As filed with the Securities and Exchange Commission on March 25, 1997
Registration No. 333- ______

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

REGISTRATION STATEMENT

ON
FORM S-3

Under
The Securities Act of 1933

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

YES! ENTERTAINMENT CORPORATION

(Exact name of Registrant as specified in its charter)

----------------
Delaware 94-3165290
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

3875 Hopyard Road, Suite 375
Pleasanton, CA 94588
(510) 847-9444

(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)

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

BRUCE D. BOWER, ESQ.
Executive Vice President,
General Counsel and Secretary
3875 Hopyard Road, Suite 375
Pleasanton, CA 94588
(510) 847-9444

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

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

Copies to:

RICHARD J. CHAR, ESQ. KENNETH L. HENDERSON, ESQ.
DEBRA B. ROSLER, ESQ. ERIC L. COHEN, ESQ.
Wilson Sonsini Goodrich & Rosati Robinson Silverman Pearce Aronsohn
Professional Corporation Berman LLP
650 Page Mill Road 1290 Avenue of the Americas
Palo Alto, California 94304 New York, New York 10104
(415) 493-9300 (212) 541-2000

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

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, please 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 statement 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, please check the following box and list the Securities
Act registration statement 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. [ ]

CALCULATION OF REGISTRATION FEE

================================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Amount to be Offering Price Aggregate Registration
Title of Securities to be Registered Registered Per Share(1) Offering Price(1) Fee
================================================================================================================

Common Stock, par value $.001 per share 4,325,591 $4.969 $21,493,862 $6,513
- ----------------------------------------------------------------------------------------------------------------

(1) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee based upon the average of the high and low
sale prices of the Common Stock as reported on the Nasdaq National Market on
March 20, 1997.
----------------

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 THAT 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.

PROSPECTUS
YES! ENTERTAINMENT CORPORATION
4,325,591 SHARES OF COMMON STOCK (PAR VALUE $.001 PER SHARE)

The 4,325,591 shares of Common Stock of YES! Entertainment Corporation, a
Delaware corporation ("YES!" or the "Company") offered hereby (the "Common
Stock") are being sold by the Selling Stockholders identified herein (the
"Selling Stockholders"). The Company will not receive any of the proceeds from
the sale of the securities offered hereby.

Such offers and sales may be made on one or more exchanges, in the over-
the-counter market, or otherwise, at prices and on terms then prevailing, or at
prices related to the then-current market price, or in negotiated transactions,
or by underwriters pursuant to underwriting agreements in customary form, or in
a combination of any such methods of sale. The Selling Stockholders may also
sell such shares in accordance with Rule 144 under the Securities Act. See
"Plan of Distribution." The Selling Stockholders are identified and certain
information with respect to them is provided under the caption "Selling
Stockholders" herein. The expenses of the registration of the securities
offered hereby, including fees of counsel for the Company, will be paid by the
Company. The underwriting discounts and selling commissions, if any, and fees
of legal counsel, if any, for the Selling Stockholders, will be borne by the
Selling Stockholders. The filing by the Company of this Prospectus in
accordance with the requirements of Form S-3 is not an admission that any person
whose shares are included herein is an "affiliate" of the Company.

The Selling Stockholders have advised the Company that they have not
engaged any person as an underwriter or selling agent for any of such shares,
but they may in the future elect to do so, and they will be responsible for
paying such a person or persons customary compensation for so acting. The
Selling Stockholders and any broker executing sell orders on behalf of any
Selling Stockholder may be deemed to be "underwriters" within the meaning of the
Securities Act, in which event commissions received by any such broker may be
deemed to be underwriting commissions under the Securities Act.

The Company's Common Stock is traded on the Nasdaq National Market under
the symbol YESS. On March 20, 1997, the last reported sales price of the Common
Stock as reported on the Nasdaq National Market was $4.969 per share.

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

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS.

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

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

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN SECURITIES OFFERED BY
THIS PROSPECTUS, OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IS UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.

