PLAY CO. TOYS & ENTERTAINMENT CORP.
550 Rancheros Drive
San Marcos, California 92069

INFORMATION STATEMENT REGARDING THE PROPOSED
ACTION TO BE TAKEN PURSUANT THE WRITTEN CONSENT
OF A MAJORITY STOCKHOLDER IN LIEU OF A SPECIAL
MEETING OF THE STOCKHOLDERS

----------

This information statement has been mailed on July 19, 1996 to the
stockholders of record on June 21, 1996 of American Toys, Inc., a Delaware
corporation (the "Company") in connection with the proposed action to be take by
the Company pursuant to the written consent by the majority of the stockholders
of the Company dated July 20, 1996. The action to be taken pursuant to the
written consent shall be taken on August 9, 1996. The principal executive
offices of the Company are located at 550 Rancheros Drive, San Marcos,
California 92069, the Company's telephone number is (619) 471-4505.

THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO
STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTER
WHICH WILL BE DESCRIBED HEREIN.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY.

Increase in the Authorized shares of Common Stock

On June 20, 1996, the Company's majority stockholder, American Toys, Inc.
("American Toys"), which owns 2,548,930 or approximately 66.0% of the 3,863,853
issued and outstanding shares of the Company's common stock, par value $.01 per
share (the "Common Stock") outstanding as of such date, executed a written
consent authorizing the Company to amend its Certificate of Incorporation such
that (i) the Company's Series D Preferred Stock shall be convertible into shares
of the Company's Common Stock at the average closing bid price for the thirty
(30) days prior to the written notice of conversion and (ii) the Company's
Series E Preferred Stock shall be separated into two classes, 6,000,000 shares
of which will be designated the Class I Series E Preferred Stock, which shares
shall be convertible at any time into twenty fully paid and nonassessable shares
of the Company's Common Stock, par value $.01 per share and the remaining
14,000,000 shares of which shall be designated the Class II Series E Preferred
Stock, which shares will be convertible two (2) years from issuance into twenty
fully paid and nonassessable shares of the Company's Common Stock, par value
$.01 per share. Under Section 228 of the General Corporation Law of the State of
Delaware, any action requiring the consent of the stockholders at an annual or
special meeting of the stockholders of the Company, may be taken without a
meeting, without prior notice and without a vote, if a consent or

consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and shall be
delivered to the Company.

RECENT DEVELOPMENTS

On May 3, 1996, the Corporation held an annual meeting of its stockholders,
at which time it proposed to its stockholders (i) the election of three persons
nominated by the Board of Directors as Directors, (ii) the authorization of an
amendment to the Corporation's Certificate of Incorporation to effect a change
of the name of the Corporation from Play Co. Toys to Play Co. Toys &
Entertainment Corp., (iii) the authorization of an amendment to the
Corporation's Certificate of Incorporation to authorize one share of Preferred
Stock, par value $.01 per share, as the "Series D Preferred Stock" and (iv) the
authorization of an amendment to the Corporation's Certificate of Incorporation
to increase the number of authorized shares of Common Stock to 410,000,000
shares and to authorize 20,000,000 shares of Preferred Stock, par value $.01 per
share, as the "Series E Preferred Stock". All proposals were adopted by the
stockholders and an amendment to the Corporation's Certificate of Incorporation
filed with the State of Delaware. The certificate of amendment as filed, amended
the name of the Corporation, authorized a share of Series D Preferred Stock,
authorized 1,000,000 shares of the Series E Preferred Stock and increased the
authorized shares of Common Stock to 30,000,000. As shares of the Series E
Preferred Stock are issued, additional shares may be authorized from time to
time.

On March 18, 1996, EACC loaned an additional $500,000 to the Company which
was subordinated to the Congress Financing. In addition, EACC paid for
approximately $28,000 of the costs incurred to arrange the Congress Financing,
bringing the aggregate due to EACC to $528,000 as of March 31, 1996. Subsequent
to March 31, 1996, the $528,070 was converted into 528,000 shares of Series E
Preferred Stock. These shares of Series E Preferred Stock will be designated
Class I Series E Preferred Stock.

