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Play Co Toys & Entertainment Corp – ‘S-3’ on 9/25/98

As of: Friday, 9/25/98 · Accession #: 1027189-98-95 · File #: 333-64237

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 9/25/98  Play Co Toys & Entertainment Corp S-3                    4:81K                                    Electronic Filers Inc/FA

Registration Statement for Securities Offered Pursuant to a Transaction — Form S-3
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-3         C:\Myfiles\Playco\1998S-3.Fin                         20    121K 
 2: EX-5        C:\Myfiles\Exhibit5.0                                  2±     8K 
 4: EX-10       C:\Myfiles\Exhibit10.102                               5±    20K 
 3: EX-23       C:\Myfiles\Exhibit23.A                                 1      5K

S-3 — C:\Myfiles\Playco\1998S-3.Fin
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) CRG Consulting Agreement Exhibits Financing Indemnification of Directors and Officers Offering, The Other Expenses of Issuance and Distribution Plan of Distribution Risk Factors Selling Securityholders Summary The Offering Undertakings
1	1st Page - Filing Submission
7	Summary
8	Financing
"	CRG Consulting Agreement
10	The Offering
11	Risk Factors
17	Selling Securityholders
18	Plan of Distribution
19	Item 14. Other Expenses of Issuance and Distribution
"	Item 15. Indemnification of Directors and Officers
"	Item 16. Exhibits
"	Item 17. Undertakings

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-3

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

 PLAY CO. TOYS & ENTERTAINMENT CORP.
(Exact Name of Registrant as Specified in Charter)

Delaware
(State or Other Jurisdiction of Incorporation or Organization)

95-3024222
 (I.R.S. Employer Identification Number)

 550 Rancheros Drive, San Marcos, California 92069, (760) 471-4505
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)

 550 Rancheros Drive, San Marcos, California 92069, (760) 471-4505
 (Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent for Service)

     Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.                

     If the only  securities  being  registered  on this form are being  offered
pursuant to dividend or interest  reinvestment plans, check the following box: [
]                                                                               

     If any of the securities being registered on this form are to be offered on
a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]                                

     If this form is filed to  register  additional  securities  for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  number  of the  earlier  effective
registration statement for the same offering. [ ]                               

     If this form is a  post-effective  amendment  filed pursuant to Rule 462(c)
under the  Securities  Act,  check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]                                                                   

     If delivery of the  prospectus is expected to be made pursuant to Rule 434,
please check the following box. [x]                                             

S-3 2nd Page of 20 TOC 1st Previous Next ↓Bottom Just 2nd
 CALCULATION OF REGISTRATION FEE

                                                        [Enlarge/Download Table]

--------------------------------------------------------------------------------------------------------------------------------    
                                                                 Proposed Maximum         Proposed                                  
Title Of Each Class                                              Aggregate Price Per      Maximum Aggregate                         
Of Securities                           Amount To                Unit(1)                  Offering Price(1)                         
To Be Registered                        Be Registered                                                     Amount Of Registration Fee
--------------------------------------------------------------------------------------------------------------------------------    

Common Stock,                                                                                                                       
par value $0.01 per                                                                                                                 
share (2)                                                                                                                           

                                                                                                                                    
                                          450,000               $.78125(3)          $    351,562.50                   $ 121.22      
--------------------------------------------------------------------------------------------------------------------------------    

Series E  Preferred                                                                                                                 
Stock, par value                                                                                                                    
$0.01 per share                                                                                                                     
                                                                                       $     19,000                    $  6.55      
                                           50,000                 $0.38(4)                                                          
--------------------------------------------------------------------------------------------------------------------------------    

Series E Preferred                                                                                                                  
Stock, par value                                                                                                                    
$.01 per share (5)                                                                                                                  

                                          700,000                 $2.25(3)               $1,575,000                    $543.06      
--------------------------------------------------------------------------------------------------------------------------------    

Totals                                                                                $1,945,562.50                    $670.83      
--------------------------------------------------------------------------------------------------------------------------------    

     (1) Total estimated  solely for the purpose of determining the registration
fee.                                                                            

     (2) Shares of Common  Stock  issuable  upon the  exercise  of options  (the
"Options") issued in accordance with a consulting agreement (the "CRG Consulting
Agreement") by and between the Company and the Selling Securityholders, together
with such  indeterminate  number of  securities  as may be issuable by reason of
anti-dilution provisions contained therein.                                     

(3)  Represents  the exercise  price of the  Options.                 

     (4)  Represents  the  closing  price for the  Series E  Preferred  Stock as
reported by a market maker on the OTC Bulletin  Board on September 22, 1998.    

     (5)  Shares of Series E  Preferred  Stock  issuable  upon the  exercise  of
options issued in accordance  with the CRG Consulting  Agreement,  together with
such  indeterminate  number  of  securities  as may be  issuable  by  reason  of
anti-dilution provisions contained therein.                                     

     The Registrant  hereby amends this  Registration  Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further  amendment  which  specifically  states  that  this  Registration
Statement shall  thereafter  become effective in accordance with Section 8(a) of
the  Securities  Act of 1933 or until the  Registration  Statement  shall become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.                                                                  

-ii-

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 CROSS REFERENCE SHEET

                                                        [Enlarge/Download Table]


                 Item In Form S-3                                                               Prospectus                    
                                                                                                                              
1   Forepart of the Registration Statement and                                                                                
    Outside Front Cover Page of Prospectus                                     Cover Page of Registration Statement           

2   Inside Front and Outside Back Cover Pages of                                                                              
    Prospectus                                                                 Continued Cover Page                           

3   Summary Information, Risk Factors, and Ratio of Earnings to FixProspectus Summary, Risk Factors                           

4   Use of Proceeds                                                            Prospectus Summary                             
5   Determination of Offering Price                                            Plan of Distribution, Cover Page, Risk Factors 
6   Dilution                                                                   Risk Factors                                   
7   Selling Securityholders                                                    Selling Securityholders                        
8   Plan of Distribution                                                       Cover Page, Plan of Distribution               
9   Description of Securities to be Registered                                 Incorporation of Certain Documents by Reference
10  Interest of Named Experts and Counsel                                      Legal Opinions, Experts                        
11  Material Changes                                                           Prospectus Summary                             

12  Incorporation of Certain Information by Reference                          Incorporation of Certain Documents by Reference

13  Disclosure of Commission Position on Securities Act Liabilities            Risk Factors and Item 15.                      
                                                                               Indemnification of Directors and Officers      


 -iii-

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                                  Subject to Completion Dated September 25, 1998

PROSPECTUS                                                                      

750,000 SHARES OF SERIES E PREFERRED STOCK AND
450,000 SHARES OF COMMON STOCK

 PLAY CO. TOYS & ENTERTAINMENT CORP.

     This  Prospectus  covers the resale of up to an  aggregate  of (i)  750,000
shares of Play Co. Toys & Entertainment Corp. (the "Company") Series E Preferred
Stock, par value $0.01 per share (the "Series E Stock"), 700,000 of which shares
are  issuable  upon the  exercise of  options;  and (ii)  450,000  shares of the
Company's common stock, par value $0.01 per share (the "Common Stock"), issuable
upon the exercise of options.  Collectively,  the options, shares underlying the
options,  and the 50,000 shares of Series E Stock  referenced above are referred
to as the  "Securities."  The Securities  offered above are subject to the terms
and conditions of a consulting agreement entered into by and between the Company
and Corporate Relations Group, Inc. ("CRG").  CRG and certain affiliates thereof
are  collectively  referred  to herein  as the  "Selling  Securityholders."  The
Securities are being offered by the Selling Securityholders and may be sold from
time to time in negotiated transactions,  at fixed prices, which may be changed,
and at market prices  prevailing at the time of sale, or a combination  thereof.
The Company will not receive any of the proceeds from the sale of any Securities
sold by the Selling  Securityholders,  but shall  receive the proceeds  from the
exercise  of  any  options.  See  "Plan  of  Distribution"  and  "Summary  - CRG
Consulting Agreement."                                                          

     The Company's  Common Stock,  Series E Stock, and Series E Stock redeemable
purchase  warrants  ("Series E  Warrants")  are  quoted on the  over-the-counter
market on the OTC Bulletin Board under the symbols "PLCO,"  "PLCOP," and PLCOW,"
respectively. Quotation on the OTC Bulletin Board does not imply that there is a
meaningful  sustained  market  for  the  Company's  Securities  or  that  if one
develops, it will be sustained for any period of time.                          

