FUN TYME CONCEPTS, INC.
290 Wild Avenue
Staten Island, New York 10314
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on April 23, 1997
To the Shareholders of FUN TYME CONCEPTS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of FUN
TYME CONCEPTS, INC. (the "Corporation") will be held at Klarman & Associates at
14 East 60th Street, New York, New York 10022 on April 23, 1997 at 10:00 a.m.,
New York time, for the following purposes:
1. To elect three Directors to the Corporation's Board of Directors to hold
office for a period of one year or until their successors are duly elected and
qualified.
2. To vote on the proposal to reverse-spilt the Corporation's outstanding
shares on a 1 for 3 basis.
3. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The close of business on March 21, 1997 has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you
plan to attend, please complete, date and sign the accompanying proxy and return
it promptly in the enclosed envelope to assure that your shares are represented
at the meeting. If you do attend, you may revoke any prior proxy and vote your
shares in person if you wish to do so. Any prior proxy will automatically be
revoked if you execute the accompanying proxy or if you notify the Secretary of
the Corporation, in writing, prior to the Annual Meeting of Shareholders.
By order of the Board of Directors
Richard Rosso, Secretary
Dated: April 3, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
<PAGE>
FUN TYME CONCEPTS, INC.
290 Wild Avenue
Staten Island, New York 10314
PROXY STATEMENT
FOR
Annual Meeting of Stockholders
To Be Held on April 23, 1997
This proxy statement and the accompanying form of proxy have been
mailed on April 3, 1997 to the stockholders of record on March 21, 1997 of Fun
Tyme Concepts, Inc., a New York Corporation (the "Corporation") in connection
with the solicitation of proxies by the Board of Directors of the Corporation
for use at the Annual Meeting to be held at 10:00 a.m., on April 23, 1997, at
the offices of Klarman & Associates, 14 East 60th Street, Suite 402, New York,
NY 10022, and at any adjournment thereof.
Proposals by Stockholders Must
Be Received Pursuant To This Section
Any and all proposals of security holders intended to be
presented at the next annual meeting of the Corporation, must be received by the
Corporation at its principal executive offices located at 290 Wild Avenue,
Staten Island, New York 10314, on or prior to December 23, 1997.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
Shares of the Corporation's common stock (the "Common Stock")
represented by an effective proxy in the accompanying form will, unless contrary
instructions are specified in the proxy, be voted FOR (i) the election of the
three (3) persons nominated by the Board of Directors as directors and (ii) the
proposal to reverse-spilt the Corporation's outstanding shares on a 1 for 3
basis (1 new share for every 3 shares presently owned).
<PAGE>
Any such proxy may be revoked at any time before it is voted. A
stockholder may revoke this proxy by notifying the Secretary of the Corporation
either in writing prior to the Annual Meeting or in person at the Annual
Meeting, by submitting a proxy bearing a later date or by voting in person at
the Annual Meeting. An affirmative vote of a plurality of the shares of Common
Stock, present in person or represented by proxy, at the Annual Meeting and
entitled to vote thereon is required to elect the directors. A stockholder
voting through a proxy who abstains with respect to the election of directors is
considered to be present and entitled to vote on the election of directors at
the meeting, and is in effect a negative vote, but a stockholder (including a
broker) who does not give authority to a proxy to vote, or withholds authority
to vote, on the election of directors shall not be considered present and
entitled to vote on the election of directors. A stockholder voting through a
proxy who abstains with respect to approval of any other matter to come before
the meeting is considered to be present and entitled to vote on that matter and
is in effect a negative vote, but a stockholder (including a broker) who does
not give authority to a proxy to vote, or withholds authority to vote, on any
such matter shall not be considered present and entitled to vote thereon.
The Corporation will bear the cost of the solicitation of proxies by
the Board of Directors. The Board of Directors may use the services of its
executive officers and certain directors to solicit proxies from stockholders in
person and by mail, telegram and telephone. Arrangements may also be made with
brokers, fiduciaries, custodians, and nominees to send proxies, proxy statements
and other material to the beneficial owners of the Corporation's Common Stock
held of record by such persons, and the Corporation may reimburse them for
reasonable out-of-pocket expenses incurred by them in so doing.
The Corporation's Quarterly Report on Form 10-QSB for the nine months ended
December 31, 1996 accompanies this proxy statement. The principal executive
offices of the Corporation are located at 290 Wild Avenue, Staten Island, New
York 10314 the Corporation's telephone number is (718) 761- 6100.
Independent Public Accountants
The Board of Directors of the Corporation has selected Richard A
Eisner & Co., Certified Public Accountants, as independent accountants of the
Corporation for the calendar year ending March 31, 1997. Stockholders are not
being asked to approve such selection because such approval is not required. The
audit services provided by Richard A Eisner & Co., consisted of examination of
financial statements, services relative to filings with the Securities and
Exchange Commission, and consultation in regard to various accounting matters.
Representatives of Richard A Eisner & Co. are expected to be present at the
meeting and will have the opportunity to make a statement if they so desire and
answer appropriate questions.
<PAGE>
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The securities entitled to vote at the meeting are the Corporation's Common
Stock, $.01 par value per share. The presence, in person or by proxy, of a
majority of shares entitled to vote will constitute a quorum for the meeting.
Each share of Common Stock entitles its holder to one vote on each matter
submitted to stockholders. The close of business on March 21, 1997 has been
fixed as the record date for the determination of stockholders entitled to
notice of and to vote at the meeting and any adjournment thereof. At that date,
2,676,000 shares of Common Stock were outstanding. Voting of the shares of
Common Stock is on a non-cumulative basis.