On June 30, 1996, in return for the issuance of 334,000 shares of Series E
Preferred Stock, EACC provided the Company with $334,000. These shares of Series
E Preferred Stock will be designated Class I Series E Preferred Stock.

On February 1, 1996, the Corporation entered into a Loan and Security
Agreement (the "Loan Agreement") with Congress Financial Corporation (Western)
("Congress") to replace its credit line with Imperial Bank. The Loan Agreement
provides the Corporation with a secured line of credit of up to 60% of the value
of all of its inventory, not to exceed $7,000,000 (the "Congress Financing").
The Congress Financing is secured by the Corporation's assets and a $2,000,000
letter of credit ("L/C") provided by Europe American Capital Corp. ("EACC") an
affiliate of Ilan Arbel, the Corporation's Chairman of the Board. Additionally,
the Congress Financing is guaranteed by American Toys and Mr. Jay.

In connection with the issuance of the L/C the Corporation on February 2,
1996 granted to EACC options (i) to purchase up to an aggregate of 1,250,000
shares of Common Stock of 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 and (ii) to purchase up to an aggregate of 20,000,000
shares of the Corporation's Series E Preferred Stock.

On February 2, 1996, Irwin Lampert and Richard Brady resigned as members of
the Corporation's Board of Directors. Mr. Brady continues as the Corporation's
Chief Executive Officer and President. Subsequently, the board appointed
Sheikhar Boodram, as a Director. Mr. Boodram is a Director of both American
Toys, the majority stockholder of the Corporation and Mister Jay Fashions
International, Inc. ("Mr. Jay"), the majority stockholder of American Toys.

In August 1995, American Toys, entered into consulting agreements with
Harold Rashbaum and Citadel Commercial Corp., whereby Harold Rashbaum would
consult with American Toys and the Corporation in the areas of retailing and
marketing, and Citadel Commercial Corp. would consult with American Toys and the
Corporation in the areas of financial management, specifically trade credit and
banking. Pursuant to such agreements, American Toys issued to each consultant
30,000 shares of its Common Stock.

On October 18, 1995, prior to the Congress Financing, the Corporation
entered into an agreement (the "LOC Agreement") with EACC, pursuant to which
EACC agreed to provide to Imperial Bank a letter of credit terminating April 16,
1996, in the amount of $2,000,000 from Soginvest Bank, Switzerland, or such
other bank or financial institution. The letter of credit was required by
Imperial Bank in order for it to waive certain defaults as of September 1995,
under the Corporation's loan agreement with Imperial Bank and to increase the
Corporation's line of credit from $3,500,000 to $5,500,000. On November 3, 1995
the letter of credit was issued and accepted by Imperial Bank at which time
Imperial Bank waived certain defaults under its loan agreement which were
present as of September 1995, and increased its line of credit to $5,500,000.
Upon the consummation of the Congress Financing the Imperial Bank line of credit
was repaid and terminated.

As compensation to EACC for the issuance of the $2,000,000 letter of credit
to Imperial Bank, the Corporation granted to EACC an option (the "Option") to
purchase 350,000 shares of Common Stock, at a price equal to 25% of the closing
bid price on the last business day prior to the date on which notice of the
exercise is given, until April 16, 1996.

As additional compensation the Corporation paid to EACC a fee of $15,000.
In addition the Corporation paid $5,000 for EACC's counsel's fees.

VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information at June 27, 1996 based
upon information obtained by the persons named below, with respect to the
beneficial ownership of common shares by (i) each person known by the Company to
be the owner of 5% or more of the outstanding common shares; (ii) by each
officer and director; (iii) and by all officers and directors as a group.

