SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12B-25
NOTIFICATION OF LATE FILING
(Check One):
[X] Form 10-K and Form 10-KSB [ ] Form 20-F [ ] Form 11-K
[ ] Form 10-Q and Form 10-QSB [ ] Form N-SAR
For Period Ended: March 31, 1999
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[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended:
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READ INSTRUCTION (ON BACK PAGE) BEFORE PREPARING FORM. PLEASE PRINT OR TYPE.
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
If the notification relates to a portion of the filing checked above, identify
the Item(s) to which the notification relates: None
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PART I
REGISTRANT INFORMATION
Full Name of Registrant Trudy Corporation
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Former Name if Applicable Not Applicable
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Address of Principal Executive Office (Street and Number)
353 Main Avenue
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City, State and Zip Code Norwalk, CT 06851-1552
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<PAGE>
PART II
RULES 12B-25(B) AND (C)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate)
(a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense;
[X] (b) The subject annual report, semi-annual report, transition report on
Form 10-K, Form 10-KSB, Form 20-F, 11-K, Form N-SAR, or portion
thereof, will be filed on or before the fifteenth calendar day
following the prescribed due date; or the subject quarterly report or
transition report on Form 10-Q, 10-QSB, or portion thereof will be
filed on or before the fifth calendar day following the prescribed due
date; and
(c) The accountant's statement or other exhibit required by Rule 12b-25(c)
has been attached if applicable.
PART III
NARRATIVE
State below in reasonable detail the reasons why the Form 10-KSB could not be
filed within the prescribed time period.
In connection with the pending merger described below, in April 1999, the
Registrant, at the request of Futech Interactive Products, Inc. ("Futech"),
selected a new audit firm, Ernst & Young LLP ("E&Y") to audit the Registrant's
financial statements. E&Y also audits the financial statements of Futech. Futech
and the Registrant want consistency in the audit and reporting activities of
both companies.
On March 3, 1999 the Registrant entered into a merger agreement with Futech.
This merger agreement was subsequently renegotiated and replaced with a new
merger agreement dated as of June 4, 1999, providing for the mergers of the
Registrant, Futech, Fundex Games, Ltd., DaMert Company, and Janex International,
Inc. into a newly incorporated Delaware company ("New Futech") or a subsidiary
thereof. The transactions are expected to close in the third quarter of 1999.
Since May 1999, the Registrant has been in default of certain covenants in its
bank loans with First Union Bank which have become due on June 15, 1999. The
Registrant has been attempting to develop a plan with Futech to repay such bank
loans and obtain alternative financing. To date, this plan has not been
satisfactorily concluded.
As a result of these factors (the pending merger, the bank loan defaults and
development of a work-out plan, and the change of the auditing firm to E&Y), the
Registrant has been unable to complete its financial statements and disclosures
and E&Y has been unable to complete its audit in a timely fashion without
unreasonable effort or expense. The Registrant believes its Form 10-KSB will be
filed on or before the 15th calendar day following the prescribed due date.
<PAGE>
PART IV
OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
William T. Carney, CFO (203) 846-2274
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section 13 or 15(d) of the
Securities Exchange Act of 1934 or Section 30 of the Investment Company Act
of 1940 during the preceding 12 months (or for such shorter) period that
the registrant was required to file such reports) been filed? If the answer
is no, identify report(s). [X] Yes [ ] No
(3) Is it anticipated that any significant change in results of operations from
the corresponding period for the last fiscal year will be reflected by the
earnings statements to be included in the subject report or portion
thereof? [X] Yes [ ] No
If so, attach an explanation of the anticipated change, both narratively
and quantitatively, and, if appropriate, state the reasons why a reasonable
estimate of the results cannot be made.
Trudy Corporation
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date June 29, 1999 By /s/ WILLIAM T. CARNEY
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William T. Carney, CFO
<PAGE>
FISCAL YEAR ENDED MARCH 31, 1999 (PRELIMINARY) COMPARED TO FISCAL YEAR ENDED
MARCH 31, 1998
NET SALES. Net sales for the year ended March 31, 1999 were $3,390,884
as compared with net sales of $4,977,599 for the year ended March 31, 1998.
Sales to warehouse clubs, the largest market segment, were down $775,443 or 44%
to $977,961 due to the clubs' decision to purchase more conservatively and
minimize inventory carryover. Direct response sales of $961,624 were $269,554 or
22% lower than last year. Catalog marketers, in general, experienced reduced
buying early in the pre-holiday season (September) due to financial market
uncertainty. Sales of $671,946 to bookstores and specialty retailers were
$492,101, 42%, below last year as the number of independent bookstores continues
to decline and specialty stores have become more selective in their purchases.
Sales to schools and education wholesalers continue to increase as a result of
the Company's decision to target its direct marketing toward this growing market
segment.
COST OF SALES. Cost of sales of $1,792,781 decreased from $2,780,401 in
the prior year primarily because of the lower level of sales volume. In
percentage terms, cost of sales decreased to 52.9% from 55.9%. The lower
percentage is the result of reduced product cost and favorable product mix among
market segments.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general, and
administrative expenses increased slightly to $2,128,721 from $2,118,322. Lower
royalty and sales commission expenses resulting from lower revenue were offset
by the higher cost of a larger consumer catalog mailing.
INCOME/(LOSS) FROM OPERATIONS. Income from operations was a loss of
$530,618 compared with a profit of $78,876 in the prior year. The decline is
primarily the result of lower sales.
INTEREST EXPENSE. Interest expense increased to $115,151 from $102,099
last year as a result of higher borrowing needed to fund working capital
requirements and operating losses.
DEPRECIATION EXPENSE. Depreciation expense increased to $75,255 from
$17,449 in the prior year. A write-off of $53,081 for a computer operating
system purchased in December 1997 was recorded because it was determined that
the new system did not meet the Company's requirements.
OTHER INCOME. Other income of $3,312 decreased from $35,904 in the
prior year. In the third quarter, the Company recognized a $30,000 liability for
sub-right royalty expense.
NET INCOME/(LOSS). A net loss of $717,712 for the year ended March 31,
1999 compares to a profit of $203,552 in the prior year. In addition to the
changes discussed above, the decline is also the result of two non-recurring
gains recorded last year: an income tax benefit of $152,000 and an after tax
gain of $56,320 from the forgiving of accrued interest on loans made to the
Company by its President.
