<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
/ / 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 No.)
20 Livingstone Avenue, Dobbs Ferry, New York 10522
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(914) 674-8697
Indicate by check mark whether the Registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
The aggregate number of the Registrant's shares outstanding on May 10, 2000 was
2,247,581 shares of Common Stock, par value $.01 per share.
- --------------------------------------------------------------------------------
<PAGE>
JUST TOYS, INC. AND SUBSIDIARIES
INDEX
Page
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets - March 31, 2000
and 1999 (unaudited) and December 31, 1999..................... 1
Consolidated Statements of Operations (unaudited)
for the Three Months Ended March 31, 2000 and 1999............. 2
Consolidated Statements of Cash Flows (unaudited)
for the Three Months Ended March 31, 2000 and 1999............. 3
Notes to Consolidated Financial Statements (unaudited)........... 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................. 7
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................ 11
SIGNATURES.................................................................. 12
<PAGE>
JUST TOYS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
------------------------------- ------------
2000 1999 1999
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . $ 136,188 $ 210,130 $ 234,509
Accounts receivable, net of allowances of $104,000,
$405,000 and $345,000 (Note 2). . . . . . . . . . . . 159,088 29,958 36,717
Inventories (Note 3) . . . . . . . . . . . . . . . . . . 1,956,434 2,605,237 1,963,641
Prepaid expenses and other current assets . . . . . . . . 1,786,775 2,051,388 1,770,056
----------- ----------- -----------
Total current assets . . . . . . . . . . . . . . . . . 4,038,485 4,896,713 4,004,923
Property and equipment, at cost, net of accumulated
depreciation and amortization. . . . . . . . . . . . . . 2,601,285 2,660,861 2,532,996
Goodwill, net of accumulated amortization. . . . . . . . . . 489,861 533,409 500,748
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 230,497 120,425 102,322
------------ ------------ ------------
TOTAL . . . . . . . . . . . . . . . . . . $ 7,360,128 $ 8,211,408 $ 7,140,989
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to factor (Note 2). . . . . . . . . . . . . . . . . . $ 1,583,184 $ 1,176,677 $ 102,319
Accounts payable . . . . . . . . . . . . . . . . . . . . 1,725,225 1,606,470 2,087,767
Accrued liabilities. . . . . . . . . . . . . . . . . . . 906,102 587,895 1,092,900
------------ ------------ ------------
Total current liabilities . . . . . . . . . . . . . . 4,214,511 3,371,042 3,282,986
Series B Convertible Redeemable Preferred Stock,
650,000 shares authorized, 129,261, 136,684 and 129,261
shares issued and outstanding (liquidation value
$468,571, $495,480 and $468,571). . . . . . . . . . . . . 300,370 293,982 294,618
------------ ------------ ------------
Total liabilities and Series B Stock. . . . . . . . . 4,514,881 3,665,024 3,577,604
----------- ----------- -----------
Commitments and contingencies. . . . . . . . . . . . . . . .
