SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


(Mark One)
[X]  Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 [No Fee Required]

     For the fiscal year ended September  30,  2002

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 [No Fee Required]

     For the  transition  period from  __________  to  ___________________

     Commission File No. 0-4289


                               FUN CITY POPCORN, INC.
                  --------------------------------------------
                 (Name of small business issuer in its charter)


            Arkansas                                            71-0390957
 ------------------------------                            --------------------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                           Identification Number)


         3211 Sunrise Avenue
          Las Vegas, Nevada                                       89101
 --------------------------------------                          --------
(Address of principal executive offices)                        (Zip Code)

Issuer's telephone number:  (702) 367-2676

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

                           $.01 Par Value Common Stock
                                (Title of Class)


Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
                                Yes   X    No
                                    -----    -----

     As of November 30, 2002, 1,891,579 shares of the Registrant's $.01 par
value Common Stock were outstanding. As of November 30, 2002, the market value
of the Registrant's $.01 par value Common Stock is $132,410.53.

     Check if there is no disclosure contained herein of delinquent filers in
response to Item 405 of Regulation S-B, and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.[ X ]

     The registrant's revenues for its most recent fiscal year were $1,750,827

     The following documents are incorporated by reference into Part III, Items
9 through 12 hereof: None.

<PAGE>


                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS
--------------------------------

     Except for the historical information contained herein, the matters set
forth in this Report include forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially. These risks and
uncertainties are detailed throughout this Report and will be further discussed
from time to time in the Company's periodic reports filed with the Commission.
The forward-looking statements included in this Report speak only as of the date
hereof.

BUSINESS

     The Company has produced and distributed snack foods in the Las Vegas,
Nevada metropolitan area since 1987. It manufactures its own proprietary brands
of plain and flavored popcorn and distributes over 400 other snack food products
including cheese sauces, potato chips, nuts, snow cone syrups, candy, cookies
and beverages.

     In connection with its popcorn sales, the Company offers popcorn machines
and nacho cheese machines to its customers free of charge. Under this
arrangement, the customer signs a contract, cancelable upon one week's notice,
which requires the customer to pay an agreed upon price for the popcorn, clean
the machine daily, not remove it from its premises and use an agreed upon
minimum amount of popcorn each month. The Company services the machine at its
expense. The Company currently has over 350 such machines placed with customers,
all of which have been placed free of charge. Prior to placing a machine the
Company makes its own determination as to whether the customer has sufficient
consumer traffic to justify placement of the machine. Historically the Company
retrieves less than 5% of the machines it places for failure to meet minimum
sales requirements. If the customer elects to purchase a machine, the cost is
between $600 and $3,000 depending upon the size and function of the machine.

     The Company's customers include Las Vegas hotel/casinos along with schools,
independent supermarkets, prisons and concessionaires. The Company's
concessionaire customers include such national companies as Host Marriott,
Aramark and W.H. Smith which account in the aggregate for approximately 5% of
its business. No one customer accounted for 10% or more of the Company's revenue
for the years ended September 30, 2002 or 2001. The Company's in-house salesmen
call upon customers and prospective customers in the Las Vegas metropolitan area
on a regular basis. The Company also uses telemarketing and direct mail to
market its products.

     The Company sells to approximately 95% of the hotel/casinos in Las Vegas.
It has two types of school programs which are sold to the Las Vegas School
District: a warehouse product line that it distributes to all of the Las Vegas
schools for meals and snack food and candy which are sold directly to
approximately 20% of the schools in the Las Vegas School District. The Company
also sells to two of the three local prisons. The balance of its sales are to
independent concessionaires that have shops in malls, ball parks, independent
theaters, bars, restaurants, skating rinks, distributors in other areas, or any
place a concession stand might be found.

<PAGE>


HISTORY

     In June 1996 Tone Products, Inc., a publicly traded company, acquired all
of the Company's outstanding common stock (1,899,544 shares) and commenced
operating the Company as a wholly-owned subsidiary. Tone is a more than
50-year-old Chicago, Illinois-based manufacturer and distributor of snack foods,
specialty beverages and condiments.

     On June 30, 2001 the Company's sole shareholder approved an 18,995.44 for
one forward stock split and authorized the issuance of up to 10,000,000 shares
of common stock and 5,000,000 shares of preferred stock. All references
throughout this Form 10 reflect this corporate action.

          Spin-Off: History and Purpose.

     In April 2001 Tone's Board of Directors voted, to distribute all of Tone's
share ownership in the Company, representing 1,899,544 shares, on a pro rata
basis to Tone's stockholders. The purpose of the distribution is (i) to allow
the management of each company to focus solely on that company's business and
(ii) to improve Tone stockholder value by providing Tone stockholders with a
separate interest in the Company. In this regard, although the Company is cash
flow positive, it has incurred marginal operating losses in the past in part as
a result of Tone's corporate overhead allocated to the Company's operations and
the time and expense associated with Tone's management of the Las Vegas-based
Company from Tone's corporate offices in Chicago. Tone believes that the
Company's Las Vegas management is capable of managing the Company's business,
thereby reducing the Company's overhead and improving its profitability.
Accordingly, following the distribution, the Company's Las Vegas management will
become the Company's executive officers and a stock option plan will be adopted
linking compensation solely to the Company's success rather than the success of
Tone. If the Company achieves the desired profitability, Tone's stockholders
will realize a separate value for their ownership in the Company in addition to
the value of their Tone shares. Following the distribution, Tone's Board of
Directors will continue to monitor the operations of the Company. In the event
the Company fails to generate earnings following the distribution, the Company
may continue to operate the business or it may sell the business and distribute
the proceeds to the Company's stockholders in the form of a dividend or cash
distribution upon liquidation.

     Tone distributed all 1,899,544 shares in the Company pro rata to
stockholders of record of Tone within five business days from the effective date
of this Form 10-SB.


COMPETITION

     The Company competes with a handful of small, Las Vegas-based snack food
distributors such as Checkmate Distributing and Food Pro Distributing. The
Company also competes with a few of the large national food distributors such as
Frito Lay, Sysco and U.S. Food Service, even though the Company often acts as a
distributor for the same companies with respect to certain other products
manufactured or distributed by them. The snack food distribution business is
intensely competitive and there are no significant barriers to entry.

     Competitive factors among snack food distributors include product price,
product variety, delivery reliability and product quality. The Company believes
it competes favorably on product price, variety and quality and emphasizes its
long tenure in business and its delivery reliability which it believes to be
superior to its local competitors.

     The Company's objective is to increase its revenue while improving its
profit margin. In order to achieve this objective, the Company will:

     o    Add new products to attract new customers. The
          Company offers over 400 snack food products.
          Nevertheless, adding new products increases
          revenue and contributes to profitability if
          product handling and inventory costs do not exceed
          the gross margins on the new products. Moreover,
          adding new products attracts new customers that
          can be offered additional company products.