MARCH 25, 1997

TABLE OF CONTENTS

Page
----

Incorporation of Certain Documents by Reference... 2
Prospectus Summary................................ 3
The Company....................................... 3
Risk Factors...................................... 4
Dividend Policy................................... 8
Selling Stockholders.............................. 8
Plan of Distribution.............................. 9
Legal Matters..................................... 9
Experts........................................... 10
Available Information............................. 10

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents or portions of documents heretofore filed by the
Company with the Securities and Exchange Commission (the "Commission") (File No.
0-25916) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") are incorporated herein by reference: (1) Annual Report on Form 10-K for
the year ended December 31, 1995; (2) Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996; (3) Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996; (4) Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996; (5) Proxy Statement for Annual Meeting of Shareholders held
on May 22, 1996; (6) Proxy Statement for Special Meeting of Shareholders held on
September 24, 1996; (7) Current Report on Form 8-K filed on February 11, 1997;
(8) Current Report on Form 8-K filed on March 25, 1997; and (9) the description
of the Company's Common Stock contained in the Company's Registration Statement
on Form 8-A filed with the Commission under the Exchange Act on April 20, 1995,
declared effective on June 7, 1995 and amended by the Company's Registration
Statement on Form 8-B filed on October 31, 1996.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such reports and documents. The Company will provide without
charge to each person to whom this Prospectus is delivered, a copy of any and
all of such documents which are incorporated herein by reference (exclusive of
exhibits unless such exhibits are specifically incorporated by reference
herein), upon written request to YES! Entertainment Corporation, 3875 Hopyard
Road, Suite 375, Pleasanton, California 94588, to the attention of the Secretary
(telephone number (510) 847-9444).

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document that also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

PROSPECTUS SUMMARY

YES! and YAK BAK are registered trademarks and YES! GEAR, MEGA, POWER
PENZ, V-LINK, AIR VECTORS, YES! PRE-SCHOOL, YES! GIRL, DISGUSTING DESIGNS,
RADICAL AIR WEAPONS (R.A.W.), YES! EXTREME and YES! GAMES are trademarks of YES!
Entertainment Corporation. MRS. FIELDS is a registered trademark of the Mrs.
Fields Development Corporation. BASKIN 31 ROBBINS is a registered trademark of
Baskin-Robbins USA, Incorporated.

THE COMPANY

YES! Entertainment Corporation ("YES!" or the "Company") develops,
manufactures and markets toys and other entertainment products, including a
variety of interactive products. YES! applies innovative technology available
in other industries to design products that are fun for children and build on
their natural creativity. Most of YES!'s products target children between the
ages of two and twelve, a market of over 45 million in North America alone.

YES! has introduced several lines of products since being founded in
December 1992. A substantial portion of the Company's current products are
marketed under the YES! Gear brand. YES! Gear is comprised of the Company's
Yak Bak and Mega lines of products. These products, which include both
children's electronic and audio products, are designed to appeal to kids six to
twelve years of age with their high impact design and unique play activities.
The Company also markets Power Penz, a line of pens that incorporate toys and
activities. In 1996, the Company also launched a line of food activity products
with Mrs. Fields Baking Factory, a toy oven using mixes developed in conjunction
with the Mrs. Fields Development Corporation, and V-Link, a new line of
communications products designed to be a short-range, toll-free radiophone
system that includes voice-messaging, conference call and private conversation
features.

In 1997, the Company expects to introduce a number of new products and
product lines. These include the Baskin-Robbins Ice Cream Maker, a toy ice
cream maker with which children can prepare ice cream for their family using
delicious mixes developed in conjunction with Baskin-Robbins USA, Incorporated.,
Air Vectors, a line of small vehicles for boys that transform and launch flying
objects, such as airplanes or missiles, YES! Pre-School, a line of pre-school
products with incorporate popular features from YES!'s highly successful Yak Bak
line, YES! Girl, a line of electronic toys and activities specially for girls,
Disgusting Designs, a ghoulish new art activity center for boys, and Radical Air
Weapons (R.A.W.), a line of toy guns that shoot foam balls that expand three
times their original size in the air.

YES! was incorporated in California in September 1992 and began
operations in November 1992. The Company changed its state of incorporation to
Delaware in October 1996.

The Company generated net revenues of $69.7 million, $55.7 million, $36.4
million and $25.9 million in 1996, 1995, 1994 and 1993, respectively. The
Company incurred operating losses from its inception through the quarter ended
June 30, 1995, incurred a net loss of approximately $12.6 million in 1996, and
had an accumulated deficit of approximately $52.7 million at December 31, 1996.

The Company's executive offices are located at 3875 Hopyard Road, Suite
375, Pleasanton, California 94588 and its telephone number is (510) 847-9444.

