<PAGE>
 
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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                  FORM 10-K/A
 
                  FOR ANNUAL AND TRANSITION REPORTS PURSUANT
                        TO SECTIONS 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
 
  (Mark One)
 
  [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 1997
 
                                      OR
 
  [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
 
           For the transition period from             to
                                          -----------   -----------
 
                        Commission file number 0-25916
 
                        YES! ENTERTAINMENT CORPORATION
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<CAPTION>
                       DELAWARE                                       94-3165290
 <S>                                                    <C>
 (STATE OR OTHER JURISDICTION OF INCORPORATION OR         (I.R.S. EMPLOYER IDENTIFICATION NO.)
                    ORGANIZATION) 
                        
 3875 HOPYARD ROAD, SUITE 375, PLEASANTON, CALIFORNIA                   94588
       (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                       (ZIP CODE)
 
      Registrant's telephone number, including area code: (952) 847-9444
 
       Securities registered pursuant to Section 12(b) of the Act: None
 
         Securities registered pursuant to Section 12 (g) of the Act:
 
                                                          NAME OF EACH EXCHANGE ON WHICH 
                 TITLE OF EACH CLASS                                 REGISTERED
                 -------------------                      ------------------------------
             Common Stock, $.01 Par Value                       Nasdaq National Market
</TABLE>
 
  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for at least the past 90 days. Yes [X] No [_]
 
  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
 
  The aggregate market value of the voting stock held by non affiliates of the
Registrant, based upon the closing sale price of the Common Stock on March 31,
1998 on the Nasdaq National Market was approximately $13,854,253.
 
  The number of shares outstanding of the Registrant's Common Stock as of
March 31, 1998 was 16,440,733.
 
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<PAGE>
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 
EXECUTIVE OFFICERS OF THE COMPANY
 
  The following sets forth certain information regarding the executive
officers of the Company, who are elected by and serve at the discretion of the
Board of Directors:
 
<TABLE>
<CAPTION>
            NAME          AGE                     POSITION
   ---------------------- --- -------------------------------------------------
   <S>                    <C> <C>
   Donald Kingsborough... 51  Chairman of the Board and Chief Executive Officer
   Mark Shepherd......... 42  Chief Operating Officer, Chief Financial Officer
   Sharon Duncan......... 46  Executive Vice President, International
   Tom Fritz............. 39  Executive Vice President, Marketing
   Leonard Ciciretto..... 41  Executive Vice President, Sales
   William Radin......... 67  Executive Vice President, Operations
</TABLE>
 
  The Company's executive officers are appointed annually by, and serve at the
discretion of, the Board of Directors. Each executive officer is a full time
employee of the Company. There is no family relationship between any executive
officer or director of the Company.
 
  Donald Kingsborough founded the Company in September 1992 and has served as
Chairman of the Board and Chief Executive Officer since that time. From May
1989 to November 1992, Mr. Kingsborough was Chief Executive Officer of
Intelligy Corporation, a developer of educational and child development
products, including software. In February 1985, Mr. Kingsborough founded
Worlds of Wonder, Inc., and served as its Chief Executive Officer until April
1988.
 
  Mark Shepherd joined the Company in October 1997 as Chief Operating Officer
and was named Chief Financial Officer in April 1998. From 1992 to 1995 he
served as Senior Vice President and Chief Financial Officer for Galoob Toys,
Inc., a toy company. Prior to joining the Company, Mr. Shepherd was most
recently the Senior Vice President-Finance for Einstein/Noah Bagel Corp. a 500
store bagel retailer.
 
  Sharon Duncan joined the Company in July 1996 as Executive Vice President,
International. From January 1990 to January 1992, she was Director of
International Sales and Marketing for Galoob Toys, Inc., a toy company. She
was promoted to Vice President, International Sales and Marketing for Galoob
in January of 1992 and held that position through June 1996.
 
  Tom Fritz joined the Company in November 1993 as Director of Marketing and
was promoted to Executive Vice President, Marketing in September 1995. From
1991 until he joined the Company, Mr. Fritz was employed by Nestle Beverage
Corporation, most recently as Business Director, Nestea.
 
  Leonard Ciciretto joined the Company in January 1998 as Executive Vice
President, Sales. From 1990 until he joined the Company, Mr. Ciciretto was
with Sega of America, most recently as Group Vice President of Sales. Prior to
that title he held various sales management positions with Sega.
 
