**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

 

**(Mark One)**

 

|   | **x** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)                                OF** |
|--------|-------|----------------------------------------------------------------------------------------|

**THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the Quarter Ended March 31, 2008**

 

|   | **[** | **]** | **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 000-51872**

 

**LILM, INC.**

(Exact name of registrant as specified in its charter)

 

|   | **Nevada** | **87-0645394** |
|--------|------------|----------------|

|   | (State or other jurisdiction of | (I.R.S. Employer Identification No.) |
|--------|---------------------------------|--------------------------------------|

|   | incorporation or organization) |
|--------|--------------------------------|

 

**1390 South 1100 East # 204, Salt Lake City,                Utah** **84105-2463**

(Address of principal executive offices)

 

**(801) 322-0253**

(Registrant’s telephone number, including area                code)

 

Indicate by check mark whether the 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 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.                                YesXNo 

 

Indicate by check mark whether the registrant is a large accelerated                filer, an accelerated filer, a non-accelerated filer, or a smaller reporting                company

 

|   | Large accelerated filer | [ | ] | Accelerated filer | [ | ] |
|--------|-------------------------|---|---|-------------------|---|---|

|   | Non-accelerated filer | [ | ] | Smaller reporting company | [X | ] |
|--------|-----------------------|---|---|---------------------------|----|---|

|   | (Do not check if a smaller reporting                                    company) |
|--------|----------------------------------------------------------------------------------|

Indicate by check mark whether the registrant is a shell company (as                defined in Rule 12b-2 of the Exchange Act).                                                                                                YesNoX 

 

**APPLICABLE ONLY TO CORPORATE ISSUERS**

 

Indicate the number of shares outstanding of each of the issuer's                classes of common equity, as of the latest practicable date.

 

|   | **Class** | **Outstanding as of April 30, 2008** |
|--------|-----------|--------------------------------------|

 

|   | Common Stock, $0.00001 par value | 2,583,750 |
|--------|----------------------------------|-----------|

 

----

 

**TABLE OF CONTENTS**

 

| **Heading** | **Page** |
|-------------|----------|

 

|   | **PART I** | **—** | **FINANCIAL INFORMATION** |
|--------|------------|-------------|---------------------------|

 

| Item 1. | Financial Statements | 3 |
|---------|----------------------|---|

 

| Item 2. | Management's Discussion and Analysis of Financial                                Condition and Results |
|---------|--------------------------------------------------------------------------------------------------------|

|   | of Operations | 10 |
|--------|---------------|----|

 

| Item 3. | Quantitative and Qualitative Disclosures About                                Market Risk | 12 |
|---------|-------------------------------------------------------------------------------------------|----|

 

| Item 4(T). | Controls and Procedures | 12 |
|------------|-------------------------|----|

 

 

|   | **PART II** | **—** | **OTHER INFORMATION** |
|--------|-------------|-------------|-----------------------|

 

| Item 1. | Legal Proceedings | 12 |
|---------|-------------------|----|

 

| Item 1A. | Risk Factors | 12 |
|----------|--------------|----|

 

| Item 2 | Unregistered Sales of Equity Securities and Use of                                Proceeds | 13 |
|--------|--------------------------------------------------------------------------------------------|----|

 

| Item 3. | Defaults Upon Senior Securities | 13 |
|---------|---------------------------------|----|

 

| Item 4. | Submission of Matters to a Vote of Securities                                Holders | 13 |
|---------|--------------------------------------------------------------------------------------|----|

 

| Item 5. | Other Information | 13 |
|---------|-------------------|----|

 

| Item 6. | Exhibits | 13 |
|---------|----------|----|

 

|   | Signatures | 14 |
|--------|------------|----|

 

-2-

 

----

 

 

**PART I — FINANCIAL INFORMATION**

 

| **Item 1.** | **Financial Statements** |
|-------------|--------------------------|

 

The accompanying unaudited balance sheet of LILM, Inc. at March 31,                2008 and December 31, 2007 (audited), related unaudited statements of operations,                stockholders' equity (deficit) and cash flows for the three months ended March 31,                2008 and 2007 and the period April 22, 1997 (date of inception of predecessor) to                March31, 2007, have been prepared by management in conformity with United States                generally accepted accounting principles. 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 period ended March 31,                2008, are not necessarily indicative of the results that can be expected for the                fiscal year ending December 31, 2008 or any other subsequent period.

