AMERICAN TOYS. INC.
2649 550 Bishops Drive
San Ramon, California 94583
INFORMATION STATEMENT REGARDING THE PROPOSED
ACTION TO BE TAKEN PURSUANT THE WRITTEN CONSENT
OF A MAJORITY STOCKHOLDER IN LIEU OF A SPECIAL
MEETING OF THE STOCKHOLDERS
----------
This information statement has been mailed on September 27, 1996 to the
stockholders of record on September 12, 1996 of American Toys, Inc., a Delaware
corporation (the "Corporation") in connection with the proposed action to be
take by the Corporation pursuant to the written consent by the majority
stockholders of the Corporation, dated September 4, 1996. The action to be taken
pursuant to the written consent shall be taken on October , 1996. The principal
executive offices of the Corporation are located at 2649 Bishops Drive, San
Ramon, California 94583, the Corporation's telephone number is (510) 830-8801.
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO
STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTER
WHICH WILL BE DESCRIBED HEREIN.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY.
Authorization for the (i) election of three (3) persons nominated by the
Board of Directors as directors (ii) to amend the Corporation's Certificate of
Incorporation to effect a change of the Corporation's name from American Toys,
Inc. to U.S. Wireless Corp. and (iii) to amend the Certificate of Incorporation
to authorize an increase in the number of authorized shares of Common Stock of
the Corporation to 40,000,000 shares from 20,000,000 shares.
On September 4, 1996, a consent by a majority of the Corporation's
stockholders, which owned 6,734,763 shares or approximately 78.3% of the
8,601,880 issued and outstanding shares of the Corporation's common stock, par
value $.01 per share (the "Common Stock") as of such date, executed a written
consent authorizing the Corporation to (i) elect three (3) persons nominated by
the Board of Directors as directors (ii) amend its Certificate of Incorporation
to effect a change of the Corporation's name from American Toys, Inc. to U.S.
Wireless Corp. and (iii) amend the Certificate of Incorporation to authorize an
increase in the number of authorized shares of Common Stock of the Corporation
to 40,000,000 shares from 20,000,000 shares.
Under Section 228 of the General Corporation Law of the State of Delaware,
any action requiring the consent of the stockholders at an annual or special
meeting of the stockholders of the Corporation, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of
<PAGE>
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted and shall be delivered to the
Corporation.
RECENT DEVELOPMENTS
Reverse Stock Split
The Corporation held a special meeting of its stockholders on May 31, 1996,
at which meeting the stockholders approved a 1 for 4 reverse stock split of its
outstanding shares of Common Stock, reducing its issued and outstanding shares
of Common Stock from 3,575,980 shares to 893,995 shares. The record date for the
purpose of calculating the reverse-split was April 17, 1996.
Spin-off of Play Co. Toys & Entertainment Corp.
In June 1996, the Corporation's Board of Directors together with the
consent of the Corporation's majority stockholder, Mister Jay Fashions
International, Inc. ("Mr. Jay"), authorized the spin-off (the "Spin-off
Distribution") of the shares of common stock of Play Co. Toys & Entertainment
Corp. ("Playco") owned by the Corporation. The record date for stockholders of
the Corporation to receive the distribution of the shares of Playco was August
15, 1996. The Corporation owned 3,705,958 shares of common stock of Playco. The
Corporation as majority stockholder of Playco authorized the conversion of its
share of Series D Preferred Stock into 1,157,028 shares of Playco's common
stock, based on the average closing bid price ($1.21) of Playco's shares for the
period from March 1, 1996 to May 31, 1996. Initially, Playco was indebted to the
Corporation in the amount of $1,400,000, which was converted into one share of
Playco's Series D Preferred Stock, which share gave the Corporation a
preferential voting right to vote to elect the majority of the board of
directors of Playco. On July 19, 1996, Playco mailed an information statement
and annual report to the stockholders of Playco describing this as well as
certain other amendments to Playco's Certificate of Incorporation, which action
was taken on August 9, 1996.
On June 20, 1996, the Corporation, as majority stockholder of Playco,
executed a written consent authorizing Playco to amend its Certificate of
Incorporation, to (i) amend the rights and preferences of the Series D Preferred
Stock to provide that it shall be convertible into 1,157,028 shares of Playco's
Common Stock and (ii) amend Playco's Series E Preferred Stock to designate two
separate classes, the "Series E Class I Preferred Stock," which shares shall be
convertible at any time into 20 shares of Playco's Common Stock, the "Series E
Class II Preferred Stock," which shares will be convertible at the option of the
holder, commencing two years from issuance, into 20 shares of Playco's Common
Stock. The 862,000 shares of the Series E Preferred Stock purchased by Europe
American Capital Corp. ("EACC") shall be reissued as Series E Class I Preferred
Stock.
