-----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, MPFuy9M9lxdja95ccrJbbKrxgCRLCPVJyeC0NJzNHq0QJdWLvkXYzsZq8qabr5rP Ww1QAJjgD3FtF/eHl9uOfg== 0001125282-02-002350.txt : 20020802 0001125282-02-002350.hdr.sgml : 20020802 20020802115009 ACCESSION NUMBER: 0001125282-02-002350 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20020802 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-17118 FILM NUMBER: 02718013 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/A 1 b319606_10qa.txt QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------- FORM 10-QA (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE - ----- SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2001 --------- 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.) 1135 Clifton Avenue Clifton, New Jersey 07013 - ----------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (973) 773-8100 --------------------- 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: 9,285,686 shares outstanding as of May 17, 2001. MARK SOLUTIONS, INC. Form 10-QA for Quarter Ended March 31, 2001 Index Part I. Financial Information Page No. Item 1. Financial Statements Consolidated Balance Sheets as of March 31, 2001 and June 30, 2000 . . . . . . . . . . . 3 Consolidated Statements of Operations for the Nine and Three Months Ended March 31, 2001 and 2000 . . . . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2001 and 2000 . . . . . . . . . . . . . . . . . . . . . 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. . . . . . . . 9 Item 5. Other Information . . . . . . . . . . . . . 9 Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 9 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 2 Mark Solutions, Inc. and Subsidiaries Consolidated Balance Sheets (in thousands)
ASSETS March 31, 2001 June 30, 2000 --------------- --------- (Unaudited) Current Assets: Cash and cash equivalents $ 33 $ 1,138 Marketable securities -- 406 Notes receivable 1,120 225 Accounts receivable 2,830 1,647 Inventories 60 60 Deferred tax asset 284 506 Net assets of discontinued segment -- 227 Prepaid expenses 34 22 -------- -------- Total Current Assets 4,361 4,231 -------- -------- Property and equipment, net 571 790 Other Assets: Cost in excess of net assets of business acquired less accumulated amortization of $857 at June 30, 2000 -- 193 Other assets 90 90 -------- -------- Total Other Assets 90 283 -------- -------- Total Assets $ 5,022 $ 5,304 ======== ======== Current Liabilities: Accounts payable $ 2,117 $ 1,787 Short term borrowings -- 250 Current maturities of long-term debt -- 402 Current portion of obligations under capital leases 61 94 Notes payable to officers/stockholders 237 100 Accrued liabilities 327 192 -------- -------- Total Current Liabilities 2,742 2,825 Other Liabilities: Long-term portion of obligations under capital leases 70 73 Convertible notes 1,900 2,000 -------- -------- Total Other Liabilities 1,970 2,073 Commitments and Contingencies -- -- Stockholders' Equity: Common stock, $.01 par value, 50,000,000 shares authorized, 9,285,686 and 7,142,373 shares issued and outstanding at March 31, 2001 and June 30, 2000, respectively 90 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 36,713 36,671 Deficit (36,442) (36,305) Accumulated other comprehensive income -- -- Treasury stock, at cost; 17,500 shares (51) (51) -------- -------- Total Stockholders' Equity 310 406 -------- -------- Total Liabilities and Stockholders' Equity $ 5,022 $ 5,304 ======== ========
3 Mark Solutions, Inc. and Subsidiaries Consolidated Statements of Operations (in thousands)
Nine Months Nine Months Three Months Three Months Ended Ended Ended Ended March 31, March 31, March 31, March 31, 2001 2000 2001 2000 ----------- ----------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $ 4,356 $ 10,309 $ 2,913 $ 3,059 ----------- ----------- ----------- ----------- Costs and Expenses: Cost of sales 2,928 8,364 1,808 3,705 General, and administrative expenses 1,145 1,147 408 637 Marketing costs 319 485 36 (47) Software costs -- -- -- -- Amortization expense 158 157 53 52 Litigation settlement -- 275 -- -- Consulting fees 22 -- 11 (161) ----------- ----------- ----------- ----------- Total Costs and Expenses 4,572 10,428 2,316 4,186 ----------- ----------- ----------- ----------- Operating Loss (216) (119) 597 (1,127) ----------- ----------- ----------- ----------- Other Income (Expenses): Interest income 14 75 8 66 Interest expense (249) (160) (140) (45) Other -- 109 -- 105 ----------- ----------- ----------- ----------- Total Other Expenses (235) 24 (132) 126 ----------- ----------- ----------- ----------- (451) (95) 465 (1,001) Income tax benefit 180 -- 180 -- ----------- ----------- ----------- ----------- Income (Loss) from Continuing Operations (271) (95) 645 (1,001) Discontinued Operations: Income from sale of discontinued segment, net of income tax provision of $920,$0,$740,$0, respectively 928 -- 928 -- (Loss) income from operations of discontinued segment, net of income tax benefit of $740,$0,$740,$0, (794) (1,655) 42 (933) respectively ----------- ----------- ----------- ----------- Net Income (Loss) $ (137) $ (1,750) $ 1,615 $ (1,934) =========== =========== =========== =========== Basic Income (Loss) per Share Income (loss) per share from continuing operations $ (0.04) $ (0.02) $ 0.08 $ (0.16) Income from sale of discontinued segment 0.12 -- 0.12 -- Loss from operations of discontinued segment (0.10) (0.28) -- (0.15) ----------- ----------- ----------- ----------- Income (loss) per share $ (0.02) $ (0.30) $ 0.20 $ (0.31) =========== =========== =========== =========== Fully Diluted Income (Loss) per Share Income (loss) per share from continuing operations $ (0.04) $ (0.02) $ 0.08 $ (0.16) Income from sale of discontinued segment 0.12 -- 0.12 -- Loss from operations of discontinued segment (0.10) (0.28) -- (0.15) ----------- ----------- ----------- ----------- Income (loss) per share $ (0.02) $ (0.30) $ 0.20 $ (0.31) =========== =========== =========== =========== Weighted Average Number of Basic Shares Outstanding 7,865,630 5,835,964 8,029,595 6,307,144 =========== =========== =========== =========== Weighted Average Number of Fully Diluted Shares Outstanding 7,865,630 5,835,964 8,029,595 6,307,144 =========== =========== =========== =========== Dividends Paid $ -- $ -- $ -- $ -- =========== =========== =========== ===========
4 Mark Solutions, Inc. and Subsidiaries Consolidated Statements of Cash Flows (in thousands)
Nine Months Ended Nine Months Ended March 31, 2001 March 31, 2000 -------------- -------------- (Unaudited) (Unaudited) Cash Flows From Operating Activities: Net income (loss) $ (137) $(1,750) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation and amortization 461 454 Securities issued for services -- 235 Securities issued for litigation settlement -- 250 Deferred tax asset 222 452 Adjustment of net assets of business acquired 35 -- Gain on sale of discontinued segment (1,848) -- Net Assets of discontinued segment (78) -- (Increase) decrease in assets: Accounts receivable (1,183) 391 Inventory -- -- Billing in excess of contract revenue recognized -- 554 Other current assets (12) 32 Other assets -- (11) Increase (decrease) in liabilities: Accounts payable 330 (840) Due to related parties -- (143) Deferred revenue -- (656) Litigation settlement payable -- (50) Accrued liabilities 135 (86) ------- Net adjustments to reconcile net loss to ------- ------- net cash provided by (used for) operating activities (1,938) 582 ------- ------- Net Cash (Used for) Operating Activities (2,075) (1,168) ------- ------- Cash Flows From Investing Activities: Acquisition of property and equipment (84) (478) Repayment of note receivable 81 25 Proceeds from sale of discontinued segment 1,177 -- Marketable securities 406 -- ------- ------- Net Cash Provided by (Used for) Investing Activities 1,580 (453) ------- ------- Cash Flows From Financing Activities: Proceeds from sale of stock -- 260 Proceeds from warrant conversions 1,024 Increase in short term borrowings -- Repayment of short term borrowings (250) Repayment of equipment loans (438) (227) Proceeds from notes payable officer 137 -- Repayment of notes payable officer -- (175) Proceeds from convertible debentures -- 950 Other (59) (6) ------- ------- Net Cash Provided by (Used for) Financing Activities (610) 1,826 ------- ------- Net increase (decrease) in Cash (1,105) 205 Cash and Cash Equivalents at Beginning of Period 1,138 298 ------- ------- Cash and Cash Equivalents at End of Period $ 33 $ 503 ======= =======
5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Mark Solutions, Inc. ("Mark") is a Delaware corporation, which operates its businesses through wholly owned subsidiaries and a division. Mark's results of operations, liquidity, and working capital position have been historically impacted by sporadic sales of its principal products, modular steel jail and prison cells and IntraScan II PACS software. Mark designs, manufactures, and installs modular steel cells for correctional institution construction and developed 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. As of March 30, 2001, the Company consummated a transaction involving sale of assets by its majority owned subsidiary Mark Technical, Inc., formerly known as MarkCare Medical Systems, Inc., herein "Mark Technical", to MMSI Acquisition Corp. ("MMSI"), a newly established wholly owned subsidiary of MediSolution Ltd. ("MediSolution"), a Canadian based company engaged in offering information systems to the health care industry. Pursuant to the terms of an Asset and Stock Purchase Agreement, MMSI purchased substantially all of the assets of Mark Technical and assumed certain specific liabilities. The sale also included all of the issued and outstanding common stock of Mark Technical's wholly owned United Kingdom subsidiary, MarkCare Medical Systems Ltd. Under the terms of the Agreement, MarkCare Medical Systems Korea was liquidated. The total purchase price negotiated by the parties was One Million Six Hundred Eighty-two Thousand Six Hundred Thirty-three Dollars ($1,682,633), subject to certain closing adjustments. Prior to the closing, Mark Technical had received from MMSI a $500,000 advance. At closing, Mark Technical received $476,210 after adjustments. The balance of $500,000 is due within ninety (90) days of closing as evidenced by a promissory note guaranteed by MediSolution. Additionally, MarkCare received 200,000 five-year warrants to purchase the Common Stock of MediSolution at an exercise price of $2.40 (CDN) a share. MediSolution Common Stock is traded on the Toronto Stock Exchange. As additional compensation, Mark Technical is also to receive ten percent (10%) of software license revenues received by MMSI from certain projects for a period of one year from closing. On February 5, 2001, Mark entered into a management service agreement (the "Agreement") with MMSI to provide management services for Mark Technical and its affiliates. During the term of the Agreement, MediSolution advanced to Mark the net amount of $1,182,000, which was used to pay off certain liabilities and to provide additional working capital. As provided by the Asset and Stock Purchase Agreement, these advanced amounts are not required to be repaid by Mark. Please refer to the company's April 23, 2001 Report on Form 8-K for a more detailed description of this transaction. Mark marketed 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 was Data General Corporation / EMC Corporation. 