 THE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
 SEE "RISK FACTORS" ON PAGE 8.

THESE  SECURITIES  HAVE NOT BEEN APPROVED OR  DISAPPROVED  BY THE SECURITIES AND
EXCHANGE COMMISSION; NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.   

 The date of this Prospectus is September__, 1998.

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     The Selling  Securityholders  will be required to represent  that they have
knowledge of  Regulation M  promulgated  under the  Securities  Act of 1933,  as
amended (the "Act") and Rule 10b-5 promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act"), which proscribe certain manipulative and deceptive
practices in connection with the distribution of securities.                    

 AVAILABLE INFORMATION

     For further  information  with  respect to the  Company and the  Securities
offered  hereby,  reference  is  made to the  Public  Reference  Section  of the
Securities and Exchange Commission (the "Commission") at its principal office at
450 Fifth Street, N.W.,  Washington,  D.C. 20549, at which all reports and other
information  filed by the Company are  available for  inspection  and copying at
rates  prescribed by the  Commission.  The Commission  maintains a Web site that
contains reports, proxy and information statements,  and other information which
is filed electronically  through the Commission's Edgar system, all of which may
be viewed and copied  through  accessing  the  Commission's  Web site located at
http://www.sec.gov.                                                             

     The  Company's  fiscal  year end is March 31. The Company is subject to the
informational  reporting  requirements  of the  Exchange  Act and in  accordance
therewith files periodic reports,  proxy statements,  and other information with
the  Commission.  In the event the  Company's  obligation  to file such periodic
reports, proxy statements,  and other information is suspended, the Company will
voluntarily  continue to file such information with the Commission.  The Company
will distribute to its stockholders  annual reports containing audited financial
statements,  together with an opinion by its independent  auditors. In addition,
the Company may, in its discretion,  furnish  quarterly  reports to stockholders
containing unaudited financial  information for the first three quarters of each
year.                                                                           

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

     The  following  documents,   heretofore  filed  by  the  Company  with  the
Commission  pursuant to the Exchange Act, are hereby  incorporated by reference,
except as superseded or modified herein:                                        

     1. The  Company's  Annual  Report on Form  10-KSB for the fiscal year ended
March 31, 1998, as filed on June 29, 1998,  and the amendment to Form 10-KSB for
the fiscal year ended March 31, 1998, as filed on July 1, 1998; and             

     2. The Company's Quarterly Report on Form 10-QSB for the quarter ended June
30, 1998, as filed on August 14, 1998; and                                      

     3. A description of the Company's  securities is contained in the Company's
Registration Statement on Form 8-A filed on October 27, 1994.                   

     4. All other reports filed by the  Registrant  pursuant to Section 13(a) or
15(d) of the  Exchange  Act,  since the end of the  fiscal  year  covered by the
Annual Report referred to in (1) above, are incorporated herein by reference.   

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     Each document filed  subsequent to the date of this Prospectus  pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act prior to the termination
of the  offering  shall  be  deemed  to be  incorporated  by  reference  in this
Prospectus and shall be a part hereof from the date of filing of such document. 

     The Company  will provide  without  charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of any such person, a
copy of any document  described above (other than  exhibits).  Requests for such
copies should be directed to Play Co. Toys & Entertainment  Corp., 550 Rancheros
Drive, San Marcos, California 92069; telephone: (760) 471-4505.                 

 3

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 SUMMARY

         The following  summary is intended to set forth certain pertinent facts
and  highlights  from  material  contained in the body of this  Prospectus.  The
summary is qualified in its entirety by the detailed  information  and financial
statements appearing elsewhere in this Prospectus.  Statements contained in this
Registration  Statement which are not historical facts may be considered forward
looking information with respect to plans, projections, or future performance of
the Company as defined  under the Private  Securities  Litigation  Reform Act of
1995.  These forward looking  statements are subject to risks and  uncertainties
which could cause actual results to differ materially from those projected.     

History                                                                         

         Play Co. Toys &  Entertainment  Corp.  (the  "Company")  was founded in
1974,  at which  time it  operated  one store  under  the name Play Co.  Toys in
Escondido,  California. The Company currently operates 21 stores: 18 are located
throughout Southern California in the Los Angeles, Orange, San Diego, Riverside,
and San Bernardino Counties, one is located in Tempe, Arizona, one is located in
the Las Vegas,  Nevada area, and one is located in the Dallas,  Texas area. From
January to  September  1998,  the Company  opened 2 new stores (it also closed a
store in January 1998) and executed four additional leases, the stores for which
the Company expects to open by calendar year end. The Company  therefore expects
to operate 25 stores by calendar year end. In calendar 1999, the Company expects
to continue  its  expansion  and open eight  additional  stores (it has executed
leases for four of such stores and is  negotiating  the remaining  four leases).
The Company operates its stores under the following  names:  Play Co. Toys, Toys
International,  Toy Co.,  and Tutti  Animali.  It shall  continue to open stores
under such names  contingent upon the product mix and location of the store. The
Company  periodically  reviews each individual  store's  merchandising and sales
history on an individual basis to decide on the appropriate product mix. General

         Traditionally,  the  Company's  merchandising  strategy was to offer an
alternative,  less intimidating environment than that provided by the larger toy
retailers who are in competition  with the Company.  In 1996,  management of the
Company realized the inherent value in, and thus the demand for, a retail outlet
which provides a combination of (i) educational, new electronic interactive, and
specialty  and  collectible  toys and  items;  and  (ii)  traditional  toys.  In
addition,  the  Company  determined  that it should  place  such  stores in high
traffic malls,  rather than in strip shopping centers where most of its original
stores were  located,  and so began to do so. To achieve its goals,  the Company
developed a new store design and marketing  format which provides an interactive
setting together with a retail operation.  This format and design has formed the
foundation for the Company's future direction and growth plans, thereby allowing
the  Company to meet what it  believes  are the  industry's  current  and future
demands.  The Company has, thus far,  remodeled four of its original stores (the
"Original  Stores") to fit its new store design (the "New  Stores"),  opened six
New Stores, and acquired three stores in an acquisition.                        

         The Company shall  continue to operate its Original  Stores until their
leases expire, except with respect to certain stores for which it is negotiating
lease extensions, which stores it may redesign to fit the New Store concept. The
Original Stores sell children's and adult toys, games, bicycles, and other wheel
goods,  sporting goods,  puzzles,  Nintendo and Sony electronic game systems and
cartridges for such game systems,  cassettes,  and books. They offer over 15,000
items for sale, most of which are major brand name toys and hobby products.     

         The New  Stores  also  carry  some of the items  found in the  Original
Stores;  however,  they  focus on  selling  educational  toys,  Steiff and North
America Bears, Small World toys, LBG trains, CD-ROMs, electronic software games,
Learning Curve, and Ty products.  The Company's Tutti Animali store,  located in
the Crystal Court Mall in Costa Mesa, California,  is a unique store which sells
only stuffed animals.                                                           

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Financing                                                                       

     On January 21,  1998,  the Company  entered  into a $7.1  million  secured,
revolving  Loan and  Security  Agreement  (the "FINOVA  Agreement")  with FINOVA
Capital Corporation ("FINOVA"), which line was increased to $7.6 million in July
1998. The Company recently  received from FINOVA verbal approval to increase the
aforesaid  line by $1 million (to $8.6  million) for a period  through and until
December 31,  1998,  at which time the line shall  revert to $7.6  million.  The
Company is in the execution  process with respect to the documents  pertinent to
this  increase.  The FINOVA  credit  line is secured  by  substantially  all the
Company's  assets and expires on August 3, 2000.  The credit line bears interest
at a rate of floating prime plus one and one-half percent.                      