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<PAGE>
Acquisition of shares of Multimedia Concepts International, Inc. and Video
On-Line USA, Inc.
In June 1996, EVC, a British Virgin Island corporation, of which Moses Mika
is the sole officer, director and stockholder, acquired 3,106,005 shares of the
Corporation's Common Stock in exchange for 400,000 shares of common stock of
Multimedia Concepts International, Inc., a Delaware corporation ("Media"), which
shares are quoted on the Nasdaq SmallCap Stock Market. EVC had the right to
either pay $1,800,000 for the shares or transfer 400,000 shares of Media to the
Corporation. Mr. Mika is the father of Ilan Arbel, the Vice-President and a
former director of the Corporation and a director of Media. The shares of Common
Stock issued to EVC were not eligible to receive the Spin-off Distribution. In
May 1996, Media acquired 51% of the outstanding shares of common stock of Video
On-Line USA, Inc. ("Video"). Video was formed by EVC, which corporation retained
49% of the outstanding shares of Video, with Media owning the balance. In June
1996, EVC exchanged all of its shares of Video for a five year options to
purchase 3,000,000 shares of the Common Stock at an exercise price of $2.00 per
share and 100,000 shares at an exercise price of $2.50.
Acquisition of Labyrinth Communications Technologies Group, Inc. ("Labyrinth")
and Mantra Technologies, Inc. ("Mantra")
Labyrinth Communications Technologies Group, Inc., a Delaware corporation
("Labyrinth"), was formed by Dr. Oliver Hilsenrath on June 17, 1996. The
Corporation entered into a stock purchase agreement with Labyrinth (the
"Labyrinth Agreement") dated July 10, 1996, whereby the Corporation agreed to
acquire 51% of the outstanding shares of common stock of Labyrinth. The
acquisition was consummated on July 31, 1996. Pursuant to the terms of the
Labyrinth Agreement, the Corporation purchased 200,000 shares of Labyrinth's
common stock or 20% of the outstanding shares for $2,000,000 and exchanged
2,250,000 shares of Common Stock for 310,000 shares of Labyrinth's common stock
from Dr. Oliver Hilsenrath, the sole officer and director of Labyrinth. Upon the
consummation of the agreement on July 30, 1996 Dr. Oliver Hilsenrath, the
founder of both Labyrinth and Mantra, became the President, Chief Executive
Officer and a Director of the Corporation.
In addition, the Corporation entered into a stock purchase agreement dated
July 10, 1996, with Mantra (the "Mantra Agreement"), to acquire 51% of the
outstanding shares of Mantra for $500,000, with the right to acquire the
remaining 49% of the outstanding shares in exchange for an aggregate of
1,000,000 shares of the Corporation's Common Stock. The acquisition was
subsequently consummated on July 30, 1996. The Corporation was issued this
option by the stockholders of Mantra pursuant to the consummation of the
acquisition, which option is exercisable, only in the event that the closing bid
price of the Common Stock for the period of 30 consecutive trading days prior to
the date of exercise shall have been at least $5.00.
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<PAGE>
Acquisition of Video Authoring Systems, Inc.
On September 7, 1996 the Corporation entered into a letter of intent to
acquire 100% of the outstanding shares of common stock of Video Authoring
Systems, Inc. ("VAS"), from its stockholders (The "VAS Acquisition"). The
Corporation would acquire 100% of the shares of VAS for such number of shares of
the Corporation equal to $2,000,000 as of the closing date, based on the average
closing bid price for such shares for a period of ten days prior thereto. In
addition, the Corporation agreed to loan an aggregate of $1,000,000 to VAS
pursuant to a loan schedule. The stockholders of VAS agreed to enter into 3 year
employment agreements. The agreement provides for a $250,000 breakup fee to be
paid by VAS to the Corporation if the transaction is not consummated by
September 13, 1996, due to a default by the stockholders.
Private Placements
In July 1996, the Corporation and Labyrinth commenced private placement
offerings (the "Private Placements") of their securities. The Corporation and
Labyrinth offered and sold 600,000 and 79,000 shares, respectively at $2.50 and
$12.00, respectively, for total proceeds of $1,500,000 and $948,000,
respectively. The funds raised by the Corporation were used for the acquisitions
of Labyrinth and Mantra.
Cancellation of Mr. Jay Note
On July 31, 1996, the Corporation and Mr. Jay agreed that American Toys,
Inc., would cancel a promissory note issued by Mr. Jay for the purchase of
275,000 shares of Common Stock in exchange for the return of such shares to the
Corporation's treasury. The 275,000 shares returned is prior to the reverse
stock split, whereby such shares now are equal to 68,750 shares.
