SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                        AMENDMENT NO. 1 TO FORM 10-KSB/A

      (Mark One)

|X|   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934

For the fiscal year ended: December 31, 2001

                                       OR

|_|   TRANSITION REPORT UNDER 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.
                 (Name of small business issuer 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)

Issuer's telephone number, including area code: (212) 829-5800

Securities registered under Section 12(b) of the Exchange Act:

Title of each class                    Name of each exchange on which registered

N/A                                    N/A

Securities registered under Section 12(g) of the Exchange Act:

                                  Common Stock
                                (Title of class)
<PAGE>

      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 |_|

      Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B that is not contained in this form, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

      The issuer's revenues for its most recent fiscal year are $0.

      As of March 26, 2002 the aggregate market value of the issuer's shares of
common stock held by non-affiliates was approximately $74,920.

      The issuer's number of shares outstanding of Common Stock, $.01 par value
per share, as of March 26, 2002, was 2,668,666.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Plan of Operation

      On the Closing Date, ComVest purchased 1,194,166 shares of 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) the Warrant to purchase an additional 3,000,000 shares of Common Stock.
In November 2001, the Warrant terminated without having been exercised.

      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. The 100,000 shares became treasury stock and
subsequently were cancelled. As a result of such transactions, the Company has
no further interest in the business of its former subsidiary (the development,
manufacturing, and marketing of the LiL Marc training urinal).

      Subsequent to the above referenced transactions, the Company's plan of
operation has been to merge or effect a business combination with a domestic or
foreign private operating entity. The Company's 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.

<PAGE>

      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.

      At December 31, 2001, the Company had cash and cash equivalents of
$223,681 and it had no accounts payable. As the Company's current operations are
limited to seeking a merger or business combination candidate, the Company
believes that the Company's cash and cash equivalents shall fund all operations
until any such merger or combination is consummated.

      The Company did not generate any revenues from operations in 2001 or 2000.
General and administrative expenses increased by 20.4% from 2000 in 2001,
reflecting professional fees paid to the Company's current attorneys and
accountants over 12 months in 2001 as contrasted to seven months in 2000 ( the
Closing Date occurred in May 2000). The Company's loss from operations increased
by 13.8% from 2000 to 2001 primarily due to this increase in general
administrative expenses. Interest income in 2001 increased by 27.2% from 2000
because it held the net proceeds of its controlling shareholders' $250,000
investment for 12 months in 2001 as contrasted to seven months in 2000.

      Although it does not currently plan to do so, the Company may in the
future raise additional funds through the sale of its securities.

                                     PART II

ITEM 7. FINANCIAL STATEMENTS

      See the financial statements annexed to this Report.

                                    PART III

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The following exhibits are being filed with this Report:

99.1  Certification of Principal Executive Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.

99.2  Certification of Principal Financial Officer pursuant to 18 U.S.C. Section
      1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.

<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this Amendment to Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                                 LIL MARC, INC.


                                              By: /s/ Keith Rosenbloom
                                                 -----------------------------
                                                 Keith Rosenbloom
                                                 President
                                                 (Principal Executive Officer)
                                                 September 18, 2002

      In accordance with the Exchange Act, this Amendment to Report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.

Signature                 Title                               Date

/S/ Keith Rosenbloom      President and Director              September 18, 2002
----------------------    (Principal Executive Officer)
Keith Rosenbloom

/s/ Joseph P. Wynne       Chief Financial Officer,            September 18, 2002
----------------------    Secretary and Director (Principal
Joseph P. Wynne           Financial and Accounting Officer)

<PAGE>

                                 LIL MARC, INC.
                          (A Development Stage Company)

                              FINANCIAL STATEMENTS

                                DECEMBER 31, 2001

<PAGE>

                                 LIL MARC, INC.
                          (A Development Stage Company)

                                TABLE OF CONTENTS

                   YEARS ENDED DECEMBER 31, 2001 AND 2000 AND
             PERIOD APRIL 22, 1997 (INCEPTION) TO DECEMBER 31, 2001

                                                                            Page
                                                                            ----