<PAGE>


     o    Outsource manufacturing to reduce overhead and
          product costs. The Company completed outsourcing
          the manufacturing of its plain and flavored popped
          (as opposed to raw) popcorn when it moved into its
          new warehouse facility. The facility does not have
          manufacturing capability. By outsourcing the
          manufacturing, the Company believes it will
          significantly reduce rent, equipment and labor
          costs which will more than offset any increased
          cost of purchasing popped popcorn from other
          sources.

     o    Introduce products with higher profit margins. A
          number of snack food products represent smaller
          niche markets and often are not offered by larger
          competitors. These products often offer higher
          profit margins because there are fewer
          distributors. The Company will continue to
          identify and promote these niche products, such as
          Asian snack foods, that have limited markets but
          offer higher profit margins.

GOVERNMENT REGULATION

     The labeling and distribution of the Company's products are subject to
rules and regulations of state and local health agencies, including the Clark
County Health Department which inspects the Company's facilities twice each
year. In addition, some of the Company's customers also inspect its facilities
from time to time.

     In addition to laws relating to food products, the Company's operations are
governed by laws relating to environmental matters, workplace safety and worker
health, principally the Occupational Safety and Health Act. The Company believes
that it presently complies in all material respects with applicable laws and
regulations.

TRADE NAMES AND TRADEMARKS

     The Company has trademarked its "Players Choice" and "Sunburst" brand names
for popcorn and cookies, There an be no assurance that the Company's trademarks
or trade names will not be copied or challenged by others.

EMPLOYEES

          The Company has nine full-time employees and one part-time employee,
all of whom are engaged in sales, warehousing, product transportation and
administration. The Company's performance is substantially dependent on the
continued services of certain members of its senior management, including
Richard A. Falk, its general manager. The Company does not have employment
agreements or "key person" life insurance policies on any of its managers or
employees.

PRODUCT LIABILITY CLAIMS.

          As a manufacturer and marketer of snack food products, the Company may
be subjected to various product liability claims. While the Company maintains
product liability insurance, there can be no assurance that such insurance will
be adequate to cover any loss or exposure for product liability, or that such
insurance will continue to be available on terms acceptable to the Company. Any
product liability claim not fully covered by insurance, as well as any adverse
publicity from a product liability claim, could have a material adverse effect
on the financial condition or results of operations of the Company.


ITEM 2.  DESCRIPTION OF PROPERTY
--------------------------------

     The Company leases 11,000 square feet of office and warehouse space in Las
Vegas, NV. on a five year lease expiring June 30, 2006 at an average yearly rate
of $61,739 or $5.61 per square foot. The Company believes that the terms of such
facilities leases are fair and reasonable. The Company believes its facilities
are adequate for its needs in the foreseeable future and that additional space
is available at reasonable rates.

<PAGE>



ITEM 3.  LEGAL PROCEEDINGS
--------------------------

     Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-----------------------------------------------------------------
     The Company's common stock is traded on the bulletin board under the symbol
FNCP.

  The following table sets forth for the quarters indicated the range of high
and low bid prices of the Company's Common Stock on the EBB.

                                                         Bid Price
                                                -------------------------
By Quarter Ended:                                High                Low
-----------------                                ----                ---
September 30, 2002 .........................    $0.07               $0.07
June 30, 2002...............................    $0.08               $0.08
March 31, 2002 .............................    $0.08               $0.08
December 2001 ..............................    None                None


     As of November 30, 2001, the Company had approximately 500 beneficial
holders of its Common Stock.

Dividend Policy

     The Company has never paid cash dividends on its Common Stock and intends
to retain earnings, if any, for use in the operation and expansion of its
business. The amount of future dividends, if any, will be determined by the
Board of Directors based upon the Company's earnings, financial condition,
capital requirements and other conditions.

Description of Securities

Common Stock

     The Company is authorized to issue 10,000,000 shares of common stock, $.01
par value per share, and 5,000,000 shares of preferred stock, $.01 par value per
share. As of September 30, 2002, 1,891,579 shares of common stock were
outstanding. No preferred stock is currently outstanding.

     (a) Common Stock.

     All shares of common stock have equal voting rights and are not assessable.
Voting rights are not cumulative and, therefore, the holders of more than 50% of
the common stock could, if they chose to do so, elect all of the directors of
the Company. Upon liquidation, dissolution or winding up of the Company, the
assets of the Company, after the payment of liabilities, will be distributed pro
rata to the holders of the common stock. The holders of the common stock do not
have preemptive rights to subscribe for any securities of the Company and have
no right to require the Company to redeem or purchase their shares. The shares
of common stock currently outstanding are validly issued, fully paid and
nonassessable.

<PAGE>


     (b) Preferred Stock.

     The preferred stock may be issued in series from time to time with such
designation, rights, preferences and limitations as the Board of Directors of
the Company may determine be resolution. The rights, preferences and limitations
of separate series of preferred stock may differ with respect to such matters as
may be determined by the Board of Directors, including, without limitation, the
rate of dividends, method and nature of payment of dividends, terms of
redemption, amounts payable on liquidation, sinking fund provisions (if any),
conversion rights (if any) and voting rights.

Security Transfer Corporation is the stock transfer agent for the Company's
Common Stock.


ITEM 6.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
--------------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------


General


Results of Operations-September 30, 2002 Compared to September 30, 2001

     The following discussion of the Company's financial condition and results
of operations for the years ended September 30, 2002 and 2001 should be read in
conjunction with the Company's financial statements, the notes related thereto
and the other financial data included elsewhere in this Registration Statement.

Year ended September 30, 2002 compared to year ended September 30, 2001.

     The Company's sales are derived principally from the sale and distribution
of snack products into the Las Vegas area. Sales of snack food products for the
Year ended September 30, 2002 were $1,750,827, down $189,447, or 9.7%, from
$1,940,274 in 2001. Sales decreased as a result of the September 11, 2001
terrorist attacks and the resulting decrease in travel and tourism in the area.
A smaller amount of the decrease in sales is due to the elimination sales of
lower margin items.

     Cost of sales decreased in 2002 by $254,788, to $1306,879 from $1,561,667
in 2001.

     Gross profit increased $65,341, or 17%, to $443,948 in 2002 from $378,607
in 2001. As a percent of sales, gross profit increased 5.8% to 25.3 in 2002 from
19.5% in 2001.

     Operating expenses for the year ended September 30, 2002 were $352,280,
compared to $430,892 for 2001, a decrease of $78,612, or 18.2%, resulting from
decreases in payroll and other expenses related to the cessation of
manufacturing. Operating expenses as a percentage of sales were 20.1% and 22.1%
for 2002 and 2001, respectively.

     Interest expense totaled $10,978 for 2002 and $9,973 in 2001.

     There was a onetime charge of $357,807 for writing off goodwill and $87,275
for disposal of fixed assets as a result of the spin off from Tone, and the
change of location of the business in the year ended September 30, 2001. These
non-recurring charges increased the company's loss by $445,082 in the year ago
period.