RISK FACTORS

The securities offered hereby involve a high degree of risk. Accordingly,
in analyzing an investment in these securities, prospective investors should
carefully consider the following risk factors, along with other information
referred to herein. No investor should participate in this offering unless such
investor can afford the loss of his or her entire investment. Because of the
variety and uncertainty of the factors affecting the Company's operating
results, past financial performance and historic trends may not be a reliable
indicator of future performance. These factors, as well as other factors
affecting the Company's operating performance, and the fact that the Company
participates in a highly dynamic industry, may result in significant volatility
in the Company's common stock price. This prospectus contains certain forward-
looking statements based on current expectations which involve risks and
uncertainties. Actual results and the timing of certain events may differ
materially from those projected in such forward-looking statements due to a
number of risk factors, including those set forth below.

Limited Operating History; History of Losses; Accumulated Deficit. The
Company has a short operating history, having commenced operation in November
1992 and shipped its first product in July 1993. Although the Company has
achieved approximately $188 million in cumulative net sales through December 31,
1996, the Company incurred substantial operating losses in 1993 and 1994 and
again in 1996, and at December 31, 1996 had an accumulated deficit of
approximately $52.7 million. Future profitability is dependent upon the
Company's ability to successfully and timely introduce, finance and manufacture
its new products, successfully market its existing products and collect trade
receivables in a timely manner.

Dependence on 1997 Products. In 1997, the Company has introduced and
expects to commence sales of a number of new product lines in new product
categories, such as the Baskin-Robbins Ice Cream Maker, Air Vectors, YES!
Extreme, YES! Games and YES! Pre-School. In addition, the Company also expects
to expand its existing product lines in 1997, particularly its YES! Gear and
Power Penz line of products. Manufacturing of certain of these items in
commercial quantities has not commenced or is just commencing. The Company
expects that completing the development and the manufacture of its 1997 product
lines will place great demands on management and other Company resources. If
the Company is not able to complete the development, tooling, manufacture and
successful marketing of its 1997 product lines, the Company's operating results
and financial condition would be materially adversely affected.

Dependence on YES! Gear and Power Penz. The majority of the Company's
current product lines are sold under the YES! Gear and Power Penz brands, which
together accounted for 83% and 58% of the Company's sales in 1996 and 1995,
respectively. The Company expects the YES! Gear, in particular the Yak Bak, and
the Power Penz product lines to continue to account for a substantial percentage
of the Company's business. In addition, the Company is aware that a number of
toy manufacturers have attempted to duplicate the Company's success in this area
of product by introducing similar lines of products in 1996 and for 1997. While
the Company believes it will compete favorably with these new products on the
basis of styling, quality, product depth and promotional support, there can be
no assurance that the sale of these competitive products will not impact the
sale of the YES! Gear or Power Penz product lines, particularly on the basis of
price.

Just in Time Inventory; Compressed Sales Cycles. Most of the Company's
most significant customers have adopted inventory management systems to track
sales of particular products and rely on reorders being filled rapidly by
suppliers, rather than maintaining large on-hand inventories to meet consumer
demand. While these systems reduce a retailer's investment in inventory, they
increase pressure on suppliers like the Company to fill orders promptly and
shift a significant portion of inventory risk to the supplier. The limited
inventory carried by the

Company's customers may also reduce or delay consumer sell-through which in
turn could impair the Company's ability to obtain reorders of its product in
quantities necessary to permit the Company to achieve planned sales and income
growth. In addition, the Company may be required to incur substantial
additional expense to fill late reorders in order to ensure the product is
available at retail prior to Christmas; these may include drop-shipment expense
and higher advertising allowances which would otherwise be born by the Company's
customers. In the event that anticipated reorders do not materialize, the
Company may incur increased inventory carrying costs.

Changes in 1997 Product Line. The Company constantly evaluates the toy
markets and its development and manufacturing schedules. As the year
progresses, the Company may elect to reduce the number of products it currently
plans on shipping in 1997 for a variety of reasons, which include but are not
limited to more accurate evaluation of demand, supply and manufacturing
difficulties, or competitive considerations. Similarly, the Company may add
products to its 1997 line either by accelerating development schedules or
strategic acquisitions of current product lines. Reducing or adding products
from and to the Company's line may have an impact on the Company's financial
performance depending on, among other things, the price points, advertising and
promotional support for and development, tooling and manufacturing costs of such
products, relative to products they replace or are replaced by, as the case may
be, if at all.