Stockholders' equity (Note 4):
Preferred stock, $1.00 par value, 2,000,000
shares authorized:
Series A Convertible Redeemable Preferred
Stock, 150,000 shares authorized, no
shares issued and outstanding. . . . . -- -- --
Common stock, par value $.01 per share, 15,000,000
shares authorized, 2,242,581, 2,238,869 and 2,242,581
issued and outstanding. . . . . . . . . . . . . . . . 22,426 22,389 22,426
Additional paid-in capital . . . . . . . . . . . . . . . 30,226,187 30,209,843 30,226,187
Accumulated deficit. . . . . . . . . . . . . . . . . . . (27,403,366) (25,685,848) (26,685,228)
---------- ---------- ----------
Total stockholders' equity. . . . . . . . . . . . . . 2,845,247 4,546,384 3,563,385
----------- ----------- -----------
TOTAL. . . . . . . . . . . . . . . . . . . . $ 7,360,128 $ 8,211,408 $ 7,140,989
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-1-
<PAGE>
JUST TOYS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,039,282 $2,817,778
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . 1,944,847 1,756,047
---------- ----------
Gross profit. . . . . . . . . . . . . . . . . . . . . . . . . . 1,094,435 1,061,731
---------- ----------
Expenses:
Merchandising, selling, warehousing
and distribution. . . . . . . . . . . . . . . . . . . . 841,082 881,431
Royalties . . . . . . . . . . . . . . . . . . . . . . . . . 216,403 111,058
General and administrative . . . . . . . . . . . . . . . . . 625,164 664,337
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . 1,682,649 1,656,826
---------- ----------
Operating loss. . . . . . . . . . . . . . . . . . . . . . . . . (588,214) (595,095)
---------- ----------
Other income (expenses):
Interest expense. . . . . . . . . . . . . . . . . . . . . . (115,972) (107,102)
---------- ----------
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . (704,186) (702,197)
Preferred stock dividends and
accretion (Note 4). . . . . . . . . . . . . . . . . . . . (13,952) (14,315)
---------- -----------
Net loss attributable to
common stockholders . . . . . . . . . . . . . . . . . . . $ (718,138) $ (716,512)
========== ===========
Weighted average common shares
outstanding . . . . . . . . . . . . . . . . . . . . . . . 2,242,581 2,238,697
========== ===========
Per share data:
Basic and dilutive loss per share
attributable to common stockholders . . . . . . . . $ (0.32) $ (0.32)
========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-2-
<PAGE>
JUST TOYS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (704,186) $ (702,197)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . 148,254 193,231
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable . . . . . . . . . . . . . . . . . . (122,371) 334,833
Inventories . . . . . . . . . . . . . . . . . . . . . . 7,207 106,448
Prepaid expenses and other current assets . . . . . . (16,719) (179,630)
Other assets. . . . . . . . . . . . . . . . . . . . . . (128,175) 10,595
Increase (decrease) in:
Accounts payable . . . . . . . . . . . . . . . . . . . . (362,542) (171,707)
Accrued liabilities. . . . . . . . . . . . . . . . . . . (194,998) (331,428)
----------- ----------
Net cash used in operating activities . . . . . . . . . . . (1,373,530) (739,855)
----------- ----------
Cash flows from investing activities:
Acquisition of property and equipment. . . . . . . . . . . . . . (205,656) (130,836)
----------- ----------
Net cash used in investing activities . . . . . . . . . . . (205,656) (130,836)
----------- ----------
Cash flows from financing activities:
Borrowings from factor . . . . . . . . . . . . . . . . . . . . . . . 1,480,865 867,841
Dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . . - (54,312)
----------- ----------
Net cash provided by financing activities. . . . . . . . . 1,480,865 813,529
----------- ----------
Net decrease in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . (98,321) (57,162)
Cash - beginning of period. . . . . . . . . . . . . . . . . . . . . . . . 234,509 267,292
----------- ----------
Cash - end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 136,188 $ 210,130
=========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE>
JUST TOYS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation and Summary of Significant Accounting Policies
- -----------------------------------------------------------------------------
In the opinion of management, the accompanying unaudited consolidated
financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for fair presentation have been included. The results of operations
for the interim periods are not necessarily indicative of the results for a full
year. These consolidated financial statements should be read in conjunction with
the consolidated financial statements and footnotes thereto included in Just
Toys, Inc.'s (the "Company") Annual Report on Form 10-K for the year ended
December 31, 1999.
(1) Basic loss per share attributable to common stockholders:
Basic loss per share was calculated by dividing net 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.
(2) Reclassifications:
Certain previously reported amounts have been reclassified to conform
to the 2000 presentation and that of the Form 10-K for the year ended December
31, 1999.