The following table sets forth information as of April 3, 1997, with
respect to the beneficial ownership of shares of Common Stock by (i) each person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended), known by the Corporation to be the
owner of more than 5% of the outstanding shares of Common Stock, (ii) each
director, and (iii) all officers and directors as a group. Except to the extent
indicated in the footnotes to the following table, each of the individuals
listed below possesses sole voting power with respect to the shares of Common
Stock listed opposite his name.
<TABLE>
<CAPTION>
Title of Number of Percentage of
Class Name and Address Shares Shares Owned (1)
<S> <C> <C> <C>
common Daniel Catalfumo (2) 517,365 20.5%
stock c\o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Richard Rosso (3) 367,278 14.6%
stock c\o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Daniel Buchanan (4) 15,000 *
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Imafina, S.A (5) 500,000 19.8% (4)
stock Route de Beaumont
4 case 952 ch 1700
Fribourg, Switzerland
common All officers and directors 889,643 33.2%
stock as a group (3 persons) (1)-(4)(9)
- -------------------------------------------------
</TABLE>
* Less than 1%
<PAGE>
(1)Does not include (i) 1,500,000 shares issuable upon the exercise of the
warrants underlying the units sold in the Corporation's initial public offering
(ii) 250,000 shares issuable upon the exercise of the underwriter's warrants and
the warrants issuable upon the exercise thereof and (iii) 150,000 shares
issuable under the Senior Management Incentive Plan, except for the 15,000
shares issued subject to a vesting schedule and an aggregate of 10,000 shares
underlying options granted to the Corporation's officers. Includes a reduction
in the number of shares outstanding from 2,676,000 to 2,516,000 due to the
Corporation's buyback, the return of such shares to treasury is currently being
undertaken. See "Certain Relationships and Related Transactions" and "Recent
Developments".
(2) Includes (i) an aggregate of 151,365 shares of Common Stock owned by
members of Daniel Catalfumo's family, of which Mr. Catalfumo disclaims
beneficial ownership and (ii) 5,000 shares underlying options presently vested
and exerciseable.
(3) Includes (i) 6,278 shares of Common Stock owned by Richard Rosso's
parents, of which Mr. Rosso disclaims beneficial ownership and (ii) 5,000 shares
underlying options presently vested and exerciseable.
(4) The consultant and the Corporation entered into a restrictive share
agreement whereby 3,750 shares vested 30 days from grant and 3,750 shares vested
six months from the execution of the agreement and each six month period
thereafter until the shares are fully vested. Pending the vesting of these
shares, the Corporation's counsel shall hold such shares in escrow.
(5) Includes 250,000 shares of Common Stock and 250,000 shares of Common
Stock issuable upon the exercise of outstanding warrants.
3
<PAGE>
Certain Reports
No person who, during the year ended March 31, 1997, was a director,
officer or beneficial owner of more than ten percent of the Corporation's Common
Stock (which is the only class of securities of the Corporation registered under
Section 12 of the Securities Exchange Act of 1934 (the "Act") (a "Reporting
Person") failed to file on a timely basis, reports required by Section 16 of the
Act during the most recent fiscal year or prior years. The foregoing is based
solely upon a review by the Corporation of Forms 3 and 4 during the most recent
fiscal year as furnished to the Corporation under Rule 16a-3(d) under the Act,
and Forms 5 and amendments thereto furnished to the Corporation with respect to
its most recent fiscal year, and any representation received by the Corporation
from any reporting person that no Form 5 is required, except as described
herein.
RECENT DEVELOPMENTS
In March 1997 the Corporation acquired the assets of a former
children's entertainment facility in Edmonton Canada, out of a bankruptcy
proceeding. Through a wholly-owned subsidiary formed by the Corporation, Fun
Tyme of Edmonton, Inc., the Corporation acquired the assets and entered into a
lease agreement with the landlord of the approximately 12,000 square ft.
facility. The Corporation plans to renovate the facility to include Fun Tyme's
unique themes and estimates that the facility will be opened at the end of April
1997.
In January 1997 the board of directors of the Corporation determined
that it is in the best interests of the Corporation to buy back up to an
aggregate of $150,000 worth of its securities from the public float due to the
depressed stock price, the Corporation believing that its stock price is
significantly undervalued. The buy back commenced in February 1997. As of the
date hereof the Corporation has repurchased approximately 160,000 units, in
ordinary brokerage transactions. The units being repurchased are in the process
of being returned to the Company's treasury. The Corporation may terminate this
repurchase at any time without notification.
On January 21, 1997 the Corporation announced that it has signed a
lease to open a 15,000 square ft. Fun Bubble in the Miracle Mall in East
<PAGE>
Brunswick, New Jersey. The Corporation will be renovating a movie theater into a
Fun Bubble children's entertainment facility. The Miracle Mall is a 120,000
square ft. landmark center in the heart of East Brunswick. The Corporation is
awaiting approval of the planning board to renovate the facility and begin
construction. The Corporation estimates that approval will be received within
the next few weeks and that construction could commence as early as May with the
facility being opened this summer.
In September 1996, State Street Capital Markets, Corp., the underwriter
of the Corporation's public offering, ceased its market making activities and
soon thereafter ceased operations. The underwriter was a dominant influence in
the market for the Corporation's securities until September 1996. In October
1996 the Company and the Underwriter mutually terminated the underwriting
agreement between them. The market for the Corporation's securities have been
significantly affected and may continue to be affected by the loss of it
underwriter's participation in the market. The loss has decreased significantly
the liquidity of an investment in the Corporation's securities. The Corporation
has been unable to split the units due to its unit price being below $1.00.