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of September __, 1996, with
respect to the beneficial ownership of shares of Common Stock by (i) each person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended), known by the Corporation to be the
owner of more than 5% of the outstanding shares of Common Stock, (ii) each
director, and (iii) all officers and directors as a group. Except to the extent
indicated in the footnotes to the following table, each of the individuals
listed below possesses sole voting power with respect to the shares of Common
Stock listed opposite their name.
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<PAGE>
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percentage of Class (%)
Beneficial Owner Beneficial Ownership
<S> <C> <C>
European Ventures Corp. (1) 6,206,005 53.0%
P.O. Box 47
Roadtown, Tortola
British Virgin Islands
Dr. Oliver Hilsenrath (2) 3,750,000 37.1%
c\o American Toys, Inc.
2649 Bishop Drive
San Ramon, CA 94583
Ilan Arbel (3) 9,834,763 74.5%
c/o American Toys, Inc.
2649 Bishop Drive
San Ramon, CA 94583
David Tamir -- --
c\o American Toys, Inc.
2649 Bishop Drive
San Ramon, CA 94583
Regina Gindin (4) 50,000 *
c/o American Toys, Inc.
2649 Bishop Drive
San Ramon, CA 94583
Officers and Directors 13,256,005 90.2%
as a Group
(4 persons) (1)-(4)
</TABLE>
- ----------
* Less than 1%
(1) A Corporation of which Moses Mika, the father of Ilan Arbel, is an officer,
director and the sole stockholder. Includes 3,100,000 shares issuable
pursuant to an option granted in July 1996. See "Certain Relationships and
Related Transactions."
(2) Includes 1,500,000 shares issuable pursuant to options granted pursuant to
Dr. Hilsenrath's employment agreement. See "Management."
(3) Includes (i) 3,106,005 shares owned by EVC and the shares issuable to EVC
pursuant to the 3,100,000 options granted to EVC (ii) 751,880 shares issued
to Galit Capital Limited, a British Virgin Island corporation, upon Mr.
Arbel's exercise of an option purchasing 751,880 in accordance with his
employment agreement (iii) 1,498,120 shares issuable upon the exercise of
the remaining options under such agreement and (iv) the 378,758 shares
owned by Mr. Jay, a corporation in which Mr. Arbel is the president, a
director and majority stockholder. See "Management."
(5) Includes 50,000 shares issuable pursuant to options granted pursuant to
Mrs. Gindin's election as a director of the Corporation.
5
<PAGE>
MANAGEMENT
Officers and Directors.
The directors of the Corporation are elected annually by the shareholders
and the officers are appointed annually by the Board of Directors. Vacancies on
the Board of Directors may be filled by the remaining directors. Each director
and officer will hold office until the next annual meeting of shareholders, or
until his successor is elected and qualified. The executive officers and
directors of the Corporation are as follows:
NAME AGE POSITION
---- --- --------
Dr. Oliver Hilsenrath __ President, Chief Executive Officer
and Director
Dr. Mati Wax __ Chief Technology Officer
David Tamir __ Director
Regina Gindin __ Director
- ----------
All directors hold office until the next annual meeting of stockholders or
until their successors are elected and qualify. Vacancies on the Board of
Directors may be filled by the remaining directors. Officers are elected
annually by, and serve at the discretion of the Board of Directors. There are no
family relationships between or among any officers or directors of the
Corporation.
Dr. Oliver Hilsenrath has been the Chief Executive Officer, President and a
Director of the Corporation since July 31, 1996. From their inceptions Dr.
Hilsenrath has been the Chief Executive, President and a director of both
Labyrinth and Mantra. From 1992 through 1996, Dr. Oliver Hilsenrath was a senior
vice president, general manager and co-founder of Geoteck Communications, Inc.,
an international wireless carrier with networks in the United States, United
Kingdom and Germany. Dr. Oliver Hilsenrath received his Ph.D in information
theory from Technion - Polytechnical Institute of Israel. He has worked in the
wireless communications industry for 20 years.
David Tamir has been a Director of the Corporation, since August, 1996.
From _________, 1996 to present Mr. Tamir has been the ____________ of GeoNet
Israel ____, a subsidiary of Geotek Communications, _____. From _________, 1992
to _________ 1995, Mr. Tamir had been the President of Powerspectrum Technology
________ (a subsidiary of Geotek Communications, ____, a cellular-wireless
communications corporation. From 1990 to 1992 Mr. Tamir was a representative of
RAFAEL, the Israeli defense ____________ to the United States government. Mr.
Tamir received an MS and BS degrees in Electrical Engineering from Technion, the
Israel Institute of Technology in Haifa and an MBA degree from Hebrew
University.
