SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                                   (Mark One)

          [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    For the fiscal year ended March 31, 1998

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

             For the transition period from __________ to __________

                         Commission File Number O-27542

                             FUN TYME CONCEPTS, INC.
               (Exact Name of Company as Specified in its Charter)

             New York                                   11-3157259
 (State or Other Jurisdiction of                    (I.R.S. Employer 
   Incorporation or Organization)                  Identification No.)

                 290 Wild Avenue, Staten Island, New York 10314
                    (Address of Principal Executive Offices)

                                 (718) 761-6100
                (Company's Telephone Number, Including Area Code)

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

  Title of Each Class              Name of Each Exchange on Which Registered
                                     NONE

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

                          Common Stock, $.001 par value
                                (Title of Class)

                         Common Stock Purchase Warrants
                                (Title of Class)

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

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,   to  the  best  of  Company'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  Company's  revenues  for its  fiscal  year ended  March 31,  1998 were
$1,141,245.

     The aggregate  market value of the voting stock on July 7, 1998 (consisting
of  Common  Stock,  par  value  $.001  per  share)  held by  non-affiliates  was
approximately  $275,995,  based upon the average  bid and asked  prices for such
Common Stock on said date ($0.15),  as reported by a market maker. On such date,
there were 9,991,965 shares of Company's Common Stock outstanding.


<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

History

     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.
In May 1998 the Company acquired Play Co. Capital Corp., a Delaware  corporation
("PCC"),  which  owns 50% of  Prestige  Fine  Jewelry,  L.L.C.  ("Prestige"),  a
Delaware limited liability company and the rights to purchase Cortina Valley Ski
Resort ("Cortina"). Unless the context requires, all references to the "Company"
include the Company's subsidiaries, PCC and Prestige and its rights to Cortina.

Corporate Overview

     Prior  to the  consummation  of its  acquisition  of PCC in May  1998,  the
Company's  business plan focused  solely on  developing,  owning,  and operating
entertainment  facilities.  Prior  to  December  1996  the  Company  focused  on
children's  educational and entertainment  facilities,  targeting  children ages
twelve years old and under. In December 1996, the Company  expanded its business
plan to develop state of the art entertainment centers for the whole family. The
Company in developing the design for its East Brunswick  facility,  expanded its
existing  concept of  children's  educational  and  entertainment  by adding the
concept of a high tech,  theme restaurant and  entertainment  center catering to
children of all ages and to some extent  adults.  Centers to be opened under the
new "Planet Playdium"  concept will focus on offering  attractions which provide
entertainment  to all age groups and all members of family  groups.  The Company
plans to incorporate this new concept within its East Brunswick facility,  which
is currently under construction and if successful add to its existing facilities
and use as a format for the development of additional facilities.

     In May 1998,  upon the  consummation  of the acquisition of PCC the Company
expanded its focus and decided to diversify  itself and its  operations.  Though
the Company shall continue to operate and develop its  children's  entertainment
facilities,  it shall seek to diversify,  investing in and acquiring  additional
businesses,  in which it believes there is the potential for greater returns, in
order to increase the profitability of the Company.

Acquisition of Play Co. Capital Corp.

     Effective May 28, 1998, the Company entered into a stock purchase agreement
(the "Acquisition") with PCC, a Delaware  corporation,  BBS Holdings,  LLC ("BBS
Holdings"), a limited liability company organized under the laws of the state of
Delaware, the members of BBS Holdings,  Anthony DiMatteo, an individual residing
at 110H Dinsmore  Street,  Staten  Island,  New York 10341  ("DiMatteo")  and LD
Trust,  a trust formed under the laws of the state of  Delaware,  CAT L.L.C.,  a
limited liability company and RICH L.L.C., a limited liability company, whereby,
BBS Holdings acquired an aggregate of 8,152,000 shares or approximately 81.6% of
the Company's common stock,  par value $.001 per share (the "Common Stock"),  of
which the Company issued  7,230,000  shares directly to BBS Holdings in exchange
for  all  of  the  outstanding  shares  of  Play  Co.  Capital  Corp.   ("PCC").
Simultaneously  therewith,  CAT L.L.C and RICH L.L.C transferred an aggregate of
922,000 shares of the Company's Common Stock to BBS Holdings for a 20% ownership
interest therein.


                                       2
<PAGE>


     PCC owns a 50%  interest  in  Prestige  Fine  Jewelry,  L.L.C.,  a Delaware
limited  liability  company  and owns the right  under a purchase  agreement  to
purchase  Cortina Valley Ski Resort and all personal and real property  included
therein.

     Prior to the exchange of shares in the  Acquisition,  Daniel  Catalfumo and
Richard Rosso each  transferred  461,000 shares of the Company's Common Stock to
CAT L.L.C. and RICH L.L.C.,  respectively,  companies formed by Daniel Catalfumo
and Richard Rosso, Officers of the Company, respectively.

     As of June 30,  1998,  inclusive of the shares  issued in the  acquisition,
there were 9,991,965 shares of the Company's Common Stock outstanding,  of which
BBS Holdings owned 8,152,000 or approximately  81.6%,  whereby,  the Company has
become a subsidiary of BBS Holdings and PCC has become a wholly owned subsidiary
of the Company.

     Since the  Acquisition  of PCC and certain  other  concurrent  transactions
resulted in the transfer of an  approximate  81.6%  controlling  interest in the
Company  to BBS  Holdings,  Management  believes  that the  Acquisition  will be
treated as a purchase business combination, effective May 28, 1998, that will be
accounted for as a "reverse acquisition" in which the Company shall be the legal
acquirer  and PCC will be  accounting  acquirer.  Accordingly,  the  assets  and
liabilities of PCC will be accounted for at their historical carrying values and
the assets and  liabilities  of the Company  will be valued at their fair values
with the  excess  of BBS  Holdings'  cost over the fair  value of the  Company's
assets, if any, allocated to goodwill.

Reorganization of Fun Centers

     In April 1998, in preparation for the Acquisition,  the Company reorganized
its corporate  structure.  The Company formed a wholly-owned  subsidiary,  named
Planet Play-Dium,  Inc. ("Planet"), a Delaware corporation,  and transferred its
ownership  in its three fun  centers  to  Planet,  whereby,  each of Fun Tyme of
Edmonton,  Inc  ("FTE"),  Fun Tyme of East  Brunswick,  Inc.  ("FTEB") and newly
formed Fun Tyme of Staten Island, Inc. ("FTSI") are wholly-owned subsidiaries of
Planet.

Initial Public Offering

     On August 15, 1996,  through State Street  Capital  Markets  Corp.  ("State
Street"),  the  Company  consummated  an  initial  public  offering  ("IPO")  of
1,250,000 units,  each unit (the "Units")  comprising one share of Common Stock,
par  value  $.001,  and  one  redeemable  Common  Stock  Purchase  Warrant  (the
"Warrants"),  at a purchase price of $6.25 per unit, inclusive of 800,000 shares
of Common  Stock sold by the  Company,  200,000  shares of Common  Stock sold by
certain  security  holders  and  250,000  shares of Common  Stock and  1,250,000
Warrants sold by a certain selling security holder.  Net proceeds to the Company
from the IPO were approximately $3,102,000.  The proceeds from the Company's IPO
were  earmarked  to enable the Company to open  additional  facilities,  each of
which is expected to combine  various  elements  of a  children's  entertainment
center  along  with  indoor   recreational   and   educational   facilities  and
specifically  designed toddler  programs.  The Company has opened a new facility
called Congo Bongo Fun Centre,  in Edmonton,  Canada,  and plans to open another
new facility  called  Planet  Playdium,  incorporating  its new Planet  Playdium
concept, in East Brunswick, New Jersey, in the autumn of 1998.


                                       3
<PAGE>


     In August 1996,  State Street ceased  operations and soon thereafter  State
Street and the  Company  terminated  its  underwriting  agreement  and all other
agreements  between the  parties.  The lack of market  support by the  Company's
underwriter  and  principal  market maker limited the liquidity of the Company's
securities  and  decreased  market  quotations to a point whereby the units were
trading  below $1.00.  As a result of this  continued  low  trading,  though the
Company  strove to keep its  securities  listed  on the  Nasdaq  SmallCap  Stock
Market,  Nasdaq  delisted  the  securities  on April 7, 1997,  at which time the
Company's securities began trading on the OTC Bulletin Board.

Family Entertainment Business

Background

     In 1993,  the  founders of the Company  began to  research  the  children's
entertainment industry and, in doing so, joined the International Association of
Amusement  Parks and  Attractions.  They  attended  trade shows and seminars and
visited many other children's entertainment  facilities.  They noticed that most
facilities  had limited floor space and low ceilings which limited the space for
the larger  children's  play  equipment and which gave most of the  facilities a
closed-in feeling. After estimating the possibilities, the founders decided that
building a facility in an air supported dome with a 40 foot ceiling would create
an airy  uncluttered  environment,  and,  with  the  help of a  manufacturer  of
pneumatically  inflated  domes,  in 1993, the Company  designed a dome unit that
would have a 40 foot ceiling.  In October 1994, the Company opened its first Fun
Bubble in  Staten  Island,  New  York.  In August  1997,  the  Company's  second
facility,  Congo Bongo, was opened in Edmonton,  Canada.  See "Business - Staten
Island, New York Fun Bubble" and "Business - Edmonton, Canada Facility."

Outlook

     Although the  Company's  current  expansion  plans are focused upon its new
acquisitions,  the Company  still  plans to expand its  business  operations  by
opening  additional  facilities,  under the Planet Playdium concept,  if same is
successful.  These facilities may be under traditional building structures,  not
the pneumatic  domes used for the Company's  Staten Island  facility.  In either
event,  the Company will seek to incorporate  high ceilings and unfettered  open
space  in  keeping  with  its  initial  concept.  The  Company  intends  to open
facilities in or near  locations  that are family  oriented,  in areas that have
large  populations  of  children,  and/or  in areas  with  higher  than  average
disposable income.

Industry Overview

     The children's  amusement industry is a highly  competitive  segment of the
family entertainment industry, which includes admissions-based, or pay for play,
recreational  and soft play centers that target young  children from toddlers to
pre-teens.  The pay for play children's  entertainment center industry is highly
fragmented  and consists  largely of local "mom and pop" stores,  small regional
chains, and local non-profit organizations that provide pay for play indoor soft
play  facilities.   The  children's  amusement  industry  is  subject  to  rapid
technological and innovative change.  Competition from and among companies which
provide  amusement  centers and other  arenas for the  amusement  of children is
characterized by continuous  technological and innovative  changes and advances.
There can be no assurance that the Company


                                       4
<PAGE>


will be able to keep pace with the technological and innovative  developments in
the industry or to implement changes in accordance with such developments.

Entertainment Concept

     In  its  existing   entertainment   centers,  the  Company  encourages  the
participation  of parents  and/or  guardians with their children and to this end
has designed a play maze and other play equipment  which will allow children and
their parents and/or  guardians to play  together.  In addition to the play maze
area, the  facilities  offer private party rooms,  games of skill,  video games,
redemption games, bumper cars, a train roller coaster ride, a bungee trampoline,
a  separate  toddler  play  area and a  private  sound  proof  parent's  lounge.
Management  believes that the  facilities  are designed to provide a fun,  safe,
reliable, and interactive environment whereby children can exercise their bodies
and minds and acquire certain  necessary  skills.  It is Management's  intention
that each location  provide such an environment.  Each facility is geared toward
enhancing a child's (i) hand, eye, and muscle  coordination;  (ii) motor skills;
(iii)  flexibility;  and (iv) social skills.  The Company plans to  continuously
update its facilities to meet children's recreational and educational needs in a
stimulating, safe, and fun arena. See "Toddler and Pre-School Programs."

     The Company's new Planet  Playdium  concept will  incorporate the Company's
existing attractions and educational offering,  with high tech games and a theme
restaurant  atmosphere,  catering to all members of family.  The East  Brunswick
location, as the initial prototype location will include a separate toddler play
area with an adjoining "Cyber Cafe" with computers available for the parents use
and a "Laser Tag" area hosting  futuristic  interactive laser gun games.  Should
the Planet  Playdium  concept  prove to be  successful  in East  Brunswick,  the
Company  plans on expanding  its existing  facilities  to  incorporate  this new
concept.

Staten Island, New York Fun Bubble

     The Staten Island Fun Bubble,  which opened in October 1994, is constructed
under a pneumatic  translucent  dome with 40 foot  ceiling  heights,  similar to
those used for tennis courts.  Although the Company  intends to open  additional
facilities  under  similar  structures,   it  may  also  operate  facilities  in
traditional  building  structures.  The  Staten  Island  Fun  Bubble  charges an
admission  fee of  $6.95  per  child;  there  is no  admission  fee  for  adults
accompanying children.

     The Fun Bubble has (i) an environmentally controlled,  supervised "Open Air
Atmosphere"  which is climate  controlled  throughout the seasons;  (ii) a party
play center for kids twelve years old and under,  which includes  athletic games
and games of skill;  and (iii) a three level  soft-sculptured  modular foam play
maze.  All  activities  are  designed  with safety in mind and are  continuously
supervised by the Company's trained  employees.  The children purchase tokens to
play skill games and receive points at the end of each game. These points may be
redeemed  at any time to  receive  a prize  at the  merchandise  and  concession
counter. See "Safety and Arcade Redemption Systems."

     In addition to the  foregoing,  the facility  also  includes  private party
rooms, a snack bar, and a sound proof television  lounge for parents.  The party
rooms can be reserved for birthdays and other group events. The Company offers a
variety of party  packages  which  combine  all  aspects of a  celebration.  The
parents'  lounge  provides a quiet place for adults to retreat on occasion while
their  children  play:  it includes a  television  and a large clear  window for
viewing


                                       5
<PAGE>


the play area.

     In fiscal year 1997,  the Staten Island Fun Bubble was remodeled in keeping
with the  Company's  desire to effect an outer  space  theme.  Accordingly,  all
equipment was redesigned with space and spaceships as the focus.

