-----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, N4R0x56noxZLbwy3pXQI/crjGkFYpXe7mu10AOp/PvqTdMJfgiu+j3NGXXmXeFQx REj3BQcdiwmEY2HpRyEzUw== /in/edgar/work/0001125282-00-000751/0001125282-00-000751.txt : 20001122 0001125282-00-000751.hdr.sgml : 20001122 ACCESSION NUMBER: 0001125282-00-000751 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARK SOLUTIONS INC CENTRAL INDEX KEY: 0000807397 STANDARD INDUSTRIAL CLASSIFICATION: [3448 ] IRS NUMBER: 112864481 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-72099 FILM NUMBER: 774003 BUSINESS ADDRESS: STREET 1: 1515 BROAD ST STREET 2: PARKWAY TECHNICAL CENTER CITY: BLOOMFIELD STATE: NJ ZIP: 07003 BUSINESS PHONE: 9738930500 MAIL ADDRESS: STREET 1: 1515 BROAD ST STREET 2: PARKWAY TECHNICAL CENTER CITY: BLOOMFIELD STATE: NJ ZIP: 07003 FORMER COMPANY: FORMER CONFORMED NAME: SHOWCASE COSMETICS INC DATE OF NAME CHANGE: 19920703 10-Q 1 0001.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------- FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE - ----- SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2000 -------------------- 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: (973) 893-0500 -------------- 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: 7,688,705 shares outstanding as of November 15, 2000. MARK SOLUTIONS, INC. Form 10-Q for Quarter Ended September 30, 2000 Index Part I. Financial Information Page No. Item 1. Financial Statements Consolidated Balance Sheets as of September 30, 2000 and June 30, 2000 . . . . . . . . . 3 Consolidated Statements of Operations for the Three Months Ended September 30, 2000 and 1999 . . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2000 and 1999 . . . . . . . . . . . . . . . . . . . . . 5 Notes to Consolidated Financial Statements . . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . 6 Part II. Other Information Item 2. Changes in Securities and Use of Proceeds. . . . . . . . 9 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 9 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2 Mark Solutions, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands)
September 30, 2000 June 30, 2000 Current Assets: Cash and cash equivalents $ 145 $ 1,536 Marketable securities -- 406 Note receivable 225 225 Accounts receivable 2,498 1,868 Inventories 60 60 Deferred tax asset 572 572 Prepaid expenses 131 84 ------- ------- Total Current Assets 3,631 4,751 Property and equipment, net 1,168 1,254 Other Assets: Cost in excess of net assets of business acquired less accumulated amortization of $910 and $857 at September 30, 2000 and June 30, 2000, respectively 140 193 Other assets 146 131 ------- ------- Total Other Assets 286 324 -------- ------- Total Assets $ 5,085 $ 6,329 ======== ======= Current Liabilities: Accounts payable 2,052 2,061 Short term borrowings 219 250 Current maturities of long-term debt -- 402 Current portion of obligations under capital leases 190 125 Notes payable to officers/stockholders 100 100 Deferred revenues 81 159 Accrued liabilities 317 282 ------- ------- Total Current Liabilities 2,959 3,379 Other Liabilities: Long-term debt excluding current maturities 70 -- Long-term portion of obligations under capital leases 20 94 Convertible notes 2,000 2,000 ------- ------- Total Other Liabilities 2,090 2,094 Commitments and Contingencies -- -- Stockholders' Equity: Common stock, $.01 par value, 50,000,000 shares authorized, 7,688,705 and 7,142,373 shares issued and outstanding at September 30, 2000 and June 30, 2000, respectively 71 71 Preferred stock, $1.00 par value, $10 liquidation value; 5,000,000 shares authorized: Series D; authorized and issued 20,000 shares; 20,000 shares outstanding at September 30, 2000 and June 30, 2000 respectively 20 20 Additional paid-in capital 36,621 36,671 Deficit (37,194) (36,305) Accumulated other comprehensive income 569 450 Treasury stock, at cost; 17,500 shares (51) (51) ------- ------- Total Stockholders' Equity 36 856 ------- ------- Total Liabilities and Stockholders' Equity $ 5,085 $ 6,329 ======== =======
3 Mark Solutions, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands)