     On  September  18,  1998,  the  Company  and Amir  Overseas  Capital  Corp.
("Amir"), a British Virgin Islands corporation, executed a subordinated security
agreement  for a $1 million  loan (the "Amir Loan") made by Amir to the Company.
The Amir Loan  shall be repaid by the  Company  at a 12%  annual  interest  rate
pursuant to a schedule which  requires full repayment on or before  December 23,
1998.                                                                           

Recent Developments                                                             

     On July 27,  1998,  the Company  sold  100,000  shares of Series E Stock to
United Toys & Textiles Corp. ("UTTC"), the Company's principal stockholder,  for
$100,000.  These shares are  restricted,  and UTTC has received no  registration
rights with respect to same.                                                    

     In June 1998, the Company and ABC Fund, Inc. ("ABC"),  a Belize corporation
holding a 5% Convertible Secured Subordinated Debenture Due August 15, 2000 (the
"Debenture"), dated January 21, 1998, agreed to amend the terms of the Debenture
to enable the conversion of the principal amount and accrued  interest  thereon,
into  shares  of  Series E Stock,  at a  conversion  price of $1.00  per  share.
Simultaneously,  ABC  elected  to convert  the  Debenture  as of June 30,  1998,
whereby,  $1.5 million in principal  amount and $33,333 in accrued interest were
converted  into  1,533,333  shares of Series E Stock.  ABC did not  receive  any
demand or piggyback registration rights regarding the shares.  Simultaneous with
the  conversion of the  Debenture,  ABC  terminated  the  subordinated  security
agreement between the parties and the intercreditor and subordination  agreement
by and between ABC and FINOVA dated January 21, 1998.                           

     Pursuant to the amended Debenture, ABC retained its right to purchase up to
an aggregate of 25% of the outstanding shares of common stock of a subsidiary of
the Company at a purchase  price per share equal to the net book value per share
of the subsidiary's common stock as of the date of exercise.  The calculation of
the  number of shares  subject to this  right and the  purchase  price per share
shall be as of the date that the Company receives notification that the right is
being  exercised.  This right shall extend until August 15, 2003 unless  earlier
terminated by ABC or its assignee.                                              

CRG Consulting Agreement                                                        

     On July 22,  1998,  the Company  entered  into a Lead  Generation/Corporate
Relations Agreement (the "CRG Consulting  Agreement") with CRG pursuant to which
CRG provides public and investor relations  services to the Company.  During the
sixty  month  term of the CRG  Consulting  Agreement,  CRG shall  publish in its
MoneyWorld  Magazine  advertorials  which shall be disseminated to approximately
300,000  individuals/entities  and shall publish  advertorials on the MoneyWorld
web site. CRG shall also publish in its Financial  Sentinel  advertorials  which
shall be disseminated to approximately 100,000  individuals/entities.  CRG shall
also  provide  public  relations  exposure to  newsletter  writers and trade and
financial  publications and include the Company as a featured "Lead Generator of
the Month" in  Confidential  Fax Alert, a newsletter  transmitted by fax to over
8,000  Brokers.  A CRG affiliate  shall  produce due diligence  packages for the
Company which CRG shall distribute to inquiring brokers.                        

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     CRG's  consideration  for its services as set forth above,  encompasses the
following:  (i) $100,000; (ii) 50,000 shares of Series E Stock to cover expenses
incurred; (iii) an option to purchase 350,000 shares of Common Stock at $0.78125
per share;  and (iv) an option to purchase  400,000  shares of Series E Stock at
$2.25 per share.  Additionally,  the Company granted options to each of four CRG
principals to purchase 25,000 shares of Common Stock and 75,000 shares of Series
E Stock,  these  options  exercisable  at their  respective  prices as indicated
above.  All  options  are  subject  to a  vesting  schedule:  1/3 of the  shares
underlying  same shall  vest on the date this  Registration  Statement  shall be
declared  effective  by the  Commission  (the  "Effective  Date")  and  shall be
exercisable for a period of 60 days thereafter,  expiring at 5:30 p.m., New York
time, on the 60th day after said Effective  Date;  1/3 of the shares  underlying
same  shall  vest on the  60th  day  after  the  Effective  Date  and  shall  be
exercisable for a period of 60 days thereafter,  expiring at 5:30 p.m., New York
time,  on the  120th  day  after  the  Effective  Date;  and  1/3 of the  shares
underlying  same shall vest on the 120th day after the Effective  Date and shall
be exercisable for a period of 240 days  thereafter,  expiring at 5:30 p.m., New
York time, on the 360th day after the Effective  Date.  The Company's  executive
offices are located at 550 Rancheros  Drive, San Marcos,  California  92069. The
Company's telephone number at its principal office is (760) 471-4505.           

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The Offering

                                                                [Download Table]


Securities Outstanding:                                                           

Prior to the Offering (1):                                                        
                                                                                  
    Common Stock            4,103,525                                             
    Series E Stock          5,883,903                                             
    Series E Warrants(2)    2,000,000                                             

After the Offering:                                                               
    Common Stock(3)         4,553,525                                             
    Series E Stock(4)       6,633,903                                             
    Series E Warrants(2)    2,000,000                                             

Risk Factors                This offering involves a high degree of risk.         
                            See "Risk Factors" on page 7.                         

Use of Proceeds             All proceeds generated by this Offering will be paid  
                            to the respective Selling Securityholders; none of the
                            proceeds will be paid to the Company. All expenses of 
                            this Offering will be paid by the Company.            


     (1) Does not include (i)  35,303,418  shares of Common Stock  issuable upon
the  conversion  of the  5,883,903  shares of Series E Stock  outstanding;  (ii)
50,000 shares of Series E Stock issuable to CRG for expenses in accordance  with
the CRG  Consulting  Agreement or the 300,000  shares of Common Stock into which
same are  convertible;  (ii) 700,000 shares of Series E Stock and 450,000 shares
of Common Stock issuable upon the exercise of options granted in accordance with
the CRG Consulting  Agreement;  or (iii) the shares of Series E Stock (or Common
Stock  issuable upon  conversion of same) issuable upon exercise of the Series E
Warrants. Includes (i) an aggregate of 50,000 shares of Series E Stock issued to
Richard Brady and Harold  Rashbaum in March 1998 subject to a vesting  schedule;
(ii) 1,533,333 shares of Series E Stock issued to ABC Fund, Inc. in June 1998 in
connection  with the Company's  conversion of $1,533,333  debt into equity;  and
(iii)  100,000  shares of Series E Stock  issued to UTTC in July 1998.          

     (2) Each warrant grants the  warrantholder  the right to purchase one share
of Series E Stock at an  exercise  price of $5.00 per share until  December  29,
2001.                                                                           

     (3) Includes  450,000  shares of Common Stock issuable upon the exercise of
options granted to CRG and affiliates pursuant to the CRG Consulting Agreement. 

     (4) Includes (i) 50,000 shares issuable under the CRG Consulting  Agreement
for  expenses;  and (ii) 700,000  shares  issuable  upon the exercise of options
granted to CRG and  affiliates  pursuant to the CRG  Consulting  Agreement.     

     (5)  Quotation  on the OTC  Bulletin  Board  does not imply that there is a
meaningful  market  for the  Company's  securities;  nor does it imply that if a
market does develop, it will be sustained for any period of time.               

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RISK FACTORS

     The Securities  offered hereby are speculative and involve a high degree of
risk. In addition to the other  information  contained in this  Prospectus,  the
following  factors  regarding risks  associated with the Company's  business and
risks related to the Offering should be carefully  considered  before purchasing
the Securities offered by this Prospectus. The purchase of Securities should not
be  considered  by  anyone  who  cannot  afford  the risk of loss of his  entire
investment. The statements contained in this Prospectus which are not historical
facts contain forward looking information with respect to plans, projections, or
future  performances  of the Company,  the  occurrences of which involve certain
risks and  uncertainties as detailed herein. No assurance can be made that these
plans  or  projections  will be  realized  or that if  realized,  such  plans or
projections will produce the results anticipated by the Company.                

