U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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 0-21178
UNITED TEXTILES & TOYS CORP.
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(Exact Name of Small Business Issuer as Specified in its Charter)
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Delaware 13-3626613
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(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
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1385 Broadway, Suite 814, New York, New York 10018
(Address of Principal Executive Offices)
(212) 391-1111
(Issuer's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address, and Former Fiscal Year,
if Changed Since Last Report)
Check whether the Issuer (1) 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 registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares of each of the issuer's classes of common equity
outstanding as of the latest practicable date: Common Stock, par value $.001 per
share: 4,550,234 shares outstanding as of November 10, 2000.
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Number
Item 1. FINANCIAL STATEMENTS
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Balance Sheets as of September 30, 2000 (unaudited) 3
and March 31, 2000.
Statement of Operations (unaudited) for the three and six
months ended September 30, 2000 and 1999. 5
Statement of Cash Flows (unaudited) for the six
months ended September 30, 2000 and 1999. 6
Notes to Financial Statements (unaudited) 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
10
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
BALANCE SHEETS
As of September 30, 2000 and March 31, 2000
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Sept. 30, March 31,
2000 2000
(Unaudited) (Note 1)
ASSETS
CURRENT ASSETS:
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Cash .......................................................... $ 4,366 $ 750
Prepaid expenses and other current assets ..................... 5,689 5,689
Investment in affiliated companies ............................ - 44,708
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Total current assets .......................................... 10,055 51,147
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FURNITURE, FIXTURES AND EQUIPMENT
Furniture, fixtures and equipment ........................... 38,152 38,152
Accumulated depreciation on furniture, fixtures and equipment (38,152) (38,152)
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Furniture, fixtures and equipment - Net ..................... 0 0
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OTHER ASSETS
Due from affiliates ........................................... 136,321 152,513
Deposits and other assets ..................................... 7,220 7,220
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Total other assets ............................................ 143,541 159,733
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Total Assets .................................................. $ 153,596 $ 210,880
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The accompanying notes are an integral part of these consolidated financial
statements.
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
BALANCE SHEETS
As of September 30, 2000 and March 31, 2000
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Sept. 30, March 31,
2000 2000
(Unaudited) (Note 1)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
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Accounts payable ....................................................... $ 47,839 $ 53,062
Accrued expenses and other current liabilities ......................... 141,932 75,228
Due to Officer ......................................................... 76,495 78,445
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Total current liabilities ...................................... 266,266 206,735
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Total liabilities .............................................. 266,266 206,735
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STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 10,000,000 shares authorized, 4,550,234
shares issued and outstanding at September 30, 2000 and March 31, 2000 4,550 4,550
Additional paid-in capital ............................................. 8,142,281 8,142,281
Retained earnings (deficit) ............................................ (8,259,501) (8,142,686)
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Total stockholders' equity ..................................... (112,670) 4,145
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Total liabilities and stockholders' equity ..................... $ 153,596 $ 210,880
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The accompanying notes are an integral part of these consolidated financial
statements.
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
STATEMENT OF OPERATIONS
(Unaudited)
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For the Three Months Ended For the Six Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
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Restated Restated
(Note 4) (Note 4)
Operating expenses:
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Operating expenses ............................................... $ 70,222 $ 37,822 $ 97,911 $ 75,176
Interest expense ................................................. 19,326 -- 19,326 --
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Total operating expenses .................................. 89,548 37,822 117,237 75,176
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Operating income (loss) ............................................ (89,548) (37,822) (117,237) (75,176)
Other income:
Interest and other income 319 310 421 310
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Net loss before loss on investment in .............................. (89,229) (37,512) (116,816) (74,866)
subsidiary ----------- ----------- ----------- -----------
Net loss ........................................................... $ (89,229) $ (37,512) $ (116,816) $ (74,866)
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Calculation of basic and diluted common share and share equivalents:
Basic and diluted loss per common share and
share equivalent ................................................... $ (.02) $ (.01) $ (.03) $ (.02)
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Weighted average number of common shares outstanding
4,550,234 4,550,234 4,550,234 4,550,234
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The accompanying notes are an integral part of these consolidated financial
statements.
