UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 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 0-27542
FUN TYME CONCEPTS, INC.
(Exact name of Registrant as Specified in its Charter)
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<S> <C>
New York 11-3157259
(State of Incorporation) (I.R.S. Employer Identification No.)
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290 Wild Avenue, Staten Island, New York 10314
(Address of Principal Executive Offices) (Zip Code)
(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
section 13 or 15 (d) of the Exchange Act during the past 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 [xx] No [
]
APPLICABLE ONLY TO CORPORATE ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Common stock, par value $.001 per share: 2,512,465 shares outstanding as of
December 31, 1997.
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FUN TYME CONCEPTS, INC.
TABLE OF CONTENTS
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PAGE
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
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Condensed Balance Sheets as of December 31, 1997
and March 31, 1997. 3
Condensed Statement of Operations for the
Three and Nine Months Ended December 31, 1997 and 1996. 4
Condensed Statement of Cash Flows for the
Nine Months Ended December 31, 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 10
Signatures 11
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<CAPTION>
FUN TYME CONCEPTS, INC.
CONDENSED BALANCE SHEETS
March 31,1997 December 31, 1997
(unaudited)
ASSETS
<S> <C> <C>
Current Assets: ................................. 2,155,460 933,460
Inventories ..................................... 32,020 40,375
Prepaid expenses and other current assets ....... 92,194 35,483
Due from employee & Officers .................... 5,000 58,869
---------- ------------------------
Total Current Assets ............................ 2,284,674 1,068,187
---------- ------------------------
Property and equipment (net of accum. dep.) ..... 1,044,879 1,428,110
Other Assets .................................... 84,072 84,038
---------- ------------------------
Total Assets .................................... 3,413,625 2,580,335
---------- ------------------------
LIABILITIES
Current Liabilities:
Accounts Payable and Accrued Expenses ........... 78,093 73,552
Customer Deposits ............................... 16,030 7,254
Current portion of lease payable ................ 48,952 10,675
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Total Current Liabilities ....................... 143,075 91,481
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Capital Lease Payable (Net of current portion) .. 60,583 30,488
Deferred Rent ................................... 23,683 23,683
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Total Liabilities ............................... 227,341 145,652
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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,
2,542,965 and 2,512,465 shares
issued and outstanding .......................... 2,676 2,676
Additional Paid-in Capital ...................... 4,033,298 4,033,298
Deficit ......................................... (760,047) (1,487,631)
Treasury stock, at cost-133035 and 163,535 shares (89,643) (113,660)
---------- ------------------------
Total Stockholders' Equity ...................... 3,186,284 2,434,683
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Total Liabilities and Stockholders' Equity ...... 3,413,625 2,580,335
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The accompanying notes to financial statements are an integral part hereof.
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FUN TYME CONCEPTS INC.
CONDENSED STATEMENTS OF OPERATIONS
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<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
December 31 December 31
1997 1996 1997 1996
---- ----- ---- ----
<S> <C> <C> <C> <C>
Operating Revenue ....................... 230,257 163,353 648,360 563,493
Merchandise Revenue ..................... 65,990 49,202 158,585 154,850
---------- ---------- ---------- ----------
Total Revenue ........................... 296,247 212,555 806,945 718,343
---------- ---------- ---------- ----------
Operating Expenses ...................... (331,041) (298,639) (1,016,680) (790,385)
Cost of Merchandise Sold ................ (46,440) (34,102) (120,571) (106,344)
Selling, General and Administrative Exp . (158,986) (37,002) (406,361) (132,569)
---------- ---------- ---------- ----------
(Loss) from operations .................. (240,220) (157,188) (736,667) (310,955)
---------- ---------- ---------- ----------
Other Income &(Expense):
Interest Income ......................... 10,010 38,018 56,530 66,800
Interest Expense ........................ (6,931) (1,916) (10,758) (10,057)
---------- ---------- ---------- ----------
(Loss) before income tax ................ (237,141) (121,086) (690,895) (254,212)
Provision for Income Taxes .............. (14,421) (3,075) (36,689) (6,004)
---------- ---------- ---------- ----------
Net Income (Loss) ....................... (251,562) (124,161) (727,584) (260,216)
---------- ---------- ---------- ----------
Net Income (Loss) per share ............. (0.10) (0.05) (0.29) (0.11)
Weighted average common shares and equiv 2,512,465 2,676,000 2,513,463 1,812,862
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The accompanying notes to financial statements are an integral part hereof.
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FUN TYME CONCEPTS, INC.