Number of Percentage
Name Shares Owned
- ---- ------ -----
American Toys, Inc.(1) 2,548,930 66.0%
448 West 16th Street
New York, New York

Ilan Arbel(1) 2,548,930 66.0%
c/o American Toys, Inc.
448 West 16th Street
New York, New York

Richard Brady 125,662 3.3%
c/o Play Co. Toys
550 Rancheros Drive
San Marcos, CA 92069

Alan Berkun 50,000 1.3%
83 Arnold Ct.
East Rockaway, New York

Angela Burnett(2) 10,000 .3%
c/o Play Co. Toys
550 Rancheros Drive
San Marcos, CA 92069

Sheikhar Boodram -- --
c/o Play Co. Toys
550 Rancheros Drive
San Marcos, CA 92069

Officers and Directors
as a Group (5 persons)(1)-(7) 2,734,592 70.9%
--------- -----

- ----------
(1) Ilan Arbel is the Chief Executive Officer and a Director of American Toys
and may be deemed an indirect beneficial owner of a majority of the issued
and outstanding common stock of American Toys (through his family's
ownership of Mister Jay Fashions International, Inc.), notwithstanding that
Mr. Arbel disclaims any beneficial ownership of such shares which are owned
or controlled by his family. Accordingly, Mr. Arbel will be able to
exercise control over the shares of Common Stock owned by American Toys.

(notes continued from previous page)

(2) Includes an option to purchase 10,000 shares of Common Stock at a price of
$2.10 per share granted in June 1994, which option has vested and is
exercisable.

MANAGEMENT

Officers and Directors.

The directors of the Company are elected annually by the shareholders and
the officers are appointed annually by the Board of Directors. Vacancies on the
Board of Directors may be filled by the remaining directors. Each director and
officer will hold office until the next annual meeting of shareholders, or until
his successor is elected and qualified. The executive officers and directors of
the Company are as follows:

NAME AGE POSITION
- ---- --- --------

Ilan Arbel 42 Chairman of the Board of Directors

Richard Brady 44 Chief Executive Officer and President

Angela Burnett 44 Secretary and Chief Financial Officer

Alan Berkun 36 Director

Sheikhar Boodram 34 Director

- ----------

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. The Corporation granted to Hanover Sterling & Company, Ltd., the
Underwriter of the Corporation's initial public offering, the right to nominate
one individual for election to the Corporation's Board of Directors. Since
Hanover ceased operations in February 1995, this right is no longer outstanding.

Ilan Arbel has been the Chairman of the Board of Directors of the
Corporation since June 1994 and a Director of the Corporation since May 1993.
Mr. Arbel has been the President, Chief Executive Officer and a Director of
American Toys, Inc. since its inception in February 1993. In July 1993 Mr. Arbel
resigned as President of American Toys upon the election of Irwin Lampert as his
replacement. Upon Mr. Lampert's resignation on March 7, 1995, Mr. Arbel was
re-elected President of American Toys. Mr. Arbel has been President, Chief
Executive Officer, a Director and an affiliate of Mister Jay Fashions
International, Inc. since 1991. Since August 1995, Mr. Arbel has been a Director
of Multimedia Concepts International, Inc., a public company, a designer and
manufacture of clothing. In 1990, Mr. Arbel was an Officer and Director of Carlo
Fashions, Inc., a company which filed a bankruptcy petition and has received a
discharge in bankruptcy. From 1989 to present, Mr. Arbel has been the sole

Officer and Director of TransAtlantic Commerce Corp., a company involved in
investments and finance in the United States and Europe. Mr. Arbel is a graduate
of the University Bar Ilan in Israel, with B.A. degrees in Economics, Business
and Finance.

Richard Brady is a co-founder of the Company and has acted as its Executive
Vice-President, Secretary and a Director since its inception in 1974. In June
1994, Mr. Brady became assistant Secretary upon the election of Angela Burnett
as Secretary. In December 1995, Mr. Brady was appointed Chief Executive Officer
and President to the Company.