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

**LILM, INC.**

**(A Development Stage Company)**

 

**FINANCIAL STATEMENTS**

 

**March 31, 2008 and December 31, 2007**

 

 

 

 

 

 

-3-

 

----

 

 

 

**LILM, INC, and                SUBSIDIARY and LIL MARC, INC. (predecessor)                (Development Stage Company)                CONSOLIDATED BALANCE SHEETS -unaudited                March 31, 2008 and December 31, 2007**

                 
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
|------------------------------------------------------------------------------|------------------------------------------------------------|---------------------------------------------------------------------------|--------------------------------------------|--------------------------------------------------------------------------------|---------------------------------------------------------------------------|---------------------------------------------------------------------------|----------------------------------------------------------------------|
|                                                                         |                                                       |                                                                      |                                       |                                                                           | **Mar.                            31**                                    |                                                                      | **Dec.                            31,**                              |
|                                                                         |                                                       |                                                                      |                                       |                                                                           | **2008**                                                                  |                                                                      | **2007**                                                             |
| **Assets**                                                                   |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
| **Current                            Assests**                               |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
| Cash                                                                         |                                                       |                                                                      |                                       |                                                                           | $                                   44 |                                                                      | $                                  226 |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
|                                                                         | Total Current                            Assets            |                                                                      |                                       |                                     44 |                                                                      |                                    226 |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
| **Office Equipment                            -**                            | net of accumulated                            depreciation |                                    161 |                                       |                                    335      |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
|                                                                         | Total                            Assets                    |                                                                      |                                       | $205                                                                           |                                                                      | $561                                                                      |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
| **Liabilities                            & Stockholders' Equity**        |                                                       |                                                                      |                                       |                                                                           |
| **Current                            Liabilities**                           |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
| Accounts                            Payable                                  |                                                       |                                                                      |                                       | $ 4,500                                                                        |                                                                      | $ 4,514                                                                   |
| Accounts Payable -                            Related Party                  |                                                       |                                17,897                      |                                       |                                14,797                           |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
|                                                                         | Total Current                            Liabilities       |                                                                      |                                       |                                22,397                           |                                                                      |                                19,311                      |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
| **Stockholders'                            Equity**                          |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
| Common                            Stock                                      |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |
| 25,000,000 shares                            authorized at $0.001 par value; |                                                       |                                                                      |                                       |
| 2,583,750 shares                            issued and outstanding           |                                                       | 2,584                                                                     |                                       | 2,584                                                                          |
| Capital in excess                            of par value                    |                                                       |                                                                      | 135,111                                    |                                                                           | 135,111                                                                   |
| Accumulated deficit                            during development stage      | (159,887)                                                  |                                                                      | (156,445)                                  |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
|                                                                         | Total Stockholders'                            Equity      |                                                                      |                              (22,192) |                                                                           |                              (18,750)                                |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |
|                                                                         |                                                       |                                                                      |                                       |                                                                           | $ 205                                                                     |                                                                      | $ 561                                                                |
|                                                                         |                                                       |                                                                      |                                       |                                                                           |                                                                      |                                                                      |                                                                 |

                 

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

                 

-4-

----

                 

                 

