PLAY CO. TOYS & ENTERTAINMENT CORP.
550 Rancheros Drive
San Marcos, California 92069
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS To Be Held on
January 28, 1998
To the Shareholders of
PLAY CO. TOYS & ENTERTAINMENT CORP.
NOTICE IS HEREBY GIVEN that an Annual Meeting of Shareholders of PLAY CO.
TOYS & ENTERTAINMENT CORP. (the "Corporation") will be held at the offices of
Klarman & Associates, 14 East 60th Street, New York, New York, on January 28,
1998, at 11:00 a.m. Eastern time, for the following purposes:
1. To elect four (4) Directors to the Corporation's Board of Directors
to hold office for a period of one year or until their successors are duly
elected and qualified; and
2. To transact such other business as properly may be brought before
the meeting or any adjournment thereof.
The close of business on December 15, 1997 has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you
plan to attend, please complete, date, and sign the accompanying proxy, and
return it promptly in the enclosed envelope to assure that your shares are
represented at the meeting. If you do attend, you may revoke any prior proxy and
vote your shares in person if you wish to do so. Any prior proxy automatically
will be revoked if you execute the accompanying proxy or if you notify the
Secretary of the Corporation, in writing, prior to the Annual Meeting of
Shareholders.
By order of the Board of Directors
James B. Frakes, Secretary
Dated: January 5, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN
THE ENCLOSED PROXY, AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO
ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF MAILED IN
THE UNITED STATES.
<PAGE>
PLAY CO. TOYS & ENTERTAINMENT CORP.
550 Rancheros Drive
San Marcos, California 92069
PROXY STATEMENT
FOR
Annual Meeting of Stockholders
To Be Held on January 28, 1998
This proxy statement and the accompanying form of proxy were mailed on
January 5, 1998 to the stockholders of record (as of December 15, 1997) of Play
Co. Toys & Entertainment Corp., a Delaware corporation (the "Corporation"), in
connection with the solicitation of proxies by the Board of Directors of the
Corporation for use at the Annual Meeting to be held on January 28, 1998 and at
any adjournment thereof.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
Shares of the Corporation's Common Stock, par value $.01 per share (the
"Common Stock"), represented by an effective proxy in the accompanying form
will, unless contrary instructions are specified in the proxy, be voted FOR the
proposal to elect four (4) Directors to the Corporation's Board of Directors to
hold office for a period of one year or until their successors are duly elected
and qualified.
Any such proxy may be revoked at any time before it is voted. A stockholder
may revoke this proxy (i) by notifying the Secretary of the Corporation either
in writing prior to the Annual Meeting or in person at the Annual Meeting; (ii)
by submitting a proxy bearing a later date; or (iii) by voting in person at the
Annual Meeting. An affirmative vote of a plurality of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote thereon is required to elect the Directors. A stockholder voting through a
proxy who abstains with respect to the election of Directors is considered to be
present and entitled to vote on the election of Directors at the meeting, and
his abstention is, in effect, a negative vote; however, a stockholder (including
a broker) who does not give authority to a proxy to vote or who withholds
authority to vote on the election of Directors shall not be considered present
and entitled to vote on the election of Directors. A stockholder voting through
a proxy who abstains with respect to approval of any other matter to come before
the meeting is considered to be present and entitled to vote on that matter and
his abstention is, in effect, a negative vote; however, a stockholder (including
a broker) who does not give authority to a proxy to vote or who withholds
authority to vote on any such matter shall not be considered present and
entitled to vote thereon.
The Corporation will bear the cost of the solicitation of proxies by the
Board of Directors. The Board of Directors may use the services of its Executive
Officers and certain Directors to solicit proxies from stockholders in person
and by mail, telegram, and telephone. Arrangements
<PAGE>
may also be made with brokers, fiduciaries, custodians, and nominees to send
proxies, proxy statements, and other material to the beneficial owners of the
Common Stock held of record by such persons, and the Corporation may reimburse
them for reasonable out-of-pocket expenses incurred by them in so doing.
