-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mt4VTgEJv1L/7y68i0fpbOnM83zE3Q4u/ctT/ly2BTxMVo5QV+n9h1lye/SvrDEs zU3KWQkiTrHMYphZgCqCIw== /in/edgar/work/20000815/0000943440-00-000255/0000943440-00-000255.txt : 20000922 0000943440-00-000255.hdr.sgml : 20000921 ACCESSION NUMBER: 0000943440-00-000255 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000701 FILED AS OF DATE: 20000815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UTOPIA MARKETING INC CENTRAL INDEX KEY: 0000880241 STANDARD INDUSTRIAL CLASSIFICATION: [3140 ] IRS NUMBER: 943060101 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-19616 FILM NUMBER: 703224 BUSINESS ADDRESS: STREET 1: 312 CLEMATIS STREET STREET 2: SUITE 500 CITY: WEST PALM BEACH STATE: FL ZIP: 33401 BUSINESS PHONE: 5618359998 MAIL ADDRESS: STREET 1: 212 MOUNT HOLLY ROAD CITY: KATONAH STATE: NY ZIP: 10536 10QSB 1 0001.txt 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 AND EXCHANGE ACT OF 1934 For the quarterly period ended July 1, 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 No.: 0-19616 UTOPIA MARKETING, INC. (Exact Name of Registrant as Specified in its Charter) Florida 94-3060101 (State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification number) 312 Clematis Street, Suite 500, West Palm Beach, Florida 33401 (Address of Principal Executive Offices, Including Zip Code) (561) 835-9998 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the Registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past twelve 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 August 15, 2000, there were 15,216,367 shares of Common stock outstanding. UTOPIA MARKETING, INC. INDEX Page PART I - FINANCIAL INFORMATION ---- Item 1 - Financial Statements Condensed Balance Sheets as of July 1, 2000 (unaudited) and January 1, 2000 2 Condensed Statements of Operations for the three and six months ended July 1, 2000 (unaudited) and July 3, 1999 (unaudited) 3 Condensed Statements of Cash Flows for the six months ended July 1, 2000 (unaudited) and July 3, 1999 (unaudited) 4 Notes to Condensed Financial Statements 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 6 PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K 10 PART I ITEM 1. FINANCIAL STATEMENTS UTOPIA MARKETING, INC. BALANCE SHEETS
ASSETS July 1, January 1, 2000 2000 ---------- ---------- (IN THOUSANDS EXCEPT PER SHARE DATA) CURRENT ASSETS: Cash and cash equivalents................................. $ 50 $ 185 Due from factor, net of allowance......................... 1,059 550 Merchandise inventories................................... 644 1,418 Other current assets...................................... 0 54 ---------- ---------- TOTAL CURRENT ASSETS...................................... 1,753 2,207 Property and equipment, net............................... 87 98 Intangible assets......................................... 629 648 ---------- ---------- TOTAL ASSETS.............................................. $ 2,469 $ 2,953 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable.......................................... $ 632 $ 1,716 Accrued expenses.......................................... 366 317 Due to factor............................................. 593 0 ---------- ---------- TOTAL CURRENT LIABILITIES.................................... 1,591 2,033 ---------- ---------- LONG-TERM OBLIGATIONS........................................ 489 468 ---------- ---------- SHAREHOLDERS' EQUITY: Common stock.............................................. 15 15 Additional paid-in capital................................ 33,147 33,147 Accumulated deficit....................................... (32,773) (32,710) --------- ---------- TOTAL SHAREHOLDERS' EQUITY................................ 389 452 --------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................ $ 2,469 $ 2,953 ========= ==========
See Notes to Condensed Financial Statements. 2 UTOPIA MARKETING, INC. STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SIX MONTHS ENDED ------------------------- ------------------------ July 1, July 3, July 1, July 3, 2000 1999 2000 1999 ---------- ----------- ---------- ----------- (IN THOUSANDS EXCEPT (IN THOUSANDS EXCEPT PER SHARE DATA) PER SHARE DATA) Net revenue......................................... $ 1,499 $ 233 $ 4,689 $ 233 Cost of sales....................................... 967 135 3,055 138 ---------- ---------- ---------- ----------- GROSS PROFIT...................................... 532 98 1,634 95 Selling, general and administrative expenses........ 754 798 1,630 1,337 ---------- ---------- ---------- ----------- Operating Income (loss)............................. (222) (700) 4 (1,242) Interest income/(expense)........................... (40) 14 (68) 34 ---------- ---------- ---------- ----------- Income (loss) before income taxes............................................. (262) (686) (64) (1,208) Income taxes........................................ 0 0 0 0 ---------- ---------- ---------- ----------- NET INCOME (LOSS) $ (262) (686) (64) (1,208) =========== ========== ========== =========== NET INCOME (LOSS) PER SHARE $ (0.02) $ (0.05) $ (0.00) (0.08) ========== ========== ========== =========== Weighted average shares outstanding................. 15,216 14,216 15,216 14,216 ========== ========== ========== ==========