  William Radin joined the Company in June 1993 as Senior Vice President, R&D,
and was promoted to Executive Vice President, Operations in July 1994. From
January 1990 to December 1992, he was Vice President and Managing Director of
Galco, the Hong Kong division of Lewis Galoob Toys, Inc., a toy manufacturer,
and from December 1992 to April 1993, he was Managing Director of Arco, Ltd.,
the Hong Kong division of Mattel, Inc., a toy manufacturer. From June 1983 to
December 1990, Mr. Radin was Vice President and Managing Director for Tonka
Kenner Parker Far East, a toy manufacturer.
 
  The information required by this Item regarding the directors of the Company
is incorporated by reference to the information set forth in the section
entitled "Proposal No. 1: Election of Directors" in the Company's Proxy
Statement for the 1998 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission within 120 days after the end of the
Company's fiscal year ended December 31, 1997.
 
                                       2
<PAGE>
 
DIRECTORS OF THE COMPANY
 
<TABLE>
<CAPTION>
                                                 PRINCIPAL OCCUPATION/
            NAME             AGE            POSITION HELD WITH THE COMPANY
 --------------------------- --- ----------------------------------------------------
 <C>                         <C> <S>
 Mr. David C. Costine (1)(3) 56  President of Costine Management Co.; General Partner
                                  of Costine Associates, L.P. and Corporate Venture
                                  Partners, L.P.; Director of the Company
 Mr. Esmond T. Goei (2)(3)   47  Vice Chairman of the Board of Directors; Chairman of
                                  the Board of Directors and President of NHancement
                                  Technologies, Inc.; Director of the Company
 Mr. Donald D. Kingsborough  51  Chairman of the Board and Chief Executive Officer of
                                  the Company
</TABLE>
--------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating Committee
 
  Mr. Costine has served as a director of the Company since January 1993.
Since 1988, Mr. Costine has been a general partner of Costine Associates,
L.P., which is the general partner of the venture capital firm Corporate
Venture Partners, L.P. Since 1987, he has served as President of Costine
Management Co., a venture capital firm. Mr. Costine also serves as a director
of Microprose, Incorporated, a video game and software publisher (a Nasdaq
National Market company), and Pathlight Technology, Inc.
 
  Mr. Goei has served as a director of the Company since September 1993, and
as Vice Chairman of the Board of the Company since July 1996. Since July 1994,
Mr. Goei has been Chairman of the Board, CEO and President of BioFactors Inc.,
a human resource software and services company, and of its successor company,
NHancement Technologies, Inc., a systems integration company, since October
1996. Mr. Goei has worked independently in venture capital management since
July 1992, and prior to that was Chief Executive Officer (North America) for
Transpac Capital Pte. Ltd., a Singapore-based international venture capital
management company that he co-founded in 1989. From October 1992 to February
1997, he was a General Partner of Transition Ventures L.L.P., a venture
capital fund. Until April 1995, Mr. Goei was Chairman of the Board of
Centigram Communications Corp., a leading telecommunications equipment
manufacturer, and had been a board member since 1987. He has also served on
the board of CliniCom, Inc., a patient care information systems company, since
1988.
 
  Mr. Kingsborough founded the Company in September 1992 and has served as
Chairman of the Board and Chief Executive Officer since that time. From May
1989 to November 1992, Mr. Kingsborough was Chief Executive Officer of
Intelligy Corporation, a developer of educational and child development
products, including software. In February 1985, Mr. Kingsborough founded
Worlds of Wonder, Inc., and served as its Chief Executive Officer until April
1988.
 
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
  Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity
securities, to file with the SEC initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
 
                                       3
<PAGE>
 
  To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
 
ITEM 11. EXECUTIVE COMPENSATION
 
COMPENSATION OF DIRECTORS
 
  Each nonemployee director of the Company receives a quarterly retainer of
$2,000. In addition, Mr. Goei receives a monthly fee of $5,000 for his
services as Vice Chairman of the Board; however, Mr. Goei waived such fee
beginning in April 1997. In the fiscal year ended December 31, 1997, the total
compensation paid to nonemployee directors was $42,000. The members of the
Board of Directors are also eligible for reimbursement for their expenses
incurred in connection with attendance at Board meetings in accordance with
Company policy.
 