**LILM, INC. and                SUBSIDIARY and LIL MARC, INC. (predecessor)                (Development Stage Company)                CONSOLIDATED STATEMENT OF CASH FLOWS - unaudited                For the Three Months Ended March 31, 2008 and 2007 and the                Period April 22, 1997 (date of inception of predecesor) to March 31,                2008**
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
|-----------------------------------------------------------|----------------------------------------------------------|---------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------|
|                                                      |                                                     |                                                                                        |                                                                              | **March 31,                            2008**                                                                |                                                                                         | **March 31,                            2007**                                                    |                                                                    | **April 22,                            1997**                           |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    | **to Mar 31,                            2008**                          |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
| **Revenues**                                              |                                                     |                                                                                        | $                                    133  |                                                                                                         | $                                      476 |                                                                                             | $                                  19,544 |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
| **Expenses**                                              |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
|                                                      | Administrative                                           |                                                                                        |                                                                              | 3,400                                                                                                        |                                                                                         | 4,832                                                                                            |                                                                    | 149,508                                                                 |
|                                                      | Royalties                                                |                                                                                        |                                                                              | 1                                                                                                            |                                                                                         | 21                                                                                               |                                                                    | 117                                                                     |
|                                                      | Depreciation and                            amortization |                                       174 |                                                                              |                                        174            |                                                                                         |                                    29,806                     |
|                                                      |                                                     |                                                                                        |                                                                              |                                    3,575                                  |                                                                                         |                                      5,027          |                                                                    |                                   179,431 |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
| **Net                            Loss**                   |                                                     |                                                                                        |                                                                              | -3,442                                                                                                       |                                                                                         | -4,551                                                                                           |                                                                    | -159,887                                                                |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
| **Net Loss Per                            Common Share**  |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
|                                                      | Basic and                            dilluted            |                                                                                        |                                                                              | $                                         - |                                                                                         | $                                       - |                                                                    |                                                                    |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
| **Average                            Outstanding Shares** |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |
|                                                      | Basic (stated in                            1000's)      |                                                                                        |                                     2,584 |                                                                                                         |                                    2,584                  |                                                                                             |                                                                    |
|                                                      |                                                     |                                                                                        |                                                                              |                                                                                                         |                                                                                         |                                                                                             |                                                                    |                                                                    |

                 

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

                 

-5-

----

                 

                 

                 

                 

**LILM, INC, and                SUBSIDIARY and LIL MARC, INC. (predecessor)                (Development Stage Company)                CONSOLIDATED STATEMENT OF CASH FLOWS - unaudited                For the Three Months Ended March 31, 2008 and 2007 and the                Period April 22, 1997 (date of inception of predecessor) to March 31, 2008                 **
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          | **Mar.                            31,**                                             |                                                                            | **Mar.                            31,**                                                   |       | **Apr 22, 1997                            to** |
|---------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|-------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------|-------------------------------------------------------------------------------|-------------------------------------------------------------------------------------|---------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------|------------|------------------------------------------------|
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          | **2008**                                                                            |                                                                            | **2007**                                                                                  |       | **Mar. 31,                            2008**   |
| **Cash Flows                            From**                                        |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |
| **Operating                            Activities**                                   |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
|                                                                                  | Net Loss                                                                       |                                                                                |   |                                                                                      |                                                                          | ($3,442)                                                                      |                                                                                | ($4,551)                                                                        |                                                                                      | ($159,887) |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
|                                                                                  | Adjustments to                            reconcile net loss to                |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |
|                                                                                  | net cash provided                            by operating activities           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
|                                                                                  | Issuance of common                            stock for expenses               |                                                                                |   | -                                                                                         |                                                                          | -                                                                             |                                                                                | 8,700                                                                           |
|                                                                                  | Depreciation and                            amortization                       |                                                                                |   |                                                                                      | 174                                                                           |                                                                          | 174                                                                                 |                                                                            | 29,656                                                                                    |
|                                                                                  | Changes in accounts                            payable                         |                                                                                |   |                                                                                      | (14)                                                                          |                                                                          | -                                                                                   |                                                                            | 112                                                                                       |
|                                                                                  | Contributions to                            capital- expenses                  |                                                                                |   |         -                                         |                                                                          |                                     - |                                                                                |                                     100 |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
|                                                                                  | Net Cash Flows Used                            in Operations                   |                                                                                |   | (3,282)                                                                                   |                                                                          | (4,377)                                                                       |                                                                                | (121,319)                                                                       |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
| **Cash Flows From                            Investing Activities**                   |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
|                                                                                  | Purchase of                            patent                                  |                                                                                |   |                                                                                      |                                                                          | -                                                                             |                                                                                     | -                                                                               |                                                                                      | (28,650)   |
|                                                                                  | Purchase office                            equipment                           |                                                                                |   |                                                                                      |                                     - |                                                                          |                                      - |                                                                            |  (2,096)                                                                             |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                     |                                                                            |                                                                                           |       |                                           |
| **Cash Flows From                            Financing Activities**                   |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
|                                                                                  | Advances from                            related party                         |                                                                                |   |                                                                                      | 3,100                                                                         |                                                                          | -                                                                                   |                                                                            | 17,897                                                                                    |
|                                                                                  | Proceeds from                            issuance of common stock net of costs |                                      - |   |                                       - |                                                                          | 134,212                                                                       |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
| Net Change in                            Cash                                         |                                                                           |                                                                                |   |                                                                                      |                                                                          | (182)                                                                         |                                                                                | (4,377)                                                                         |                                                                                      | 44         |
| Cash at Beginning                            of Period                                |                                                                           |                                                                                |   |                                                                                      |                                  226                 |                                                                          |                               10,897                                      |                                                                            |                                       - |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
| Cash at End of                            Period                                      |                                                                           |                                                                                |   |                                                                                      | $ 44                                                                          |                                                                          | $ 6,520                                                                             |                                                                            | $ 44                                                                                      |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
| **NON CASH FLOWS                            FROM OPERATING AND INVESTING ACTIVITIES** |                                                                           |                                                                                |   |                                                                                      |                                                                          |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |
| Issuance of 922,900                            common shares for a patent- 2000       |                                                                           |                                                                                |   |                                                                                      |                                                                          | $                            11,963                                           |
| Contributions to                            capital- expenses- 2001                   |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                   100             |
|                                                                                  |                                                                           |                                                                                |   |                                                                                      |                                                                          |                                                                          |                                                                                |                                                                            |                                                                                      |       |                                           |