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
STATEMENT OF CASH FLOWS
(Unaudited)
Increase (Decrease) in Cash
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Six Months Ended
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Sept. 30, Sept. 30,
2000 1999
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(Restated)
(Note 4)
CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income (loss) $ (116,816) $ (74,866)
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Adjustments to reconcile net loss to cash (used) provided for operating
activities:
Changes in assets and liabilities:
(Decrease) in accounts receivable - 20,242
(Increase) decrease in prepaid expenses and other current assets - (101)
Increase (decrease) in accounts payable (5,222) -
Increase (decrease) in accrued expenses and other liabilities 66,704 58,031
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Total adjustments 61,482 78,172
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Net cash provided (used) by operating activities (55,334) 3,306
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CASH FLOWS FROM INVESTING ACTIVITIES:
Loans ( made to ) officer (1,950) 41,511
Investment in affiliated companies 44,708 (44,708)
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Net cash (used for) investing activities 42,758 (3,197)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Loans and advances - Affiliates 16,192 (14,743)
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Net cash provided by (used for) investing activities 16,192 (14,743)
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NET INCREASE (DECREASE) IN CASH 3,616 (14,634)
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Cash, beginning of period 758 658
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Cash, end of period $ 4,366 $ (13,976)
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Supplemental disclosure of cash flow information:
Interest paid $ - $ -
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Taxes paid $ 1,856 $ 21,152
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The accompanying notes are an integral part of these consolidated financial
statements.
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
NOTES TO FINANCIAL STATEMENTS
September 30,2000
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION:
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and the
instructions to Form 10-QSB. Accordingly, they do not include
all the information and footnotes required by generally
accepted accounting principles for more complete financial
statements. In the opinion of management, the interim
financial statements include all adjustments considered
necessary for a fair presentation of the Company's financial
position and the results of its operations for the three
months ended September 30, 2000 and are not necessarily
indicative of the results to be expected for the full fiscal
year. For further information, refer to the Company's Annual
report on Form 10-KSB for the fiscal year ended March 31,
2000, as filed with the Securities and Exchange Commission.
NOTE 2 - DESCRIPTION OF COMPANY:
United Textiles & Toys Corp. (the "Company") is a Delaware
corporation which was organized in March 1991 and commenced
operations in October 1991. The Company formerly designed,
manufactured, and marketed a variety of lower priced women's
dresses, gowns, and separates (blouses, camisoles, jackets,
skirts, and pants) for special occasions and formal events. In
April 1998, the Company ceased all operating activities; it
now operates solely as a holding company.
NOTE 3 - INVESTMENT BY MULTIMEDIA CONCEPTS INTERNATIONAL, INC.:
On January 2, 1998, the Company issued 3,571,429 shares of its
common stock to Multimedia, a company of which the Company's
President is also President, Chief Executive Officer, and a
Director. The issuance of these common shares at a price of
$.28 per share ($.01 above the closing price on December 31,
1997) represented payment for $1,000,000 loaned to the Company
by Multimedia.
As a result of this transaction, Multimedia owns 78.5% of the
outstanding shares of common stock of the Company, effectively
making the Company a subsidiary of Multimedia.
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 3 - INVESTMENT BY MULTIMEDIA CONCEPTS INTERNATIONAL, INC.(continued)
On January 20, 1998, U.S. Stores acquired 1,465,000
shares of Multimedia's common stock. U.S. Stores was
incorporated on November 10, 1997. The Company's president
is also President and Director of U.S. Stores. After this
transaction, U.S. Stores held an aggregate of 1,868,000
shares of Multimedia's common stock, or 63%, of the
outstanding shares, effectively making Multimedia a
subsidiary of U.S. Stores.
On February 28, 1998, American Telecom Corporation ("American
Telecom") acquired 100% of the outstanding common shares of
U.S. Stores. American Telecom was incorporated on July 18,
1997. The Company's President is also President and a Director
of American Telecom. After this transaction, American Telecom
effectively obtained beneficial voting control of the Company.
In April 1998, American Telecom exchanged all of its
outstanding common shares with American Telecom, PLC, a
publicly traded company in Great Britain. After this
transaction, American Telecom effectively became a subsidiary
of American Telecom, PLC. Additionally, as part of this
transaction, American Telecom, PLC acquired 100% of the
outstanding common shares of U.S. Stores, thereby effectively
making U.S. Stores a direct subsidiary of American Telecom,
PLC and the Company.
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 4 - RESTATEMENT OF AMOUNTS PREVIOUSLY REPORTED
The Financial statements for the three months ended September
30, 2000 contain certain restatements of amounts previously
reported.
These restatements were the result of the Company's
decision to deconsolidate the accounts of Play Co. as of
March 31, 2000 and retroactively to March 31, 1999. At March
31, 1999, the Company's percentage of ownership in Play Co.
was 45.2%. Although the Company at that date owned less than
51% of Play Co.'s outstanding common stock, the Company
still exercised prerogative of control over Play Co. and
consolidated the accounts of Play Co. into the Company.