CONDENSED STATEMENT OF CASH FLOWS
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NINE MONTHS ENDED
December 31
1997 1996
Cash flows from operating activities:
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Net income (loss) ................................................... (727,584) (260,216)
Adjustments to reconcile net (loss) to net cash (used in)
Operating activities:
Depreciation and amortization ....................................... 134,572 74,604
Increase (decrease) in inventories .................................. (8,356) (2,675)
Decrease (increase) due from officers ............................... (53,869) --
(Increase) decrease in prepaid expenses & other current assets ...... 56,745 (14,521)
Increase (decrease) in accounts payable and accrued expenses ....... (4,541) (104,412)
Increase (decrease) in customer deposits ............................ (8,776) (10,941)
Increase (decrease) in other assets ................................. 0 (30,257)
Increase (decrease) in deferred costs ............................... 0 0
Net cash (used in) operating activities ............................. (611,809) (451,175)
---------- ----------
Cash flows from investing activities:
Acquisition of fixed assets .................................... (517,802) (131,447)
---------- ----------
Net cash (used in )investing activities ....................... (517,802) (131,447)
---------- ----------
Cash from financing Activities:
Net proceeds of initial public offering ............................. 0 3,328,242
Proceeds of notes payable to stockholders ........................... 0 (1,468)
Repayment of note payable ........................................... 0 (200,000)
Repayments of capital lease obligations ............................. (68,372) (16,703)
Purchase of treasury stock .......................................... (24,017 0
---------- ----------
Net cash provided by financing activities ........................... (92,389) 3,110,071
---------- ----------
NET INCREASE (DECREASE) IN CASH ..................................... (1,222,000) 2,527,449
---------- ----------
Cash-beginning of period ............................................ 2,155,460 66,596
CASH- END OF PERIOD ................................................. 933,460 2,594,045
---------- ----------
Supplemental schedule of non cash investing and financing activities:
Equipment acquired by capital lease ................................. 0 64,870
Transfer to common stock of deferred registration costs ............. 0 226,333
Supplemental disclosure of cash slow information: ................... 10,758 8,141
Taxes Paid .......................................................... 36,689 2,929
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The accompanying notes to financial statements are an integral part hereof.
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FUN TYME CONCEPTS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
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<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
------ ----- ------ ------ ------- -------- --------
Balances
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1997 ..........0 0 2,542,965 2,676 4,033,298 (760,047) (89,643) 3,186,284
Net income (loss)
for the nine months
ended December 31,1997 .. ($727,584) ($727,584)
Treasury stock, at cost
30,500 shares repurchased
April 9,1997 ............ (30,500) ($24,017) ($24,017)
----------- ----------
Balances
Dec. 31,1997 ............0 0 2,512,465 $2,676 $4,033,928 ($1,487,631)($113,660) $2,434,683
</TABLE>
Attention is directed to the foregoing accountant's report and to the
accompanying notes to financial statements.
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FUN TYME CONCEPTS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
December 31, 1997
(Unaudited)
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 by the
end of the second quarter of fiscal year 1999. 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 December 31, 1997 and the results of its operations for
the nine months ended December 31, 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 nine months ended
December 31, 1997 may not be indicative of total results of operations for the
full year.
While the Company believes the disclosures presented herein 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 and the Company's audited Financial
Statements contained in the Company's Form 10-KSB for the fiscal year ended
March 31, 1997.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Statements contained in this report which are not historical facts may be
considered forward looking information with respect to plans, projections, or
future performance of the Company as defined under the Private Securities
Litigation Reform Act of 1995. These forward looking statements are subject to
risks and uncertainties which could cause actual results to differ materially
from those projected.
For the three months ended December 31, 1997, the Company generated
revenues of $296,247 as compared to the $212,555 in revenues generated during
the three months ended December 31, 1996. This increase of $83,692 (or 39.4 %)
was attributable to both an increase of $66,904 (or 40.9%) in operating revenues
and a $16,788 (or 34.1%) increase in merchandise revenue. Total revenues
increased during the three months ended December 31, 1997 as a result of
revenues from the new location in Edmonton, Canada. The Edmonton location opened
on August 5,1997; therefore, revenues are for five and one half months only.
Revenues for the nine month months ended December 31, 1997 were $806,945,
showing an increase of $88,602 (or 12.3%) during the comparable period one year
ago. This increase is attributable to a $84,867 (or 15.1%) increase in operating
revenue and a $3,735 (or 2.4%) increase in merchandise revenue for the same
period ended December 31, 1996. The increase is attributable to the operation of
the newly opened Edmonton location.