Sales Concentration Risk. The Company's ten largest customers accounted
for approximately 85%, 87% and 68% of net sales for the years ending December
31, 1996, 1995 and 1994, respectively. For the year ended December 31, 1996,
the Company's two largest customers, Toys "R" Us and Wal-Mart, Inc., accounted
for 21% and 20% of net sales, respectively. For the year ended December 31,
1995, the same two customers each accounted for approximately 27% of net sales
and for the year ended December 31, 1994, Toys "R" Us and Wal-Mart, Inc.
accounted for 21% and 14% of net sales, respectively. While the Company intends
to expand distribution to new accounts, the Company expects to continue to
depend on a relatively small number of customers for a significant percentage of
its sales. Significant reductions in sales to any one or more of the Company's
largest customers would have a material adverse effect on the Company's
operating results. Because orders in the toy industry are generally cancelable
at any time without penalty, there can be no assurance that present or future
customers will not terminate their purchase arrangements with the Company or
significantly change, reduce or delay the amount of products ordered from the
Company. Any such termination of a significant customer relationship or change,
reduction or delay in significant orders could have a material adverse effect on
the Company's operating results.

Price Protection; Stock Balancing; Reliance on Timely Payment. In
connection with the introduction of new products, many companies in the toy
industry discount prices of existing products, provide for certain advertising
allowances and credits or give other sales incentives to their customers,
particularly their most significant customers. In addition, in order to
address working capital requirements, sales of inventory, changes in marketing
trends and other issues, many companies in the toy industry allow retailers to
return slow-moving products for credit, or if the manufacturer lowers the prices
of its products, to provide price adjustments for inventories on hand at the
time the price change occurs. The Company has made such accommodations in the
past, and there can be no assurance that the Company will not make
accommodations such as stock balancing, returns, other allowances or price
protection adjustments to a significant degree in the future. Any such
accommodations by the Company in the future could have a material adverse effect
on the Company's operating results. In addition, in the past certain of the
Company's retail customers have delayed payment beyond the date such payment is
due. Delays in payments from retail customers in the future could materially
impact the Company's anticipated cash flow to the detriment of the Company's
business.

Seasonality. The Company's revenues, as with many other toy companies, are
highly seasonal, with a majority of retail sales occurring during the December
holiday season. Accordingly, the Company expects that its operating results
will vary significantly from quarter to quarter, particularly in the quarters
ending September 30, and December 31, when the majority of products are shipped
to the Company's customers.

Short Product Cycles. Consumer preferences in the toy industry are
continuously changing and are difficult to predict. Few products achieve market
acceptance, and even when they do achieve commercial success, products typically
have short life cycles. There can be no assurance that (i) new products
introduced by the Company will achieve any significant degree of market
acceptance, (ii) acceptance, if achieved, will be sustained for any significant
amount of time, or (iii) such products' life cycles will be sufficient to permit
the Company to recover development, manufacturing, marketing and other costs
associated therewith. In addition, sales of the Company's existing product lines
are expected to decline over time, and may decline faster than expected unless
existing products are enhanced or new product lines are introduced. Failure of
new product lines to achieve or sustain market acceptance would have a material
adverse effect on the Company's operating results and financial condition.

International Business Risk. The Company will rely in 1997 principally on
foreign distributors to market and sell the Company's products outside the
United States. Although the Company's international sales personnel work
closely with its foreign distributors, the Company cannot directly control such
entities' sales and marketing activities and, accordingly, cannot directly
manage the Company's product sales in foreign markets. In addition, the
Company's international sales may be disrupted by currency fluctuations or other
events beyond the Company's control, including political or regulatory changes.

Dependence on Manufacturing Facilities Based in People's Republic of China.
The Company contracts for the manufacture of substantially all of its products
with entities based in Hong Kong whose manufacturing facilities are located in
the People's Republic of China. In 1997, Hong Kong will become a sovereign
territory of the People's Republic of China. While the People's Republic of
China has provided assurances that Hong Kong will be allowed to maintain
critical economic and tax policies, there can be no assurance that political or
social tensions will not develop in Hong Kong that would disrupt this process.
In addition, recent tensions between the People's Republic of China and the
Republic of China (Taiwan), and the United States' involvement therein, could
result either in a disruption in manufacturing in the China mainland or in the
imposition of tariffs or duties on Chinese manufactured goods. Either event
would have an adverse impact on the Company's ability to obtain its products or
on the cost of these products, respectively, such that its operating results and
financial condition would be materially adversely affected.

