JUST TOYS INC, 10-K, 2000-03-30

JUST TOYS INC
10-K, 2000-03-30
GAMES, TOYS & CHILDREN'S VEHICLES (NO DOLLS & BICYCLES)

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM 10-K

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

For the fiscal year ended December 31, 1999

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

For the transition period from __________ to __________

Commission File Number 0-20612

JUST TOYS, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware 13-3677074
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)

20 Livingstone Avenue, Dobbs Ferry, NY 10522
(Address of principal executives offices) (Zip Code)

Registrant's telephone number, including area code: (914) 674-8697

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

Name of each exchange
Title of each class on which registered
- ------------------- ---------------------
None Not Applicable

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

Common Stock, par value $.01 per share
(Title of class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [X]

The aggregate market value at March 24, 2000 of shares of the Registrant's
Common Stock, par value $.01 per share (based upon the mean between the bid and
asked price of such stock as reflected in the over-the-counter market on such
date) held by non-affiliates of the Registrant was approximately $2,721,836.
Solely for the purposes of this calculation, shares held by directors and
officers of the Registrant have been excluded. Such exclusion should not be
deemed a determination or an admission by the Registrant that such individuals
are, in fact, affiliates of the Registrant.

At March 24, 2000, there were 2,242,581 shares outstanding of the Registrant's
Common Stock, par value $.01 per share.

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JUST TOYS, INC.

Index to Form 10-K

Item Number Page
- ----------- ----

PART I.........................................................................1
ITEM 1 - BUSINESS...........................................................1
ITEM 2 - PROPERTIES.........................................................9
ITEM 3 - LEGAL PROCEEDINGS.................................................10
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............10

PART II.......................................................................11
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.......................................11
ITEM 6 - SELECTED FINANCIAL DATA...........................................14
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.....................15
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK........21
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................21
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE................21

PART III......................................................................22
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................22
ITEM 11 - EXECUTIVE COMPENSATION............................................24
ITEM 12 - SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..........................27
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................29

PART IV.......................................................................29
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K...............................................29

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This Annual Report on Form 10-K contains "forward looking statements"
within the meaning of Section 21E of the Securities Exchange Act of 1934. The
statements appear in a number of places in this Annual Report and include
statements regarding the intent, belief or current expectations of Just Toys,
Inc. (the "Company") with respect to, among other things, future business
conditions and the outlook for the Company including trends affecting the
Company's business, financial condition and results of operations. Readers are
cautioned not to place undue reliance on these forward looking statements, which
speak only as of the date hereof. These forward looking statements are subject
to risks and uncertainties which could cause the Company's actual results or
performance to differ materially from those expressed in these statements. These
risks and uncertainties include the following: changes in consumer preferences,
dependence on a limited number of major customers, reliance on manufacturers
based in Asia, competition from major toy companies, seasonality and quarterly
fluctuations, government regulation, as well as the items set forth under
"Business--Certain Cautionary Factors." Wherever possible, the Company has
identified forward looking statements by words such as "anticipates,"
"believes," "estimates," "expects" and similar expressions. The Company assumes
no obligation to update publicly any forward looking statements, whether as a
result of new information, future events or otherwise.

PART I

ITEM 1 - BUSINESS

The Company designs, develops, manufactures, markets and distributes a
variety of junior sporting goods, foam shooting toys and other toy products for
children of various ages. The Company is a Delaware corporation formed in August
1992. Its business was begun in 1989 and was conducted as a joint venture (the
"Joint Venture") until September 1992 when the Company succeeded to the business
of the Joint Venture.

The Company's product lines primarily consist of staple toy items such
as junior sporting goods, foam shooting toys and other toy products which do not
require promotional support. The Company's products are sold under its own name
and under established names such as Spalding(R), Louisville Slugger(R) and World
Wrestling Federation(R) pursuant to license arrangements. The Company also sells
a line of PlayTable products that are compatible with most brands of toy
construction blocks and the Welsh line of doll accessories, carriages and
strollers. The Company's products are positioned to meet certain retail price
points and are intended to deliver value to consumers and reasonable profit
margins to retailers.

The Company presented its entire product line to retailers in Hong Kong
and at the Dallas and New York toy shows in January and February 2000.

As of December 31, 1998, the Company sold its Flexitoys construction
block product line to the product's original founder. The Company received
approximately 146,000 shares of its Series B Convertible Redeemable Preferred
Stock as consideration for inventory, fixed assets and intellectual property
associated with the Flexitoys product line.

The Company has a wholly-owned manufacturing subsidiary, Celt Specialty
Partners, Inc. ("Celt") and two wholly-owned foreign subsidiaries, Just Toys
Products Limited and Joyful World Enterprises Limited, both of which are
incorporated in Hong Kong.

1
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In September 1998, the Company retained Gerard Klauer Mattison & Co.,
Inc. ("Gerard Klauer"), an investment banking firm, to identify other toy
companies and product lines of other toy companies for acquisition by the
Company and to assist the Company in the completion and financing of such
transactions. See Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters -- Common Stock Warrant for a description of the warrant
issued to Gerard Klauer in connection with its retention by the Company.

On September 4, 1998, the Company effected a one-for-two reverse stock
split of its common stock, par value $.01 per share ("Common Stock"). All
disclosures herein relating to outstanding shares and the trading prices of the
Common Stock and earnings per share information have been retroactively adjusted
to reflect the reverse stock split.

Products

The Company's line of junior sporting goods include spiral footballs,
foam baseballs and baseball bats, soccer balls and basketballs, mini basketball
hoop sets and various other junior sporting goods items. The products are sold
under the Company's names as well as licensed names such as Spalding(R) and
Louisville Slugger(R). The Company's junior sporting goods generally sell at
retail for between $2.00 and $50.00, a majority of which sell at retail for
under $15.00.

The Company's toy line consists of many different items, including
bendable figures and plastic accessories, which are based on licensed
characters, primarily World Wrestling Federation(R) licensed products. The
Company's toy line also includes play tables, doll strollers and accessories,
Laser Light(R) toys, which are hand-held toys that project laser-like images,
and a line of foam shooting toys. The Company's products in its toy line
generally sell at retail for between $2.00 and $100.00, a majority of which sell
at retail for under $15.00.

Licensing

Some of the Company's products are manufactured under patent and
trademark license agreements. The Company also acquires rights to ideas and
designs for new products from independent inventors and designers. A
determination to acquire a license must frequently be made before the commercial
introduction of the product in which a licensed property appears and license
arrangements often require the payment of non-refundable advances or guaranteed
minimum royalties. Substantially all of the Company's licenses extend for one to
three years although the Company's spiral footballs are manufactured under a
non-exclusive patent license that extends for the life of the patent. Some
licenses are renewable at the option of the Company upon payment of certain
minimum guaranteed payments or the attainment of certain sales levels during the
initial term of the license. There can be no assurance that any license will be
renewed upon its expiration or that the Company will be able to obtain licenses
that will achieve the same degree of popularity as the Company's existing
licenses. Royalties to licensors typically range from 4% to 12% of sales of the
related product. Licenses for some foreign territories require royalties that
exceed such range. As of December 31, 1999, minimum future guaranteed payments
through 2001 under license agreements aggregated approximately $335,000.

2
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The Company has six principal licenses. Each of these licenses cover a
number of different products. Such products accounted for approximately 62.9%
and 62.4% of the Company's net sales in 1999 and 1998, respectively. One of
these licenses, with the World Wrestling Federation(R), accounted for 23.3% and
12.6% of the Company's net sales in 1999 and 1998, respectively. The loss of any
of the Company's principal licenses could have a material adverse effect on the
Company's operations.

Design and Development

The Company relies on its ability to purchase selective product lines
and on its management personnel and independent inventors, designers, sculptors,
model-makers and engineers for new products. The Company pays royalties to
independent inventors and designers based on sales of products developed by them
generally ranging from 2% to 6.5%.

Manufacturing

The Company relies on contract manufacturers in the United States and
Asia and on its wholly-owned subsidiary, Celt, to manufacture its products. Celt
manufactures certain of the Company's foam sport balls as well as other
products. Approximately 19.5%, 22.7% and 28.4% of net sales in 1999, 1998 and
1997, respectively, were derived from the sale of products manufactured at this
facility. As needed, certain of the products manufactured by Celt can also be
obtained from manufacturers in Asia. Additionally, the Company moved its Table
Toys assembly operations from Arkansas City, Kansas to its Celt facility in
April 1999.

The Company's operations relating to wooden playtables is based at a
contractor's facility in Arkansas City, Kansas.

Decisions related to the choice of third party manufacturers are based
on price, quality of merchandise, reliability and the ability of a manufacturer
to meet the Company's timing requirements for delivery. The Company is not a
party to long-term contractual or other arrangements with any manufacturer. The
Company often uses more than one manufacturer to produce a single product. The
Company utilizes warehouse facilities at two primary locations in the U.S., at
which it regularly maintains an inventory of its products, thus enabling the
Company to respond quickly to customer orders. One of these warehouse facilities
is located near the Company's manufacturing facility in upstate New York.
Tooling and injection molding are owned by the Company and may be utilized by
different manufacturers if the need arises for alternate sources of production.

The principal raw materials used in the production and sale of the
Company's products are chemicals for foam, plastics and paper products. Raw
materials are generally purchased by the manufacturers who deliver completed
products to the Company. The Company believes that an adequate supply of raw
materials used in the manufacture of its products is readily available from
existing and alternative sources at competitive prices.

3
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Most of the Company's products are manufactured by unaffiliated parties
located in the People's Republic of China and Taiwan. Asia is the largest
manufacturing center of toys in the world and most toy companies utilize the
services of manufacturers located in Asia. The majority of the Company's molds
and tools are located in Asia. The majority of the Company's manufacturing in
Asia is performed by five to seven manufacturers. In any particular year, an
individual manufacturer may account for more than 10% of the Company's products,
depending upon the popularity of the product made by it. While the Company is
not dependent on any single manufacturer in Asia to supply it with products, the
Company could be affected by political or economic disruptions affecting
businesses in Asia generally. The Company believes that alternate sources of
manufacturing are available outside of Asia. The Company has two wholly-owned
subsidiaries based in Hong Kong to maintain contact with manufacturers and
subcontractors in Asia and supervise manufacturing and quality control.

Sales and Marketing

The Company distributes its products in the United States primarily to
toy stores, mass merchandisers and, to a lesser extent, discount drug chains,
supermarket chains, sporting goods stores, catalogers and gift stores located in
the United States. The Company participates in the electronic data interchange
program maintained by many of its largest customers. This program allows the
Company to monitor store inventory and schedule production to meet anticipated
reorders.

In 1999, the Company maintained an internal sales and marketing staff
of 7 people, including its senior management. The Company retains approximately
26 sales representation firms in the United States which act as independent
contractors and which market the Company's products at the major toy trade shows
held in New York City and Hong Kong and at regional trade shows. In addition,
sales representatives make on-site visits to customers for the purpose of
soliciting orders for products.

The Company's net sales to foreign markets in 1999, 1998 and 1997 were
approximately 2.2%, 2.3% and 2.7%, respectively, of total net sales. Sales in
foreign countries are generally made directly to independent distributors, some
of which are licensees that have acquired foreign distribution rights in respect
of categories of products which the Company has the right to distribute
domestically. Foreign distributors ordinarily retain their own sales
representatives. Sales of products to distributors in foreign countries are in
United States dollars which reduces the Company's exposure to fluctuations in
monetary rates overseas.

The Company's net sales and gross margin, as a percentage of sales, is
to some extent dependent on its mix of business during a given time period.
Variables include such factors as whether merchandise is shipped from a domestic
warehouse or directly from Asia, whether the merchandise is purchased from
overseas sources or is produced domestically and the specific blend of products
shipped to the Company's customers.

The Company does not sell any of its products on consignment. A portion
of firm orders, by their terms, may be canceled if shipment is not made by a
certain date.

Customers

The five largest customers of the Company accounted for approximately
68.2%, 71.3% and 75.3% of net sales in 1999, 1998 and 1997, respectively. In
1999, the Company had one customer, Wal-Mart, which represented approximately
52% of its net sales. During 1998, the Company's two largest customers, Toys "R"
Us and Wal-Mart, each represented more than 10% of net sales. Sales to these
customers totaled approximately 55% of net sales in 1998. In 1997, the Company's
two largest customers, Target and Wal-Mart, each represented more than 10% of
net sales. Sales to these customers totaled approximately 60% of net sales in
1997. The termination by any of these customers of their relationship with the
Company would have a material adverse effect on the Company.

4
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Segment Information

The Company operates its business in two segments which are its United
States and Hong Kong operations. Both segments sell similar products to
customers primarily located in the United States. The United States segment's
net sales result from shipments from the Company's domestic warehouses. The Hong
Kong segment derives its revenue from the Company's FOB Hong Kong sales and by
acting as a third party product sourcing and quality control agent for other toy
companies. See Note 16 - "Business Segments" to the Company's consolidated
financial statements on pages F-26 through F-28 for a report of the Company's
United States and Hong Kong operation's net sales, profit (loss) and total
assets.

Backlog

Total order backlog at December 31, 1999 and 1998 was approximately
$920,000 and $921,000, respectively. The Company expects substantially all of
its current backlog to be filled during 2000. Cancellations may materially
reduce the amount of sales realized from the Company's backlog. The business of
the Company is characterized by customer order patterns which vary from one year
to the next largely because of the different levels of consumer acceptance of a
product line, product availability, marketing strategies, inventory levels of
retailers and differences in overall economic conditions. The use of
just-in-time/quick response inventory techniques and replenishment programs by
larger retailers has resulted in fewer orders being placed in advance of
shipment and more orders for immediate delivery. This distorts the comparisons
of unshipped orders at any given date. The Company expects these trends to
continue. Additionally, it is a general industry practice that orders are
subject to amendment or cancellation by customers prior to shipment. Therefore,
comparisons of unshipped orders in any specific period in any given year with
those same periods in preceding years are not necessarily indicative of sales
for an entire year. Order backlog is also impacted by a shift in the Company's
revenues to the second half of the year with fourth quarter revenues becoming
increasingly significant. The Company does not consider total order backlog to
be a meaningful indicator of future sales.