6
<PAGE>
Regina Gindin has been a Director of the Corporation since August 1996.
From August 1994 to present Ms. Gindin has been an independent consultant to RBG
Associates ____, a consulting firm which provides management consulting services
for strategic business planning. From 1993 to August 1994 Ms. Gindin was the
Senior Vice-President of Strategic Management and Corporate Communications for
Conner Peripherals, Inc. ("Conner"), ___________ corporation. Previously, from
1992 to 1993, Ms. Gindin was the acting chief financial officer of such
corporation and prior to that from 1988 to 1992 was the Vice-President of
Strategic Planning and Corporate Communications. Ms. Gindin received her MBA in
Business Administration from the Warton School of Business, University of
Pennsylvania. Ms. Gindin is a director of The American Jewish World Service and
The Warton Club of Northern California. Ms. Gindin is also an advisor to the
marketing department of The Warton School of Business.
Dr. Mati Wax has been the Chief Technology Officer of the Corporation and
Labyrinth since August 1996. From 1985 to 1996 has been the head of the Signal
Processing Center at RAFAEL. Dr. Wax received his PHD degree in Electrical
Engineering from Stanford University in 1985.
The directors of the Corporation are elected annually by the shareholders
and hold office until the next annual meeting of shareholders, or until their
successors are elected and qualified. The Executive officers are elected
annually by the Board of Directors, serve at the discretion of the board of
directors and hold office until their successors are elected and qualified.
Vacancies on the Board of Directors may be filled by the remaining directors.
The Corporation has agreed to indemnify its officers and directors with
respect to certain liabilities including liabilities which may arise under the
Securities Act of 1933. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Corporation pursuant to any charter, provision, by-law, contract,
arrangement, statute or otherwise, the Corporation has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Corporation of expenses incurred or
paid by a director, officer, or controlling person of the Corporation in the
successful defense of any such action, suit or proceeding) is asserted by such
director, officer or controlling person of the Corporation in connection with
the Securities being registered, the Corporation will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
As a result of the inclusion of such provision, stockholders may be unable
to recover damages against directors for actions taken by them which constitute
negligence or gross negligence or that are in violation of their fiduciary
duties. The inclusion of this provision in the Corporation's Certificate of
Incorporation may reduce the likelihood of derivative litigation against
directors and other types of shareholder litigation.
7
<PAGE>
Executive Compensation
Summary of Cash and Certain Other Compensation
The following provides certain information concerning all Plan and Non-Plan
(as defined in Item 402 (a)(ii) of Regulation S-B) compensation awarded to,
earned by, paid by the Corporation during the years ended March 31, 1996, 1995
and 1994 to each of the named executive officers of the Corporation.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
-------------------
(a) (b) (c) (d) (e)
Name and Principal Other Annual
Position Year Salary($) Bonus($)(1) Compensation($)
- ----------------------- ---- --------- ----------- ---------------
<S> <C> <C> <C> <C>
Dr. Oliver Hilsenrath (1) 1996 -- -- --
Chief Executive Officer
Ilan Arbel 1996 -- -- -- (2)
Vice-President 1995 -- -- -- (2)
1994 -- -- --
</TABLE>
- ----------
(1) Dr. Hilsenrath became the Chief Executive Officer, President and Director
on July 31, 1996. Dr. Hilsenrath receives a salary at the rate of $160,000
per annum. See "-- Employment Agreements."
(2) Until August 1996 Mr. Arbel was the president of the Corporation, and
received no salary. In March 1995, the Corporation granted Mr. Arbel
150,000 and 100,000 options to purchase shares of Common Stock at exercise
prices of $3.00 and $4.25, respectively. The 150,000 options exercisable at
$3.00 were exercised on March 21, 1995 and the shares purchased sold
pursuant to a S-8 Registration Statement. On June 16, 1995, the Corporation
filed an amendment to its registration statement on Form S-8, whereby the
Corporation amended the options issued to Mr. Arbel from 150,000 options
exercisable at $4.25 per share to 150,000 options exercisable at $1.00 per
share. These options were exercised on such date and the shares issued
sold. Pursuant to his employment agreement dated June 1, 1996, Mr. Arbel
received options to purchase 1,000,000 shares at $1.00 for a period of five
years and 2,250,000 shares at $1.33 per share until December 31, 1996. Mr.
Arbel exercise has exercised his option to purchase 1,000,000 shares at
$1.00 and has exercised his other option to purchase an additional 751,880
shares. The shares underlying such options have also been registered for
sale in an form S-8 registration statement. See "-- Employment Agreements"
and "Certain Relationships and Related Transactions."
