Subsidiaries (the Company) as of December 31, 1995 and June 30, 1995 and the results of operations and cash flows for the six months ended December 31, 1995 and 1994. The accounting policies followed by the Company are set forth in the Notes to Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1995, respectively, and such notes are incorporated herein by reference. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full fiscal year. Certain reclassifications have been made to the current and prior year amounts to conform to the current period presentation. Note 2 - Inventories: Inventories at December 31, 1995 and June 30, 1995 consist of the following: December 31, 1995 June 30, 1995 Raw materials $ 280,971 $ 112,060 Finished goods 127,530 119,230 --------- --------- $ 408,501 $ 231,290 ========= ========= Note 3 - Common Stock and Additional Paid-In Capital: During the six months ended December 31, 1995, the Company issued 1,084,671 shares of common stock as a result of exercise of warrants, receiving gross proceeds of $2,907,088. Note 4 - Discontinued Operations: On October 13, 1995, the Company disposed of its cosmetics segment, (the Bar-Lor Subsidiaries), whose principal services were the packaging and distribution of cosmetics products. The assets of the segment to be sold consist primarily of cash, accounts receivable, inventories, and machinery and equipment. Operating results of the segment for the period July 1, 1995 through October 13, 1995 are shown separately in the accompanying Statement of Operations. The Statement of Operations for September 30, 1994 has been restated and the operating results of the segment are shown separately. Revenues of the segment for the period July 1, 1995 through October 13, 1995 and the six months ended December 31, 1994 were $166,989 and $592,940, respectively. These amounts are not included in the accompanying Statements of Operations. -7- Note 4 - Discontinued Operations (Continued): Assets and liabilities of the segment disposed of consisted of the following: October 13, 1995 June 30, 1995 ---------------- -------------- Cash $ 16,513 $ 50,580 Accounts receivable, net 6,291 (10,485) Inventories 346,104 363,093 Other current assets 11,434 5,251 Machinery and equipment, net 29,335 33,499 Other 17,880 17,880 ---------- ---------- Total Assets 427,557 459,818 ---------- ---------- Accounts payable 234,145 239,199 Accrued expenses 8,987 16,116 Notes payable 15,000 - - - ---------- ---------- Total Liabilities 258,132 255,315 ---------- ---------- Net Assets of Discontinued Segment 169,425 $ 204,503 ========== Less: Loss on disposition of segment 69,425 ---------- Net Proceeds from Disposition of Segment $ 100,000 ========== Note 5 - Subsequent Events: Subsequent to December 31, 1995, the Company issued 25,200 shares of its common stock through the exercise of warrants, receiving net proceeds of $85,890. -8- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Mark Solutions, Inc.'s (the "Company") results of operations, liquidity, and working capital position have been acutely affected by sporadic sales of its principal products, modular steel cells and infectious disease isolation units. This sales pattern is primarily the result of the construction industry's unfamiliarity with the Company's products and the emergence of competition. The Company's products represent a radical alternative to traditional construction methods, and penetration into the construction market has met resistance typically associated with a new, unfamiliar product. Accordingly, the Company has been and will continue to be subject to significant sales fluctuations until its modular cell technology receives greater acceptance in the construction market, which management believes will occur as new projects are awarded and completed by the Company. In an attempt to achieve greater acceptance in the architectural, engineering and construction communities, the Company's internal sales and engineering personnel and its nationwide network of independent sales representatives conduct sales presentations and participate in trade shows and other promotional activities. The Company has expanded its marketing efforts to more aggressively pursue domestic and international joint venture and design/build development opportunities to obtain projects and improve its results of operations in efforts to return to profitability. Subsequent to December 31, 1995, the Company has reduced office and factory overhead and personnel expenses and, to the extent practicable, the Company will further reduce overhead and personnel expenses and review its options regarding the sale or suspension of some of its products lines if it is unable to improve its operating results or prospects. The Company is continually bidding on and soliciting joint venture opportunities regarding construction projects. The anticipated revenues from any of these projects would substantially -9- improve the Company's operating results and cash flow, although no assurances can be given that any of these projects will be awarded to the Company. For the six months ended December 31, 1995, the Company has submitted bids on approximately $ 29,513,000 in projects of which $ 233,000 were awarded to the Company. The Company continues to be under consideration for $ 19,500,000 of the remaining projects. The Company continues to market its IntraScan medical image systems and is analyzing the benefits of alliances with other companies with related products. Management anticipates that the sale of the IntraScan systems, primarily IntraScan II, will begin to generate revenues in the calendar year ending December 31, 1996, although no assurances can be given in this regard. If the IntraScan marketing plan is successful, management believes that the revenues from resulting sales will be more constant then those of the modular steel products presently