Dependence on Restrictive Facility. The Company is dependent on an
Accounts Receivable Management Agreement (the "ARM Agreement") with the BNY
Financial Corporation to meet its financial needs during 1997, due in large part
to the seasonality of the Company's business whereby the Company is required to
finance the manufacture of a substantial portion of its products in the summer
and autumn but does not collect on the sale of these products until the fourth
quarter of that year and the first quarter of the following year. Under the
terms of the ARM Agreement, BNY Financial Corporation has taken a first priority
security interest in substantially all of the Company's assets, including its
intellectual property. The ARM Agreement also contains a number of restrictive
covenants, including covenants concerning the requirement that Donald
Kingsborough and Sol Kershner, the Company's Chief Executive Officer and Chief
Financial Officer, respectively, remain active in the management of the Company.
The Company was not in compliance with the quick ratio and profitability
covenants at December 31, 1996 and has obtained a waiver from BNY Financial
Corporation with regard to these covenants. In the event the Company falls out
of compliance with the ARM Agreement, and BNY Financial Corporation does not
provide financing, the Company would not be able to finance its operations as
contemplated, and its operating results and financial condition would be
materially adversely affected.

Volatility of Stock Price. The Company's Common Stock has experienced
significant price volatility and such volatility may occur in the future,
particularly as a result of quarter-to-quarter variations in the actual or
anticipated financial results of the Company or of other toy companies or
announcements by the Company or its competitors regarding new product
introductions or other developments affecting the Company. In addition, the

market has experienced extreme price and volume fluctuations that have affected
the market price of many technology companies' stock and that have been
unrelated or disproportionate to the operating performance of these companies.

Dependence on Key Personnel. The Company's future success will depend to a
significant extent on the efforts of key management personnel, including Donald
D. Kingsborough, the Company's Chairman and Chief Executive Officer, and Sol
Kershner, the Company's Chief Financial Officer and Chief Operating Officer, and
other key employees. The loss of one or more of these employees could have a
material adverse effect on the Company's business. In addition, the Company
believes that its future success will depend in large part on its ability to
attract and retain highly qualified management, operations and sales personnel.
There can be no assurance that the Company will be able to attract and retain
the employees it needs to in order to ensure its success.

No Dividends. The Company does not anticipate that any cash dividends will
be declared or paid in the foreseeable future. In addition, the Company is
restricted under its bank line of credit from paying any dividends.

Effect of Certain Charter Provisions; Antitakeover Effects of Certificate
of Incorporation, Bylaws and Delaware Law. The Board of Directors has the
authority to issue up to 1,915,000 shares of Preferred Stock (net of 85,000
shares previously issued by the Company) and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of those
shares without any further vote or action by the stockholders. The rights of
the holders of Common Stock will be subject to and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company. Further, certain
provisions of the Company's Bylaws and of Delaware law could delay or make
difficult a merger, tender offer or proxy contest involving the Company.

DIVIDEND POLICY

The Company has never declared or paid any cash dividends on its Common
Stock. The Company intends to reinvest earnings, if any, in the development and
expansion of the Company's business. Any future declaration of cash dividends
will be at the discretion of the Board of Directors and will depend upon the
earnings, capital requirements and financial position of the Company, general
economic conditions and other pertinent factors. In addition, the Loan and
Security Agreement entered into with BNY Financial Corporation limits the
Company's ability to pay dividends without the lender's consent.

SELLING STOCKHOLDERS

The shares of Common Stock offered hereby by the Selling Stockholders are
issuable upon conversion of convertible subordinated debentures in the aggregate
principal amount of $1,566,667 (the "Debentures") and 85,000 shares of the
Company's Series A Convertible Preferred Stock (the "Preferred Stock") held by
Infinity Investors Limited and Fairway Capital Limited (the "Purchasers") and
upon the exercise of warrants to purchase an aggregate of 300,000 shares of
Common Stock (the "Warrants"). Warrants to purchase 202,500, 22,500 and 75,000
shares of Common Stock are held respectively by Infinity Investors Limited,
Fairway Capital Limited and Brown Simpson, LLC ("Brown Simpson" and together
with the Purchasers, the "Selling Stockholders"). The Debentures, the Preferred
Stock and the Warrants were issued to the Selling Stockholders in connection
with a private placement in March 1997.