Nasdaq requires a minimum bid price of $1.00 for the Common Stock in order to
have the Units separated. In the event that the Corporation's securities become
in compliance with the Nasdaq bid price requirements, it will seek to have the
units separated. See "II. Reverse-Stock Split".
It is expected that the following will be considered at the meeting and
action taken thereon.
I. ELECTION OF DIRECTORS
The Board of Directors currently consists of three members elected for
a term of one year and until their successors are duly elected and qualified.
An affirmative vote of a plurality of the shares of Common Stock,
present in person or represented by proxy at the Annual Meeting, and entitled to
<PAGE>
vote thereon is required to elect the directors. All proxies received by the
Board of Directors will be voted for the election as directors of the nominees
listed below if no direction to the contrary is given. In the event any nominee
is unable to serve, the proxy solicited hereby may be voted, in the discretion
of the proxies, for the election of another person in his stead. The Board of
Directors knows of no reason to anticipate this will occur.
The following table sets forth as of April 3, 1997 with respect to the
three nominees for election as directors of the Corporation:
<TABLE>
<CAPTION>
Position with Corporation; Continually
Name Principal Occupation and Age Since
<S> <C> <C>
Daniel Catalfumo President and Director, 40 1993
Richard Rosso Secretary, Treasurer and Director, 40 1993
Dan Buchanan Director, 51 1995
</TABLE>
All directors hold office until the next annual meeting of stockholders or
until their successors are duly elected and qualified. Officers are elected
annually by, and serve at the discretion of the Board of Directors. Richard
Rosso is Daniel Catalfumo's uncle.
Daniel Catalfumo has been the president and a director of the Corporation
since its inception in 1993. From 1982 to November 1994, Mr. Catalfumo was the
sole shareholder, officer and director of Professional Tile Contracting Co., a
tile contracting company located in Brooklyn, New York.
4
<PAGE>
Richard Rosso has been the secretary, treasurer and a director of the
Corporation since its inception in 1993. From 1983 to November 1994, Mr. Rosso
was the owner of Dynamic Dental Labs located in Brooklyn, New York. Mr. Rosso
operated Dynamic Dental Labs for over ten years, servicing over 1,000 area
dentists.
Dan Buchanan was engaged as a consultant to the Corporation and elected as
a Director in December 1995. Since 1990, Mr. Buchanan has been the President of
Delta Play Ltd., a Canadian Corporation, which manufactures children's play
equipment, including the soft sculptured modular foam play mazes used by the
Corporation.
The directors of the Corporation are elected annually by the shareholders
and the officers are appointed annually by the board of directors. Vacancies on
the board of directors may be filled by the remaining directors. Each director
and officer will hold office until the next annual meeting of shareholders, or
until his successor is elected and qualified. The Corporation has no present
intention or plans to acquire or merge with any affiliated company or to join
with any such company in acquiring another entity or business.
As permitted under New York Corporation Law, the Corporation's certificate
of incorporation eliminates the personal liability of the directors to the
Corporation or any of its shareholders for damages for breaches of their
fiduciary duty as directors. As a result of the inclusion of such provision,
shareholders may be unable to recover damages against directors for actions
taken by them which constitute negligence or gross negligence or that are in
violation of their fiduciary duties. The inclusion of this provision in the
Corporation's Certificate of incorporation may reduce the likelihood of
derivative litigation against directors and other types of shareholder
litigation.
Board Meetings, Committees and Compensation
During the year ended March 31, 1997, no meetings of the Board of
Directors were held and action was taken on 5 occasions by unanimous written
consent of the Board of Directors in lieu of meeting. The Corporation does not
pays its directors for their attendance at meetings of the board of Directors
and committee meetings. The Corporation does not have standing audit,
nominating, nor compensation committees of the board of directors, nor any other
such committee performing similar functions.
The Board of Directors recommends that you vote "FOR" the nominees for
Director.
5
<PAGE>
EXECUTIVE COMPENSATION AND RELATED MATTERS
Summary Compensation Table
<TABLE>
<CAPTION>
Name and Principal Year End Shares underlying Other Annual
Position March 31 Salary($) Bonus($) Options Compensation
- -------------------- -------- --------- -------- --------------------- ------------
<S> <C> <C> <C> <C> <C>
Daniel Catalfumo 1997 (1) 110,000 $1,000 (2) 5,000(2) $12,000 (3)
President and Director 1996 75,489
1995 15,235
Richard Rosso 1997 (1) 110,000 $1,000 (2) 5,000(2) $12,000 (3)
Secretary, Treasurer 1996 86,553
and Director 1995 15,235
- --------------------------------
</TABLE>
This is the estimated salary of the officers pursuant to their employment
agreements, however, the audit of the Corporation's financial statements for the
year ended March 31, 1997 has not been completed. See "--Employment and
Consulting Agreements." In December 1996, the Corporation issued to each officer
options to purchase 5,000 shares of Common Stock at an exercise price of $ .62
per share, for a period of five years as a bonus. In addition, the Corporation
issued a $1,000 bonus to each officer. The Corporation leases automobiles for
the Corporation's officers at approximately $1,000 per month.