     Net income amounted to $58,110, or $0.03 per share, for the year ended
September 30, 2002 compared to a loss of $(66,181), or $(0.03) per share, for
2001 after removing (for comparison) the one time charge of $445,082 related to
the spin off and relocation.

LIQUIDITY AND CAPITAL RESOURCES

     The Company has access to traditional lines of credit and term financing,
but does not have any commitments for such sources of funds. The Company
believes cash flows from operations and existing cash resources are sufficient
to meet its needs in 2001.

<PAGE>


     The Company has a $200,000 line of credit with a bank of which $150,000 was
available to it under the line at September 30 2002.

     There were no significant Capital expenditures in 2002. There are no
significant capital expenditures planned in 2003

     Cash amounted to $51,022 at year end 2002. Cash provided by operating
activities amounted to $94,138 in 2002 and $77,894 in 2001.

<PAGE>


Trends

The Company believes that the benefit provided by it's move to it's current
location as well as the elimination of manufacturing will continue to increase
margins in the coming year. Some increases in prices on resale items have been
experienced in the last 3 months however the company does not believe it will
experience any market pressure that would make it difficult to pass along the
increases to the customers.



     This Form 10-KSB specifies the forward looking statements of management.
Forward looking statements are statements that estimate or anticipate the
happening of future events. The forward looking statement of management
specified in this Form 10-KSB have been compiled on the basis of assumptions
made by management and considered to be reasonable. Future operating results of
the Company, however, are impossible to predict and not representation regarding
future operating results of the Company is to be inferred from those forward
looking statements. The assumptions used for purposes of the forward looking
statements specified in this Form 10-KSB represent estimates of future events
and are subject to uncertainty as to possible changes in economic, legislature,
industry, and other circumstances. As a result, the developing and selecting
assumptions from and among reasonable alternatives require the exercise of
judgment to the extent that the assumed events do not occur. The outcome may
vary substantially from that projected, and accordingly, no opinion is expressed
regarding the achievability of particular forward looking results. In addition,
those forward looking statements have been compiled as of the date of this Form
10-KSB and should be evaluated with consideration of any changes occurring after
the date of this Form 10- KSB.


ITEM 7.  FINANCIAL STATEMENTS

---------------------------------

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                              Financial Statements

                      As of September 30, 2002 and 2001 and
        For Each of the Two Years in the Period Ended September 30, 2002


<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Index to the Financial Statements

                      As of September 30, 2002 and 2001 and
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


Report of Independent Auditors .............................................1

Financial Statements of Fun City Popcorn, Inc.:


      Balance Sheets, September 30, 2002 and 2001...........................2


      Statements of Operations For Each of the Two Years in the
        Period Ended September 30, 2002.....................................3


      Statements of Shareholders' Equity For Each of the Two Years in
        the Period Ended September 30, 2002.................................4


      Statements of Cash Flows For Each of the Two Years in the
        Period Ended September 30, 2002.....................................5


Notes to the Financial Statements...........................................6


<PAGE>


                         REPORT OF INDEPENDENT AUDITORS




To the Board of Directors
Fun City Popcorn, Inc.
(Formerly a wholly-owned subsidiary of Tone Products, Inc.)


We have audited the accompanying balance sheets of Fun City Popcorn, Inc.
(formerly a wholly-owned subsidiary of Tone Products, Inc.) as of September 30,
2002 and 2001 and the related statements of operations, shareholders' equity and
cash flows for each of the two years in the period ended September 30, 2002.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.


We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Fun City Popcorn, Inc. as of
September 30, 2002 and 2001, and the results of its operations and its cash
flows for each of the two years in the period ended September 30, 2002, in
conformity with accounting principles generally accepted in the United States of
America.






/s/  Kelly & Company
-----------------------------
     Kelly & Company

Costa Mesa, California
December 18, 2002

                                       1

<PAGE>
<TABLE>
<CAPTION>


                                 Fun City Popcorn, Inc.
               (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                                     Balance Sheets

                            As of September 30, 2002 and 2001



                                         ASSETS

                                                                 2002           2001
                                                             -----------    -----------
Current assets:
      <S>                                                    <C>            <C>
      Cash and equivalents                                   $    51,022    $    46,614
      Accounts receivable - trade, net                           118,044        114,280
      Inventory, net                                             224,980        238,559
      Deferred tax asset                                           3,377         11,368
      Prepaid insurance                                            4,612          3,400
                                                             -----------    -----------
           Total current assets                                  402,035        414,221
      Property and equipment, net                                 52,467         66,657
      Other assets                                                 7,947          7,947
                                                             -----------    -----------
Total assets                                                 $   462,449    $   488,825
                                                             ===========    ===========



                                       LIABILITIES
Current liabilities:
      Line of credit - bank                                  $    50,000    $    69,594
      Accounts payable - trade                                    15,651         40,461
      Accrued expenses                                             4,797          5,683
      Income tax payable                                          13,786           --
      Notes payable, net of current maturities                      --           26,940
                                                             -----------    -----------
           Total current liabilities                              84,234        142,678

Deferred tax liability, noncurrent                                 4,808          5,091
Notes payable, net of current maturities                            --            9,531
Amounts due to related party                                     106,338        122,566
                                                             -----------    -----------
           Total liabilities                                     195,380        279,866
                                                             -----------    -----------
Commitments and contingencies
Shareholders' equity:
      Preferred stock; $0.01 par value; 5,000,000 shares
       authorized; no shares issued and outstanding at
       September 30, 2002 and 2001, respectively                    --             --
      Common stock; $0.01 par value; 10,000,000 shares
       authorized; 1,891,579 shares issued and outstanding
       at September 30, 2002 and 2001, respectively               18,916         18,916
      Additional paid-in capital                               1,077,220      1,077,220
      Accumulated deficit                                       (829,067)      (887,177)
                                                             -----------    -----------
           Total shareholders' equity                            267,069        208,959
                                                             -----------    -----------
Total liabilities and shareholders' equity                   $   462,449        488,825
                                                             ===========    ===========


        The accompanying notes are an integral part of the financial statements.

                                           2
</TABLE>

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                            Statements of Operations

        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


                                                         2002           2001
                                                     -----------    -----------

Net sales                                            $ 1,750,827    $ 1,940,274
Cost of sales                                          1,306,879      1,561,667
                                                     -----------    -----------

      Gross profit                                       443,948        378,607
                                                     -----------    -----------

Selling, general  and administrative expenses            352,280        430,892
Loss on disposal of fixed assets                           1,086         87,275
Writeoff of impaired goodwill                               --          357,807
                                                     -----------    -----------

                                                         353,366        875,974
                                                     -----------    -----------

Income (loss) from operations                             90,582       (497,367)
                                                     -----------    -----------


Other expense

      Interest expense - related party                    (6,338)          --
      Interest expense - third parties                    (4,640)        (9,973)
                                                     -----------    -----------

           Total other expense                           (10,978)        (9,973)
                                                     -----------    -----------

Income (loss) before provision for income taxes           79,604       (507,340)
Provision for income taxes                               (21,494)        (3,923)
                                                     -----------    -----------

Net income (loss)                                    $    58,110    $  (511,263)
                                                     ===========    ===========

Earnings (loss) per common share, basic and diluted  $      0.03    $     (0.27)
                                                     ===========    ===========

Weighted average common shares outstanding, basic
 and diluted                                           1,891,579      1,891,579
                                                     ===========    ===========


    The accompanying notes are an integral part of the financial statements.