Competition

The toy industry is highly competitive and dominated by a small number
of large toy companies. The Company competes with larger, better capitalized
companies which have significantly more resources than the Company to devote to
the design and development of new toys, the procurement of licenses and the
marketing and distribution of their products. Due to the Company's relatively
modest advertising budget, the Company has greater difficulties in obtaining
retailer product acceptance than do companies with large advertising budgets.

Seasonality

The toy industry is typically seasonal in nature due to the heavy
demand for toy products during the Christmas season. During the past several
years, the Company has experienced a shift in its revenues to the second half of
the year with fourth quarter revenues becoming increasingly significant. The
Company expects that this trend will continue due to industry changes and due to
changes to the Company's product mix. This concentration increases the risk of
(a) underproduction of popular items, (b) overproduction of less popular items
and (c) failure to achieve tight and compressed shipping schedules.

5
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Government Regulation

The Company is subject to the provisions of, among other laws, the
Federal Hazardous Substances Act and the Federal Consumer Product Safety Act.
These laws empower the Consumer Products Safety Commission (the "CPSC") to
protect children from hazardous toys and other articles. The CPSC has the
authority to exclude from the market articles which are found to be hazardous
and can require a manufacturer to repurchase such toys under certain
circumstances. Any such determination by the CPSC is subject to court review.
Similar laws exist in some states and cities in the United States and in many
jurisdictions throughout the world. The Company maintains a quality control
program (including the inspection of goods at factories and the retention of
independent testing laboratories in Hong Kong) to ensure compliance with
applicable laws.

Certain Cautionary Factors

The following factors, in addition to those discussed elsewhere in this
Report, should be considered carefully in evaluating the Company and its
business.

Change in Consumer Preferences; Reliance on New Product Introduction

The toy market is characterized by changing consumer preferences and
frequent new product introductions which reduce the length of product life
cycles. There can be no assurance that any of the Company's current products or
product lines will continue to be popular with consumers for any significant
period of time or that new products and products lines introduced by the Company
will achieve and sustain an acceptable degree of market acceptance. Furthermore,
sales of the Company's existing products are expected to decline over time and
may decline at rates faster than expected. The Company's success is dependent
upon the Company's ability to enhance existing product lines and develop new
products and product lines. The failure of the Company's new products and
product lines to achieve and sustain market acceptance and to produce acceptable
margins could have a material adverse effect on the Company's financial
condition and results of operations.

Dependence on Limited Number of Major Customers

For fiscal 1999, the Company's five largest customers accounted for
approximately 68.2% of the Company's net sales. Sales to Wal-Mart, the Company's
largest customer, aggregated approximately 52% of the Company's net sales during
the same period. The Company expects to continue to rely on a relatively small
number of customers for a significant percentage of sales for the foreseeable
future. Because of the large portion of the Company's sales to the Company's
largest customer and the significant share of the market for toy sales to
consumers represented by the Company's five largest customers, the loss of one
of them as a customer, or a significant reduction in sales to any one of them,
would have a material adverse effect on the Company's financial condition and
results of operations.

6
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Inventory Management

Most of the Company's largest retail customers utilize an electronic
inventory management system to track sales of products and rely on reorders
being rapidly filled by suppliers rather than maintaining large product
inventories. These types of systems put pressure on suppliers like the Company
to promptly fill customer orders and shift some of the inventory risk from the
retailer to suppliers. The Company generally places orders with manufacturers
based in part on advance, non-binding, estimates of orders from its major retail
clients. Such estimates may deviate substantially from actual orders. In the
event that subsequent orders fall short of original estimates, the Company may
be left with excess inventory. Significant excess inventory could result in
price discounts and increased inventory carrying costs for the Company.
Similarly, if the Company fails to have an adequate supply of products
manufactured on a timely basis, the Company may, as a result, lose sales
opportunities. Despite the Company's efforts to adjust its production schedule
based on market activities, including participating in electronic data
interchange programs with its largest retail customers, there can be no
assurance that the Company will maintain appropriate inventory levels. Such
occurrences may have a material adverse effect on the Company's financial
condition and results of operations.

Returns and Markdowns

The Company historically has permitted certain customers to return
slow-moving items for credit or has provided price protection by making any
price reductions effective as to certain products then held by retailers in
inventory. The Company expects that it will continue to be required to make such
accommodations in the future. Any significant increase in the amount of returns
or markdowns could have a material adverse effect on the Company's financial
condition and results of operations.

Competition

The toy industry is highly competitive and dominated by a small number
of large toy companies. Many of the Company's competitors have longer operating
histories, broader product lines and greater financial resources and advertising
budgets than the Company. In addition, the toy industry has nominal barriers to
entry. Competition is based primarily on the ability to design and develop new
toys, procure licenses for popular products, characters and trademarks, and
successfully market products. Many of the Company's competitors offer similar
products or alternatives to the Company's products. The Company's products
compete with other products for retail shelf space. There can be no assurance
that shelf space in retail stores will continue to be available to support the
Company's existing products or any expansion of the Company's products and
product lines. There can also be no assurance that the Company will be able to
continue to compete effectively in this marketplace.

7
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Reliance on License Agreements

The Company has six principal licenses. Each of these licenses cover a
number of different products. Such products accounted for approximately 62.9% of
the Company's net sales in 1999. One of these licenses, with the World Wrestling
Federation(R), accounted for 23.3% of the Company's net sales in 1999. The loss
of any of the Company's principal licenses could have a material adverse effect
on the Company's operations. In general, the Company's license agreements have
terms of one to three years. There can be no assurance that any license
agreement will be renewed upon its expiration or that the Company will be able
to obtain licenses for additional licenses that will achieve the same degree of
popularity as the Company's existing licenses.

Employees

As of December 31, 1999, the Company and its subsidiaries employed 56
persons, 17 of which were engaged in manufacturing.

Executive Officers of the Company

The following table sets forth the names, ages and principal
occupations of each of the Company's executive officers and the year in which
each was elected an officer.

<TABLE>
<CAPTION>
Name Age Title Officer Since
---- --- ----- -------------
<S> <C> <C> <C>
Jerry Carroll 51 President, Chief Executive Officer, Chief 1997
Operating Officer and Director of the Company
David Schwartz 40 Chief Financial Officer and Treasurer 1996
Seymour Rosenthal 69 Secretary 1996
Robert Pagano 45 Vice President - Marketing and Product Planning 1996

Larry Scott 50 Vice President - Sales 1997
</TABLE>

Jerry Carroll was appointed President and Chief Executive Officer of
the Company in March 2000. He was appointed Senior Vice President and Chief
Operating Officer of the Company in May 1999. Mr. Carroll is an officer of all
of the Company's subsidiaries. In September 1997, Mr. Carroll was appointed Vice
President--Domestic Manufacturing Operations of the Company. From 1994 through
1997, Mr. Carroll was the Vice President - Operations of Empire Industries,
Inc., a manufacturer and distributor of toys. From 1991 through 1994, Mr.
Carroll was Vice President-Operations of Marchon, Inc., a manufacturer and
distributor of toys.

8
<PAGE>

David Schwartz was appointed Chief Financial Officer and Treasurer of
the Company in November 1996. Mr. Schwartz is an officer of each of the
Company's United States subsidiaries. From January 1996 through November 1996,
Mr. Schwartz was self-employed as a consultant to a number of companies in the
consumer products business. From May 1994 through December 1995, he was the
Chief Financial Officer of Philips Industries, Inc., a distributor of women's
hair and cosmetic accessories. From December 1990 through May 1994, Mr. Schwartz
was the Controller of Ameriscribe Management Services, Inc., a provider of
facilities management services.

Seymour Rosenthal was appointed Secretary of the Company in November
1996. Mr. Rosenthal has been the Director of Internal Operations for the Company
since September 1995. Mr. Rosenthal is an officer of all of the Company's
subsidiaries. From 1993 through 1995, he was a consultant working with various
financial institutions in the workout of bankrupt organizations. During 1992,
Mr. Rosenthal was the Manager of Operations of Sunweave Linens, a manufacturer
and distributor of linens.

Robert Pagano was appointed Vice President--Marketing and Product
Planning of the Company in February 1996. From May 1994 through December 1995,
Mr. Pagano was the Vice President for Research and Development at Toy Biz, Inc.
Prior to that time, starting in November 1991 through May 1994, Mr. Pagano was
Vice President--Marketing of the Joint Venture and then of the Company.

Larry Scott was appointed Vice President of Sales of the Company in
February 1997. From 1994 through 1996, Mr. Scott was the Vice
President--Seasonal Product and Regional Sales Manager of Trendmasters, Inc., a
manufacturer and distributor of toys. Prior to that time, starting in 1990, he
was the Vice President of International Sales of Collegeville Imagineering, Inc.

ITEM 2 - PROPERTIES

On March 1, 1998, the Company moved its principal executive offices and
showroom to Dobbs Ferry, New York. The Company leases approximately 12,500
square feet of office space under a lease expiring in April 2008. The Company
believes that this facility is suitable for the Company's purposes for the
foreseeable future.

The Company leases a showroom in the Toy Center Building at 200 Fifth
Avenue, New York, New York, consisting of approximately 3,200 square feet under
a lease expiring in April 2008. The showroom is adequate for the Company's
purposes for the foreseeable future and has sufficient capacity to accommodate
growth in the Company's product line.

The Company leases approximately 3,400 square feet of office space in
Hong Kong, currently on a month to month basis. The Company expects to remain in
this space; however, it is evaluating alternative office space in Hong Kong. The
Company believes that its current facility or available equivalent facilities
will be adequate for the Company's purposes for the foreseeable future.

9
<PAGE>

The Company's Celt subsidiary owns an approximately 31,000 square foot
manufacturing facility on 7.5 acres of land in Brockport, New York. The Company
manufactures its foam balls and related products in that facility. The Company
believes that the facility is suitable for the products manufactured directly by
the Company. The facility is subject to a mortgage which secures the Company's
obligation to its factor, Milberg Factors, Inc. ("Milberg"). The Company leases
warehouse space near the manufacturing facility in upstate New York primarily
for Celt manufactured products. Additionally, the Company moved its Table Toys
assembly operations from Arkansas City, Kansas to its Celt facility in April
1999.

The Company utilizes public warehouse facilities in Washington
primarily for products imported from Asia.

The Company's operations relating to wooden playtables is based at a
contractor's facility in Arkansas City, Kansas.

ITEM 3 - LEGAL PROCEEDINGS

The Toys "R" Us class actions have been settled. The Company paid
$30,000.

The Company is involved in various litigation and other legal matters
which are being addressed or defended and handled in the ordinary course of
business. None of these matters is expected to result in outcomes having a
material adverse effect on the Company's liquidity, operating results or
consolidated financial position.

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

Not applicable.

10
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PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

Market Information

The Company's Common Stock is quoted in the National Quotation Bureau's
"Pink Sheets" under the symbol "JUST". From October 1, 1992 through October 29,
1998, the Company's Common Stock was traded on the Nasdaq National Market and on
October 29, 1998 the Common Stock was delisted from the Nasdaq Stock Market. The
high and low sale prices for the Common Stock as reported by the Nasdaq National
Market from January 1, 1998 through October 29, 1998 and the high and low bid
prices as reported by the National Quotations Bureau from October 30, 1998
through December 31, 1999 are as follows:

Calendar Year High Low
------------- ------ ------
1998
First Quarter $2.625 $1.500
Second Quarter 2.875 1.688
Third Quarter 2.000 0.656
Fourth Quarter 1.125 0.688
(through October 29)
Fourth Quarter 0.750 0.250
(October 30 through
December 31)

1999
First Quarter $0.469 $0.313
Second Quarter 1.031 0.344
Third Quarter 0.563 0.250
Fourth Quarter 4.188 0.438

The over-the-counter market quotations reflect inter-dealer prices, without
retail mark-up, markdown or commission and may not necessarily represent actual
transactions.

11
<PAGE>

Dividends and Distributions

Pursuant to the Company's Certificate of Incorporation, the Company's
Board of Directors has authorized 150,000 shares of non-voting Series A
Convertible Redeemable Preferred Stock, par value $1.00 per share ("Series A
Stock") and 650,000 shares of non-voting Series B Convertible Redeemable
Preferred Stock, par value $1.00 per share ("Series B Stock"). As of December
31, 1999, there were no shares of Series A Stock outstanding and 129,261 shares
of Series B Stock outstanding. The Series A Stock and Series B Stock rank senior
to the Common Stock with respect to dividends. The Series A Stock and Series B
Stock have cumulative dividends of $.06 per share and $.25375 per share,
respectively, per annum, payable quarterly. Such dividends are payable in cash
or additional stock at the Company's election. During 1999, there were no cash
dividends paid on the Series A Stock. During 1999, the Company paid cash
dividends only to those entities which converted their Series B Stock to Common
Stock. As long as any shares of either the Series A Stock or Series B Stock are
outstanding, no cash dividends will be paid on the Common Stock unless, at the
time, all accrued and unpaid dividends and applicable sinking fund obligations
have been paid or provided for. The Company has not paid cash dividends on its
Common Stock and does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future.

Reverse Stock Split

On September 4, 1998 (the "Effective Date"), the Company amended its
Certificate of Incorporation to effect a one-for-two reverse stock split of its
Common Stock, which was approved by the Company's stockholders on September 1,
1998. On the Effective Date, the number of shares of Common Stock held by each
stockholder were deemed to represent one-half of the number of shares of Common
Stock owned immediately prior to the reverse stock split with fractional shares
rounded to the next highest whole share. The number of shares and exercise price
of the Company's outstanding warrants and options for future issuance of Common
Stock were proportionately adjusted in accordance with their terms to reflect
the reverse stock split. The reverse stock split also resulted in the conversion
price of the Series A Stock and the conversion price and the number of shares of
Common Stock issuable upon conversion of the Series B Stock being
proportionately adjusted as provided in each such security's Certificate of
Designations, Preferences and Rights.

Series A Stock

In December 1998, all of the 120,000 outstanding shares of Series A
Stock were converted into 30,000 shares of Common Stock.