Operating expenses increased by $226,295 (or 28.6%) for the nine months
ended December 31, 1997 and $32,402 (or 10.8%) for the three months ended
December 31, 1997 as compared to the comparable periods ended December 31, 1996.
This increase was primarily caused by the costs associated with the operations
of the Edmonton Fun Bubble, additional staff salaries, additional lease
payments.
Selling, general, and administrative expenses have also increased by
$121,984 (or 329.6%) for the quarter and by $273,792 (or 206.5%) for the nine
months ended December 31, 1997, as compared to the comparable periods ended
December 31, 1996. This increase is due to increased marketing expenses and
professional fees incurred in connection with the opening of the Edmonton Fun
Bubble and the ongoing development of the East Brunswick Fun Bubble. In
addition, there are costs expensed from start-up that could not be capitalized
for the Edmonton and East Brunswick locations.
Cost of merchandise sold amounted to 76.0% of merchandise revenue during
the nine months ended December 31, 1997 as compared to 68.7% for the same period
ended December 31, 1996. Cost of merchandise sold varies based on product mix
and value discounts earned.
During the nine and three months ended December 31, 1997, the Company
incurred a net loss of $727,584 (or $0.29 per share) and $251,562 (or 0.10 per
share), respectively, as compared with $260,216 (or $0.11 per share), and
$124,161 (or $0.05 per share ) during the comparable periods ended December 31,
1996. The primary reason for the increase in the net loss and net loss per share
is the increase in operating expenses resulting from the new sites and an
increase in corporate expenses for the nine month period ended December 31,
1997, as compared to the comparable nine month period ended December 31,1996.
Included in these are expenses related to the opening of new sites.
Financial Condition
At December 31, 1997, the Company had working capital of $976,706 and
shareholders' equity of $2,434,683.
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During the nine months ended December 31, 1997, the Company used $611,809
in cash for operating activities as compared with $451,175 in cash used for
operating activities during the comparable nine month period ended December 31,
1996. The increase of $160,634 is primarily due to additional expenses incurred
in connection with the Edmonton location and the new site being developed in New
Jersey. The Company acquired fixed assets of $517,802 and $131,447 during the
nine months ended December 31, 1997 and 1996, respectively. Cash was provided by
financing activities of $3,110,071 during the nine months ended December 31,
1996, and $92,389 in cash was used during the nine months ended December 31,
1997 primarily to pay off capital lease obligations and to acquire treasury
stock.
At this time, the Company has acquired play equipment and construction
related purchases for the Edmonton, Canada site which opened for operation on
August 5, 1997. Also at this time, the Company has commitments for the
acquisition of additional play equipment and construction related purchases for
the East Brunswick facility in New Jersey.
The Company can give no assurance that the revenues generated from its
operations together with its current capitalization will be adequate to finance
its present and future operations.
New Accounting Pronouncement:
In February 1997, Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128 Earning per share ("EPS").
SFAS No. 128 is effective for the Company's fiscal year ending March 31,
1998. The Company believes that SFAS No. 128 will not have a material impact on
its financial statements.
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PART II
Item 1. Legal Proceedings: None
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
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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 under
signed thereunto duly authorized.
Dated: March 10, 1998
Fun Tyme Concepts, Inc.
By: /s/ Daniel Catalfumo
Daniel Catalfumo, President
By: /s/ Richard Rosso
Richard Rosso, Treasurer
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<ARTICLE> 5
<LEGEND>
Exhibit 27.01
Financial Data Schedule
FUN TYME CONCEPTS, INC.
EXHIBIT 27.01
FINANCIAL DATA SCHEDULE
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> mar-31-1997
<PERIOD-END> dec-31-1997
<CASH> 933,460
<SECURITIES> 0
<RECEIVABLES> 58,869
<ALLOWANCES> 0
<INVENTORY> 40,375
<CURRENT-ASSETS> 1,068,187
<PP&E> 1,750,624
<DEPRECIATION> 383,682
<TOTAL-ASSETS> 2,580,335
<CURRENT-LIABILITIES> 73,552
<BONDS> 0
0
0
<COMMON> 2,676
<OTHER-SE> 2,434,683
<TOTAL-LIABILITY-AND-EQUITY> 2,580,335
<SALES> 806,945
<TOTAL-REVENUES> 806,945
<CGS> 120,571
<TOTAL-COSTS> 1,423,041
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (10,758)
<INCOME-PRETAX> (690,895)
<INCOME-TAX> (36,689)
<INCOME-CONTINUING> (727,584)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (727,584)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
