<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 SEPTEMBER 30, 1996
-------------------------------------------------
COMMISSION FILE NUMBER: 1-12722
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GOOD IDEAS ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE #75-2206675
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10410 TRADEMARK STREET, RANCHO CUCAMONGA, CALIFORNIA 91730
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(909) 466-8378
- --------------------------------------------------------------------------------
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. [ X ] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
As of November 8, 1996 - Common Stock, $.001 Par Value 3,948,680
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
GOOD IDEAS ENTERPRISES, INC.
STATEMENTS OF NET ASSETS IN LIQUIDATION
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30 MARCH 31
1996 1996
(UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
Cash and Cash Equivalents $ 5,764 $ 82,701
Accounts Receivable (Net of Allowance for Bad Debts of $76,213
and $77,061 at September 30, 1996 and March 31, 1996) 76,962 61,612
Inventories 146,735 196,209
Prepaid Expenses 4,151 7,358
Note Receivable - Parent 2,007,098 2,052,243
Property and Equipment (Net of Accumulated Depreciation
of $11,287 at March 31, 1996) - 15,801
Other Assets 6,808 6,808
----------- -----------
Total Assets 2,247,518 2,422,732
----------- -----------
LIABILITIES
Accounts Payable 44,696 86,830
Accrued Expenses 22,118 28,858
Capital Lease Obligations - 22,519
Reserve for Sale or Liquidation Costs 56,179 110,000
----------- -----------
Total Liabilities 122,993 248,207
----------- -----------
Commitments and Contingencies
NET ASSETS IN LIQUIDATION (Note 1)* $ 2,124,525 $ 2,174,525
=========== ===========
*Comprised of the following:
Preferred Stock, $.001 Par Value, 2,000,000 Shares
Authorized, None Issued and Outstanding $ - $ -
Common Stock, $.001 Par Value, 20,000,000 Shares
Authorized, Issued and Outstanding 3,948,680 Shares
at September 30 and March 31, 1996 3,949 3,949
Additional Paid-In Capital 5,768,662 5,768,662
Accumulated Deficit (3,648,086) (3,598,086)
----------- -----------
$ 2,124,525 $ 2,174,525
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 3
GOOD IDEAS ENTERPRISES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net Sales $ 50,000 $ 754,864 $ 48,868 $ 1,095,550
Cost of Sales 61,631 469,922 82,383 703,284
----------- ----------- ----------- -----------
Gross Profit (Loss) (11,631) 284,942 (33,515) 392,266
Operating Expenses:
Selling, General and Administrative Expenses 81,870 383,561 150,581 786,534
Management Fees - Parent - 75,000 - 150,000
Projected Costs through Sale or Liquidation (4,187) - (53,821) -
----------- ----------- ----------- -----------
Total Operating Expenses 77,683 458,561 96,760 936,534
Loss from Operations (89,314) (173,619) (130,275) (544,268)
Other Income 39,314 38,878 80,275 83,502
----------- ----------- ----------- ----------
Net Profit (Loss) $ (50,000) $ (134,741) $ (50,000) $ (460,766)
=========== =========== =========== ===========
Weighted Average Common Shares Outstanding 3,948,680 3,938,680 3,948,680 3,991,397
----------- ----------- ----------- -----------
Net Loss Per Common Share $ (0.01) $ (0.03) $ (0.01) $ (0.12)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 4
GOOD IDEAS ENTERPRISES, INC. FOR THE SIX MONTHS ENDED
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months Ended
September 30
1996 1995
--------- ---------
<S> <C> <C>
Cash Flow From Operating Activities:
Net Profit (Loss) $ (50,000) $(460,766)
Adjustments to Reconcile Net Loss to Net Cash:
Used by Operating Activities:
Depreciation - 25,187
Provisions for Sales Returns and Allowances - (11,837)
Excess of Capital Lease Liability Assumed by Parent
Over Book Value of Leased Assets Transferred (3,703) -
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (15,350) (247,843)
(Increase) Decrease in Inventories 49,474 (118,462)
(Increase) Decrease in Prepaid Expenses 3,207 3,290