Employment and Consulting Agreements
In April 1995, the Corporation entered into employment agreements with
both of its officers, Daniel Catalfumo and Richard Rosso. Such officers are
presently full-time and pursuant to the terms of their agreements shall receive
compensation at a rate of $100,000 annually, with 10% yearly escalation's during
the term of the agreement. The agreements are for a term of five years expiring
April 2000. Pursuant to the terms of the agreements each employee is to receive
a yearly bonus equal to five percent (5%) of the first $200,000 (only after
reaching $100,000), seven and one-half percent (7 1/2%) for all amounts between
$200,000 and $400,000 and ten percent (10%) of all amounts over $400,000, of the
after-tax profit of the Corporation.
In December 1995, the Corporation entered into a two-year consulting
agreement with Dan Buchanan to become a member of the Corporation's board of
directors and to provide the Corporation with consulting services in locating
and designing additional Fun Bubble facilities and with respect to informing the
Corporation as to changes and innovations in the children's entertainment
industry. Pursuant to the terms of the consulting agreement, the Corporation
issued 15,000 restricted shares of Common Stock to the consultant under its
Senior Management Incentive Plan. The consultant and Corporation entered into a
restrictive share agreement whereby 3,750 shares vested 30 days from grant and
3,750 shares vest six months from the execution of the agreement and each six
month period thereafter until the shares are fully vested. Pending the vesting
of these shares, the Corporation's counsel shall hold such shares in escrow.
<PAGE>
Senior Management Incentive Plan
In February 1995, the board of directors adopted the Senior Management
Incentive Plan (the "Management Plan"), which was adopted by shareholder
consent. The Management Plan provides for the issuance of up to 150,000 shares
of the Corporation's Common Stock in connection with the issuance of stock
options and other stock purchase rights to executive officers and other key
employees.
The adoption of the Management Plan was prompted by its desire to
provide the board with sufficient flexibility regarding the forms of incentive
compensation which the Corporation will have at its disposal in rewarding
executive officers, key employees and consultants who render significant
services to the Corporation. The board of directors intends to offer key
personnel equity ownership in the Corporation through the grant of stock options
and other rights pursuant to the Management Plan to enable the Corporation to
attract and retain qualified personnel without unnecessarily depleting the
Corporation's cash reserves. The Management Plan is designed to augment the
Corporation's existing compensation programs and is intended to enable the
Corporation to offer executives, key employees and consultants a personal
interest in the Corporation's growth and success through awards of either shares
of Common Stock or rights to acquire shares of Common Stock.
The Management Plan is intended to attract and retain key executive
management personnel whose performance is expected to have a substantial impact
on the Corporation's long-term profit and growth potential by encouraging and
assisting those persons to acquire equity in the Corporation. It is contemplated
that only those executive management employees (generally the Chairman of the
Board, Vice-Chairman, Chief Executive Officer, Chief Operating Officer,
President, and Vice-Presidents of the Corporation), key employees and
consultants who perform services of special importance to the Corporation will
be eligible to receive compensation under this plan. As of the date of this
Prospectus, the Corporation's officers and directors are Daniel Catalfumo,
Richard Rosso and Dan Buchanan. A total of 150,000 shares of Common Stock have
been reserved for issuance under the Management Plan. Pursuant to the terms of
his consulting agreement, Dan Buchanan received 15,000 restricted shares under
the Management Plan, which shares vest pursuant to a two year vesting schedule,
of which 11,250 have vested. In addition, options to purchase 5,000 shares have
been issued to each of the Corporation's officers. It is anticipated that awards
made under the Management Plan will be subject to three-year vesting periods,
although the vesting periods are subject to the discretion of the Administrator.
See "Management - Officers and Directors."
<PAGE>
Unless otherwise indicated, the Management Plan is to be administered
by the Board of Directors or a committee of the Board, if one is appointed for
this purpose (the Board or such committee, as the case may be, shall be referred
to in the following description as the "Administrator"). Subject to the specific
provisions of the Management Plan, the Administrator will have the discretion to
determine the recipients of the awards, the nature of the awards to be granted,
the dates such awards will be granted, the terms and conditions of awards and
the interpretation of the Management Plan, except that any award granted to any
employee of the Corporation who is also a director of the Corporation shall also
be subject, in the event the persons serving as members of the Administrator of
such plan at the time such award is proposed to be granted do not satisfy the
requirements regarding the participation of "disinterested persons" set forth in
Rule 16b-3 ("Rule 16b-3") promulgated under the Exchange Act, to the approval of
an auxiliary committee consisting of not less than two individuals who are
considered "disinterested persons" as defined under Rule 16b-3. As of the date
hereof, the Corporation has not yet determined who will serve on such auxiliary
committee, if one is required. The Management Plan generally provides that,
unless the Administrator determines otherwise, each option or right granted
under a plan shall become exerciseable in full upon certain "change of control"
events as described in the Management Plan, or subject to any right or option
granted under the Management Plan (through merger, consolidation,
reorganization, re-capitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Administrator will make
appropriate adjustments to such plans and the classes, number of shares and
price per share of stock subject to outstanding rights or options. Generally,
the Management Plan may be amended by action of the Board of Directors, except
that any amendment which would increase the total number of shares subject to
such plan, extend the duration of such plan, materially increase the benefits
accruing to participants under such plan, or would change the category of
persons who can be eligible for awards under such plan must be approved by
affirmative vote of a majority of shareholders entitled to vote. The Management
Plan permits awards to be made thereunder until November, 2004.
<PAGE>
Directors who are not otherwise employed by the Corporation will not be
eligible for participation in the Management Plan. The Management Plan provides
for four types of awards: stocks options, incentive stock rights, stock
appreciation rights (including limited stock appreciation rights) and restricted
stock purchase agreements, as described below.
