<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 June 30, 1996
------------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
------------------------------------------------
Commission File Number: 33-73494
-------------------------------------------------------
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
- - -------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 OR 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
As of August 11, 1996 - Common Stock, $.001 Par Value 3,948,680
<PAGE> 2
GOOD IDEAS ENTERPRISES, INC.
STATEMENT OF NET ASSETS IN LIQUIDATION
ASSETS
<TABLE>
<CAPTION>
JUNE 30 MARCH 31
1996 1996
----------- -----------
(Unaudited)
<S> <C> <C>
Cash and Cash Equivalents $ 7,656 $ 82,701
Accounts Receivable (Net of allowance for Bad Debts of
$75,213 and $77,061 at June 30, 1996 and March 31, 1996) 37,962 61,612
Inventories 196,734 196,209
Prepaid Expenses 4,151 7,358
Note Receivable - Parent 2,045,235 2,052,243
Property and Equipment (Net accumulated
Depreciation of $11,287) 15,801 15,801
Other Assets 6,808 6,808
----------- -----------
Total Assets $ 2,314,347 $ 2,422,732
=========== ===========
LIABILITIES
Accounts Payable $ 22,424 $ 86,830
Accrued Expenses 35,273 28,858
Capital Lease Obligations 21,759 22,519
Reserve for Sale or Liquidation Costs 60,366 110,000
----------- -----------
Total Liabilities 139,822 248,207
----------- -----------
NET ASSETS IN LIQUIDATION (Note 1)* $ 2,174,525 $ 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 March 31, 1996 and 1995 3,949 3,949
Additional Paid-In Capital 5,768,662 5,768,662
Accumulated Deficit (3,598,086) (3,598,086)
----------- -----------
$ 2,174,525 $ 2,174,525
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 3
GOOD IDEAS ENTERPRISES, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30,
---------------------------
1996 1995
----------- ----------
(Unaudited)
<S> <C> <C>
Net Sales (Returns) $ (1,132) $ 340,685
Cost of Sales 20,752 233,362
---------- ----------
Gross Profit (Loss) (21,884) 107,323
Operating Expenses:
Selling, General and Administrative Expenses 68,732 402,971
Management Fees - Parent -0- 75,000
Projected costs through sale or liquidation (49,634) -0-
---------- ----------
Total Operating Expenses (21,884) 477,971
---------- ----------
Loss from Operations -0- (370,648)
Other Income 40,982 44,623
---------- ----------
Net Loss $ -0- $ (326,025)
--------- ----------
Weighted Average Common Shares Outstanding 3,948,680 4,044,113
---------- ----------
Net Loss Per Common Share $(.00) $(.08)
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 4
GOOD IDEAS ENTERPRISES, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30,
--------------------------
1996 1995
-------- ----------
<S> <C> <C>
Cash Flow From Operating Activities:
Net Loss $ -0- $(326,025)
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities:
Depreciation -- 12,395
Provision for Sales Returns and Allowances -- (27,273)
Changes in Operating Assets and Liabilities:
Decrease in Accounts Receivable 23,650 46,616
(Increase) Decrease in Inventories (525) (96,944)
(Increase Decrease in Prepaid Expenses 3,207 18,583
Increase (Decrease) in Accounts Payable (64,406) 142,316
Increase (Decrease) in Accrued Expenses 6,414 18,202
(Decrease) in Reserve for Sale of
Liquidation Costs (49,634) -0-
-------- ----------
Total Adjustments (81,294) (113,895)
-------- ----------
Net Cash Used by Operating Activities (81,294) (212,130)
Cash Flow From Investing Activities:
Purchases of Property and Equipment -- (7,166)
-------- ----------
Net Cash Used by Investing Activities -- (7,166)
Cash Flows From Financing Activities:
Net Repayment of Loan to Parent 7,008 84,309
Loans to Affiliated Company -- (20,684)
Payments of Long-Term Debt (760) (2,274)
-------- ----------
Net Cash Provided (Used) by Financing Activities 6,280 61,351
Net Decrease in Cash and Cash Equivalents (75,045) (157,945)
Cash and Cash Equivalents - Beginning of Period (82,701) 351,355
-------- ----------
Cash and Cash Equivalents - End of Period $ 7,656 $ 193,410
-------- ----------
Supplemental Cash Flow Information:
Cash Paid for Interest $ 229 $ 761
Cash Paid for Income Taxes $ -- $ --
-------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 5
GOOD IDEAS ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - Plan of Sale or Liquidation and Basis of Presentation
-----------------------------------------------------
The Board of Directors of U.S. Alcohol Testing of America,
Inc., ("USAT"), owner of 60.8% of the Common Stock of Good
Ideas Enterprises, Inc. ("Good Ideas") ("the Company"),
decided at its February 26, 1996 meeting to focus on its drug
and alcohol testing and human resource provider business and
to dispose of what it considered to be noncore businesses,
such as the Company. The USAT directors concluded that,
because of the history of losses in the Company and what it
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.
USAT 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 USAT Board
intends to liquidate the Company by December 31, 1996. To
facilitate this plan, in April 1996, USAT filed a Registration
Statement on Form S-4 under the Securities Act of 1933, as
amended (the "Securities Act") to register shares of USAT'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 USAT with and into the Company.