     1.  Decline  in  Revenues;  Continued  Operating  Losses;  Working  Capital
Deficit;  and Retained  Earnings Deficit.  While the Company's  revenues for the
year ended March 31, 1998 increased by $2,944,251 to  $22,568,527,  its revenues
for the years  ended March 31,  1995,  1996,  and 1997  steadily  declined  from
$25,374,722  to  $21,230,853  to  $19,624,276,  respectively.  The  decrease  in
revenues  during  1995,  1996,  and 1997 was  primarily  the result of a general
economic downturn in the southern California economy, increased competition, and
the closing by the Company of  non-profitable  stores.  While the  Company's net
loss for the year ended March 31, 1998  decreased by $1,530,411  to  $2,054,470,
for the years ended March 31, 1996 and 1997, the Company's net losses  increased
from $3,542,715 to $3,584,881, respectively. For the three months ended June 30,
1998 and 1997,  the  Company  recorded  net losses of $186,776  and  $1,209,504,
respectively. While the implementation of the Company's business plan is showing
positive results in terms of an increase in revenues and a decrease in net loss,
there can be no assurance  that the Company's  revenues or results of operations
will not decline in the future,  that the Company  will not  continue to sustain
losses, or that the Company will be able to continue funding such losses if they
continue.                                                                       

     At June  30,  1998  and  1997,  the  Company  had (i)  working  capital  of
$5,096,166 and a working capital deficiency of $1,407,003, respectively; (ii) an
accumulated  deficit of  $10,291,722  and  $9,259,980,  respectively;  and (iii)
stockholders' equity of $3,860,002 and $1,044,032, respectively. The accumulated
deficit could adversely affect the Company's ability to conduct its operations. 

     2. Change in Business Focus. In the beginning of 1996,  management realized
it needed to change its corporate  focus.  It found there was a large demand for
educational and promotional toys and collectibles and thus decided to change its
business plan to focus on these  markets.  To this end, the Company  developed a
new store design, marketing format, and product mix and decided to redesign some
of its existing  stores and open new stores  under this format.  This new format
includes the opening of new stores in malls rather than in strip  centers  where
most of the  Company's  Original  Stores are located.  There can be no assurance
that this new direction  and marketing  focus will be successful in the short or
long run or that the Company will have the funding to continue to implement  its
business plan.                                                                  

     3.  Dependence  on Specialty  Toys;  Changes in Consumer  Preferences.  The
Company's  increase in same store sales and gross  margins is largely due to the
Company's  commencement  of the sale of specialty toys,  including  educational,
electronic  interactive,  and  collectible  toys.  As a result of the  continual
changing nature of children's  consumer  preferences and tastes,  the success of
the Company is  dependent  on its  ability to change and adapt to such  changing
tastes   and   preferences.   Children's   entertainment   products   are  often
characterized by fads of limited life cycles. There can be no assurance that the
Company  accurately  will be  able  to  forecast  consumer  preferences  or that
specialty toys will continue to have higher profit margins.  In addition,  there
can be no assurance  that its  competitors  will not also embrace the  Company's
business  concept and vary their product mix so as to compete  directly with the
Company's New Stores. See "Risk Factor No. 5 - Competition."                    

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     4.  Dependence  on FINOVA  Credit Line,  Supplier  Credit,  and Loans.  The
Company  purchases all of its products from  manufacturers  and  wholesalers and
ships  them to its stores  from its  distribution  center.  There are no written
contracts  and/or  agreements  with any  individual  manufacturer  or  supplier;
rather,  all orders are on a purchase  order  basis only.  The Company  requires
certain lines of credit and banking relations to conduct its business.          

     On September 18, 1998,  the Company and Amir entered into the Amir Loan for
$1  million  loan by Amir to the  Company.  The Amir Loan shall be repaid by the
Company at a 12% annual interest rate pursuant to a schedule which requires full
repayment  on or before  December 23,  1998.  On January 21,  1998,  the Company
entered into the FINOVA  Agreement (for $7.1 million),  which line was increased
to $7.6 million in July 1998. The Company  recently  received from FINOVA verbal
approval to increase the  aforesaid  line by $1 million (to $8.6  million) for a
period  through and until December 31, 1998, at which time the line shall revert
to $7.6  million.  The FINOVA  Agreement  expires on August 3, 2000,  subject to
yearly extensions.  The line of credit is secured by all of the Company's assets
and by letters of credit in the sum of $3,000,000.  The credit line requires the
Company  to  continue  to  meet  certain   financial   covenants,   among  other
requirements,  which if not met could cause the line of credit to terminate. The
Company's inability to pay or refinance such line of credit or to repay the Amir
Loan when due would have a material  adverse affect on the business  operations.
See  "Summary  -  Financing"  and  "Risk  Factor  No.  7 - Need  for  Additional
Financing."                                                                     

     In  addition,  the Company  relies on credit terms from its  suppliers  and
manufacturers  to purchase  nearly all of its inventory.  Credit terms vary from
company  to company  and are based upon many  factors,  including  the  ordering
company's financial condition, account history, type of product, and the time of
year the order is placed.  Such credit arrangements vary for reasons both within
and outside the control of the Company. In past years, prior to fiscal 1998, the
Company's  credit  lines  decreased  due to the  Company's  then poor  financial
condition.  Recently,  the Company has seen a significant increase in its credit
lines based on its improved  financial  condition  and its ability  generally to
remain  current with its accounts  payable.  There can be no assurance  that the
Company's  credit  lines or the terms  thereof will not once again be reduced or
terminated  altogether in the future.  The reduction or  termination of existing
credit lines or the loss of major suppliers would have a material adverse effect
on the Company's business.                                                      

     5.  Competition.  The toy and hobby products market is highly  competitive.
Though the Company's New Stores offer a combination of traditional, educational,
new electronic  interactive,  specialty,  and  collectible  toys and items,  the
Company remains in direct  competition  with local,  regional,  and national toy
retailers and  department  stores,  including  Toys R Us  (considered  to be the
dominant toy retailer in the United  States),  Kay Bee Toy Stores,  K-Mart,  Wal
Mart,  and various other  discount and retail chain stores,  which carry various
mixes of toys such as those  carried by the  Company's  New Stores.  The Company
competes for the educational  toy customer with other  specialty  stores such as
Disney Stores,  Warner Bros.  Stores,  Learning Smith, Lake Shore, Zainy Brainy,
and Noodle  Kidoodle.  Most of the Company's  larger  competitors are located in
free-standing  stores, not malls. Kay Bee stores however,  are located in malls,
though their product line is different than the Company's.  In addition, the toy
and hobby products market is particularly  characterized  by large retailers and
discount  stores with  intensive  advertising  and marketing  campaigns and with
deeply  discounted  pricing of such products.  The Company competes as to price,
personnel,  service, speed of delivery, and breadth of product line. Many of the
Company's  competitors have more extensive  research and development,  marketing
and customer support  capabilities,  and greater financial,  technological,  and
other  resources  than  those  of  the  Company.  Accordingly,  there  can be no
assurance that the Company will be successful in its competition against same or
that it will be able to distinguish itself from such competitors.  Combining the
traditional  and educational toy segments of the market into one retail location
is  believed  to be a unique  concept  that should  prove to  differentiate  the
Company's New Stores from the stores of its larger or similar size  competitors.
However,  there can be no assurance that such  competitors will not also embrace
this  concept  and vary their  product  mix so as to compete  directly  with the
Company's New Stores.                                                           

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     6. Narrow Profit  Margins and Need to Control  Expenses and Other  Charges.
The Company's operating history has been characterized by narrow profit margins,
though  recently its margins have  increased  through the refocus of its product
mix. Nonetheless the Company's earnings will continue to depend significantly on
its ability to (i) purchase its products on favorable  terms;  (ii) obtain store
locations on favorable  price and credit terms;  (iii) retail a large volume and
variety of products  efficiently;  and (iv) provide  quality  support  services.
Moreover,  small  increases in expenses or other  charges to income could have a
material adverse effect on the Company's results of operations.  There can be no
assurance  that the  Company  will be able to  generate  sufficient  revenues or
maintain  sufficient  control  over  expenses  and  other  charges  to  increase
profitability.  Though the Company  has within the past  fiscal  year  increased
gross profit margins, it has not to date posted a net profit in any quarter.    