Angela Burnett has been the Treasurer of the Company since 1992 and the
Secretary of the Company since June 1994. In December 1995, Ms. Burnett was
appointed Chief Financial Officer and Secretary. Ms. Burnett has been employed
at the Company since 1985, where she was initially employed as the data entry
employee in charge of inventory control, becoming Assistant Controller of the
Company in 1988.

Sheikhar Boodram was appointed as a Director of the Corporation on February
2, 1996. Mr. Boodram has been a Director of American Toys, Inc. since May 1993.
From September 1992 to present, Mr. Boodram has been employed as Vice-President
and a Director of Mister Jay Fashions International, Inc. From October 1991 to
September 1992, Mr. Boodram was employed as a designer with Mister Jay Fashions
International, Inc. Mr. Boodram has been the President and Secretary of
Multimedia Concepts International, Inc. since June 12, 1995. Mr. Boodram is the
sole Officer and Director of American Eagle Industries Corp. and Match II, Inc.
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.

Alan Berkun has been a Director of the Corporation since July 1993. Mr.
Berkun has also been a Director of American Toys since July 1993. Mr. Berkun has
been a Director of Multimedia Concepts International, Inc., since June 1995. For
more than the past five years, Mr. Berkun has been employed by Russo Securities
as its general counsel. Mr. Berkun was licensed as an NASD Series 7 Registered
Representative with Russo Securities from October 1991 through November 1991 and
June 1989 through October 1989. Mr. Berkun's Series 7 license lapsed in December
1993, however, subsequently, Mr. Berkun received a waiver from the NASD and
renewal of his Series 7 status. Presently, Mr. Berkun is the sole Officer,
Director and stockholder of Emme Corp., d/b/a Marlowe & Company, a registered
NASD broker/dealer. Mr. Berkun is an attorney licensed in the State of New York.

The Company has agreed to indemnify its officers and directors with respect
to certain liabilities including liabilities which may arise under the
Securities Act of 1933. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the 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 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.

Executive Compensation

Summary of Cash and Certain Other Compensation

The following provides certain information concerning all Plan and Non-Plan
(as defined in Item 402 (a)(ii) of Regulation S-B) compensation awarded to,
earned by, paid by the Company during the years ended March 31, 1996, 1995 and
1994 to each of the named executive officers of the Company.

Summary Compensation Table

Annual Compensation Long-Term Compensation
------------------- -----------------------------------
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Restricted Underlying LTIP All
Name and Principal Other Annual Stock Option/ Payments Other
Position Year Salary($) Bonus($)(1) Compensation($) Awards(s)($) SARS($) ($) Compensation
- ----------------------- ---- --------- ----------- --------------- ------------ --------- -------- ------------

Richard Brady 1996 117,230 -- 7,979(2) -- -- -- --
Chief Executive Officer, 1995 120,000 -- 7,829(2) -- -- -- --
President and Director 1994 114,450 -- 7,229(2) -- -- -- --

(1) No bonuses were paid during the periods herein stated.

(2) Includes an automobile allowance of $6,600 for 1996, 1995 and 1994,
respectively, and the payment of life insurance premiums of $1,379, $1,888,
and $629, for 1996, 1995 and 1994, respectively.

Employment Agreements

In May 1993 the Company entered into three year employment agreement with
Richard Brady, the Chief Executive Officer and President of the Company. The
employment agreement provides for an annual salary of $120,000. In addition, the
employment agreement provides for an automobile allowance and an annual bonus of
2% of the earnings of the Company before depreciation, interest and taxes
("EBDIT"), provided the Company earns a minimum EBDIT of $750,000 for the fiscal
year ended March 31, 1994 and $900,000 for the fiscal year ended March 31, 1995.
The Company also pays for $500,000 of life insurance for Mr. Brady. No bonuses
were earned for either of the years ended March 31, 1996, 1995 or 1994.