Employment Agreements
As of July 31, 1996 the Corporation entered into a five year employment
agreement with Dr. Oliver Hilsenrath, whereby upon the consummation of the
Labyrinth Agreement, Dr. Oliver Hilsenrath became the Chief Executive Officer
and President of the Corporation. Dr. Oliver Hilsenrath's employment agreement
provides for an annual salary of $160,000 and increases of 10% per year for each
year. Pursuant to the terms of the employment agreement, the Corporation will
issue Dr. Oliver Hilsenrath options to purchase 1,500,000 shares of Common Stock
at $2.00 per share for a period of five years, which options are intended to
qualify as incentive stock options. The Corporation has agreed to register the
shares underlying the option in a registration statement, however 500,000 shares
shall be subject to a 2 year lock-up agreement. Dr. Oliver Hilsenrath's
employment agreement further provides that the Corporation shall provide Dr.
Oliver Hilsenrath with health insurance benefits and the use of an automobile
including reasonable
8
<PAGE>
automobile expenses. In the event the Corporation wishes to obtain Key Man life
insurance on the life of Dr.Oliver Hilsenrath, Dr. Oliver Hilsenrath agrees to
cooperate with the Corporation in completing any applications necessary to
obtain such insurance.
On June 1, 1996, the Corporation entered into a five year employment
agreement with Ilan Arbel whereby Mr. Arbel resigned as Chief Executive Officer
and President of the Corporation and became the Vice-President of strategic
business development for the Corporation pursuant to the consummation of the
acquisitions of Labyrinth and Mantra. Pursuant to the terms of his employment
agreement, Mr. Arbel received options to purchase 1,000,000 shares at $1.00 for
five years and 2,250,000 shares at $1.33 exercisable until December 31, 1996,
which options are intended to qualify as incentive stock options. In June and
August 1996, Mr. Arbel exercised options to purchase 1,000,000 shares of Common
Stock at $1.00 per share and 751,880 at $1.33, pursuant to the terms of the
employment agreement. The Corporation has agreed to register the shares
underlying the options in a registration statement, there will be no restriction
pursuant to a lock-up agreement on any shares issued pursuant to the exercise of
such options.
1993 Stock Option Plan
During 1993, the Corporation adopted the Corporation's 1993 Stock Option
Plan (the "Plan"). The Board believes that the Plan is desirable to attract and
retain executives and other key employees of outstanding ability. Under the
Plan, options to purchase an aggregate of not more than 150,000 shares of Common
Stock may be granted from time to time to key employees, officers, directors,
advisors and independent consultants to the Corporation and its subsidiaries. In
March 1995, the Corporation granted options to purchase 75,000 shares of Common
Stock at $3.50 per share, to each of Allean Goode and Sheikhar Boodram, former
officers of the Corporation, which options expired un exercised. The Plan was
registered pursuant to an S-8 registration statement filed with the SEC on March
21, 1995.
The Board of Directors is charged with the administration of the Plan, the
Board is generally empowered to interpret the Plan, prescribe rules and
regulations relating thereto, determine the terms of the option agreements,
amend them with the consent of the optionee, determine the employees to whom
options are to be granted, and determine the number of shares subject to each
option and the exercise price thereof. The per share exercise price for
incentive stock options ("ISOs") will not be less than 100% of the fair market
value of a share of the Common Stock on the date the option is granted (110% of
fair market value on the date of grant of an ISO if the optionee owns more than
10% of the Common Stock of the Corporation).
Options will be exercisable for a term determined by the Board which will
not be less than one year. Options may be exercised only while the original
grantee has a relationship with the Corporation or a subsidiary of the
Corporation which confers eligibility to be granted options or up to ninety (90)
days after termination at the sole discretion of the Board. In the event of
termination due to retirement, the Optionee, with the consent of the Board,
shall have the right to exercise his option at any time during the thirty-six
(36) month period after such retirement. Options may be exercised up to
thirty-six (36) months after death or total and permanent
9
<PAGE>
disability. In the event of certain basic changes in the Corporation, including
a change in control of the Corporation (as defined in the Plan) in the
discretion of the Board, each option may become fully and immediately
exercisable. ISOs are not transferable other than by will or the laws of descent
and distribution. Options may be exercised during the holder's lifetime only by
the holder, his or her guardian or legal representative.