(Increase) Decrease in Other Assets - 1,690
Increase (Decrease) in Accounts Payable (42,134) 160,860
Increase (Decrease) in Accrued Expenses (6,740) (7,381)
Increase (Decrease) in Reserve for Sale or Liquidation Costs (53,821) -
--------- ---------
Total Adjustments (69,067) (194,496)
--------- ---------
Net Cash Used by Operating Activities (119,067) (655,262)
--------- ---------
Cash Flow from Investing Activities:
Purchase of Property and Equipment - (14,846)
--------- ---------
Net Cash Provided (Used) by Investing Activities - (14,846)
Cash Flows from Financing Activities:
Net Payments Received on Loan to Parent 45,145 742,895
Loans to Affiliated Company - (41,784)
Payments of Capital Lease Obligations (3,015) (4,549)
--------- ---------
Net Cash Provided (Used) by Financing Activities 42,130 696,562
--------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents (76,937) 26,454
Cash and Cash Equivalents - Beginning of Period 82,701 351,355
--------- ---------
Cash and Cash Equivalents - End of Period $ 5,764 $ 377,809
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 5
NOTE 1 - Plan of Sale or Liquidation and Basis of Presentation
The Board of Directors of Substance Abuse Technologies, Inc.
("SAT" or "Parent"), formerly U.S. Alcohol Testing of America,
Inc., owner of 60.8% of the Common Stock of Good Ideas
Enterprises, Inc., ("Good Ideas" or "the Company"), decided at
its February 26, 1996 meeting to focus on its drug and alcohol
testing and human resource provider businesses and to dispose
of what it considered to be noncore businesses, such as the
Company. The SAT directors concluded that, because of the
history of losses in the Company and what they believed to be
the problems generally in the toy industry, as well as the
belief that new products are necessary to turn the Company
around, it would be difficult to make the Company's operations
profitable in a reasonable amount of time, if ever. SAT
management was authorized by its Board to seek offers to
purchase the Company. There can be no assurance that an
acceptable offer will be received or as to the terms of such
offer. If no acceptable offer is received, the SAT Board
intends to liquidate the Company by December 31, 1996. To
facilitate this plan, in April 1996, SAT filed a Registration
Statement on Form S-4 under the Securities Act of 1993, as
amended (the "Securities Act"), to register shares of SAT's
common stock to be issued to the minority stockholders of the
Company upon consummation of a proposed merger of a
wholly-owned subsidiary of SAT with and into the Company.
There can be no assurances that the minority stockholders will
approve the merger.
Effective March 31, 1996, the Company changed its basis of
accounting from the going concern basis to a liquidation
basis. Under the liquidation basis of accounting, assets are
adjusted to amounts estimated to be realizable, liabilities
are stated at anticipated settlement amounts and estimated
costs of liquidating the Company are provided to the extent
reasonably determinable. Accordingly, at March 31, 1996, the
Company recorded a reserve for the estimated costs to sell or
liquidate the Company and has reflected the expenses applied
to the reserve as a separate line on the statement of
operations. The statements of operations and cash flows for
the period ended September 30, 1995 have been prepared using
the historical cost (going concern) basis of accounting on
which the Company had previously been reporting its financial
condition and results of operations.
In the opinion of Good Ideas, the accompanying unaudited
financial statements reflect all adjustments (which include
only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows
for the periods presented.
Results of operations for interim periods are not necessarily
indicative of the results of operations for full year due to
external factors which are beyond the control of the Company.
The Report should be read with the Company's Annual Report on
Form 10-K for the fiscal year March 31, 1996.