Edmonton, Canada Facility

     In February 1997, the Company formed a wholly-owned subsidiary, Fun Tyme of
Edmonton,  Inc. ("FTE").  FTE purchased the assets of a pre-existing  children's
entertainment facility in Edmonton, Canada. This facility was in bankruptcy, and
the assets  purchased by the Company was effected on May 20, 1997 by and between
FTE and Browning Smith Inc., trustee of the estate in bankruptcy.

     On May 21, 1997,  upon approval of Browning  Smith Inc., FTE and the lessor
of the former facility executed a lease agreement for the premises. The Edmonton
facility commenced  operations in August 1997, with a jungle theme, and operates
under the name "Congo Bongo."

     The Company  charges an admission  fee of $6.50  Canadian per child;  there
being no admission fee for adults accompanying  children.  The Edmonton facility
contains  substantially the same attractions and programs as the original Staten
Island Fun Bubble.

East Brunswick, New Jersey Facility

     In December 1996, the Company formed a wholly owned subsidiary, Fun Tyme of
East  Brunswick,  Inc. On January 21, 1997,  FTEB executed a lease for an 18,000
square foot  facility,  formally a movie  theatre,  in the Miracle  Mall in East
Brunswick,  New Jersey.  The Company is in the process of  renovating  the movie
theater within the Mall and plans to open a entertainment  facility which can be
enjoyed by the whole family.  The design of the facility  incorporates areas for
the facility's theme  restaurant,  the Cyber Cafe, a Laser Tag section,  and the
Solocoaster ride, in addition to the original Fun Bubble attractions, therein to
bring this area its largest children's  entertainment facility. The Miracle Mall
is a 120,000 square foot landmark center in the heart of East  Brunswick's  most
active regional  shopping area. This mall includes 18 centrally  anchored stores
and is  adjacent  to Tices Lane on which an  additional  700,000  square feet of
retail  stores are situated.  The movie  theater was chosen  because of its high
ceilings and existing layout,  both of which will enable the Company to retrofit
the space into its Planet Playdium concept.

     The Company has chosen a theme focusing on the future and Hollywood  movies
for its East Brunswick location. The East Brunswick location is expected to open
in the fall of 1998.

Marketing

     The Company has incurred  marketing expenses in purchasing cable television
and radio advertising  time, local newspaper and magazine print  advertisements,
and  brochures  which it has  disseminated  at its Staten  Island Fun Bubble and
Edmonton facility locations. As the Company expands to add additional locations,
it intends to increase its advertising and marketing  activities:  it expects to
contact local school systems,  clubs,  and religious  organizations  to organize
events for children and attract target groups of children to its facilities.


                                       6
<PAGE>


Suppliers

     Operation of the entertainment facilities is contingent upon the ability of
the Company to purchase and lease equipment from  suppliers.  Though the Company
intends to purchase most of the play equipment it requires for each facility, it
may lease certain  pieces of equipment.  The Company will purchase one play maze
(discussed  above),  at an  estimated  cost of $250,000 for each  facility.  The
Company  believes  that there are many  vendors and  suppliers  of the games and
equipment it purchases and leases.  The Company  believes it will continue to be
able to  purchase  and lease  equipment  in the  future  at prices  and on terms
similar to those at which it presently  does so. As fads arise and certain games
or attractions become popular the Company's inability to obtain these items in a
timely  manner,  to meet  demand may have and  adverse  affect on the  Company's
operations.

Competition

     The Company's facilities are directed at the highly competitive business of
children's indoor recreation and educational  facilities.  The Company's largest
competitor  in the pay for play segment of the industry is the  Discovery  Zone.
While the  Discovery  Zone  closed over 35% of its  locations  during its recent
bankruptcy, it has recently emerged from its Chapter 11 protection and remains a
competitor to the Company.  New competitors may include The Walt Disney Company,
which has a family  entertainment  concept in two  locations  and has  announced
plans to open additional  store  locations.  The Company also competes with many
other small companies which have individual amusement center locations providing
basically  the same services as the Company.  The Company  believes that many of
its competitors  have (i) more extensive  research and development and marketing
and customer support  capabilities;  and (ii) greater financial,  technological,
and other  resources  than those of the Company.  Further,  the Company does not
believe there are any  significant  barriers to entry by new companies into this
industry.

     The Company also competes to some extent against certain  children's  theme
restaurant  chains,   which  provide  ancillary   entertainment   offerings  and
merchandise  in  addition  to  food  and  do not  charge  admission  fees.  Such
competitors  include  ShowBiz Pizza Time,  Inc.,  the operator and franchiser of
approximately 300 "Chuck E. Cheese"  restaurants in the United States, and, to a
lesser extent, certain franchisees of McDonald's Corporation that operate indoor
playgrounds  at a  number  of  locations.  These  restaurants  differ  from  the
Company's  locations in that they do not charge for  admission and focus on food
as their primary attraction and source of revenue.

     The  Company  expects  additional  entities to enter into the market in the
near future,  some of which may have  significantly  greater  resources than the
Company.  The Company  expects that its facilities  will naturally  compete with
other ventures  similar to the Company's with respect to location,  availability
of new and  distinct  product  and  service  offerings,  and cost per visit.  In
addition to competing with other companies in the business of children's  indoor
amusement and educational facilities, the Company will compete for dollars spent
on  entertainment  for  children  involving  other types of  amusement,  sports,
recreation,  and fitness  services  such as park  district  programs,  amusement
parks, and specialty restaurants.


                                       7
<PAGE>


Safety and Arcade Redemption Systems

     The Company is very concerned about the safety of the children entering its
facilities.  Accordingly,  it  has  designed  the  Staten  Island  and  Edmonton
locations, and intends to design all additional facilities, to guard against (i)
injuries to children using the facilities;  (ii) children leaving the facilities
unaccompanied;  and (iii)  children  leaving the  facilities  without the parent
and/or guardian with whom they entered. As additional  precautions,  the Company
will continue to purchase only the type of play equipment it deems safe and will
provide  constant  supervision  over its  young  patrons  in  order to  minimize
injuries.

Electronic Safety Systems

     One measure the Company has taken to ensure the safety of children visiting
its facilities involves the use of a child safety alarm system. The goal of this
system is to prevent a child from leaving the facility  without his  supervising
adult.  To accomplish this goal, the Company  provides  electronic tags for each
child entering the facility.  These  electronic tags are attached to the child's
clothing.  When a child  leaves the facility  with his  supervising  adult,  the
electronic  tag is  removed.  At each  exit of the  facility,  the  Company  has
installed  electronic  arches  which sound an alarm if a child whose tag has not
been removed attempts to leave the location.

Wristband System

     An additional safety concern of the Company is that a child only leave with
the adult who brought him to the  facility.  To achieve  this goal,  no adult is
admitted to a location  unless he is  accompanied by a child.  In addition,  the
Company  provides  individually  numbered and bar coded  wristbands which fasten
around the wrists of each adult and child who enter the  facility.  Each adult's
wristband number and bar code correspond with the wristband and bar code of each
child the adult is supervising.  When an adult leaves the facility with a child,
the adult will only be allowed to take the child whose wristband  number and bar
code  correspond to the adult's.  (These bar coded wrist bands are also used for
children  to accrue  points in order to  receive  prizes  and  memorabilia  when
playing the skill  games.) By following  this  procedure,  the Company  hopes to
prevent a child from leaving the facility without his supervising adult.

 Toddler and Pre-School Programs

Mommy & Me

     The Company,  as part of the services it makes available to the public, has
developed,  with its consultants,  toddler programs called "Mommy & Me." Parents
with  children  ages  twelve to eighteen  months  attend  class  together at the
facilities  on a weekly basis for nine weeks,  at a cost ranging from $168.00 to
$250.00  per  child,  depending  on the  number  of hours per week  parents  and
children attend. In this program, children participate in activities which focus
on  socializing,  singing,  exercising,  and playing in the Company's  specially
designed  toddler play area.  As children  reach  eighteen  months,  the classes
include creative arts and crafts programs.  Children work with materials such as
paints, glue, and beads. After class ends each week, the children are invited to
play at the Fun  Bubble  with  their  parents.  The  Company  offers  Mommy & Me
programs for  children up to the age of 4 1/2 years old.  Each child who enrolls
will receive an  identification  card and during class hours will be required to
wear an electronic tag as part of the child safety alarm system.  These programs
were designed primarily by two consultants to the


                                       8
<PAGE>


Company, pursuant to the terms of a consulting agreement. These consultants have
been designing and  instructing  the Mommy & Me class for several years at other
locations.

Separation Classes

     Another program the Company  provides is a series of "Separation  Classes."
These classes were designed by the same  consultants who designed the Mommy & Me
classes.  These classes are designed for children who soon will be  experiencing
their first  separation from their parents.  The classes focus on topics such as
sharing,  manners,  food groups,  recognizing  letters and  numbers,  shapes and
colors,  worksheets,  play stations,  creative arts and crafts projects, special
theme weeks, and holiday parties.  The classes meet from one to two times a week
for 2 1/2 hours at a time for nine  weeks,  at a cost  ranging  from  $110.00 to
$190.00 per child.  The  classes are open to children  two to five years of age.
Each child who enrolls receives an identification  card and, during class hours,
is required to wear an electronic  tag as part of the child safety alarm system.
After class ends each week, the children are invited to stay at the facility and
play.

Day Camp

     The Company also has  developed a day camp called  "Camp Fun Bubble"  which
provides four different day camp programs for different age groups.  The program
for children two to three years old is called the "playfull  summer" camp and is
a two hour on premise  program offered either two or three times per week during
either a four, six, or eight week period. This camp is an extension of the Mommy
and Me program, except that the parents choose whether or not to participate.

     The "junior  camp" is for children  three to four years old and provides on
premises  activities from either 9 a.m. to 12 p.m. or 1 p.m. to 4 p.m., three to
five days per week, for a four, six, or eight week period.

     The "day  camp" is for  children  two to  fourteen  years old and  provides
activities,  on and off premises,  from 9 a.m. to 4 p.m., three to five days per
week,  during either a four,  six, or eight week period.  The day camp is run by
board of education  certified teachers and includes bus  transportation,  lunch,
and regular camp type activities including sports and crafts.

Seasonality

     The Company believes that its business may be considered  seasonal and that
a large portion of its revenues and profits will be derived  during the fall and
winter months.  The Company  believes that outdoor  amusement  centers and theme
parks will take  business  away from the  inside  amusement  centers  during the
spring and summer months.  Since the Company has been  operating  (since October
1994),  it has observed that the busier months have been in the fall and winter:
the spring and summer  months have shown a decline in revenues.  Since  Edmonton
experiences a very cold climate,  with a long winter,  the Company  expects that
the summer decline in revenues at the Edmonton  location to be less  pronounced.
See "Business - Day Camp."


                                       9
<PAGE>


Insurance

     In view of the nature of the activities  conducted in an amusement  center,
there are  inherent  risks of exposure to certain  personal  injury  liabilities
including  product  liability and negligence claims resulting from injury caused
by the use of, or items purchased in, the facilities.  Accordingly, with respect
to the Staten Island Fun Bubble, the Company currently carries general liability
insurance in the amount of $1,000,000  and  maintains an  additional  $1,000,000
umbrella  policy.  For the  Edmonton,  Canada  facility,  the Company  carries a
$5,000,000  general  liability  policy.  For  the  East  Brunswick,  New  Jersey
facility,  the  Company  maintains a  $2,000,000  general  liability  policy and
carries an  additional  $1,000,000  umbrella  policy.  The Company  believes its
insurance coverage is sufficient.

Government Regulations

     The Company is subject to the  provisions of, among other laws, the Federal
Hazardous Substances Act and the Federal Consumer Product Safety Act, the latter
of which  empowers  the  Consumer  Products  Safety  Commission  ("the  Consumer
Commission") to protect  children from hazardous toys and other articles used by
children.  Any determination by the Consumer Commission outlawing the use of the
type of  soft-sculpted  modular foam or other toys  provided for the children by
the Company in its facilities  would adversely  affect the Company's  ability to
sustain its operations.  Presently, the Company does not know of any alternative
products to the  soft-sculpted  modular foam it currently uses;  therefore,  any
restrictions on its use would significantly adversely affect the Company and its
operations.  The  Company  also is required to comply with a wide range of other
state and local rules and regulations applicable to its business. The ability of
the Company to comply with the current and anticipated broad federal, state, and
local regulatory  network is essential and may be costly.  The failure to comply
with such regulations would have an adverse effect on the Company's operations.

Service Mark

     The  Company  relies on common law  service  marks for use of its name "Fun
Bubble." The Company filed to register the Fun Bubble service mark in the United
States, and its application was approved on April 3, 1996.

Marketing Research

     During the last several years, the Company's  executive officers have spent
a large  portion of their time on research  and  development  of the indoor play
facility market,  the equipment  utilized  therein,  possibilities  for new play
equipment,  and new locations at which additional facilities may be opened. This
research led to an  awareness  that the  offerings  of the fun centers  could be
combined with  attractions  which cater to older children and adults in order to
provide a  destination  which  would  appeal  to the  entire  family,  including
children of all ages. The recent success of theme  restaurants,  such as "Planet
Hollywood"  and "Hard Rock Cafe," has evidenced  the existing  demand for family
entertainment.


                                       10
<PAGE>


Cortina Valley Ski Resort

General

     In May 1998, the Company,  through its subsidiary PCC,  acquired the rights
to purchase  Cortina Valley Ski Resort in the Catskill  Mountains.  PCC owns all
the rights,  title and interest of Cortina Mt.  Partnership  to a contract dated
January 24, 1998 between Cortina Mt. Partnership and Rainbow Operation, Inc. and
Toru Hamanaka to purchase the rights under a lease  agreement and all buildings,
ski lifts, and other personal and real property  incorporated in the ski resort,
known  as  Cortina  Valley  Ski  Resort  ("Cortina").  The  contract  originally
scheduled to close on or before July 1, 1998,  has been extended  until July 15,
1998.

