-----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, RbCyFMBG1o6Wcef7CGhE+1LsEj1lskaiWKbNW0ohFxyGWqcCbJ6TiChY8UKMsvHx HzmaRx/cSEs/xeXMrrXJJw== 0001125282-01-000680.txt : 20010224 0001125282-01-000680.hdr.sgml : 20010224 ACCESSION NUMBER: 0001125282-01-000680 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010220 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARK SOLUTIONS INC CENTRAL INDEX KEY: 0000807397 STANDARD INDUSTRIAL CLASSIFICATION: PREFABRICATED METAL BUILDINGS & COMPONENTS [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: 1550684 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 QUARTERLY REPORT 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: December 31, 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: 8,408,647 shares outstanding as of February 15, 2001. 8 MARK SOLUTIONS, INC. Form 10-Q for Quarter Ended December 31, 2001 Index Part I. Financial Information Page No. Item 1. Financial Statements Consolidated Balance Sheets as of December 31, 2000 and June 30, 2000 . . . . . . . . . 3 Consolidated Statements of Operations for the Six and Three Months Ended December 31, 2000 and 1999 . . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2000 and 1999 . . . . . . . . . . . .. . . . . . . . . 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . 6-8 Part II. Other Information Item 2. Changes in Securities and Use of Proceeds. . . . . . . . 8 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 8 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2 Mark Solutions, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands)
December 31, 2000 June 30, 2000 ----------------------- ---------------------- Current Assets: Cash and cash equivalents ....................................... $ 343 $ 1,536 Marketable securities ........................................... -- 406 Note receivable ................................................. 214 225 Accounts receivable ............................................. 2,642 1,868 Inventories ..................................................... 60 60 Deferred tax asset .............................................. 438 572 Prepaid expenses ................................................ 92 84 -------- -------- Total Current Assets .......................................... 3,789 4,751 Property and equipment, net ...................................... 1,113 1,254 Other Assets: Cost in excess of net assets of business acquired less accumulated amortization of $962 and $857 at December 31, 2000 and June 30, 2000, respectively .................................. 87 193 Other assets .................................................... 151 131 -------- -------- Total Other Assets ............................................. 238 324 -------- -------- Total Assets ..................................................... $ 5,140 $ 6,329 ======== ======== Current Liabilities: Accounts payable ................................................. $ 2,552 $ 2,061 Short term borrowings ............................................ 219 250 Current maturities of long-term debt ............................. -- 402 Current portion of obligations under capital leases .............. 185 125 Notes payable to officers/stockholders ........................... 155 100 Deferred revenues ................................................ 263 159 Accrued liabilities .............................................. 490 282 -------- -------- Total Current Liabilities ..................................... 3,864 3,379 Other Liabilities: Long-term portion of obligations under capital leases ............ 90 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, 7,688,689 and 7,142,373 shares issued and outstanding at December 31, 2000 and June 30, 2000, respectively .............. 76 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 June 30, 2000 ............. -- 20 Additional paid-in capital ..................................... 36,630 36,671 Deficit ........................................................ (38,057) (36,305) Accumulated other comprehensive income ......................... 588 450 Treasury stock, at cost; 17,500 shares ....................... . (51) (51) -------- -------- Total Stockholders' Equity .................................... (814) 856 -------- -------- Total Liabilities and Stockholders' Equity ....................... $ 5,140 $ 6,329 ======== ========
Mark Solutions, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands)
Six Months Ended Six Months Ended Three Months Ended Three Months Ended December 31, 2000 December 31, 1999 December 31, 2000 December 31, 1999 ----------------- ----------------- ----------------- ----------------- Revenues .......................................... $ 1,443 $ 7,250 $ 1,244 $ 4,212 ----------- ----------- ----------- ----------- Costs and Expenses: Cost of sales ..................................... 1,120 4,659 536 2,633 General and administrative expenses ............... 737 510 521 175 Marketing costs ................................... 283 532 152 502 Software costs .................................... -- -- -- (89) Amortization expense .............................. 105 105 52 53 Litigation settlement ............................. -- 275 -- -- Consulting fees ................................... 11 161 9 90 ----------- ----------- ----------- ----------- Total Costs and Expenses .......................... 2,256 6,242 1,270 3,364 ----------- ----------- ----------- ----------- Operating Loss .................................... (813) 1,008 (26) 848 ----------- ----------- ----------- ----------- Other Income (Expenses): Interest income ................................... 6 9 1 3 Interest expense .................................. (109) (115) (56) (79) Other ............................................. -- 4 -- 4 ----------- ----------- ----------- ----------- Total Other Expenses .............................. (103) (102) (55) (72) ----------- ----------- ----------- ----------- Income (Loss) from Continuing Operations .......... (916) 906 (81) 776 Discontinued Operations: Loss from operations of discontinued segment ...... (836) (722) (781) (725) ----------- ----------- ----------- ----------- Net Income (Loss) ................................. $ (1,752) $ 184 $ (862) $ 51 =========== =========== =========== =========== Basic Income (Loss) per Share ..................... $ (0.24) $ 0.03 $ (0.12) $ 0.01 =========== =========== =========== =========== Fully Diluted Income (Loss) per Share ............. $ (0.24) $ 0.03 $ (0.12) $ 0.01 =========== =========== =========== =========== Weighted Average Number of Basic Shares Outstanding ..................... 7,376,913 5,617,207 7,428,399 5,680,914 =========== =========== =========== =========== Weighted Average Number of Fully Diluted Shares Outstanding ............. 7,376,913 6,769,737 7,428,399 6,833,444 =========== =========== =========== =========== Dividends Paid .................................... $ -- $ -- $ -- $ -- =========== =========== =========== ===========
Mark Solutions, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands)