NOTE 2 - Cash and Cash Equivalents
Cash and cash equivalents are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
1996 1996
------- -------
<S> <C> <C>
Cash in Bank $ 5,757 $77,951
Money Market Funds 7 4,750
------- -------
$ 5,764 $82,701
======= =======
</TABLE>
<PAGE> 6
GOOD IDEAS ENTERPRISE, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 3 - Inventories
<TABLE>
<CAPTION>
Inventories are summarized as follows: SEPTEMBER 30 MARCH 31
1996 1996
-------- --------
<S> <C> <C>
Finished Goods $ 91,022 $ 74,976
Work in Process 33,785 43,463
Raw Materials 218,928 274,770
-------- --------
343,735 393,209
-------- --------
Less: Reserve for write down and
Net Realizable Value 197,000 197,000
-------- --------
Total Inventory $146,735 $196,209
======== ========
</TABLE>
NOTE 4 - Property and Equipment
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
1996 1996
-------- --------
<S> <C> <C>
Warehouse Equipment $ - $ 27,088
Less: Accumulated Depreciation - 11,287
------- --------
Total Property and Equipment $ - $ 15,801
======= ========
</TABLE>
NOTE 5 - Note Receivable
The note receivable from parent consists of demand loans
bearing interest at the rate of 8% per annum, due December 31,
1996 and secured by the Parent's shares in the Company.
NOTE 6 - Capital Lease Obligations
As of March 31, 1996, the Company had capital lease
obligations totaling $22,519. The leases were payable in
monthly installments due from February 1988 to January 1999.
These leases, together with the equipment financed, were
transferred to the Parent during the quarter ended September
30, 1996.
NOTE 7 - Recent Developments
The Board of Directors of SAT, at its February 26, 1996
meeting, reached a decision to either sell or liquidate the
Company. Accordingly, the financial statements for the year
ended March 31, 1996 reflected a writedown of inventory and
fixed assets in the amount of approximately $258,000 to reduce
the carrying values of these assets to estimated net
realizable value. In addition, the Company provided in the
results of operations for the year ended March 31, 1996 the
projected cost of operations through the date of sale or
liquidation totaling $110,000. During the quarter ended
September 30, 1996, the Company provided an additional $50,000
to cover the projected cost of operation through date of
liquidation.
During April 1996, an executive of the Company with an
employment contract scheduled to terminate on March 31, 1997
resigned her position and received $10,000 in severance
compensation.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended September 30, 1996, the Company accrued
interest income of approximately $81,000 on its loan to its Parent. The loan
bears interest at 8% and is evidenced by notes that become due December 31,
1996. These loans were made with funds in excess of amounts required by the
Company and carry interest rates in excess of those available to the Company on
short term money market investment.
Even if the Note Receivable ($2,007,698 at September 30, 1996) was paid by
the Parent, management does not believe that this amount would be sufficient for
the Company to acquire all of the products necessary to turn the Company around
and, if the Company is liquidated as currently contemplated as the alternative
to sale, 60.8% or $1,220,316 of such payment would be returned to the Parent and
only 39.2% or $786,782 would go to the Company's minority stockholders, assuming
that all creditor claims were satisfied.
Cash used by operations during the six months ended September 30, 1996 was
approximately $119,000 as compared with $655,000 in the same period of the prior
year. The net loss was $50,000, which represented an increase in the $110,000
reserve which was established in the fiscal year ended March 31, 1996 to cover
the expenses incurred while management attempted to sell or liquidate the
business. The additional reserve was established due to delays encountered in
selling or liquidating the business. Financing activities provided approximately
$42,000 primarily from the partial repayment of the loan to Parent.
The Company believes that its present cash resources are adequate to meet
its minimal needs while its assets are held for sale or liquidation.
RESULTS OF OPERATIONS
Three months ended September 30, 1996 as compared with three months ended
September 30, 1995
Net sales for the three months ended September 30, 1996 were $50,000 as
compared with $755,000 for the same period of the prior year. The decrease of
$705,000 reflected the suspension of normal operations as the assets of the
Company are held for sale or liquidation.