Independent Auditors' Report                                                  1

Balance Sheet                                                                 2

Statements of Operations                                                      3

Statements of Stockholders' Equity                                            4

Statements of Cash Flows                                                      5

Notes to Financial Statements                                               6-11

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

Board of Directors
Lil Marc, Inc.
(A Development Stage Company)
New York, NY

We have audited the accompanying balance sheet of Lil Marc, Inc. (a development
stage company) as of December 31, 2001, and the related statements of
operations, stockholders' equity and cash flows for the years ended December 31,
2001 and 2000 and the period April 22, 1997 (inception) to December 31, 2001.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lil Marc, Inc. as of December
31, 2001, and the results of its operations and its cash flows for the years
ended December 31, 2001 and 2000 and the period April 22, 1997 (inception) to
December 31, 2001, in conformity with accounting principles generally accepted
in the United States of America.

New York, NY
January 24, 2002 (except for note 8 as
  to which the date is June 7, 2002)

<PAGE>
                                                                          Page 2


                                 LIL MARC, INC.
                          (A Development Stage Company)

                                  BALANCE SHEET

                                DECEMBER 31, 2001
                                   (Restated)

                                   A S S E T S

Current assets:
Cash and cash equivalents                                             $ 223,681
                                                                      ---------

Total current assets                                                  $ 223,681
                                                                      =========

STOCKHOLDERS' EQUITY

Stockholders' equity:
   Common stock, $0.01 par value; 5,000,000 shares
     authorized; 2,668,666 shares issued and outstanding              $  26,686
   Additional paid-in capital                                           288,803
   Accumulated deficit during the development stage                     (91,808)
                                                                      ---------
                                                                        223,681
                                                                      ---------

                                                                      $ 223,681
                                                                      =========

    The accompanying notes are an integral part of the financial statements.

<PAGE>
                                                                          Page 3


                                 LIL MARC, INC.
                          (A Development Stage Company)

                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                           Period
                                                                       April 22, 1997
                                           Years ended                 (inception) to
                                           December 31,                  December 31,
                                   ------------------------------      --------------
                                       2001              2000               2001
                                   -----------        -----------        ---------
                                                       (Restated)        (Restated)
<S>                                <C>                <C>                <C>
Sales                              $        --        $        --        $     346

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

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

Operating expenses:
  General and administrative            30,085             24,996           90,746
  Amortization                              --              1,433           17,191
                                   -----------        -----------        ---------
                                        30,085             26,429          107,937
                                   -----------        -----------        ---------

Loss from operations                   (30,085)           (26,429)        (107,591)
                                   -----------        -----------        ---------

Other income (expense):
  Interest expense                          --                 --             (900)
  Interest income                        9,341              7,342           16,683
                                   -----------        -----------        ---------
                                         9,341              7,342           15,783
                                   -----------        -----------        ---------

Net loss                           $   (20,744)       $   (19,087)       $ (91,808)
                                   ===========        ===========        =========

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

Weighted average number of
  shares outstanding                 2,668,666          2,328,392
                                   ===========        ===========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

<PAGE>
                                                                          Page 4


                                 LIL MARC, INC.
                          (A Development Stage Company)

                       STATEMENTS OF STOCKHOLDERS' EQUITY
                   YEAR ENDED DECEMBER 31, 2001 (RESTATED) AND
        PERIOD APRIL 22, 1997 (INCEPTION) TO DECEMBER 31, 2001 (RESTATED)

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

Common stock issued for cash
  at $0.00 per share                        666,666        6,666         --           --        (1,666)          --         5,000
Issuance of shares to acquire patent
  rights recorded at predecessor
  cost of $0.00 per share                   400,000        4,000         --           --        (1,000)          --         3,000
Issuance of 540,000 shares of
  common stock at $0.10 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 $0.10 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 $0.10 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

Repurchase of 100,000 shares of
  common stock at $0.25 per share                --           --    100,000      (25,000)       21,132           --        (3,868)
Cancellation of treasury stock             (100,000)      (1,000)  (100,000)      25,000       (24,000)          --            --
Common stock issued for cash at
  $0.25 per share                         1,000,000       10,000         --           --       240,000           --       250,000
Net loss, December 31, 2000,
  as restated                                    --           --         --           --            --      (19,087)      (19,087)
                                          ---------     --------   --------     --------     ---------     --------     ---------