The Resort

     Cortina Valley Ski Resort is a 25 year old all season destination  mountain
resort in the Catskill  Mountains,  with primary emphasis on the ski season. The
facility currently  comprises a base lodge,  including a 20 room motel building,
lodge/restaurant,  ski  school  building,  ski  rental  shops and other  related
storage buildings,  all of which comprise  approximately 19,000 square feet. The
resort had operated until the 1996/1997 ski season,  during which it was closed.
The total land area of the  property  involved  is  approximately  300 acres and
consists of a ski area containing 106.2 acres and adjacent land containing 193.8
acres.  The ski area comprises 18  slopes/trails  with a base elevation of 1,925
feet and a top  elevation of 2,650 feet.  There are two double chair lifts,  one
tow rope  and one poma  lift.  The  resort  has  snow  making  capabilities  for
approximately  90% of the ski area and lighting for approximately 80% of the ski
area for night skiing.

Industry Overview

     The Catskill  Mountains,  approximately  705,000  acres,  contains four ski
resorts,  one of which is Cortina.  Cortina is located  approximately  two hours
outside of New York City and one hour from Albany,  New York, the capital of New
York  state.  The  population  within 100 miles of the  resort is  approximately
20,000,000 people.  According to the Ski Areas of New York, Inc., New York state
has averaged 3.5 million skier visits (defined as any person  acquiring a ticket
for any part of a day) per year over the last five  years,  making the state the
fourth busiest state in the nation for skier volume.  Despite  ranking fourth in
the nation, New York has more operable ski areas (approaching 60) than any other
state in the  nation.  Due to this  large  number  of  areas,  New York has more
skiable acres under lights  available for night skiing than any other state. New
York ski areas are a diverse offering of all types of resorts including national
destination resorts, regional destinations, and local "day" areas.

     During the last decade,  the  industry  began  experiencing  a shift in its
focus as the growth of  snowboarding  has caused  snowboarding to become a major
segment of the industry. The preliminary results from the 1998 annual Kottke end
of season survey of the ski industry showed that  snowboarding has continued its
impressive growth.  Snowboarding  represented 21.2 percent of total skier visits
this year,  an increase  of  approximately  20 percent  over last and a compound
annual rate of growth of 20.7 percent  since  1994-95.  A 1997 study by American
Sports Data indicated that snowboarding is the fastest growing sport in America,
up 33% from the previous year.


                                       11
<PAGE>


     The  preliminary  results  from the Kottke  survey  showed  that during the
1997-1998  season skier visits were up 2.5 percent  nationally over the previous
year. The Northeast ranked second among the regions of the nation for percentage
increase with a growth of 5.86 percent over the previous season. Skiers continue
to be among the most affluent of any sport participants. A recent poll conducted
by the  National  Sporting  Goods  Association  shows  that two thirds of alpine
skiers have a household income of over $50,000.

Outlook

     The Company plans on reopening the currently  non-operating  ski resort for
the 1998-1999 winter season. The Company has budgeted  approximately $300,000 to
renovate and upgrade the resort for its re-opening, which funding it anticipates
obtaining from loans secured by the property.

     In time the Company plans on redesigning  the resort,  turning the facility
into a year round full  service,  all  amenities  resort  catering to  families,
decreasing  the emphasis on the ski season and adding  entertainment  facilities
for year round use. In addition to the traditional hotel, restaurant, nightclub,
and swimming pool,  which the resort  currently  offers,  the Company intends on
adding a family entertainment center, currently in the planning stages.

     The Company  plans on providing a variety of outdoor  winter  activities at
the  Resort.  In  addition,  the  future  plans for the resort are to expand the
available ski acreage and number of lifts.  The resort,  however,  will focus on
catering  to the  snowboarding  segment  of the  skiing  industry.  Snowboarding
currently  constitutes a large portion of the skiing industry and its popularity
is growing,  especially  among children.  In order to fill a need and to attract
families,  the Company plans on developing a snowboarding park. In addition, the
Company  plans  on  constructing  a snow  tubing  park  adjacent  to the  family
entertainment portion of the lodge and an outdoor ice skating rink.

     The Company is exploring  plans to expand its outdoor summer  activities to
contain  amusement  attractions.  The existing  property also contains  mountain
biking trails which the Company plans on providing for the use of its customers.
In addition to the hotel accommodations provided to guests, the Company plans on
expanding the partially completed campgrounds.

Competition

     The Catskill  Mountains,  approximating  705,000  acres,  encompasses 4 ski
resorts,  including  Cortina  Valley Ski Resort,  Hunter  Mountain,  Ski Windham
Resort and Belleayre Mountain Ski Center. In addition,  there are numerous other
ski  areas,  totaling  60  within  New York  State  some of  which  are in close
proximity.  However, since Cortina Mountain is a small, family-oriented mountain
with its major advantage of being close to the New York City metropolitan  area,
its major  competition  will be from  other ski  areas in the  Catskill  region.
Although these areas offer longer  vertical  drops,  and more skiable acres than
Cortina,  Cortina should be able to compete  favorably  with these  mountains by
offering  lower lift  prices and family  oriented  services  and  entertainment.
During the 1996-1997 ski season, both Ski Windham and Hunter Mountain had annual
ticket sales of approximately  375,000 and adult lift ticket prices ranging from
$32 to $43. In addition,  Belleayre  had sales of 175,000  ticket  prices around
$30.


                                       12
<PAGE>


Prestige Fine Jewelry, LLC

General

     The Company, through its subsidiary PCC, owns 50% of Prestige Fine Jewelry,
LLC, a Delaware limited liability company,  ("Prestige") formed in March 1998 by
Anthony DiMatteo,  the Company's Executive Vice President of Sales and Marketing
and a Director, and Zeki Kochisarli,  the owner of Prestige Chain, Inc. ("PCI"),
a  manufacturer  of jewelry,  primarily  gold,  located in Long Island City, New
York. Mr. Kochisarli continues to own 50% of Prestige and 100% of PCI.

Overview

     Prestige was formed to be the  exclusive  sales and  marketing arm for PCI,
whereby, substantially all jewelry manufactured by PCI is sold through Prestige.
Prestige's  objective is to act as a wholesaler,  selling the Company's products
directly to  independent  jewelry stores and large chain  retailers  which stock
gold  chains.  The Company  shall also seek to directly  market its products and
service to jewelry  designers and department stores who sell jewelry under their
own labels.  Additionally,  the Company may seek to expand into retail sales, by
direct marketing avenues such as catalogs and television home shopping networks.

     PCI has a unique manufacturing operation,  which is one of only a few fully
automated precious metal, primarily gold, manufacturing operations in the world,
which  processes the precious metal from 24 karat fine gold stages to a finished
product, providing a high quality product.

     PCI is one of the only jewelry  manufacturers  in the United States who, in
addition to producing gold chain and castings, also produces the karat gold used
for the production of the jewelry from fine gold. Karat gold (commonly  referred
to as 10 karat gold, 14 karat gold, etc.) is the raw material used in the making
of gold  jewelry  and is  produced  by mixing raw gold with an alloy in order to
harden  the  metal.  PCI is a leading  innovator  in the  automation  of jewelry
manufacturing, attaining substantial reductions in labor requirements especially
skilled labor. The automation of the manufacturing process allows PCI to quickly
adapt  its  manufacturing  process  to copy the  latest  seasonal  styles of the
industry.

     This fully automated manufacturing process does not require extensive labor
to operate, though it does require continuous maintenance.  The Company believes
that the manufacturing process is cost-effective and provides the Company with a
competitive  advantage  because (i) it requires limited labor to operate (ii) is
produced in the United  States,  which  limits  shipping  costs and taxes (duty,
tariffs and sales) when compared to the costs associated with purchasing jewelry
from overseas and (iii) due to the automation and venue of production  decreases
the time to market for the products when ordered.

Industry Overview

     Although the United  States  provides a majority of the world's  demand for
gold  jewelry,  the gold jewelry  industry is  dominated  by oversees  producers
located in the Mediterranean region, primarily Italy. The seasonal styles of the
industry are largely set by the Italian 


                                       13
<PAGE>


manufacturers  in the  industry.  In 1997 sales of gold  jewelry  reached  $12.6
billion up from $12.3 billion from the prior year.

     Starting in the late 1970's U.S.  companies started to compete with Italian
manufacturers,   however,  in  principal  these  manufacturers  were  not  fully
integrated operations,  which increased their cost structure.  In addition, upon
the devaluation of the Italian Lira, U.S.  companies were unable to compete with
the lower priced Italian products, causing many companies to fail.

Exclusive Sales Agreement

     In April 1998, Prestige entered into an exclusive sales agreement with PCI,
whereby  Prestige became the exclusive and sole sales and marketing arm for PCI.
Prestige commenced  operations in May 1998, at which time it proceeded to obtain
purchase orders for PCI. In accordance with the agreement, Prestige and PCI have
negotiated  pricing  for the  different  types,  styles  and  designs of jewelry
manufactured  by  PCI,  notwithstanding  the  cost of the  gold  and  other  raw
materials used in the  manufacturing  process,  which is paid on a cost basis or
purchased directly by Prestige.

Marketing and Sales

     Prestige has entered in a sales agreement with J.K. Limited, Inc. ("JKLI"),
for the sale of jewelry,  primarily gold to large chain store  retailers.  Under
the agreement JKLI is the exclusive sales  representative for the accounts of 15
customers,  including  Wal-Mart,  K-Mart,  Service  Merchandise,  Target,  Sam's
Wholesale,  and Costco.  The  agreement is for an initial term of one year,  and
provides for three annual  extensions if JKLI meets the yearly sales  production
requirements.  The sales  production  requirement is $10,000,000 for the initial
year and increases annually by $8,000,000.

Competition

     The Company  competes,  in the U.S.  primarily with several companies which
manufacture  gold jewelry,  two of which  purchase  products from the Company to
supplement  their  offerings.  They include;  Amburst of Rhode Island,  Excel of
Rhode  Island,  and Olef  Creations  of New York,  New York.  The  Company  also
competes with many other small companies which have machine shops producing gold
jewelry.  The  Company  believes  that  many  of its  competitors  have  greater
marketing and customer support capabilities and greater financial resources than
those of the  Company.  The Company does not believe  there are any  significant
barriers to entry by new  companies  into this  industry,  as the  machinery  is
unique  and  the   maintenance   thereof  require  skilled  and  highly  trained
technicians.

Financing

     Prestige  entered  in  an  accounts  receivable  factoring  agreement  with
Prestige Capital Corporation ("Prestige Capital"),  an unaffiliated entity for a
term ending  January  15,  1999.  The terms of the  agreement  provide  that the
Company  shall  assign all of its  receivables  to  Prestige  Capital,  whereby,
Prestige  Capital  shall  pay to  Prestige  up to 80% of the  face  value of the
receivables,  hold 10% as security for the receivables and pay out the remaining
portion  on a sliding  scale.  If the  receivables  are paid  within 30 days the
Company  gets an  additional  6%,  within 45 days an  additional  5%, 60 days an
additional 4% and 90 days or over an additional


                                       14
<PAGE>


2%. Therefore,  Prestige Capital's fee is based on time of collection and ranges
from a minimum of 4% to a maximum of 8% of the receivable.

Maintenance

     Since the machinery is mostly automated, it requires continuous maintenance
by high skilled and trained individuals,  such as Mr. Kochisarli.  The inability
to maintain the  machinery  in working  order or the  perception  thereof by the
jewelry industry could inhibit  Prestige's  ability to proceed with its business
plan. For this reason, management has decided to commence a slow and progressive
operation of obtaining and processing purchase orders.

Employees

     As of March 31, 1998, the Company had five executive  Officers and employed
approximately 6 full time employees and 25 part time employees.  The Company has
hired two managers for its Edmonton  facility and shall relocate two of its four
Staten Island Fun Bubble  managers to the East Brunswick  facility.  None of the
employees  of the  Company is  represented  by a union.  The  Company  considers
relations  with its  employees  to be good.  The  Company  continues  to utilize
LaborChex  Companies,  a  company  located  in  Jackson,  Missouri,  to  provide
screening of each applicant prior to employment.  The screening  process informs
the Company of the applicants' prior criminal histories, if any, their addresses
for the past five years, and their social security numbers.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Company  leases  approximately  31,000  square feet at 290 Wild Avenue,
Staten Island, New York 10314, where the Staten Island Fun Bubble, approximately
10,000 square feet is located.  The Company  utilizes  approximately  500 square
feet of such space for its executive offices.  The lease extends for a period of
seven  years,  until June 30, 2000,  at  approximately  $95,000 per annum,  with
annual  scheduled  rent  increases of 4%. The lease term may be extended for two
five year renewal terms, until June 30, 2010.

     In the event the first renewal term option is exercised by the Company, the
rental  payment  shall be the greater of the fair  market  value and 104% of the
prior year's  rental  payment (a 4% increase  over such  previous  year's rental
payment).  In each year of the first  renewal  period,  commencing on the second
year of the five year renewal  period,  the yearly rental payment shall increase
by 4% over the  previous  year's rent.  In the event the second  renewal term is
exercised,  the Company will be required to pay the fair market value of leasing
the property for such renewal term.

     On December 31, 1996, FTEB entered into a lease agreement for the rental of
approximately 15,200 square feet at the Miracle Mall located at Route 18 in East
Brunswick, New Jersey, for the location of its East Brunswick facility. The East
Brunswick  lease extends for an initial term of ten years,  said term commencing
90  days  after  issuance  of  the  required  building  permits  for  the  work,
improvements,  and alterations required for the Company to open for business and
expiring February 28, 2007 unless renewed at the Company's option.  The required
building  permits  were  issued  on April 17,  1998.  In July 1998 the lease was
amended to increase the square  footage  leased by an  additional  approximately
1,700 square feet.  The annual rent due under the lease is as follows:  $202,800
for the first five years of the lease; $228,150 for the


                                       15
<PAGE>


second five years of the lease;  $256,711  for the  eleventh  through  fifteenth
years and $288,821 for the sixteenth through twentieth years.