     7. Need for Additional Financing. In order to continue implementing its new
business  plan,  the  Company  shall  require  additional  funds to (i) open New
Stores; (ii) redesign its Original Stores; and (iii) finance its losses, if any.
If,  for any  reason,  such  estimates  prove  inaccurate,  the  Company's  only
recourse,  outside its existing  $8.6 million line of credit with FINOVA  (which
shall  revert to $7.6 million  after  December 31, 1998) and its $1 million Amir
Loan  (which the  Company  must repay by  December  23,  1998),  will be to seek
additional  financing via the sale of additional  equity or debt securities in a
future public or private transaction.  There can be no assurance,  however, that
such  financing  indeed will be available or that it will be available at prices
and/or  terms  acceptable  to the Company.  See  "Summary - Financing"  and Risk
Factor No. 4 - Dependence on FINOVA Credit Line, Supplier Credit, and Loans ."  

     8.  Seasonality.  The  Company's  business is highly  seasonal with a large
portion of its revenues  (approximately  30% to 40% of the Company's  annual net
sales) and profits being derived during the months of October through  December.
Accordingly,  the Company must obtain substantial  short-term  borrowings during
the first three quarters of the calendar year to purchase  inventory and finance
capital and operating  expenditures.  Historically,  these  borrowings have been
repaid after the fourth quarter                                                 

     9. Reliance  Upon  Management.  The Company is dependent  upon the personal
efforts  and  abilities  of its  management,  none  of  whom  has an  employment
agreement  with the  Company.  The loss of  services  of  Richard  Brady  (Chief
Executive  Officer),  James Frakes (Chief Financial  Officer and Secretary),  or
Harold Rashbaum (the Company's Chairman of the Board) would adversely affect the
business  of the  Company.  The  Company  recently  obtained  a  "key-man"  life
insurance policy, in the amount of $5,000,000,  on Richard Brady and has applied
for such a policy on Ilan Arbel, president of UTTC, the Company's parent.       

     10.  Limited  Utility of Tax Loss  Carryforwards.  At March 31,  1998,  the
Company had net operating loss  carryforwards  of  approximately  $9,800,000 for
federal  purposes  and  approximately   $5,300,000  for  state  purposes.   Such
carryforwards are utilized to offset future taxable income. Under Section 382 of
the  Internal  Revenue  Code of 1986,  as  amended,  utilization  of  prior  net
operating loss carryforwards is limited after an ownership change, as defined in
Section 382, to an annual  amount equal to the value of a company's  outstanding
stock  immediately  before the date of the  ownership  change  multiplied by the
federal long-term  tax-exempt rate. Due to the change in ownership in connection
with the spin-off of the Company's shares by American Toys, Inc. ("Atoys"),  its
former parent company,  to Atoys'  stockholders,  including UTTC, the Company is
subject  to  limitations  on the use of its  net  operating  loss  carryforwards
available as of March 31, 1998. In the event a net operating loss is incurred in
the year ending March 31, 1999,  use of such net  operating  loss  carryforwards
could also be limited as a result of this Offering,  grants of options under the
1994 Stock Option Plan,  grants of options  under the Employee  Stock  Ownership
Plan, and other events. In the event the Company achieves profitable operations,
any  significant  limitation  on the  utilization  of  the  net  operating  loss
carryforward  will have the effect of increasing the Company's tax liability and
reducing income and available cash resources.                                   

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     11. Possible Future Dilution.  The Company has authorized  capital stock of
66,500,000  shares  comprised of 51,000,000  shares of Common  Stock,  par value
$0.01 per share, 10,000,000 shares of Series E Stock, par value $0.01 per share,
and  5,500,000  shares of Series F Preferred  Stock,  par value $0.01 per share.
Inasmuch as the Company may use authorized  but unissued  shares of Common Stock
and/or  Series  E Stock  without  shareholder  approval,  there  may be  further
dilution of the  shareholders'  interests.  The Company  may  additionally  sell
equity and/or debt securities in a future public offering or private transaction
to raise  additional  capital  which  may  dilute  the  interests  of  potential
investors in this Offering. In addition,  the Company may, in the future, donate
shares of its  Common  Stock to its ESOP  plan,  which  donation  may dilute the
interests of potential investors in this Offering.                              

     There are 5,883,903 shares of Series E Stock currently outstanding,  all of
which are  restricted  and none of which is  convertible  into  shares of Common
Stock until two years from issuance.  Of the 5,883,903 shares of Series E Stock,
3,450,570  shares are subject to a two-year  lock-up  from the date of issuance.
Notwithstanding the foregoing,  conversion of the Series E Stock (or exercise of
the Company's  2,000,000  outstanding Series E Warrants) will have the effect of
decreasing the net tangible book value per share of Common Stock.               

     12.  Dilutive  Effect of Employee  Stock  Ownership  Plan. In May 1994, the
Company  adopted  resolutions  approving a 401(k)  Employee Stock Ownership Plan
(the  "Plan" or "ESOP")  which will cover  substantially  all  employees  of the
Company.  The Plan includes  provisions  for both an ESOP and a 401(k) Plan. The
ESOP allows only contributions by the Company,  which  contributions can be made
annually at the  discretion  of the Company's  Board of Directors.  The ESOP has
been designed to invest  primarily in the Company's stock. The 401(k) portion of
the Plan is  contributed  to by the  employees  of the Company  through  payroll
deductions.   The  Company   does  not  match   contributions   to  the  401(k).
Contributions  to the ESOP may result in an expense  resulting in a reduction in
earnings  and  may  dilute  the  ownership  interests  of  persons  who  acquire
Securities in this Offering.                                                    

     13. Limited Market for  Securities.  At present,  there is a limited market
for the Company's Common Stock, Series E Stock, and Series E Warrants.  There is
no assurance that a regular  trading market will develop for such  Securities or
that if one does develop,  it will be sustained;  therefore,  purchasers  may be
unable  to resell  the  Securities  offered  herein  at or near  their  original
Offering  price or at any  price.  Furthermore,  it is  unlikely  that a lending
institution will accept the Company's Securities as pledged collateral for loans
even if a regular trading market therefor does develop.                         

     14.  No  Dividends  and  None  Anticipated.  The  Company  has not paid any
dividends;  nor,  because  of its  present  financial  status,  does it have any
intention to issue any dividends in the future. The Company expects that it will
reinvest any profits in its business.                                           

     15. Significant Ownership by Principal Stockholder. UTTC owns approximately
59.3% of the  Company's  Common  Stock.  As a result,  UTTC and its  management,
through  their  Common  Stock  holdings,  are able to exercise  control over the
policies and direction of the Company.                                          

     16.  Future  Sales of  Stock by  Stockholders.  The  Company's  outstanding
capital stock consists of 4,103,525 shares of Common Stock,  5,883,903 shares of
Series  E Stock,  and  2,000,000  Series  E  Warrants.  In  accordance  with the
Company's  Series E  Offering  in  December  1997,  all  Securities  held by the
Company's  Officers,  Directors and principal  stockholders are subject to a two
year lock-up  agreement  with the  underwriter  of the Company's  offering:  the
lock-up  expires in December 1999. All " restricted  securities" as that term is
defined under the Securities Act, in the future,  may be sold only if the holder
is in compliance with Rule 144 promulgated  under the Securities Act or pursuant
to an effective registration statement. Except for the Securities subject to the
lock-up  referenced  above,  most Securities issued were issued in excess of one
year ago and may be sold in accordance  with Rule 144. The sale of Securities by
current  stockholders,  whether  pursuant to Rule 144 or  otherwise,  may have a
depressing effect upon the market price of the Company's Securities.            

