<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 28, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from January 3, 1998 to March 28, 1998
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 number)
PO Box 803, Katonah, New York, 10536
(Address of principal executive offices, including zip code)
(914) 763-0082
(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 March 28, 1998 there were 14,216,367 shares of Common Stock outstanding
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UTOPIA MARKETING, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands)
ASSETS
<TABLE>
<CAPTION>
MARCH 28, January 3,
1998 1998
---------- --------
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 2,372 $ 2,389
Due from factor 0 0
Miscellaneous receivable 6 39
Merchandise inventories 0 0
Prepaid expenses 0 0
-------- --------
Total current assets 2,378 2,428
Property and equipment, net 0 0
Other assets 0 0
-------- --------
Total Assets $ 2,378 $ 2,428
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 0 $ 30
Accrued expenses 25 25
-------- --------
Total current liabilities 25 55
-------- --------
Long-term obligations 0 0
-------- --------
Shareholders' Equity:
Common Stock 14 14
Additional paid-in capital 32,947 32,947
Accumulated deficit (30,608) (30,588)
-------- --------
Total shareholders' equity 2,353 2,373
-------- --------
Total Liabilities and Shareholders' Equity $ 2,378 $ 2,428
======== ========
</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 28, March 29,
1998 1997
---- ----
<S> <C> <C>
Net revenue $ 0 $ 129
Cost of sales $ 0 58
-------- --------
Gross profit 0 71
Selling, general and administrative expenses 54 (966)
Sale of trademark, net $ 0 0
-------- --------
Operating income (loss) (54) (895)
Interest income/(expense) $ 33 109
-------- --------
Income (loss) before income
Taxes and extraordinary item (21) (786)
Income taxes 0 0
-------- --------
Net income (loss) before
Extraordinary item (21) (786)
======== ========
Extraordinary gain, net of
Income taxes 0 0
-------- --------
Net income (loss) $ (21) $ (786)
======== ========
Net income per share $ (0.00) $ (0.06)
======== ========
Weighted average shares outstanding 13,866 13,866
======== ========
</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 28, March 29,
1998 1997
<S> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ (21) $ (337)
Adjustments to reconcile net income to net cash used by
Operating activities:
Depreciation and amortization 0 0
Deferred compensation expense 0 0
Changes in assets and liabilities:
Due from factor, net 0 107
Accounts receivable 33 68
Merchandise inventories 0 33
Prepaid expenses 0 25
Other assets 0 0
Accounts payable and accrued expenses (30) (58)
Other current liabilities 0 0
------- -------
Net cash used by operating activities (18) (162)
------- -------
Cash Flows From Investing Activities:
Purchase of property and equipment 0 0
------- -------
Net cash used by investing activities 0 0
------- -------
Cash Flows From Financing Activities:
Repayment of long-term obligations 0 0
Proceeds from issuance of common stock, net 0 0
------- -------
Net cash provided (used) by financing activities 0 0
------- -------
Net Increase (Decrease) in cash & cash equivalents (18) (162)
Cash:
Beginning of period 2,389 2,852
End of period $ 2,371 $ 2,690
======= =======
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIODS ENDED MARCH 28, 1998 AND MARCH 29, 1997
(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
28, 1998 and the results of operations and its cash flows for the three month
periods ended March 28, 1998 and March 29, 1997. The condensed consolidated
balance sheet as of January 3, 1998, 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 January 3,
1998. 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 January 3,
1998.
The results of operations for the three month period ended March 28,
1998 is 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 28, 1998 and March 29, 1997 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.
Commencing in May, 1996, when the Company commenced in-depth
negotiations with Maxwell shoe Company, Inc. for the sale of Utopia's
trademarks, which would result in the termination of its then present business,
Utopia's management began to explore new avenues of business for Utopia. The
management of Utopia looked into business combination opportunities in the
apparel, industrial, manufacturing, financial services and scientific fields.
Additionally, in the event that the sale of the trademarks was not successfully
concluded, the Company also explored various business combination opportunities
in the footwear industry. The Company evaluated internally approximately fifty
(50) possible business combinations, all of which were rejected for one or more
of the following reasons: (I) management believed that Utopia's assets would not
be sufficient to allow the merged entities to succeed without additional
substantial dilution to Utopia's shareholders; (ii) Utopia's equity ownership
interest would not be significant; (iii) the expected multiple of earnings for
the merged entities would have diminished the Utopia's value: and/or (iv) the
need for cash required a strategic partner or such heavy debt that the risk of
failure of the merged entities appeared to be an unacceptable risk. None of
these explorations resulted in formal business combination talks being
completed. The Company is continuing its search for new ventures.
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 was received on April 30, 1997.
Operations
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The Company's operations for the Quarter ended March 28, 1998 consisted
of searching for new business opportunities.
Selling, General, and Administrative Expenses.
These expenses in 1998 consisted primarily of the administrative
expenses connected with searching for investment opportunities.
The company will shortly be occupying temporary space in the State
of Florida. Presently the Company's mailing address is P. O. Box
803, Katonah, New York 10536
Interest Revenue.
Interest revenue for the first quarter 1998 was revenue associated with
the interest earned from amounts due from the factor. The amount due from the
factor at March 28, 1998 was $2,371,000 included in the balance sheet caption
"Cash and cash equivalents".
Liquidity and Capital Resources.
At March 28, 1998 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> 8
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> 9
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: May 12, 1998 /s/ Samuel L. Edelman
Samuel L. Edelman
Chairman of the Board
Chief Executive Officer
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<PERIOD-START> JAN-04-1998
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