SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number O-27542
FUN TYME CONCEPTS, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 11-3157259
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
290 Wild Avenue, Staten Island, New York 10314
(Address of Principal Executive Offices)
(718) 761-6100
(Registrant's Telephone Number, Including Area Code)
N/A
(Former name, former address, and former fiscal year, if changed since last
report)
Check whether the Issuer: (1) has filed all reports required to be filed by
Sections 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 CORPORATE ISSUERS
State the number of shares of each of the issuer's classes of common equity
outstanding as of the latest practicable date: On November 5, 1997 there were
outstanding 2,512,465 shares of Common Stock, par value $.001 per share.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
FUN TYME CONCEPTS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<S> <C>
Condensed balance sheets as of September 30, 1997
and March 31, 1997 ................................... 3
Condensed statements of operations for the
three and six months ended September 30, 1997 and 1996 4
Condensed statements of cash flows for the
three months ended September 30, 1997 and 1996 ....... 5
Statements of changes in stockholders' equity ........ 6
Notes to condensed financial statements .............. 7
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ....... 8-9
Part II OTHER INFORMATION
Item 1 LEGAL PROCEEDINGS 10
Item 2 CHANGES IN SECURITIES AND USE OF PROCEEDS 10
Item 3 DEFAULTS UPON SENIOR SECURITIES 10
Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10
Item 5 OTHER INFORMATION 10
Item 6 EXHIBITS AND REPORTS ON FORM 8-K 10
</TABLE>
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
FUN TYME CONCEPTS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,1997 September 30, 1997
(unaudited)
ASSETS
Current Assets:
<S> <C> <C>
Cash ........................................................................... 2,155,460 1,149,537
Inventories .................................................................... 32,020 34,978
Prepaid expenses and other current assets ...................................... 92,194 43,969
---------- ----------
Due from employee & Officers ................................................... 5,000 58,925
Total Current Assets ........................................................... 2,284,674 1,287,409
---------- ----------
Property and equipment (net of accum. dep.) .................................... 1,044,879 1,409,900
Other Assets ................................................................... 84,072 114,216
---------- ----------
Total Assets ................................................................... 3,413,625 2,809,525
---------- ----------
LIABILITIES
Current Liabilities:
Accounts Payable and Accrued Expenses .......................................... 78,093 45,386
Customer Deposits .............................................................. 16,030 8,170
Current Portion of Lease Payable ............................................... 48,952 15,553
---------- ----------
Total Current Liabilities ...................................................... 143,075 69,109
---------- ----------
Capital Lease Payable (Net of current portion) ................................. 60,583 30,488
Deferred Rent .................................................................. 23,683 23,683
----------
Total Liabilities .............................................................. 227,341 123,280
---------- ----------
STOCKHOLDERS' EQUITY
Preferred Stock - par value $.01, 500,000 shares authorized, none issued and
outstanding Common stock - par value $.001, 10,000,000 shares authorized,
2,512,465 shares issued and
outstanding .................................................................... 2,676 2,676
Additional Paid-in Capital ..................................................... 4,033,298 4,033,298
Deficit ........................................................................ (760,047) (1,236,069)
Treasury stock, at cost - 163,535 shares ....................................... (89,643) (113,660)
Total Stockholders' Equity ..................................................... 3,186,284 2,686,245
---------- ----------
Total Liabilities and Stockholders' Equity ..................................... 3,413,625 2,809,525
---------- ----------
</TABLE>
The accompanying notes to financial statements are an
integral part hereof.
<PAGE>
FUN TYME CONCEPTS INC.
