U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

     [X]  Quarterly  report  pursuant  to Section 13 or 15(d) of the  Securities
          Exchange Act of 1934

     For the quarterly period ended June 30, 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:         0-24431

                                 LIL MARC, INC.
        (Exact Name of Small Business Issuer as Specified in Its Charter)

               Nevada                                     84-1417774
   (State or Other Jurisdiction of                     (I.R.S. Employer
   Incorporation or Organization)                     Identification No.)

830 Third Avenue, New York, New York                         10022
(Address of Principal Executive Offices)                  (Zip Code)

                                  212-829-5800
                (Issuer's Telephone Number, Including Area Code)


        ---------------------------------------------------------------
        (Former Name, Former Address and Former Fiscal Year, if Changed
                               Since Last Report)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes X            No
   ---             ---

The number of shares  outstanding  of the  Registrant's  Common Stock,  $.01 par
value per share, as of August 9, 2001, was 2,668,666 shares.

Transitional Small Business Disclosure Format (check one):

Yes              No X
   ---             ---

<PAGE>

                                 LIL MARC, INC.

                              INDEX TO FORM 10-QSB

                                                                        PAGE
PART I.  FINANCIAL INFORMATION

Item 1.    Financial Statements                                           3

         Balance Sheets as of June 30, 2001 (Unaudited)                   3
            and December 31, 2000

         Statements of Operations (Unaudited) for the                     4
            Six Months Ended June 30, 2001 and 2000
             and from Inception through June 30, 2001

         Statements of Stockholders' Equity from Inception                5
            through June 30, 2001

         Statements of Cash Flows (Unaudited) for the                     6
           Six Months Ended June 30, 2001 and 2000
            and from Inception through June 30, 2001

         Notes to Financial Statements                                    7

Item 2.    Management's Discussion and Analysis or Plan of Operation      8


PART II.  OTHER INFORMATION                                               10

Item 6.    Exhibits and Reports on Form 8-K                               10

SIGNATURES                                                                11

<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                                 LIL MARC, INC.
                          (A Development Stage Company)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               June 30,     December 31,
                            A S S E T S                          2001           2000
                                                              ---------     ------------
<S>                                                           <C>            <C>
Current assets:
   Cash and cash equivalents                                  $ 243,649      $ 245,542
                                                              ---------      ---------

             Total current assets                             $ 243,649      $ 245,542
                                                              =========      =========


               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                           $  16,634      $   1,117
                                                              ---------      ---------

Stockholders' equity:
   Common stock, $.01 par value; 5,000,000 shares
     authorized; 2,668,666 shares, issued and outstanding        26,686         26,686
   Additional paid-in capital                                   267,671        267,671
   Accumulated deficit during the development stage             (67,342)       (49,932)
                                                              ---------      ---------
                                                                227,015        244,425
                                                              ---------      ---------

                                                              $ 243,649      $ 245,542
                                                              =========      =========
</TABLE>


                 See accompanying notes to financial statements.

                                       -3-


<PAGE>

                                 LIL MARC, INC.
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                                              Period
                                               Six months ended                 Three months ended        April 22, 1997
                                                   June 30,                          June 30,             (inception) to
                                         ----------------------------      ----------------------------      June 30,
                                             2001             2000             2001             2000            2001
                                         -----------      -----------      -----------      -----------      ---------
<S>                                      <C>              <C>              <C>              <C>              <C>
Sales                                    $        --      $        --      $        --      $        --      $     346

Cost of sales                                     --               --               --               --
                                         -----------      -----------      -----------      -----------

Gross margin                                      --               --               --               --            346
                                         -----------      -----------      -----------      -----------      ---------

Operating expenses:
   General and administrative                 23,418           13,536            7,067            2,735         84,079
   Amortization                                   --            1,433               --               --         17,191
                                         -----------      -----------      -----------      -----------      ---------
                                              23,418           14,969            7,067            2,735        101,270
                                         -----------      -----------      -----------      -----------      ---------

Loss from operations                         (23,418)         (14,969)          (7,067)          (2,735)      (100,924)
                                         -----------      -----------      -----------      -----------      ---------