Options granted pursuant to the Plan may be designated as ISOs, with the
attendant tax benefits provided under Section 421 and 422A of the Internal
Revenue Code of 1986. Accordingly, the Plan provides that the aggregate fair
market value (determined at the time an ISO is granted) of the Common Stock
subject to ISOs exercisable for the first time by an employee during any
calendar year (under all plans of the Corporation and its subsidiaries) may not
exceed $100,000. The Board may modify, suspend or terminate the Plan; provided,
however, that certain material modifications affecting the Plan must be approved
by the shareholders, and any change in the Plan that may adversely affect an
optionee's rights under an option previously granted under the Plan requires the
consent of the optionee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 9, 1995 the Corporation's board of directors granted 250,000 and
100,000 stock options to Ilan Arbel and Alan Berkun, respectively. 150,000 and
50,000 options granted to Messrs. Arbel and Berkun, respectively, were
exercisable at $3.00 per share, which options were exercised. The remaining
100,000 and 50,000 options granted to Messrs. Arbel and Berkun, respectively,
are exercisable at $4.25 per share, which options have not been exercised. On
March 21, 1995, the Corporation filed a Form S-8 registration statement
registering the sale of the shares of Common Stock underlying such options, at
which time Messrs. Arbel and Berkun exercised 150,000 and 50,000 options,
respectively, and sold the shares pursuant to such registration. The options
were issued as compensation.
On June 16, 1995, the Corporation filed an amendment to the filed Form S-8,
amending the 100,000 options exercisable at $4.25 per share issued to Mr. Arbel
to 150,000 options exercisable at $1.00 per share. Also, the 50,000 options
exercisable at $4.25 per share issued to Alan Berkun were amended to 75,000
options exercisable at $1.00 per share. Both sets of options were exercised by
said individuals in full on such date and sold.
In August 1995, the Corporation, entered into consulting agreements with
Harold Rashbaum and Citadel Commercial Corp., whereby Harold Rashbaum would
consult with the Corporation and Playco in the areas of retailing and marketing,
and Citadel Commercial Corp. would consult with the Corporation and Playco in
the areas of financial management, specifically trade credit and banking.
Pursuant to such agreements, the Corporation issued to each consultant 30,000
shares of its Common Stock.
On September 29, 1995, Mr. Jay, the Corporation's parent Corporation,
exercised its Special Warrant and purchased 275,000 shares of Common Stock at
$2.00 per share. As a result, Mr. Jay retained approximately 50.1% of the
outstanding shares of Common Stock of the Corporation. This Special Warrant has
expired.
10
<PAGE>
On May 31, 1996, at a special meeting of the Corporation's stockholders,
the stockholders approved a proposal to effect a 1 for 4 reverse-split (1 new
share for every 4 old shares) of all the Corporation's outstanding shares of
Common Stock. The reverse split became effective as of May 31, 1996. As of the
date of this report, not all stockholders have surrendered their old common
stock certificates for post split, new common stock certificates.
In June 1996, Playco, pursuant to the consent of its majority shareholder,
amended its certificate of incorporation to (i) amend the rights and preferences
of the Series D Preferred Stock to provide that it shall be convertible into
1,157,028 shares of Playco's common stock and (ii) amend Playco's Series E
Preferred Stock to designate two separate classes, of which 10,000,000 shares
shall be designated the "Series E Class I Preferred Stock", which shares shall
be convertible into 20 shares of Playco's common stock, and 10,000,000 shares of
which shall be designated the "Series E Class II Preferred Stock", which shares
will be convertible at the option of the holder, commencing two years from
issuance, into 20 shares of Playco's common stock. Playco prepared and mailed to
its stockholders, an information statement whereby Playco informed its
stockholders that authorized Playco to mailed to its stockholders and
information statement whereby Playco informed its stockholders that pursuant to
the consent of its majority, the aforesaid actions were taken.
In June 1996, EACC exercised its option and purchased 334,000 shares of
Playco's Series E Preferred Stock for $334,000. These shares of Series E
Preferred Stock will be designated Class I Series E Preferred Stock.
In June 1996, the Corporation, pursuant to the consent of its majority
shareholder, Mr. Jay, authorized the spinoff of the shares of Playco's common
stock owned by the Corporation to the shareholders of the Corporation.
Additionally, the Corporation authorized the conversion of its share of Series D
Preferred Stock into 1,157,028 shares of Playco's common stock based upon the
average closing bid price ($1.21) of Playco's shares for the period from March
1, 1996 to May 31, 1996. Playco is amending its Certificate of Incorporation to
reflect the conversion provisions referenced to herein.
In June 1996, European Ventures Corp. ("EVC"), a British Virgin Island
Corporation, of which Moses Mika is the sole officer, director and stockholder,
acquired 3,106,500 shares of the Corporation's Common Stock, par value $.01, in
exchange for 400,000 shares of common stock of Multimedia Concepts
International, Inc. ("Media"), a Delaware Corporation. The Corporation had the
right to either pay $1,800,000 for the shares or transfer 400,000 shares of
Media to the Corporation. Mr. Mika is the father of Ilan Arbel, the president
and Chief executive Officer of the Corporation and the president and Chairman of
the Board of Media. The shares of Common Stock issued to EVC will not be subject
to the spin-off distribution referred to herein.