Balance, December 31, 2000                2,668,666       26,686         --           --       288,803      (71,064)      244,425

Net loss, December 31, 2001                      --           --         --           --            --      (20,744)      (20,744)
                                          ---------     --------   --------     --------     ---------     --------     ---------

Balance, December 31, 2001                2,668,666     $ 26,686         --     $     --     $ 288,803     $(91,808)    $ 223,681
                                          =========     ========   ========     ========     =========     ========     =========
</TABLE>

    The accompanying notes are an integral part of the financial statements.

<PAGE>
                                                                          Page 5


                                 LIL MARC, INC.
                         (A Development Stage Company)

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                                     Period
                                                                                                                 April 22, 1997
                                                                                          Years ended            (inception) to
                                                                                          December 31              December 31,
                                                                                  --------------------------     --------------
                                                                                     2001             2000            2001
                                                                                  ---------        ---------        ---------
                                                                                                   (Restated)       (Restated)
<S>                                                                               <C>              <C>              <C>
Cash flows from operating activities:
   Net loss                                                                       $ (20,744)       $ (19,087)       $ (91,808)
   Adjustments to reconcile net loss to
     net cash used by operating activities:
     Amortization                                                                        --            1,433           17,191
     Common stock issued for services                                                    --               --            8,700
     Changes in assets and liabilities:
       Increase (decrease) in accounts payable                                       (1,117)           8,317            8,700
                                                                                  ---------        ---------        ---------
           Net cash used by operating activities                                    (21,861)          (9,337)         (57,217)
                                                                                  ---------        ---------        ---------

Cash flows used by investing activities:
   Cash included pursuant to sale of subsidiary                                          --           (1,109)          (1,109)
   Purchase of patent rights                                                             --               --          (28,650)
                                                                                  ---------        ---------        ---------
           Net cash used by investing activities                                         --           (1,109)         (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                                (21,861)         239,554          223,681
Cash and cash equivalents, beginning of period                                      245,542            5,988               --
                                                                                  ---------        ---------        ---------

Cash and cash equivalents, end of period                                          $ 223,681        $ 245,542        $ 223,681
                                                                                  =========        =========        =========

Supplemental cash flow information:
   Cash paid during the period for:
     Interest                                                                     $      --        $      --        $      --
     Income taxes                                                                       704              100              804

Noncash financing and investing activities:
   Patent rights and deferred interest acquired for
     common stock and assumption of note payable                                  $      --        $      --        $  30,000
   Sale of non cash assets of subsidiary:
     Book value of patent                                                            11,459               --           11,459
     Account payable assumed                                                          8,700               --            8,700
     Common stock acquired for treasury                                              25,000               --           25,000
     Treasury stock cancelled                                                        25,000               --           25,000
     Increase in additional paid in capital                                          21,132               --           21,132
</TABLE>

    The accompanying notes are an integral part of the financial statements.

<PAGE>
                                                                          Page 6


                                 LIL MARC, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000

1.    Organization and description of business:

      Lil Marc, Inc. (a development stage company) (the "Company") was
      incorporated under the laws of the State of Nevada on April 22, 1997. The
      Company was organized to engage in the marketing of the "Lil Marc"
      training urinal. The Company is considered a development stage company as
      defined in Statement of Financial Accounting Standards Number 7 ("SFAS No.
      7").

      LILM, Inc. was incorporated as a wholly-owned subsidiary of the Company
      under the laws of the State of Nevada on December 30, 1999. LILM, Inc. was
      organized to continue with the product development and sales of the "Lil
      Marc" training urinal.

      On May 19, 2000, the Board of Directors approved a proposal to change the
      stated purpose of the corporation as stated in Article III of the Articles
      of Incorporation to a general purpose.