-4-
<PAGE>
Note 2 - Accounts Receivable and Due to Factor
- ----------------------------------------------
Accounts receivable and amounts due to factor consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
---------------------------- ------------
2000 1999 1999
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Accounts receivable - factor . . . . . . . . . . . . . . . . . . $1,889,908 $1,782,025 $3,443,934
Borrowings from factor . . . . . . . . . . . . . . . . . . . . . (3,473,092) (2,958,702) (3,546,253)
---------- ---------- ----------
Net due to factor . . . . . . . . . . . . . . . . . . . . . . . $1,583,184 $1,176,677 $ 102,319
========== ========== ==========
Accounts receivable - trade . . . . . . . . . . . . . . . . . . $ 263,088 $ 434,958 $ 381,717
Less: Accounts receivable allowances . . . . . . . . . . . . . . (104,000) (405,000) (345,000)
---------- ---------- ----------
Total accounts receivable, net of
allowances . . . . . . . . . . . . . . . . . . . . . . $ 159,088 $ 29,958 $ 36,717
========== ========== ==========
</TABLE>
Substantially all of the Company's US accounts receivables are sold to
a factor. Such sales are without recourse as to bad debts, but with recourse as
to customers' claims. Interest is charged at the rate of prime plus one percent,
which was 9.75% and 8.75% at March 31, 2000 and 1999, respectively, and 9.5% at
December 31, 1999. The factoring arrangement 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.
Note 3 - Inventories
- --------------------
The inventories consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
---------------------------- ------------
2000 1999 1999
---- ---- ----
(Unaudited)
<S> <C> <C> <C>
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . $1,234,296 $1,719,151 $1,418,710
Material components and supplies . . . . . . . . . . . . . . . . 722,138 886,086 544,931
---------- ---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,956,434 $2,605,237 $1,963,641
========== ========== ==========
</TABLE>
-5-
<PAGE>
Note 4 - Stockholders' Equity
- -----------------------------
Stockholders' equity consists of the following:
<TABLE>
<CAPTION>
Common Additional Paid-in Accumulated
Stock Capital Deficit Total
------- ------------------- ----------- -------
<S> <C> <C> <C> <C>
Balance December 31, 1999 . . . . . . . . . . . . $22,426 $30,226,187 $(26,685,228) $3,563,385
Net loss (unaudited). . . . . . . . . . . . . . . -- -- (704,186) (704,186)
Preferred stock dividends and
accretion . . . . . . . . . . . . . . . . . . -- -- (13,952) (13,952)
------- ----------- ------------ ----------
Balance March 31, 2000
(unaudited) . . . . . . . . . . . . . . . . . $22,426 $30,226,187 $(27,403,366) $2,845,247
======= =========== ============ ==========
</TABLE>
Note 5 - Segment Information
- ----------------------------
Information regarding the Company's business segments for the three
month period ended March 31, 2000 and 1999 are as follows:
<TABLE>
<CAPTION>
March 31, 2000 March 31, 1999
---------------------------------- --------------------------------
United States Hong Kong United States Hong Kong
------------- --------- ------------- ---------
<S> <C> <C> <C> <C>
Net Sales . . . . . . . . . . . . . . . $ 2,402,259 $ 637,023 $2,270,360 $ 547,418
Operating income (loss). . . . . . . . $ (463,745) $ (124,469) $ (418,365) $ (176,730)
Identifiable assets (1) . . . . . . . . $ 5,767,584 $1,584,879 $6,565,040 $1,638,703
</TABLE>
(1) Excludes corporate assets of $7,665 at March 31, 2000 and 1999,
respectively. Hong Kong identifiable assets include intercompany receivables
from the parent company totaling $1,213,984 and $1,205,866 at March 31, 2000
and 1999, respectively.
-6-
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
This Quarterly Report on Form 10-Q 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 Quarterly 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" in the Company's December 31, 1999 Annual
Report on Form 10-K. 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.
Results of Operations
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.
Three Months Ended March 31, 2000 and 1999
Net sales for the three months ended March 31, 2000 increased 7.9% to
$3,039,000 from $2,818,000 in the comparable period in 1999. The increase in
sales is due primarily to broader product placement and to inventory
replenishment by retailers.
Gross profit as a percentage of net sales decreased to 36.0% for the
three months ended March 31, 2000 compared to 37.7% for the three months ended
March 31, 1999. This decrease resulted primarily from the sale of certain
discontinued merchandise at lower profit margins in connection with an
aggressive inventory management plan. Gross profit increased 3.1% to $1,094,000
in the first quarter of 2000 from $1,062,000 in the comparable period in 1999 as
a result of the increase in sales.