The Corporation's annual report on Form 10-KSB for the fiscal year
ended March 31, 1997 and its quarterly report on Form 10-QSB for the six months
ended September 30, 1997 accompany this proxy statement.
The principal executive offices of the Corporation are located at 550
Rancheros Drive, San Marcos, California 92069; the Corporation's telephone
number is (760) 471-4505.
Recent Developments
On December 29, 1997, the Corporation consummated an initial public
offering of 750,000 shares of its Series E Preferred Stock (the "Series E
Stock") and 1,500,000 Series E Preferred Stock purchase warrants ("Warrants") at
$4.00 per share and $.10 per Warrant, respectively, through West America
Securities Corp. as underwriter, for a total offering of $3,150,000. The
Corporation received gross proceeds of approximately, $2,740,000 from the
offering after the payment of a 10% commission and 3% non accountable expense
allowance to the underwriter. With the closing of the offering the option to
purchase shares of the Series E Stock granted to Europe American Capital Corp.,
in accordance with the Congress Financial Corp. (Western) ("Congress") financing
has terminated. See "Certain Relationships and Related Transactions."
Independent Public Accountants
The Board of Directors of the Corporation has selected Haskell & White
LLP, Certified Public Accountants, as independent accountants of the Corporation
for the fiscal year ending March 31, 1998. Shareholders are not being asked to
approve such selection because such approval is not required. The audit services
provided by Haskell & White LLP consist of examination of financial statements,
services relative to filings with the Securities and Exchange Commission, and
consultation in regard to various accounting matters. Representatives of Haskell
& White LLP are not expected to be present at the meeting; however, same will
have the opportunity to make a statement, via telephone, if they so desire and
to answer appropriate questions.
On February 20, 1997, the Board of Directors of the Corporation
authorized the Corporation's Executive Officers to engage Haskell & White LLP as
the Corporation's new auditing firm for the year ending March 31, 1997. Prior to
engaging Haskell & White, such accounting firm was not consulted on any matters
relative to the application of accounting principles on specified transactions
or in any matter that was the subject of a disagreement with the prior
accountants. The change in accountants was not due to any discrepancies or
disagreements between the Corporation and its former accountants, BDO Seidman,
LLP, on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
<PAGE>
The former accountants' reports on the Corporation's financial statements for
the years ended March 31, 1995 and 1996 did not contain any adverse opinions or
disclaimers of opinion; nor were they qualified or modified as to uncertainty,
audit scope, or accounting principles as required by Item 304 (a)(3) of
Regulation S-B promulgated under the Securities Act of 1933, as amended.
Certain Reports
No person ("a Reporting Person") who during the fiscal year ended March
31, 1997 was a Director, Officer, or beneficial owner of more than ten percent
of the Corporation's Common Stock or Series E Preferred Stock [which are the
only classes of equity securities of the Corporation registered under Section 12
of the Securities Exchange Act of 1934 ("the Act")], failed to file on a timely
basis reports required by Section 16 of the Act during the most recent fiscal
year or prior years. The foregoing is based solely upon a review by the
Corporation of (i) Forms 3 and 4 during the most recent fiscal year as furnished
to the Corporation under Rule 16a-3(d) under the Act; (ii) Forms 5 and
amendments thereto furnished to the Corporation with respect to its most recent
fiscal year; and (iii) any representation received by the Corporation from any
reporting person that no Form 5 is required, except as described herein.
VOTING SECURITIES AND SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The securities entitled to vote at the meeting are the Common Stock,
par value $.01 per share. The presence, in person or by proxy, of a majority of
shares entitled to vote will constitute a quorum for the meeting. Each share of
Common Stock entitles its holder to one vote on each matter submitted to the
stockholders. The close of business on December 15, 1997 has been fixed as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the meeting and any adjournment thereof. On that date, 4,103,519 shares
of Common Stock were outstanding. Voting of the shares of Common Stock is on a
non-cumulative basis.