See Notes to Condensed Financial Statements 3 UTOPIA MARKETING, INC. STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED -------------------------- JULY 1, JULY 3, 2000 1999 ------------ ------------ (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)....................................... $ ( 64) $ (1,208) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization........................... 51 3 CHANGES IN OPERATING ASSETS AND LIABILITIES: Accounts receivable..................................... (509) (209) Merchandise inventories................................. 774 (315) Prepaid expenses........................................ 0 68 Other assets............................................ 54 (1) Accounts payable, accrued expenses...................... (1,034) 360 ---------- ---------- Net cash provided by (used in) operating activities........ (728) (1,302) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment..................... (0) (63) ---------- ---------- Net cash provided by (used in) investing activities........ (0) (63) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Advances from factor.................................... 593 0 ---------- ---------- Net cash (used in) provided by financing activities........ 593 0 ---------- ---------- Net (decrease) in cash and cash equivalents................ (135) (1,365) Cash and cash equivalents: Beginning of period..................................... 185 1,942 End of period........................................... $ 50 $ 577 ========== ==========
See Notes to Condensed Financial Statements 4 UTOPIA MARKETING, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS SIX MONTH PERIODS ENDED JULY 1, 2000 AND JULY 3, 1999 (UNAUDITED) NOTE 1 - SUMMARY OF ACCOUNTING POLICIES The accompanying unaudited condensed financial statements have been prepared from the records of the Company without audit and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the Company's financial position at July 1, 2000 and January 1, 2000 and the results of operations and its cash flows for the three and six month periods ended July 1, 2000 and July 3, 1999. Accounting policies followed by the Company are described in Note 1 to the audited financial statements for the year ended January 1, 2000. As permitted by the rules and regulations of the Securities & Exchange Commission, certain information and footnote disclosures included in the annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted for the purposes of these condensed interim financial statements. The unaudited condensed interim financial statements included herein should be read in conjunction with the audited financial statements and the notes thereto included in the Company's Form 10-KSB for the year ended January 1, 2000. The results of operations and cash flows for the six-month period ended July 1, 2000 are not necessarily indicative of the results of operations or cash flows to be expected for any other period or for the full year. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Utopia Marketing, Inc., formerly known as Sam & Libby, Inc. (the "Company"), was founded in October 1987, primarily for the purpose of developing and commercializing footwear products. In 1991, the Company completed a public offering of its common stock. On July 2, 1996, the Company entered into an agreement with Maxwell Shoe Company Inc. ("Maxwell") pursuant to which the Company sold its brand names, trademarks, trade names and certain other intellectual property rights to Maxwell, and received approximately $5.5 million. After the sale to Maxwell, the Company's management had been primarily involved in the investigation of new business opportunities for the Company. During this time, management investigated possible acquisitions and mergers and explored various start-up ventures. Since December 1998, the Company has been developing and commercializing a line of fashion footwear products under the Company's NAKEDFEET [TM] brand name. On October 6, 1999, the Company acquired