  Each nonemployee director of the Company also receives stock option grants
under the 1995 Director Stock Option Plan (the "Director Plan"). Only
nonemployee directors of the Company or an affiliate of such directors (as
defined in the Internal Revenue Code of 1986, as amended (the "Code")) are
eligible to receive options under the Director Plan.
 
  Options granted under the Director Plan are intended by the Company not to
qualify as incentive stock options under the Code. Options granted under the
Director Plan are non-discretionary. On the date of the first meeting of the
Board of Directors in which an individual participates as a director, such
individual is automatically granted an option to purchase 15,000 shares of
Common Stock (an "Initial Option"). On July 31 of each year (or the next
business day should such date be a legal holiday), each member of the
Company's Board of Directors who is not an employee of the Company and has
served as a nonemployee director for at least six months or, where specified
by the nonemployee director, an affiliate of such director, is automatically
granted under the Director Plan, without further action by the Company, the
Board of Directors or the stockholders of the Company, an option to purchase
7,500 shares of Common Stock of the Company (a "Director Option"). No other
options may be granted at any time under the Director Plan. The exercise price
of options granted to nonemployee directors and employee directors under the
Director Plan is 100% and 110%, respectively, of the fair market value of the
Common Stock subject to the option on the date of the option grant. Option
shares subject to Initial Options vest at the rate of 1/48 per month and 25%
of the option shares subject to Director Options vest 12 months after the date
of grant, with the balance of the option shares vesting ratably thereafter at
1/48 per month. The term of options granted under the Director Plan is
ten years. In the event of a merger of the Company with or into another
corporation or a consolidation, acquisition of assets or other change-in-
control transaction involving the Company, each option either will continue in
effect, if the Company is the surviving entity, or will be assumed or an
equivalent option will be substituted by the successor corporation, if the
Company is not the surviving entity.
 
  During the last fiscal year, the Company granted options covering 7,500
shares to each nonemployee director of the Company at an exercise price per
share of $4.00; however, such options have not yet been issued. The fair
market value of such Common Stock on the date of grant was $4.00 per share
(based on the closing sales price reported in the National Market System for
the date of grant). As of March 31, 1998, no options had been exercised under
the Director Plan.
 
                                       4
<PAGE>
 
COMPENSATION OF EXECUTIVE OFFICERS
 
                            SUMMARY OF COMPENSATION
 
  The following table shows, for the years ended December 31, 1997, 1996 and
1995, compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer and its other four most highly compensated executive
officers at December 31, 1997, including two former executive officers who
departed from the Company during fiscal year 1997 (the "Named Executive
Officers"):
 
                          SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                               ANNUAL COMPENSATION
                                  ----------------------------------------------
                                                   SECURITIES
                                  SALARY  BONUS    UNDERLYING      ALL OTHER
NAME AND PRINCIPAL POSITION  YEAR   ($)    ($)   OPTIONS (#)(1) COMPENSATION ($)
---------------------------  ---- ------- ------ -------------- ----------------
<S>                          <C>  <C>     <C>    <C>            <C>
Donald D. Kingsborough....   1997 516,200     --    300,000           7,180 (2)
 President and Chief Exec-
  utive Officer              1996 457,450 33,645    300,000           7,176 (2)(3)
                             1995 275,500     --    225,000           1,099 (2)(4)
William Radin.............   1997 257,800     --     80,000              --
 Executive Vice President,
  Operations                 1996 257,800 27,694     80,000              --
                             1995 216,067     --     85,062             761 (2)
Sharon Duncan.............   1997 210,000     --     95,000              --
 Executive Vice President,
  International              1996 100,000     --     75,000              --
                             1995      --     --         --              --
FORMER OFFICERS:
Sol Kershner (6)..........   1997 337,000     --         --              --
                             1997 304,500 30,480    175,000             439 (2)
                             1997 156,672     --    125,000              --
Mark Bradlee (7)..........   1997 165,933     --         --          33,333 (5)
                             1996 209,600 18,598     25,000              --
                             1995 173,100     --     55,000              --
</TABLE>
-------
(1) All 1997 option grants represent options issued in 1996 which were
    subsequently canceled, repriced and reissued in 1997. In addition to the
    repriced options, Ms. Duncan received options to purchase 20,000 shares in
    1997.
 
(2) Represents premiums paid on life insurance.
 