The following table sets forth information as of December 15, 1997 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 his name.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Name and Address Shares of % of Common
of Beneficial Owner Common Stock Stock Outstanding (1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Harold Rashbaum
c/o Play Co. Toys & -- --
Entertainment Corp.
550 Rancheros Drive
San Marcos, CA
- -----------------------------------------------------------------------------------------------------------------
Richard Brady
c/o Play Co. Toys & 25,587 *
Entertainment Corp.
550 Rancheros Drive
San Marcos, CA
- -----------------------------------------------------------------------------------------------------------------
Sheikhar Boodram
c/o Play Co. Toys & -- --
Entertainment Corp.
550 Rancheros Drive
San Marcos, CA
- -----------------------------------------------------------------------------------------------------------------
United Textiles &
Toys Corporation 2,419,581(2) 59.3
448 West 16th Street
New York, NY 10011
- -----------------------------------------------------------------------------------------------------------------
Multimedia Concepts
International, Inc. --(3) --(3)
448 West 16th Street
New York, NY 10011
- -----------------------------------------------------------------------------------------------------------------
Europe American
Capital Foundation --(4) --(4)
Box 47
Tortola, BVI
- -----------------------------------------------------------------------------------------------------------------
Vermogenstreuhand GMBH
Kiser Street, #14 --(5) --(5)
Bregenz Austria
- -----------------------------------------------------------------------------------------------------------------
Volcano Trading Limited
Via Cantonale, #16 --(6) --(6)
Lugano Switzerland
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%
(1) Does not include the shares of Common Stock issuable upon the
conversion of the 4,200,570 shares of Series E Stock which are outstanding. Does
include the 750,000 shares of Series E Stock issued in the Corporation's initial
public offering which closed 12/29/97.
(2) Does not include 1,350,000 shares of Common Stock issuable upon the
conversion of 225,000 shares of the Series E Stock. Includes 578,742 shares
issued to United Toys & Textiles Corp. ("UTTC") in connection with the August
1996 distribution of the Corporation's shares by American Toys in August 1996.
(3) Does not include 4,818,420 shares of Common Stock issuable upon the
conversion of 803,070 shares of the Series E Stock.
(4) Does not include 7,035,000 shares of Common Stock issuable upon the
conversion of 1,172,500 shares of the Series E Stock.
(5) Does not include 4,500,000 shares of Common Stock issuable upon the
conversion of 750,000 shares of the Series E Stock.
(6) Does not include 1,500,000 shares of Common Stock issuable upon the
conversion of 250,000 shares of the Series E Stock.
<PAGE>
It is expected that the following will be considered at the meeting and that
action will be taken thereon:
I. ELECTION OF DIRECTORS
The Board of Directors currently consists of four members elected for a
term of one year or until their successors are duly elected and qualified. Two
such members are inside directors; two are outside independent directors.
An affirmative vote of a plurality of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting and entitled to
vote thereon is required to elect the Directors. All proxies received by the
Board of Directors will be voted for the election as Directors of the nominees
listed below if no direction to the contrary is given. In the event any nominee
is unable to serve, the proxy solicited hereby may be voted, in the discretion
of the proxy, for the election of another person in his stead. The Board of
Directors knows of no reason to anticipate this will occur.
The following table sets forth, as of December 15, 1997, the four
nominees for election as Directors of the Corporation:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Harold Rashbaum 70 Chairman of the Board
Richard Brady 46 Chief Executive Officer, President,
and Director
James Frakes 40 Chief Financial Officer, Secretary,
and Director
Sheikhar Boodram 34 Director
</TABLE>
All Directors hold office until the next annual meeting of stockholders or
until their successors are duly elected and qualified. 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. Each Director is elected for a period of one year at an annual
meeting of the Corporation's shareholders and serves until his successor is duly
elected.
As permitted under the Delaware Corporation Law, the Corporation's
Certificate of Incorporation eliminates the personal liability of the Directors
to the Corporation or any of its shareholders for damages caused by breaches of
said Directors' fiduciary duties. As a result of such provision, stockholders
may be unable to recover damages against Directors for actions which constitute
negligence or gross negligence or are in violation of said Directors' fiduciary
duties. This provision in the Corporation's Certificate of Incorporation may
reduce the likelihood of derivative, and other types of shareholder, litigation
against Directors.