                                       3

<PAGE>
<TABLE>
<CAPTION>


                                                    Fun City Popcorn, Inc.
                                  (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                                              Statements of Shareholders' Equity

                               For Each of the Two Years in the Period Ended September 30, 2002
------------------------------------------------------------------------------------------------------------------------------


                                                                                      Additional
                               Preferred     Preferred       Common        Common       Paid in     Accumulated
                                 Shares        Stock         Shares        Stock        Capital       Deficit         Total
                              -----------   -----------   -----------   -----------   -----------   -----------    -----------
<S>                           <C>           <C>           <C>           <C>           <C>           <C>            <C>
Balance, September 30, 2000          --            --     $ 1,891,579   $    18,916   $ 1,077,220   $  (375,914)   $   720,222

    Net loss                         --            --            --            --            --        (511,263)      (511,263)
                              -----------   -----------   -----------   -----------   -----------   -----------    -----------

Balance, September 30, 2001          --            --       1,891,579        18,916     1,077,220      (887,177)       208,959

    Net income                       --            --            --            --            --          58,110         58,110
                              -----------   -----------   -----------   -----------   -----------   -----------    -----------

Balance, September 30, 2002          --            --       1,891,579   $    18,916   $ 1,077,220   $  (829,067)   $   267,069
                              ===========   ===========   ===========   ===========   ===========   ===========    ===========

                                           The accompanying notes are an integral part of the financial statements.

                                                              4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>


                                Fun City Popcorn, Inc.
              (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                               Statements of Cash Flows

           For Each of the Two Years in the Period Ended September 30, 2002
-----------------------------------------------------------------------------------


                                                                2002         2001
                                                              ---------    ---------
Cash flows provided by (used in) operating activities:
     <S>                                                      <C>          <C>
      Net income (loss)                                       $  58,110    $(511,263)
      Adjustments to reconcile the income (loss) to net
      cash provided by operating activities:
           Provision for losses on accounts receivable           (3,787)      13,304
           Provision for obsolete and slow-moving inventory      (7,104)      15,978
           Depreciation                                          30,541       79,692
           Amortization                                            --         32,582
           Writeoff of impaired goodwill                           --        357,807
           Loss on sale of assets                                 1,086       87,275
           Decrease (increase) in assets:
               Accounts receivable - trade                           23       15,051
               Finished goods inventory                          20,683       (6,944)
               Deferred tax asset                                 7,991        3,246
               Other current assets                              (1,212)       4,214
               Other assets                                        --         (3,299)
           Increase (decrease) in liabilities:
               Accounts payable - trade                         (24,810)     (12,881)
               Accrued expenses                                    (886)      (1,024)
               Income tax payable                                13,786         --
               Deferred tax liabilities                            (283)       4,156
                                                              ---------    ---------
Cash provided by operating activities                            94,138       77,894
                                                              ---------    ---------
Cash flows provided by (used in) investing activities:
      Purchase of property and equipment                        (18,137)        --
      Sale of property and equipment                                700        1,687
                                                              ---------    ---------
Cash provided by (used in) investing activities                 (17,437)       1,687
                                                              ---------    ---------
Cash flows used in financing activities:
      Payments on the line of credit                            (19,594)     (20,360)
      Payment on the notes payable                              (36,471)     (37,800)
      Payment on amounts due to a related party                 (16,228)     (31,662)
                                                              ---------    ---------
Cash used in financing activities                               (72,293)     (89,822)
                                                              ---------    ---------
Net increase (decrease) in cash                                   4,408      (10,241)
Cash at beginning of period                                      46,614       56,855
                                                              ---------    ---------
Cash at end of period                                         $  51,022    $  46,614



Supplemental Disclosure of Cash Flow Information
Interest paid - third parties                                 $   4,640    $   9,973
Income taxes paid                                                  --           --


       The accompanying notes are an integral part of the financial statements.

                                           5
</TABLE>

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


1.   Description of the Company's Business
     -------------------------------------

     Fun City Popcorn, Inc. (a Nevada corporation)(the "Company") was formerly a
     wholly owned subsidiary of Tone Products, Inc. (an Arkansas corporation)
     ("Tone") that engages in the wholesale distribution of food products in the
     beverage and snack categories in Nevada.


     In June 2001, the board of directors of the Company's then parent, Tone,
     voted to distribute all of its shares of Fun City Popcorn, Inc. ("Fun
     City") on a pro rata basis to Tone's shareholders (Note 3). In this
     connection, the Company's board of directors authorized a forward split of
     its common stock that was later distributed to the shareholders of Tone on
     September 30, 2001 (Note 2). As a result, effective September 30, 2001, the
     Company was no longer a wholly owned subsidiary of Tone.


2.   Summary of Significant Accounting Policies
     ------------------------------------------

     Recognition of Revenue

     Revenues are recognized when the Company's products are shipped. Provisions
     for discounts and rebates to customers, estimated returns and allowances,
     and other adjustments are provided for in the same period the related
     revenues are recorded.

     Cash and Equivalents

     The Company invests portions of its excess cash in highly liquid
     investments. Cash and equivalents include time deposits and commercial
     paper with original maturities of three months or less. The Company has no
     requirements for compensating balances. The Company maintains cash balances
     in accounts, none of which exceeded the federally insured limits at
     September 30, 2002 and 2001.

     Inventories

     Inventories are stated at the lower of cost or market. Cost is determined
     on the first in - first out method of valuation. The Company's management
     monitors inventories for excess, obsolete, and calendar date sensitive
     items and makes necessary valuation corrections when such adjustments are
     required. The Company recognized inventory obsolescence and slow moving
     expense of $8,874 and $15,978 for the year ended September 30, 2002 and
     2001, respectively.

                                       6

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


2.   Summary of Significant Accounting Policies, Continued
     -----------------------------------------------------

     Property and Equipment


     Property and equipment are recorded at cost and depreciated using the
     straight line method over the expected useful lives noted below.
     Expenditures for normal maintenance and repairs are charged to operations.
     The cost and related accumulated depreciation of assets are removed from
     the accounts upon retirement or other disposition, and the resulting profit
     or loss is reflected in the statement of operations. Renewals and
     betterments that materially extend the life of the assets are capitalized.