                 

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

                 

-6-

----

                 

**LILM, INC. and SUBSIDIARY and LIL MARC, INC.                 (predecessor)**

**(A Development Stage                Company)**

**NOTES TO FINANCIAL STATEMENTS**

**March 31, 2008**

 

| **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 $.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                statement 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 March 31, 2008.

 

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

Accounting Methods

 

The Company recognizes income and expenses based on the accrual                method of accounting.

 

Dividend Policy

 

The Company has not yet adopted a policy regarding payment of                dividends.

 

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.

 

On March 31, 2008, the Company had a net operating loss available                for carryforward of $107,910. The income tax benefit of approximately $ 32,000 from                the carryforward has been fully offset by a valuation reserve because the use of                the future tax benefit is doubtful since the Company has not started full                operations. The net operating loss will expire starting in 2021 through                2028.

                 

-7-

                 

----

                 

**LILM, INC. and SUBSIDIARY and LIL MARC, INC.                (predecessor)**

**( Development Stage Company )**

**NOTES TO FINANCIAL STATEMENTS (Continued)**

**March 31, 2008**

 

 

**2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -                continued**

 

Revenue Recognition

 

Revenue is recognized upon the completion of the sale and shipment                of the training urinal products.

 

Advertising and Market Development

 

The company expenses advertising and market development costs as                incurred.

 

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.

 

Basic and Diluted Net Income (Loss) Per Share

 

Basic net income (loss) per share amounts are computed based on the                weighted average number of shares actually outstanding. Diluted net income (loss)                per share amounts are computed using the weighted average number of common shares                and common equivalent shares outstanding as if shares had been issued on the                exercise of any common share rights unless the exercise becomes antidilutive and                then only the basic per share amounts are shown in the report.

 

Financial and Concentrations Risk

 

The Company does not have any concentration or related financial                credit risk.

 

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.

 

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.

                 

-8-

                 

                 

----

                 

**LILM, INC. and SUBSIDIARY and LIL MARC, INC.                (predecessor)**

**( Development Stage Company )**

**NOTES TO FINANCIAL STATEMENTS (Continued)**

**March 31, 2008**

 

Office Equipment

 

Office equipment consists of computers and is depreciated over three                years on the straight method.

 

Recent Accounting Pronouncements

 

The Company does not expect that the adoption of other recent                accounting pronouncements will

have a material impact on its financial statements.

 

**3. 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                $.25, due to the inventor, on the sale of each training urinal.

 

**4. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES**

 

Officer-directors have acquired 73% of the outstanding common stock                of the Company and have made demand, no interest, loans to the Company of                $17,897.