The number of shares registered on the registration statement of which this
Prospectus is a part and the number of shares offered hereby have been
determined by agreement between the Company and the Purchasers. The number of
shares of Common Stock that will ultimately be issued to the Purchasers upon
conversion of the Debentures and the Preferred Stock is dependent upon a
conversion formula which relies in part on the closing bid price of the Common
Stock for the five (5) trading days immediately preceding the date of conversion
and therefore cannot be determined at this time.

The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock by the Selling Stockholders as of March
20, 1997, and as adjusted to reflect the sale of the Common Stock offered hereby
by the Selling Stockholders.

Shares
Owned After
Shares Beneficially Number of Offering(1)(2)
Owned Prior to Shares Being ---------------------------------
Selling Stockholder Offering(1) Offered Number Percent
- --------------------------- ---------------------- ------------- ------------ ----------------

Infinity Investors Limited 3,825,532(1)(3) 3,825,532 0 *
Fairway Capital Limited 425,059(1)(3) 425,059 0 *
Brown Simpson, LLC 75,000 75,000 0 *

- -----------------------
* Less than 1%.
(1) Based on 14,043,432 shares of Common Stock outstanding on March 20, 1997.
(2) Assumes the sale of all shares offered hereby to unaffiliated third parties.
(3) Based, in part, upon a hypothetical conversion of the full principal amount
of the Debentures and the total outstanding number of shares of Preferred
Stock on March 20, 1997. By agreement with the Company, no Purchaser may
acquire beneficial ownership (as defined in Rule 13d-3 promulgated by the
Commission under the Exchange Act) of more than 4.9% of the outstanding
shares of Common Stock.

PLAN OF DISTRIBUTION

The 4,325,591 shares of Common Stock of the Company offered hereby
(the "Shares") may be sold by the Selling Stockholders, or by pledgees, donees,
transferees or other successors in interest, either pursuant to a Registration
Statement of which this Prospectus forms a part or, if available, under Section
4(1) of the Securities Act of 1933, as amended (the "Securities Act") or Rule
144 promulgated thereunder.

This offering is not being underwritten. The Selling Stockholders,
directly, through agents designated from time to time or through broker-dealers
or underwriters also to be designated (who may purchase as principals and resell
for their own account), may sell the Shares from time to time, in or through
privately negotiated transactions, or in one or more transactions, including but
not limited to a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction, an exchange distribution in
accordance with the rules of such exchange, and a combination of any such
methods of sale, on the Nasdaq National Market or on any other market or stock
exchange on which the Shares may be listed in the future pursuant to and in
accordance with the applicable rules of such market or exchange or otherwise.
The selling price of the Shares may be at market prices prevailing at the time
of sale, at prices relating to such prevailing market prices or at negotiated
prices. From time to time the Selling Stockholders may engage in short sales,
including short sales against the box, puts and calls and other transactions in
securities of the Company or derivatives thereof, and may sell and deliver the
shares in connection therewith. In effecting sales, brokers or dealers engaged
by the Selling Stockholder may arrange for other brokers or dealers to
participate. Brokers or dealers may receive commissions or discounts from the
Selling Stockholders or from the purchasers in amounts to be negotiated
immediately prior to the sale. Further, except as set forth herein, the Selling
Stockholders are not restricted as to the number of shares which may be sold at
any one time, and it is possible that a significant number of shares could be
sold at the same time, which may have a depressive effect on the market price of
the Common Stock.

The Selling Stockholders may also pledge shares as collateral for
margin accounts, and such shares could be resold pursuant to the terms of such
accounts.

Resales or reoffers of the Shares by the Selling Stockholders must be
accompanied by a copy of this Prospectus.

The Selling Stockholders and any agents, broker-dealers or
underwriters that participate in the distribution of the Shares may be deemed to
be underwriters, and any profit on the sale of the Shares by them, and any
discounts, commissions or concessions received by them, may be deemed to be
underwriting commissions or discounts under the Securities Act.

The Company has agreed to use its best efforts to maintain the
effectiveness of the registration of the Shares for a period of three (3) years
after the effective date of this Prospectus or such earlier date when all of the
shares being offered hereunder have been sold or may be sold without volume or
other restrictions pursuant to Rule 144 or Rule 144A under the Securities Act,
as determined by counsel to the Company pursuant to a written opinion letter.