Harold Rashbaum was appointed Chairman of the Board of Directors on
September 10, 1996. Mr. Rashbaum was a crisis management consultant to the
Corporation from July 1995 to September 10, 1996. He has been the President,
Chief Executive Officer, and a Director of
<PAGE>
Hollywood Productions, Inc. ("Hollywood") since January 1997. From May 1996
to January 1997, Mr. Rashbaum served as Secretary and Treasurer of Hollywood and
the President of Breaking Waves, Inc., a subsidiary of Hollywood. Also since May
1996, Mr. Rashbaum has served as the Secretary, Treasurer, and a Director of
D.L. Productions, Inc. ("DLP"). He became President of DLP in January 1997.
Since February 1996, Mr. Rashbaum has also been the President and a Director of
H.B.R. Consultant Sales Corp. ("HBR"), of which his wife is the sole
stockholder. Prior thereto from February 1992 to June 1995, Mr. Rashbaum was a
consultant to 47th Street Photo, Inc., an electronics retailer. Mr. Rashbaum
held this position at the request of the bankruptcy court during the time 47th
Street Photo, Inc. was in Chapter 11. From January 1991 to February 1992, Mr.
Rashbaum was a consultant for National Wholesale Liquidators, Inc., a major
retailer of household goods and housewares.
Richard Brady is a co-founder of the Corporation and has acted as the
Corporation's Chief Executive Officer and President since December 1995. Mr.
Brady was the Executive Vice President, Secretary, and a Director from the
Corporation's inception in 1974 until December 1996. He was re-elected Director
of the Corporation in May 1997.
James Frakes was elected Chief Financial Officer and Secretary of the
Corporation in June 1997 and July 1997, respectively. In August 1997, Mr. Frakes
was appointed as a Director of the Corporation by the board to fill an existing
vacancy. Prior thereto, from June 1990 to March 1997, Mr. Frakes was Chief
Financial Officer of Urethane Technologies, Inc. ("UTI") and two of its
subsidiaries, Polymer Development Laboratories, Inc. ("PDL") and BMC
Acquisition, Inc. These were specialty chemical companies which focused on the
polyurethane segment of the plastics industry. Mr. Frakes was also Vice
President and a Director of UTI during this period. In March 1997, three
unsecured creditors of PDL filed a petition for the involuntary bankruptcy of
PDL. This matter is pending before the United States Bankruptcy Court, Central
District of California. In 1980, Mr. Frakes obtained a Masters in Business
Administration from University of Southern California. He obtained his Bachelor
of Arts degree in history from Stanford University from which he graduated with
honors in 1978.
Sheikhar Boodram was appointed as a Director of the Corporation on February
2, 1996. Mr. Boodram was a Director of American Toys from May 1993 until July
1996. Since September 1992, Mr. Boodram has been the Vice President and a
Director of United Toys & Textiles Corp. ("UTTC"). From October 1991 to
September 1992, Mr. Boodram was employed as a designer with UTTC. Mr. Boodram
has been the Secretary of Multimedia Concepts International, Inc. ("Multimedia")
since June 12, 1995. He also served as President of Multimedia from June 12,
1995 until May 15, 1997. Mr. Boodram was the sole Officer and Director of
American Eagle Industries Corp. and Match II, Inc. until both ceased operations
in December 1996. Since February 5, 1997, Mr. Boodram has been Secretary and
Director of U.S. Apparel Corp. From 1979 until October 1991, Mr. Boodram was the
production manager for Lady Helene Sophisticates, Ltd., a manufacturer of ladies
garments, which ceased operations in 1991.