the rights from Ipanema Shoe Corporation ("Ipanema") to market and commercialize footwear under the brand name IPANEMA [TM]. In exchange for these rights, the Company issued 1,000,000 shares of its common stock to Ipanema and a convertible note for $500,000 plus interest due October 5, 2002. Interest accrues under the note at prime rate plus 1%. Additionally, in connection with the Ipanema asset purchase, the Company entered into a Collection Services Agreement with Ipanema, pursuant to which the Company assisted in collecting Ipanema's outstanding accounts receivable of approximately $3,300,000 in exchange for Ipanema's payment to the Company of 30% of the gross collections of such accounts receivable. As of April 1, 2000 the Company had received $990,000 under the Collection Services Agreement. The Company does not expect to earn any additional revenues under this Agreement during fiscal year 2000. Results of Operations Six months ended July 1, 2000 and July 3, 1999 Revenues. The Company generated net revenues of $4,689,000 through the sale of its product lines under the brand names NAKEDFEET[TM] and IPANEMA[TM] during the six months ended July 1, 2000 compared with $233,000 for the same period ended July 3, 1999. Net revenues increased as a result of a full six 6 months of shipping and the addition of the IPANEMA product line. Interest expense for the six-month period ended July 1, 2000 was $68,000 compared with interest income of $34,000 for the period ended July 3, 1999. Interest expense for the first six months of 2000 was on various borrowing from the Company's factor and a $500,000 note due to the Sumitomo Corporation in connection with the purchase certain IPANEMA assets. Interest income for the first six months of 1999 was earned as a result of the Company holding funds in a money market account. Gross Profit. Gross profit of $1,634,000 for the six months ended July 1, 2000 includes 360,000 of first-cost commissions. Gross profit of $95,000 for the six months ended July 3, 1999 includes $24,000 of first-cost commissions. First-cost commissions are generated when the Company acts as an agent for its customers. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased to $1,630,000 for the six months ended July 1, 2000 as compared to $1,337,000 for the six months ended July 3, 1999. Selling, general and administrative expenses for the six months ended July 1, 2000 increased as a result of the addition of the IPANEMA division and consisted primarily of $374,000 in personnel costs; $329,000 for sales representatives; $144,000 for travel and entertainment; $235,000 for trade shows; $163,000 for product development; and $59,000 for professional fees. Liquidity and Capital Resources The Company's primary source of liquidity for the first two quarters of 2000 was a credit facility extended by Capital Factors, Inc. ("Capital Factors"), whereby the Company can borrow an amount equal to 85% of the Company's accounts receivable and 50% of its inventory (the "Credit Facility"). The Credit Facility is secured by the Company's receivables, which have been assigned to Capital Factors and the Company's inventory, which has been pledged to Capital Factors. Borrowings under the Credit Facility accrue interest at a rate of prime plus 1% on its outstanding balance, which totaled $593,000 as of July 1, 2000. The Company has increased its capital expenditures in fiscal year 1999 as a result of the Board of Directors' decision to develop and commercialize a line of footwear. However, the Company did not make any capital expenditures during the first half of 2000. During the current phase of the Company's operations, the Company's cash requirements will continue to be substantial. The Company currently anticipates that it will require significant additional capital to fund its working capital needs until it has positive cash flows. Until the Company 7 raises this additional capital, it may not be able to expand its product lines or market its products as quickly or effectively as will be required in order for it to be competitive. The amount of additional capital the Company will require will depend primarily on its ability to design, develop and market products that are accepted by the market and generate rapidly increasing levels of sales. The Company's failure to design, develop and market well-received products and other events, including the costs and timing of establishing trademarks and other proprietary rights; the Company's ability to manufacture products at an economically feasible cost; the extent and terms of any collaborative manufacturing, marketing or other arrangement; and changes in economic or competitive