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
September 30 September 30
1997 1996 1997 1996
----
<S> <C> <C> <C> <C>
Operating Revenue ........................... 256,082 219,222 417,553 400,140
Merchandise Revenue ......................... 50,464 49,777 92,374 105,649
---------- ---------- ---------- ----------
Total Revenue ............................... 306,546 268,999 509,927 505,789
---------- ---------- ---------- ----------
Operating Expenses .......................... (480,385) (266,988) (682,950) (540,128)
Cost of Merchandise Sold .................... (44,307) (35,654) (73,938) (72,242)
Selling, General, and Administrative Expenses (157,355) (62,987) (249,632) (95,567)
---------- ---------- ---------- ----------
(Loss) from Operations ...................... (375,501) (96,630) (496,593) (202,148)
---------- ---------- ---------- ----------
Other Income & (Expense):
Interest Income ............................. 18,717 221 46,517 28,752
Interest Expense ............................ (1,816) (3,602) (3,827) (8,141)
---------- ---------- ---------- ----------
(Loss) Before Income Tax .................... (358,600) (100,011) (453,903) (181,537)
----------
Provision for Income Taxes .................. (20,715) (1,211) (22,119) (2,929)
- --------------------------------------------- ---------- ---------- ---------- ----------
Net Income (Loss) ........................... (379,315) (101,222) (476,022) (184,466)
---------- ---------- ---------- ----------
Net Income (Loss) per Share ................. (0.15) (0.03) (0.19) (0.09)
Weighted Average Common Shares and Equiv .... 2,512,465 2,415,130 2,512,465 2,147,038
</TABLE>
The accompanying notes to financial statements are an integral part hereof
<PAGE>
FUN TYME CONCEPTS, INC.
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
September 30
1997 1996
----
Cash flows from operating activities:
<S> <C> <C>
Net Income (Loss) .............................................................. (476,022) (136,084)
Adjustments to Reconcile Net (Loss) to Net Cash (used in)
Operating Activities:
Depreciation and Amortization .................................................. 82,802 49,188
Increase(Decrease) in Inventories .............................................. (2,958) 1,633
Decrease (Increase) due from Officers .......................................... (53,925)
(Increase)Decrease in Prepaid Expenses & Other Current Assets .................. 48,225 (15,169)
Increase (Decrease) in Accounts Payable and Accrued Expenses .................. (32,707) (118,247)
(Decrease) in Customer Deposits ................................................ (7,860) (6,459)
Increase (Decrease) in Other Assets ............................................ (30,144) (36,164)
Increase (Decrease) in Deferred Costs
Net Cash (used in) Operating Activities ........................................ (472,589) (261,302)
---------- ----------
Cash Flows from Investing Activities:
Acquisition of Fixed Assets .................................................... (445,823) (49,322)
---------- ----------
Net Cash (used in ) Investing Activities ...................................... (445,823) (49,322)
---------- ----------
Net Proceeds of Initial Public Offering ........................................ 0 3,328,242
Cash from Financing Activities:
Proceeds of Notes Payable to Stockholders ...................................... (1,468)
Repayment of Note Payable ...................................................... (200,000)
Repayments of Capital Lease Obligations ........................................ (63,494 (14,651)
Purchase of Treasury Stock ..................................................... (24,017) 0
----------
Net Cash Provided by Financing Activities ...................................... (87,511) 3,112,123
---------- ----------
NET INCREASE (DECREASE) IN CASH ................................................ (1,005,923) 2,771,242
Cash-Beginning of Period ....................................................... 2,155,460 66,596
CASH- END OF PERIOD ............................................................ 1,149,537 2,837,838
---------- ----------
Supplemental Schedule of Non-cash Investing and Financing Activities:
Equipment Acquired by Capital Lease ............................................ 64,870
Transfer to Common Stock of Deferred Registration Costs ........................ 226,333
Supplemental Disclosure of Cash Slow Information:
Interest Paid .................................................................. 3,827 8,141
Taxes Paid ..................................................................... 22,093 2,929
</TABLE>
The accompanying notes to financial statements are an
integral part hereof.
<PAGE>
FUN TYME CONCEPTS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Number Number Treasury
Of of Additional Stock
Shares (Par $.01) Shares Par $.001 Paid-in At
Issued amount issued Amount Capital (Deficit) Cost Total
------ ----- ------ ------ ------- ------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances-March 31,1997 .... 0 0 $2,542,965 $2,676 $4,033,298 ($760,047) ($89,643) $3,186,284
Net(loss)for the Six months
Ended September 30,1997 ... ($476,022) ($476,022)
Treasury Stock, at cost
30,500 shares ............. (30,500) ($24,017) ($24,017)
Balances-Sept. 30,1997 .... 0 0 $2,512,465 $2,676 $4,033,928 ($1,236,069)($113,660) $2,686,245
</TABLE>
Attention is directed to the foregoing accountant's report and to
the accompanying notes to financial statements.