6 Results of Operations As a result of the Agreement with MediSolution, results of Mark Technical and its subsidiaries have been treated as discontinued operations. Current and historical information for Mark Technical has been presented to reflect this change. Revenues from sales for the nine months ended March 31, 2001, decreased to $4,356,000 from $10,309,000 for the comparable prior period. This decrease is attributable to fewer active modular steel cell projects within the first six months of each period. Revenues from sales for the three months ended March 31, 2001, decreased to $2,913,000 from $3,059,000 for the comparable prior period. Cost of sales for the nine months ended March 31, 2001, consisting of materials, labor and fixed factory overhead expense decreased to $2,928,000 from $8,364,000 for the comparable period. Cost of sales as a percentage of revenues was 67.2% for the nine months ended March 31, 2001 as compared to 81.1% for the prior comparable period. This decrease is due to the general decrease in projects for the comparable period as well as tighter cost controls in the manufacturing process. Cost of sales for the three months ended March 31, 2001, consisting of materials, labor and fixed factory overhead expense decreased to $1,808,000 from $3,705,000 for the comparable period. Cost of sales as a percentage of revenues was 62.1% for the three months ended March 31, 2001 as compared to 121.1% for the prior comparable period. This decrease is due to the general improvement in operating efficiencies and cost controls in the manufacturing process. General and administrative expenses for the nine months ended March 31, 2001, decreased slightly to $1,145,000 from $1,147,000 for the comparable period. General and administrative expenses for the three months ended March 31, 2001, decreased to $408,000 from $637,000 for the comparable period. Marketing costs for the nine months ended March 31, 2001, decreased to $319,000 from $485,000 for the comparable period. Marketing costs for the three months ended March 31, 2001, increased to $36,000 from $(47,000) 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. 7 For the nine months ended March 31, 2001, Mark had negative cash flow from operating activities of $2,075,000, which includes the gain on sale of the discontinued segment of $1,848,000 as compared to the negative cash flow for the nine months ended March 31, 2000 of $1,168,000. For the nine months ended March 31, 2001, financing activities used $610,000 in cash, principally due to the repayment of short-term borrowings and equipment loans. Cash and cash equivalents decreased to $33,000 at March 31, 2001 from $1,138,000 at June 30, 2000 due primarily to a loss from operations, and repayment of notes receivable, short-term borrowings and equipment loans. Working capital increased to $1,627,000 at March 31, 2001 from a surplus of $1,406,000 at June 30, 2000 primarily due to an increase in accounts receivable and notes receivable. 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. 8 PART II OTHER INFORMATION Item 2. Changes In Securities and Use Of Proceeds None. Item 5. Other Information This Form 10-QA amends the Form 10-Q originally filed with the Commission on May 21, 2001. The original filing reflected income from the sale of the discontinued segment of $2,204,000. However, in view of certain adjustments originally recorded in the quarter ended June 30, 2001,which should have been recorded in the quarter ending March 31, 2001, the income from the sale should have been reflected as $1,848,000. In addition, the original Form 10-Q reflected a loss from the operations of the discontinued segment of $1,499,000. However, in view of subsequent adjustments to the net assets disposed of on March 30,2001, the loss from the operations of the discontinued segment should have been $$1,534,000.As a result of the forgoing adjustments, net income was reduced to $137,000 from $254,000. Item 6. Exhibits and Reports on Form 8-K On April 23, 2001, the company filed a Report on Form 8-K detailing the sale of assets by its majority owned subsidiary Mark Technical, Inc. ("Mark Technical"), formerly known as MarkCare Medical Systems, Inc. ("MarkCare") to MMSI Acquisition Corp. ("MMSI"), a newly established wholly owned subsidiary of MediSolution Ltd. ("MediSolution"), a Canadian based company engaged in offering information systems to the health care industry. On April 23, 2001, the company filed, as an exhibit to its Report on Form 8-K, the Asset and Stock Purchase Agreement by and among MMSI Acquisition Corporation, Mark Technical, INC., and Mark Solutions, INC. 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: July 26, 2002 MARK SOLUTIONS INC. By: /s/ Carl Coppola ------------------------- President and Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----