For a description of the Corporation's employment agreement See "Management
- - Employment Agreements."
11
<PAGE>
II. AMENDMENT TO THE CORPORATION'S CERTIFICATE
OF INCORPORATION TO EFFECT A CHANGE OF THE
CORPORATION'S NAME FROM AMERICAN TOYS, INC. TO
U.S. WIRELESS CORP.
The Board of Directors has unanimously approved a proposal to amend the
Corporation's Certificate of Incorporation to effect a change of the name of the
Corporation from American Toys, Inc. to U.S. Wireless Corp. The full text of the
proposed Amendment to the Certificate of Incorporation is annexed hereto as
Appendix A to this Proxy Statement.
The Corporation has decided to redirect the Corporation's business from
being a holding Corporation for Playco, a retail toy Corporation to being a
holding company for Labyrinth and Mantra, companies which operations are focused
in the areas of wireless communications and internet services. To this end, the
Corporation has consummated the acquisitions of Labyrinth and Mantra and both
the Corporation and Labyrinth have completed private placement offering raising
$1,500,000 and $948,000, respectively, to raise capital in order to consummate
such acquisitions and for working capital. The Corporation believes its name
shall be an integral part of its development, in terms or public recognition of
its corporate strategy and product development. In addition, the Corporation has
entered into a letter of intent to acquire Video Authoring Systems, Inc., which
it expects to be consummated as of September 13, 1996. The Corporation does plan
on engaging in additional acquisitions and business ventures and other
opportunities in these industries.
Stockholders will not be required to submit their stock certificates for
exchange and, following the effective date of the amendment changing the name of
the Corporation, all new stock certificates issued by the Corporation will
either be overprinted with the Corporation's new name or new certificates
issued.
III. AMENDMENT OF THE CORPORATION'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK FROM 20,000,000 TO 40,000,000
The Board of Directors of the Corporation have unanimously determined that
an amendment to the Corporation's Certificate of Incorporation to increase the
number of authorized shares of Common Stock is advisable, and accordingly, has
voted to recommend an amendment to the stockholders for adoption. Stockholders
are urged to carefully read the materials that follow as they involve matters of
particular importance. The full text of the Amendment to the Certificate of
Incorporation is set forth in Appendix A to this Proxy Statement.
Increase In Authorized Common Stock
The Board of Directors has unanimously approved a proposal to amend the
certificate of Incorporation to authorize an increase in the authorized shares
of Common Stock of the Corporation to 40,000,000 shares from 20,000,000 shares.
As of September ___, 1996, there
12
<PAGE>
were 8,601,880 shares of Common Stock issued and outstanding, approximately
7,800,000 shares reserved for issuance upon the exercise of options, warrants
and other contractual commitments and approximately 400,000 shares to be issued
pursuant to the VAS Acquisition.
The Corporation desires to aggressively pursue business acquisitions and
opportunities, which may include the issuance of shares of Common Stock and the
expenditure of capital. The Corporation may require additional capital to
sustain operations and for potential acquisitions. The Board of Directors
anticipates it will investigate and consider acquisitions, joint venture and
similar transactions which may involve a broad range of financial arrangements.
The Board of Directors believes that situations will arise where it is necessary
or advantageous to accept additional equity investment through the sale of
Common Stock. Additionally, the Board believes that the issuance of shares to
effect an acquisition, instead of the payment of the Corporation's operating
revenues is in the best interests of the Corporation.
The Board of Directors proposed an amendment to the Corporation's
Certificate of Incorporation (the "Amendment"), and same was approved by written
consent of a majority of the Corporation's stockholder, to increase the number
of authorized shares of Common Stock after such Amendment to 40,000,000 shares.
The additional shares of Common Stock being authorized by the Amendment would
enable the Corporation to proceed with financing and acquisition opportunities
without the delay and expense associated with the holding of a special meeting
or soliciting the consent or approval of stockholders at the time such
additional shares are needed, except as required by any regulatory authority.
The Corporation has no current plans, or commitments for the issuance of
any Common Stock, except as described herein. However, the Board may consider
transactions involving the sale or issuance of Common Stock. Accordingly, the
Board of Directors considers it desirable to have additional shares of Common
Stock available to provide the Corporation with increased flexibility in
structuring possible future financings and acquisitions and in meeting other
corporate needs which may arise.
Amendment Proposed by the Board of Directors
The full text of the Amendment to Article FOURTH is annexed hereto as
Appendix A to this Information Statement. The following description of the
amendment is qualified in its entirety by reference to Article FOURTH of
Appendix A.