The Company has no plans to issue additional securities to its management,
promoters or their affiliates or associates other than through the Company's
stock option plan.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In February 1994, Messrs. Davidson, Brady and the Donald Welker Trust each
gave notice to the Company of their intention to put 82,727, 29,614 and 122,381
of their respective Series B preferred shares to the Company at a price of $1.00
per share, for aggregate consideration of $234,722. In addition, such notice
also demanded payment of accrued dividends to Messrs. Davidson, Brady and the
Donald Welker Trust on their respective Series A and Series B Preferred Shares
as follows: Mr. Davidson accrued dividends on his Series A Preferred Shares of
$8,325 and on his Series B Preferred Shares of $11,020.39; Mr. Brady accrued
dividends on his Series A Preferred Shares of $2,775 and accrued dividends on
his Series B Preferred Shares of $3,944.58; and the Donald Welker Trust accrued
dividends on his Series B Preferred Shares of $16,300. All of such sums were
paid on April 1, 1994.

In June 1994, the Company applied to the California Corporation Department
to change its domicile from California, where it was incorporated in 1973, to
Delaware, through a merger with a newly formed Delaware corporation (the
"Delaware Reorganization"). Each share of outstanding Common Stock was exchanged
for 50 shares of common stock of the Company (Delaware) in connection with the
Delaware Reorganization.

In June 1994, Irwin Lampert and Alan Berkun each acquired 50,000 shares of
the Common Stock for total consideration of $500 each. For financial statement
purposes, these shares were valued at 50% of the November 1994 initial public
offering price, or $250,000, as these are unregistered shares. The difference
between the valuation and cash received, $249,000, has been charged to
operations for the year ended March 31, 1995. Also in June 1994, Lampert &
Lampert were issued 50,000 shares of the Common Stock.

On November 9, 1994, the Company redeemed an aggregate of 224,708 shares of
Series B preferred stock owned by Messrs. Davidson and Brady aggregating
$224,708, from the proceeds of the Company's initial public offering.

As of January 10, 1995, the Series C Preferred Stock was converted into
428,580 shares of the Common Stock. During January 1995, effective February 1,
1995, the Donald Welker Trust gave notice to the Company to put 122,368 shares
of its Series B Preferred Stock to the Company as well as accrued dividends
thereon, aggregating $137,000. On April 3, 1995, the Company redeemed the
122,368 shares of Series B Preferred Stock at the redemption price of $122,368
and paid dividends on the Series B Preferred Stock aggregating $15,931.

On October 18, 1995, prior to the Congress Financing, the Company entered
into the LOC Agreement with EACC, pursuant to which EACC agreed to provide to
Imperial Bank a letter of credit terminating April 16, 1996, in the amount of
$2,000,000 to Imperial Bank. Upon the

consummation of the Congress Financing the Imperial Bank line of credit was
repaid and terminated. See "Recent Developments."

In February 1996, the Welker Trust gave notice to the Company to put the
remaining 122,368 shares of its Series B Preferred Stock to the Company as well
as accrued dividends thereon, aggregating $9,152.88. Pursuant to an oral
agreement between the Company and the Welker Trust, the Company shall redeem
122,368 shares plus accrued interest thereon, pursuant to a payment schedule.
The Company shall pay $43,840.30 to the Welker Trust on each of March 1, 1996,
April 1, 1996 and May 1, 1996.

On January 30, 1996, pursuant to the requirements of the Loan Agreement
with Congress, American Toys, the majority stockholder of the Company, converted
all $1,400,000 of debt owed by the Company into equity. In exchange for the
debt, American Toys received from the Company one share of preferred stock, with
the right to vote to elect 2/3 of the Company's Board of Directors, subject
stockholder approval, which approval has been obtained. The conversion of debt
into equity increases the Company's stockholders' equity and reduces total
liabilities, thereby reducing the Company's debt to equity ratio.

