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 June 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
(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 July 31, 2000.
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION Page
Number
Item 1. FINANCIAL STATEMENTS
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Balance Sheets as of June 30, 2000 (unaudited)
and March 31, 2000. 3-4
Statements of Operations (unaudited) for the Three Months Ended June 30, 2000 and
1999 (restated). 5
Statements of Cash Flows (unaudited) for the Three Months
Ended June 30, 2000 and 1999 (restated). 6
Notes to Financial Statements 7-8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9-10
PART II. OTHER INFORMATION 11
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
BALANCE SHEETS
As of June 30, 2000 and March 31, 2000
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June 30, March 31,
2000 2000
ASSETS
CURRENT ASSETS:
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Cash ........................................................ $ 712 $ 750
Prepaid expenses and other current assets ................... 5,689 5,689
Investment in affiliated companies .......................... 44,708 44,708
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Total current assets .......................................... 51,109 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 ......................................... 130,213 152,513
Deposits and other assets ................................... 7,220 7,220
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Total other assets .......................................... 137,433 159,733
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Total Assets ........................................ $ 188,542 $ 210,880
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
BALANCE SHEETS
As of June 30, 2000 and March 31, 2000
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June 30, March 31,
2000 2000
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
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Accounts payable ............................................................ $52,231 $ 53,062
Accrued expenses and other current liabilities .............................. 75,228 75,465
Due to Officer .............................................................. 84,287 78,445
Total current liabilities ........................................... 211,983 206,735
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Total liabilities ................................................... 211,983 206,735
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 10,000,000 shares
authorized, 4,550,234 shares issued and outstanding
at March 31, 2000 and 4,550,234 shares issued and
outstanding at March 31, 1999 4,550 4,550
Additional paid-in capital .................................................. 8,142,281 8,142,281
Retained earnings (Deficit) ................................................. (8,170,272) (8,142,686)
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Total stockholders' equity
(23,441) 4,145
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Total liabilities and stockholders' equity .......................... $ 188,542 $ 210,880
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
STATEMENT OF OPERATIONS
(Unaudited)
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Three Months Ended
June 30, June 30,
2000 1999
(Restated)
(Note 4)
Operating expenses:
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Operating expenses ............................................... $ 27,689 $ 37,355
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Total operating expenses ................................. 27,689 37,355
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Operating income (loss) ............................................ (27,689) (37,355)
Other income:
Interest and other income
103 --
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Net loss ........................................................... $ (27,586) $ (37,355)
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Calculation of basic and diluted common share and share equivalents:
Basic and diluted loss per common share and share equivalent ..... $ (.01) (.01)
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Weighted average number of common shares outstanding ............... 4,550,234 4,550,234
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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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Three Months Ended
June 30, June 30,
2000 1999
(Restated)
(Note 4)
CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss .............................................................................. $(27,586) $(37,355)
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Adjustments to reconcile net loss to cash (used) provided for operating
Activities: Changes in assets and liabilities:
Increase (decrease) in prepaid expenses and other current assets -- (101)
Increase (decrease) in accounts payable
(831) --
Increase (decrease) in accrued expenses and other liabilities 237 13
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Total adjustments (594) (88)
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Net cash provided (used) by operating activities
(28,180) (37,443)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Loans and exchanges 5,842 15,408
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Net cash (used for) investing activities
5,842 15,408
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CASH FLOWS FROM FINANCING ACTIVITIES:
22,300 21,600
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Loans and advances - affiliates 22,300 21,600
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Net cash provided by (used for) investing activities (38) (435)
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NET INCREASE (DECREASE) IN CASH
Cash, beginning of period 750 658
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Cash, end of period $ 712 223
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Supplemental disclosure of cash flow information:
Interest paid $ -- $ --
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Taxes paid $ -- $ --
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
NOTES TO FINANCIAL STATEMENTS
June 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 June 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.
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.
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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
NOTE 3 - INVESTMENT BY MULTIMEDIA CONCEPTS INTERNATIONAL, INC.:
(continued)
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.
NOTE 4 - RESTATEMENT OF AMOUNTS PREVIOUSLY REPORTED
The Financial statements for the three months ended June 30,
1999 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. 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. 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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UNITED TEXTILES & TOYS CORP.
(A Subsidiary of Multimedia Concepts International, Inc.)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS
Results of Operations
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 and now operates solely as a holding company for its
ownership in Play Co.
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.
For the three months ended June 30, 2000 compared to the three months ended June
30, 1999 (restated):
Consolidated operating expenses were $27,689 as compared to $37,355
restated for the three months ended June 30, 1999. This decrease of $9,666, or
26%, was primarily due to management's commitment to reducing operating
expenses.
For the three months ended June 30, 2000, the Company reported a
consolidated net loss of $27,586, or basic loss per share of .01, as compared to
a restated net loss of $37,355, or a basic loss per share of $.01 for the three
months June 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
June 30, 2000 and June 30, 1999.
Liquidity and Capital Resources
At June 30, 2000, the Company reported cash and cash equivalents of
$712 , working capital of $160,874, and stockholders' equity of $(23,441) as
compared to cash and cash equivalents of $750, working capital deficit of
$155,588, and stockholders' equity of $4,145 at March 1, 2000.
Year 2000
The Company in 1999 upgraded its computer system by installing a year
2000 upgrade to its software.
Although the Company has not experienced any problems related to the
year 2000 issues, the possibility still exists that such problems might arise
during the calendar year. However, the effect, if any, of year 2000 problems on
the Company's results of operations cannot be estimated with any degree of
certainty if the Company or its affiliated companies, or service providers are
not fully compliant.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS (CONTINUED)
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 8th day of August 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