-7-
<PAGE>
The Company's net sales and gross profit, 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.
Royalty expense increased to $216,000, or 7.1% of net sales, in the
period ended March 31, 2000 from $111,000, or 3.9% of net sales, for the period
ended March 31, 1999, primarily due to the increase of licensed items in the
product mix and improved first quarter sales of those items.
Merchandising, selling, warehousing and distribution expenses decreased
4.6% to $841,000 for the first quarter of 2000 from $881,000 in the comparable
1999 period. This decrease resulted from continued cost control measures,
including a reduction in personnel costs, which were partly offset by increased
commissions due to the increase in sales for the quarter.
General and administrative expenses decreased 5.9% to $625,000 for the
first quarter of 2000 from $664,000 in the comparable 1999 period. This decrease
resulted from a reduction in personnel and other related costs.
The Company had an operating loss of $588,000 in the three months ended
March 31, 2000 compared with an operating loss of $595,000 in the three months
ended March 31, 1999.
Interest expense was $116,000 in the first quarter of 2000 as compared
to $107,000 in the comparable period in 1999.
The Company had a net loss of $704,000 in the first quarter of 2000 as
compared to $702,000 in the first quarter of 1999.
In 2000 and 1999, 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 loss attributable to common stockholders.
Basic loss per share attributable to common stockholders for the three
months ended March 31, 2000 totaled $.32 per share compared to a basic loss per
share attributable to common stockholders of $.32 per share in the comparable
period in 1999 based upon 2,243,000 and 2,239,000 weighted average shares
outstanding in the three months ended March 31, 2000 and 1999, respectively.
Liquidity and Capital Resources
The Company's primary sources of liquidity and capital resources in
2000 and 1999 were funds provided from operations and its credit agreement with
Milberg Factors, Inc. ("Milberg"). At March 31, 2000, working capital reflected
a deficiency of $176,000 as compared to a working capital of approximately
$722,000 at December 31, 1999. The decrease in working capital for the period
primarily is a result of (a) the loss for the quarter, (b) the Company's
investment in product development and (c) capital expenditures for fixed assets
consisting primarily of molds and tools for new products.
-8-
<PAGE>
Cash used in operating activities in the first three months of 2000 was
$1,374,000 as compared with $740,000 in the comparable period in 1999. The
increase in cash used in operating activities was primarily due to investments
in new product lines during the quarter and the timing of certain allowances
taken by customers.
Cash used in investing activities was $206,000 and $131,000 for the
three months ended March 31, 2000 and 1999, respectively, which was primarily
attributable to capital expenditures for fixed assets, including molds and
tooling for new products.
Cash provided by financing activities was $1,481,000 and $814,000 in
the first three months of 2000 and 1999, respectively. Funds borrowed from
Milberg were used to finance the operations of the business.
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 Company's
inventory located in the United States. Such advances 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.
During the three months ended March 31, 1999, 499 shares of Series B
Stock were converted into 250 shares of Common Stock. No shares of Series B
Stock were converted into Common Stock during the three month period ended March
31, 2000.
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 fiscal year ending December 31, 2000.
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 its 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.
-9-
<PAGE>
Backlog
Total order backlog at March 31, 2000 and 1999 was approximately
$1,474,000 and $1,690,000, 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.
-10-
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) 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).
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.
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.
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 Form 8-K filed with the Securities and Exchange
Commission on July 10, 1996 (the "July 1996 Form 8-K").
*10.1 Letter Agreement dated as of March 28, 2000 between the Company
and Gerald M. Carroll.
+27 Financial Data Schedule
- --------------------------
* Filed herewith
+ Filed with the Securities and Exchange Commission only pursuant to
Article 5 of Regulation S-X.
(b) Reports on Form 8-K -- None
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 12, 2000
JUST TOYS, INC.,
a Delaware corporation
By: /s/ Jerry Carroll
------------------------------------
Jerry Carroll
Chief Executive Officer and
Principal Accounting Officer
<PAGE>
[JUST TOYS LETTERHEAD]
As of March 28, 2000
Mr. Gerald M. Carroll
120 Bedford Road
Pleasantville, NY 10570
Dear Jerry:
This will confirm your compensation and other arrangements with Just
Toys, Inc. (the "Company"). This letter agreement replaces and supercedes in its
entirety the letter agreement dated July 30, 1997.
