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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to
Commission file number 0-19616
UTOPIA MARKETING, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-3060101
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
70 EAST 55TH STREET, NEW YORK, NEW YORK 10022
(Address of principal executive offices, including zip code)
(212) 980-5990
(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 preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
___ ___
As of September 26, 1997 there were 13,816,367 shares of Common Stock
outstanding.
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UTOPIA MARKETING, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
ASSETS
SEPT 26 DECEMBER 28
1997 1996
---------- ------------
(UNAUDITED)
Current Assets:
Cash and cash equivalents $ 2,471 $ 2,852
Due from factor 0 107
Accounts receivable 39 293
Merchandise inventories 0 36
Prepaid expenses 0 31
-------- --------
Total current assets 2,510 3,319
Property and equipment, net 0 0
Other assets 0 25
-------- --------
Total Assets $ 2,510 $ 3,344
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 12 $ 58
Accrued expenses 60 99
-------- --------
Total current liabilities 72 157
-------- --------
Long-term obligations 0 7
-------- --------
Shareholders' Equity:
Common Stock 14 14
Additional paid-in capital 32,943 32,943
Accumulated deficit (30,519) (29,777)
-------- --------
Total shareholders' equity 2,438 3,180
-------- --------
Total Liabilities and Shareholders' Equity $ 2,510 $ 3,344
======== ========
See notes to condensed consolidated financial statements.
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UTOPIA MARKETING, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA, UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------ ------------------------
SEPT 26 SEPT 28 SEPT 26 SEPT 28
1997 1996 1997 1996
-------- -------- -------- --------
Net revenue $ 22 $ 7,034 $ 119 $ 24,344
Cost of sales $ 0 7,010 58 20,788
-------- -------- -------- --------
Gross profit 22 24 61 3,556
Selling, general and administrative expenses 112 (2,720) 854 (7,958)
Sale of trademark, net $ 0 4,100 0 4,100
-------- -------- -------- --------
Operating income (loss) (90) 1,404 (793) (302)
Interest income/(expense) $ 28 (194) 76 (648)
-------- -------- -------- --------
Income (loss) before income
taxes and extraordinary item (62) 1,210 (717) (950)
Income taxes 0 50 0 50
-------- -------- -------- --------
Net income (loss) before
extraordinary item (62) 1,160 (717) (1,000)
======== ======== ======== ========
Extraordinary gain, net of
income taxes 0 1,288 0 1,288
-------- -------- -------- --------
Net income (loss) $( 62) $ 2,448 $( 717) $ 288
======== ======== ======== ========
Net income per share $ 0.00 $ 0.18 $( 0.05) $ 0.02
======== ======== ======== ========
Weighted average shares outstanding 13,816 13,741 13,816 13,741
======== ======== ======== ========
See notes to condensed consolidated financial statements.
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UTOPIA MARKETING, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS EXCEPT PER SHARE DATA, UNAUDITED)
NINE MONTHS ENDED
------------------------
SEPT 26 SEPT 28
1997 1996
-------- --------
Cash Flows From Operating Activities
Net income (loss) $( 717) $ 288
Adjustments to reconcile net income to net cash used by
operating activities:
Depreciation and amortization 0 244
Deferred compensation expense 0 655
Changes in assets and liabilities:
Due from factor, net 107 (6,621)
Accounts receivable 254 1,687
Merchandise inventories 36 5,467
Prepaid expenses 31 182
Other assets 0 236
Accounts payable and accrued expenses (85) (4,370)
Other current liabilities 0 (2)
------- -------
Net cash used by operating activities (374) (2,234)
------- -------
Cash Flows From Investing Activities:
Purchase of property and equipment 0 172
------- -------
Net cash used by investing activities 0 172
------- -------
Cash Flows From Financing Activities:
Repayment of long-term obligations (7) (29)
Proceeds from issuance of common stock, net 0 2,107
------- -------
Net cash provided (used) by financing activities (7) 2,078
------- -------
Net Increase (Decrease) in cash & cash equivalents (381) 16
Cash:
Beginning of period 2,852 128
End of period $ 2,471 $ 144
======= =======
See notes to condensed consolidated financial statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTH PERIODS ENDED SEPTEMBER 26, 1997 AND SEPTEMBER 28, 1996
(UNAUDITED)
1. SUMMARY OF ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements
have been prepared from the records of the Company without audit and, in the
opinion of management, include all adjustments (consisting of normally recurring
accruals) necessary to fairly present the Company's financial position at Sept
26, 1997 and the results of its operations and its cash flows for the nine month
periods ended Sept. 26, 1997 and Sept. 28, 1996. The condensed balance sheet as
of December 31, 1996, presented herein, has been prepared from the audited
consolidated balance sheet of the Company.