Other income (expense):
   Gain (loss) on sale of subsidiary              --           (2,411)              --           (2,411)        21,132
   Interest expense                               (3)              --               (3)              --           (903)
   Interest income                             6,011               --            2,609               --         13,353
                                         -----------      -----------      -----------      -----------      ---------
                                               6,008           (2,411)           2,606           (2,411)        33,582
                                         -----------      -----------      -----------      -----------      ---------

Net loss                                 $   (17,410)     $   (17,380)     $    (4,461)     $    (5,146)     $ (67,342)
                                         ===========      ===========      ===========      ===========      =========

Net loss per common share                $      (.01)     $      (.01)     $        --      $        --
                                         ===========      ===========      ===========      ===========

Weighted average number of
  shares outstanding                       2,668,666        1,946,688        2,668,666        2,124,710
                                         ===========      ===========      ===========      ===========
</TABLE>


                 See accompanying notes to financial statements.

                                       -4-

<PAGE>

                                 LIL MARC, INC.
                          (A Development Stage Company)

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
                       SIX MONTHS ENDED JUNE 30, 2001 AND
               PERIOD APRIL 22, 1997 (INCEPTION) TO JUNE 30, 2001


<TABLE>
<CAPTION>
                                                                                      Accumulated
                                                                                        deficit
                                                 Common stock           Additional    during the       Total
                                            ----------------------       paid-in      development   stockholders'
                                             Shares        Amount        capital         stage         equity
                                            --------      --------     -----------   ------------   -------------
<S>                                        <C>            <C>           <C>            <C>           <C>
Balance, April 22, 1997                           --      $     --      $      --      $     --      $      --

Common stock issued for cash at
  $.00 per share                             666,666         6,666         (1,666)           --          5,000
Issuance of shares to acquire patent
  rights recorded at predecessor cost
  of $.00 per share                          400,000         4,000         (1,000)           --          3,000
Issuance of 540,000 shares at common
  stock at $.10 per share                    540,000         5,400         48,600            --         54,000
Stock offering costs                              --            --         (8,843)           --         (8,843)
Net loss, December 31, 1997                       --            --             --        (9,251)        (9,251)
                                           ---------      --------      ---------      --------      ---------

Balance, December 31, 1997                 1,606,666        16,066         37,091        (9,251)        43,906

Issuance of 75,000 shares of common
  stock at $.10 per share                     75,000           750          6,750            --          7,500
Net loss, December 31, 1998                       --            --             --       (21,560)       (21,560)
                                           ---------      --------      ---------      --------      ---------

Balance, December 31, 1998                 1,681,666        16,816         43,841       (30,811)        29,846

Issuance of 87,000 shares of common
  stock at $.10 per share                     87,000           870          7,830            --          8,700
Net loss, December 31, 1999                       --            --             --       (21,166)       (21,166)
                                           ---------      --------      ---------      --------      ---------

Balance, December 31, 1999                 1,768,666        17,686         51,671       (51,977)        17,380

Cancellation of treasury stock              (100,000)       (1,000)       (24,000)           --        (25,000)
Common stock issued for cash at
  $.25 per share                           1,000,000        10,000        240,000            --        250,000
Net income, December 31, 2000                     --            --             --         2,045          2,045
                                           ---------      --------      ---------      --------      ---------

Balance, December 31, 2000                 2,668,666        26,686        267,671       (49,932)       244,425

Net loss, six months ended
  June 30, 2001                                   --            --             --       (17,410)       (17,410)
                                           ---------      --------      ---------      --------      ---------

Balance, June 30, 2001                     2,668,666      $ 26,686      $ 267,671      $(67,342)     $ 227,015
                                           =========      ========      =========      ========      =========
</TABLE>

                 See accompanying notes to financial statements.