12
<PAGE>

Series B Stock

On April 9, 1998, the Company offered to pay and exchange $0.5075 in
cash and one-half of one share of the Company's Common Stock (as adjusted for
the one-for-two reverse stock split) for each share of Series B Stock (the
"Exchange Offer"). The holders of 239,016 shares of Series B Stock, net of
certain adjustments, accepted the Exchange Offer and the Company paid $122,770
in cash and issued 119,508 shares of Common Stock in exchange for the 239,016
shares of Series B Stock. The market value of the Common Stock and carrying
value of the Series B Stock on the date of exchange amounted to $226,389 and
$487,037, respectively. The total consideration paid by the Company was less
than the carrying value of the Series B Stock by $137,878, and has been
accounted for as a gain on conversion of the Series B Stock in 1998.

As of December 31, 1998, the Company sold its Flexitoys construction
block product line to the product's original founder. The Company received
approximately 146,000 shares of its Series B Stock as consideration for
inventory, fixed assets and intellectual property associated with the Flexitoys
product line.

Common Stock Warrant

On August 31, 1998, the Company issued a five-year warrant, as amended,
to its investment banker to purchase up to 250,000 shares of Common Stock with
an exercise price of $1.00 per share. The warrant is exercisable with respect to
50,000 shares of Common Stock. The warrant becomes exercisable with respect to
the remaining 200,000 shares of Common Stock only after the consummation of
certain acquisition transactions by the Company. The number of such shares
subject to exercise is determined by a formula based upon the net sales of the
business or product line acquired by the Company.

Number of Stockholders

As of March 24, 2000, there were approximately 200 holders of record of
the Common Stock. The Company has approximately 1,300 beneficial stockholders of
the Common Stock.

13
<PAGE>

ITEM 6 - SELECTED FINANCIAL DATA

The following table sets forth certain selected financial data at and
for the periods presented. This information should be read in conjunction with
the Company's Financial Statements and related Notes.

<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Income Statement Data:

Net sales $18,071 $19,347 $23,259 $22,056 $19,588
Cost of goods sold 11,342 11,756 14,505 13,569 13,339
------- ------- ------- ------- -------
Gross profit 6,729 7,591 8,754 8,487 6,249
------- ------- ------- ------- -------
Expenses:
Merchandising, selling, warehousing and 3,757 3,782 3,500 3,575 5,941
distribution
Royalties 1,081 884 1,009 710 1,868
General and administrative 3,014 3,251 3,571 3,762 4,506
------- ------- ------- ------- -------
Operating (loss) income (1,123) (326) 674 440 (6,066)
Interest expense, net (537) (576) (615) (533) (216)

Gain (writedown) related to investment in
Hong Kong property -- -- -- 198 (1,578)

Settlement of arbitration and related legal
expenses -- -- -- -- (910)

Other income (expense) -- -- 7 50 (17)
------- ------- ------- ------- -------
Income (loss) before preferred stock
dividends and accretion (1,660) (902) 66 155 (8,787)
Preferred stock dividends and accretion (56) (153) (215) (109) --
Gain on conversion of Series B Stock -- 138 -- -- --
------- ------- ------- ------- -------
Net (loss) income attributable to common
stockholders $(1,716) $ (917) $ (149) $ 46 $(8,787)
======= ======= ======= ======= =======
Basic (loss) earnings per share attributable to
common stockholders $ (0.77) $ (0.43) $ (0.07) $ 0.02 $ (4.23)
======= ======= ======= ======= =======
Balance Sheet Data:

Working capital $722 $ 2,164 $ 3,025 $ 2,742 $ 2,273
Total assets 7,141 8,603 9,728 9,986 11,823
Short-term debt 102 309 -- -- 360
Long-term debt -- -- -- -- 1,886
Stockholders' equity 3,563 5,262 5,959 6,053 6,008

</TABLE>

14
<PAGE>

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company reported a net loss before preferred stock dividends and
accretion of approximately $1,660,000 for the year ended December 31, 1999,
compared to a loss of approximately $902,000 in the prior year. The net loss in
1999 was primarily attributable to a reduction in the Company's net sales to
$18,071,000 in 1999 from $19,347,000 in 1998.

In each of the three years ended December 31, 1999, the Company has had
increasing losses. The Company believes that it needs to increase its sales and
distribution in order to increase its profitability. During 1999, the Company
invested in a number of new licenses and product lines and expanded existing
product lines, thereby increasing the number of new products available for sale
in 2000 and in subsequent years. The Company also is increasing its efforts to
sell to a wider range of customers to increase its sales. The Company also seeks
to improve its cash flow through continuing its close control of inventory
levels and monitoring expenditures. The Company anticipates that the foregoing
efforts can improve the sales, profitability and cash flow of its operations.

The following table sets forth the percentage of net sales for the
periods indicated and percentage changes from period to period of certain income
and expense items included in "Selected Financial Data".

<TABLE>
<CAPTION>
Percentage of Net Sales Period-to-Period
Year Ended December 31, Percentage Change
------------------------------------ -----------------------
1999 1998
vs. vs.
1999 1998 1997 1998 1997
------------------------------------ -----------------------
<S> <C> <C> <C> <C> <C>
Net sales ..................................... 100.0% 100.0% 100.0% (6.6%) (16.8%)

Cost of goods sold ............................ 62.8 60.8 62.4 (3.5) (19.0)

Gross profit .................................. 37.2 39.2 37.6 (11.4) (13.3)

Merchandising, selling, warehousing and
distribution expenses ....................... 20.8 19.5 15.0 (0.7) 8.1

Royalties ..................................... 6.0 4.6 4.3 22.2 (12.3)

General and administrative expenses ........... 16.6 16.8 15.4 (7.3) (9.0)

Operating (loss) income ....................... (6.2) (1.7) 2.9 (244.2) (148.4)
</TABLE>

15
<PAGE>

Results of Operations

Year Ended December 31, 1999 and 1998

Net Sales

Net sales for 1999 decreased 6.6% to $18,071,000 from $19,347,000 in
1998. The decrease in sales was due primarily to aggressive competition from
large toy companies for several of the most popular items, a decline in
popularity of some items which have been offered for several years, and lower
than anticipated fourth quarter orders as retailers, over-stocked with Star Wars
merchandise, attempted to control inventories.

Gross Profit

Gross profit as a percentage of net sales decreased to 37.2% in 1999
compared to 39.2% in 1998. This decrease resulted primarily from changes in the
mix of business and from the sale of excess inventory at discounted prices.
Gross profit decreased 11.4% to $6,729,000 in 1999 from $7,591,000 in 1998 as a
result of the decease in sales.

The Company's net sales and gross margin, as a percentage of net sales,
is to some extent dependent on its mix of business during a given time period.
Variables include such factors as whether merchandise is shipped from a domestic
warehouse or directly from Asia, whether the merchandise is purchased from
overseas sources or is produced domestically and the specific blend of products
shipped to the Company's customers.

Royalties

Royalty expense increased as a percentage of net sales to 6.0% in 1999
from 4.6% in 1998 primarily due to an increase in net sales of products subject
to royalties, which are a result of the Company's investment in new products.

General and Administrative Expenses

General and administrative expenses decreased 7.3% to $3,014,000 for
1999 from $3,251,000 in 1998. This decrease resulted from (a) cost control
measures implemented by the Company and (b) the reimbursement from an insurance
carrier of certain legal expenses incurred in previous years. Included in the
1999 general and administrative expenses are approximately $100,000 for
professional fees incurred by the Company in connection with its proposed
acquisition of 4KIDZ, which acquisition was terminated during the third quarter
of 1999.

Operating Profit (Loss)

The Company had an operating loss of $1,123,000 in 1999 compared with
an operating loss of $326,000 in 1998. This difference is primarily attributable
to the decrease in sales and the resulting decrease in gross profit.

16
<PAGE>

Interest Expense

Interest expense decreased to $546,000 in 1999 as compared to $590,000
in 1998. This change was due primarily to decreased borrowings from Milberg
during the year as a result of lower sales and inventory levels in 1999.

Net Income (Loss)

The Company had net loss of $1,660,000 in 1999 as compared with net
loss of $902,000 in 1998. This difference is primarily attributable to the
decrease in sales and the resulting decrease in gross profit.

Basic Loss Per Share Attributable to Common Stockholders

In 1999 and 1998, the Company deducted dividends paid on its preferred
stock outstanding, and the accretion of the Series B Stock to its redemption
value as expenses in computing net income attributable to common stockholders.

On April 9, 1998, the Company offered to pay and exchange $.5075 in
cash and one-half of one share of the Company's Common Stock (as adjusted for
the reverse stock split) for each share of Series B Stock. The holders of
239,016 shares of Series B Stock accepted this offer. The total consideration
paid by the Company was less than the carrying value of the Series B Stock
exchanged and $138,000 has been accounted for as a gain on conversion of the
Series B Stock in 1998.

Basic loss per share attributable to common stockholders for 1999
totaled $.77 per share compared to a basic loss per share attributable to common
stockholders of $.43 per share in 1998 based upon 2,240,000 and 2,157,000
weighted average shares outstanding during 1999 and 1998, respectively.

Results of Operations

Year Ended December 31, 1998 and 1997

Net Sales

Net sales for 1998 decreased 16.8% to $19,347,000 from $23,259,000 in
1997. The decrease in sales was due primarily to (a) significant reduction in
inventories at a number of the Company's larger customers during 1998, (b) the
discontinuance in 1997 of the Company's unprofitable product lines, and (c) a
weak toy market in 1998 especially for traditional toys.

Gross Profit

Gross profit as a percentage of net sales increased to 39.2% in 1998
compared to 37.6% in 1997. This increase resulted primarily from the Company's
efforts to market products with a higher gross profit which include its
selective discontinuance of products the Company believes will not achieve an
acceptable return on investment. Gross profit decreased 13.3% to $7,591,000 in
1998 from $8,754,000 in 1997 as a result of the decease in sales.

17
<PAGE>

Merchandising, Selling, Warehousing and Distribution Expenses

Merchandising, selling, warehousing and distribution expense increased
8.1% to $3,782,000 for 1998 from $3,500,000 in 1997. During 1997, the Company
significantly increased its investment in the development, design and packaging
of products to be introduced in 1998. The amortization of such amounts resulted
in an increase in merchandising expense in 1998. The increase in this expense
was partially offset by a decline in sales commissions as a result of the
decrease in sales.

Royalties

Royalty expense increased as a percentage of net sales to 4.6% in 1998
from 4.3% in 1997 primarily due to an increase in net sales of products subject
to royalties, which are a result of the Company's investment in new products.

General and Administrative Expenses

General and administrative expenses decreased 9.0% to $3,251,000 for
1998 from $3,571,000 in 1997. The Company implemented certain cost control
measures which reduced these expenses in 1997 and 1998.

Operating Profit (Loss)

The Company had an operating loss of $326,000 in 1998 compared with an
operating profit of $674,000 in 1997. This difference is primarily attributable
to the decrease in sales and the resulting decrease in gross profit.

Interest Expense

Interest expense decreased to $590,000 in 1998 as compared to $623,000
in 1997. This change was due primarily to decreased borrowings from Milberg
during the year as a result of lower sales and inventory levels in 1998.

Net Income (Loss)

The Company had net loss of $902,000 in 1998 as compared with net
income of $66,000 in 1997. This difference is primarily attributable to the
decrease in sales and the resulting decrease in gross profit.

18
<PAGE>

Basic Loss Per Share Attributable to Common Stockholders

In 1998 and 1997, the Company deducted dividends paid on its preferred
stock outstanding, and the accretion of the Series B Stock issued in 1996 to its
redemption value as expenses in computing net income attributable to common
stockholders.

Basic loss per share attributable to common stockholders for 1998
totaled $.43 per share compared to a basic loss per share attributable to common
stockholders of $.07 per share in 1997 based upon 2,157,000 and 2,079,000
weighted average shares outstanding during 1998 and 1997, respectively.

Liquidity and Capital Resources

The Company's primary sources of liquidity and capital resources in
1999 and 1998 were funds provided from operations and its Milberg credit
facility. At December 31, 1999, working capital was $722,000 compared to
approximately $2,164,000 at December 31, 1998. The reduction in working capital
is a result of the net loss incurred during 1999.

Inventory levels were $748,000 lower at December 31, 1999 compared with
December 31, 1998 as a result of management's efforts to control the amount of
inventory on hand and the sale of slow moving inventory.

Cash provided by operating activities in 1999 was $844,000 as compared
with $396,000 in 1998. Although the Company incurred losses in the past two
years, it has generated cash from operating activities through tight control
over inventory levels and expenditures.

Cash used in investing activities was $613,000 and $501,000 for the
years ended 1999 and 1998, respectively, which was primarily attributable to
capital expenditures for fixed assets, including molds and tooling for new
products.

Cash (used in) provided by financing activities was ($264,000) and
$158,000 in 1999 and 1998, respectively. Funds borrowed from the Company's
factor were used to reduce the amount of the Series B Stock outstanding pursuant
to the Exchange Offer and to finance the operations of the business.

19
<PAGE>

The Company's factoring agreement with Milberg provides for advances
equal to the lesser of 85% of total accounts receivable or $5,000,000. The
factoring charge is 0.65% of receivables. Advances bear interest at the rate of
prime plus one percent. Milberg has also agreed to advance to the Company, at
the Company's request, the lesser of $2,000,000 or 50% of the book value of the
Company's inventory located in the United States. Such advances will also bear
interest at the rate of prime plus one percent. Additionally, the factoring
arrangement with Milberg is secured by a mortgage on the real property owned by
the Company's manufacturing subsidiary and a security interest in the inventory
and personal property located in the United States.

The Company believes that its cash flow from operations, its ability to
control expenditures and available borrowings will be adequate to meet its
obligations for the ensuing year.

Inflation

The Company does not believe that the relatively moderate rates of
inflation in recent years have had a significant effect on its net sales or
profitability.

Seasonality

The toy industry is typically seasonal in nature due to the heavy
demand for toy products during the Christmas season. During the past several
years, the Company has experienced a shift in its revenues to the second half of
the year with fourth quarter revenues becoming increasingly significant. The
Company expects that this trend will continue due to industry changes and due to
changes in the Company's product mix. This concentration increases the risk of
(a) underproduction of popular items, (b) overproduction of less popular items
and (c) failure to achieve tight and compressed shipping schedules.