conditions of the Company's planned business, would cause the Company to require greater amounts of additional capital prior to achieving positive cash flows. The Company may seek to raise such additional capital through loans, factoring and other financial arrangements, or the issuance of debt or equity securities. To the extent the Company raises additional capital by issuing equity securities or obtaining borrowings convertible into equity, ownership dilution to existing shareholders will result, and future investors may be granted rights superior to those of existing shareholders. There can be no assurance that any additional capital will be available to the Company on acceptable terms, or at all. If additional capital is not available, the Company will not be able to complete the commercialization of any products it may have developed. As a result, the Company may be required to discontinue its operations without obtaining any value for its products under development, thereby eliminating shareholder equity or the Company could be forced to relinquish rights to some or all of its products under development in return for an amount substantially less than the Company expended to develop such products. FORWARD-LOOKING INFORMATION: CERTAIN CAUTIONARY STATEMENTS Certain statements contained in this Form 10-QSB, principally in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," that are not related to historical results, including statements relating to the design, development and commercialization of the Company's products and the expansion of marketing, promotional and research and development programs, are forward-looking statements. Actual results may differ materially from those projected or implied in the forward-looking statements. Further, certain forward-looking statements are based upon assumptions of future events that may not prove to be accurate. These forward-looking statements involve risks and uncertainties, including but not 8 limited to, the Company's ability to successfully develop and commercialize a line of footwear; the Company's future cash flows, sales, gross margins and operating costs; the Company's ability to raise significant amounts of additional capital; the Company's ability to devote the resources required to adequately market a line of footwear; the Company's ability to recruit qualified personnel; the Company's ability to manufacture products at an economically feasible cost; the Company's ability to expand its product lines; the Company's ability to establish trademarks and other proprietary rights; the effect of conditions in the footwear market and the economy in general; and certain other risks. Forward-looking statements contained in this report and in subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by cautionary statements in this paragraph and elsewhere in this Form 10-QSB, in other reports filed by the Company with the Securities and Exchange Commission and in the Company's Form 10-KSB for the year ended January 1, 2000, filed with the Securities and Exchange Commission on April 17, 2000, under the caption "Forward-Looking Information: Certain Cautionary Statements". 9 PART II. - OTHER INFORMATION ---------------------------- ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits 3.1* Articles of Incorporation of the Company. 3.2* Bylaws of the Company. 4.1 See Exhibits 3.1 and 3.2 for provisions of the Articles of Incorporation and Bylaws of the Company defining the rights of holders of Common Stock of the Company. 27 Financial Data Schedule b. Current Reports on Form 8-K There were no reports filed on Form 8-K during the quarter ended July 1, 2000. - ------------------- * Filed with the Company's Annual Report on Form 10-KSB , filed with the Securities and Exchange Commission on April 17, 1999, and incorporated herein by reference. 10 SIGNATURES ---------- In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. UTOPIA MARKETING, INC. (Registrant) Dated: August 15, 1999 BY:/s/Samuel L. Edelman Samuel L. Edelman, Chairman of the Board, Chief Executive Officer Dated: August 15, 1999 BY:/s/Vance F. Kistler Vance F. Kistler, Chief Financial Officer EX-27 2 0002.txt
5 This schedule contains summary financial information extracted from Balance Sheet, Statement of Operations, Statements of Cash Flows and Notes thereto incorporated in Part I, Item 1. of this Form 10-QSB and is qualified in its entirety by reference to such financial statements. 1000 6-MOS DEC-30-2000 JUL-01-2000 50 0 1,059 0 644 1,753 87 0 2,469 1,591 0 0 0 15 374 2,469 4,689 4,689 3,055 3,055 1,630 0 68 (64) 0 (64) 0 0 0 (64) (0.02) (0.02)
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