                                                              Estimated
                                                            Useful Lives
                                                            ------------
          Property and equipment                             5 -10 years
          Furniture and fixtures                             5 - 7 years
          Vehicles                                           3 - 7 years
          Leasehold improvements                                 5 years

     Intangible Assets

     Intangible assets was comprised solely of goodwill resulting from two
     business acquisitions and represented the excess of the cost over the value
     assigned to the net tangible assets at the date each business was acquired.
     These assets were amortized using the straight-line method over their
     estimated useful lives. management periodically reviewed the carrying
     values and lives of the individual goodwill assets based on the expected
     future cash flows. On October 1, 2001, the Company adopted Financial
     Accounting Standard ("FAS") 142, which means it no longer amortizes
     goodwill and will at least annually perform a two-step test for impairment.

     Impairment of Long Lived Assets

     The Company periodically evaluates its long lived assets for potential
     impairment. When circumstances indicate that the carrying amount of an
     asset is not recoverable, as demonstrated by the projected undiscounted
     cash flows, an impairment loss is recognized. In the year ended September
     30, 2003, the Company will adopt FAS No. 144 for accounting for the
     impairment or the disposal of long-lived assets (see Note 2 - New
     Accounting Pronouncements).

                                       7

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


2.   Summary of Significant Accounting Policies, Continued
     -----------------------------------------------------

     Income Taxes

     The Company accounts for deferred income taxes using the liability method.
     Deferred income taxes are computed based on the tax liability or benefit in
     future years of the reversal of temporary differences in the recognition of
     income or deduction of expenses between financial and tax reporting
     purposes. The net difference between tax expense and taxes currently
     payable is reflected in the balance sheet as deferred taxes. Deferred tax
     assets and/or liabilities are classified as current and noncurrent based on
     the classification of the related asset or liability for financial
     reporting purposes, or based on the expected reversal date for deferred
     taxes that are not related to an asset or liability.


     The Company through September 30, 2001, the effective date of the spin-off
     (Note 3) filed a consolidated federal income tax return with its former
     parent company. Subsequent to the spin-off, the Company is not subject to
     state income taxes. In accordance with the intercorporate tax allocation
     policy, the Company charged to or received from the parent company amounts
     equivalent to federal income tax charges or credits based on the separate
     company taxable income or loss using the statutory rates. As of September
     30, 2001, the Company filed a separate federal income tax return.

     Advertising Costs

     Advertising costs are expensed as they are incurred. Advertising expense
     was $1,589 and $1,330 for the years ended September 30, 2002 and 2001,
     respectively.

     Shipping and Handling Costs

     Shipping and handling costs are included in selling, general and
     administrative expenses and amounted to $153,047 and $115,614 for the years
     ended September 30, 2002 and 2001, respectively.

     Stock Split

     On July 17, 2001, Tone's board of directors declared a 1.891579 for 1 split
     of the Company's common shares that was effective immediately. This
     resulted in the issuance of 891,579 shares of common stock along with a
     corresponding increase in common stock and a decrease in additional paid-in
     capital of $8,916. All references to the number of shares of common stock
     issued or outstanding in the financial statements, per share amounts, and
     any other reference to common shares and common stock in the financial
     statements and the accompanying notes to the financial statements have been
     adjusted to reflect the split on a retroactive basis.

                                       8

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


2.   Summary of Significant Accounting Policies, Continued
     -----------------------------------------------------

     Use of Estimates

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period. Actual results could differ from those
     estimates.

     Financial Statement Reclassification

     Certain amounts within the September 30, 2001 financial statements have
     been reclassified in order to conform to the September 30, 2002 financial
     statement presentation.

     New Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board ("FASB") issued two
     new pronouncements: FAS No. 141, Business Combinations and FAS No. 142,
     Goodwill and Other Intangible Assets. FAS No. 141 is effective as follows:
     a) use of the pooling-of-interest method is prohibited for business
     combinations initiated after June 30, 2001; and b) the provisions of FAS
     No. 141 also apply to all business combinations accounted for by the
     purchase method that are completed after June 30, 2001 (that is, the date
     of the acquisition is July 2001 or later). The adoption of FAS No. 141 had
     no impact on the financial position or results of operations. FAS No. 142
     is effective for the fiscal years beginning after December 15, 2001 with
     respect to all goodwill and other intangible assets recognized in the
     Company's statement of financial position at that date, regardless of when
     those assets were initially recognized. FAS No. 142 specifies that all
     goodwill and intangibles with indefinite lives shall not be amortized.
     Goodwill must be evaluated for impairment on an annual basis with an
     initial impairment assessment to be performed upon adoption of the
     Statement. The Company adopted he provisions of FAS No. 142 as of October
     1, 2001.

     In August 2001, the FASB issued FAS No. 144, Accounting for the Impairment
     or Disposal of Long-Lived Assets. FAS No. 144 retains the requirements of
     FAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
     Long-Lived Assets to be Disposed Of, to recognize an impairment loss if the
     impairment loss of the carrying amount of a long-lived asset is not
     recoverable from its undiscounted cash flows and to measure an impairment
     loss as the difference between the carrying amount and fair value of the
     asset. FAS No. 144 modifies FAS No. 121 in that it eliminates the
     requirement to allocate goodwill to long-lived assets to be tested for
     impairment. FAS No. 144 is effective for fiscal years beginning after
     December 15, 2001, and early adoption is encouraged. The Company adopted
     FAS No. 144 effective October 1, 2002.

                                       9

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


 2.  Summary of Significant Accounting Policies, Continued
     -----------------------------------------------------

     New Accounting Pronouncements, Continued


     In July 2002, the FASB issued FAS No. 146, Accounting for Costs Associated
     with Exit or Disposal Activities , which addresses financial accounting and
     reporting for costs associated with exit or disposal activities, and
     nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, Liability
     Recognition for Certain Employee Termination Benefits and Other Costs to
     Exit an Activity (including Certain Costs Incurred in a Restructuring),
     which previously governed the accounting treatment for restructuring
     activities. FAS 146 applies to costs associated with an exit activity that
     does not involve an entity newly acquired in a business combination or with
     a disposal activity covered by FAS 144. FAS 146 is effective for exit or
     disposal activities initiated after December 31, 2002. The Company is
     currently evaluating the impact of FAS 146 to determine the effect, if any,
     it may have on the Company's consolidated results of operations, financial
     position or cash flows.


3.   Spin-Off
     --------

     In June 2001, the Tone board of directors approved a plan to distribute the
     common shares of the Company (then its wholly-owned subsidiary on a 1 for 1
     basis to the shareholders of Tone (the "spin-off") after the completion of
     a forward stock split (Note 2). Tone completed the spin-off of the Company
     on September 30, 2001, to shareholders of record on July 17, 2001. Pursuant
     to the spin-off, each Tone shareholder received one share of the Company's
     common stock for each share of Tone common stock owned.