Three Months Ended Three Months Ended September 30, 2000 June 30, 2000 Revenues $ 1,062 $ 3,997 ------- ------- Costs and Expenses: Cost of sales 1,008 2,166 General, and administrative expenses 477 675 Marketing costs 235 318 Software costs 128 275 Amortization expense 53 52 Litigation settlement -- 275 Consulting fees 18 72 ------- ------- Total Costs and Expenses 1,919 3,833 ------- ------- Operating Loss (857) 164 Other Income (Expenses): Interest income 5 6 Interest expense (52) (36) Other 15 -- ------- ------- Total Other Expenses (32) (30) ------- ------- Net Income (Loss) (889) 134 ======= ======= Basic Income (Loss) per Share (0.12) 0.02 ======= ======= Fully Diluted Income (Loss) per Share (0.12) 0.02 ======= ======= Weighted Average Number of Basic Shares Outstanding 7,298 5,536 ======= ======= Weighted Average Number of Fully Diluted Shares Outstanding 7,298 6,499 ======= ======= Dividends Paid -- -- ======= =======
4 Mark Solutions, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands)
Three Months Ended Three Months Ended September 30,2000 September 30, 1999 Cash Flows From Operating Activities: Net loss $ (889) $ 133 ------- ------- Adjustments to reconcile net loss to net cash (used for) operating activities: Depreciation and amortization 139 163 Securities issued for services -- 121 (Increase) decrease in assets: Accounts receivable (630) 268 Billing in excess of contract revenue recognized -- 293 Other current assets (47) (5) Other assets (15) (1) Increase (decrease) in liabilities: Accounts payable (9) (426) Due to related parties -- (18) Deferred revenue (78) (656) Accrued liabilities 35 275 ------- ------- Net adjustments to reconcile net loss to net cash provided by (used for) operating activities (605) 14 ------- ------- Net Cash (Used for) Operating Activities (1,494) 147 ------- ------- Cash Flows From Investing Activities: Acquisition of property and equipment -- (242) Marketable securities 406 -- ------- ------- Net Cash (Used for) Investing Activities 406 (242) ------- ------- Cash Flows From Financing Activities: Proceeds from sale of stock -- 200 Repayment of short term borrowings (31) Repayment of equipment loans (341) (13) Proceeds from notes payable officer -- 100 Repayment of notes payable officer -- (375) Other 35 2 ------- ------- Net Cash Provided by Financing Activities (337) (86) ------- ------- Net increase (decrease) in Cash (1,391) (181) Cash and Cash Equivalents at Beginning of Period 1,536 298 ------- ------- Cash and Cash Equivalents at End of Period $ 145 $ 117 ======= =======
5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Mark's results of operations, liquidity, and working capital position have been historically impacted by sporadic sales of its principal products, IntraScan II PACS software and modular steel jail and prison cells. Mark Solutions, Inc. ("Mark") is a Delaware corporation, which operates its businesses through wholly owned subsidiaries and a division. Mark markets its IntraScan II PACS software to radiology departments, large healthcare facilities, hospitals, and outpatient imaging group practices as part of comprehensive PACS proposals through marketing and strategic partnering agreements with computer hardware manufacturers, systems integrators, and radiology imaging equipment manufacturers. Mark's principal marketing partner is Data General Corporation / EMC Corporation. Mark designs, manufactures, and installs modular steel cells for correctional institution construction and develops software applications under the name "IntraScan II" for diagnostic support, picture, archiving and communication computer systems (PACS). Mark markets its modular steel products by responding to public bids and by pursuing joint ventures and affiliations with other companies to solicit design/build correctional facilities. Mark has decided it is in its best interest to separate the two business segments. No definitive plan has been reached to effect such a separation and there can be no assurances that one will occur. Results of Operations Although the majority of revenues for the three months ended September were derived from MarkCare Medical Systems, management believes that the sale of cells will continue to represent a majority of Mark's operating revenues through June 30, 2001. Revenues from sales for the three months ended September 30, 2000, decreased to $1,063,000 from $3,997,000 for the comparable period. This decrease is attributable to fewer active modular steel cell projects. Cost of sales for the three months ended September 30, 2000, consisting of materials, labor and fixed factory overhead expense decreased to $1,008,000 from $2,166,000 for the comparable