                                       -5-

<PAGE>

                                 LIL MARC, INC.
                          (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                              Period
                                                                  Six months ended        April 22, 1997
                                                                      June 30,            (inception) to
                                                              ------------------------       June 30,
                                                                 2001           2000           2001
                                                              ---------      ---------    --------------
<S>                                                           <C>            <C>            <C>
Cash flows from operating activities:
   Net loss                                                   $ (17,410)     $ (17,380)     $ (67,342)
   Adjustments to reconcile net loss to net cash
    used by operating activities:
      Amortization                                                   --          1,433         17,191
      Gain (loss) on sale of subsidiary                              --          2,411        (21,132)
      Common stock issued for services                               --             --          8,700
      Changes in assets and liabilities:
        Increase in accounts payable and accrued expenses        15,517          7,548         25,334
                                                              ---------      ---------      ---------
             Net cash used by operating activities               (1,893)        (5,988)       (37,249)
                                                              ---------      ---------      ---------

Cash flows used by investing activities:
   Cash included pursuant to sale of subsidiary                      --             --         (1,109)
   Purchase of patent rights                                         --             --        (28,650)
                                                              ---------      ---------      ---------
             Net cash used by investing activities                   --             --        (29,759)
                                                              ---------      ---------      ---------

Cash flows from financing activities:
   Stock offering costs                                              --             --         (5,843)
   Common stock issued for cash                                      --        250,000        316,500
                                                              ---------      ---------      ---------
             Net cash provided by financing activities               --        250,000        310,657
                                                              ---------      ---------      ---------

Net increase (decrease) in cash and cash equivalents             (1,893)       244,012        243,649
Cash and cash equivalents, beginning of period                  245,542          5,988             --
                                                              ---------      ---------      ---------

Cash and cash equivalents, end of period                      $ 243,649      $ 250,000      $ 243,649
                                                              =========      =========      =========

Supplemental cash flow information:
   Cash paid during the period for:
      Interest                                                $       3      $      --      $     903
      Income taxes                                                  701             --            801
Noncash financing activities:
   Patent rights and deferred interest acquired for
     or common stock and assumption of note payable           $      --      $      --      $  30,000
</TABLE>

                 See accompanying notes to financial statements.

                                       -6-

<PAGE>

                                 LIL MARC, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                             JUNE 30, 2001 AND 2000

1. The Company and basis of presentation:

     The financial  statements  presented herein as of June 30, 2001 and for the
     six months  ended  June 30,  2001 and 2000 and the  period  April 22,  1997
     (inception)  to  June  30,  2001  are  unaudited  and,  in the  opinion  of
     management,   include  all  adjustments  (consisting  only  of  normal  and
     recurring  adjustments)  necessary  for a fair  presentation  of  financial
     position  and  results of  operations.  Such  financial  statements  do not
     include all of the information and footnote  disclosures  normally included
     in audited  financial  statements  prepared in  accordance  with  generally
     accepted  accounting  principles.   The  accompanying  unaudited  financial
     statements have been prepared in accordance  with the  instructions to Form
     10-QSB.  The results of  operations  for the six months ended June 30, 2001
     are not necessarily  indicative of the results that may be expected for any
     other interim period or the full year ending December 31, 2001.

2. Net loss per common share:

     Net loss per common  share for the six months  ended June 30, 2001 and 2000
     is based on 2,668,666  and  1,946,688,  respectively,  of weighted  average
     common shares outstanding.


                                       -7-
<PAGE>

 Item 2.  Management's Discussion and Analysis or Plan of Operation

     This  document  includes  statements  that may  constitute  forward-looking
     statements  made  pursuant  to the Safe  Harbor  provisions  of the Private
     Securities Litigation Reform Act of 1995. The Company would like to caution
     readers regarding certain  forward-looking  statements in this document and
     in all of its  communications  to shareholders and others,  press releases,
     securities filings, and all other communications. Statements that are based
     on management's projections,  estimates and assumptions are forward-looking
     statements.  The words  "believe,"  "expect,"  "anticipate,"  "intend," and
     similar expressions generally identify  forward-looking  statements.  While
     the  Company  believes  in the  veracity  of all  statements  made  herein,
     forward-looking statements are necessarily based upon a number of estimates
     and  assumptions  that,  while  considered  reasonable by the Company,  are
     inherently  subject  to  significant  business,  economic  and  competitive
     uncertainties  and  contingencies  and known and unknown risks. Many of the
     uncertainties  and contingencies can affect events and the Company's actual
     results and could cause its actual results to differ  materially from those
     expressed in any  forward-looking  statements made by, or on behalf of, the
     Company.