A negative gross profit of $12,000 was incurred in the three months ended
September 30, 1996 as compared with a gross profit of $285,000 in the same
period of the prior year. The loss in the current period reflected the
insignificant level of sales and warehouse rental and other holding costs for
the inventory pending sale or liquidation.
Selling, general and administrative expenses for the three months ended
September 30, 1996 were $82,000 as compared with $384,000 in the same period of
the prior year. The decrease of $302,000 was attributable to the suspension of
operations. Expenses continuing in 1996 consisted primarily of salary and
benefits of the Company's remaining employee, a severance payment of $10,000 and
$30,000 of legal costs incurred in connection with the proposed offer by the
Parent to acquire common shares owned by the minority interest.
During the three-month period ended September 30, 1996, the Company
recorded approximately $40,000 in interest income from a loan to its Parent.
Approximately the same amount was recorded in the same period of the prior year.
<PAGE> 8
Six months ended September 30, 1996 as compared with six months ended September
30,1995
Net sales for the six months ended September 30, 1996 were approximately
$49,000 as compared with sales of $1,096,000 in the comparable period of the
prior year. This decrease was a result of the concentration of management on the
sale or liquidation of the Company's assets rather than pursuing traditional
sales efforts.
RESULTS OF OPERATIONS (CONTINUED)
There was a negative gross profit of $36,000 in the six months ended
September 30, 1996 as compared with a gross profit of $392,000 in the comparable
period of the prior year. The loss in the current period reflected the
insignificant level of sales during the period, and warehouse rental and other
holding costs for the inventory and other assets of the Company.
Selling, general and administrative expenses for the six months ended
September 30, 1996 were $152,000 as compared with $786,000 in the comparable
period of its prior year reflecting the elimination of most employees and the
office facility in Texas and other related costs. The Company incurred no
management fees in the six months ended September 30, 1996 as the Parent
suspended these charges retroactive to January 1, 1996.
During the six months ended September 30, 1996, the Company recognized
interest income of approximately $81,000 on its loans to the Parent as compared
with interest income from affiliates of a comparable amount in the same period
of the prior year.
The Company provided a reserve for sale or liquidation costs of $110,000 in
its results of operations for the year ended March 31, 1996. Approximately
$100,000 of the reserve was utilized in the six months ended September 30, 1996
to offset losses incurred, resulting in the elimination of any net loss from
operations. However, due to the delay in the sale or liquidation of the assets
of the Company, an additional provision of $50,000 was charged against the
current quarter income to cover costs expected to be incurred through sale or
liquidation.
<PAGE> 9
PART II
OTHER INFORMATION
ITEM 1 - Legal Proceedings
There are no known legal proceedings pending against the Registrant.
ITEM 2 - Changes in Securities
There have been no changes in securities of the Registrant during the
period covered by these Reports.
ITEM 3 - Defaults upon Senior Securities
None
ITEM 4 - Submission of Matters for a Vote of Security Holders
There was no matter submitted to a stockholder vote during the period
covered by these Reports.
ITEM 5 - Other Information
Not applicable.
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
A Current Report on Form 8-K reporting Item 4 (Changes in
Registrant's Certifying Accountant) was filed on September 18,
1996.
<PAGE> 10
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 thereto duly authorized.
GOOD IDEAS ENTERPRISES, INC.
Registrant
Date: November 19, 1996 BY: /s/ DENNIS A. WITTMAN
-----------------------------
Dennis A. Wittman
Vice President of Finance and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,764
<SECURITIES> 0
<RECEIVABLES> 76,962
<ALLOWANCES> 76,213
<INVENTORY> 146,735
<CURRENT-ASSETS> 2,247,518
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,247,518
<CURRENT-LIABILITIES> 122,993
<BONDS> 0
0
0
<COMMON> 3,949
<OTHER-SE> 2,120,576
<TOTAL-LIABILITY-AND-EQUITY> 2,247,518
<SALES> 50,000
<TOTAL-REVENUES> 50,000
<CGS> 61,631
<TOTAL-COSTS> 139,314
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (50,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (50,000)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