Backlog

20
<PAGE>

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See page F-1.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On February 9, 2000, the Company replaced Ernst & Young LLP ("E&Y") as
its principal independent accountants and engaged Edward Isaacs & Company LLP
("Isaacs") as its new principal independent accountants to audit the Company's
financial statements. The decision to change accountants was recommended and
unanimously approved by the audit committee of the board of directors of the
Company.

The reports of E&Y on the Company's financial statement for the past
two fiscal years did not contain an adverse opinion or disclaimer of opinion and
neither statement was qualified or modified as to uncertainty, audit scope or
accounting principles. During the Company's two most recent fiscal years ended
December 31, 1998 and 1997, and the subsequent interim period preceding the
replacement of E&Y, there were no disagreements with E&Y on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
E&Y, would have caused it to make reference to the subject matter of the
disagreements in their report. There were no "reportable events" as that term is
described in Item 304(a)(1)(v) of Regulation S-K with respect to the Company
during the Company's two most recent fiscal years and the subsequent interim
period preceding the replacement of E&Y.

21
<PAGE>

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Identification of Directors

The following table sets forth the names, ages and principal
occupations of each of the Company's directors and the year in which each was
elected a director.

<TABLE>
<CAPTION>
Name Age Principal Occupation Director Since
- ------------- --- ------------------------------------------------- --------------
<S> <C> <C> <C>
Jerry Carroll 51 President, Chief Executive Officer, Chief 2000
Operating Officer and Director of the Company

Roger Gimbel 69 Chairman of the Board of Directors; Chairman of 1992
Worldwide Dreams LLC

Charmaine Jefferson 46 Director of the Company; Attorney; 1995
Director, Creative Arts Resources, Disney
Entertainment Productions, Inc.

Howard Kaufman 73 Director of the Company; private investor 1992

Morton J. Levy 78 Director of the Company; private investor 1992

Irwin Naitove 82 Director of the Company; private investor 1995

Donald D. Shack 71 Director of the Company; shareholder and director 1992
of the law firm Shack & Siegel, P.C.
</TABLE>

See "Executive Officers of the Company" with respect to information
regarding Mr. Carroll's business experience.

Roger Gimbel was appointed Chairman of the Board of Directors in March
2000. He was appointed Vice Chairman of the Board of Directors, Chief Financial
Officer and Vice President of the Company in August 1992. Mr. Gimbel resigned as
Chief Financial Officer and Vice President of the Company in April 1995. Mr.
Gimbel was one of the founders of the Company. Mr. Gimbel is the Chairman of
Worldwide Dreams LLC, an importer and distributor of personal accessories, small
leather goods and related items.

22
<PAGE>

Charmaine Jefferson was appointed a director of the Company in July
1995. Ms. Jefferson is an attorney and is the Director, Creative Arts Resources,
Disney Entertainment Productions, Inc. Ms. Jefferson is also President of Kelan
Resources, a non-profit arts management consulting firm. From April 1996 to
November 1997, Ms. Jefferson served as Vice President - Business Affairs for de
Passe Entertainment, Inc. and from November 1997 to June 1998 Ms. Jefferson
served as the Business Affairs Consultant of such company. From August 1992 to
June 1995, Ms. Jefferson was employed as the Executive Director of the Dance
Theatre of Harlem, Inc. From 1988 through August 1992, Ms. Jefferson was Deputy
and Acting Commissioner for the New York City Department of Cultural Affairs.

Howard Kaufman was appointed a director of the Company in October 1992.
Mr. Kaufman has been engaged in the toy business for approximately 34 years,
having been a founder and principal officer of KayBee Stores. For more than the
past five years, Mr. Kaufman has been a private investor.

Morton J. Levy was the Company's Chairman from March 1995 through March
2000 and also served as the Chief Executive Officer from March 1995 until July
1997. Mr. Levy is a director of each of the Company's subsidiaries. He was
appointed a director of the Company in October 1992 and became a consultant to
the Company in 1994 until being hired as Chief Executive Officer in March 1995.
Mr. Levy has been engaged in the toy business for over 35 years, having been a
founder and principal officer of Gabriel Industries, Inc., a diversified toy
manufacturer. For more than the past five years, Mr. Levy has been a private
investor.

Irwin Naitove was appointed a director of the Company in May 1995. Mr.
Naitove has been in corporate finance for the past 45 years. For more than the
past five years, Mr. Naitove has been a private investor.

Donald D. Shack was appointed a director of the Company in August 1992.
Mr. Shack is an attorney and, since April 1993, has been a shareholder and
director of the law firm of Shack & Siegel, P.C., general counsel to the
Company. From January 1990 through March 1993, Mr. Shack was a member of the law
firm of Whitman & Ransom which served as general counsel to the Company during
that period. Mr. Shack is also a director of the following publicly-held
companies: Andover Togs, Inc., Ark Restaurants Corp. and International Citrus
Corporation.

Identification of Executive Officers

See Item 1. "Business-- Executive Officers of the Company."

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities to file reports
of ownership and changes in ownership on Forms 3, 4 and 5 with the Commission
and the National Association of Securities Dealers, Inc. Officers, directors and
greater than ten percent stockholders are required by the Commission's
regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file.

23
<PAGE>

Based solely on the Company's review of the copies of such forms it has
received and written representations that no Form 5 is required to be filed, the
Company believes that all but one of its officers, directors and greater than
ten percent beneficial owners complied with all filing requirements applicable
to them with respect to transactions during fiscal 1999. There was one late
filing involving one transaction for the sale of 3,750 shares of stock owned by
Morton J. Levy.

ITEM 11 - EXECUTIVE COMPENSATION

The Summary Compensation Table below sets forth certain information
concerning compensation paid or accrued in 1999 to the Chief Executive Officer
of the Company and the four executive officers whose total salary and bonus in
1999 exceeded $100,000.

Summary Compensation Table

<TABLE>
<CAPTION>
Long-Term
Compensation
--------------
Annual Compensation Securities
----------------------- Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options (#) Compensation ($)
- ------------------------------------ ------------ ---------- --------- -------------- -------------------
<S> <C> <C> <C> <C> <C>
Barry Shapiro (1) 1999 116,348 - 100,000 -
President and Chief 1998 250,000 - - -
Executive Officer 1997 237,197 - 50,000 -

Jerry Carroll (3)(4)(6) 1999 160,288 - 25,000 -
President, Chief Executive 1998 130,000 - - -
Officer, Chief Operating Officer 1997 47,500 - 5,000 30,000(5)

David Schwartz (2)(4) 1999 135,000 - 25,000 -
Chief Financial Officer and 1998 135,000 - - -
Treasurer 1997 130,000 - 5,000 -

Robert Pagano (2) 1999 146,000 - 20,000 -
Vice President - Marketing and 1998 146,000 - - -
Product Planning 1997 139,808 - - -

Larry Scott (3)(4) 1999 145,000 - 20,000 -
Vice President - Sales 1998 145,000 - - -
1997 138,384 - 7,500 34,039(5)
</TABLE>

- -------------------
(1) Mr. Shapiro was appointed an executive officer of the Company at the end of
1994. Mr. Shapiro was appointed Chief Executive Officer of the Company in
July 1997. Mr. Shapiro resigned from the Company in June 1999 and all
options granted to him have been cancelled.
(2) Mr. Schwartz and Mr. Pagano were appointed executive officers of the Company
in 1996.
(3) Mr. Scott and Mr. Carroll were appointed executive officers of the Company
in 1997.
(4) Mr. Schwartz started with the Company in November 1996. Mr. Scott started
with the Company in January 1997. Mr. Carroll started with the Company in
August 1997.
(5) Represents amounts paid to Mr. Scott and Mr. Carroll for relocation expenses
and related matters.
(6) Mr. Carroll was appointed President and Chief Executive Officer of the
Company in March 2000. He was appointed Senior Vice President and Chief
Operating Officer of the Company in May 1999.

24
<PAGE>

The following table sets forth certain information with respect to
options to purchase Common Stock granted in fiscal year 1999 under the Company's
1992 Incentive and Non-Qualified Stock Option Plan (the "Plan") for the
executive officers named in the Summary Compensation Table above.

Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Appreciation
Individual Grants for Option Term
- ---------------------------------------------------------------------------------------------- -----------------------
Percent of
Number of Total
Securities Options Granted Exercise
Underlying to Employees in Price Expiration
Name Options Granted (#) 1999 ($/Share) Date 5%($) 10%($)
---- -------------------- ---------------- ---------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Barry Shapiro 50,000 21.1% 0.391 03/22/09 -- --
Barry Shapiro 50,000 21.1% 1.000 03/22/09 -- --
Jerry Carroll 25,000 10.5% 0.391 03/22/09 6,147 15,579
David Schwartz 25,000 10.5% 0.391 03/22/09 6,147 15,579
Robert Pagano 20,000 8.4% 0.391 03/22/09 4,918 12,463
Larry Scott 20,000 8.4% 0.391 03/22/09 4,918 12,463
</TABLE>

The following table details the value on December 31, 1999 of options
to purchase Common Stock held by the executive officers named in the Summary
Compensation Table above.

Fiscal Year End Option Values

<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised in-the-Money
Unexercised Options at December 31, 1999 Options at December 31, 1999 (1)
--------------------------------------------- ----------------------------------------
Name Exercisable(#) Unexercisable(#) Exercisable($) Unexercisable($)
---- --------------------- -------------------- ----------------- -------------------
<S> <C> <C> <C> <C>
Barry Shapiro -- -- -- --
Jerry Carroll 2,000 28,000 -- 19,523
David Schwartz 6,500 31,000 -- 19,523
Robert Pagano 6,000 24,000 -- 15,618
Larry Scott 3,000 24,500 -- 15,618
</TABLE>

(1) Based on the mean between the bid and asked price of the Common Stock of
$1.1719 per share as reflected in the over-the-counter market on December
31, 1999.

25
<PAGE>

Compensation Arrangements

The Company has an employee bonus pool based on the Company's profits.
In 1999, the pool consisted of 20% of the first $1,000,000 of pre-tax earnings
after preferred stock dividends and accretion, 15% of the next $1,000,000 of
pre-tax earnings and 10% of all such pre-tax earnings over $2,000,000. No
bonuses were earned for 1999.

Through August 1998, all non-officer directors of the Company who do
not receive compensation from the Company were entitled to receive a fee of
$10,000 per year and options to purchase 2,500 shares of Common Stock at the
market price of the Common Stock on the anniversary of their election as a
member of the Board of Directors. On September 1, 1998, the Board of Directors
reduced the annual fee paid to such non-officer directors to $5,000. On March
23, 1999, the Board of Directors decided to eliminate the annual fee paid to
non-officer directors for the current year. On March 23, 1999, the Board of
Directors decided to cancel all annual grants of stock options to non-officer
directors and to amend the Plan to eliminate any automatic grants of options to
eligible directors. The Board of Directors also decided to make non-cancellable
out-of-Plan grants in the amount of (i) 20,000 shares to each of Messrs. Gimbel,
Kaufman, Naitove and Shack and (ii) 12,000 shares to Ms. Jefferson.

26
<PAGE>

ITEM 12 - SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information at March 24, 2000,
as to shares of Common Stock beneficially owned by (i) each person known by the
Company to be the beneficial owner of more than five percent of the outstanding
Common Stock, (ii) the Company's directors, the Chief Executive Officer and the
other four executive officers identified in the Summary Compensation Table above
and (iii) the directors and officers of the Company as a group.

<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership (1) Class
------------------- ------------------------ ----------
<S> <C> <C>
Roger Gimbel ....................................... 216,116(2) 9.5%
350 Fifth Avenue
New York, New York 10118

Morton J. Levy...................................... 166,698(3) 7.1%
20 Livingstone Avenue
Dobbs Ferry, New York 10522

G. Gimbel/M. Meyers Voting Trust ................... 149,842(4) 6.7%
c/o Shack & Siegel, P.C.
530 Fifth Avenue
New York, New York 10036

Donald D. Shack..................................... 47,500(5) 2.1%
530 Fifth Avenue
New York, New York 10036

Howard Kaufman...................................... 28,000(6) 1.2%
Bishops Estate
Lenox, Massachusetts 01290

Irwin Naitove....................................... 26,000(7) 1.1%
RR1
Box 630
Mount Holly, Vermont 05758

Charmaine Jefferson ................................ 18,000(8) Less than 1%
2003 Victoria Avenue
Los Angeles, California 90016

David Schwartz...................................... 15,250(9) Less than 1%
20 Livingstone Avenue
Dobbs Ferry, New York 10522

Robert Pagano....................................... 11,000(10) Less than 1%
20 Livingstone Avenue
Dobbs Ferry, New York 10522
</TABLE>

27
<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Larry Scott......................................... 8,500(11) Less than 1%
20 Livingstone Avenue
Dobbs Ferry, New York 10522

Jerry Carroll....................................... 7,000(12) Less than 1%
20 Livingstone Avenue
Dobbs Ferry, New York 10522

All directors and executive officers as
a group (eleven persons).......................... 552,314(13) 21.8%
</TABLE>

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

(1) Except as otherwise indicated in the following footnotes, the persons
listed in the table own of record the shares of Common Stock opposite their
name and have sole voting and investment power with respect to such shares
of Common Stock.

(2) Includes 13 shares of Common Stock owned by the Voting Trust listed below,
11,500 shares issuable upon exercise of currently exercisable stock options
granted under the Plan and 20,000 shares issuable upon exercise of a
separate currently exercisable stock option.

(3) Includes 47,000 shares issuable upon exercise of currently exercisable
stock options granted under the Plan and 50,000 shares issuable upon
exercise of a separate currently exercisable stock option.

(4) Based upon information set forth in Schedule 13D filed by Geoffrey Gimbel
and Murray Meyers as Trustees under Voting Trust dated as of October 7,
1997 by and between Geoffrey Gimbel, Roger Gimbel, Bradley Meyers, Gary
Meyers, Lawrence Meyers, Murray Meyers and Susan Schulman (the "Voting
Trust") on or about February 11, 1998. The duration of the Voting Trust is
three years unless earlier terminated or extended by the Trustees. Geoffrey
Gimbel as Trustee has sole voting power over 99,895 shares and Murray
Meyers as Trustee has sole voting power over 49,947 shares.