     During the year ended September 30, 2001, the Company and Tone entered into
     certain oral agreements governing various ongoing relationships, including
     the provision of support services and a tax allocation agreement for the
     period prior to the spin-off. The tax allocation agreement provided for the
     allocation of tax attributes to each company as if it had actually filed
     separately with respective tax authorities.

                                       10

<PAGE>
<TABLE>
<CAPTION>


                                   Fun City Popcorn, Inc.
                 (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                              Notes to the Financial Statements

                              As of September 30, 2002 and 2001
              For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------------------


4.   Accounts Receivable - Trade
     ---------------------------

     At September 30, 2002 and 2001, accounts receivable - trade, net was
     comprised of the following:

                                                                       2002         2001
                                                                     ---------    ---------
           <S>                                                       <C>          <C>
           Accounts receivable - trade                               $ 127,561    $ 127,584
               Less: reserve for uncollectible accounts receivable      (9,517)     (13,304)
                                                                     ---------    ---------

           Accounts receivable - trade, net                          $ 118,044    $ 114,280
                                                                     =========    =========


     During the year ended September 30, 2001, the Company recognized $13,304 in
     bad debt expense


5    Inventory
     ---------

     At September 30, 2002 and 2001, inventory, net was comprised of the
     following:

                                                                          2002         2001
                                                                     ---------    ---------
           Finished goods inventory                                  $ 233,854    $ 254,537
               Less: reserve for inventory obsolescence                 (8,874)     (15,978)
                                                                     ---------    ---------

           Inventory, net                                            $ 224,980    $ 238,559
                                                                     =========    =========


     During the year ended September 30, 2002, the Company disposed of $15,978
     of obsolete inventory, which had been identified and reserved for in a
     prior year


6.   Property and Equipment
     ----------------------

     At September 30, 2002 and 2001, property and equipment consisted of the
     following:

                                                                          2002         2001
                                                                     ---------    ---------
           Equipment                                                 $ 278,925    $ 315,414
           Furniture and fixtures                                       17,340       21,336
           Vehicles                                                     64,141       62,927
           Leasehold improvements                                         --           --
                                                                     ---------    ---------
                                                                       360,406      399,677
               Less: accumulated depreciation                         (307,939)    (333,020)
                                                                     ---------    ---------

           Total property and equipment, net                         $  52,467    $  66,657
                                                                     =========    =========

                                             11
</TABLE>

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


6.   Property and Equipment, Continued
     ---------------------------------

     Depreciation expense for the years ended September 30, 2002 and 2001 was
     $30,541 and $79,692, respectively.

7.   Goodwill Impairment
     -------------------

     The acquisition of the Company in 1996 by Tone, was based in part on a
     business model that contemplated sales of Tone's beverage and other
     products to the Las Vegas casino community through the Company's existing
     customers and distribution system. Several attempts were made subsequent to
     the acquisition to introduce the Tone products into this market; which have
     not been successful. More recently, due to consolidations in the Las Vegas
     market place, the Company's ability to introduce beverage products to the
     casinos has become even more limited. Consequently, Tone and the Company
     decided not to pursue further attempts by the Company to market Tone's
     products. Accordingly, the Company and Tone evaluated the goodwill recorded
     in connection with Tone's acquisition of the Company and concluded that it
     was impaired. As a result, the Company wrote off the related remaining
     unamortized goodwill as of June 17, 2001 of $264,263.

     In 1998, the Company acquired T.J. Distributing in an attempt to expand the
     Company's customer base through which it could market its own products as
     well as those of Tone. When Tone and the Company decided that the Company
     would not pursue further attempts to sell Tone's products, the goodwill
     related to the acquisition of T. J. Distributing was evaluated and was
     determined to be impaired. As a result, the Company has written off the
     related unamortized goodwill at June 17, 2001 of $93,544.

     Amortization expense for the year ended September 30, 2001 was $32,582.

                                       12

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


8.   Line of Credit - Bank
     ---------------------                                 2002         2001
                                                         ---------    ---------
     At September 30, 2001 and 2000, the Company
     had an operating line of credit with a bank
     with a maximum amount of $100,000 available,
     collateralized by all of the Company's assets
     (with a net carrying amount of approximately
     $462,000 at September 30, 2002). At September
     30, 2002, predicated upon an asset-based
     formula, the maximum borrowable amount
     available on the line of credit was $100,000.
     The line of credit had a weighted average
     interest rate of 4.6 % and 7.80% for the
     years ended September 30, 2002 and 2001,
     respectively. When the line of credit was
     rewritten in February 2002, Tone was released
     as a guarantor. The line of credit expires in
     February 2003. It is the Company's intention
     at this time to extend any unpaid balance at
     the due date.                                       $  50,000    $  69,594
                                                         =========    =========

9.   Notes Payable
     -------------

     At September 30, 2002 and 2001, notes payable consist of the following:

                                                           2002         2001
                                                         ---------    ---------
     Collateralized

     Note payable to a bank, collateralized by
     certain Tone Products, Inc. assets was paid
     in full during the year ended September 30,
     2002. Interest was calculated at a fixed rate
     of 8.00% per annum.                                      --      $  12,372

     Uncollateralized

     Note payable to an individual as part of the
     purchase price of a business acquisition was
     paid in full during the year ended September
     30, 2002. Interest was calculated at a fixed
     rate of 7.00% per annum.                                 --         24,099
                                                         ---------    ---------

     Total notes payable                                 $  (7,104)      52,449

          Less: current maturities                            --        (26,940)
                                                         ---------    ---------
     Long term portion of notes payable                  $  (7,104)   $  25,509
                                                         =========    =========

                                       13



<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


 9.  Notes Payable, Continued
     ------------------------

     Interest expense during the years ended September 30, 2002 and 2001 was
     $10,798 and $9,973, respectively.


 10. Amount due to Related Party
     ---------------------------

     As of September 30, 2002 and 2001, the Company had amounts due to Tone (a
     related party) of $106,338 and $122,566, respectively. As of the date of
     the "spin-off", September 30, 2001, Tone and the Company agreed that the
     unpaid principal plus accrued interest will be due on or before September
     30, 2004. The amount is unsecured and interest is calculated at a fixed
     rate of 6.00% per annum. Tone is a related party, as both Tone and the
     Company are under the control of two brothers who collectively own more
     than 50% of the voting shares of each company.