Certain Relationships and Related Transactions
In November 1994 and December 1994, the Corporation issued promissory
notes of $25,000 and $8,300 to Joseph Rosso and Frank Catalfumo, respectively.
The notes accrued interest at the rate of 18% per annum. The notes and accrued
interest were repaid in August 1995. The proceeds of the loans were utilized for
working capital.
In February 1995, the Corporation advanced $3,000 to each of Messrs.
Catalfumo and Rosso, the Corporation's officers, which advances were repaid
during July 1995 and December 1995. The advances accrued interest at a rate of
6% per annum.
In March 1995, the Corporation issued 50,000 shares of Common Stock to
Lampert & Lampert, the Corporation's prior counsel, in lieu of legal fees and
expenses aggregating $500.
In May 1995, but prior to the 19,000-to-1 stock split, the
Corporation's initial investors prior to the Corporation's initial public
offering returned to the Corporation's treasury an aggregate of 1,767,000 or 75%
of the shares of Common Stock owned by such shareholders, on a pro-rata basis,
whereby they retained an aggregate of 589,000 shares of Common Stock. As
compensation for the return of their shares of Common Stock, the investors
received "piggyback" registration rights. At the same time, each officer
returned 361,000 shares of Common Stock to the Corporation's treasury, for no
remuneration or compensation. In connection with the return of a portion of
their shares of Common Stock held by the investors, the Corporation recorded a
compensation charge of $229,500, which charge was based on the increase in
percentage ownership of the Corporation received by the officers.
In July 1995, the Corporation issued a promissory note of $6,500 to
Daniel Catalfumo, which accrued interest at the rate of 18% per annum. During
this period, Daniel Catalfumo advanced an additional $5,000 to the Corporation,
which advance did not accrue interest. In addition, the Corporation issued notes
in the amount of $6,500 and $17,000 to Sal Catalfumo and Frank Catalfumo,
respectively, which notes accrued interest at the rate of 18% per annum. All of
these notes and the advance from Daniel Catalfumo were repaid in August 1995.
The proceeds of the loans were utilized for working capital.
<PAGE>
In December 1995, the Corporation entered into a two-year consulting
agreement with Dan Buchanan to become a member of the Corporation's Board of
Directors and to provide the Corporation with consulting services in locating
and designing additional Fun Bubble facilities, and with respect to informing
the Corporation as to changes and innovations in the children's entertainment
industry. Pursuant to the terms of the consulting agreement, the Corporation
issued 15,000 restricted shares of Common Stock to the consultant under its
Senior Management Incentive Plan. The consultant and Corporation entered into a
restrictive share agreement whereby 3,750 shares vested 30 days from grant and
3,750 shares vest six months from the execution of the agreement and each six
month period thereafter until the shares are fully vested. Pending the vesting
of these shares, the Corporation's counsel shall hold such shares in escrow.
The Corporation issued three promissory notes in the aggregate amount
of $200,000, two notes in the aggregate principal amount of $100,000 in January
1996 and one note in the principal amount of $100,000 in February, 1996, to
unaffiliated parties, bearing interest at 18% per annum. The principal amount of
each note was payable together with accrued interest, on the earlier of July 1,
1997 and the consummation of an initial public offering of the Corporation's
securities, which was repaid upon the closing of the Corporation's initial
public offering. Initially the notes matured on the earlier of six months from
issuance and the consummation of an initial public offering of the Corporation's
securities. The Corporation requested that holders of the notes amend the term
of maturity of the notes to the earlier of July 1997 and the consummation of an
initial public offering. The two notes issued in January 1996 were personally
guaranteed by the Corporation's officers. The notes were repaid from the
proceeds of the Corporation's public offering.
In December 1996 the Corporation granted options to purchase 5,000
shares at $.62 per share of 100% of the then market price of the Corporation's
units, exerciseable for a period of five years commencing on the date of grant.
In addition, the Corporation issued a $1,000 bonus to each of Messrs. Rosso and
Catalfumo.
For information on the Corporation's compensation arrangements, see
"Employment and Consulting Agreements."
<PAGE>
II. REVERSE-STOCK SPLIT
Management of the Corporation is of the opinion that a reverse-spilt of the
Corporation's stock 1 for 3 (1 new share for every 3 old shares) is in the best
interests of the Corporation's shareholders. All fractional shares will be
rounded up or down to the nearest whole shares. No cash will be paid for any
fractions of shares.
Currently, the Corporation's Common Stock is quoted on the Nasdaq
SmallCap Stock Market ("Nasdaq"). The Corporation recently received notice from
Nasdaq that due to the Corporation's failure to maintain the Nasdaq bid price
requirement that it was going to delist the Corporation's securities. This
determination was made because the Corporation's units had traded below the
$1.00 minimum bid price. In order to continue to have its Securities listed on
Nasdaq, the Corporation is required to maintain (i) total assets of at least
$2,000,000, (ii) total stockholders' equity of $1,000,000, (iii) a minimum bid
price of $1.00, (iv) one market maker, (v) 300 stockholders, (vi) at least
100,000 shares in the public float and (vii) a minimum market value for the
public float of $200,000. In the event the Corporation's Common Stock is
delisted from the Nasdaq, trading, if any, of the Corporation's securities would
thereafter be conducted in the over-the-counter market on the OTC Bulletin
Board. Consequently, an investor may find it less liquid, therefore, being more
difficult to dispose of, or to obtain accurate quotations as to the price of the
Corporation's securities. As of March 19, 1997, the Corporation appealed
Nasdaq's initial determination to delist the Corporation's securities, by
written submission to the Nasdaq listings panel. The Corporation is presently
awaiting a determination by the listings panel. The Corporation has been seeking
representation by an investment banking and investor relations firm which would
provide assistance with the Corporation's financing needs and seek market
support for the Corporation's securities. The Corporation has negotiated with
several firms for these services but has not engage one at this time, though the
Corporation believes that a firm will be engaged in the near future.