     Another  wholly owned  subsidiary of the Company,  FTE, also entered into a
lease agreement for the rental of approximately  12,200 square feet of space for
the  location of its Edmonton  facility.  The lease term extends for a period of
ten years,  commencing  April 1, 1997 and expiring  March 31, 2007. The space is
leased at an annual  rent of U.S.  $52,704  for the first  thirty  months of the
lease term, U.S. $57,093 for the subsequent thirty months,  U.S. $61,490 for the
succeeding thirty months, and U.S. $65,880 for the final thirty months.

     In May 1998,  the  Company  acquired  all rights,  title and  interest to a
contract  (the  "Contract")  to purchase a lease and certain  real and  personal
property  incorporated  in the Cortina  Valley Ski Resort in Haines  Falls,  New
York,  within  the  Catskill  Mountains.  The total  land  area of the  property
involved is approximately  300 acres and consists of a ski area containing 106.2
acres and adjacent land containing 193.8 acres. The lease,  covering portions of
the ski  area,  is for a term of 99  years,  with the  option  to  renew  for an
additional  99 year at a rental rate of $500 per year.  The lease  commenced  in
March 1964.  The ski area contains 18 trails with varying  degrees of difficulty
and two  double  chair  lifts,  one rope tow and one poma  lift,  all in working
condition.  Approximately  90%  of  the  ski  trails  are  covered  by  existing
snowmaking  equipment and  approximately  80% of the trails are  illuminated for
night  skiing.  Existing  structures on the  properties  include a 20 room motel
building,  a lodge and  restaurant  building,  ski school  building,  ski rental
shops, and storage buildings.

ITEM 3. LEGAL PROCEEDINGS:    None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:     None.


                                       16
<PAGE>


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's  Units were quoted on the Nasdaq  SmallCap Stock Market until
April 7, 1997,  at which time Nasdaq  delisted  the  Company's  securities.  The
Company's Units are currently  quoted on the OTC Bulletin  Board.  The following
table sets forth representative high and low closing bid quotes as reported by a
market  maker for the  Company's  Units  during the period  which the  Company's
securities  were listed on the Nasdaq  SmallCap  Market  (August 1, 1996 through
April 6, 1997) and  representative  high and low closing prices as reported by a
market  maker for the  Company's  Units  during the period  which the  Company's
securities were listed on the OTC Bulletin Board (April 7, 1997 through June 30,
1998). Bid and price quotations  reflect prices between dealers,  do not include
resale  mark-ups,   mark-downs,  or  other  fees  or  commissions,  and  do  not
necessarily represent actual transactions.

                                                   Units
Calendar Period                                     Low             High
---------------                                     ---             ----
08/01/96 - 09/30/96                                1.00            11.75
10/01/96 - 12/31/96                                 .25             2.00
01/01/97 - 03/31/97                                 .19              .87
04/01/97 - 04/06/97(1)                              .69              .69
04/07/97 - 06/30/97(1)                              .25              .50
07/01/97 - 09/30/97                                 .06              .26
10/01/97 - 12/31/97                                 .09              .25
01/01/98 - 03/31/98                                 .16              .25
04/01/98 - 06/30/98                                 .15              .16
----------

(1)  Effective  April  7,  1997,  Nasdaq  delisted  the  Company's   securities;
therefore,  same have not been traded on Nasdaq since said date.  As of April 7,
1997, the Company's securities have been traded on the OTC Bulletin Board.

     Each Warrant  entitles the registered  holder thereof to purchase one share
of Common  Stock at a price of $5.25 per share at any time  through  October 27,
2001. The Warrants are redeemable by the Company at any time,  commencing on the
separation date, upon 30 days' notice at a redemption price of $.05 per Warrant,
provided  that the closing  bid  quotation  of the Common  Stock for at least 30
consecutive  trading days ending on the third day prior to the date on which the
Company  gives  notice  has  been at  least  170% of the  exercise  price of the
Warrants being redeemed.

     As of July 7,  1998,  there  were 109  holders  of record of the  Company's
Common Stock, and there are  approximately  530 additional  beneficial owners of
shares of Common  Stock held in street name.  As of July 7, 1998,  the number of
outstanding shares of the Company's Common Stock was 9,991,965.


                                       17
<PAGE>


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

Results of operations:

     During  the  fiscal  year  ended  March  31,  1998,   total  revenues  were
approximately  $1,141,000  as compared  to  $950,000  during  fiscal  1997.  The
increase  of  $191,000  was  attributable  mainly to an  increase in revenues of
approximately  $253,000  derived  after  the  opening  of the  Edmonton,  Canada
facility in August 1997 net of a decrease of  approximately  $48,000 in sales of
merchandise at the Staten Island facility.

     Operating  expenses  for fiscal 1998  increased by  approximately  $495,000
compared to those for fiscal  1997.  This  increase was  attributable  mainly to
operating costs incurred at the new Edmonton facility of approximately  $262,000
and a net increase in operating costs totaling  approximately  $233,000 incurred
at the Staten  Island  facility.  The net  increase in Staten  Island  costs was
attributable mainly to: insurance -- $50,000; depreciation -- $70,000; and other
operating costs -- $113,000.

     Cost of merchandise sold amounted to approximately 97% of merchandise sales
during  fiscal  1998  compared  to 67% during  fiscal  1997.  The  increase  was
attributable mainly to inventory valuation adjustments.

     Selling,  general and administrative  expenses for fiscal 1998 increased by
approximately  $200,000  compared to fiscal 1997. This increase was attributable
mainly to expenses  incurred at Edmonton and East  Brunswick,  the Company's new
facilities,  of $57,000 and $26,000,  respectively,  and a net increase in costs
incurred  at the Staten  Island  facility  of  approximately  $117,000.  The net
increase in Staten  Island  costs was  attributable  to  increases  in officers'
salaries of $24,000 and professional fees of $100,000, net of decreases in other
selling, general and administrative expenses of approximately $7,000.

     During  fiscal  1998,   there  was  a  net  increase  in  other  income  of
approximately  $42,000 mainly as a result of a  nonrecurring  realized gain from
the sale of marketable securities of approximately $53,000.

     During  fiscal  1998,  the  Company  incurred  a net loss of  approximately
$985,000  (or $.39  per  share)  as  compared  with a net loss of  approximately
$510,000 (or $.21 per share) during fiscal 1997. The increase in the net loss of
approximately  $475,000  in fiscal  1998  reflects  a net loss of  approximately
$92,000  incurred at the Company's new facilities and the increases in operating
expenses,  cost of  merchandise  sold and  selling,  general and  administrative
expenses incurred at the Staten Island facility described above.

Financial condition:

     During  fiscal 1997,  the Company  received  net proceeds of  approximately
$3,102,000  from its  initial  public  offering  of units of  common  stock  and
warrants.  During  fiscal  1998,  net  cash  used  in  the  Company's  operating
activities totaled approximately  $762,000 as compared to $592,000 during fiscal
1997.  The  increase  in cash  used in  operating  activities  of  approximately
$170,000 was primarily attributable to the losses incurred at the Company's


                                       18
<PAGE>


new Edmonton  facility  and  increases  in  operating  and selling,  general and
administrative expenses incurred at the Staten Island facility.

     The Company  acquired  property and  equipment  at a cost of  approximately
$404,000  and  $303,000  during  fiscal  1998 and  1997,  respectively.  It used
approximately  $79,000 to pay capital lease  obligations and $24,000 to purchase
treasury  stock  during  fiscal 1998 and  approximately  $223,000 to pay capital
lease obligations and notes and $90,000 to purchase treasury stock during fiscal
1997.

     At March 31,  1998,  the  Company  had  working  capital  of  approximately
$849,000 and stockholders' equity of approximately  $2,212,000.  As explained in
Item 1 and Note 10 of the notes to the consolidated financial statements, on May
28, 1998, BBS Holdings obtained control of the Company by acquiring 8,152,000 of
the outstanding  shares (or approximately  81.5%) of the Company's common stock,
including  7,230,000 shares issued directly to BBS Holdings in exchange for 100%
of the outstanding shares of the common stock of PCC. PCC owns a 50% interest in
Prestige,  a newly-formed company that commenced jewelry marketing operations in
May 1998,  and all rights,  title and  interest to the  contract to purchase the
lease and certain real and personal property  incorporated in the Cortina Valley
Ski Resort, which had been closed during the 1997/1998 ski season.

     Management  expects  that the Company will need  capital  resources  during
fiscal 1999 to fund significant currently planned activities as described below:

o    Approximately  $540,000 to purchase  the Cortina  lease rights and property
     (management anticipates this purchase will be consummated in July 1998) and
     approximately  $300,000 for the improvements and working capital which will
     be necessary to make the facility operational for the 1998/1999 ski season.

o    Approximately  $800,000 for the improvements and working capital which will
     be  necessary  to  make  the  East  Brunswick,   New  Jersey  "fun  bubble"
     operational  (management  anticipates  this facility will be operational by
     October 1998).

o    Additional  capital  resources to fund the  operations at the Staten Island
     and Edmonton "fun bubbles" and the inventory  purchasing  and other working
     capital needs of Prestige during fiscal 1999;  however,  management  cannot
     presently estimate the amounts that will be needed.

     In addition to using the working  capital  available  as of March 31, 1998,
management  expects,  but cannot assure, that the Company will be able to obtain
additional  capital  resources to meet its requirements  during fiscal 1999 from
the sources described below:

o    A loan facility with outstanding borrowings secured by the Cortina Mountain
     Ski Resort.

o    Borrowings  under a  factoring  agreement  secured by  Prestige's  accounts
     receivable.

o    Unsecured loan facilities.

o    Equipment leasing transactions.

     The Company's "fun bubble" operations have not, and management  anticipates
that the Company's jewelry operations will not, involve  sophisticated  computer
applications;  therefore,  management does not expect that the Company will have
any  significant  costs or problems  related to "Year 2000 Issues"  (issues with
respect to possible errors or computer  failures by or at the Year 2000). If the
Cortina lease rights are purchased, the Company will be operating a


                                       19
<PAGE>


20 room motel, a restaurant,  a ski school and ski rental shops.  Management has
not made any  assessment  of any Year 2000 Issues that may arise from future ski
resort operations.

Effects of acquisition of PCC and transfer of control of the Company:

     Since the  acquisition  of PCC and certain  other  concurrent  transactions
resulted in the transfer of an  approximate  81.5%  controlling  interest in the
Company to BBS Holdings,  the  acquisition of PCC by the Company will be treated
as a  purchase  business  combination,  effective  as  of  May  28,  1998,  that
management believes will have to be accounted for as a "reverse  acquisition" in
which the  Company  will be the legal  acquirer  and PCC will be the  accounting
acquirer.  Accordingly,  the assets and liabilities of PCC will be accounted for
at their  historical  carrying  values  and the assets  and  liabilities  of the
Company  will be valued at their fair  values as of May 28, 1998 with the excess
of BBS  Holdings'  cost over the fair  value of the  Company's  assets,  if any,
allocated to goodwill. In addition,  the historical  consolidated  statements of
operations  issued  subsequent  to May 28, 1998 will  include  the  consolidated
results  of  operations  of PCC and the  Company  for any  portion of the period
subsequent to May 28, 1998, but only the  consolidated  results of operations of
PCC for  any  portion  of the  period  prior  to May 28,  1998;  therefore,  the
consolidated statements of operations in future reports may not be comparable to
those included in prior reports issued by the Company.

ITEM 7. FINANCIAL STATEMENTS

     See attached financial statements.

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

     On April 24,  1998,  the  Company  and  Richard A.  Eisner &  Company,  LLP
mutually  agreed that  Richard A.  Eisner & Company,  LLP would no longer be the
Company's  auditors.  The dismissal of Richard A. Eisner & Company,  LLP was not
due to any  discrepancies  or  disagreements  between the Company and Richard A.
Eisner &  Company,  LLP on any matter of  accounting  principles  or  practices,
financial statement disclosure,  or auditing scope or procedure,  and Richard A.
Eisner & Company,  LLP's report on the financial  statements for the fiscal year
ended  March 31,  1997,  dated  April 30 and May 21,  1997,  did not contain any
adverse  opinions or disclaimers of opinion.  Nor was such report modified as to
uncertainty,  audit scope, or accounting principles.  During the two most recent
fiscal years and any  subsequent  interim  period through the date of Richard A.
Eisner & Company, LLP's dismissal,  the Company and Richard A. Eisner & Company,
LLP had no disagreements or "reportable events."

     The  Company's  Board of Directors  approved the  acceptance  of Richard A.
Eisner & Company, LLP's release.

     On April 30, 1998, the Company's Board of Directors approved the engagement
of J.H. Cohn LLP as its principal  accountant to audit its and its subsidiaries'
financial statements as of and for the fiscal year ended March 31, 1998.


                                       20
<PAGE>


                                    PART III

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

Executive Officers and Directors

         The executive Officers and Directors of the Company are as follows:

      NAME                  AGE                POSITION
      ----                  ---                --------

 Herbert  P. Marks          66        President, Chief Executive Officer,
                                       and Director

 Russell C. Murawski        49        Chief Financial Officer and Treasurer

 Daniel Catalfumo           41        Chief Operating Officer and Director

 Anthony DiMatteo           47        Executive Vice President of Sales
                                       and Marketing and Director

 Richard Rosso              41        Executive Vice President of Entertainment,
                                       Secretary, and Director

     All Directors hold office until the next annual meeting of  stockholders or
until their  successors are duly elected and qualified.  The Executive  Officers
are elected  annually by the Board of Directors,  serve at the discretion of the
Board of Directors,  and hold office until their successors are duly elected and
qualified.  Vacancies on the Board of Directors  may be filled by the  remaining
Directors.