(3) Does not include approximately $1,490 representing Mr. Kingsborough's
    share of royalties earned in 1996 by Shoot the Moon Products, Inc.
    ("STM").
 
(4) Does not represent approximately $50,250 representing Mr. Kingsborough's
    share of royalties earned in 1995 by STM.
 
(5) Represents severance pay.
 
(6) Mr. Kershner was Chief Financial Officer and Chief Operating Officer of
    the Company until October 13, 1997; he is no longer an employee of the
    Company.
 
(7) Mr. Bradlee was Executive Vice President, Sales of the Company until
    October 15, 1997; he is no longer an employee of the Company.
 
                                       5
<PAGE>
 
STOCK OPTION GRANTS AND EXERCISES
 
  The Company grants options to its executive officers under its 1992 Stock
Option Plan (the "1992 Plan"), or its 1995 Stock Option Plan (the "1995
Plan"). As of December 31, 1997, options to purchase a total of 2,630,838
shares were outstanding under the Plans and options to purchase 406,826 shares
remained available for grant thereunder.
 
  The following tables show for the fiscal year ended December 31, 1997,
certain information regarding options granted to, exercised by, and held at
year end by, the Named Executive Officers:
<TABLE>
<CAPTION>
                              OPTION GRANTS IN LAST FISCAL YEAR                                                                   
                                                                    
                                     INDIVIDUAL GRANTS                  
                         ------------------------------------------ 
                                      PERCENT                         POTENTIAL REALIZABLE
                                      OF TOTAL                          VALUE AT ASSUMED
                          NUMBER OF   OPTIONS                         ANNUAL RATES OF STOCK
                         SECURITIES  GRANTED TO                       PRICE APPRECIATION FOR
                         UNDERLYING  EMPLOYEES  EXERCISE                 OPTION TERM (4)
                           OPTIONS   IN FISCAL   PRICE   EXPIRATION  ----------------------
          NAME           GRANTED (1)  YEAR (2)   ($/SH)   DATE (3)    5% ($)     10% ($)
------------------------ ----------- ---------- -------- ---------- ---------- ------------
<S>                      <C>         <C>        <C>      <C>        <C>        <C>
Donald D. Kingsborough..   300,000     17.72%    $5.00    8/07/07      943,355    2,390,610
William Radin...........    80,000      4.73%    $3.75    8/07/07      188,667      478,122
Sharon Duncan...........    75,000      4.43%    $3.75    8/07/07      176,875      448,239
                            20,000      1.18%    $6.00    2/12/07      191,249       75,467
FORMER OFFICERS:
Sol Kershner (5)........        --        --        --         --           --           --
Mark Bradlee (6)........        --        --        --         --           --           --
</TABLE>
                      
-------
(1) Options in this table are either incentive stock options or nonstatutory
    stock options, were granted pursuant to the Company's 1992 Stock Option
    Plan (the "1992 Plan") or the 1995 Stock Option Plan (the "1995 Plan"),
    and have exercise prices equal to the fair market value on the date of
    grant. Options granted pursuant to the 1992 Plan have five or ten year
    terms, and options granted pursuant to the 1995 Plan have ten year terms.
    All such options vest over a four year period at the rate of one-fourth of
    the shares at the end of one year from the date of grant (or the first day
    of employment for new employees) and 1/48th per month thereafter.
 
(2) Based on options to purchase 1,692,700 shares of Common Stock granted to
    employees, including executive officers, for the fiscal year ended
    December 31, 1997.
 
(3) Options may terminate prior to the expiration date upon the termination of
    the optionee's status as an employee or consultant, the optionee's death
    or disability or, under certain circumstances, upon an acquisition of the
    Company.
 
(4) The potential realizable value is based on the term of the option at the
    date of grant (10 years). It is calculated by assuming that the stock
    price on the date of grant appreciates at the indicated annual rate,
    compounded annually for the entire term, and that the option is exercised
    and sold on the last day of the option term for the appreciated stock
    price. Actual gains, if any, are dependent upon the actual future
    performance of the Company's Common Stock. There can be no assurance that
    the amounts reflected in this table will be achieved.
 
(5) Mr. Kershner was Chief Financial Officer and Chief Operating Officer of
    the Company until October 13, 1997; he is no longer an employee of the
    Company.
 
(6) Mr. Bradlee was Executive Vice President, Sales of the Company until
    October 15, 1997; he is no longer an employee of the Company.
 