At present, the bid price of the Corporation's units are below $1.00.
The proposed reverse-split is necessary to keep the Corporation in compliance
with Nasdaq's continued listing requirements. Management believes that a
reverse-split of the Corporation's stock is the best strategy to keep the
Corporation in compliance with the continued listing requirements of the Nasdaq
SmallCap Market. See" Recent Developments."
<PAGE>
The reverse-split will be effected by reducing its present issued and
outstanding shares from approximately 2,516,000 shares to 838,667 shares. The
effective date for purposes of calculating the reverse-split would be as soon as
practical after the meeting date as Nasdaq could effect the reverse split within
its systems.
FINANCIAL INFORMATION
A COPY OF THE CORPORATION'S ANNUAL REPORTS ON FORM 10-KSB FOR THE
FISCAL YEAR ENDED MARCH 31, 1997 AS TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE FURNISHED WITHOUT THE ACCOMPANYING EXHIBITS TO STOCKHOLDERS
WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR SENT TO RICHARD RUSSO, SECRETARY,
FUN TYME CONCEPTS, INC., 290 WILD AVENUE, STATEN ISLAND, NEW YOK 10314. EACH
SUCH REQUEST MUST SET FORTH A GOOD FAITH REPRESENTATION THAT AS OF MARCH 21,
1997 THE PERSON MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF COMMON SHARES OF
THE CORPORATION ENTITLED TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS.
III. OTHER BUSINESS
As of the date of this proxy statement, the only business which the Board
of Directors intends to present, and knows that others will present, at the
Annual Meeting is that herein above set forth. If any other matter or matters
are properly brought before the Annual Meeting, or any adjournments thereof, it
is the intention of the persons named in the accompanying form of proxy to vote
the proxy on such matters in accordance with their judgment.
Stockholder Proposals
Proposals of stockholders intended to be presented at the Corporation's
1997 Annual Meeting of Stockholders must be received by the Corporation on or
prior to December 21, 1997 to be eligible for inclusion in the Corporation's
proxy statement and form of proxy to be used in connection with the 1997 Annual
Meeting of Stockholders.
By Order of the Board of Directors,
Richard Rosso
Secretary
April 3, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN
YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF IT IS
MAILED IN THE UNITED STATES OFAMERICA.
6
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Period Ended December 31, 1996
Commissioner File Number 0-27542
FUN TYME CONCEPTS, INC.
(Exact name of Registrant as specified in its charter)
New York 11-3157259
(State of (I.R.S. employer
Incorporation) identification No.)
290 Wild Avenue
Staten Island, NY 10314
(718)761-6100
(Address and Telephone Number of Principal Executive Offices)
Check whether the Issuer: (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 and (2) has been subject to such filing requirements for the
past 90 days. Yes X No _
On November 17, 1996 there were outstanding 2,676,000 shares of Common
Stock, par value $.001 per share.
Documents incorporated by reference: None.
<PAGE>
PART I - Financial Information
ITEM 1 Financial Information. Annexed hereto.
<PAGE>
FUN TYME CONCEPTS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
Mar.31,1996 Dec.31,1996
ASSETS
Current Assets:
<S> <C> <C>
Cash 66,596 2,594,045
Inventories 14,735 17,410
Prepaid expenses and other current assets 27,635 42,156
Total Current Assets 108,966 2,653,611
Property and equipment(net of accum. dep.) 789,917 911,630
Deferred registration costs 226,333 0
Other Assets 25,324 128,081
Total Assets 1,150,540 3,693,322
LIABILITIES
Current Liabilities:
Accounts Payable and Accrued Expenses 131,457 27,045
Customer Deposits 15,008 4,067
Current portion of lease payable 16,857 35,191
Loans from Stockholders 1,468 0
Total Current Liabilities 164,790 66,303
Deferred Officers' Compensation 30,257 0
Notes Payable 200,000 0
Capital Lease Payable(Net of current portion) 49,222 79,055
Deferred Rent 22,560 22,560
Total Liabilities 466,829 167,918
STOCKHOLDERS' EQUITY
Preferred Stock - par value $.01, authorized 500,000 shares, none issued and
outstanding Common Stock - par value $.001, authorized 10,000,000 shares,
2,676,000 and 1,876,000, respectively shares
issued and outstanding 1,876 2,676
Additional Paid -in Capital 932,189 4,033,298
Deficit -250,354 -510,570
Total Stockholders' Equity 683,711 3,525,404
Total Liabilities and Stockholders' Equity 1,150,540 3,693,322
The accompanying notes to financial statements are and integral part hereof.
</TABLE>
<PAGE>
FUN TYME CONCEPTS, INC.