1. Until further adjustment, your base salary will be at the rate of $175,000
per year.
2. You will receive an automobile allowance of $500 per month.
3. Concurrently herewith, you have been granted an option to purchase 75,000
shares of the Company's common stock pursuant to the terms of a separate option
agreement dated the date hereof.
4. You will continue to be eligible to participate in the Company's Bonus Plan
as established and modified from time to time. With respect to 2000, you will
receive 30% of the available monies under the Bonus Plan and the balance will be
distributed to other officers and employees of the Company as proposed by you in
consultation with the Compensation Committee. You will also be entitled to
participate, to the extent you are eligible, in the Company's employee benefits
including medical and dental insurance, 401(k) and vacation under the same terms
as the Company's other employees.
5. In the event of a "change of control" (as defined below) of the Company and
the Company or its successor elects to terminate your employment without cause
with six months of such change in control, the Company will pay you in a lump
sum an amount equal to six months of your base salary in effect at the time of
termination and shall pay and provide you at the Company's expense your full
benefits (medical, insurance, etc.) for six months after your date of
termination.
The term "change of control" means (i) the acquisition of more than 50%
of the Company's common stock by one person or group of persons acting in
concert; (ii) a sale of all or substantially all of the assets of the Company
<PAGE>
Mr. Gerald M. Carroll -2- As of March 28, 2000
and its subsidiaries; or (iii) individuals who presently constitute the Board of
Directors of the Company, or who have been recommended for election to the Board
by two-thirds of the Board consisting of individuals who are either presently on
the Board or such recommended successors, cease for any reason to constitute at
least a majority of such Board.
6. The Company may terminate your employment for any reason at its sole
discretion at any time. If the Company terminates your employment without cause,
the Company will pay you your base salary in effect at such time and your full
benefits for six months after your date of termination in accordance with the
Company's normal payroll policies.
7. In the event you desire to terminate your employment with the Company other
than pursuant to Paragraph 5 above or for cause, you will give the Company a
minimum of 30 days notice.
8. Throughout your employment by the Company, you will devote your full business
time, attention, knowledge and skills, to the business of the Company. During
your employment you shall render your services exclusively to the Company and
you will not, directly or indirectly, accept employment or compensation from or
perform services of any nature for, any business enterprise other than the
Company or its affiliates.
9. You will hold in a fiduciary capacity for the benefit of the Company and its
affiliates all information, knowledge and data relating to or concerned with
their operations, sales, business and affairs (except such information as is
generally known in the industry), and you will not, at any time hereafter,
disclose or divulge any such information, knowledge or data to any person, firm
or corporation other than to the Company or its designees or except as may
otherwise be required in connection with the business and affairs of the Company
and its affiliates.
10. Any interests in copyrights, trademark, patents, patent applications,
inventions, developments and processes which you may develop during your
employment relating to the fields in which the Company is engaged shall belong
to the Company.
11. This agreement shall be governed, interpreted and construed in accordance
with the laws of the State of New York applicable to agreements entered into and
to be performed entirely therein. Any suit, action or proceeding with respect to
this agreement shall be brought exclusively in the courts of the State of New
York or in the United States courts located in New York County.
12. This agreement constitutes the entire agreement between the Company and you
supersedes all prior understandings and agreements regarding your employment by
the Company. This agreement shall not be altered or modified except in writing,
duly executed by the parties hereto.
<PAGE>
Mr. Gerald M. Carroll -3- As of March 28, 2000
If this agreement is in accordance with your understanding, please sign
a copy of this letter below under the words "Accepted and Agreed to."
Very truly yours,
Just Toys, Inc.
By: /s/ David Schwartz
---------------------------------
David Schwartz
Chief Financial Officer
ACCEPTED AND AGREED TO:
/s/ Gerald M. Carroll
- -----------------------
Gerald M. Carroll
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