(5) Includes 12,500 shares issuable upon exercise of currently exercisable
stock options granted under the Plan and 30,000 shares issuable upon
exercise of a separate currently exercisable stock option.

(6) Includes 8,000 shares issuable upon exercise of currently exercisable stock
options granted under the Plan and 20,000 shares issuable upon exercise of
a separate currently exercisable stock option.

(7) Includes 6,000 shares issuable upon exercise of currently exercisable stock
options granted under the Plan and 20,000 shares issuable upon exercise of
a separate currently exercisable stock option.

(8) Includes 6,000 shares issuable upon exercise of currently exercisable stock
options granted under the Plan and 12,000 shares issuable upon exercise of
a separate currently exercisable stock option.

(9) Includes 11,500 shares issuable upon exercise of currently exercisable
stock options granted under the Plan.

(10) Includes 11,000 shares issuable upon exercise of currently exercisable
stock options granted under the Plan.

28
<PAGE>

(11) Includes 8,500 shares issuable upon exercise of currently exercisable stock
options granted under the Plan.

(12) Includes 7,000 shares issuable upon exercise of currently exercisable stock
options granted under the Plan.

(13) Includes 289,250 shares issuable upon exercise of currently exercisable
stock options.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 1999, Morton J. Levy, a director of the Company, was paid a
consulting fee of $50,000 pursuant to a December 1996 agreement with the
Company.

Donald D. Shack, a director of the Company, is a shareholder and
director of Shack & Siegel, P.C., general counsel to the Company.

PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K

(a)(1) Financial Statements: Page
----

Index to Financial Statements F- 1

Report of Independent Auditors F- 2

Consolidated Balance Sheets -
December 31, 1999 and 1998 F- 6

Consolidated Statements of Operations -
For each of the years ended
December 31, 1999, 1998 and 1997 F- 7

Consolidated Statements of Changes in
Stockholders' Equity -- For each of the
years ended December 31, 1999, 1998 and 1997 F- 8

Consolidated Statements of Cash Flows -
For each of the years ended
December 31, 1999, 1998 and 1997 F- 9

Notes to Consolidated Financial Statements F-10

(2) Financial Statement Schedules:

Schedule II -- Valuation and Qualifying Accounts F-29

29
<PAGE>

(3) Exhibits:

3.1 Certificate of Incorporation, incorporated by reference to
Exhibit 3.1 to the Registration Statement on Form S-1 (File
No. 33-50878) (the "Form S-1").

3.2 Certificate of Amendment of Certificate of Incorporation
incorporated by reference to Exhibit 3.5 of the Quarterly
Report on Form 10-Q filed with the Securities and Exchange
Commission on November 8, 1996 (the "1996 3rd Quarter 10-Q").

3.3 Certificate of Designations, Preferences and Rights of the
Series A Stock (included in Exhibit 4.1 hereof).

3.4 Certificate of Designations, Preferences and Rights of the
Series B Stock (included in Exhibit 4.2 hereof).

3.5 Amended and Restated By-laws incorporated by reference to
Exhibit 3.4 to the 1996 3rd Quarter 10-Q.

3.6 Certificate of Amendment of Certificate of Incorporation,
incorporated by reference to Exhibit 3.6 of the Quarterly
Report on Form 10-Q filed with the Securities and Exchange
Commission on October 15, 1998 (the "1998 3rd Quarter 10-Q").

4.1 Certificate of Designations, Preferences and Rights of the
Series A Stock, incorporated by reference to Exhibit 4 of the
Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on November 7, 1995 (the "1995 3rd Quarter
10-Q").

4.2 Certificate of Designations, Preferences and Rights of the
Series B Stock, incorporated by reference to Exhibit 3.2 of
the Current Report on From 8-K filed with the Securities and
Exchange Commission on July 10, 1996 (the "July 1996 Form
8-K").

4.3 Form of Warrant, dated June 26, 1995, issued to various
parties in respect of the aggregate of 60,000 shares of the
Company's Common Stock, incorporated by reference to Exhibit
4.2 of the July 1996 Form 8-K.

4.4 Stock Option, dated December 5, 1996, granted to Morton J.
Levy, incorporated by reference to Exhibit 4.4 of the
Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on May 15, 1997 (the "1997 1st Quarter
10-Q").

4.5 Stock Option, dated June 30, 1997, granted to Morton J. Levy,
incorporated by reference to Exhibit 4.4 of the Quarterly
Report on Form 10-Q filed with the Securities and Exchange
Commission on August 14, 1997 (the "1997 2nd Quarter 10-Q").

4.6 Warrant agreement, dated as of August 31, 1998, between the
Company and Gerard Klauer, incorporated by reference to
Exhibit 4.4 of the 1998 3rd Quarter 10-Q.

30
<PAGE>

10.1 Form of Indemnification Agreement between the Company and each
of its Directors, incorporated by reference to Exhibit 10.12
of the Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission on August 14, 1995 (the "1995 2nd
Quarter 10-Q").

10.2 1992 Incentive and Non-Qualified Stock Option Plan,
incorporated by reference to Exhibit 10.4 of the Form S-1.

10.3 Amended and Restated 1992 Incentive and Non-Qualified Stock
Option Plan, incorporated by reference to Exhibit 10.3 of the
1996 3rd Quarter 10-Q.

10.4 Form of Underwriters Warrant Agreement between the Company and
Gruntal & Co., Incorporated and Gerard Klauer, incorporated by
reference to Exhibit 10.12 of the Form S-1.

10.5 Factoring Agreement dated as of July 26, 1995 with Milberg,
incorporated by reference to Exhibit 10.17 of the Current
Report on Form 8-K filed with the Securities and Exchange
Commission on August 4, 1995 (the "August 1995 Form 8-K").

10.6 Letter dated July 20, 1995 from Milberg to the Company,
incorporated by reference to Exhibit 10.18 of the August 1995
Form 8-K.

10.7 Amendment dated March 21, 1996 between Milberg and the
Company, incorporated by reference to Exhibit 10.13 of the
1995 10-K.

10.8 Settlement Agreement dated October 30, 1995 between the
Company, Allan Rigberg, Rose Evangelista and JTI Toys, Inc.
incorporated by reference to Exhibit 10.10 of the 1995 3rd
Quarter 10-Q.

10.9 Warrant Agreement dated as of January 1, 1996 between Just
Toys, Inc. and Patricof & Co. Capital Corp., incorporated by
reference to Exhibit 10.11 of the Annual Report on Form 10-K
with respect to the year ended December 31, 1996 (the "1995
10-K").

10.10 Agreement for Sale and Purchase of the Hong Kong property
dated March 22, 1996 between Just Toys Products Limited and
Advanced Chemicals Limited, incorporated by reference to
Exhibit 10.12 of the 1995 10-K.

10.11 Asset Purchase Agreement dated January 22, 1996 between the
Company and Table Toys, Inc. (the "Asset Purchase Agreement"),
incorporated by reference to Exhibit 2.1 of the July 1996 Form
8-K.

10.12 Amendment dated April 12, 1996 to the Asset Purchase
Agreement, incorporated by reference to Exhibit 2.2 of the
July 1996 Form 8-K.

10.13 Second Amendment dated April 15, 1996 to the Asset Purchase
Agreement, incorporated by reference to Exhibit 2.3 of the
July 1996 Form 8-K.

31
<PAGE>

10.14 Agreement, dated December 5, 1996 between the Company and
Morton J. Levy incorporated by reference to Exhibit 10.1 of
the 1997 1st Quarter 10-Q.

10.15 Security Agreement - Goods and Chattels, dated May 9, 1997
between Milberg and Celt incorporated by reference to Exhibit
10.1 of the 1997 2nd Quarter 10-Q.

10.16 Guaranty, dated May 9, 1997, between Milberg and Celt,
incorporated by reference to Exhibit 10.2 of the 1997 2nd
Quarter 10-Q.

10.17 Mortgage and Security Agreement, dated May 9, 1997, made by
Celt in favor of Milberg incorporated by reference to Exhibit
10.3 of the 1997 2nd Quarter 10-Q.

10.18 Employment Agreement, dated July 1, 1997, between the Company
and Barry Shapiro, incorporated by reference to Exhibit 10.1
to the Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission on November 13, 1997.

10.19 Lease, dated December 16, 1997 between the Company and Akzo
Nobel Chemicals, Inc. incorporated by reference to Exhibit 10
of the Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission on May 14, 1998.

10.20 Engagement letter, dated August 31, 1998, between the Company
and Gerard Klauer, incorporated by reference to Exhibit 10.1
of the 1998 3rd Quarter 10-Q.

16.1 Letter of E&Y dated February 14, 2000 to the Securites and
Exchange Commission incorporated by reference to Exhibit 16.1
on Form 8-K filed on February 14, 2000.

21 Subsidiaries of the Company incorporated by reference to
Exhibit 10.21 of the 1995 10-K.

*23.1 Consent of Isaacs.

*23.2 Consent of Ernst & Young.

*23.3 Consent of Ernst & Young.

*23.4 Consent of E&Y.

*27 Financial Data Schedule.

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

* Filed herewith

(b) Reports on Form 8-K:

During the first quarter of 2000, the Company filed one report
on Form 8-K with respect to Item 4 - Changes in Registrant's
Certifying Accountant on February 14, 2000.

32
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in Dobbs
Ferry, State of New York, on the 28th day of March, 2000.

JUST TOYS, INC.

By: /s/ Jerry Carroll
-----------------------
Jerry Carroll
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been duly signed below by the following persons on
behalf of the Company in the capacities and on the date indicated.

Name Title Date
---- ----- ----

/s/ Roger Gimbel Chairman of the Board March 28, 2000
- ------------------------
(Roger Gimbel)

/s/ Jerry Carroll President, Chief Executive March 28, 2000
- ------------------------ Officer, Chief Operating Officer
(Jerry Carroll) and Director

/s/ David Schwartz Chief Financial Officer, March 28, 2000
- ------------------------ Treasurer and Principal
(David Schwartz) Accounting Officer

Director March 28, 2000
- ------------------------
(Howard Kaufman)

/s/ Morton J. Levy Director March 28, 2000
- ------------------------
(Morton J. Levy)

/s/ Donald D. Shack Director March 28, 2000
- ------------------------
(Donald D. Shack)

/s/ Irwin Naitove Director March 28, 2000
- ------------------------
(Irwin Naitove)

/s/ Charmaine Jefferson Director March 28, 2000
- ------------------------
(Charmaine Jefferson)

<PAGE>

FORM 10-K
ITEM 14(A)(1) AND (2)

JUST TOYS, INC. AND SUBSIDIARIES

LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

THE FOLLOWING CONSOLIDATED FINANCIAL STATEMENTS OF JUST TOYS, INC. AND
SUBSIDIARIES ARE INCLUDED IN ITEM 8:

PAGE
NUMBER
------

REPORT OF INDEPENDENT AUDITORS F-2

BALANCE SHEETS AT DECEMBER 31, 1999 AND 1998 F-6

STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1999, 1998 AND 1997 F-7

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 F-8

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 1999, 1998 AND 1997 F-9

NOTES TO FINANCIAL STATEMENTS F-10

THE FOLLOWING CONSOLIDATED FINANCIAL STATEMENT SCHEDULE OF JUST TOYS, INC. AND
SUBSIDIARIES IS INCLUDED IN ITEM 14(A)(2):

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS F-29

ALL OTHER SCHEDULES FOR WHICH PROVISION IS MADE IN THE APPLICABLE REGULATION OF
THE SECURITIES AND EXCHANGE COMMISSION ARE NOT REQUIRED UNDER THE RELATED
INSTRUCTIONS OR ARE INAPPLICABLE AND, THEREFORE, HAVE BEEN OMITTED.

F-1
<PAGE>

Independent Auditors' Report

We have audited the accompanying consolidated balance sheet of Just Toys, Inc.
and subsidiaries (the "Company") as of December 31, 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year then ended. Our audit also included the financial statement schedule
listed in the index at Item 14(a). These financial statements and schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and schedule based on our audit. We did
not audit the financial statements of Just Toys Products Limited and Joyful
World Enterprises Limited, wholly-owned subsidiaries, which statements reflect
total assets of $442,000 as of December 31, 1999 and net sales of $4,861,814 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 Just Toys Products Limited and Joyful World Enterprises
Limited, 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 and the report of the other auditors provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Just Toys, Inc.
and subsidiaries at December 31, 1999, and the consolidated results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

/s/EDWARD ISAACS & COMPANY LLP

White Plains, New York
March 24, 2000

F-2
<PAGE>

Report of Independent Auditors

The Board of Directors
Just Toys Products Limited

We have audited the balance sheet of Just Toys Products Limited as of December
31, 1999, and the related statements of operations, changes in stockholders'
equity and cash flows for the year then ended (not presented separately herein).
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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Just Toys Products Limited at
December 31, 1999, and the results of its operations and cash flows for the year
then ended, in conformity with accounting principles generally accepted in the
United States of America.

/s/ERNST & YOUNG
Hong Kong
March 24, 2000

F-3
<PAGE>

Report of Independent Auditors

The Board of Directors
Joyful World Enterprises Limited

We have audited the balance sheet of Joyful World Enterprises Limited as of
December 31, 1999, and the related statements of operations, changes in
stockholders' deficit and cash flows for the year then ended (not presented
separately herein). 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.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Joyful World Enterprises
Limited at December 31, 1999, and the results of its operations and cash flows
for the year then ended, in conformity with accounting principles generally
accepted in the United States of America.