     Herbert P. Marks was elected as a Director and  appointed as President  and
Chief Executive  Officer of the Company in May 1998. Since March 1997, Mr. Marks
has run The Marks Group,  L.L.C. a firm created by Mr. Marks to offer consulting
services to lending  institutions  and businesses.  The services  offered by The
Marks  Group,  L.L.C.   include  financial  and  management   consulting,   loan
restructuring  and  placement,  cash  control,  asset  liquidation,   collateral
evaluations,  asset  monitoring  support,  on-site field  examinations,  and the
liquidation of assets securing loans. From July 1993 to March 1997 Mr. Marks was
the  Director of Marketing  in charge of new  business  development  for Century
Business  Credit Corp.  Mr.  Marks shall devote 90% of his business  time to the
affairs of the Company.

     Russell C. Murawski was appointed Chief Financial  Officer and Treasurer in
May 1998.  Since 1993,  Mr.  Murawski has been  President of Princeton  Business
Consultants,  Inc., a capital,  banking, and financial consulting company, which
he founded. Mr. Murawski shall devote 90% of his business time to the affairs of
the Company.

     Daniel  Catalfumo has been a Director of the Company since its inception in
1993.  From the  Company's  inception  until May 1998, he was also the Company's
Chief Executive Officer


                                       21
<PAGE>


and  President.  In May  1998,  upon the  appointment  of  Herbert  P.  Marks as
President,  Mr.  Catalfumo was named Chief Operating  Officer and Executive Vice
President.  From 1982 to November 1994, Mr. Catalfumo was the sole  shareholder,
Officer,  and Director of Professional  Tile Contracting Co., a tile contracting
company located in Brooklyn, New York.

     Anthony  DiMatteo  was elected as a director  of the Company and  appointed
Executive  Vice  President of Sales and Marketing in May 1998.  Since 1972,  Mr.
DiMatteo  served as Executive  Vice  President of Sales and  Marketing  for Four
Color Litho,  Inc., a lithograph  plating  facility  servicing the financial and
commercial printing community of New York and New Jersey. From 1992 to 1995, Mr.
DiMatteo  also  served as a director  of  Leadville  Milling & Mining  Corp.,  a
Colorado based gold and silver mining company. Mr. DiMatteo voluntarily resigned
his  directorship in 1995. Mr. DiMatteo shall devote 90% of his business time to
the affairs of the Company.

     Richard  Rosso has been the  Secretary  and a Director of the Company since
its inception in 1993. From the Company's  inception until May 1998, he was also
Treasurer.   In  May  1998  he  was  appointed   Executive   Vice  President  of
Entertainment and  Administrative  Coordinator.  From 1983 to November 1994, Mr.
Rosso was the owner of Dynamic  Dental Labs located in Brooklyn,  New York.  Mr.
Rosso operated  Dynamic Dental Labs, which serviced over 1,000 area dentists for
over ten years.

     As permitted  under the New York Business  Corporations  Law, the Company's
Certificate of Incorporation  eliminates the personal liability of the Directors
to the Company or any of its  shareholders  for  damages  for  breaches of their
fiduciary  duties as Directors.  As a result of the inclusion of such provision,
stockholders may be unable to recover damages against Directors for negligent or
grossly  negligent  actions which  Directors may take or for Directors'  actions
which violate their  fiduciary  duties.  The inclusion of this  provision in the
Company's  Certificate of Incorporation  may reduce the likelihood of derivative
litigation against Directors and other types of shareholder litigation.

Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
the Company's  Officers,  Directors,  and any persons who  beneficially own more
than ten (10%) percent of a registered class of the Company's equity  securities
to file reports of securities  ownership and changes in such  ownership with the
Securities and Exchange Commission  ("SEC").  Officers,  Directors,  and greater
than ten percent beneficial owners also are required by rules promulgated by the
SEC to furnish the Company with copies of all Section  16(a) forms they file. No
person who,  during the year ended March 31, 1998, was a Director,  Officer,  or
beneficial  owner of more than ten percent of the Company's  Common Stock (which
is the only class of  securities of the Company  registered  under Section 12 of
the Securities Exchange Act of 1934 ("the Act") failed to file on a timely basis
reports  required by Section 16 of the Act during the most recent fiscal year or
prior years. The foregoing is based solely upon the Company's review, during the
most recent  fiscal year, of (i) Forms 3 and 4 as furnished to the Company under
Rule 16a-3(d)  under the Act; (ii) Forms 5 and amendments  thereto  furnished to
the  Company  with  respect  to its most  recent  fiscal  year;  and  (iii)  any
representation  received by the Company from any reporting person that no Form 5
is required, except as described herein.


                                       22
<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation

     The following provides certain information concerning all Plan and Non-Plan
(as defined in Item 402 (a)(6) of Regulation S-B)  compensation  awarded or paid
by the Company during the years ended March 31, 1998,  1997, and 1996 to each of
the named Executive Officers of the Company.

                           Summary Compensation Table
                               Annual Compensation
<TABLE>
<CAPTION>
                                                 Annual Compensation                                 Long-Term Compensation

                                                                                                    Restricted      Shares
Name and Principal            Year End                                         Other Annual           Stock       underlying
Position                      March 31        Salary ($)       Bonus ($)       Compensation ($)      Award(s)($)   Options (#)  
--------                      --------        ----------       ---------       ----------------      -----------   -----------  
<S>                              <C>          <C>             <C>                <C>                <C>            <C>
Daniel Catalfumo                 1998         121,000         $ 1,000(1)         $12,000(2)         $18,700(3)         --
President and                    1997         110,000         $ 1,000(1)         $12,000(2)                        30,000(4)
 Director                        1996          75,489

Richard Rosso                    1998         121,000         $ 1,000(1)         $12,000(2)         $18,700(3)         --
 Vice President, Sec.,           1997         110,000         $ 1,000(1)         $12,000(2)                        30,000(4)
 Treas., and Director            1996          86,553
</TABLE>

----------
(1)  In December 1996, and December 1997, the Company issued a $1,000 cash bonus
     to each Officer.  The Company did not meet the financial  requirements  for
     bonuses to be issued under their employment agreements.

(2)  The  Company  leases  automobiles,  at  approximately  $1,000 per month for
     Messrs. Catalfumo and Rosso.

(3)  On December 20,  1997,  the Company  granted  Messrs.  Catalfumo  and Rosso
     100,000 shares of restricted  Common Stock. The value of such stock on that
     date was ($.187),  as reported by a market maker on December 17, 1997,  the
     most recent day prior to December  20th on which the  Company's  securities
     traded.

(4)  In December 1996, the Company granted  Messrs.  Catalfumo and Rosso options
     each to purchase 5,000 shares of the Company's  Common Stock at an exercise
     price of $0.62 per  share.  In March  1997,  the  Company  granted  Messrs.
     Catalfumo and Rosso options each to purchase 25,000 shares of the Company's
     Common  Stock at an exercise  price of $0.69 per share.  Such  options were
     voluntarily cancelled in June 1998.


                                       23
<PAGE>


                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (Individual Grants)
<TABLE>
<CAPTION>
===================================================================================================================
                                                 Individual Grants
===================================================================================================================
(a)                             (b)                       (c)                  (d)                  (e)

                                                          % of Total            
                                # of Securities           Options/SAR's
                                underlying                Granted to           Exercise or
                                Options/SAR's Granted     Employees    in      Base                 Expiration Date
Name                                                      Fiscal Year          Price ($/SH)
-------------------------------------------------------------------------------------------------------------------
<S>                               <C>                          <C>                <C>                   <C>   
Richard Rosso                     25,000(1)                    50%                $.69                  03/31/02
                                   5,000(1)                                       $.62                  12/30/01
===================================================================================================================
Daniel Catalfumo                  25,000(1)                    50%                $.69                  03/31/02
                                   5,000(1)                                       $.62                  12/30/01
===================================================================================================================
</TABLE>

(1)  In June 1998, these options were voluntarily cancelled.
                                                                             

     The following table contains  information  with respect to employees of the
Corporation concerning options held as of March 31, 1997.


               AGGREGATED OPTION/SAR EXERCISE IN LAST FISCAL YEAR
                          AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
===================================================================================================================
(a)                             (b)                 (c)                  (d)                    (e)
-------------------------------------------------------------------------------------------------------------------
                                                                                                Value of
                                                                         Number of              Unexercised
                                                                         Unexercised            In-The-Money
                                                                         Options/SAR's at       Options/SAR's
                                Shares Acquired on                       FY-End (#)             at FY-End ($)
                                Exercise (#)        Value Realized ($)   Exerciseable/          Exerciseable/
Name                                                                     Unexerciseable         Unexerciseable (1)
-------------------------------------------------------------------------------------------------------------------
<S>                                   <C>                    <C>         <C>                    <C>
                                                                         25,000/0(2)              0/0
Richard Rosso                         --                     --           5,000/0(2)            350/0
===================================================================================================================
                                                                         25,000/0(2)              0/0
Daniel Catalfumo                      --                     --           5,000/0(2)            350/0
===================================================================================================================
</TABLE>

(1)  Based upon the closing price for the Common Stock on March 31, 1997 ($.69),
     as reported by a market maker.

(2)  In June 1998, these options were voluntarily cancelled.

Employment and Consulting Agreements

     In April 1995, the Company entered into employment  agreements with both of
its Officers,  Mr. Catalfumo and Mr. Rosso. Such Officers are employed full time
by the Company


                                       24
<PAGE>


and pursuant to the terms of their agreements,  shall receive  compensation at a
rate of  $100,000  annually,  with  yearly  escalations  during  the term of the
agreement.  The  agreements  are of five year duration and expire in April 2000.
Pursuant  to the terms of the  agreements,  Messrs.  Catalfumo  and Rosso are to
receive  yearly  bonuses  in an  amount  equal to (i) five  percent  (5%) of the
Company's first $200,000 of after-tax profit; (ii) seven and one half percent (7
1/2%) of the Company's next $200,000 to $400,000 of after-tax profit;  and (iii)
ten percent (10%) of any after-tax profit over $400,000.

     In December  1997,  the Company  entered into a consulting  agreement  with
Herbert P. Marks and Russell C.  Murawski to provide  financial  and  management
advice  and  counsel  to  the  Company.  Through  June  15,  1998,  the  Company
compensated Messrs. Marks and Murawski $45,000 and $9,182,  respectively,  under
the  agreement.  Subsequent to the  agreement,  Messrs.  Marks and Murawski were
named as Officers of the Company.  Accordingly,  the  consulting  agreement  was
terminated  in June  1998.  Beginning  July  1998,  the  Company  will  commence
compensating  Messrs.  Marks and  Murawski  for their  services  to the  Company
through an annual salary.

1995 Senior Management Incentive Plan

     In February  1995,  the Board of  Directors  adopted the Senior  Management
Incentive Plan ("the Management Plan") which was adopted by shareholder consent.
The  Management  Plan  provides for the issuance of up to 150,000  shares of the
Corporation's  Common Stock in connection with the issuance of stock options and
other stock purchase rights to executive Officers and other key employees of the
Company.

     The adoption of the  Management  Plan was prompted by the Company's  desire
(i) to attract and retain qualified personnel,  whose performance is expected to
have  a  substantial  impact  on  the  Company's  long-term  profit  and  growth
potential,  by encouraging  those persons to acquire equity in the  Corporation;
and (ii) to provide the Board with sufficient flexibility regarding the forms of
incentive  compensation which the Company will have at its disposal in rewarding
executive  Officers,  key  employees,   and  consultants  without  unnecessarily
depleting  the  Company's  cash  reserves.  The  Management  Plan is designed to
augment the Company's existing  compensation  programs and is intended to enable
the Company to offer  executives,  key  employees,  and  consultants  a personal
interest in the Company's  growth and success through the grant of stock options
and/or other rights  pursuant to the Management  Plan. It is  contemplated  that
only those executive  management employees (generally the Chairman of the Board,
Vice Chairman, Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer,  President,  and Vice  President of the Company),  key  employees,  and
consultants  who perform  services of special  importance to the Company will be
eligible  to receive  compensation  under the  Management  Plan.  As of the date
hereof,   the  Company's  Officers  and  Directors  number  only  five:  Messrs.
Catalfumo, DiMatteo, Marks, Murowski, and Rosso.

     A total of 150,000  shares of Common  Stock had been  reserved for issuance
under the  Management  Plan.  Also pursuant to the Management  Plan,  options to
purchase an aggregate of 30,000 shares were granted to each of Messrs. Catalfumo
and Rosso in December  1996 and March 1997.  In June 1998,  these  options  were
voluntarily terminated.  It is anticipated that awards made under the Management
Plan will be subject to three year vesting periods, although the vesting periods
are subject to the discretion of the Administrator.


                                       25
<PAGE>


     Unless  otherwise  indicated,  the Management Plan is to be administered by
the Board of  Directors  or a committee  of the Board,  if such a  committee  is
appointed  for this  purpose (the Board or such  committee,  as the case may be,
shall be  referred  to in the  following  description  as "the  Administrator").
Subject to the specific  provisions of the Management  Plan,  the  Administrator
will have the discretion to determine (i) the recipients of the awards; (ii) the
nature of the awards to be granted; (iii) the dates such awards will be granted;
(iv) the terms and conditions of the awards;  and (v) the  interpretation of the
Management  Plan,  except that any award  granted to any employee of the Company
who is also a Director of the  Company  shall also be subject - in the event the
persons  serving as members of the  Administrator  of the Management Plan at the
time such  award is  proposed  to be  granted do not  satisfy  the  requirements
regarding the participation of  "disinterested  persons" set forth in Rule 16b-3
("Rule  16b-3")  promulgated  under the  Exchange  Act - to the  approval  of an
auxiliary  committee  consisting  of not  less  than  two  individuals  who  are
considered  "disinterested  persons" as defined under Rule 16b-3. As of the date
hereof,  the Company  has not yet  determined  who will serve on such  auxiliary
committee, if one is required.