2.    Summary of significant accounting policies:

      a.    Principles of consolidation:

            The financial statements previously included the accounts of a
            wholly-owned subsidiary of the Company. All significant intercompany
            accounts and transactions have been eliminated in consolidation. The
            wholly-owned subsidiary was sold in May, 2000.

      b.    Net income (loss) per common share:

            The computation of net income (loss) per share of common stock is
            based on the weighted average number of shares outstanding during
            the period of the financial statements. Warrants have not been
            included in the computation of net income (loss) per share of common
            stock because to do so would have been antidilutive. However, these
            warrants could have potentially dilutive effects in the future.

      c.    Cash and cash equivalents:

            For cash flow purposes, the Company considers all highly liquid
            investments with a maturity of three months or less when purchased
            to be cash equivalents.

<PAGE>
                                                                          Page 7


                                 LIL MARC, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000

2.    Summary of significant accounting policies: (Continued)

      c.    Cash and cash equivalents: (Continued)

            The Company maintains its cash accounts in a commercial bank located
            in New York. The balance in the bank is insured by the Federal
            Deposit Insurance Corporation (FDIC) up to $100,000.

      d.    Patents:

            During 1997, the Company purchased the patent for the "Lil Marc"
            training urinal. Amortization was computed on the straight-line
            method over the estimated five year life of the patent. Amortization
            expense for the years ended December 31, 2001 and 2000 was $-0- and
            $1,433, respectively.

            On February 3, 2000, the Company assigned the rights of the patent
            for the "Lil Marc" training urinal to its subsidiary, LILM, Inc.

            The patent rights for the "Lil Marc" training urinal were sold as
            part of the Stock Sale Agreement (note 7).

      e.    Estimates:

            The preparation of financial statements in conformity with generally
            accepted accounting principles requires management to make estimates
            and assumptions that affect the reported amounts of assets and
            liabilities and disclosure of contingent assets and liabilities at
            the date of the financial statements and the reported amounts of
            revenues and expenses during the reporting period. Actual results
            could differ from those estimates.

      f.    Revenue recognition:

            A revenue recognition policy will be established when planned
            principal operations commence.

<PAGE>
                                                                          Page 8


                                 LIL MARC, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000

2.    Summary of significant accounting policies: (Continued)

      g.    Stock offering costs:

            Costs incurred in connection with the Company's stock offering have
            been capitalized and were charged to the proceeds of the offering
            upon its completion.

      h.    Fair value of financial instruments:

            The carrying amounts of cash and cash equivalents approximate fair
            value due to the short maturity of these instruments.

3.    Related party transactions:

      In 1997, the Company issued 400,000 shares of its common stock to its
      stockholders for the acquisition of the patent rights to the "Lil Marc"
      training urinal.

      In 1999, the Company issued 87,000 shares of its common stock at $0.10 per
      share to its stockholders for gross services valued at $8,700.

4.    Income taxes:

      The total of the deferred tax asset is as follows:

                                                       2001               2000
                                                    --------            -------

Deferred tax asset                                  $ 22,000            $ 8,000
Valuation allowance                                  (22,000)            (8,000)
                                                    --------            -------

Net deferred tax asset                              $     --            $    --
                                                    ========            =======

      The deferred tax asset is the book vs. tax difference from net operating
      loss carryforwards.

      The Company has available, at December 31, 2001, unused operating loss
      carryforwards of approximately $71,000 for federal and state tax purposes
      that may be applied against future taxable income and begin to expire in
      December 2012.

<PAGE>
                                                                          Page 9


                                 LIL MARC, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000

5.    Forward stock split:

      On September 4, 1997, the stockholders' meeting approved a 2-for-1 forward
      stock split. The forward stock split is reflected in these financial
      statements on a retroactive basis.

6.    Public offering:

      In 1997, the Company offered to the public 1,000,000 shares of its
      authorized common stock at $0.10 per share. The costs of the offering of
      $8,843 have been charged to the proceeds of the offering. 540,000 shares
      were issued for a total of $54,000.

7.    Stock transactions and warrants:

      On May 25, 2000, pursuant to a Stock Purchase Agreement dated May 19,
      2000, a new stockholder acquired a controlling interest in the Company by
      purchasing 1,194,166 shares of common stock from its stockholders for an
      aggregate purchase price of $315,000. In addition, the Company sold
      1,000,000 shares of its authorized common stock at $0.25 per share to this
      new stockholder for $250,000 cash.

