-----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, SnVo+A/kG3+W9LhjKQKKCOm7y3mCTAyueIwymleDbevoxlepS5isflE4+S+NdOoI rCjpt1bKWLdZYDYxYe/aIA== 0000892569-97-000463.txt : 19970222 0000892569-97-000463.hdr.sgml : 19970222 ACCESSION NUMBER: 0000892569-97-000463 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOOD IDEAS ENTERPRISES INC CENTRAL INDEX KEY: 0000916714 STANDARD INDUSTRIAL CLASSIFICATION: GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES) [3944] IRS NUMBER: 752206675 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12722 FILM NUMBER: 97536140 BUSINESS ADDRESS: STREET 1: 10410 TRADEMARK STREET CITY: RANCHO CUCAMONGA STATE: CA ZIP: 91730 BUSINESS PHONE: 9094668378 MAIL ADDRESS: STREET 1: 10410 TRADEMARK ST CITY: RANCHO CUCAMONGA STATE: CA ZIP: 91730 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED DECEMBER 31, 1996 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 2 PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GOOD IDEAS ENTERPRISES, INC. STATEMENTS OF NET ASSETS IN LIQUIDATION ASSETS
DECEMBER 31 1996 MARCH 31 (UNAUDITED) 1996 ----------- ---------- 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 =========== ==========
The accompanying notes are an integral part of the financial statements. 3 GOOD IDEAS ENTERPRISES, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED DECEMBER 31 DECEMBER 31 ------------------------------ -------------------------------- 1996 1995 1996 1995 --------------- -------------- --------------- ---------------- 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) =============== ============== =============== ================
The accompanying notes are an integral part of the financial statements. 4 GOOD IDEAS ENTERPRISES, INC. STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED DECEMBER 31 1996 1995 ----------- ----------- 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 =========== ===========
The accompanying notes are an integral part of the financial statements. 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:
DECEMBER 31 MARCH 31 1996 1996 ---------- ---------- Cash in Bank $ 532 $ 77,951 Money Market Funds -- 4,750 ---------- ---------- $ 532 $ 82,701 ========== ==========
6 GOOD IDEAS ENTERPRISES, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 3 - Inventories
Inventories are summarized as follows: DECEMBER 31 MARCH 31 1996 1996 -------------- -------------- 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 ============== ==============
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. 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 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 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 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 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10Q FOR NINE MONTHS ENDED DEC-31-1996. 9-MOS MAR-31-1997 APR-01-1996 DEC-31-1996 532 0 2,123,519 (76,427) 146,735 2,203,661 0 0 2,203,661 79,136 0 0 0 0 0 2,203,661 48,868 48,868 91,327 127,334 0 0 0 (50,000) 0 (50,000) 0 0 0 (50,000) (.01) 0
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