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1. ORGANIZATION
The Company was incorporated under the laws of the state of Nevada on December 30, 1999 with authorized common stock of 25,000,000 shares with a par value of $0.001.
The principal business activity of the Company is to manufacture and market the LiL Marc urinal used in the training of young boys.
During January 2005 the Company organized LiL Marc, Inc., in the state of Utah, and transferred all its assets, liabilities, and operations to LiL Marc Inc. in exchange for all of the outstanding stock of LiL Marc, Inc. for the purpose of continuing the operations in the subsidiary.
LiL Marc, Inc. (predecessor) was incorporated under the laws of the state of Nevada on April 22, 1997 for the purpose of marketing and sales of the LiL Marc training urinal for use by young boys. The marketing and sales activity was transferred to LILM, Inc. on December 30, 1999.
Included in the following financial statements are the combined statements of operations of LIL Marc, Inc. (predecessor) for the period April 22, 1997 to December 30, 1999 and LILM, Inc., and its subsidiary, for the period December 30, 1999 to June 30, 2013.
The accompanying unaudited balance sheet of LILM, Inc and Subsidiary and LiL Marc, Inc. (predecessor) (development stage company) as of the June 30, 2013 and related unaudited statements of operations for the three and six months ended June 30, 2013 and 2012, and the period April 22, 1997 ( date of inception of predecessor) to June 30, 2013, and related unaudited statements of cash flows for the six months ended June 30, 2013 and 2012, and the period April 22, 1997 (date of inception of predecessor) to June 30, 2013, have been prepared in accordance with the requirements for unaudited interim periods, and consequently do not include all disclosures required to be in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the six month period ended June 30, 2013, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2013 or any other subsequent period.
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3. INVENTORY
The product is a stand alone product made of plastic consisting of a urinal produced in California using a blow mold and a stand and base produced in China with an injection mold. All inventory is shipped to Salt Lake City, Utah, and stored in a small warehouse. The product is sold via the internet, is assembled at time of shipping by the Company, and is delivered to customers or to wholesale resellers using a ground courier service. During December 2010, the Company paid a deposit of $2,990 to a China consortium for parts to be used in its training urinal product. 200 samples were delivered to the Company in January 2011 and sold to customers. Another 2,100 were delivered to the company in February 2011 and are currently being sold to customers.
Inventory is reported at the lower of cost or net realizable value.
As of June 30, 2013 and 2012, all inventory was finished goods.
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4. EQUIPMENT –PRODUCTION MOLD
On August 2, 2010, the Company purchased an injection mold from a China consortium for $1,700 to produce the base and stand for the LiL Marc training urinal. The Company has determined the mold went into service on or about January 1, 2011 and is being depreciated, using the straight-line method, over a 5 year period. Depreciation expense for the six months ended June 30, 2013 and 2012 was $170, for each period. Equipment is carried at cost.
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5. PATENT
The Company acquired a patent from a related party, for the LiL Marc training urinal and was recorded at the predecessor cost, less amortization. The patent was issued on July 16, 1991 and has been fully amortized.
The terms of the acquisition of the patent includes a royalty of $0.25, due to the inventor, on the sale of each training urinal.
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6. STOCKHOLDERS’ DEFICIENCY
As of June 30, 2013, the Company had 25,000,000 common shares authorized ($1 par value), and 2,633,750 commonshares issued and outstanding.
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7. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
The Chief Executive Officer (CEO) and two Directors have acquired 72% of the outstanding common stock of the Company. During the six months ended June 30, 2013, the Company received loans from the CEO and Directors in the amount of $15,092 and repaid prior loans of $2,506. From inception (April 22, 1997) to June, 30, 2013, net loans from the CEO and Directors are $65,342, which are payable on demand.
As of January 1, 2012, the Company’s Board of Directors approved a modification of the terms of these loans to include an annual, simple interest rate of 4%. Related interest expense for the six months ended June 30, 2013 was $1,143.
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8. GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company does not have sufficient working capital for its planned activity, and to service its debt, which raises substantial doubt about its ability to continue as a going concern.
Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through short term loans from an officer-director, and additional equity investment, which will enable the Company to continue operations for the coming year.
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Accounting Method
The Company recognizes income and expenses based on the accrual method of accounting.
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Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
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Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
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Cash and Cash Equivalents
Cash and cash equivalents consist of cash in banks and highly liquid investments with original maturities of three months or less at the date of acquisition.
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Long-lived Assets
The Company reviews its long-lived assets and intangibles periodically to determine potential impairment by comparing the carrying value of the long-lived assets with the estimated future cash flows expected to result from the use of the assets, including cash flows from disposition. Should the sum of the expected future cash flows be less than the carrying value, the Company would recognize an impairment loss. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value of the long-lived assets and intangibles. To date, management has determined that no impairment of long-lived assets exists.
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Revenue Recognition
Revenue is recognized upon the completion of the sale and shipment of the training urinal product. The product is sold via the internet and is delivered to customers or to wholesale resellers using a ground courier service.
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Advertising and Market Development
The company expenses advertising and market development costs as incurred. The Company incurred $0 in advertising and market development costs for the six month period ended June 30, 2013 and 2012.
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Financial Instruments
The carrying amounts of financial instruments, including cash and accounts payable, are considered by management to be their estimated fair values due to their short term maturities.
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Financial and Concentrations Risk
The Company does not have any concentration or related financial credit risk.
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Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
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Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its subsidiary from its inception. All significant intercompany accounts and balances have been eliminated in consolidation.
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Inventory is reported at the lower of cost or net realizable value.
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