period. Cost of sales as a percentage of revenues was 94.8% for the three months ended September 30, 2000 as compared to 54.2% for the prior comparable period. This increase is due to the general lack of projects in the modular steel cell business. General and administrative expenses for the three months ended September 30, 2000, decreased to $443,000 from $675,000 for the comparable period. The decrease is attributable to a reduction in general overhead costs and the reallocation of resources to marketing and development. Marketing costs for the three months ended September 30, 2000, decreased to $235,000 from $318,000 for the comparable period Software costs for the three months ended September 30, 2000 related to IntraScan II PACS, decreased to $128,000 from $275,000 for the comparable period. Mark has stabilized its development costs and has focused working capital on marketing its IntraScan II PACS software and related items in response to increased interest from distributors and potential customers. 6 Liquidity and Capital Resources Mark's working capital requirements result principally from staff and management overhead, office expense and marketing efforts. Mark's working capital requirements have historically exceeded its working capital from operations due to sporadic sales. Accordingly, Mark has depended on and, absent continued improvements in operations, will depend on new capital in the form of equity or debt financing to meet its working capital deficiencies, although no assurances can be given that such financing will be available. Mark believes its present available working capital from existing contracts, from anticipated contracts, and if required investments from private sources, will be sufficient to meet its operating requirements through June 30, 2001. If Mark does require additional capital, it will continue to principally look to private sources. While Mark presently does not have any material commitments for capital expenditures, management believes that its working capital requirements for inventory and other manufacturing related costs will significantly increase with increases in product orders. For the three months ended September 30, 2000, Mark had negative cash flow from operating activities of $1,460,000, most of which is attributable to the net operating loss sustained for the period. For the three months ended September 30, 2000, Mark had positive cash flow from investing activities of $406,000. Mark has no present intention of making any acquisition, which would have a material negative or positive effect on cash flow. For the three months ended September 30, 2000, financing activities used $337,000 in cash, principally due to the repayment of equipment loans. Cash and cash equivalents decreased to $145,000 at September 30, 2000 from $1,536,000 at June 30, 2000 due primarily a loss from operations. Working capital decreased to $707,000 at September 30, 2000 from $1,372,000 at June 30, 2000 primarily due to operating losses. Forward Looking Statements Except for the historical information contained herein, the matters discussed in this report are forward looking statements under the federal securities law. These statements are based on current plans and expectations of Mark and involve risks and uncertainties that could cause actual future activities and results of operations to be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include whether cell and PACS projects are awarded to Mark and the timing of their completion, meeting current and future financial requirements, competition and changes in PACS related technology. Year 2000 Disclosure There were no material adverse effects to Mark's operations due to Year 2000 software failures. 7 PART II OTHER INFORMATION Item 2. Changes In Securities and Use Of Proceeds In July 2000, the Company issued an aggregate of 89,000 shares of Common Stock to two entities as compensation for services rendered or materials provided. In July, August and September 2000, the Company issued an aggregate of 457,316 shares of Common Stock to one individual as satisfaction of the remainder of a convertible promissory note. Item 6. Exhibits and Reports on Form 8-K None. 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: November 20, 2000 MARK SOLUTIONS INC. By:/s/ Carl Coppola ------------------------- President and Chief Executive Officer 8 -----END PRIVACY-ENHANCED MESSAGE-----