     The Management  Plan  generally  provides  that,  unless the  Administrator
determines otherwise,  each option or right granted shall become exerciseable in
full upon certain  "change of control"  events as  described  in the  Management
Plan,  or  subject  to any right or option  granted  under the  Management  Plan
(through  merger,   consolidation,   reorganization,   recapitalization,   stock
dividend,  dividend  in  property  other than  cash,  stock  split,  liquidating
dividend,  combination  of  shares,  exchange  of  shares,  change in  corporate
structure, or otherwise), the Administrator will make appropriate adjustments to
such  plans  and the  classes,  number of  shares,  and price per share of stock
subject to outstanding rights or options.  Generally, the Management Plan may be
amended by action of the Board of Directors, except that any amendment which (i)
would increase the total number of shares subject to such plan;  (ii) extend the
duration  of such plan;  (iii)  materially  increase  the  benefits  accruing to
participants  under such plan; or (iv) change the category of persons who can be
eligible for awards under such plan, must be approved by the affirmative vote of
a majority of the  shareholders  entitled to vote. The  Management  Plan permits
awards to be made thereunder until November 2004.

     Directors  who  are not  otherwise  employed  by the  Company  will  not be
eligible for  participation in the Management Plan. The Management Plan provides
for  four  types  of  awards:  stock  options,  incentive  stock  rights,  stock
appreciation   rights  (including  limited  stock  appreciation   rights),   and
restricted stock purchase agreements.


                                       26
<PAGE>


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following  table sets forth certain  information  at June 30, 1998 with
respect to the  beneficial  ownership  of Common  Stock held by (i) each  person
known by the  Company  to be the owner of 5% or more of the  outstanding  Common
Stock;  (ii) by each  Director;  and (iii) by all  Officers  and  Directors as a
group. Except as otherwise indicated below, each named beneficial owner has sole
voting and investment power with respect to the shares of Common Stock listed:

<TABLE>
<CAPTION>
Title               Name and Address                        Amount and Nature                  Percentage of
of Class           of Beneficial Owner                   of Beneficial Ownership (1)             Class (2)
--------           -------------------                   ---------------------------             ---------
<S>               <C>                                             <C>                              <C> 
common            Daniel Catalfumo (3)                              151,365                         1.5%
stock             c/o Fun Tyme Concepts, Inc.
                  290 Wild Avenue
                  Staten Island, New York 10314

common            Richard Rosso (4)                                   6,278                         *
stock             c/o Fun Tyme Concepts, Inc.
                  290 Wild Avenue
                  Staten Island, New York 10314

common            Herb Marks                                              0                         *
stock             c/o Fun Tyme Concepts, Inc.
                  290 Wild Avenue
                  Staten Island, New York 10314

common            Anthony DiMatteo (5)                                    0                         *
stock             c/o Fun Tyme Concepts, Inc.
                  290 Wild Avenue
                  Staten Island, New York 10314

common            BBS Holdings, LLC                               8,152,000                        81.6%
stock             c/o Fun Tyme Concepts, Inc.
                  290 Wild Avenue
                  Staten Island, New York 10314

common            All Officers and Directors                        157,643                         1.6%
stock             as a group (5 persons) (3)-(5) 
</TABLE>

*    Less than 1%

(1)  Unless  otherwise noted, all of the shares shown are held by individuals or
     entities  possessing sole voting and investment  power with respect to such
     shares.  Shares not outstanding but deemed  beneficially owned by virtue of
     the right of a person  to  acquire  them  within  60 days,  whether  by the
     exercise of options or warrants,  are deemed outstanding in determining the
     number of shares beneficially owned by such person or group.

(2)  The "Percentage  Beneficially  Owned" is calculated by dividing the "Number
     of  Shares  Beneficially  Owned"  by the sum of (i) the  total  outstanding
     shares of Common  Stock of the  Company,  and (ii) the  number of shares of
     Common  Stock that such  person  has the right to  acquire  within 60 days,
     whether by exercise of options or warrants.  The  "Percentage  Beneficially
     Owned" does not reflect shares beneficially


                                       27
<PAGE>


     (footnotes continued from previous page)

     owned by virtue of the right of any person, other than the person named and
     affiliates  of the  person,  to  acquire  them  within 60 days,  whether by
     exercise of options or warrants.

(3)  Includes an aggregate of 151,365 shares of Common Stock owned by members of
     Mr.  Catalfumo's  family,  of  which  Mr.  Catalfumo  disclaims  beneficial
     ownership.  Does not include the shares owned by BBS  Holdings,  in which a
     trust  of  which  Mr.Catalfumo  is  the  grantor  and  his  family  is  the
     beneficiary, owns a 10% interest.

(4)  Includes  6,278 shares of Common  Stock owned by Mr.  Rosso's  parents,  of
     which Mr. Rosso disclaims beneficial ownership. Does not include the shares
     owned by BBS  Holdings,  in which a trust of which Mr. Rosso is the grantor
     and his family is the beneficiary, owns a 10% interest.

(5)  Mr.  DiMatteo owns 20% of BBS  Holdings,  the majority  stockholder  of the
     Company.

(6)  Messrs. Catalfumo,  Rosso & DiMatteo are managers of BBS Holdings, of which
     Messrs.  Catalfumo  and  Rosso  represent  trusts  in  which  they  are the
     trustees.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In May 1998, prior to the exchange of shares in the acquisition of Play Co.
Capital  Corp.,  Daniel  Catalfumo  and Richard Rosso each  transferred  461,000
shares  of  the  Company's   Common  Stock  to  CAT  L.L.C.   and  RICH  L.L.C.,
respectively,  companies formed by Daniel Catalfumo and Richard Rosso,  Officers
of the Company. Additionally,  trusts formed by Messrs. Catalfumo and Rosso each
acquired 10% of BBS Holdings, LLC upon consummation of the Acquisition and their
transfer of shares of the Company's Common Stock to BBS Holdings, LLC.

     In December 1997, the Company issued 100,000 shares of Common Stock to each
of Messrs. Catalfumo and Rosso as a bonus.

     In December 1996, the Company granted  Messrs.  Catalfumo and Rosso options
each to purchase 5,000 shares of the Company's Common Stock at an exercise price
of $0.62 per share.  In addition,  the Company  issued $1,000 bonuses to each of
Messrs.  Rosso  and  Catalfumo.  In March  1997,  the  Company  granted  Messrs.
Catalfumo  and Rosso each  options to purchase  25,000  shares of the  Company's
Common Stock at an exercise price of $0.69 per share.  Both sets of options were
exerciseable for a period of five years commencing on the date of grant. In June
1998, both sets of options were voluntarily cancelled.

     From February  through April 1997, the Company  repurchased an aggregate of
163,535  shares of its Common Stock at a total cost of  $113,660.01.  The shares
were returned to treasury as authorized but unissued.

     For information on the Company's compensation arrangements, see "Employment
and Consulting Agreements."


                                       28
<PAGE>


                                     PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

     The Company  filed a Form 8-K on June 12, 1998 which was amended on July 8,
1998  detailing  the  Company's  acquisition  of PCC and the rights to  purchase
Cortina.

     All exhibits except those  designated with an asterisk (*), which are filed
herewith,  and those designated with two asterisks (**) which shall be filed via
Form SE, have  previously  been filed with the Commission in connection with (i)
the Company's  Registration  Statement on form SB-2 under File No.  33-80931-NY,
(ii) the Company's  Form 10-KSB for the year ended March 31, 1997, and (iii) the
Company's  Form 8-K  filed  on June 12,  1998  and as  amended  on July 8,  1998
pursuant to 17 C.F.R 230.411, and are incorporated by reference herein.

 3.1      -    Certificate of Incorporation of the Company filed April 19, 1993.
               See (i) above.
 
 3.2      -    Certificate of Amendment to the Certificate of  Incorporation  of
               the Company filed May 19, 1995. See (i) above.

 3.2(a)   -    Certificate of Amendment to the Certificate of  Incorporation  of
               the Company dated February 7, 1996. See (i) above.

 3.3      -    By-Laws of the Company. See (i) above.

 4.1      -    Specimen of Common Stock Certificate. See (i) above.

 4.2      -    Specimen of Common Stock Purchase  Warrant  Certificate.  See (i)
               above.

 4.5      -    Form of Common Stock Purchase Warrant Agreement. See (i) above.

10.2      -    Employment Agreement of Daniel Catalfumo. See (i) above.

10.3      -    Employment Agreement of Richard Rosso. See (i) above.

10.4      -    Lease Agreement and amendments one through four thereto,  between
               the Company and Block 2467 Lot 1 Associates. See (i) above.

10.5      -    The Company's Senior Management Incentive Plan. See (i) above.

10.22     -    Lease Agreement by and between  Manufacturer's  Lease Company and
               the Company and personal  guarantees of the  Company's  officers.
               (Previously  filed as Exhibit 10.2 in the  Company's  Form 10-KSB
               for the year ended March 31, 1997).

10.23     -    Lease  agreement  for  East  Brunswick   facility  and  Amendment
               thereto.  (Previously filed as Exhibit 10.3 in the Company's Form
               10-KSB for the year ended March 31, 1997).  10.23(a)* - Amendment
               to lease agreement for East Brunswick facility.

10.24     -    Lease Agreement for Edmonton Canada facility.  (Previously  filed
               as Exhibit 10.4 in the  Company's  Form 10-KSB for the year ended
               March 31, 1997).

10.25     -    Stock Purchase Agreement among Fun Tyme Concepts,  Inc.; Play Co.
               Capital  Corp.;  BBS Holdings,  LLC; the Members of BBS Holdings,
               LLC; Cat LLC; and Rich LLC.  (Previously filed as Exhibit 10.5 in
               the Company's Form 8-K filed June 12, 1998).

10.26     -    Operating  Agreement of Prestige  Fine  Jewelry LLC.  (Previously
               filed as Exhibit  10.6 in the  Company's  Form 8-K filed June 12,
               1998).

10.27     -    Exclusive Sales Agreement  between  Prestige Fine Jewelry LLC and
               Prestige  Chain,  Inc.  (Previously  filed as Exhibit 10.7 in the
               Company's Form 8-K/A filed July 8, 1998).


                                       29
<PAGE>




10.28     -    Sales  Agreement  between  Prestige  Fine  Jewelry  LLC and  J.K.
               Limited,  Inc. (Previously filed as Exhibit 10.8 in the Company's
               Form 8-K/A filed July 8, 1998).

10.29     -    Contract to purchase  Cortina  Mountain  Ski Resort.  (Previously
               filed as Exhibit 10.9 in the  Company's  Form 8-K/A filed July 8,
               1998).

10.30     -    Attorney  representation  confirming  modification of Contract to
               purchase Cortina Mountain Ski Resort. See (iii) above

10.31**   -    Factoring Agreement with Prestige Capital Corporation. 

 27.0*    -    Financial Data Schedule.


                                       30
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES


                                    I N D E X
                                    ---------

                                                                          PAGE
                                                                          ----
REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS                                 F-2/4

CONSOLIDATED BALANCE SHEET
     MARCH 31, 1998                                                       F-5

CONSOLIDATED STATEMENTS OF OPERATIONS
     YEARS ENDED MARCH 31, 1998 AND 1997                                  F-6

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
     YEARS ENDED MARCH 31, 1998 AND 1997                                  F-7

CONSOLIDATED STATEMENTS OF CASH FLOWS
     YEARS ENDED MARCH 31, 1998 AND 1997                                  F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                               F-9/19




                                      * * *


                                      F-1
<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors
Fun Tyme Concepts, Inc.

We  have  audited  the  accompanying  consolidated  balance  sheet  of FUN  TYME
CONCEPTS,  INC.  AND  SUBSIDIARIES  as  of  March  31,  1998,  and  the  related
consolidated statements of operations,  changes in stockholders' equity and cash
flows for the year then ended. 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 audit. We did not audit the financial
statements  of  Fun  Tyme  of  Edmonton,   Inc.,  a  wholly-owned   consolidated
subsidiary,  which  statements  reflect total assets of $336,320 as of March 31,
1998 and total  revenues of $253,403 for the year then ended.  Those  statements
were audited by other  auditors  whose report has been  furnished to us, and our
opinion, insofar as it relates to the amounts included for Fun Tyme of Edmonton,
Inc., is based solely on the report of the other auditors.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.

In our opinion,  the 1998 consolidated  financial  statements  referred to above
present fairly,  in all material  respects,  the financial  position of Fun Tyme
Concepts,  Inc.  and  Subsidiaries  as of March 31, 1998,  and their  results of
operations and cash flows for the year then ended,  in conformity with generally
accepted accounting principles.

               
                                                        J. H. COHN LLP

Roseland, New Jersey
June 11, 1998, except
  for Note 10 as to which
  the date is June 29, 1998


                                      F-2
<PAGE>


AUDITORS' REPORT

To the Shareholders
Fun Tyme of Edmonton, Inc.

We have audited the balance sheet of FUN TYME OF EDMONTON,  INC. as of March 31,
1998,  and the statements of deficit,  income and changes in financial  position
for  the  eight  months  then  ended.   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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
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.

In our opinion,  these  financial  statements  present  fairly,  in all material
respects,  the financial position of Fun Tyme of Edmonton,  Inc. as of March 31,
1998,  and the  results  of its  operations  and the  changes  in its  financial
position for the eight months then ended in accordance  with generally  accepted
accounting principles.


                                                GARDINER KARBANI AUDY & PARTNERS
                                                CHARTERED ACCOUNTANTS

June 11, 1998
Edmonton, Alberta


                                      F-3
<PAGE>


REPORT OF INDEPENDENT AUDITORS

Board of Directors
Fun Tyme Concepts, Inc.
Staten Island, New York

We have audited the accompanying consolidated statements of operations,  changes
in  stockholders'  equity  and  cash  flows  of  Fun  Tyme  Concepts,  Inc.  and
subsidiaries for the year ended March 31, 1997.  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 audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements  enumerated above present
fairly,  in all material  respects,  the results of operations and cash flows of
Fun Tyme Concepts,  Inc. and  subsidiaries for the year ended March 31, 1997, in
conformity with generally accepted accounting principles.