/s/ERNST & YOUNG
Hong Kong
March 24, 2000

F-4
<PAGE>

Report of Independent Auditors

We have audited the accompanying consolidated balance sheet of Just Toys, Inc.
and subsidiaries (the "Company") as of December 31, 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the two years in the period ended December 31, 1998. Our audits also
included the financial statement schedule listed in the index at Item 14(a).
These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

We conducted our audits 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Just Toys, Inc.
and subsidiaries at December 31, 1998, and the consolidated results of their
operations and their cash flows for each of the two years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

/s/ERNST & YOUNG LLP

New York, New York
March 12, 1999

F-5
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-----------------------------
1999 1998
----------- -----------
<S> <C> <C>
ASSETS

Current assets:
Cash .................................................... $ 234,509 $ 267,292
Accounts receivable, net of allowances of
$345,000 and $458,000 (Note 4) ........................ 36,717 364,791
Inventories (Note 5) .................................... 1,963,641 2,711,685
Prepaid expenses and other current assets (Note 6) ...... 1,770,056 1,871,758
----------- -----------
Total current assets 4,004,923 5,215,526

Property and equipment, at cost, net of accumulated
depreciation and amortization (Notes 2, 4 and 7) ........ 2,532,996 2,712,369
Goodwill, net of accumulated amortization .................. 500,748 544,296
Other assets ............................................... 102,322 131,020
----------- -----------
TOTAL ............................................ $ 7,140,989 $ 8,603,211
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Due to factor (Note 4) .................................. $ 102,319 $ 308,836
Accounts payable ........................................ 2,087,767 1,778,177
Accrued liabilities (Note 9) ............................ 1,092,900 964,964
----------- -----------
Total current liabilities ........................ 3,282,986 3,051,977

Series B Convertible Redeemable Preferred Stock,
650,000 shares authorized, 129,261 and 137,183 shares
issued and outstanding (liquidation value $468,571
and $497,288)(Note 3) .................................... 294,618 289,405
----------- -----------
Total liabilities ................................ 3,577,604 3,341,382
----------- -----------
Commitments and contingencies (Note 10)

Stockholders' equity:
Preferred stock, $1.00 par value, 2,000,000 shares
authorized (Note 3):
Series A Convertible Redeemable Preferred
Stock, 150,000 shares authorized, no
shares issued and outstanding ..................... - -
Common stock, $.01 par value, 15,000,000 shares
authorized, 2,242,581 and 2,238,619 issued and
outstanding ........................................... 22,426 22,386
Additional paid-in capital .............................. 30,226,187 30,208,779
Accumulated deficit ..................................... (26,685,228) (24,969,336)
----------- -----------
Total stockholders' equity ....................... 3,563,385 5,261,829
----------- -----------
TOTAL ............................................ $ 7,140,989 $ 8,603,211
=========== ===========
</TABLE>

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

F-6
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net sales (Note 11) ..................... $18,071,026 $19,346,789 $23,259,054

Cost of goods sold ...................... 11,342,048 11,755,755 14,504,663
----------- ----------- -----------
Gross profit ............................ 6,728,978 7,591,034 8,754,391
----------- ----------- -----------
Expenses:
Merchandising, selling,
warehousing and distribution ....... 3,756,606 3,782,159 3,500,068
Royalties ............................ 1,080,633 884,436 1,009,028
General and administrative ........... 3,014,281 3,250,596 3,570,950
----------- ----------- -----------
Total ......................... 7,851,520 7,917,191 8,080,046
----------- ----------- -----------
Operating (loss) income ................. (1,122,542) (326,157) 674,345
Other income (expenses):
Interest expense ..................... (545,738) (589,605) (623,277)
Interest and dividend income ......... 8,791 13,291 7,945
Other income ......................... - - 7,551
----------- ----------- -----------
Net (loss) income ....................... (1,659,489) (902,471) 66,564

Preferred stock dividends and
accretion (Note 3) ................... 56,403 152,777 215,081

Gain on conversion of Series B
Stock (Note 3) ....................... - 137,878 -
----------- ----------- -----------
Net loss attributable to
common stockholders .................. $(1,715,892) $ (917,370) $ (148,517)
=========== =========== ===========
Weighted average common shares
outstanding .......................... 2,240,342 2,157,387 2,078,732
=========== =========== ===========
Per share data:

Basic and dilutive loss per share
attributable to common stockholders .. $ (.77) $ (.43) $ (.07)
=========== =========== ===========
</TABLE>

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

F-7
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
Series A
Preferred Stock Common Stock
------------------------- -----------------------
Number Number
of Shares Amount of Shares Amount
--------- ------ --------- ------
<S> <C> <C> <C> <C>
Balance -
January 1, 1997 ................ 120,000 $120,000 2,075,000 $20,750

Conversion of Series B
Stock to Common Stock .......... 8,195 82
Sale of Common Stock .............. 5,889 59
Net income
Preferred stock dividends and
accretion (Note 3) .............
------- -------- --------- -------
Balance - December 31, 1997 120,000 120,000 2,089,084 20,891

Conversion of Series B
Stock to Common
Stock and other
related matters ................ 119,535 1,195
Conversion of Series A
Stock to Common Stock .......... (120,000) (120,000) 30,000 300
Net loss ..........................
Preferred stock
dividends and
accretion (Note 3) .............
Gain on conversion of
Series B Stock (Note 3) ........
------- -------- --------- -------
Balance - December 31, 1998 ....... -0- -0- 2,238,619 22,386

Conversion of Series B
Stock to Common Stock .......... 3,962 40
Net loss ..........................
Preferred stock
dividends and
accretion (Note 3) .............
------- -------- --------- -------
Balance - December 31, 1999 ....... -0- $ -0- 2,242,581 $22,426
======= ======== ========= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Additional
Paid-in Accumulated
Capital Deficit Total
---------- ----------- -----
<S> <C> <C> <C>
Balance -
January 1, 1997 ................ $29,816,518 $(23,903,449) $6,053,819

Conversion of Series B
Stock to Common Stock .......... 31,127 31,209
Sale of Common Stock .............. 22,289 22,348
Net income ........................ 66,564 66,564
Preferred stock dividends and
accretion (Note 3) ............. (215,081) (215,081)
----------- ------------ ----------
Balance - December 31, 1997 ....... 29,869,934 (24,051,966) 5,958,859

Conversion of Series B
Stock to Common
Stock and other
related matters ................ 219,145 220,340
Conversion of Series A
Stock to Common Stock .......... 119,700
Net loss .......................... (902,471) (902,471)
Preferred stock
dividends and
accretion (Note 3) ............. (152,777) (152,777)
Gain on conversion of
Series B Stock (Note 3) ........ 137,878 137,878
----------- ------------ ----------
Balance - December 31, 1998 ....... 30,208,779 (24,969,336) 5,261,829

Conversion of Series B
Stock to Common Stock .......... 17,408 17,448
Net loss .......................... (1,659,489) (1,659,489)
Preferred stock
dividends and
accretion (Note 3) ............. (56,403) (56,403)
----------- ------------ ----------
Balance - December 31, 1999 ....... $30,226,187 $(26,685,228) $3,563,385
=========== ============ ==========
</TABLE>

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

F-8
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------
1999 1998 1997
------------ ---------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income ................................................ $(1,659,489) $(902,471) $ 66,564
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization ................................ 835,666 900,432 939,030
Changes in operating assets and liabilities (net
of the effect of the sale of Flexitoys in 1998):
(Increase) decrease in:
Accounts receivable ................................... 328,074 (267,013) 189,800
Inventories ........................................... 748,044 876,603 399,319
Prepaid expenses and other current assets ............. 101,702 (121,601) (603,115)
Other assets .......................................... 28,698 (16,485) 5,115
Increase (decrease) in:
Accounts payable ...................................... 309,590 (75,069) 215,297
Accrued liabilities ................................... 151,984 1,996 (424,422)
----------- --------- ---------
Net cash provided by operating
activities ........................................ 844,269 396,392 787,588
----------- --------- ---------

Cash flows from investing activities:
Acquisition of property and equipment ............................ (612,745) (500,676) (612,194)
----------- --------- ---------
Net cash used in investing
activities ........................................ (612,745) (500,676) (612,194)
----------- --------- ---------

Cash flows from financing activities:
(Repayments) borrowings from factor .............................. (206,517) 308,836 -
Proceeds from sale of Common Stock ............................... - - 22,348
Cash paid in connection with conversion
of Series B Stock (Note 3) ...................................... - (122,770) -
Dividends paid ................................................... (57,790) (28,279) (137,660)
----------- --------- ---------
Net cash (used in) provided by financing
activities ........................................ (264,307) 157,787 (115,312)
----------- --------- ---------

Net (decrease) increase in cash .................................... (32,783) 53,503 60,082

Cash - beginning of year ........................................... 267,292 213,789 153,707
----------- --------- ---------
Cash - end of year ................................................. $ 234,509 $ 267,292 $ 213,789
=========== ========= =========

</TABLE>

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

F-9
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - Description of Business and Basis of Presentation:

Just Toys, Inc. (the "Company") designs, develops, manufactures, markets and
distributes junior sporting goods, foam shooting toys and other toy products for
children of various ages. The Company's principal customers are located in the
United States and consist primarily of toy stores and mass merchandisers and, to
a lesser extent, discount drug chains, supermarket chains, sporting goods
stores, catalogers and gift stores. The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries, Just Toys
Products Limited ("JTP") and Joyful World Enterprises Limited ("JWE"), which are
incorporated in Hong Kong, and Celt Specialty Partners, Inc. ("Celt"), which is
a U.S. manufacturer of foam and plastic toys, sporting goods and other specialty
toy products. Significant intercompany balances and transactions have been
eliminated in consolidation.

The consolidated financial statements include the following applicable to the
foreign subsidiaries:

December 31,
-----------------------------------------
1999 1998 1997
--------- ---------- ----------

Assets ............................ $1,493,797 $1,403,150 $1,507,320
Liabilities ....................... 865,445 806,252 932,492
Stockholder's equity .............. 628,352 596,898 574,828
Revenues .......................... 4,861,814 5,909,658 6,489,345
Net income ........................ 31,454 22,070 258,974

The assets of the foreign subsidiaries included intercompany receivables from
the parent company totaling $1,051,797, $642,948 and $729,721 in 1999, 1998 and
1997, respectively.

In each of the three years ended December 31, 1999, the Company has had
increasing losses. The Company believes that it needs to increase its sales and
distribution in order to increase its profitability. During 1999, the Company
invested in a number of new licenses and product lines and expanded product
lines, thereby increasing the number of new products available for sale in 2000
and in subsequent years. The Company also is increasing its efforts to sell to a
wider range of customers to increase its sales. The Company also seeks to
improve its cash flow through continuing its close control of inventory levels
and monitoring expenditures. The Company anticipates that the foregoing efforts
can improve the sales, profitability and cash flow of its operations.

Reclassification:

Certain prior year amounts have been reclassified to conform to the present
year's presentation.

F-10
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - Description of Business and Basis of Presentation: (continued)

Recapitalization

Effective September 4, 1998, the Company effected a one-for-two reverse stock
split of its Common Stock. The accompanying financial statements give
retroactive effect to the above recapitalization.

NOTE 2 - Summary of Significant Accounting Policies:

Inventories:

Inventories are stated at the lower of cost (first-in, first-out basis) or
market. The Company supplies certain purchased material components used in its
product lines to third-party manufacturers.

Property and equipment:

Assets are stated at cost. The Company owns the molds and tools used in
production of the Company's products by third-party manufacturers. The molds and
tools are depreciated using the straight-line method over the life of the
related product licensing agreement, if applicable, or three years, whichever is
less. Obsolete molds and tools are written-off when no longer being used.
Property and equipment are depreciated on a straight-line basis over the
following lives:

Life
---------
Buildings .................................. 19 years
Molds and tools ............................ 3 years
Manufacturing equipment .................... 7 years
Furniture, fixtures and office
equipment ................................ 5-7 years
Leasehold improvements ..................... Shorter of life of
lease or useful life

Income taxes:

The Company accounts for income taxes in accordance with Statement of Accounting
Standards No. 109 ("SFAS 109"), "Accounting For Income Taxes", which requires
use of the liability method of accounting for income taxes. The liability method
measures deferred income taxes by applying enacted statutory rates in effect at
the balance sheet date to the differences between the tax bases of assets and
liabilities and their reported amounts in the financial statements. The
resulting asset or liability is adjusted to reflect changes in the tax laws as
they occur.

F-11
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - Summary of Significant Accounting Policies: (continued)

Product development, design and packaging costs:

Expenditures for the development, design and packaging of products to be
introduced in the coming year are recorded as prepaid expenses and amortized
within one year. Amounts expensed for these costs were approximately $602,000,
$572,000 and $181,000 during 1999, 1998 and 1997, respectively.

Royalties:

The Company enters into agreements to license trademarks, copyrights, patents
and inventions. The Company expenses royalties at the time the related product
is sold. The agreements may call for minimum amounts of royalties to be paid in
advance and throughout the term of the agreement which are nonrefundable in the
event that product sales fail to meet certain minimum levels. Advance royalties
resulting from such transactions are stated at amounts estimated to be
recoverable from future sales of the related products. Prepaid and future
guaranteed royalties applicable to discontinued products or where sales were
below expectations are also expensed.

Advertising costs:

The Company expenses advertising costs as incurred. Advertising costs for the
years ended December 31, 1999, 1998 and 1997 amounted to approximately $161,000,
$79,000 and $144,000, respectively.

Earnings (loss) per share attributable to common stockholders:

In 1997, the Financial Accounting Standards Board issued Statement No. 128
("SFAS 128"),"Earnings per Share". SFAS 128 replaced the calculation of primary
and fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. The Company's
basic earnings (loss) per share attributable to common stockholders was
calculated by dividing the net income (loss) attributable to common stockholders
by the weighted average number of shares of Common Stock outstanding. All
options, warrants and preferred stock issued by the Company were antidilutive.
All earnings per share have been adjusted for the reverse stock split disclosed
in Note 1.

The adoption of SFAS 128 had no effect on the earnings (loss) per share
attributable to common stockholders reported by the Company.

F-12
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - Summary of Significant Accounting Policies: (continued)

Securities for issuance of Common Stock excluded from diluted earnings per share
due to anti-dilutive effect are as follows:

1999 1998 1997
------- ------- -------
Stock Options .............................. 474,376 330,876 335,624
Common Stock purchase warrants ............. 327,056 327,056 77,056
Convertible debt ........................... 64,631 68,592 290,927
------- ------- -------
Total ............................ 866,063 726,524 703,607
======= ======= =======
Foreign currency translation:

Assets and liabilities are translated at year-end rates of exchange. Income and
expense accounts are translated at the average of exchange rates in effect
during the period. Realized foreign exchange transaction gains and losses are
included in income and are not material. The cumulative foreign currency
adjustment was not material.