and will reduce fluctuations in the Company's results of operations and financial condition. On October 13, 1995, the Company disposed of its cosmetics business, Bar-Lor Cosmetics. Accordingly, the statement of operations contained in this report segregate the results of Bar-Lor Cosmetics and the following discussion addresses only the continuing operations. Results of Operations Substantially all of the Company's operating revenues for the reported periods were derived from the sale of its modular cells for correctional institutions. Management believes that the sale of these modular steel products will continue to represent substantially all of the Company's operating revenues through September 30, 1996. Revenues for the six months ended December 31, 1995 increased 78.4% to $2,550,492 from $ 1,429,819 for the comparable 1994 period. This increase is attributed to the amount of work completed under modular steel product contracts during the period, of which the Jackson, Michigan project represented approximately $ 1,899,000 in revenues. -10- Cost of sales for the six months ended December 31, 1995 which consists primarily of materials, labor, supplies and fixed overhead expense, increased 141.7% to $2,929,219 from $ 1,211,960 for the comparable 1994 period due to the increase in sales. Cost of sales as a percentage of revenues increased was 114.8% for the period ended December 31, 1995 as compared to 84.8% for the comparable 1994 period. This increase was the result of lower profit margins on construction contracts and a significant increase in factory overhead allocated to cost of sales. Fixed overhead expenses for the six months ended December 31, 1995 such as rent, real estate taxes, depreciation and repairs and maintenance increased 22.4% to $ 158,889 from $ 129,771 for the comparable 1994 period. This increase is primarily attributed to the increase in repairs and maintenance of machinery and equipment between the two periods. Selling, general and administrative expenses for the six months ended December 31, 1995 increased 11.6% to $ 1,951,353 from $ 1,749,099 for the comparable 1994 period. This increase is primarily due to the hiring of additional office personnel and an increase in consulting fees, professional fees and traveling expenses. Liquidity and Capital Resources The Company's working capital requirements result principally from office expense, staff and management overhead and marketing efforts. The Company's working capital requirements have historically exceeded its working capital from operations due to the sporadic sales of its products. Accordingly, the Company has been dependent and, absent significant improvements in operations will continue to be dependent on the infusion of new capital in the form of equity or debt financing. The Company expects to meet its working capital requirements from these sources through the fiscal year end 1996. The Company has been unable to secure bank financing and, to the extent it requires additional capital, will continue to principally look to private sources. -11- The Company presently has an effective registration statement relating to approximately 3,075,000 shares of Common Stock issuable upon the exercise of warrants and options, the majority of which are at exercise prices ranging from $1.00 to $5.00 per share. The Company is not actively seeking additional private sales but will initially look to the exercise of the warrants covered by the registration statement for working capital. For the six months ended December 31, 1995 the Company sold 1,084,671 shares of Common Stock pursuant to the exercise of the foregoing warrants, resulting in gross proceeds of $ 2,907,088. Since December 31, 1995, the Company has sold an additional 25,200 shares of Common Stock through the exercise of these warrants resulting in gross proceeds of $85,890. Cash and cash equivalents increased from $ 116,704 at June 30, 1995 to $212,184 at December 31, 1995 primarily due to the proceeds of the exercise of warrants offset by operating activities. Working capital increased from ($48,112) at June 30, 1995 to $ 776,732 at December 31, 1995 due to the proceeds from the exercise of warrants. -12- PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security-Holders. On December 18, 1995, the Company held its Annual Meeting of Shareholders (the "Annual Meeting") at which directors were elected and the Company's selection of its independent public accountants, Sax, Macy, Fromm & Co., P.C. for the year ending June 30, 1996 was ratified. The vote for the foregoing matters was as follows: 1. Election of Directors Except for Mr. Michael Nafash, each of the directors was re-elected. Name Votes For Votes Against Carl Coppola 10,676,795 40,640 Richard Branca 10,683,045 34,390 Ronald E. Olszowy 10,683,045 34,390 William Westerhoff 10,683,045 34,390 Michael Nafash 10,678,189 39,246 2. Ratification of Selection of Independent Public Accountants Votes For Votes Against Abstentions 10,390,762 294,923 31,750 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit No. Exhibit Description 27.1 Financial Data Schedule -13- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. Date: February 13, 1996 MARK SOLUTIONS, INC. By: /s/ Carl Coppola ------------------------------ Carl Coppola, President, Chief Executive Officer and Chief Financial Officer -14- EX-27.1 2 FINANCIAL DATA SCHEDULE
5 The schedule contains summary financial information extracted from the consolidated financial statements and is qualified in its entirety by reference to such financial statements. 1 6-MOS JUN-30-1996 JAN-01-1995 DEC-31-1995 212,184 0 871,231 0 408,501 2,320,105 2,061,795 1,715,357 3,815,557 1,513,953 0 0 0 128,194 2,114,046 3,815,557 2,550,492 2,562,536 2,929,219 4,906,964 0 0 4,979 (2,453,910) 0 (2,349,407) (104,503) 0 0 (2,453,910) (.20) (.20)
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