                                                Richard A. Eisner & Company, LLP

New York, New York
April 30, 1997, except as
  to the second paragraph
  of Note 1 as to which the
  date is May 21, 1997



                                      F-4
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 1998


<TABLE>
<CAPTION>
                                     ASSETS
<S>                                                                        <C>        
Current assets:
    Cash and cash equivalents                                              $   639,572
    Certificate of deposit                                                     267,267
    Inventories                                                                 10,110
    Other current assets                                                        86,328
                                                                           -----------
          Total current assets                                               1,003,277

Property and equipment, net                                                  1,263,821
Due from officers                                                               57,200
Other assets                                                                    71,198
                                                                           -----------
          Total                                                            $ 2,395,496
                                                                           ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable and accrued expenses                                  $   114,045
    Customer deposits                                                           17,857
    Current portion of capital lease obligations                                22,602
                                                                           -----------
          Total current liabilities                                            154,504

Capital lease obligations, net of current portion                                7,886
Deferred rent                                                                   20,908
                                                                           -----------
          Total liabilities                                                    183,298
                                                                           -----------

Commitments and contingencies

Stockholders' equity:
    Preferred stock, par value $.01 per share;
       500,000 shares authorized; none issued
    Common stock, par value $.001 per share, 10,000,000
       shares authorized; 2,761,965 shares issued
       and outstanding                                                           2,762
    Additional paid-in capital                                               3,954,552
    Accumulated deficit                                                     (1,745,116)
                                                                           -----------
          Total stockholders' equity                                         2,212,198
                                                                           -----------
          Total                                                            $ 2,395,496
                                                                           ===========
</TABLE>

See Notes to Consolidated Financial Statements 


                                      F-5
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       YEARS ENDED MARCH 31, 1998 AND 1997


                                                       1998             1997
                                                       ----             ----


Revenues:
    Operating                                      $   983,633      $   744,196
    Merchandise                                        157,612          205,714
                                                   -----------      -----------
          Totals                                     1,141,245          949,910
                                                   -----------      -----------

Costs and expenses:
    Operating expenses                               1,440,052          944,906
    Cost of merchandise sold                           152,542          138,790
    Selling, general and administrative
       expenses                                        636,329          436,693
                                                   -----------      -----------
          Totals                                     2,228,923        1,520,389
                                                   -----------      -----------

Loss from operations                                (1,087,678)        (570,479)
                                                   -----------      -----------

Other income (expense):
    Interest income                                     76,750           88,403
    Realized gain on sale of marketable
       securities                                       53,233
    Interest expense                                    (7,423)         (11,892)
    Other expense                                      (19,951)         (15,725)
                                                   -----------      -----------
          Totals                                       102,609           60,786
                                                   -----------      -----------

Net loss                                           $  (985,069)     $  (509,693)
                                                   ===========      ===========

Basic net loss per share                           $      (.39)     $      (.21)
                                                   ===========      ===========

Basic weighted average common and common
    equivalent shares outstanding                    2,516,087        2,410,795
                                                   ===========      ===========



See Notes to Consolidated Financial Statements.



                                      F-6
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                       YEARS ENDED MARCH 31, 1998 AND 1997

<TABLE>
<CAPTION>
                                        Common Stock            Additional                         Treasury Stock
                                    ---------------------        Paid-In       Accumulated       --------------------
                                    Shares         Amount        Capital         Deficit         Shares         Amount      Total
                                    ------         ------        -------         -------         ------         ------      -----
<S>                               <C>          <C>            <C>            <C>               <C>        <C>           <C>        
Balance, April 1, 1996            1,876,000    $     1,876    $   932,189    $  (250,354)                                $   683,711

Issuance of units of
     common stock and
     warrants in initial
     public offering,
     net of registration
     costs                          800,000            800      3,101,109                                                 3,101,909

Repurchase of units                                                                             133,045   $   (89,643)      (89,643)

Net loss                                                                        (509,693)                                  (509,693)
                                -----------    -----------    -----------    -----------    -----------   -----------   -----------

Balance, March 31, 1997           2,676,000          2,676      4,033,298       (760,047)       133,045       (89,643)    3,186,284

Repurchase of units                                                                              30,490       (24,016)      (24,016)

Effects of issuance
    of 249,500 shares to
    employees as bonus               85,965             86        (78,746)                     (163,535)      113,659        34,999

Net loss                                                                        (985,069)                                  (985,069)
                                -----------    -----------    -----------    -----------    -----------   -----------   -----------

Balance, March 31, 1998           2,761,965    $     2,762    $ 3,954,552    $(1,745,116)          --     $      --     $ 2,212,198
                                ===========    ===========    ===========    ===========    ===========   ===========   ===========
</TABLE>

See Notes to Consolidated Financial Statements.




                                      F-7
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                      YEARS ENDED MARCH 31, 1998 AND 1997

<TABLE>
<CAPTION>
                                                                           1998           1997
                                                                       -----------    -----------
<S>                                                                    <C>            <C>         
Operating activities:
     Net loss                                                          $  (985,069)   $  (509,693)
     Adjustments to reconcile net loss to
         net cash used in operating activities:
         Depreciation and amortization                                     188,708        113,236
         Issuance of stock as compensation                                  34,999
         Deferred officers' compensation                                                  (30,257)
         Deferred rent                                                      (2,775)         1,123
         Gain on sale of marketable equity securities                      (53,233)
         Changes in operating assets and liabilities:
              Inventories                                                   21,910        (17,285)
              Other current assets                                           5,866        (64,559)
              Other assets                                                 (10,523)       (32,084)
              Accounts payable and accrued expenses                         35,952        (53,364)
              Customer deposits                                              1,827          1,022
                                                                       -----------    -----------
                  Net cash used in operating activities                   (762,338)      (591,861)
                                                                       -----------    -----------
Investing activities:
     (Increase) decrease in cash surrender value
         of officers' life insurance                                        20,146        (26,664)
     Purchase of property and equipment                                   (404,399)      (303,328)
     Advances to officers                                                  (52,200)        (5,000)
     Purchases of marketable equity securities                             (76,660)
     Proceeds from sales of marketable equity securities                   129,893
     Purchases of certificates of deposit                                 (267,267)
                                                                       -----------    -----------
                  Net cash used in investing activities                   (650,487)      (334,992)
                                                                       -----------    -----------
Financing activities:
     Proceeds from issuances of common stock                                            3,328,242
     Repayments of notes payable                                                         (200,000)
     Repayments of capital lease obligations                               (79,047)       (21,414)
     Repayments of notes payable to stockholders                                           (1,468)
     Purchases of treasury stock                                           (24,016)       (89,643)
                                                                       -----------    -----------
                  Net cash provided by (used in)
                      financing activities                                (103,063)     3,015,717
                                                                       -----------    -----------

Net increase (decrease) in cash and cash
     Equivalents                                                        (1,515,888)     2,088,864
Cash and cash equivalents, beginning of year                             2,155,460         66,596
                                                                       -----------    -----------
Cash and cash equivalents, end of year                                 $   639,572    $ 2,155,460
                                                                       ===========    ===========

Supplemental disclosures of cash flow information:
     Interest paid                                                     $     7,423    $    11,892
                                                                       ===========    ===========
     Income taxes paid                                                 $    15,849    $    10,795
                                                                       ===========    ===========

Supplemental schedule of noncash investing 
     and financing activities:
     Equipment acquired through capital leases                                        $    64,870
                                                                                      ===========
</TABLE>


See Notes to Consolidated Financial Statements.


                                      F-8
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Business activities:

     Fun Tyme  Concepts,  Inc.  and its  subsidiaries  (the  "Company")  operate
     children's  entertainment  centers in Staten Island, New York and Edmonton,
     Alberta,  Canada for children ages two through  twelve under the trade name
     "Fun  Bubble."  The Company  also  operates a day camp  program  during the
     summer months which  includes  indoor and outdoor  activities  for children
     ages three through fourteen.

     In May 1997, a  subsidiary  of the Company  entered into a lease  agreement
     with the landlord of a facility in Edmonton, Canada and acquired $36,000 of
     assets  for a  children's  entertainment  center  to  be  located  at  that
     facility.

     The Edmonton  facility was opened in August 1997. As of March 31, 1998, the
     Company  was  renovating  a facility it is leasing in East  Brunswick,  New
     Jersey which it expects to open during fiscal 1999.

Note 2 - Summary of significant accounting policies: 

     Use of estimates:

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions   that  affect  certain   reported   amounts  and  disclosures.
     Accordingly, actual results could differ from those estimates.

     Principles of consolidation:

     The  consolidated  financial  statements  include the  accounts of Fun Tyme
     Concepts,   Inc.  and  its  wholly-owned   subsidiaries.   All  significant
     intercompany   balances   and   transactions   have  been   eliminated   in
     consolidation.

     Cash equivalents:

     The Company  considers  all highly  liquid  investments  with a maturity of
     three months or less when acquired to be cash equivalents.

     Inventories:

     Inventories, which consist of food, beverage and souvenir items sold at the
     Company's entertainment centers, are valued at the lower of cost (first-in,
     first-out basis) or market.


                                      F-9
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of significant accounting policies (continued):

     Property and equipment:

     Property  and  equipment  are carried at cost.  Depreciation  is  generally
     provided using the straight-line  method over the estimated useful lives of
     the  related  assets.   Leasehold  improvements  are  amortized  using  the
     straight-line  method  over the lesser of the lease  term or the  estimated
     useful lives of the improvements.

     Revenue recognition:

     Customer  deposits for parties are recorded as  liabilities  when received.
     Revenue is recognized when the event occurs.

     Advertising:

     The Company  expenses the cost of  advertising  and promotions as incurred.
     Advertising  costs charged to operations  were not material during 1998 and
     1997.

     Income taxes:

     The Company  accounts for income taxes  pursuant to the asset and liability
     method which  requires  deferred  income tax assets and  liabilities  to be
     computed annually for temporary differences between the financial statement
     and tax bases of assets  and  liabilities  that will  result in  taxable or
     deductible  amounts  in the  future  based on  enacted  tax laws and  rates
     applicable to the periods in which the  differences  are expected to affect
     taxable  income.  Valuation  allowances are  established  when necessary to
     reduce  deferred  tax assets to the amount  expected  to be  realized.  The
     income tax  provision  or credit is the tax payable or  refundable  for the
     period plus or minus the change  during the period in  deferred  tax assets
     and liabilities.

     Foreign currency translation and transactions:

     The financial statements of the Company's foreign subsidiary are translated
     into U.S.  dollars using exchange rates in effect at the end of each period
     for assets and  liabilities and the weighted  average  exchange rate during
     each period for revenue and expense  accounts.  If material,  the resulting
     translation   adjustments   are   included  as  a  separate   component  of
     stockholders'  equity.  Net gains or losses resulting from foreign currency
     transactions  are  included in the results of  operations  in the period in
     which they are incurred. Cumulative translation adjustments as of March 31,
     1998 and translation adjustments and transaction gains during 1998 were not
     material.


                                      F-10
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 2 - Summary of significant accounting policies (continued):

     Stock options:

     In accordance  with the provisions of Accounting  Principles  Board Opinion
     No. 25 ("APB 25"),  Accounting  for Stock Issued to Employees,  the Company
     will  recognize  compensation  costs as a result of the  issuance  of stock
     options to employees based on the excess,  if any, of the fair value of the
     underlying  stock  at the date of  grant  or  award  (or at an  appropriate
     subsequent  measurement  date) over the amount  the  employees  must pay to
     acquire the stock. Therefore, the Company will not be required to recognize
     compensation  expense  as a  result  of any  grants  of  stock  options  to
     employees at an exercise  price that is  equivalent to or greater than fair
     value.  The Company  will also make pro forma  disclosures,  as required by
     Statement  of  Financial  Accounting  Standards  No.  123,  Accounting  for
     Stock-Based  Compensation  ("SFAS 123"), of net income or loss as if a fair
     value based method of accounting  for stock  options had been  applied,  if
     such amounts differ materially from the historical amounts.

     Earnings (loss) per share:

     Effective  March 31, 1998, the Company  adopted the provisions of Statement
     of Financial Accounting Standards No. 128, Earnings per Share ("SFAS 128"),
     which replaces the presentation of "primary" and  "fully-diluted"  earnings
     (loss) per common share required under  previously  promulgated  accounting
     standards with the  presentation  of "basic" and "diluted"  earnings (loss)
     per common share.

     Basic earnings (loss) per common share is calculated by dividing net income
     or loss by the weighted average number of common shares  outstanding during
     the period.  The calculation of diluted earnings (loss) per common share is
     similar to that of basic earnings (loss) per common share,  except that the
     denominator is increased to include the number of additional  common shares
     that would have been outstanding if all potentially dilutive common shares,
     principally those issuable upon the exercise of stock options and warrants,
     were issued during the period.


                                      F-11
<PAGE>


                     FUN TYME CONCEPTS, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2 - Summary of significant accounting policies (concluded):

     Earnings (loss) per share (concluded):

     Since the Company had losses  applicable  to common stock in 1998 and 1997,
     the  assumed  effects of the  exercise  of  outstanding  stock  options and
     warrants were  anti-dilutive and,  accordingly,  dilutive per share amounts
     have not been  presented in the  accompanying  consolidated  statements  of
     operations.  In addition,  the basic per share and weighted  average  share
     amounts  presented  in the  accompanying  1997  consolidated  statement  of
     operations  which were computed in  accordance  with SFAS 128 do not differ
     from those computed under previously promulgated accounting standards.

     In accordance  with the rules  promulgated  by the  Securities and Exchange
     Commission,  the weighted average number of common shares  outstanding used
     in the  computation  of basic  loss per share in 1997  include  all  shares
     issued during the period from April 1, 1996 to August 15, 1996, the date of
     the consummation of the Company's initial public offering (the "IPO") as if
     such shares had been outstanding as of April 1, 1996 (see Note 8).

