I try to customize categories listing layout in K2 Categories List(Menu), of K2 Tools module.

I want a smaller font and smaller line height, also not anymore <li> elements, as it looses too much space.

I have searched source of pages and can't find what to customize. I edited K2.css but there is no effect(or I don't know what to edit).

I can see sometimes <ul class"level1"> in source but couldn't find "level1" word searching in site's files with Windows Grep.