Six Months Ended Six Months Ended December 31, 2000 December 31, 1999 ----------------- ----------------- Cash Flows From Operating Activities: Net Profit/(Loss) ............................................... $(1,752) $ 184 Adjustments to reconcile net loss to net cash (used for) operating activities: Depreciation and amortization ................................. 304 263 Securities issued for services ................................ -- 204 Deferred tax asset ............................................ -- 452 (Increase) decrease in assets: Accounts receivable .......................................... (774) 388 Inventory .................................................... -- (511) Billing in excess of contract revenue recognized ............. -- 13 Other current assets ......................................... 126 (7) Other assets ................................................. (20) (6) Increase (decrease) in liabilities: Accounts payable ............................................. 491 109 Due to related parties ....................................... -- (123) Deferred revenue ............................................. 104 (656) Litigation settlement payable ................................ -- 225 Accrued liabilities .......................................... 208 (167) Net adjustments to reconcile net loss to ------- ------- net cash provided by (used for) operating activities ........... 439 184 ------- ------- Net Cash (Used for) Operating Activities ..................... (1,313) 368 ------- ------- Cash Flows From Investing Activities: Acquisition of property and equipment .......................... (57) (468) Repayment of note receivable ................................... 11 -- Marketable securities .......................................... 406 -- ------- ------- Net Cash (Used for) Investing Activities ...................... 360 (468) ------- ------- Cash Flows From Financing Activities: Proceeds from sale of stock .................................... -- 260 Increase in short term borrowings .............................. -- 217 Repayment of short term borrowings ............................. (31) Repayment of equipment loans ................................... (346) (96) Proceeds from notes payable officer ............................ 55 (175) Other .......................................................... 82 -- ------- ------- Net Cash Provided by Financing Activities ....................... (240) 206 ------- ------- Net increase (decrease) in Cash .................................. (1,193) 106 Cash and Cash Equivalents at Beginning of Period ................. 1,536 298 ------- ------- Cash and Cash Equivalents at End of Period ....................... $ 343 $ 404 ======= =======
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 subsidiaries and a division. 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 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 has decided it is in its best interest to separate the two business segments. On February 5, 2001, Mark entered in a management services agreement (the "Agreement") with a subsidiary of MediSolution Ltd. ("MediSolution"), a publicly held Canadian company, to provide management services for MarkCare Medical Systems, Inc. and its affiliates. During the term of the Agreement, which runs until March 15, 2001, MediSolution will loan to Mark up to $1,182,000, which proceeds will be used to pay off certain liabilities and to provide additional working capital. The Agreement has been structured to afford MediSolution adequate time to complete its due diligence with a view toward MediSolution entering into an agreement with Mark to buy MarkCare's assets for a total purchase price of approximately $1,683,000, subject to adjustments. However, there can be no assurance that any such agreement will be entered into, or if entered into, that a transaction will be eventually be consummated. If the purchase transaction is not consummated by March 15, 2001, Mark will be required to repay the amounts advanced by MediSolution. Results of Operations As a result of the Agreement with MediSolution, results of MarkCare Medical Systems and its subsidiaries have been treated as discontinued operations. Current and historical information for MarkCare has been presented to reflect this change. Revenues from sales for the six months ended December 31, 2000, decreased to $1,443,000 from $7,250,000 for the comparable prior period. This decrease is attributable to fewer active modular steel cell projects. Revenues from sales for the three months ended December 31, 2000, decreased to $1,244,000 from $4,212,000 for the comparable prior period. This decrease is also attributable to fewer active modular steel cell projects. Cost of sales for the six months ended December 31, 2000, consisting of materials, labor and fixed factory overhead expense decreased to $1,120,000 from $4,659,000 for the comparable period. Cost of sales as a percentage of 6 revenues was 77.6% for the six months ended December 31, 2000 as compared to 64.3% for the prior comparable period. This increase is due to the general lack of projects in the modular steel cell business. Cost of sales for the three months ended December 31, 2000, consisting of materials, labor and fixed factory overhead expense decreased to $536,000 from $2,633,000 for the comparable period. Cost of sales as a percentage of revenues was 43.1% for the three months ended December 31, 2000 as compared to 62.5% for the prior comparable period. This decrease in total dollars is due to the general lack of projects in the modular steel cell business while the decrease in percentage of sales is due to improved plant efficiencies and a reduction of overhead expenses. General and administrative expenses for the six months ended December 31, 2000, increased to $737,000 from $510,000 for the comparable period. General and administrative expenses for the three months ended December 31, 2000, increased to $521,000 from $175,000 for the comparable period. Marketing costs for the six months ended December 31, 2000, decreased to $283,000 from $532,000 for the comparable period. Marketing costs for the three months ended December 31, 2000, decreased to $152,000 from $502,000 for the comparable period. 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 six months ended December 31, 2000, Mark had negative cash flow from operating activities of $1,313,000, most of which is attributable to the net operating loss sustained for the period. For the six months ended December 31, 2000, Mark had positive cash flow from investing activities of $360,000. Mark has no present intention of making any acquisition, which would have a material negative or positive effect on cash flow. For the six months ended December 31, 2000, financing activities used $240,000 in cash, principally due to the repayment of equipment loans. Cash and cash equivalents decreased to $343,000 at December 31, 2000 from $1,536,000 at June 30, 2000 due primarily a loss from operations. Working capital decreased to a deficit of $75,000 at December 31, 2000 from a surplus of $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 7 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. PART II OTHER INFORMATION Item 2. Changes In Securities and Use Of Proceeds None. 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: February 19, 2001 MARK SOLUTIONS INC. By:/s/ Carl Coppola ------------------------- President and Chief Executive Officer 8 -----END PRIVACY-ENHANCED MESSAGE-----