11.  Income Taxes
     ------------

     At September 30, 2002 and 2001, the components of the provision for income
     taxes are:

                                                           2002         2001
                                                         ---------    ---------
           Current tax expense (benefit):
               Federal                                   $  13,787    $  (2,915)
               State                                          --           (565)
                                                         ---------    ---------

                                                            13,787       (3,480)
                                                         ---------    ---------
           Deferred tax expense (benefit):
               Federal                                       6,527        6,011
               State                                         1,180        1,392
                                                         ---------    ---------
                                                             7,707        7,403
                                                         ---------    ---------

           Total provision                               $  21,494    $   3,923
                                                         =========    =========

                                       14

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


11.  Income Taxes, Continued
     -----------------------

     Significant components of the Company's deferred income tax assets and
     liabilities at September 30, 2002 and 2001 are:

                                                           2002         2001
                                                         ---------    ---------

           Deferred income tax asset:

               Accrued related party interest            $   1,163         --
               Inventory                                     1,629    $   6,198
               Accounts receivable                           1,747        5,495
                                                         ---------    ---------
           Total deferred income tax asset                   4,539       11,693
               Valuation allowance                            --           --
                                                         ---------    ---------
           Net deferred income tax asset                     4,539       11,693
                                                         ---------    ---------

           Deferred income tax liability:

               Depreciation                                 (5,971)      (5,416)
                                                         ---------    ---------
           Total deferred income tax liability              (5,971)      (5,416)
                                                         ---------    ---------


           Net deferred income tax asset (liability)     $  (1,432)   $   6,277
                                                         =========    =========


     Reconciliation of the effective tax rate to the U.S. statutory rate is as
     follows:

                                                           2002         2001
                                                         ---------    ---------

           Tax expense at U.S. statutory rate              18.4  %       (34.0)%
           Non deductible expenses                          0.1           34.7
           Effect of change in tax rate                     8.5             --
                                                         ---------    ---------

           Effective income tax rate                       27.0  %         0.7 %
                                                         =========    =========


12.  Disclosures about Fair Values of Financial Instruments
     ------------------------------------------------------

     The estimated fair value amounts of all financial instruments on the
     Company's September 30, 2002 and 2001 balance sheets, which are held for
     nontrading purposes, have been determined by using available market
     information and appropriate valuation methodologies.


     Fair value is described as the amount at which the instrument could be
     exchanged in a current transaction between informed willing parties, other
     than in a forced liquidation. However, considerable judgment is necessarily
     required in interpreting market data to develop the estimates of fair

                                       15

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


12.  Disclosures about Fair Values of Financial Instruments, Continued
     -----------------------------------------------------------------

     value. Accordingly, the estimates presented herein are not necessarily
     indicative of the amounts that the Company could realize in a current
     market exchange. The use of different market assumptions and/or estimation
     methodologies may have a material effect on the estimated fair value
     amounts. The Company does not have any off balance sheet financial
     instruments.


     The following methods and assumptions were used by the Company in
     estimating fair value disclosures for financial statements:


          Cash and equivalents, accounts receivable - trade, net, inventory,
          net, prepaid insurance, accounts payable - trade, accrued expenses,
          and the line of credit, as reported on the balance sheet, approximate
          fair value due to the short-term maturities of these instruments.


          The fair value of notes payable is estimated by determining the net
          present value of the future payment stream. The carrying amounts on
          the balance sheet approximate fair value.

13.  Employee Benefit Plans
     ----------------------

     Employee Retirement Plan

     The Company, when it was a wholly owned subsidiary participated in the
     employee benefit plan (the "plan") of Tone, whereby employees could elect
     to defer a portion of their annual compensation up to a maximum of 15%,
     pursuant to Section 401(k) of the Internal Revenue Code. Tone could match
     the employee plan contributions on a discretionary basis as determined by
     its Board of Directors. During the year ended September 30, 2001, Tone did
     not make a contribution to the plan. None of the Company's employees ever
     participated in the plan. Subsequent to September 30, 2001, the date of the
     spin-off, the Company does not have an employee benefit plan.

14.  Related Party Transaction
     -------------------------

     Facilities Operating Leases

     In 2001 and earlier years, the Company leased its Las Vegas area facility
     from a former Tone shareholder who was the owner of the Company prior to
     its acquisition by Tone and who was a related party. For the year ended
     September 30, 2001, the Company paid the former major shareholder facility
     rent of $61,506. The Company relocated its facility to a new site in July
     2001 not owned by a related party.

                                       16

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


15.  Commitments and Contingencies
     -----------------------------

     Facilities Lease Agreement

     The Company leases its facility on an operating lease (Note 14) with future
     minimum lease payments at September 30, 2002, as follows:

           2003                                          $  64,540
           2004                                             66,656
           2005                                             68,468
           2006                                             46,552
           2007 and thereafter                                --
                                                         ---------

           Total future minimum lease payments           $ 246,216
                                                         =========


     Rental expense was $79,827 and $105,219 during the years ended September
     30, 2002 and 2001, respectively.

     Concentration of Credit Risk

     Financial instruments, which potentially subject the Company to
     concentrations of credit risk, consist primarily of trade accounts
     receivable. The Company sells products to private and public companies in
     the food services industry, certain governmental entities, and public
     institutions primarily within a 300 mile radius of its location. Exposure
     to losses on accounts receivable is principally dependent on the individual
     customer's financial condition, as credit sales are not collateralized. The
     Company monitors its exposure to credit losses and reserves for those
     accounts receivable that it deems to be not collectible. No single customer
     accounted for more than 10% of the accounts receivable at September 30,
     2002 and 2001 or of the revenues for the years then ended.

     Concentration of Vendors

     There were two vendors who individually exceeded 10% of the Company's
     purchases and in total represented 31% and 23% of purchases for the years
     ended September 30, 2002 and 2001, respectively. The products provided by
     the vendors are available from multiple sources, and there would be no
     disruption in operations if either of the vendors were unable to service
     the Company.

                                       17

<PAGE>


                             Fun City Popcorn, Inc.
           (Formerly a Wholly-Owned Subsidiary of Tone Products, Inc.)

                        Notes to the Financial Statements

                        As of September 30, 2002 and 2001
        For Each of the Two Years in the Period Ended September 30, 2002
--------------------------------------------------------------------------------


16.  Earnings (Loss) Per Share
     -------------------------

     Basic earnings (loss) per share has been computed by dividing the income
     (loss) available to common shareholders by the weighted average number of
     common shares outstanding for the year. There are no potentially dilutive
     securities that need to be considered for the periods presented.


     The computation of basic and diluted earnings (loss)per common share at
     September 30, 2002 and 2001 is as follows:

                                                           2002         2001
                                                        ----------   ----------

         Basic and diluted earnings (loss) per
          common share:

             Net income (loss) (numerator)              $   58,110   $ (511,263)
             Weighted average shares outstanding
               (denominator)                             1,891,579    1,891,579
                                                        ----------   ----------

         Basic and diluted earnings (loss) per common
           share                                        $      .03   $    (0.27)
                                                        ==========   ==========


17.  FAS 142 Transitional Reporting Requirements
     -------------------------------------------

     With the adoption of FAS 142 at the beginning of the year ended September
     30, 2002, this standard provides that its requirements for accounting for
     goodwill and other intangible assets not be retroactively applied to
     previously reported results. However, it does provide for the following
     analysis comparing the current to the previous accounting practice.

