<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 DECEMBER 31, 1996
--------------------------------------------------
COMMISSION FILE NUMBER: 1-12722
--------------------------------------------------------
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)
4517 N.W. 31ST AVENUE, FT. LAUDERDALE, FLORIDA 33309
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(954) 739-9600
- --------------------------------------------------------------------------------
Registrant's Telephone Number, Including Area Code
10410 TRADEMARK STREET, RANCHO CUCAMONGA, CALIFORNIA 91730
- --------------------------------------------------------------------------------
(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. [ 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 February 10, 1997 - Common Stock, $.001 Par Value 3,948,680
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GOOD IDEAS ENTERPRISES, INC.
STATEMENTS OF NET ASSETS IN LIQUIDATION
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31
1996 MARCH 31
(UNAUDITED) 1996
----------- ----------
<S> <C> <C>
Cash and Cash Equivalents $ 532 $ 82,701
Accounts Receivable (Net of Allowance
for Bad Debts of $76,427
and $77,061 at December 31, 1996
and March 31, 1996) 75,156 61,612
Inventories 146,735 196,209
Prepaid Expenses 2,494 7,358
Note Receivable - Parent 1,971,936 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 2,203,661 2,422,732
----------- ----------
LIABILITIES
Accounts Payable 18,371 86,830
Accrued Expenses 20,018 28,858
Capital Lease Obligations -- 22,519
Reserve for Sale or Liquidation Costs 40,747 110,000
----------- ----------
Total Liabilities 79,136 248,207
----------- ----------
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 December 31 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 NINE MONTHS ENDED
DECEMBER 31 DECEMBER 31
------------------------------ --------------------------------
1996 1995 1996 1995
--------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
Net Sales $ -- $ 377,866 $ 48,868 $ 1,473,416
Cost of Sales 8,945 439,013 91,327 1,142,298
--------------- -------------- --------------- ----------------
Gross Profit (Loss) (8,945) (61,147) (42,459) 331,118
Operating Expenses:
Selling, General and Administrative Expenses 45,905 352,563 196,486 1,139,095
Management Fees - Parent -- 75,000 -- 225,000
Projected Costs through Sale or Liquidation (15,431) -- (69,252) --
--------------- -------------- --------------- ----------------
Total Operating Expenses 30,474 427,563 127,234 1,364,095
Loss from Operations (39,419) (488,710) (169,693) (1,032,977)
Other Income 39,419 17,217 119,693 100,718
--------------- -------------- --------------- ----------------
Net Profit (Loss) $ -- $ (471,493) $ (50,000) $ (932,259)
=============== ============== =============== ================
Weighted Average Common Shares Outstanding 3,948,680 3,942,013 3,948,680 3,974,936
--------------- -------------- --------------- ----------------
Net Loss Per Common Share $ -- $ (0.12) $ (0.01) $ (0.23)
=============== ============== =============== ================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 4
GOOD IDEAS ENTERPRISES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
DECEMBER 31
1996 1995
----------- -----------
<S> <C> <C>
Cash Flow From Operating Activities:
Net Profit (Loss) $ (50,000) $ (932,259)
Adjustments to Reconcile Net Loss to Net Cash:
Used by Operating Activities:
Depreciation -- 53,012
Provisions for Sales Returns and Allowances -- (15,683)
Value of Common Stock Issued to Officer as Compensation -- 5,000
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 (13,544) 140,816
(Increase) Decrease in Inventories 49,474 168,658
(Increase) Decrease in Prepaid Expenses 4,864 97,301
(Increase) Decrease in Other Assets -- 8,535
Increase (Decrease) in Accounts Payable (68,459) 30,934
Increase (Decrease) in Accrued Expenses (8,840) (24,924)
Increase (Decrease) in Reserve for Sale or Liquidation Costs (69,253) --
----------- -----------
Total Adjustments (109,461) 463,649
----------- -----------
Net Cash Used by Operating Activities (159,461) (468,610)
----------- -----------
Cash Flow from Investing Activities:
Purchase of Property and Equipment -- (14,846)
Disposal of Property and Equipment -- 48,117
----------- -----------
Net Cash Provided (Used) by Investing Activities -- 33,271
Cash Flows from Financing Activities:
Net Payments Received on Loan to Parent 80,307 295,905
Payments of Capital Lease Obligations (3,015) (6,828)
----------- -----------
Net Cash Provided (Used) by Financing Activities 77,292 289,077
----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents (82,169) (146,262)
Cash and Cash Equivalents - Beginning of Period 82,701 351,355
----------- -----------
Cash and Cash Equivalents - End of Period $ 532 $ 205,093
=========== ===========
</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 Substance Abuse Technologies, Inc.