 

**5. 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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*The following information should be read in conjunction with the                financial statements and notes thereto appearing elsewhere in this Form                10-Q.*

 

**Results of Operations**

 

We are a development stage company with minimal cash assets and                limited operations and revenue. Ongoing operating expense, including the costs                associated with the preparation and filing of our registration statement and                periodic reports, have been paid for by (I) the net proceeds of $55,030 (after                deducting offering costs) from our stock offering in 2002; and (ii) from advances                from a stockholder. A total of $17,897 has been advanced by Alewine Limited                Liability Company, a 73% stockholder that is managed by our President, George I.                Norman, III. The debt is evidenced by a promissory note that is payable upon demand                with a provision that an interest rate of 10% would be charged on any outstanding                balance not paid when due.

 

It is anticipated that we will require approximately $20,000 over                the next 12 months to fund operations and to maintain our corporate viability. If                we are unable to generate sufficient revenues, we may have to rely on funds from                credit lines, directors and/or stockholders in the future. In March 2005, our                subsidiary LiL Marc, Inc., received tentative approval for an unsecured credit line                with Wells Fargo Bank in the amount of $15,000. The credit line was never used and                was closed. There can be no assurance at this time that the credit line can be                reopened nor do we have any other potential sources of funds available to it or its                subsidiary at this time. We also do not have any further commitments from a                director or stockholder to provide any additional funding.

 

**Results of Operations**

 

During the three month period ended March 31, 2008, we realized                revenues of $133 compared with $476 for the three month period ended March 31,                2007.                Revenues for the 2008 period were the result of Internet retail and wholesale                orders, which decreased 72% for the first quarter. Revenues for the 2007 period                were also from internet retail and wholesale orders. The first quarter decrease was                due to a 70% decrease in retail orders and a 72 % decrease in wholesale                orders.

 

Total expenses were $3,575 for the first quarter of 2008 compared to                $5,027 for the corresponding period 2007 period. Expenses during the first quarter                of 2008 were primarily for administrative expenses, which decreased 28% for the                first quarter. The first quarter decrease was primarily attributed to an 30%                decrease in general operating expenses , due to the timing of payments and varying                monthly charges.

 

The net loss for the first quarter of 2008 was $3,442 compared with                a net loss of $4,551 for the first quarter of 2007. The decrease in net loss is due                to a 30% decrease in general operating expenses, which included a 13% ( $350)                decreased in accounting fees and a 10% increase in depreciation expense and a 31%                increase in royalty payments.

 

**Liquidity and Capital Resources**

 

At March 31, 2008 and December 31, 2007, we had total assets                consisting of cash and office equipment of $205 and $561, respectively. Total                liabilities at March 31, 2008 and December 31,                2007were                $22,397 and $19,311 respectively. Total liabilities at March 31, 2008 consisted of                $4,500 for legal fees and a demand note in the amount of $17,897 issued to a                private limited liability company owned by two directors, George Norman and Laurie                Norman . The note is payable upon demand and does not bear an interest rate. If a                portion of the principal is not paid when due then the note will bear an interest                rate of 10% per annum.

 

Because we currently have only minimal revenues and limited cash                reserves, we anticipate that we may have to rely on our directors and stockholders                to pay expenses until such time as we realize adequate revenues from the production                and sales of our baby product. There is no assurance that we will be able to                generate adequate revenues in the immediate future to satisfy its cash needs. At                December 31, 2007, we had cash on hand of $226, working capital of a negative                $19,085 and total stockholders’ equity of a negative $18,750. At March 31,                2008, we had cash on hand of $44 working capital of a negative $22,353 and total                stockholders’ equity of a negative $22,192.

                 

-10-

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In the opinion of management, inflation has not and will not have a                material effect on the ongoing operations of the Company.