                                                          For the Year Ended
                                                           2002         2001
                                                        ----------   ----------

         Net income (loss), as reported                 $   58,110   $ (511,263)
             Add back: goodwill amortization, net
               of income taxes                                --         32,582
                                                        ----------   ----------

         Net income (loss) adjusted                     $   58,110   $ (478,681)
                                                        ==========   ==========


         Basic and diluted earnings (loss) per share:

               Net earnings (loss), as reported         $     0.03   $    (0.27)
               Add back: goodwill amortization, net
                of income taxes                               --           0.02
                                                        ----------   ----------
           Net basic and diluted earnings (loss)
                per share, adjusted                     $     0.03   $    (0.25)
                                                        ==========   ==========

                                       18

<PAGE>


ITEM 8.   CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
          ----------------------------------------------------------------------
          FINANCIAL DISCLOSURE
          --------------------

NONE


                                    PART III


ITEM 9.   DIRECTORS,   EXECUTIVE   OFFICERS,   PROMOTERS  AND  CONTROL  PERSONS;
          ----------------------------------------------------------------------
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
          -------------------------------------------------

Directors and Executive Officers

     The following table sets forth certain information regarding the Company's
executive officers and directors:

                                                           Officer or
     Name            Age            Office                 Director Since(1)
     ----            ---            ------                 -----------------

Timothy E. Evon       49       Chairman of the Board        September, 2001

Thomas J. Evon        48       Director                     September, 2001

William H. Hamen      42       Director                     September, 2001

Richard Falk          56       President / CEO              October, 2001

Loyd S. Dean          66       Vice President               October, 2001

Maryann Talavera      37       Secretary                    October, 2001



(1)  Reflects the date TPI was acquired by the Company. Messrs. Evon and Evon
     had been directors of TPI, the Company's predecessor, from September 1978.

     Directors hold office for a period of one year from their election at the
annual meeting of stockholders and until their successors are duly elected and
qualified. Officers of the Company are elected by, and serve at the discretion
of, the Board of Directors. Directors not employed by the Company do not receive
fees for attending Board of Directors' meetings but are reimbursed for
out-of-pocket expenses. Timothy E. Evon and Thomas J. Evon are brothers.

Background

     The following is a summary of the business experience of each executive
officer and director of the Company for at least the last five years:

     Timothy E. Evon has been a Director since October 2001. Mr. Evon has been
President of TPI, since 1989 and a Director and Chairman of the Board since
1996. He is responsible for TPI's overall operations, with emphasis upon
management of production facilities and sauce operations.

<PAGE>


     Thomas J. Evon has been a Director since October 2001. Mr. Evon has been an
executive officer of TPI since 1989 and a Director since 1996 with principal
responsibility for marketing TPI's products primarily to government agencies,
including school districts, colleges and prisons.

     William H. Hamen has been a Director since October 2001. Mr. Hamen has been
the controller of TPI since 1996 and was named its Secretary, Treasurer and
Chief Financial Officer in November 1998 and a Director in 2000, with principal
responsibility for accounting and related functions. Previously, Mr. Hamen was
an independent systems consultant.

     Richard A. Falk, age 56, has been the general manager of the Company since
June 1996. Mr. Falk was named the Company's Chief Executive Officer in October
2001.

     Lloyd S. Dean, age 66, joined the Company in October 1998 as sales manager.
Mr. Dean was named the Company's Vice President Sales in October 2001. From 1996
to October 1998 he was an account manager for Premier Cleaners in Las Vegas.

     Maryann Talavera, age 37, joined the Company in April 1997 as office
manager and bookkeeper. Ms. Talavera was named the Company's Chief Financial
Officer in October 2001. From April 1996 to April 1997 she was office manager
for Rotondi & Sons, Inc.

ITEM 10.  EXECUTIVE COMPENSATION
--------------------------------

     The following table sets forth certain information concerning compensation
paid to the Company's Chief Executive Officer for the years ended September 30,
2002 and 2001.

<TABLE>
<CAPTION>
                                   Summary Compensation Table

                                     Annual                             Long Term
                                  Compensation                         Compensation
                                  ------------                         ------------
                                            Other
     Name and                           Annual Awards                                       All Other
Principal Position    Year    Salary        Bonus          Options       Compensation     Compensation
-------------------   ----    -------     ---------     ------------     ------------     ------------
<S>                   <C>     <C>          <C>             <C>              <C>              <C>
Richard Falk,         2002    $52,000      $     0         $   0            $   0            $   0
President             2001    $42,015      $12,000         $   0            $   0            $   0

</TABLE>


<PAGE>


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------

     The following table sets forth certain information as of November 30, 2001
concerning stock ownership of the Company's Common Stock by all persons known to
the Company to own beneficially 5% or more of the outstanding shares of Common
Stock, by each director and by all directors and officers as a group.

     Except as otherwise noted, the persons named in the table own the shares
beneficially and of record and have sole voting and investment power with
respect to all shares of Common Stock shown as owned by them, subject to
community property laws, where applicable. Each stockholder's address is in care
of the Company at 2129 North 15th Street, Melrose Park, Illinois 60160. The
table also reflects all shares of Common Stock which may be acquired within 60
days from the date hereof upon exercise of stock options or common stock
purchase warrants.

                                        Number of
                                        Shares of
                                         Common
                                       Stock Owned                   Percent of
                                        of Record                   Common Stock
       Name                        and Beneficially(1)                 Owned
       ----                        -------------------                 -----

Timothy E. Evon                          698,166                       36.9%
Thomas J. Evon                           698,166                       36.9%
William H. Hamen                          61,500                        3.2%
Cede & Co.                               190,394                        7.9%
All officers and directors             1,457,832                       77.1%
as a group (3 persons)
-----------

(1) Includes Stock Options exercisable within 60 days from the date hereof.


ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------

     The Company has no related party transactions.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------

     a. Exhibits: 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as
                       Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                       Act of 2002
     b. Reports on Exhibit 8K: None

<PAGE>


                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned,
hereunto duly authorized, in Melrose Park, Illinois, on December 23, 2002.


                                            TONE PRODUCTS, INC.



                                            By:  /s/  Richard Falk
                                               ------------------------------
                                                      Richard Falk
                                                      President

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this Report has been signed below by the following persons on the dates
indicated.

       Signature                        Title                        Date
       ---------                        -----                        ----

/s/  Timothy E. Evon              Chairman of the Board       December 23, 2002
------------------------          of Directors,
     Timothy E. Evon


/s/  Thomas J. Evon               Director,                   December 23, 2002
------------------------
     Thomas J. Evon


/s/  William H. Hamen             Director ,                  December 23, 2002
------------------------
     William H. Hamen



/s/  Richard A. Falk              President,                  December 23, 2002
------------------------
     Richard A. Falk


/s/  Lloyd S. Dean                Vice President              December 23, 2001
------------------------
     Lloyd S. Dean


/s/  Maryann Talavera             Chief Financial Officer,    December 23, 2002
------------------------
     Maryann Talavera

<PAGE>