     Other recent accounting pronouncements:

     In June 1997, the Financial  Accounting Standards Board issued Statement of
     Financial  Accounting  Standards No. 130,  Reporting  Comprehensive  Income
     ("SFAS  130"),  and  Statement of Financial  Accounting  Standards No. 131,
     Disclosures about Segments of an Enterprise and Related  Information ("SFAS
     131"),  which could require the Company to make  additional  disclosures in
     its financial  statements no later than for the year ending March 31, 1999.
     SFAS 130 defines  comprehensive income, which includes items in addition to
     those  reported in the statement of  operations,  and requires  disclosures
     about its  components.  Management  believes  that the adoption of SFAS 130
     will not have a material  impact on the  disclosures  made by the  Company.
     SFAS 131  requires  disclosures  for each  segment  of a  business  and the
     determination  of  segments  based on its  internal  management  structure.
     Management  is in the process of  evaluating  whether SFAS 131 will require
     the Company to make any additional disclosures.

     Reclassifications:

     Certain  amounts in the 1997  consolidated  financial  statements have been
     reclassified to conform to the 1998 presentations.


                                      F-12
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3 - Property and equipment:

     Property and equipment at March 31, 1998 consisted of the following:

                                               Estimated
                                                Useful
                                                 Lives                  Amount
                                                 -----                  ------
      Buildings (air structures)                16 years            $  231,928
      Equipment                                3-5 years               813,629
      Furniture and fixtures                     7 years                29,317
      Leasehold improvements (a)             15-16 years               623,892
                                                                    ----------
                                                                     1,698,766
      Less accumulated depreciation
          and amortization                                             434,945
                                                                    ----------
              Total                                                 $1,263,821
                                                                    ==========

     (a)  Includes  approximately  $148,000  attributable  to the renovations in
          progress at March 31, 1998 at the Company's East Brunswick facility.

Note 4 - Due from officers:

     The balance of $57,200 due from  officers at March 31, 1998 bears  interest
     at 6% and is payable on June 11,  2002.  Interest  earned by the Company on
     these loans was not material in 1998 and 1997.

Note 5 - Credit facility:

     At March 31, 1998,  the Company was able to borrow up to $250,000  under an
     unused line of credit  provided by a financial  institution  pursuant to an
     agreement that expires on August 1, 1998. Any future  borrowings  will bear
     interest at the financial  institution's  prime rate and will be secured by
     the Company's certificate of deposit which matures on October 17, 1998. The
     certificate of deposit had a carrying value of $267,267 at March 31, 1998.



                                      F-13
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 6 - Commitments and contingencies:

     Leases:

     The Company has operating leases for its children's  entertainment  centers
     which expire at various dates  through  April 17, 2008,  some of which have
     renewal  options.  The  Company is  responsible  for the costs of  property
     taxes, maintenance and insurance under the leases.

     Future minimum lease payments,  including  expected renewal options,  under
     noncancelable  operating lease  agreements in years subsequent to March 31,
     1998 are as follows:

     Year Ending
      March 31,                                                       Amount
      ---------                                                       ------
         1999                                                      $  288,621
         2000                                                         348,505
         2001                                                         356,222
         2002                                                         360,828
         2003                                                         370,073
         Thereafter                                                 4,827,775
                                                                   ----------

           Total                                                   $6,552,024
                                                                   ==========

     Rent expense for 1998 and 1997 was $165,758 and $98,603, respectively.

     The Company also leases  automobiles  under capital  leases.  The Company's
     obligations under such leases as of March 31, 1998 were immaterial.

     Litigation:

     During 1997, the Company  accrued a liability of $75,000 in connection with
     an  action  brought  by a  lessor.  The  action  was  settled  without  any
     additional material effect in 1998.

     Concentrations of credit risk:

     Financial   instruments   that   potentially   subject   the   Company   to
     concentrations of credit risk consist  principally of cash and certificates
     of deposit.  The Company  maintains  its cash in bank deposit  accounts the
     balances of which, at times, may exceed Federally insured limits.  Exposure
     to credit  risk is reduced by placing  such  deposits  with and  purchasing
     certificates of deposit from high quality financial institutions.


                                      F-14
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7 - Income taxes:

     At March  31,  1998,  the  Company  had net  operating  loss  carryforwards
     available of approximately  $1,856,000 for Federal,  state and local income
     tax purposes,  which expire at various  dates  through  2012.  The Internal
     Revenue  Code  limits  the  amounts  of net  operating  loss  carryforwards
     available  to a  corporation  following  a change  of more  than 50% in its
     ownership over a three year period.  As a result of the consummation of the
     Company's initial public offering in fiscal 1997, its repurchases of common
     stock in fiscal  1997 and 1998 and  certain  changes  in its  ownership  in
     fiscal  1999 (see Note 10),  the  Company  may be  subject  to  substantial
     limitations on the utilization of its net operating loss carryforwards.

     At March 31, 1998, the Company had net deferred tax assets of approximately
     $875,000  attributable  primarily to the  potential  benefits  from its net
     operating loss  carryforwards.   However,  the net deferred tax assets have
     been fully reserved as a result of the uncertainties as to their future use
     arising from the  possible  limitations  described  above and the lack of a
     historical taxable income stream.

     As a result of the availability of the net operating loss carryforwards and
     the  uncertainties  related  to  their  utilization,  the  Company  had  no
     provision or credit for income taxes in 1998 and 1997. A reconciliation  of
     the statutory  Federal income tax rate to the Company's  effective tax rate
     follows:

                                                            1998          1997
                                                            ----          ----

     Credit at Federal statutory rate                       (34)%         (34)%
     Increase in taxes resulting from
         increase in valuation reserve                       34            34
                                                            ---           ---
     
             Totals                                         -- %          -- %
                                                            ===           ===


                                      F-15
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Stockholders' equity:

     Private placement and initial public offering:

     As of April 1, 1996, the Company had 1,500,000  warrants  outstanding which
     had been sold to a single securityholder (the "Original  Warrantholder") as
     part of a private placement of securities.  On August 15, 1996, the Company
     completed the IPO pursuant to which a total of 1,250,000 units were sold by
     the Company and certain selling  securityholders,  with each unit comprised
     of one  share of common  stock and one  warrant  to  purchase  one share of
     common stock. Of the 1,250,000 shares of common stock sold through the IPO,
     800,000  shares  were sold by the  Company.  Net  proceeds  received by the
     Company as a result of such sale totaled  $3,101,909.  All of the 1,250,000
     warrants sold through the IPO were sold by the Original  Warrantholder  and
     not the Company; as a result, 1,500,000 warrants remained outstanding after
     the IPO.

     Each warrant  entitles the registered  holder thereof to purchase one share
     of common stock at a price of $5.25 per share at any time  through  October
     27, 2001.  The warrants are  redeemable  by the Company at any time upon 30
     days' notice at a redemption  price of $.05 per warrant,  provided that the
     closing  bid  quotation  of the  common  stock for at least 30  consecutive
     trading days ending on the third day prior to the date of which the Company
     gives notice has been at least 170% of the  exercise  price of the warrants
     being redeemed.

     As a result of the  repurchases  of 133,045  and  30,500  units in 1998 and
     1997,  respectively,  1,336,455  shares of common  stock were  reserved for
     issuance  upon the exercise of the warrants that  remained  outstanding  at
     March 31, 1998 (see Note 10).

     Senior Management Incentive Plan:

     In 1995, the Board of Directors and  stockholders  of the Company  approved
     the Senior Management Incentive Plan (the "Management Plan") which provides
     for the issuance of up to 150,000  shares of common stock through grants of
     stock  options and other stock  purchase  rights to executive  officers and
     other key employees of the Company and certain consultants to the Company.


                                      F-16
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8 - Stockholders' equity (concluded):

     Senior Management Incentive Plan (concluded):

     In December 1995, the Company  awarded 15,000  restricted  shares of common
     stock,  which became fully vested in fiscal 1998, to a consultant  pursuant
     to the  Management  Plan (the  consultant,  who was,  at that time,  also a
     director  of the  Company,  was not  required  to make any  payment  to the
     Company for such shares).

     The Company granted  options to two executive  officers to purchase a total
     of 10,000 shares of common stock at $.62 per share on December 30, 1996 and
     50,000 shares of common stock at $.69 per share on March 31, 1997 which are
     exercisable  at any time for a period of five years from the date of grant.
     The  exercise  prices  were equal to the fair  market  value on the date of
     grant. At March 31, 1998, the options remained  outstanding and exercisable
     and had a weighted average exercise price of $.67 per share.

     Since the Company has elected to continue to use the  provisions  of APB 25
     in accounting  for its stock  options and the exercise  price of all of the
     options  granted in 1997 were equal to the fair market value at the date of
     grant,  no earned  or  unearned  compensation  cost was  recognized  in the
     accompanying  consolidated  statements of operations  for the stock options
     granted in 1997.

     If  compensation  cost  for the  stock  options  granted  in 1997  had been
     determined  based on the fair value of the  options at the grant date under
     the  provisions  of SFAS 123, the Company's pro forma net loss and net loss
     per share would equal the historical amounts of $985,069 and $.39 per share
     in 1998 and would have been  $513,793 and $.21  compared to the  historical
     amounts  of  $509,693  and $.21 per  share in 1997.  The fair  value of the
     options  granted  during 1997 were  estimated at $.07 on the dates of grant
     using  the   Black-Scholes   option-pricing   model   with  the   following
     assumptions:  dividend  yield 0%;  expected  volatility  of 75%,  risk-free
     interest rate of 6.04% and expected life of two years.

     As of March 31, 1998, there were 60,000 shares of common stock reserved for
     issuance  upon the  exercise  of  outstanding  options  and  75,000  shares
     reserved for issuance based on additional awards that may be made under the
     Management Plan (see Note 10).


                                      F-17
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 9 - Foreign operations:

     The consolidated  financial  statements  include the following  approximate
     amounts applicable to the Company's  Canadian  subsidiary as of and for the
     year ended March 31, 1998 (see Note 1):

     Total assets                                                    $337,000
     Total liabilities                                               (403,000)
                                                                     -------- 
     Net liabilities                                                 $(66,000)
                                                                     ======== 
     Total revenues                                                  $253,000
                                                                     ========
     Net loss                                                        $(66,000)
                                                                     ======== 

Note 10- Subsequent events:

     On May 28, 1998, BBS Holdings, LLC ("BBS Holdings") obtained control of the
     Company by acquiring  8,152,000 of the outstanding shares (or approximately
     81.5%) of the Company's  common stock.  The Company issued 7,230,000 shares
     of its common  stock  directly to BBS  Holdings in exchange for 100% of the
     outstanding  shares of the common stock of Play Co. Capital Corp.  ("PCC").
     PCC owns (i) a 50% interest in Prestige Fine Jewelry,  LLC ("Prestige") and
     (ii) all rights,  title and  interest  to a contract  (the  "Contract")  to
     purchase a lease and certain real and personal property incorporated in the
     Cortina Valley Ski Resort in Haines Falls, New York  ("Cortina").  Prestige
     was   formed  on  April  6,  1998  to  become   the   exclusive   marketing
     representative  for a  manufacturer  of gold  and  certain  other  jewelry.
     Cortina is a ski resort in upstate New York that had been operating but was
     closed during the 1997/1998 ski season.

     Since the  acquisition  of PCC and certain  other  concurrent  transactions
     resulted in the transfer of an approximate  81.5%  controlling  interest in
     the Company to BBS Holdings,  the acquisition of PCC by the Company will be
     treated as a purchase business  combination,  effective as of May 28, 1998,
     that  management  believes  will  have to be  accounted  for as a  "reverse
     acquisition"  in which the Company will be the legal  acquirer and PCC will
     be the accounting acquirer.  Accordingly, the assets and liabilities of PCC
     will be accounted for at their historical carrying values


                                      F-18
<PAGE>


                    FUN TYME CONCEPTS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10- Subsequent events (concluded):

     and the assets and  liabilities of the Company will be valued at their fair
     values as of May 28,  1998 with the excess of BBS  Holdings'  cost over the
     fair value of the  Company's  assets,  if any,  allocated to  goodwill.  In
     addition,  the  historical  consolidated  statements of  operations  issued
     subsequent  to May 28,  1998  will  include  the  consolidated  results  of
     operations of PCC and the Company for any portion of the period  subsequent
     to May 28, 1998, but only the consolidated results of operations of PCC for
     any  portion  of  the  period  prior  to  May  28,  1998;  therefore,   the
     consolidated  statements  of  operations  in  future  reports  may  not  be
     comparable to those included in prior reports issued by the Company.

     As a result of the  issuance  of its shares in  exchange  for the shares of
     PCC, the Company will not have a sufficient  number of authorized shares to
     enable it to issue  additional  shares  upon the  exercise  of  outstanding
     options  and  warrants  until its  stockholders  approve an increase in the
     number of shares  authorized for issuance.  On June 29, 1998, the executive
     officers  of the  Company  that held  options to purchase a total of 60,000
     shares of the Company's  common stock agreed to allow the Company to cancel
     those options.


                                      * * *


                                      F-19
<PAGE>


                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the Company has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized this 8th day of July 1998.


                               FUN TYME CONCEPTS, INC.


                      By:      /s/ Herbert P. Marks 
                               -----------------------------------------------
                               Herbert P. Marks
                               President, Chief Executive Officer, and Director


     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the Company and in the capacities and on the
dates indicated.


/s/ Herbert P. Marks           President, Chief Executive Officer,       07/8/98
--------------------------     and Director                                Date
Herbert P. Marks                   


/s/ Daniel Catalfumo           Chief Operating Officer, Executive        07/8/98
--------------------------     Vice President, and Director               Date
Daniel Catalfumo                    


/s/ Russell Murowski           Chief Financial Officer and Treasurer     07/8/98
--------------------------                                                 Date
Russell Murowski                

/s/ Richard Rosso              Executive Vice President, Secretary,      07/8/98
--------------------------     and Director                                Date
Richard Rosso                              


/s/ Anthony DiMatteo           Executive Vice President and Director     07/8/98
--------------------------
Anthony DiMatteo                                                           Date