In February 1996, pursuant to the terms of the Congress Financing, EACC
delivered to Congress a $2,000,000 letter of credit. EACC is an affiliate of
Ilan Arbel, the Company's Chairman of the Board. The Congress Financing is also
guaranteed by American Toys, the majority stockholder of the Company. In
connection with the issuance of the L/C the Company granted to EACC options,
subject to stockholder approval, (i) to purchase up to an aggregate of 1,250,000
shares of Common Stock of 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 and (ii) to purchase up to an aggregate of 20,000,000
shares of the Company's preferred stock, designated as the "Series E Preferred
Stock". No options have been exercised pursuant to items (i) or (ii). For the
option to purchase up to an aggregate of 1,250,000 shares of the Company's
Common Stock at a price off 25% of the closing bid price for the Common Stock on
the last business day prior to exercise, it was never the intention of the
Company or EACC to exercise the option, accordingly, granting of the option was
unwound. Additionally, the Company has placed no value on the options to
purchase up to an aggregate of 20,000,000 shares of the Company's Series E
Preferred Stock.

I. AMENDMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION

The Board of Directors of the Company have unanimously determined that an
amendment to the Company's Certificate of Incorporation, whereby (i) the
Company's Series D Preferred Stock shall be convertible into shares of the
Company's Common Stock at the average closing bid price for the thirty (30) days
prior to the written notice of conversion and (ii) the Company's Series E
Preferred Stock shall be separated into two classes of whereby 6,000,000 shares
of which shall be convertible at any time and 14,000,000 shares of which shall
be convertible two (2) years from issuance is advisable, and accordingly, has
voted to recommend an amendment to the stockholders for adoption. Stockholders
are urged to carefully read the materials that follow as they involve matters of
particular importance. The full text of the Amendment to the Certificate of
Incorporation is set forth in Appendix A to this Information Statement.

Authorization of Conversion Provision of Series D Preferred Stock

The Board of Directors has unanimously approved a proposal to amend the
Certificate of Incorporation such that the Company's Series D Preferred Stock
shall be convertible into shares of the Company's Common Stock at the average
closing bid price for the thirty (30) days prior to the written notice of
conversion. As of June 21, 1996, there were 3,863,530 shares of Common Stock
issued and outstanding and 150,000 shares reserved for issuance upon the
exercise of options, warrants and other contractual commitments. As of June 21,
1996, American Toys, the Company's majority shareholder, owned 2,548,930 shares
of the Company's Common Stock as well as one share of the Company's Series D
Preferred Stock which was obtained by American Toys converting $1,400,000 of
debt owed by the Company into a share of preferred stock, with the right to
elect 2/3 of the Company's Board of Directors and which has a liquidation value
of $1,400,000.

American Toys desires to convert its share of Series D Preferred Stock into
shares of the Company's Common Stock and then "spin-off" all of its shares of
the Company's Common Stock (inclusive of the shares American Toys currently owns
and the shares American Toys would acquire via the conversion of its share of
Series D Preferred Stock) to the shareholders of American Toys by way of a
dividend distribution.

The Board of Directors proposed an amendment to the Company's Certificate
of Incorporation (the "Amendment"), and same was approved by written consent of
the Company's majority stockholder, American Toys, such that the Company's
Series D Preferred Stock shall be convertible into shares of the Company's
Common Stock at the average closing bid price for the thirty (30) days prior to
the written notice of conversion. The conversion provision being authorized by
the Amendment would enable the Company's majority shareholder to proceed with
its desire to "spin-off" its shares of the Company's Common Stock to American
Toys' shareholders without the delay and expense associated with the holding of
a special meeting.

The Company has no current plans, or commitments for the issuance of any
Common Stock, except as described herein. However, the Board may consider
transactions involving the sale or issuance of Common Stock.

Authorization of Classification of the Series E Preferred Stock into Two Classes

The Board of Directors has unanimously approved a proposal to amend the
Certificate of Incorporation such that the Company's Series E Preferred Stock
shall be separated into two classes, 6,000,000 shares will be designated Class
I, which shares shall be convertible at any time and the remaining 14,000,000
shares shall be designated Class II, which shares will be convertible two (2)
years from issuance.