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     17. Penny Stock  Regulation.  The Commission has adopted  regulations  that
generally  define a "penny  stock" to be any equity  security  that has a market
price of less than $5.00 per share or an  exercise  price of less than $5.00 per
share, subject to certain exceptions. Such exceptions include the following: (i)
an equity  security  listed on  Nasdaq  or a stock  exchange;  or (ii) an equity
security  whose issuer has (a) net tangible  assets of at least  $2,000,000,  if
such issuer has been in continuous  operation for three years;  (b) net tangible
assets of at least $5,000,000,  if such issuer has been in continuous  operation
for less than three years;  or (c) average  revenues of at least  $6,000,000 for
the  preceding  three years.  Since the Company has had more than  $6,000,000 in
revenues  for the  preceding  three years,  it is not a designated  penny stock.
Unless an exception is available, the regulations require the delivery, prior to
any  transaction  involving  a  penny  stock,  of  a  risk  disclosure  schedule
explaining  the penny stock market and the risks  associated  therewith.  If the
Company's  securities  were to become subject to the  regulations  applicable to
penny  stocks,  the  market  liquidity  for the  securities  would  be  severely
affected,  limiting the ability of broker-dealers to sell the securities and the
ability of purchasers in this Offering to sell their securities in the secondary
market.  There is no assurance that trading in the Company's Securities will not
be subject to these or other  regulations that would adversely affect the market
for such securities.                                                            

     18.  Indemnification  of Officers and  Directors.  As  permitted  under the
Delaware  General  Corporation  Law, the Company's  Certificate of Incorporation
provides for the  indemnification  and elimination of the personal  liability of
the Directors to the Company or any of its  shareholders  for damages related to
breaches of their fiduciary duties as Directors. As a result of the inclusion of
such provision,  shareholders 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  Company's  Certificate  of  Incorporation  may reduce the  likelihood of
derivative   litigation   against  Directors  and  other  types  of  shareholder
litigation.                                                                     

     19.  Litigation.  The Company is currently in litigation in connection with
the  closing  last year of its  Rialto  store.  If the  court  finds in favor of
plaintiff,  the  outcome  could have an adverse  effect on the  Company  and its
operations.  Such  outcome  could  affect the  Company's  implementation  of its
business plan. If the Company's  funds are  insufficient  to meet an adjudicated
financial obligation,  the Company may be forced to seek additional financing to
implement its business plan.                                                    

     20.  Year 2000.  The  Company  has  investigated  its  existing  management
information  system and has determined that it does not provide sufficient scope
to support the planned level of expanded  operations  and,  furthermore,  is not
year 2000 compliant.  The Company has explored the cost of upgrading its current
system or purchasing a new system to meet the projected  demands of the business
and to become year 2000  compliant.  In order to minimize the  disruption to its
operations,  the Company has decided to upgrade its existing  system to increase
the scope of the system and to become year 2000 compliant. The Company estimates
that the cost of upgrading its current  system will be  approximately  $100,000.
The Company does not have any  guaranteed  estimates as to the cost of replacing
its current  system,  however,  and thus there can be no assurance that the cost
will not be significantly greater.                                              

     Beyond the above noted internal year 2000 system issue,  the Company has no
current  knowledge of any outside third party year 2000 issues that would result
in a material  negative  impact on its  operations.  There can be no  assurance,
however,  that such issues will not arise or that if they do arise they will not
have an adverse effect on the Company.                                          

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     21. Forward Looking  Statements.  The statements  contained herein that are
not historical facts are "forward-looking statements" which can be identified by
the use of forward looking  terminology  such as "believes,"  "expects,"  "may,"
"will," "should," or "anticipates," the negatives or other variations thereof or
comparable  terminology,  and include  statements as to the intent,  belief,  or
current expectations of the Company and its Directors,  Officers, and management
with respect to the future operations,  performance, or position of the Company.
These forward  looking  statements are  predictions.  No assurances can be given
that the  future  results  indicated,  whether  expressed  or  implied,  will be
achieved.  While sometimes presented with numerical  specificity,  these forward
looking  statements  are based upon a variety  of  assumptions  relating  to the
business of the Company,  which,  although considered reasonable by the Company,
may  not be  realized.  Because  of the  number  and  range  of the  assumptions
underlying the Company's forward looking  statements,  many of which are subject
to significant  uncertainties and contingencies beyond the reasonable control of
the  Company,  some of the  assumptions  inevitably  will not  materialize,  and
unanticipated  events and circumstances may occur subsequent to the date herein.
These  forward  looking   statements  are  based  on  current   information  and
expectations,  and the Company assumes no obligation to update.  Therefore,  the
actual  experience of the Company and results achieved during the period covered
by any particular  forward  looking  statement may differ  materially from those
anticipated.  Consequently,  the inclusion of forward looking  statements should
not be regarded  as a  representation  by the  Company or any other  person that
these  estimates will be realized,  and actual  results may vary  substantially.
There can be no  assurance  that any of these  expectations  will be realized or
that any of the forward looking statements contained herein will prove accurate.

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S-3 17th Page of 20 TOC 1st Previous Next ↓Bottom Just 17th
 SELLING SECURITYHOLDERS

     The following  table sets forth certain  information  at September 25, 1998
and as adjusted to reflect the sale of the shares of Common Stock by the Selling
Securityholders.                                                                

                                                        [Enlarge/Download Table]


                                  Shares of      Shares of                                              
                                  Common Shares  Series E    Shares of  Shares of  Shares of            
                                  Stock          Stock       Common     Common     Series E   Percentage
Name & Address of Securityholder  Owned          Owned       Stock/     Stock      Stock      of Shares 
                                  Prior to       Prior to    Series E   Owned      Owned      Owned     
                                  the            the         Stock      After the  After the  After the 
                                  Offering       Offering    Offered    Offering   Offering   Offering  
                                                                                                        
Corporate Relations Group, Inc.                                                                         
1947 Lee Road                                                350,000/                                   
Winter Park, FL 32789             350,000(1)     450,000(2)   450,000   0             0            0    

Roger Tichenor                                                                                          
Corporate Relations Group, Inc.                                                                         
1947 Lee Road                                                 25,000/                                   
Winter Park, FL 32789              25,000(1)      75,000(3)    75,000   0             0            0    

Roberto E. Vietia                                                                                       
Corporate Relations Group, Inc.                                                                         
1947 Lee Road                                                 25,000/                                   
Winter Park, FL 32789              25,000(1)      75,000(3)    75,000   0             0            0    

Joseph H. Landis                                                                                        
Corporate Relations Group, Inc.                                                                         
1947 Lee Road                                                 25,000/                                   
Winter Park, FL 32789              25,000(1)      75,000(3)    75,000   0             0            0    

James Skalko                                                                                            
Corporate Relations Group, Inc.                                                                         
1947 Lee Road                                                 25,000/                                   
Winter Park, FL 32789              25,000(1)      75,000(3)    75,000   0             0            0    

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

     (1) Includes  shares  issuable  upon the exercise of options at an exercise
price of $0.78125 per share,  in accordance  with the CRG Consulting  Agreement.
1/3 of the  shares  underlying  same shall  vest on the  Effective  Date of this
Prospectus and shall be exercisable for a period of 60 days  thereafter;  1/3 of
the shares  underlying  same shall vest on the 60th day after the Effective Date
and  shall be  exercisable  for a period of 60 days  thereafter;  and 1/3 of the
shares  underlying same shall vest on the 12 th day after the Effective Date and
shall be exercisable for a period of 240 days thereafter.                       