Board Meetings, Committees, and Compensation
During the fiscal year ended March 31, 1997, no meetings of the Board of
Directors were held. Actions were taken on twelve (12) occasions by unanimous
written consent of the
<PAGE>
Board of Directors, which consent was obtained in lieu of meetings. The
Corporation does not pay its Directors for attendance at Board of Directors
meetings or committee meetings. Upon the election of the directors nominated
hereunder, the Corporation shall form an audit committee, which committee shall
be comprised of the two outside directors, Harold Rashbaum and Sheikhar Boodram,
and James Frakes as the inside director
The affirmative vote of the holders of a majority of the shares of the
Common Stock issued and outstanding on the record date, voting together as a
single class, is required for the approval of this proposal. The Directors and
Officers of the Corporation and other principal stockholders owning of record,
beneficially, directly and indirectly, an aggregate of approximately 59.3% of
such shares outstanding on the record date, have agreed to vote in favor of
approval of this proposal; therefore, this proposal shall be approved at the
meeting.
The Board of Directors recommends that you vote "FOR" this Proposal.
EXECUTIVE COMPENSATION AND RELATED MATTERS
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, or paid by the Corporation during the years ended March 31, 1997,
1996, and 1995 to each of the named executive officers of the Corporation:
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
(a) (b) (c) (d) (e)
Name and Principal Other Annual
Position Year Salary($) Bonus($)(1) Compensation($)
- ----------------------- ---- --------- ----------- ---------------
<S> <C> <C> <C> <C>
Richard Brady 1997 108,000 - 6,179(2)
Chief Executive Officer, 1996 117,230 - 7,979(2)
President, and Director 1995 120,000 - 7,829(2)
</TABLE>
(1) No bonuses were paid during the periods herein stated.
(2) Includes an automobile allowance of $4,800 for 1997 and $6,600 for 1996
and 1995, and the payment of life insurance premiums of $1,379, $1,379, and
$1,888 for 1997, 1996, and 1995, respectively.
1994 Stock Option Plan
In 1994, the Corporation adopted the Corporation's 1994 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 50,000 (reflects 1 for 3
reverse split) shares of Common Stock may be granted from time to time to key
employees, Officers, Directors, advisors, and independent consultants to the
<PAGE>
Corporation and its subsidiaries. The Corporation has granted to James Frakes,
Chief Financial Officer and Secretary, pursuant to his hire, options to purchase
30,000 shares of Common Stock at an exercise price of $3.25 per share, vesting
at the rate of 10,000 shares per annum for the year ending July 1998, 1999, and
2000.
The Board of Directors is charged with administration of the Plan and
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 (not less than one year)
determined by the Board. Options may be exercised only while the original
grantee has a relationship with the Corporation or at the sole discretion of the
Board, within ninety days after the original grantee's termination. 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
month period following such retirement. Options may be exercised up to
thirty-six months after the death or total and permanent disability of an
Optionee. 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 by the laws of descent and distribution.
Options may be exercised during the holder's lifetime only by the holder or his
guardian or legal representative.
Options granted pursuant to the Plan may be designated as ISOs with the
attendant tax benefits provided therefor pursuant to Sections 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.
1994 401(k) Employee Stock Option Plan ("ESOP")
In May 1994, the Corporation adopted corporate resolutions
approving a 401(k) Employee Stock Ownership Plan ("the ESOP Plan") which covers
substantially all employees of the Corporation. The ESOP Plan was filed on July
14, 1995 with the Internal Revenue Service and includes provisions for both
employee stock ownership and a 401(k) Plan. The ESOP Plan allows contributions
only by the Corporation: these can be made annually at the discretion of the
Corporation's Board of Directors. The ESOP Plan has been designed to invest
primarily in the Corporation's stock. The 401(k) portion of the ESOP Plan will
be contributed to by the employees of the Corporation through payroll
deductions. The Corporation does not intend to match contributions to the
401(k). Contributions to the ESOP Plan may result in an expense,
<PAGE>
resulting in a reduction in earnings, and may dilute the ownership interests of
persons who currently own securities of the Corporation.