      Subsequently, and pursuant to a Stock Sale Agreement dated May 19, 2000,
      the Company sold all of the outstanding shares (1,000,000 shares) of its
      wholly-owned subsidiary LILM, Inc. to one of its stockholders for 100,000
      shares of that stockholder's common stock. These 100,000 shares of the
      Company's treasury stock have been canceled.

8.    Restatement:

      The Company's financial statements have been restated to reflect the
      correction of an error in accounting for the sale of its wholly-owned
      subsidiary LILM, Inc. to one of its stockholders for 100,000 shares of
      that stockholder's common stock. These shares were canceled during 2000.
      The Company had previously recorded a gain on the sale of its wholly-owned
      subsidiary. In accordance with APB 9, the sale should have been reflected
      as a capital transaction.

<PAGE>
                                                                         Page 10


                                 LIL MARC, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000

8.    Restatement: (Continued)

      The effect of this restatement for 2001 and 2000 is as follows for the
      years ended December 31:

<TABLE>
<CAPTION>
                                                            2001                             2000
                                               -----------------------------     -----------------------------
                                               As previously         As          As previously          As
                                                 reported         restated          reported         restated
                                               -------------     -----------     -------------     -----------
<S>                                              <C>              <C>              <C>              <C>
      Balance sheet:
        Additional paid in capital               $ 267,671        $ 288,803        $ 267,671        $ 288,803
        Accumulated deficit                        (70,576)         (91,808)         (49,932)         (70,064)

      Statement of operations:
        Gain on sale of subsidiary                      --               --           21,132               --
        Net income (loss)                          (20,744)         (20,744)           2,045          (19,087)
        Net income (loss) per common share           (0.01)           (0.01)            0.00            (0.01)
</TABLE>

      The effect of this restatement for 2000 is as follows for the quarters
      ended June 30 and September 30:

<TABLE>
<CAPTION>
                                                    Three months ended                 Six months ended
                                                      June 30, 2000                      June 30, 2000
                                               -----------------------------     -----------------------------
                                               As previously         As          As previously          As
                                                 reported         restated          reported         restated
                                               -------------     -----------     -------------     -----------
<S>                                              <C>              <C>              <C>              <C>
      Balance sheet:
        Additional paid in capital                $ 292,671        $ 288,803        $ 292,671        $ 288,803
        Accumulated deficit                         (69,357)         (65,489)         (69,357)         (65,489)

      Statement of operations:
        Loss on sale of subsidiary                   (2,411)              --           (2,411)              --
        General and administrative expenses           2,735            1,278           13,536           12,079
        Net loss                                     (5,146)          (1,278)         (17,380)         (13,512)
        Net loss per common share                      0.00             0.00            (0.01)           (0.01)
</TABLE>

<PAGE>
                                                                         Page 11


                                 LIL MARC, INC.
                          (A Development Stage Company)

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000

8.    Restatement: (Continued)

<TABLE>
<CAPTION>
                                                    Three months ended                  Nine months ended
                                                    September 30, 2000                 September 30, 2000
                                               -----------------------------     -----------------------------
                                               As previously         As          As previously          As
                                                 reported         restated          reported         restated
                                               -------------     -----------     -------------     -----------
<S>                                               <C>              <C>              <C>              <C>
      Balance sheet:
        Additional paid in capital                $ 292,671        $ 288,803        $ 292,671        $ 288,803
        Accumulated deficit                         (66,876)         (63,008)         (66,876)         (63,008)

      Statement of operations:
        Loss on sale of subsidiary                       --               --           (2,411)              --
        General and administrative expenses           1,022            1,022           14,588           13,131
        Net income (loss)                             2,481            2,481          (14,899)         (11,031)
        Net income (loss) per common share             0.00             0.00            (0.01)           (0.01)
</TABLE>

      Accumulated deficit as of January 1, 2001, as well as the net loss for the
      period April 22, 1997 (inception) to December 31, 2001 has been increased
      by $21,132 for the effects of the restatement for the year ended December
      31, 2000.