                 

                 

**Plan of Operation**

 

During the next 12 months, we plan to continue to focus on improving                our website found athttp://LiLMarc                dot comandhttp://Boyspottytraining dot                .com. Anticipated improvements include simplifying                the ordering process, improving the appearance and layout of the website, and                making changes to the website that would increase impulse purchases. We will also                continue to focus on improving our relationships with resellers who sell our                product on their websites and on engaging new website hosts for the product. We                anticipate that this can be accomplished through individual calls and E-mails to                the website hosts. Additionally, we are committed to the production of additional                stands when sale of more than 500 LiL Marcs is achieved. Because we lack immediate                requisite funds, it may be necessary to rely on advances from directors and/or                stockholders, although we have no firm commitment from anyone to advance future                funds. Management intends to hold expenses to a minimum and to obtain services on a                contingency basis when possible. Further, our directors will defer any compensation                until such time as business warrants the payment of such.

 

After paying certain costs and expenses related to ongoing                administrative costs and associated professional fees, including the cost of                preparing and filing requisite reports with the SEC, management estimates that we                will have sufficient funds to operate for the next six to twelve months. If                business revenues do not provide enough funds to continue operations, it may be                necessary to seek additional financing. This would most likely come from current                directors, although the directors are under no obligation to provide additional                funding and there is no assurance outside funding will be available on acceptable                terms, or at all.

If we cannot generate or secure adequate funds during the next 12                months, we may be forced to seek alternatives such a joint venture or licensing our                product. If we are unsuccessful in securing alternative sources of revenue, we may                have to cease operations or sell off existing inventory at liquidating                prices.

 

Because we rely on others for production of our product, we do not                anticipate making any significant capital expenditures for new equipment or other                assets during 2008. If additional equipment does become necessary, we believe that                we may have to seek outside financing to acquire the equipment or                assets.

 

Currently, we have three employees. Our President devotes                approximately 20 hours per week to our business and our Secretary assists on an                as-needed basis. We also have a part-time laborer for packaging and shipping                product. Management believes that these employees will be adequate for the                foreseeable future, or until production reaches a level to justify additional                employees. Further, we believe that in the event increased business necessitates                additional employees, we will be able to pay the added expenses of these employees                from increased revenues.

 

**Inflation**

 

In the opinion of management, inflation has not and will not have a                material effect on our operations in the immediate future. Management will continue                to monitor inflation and evaluate the possible future effects of inflation on our                business and operations.

 

**Off-balance Sheet Arrangements**

 

|   | We have no off-balance sheet                                arrangements. |
|--------|---------------------------------------------------------------------------|

 

**Forward-Looking and Cautionary Statements**

 

This report includes "forward-looking statements" that may relate to                such matters as anticipated financial performance, future revenues or earnings,                business prospects, projected ventures, new products and services, anticipated                market performance and similar matters. When used in this report, the words                “may,” “will,” “expect,”“anticipate,” “continue,”                “estimate,” “project,” “intend” and similar                expressions are intended to identifyforward-

                 

-11-

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looking statements regarding events, conditions, and financial                trends that may affect our future plans of operations, business strategy, operating                results, and financial position. We caution readers that a variety of factors could                cause its actual results to differ materially from the anticipated results or other                matters expressed in forward-looking statements. These risks and uncertainties,                many of which are beyond our control, include:

|   | ● | the ability to maintain current business and, if                                feasible, expand the marketing of products; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------|

 

|   | ● | the ability to attract and retain new individual and                                retail customers; |
|--------|---------|-------------------------------------------------------------------------------------------------------|

 

|   | ● | the sufficiency of existing capital resources and                                the ability to raise additional capital to fund cash requirements                                for future operations; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | ● | uncertainties involved in the rate of growth of                                business and acceptance of the Company’s product                                and; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | ● | anticipated size or trends of the market segments in                                which we compete and the anticipated competition in those                                markets; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | ● | future capital requirements and our ability to                                satisfy its needs; |
|--------|---------|--------------------------------------------------------------------------------------------------|

 

|   | ● | general economic conditions. |
|--------|---------|------------------------------|

 

Although management believes the expectations reflected in these                forward-looking statements are reasonable, such expectations cannot guarantee                future results, levels of activity, performance or achievements. Actual results may                differ materially from those included within the forward-looking statements as a                result of various factors. Cautionary statements in the risk factors section and                elsewhere in this registration statement identify important risks and uncertainties                affecting our future, which could cause actual results to differ materially from                the forward-looking statements made herein.