LEGAL MATTERS

Certain matters with respect to the legality of the issuance of the
Securities offered hereby have been passed upon for the Company by Wilson
Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo
Alto, California 94304. As of the date of this Prospectus, certain members,
employees and affiliates of Wilson Sonsini Goodrich & Rosati beneficially owned
an aggregate of 7,985 shares of Common Stock and warrants to purchase an
aggregate of 1,140 shares of Common Stock.

EXPERTS

The consolidated financial statements of YES! Entertainment
Corporation appearing in the YES! Entertainment Corporation Annual Report (Form
10-K) for the year ended December 31, 1995, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements
are incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1993, as amended (the "Securities
Act"), with respect to the Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with respect to the
Company and the Common Stock being offered, reference is hereby made to such
Registration Statement and the exhibits and schedules thereto, which may be
obtained from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington D.C. 20549, at prescribed rates.

The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at its principal office referred to above and at the Commission's
regional offices at 13th Floor, Seven World Trade Center, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison, Suite 1400, Chicago,
Illinois 60601-2511. The Commission maintains a World Wide Web site that
contains reports, proxy statements and other information regarding registrants
that file electronically with the Commission. The address of the site is
http://www.sec.gov. The Company's Common Stock is quoted on the Nasdaq National
Market under the symbol YESS. Reports and other information concerning the
Company may be inspected at the National Association of Securities Dealers, Inc.
located at 1735 K Street, N.W., Washington, D.C. 20006.

The Company intends to furnish to its stockholders annual reports
containing financial statements audited and reported on by its independent
public accounting firm and such other periodic reports as the Company may
determine to be appropriate or as may be required by law.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of Common Stock being registered. All
amounts are estimates except the SEC registration fee and the Nasdaq National
Market listing fee.

Amount
To
Be Paid
--------

SEC Registration Fee.................. $ 6,513
Nasdaq National Market listing fee.... 17,500
Edgar Filing Expenses................. 2,000
Legal Fees and Expenses............... 40,000
Accounting Fees....................... 0
Transfer Agent and Registrar's Fees... 4,000
Miscellaneous Expenses................ 0
-------
Total............................ $70,013
=======

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except for
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation, or (iv) for any transaction
from which the director derived an improper personal benefit.

The Company's Bylaws provide that the Company shall indemnify its directors
and officers and may indemnify its employees and other agents to the fullest
extent permitted by law. The Company believes that indemnification under its
Bylaws covers at least negligence and gross negligence on the part of
indemnified parties. The Company's Bylaws also permit the Company to secure
insurance on behalf of any officer, director, employee or other agent for any
liability arising out of his or her actions in such capacity, regardless of
whether the Company would have the power to indemnify him or her against such
liability under the General Corporation Law of Delaware. The Company currently
has secured such insurance on behalf of its officers and directors.

The Company has entered into agreements to indemnify its directors and
officers, in addition to indemnification provided for in the Company's Bylaws.
Subject to certain conditions, these agreements, among other things, indemnify
the Company's directors and officers for certain expenses (including attorney's
fees), judgments, fines and settlement amounts incurred by any such person in
any action or proceeding, including any action by or in the right of the
Company, arising out of such person's services as a director or officer of the
Company, any subsidiary

II-1

of the Company or any other company or enterprise to which the person provides
services at the request of the Company.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the provisions
referenced in Item 15 of this Registration Statement or otherwise, the
Registrant 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
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant 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 hereunder, the Registrant 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
Securities Act and will be governed by the final adjudication of such issue.

In addition, the Amended and Restated Registration Rights Agreement, filed
as Exhibit 4.4 hereto, contains provisions for indemnification by the Selling
Stockholders of the Registrant and its officers, directors, and controlling
persons against certain liabilities under the Securities Act.

ITEM 16. EXHIBITS

Exhibit
Number Description
-------- -------------------------------------------------------

4.1(1) Certificate of Designation of the Series A Convertible
Preferred Stock.

4.2(2) Form of Registrant's Common Stock Certificate.

4.3 Amended and Restated Convertible Debenture and
Convertible Preferred Stock Purchase Agreement dated as
of March 18, 1997 among Infinity Investors Limited,
Fairway Capital Limited and the Registrant.

4.4 Amended and Restated Registration Rights Agreement
dated as of March 18, 1997 among Infinity Investors
Limited, Fairway Capital Limited and the Registrant.

4.5(3) Form of Warrant dated March 18, 1997.

4.6(4) Form of Convertible Subordinated Debenture dated March
18, 1997.