Accounting policies followed by the Company are described in Note 1 to
the audited consolidated financial statements for the year ended December 28,
1996. As permitted by the rules of the Securities and Exchange Commission,
certain information and footnote disclosures included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted for the purposes of the condensed consolidated
interim financial statements. The condensed consolidated interim financial
statements should be read in conjunction with the audited consolidated financial
statements, including the notes thereto, for the year ended December 28, 1996.
The results of operations for the three and nine month periods ended
September 26, 1997 are not necessarily indicative of the results to be expected
for any other period or for the full year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL
The following discussion of the Company's results of operations for the
three and nine month periods ended Sept. 26, 1997 and Sept. 28, 1996 includes
the consolidated results of operations of Utopia Marketing, Inc. and its three
wholly-owned subsidiaries, Sanders Importacao E. Exportacao Ltda. ("Sam & Libby
Brazil"), Sam & Libby (HK) Limited, ("Sam & Libby Hong Kong"), and Utopia
Outlets, Inc. (formerly Sam & Libby Outlets, Inc). The Hong Kong subsidiary was
liquidated in connection with the Company's discontinued apparel operation. In
the fourth quarter of 1995, the Company terminated operations in Brazil. Utopia
Outlets, Inc. (formerly Sam & Libby Outlets, Inc.) no longer has any operations.
SALE OF TRADEMARK
On July 2, 1996 the Company entered into an agreement with Maxwell Shoe
Company Inc. to sell all worldwide rights to the Company's trademarks,
tradenames and intellectual property rights free and clear of all liens,
mortgages, encumbrances and security interests. Maxwell Shoe Company did not
assume any of the Company's liabilities or obligations. In August 1996, the
Company received cash of $5.3 million. The balance of $0.2 million was received
on April 30, 1997.
OPERATIONS
The Company's operations for the Quarter ended September 26, 1997
consisted of collecting remaining accounts receivable. (See the Company's
December 28, 1996 financial statements for a discussion of the sale of all the
Company's trademarks to Maxwell Shoe Company, Inc. in July 1996). This endeavor
is now substantially complete.
Selling, General, and Administrative Expenses
These expenses in 1997 consisted primarily of contractual obligations
and the administrative expenses connected with searching for investment
opportunities.
The company had terminated the lease on its Corporate office space at
58 West 40th on June 30, 1997.
Interest Revenue
Interest revenue for the third quarter 1997 was revenue associated with
the interest earned from amounts due from the factor. The amount due from the
factor at September 26, 1997 was $2,356,642 included in the balance sheet
caption "Cash and cash equivalents".
Liquidity and Capital Resources.
At September 26, 1997 the Company's basic asset is "Cash and cash
equivalents". The company has no need for additional resources at this time.
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Management is seeking investment opportunities to either acquire an
operating business or to start a new business. The Company has no plans to pay a
dividend at this time.
Management expects to incur a loss in the Fourth quarter.
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UTOPIA MARKETING, INC.
PART II. OTHER INFORMATION
Items 1 and 2. Not applicable
Item 3. Defaults Upon Senior Securities.
None.
Items 4 and 5. Not applicable.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
UTOPIA MARKETING, INC.
(Registrant)
Date: September 26, 1997 /s/ Kenneth Sitomer
-------------------------------
Kenneth Sitomer
Chief Operating Officer
Chief Financial Officer