EACC has requested that the Company create and separate the Series E
Preferred Stock into two classes, one of which permits the conversion of the
Series E Preferred Stock at any time (Class I) and another class that permits
the conversion of the Series E Preferred Stock two (2) years from issuance
(Class II). The Board of Directors has proposed an amendment to the Company's
Certificate of Incorporation whereby the Series E Preferred Stock would be
separated into two classes. The shares of Series E Preferred Stock designated
Class I will be convertible at any time, the shares of Series E Preferred Stock
designated Class II will be convertible two (2) years from issuance. The Company
has asked American Toys, the Company's majority shareholder, and American Toys
has agreed to give its written consent to this proposal so that the Company can
procure the financing it desires from EACC. All of the shares of Series E
Preferred Stock previously issued to EACC will be Class I shares.

The Company has no current plans or commitments for the issuance of any
shares of Series E Preferred Stock, except as described herein. However, the
Board may consider transactions involving the sale or issuance of Series E
Preferred Stock.

Amendment Proposed by the Board of Directors

The full text of the Amendment to Article FOURTH is annexed hereto as
Appendix A to this Information Statement. The following description of the
amendment is qualified in its entirety by reference to Article FOURTH of
Appendix A.

The Company's Certificate of Incorporation currently authorizes thirty-one
million four hundred sixty-nine thousand four hundred forty-five (31,469,445)
shares consisting of thirty million (30,000,000) shares of Common Stock, par
value $.01 per share and one million four hundred sixty-nine thousand four
hundred forty-five (1,469,455) shares of preferred stock, par value $.01 per
share, of which 469,444 have been designated the Series B Preferred Stock, 1
share of which has been designated the Series D Preferred Stock, and 1,000,000
shares of which have been designated the Series E Preferred Stock.

The one share of Series D Preferred Stock is currently not convertible,
however, it has a liquidation value of $1,400,000. As of June 27, 1996, the
Company has outstanding 3,863,530

shares of Common Stock. As of such date, there was also reserved for issuance
upon the conversion or exercise of various securities of the Company 150,000
shares of Common Stock, leaving a total of 25,986,470 shares authorized,
unissued and unreserved shares of Common Stock available for future issuances,
including the shares that American Toys intends to purchase pursuant to the
conversion of the share of Series D Preferred Stock.

Consequences of the Amendment

Stockholders should note that certain disadvantages may result from the
adoption of the amendment. Such disadvantages may include a significant
reduction in their interest in the Company with respect to earnings per share,
voting, liquidation, value and book and market value per share if the additional
authorized shares of Common Stock are issued. While not having such purpose, the
amendment could have the effect of deterring a future takeover attempt which the
majority of stockholders may deem to be in their best interest. Such event would
arise if the Board of Directors deemed it in the best interest of the Company to
issue an option to purchase Common Stock, a security convertible into shares of
Common Stock or shares of Common Stock to a party friendly to management in an
amount that would make it less likely for an unfriendly purchase to attempt an
acquisition of shares by tender offer or other purchase. If a majority in voting
power of the current stockholders desire a takeover or change in control of the
Company, and if such takeover or change were opposed by the Board of Directors,
the additional shares of Common Stock could possibly be used by the Company to
thwart the desires of the majority.

Members of the Board of Directors may have a conflict in proposing this
amendment, and such amendment may operate to the disadvantage of stockholders by
reducing the likelihood of a hostile takeover of the Company which may result in
a change in the membership of the Board of Directors.

FINANCIAL INFORMATION

A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED MARCH 31, 1995 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL
BE FURNISHED WITHOUT THE ACCOMPANYING EXHIBITS TO STOCKHOLDERS WITHOUT CHARGE
UPON WRITTEN REQUEST THEREFOR SENT TO ANGELA BURNETT, 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 JUNE 21, 1996
THE PERSON MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF COMMON SHARES OF THE
CORPORATION ENTITLED TO VOTE AT THE SPECIAL MEETING OF STOCKHOLDERS.

By Order of the Board of Directors,

Angela Burnett
Secretary

July 19, 1996

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.