<PAGE>
FUN TYME CONCEPTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
Note A. The Company
Fun Tyme Concepts, Inc. ("the Company") is a New York corporation which
was organized in April 1993. The Company commenced operations with the
construction of its first Fun Bubble play center in October 1994, in Staten
Island, New York. One of the Company's wholly owned subsidiaries, Fun Tyme of
Edmonton, Inc. opened a Fun Bubble play center on August 5, 1997. The other
subsidiary, Fun Tyme of East Brunswick, Inc., entered into a lease agreement and
expects to open a Fun Bubble play center in East Brunswick, New Jersey in the
fourth quarter of this year. Each Fun Bubble is designed based on a theme unique
in comparison to the themes of the others: the Staten Island Fun Bubble focuses
on space; the Edmonton Fun Bubble emphasizes the jungle; and the East Brunswick
Fun Bubble will focus on the future. In addition to the foregoing, the Company
is contemplating opening new sites in the Tri-State Area.
Note B. Accompanying Financial Statements
In the opinion of management, the accompanying Unaudited Condensed
Financial Statements of the Company include all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the Company's
financial position as of September 30, 1997 and the results of its operations
for the six months ended September 30, 1997. Due to the construction of the New
Jersey Fun Bubble, the opening of the Canadian Fun Bubble, and the search for
new locations, the results of the Company's operations for the six months ended
September 30, 1997 may not be indicative of total results of operations for the
full year.
While the Company believes the disclosures presented are adequate to make
the information not misleading, it is recommended that these condensed financial
statements be read in conjunction with the Company's registration statement on
Form SB-2.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
During the three months ended September 30, 1997, revenues of the Company
were $306,546 as compared with $268,999 during the three months ended September
30, 1996. This increase of 13.9 % was attributable to both an increase in
operating revenues (16.8%) and an increase in merchandise revenues (1.3%).
Operating revenues increased during the three months ended September 30, 1997 as
a result of the generation of revenues from the new location in Edmonton,
Canada. The Canada location opened on August 5, 1997, during the second quarter
of fiscal 1997; therefore, revenues therefrom cover a period of eight weeks
only.
Revenues for the six months ended September 30, 1997 increased 0.8% over
the same period ended September 30, 1996, to $509,927. This increase resulted
from a $17,413 (or 4.35%) increase in operating revenues and a $13,275 (or
12.5%) decrease in merchandise revenues for the same period ended September 30,
1996. These increases are attributable to the August 5, 1997 opening of the
Canada Fun Bubble which the Company expects will gain further exposure and
generate additional revenue on its own.
Operating expenses increased by $142,822 (or 26.4%) for the six months
ended September 30, 1997 and $213,397 (or 79.9%) for the three months ended
September 30, 1996. This increase was primarily caused by the costs associated
with the construction and opening of the Canada Fun Bubble, additional staff
salaries, and additional lease payments.
Selling, general, and administrative expenses increased to $94,368 (or
149.8%) for the quarter and $154,065 (or 161.2%) for the six months ended
September 30, 1997 as compared to the same period ended September 30, 1996. This
increase is due to marketing expenses and professional fees incurred in
connection with the opening of the Canada Fun Bubble and the commencement of
construction of the New Jersey Fun Bubble.
Cost of merchandise sold amounted to 80.1% of merchandise revenue during
the six months ended September 30, 1997 as compared to 68.4% for the same period
ended September 30,1996. Cost of merchandise sold varies based on product mix
and value discounts earned.
During the six months ended September 30, 1997 and the three months ended
September 30, 1997, the Company incurred net losses of $476,022 (or $0.19 per
share) and $379,315 (or 0.15 per share), respectively, as compared with $184,466
(or $0.09 per share) and $101,222 ( or $0.03 per share) during the respective
comparable periods ended September 30, 1996. The primary reason for the increase
in the net loss and net loss per share was the result of an increase in
operating expenses resulting from the new sites and an increase in corporate
expenses for the six month period ended September 30, 1997, as compared to the
comparable six month period ended September 30,1996. Included in these expenses
are one time non-recurring expenses related to the opening of new sites.