     (2) Includes  400,000  shares  issuable  upon the exercise of options at an
exercise  price  of $2.25  per  share,  in  accordance  with the CRG  Consulting
Agreement,  and 50,000  shares  issuable  under the terms of the CRG  Consulting
Agreement for  expenses.  The shares  underlying  the options are subject to the
same vesting  schedule as described in footnote (1) above.                      

     (3) Includes  shares  issuable  upon the exercise of options at an exercise
price of $2.25 per share, in accordance with the CRG Consulting  Agreement.  The
shares  underlying  the  options  are  subject to the same  vesting  schedule as
described in footnote (1) above.                                                

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PLAN OF DISTRIBUTION

     This  Prospectus  covers the resale of up to an  aggregate  of (i)  750,000
shares of Play Co. Toys & Entertainment Corp. (the "Company") Series E Preferred
Stock, par value $0.01 per share (the "Series E Stock"), 700,000 of which shares
are  issuable  upon the  exercise of  options;  and (ii)  450,000  shares of the
Company's Common Stock,  issuable upon the exercise of options offered hereby by
the Selling Securityholders.  This Prospectus shall be delivered by said Selling
Securityholders  upon the sale of any securities by said holders.  The shares of
Common  Stock and Series E Stock  issuable  upon the exercise of the Options and
the shares of Common Stock into which the Series E Stock are  convertible may be
sold from time to time by the Selling Securityholders.  Sales of such Securities
or even the  potential  of such sales at any time may have an adverse  effect on
the market  prices of the  Securities  offered  hereby.  See "Risk  Factors" and
"Selling Securityholders."                                                      

     The sale of the Securities by the Selling  Securityholders  may be effected
from  time to time in  negotiated  transactions,  at fixed  prices  which may be
changed,  and at market prices  prevailing at the time of sale, or a combination
thereof.  The Selling  Securityholders  may effect such  transactions by selling
directly to purchasers or to or through  broker-dealers  which may act as agents
or  principals,  including in a block trade  transaction  in which the broker or
dealer will attempt to sell the  securities as agent but may position and resell
a portion of the block as principal to facilitate the  transactions or purchases
by a broker or dealer as  principal  and resale by such broker or dealer for its
own account pursuant to this Prospectus,  or in ordinary brokerage  transactions
and  transactions in which the broker solicits  purchasers.  In effecting sales,
brokers or dealers engaged by the Selling  Securityholders may arrange for other
brokers or dealers to participate.  Such broker-dealers may receive compensation
in  the  form  of  discounts,  concessions,  or  commissions  from  the  Selling
Securityholders  and/or the purchasers of the  securities,  as  applicable,  for
which such  broker-dealers  may act as agents or to whom they sell as principal,
or both (which compensation as to a particular  broker-dealer might be in excess
of customary  commissions).  The Selling  Securityholders and any broker-dealers
that act in connection with the sale of the shares of Common Stock and/or by the
Selling  Securityholders might be deemed to be "underwriters" within the meaning
of Section  2(11) of the Act.  In that  connection,  the  Company  has agreed to
indemnify  the  Selling  Securityholders  and the Selling  Securityholders  have
agreed to indemnify  the Company  against  certain civil  liabilities  including
liabilities under the Act.                                                      

     At the time a particular offer of its securities is made by or on behalf of
the Selling  Securityholders,  to the extent required,  a prospectus  supplement
will be  distributed  which will set forth the number of shares of Common  Stock
being  offered  and the terms of the  offering,  including  the  name(s)  of any
underwriters, dealers, or agents, the purchase price paid by any underwriter for
shares purchased from the Selling Securityholders and any discounts, commission,
or  concessions  allowed or  re-allowed  or paid to  dealers,  and the  proposed
selling price to the public.                                                    

     Under the Exchange Act and the rules and regulations thereunder, any person
engaged in a distribution of the Company's Securities offered by this Prospectus
may not simultaneously  engage in market-making  activities with respect to such
securities  during the applicable  "cooling off" period (nine days) prior to the
commencement  of such  distribution.  In  addition,  and  without  limiting  the
foregoing,  the Selling Securityholders will be subject to applicable provisions
of the  Exchange Act and rules and  regulations  thereunder,  including  without
limitation,  Regulation M, in connection with  transactions in such  securities,
which  provisions  may limit the timing of purchases and sales of the securities
by the Selling Securityholders.                                                 

Reports to Shareholders                                                         

     The Company has adopted  March 31 as its fiscal year end.  The Company will
furnish  annual  reports  to  its  shareholders   containing  audited  financial
statements,   together  with  an  opinion  by   independent   certified   public
accountants.  In  addition,  the  Company  may,  in its  discretion,  furnish to
shareholders   interim  quarterly   reports   containing   unaudited   financial
information.                                                                    

LEGAL OPINIONS

     Legal matters  relating to the Securities  offered hereby will be passed on
for the Company by its counsel,  Klarman & Associates,  David S. Klarman,  Esq.,
2303 Camino Ramon, Suite 200, San Ramon, California 94583.                      

 EXPERTS

     The audited  financial  statements of the Company for the years ended March
31, 1998 and 1997  included in Form 10-KSB for the  Company's  fiscal year ended
March 31, 1998, incorporated by reference in this Prospectus,  have been audited
by Haskell & White LLP, Certified Public Accountants,  to the extent and for the
periods set forth in their  report  incorporated  herein by  reference,  and are
incorporated  herein in reliance upon such report given on the authority of said
firm as experts in auditing and accounting.                                     

 AVAILABLE INFORMATION

     The  Company  has filed  with the  Securities  and  Exchange  Commission  a
Registration  Statement on Form S-3 under the Securities Act with respect to the
shares of Common Stock and Series E Stock to which this Prospectus  relates.  As
permitted by the rules and regulations of the  Commission,  this Prospectus does
not contain all of the information set forth in the Registration Statement, some
of which is  incorporated  by reference  from prior filings of the Company.  For
further  information  with respect to the Company and the shares offered hereby,
reference is made to the  Registration  Statement  and all reports  incorporated
herein by  reference,  including the exhibits  thereto,  which may be copied and
inspected at the Public  Reference  Section of the  Commission  at its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549.                       

 8

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 PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.          Other Expenses of Issuance and Distribution.                  

                                                                [Download Table]


                              
Registration Fee       $670.83
Accounting Fees    (1)2,500.00
Legal Fees        (1)15,000.00
Printing Fees     (1) 2,500.00
Miscellaneous      (1)2,500.00

Total             (1)23,170.83

(1)      Estimated.                                                             

Item 15.          Indemnification of Directors and Officers.                    

     As permitted  under the Delaware  General  Corporation  Law, the  Company's
Certificate of Incorporation provides for the indemnification and elimination of
the  personal  liability  of  the  Directors  to  the  Company  or  any  of  its
shareholders  for  damages  related to  breaches  of their  fiduciary  duties as
Directors.  As a result of the inclusion of such provision,  shareholders 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 Company's  Certificate
of  Incorporation  may reduce the  likelihood of derivative  litigation  against
Directors and other types of shareholder litigation.                            

     As permitted under the Delaware Corporation Law, the Company's  Certificate
of  Incorporation  and  By-laws  provide  for  indemnification  of a Director or
Officer under  certain  circumstances  against  reasonable  expenses,  including
attorneys'  fees,  actually  and  necessarily  incurred in  connection  with the
defense of an action  brought  against  him by reason of his being a Director or
Officer.   In  addition,   the  Company's  charter  documents  provide  for  the
elimination  of  Directors'  liability  to the Company or its  shareholders  for
monetary  damages  except  in  certain  instances  of  bad  faith,   intentional
misconduct, a knowing violation of law, or illegal personal gain.               