Use of estimates:

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

Stock-based compensation:

In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 123, "Accounting for Stock-Based Compensation"
("SFAS 123"). SFAS 123 is effective for transactions after December 15, 1994 and
prescribes accounting and reporting standards for all stock-based compensation
plans, including employee stock options, restricted stock, employee stock
purchase plans and stock appreciation rights. SFAS 123 requires compensation
expense to be recorded (i) using the new fair value method or (ii) using
existing accounting rules prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" ("APB 25"), and related
interpretations with pro forma disclosure of what net income and earnings would
have been had the Company adopted the new fair value method. The Company has
elected to continue to account for its stock issued to employees in accordance
with APB 25 (see Note 14).

F-13
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - Summary of Significant Accounting Policies: (continued)

Goodwill:

Goodwill represents the cost in excess of the fair market value of the net
assets acquired of Table Toys. Goodwill is being amortized on a straight-line
basis over 15 years. In connection with the sale of the Flexitoys product line,
the Company wrote off $25,000 of goodwill (net of accumulated amortization of
$5,000). Amortization of goodwill for the years ended December 31, 1999, 1998
and 1997 was approximately $43,500, $45,500 and $45,500, respectively, and
accumulated amortization at December 31, 1999 approximated $152,500.

Accretion of Preferred Stock B:

The redemption value of the Series B Convertible Redeemable Preferred Stock is
being accreted using the interest method for redemption on December 31, 2005.

Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of:

In March 1995, the Financial Accounting Standards Board issued Statement No. 121
("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed Of", which requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. SFAS 121 also addresses the accounting
for long-lived assets to be disposed of. The Company adopted SFAS 121 in the
first quarter of 1996 and does not believe that any of its long-lived assets are
impaired.

F-14
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - Preferred Stock:

Series A Convertible Redeemable Preferred Stock

The Board of Directors of the Company has authorized 150,000 shares of
non-voting Series A Convertible Redeemable Preferred Stock ("Series A Stock")
with a par value of $1.00 per share of which 120,000 shares were issued and none
were outstanding at December 31, 1999 and 1998. The Series A Stock ranks senior
to the Company's common stock, par value $0.01 per share ("Common Stock") with
respect to dividend rights and rights on liquidation, winding-up and
dissolution. The Series A Stock has a cumulative preferred quarterly dividend of
6% per annum of the Series A Liquidation Value (as defined below) payable either
in cash or additional shares of Series A Stock, at the Company's option. As long
as any shares of the Series A Stock remain outstanding, no cash dividends may be
paid on the Common Stock nor can Common Stock be acquired by the Company unless
all accrued and unpaid dividends have been paid on the Series A Stock. The
Series A Stock has a liquidation preference over the Common Stock in an amount
equal to $1.00 per share (the "Series A Liquidation Value") plus dividends
accrued and unpaid. At the holder's option until December 31, 1998, the Series A
Stock was convertible into Common Stock at a conversion price of $4.00 per share
(subject to certain adjustments). The Series A Stock is redeemable at the Series
A Liquidation Value plus dividends accrued and unpaid at the Company's option at
any time.

In December 1998, the holders of all of the outstanding shares of the Series A
Stock converted such shares into 30,000 shares of Common Stock.

Series B Convertible Redeemable Preferred Stock

The Board of Directors of the Company also authorized 650,000 shares of
non-voting Series B Convertible Redeemable Preferred Stock ("Series B Stock")
with a par value of $1.00 per share of which 129,261 shares (137,183 shares at
December 31, 1998) are issued and outstanding. The Series B Stock ranks senior
to the Common Stock and junior to the Series A Stock with respect to dividend
rights and rights on liquidation, winding up and dissolution. The Series B Stock
has a cumulative preferred quarterly dividend of 7% per annum of the Series B
Liquidation Value (as defined below) payable either in cash or additional shares
of Series B Stock, at the Company's option. As long as any shares of the Series
B Stock remain outstanding, no cash dividends can be paid on the Common Stock
nor can Common Stock be acquired by the Company unless all accrued and unpaid
dividends have been paid on the Series B Stock and any required redemptions have
been provided for. The Series B Stock has a liquidation preference over the
Common Stock in an amount equal to $3.625 per share (the "Series B Liquidation
Value") plus dividends accrued and unpaid. At the holder's option, the shares of
Series B Stock are convertible in Common Stock at a rate of one share of Common
Stock for two shares of Series B Stock (subject to certain adjustments). After
December 30, 1996, the Series B Stock is redeemable at the Company's option at
the Series B Liquidation Value plus dividends accrued and unpaid.

F-15
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - Preferred Stock: (continued)

The Series B Stock is subject to mandatory redemption through the operation of a
sinking fund at the Series B Liquidation Value plus dividends accrued and
unpaid. The Company is required, at its option, to redeem or set apart for
payment, on each December 31 commencing 2001 and ending 2004, an amount
sufficient to redeem 10% of the Series B Stock issued and any additional shares
issued as dividends on such shares. The Company may apply as a credit against
its sinking fund obligations any shares which have been previously redeemed or
converted. All remaining and outstanding shares shall be redeemed on December
31, 2005 at the Series B Liquidation Value plus dividends accrued and unpaid.

The holders of 7,922 and 239,016 shares of Series B Stock converted their shares
into 3,962 and 119,508 shares, respectively, of Common Stock in 1999 and 1998,
respectively.

On April 9, 1998, the Company offered to pay and exchange $0.5075 in cash and
one half of one share of the Company's Common Stock (as adjusted for the
one-for-two reverse stock split) for each share of Series B Stock (the "Exchange
Offer"). The holders of 239,016 shares of the Series B Stock, net of certain
adjustments, accepted the Exchange Offer and the Company paid $122,770 in cash
and issued 119,508 shares of Common Stock in exchange for the 239,016 shares of
Series B Stock. The market value of the Common Stock and carrying value of the
Series B Stock on the date of exchange amounted to $226,389 and $487,037,
respectively. The total consideration paid by the Company was less than the
carrying value of the Series B Stock by $137,878, and has been accounted for as
a gain on conversion of the Series B Stock in 1998.

NOTE 4 - Accounts Receivable and Allowances:

On July 26, 1995, the Company entered into a Factoring Agreement with Milberg
Factors, Inc. ("Milberg") pursuant to which Milberg agreed to purchase the
Company's domestic accounts receivable on a non-recourse basis, and to advance
to the Company, at the Company's request, the lesser of 85% of total accounts
receivable or $1,750,000. Effective February 1, 1996, the agreement was amended
to increase the amount of the advance to the lesser of 85% of total accounts
receivable or $5,000,000. The factoring charge is .65% of receivables. Advances
bear interest at the rate of prime (8.50% at December 31, 1999) plus one
percent. Milberg has also agreed to advance to the Company, at the Company's
request, the lesser of $2,000,000 or 50% of the Company's inventory located in
the United States. Such advances also will bear interest at the rate of prime
plus one percent. Additionally, the factoring arrangement with Milberg is
secured by a mortgage on the real property owned by Celt and a security interest
in the inventory and personal property located in the United States.

F-16
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - Accounts Receivable and Allowances: (continued)

Accounts receivable and amounts due from factor consists of the following:

December 31,
----------------------------
1999 1998
----------- -----------
Accounts receivable - factor .................. $ 3,443,934 $ 4,635,787
Advances from factor .......................... (3,443,934) (4,635,787)
----------- -----------
Net due from factor ........................... -0- -0-
Accounts receivable - trade ................... 381,717 822,791
----------- -----------
Total accounts receivable .................. 381,717 822,791

Less: Accounts receivable allowances .......... (345,000) (458,000)
----------- -----------
Total accounts receivable, net of
allowances ............................... $ 36,717 $ 364,791
=========== ===========

The accounts receivable allowances consist of the following:

December 31,
----------------------------
1999 1998
----------- -----------
Returns, allowances and discounts ............. $ 295,000 $ 408,000
Doubtful accounts ............................. 50,000 50,000
----------- -----------
Total ............................. $ 345,000 $ 458,000
=========== ===========

At December 31, 1999 and 1998, the Company was in an overadvance position of
$102,319 and $308,836, respectively.

NOTE 5 - Inventories:

Inventories consist of the following:

December 31,
----------------------------
1999 1998
----------- -----------
Finished goods ................................ $ 1,418,710 $ 2,049,996
Material components and supplies .............. 544,931 661,689
----------- -----------
Total ............................. $ 1,963,641 $ 2,711,685
=========== ===========

F-17
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 - Prepaid expenses and other current assets:

Prepaid expenses and other current assets consist of the following:

December 31,
----------------------------
1999 1998
----------- -----------
Prepaid royalties ............................. $ 476,851 $ 423,241
Prepaid insurance ............................. 155,663 161,109
Insurance recoverable ......................... 77,578 138,259
Development, design and packaging ............. 646,101 666,680
Other ......................................... 413,863 482,469
----------- -----------
Total ............................. $ 1,770,056 $ 1,871,758
=========== ===========

NOTE 7 - Property and Equipment:

Property and equipment consists of the following:

December 31,
----------------------------
1999 1998
----------- -----------
Property and equipment at cost:
Land ....................................... $ 325,000 $ 325,000
Building ................................... 725,000 725,000
Molds and tools ............................ 3,923,489 3,440,863
Manufacturing equipment .................... 1,448,379 1,442,695
Furniture, fixtures and
office equipment ....................... 1,483,906 1,359,902
Leasehold improvements ..................... 182,991 179,991
----------- -----------
8,088,765 7,473,451

Less:
Accumulated depreciation
And amortization ................... 5,555,769 4,761,082
----------- -----------
Total ............................ $ 2,532,996 $ 2,712,369
=========== ===========

NOTE 8 - Related Party Transactions:

Consulting fees:

During 1999 and 1998, the Company incurred expenses of $50,000 and $75,000,
respectively, to a director for consulting fees.

F-18
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9 - Accrued Liabilities:

Accrued liabilities consist of the following:

December 31,
----------------------------
1999 1998
----------- -----------
Royalties ........................ $ 314,259 $ 267,575
Insurance ........................ 108,085 116,796
Deferred rent .................... 100,261 90,532
Dividends ........................ 75,013 99,061
Other ............................ 495,282 391,000
----------- -----------
Total ..................... $ 1,092,900 $ 964,964
=========== ===========

NOTE 10 - Commitments, Contingencies and Other Matters:

License agreements:

The Company develops and produces certain products under license agreements with
third parties. The amounts paid periodically under the terms of these agreements
range from 2% to 12% of the net sales of the licensed products. The Company is
obligated for guaranteed minimum royalty and other license payments at December
31, 1999 as follows:

2000 ............................ $250,000
2001 ............................ 85,000
--------
Total ..................... $335,000
========

Leases:

Minimum annual rentals under leases expiring at various times through the year
2008 for showroom, merchandising and warehouse facilities as at December 31,
1999 are as follows:

2000 .......................... $ 378,000
2001 .......................... 400,000
2002. ......................... 376,000
2003 .......................... 317,000
2004 .......................... 325,000
Thereafter .................... 1,110,000
----------

Total ................... $2,906,000
==========

Rent expense approximated $519,000, $540,000 and $559,000 for 1999, 1998 and
1997, respectively.

F-19
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 - Commitments, Contingencies and Other Matters: (continued)

Letters of credit:

As of December 31, 1999, the Company had two outstanding letters of credit
totaling $120,000.

Litigation:

The Toys "R" Us class actions have been settled. The Company paid $30,000.

The Company is involved in various litigation and other legal matters which are
being addressed or defended and handled in the ordinary course of business. None
of these matters is expected to result in outcomes having a material adverse
effect on the Company's liquidity, operating results or consolidated financial
position.

Deferred compensation plan:

Effective January 1, 1996, the Company established a defined contribution plan
under Section 401(k) of the Internal Revenue Code. The Company has elected not
to make contributions to this plan for the years ended December 31, 1999 and
1998.

Concentration of credit risk:

The Company places its cash in various banking institutions and Milberg. At
times, such amounts might be in excess of the FDIC insurance limit at the
banking institutions. Amounts due from Milberg are not covered by insurance.

NOTE 11 - Major Customers:

In 1999, the Company had one customer which represented approximately 52% of its
net sales. In 1998 and 1997, the Company had two customers which each
individually represented greater than 10% of net sales. Sales to these customers
totaled 55% and 60% of net sales in 1998 and 1997, respectively. The termination
by any of these customers of their relationship with the Company would have a
material adverse effect on the Company.

F-20
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - Income Taxes:

The tax effects of principal temporary differences and net operating losses are
as follows:
Year Ended December 31,
---------------------------
1999 1998
----------- -----------

Deferred Tax Assets:
Estimated allowances ........... $ 147,100 $ 195,100
Depreciation ................... -0- 165,700
Capitalization of
inventory ................... 36,100 52,000
Net operating loss ............. 11,423,000 10,986,000
----------- -----------
11,606,200 11,398,800

Deferred Tax Liabilities:

Depreciation ................... (100,800) -

Valuation allowance
for deferred taxes ........... (11,505,400) (11,398,800)
----------- ------------
Total ....................... $ - $ -
=========== ============

The valuation allowance at December 31, 1997 was approximately $10,146,000. The
valuation allowance increased by $106,600 during the year ended December 31,
1999.

The differences between the statutory Federal income tax rate of 34% and the
income taxes reported in the statements of operations are as follows:

<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------
1999 1998 1997
----------- ----------- ----------
<S> <C> <C> <C>
Net income (loss):
United States ............ $(1,690,943) $ (924,541) $(192,410)
Foreign .................. 31,454 22,070 258,974
----------- ----------- ---------
$(1,659,489) $ (902,471) $ 66,564
=========== =========== =========
Statutory rate ............... $ (564,226) $ (306,840) $ 22,632
Utilization of benefit of tax
loss carryforward ......... (5,190) (3,642) (42,731)
Loss from which no tax
benefit was provided ..... 574,920 314,344 65,419
Effect of foreign tax
rate difference .......... (5,504) (3,862) (45,320)
Foreign income not subject
to tax ................... - - -
----------- ----------- ---------
Total tax provision
(benefit) .............. $ - $ - $ -
=========== ============ =========
</TABLE>

F-21
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 - Income Taxes: (continued)

Undistributed foreign income:

At December 31, 1999, JTP had approximately $630,000 of undistributed
accumulated earnings.