 

| **Item 3.** | **Quantitative and Qualitative Disclosures About                                Market Risk.** |
|-------------|------------------------------------------------------------------------------------------------|

 

|   | This item is not required for a smaller reporting                                company. |
|--------|-------------------------------------------------------------------------------------------|

 

| **Item 4(T).** | **Controls and Procedures.** |
|----------------|------------------------------|

 

*Evaluation of Disclosure Controls and                Procedures*. Disclosure controls and procedures (as                defined in Rules  13a-15(e) and 15d-15(e) under the Securities Exchange Act of                1934) are designed to ensure that information required to be disclosed in reports                filed or submitted under the Exchange Act is recorded, processed, summarized and                reported within the time periods specified in SEC rules and forms. Disclosure and                control procedures are also designed to ensure that such information is accumulated                and communicated to management, including the chief executive officer and principal                accounting officer, to allow timely decisions regarding required                disclosures.

 

As of the end of the period covered by this quarterly report, we                carried out an evaluation, under the supervision and with the participation of                management, including our chief executive officer and principal accounting officer,                of the effectiveness of the design and operation of our disclosure controls and                procedures. In designing and evaluating the disclosure controls and procedures,                management recognizes that there are inherent limitations to the effectiveness of                any system of disclosure controls and procedures, including the possibility of                human error and the circumvention or overriding of the controls and procedures.                Accordingly, even effective disclosure controls and procedures can only provide                reasonable assurance of achieving their desired control objectives. Additionally,                in evaluating and implementing possible controls and procedures, management is                required to apply its reasonable judgment. Based on the evaluation described above,                our management, including our principal executive officer and principal accounting                officer, have concluded that, as of March 31, 2008, our disclosure controls and                procedures were effective.

 

*Changes in Internal Control Over Financial                Reporting*. Management has evaluated whether any change in                our internal control over financial reporting occurred during the first quarter of                fiscal 2008. Based on its evaluation, management, including the chief executive                officer and principal accounting officer, has concluded that there has been no                change in our internal control over financial reporting during the first quarter of                fiscal 2008 that has materially affected, or is reasonably likely to materially                affect, our internal control over financial reporting.

                 

-12-

                 

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**PART II — OTHER INFORMATION**

 

| **Item 1.** | **Legal Proceedings** |
|-------------|-----------------------|

 

There are no material pending legal proceedings to which we are a                party or to which any of our property is subject and, to the best of our knowledge,                no such actions against us are contemplated or threatened.

 

| **Item 1A.** | **Risk Factors** |
|--------------|------------------|

 

|   | This item is not required for a smaller reporting                                company. |
|--------|-------------------------------------------------------------------------------------------|

| **Item 2.** | **Unregistered Sales of Equity Securities and Use                                of Proceeds** |
|-------------|------------------------------------------------------------------------------------------------|

 

|   | This Item is not applicable. |
|--------|------------------------------|

 

| **Item 3.** | **Defaults Upon Senior Securities** |
|-------------|-------------------------------------|

 

|   | This Item is not applicable. |
|--------|------------------------------|

 

| **Item 4.** | **Submission of Matters to a Vote of Security                                Holders** |
|-------------|----------------------------------------------------------------------------------------|

 

|   | This Item is not applicable. |
|--------|------------------------------|

 

| **Item 5.** | **Other Information** |
|-------------|-----------------------|

 

|   | This Item is not applicable. |
|--------|------------------------------|

 

| **Item 6.** | **Exhibits** |
|-------------|--------------|

 

|   | Exhibit 31.1 | Certification of C.E.O. and Principal Accounting                                Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of                                2002. |
|--------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

|   | Exhibit 32.1 | Certification of C.E.O. and Principal Accounting                                Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to                                Section 906 of the Sarbanes-Oxley Act of 2002. |
|--------|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

-13-

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**SIGNATURES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934,                the registrant has duly caused this report to be signed on its behalf by the                undersigned, thereunto duly authorized.

 

**LILM, INC.**

 

 

| Date: May 14, 2008 | By:/S/__ | GEORGEI.NORMAN,III |
|--------------------|----------|--------------------|

|   | ***George I. Norman, III*** |
|--------|-----------------------------|

President, C.E.O. and Director

(Principal Accounting Officer)

                 

                 

                 

-14-