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to Directors,  Officers and controlling  persons of the
Company  pursuant to any  charter,  provision,  by-law,  contract,  arrangement,
statute,  or otherwise,  the Company 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  of  1933  and  is,   therefore,
unenforceable.  In the  event  that a claim  for  indemnification  against  such
liabilities  (other than the payment by the Company of expenses incurred or paid
by a Director,  Officer,  or controlling person of the Company in the successful
defense of any such action,  suit, or  proceeding) is asserted by such Director,
Officer or controlling  person of the Company in connection  with the securities
being  registered,  the Company  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.                                                     

Item 16.          Exhibits.                                                     

     All  exhibits - except those  designated  with an asterisk  (*),  which are
filed herewith,  and those  designated with double asterisks (**) which shall be
filed as an  amendment  to this  registration  statement on Form S-3 - have been
previously  filed  with the  Commission,  either  within the Form  SB-2/A  filed
September  30, 1997 file No.  333-32051  (SB-2.97),  or in  connection  with the
Company's  Registration  Statement on Form SB-2,  dated November 2, 1994,  under
file No.  33-81940-NY  ("SB-2.94"),  or pursuant to the referenced  Exchange Act
report and pursuant to 17 C.F.R.  ss.230.411 and are  incorporated  by reference
herein.                                                                         

                                                        [Enlarge/Download Table]


                                                                                                
  1.1     -  Form of Underwriting Agreement. (Incorporated by reference into                    
             herein from SB-2.94).                                                              
  3.1     -  Certificate of Incorporation of the Company dated June 15, 1995                    
             (Incorporated by reference into herein from SB-2.94).                              
  3.2     -  Amendment to Certificate of Incorporation of the Company, filed July 2, 1997.      
             (Incorporated by reference into herein from SB-2.97).                              
  3.2(a)  -  Amendment to Certificate of Incorporation of the Company, filed August 11, 1997.   
             (Incorporated by reference into herein from SB-2.97).                              
  3.3     -  By-Laws of the Company (Incorporated by reference into herein from SB-2.94).       
  4.1     -  Specimen Common Stock Certificate (Incorporated reference herein                   
             from the SB-2.94).                                                                 
  4.2     -  Specimen Warrant Certificate. (Incorporated by reference into herein from SB-2.97).
  4.3     -  Specimen Series E Preferred Stock Certificate. (Incorporated by reference          
             into herein from SB-2.97).                                                         
  4.4     -  ESOP Plan (incorporated by reference herein from the SB-2.94).                     
  4.5     -  Form of Warrant Agreement between the Company, the Underwriter and                 
             Continental Stock Transfer & Trust Company.                                        
  5.0*    -  Opinion of Klarman & Associates                                                    
10.102*   -  Amendment No. 2 to FINOVA Loan Agreement                                           
10.103**  -  Loan Agreement with Amir Overseas Capital Corp.                                    
23(a)*    -  Consent of Haskell & White LLP.                                                    
23(b)*    -  Consent of Klarman & Associates is included in the opinion filed as Exhibit 5.0    

Item 17.          Undertakings.                                                 

The undersigned Registrant hereby undertakes:                                   

     (1) To file,  during any period in which  offers or sales are being made, a
Post-Effective Amendment to this Registration Statement:                        

     (i)  To  include  any  prospectus  required  by  Section  10(a)(3)  of  the
Securities Act of 1933;                                                         

     (ii) To reflect in the  prospectus  any facts or events  arising  after the
effective date of the Registration  Statement (or the most recent Post-Effective
Amendment  thereof)  which,  individually  or  in  the  aggregate,  represent  a
fundamental change in the information set forth in the Registration Statement;  

     (iii) To  include  any  material  information  with  respect to the plan of
distribution  not  previously  disclosed  in the  Registration  Statement or any
material change to such information in the Registration Statement, including but
not limited to any addition or deletion of a managing Underwriter.              

     (2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended,  each such Post-Effective  Amendment shall be deemed to
be a new Registration  Statement relating to the securities offered therein, and
the  offering of such  securities  at the time shall be deemed to be the initial
bona fide offering thereof.                                                     

     (3) To remove from registration by means of Post-Effective Amendment any of
the securities  being  registered  which remain unsold at the termination of the
offering.                                                                       

     (4) That, for the purpose of determining  any liability under the Act, each
Post-Effective  Amendment that contains a form of prospectus  shall be deemed to
be a new Registration  Statement relating to the securities offered therein, and
the offering of such  securities  at that time shall be deemed to be the initial
bona fide offering thereof.                                                     

     (5) For purposes of determining  any liability  under the Securities Act of
1933,  each filing of the Company's  annual report  pursuant to Section 13(a) or
Section 15(d) of the  Securities  Exchange Act of 1934 (and,  where  applicable,
each filing of an employee  benefit  plan's  annual  report  pursuant to Section
15(d) of the Securities  Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.      

         Insofar as indemnification for liabilities arising under the Act may be
permitted  to  Directors,  Officers  and  controlling  persons  of the  Company,
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that  in  the  opinion  of  the   Securities  and  Exchange   Commission,   such
indemnification  is  against  public  policy  as  expressed  in the  Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Company of expenses incurred or
paid  by a  Director,  Officer  or  controlling  person  of the  Company  in the
successful  defense of any  action,  suit,  or  proceeding)  is asserted by such
Director,  Officer or controlling person in connection with the securities being
registered,  the Company  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.                                                                     

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SIGNATURES

         Pursuant  to the  requirements  of the  Securities  Act  of  1933,  the
Registrant certifies that it has reasonable grounds to believe that it meets all
the  requirements  for filing on Form S-3 and has duly caused this  Registration
Statement  to be signed on its  behalf  by the  undersigned,  on the 22nd day of
September 1998.                                                                 

                                             Play Co. Toys & Entertainment Corp.

                                                           By: /s/ Richard Brady
                                                                   Richard Brady
                                                         Chief Executive Officer

         Pursuant  to the  requirements  of the  Securities  Act of  1933,  this
Registration  Statement  has been signed below by the  following  persons in the
capacities and on the dates indicated.                                          

                                                                [Download Table]


                                                                 
/s/ Richard Brady    Chief Executive Officer             09/22/98
Richard Brady        President and Director              Date    

/s/ James B. Frakes  Chief Financial Officer, Secretary  09/22/98
James B. Frakes      and Director                        Date    

/s/ Harold Rashbaum  Chairman of the Board               09/22/98
Harold Rashbaum                                          Date    

/s/ Moses Mika       Director                            09/22/98
Moses Mika                                               Date

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘S-3’ Filing	Date	First	Last	Other Filings

	8/15/03	8
	12/29/01	10
	8/15/00	8
	8/3/00	8	12	10KSB/A, 10QSB/A
	3/31/99	13		10KSB, 10KSB/A, NT 10-K
	12/31/98	8	13	10QSB, 10QSB/A, NT 10-Q
	12/23/98	8	13
Filed on:	9/25/98	4	17
	9/22/98	2
	9/18/98	8	12
	8/14/98	5		10QSB
	7/27/98	8
	7/22/98	8
	7/1/98	5		10KSB/A
	6/30/98	5	11	10QSB, 10QSB/A
	6/29/98	5		10KSB
	3/31/98	5	18	10KSB, 10KSB/A, 8-K
	1/21/98	8	12
	9/30/97	19		10QSB, 10QSB/A, NT 10-Q, SB-2/A
	8/11/97	19
	7/2/97	19
	6/30/97	11		10KSB, 10QSB, 10QSB/A, NT 10-Q
	3/31/97	11	18	10KSB
	3/31/96	11		10KSB, 10KSB/A, NT 10-K
	6/15/95	19
	3/31/95	11
	11/2/94	19
	10/27/94	5
				List all Filings

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Filing Submission 0001027189-98-000095 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Play Co Toys & Entertainment Corp – ‘S-3’ on 9/25/98

As of: Friday, 9/25/98 · Accession #: 1027189-98-95 · File #: 333-64237

Registration Statement for Securities Offered Pursuant to a Transaction — Form S-3Filing Table of Contents

S-3 — C:\Myfiles\Playco\1998S-3.FinDocument Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Registration Statement for Securities Offered Pursuant to a Transaction — Form S-3
Filing Table of Contents

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