Net operating loss:

The Company has a net operating loss carryforward of approximately $26,700,000
as at December 31, 1999. Approximately $920,000 expires by 2008, $14,060,000 by
2009, $6,450,000 by 2010, $600,000 by 2011, $1,350,000 by 2012, $1,320,000 by
2018 and $2,000,000 by 2019. However, pursuant to Section 382 of the Internal
Revenue Code the future utilization of approximately $20,000,000 of these net
operating loss carryforwards are significantly limited due to ownership changes.
Based on management's estimates, the annual limitation on such net operating
loss carryforwards is approximately $500,000.

NOTE 13 - Supplemental Cash Flow Information:

Interest:

Payments for interest expense were $455,257, $496,161 and $519,514 for 1999,
1998 and 1997, respectively.

Noncash transactions:

The Company accrued dividends of $33,742, $94,094 and $137,660 in 1999, 1998 and
1997, respectively.

NOTE 14 - Stock Options:

Stock Option Plan

Effective August 10, 1992, the Company adopted the 1992 Incentive and
Non-Qualified Stock Option Plan (the "Plan"), which will terminate on August 9,
2002. Under the terms of the Plan, options to purchase shares of Common Stock of
the Company intended to qualify as "incentive stock options" and non-qualified
stock options may be granted to employees and directors of the Company and
independent contractors providing services to the Company. A total of 1,000,000
shares of Common Stock are authorized under the Plan. Options are exercisable
within ten years of the date of grant.

F-22
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - Stock Options: (continued)

Detail of stock options are as follows:

<TABLE>
<CAPTION>
Weighted Weighted
Average Average
Exercise Number of Price per
Number of Price per Shares Exercisable
Shares Share Exercisable Share
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Balance - December 31, 1996 ...................... 281,174 $ 8.22 103,149 $11.84
=======
Granted - 1997 ................................... 83,250 2.92
Canceled pursuant to amendment
offer - 1997 ................................... (43,500) (22.20)
Canceled - 1997 .................................. (35,300) (5.86)
--------
Balance - December 31, 1997 ...................... 285,624 $ 4.52 99,924 $ 5.78
=======
Granted - 1998 ................................... 15,000 1.63
Canceled - 1998 .................................. (19,748) (10.88)
--------
Balance - December 31, 1998 ...................... 280,876 $ 3.90 126,835 $ 4.67
Granted - 1999 ................................... 237,250 0.52 =======
Canceled - 1999 .................................. (195,750) (2.07)
--------
Balance - December 31, 1999 ...................... 322,376 $ 2.53 134,176 $ 4.54
======== =======
</TABLE>

The exercise price of options outstanding at December 31, 1999 ranged from $0.39
to $8.25 as follows:

<TABLE>
<CAPTION>
Weighted Weighted
Number of Average Average
Number of Shares Contractual Exercise
Exercise Price between: Shares Exercisable Life Price
----------------------- --------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
$7.25 - $8.25 45,542 42,342 5.14 $7.30
$2.37 - $4.00 133,084 90,334 6.31 $3.17
$0.75 - $1.25 7,500 1,500 8.74 $1.00
$0.39 136,250 - 9.23 $0.39
</TABLE>

During 1997, the Company offered holders of options with exercise prices at or
greater than $21.00 per share the opportunity to amend their option agreements
to (a) reduce the number of shares in their option agreement by 90% and (b)
reduce the exercise price to $3.00 per share, which was the market price of the
stock on the date of the offer. This offer was accepted by holders of options
totaling 48,333 shares with exercise prices at or above $21.00 per share
representing 87.9% of the total options with exercise prices at or above $21.00
per share. As a result, the Company amended their option agreements to the new
exercise price and canceled options to purchase 43,500 shares of Common Stock.

The Company has not recorded a charge for financial reporting purposes for the
issuance and repricing of the above stock options because the options were
issued or repriced at exercise prices equal to or greater than the fair value of
the Common Stock.

F-23
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - Stock Options: (continued)

Other

Pursuant to an agreement between a director of the Company and the Company in
December 1996, the Company granted the director a fully vested and exercisable
ten-year option to purchase up to 25,000 shares of Common Stock at an exercise
price of $3.00 per share, the market price of the stock at the time of the
grant. The Company granted the director an additional fully vested and
exercisable ten-year option to purchase up to 25,000 shares of the Common Stock
on June 30, 1997 at an exercise price of $2.75, the market price of the stock at
the time of grant. Neither of such options is governed by the Company's Plan and
are subject to stockholder approval. Both of such options will remain
outstanding for their full term until exercised, whether or not the director is
still affiliated with the Company.

During 1999, the Company granted various directors fully vested and exercisable
ten-year options to purchase up to a total of 92,000 shares of Common Stock at
an exercise price of $0.39 per share, the market price of the stock at the time
of the grant. In 1999, the Company granted one director an additional fully
vested and exercisable ten-year option to purchase up to 10,000 shares of the
Common Stock at an exercise price of $1.00, which was greater than the market
price of the stock at the time of grant. None of these options are governed by
the Company's Plan. All of these options will remain outstanding for their full
term until exercised, whether or not the director is still affiliated with the
Company.

Pro forma information regarding net loss and loss per share is required by SFAS
123, and has been determined as if the Company had accounted for its employee
stock options under the fair value of SFAS 123. The fair value for these options
was estimated at the date of grant using a Black-Scholes option pricing model
with the following weighted-average assumptions for 1999, 1998 and 1997:

1999 1998 1997
---- ---- ----
Risk free rate ................................ 5.31% 5.50% 6.36%
Dividend yield ................................ 0% 0% 0%
Volatility factor of the expected price
of the Company's Common Stock ............... 1.178 0.737 0.284
Average life (years) .......................... 5 5 5

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock volatility. Because the
Company's employee stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

F-24
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 - Stock Options: (continued)

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the vesting period of the options. The Company's
pro forma information is as follows:

1999 1998 1997
---- ---- ----
Pro forma net loss attributable
to common stockholders $(1,812,695) $(991,249) $(255,791)

Pro forma basic loss per share
attributable to common $ (.81) $ (.46) $ (.12)
stockholders

The weighted average fair value of options granted during the years ended
December 31, 1999, 1998 and 1997 were $0.33, $1.04 and $0.94, respectively.

As of December 31, 1999, 866,063 shares of the Company's Common Stock were
reserved for issuance on the exercise of stock options and warrants and the
redemption of preferred stock.

NOTE 15 - Warrants:

On August 31, 1998, the Company issued a five-year warrant, as amended, to its
investment banker to purchase up to 250,000 shares of Common Stock with an
exercise price of $1.00 per share. The warrant is exercisable with respect to
50,000 shares of Common Stock. The warrant becomes exercisable with respect to
the remaining 200,000 shares of Common Stock only after the consummation of
certain acquisition transactions by the Company. The number of such shares
subject to exercise is determined by a formula based upon the net sales of the
business or product line acquired by the Company.

On January 1, 1996, the Company issued warrants to its former investment banker
to purchase 50,000 shares of common stock at $7.25 per share, which expire on
December 31, 2000. In connection with the acquisition of the assets of Table
Toys, warrants were issued to various individuals to purchase 30,000 shares of
common stock at $7.25 per share, which expire on June 26, 2001. In 1997,
pursuant to an agreement to issue 5,889 shares of Common Stock for approximately
$3.80 per share to one of the holders of a warrant, the Company cancelled
warrants to purchase 2,944 shares of Common Stock.

F-25
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 - Business Segments:

Foreign operations and sales for the year ended December 31, 1999 are as
follows:

<TABLE>
<CAPTION>
United
States Hong Kong* Eliminations Consolidated
------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales ................. $13,209,212 $ 4,861,814 $18,071,026
=========== =========== ===========
Operating income
(loss) .................. $(1,223,870) $ 101,328 $(1,122,542)
=========== ===========
Interest expense, net ..... (536,947)
-----------
Loss before income taxes .. $(1,659,489)
===========
Identifiable assets at
December 31, 1999 ....... $ 5,639,527 $ 1,493,797 $ 7,133,324
=========== ===========
Corporate assets .......... 7,665
-----------
Total assets .............. $ 7,140,989
===========
</TABLE>

* Represents net sales made F.O.B. Hong Kong which are primarily shipped to
customers in the United States. Identifiable assets include intercompany
receivables from the parent company totaling $1,051,797.

F-26
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 - Business Segments: (continued)

Foreign operations and sales for the year ended December 31, 1998 are as
follows:

<TABLE>
<CAPTION>
United
States Hong Kong* Eliminations Consolidated
------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales .................. $13,437,131 $5,909,658 $19,346,789
=========== ========== ===========
Operating income ........... $ (412,739) $ 86,582 $ (326,157)
=========== ==========
Interest expense, net ...... (576,314)
-----------
Loss before
income taxes ............. $ (902,471)
===========
Identifiable assets at
December 31, 1998 ........ $ 7,192,396 $1,403,150 $ 8,595,546
=========== ==========
Corporate assets ........... 7,665
-----------
Total assets ............... $ 8,603,211
===========
</TABLE>

F-27
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16 - Business Segments: (continued)

Foreign operations and sales for the year ended December 31, 1997 are as
follows:

<TABLE>
<CAPTION>
United
States Hong Kong* Eliminations Consolidated
------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales ................. $16,769,709 $6,489,345 $23,259,054
=========== ========== ===========

Operating income .......... $ 352,031 $ 322,314 $ 674,345
=========== ==========
Interest expense, net ..... (615,332)
Other income .............. 7,551
-----------
Income before
income taxes ............ $ 66,564
===========

Identifiable assets at
December 31, 1997 ....... $ 8,213,263 $1,507,320 $ 9,720,583
=========== ==========
Corporate assets .......... 7,665
-----------
Total assets .............. $ 9,728,248
===========
</TABLE>

- --------
* Represents net sales made F.O.B. Hong Kong which are primarily shipped to
customers in the United States. Identifiable assets include intercompany
receivables from the parent company totaling $729,721.

F-28
<PAGE>

JUST TOYS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SCHEDULE II
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ------------------------------------------------------------------------------------------------------------------------------------
Additions-
Balance at Charged to (1) Balance at
Beginning Costs and Deductions- End of
of Period Expenses Describe Period
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31, 1999: .......................... $ 50,000 $ - $ - $ 50,000
Allowance for doubtful accounts
Allowance for sales returns, discounts and
allowances ........................................ 408,000 462,940 575,940 295,000
--------- --------- --------- ---------
Total ........................................ $ 458,000 $ 462,940 $ 575,940 $ 345,000
========= ========= ========= =========
Year ended December 31, 1998:
Allowance for doubtful accounts ..................... $ 50,000 $ - $ - $ 50,000
Allowance for sales returns, discounts and
allowances ........................................ 638,000 526,935 756,935 408,000
--------- --------- --------- ---------
Total ........................................ $ 688,000 $ 526,935 $ 756,935 $ 458,000
========= ========= ========= =========
Year ended December 31, 1997:
Allowance for doubtful accounts ..................... $ 50,000 $ - $ - $ 50,000
Allowance for sales returns, discounts and
allowances ........................................ 553,000 873,568 788,568 638,000
--------- --------- --------- ---------
Total ........................................ $ 603,000 $ 873,568 $ 788,568 $ 688,000
========= ========= ========= =========
</TABLE>

(1) Write off of uncollectibles and sales returns, discounts and allowances.

F-29

<PAGE>

Exhibit 23.1

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-69812) pertaining to the 1992 Incentive and Non-Qualified Stock
Option Plan of Just Toys, Inc. of our report dated March 24, 2000, with respect
to the consolidated financial statements and schedule of Just Toys, Inc. for the
year ended December 31, 1999 included in the Annual Report (Form 10-K) for the
year ended December 31, 1999.

/s/EDWARD ISAACS & COMPANY LLP

White Plains, New York
March 24, 2000

<PAGE>

Exhibit 23.2

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-69812) pertaining to the 1992 Incentive and Non-Qualified Stock
Option Plan of Just Toys, Inc. of our report dated March 24, 2000, with respect
to the financial statements of Just Toys Products Limited for the year ended
December 31, 1999 included in the Annual Report (Form 10-K) for the year ended
December 31, 1999.

/s/ERNST & YOUNG
Hong Kong
March 24, 2000

<PAGE>

Exhibit 23.3

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-69812) pertaining to the 1992 Incentive and Non-Qualified Stock
Option Plan of Just Toys, Inc. of our report dated March 24, 2000, with respect
to the consolidated financial statements of Joyful World Enterprises Limited for
the year ended December 31, 1999 included in the Annual Report (Form 10-K) for
the year ended December 31, 1999.

/s/ERNST & YOUNG
Hong Kong
March 24, 2000

<PAGE>

Exhibit 23.4

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-69812) pertaining to the 1992 Incentive and Non-Qualified Stock
Option Plan of Just Toys, Inc. of our report dated March 12, 1999, with respect
to the consolidated financial statements and schedule of Just Toys, Inc. for the
years ended December 31, 1998 and 1997 included in the Annual Report (Form 10-K)
for the year ended December 31, 1999.

/s/ERNST & YOUNG LLP

New York, New York
March 28, 2000

<ARTICLE> 5
<CIK> 0000890639
<NAME> JUST TOYS, INC.
<CURRENCY> U. S.

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 234,509
<SECURITIES> 0
<RECEIVABLES> 381,717
<ALLOWANCES> 345,000
<INVENTORY> 1,963,641
<CURRENT-ASSETS> 4,004,923
<PP&E> 8,088,765
<DEPRECIATION> 5,555,769
<TOTAL-ASSETS> 7,140,989
<CURRENT-LIABILITIES> 3,282,986
<BONDS> 0
294,618
0
<COMMON> 22,426
<OTHER-SE> 3,540,959
<TOTAL-LIABILITY-AND-EQUITY> 7,140,989
<SALES> 18,071,026
<TOTAL-REVENUES> 18,071,026
<CGS> 11,342,048
<TOTAL-COSTS> 7,851,520
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 536,947
<INCOME-PRETAX> (1,659,489)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,659,489)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,659,489)
<EPS-BASIC> (0.77)
<EPS-DILUTED> (0.77)

</TABLE>