The Corporation's Articles of Incorporation currently authorizes the
issuance of 20,000,000 shares of Common Stock. As of September , 1996, the
Corporation has outstanding 8,601,880 shares of Common Stock. As of such date,
there was also reserved for issuance upon the conversion or exercise of various
securities and the consummation of the VAS Acquisition of approximately
8,200,000 shares of Common Stock, leaving a total of approximately 3,200,000
shares authorized, unissued and unreserved shares of Common Stock available for
future issuances.
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<PAGE>
The number of authorized shares of Common Stock after the Amendment will
represent an increase of 20,000,000 shares of Common Stock over and above the
20,000,000 shares of Common Stock currently authorized.
Consequences of the Amendment
Stockholders should note that certain disadvantages may result from the
adoption of the amendment. Such disadvantages may include a significant
reduction in their interest in the Corporation with respect to earnings per
share, voting, liquidation, value and book and market value per share if the
additional authorized shares of Common Stock are issued. While not having such
purpose, the amendment could have the effect of deterring a future takeover
attempt which the majority of stockholders may deem to be in their best
interest. Such event would arise if the Board of Directors deemed it in the best
interest of the Corporation to issue an option to purchase Common Stock, a
security convertible into shares of Common Stock or shares of Common Stock to a
party friendly to management in an amount that would make it less likely for an
unfriendly purchase to attempt an acquisition of shares by tender offer or other
purchase. If a majority in voting power of the current stockholders desire a
takeover or change in control of the Corporation, and if such takeover or change
were opposed by the Board of Directors, the additional shares of Common Stock
could possibly be used by the Corporation to thwart the desires of the majority.
Members of the Board of Directors may have a conflict in proposing this
amendment, and such amendment may operate to the disadvantage of stockholders by
reducing the likelihood of a hostile takeover of the Corporation which may
result in a change in the membership of the Board of Directors.
FINANCIAL INFORMATION
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED MARCH 31, 1996 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL
BE FURNISHED WITHOUT THE ACCOMPANYING EXHIBITS TO STOCKHOLDERS WITHOUT CHARGE
UPON WRITTEN REQUEST THEREFOR SENT TO __________________ , SECRETARY, AMERICAN
TOYS, INC., 2649 BISHOP DRIVE, SAN RAMON, CA 94583. EACH SUCH REQUEST MUST SET
FORTH A GOOD FAITH REPRESENTATION THAT AS OF AUGUST 12, 1996 THE PERSON MAKING
THE REQUEST WAS THE BENEFICIAL OWNER OF COMMON SHARES OF THE CORPORATION
ENTITLED TO VOTE AT THE SPECIAL MEETING OF STOCKHOLDERS.
By Order of the Board of Directors,
--------------------------
, Secretary
September 27, 1996
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APPENDIX A
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF
AMERICAN TOYS, INC.
Under Section 242 of the Delaware Corporation Law:
The undersigned, for the purpose of amending the Certificate of
Incorporation of AMERICAN TOYS, INC., does hereby certify and set forth:
FIRST:
The name of the Corporation is
AMERICAN TOYS, INC.
"FOURTH
A. Authorized Capital Stock. The total number of shares of all classes of
capital stock which this shall have authority to issue is TWENTY MILLION
(20,000,000) shares of Common Stock, par value $.01 per share (hereinafter, the
"Common Stock").
SECOND:
The Certificate of Incorporation was filed by the Department of State on
March __, 1993.
THIRD:
The amendment of the Certificate of Incorporation of the Corporation
effected by this Certificate of Amendment is to change the name of the
Corporation from American Toys, Inc. to U.S. Wireless Corp., (ii) to increase
the number of authorized shares of Common Stock from 20,000,000 to 40,000,000.
The Certificate of Incorporation of this Corporation are amended by changing
"Article First" and "Article FOURTH", so that, as amended, said Articles shall
read as follows:
The Certificate of Incorporation of this Corporation are amended by
changing "Article FIRST, so that, as amended, said Article shall read as
follows:
"FIRST:
<PAGE>
The name of this Corporation is
U.S. WIRELESS CORP.
The Certificate of Incorporation of this Corporation are amended by
changing "Article FOURTH, so that, as amended, said Article shall read as
follows:
"FOURTH:
Authorized Capital Stock. The total number of shares of all classes of
capital stock which this Corporation shall have authority to issue is FORTY
MILLION (40,000,000) shares of Common Stock, par value $.01 per share.
The amendment to the Articles of Incorporation of the Corporation set forth
above was adopted by written consent of a majority of the Corporation's
stockholders on the 4th day of September, 1996.
IN WITNESS WHEREOF, the undersigned President of this Corporation has
executed this Certificate of Amendment on this ____ day of September, 1996.
AMERICAN TOYS, INC.
By:
----------------------------------------
Dr. Oliver Hilsenrath, President
2