Although there are 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, the Company has recorded a reserve for the
estimated costs to sell or liquidate the Company. The
statements of operations and cash flows for the period ended
June 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, Inc, the Company, 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>
June 30, March 31,
1996 1996
------- --------
<S> <C> <C>
Cash in Bank $7,649 $77,951
Money Market Funds 7 4,750
------ -------
$7,656 $82,701
====== =======
</TABLE>
<PAGE> 6
GOOD IDEAS ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
CONTINUED
NOTE 3 - Inventories
-----------
Inventories are summarized as follows:
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
------- --------
<S> <C> <C>
Finished Goods $ 75,501 $ 74,976
Work in Process 43,463 43,463
Raw Materials 274,770 274,770
-------- --------
393,734 393,209
-------- --------
Less: Reserve for write down to
Net Realizable Value 197,000 197,000
-------- --------
Total Inventory $196,734 $196,209
======== ========
</TABLE>
NOTE 4 - Property and Equipment
----------------------
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
------- --------
<S> <C> <C>
Warehouse Equipment $27,088 $27,088
Less: Accumulated Depreciation 11,287 11,287
------- ------
$15,801 $15,801
======= =======
</TABLE>
NOTE 5- Note Receivable - Parent
------------------------
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 June 30, 1996 and March 31, 1996, the Company had
capital lease obligations totaling $21,759 and $22,519,
respectively. The leases are payable in monthly installments
due from February 1988 to January 1999.
<PAGE> 7
GOOD IDEAS ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 7- Recent Developments
-------------------
The Board of Directors of USAT, 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 of
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 April 1996, USAT filed a Registration Statement on Form
S-4 under the Securities Act in an attempt, through a consent
solicitation, to acquire the common shares owned by the
minority interest and thus own 100% of the Company. There can
be no assurances that such solicitation will be successfully
consummated.
During April 1996, an executive of the Company with an
employment contract scheduled to terminate on March 31, 1997
resigned her position and will receive $10,000 in severance
compensation.
On June 25, 1996, the Board of Directors extended the due date
of the note receivable from USAT to December 31, 1996. All
other terms and conditions of the note remain unchanged.
<PAGE> 8
Managements Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
- - -------------------------------
During the quarter ended June 30, 1996, the Company accrued interest income of
$40,982 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.
Cash used by operations was approximately $80,000 compared with $212,000 in the
same period of the prior year. The net loss was $0 as a provision of $110,000
was made in the fiscal year ended March 31, 1996 to cover the expenses incurred
while management attempted to sell or liquidate the business. No cash was used
or provided by investing activities. Financing activities provided
approximately $4,000 from the net 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 June 30, 1996 compared with three months ended June 30, 1995
- - -------------------------------------------------------------------------------
Net sales for the three months ended June 30, 1996 were net returns of
approximately $1,000, compared with sales of $341,000 in the comparable period
of the prior year. This decrease is a result of the concentration of
management on the sale or liquidation of the Company's assets rather than
pursuing traditional sales efforts.
Gross profit was a loss of $22,000 in the three months ended June 30, 1995,
compared with a gross profit of $107,000 in the comparable period of the prior
year. The loss in the current period reflects the insignificant level of sales
during the period, and warehouse rental and other holding cost for the
inventory and other assets of the Company.
Selling, general and administrative expenses for the quarter ended June 30,
1996 were $69,000 as compared with $403,000 in the comparable period of its
prior year reflecting the elimination of most employees, office facility in
Texas and other related costs. The Company incurred no management fees in the
quarter ending June 30, 1996 as the Parent suspended these charges retroactive
to January 1, 1996.
During the quarter ended June 30, 1996 the Company recognized interest income
of approximately $41,000 on its loans to its parent compared with interest
income from affiliates of 43,000 in the comparable period of the prior year.
The Company provided $110,000 in its results of operations for the year ended
March 31, 1996 to cover losses while the assets of the Company were held for
sale or liquidation. Approximately $50,000 of the provisions was utilized in
the quarter ended June 30, 1996 to offset losses incurred, resulting in the
elimination of any net loss.
<PAGE> 9
PART II
ITEM 1 - Legal Proceedings
There are no known legal proceedings against the Registrant.
ITEM 2 - Changes in Securities
There have been no changes in securities of the Registrant.
ITEM 3 - Defaults Upon Senior Securities
None
ITEM 4 - Increase in Amount of Outstanding Securities
There have been no changes in the amount of outstanding securities
of Registrant.
ITEM 5 - Submission of Matters for a Vote of Shareholders
There have been no changes in the amount of outstanding securities
of the Registrant.
ITEM 6 - Exhibits and Reports on Form 8-K
Exhibit
27 Financial Data Schedule
There were no reports filed on Form 8-K for the quarter
ended September 30, 1995.
<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
BY: /s/ ROBERT M. STUTMAN
---------------------------------
Robert M. Stutman
Chief Executive Officer and
Chairman of the Board
BY: /s/ JOSEPH BRADLEY
---------------------------------
Joseph Bradley
Treasurer, Acting Chief
Financial Officer and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1996 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH JUNE 30, 1996
10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,656
<SECURITIES> 0
<RECEIVABLES> 37,962
<ALLOWANCES> 75,213
<INVENTORY> 196,734
<CURRENT-ASSETS> 246,503
<PP&E> 27,088
<DEPRECIATION> 11,287
<TOTAL-ASSETS> 2,314,347
<CURRENT-LIABILITIES> 139,822
<BONDS> 0
0
0
<COMMON> 3,949
<OTHER-SE> 2,170,576
<TOTAL-LIABILITY-AND-EQUITY> 2,314,347
<SALES> (1,132)
<TOTAL-REVENUES> (1,132)
<CGS> 20,752
<TOTAL-COSTS> (21,884)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