("SAT" or the "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 were 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 after the results of a consent
solicitation for the merger hereinafter described are known. 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
December 31, 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>
DECEMBER 31 MARCH 31
1996 1996
---------- ----------
<S> <C> <C>
Cash in Bank $ 532 $ 77,951
Money Market Funds -- 4,750
---------- ----------
$ 532 $ 82,701
========== ==========
</TABLE>
<PAGE> 6
GOOD IDEAS ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - Inventories
<TABLE>
<CAPTION>
Inventories are summarized as follows: DECEMBER 31 MARCH 31
1996 1996
-------------- --------------
<S> <C> <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
============== ==============
NOTE 4 - Property and Equipment
---------------------- DECEMBER 31 MARCH 31
Property and equipment is summarized as follows: 1996 1996
-------------- --------------
Warehouse Equipment $ -- $ 27,088
Less: Accumulated Depreciation -- 11,287
-------------- --------------
Total Property and Equipment $ -- $ 15,801
============== ==============
</TABLE>
NOTE 5 - Note Receivable
The note receivable from the Parent consists of demand loans
bearing interest at the rate of 8% per annum, due March 31,
1997 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.
Effective December 31, 1996, the employment contract with
William D. Robbins, Chief Executive Officer, expired and his
employment was terminated.
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended December 31, 1996, the Company accrued
interest income of approximately $120,000 on its loan to its Parent. The loan
bears interest at 8% and is evidenced by notes that become due March 31, 1997.
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 investments.
Even if the Note Receivable ($1,971,936 at December 31, 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 approximately $1,199,000 of such payment would be returned to
the Parent and only 39.2% or approximately $773,000 would go to the Company's
minority stockholders, assuming that all creditor claims were otherwise
satisfied.
Cash used by operations during the nine months ended December 31, 1996 was
approximately $159,000 as compared with $469,000 in the same period of the prior
year. The net loss for the nine months ended December 31, 1996 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 $77,000 primarily from the
partial repayment of the loan to the 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 December 31, 1996 as compared with three months ended
December 31, 1995
There were no net sales for the three months ended December 31, 1996 as
compared with $378,000 for the same period of the prior year. The decrease of
$378,000 reflected the suspension of normal operations as the assets of the
Company are held for sale or liquidation.
A negative gross profit of $9,000 was incurred in the three months ended
December 31, 1996 as compared with a negative gross profit of $61,000 in the
same period of the prior year. The loss in the current period reflected the lack
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
December 31, 1996 were $46,000 as compared with $353,000 in the same period of
the prior year. The decrease of $307,000 was attributable to the suspension of
operations. Expenses continuing in 1996 consisted primarily of salary and
benefits of the Company's remaining employee who was terminated on December 31,
1996.
During the three-month period ended December 31, 1996, the Company recorded
approximately $39,000 in interest income from a loan to its Parent as compared
with $36,000 of interest income in the same period of the prior year, offset by
a loss on the disposal of fixed assets of approximately $20,000.
Good Ideas
<PAGE> 8
RESULTS OF OPERATIONS (CONTINUED)
Nine months ended December 31, 1996 as compared with nine months ended
December 31, 1995
Net sales for the nine months ended December 31, 1996 were approximately
$49,000 as compared with sales of $1,473,000 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.
There was a negative gross profit of $42,000 in the nine months ended
December 31, 1996 as compared with a gross profit of $331,000 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 nine months ended
December 31, 1996 were $196,000 as compared with $1,139,000 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 nine months ended December 31, 1996 as the Parent
suspended these charges retroactive to January 1, 1996.
During the nine months ended December 31, 1996, the Company recognized
interest income of approximately $120,000 on its loans to the Parent as compared
with interest income from affiliates of $118,000 in the same period of the prior
year. The prior year net other income (expense) included a charge of $20,000 for
loss on disposal of fixed assets.
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. 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 second quarter income to cover
costs expected to be incurred through sale or liquidation. Approximately
$119,000 of the reserve was utilized in the nine months ended December 31, 1996
to offset losses incurred.
Good Ideas
<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
Effective January 1, 1997, the Good Ideas Common Stock was delisted
from the Pacific Stock Exchange and now trades on the
over-the-counter market.
ITEM 6 - Exhibits and Reports on Form 8-K
None.
Good Ideas
<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: February 14, 1997 BY: /s/ Dennis A. Wittman
------------------------ -------------------------------
Dennis A. Wittman
Vice President of Finance and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q
FOR NINE MONTHS ENDED DEC-31-1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 532
<SECURITIES> 0
<RECEIVABLES> 2,123,519
<ALLOWANCES> (76,427)
<INVENTORY> 146,735
<CURRENT-ASSETS> 2,203,661
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,203,661
<CURRENT-LIABILITIES> 79,136
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,203,661
<SALES> 48,868
<TOTAL-REVENUES> 48,868
<CGS> 91,327
<TOTAL-COSTS> 127,334
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (50,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (50,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (50,000)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