At March 31, 2000, the Company's percentage of ownership in
Play Co. was reduced to 21.69%. Accordingly, the Company has
elected to deconsolidate the accounts of Play Co., and account
for its investment in Play Co. on the equity method of
accounting. The report as of March 31, 1999 and September 30,
1999 have also been restated to reflect the deconsolidation of
Play Co. Under the equity method, the original investment is
recorded at cost, and is adjusted periodically to recognize
the investor's share of the earnings or losses of the investee
subsequent to the date of acquisition. Under this method of
accounting, the investment generally cannot be reduced below
zero, when the investee has operating losses that exceed the
investment, at which point the use of the equity method is
suspended.
The Company will resume accounting for the investment in Play
Co. under the equity method when Play co. subsequently reports
net income and the net income exceeds the Company's
accumulated share of Play Co.'s net losses not recognized
during the period of discontinuance of the equity method.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS
Results of Operations
United Textiles & Toys Corp. (the "Company") is a Delaware corporation
which was organized in March 1991 and commenced operations in October 1991. In
April 1998, the Company ceased all operating activities.
Statements contained in this report which are not historical facts may be
considered forward looking information with respect to plans, projections, or
future performance of the Company as defined under the Private Securities
Litigation Reform Act of 1995. These forward looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those now projected.
Three months ended September 30, 2000 compared to three months ended September
30, 1999
Operating expenses were $70,222 for the three months ended September 30,
2000, as compared to $ 37,822 for the three months ended September 30, 1999.
This increase of $32,400 or 86 %, was due primarily to the recognition of
$27,632 in new penalties assessed by New York State for late filing of income
taxes in prior years.
The Company incurred interest expense of $19,326 in the three months ended
September 30, 2000, as compared to $ 0 in the three months ended September 30,
1999. The recognition of interest expense was a result of an assessment by the
State of New York on late filed payroll tax returns in prior years.
For the three months ended September 30, 1999, the Company reported a net
loss of $89,229 or basic earnings deficit per share of $.02 as compared to a
restated net loss of $37,512, or a basic earnings deficit per share of $.01 for
the three months ended September 30, 1999. The weighted average number of common
shares used in the computation of basic earnings per share was 4,550,234 for the
three months ended September 30, 2000 and 1999.
Six months ended September 30, 2000 compared to six months ended September 30,
1999
Operating expenses were $97,911 for the six months ended September 30,
2000, as compared to $75,176 for the six months ended September 30, 1999. This
increase of $ 22,735 or 31%, was due to a new assessment by New York State of
penalties on late filing of income taxes for prior years.
The Company incurred interest expense of $19,326 in the six months ended
September 30, 2000, as compared to $ 0 in the six months ended September 30,
1999. The recognition of interest expense was a result of an assessment by the
State of New York on late filed payroll tax returns in prior years.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS (CONTINUED)
Results of Operations (continued)
For the six months ended September 30, 2000, the Company reported a
consolidated net loss of $116,816, or basic earnings deficit per share of $.03,
as compared to a restated net loss of $74,866, or a basic earnings deficit per
share of $.02, for the six months ended September 30, 1999. The weighted average
number of common shares used in the computation of basic earnings per share was
4,550,234 for the six months ended September 30, 2000 and 1999.
Liquidity and Capital Resources
At September 30, 2000, the Company reported cash and cash equivalents of
$4,366, working capital deficit of $256,211, and stockholders' equity of
$(112,670), reflecting the net loss of $116,816 for the six months ended
September 30, 2000.
At March 31, 2000, the Company reported cash and cash equivalents of $750,
working capital deficit of $155,588, and stockholders' equity of $4,145.
During the six month period ending September 30, 2000, the Company used
$55,334 in cash from its operating activities, as compared to providing $3,306
from operating activities in the six month period ended September 30, 1999.
The Company provided $42,758 of cash in investing activities during the six
months ended September 30, 2000, compared to using $3,197 in the six months
ended September 30, 1999.
The Company generated $16,192 from its financing activities in the six
month period ended September 30, 2000, as compared to using $14,743 in the six
months ended September 30, 1999.
As a result of the above factors, the Company has a net increase in cash of
$3,616 in the six months ended September 30, 2000, compared to a net decrease in
cash of $14,634 in the six months ended September 30, 1999.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS (CONTINUED)
YEAR 2000 UPDATE
Subject to continued monitoring of third party suppliers, the Company's year
2000 program ("Program") is complete, and no material problems have arisen since
the end of calendar year 1999. The Program addressed the issue of computer
programs and embedded computer chips being unable to distinguish between the
year 1900 and the year 2000. All of the Company's business computer systems are
year 2000 ready.
Trends Affecting Liquidity, Capital Resources and Operations
Since the Company is ostensibly a holding company, there are no trends that
will affect liquidity, capital resources, and operations.
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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, on this 14th day of November 2000.
UNITED TEXTILES & TOYS CORP.
By: /s/ Ilan Arbel
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Ilan Arbel
President
By: /s/ Allean Goode
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Allean Goode
Treasurer