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTH ENDED NINE MONTHS ENDED
December 31 December 31
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Operating Revenue 163,353 161,827 563,493 466,983
Merchandise Revenue 49,202 49,160 154,850 152,714
Total Revenue 212,555 210,987 718,343 619,697
Operating Expenses -298,639 -245,793 -790,385 -658,316
Cost of Merchandise Sold -34,102 -19,471 -106,344 -93,281
Selling, General and Admin.Exp. -37,002 -22,981 -132,569 -110,239
Compensation Charges 0 -52,500 0 -52,500
(Loss) from operations -157,188 -129,758 -310,955 -294,639
Other Income &(Expenses)
Interest Income 38,018 1,260 66,800 1,481
Interest Expense -1,916 -5,323 -10,057 -14,482
(Loss)before income tax -121,086 -133,821 -254,212 -307,640
Provision for Income Taxes -3,075 1,211 -6,004 0
Net Income(Loss) -124,161 -132,610 -260,216 -307,640
Net Income(Loss)per share -0.05 -0.07 -0.11 -0.17
Weighted average common shares
and equivalents 2,676,000 1,812,862 2,325,635 1,812,862
The accompanying notes to financial statements are an integral part thereof.
</TABLE>
<PAGE>
<TABLE>
FUN TYME CONCEPTS, INC.
CONDENSED STATEMENT OF CASH FLOWS
NINE MONTHS ENDED
December 31st.
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net Income(Loss) -260,216 -307,641
Adjustments to reconcile net(loss)to
net cash (used in) Operating activities:
Depreciation and amortization 74,604 67,432
(Increase)Decrease in inventories -2,675 15,138
(Increase)Decrease in prep.exp.& other curr. assets -14,521 24,393
Increase(decrease) in A/P & accrued exp. -104,412 75,030
(Decrease)in customer deposits -10,941 668
(Decrease) in other assets -102,757 0
Decrease in deferred Officers Compensation -30,257 0
Decrease in due from Officers 0 6,156
Increase in deferred rent 0 3,655
Compensation charges 0 52,500
Net cash(used in) operating activities -451,175 -62,669
Cash flows from investing activities:
Acquisition of fixed assets -131,447 -34,805
Increase in security deposit 0 -2,271
Net cash(used in) investing activities -131,447 -37,076
Proceeds from issuance of preferred stock 0 261,476
Proceeds from issuance of common stock 0 8,300
Net proceeds of initial public offering 3,328,242 0
Proceeds of notes payable to stockholders -1,468 35,000
Repayments of capital lease obligations -16,703 -9,470
Repayments of notes payable to stockholders 0 -61,132
Payment of deferred registration costs 0 -106,565
Repayment of note payable -200,000 0
Net cash provided by financing activities 3,110,071 127,609
NET INCREASE IN CASH 2,527,449 27,864
Cash - beginning of period 66,596 21,633
CASH - END OF PERIOD 2,594,045 49,497
Supp'l sched. of non cash invest'g and
financing activities:
Equipment acquired by capital lease 64,870 4,524
Transfer to common stock of defer.reg.costs 226,333 0
Supplemental disclosure of cash flow info.:
Interest Paid 10,057 14,482
Taxes Paid 6,004 1,202
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
<PAGE>
FUN TYME CONCEPTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note A - The Company
Fun tyme Concepts, Inc. (the "Company") operates a children's entertainment
center in Staten Island, New York for children of ages two through twelve under
the trade name "Fun Bubble, Party/Party Center" since October 1994. The
management of the company is at the present time in search of new sites in the
Tri-State Area.
Note B - Accompanying Financial Statements:
In the opinion of management, the accompanying Unaudited Condensed
Financial Statements of Fun Tyme Concepts, Inc. (the "Company") include all
adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the Company's financial position as of December 31,1996, and the
results of its operations for the three months, and nine months periods ended
December 31,1996. Due to the seasonality of the Company's operation, the results
of its operations for the interim period ended December 31,1996, may not be
indicative of total results for the full year.
While the Company believes the disclosures presented are adequate to make
the information not misleading, it is suggested that these condensed financial
statements be read in conjunction with the Company's registration statement on
Form SB-2.
Note C - Public Offering:
On August 15,1996 the Registrant consummated a public offering (the
"Offering") of its securities, whereby it sold, through State Street Capital
Markets Corp. (the "Underwriter"), 1,250,000 Units (inclusive of 250,000 Units
by a certain selling securityholder and 200,000 shares by certain selling
stockholders), each Unit comprising one share of the Registrant's common stock,
par value $.001 per share (the "Common Stock") and one Common Stock Purchase
Warrant. The Registrant received net proceeds of $3,328,242 after the payment of
underwriting commissions, the non-accountable expense allowance and other cost
of the Offering. Also in connection with the Offering the Registrant sold
Underwriter's Warrants to purchase 125,000 Units to the Underwriter for a
nominal value.
The Registrant also entered into a two year consulting agreement with the
Underwriter commencing July 31,1996 and ending July 31,1998 with a yearly
consulting fee of $30,000, paid in advance at the closing.
<PAGE>
The Underwriting Agreement and Consulting agreement have been terminated by
mutual consent between the parties.
The Units were to be separately tradable 90 days from issuance, which date
was October 28, 1996. Since August 1996, the Underwriter has ceased market
making activities. The lack of support for the Registrant's securities has
provided for limited liquidity in such securities and decreased quotations,
whereby the Units are trading below $1.00. NASDAQ has notified the Company that
unless it can provide a viable plan and/or see its stock price trade above $1.00
then with 90 days of such notice by February 5, 1997 its securities may be
delisted from the NASDAQ Small Cap Stock Market and quoted on the OTC Bulletin
Board. The Company is actively seeking to find additional market makers for its
securities. The Company has submitted a plan to NASDAQ which includes among
other business undertaking a proposal to reverse split the outstanding shares on
a 1 for 3 basis. A Buyback of $150,000 worth of the Company's Common Stock
Outstanding which will be retired to treasury.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Result of Operation
During the quarter ended December 31, 1996 revenues of the Company
were $212,555 as compared with $210,987 during the comparable quarter ended in
1995. This increase of $1,568 or (1%) was attributable to an increase in
operating revenues merchandise revenues as a result of renovation and new rides
at Staten Island Fun Bubble which increased admission in the period.
