<PAGE> 1
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 March 31, 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 Identification No.)
incorporation or organization)
58 WEST 40TH STREET, NEW YORK, NEW YORK 10018
(Address of principal executive offices, including zip code)
(212) 944-4830
(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 No X
----- -----
As of March 31, 1997 there were 13,741,367 shares of Common Stock outstanding
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UTOPIA MARKETING, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
MARCH 31 DECEMBER 28
1997 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 2,690 $ 2,852
Due from factor, less allowance of $75 as of Dec. 31, 1996 0 107
Accounts receivable 225 293
Merchandise inventories 3 36
Prepaid expenses 6 31
-------- --------
Total current assets 2,924 3,319
Property and equipment, net 0 0
Other assets 25 25
-------- --------
Total Assets $ 2,949 $ 3,344
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 77 $ 58
Accrued expenses 22 99
-------- --------
Total current liabilities 99 157
-------- --------
Long-term obligations 7 7
-------- --------
Shareholders' Equity:
Common Stock 14 14
Additional paid-in capital 32,943 32,943
Accumulated deficit (30,114) (29,777)
-------- --------
Total shareholders' equity 2,843 3,180
-------- --------
Total Liabilities and Shareholders' Equity $ 2,949 $ 3,344
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 3
UTOPIA MARKETING, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA, UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------
MARCH 31, 1997 MARCH 30, 1996
-------------- --------------
<S> <C> <C>
Net revenue $ 72 $11,957
Cost of sales 41 8,314
------- -------
Gross profit 31 3,643
Selling, general and administrative expenses 393 2,851
------- -------
Operating income (loss) (362) 792
Interest income/(expense) 25 (186)
------- -------
Net income (loss) $ (337) $ 606
======= =======
Net income per share $ (0.02) $ 0.05
======= =======
Weighted average shares outstanding 13,741 11,370
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 4
UTOPIA MARKETING, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS EXCEPT PER SHARE DATA, UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------
MARCH 31 MARCH 30
1997 1996
-------- --------
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $(337) $606
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation and amortization 0 89
Deferred compensation expense 0 123
Changes in assets and liabilities:
Due from factor, net 107 (2,899)
Accounts receivable 68 (191)
Merchandise inventories 33 879
Prepaid expenses 25 31
Accounts payable and accrued
expenses (58) 1,271
Other current liabilities 0 (2)
------ ------
Net cash used by operating activities (162) (93)
------ ------
Cash Flows From Investing Activities:
Purchase of property and equipment 0 (35)
------ ------
Net cash used by investing activities 0 (35)
------ ------
Cash Flows From Financing Activities:
Repayment of long-term obligations 0 (29)
Proceeds from issuance of common stock, net 0 62
------ ------
Net cash provided (used) by financing activities 0 33
------ ------
Net Increase (Decrease) in cash & cash equivalents (162) (95)
Cash:
Beginning of period 2,852 128
End of period $2,690 $33
====== ======
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIODS ENDED MARCH 31, 1997 AND MARCH 31, 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 normal recurring
accruals) necessary to fairly present the Company's financial position at March
31, 1997 and the results of operations and its cash flows for the three month
periods ended March 31, 1997 and March 31, 1996. The condensed consolidated
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 and regulations 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 these 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 hereto, for the year ended December
28, 1996.
The results of operations for the three months ended March 31, 1997 are
not necessarily indicative of the results to be expected for any other period or
for the full year.
<PAGE> 6
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 month periods ended March 31, 1997 and March 31, 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 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. Sam & Libby Outlets, Inc. no longer has
any operations.
SALE OF TRADEMARK
On July 2, 1996, Utopia Marketing , Inc. (formerly Sam & Libby, Inc.)
entered into an agreement with Maxwell Shoe Company Inc. to sell all worldwide
rights to the Company's trademarks, trade names and intellectual property rights
free and clear of all liens, mortgages, encumbrances and security interests.
Maxwell Shoe Company will 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 (included in the March 31, 1997 balance sheet caption
"Accounts receivable") was received on April 30, 1997.
OPERATIONS
The Company's operations for the Quarter ended March 31, 1997 consisted
of selling (at close-out prices) the remaining inventory and collecting the
accounts receivable. (See the Company's December 28, 1996 financial statements
for a discussion of the sale of all of 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.
Interest Revenue.
Interest revenue for the first quarter 1997 was revenue associated with
the interest earned from amounts due from the factor. The amount due from the
factor at March 31, 1997 was $2,644,000 included in the balance sheet caption
"Cash and cash equivalents".
Liquidity and Capital Resources.
At March 31, 1997 the Company's basic asset is "Cash and cash
equivalents". The Company has no need for additional liquid resources at this
time.
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 second quarter.
<PAGE> 7
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
<PAGE> 8
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 thereto
duly authorized.
UTOPIA MARKETING, INC.
(Registrant)
Dated: April 30, 1997 /s/ Kenneth Sitomer
-------------------
Kenneth Sitomer
Chief Operating Officer
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> DEC-29-1996
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 2,690
<SECURITIES> 0
<RECEIVABLES> 225
<ALLOWANCES> 0
<INVENTORY> 3
<CURRENT-ASSETS> 2,924
<PP&E> 25
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,949
<CURRENT-LIABILITIES> 99
<BONDS> 7
0
0
<COMMON> 14
<OTHER-SE> 2,829
<TOTAL-LIABILITY-AND-EQUITY> 2,949
<SALES> 72
<TOTAL-REVENUES> 72
<CGS> 41
<TOTAL-COSTS> 41
<OTHER-EXPENSES> 393
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (25)
<INCOME-PRETAX> (337)
<INCOME-TAX> 0
<INCOME-CONTINUING> (337)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (337)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