Financial Condition
At September 30, 1997, the Company had working capital of $1,218,300 and
shareholder's equity of $ 2,686,245.
During the six months ended September 30, 1997, the Company used $472,589
in cash for operating activities as compared with $261,302 in cash used for
operating activities during the comparable six month period ended September 30,
1996. The increase of $211,287 is primarily due to notes from officers and is in
addition to other expenses incurred in connection with the two new sites. The
Company acquired fixed assets of $445,823 and $49,322 during the six month
period ended September 30, 1997 and 1996, respectively. Cash in the amount of
$3,112,123 was generated by financing activities during the six month period
ended September 30, 1996. $87,511 was used during the six months ended September
30, 1997 to pay off capital lease obligations and to repurchase 163,535 shares
of Common Stock pursuant to a buy back.
The Company has acquired play equipment and made construction related
purchases for the Canada Fun Bubble which opened on August 5, 1997. The Company
has commitments for the acquisition of additional play equipment and
construction related purchases for the New Jersey Fun Bubble.
The Company believes that the revenues generated from the operations of its
two locations, along with the funds on hand, shall be adequate to finance it's
present operations and its future operation in New Jersey.
New Accounting Pronouncement:
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128 Earnings Per Share ("EPS").
SFAS No. 128 requires all companies to present "basic" EPS and, if they have a
complex capital structure, "diluted" EPS. Under SFAS No. 128, "basic" EPS is
computed by dividing income (adjusted for any preferred stock dividends) by the
weighted average number of common shares outstanding during the period.
"Diluted" EPS is computed by dividing income (adjusted for any preferred stock
or convertible stock dividends and any potential income or loss from convertible
securities) by the weighted average number of common shares outstanding during
the period plus the number of additional common shares that would have been
outstanding if any dilutive potential common stock had been issued. The issuance
of antidilutive potential common stock should not be considered in the
calculation. In addition, SFAS No. 128 requires certain additional disclosures
relating to EPS. SFAS No. 128 is effective for financial statements issued for
periods ending after December 15, 1997. Thus, the Company expects to adopt the
provisions of this statement in fiscal year 1998. Management does not expect the
adoption of this pronouncement to have a significant impact on the Company's
financial statements.
<PAGE>
PART II - Other Information
ITEM 1. LEGAL PROCEEDINGS.
In or about October 1996, the First Richmond Bank, S.B. ("plaintiff")
commenced suit against the Company, and its principals and their wives, alleging
that the Company breached an equipment lease agreement and seeking $162,753.96
in damages. In August 1997, the matter settled for $75,000, and the action was
discontinued with prejudice.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS: None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES: None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: None
ITEM 5. OTHER INFORMATION: None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K: None
<PAGE>
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 thereunto duly authorized.
Dated: November 18, 1997
Fun Tyme Concepts, Inc.
By: /s/ Daniel Catalfumo
Daniel Catalfumo, President
By: /s/ Richard Rosso
Richard Rosso, Treasurer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27.01
Financial Data Schedule
FUN TYME CONCEPTS, INC.
EXHIBIT 27.01
FINANCIAL DATA SCHEDULE
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> mar-31-1997
<PERIOD-END> sep-30-1997
<CASH> 1,149,537
<SECURITIES> 0
<RECEIVABLES> 58,925
<ALLOWANCES> 0
<INVENTORY> 34,978
<CURRENT-ASSETS> 1,287,409
<PP&E> 1,740,191
<DEPRECIATION> 332,291
<TOTAL-ASSETS> 2,809,525
<CURRENT-LIABILITIES> 69,109
<BONDS> 0
0
0
<COMMON> 2,676
<OTHER-SE> 2,686,245
<TOTAL-LIABILITY-AND-EQUITY> 2,809,525
<SALES> 509,927
<TOTAL-REVENUES> 509,927
<CGS> 73,938
<TOTAL-COSTS> 932,582
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (3,827)
<INCOME-PRETAX> (453,903)
<INCOME-TAX> (22,119)
<INCOME-CONTINUING> (476,022)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (476,022)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
</TABLE>