Certain Relationships and Related Transactions
On January 30, 1996, pursuant to the requirements of a Loan and
Security Agreement with Congress Financial Corporation (Western) ("Congress")
which provides a secured line of credit for the Corporation, American Toys, Inc.
converted all $1,400,000 of debt owed by the Corporation into equity. In
exchange for the debt, American Toys, Inc. agreed to receive from the
Corporation one share of Series D Preferred Stock with the right to elect 2/3 of
the Corporation's Board of Directors upon stockholder approval. In August 1996,
the one share of Series D Preferred Stock was converted into 1,157,028 shares of
the Corporation's Common Stock based on the initial amount of the debt divided
by the average price of the shares for a 90 day period prior to the conversion.
This was performed in order for American Toys, Inc. to spin such shares off to
its stockholders and divest its interest in the Corporation.
In February 1996, pursuant to the terms of the Congress financing,
Europe America Capital Corporation ("EACC"), delivered to Congress a $2,000,000
letter of credit ("L/C"). EACC is an affiliate of Ilan Arbel, the Corporation's
former Chairman of the Board. The Congress financing is also guaranteed by UTTC,
the majority stockholder of the Corporation. As compensation for the issuance of
the L/C, the Corporation granted to EACC options, subject to stockholder
approval, (i) to purchase up to an aggregate of 1,250,000 shares of Common Stock
at a purchase price of 25% of the closing bid price for the Common Stock on the
last business day prior to exercise, for a period of six months from issuance
(this option expired unexercised); and (ii) to purchase up to an aggregate of
20,000,000 shares of the Corporation's preferred stock, designated as the
"Series E Preferred Stock."
From April 1996 to June 1997, EACC exercised its options and purchased
an aggregate of 3,812,070 shares of the Series E Class I Preferred Stock (which
class has since been eliminated pursuant to shareholder vote), for $3,812,070.
An aggregate of 361,500 shares have been converted to Common Stock, leaving an
aggregate of 3,450,570 shares of Series E Preferred Stock outstanding, prior to
the public offering. The proceeds of the funds received for this investment have
enabled Playco to acquire the assets of Toys International (a three store
chain); to finance the openings of the Santa Clarita, Arizona Mills, Redondo
Beach, Ontario Mills, and Clairemont stores; to redesign five store locations;
and to support losses incurred during the Corporation's business turnaround.
In April 1997, EACC issued an additional $1 million L/C to Congress as
security. This L/C has enabled the Corporation to receive additional advances in
such amount from Congress. EACC did not receive any compensation for the
issuance of this L/C.
<PAGE>
FINANCIAL INFORMATION
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED MARCH 31, 1997, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WILL BE FURNISHED (WITHOUT THE ACCOMPANYING EXHIBITS) TO STOCKHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST THEREFOR SENT TO JAMES B. FRAKES, SECRETARY, PLAY
CO. TOYS & ENTERTAINMENT CORP., 550 RANCHEROS DRIVE, SAN MARCOS, CALIFORNIA
92069. EACH SUCH REQUEST MUST SET FORTH A GOOD FAITH REPRESENTATION THAT AS OF
DECEMBER 15, 1997 THE PERSON MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF
SHARES OF THE CORPORATION'S COMMON STOCK ENTITLED TO VOTE AT THE ANNUAL MEETING
OF STOCKHOLDERS.
II. OTHER BUSINESS
As of the date of this proxy statement, the only business which the
Board of Directors intends to present, and knows that others will present, at
the Annual Meeting is that herein set forth. If any other matter properly is
brought before the Annual Meeting or any adjournments thereof, it is the
intention of the persons named in the accompanying form of proxy to vote the
proxy on such matters in accordance with their judgment.
Shareholder Proposals
Proposals of shareholders intended to be presented at the Corporation's
1999 Annual Meeting of Shareholders must be received by the Corporation on or
prior to August 16, 1999 to be eligible for inclusion in the Corporation's proxy
statement and form of proxy to be used in connection with the 1999 Annual
Meeting of Shareholders.
By Order of the Board of Directors,
James B. Frakes
Secretary
January 5, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE AND RETURN YOUR
PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF IT IS MAILED
IN THE UNITED STATES OF AMERICA.