     The following  discussion and analysis  should be read in conjunction  with
the  financial  statements  and related  notes thereto which are included in the
Company's  Annual  Report on Form 10-KSB for the fiscal year ended  December 31,
2000 filed with the Securities and Exchange Commission.

     Pursuant  to a Stock  Purchase  Agreement  dated  as of May 19,  2000  (the
"Purchase Agreement") by and among ComVest Capital Partners, LLC ("ComVest") and
the Company,  George I. Norman III, Laurie J. Norman,  Alewine Limited Liability
Company ("Alewine"), and Linda Bryson (the latter four parties, collectively the
"Sellers"),  on May 25, 2000 (the "Closing Date"),  ComVest purchased  1,194,166
shares of the common stock of the Company (the "Common  Stock") from the Sellers
for an  aggregate  purchase  price of  $315,000.  Also  pursuant to the Purchase
Agreement,  ComVest purchased from the Company,  for an aggregate purchase price
of  $250,000,  (i)  1,000,000  newly  issued  shares of Common  Stock and (ii) a
warrant (the  "Warrant")  to purchase an additional  3,000,000  shares of Common
Stock.  The Warrant is exercisable  until November 25, 2001 at an exercise price
of $0.25 per share.

     In addition,  on the Closing Date, all of the officers and directors of the
Company  resigned and ComVest's  designees,  Joseph P. Wynne and Basil Asciutto,
were elected sole  directors and officers.  On January 26, 2001,  Basil Asciutto
resigned as President and director and was replaced in those capacities by David
Boris.

     Subsequent to the Closing Date,  pursuant to a stock sale agreement between
the Company and  Alewine,  the  Company  sold all of the issued and  outstanding
capital stock of its wholly-owned subsidiary, LILM, Inc., to Alewine in exchange
for 100,000 shares of Common Stock, which 100,000 shares became treasury stock.

     As a result of such  transactions,  the Company has no further  interest in
its former business (the development, manufacture, and marketing of the Lil Marc
training  urinal).  From


                                      -8-
<PAGE>

and after  consummation of those  transactions,  the Company's plan of operation
has been to merge or effect a business  combination  with a domestic  or foreign
private operating entity.  Management believes that there are perceived benefits
to being a "reporting company" with a class of publicly-traded  securities which
may be  attractive  to private  entities.  Other  than  activities  relating  to
attempting to locate such a candidate, the Company does not currently anticipate
conducting any operations.

     The Company may enter into a  definitive  agreement  with a wide variety of
private businesses  without  limitation as to their industry or revenues.  It is
not possible at this time to predict when, if ever,  the Company will enter into
a  business  combination  with  any such  private  company  or what  will be the
industry, operating history, revenues, future prospects or other characteristics
of any such company. As of the date hereof, the Company is not currently engaged
in negotiations concerning any such business combination.

Liquidity and Capital Resources

     At June 30, 2001, the Company had cash and cash  equivalents of $243,649 as
contrasted to accounts payable of $16,634.  As the Company's current  operations
are limited to seeking a merger or business combination  candidate,  the Company
believes that its cash and cash  equivalents  will fund all operations until any
such merger or combination is consummated.

     Although it does not currently plan to do so, the Company may in the future
raise  additional  funds through the sale of its  securities.  In addition,  the
Company  would  receive up to $750,000 if ComVest  should  exercise the Warrant;
however, no assurances can be given that ComVest will exercise such Warrant.


                                       -9-
<PAGE>

                           PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

          No exhibits are being filed with this Report.

     (b)  Reports on Form 8-K

          During the quarter  ended June 30, 2001,  the Company filed no Reports
          on Form 8-K.


                                      -10-
<PAGE>

                                   SIGNATURES

      In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                               LIL MARC, INC.


Dated: As of August 13, 2001              By:  /s/ David Boris
                                               -----------------------------
                                               David Boris, President
                                               and a Director
                                               (Principal Executive Officer)



Dated:   As of August 13, 2001            By:  /s/ Joseph P. Wynne
                                               -------------------
                                               Joseph P. Wynne,
                                               Chief Financial Officer,
                                               Secretary, and a Director
                                               (Principal Financial and
                                               Accounting Officer)

                                      -11-