The Nine months ended December 31, 1996 revenue of $718,343 was an increase
by $98,646 or (15.9%) over the same period a year-ago. This increase was the
result of an increase in operating revenues of $96,510 or (20.7%) and an
increase in merchandise revenue of $2,136 or (1.4%) over the same period ended
December 31, 1995. The increase is due to the three new programs (Fun Bubble's
Summer Day Camp, After School Program and Little Miss Fun Bubble Pageant). These
programs started in the second quarter of fiscal 1996, which brought more
children into the facility on a daily basis. The programs provided further
exposure to our already established programs, as well generated additional
revenue on their own.
<PAGE>
Operating expenses for the nine months ended December 31, 1996 increased by
$132,069 or (20%) and for three months by $52,846 or (21.5%), compared to the
same period a year-ago ended December 31, 1995. This increase was primarily
caused by new staffing salaries, additional lease payments, and additional costs
resulting from the new programs implemented.
Selling, general and administrative expenses, have also increased to
$37,002 or (61%) for the quarter, and $132,569 or(20.3%) for nine months ended
December 31,1996 as compared to the same period ended December 31,1995. The
increase is due to marketing expenses, professional fees and other corporate
expenses. The Company now has the corporate overhead in place which will enable
it to support additional facilities.
Cost of merchandise sold amounted to 69.3% of merchandise revenue during
the quarter ended December 31,1996 compared to 39.6% for the same period ended
December 31,1995 and 68.7% of merchandise revenue during the nine months ended
December 31,1996 compared to 61.1% in nine months ended December 31,1995. Cost
of merchandise sold varies based on product mix and value discounts earned.
During the three months and the nine months ended December 31,1996 the
Company incurred a net loss of $124,161 or($0.05) per share, and $260,216 or
($0.11) per share respectively as compared with $132,610 or($0.07) per share,
and $307,640 or($0.17) during the comparable period a year-ago December 31,1995.
The primary reason for the decrease in the net loss and net loss per share was
the result of an increase in revenues over operating expenses. In addition to
the new programs implemented and decreased corporate expenses for the three
months and nine months ended December 31,1996 to the comparable three months and
nine months in 1995.
Financial Condition
At December 31,1996 the Company had working capital of $2,587,308 and
shareholders' equity of $3,525,404.
During the nine months ended December 31,1996 the Company used cash for
operating activities of $451,175 a compared with cash used of $62,669 for
operating activities during the comparable of nine months in 1995. The increase
in cash used of $388,506 is primarily due to IPO related expense, decrease in
accounts payable and accrued officer's compensation. The Company acquired fixed
assets of $131,447 and $34,805 during the nine month ended December 31,1996 and
1995, respectively. Cash was provided by financing activities of $127,609 during
the nine month ended December 31,1995 and $3,110,071 during the nine month ended
December 31,1996.
At this time, the Company has commitments for the acquisition of play
equipment and construction for an additional facilities. The proceeds from the
initial public offering will be used primarily for the opening of additional
facilities and working capital. In January 1997 the Company signed a lease to
build a 15,000 square ft. facility in East Brunswick, New Jersey.
The Company believes that funds it generates from ongoing operations
and the proceeds from the initial public offering will be adequate to fund its
present operation and any additional operations it plans to commence in the
future.
<PAGE>
Part II - Other Information
ITEM 1. Legal Proceedings. None.
ITEM 2. Changes in Securities. None.
ITEM 3. Defaults Upon Senior Securities. None.
ITEM 4. Submission of Matters to a Vote. None.
ITEM 5. Other Information. None.
ITEM 6. Exhibit and Reports on Form 8-k.
(a) None.
(b) 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: February 20, 1997
Fun Tyme Concepts, Inc.
By: \s\ Daniel Catalfumo
Daniel Catalfumo, President
By: \s\ Richard Rosso
Richard Rosso, Treasurer
<PAGE>
FINANCIAL DATA SCHEDULE
<TABLE>
<CAPTION>
<S> <C>
PERIOD-TYPE 9 MOS
FISCAL-YEAR-END MARCH 31,1997
PERIOD-START APRIL 1,1996
PERIOD-END DECEMBER 31,1996
CASH 2,594,045
SECURITIES 0
RECEIVABLES 10,033
ALLOWANCES 0
INVENTORY 17,410
CURRENT-ASSETS 2,653,611
PP&E 1,129,996
DEPRECIATION 218,365
TOTAL-ASSETS 3,693,322
CURRENT-LIABILITIES 66,303
BONDS 0
COMMON 2,676
PREFERRED-MANDATORY 0
PREFERRED 0
OTHER-SE 3,522,728
TOTAL-LIABILITY-AND-EQUITY 3,693,322
SALES 718,343
TOTAL REVENUE 718,343
CGS 106,344
TOTAL COST 922,954
OTHER-EXPENSES 0
LOSS-PROVISION 0
INTEREST-EXPENSE 10,057
INCOME-TAX 6,004
INCOME-CONTINUING -260,216
DISCONTINUED 0
EXTRAORDINARY 0
CHANGES 0
NET-INCOME -260,216
EPS-PRIMARY -0.11
EPS-DILUTED -0.11
</TABLE>