5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C.,
regarding the legality of the securities being issued.

23.1 Consent of Ernst & Young LLP, independent auditors.

23.2 Consent of Counsel (included in Exhibit 5.1).

24.1 Power of Attorney (see page II-4).

- -------------------
(1) Incorporated by reference to Exhibit 4.1 filed with the Registrant's
Current Report on Form 8-K, which was filed with the Commission on March 25,
1997.

(2) Incorporated by reference to Exhibit 4.3 filed with the Registrant's Post-
Effective Amendment No. 4 on Form S-3 to Registration Statement on Form S-1
(File No. 33-91408), which became effective on November 20, 1996.

(3) Incorporated by reference to Exhibit 4.3 filed with the Registrant's Current
Report on Form 8-K, which was filed with the Commission on March 25, 1997.

(4) Incorporated by reference to Exhibit 4.2 filed with the Registrant's Current
Report on Form 8-K, which was filed with the Commission on March 25, 1997.

II-2

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes, in accordance with the following
sections of Item 512 of Regulation S-K:

(a) (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this 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;

(3) That, for the purpose of determining any liability under the
Securities Act, 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 that time shall be deemed to be the initial bona
fide offering thereof;

(4) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering;

(b) That, for purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d)
of the Exchange Act 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; and

(c) To deliver or cause to be delivered with the Prospectus, to each person to
whom the Prospectus is sent or given, the latest annual report, to
securityholders that is incorporated by reference in the Prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 and Rule 14c-3
under the Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the Prospectus, to
deliver, or cause to be delivered to each person to whom the Prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.

II-3

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 of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Pleasanton, State of California, on March 25,
1997.

YES! ENTERTAINMENT CORPORATION

By: /s/ BRUCE D. BOWER
---------------------------------
Bruce D. Bower
Executive Vice President.
General Counsel and Secretary

POWER OF ATTORNEY

KNOWN ALL THESE PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald D. Kingsborough and Bruce D. Bower
and each of them, jointly and severally, his attorneys-in-fact, each with full
power of substitution, for him in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
on Form S-, (or any other registration statement for the same offering that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act),
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each said attorneys-in-fact or his substitute or
substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ Donald D. Kingsborough Chairman of the Board and Chief Executive March 25, 1997
- --------------------------- Officer (Principal Executive Officer)
Donald D. Kingsborough

/s/ Sol Kershner Chief Financial Officer March 25, 1997
- --------------------------- (Principal Financial and Accounting Officer)
Sol Kershner

/s/ David C. Costine Director March 25, 1997
- ---------------------------
David C. Costine

/s/ Esmond T. Goei Director March 25, 1997
- ---------------------------
Esmond T. Goei

Director
- ---------------------------
Michael J. Marocco

/s/ Gary L. Nemetz Director March 25, 1997
- ---------------------------
Gary L. Nemetz

II-4

INDEX TO EXHIBITS

Exhibit
Number Description
--------- ----------------------------------------------

4.1(1) Certificate of Designation of the Series A
Convertible Preferred Stock.

4.2(2) Form of Registrant's Common Stock Certificate.

4.3 Amended and Restated Convertible Debenture and
Convertible Preferred Stock Purchase Agreement
dated as of March 18, 1997 among Infinity
Investors Limited, Fairway Capital Limited and
the Registrant.

4.4 Amended and Restated Registration Rights
Agreement dated as of March 18, 1997 among
Infinity Investors Limited, Fairway Capital
Limited and the Registrant.

4.5(3) Form of Warrant dated March 18, 1997.

4.6(4) Form of Convertible Subordinated Debenture dated
March 18, 1997.

5.1 Opinion of Wilson Sonsini Goodrich & Rosati,
P.C., regarding legality of the securities being
issued.

23.1 Consent of Ernst & Young LLP, independent
auditors.

23.2 Consent of Counsel (included in Exhibit 5.1).

24.1 Power of Attorney (see page II-4).
- ----------------

(1) Incorporated by reference to Exhibit 4.1 filed with the Registrant's
Current Report on Form 8-K, which was filed with the Commission on March
25, 1997.

(3) Incorporated by reference to Exhibit 4.3 filed with the Registrant's
Current Report on Form 8-K, which was filed with the Commission on March
25, 1997.

(4) Incorporated by reference to Exhibit 4.2 filed with the Registrant's
Current Report on Form 8-K, which was filed with the Commission on March
25, 1997.