                                       6
<PAGE>
 
                          AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, 
                                AND FISCAL YEAR-END OPTION VALUES
 <TABLE>
<CAPTION>
                                                               NUMBER OF
                                                              SECURITIES           VALUE OF
                                                              UNDERLYING      UNEXERCISED IN-THE-
                                                          UNEXERCISED OPTIONS  MONEY OPTIONS AT
                                                             AT FY-END (#)        FY-END ($)
                                                          ------------------- -------------------
                         SHARES ACQUIRED      VALUE          EXERCISABLE/        EXERCISABLE/
          NAME           ON EXERCISE (#) REALIZED ($) (1)  UNEXERCISABLE (2)   UNEXERCISABLE (3)
------------------------ --------------- ---------------- ------------------- -------------------
<S>                      <C>             <C>              <C>                 <C>
Donald D. Kingborough...        --              --          223,621/396,876              --
William Radin...........        --              --           61,623/115,105         2,291/0
Sharon Duncan...........        --              --                 0/95,000              --
FORMER OFFICERS:
Sol Kershner (4)........        --              --          141,666/158,334              --
Mark Bradlee (5)........        --              --                 27,916/0              --
</TABLE>
-------
(1) Represents the fair market value of the Company's Common Stock on the date
    of exercise (based on the closing sales price reported on the Nasdaq
    National Market or the actual sales price if the shares were sold by the
    optionee) less the exercise price, and does not necessarily indicate that
    the shares were sold by the optionee.
 
(2) Includes both in-the-money and out-of-the-money options.
 
(3) Fair market value of the Company's Common Stock at December 31, 1997 ($1-
    27/32, based on the closing sales price reported on the Nasdaq National
    Market), less the exercise price.
 
(4) Mr. Kershner was Chief Financial Officer and Chief Operating Officer of
    the Company until October 13, 1997; he is no longer an employee of the
    Company.
 
(5) Mr. Bradlee was Executive Vice President, Sales of the Company until
    October 15, 1997; he is no longer an employee of the Company.
 
                                       7
<PAGE>
 
  The following table provides the specified information concerning all
repricings of options to purchase the Company's Common Stock held by any
executive officer since June 8, 1995, the date of the Company's initial public
offering.
 
                          TEN-YEAR OPTION REPRICINGS
 
<TABLE>
<CAPTION>
                                  NUMBER OF   MARKET PRICE
                                 SECURITIES   OF THE STOCK   EXERCISE PRICE              LENGTH OF ORIGINAL
                                 UNDERLYING    AT TIME OF      AT TIME OF                   OPTION TERM
                                   OPTIONS    REPRICING OR    REPRICING OR  NEW EXERCISE   REMAINING AT
                                 REPRICED OR    AMENDMENT      AMENDMENT       PRICE      DATE OF REPRICING
NAME AND POSITION         DATE   AMENDED (#)       ($)            ($)           ($)         OR AMENDMENT
-----------------        ------- ----------- --------------- -------------- ------------ ------------------
<S>                      <C>     <C>         <C>             <C>            <C>          <C>
Donald D. Kingsborough.. 8/07/97   300,000       $3.875         $ 13.875       $5.00       9 yrs. 3 mos.
 President and Chief
 Executive Officer
William Radin........... 8/07/97    80,000       $3.875         $ 13.875       $3.75       9 yrs. 3 mos.
 Executive
 Vice President,
 Operations
Sharon Duncan........... 8/07/97    75,000       $3.875         $10.6875       $3.75       9 yrs.
 Executive
 Vice President,
 International
FORMER OFFICERS:
Sol Kershner (1)........     --        --           --               --          --        --
Mark Bradlee (2)........     --        --           --               --          --        --
</TABLE>
--------
(1) Mr. Kershner was Chief Financial Officer and Chief Operating Officer of
    the Company until October 13, 1997; he is no longer an employee of the
    Company.
(2) Mr. Bradlee was Executive Vice President, Sales of the Company until
    October 15, 1997; he is no longer an employee of the Company.
 
                                       8
<PAGE>
 
                             EMPLOYMENT AGREEMENTS
 
  Employment Agreement with Donald D. Kingsborough. The Company has entered
into an employment agreement with Mr. Kingsborough effective as of June 7,
1995, for an initial term of three years. The Agreement provides that if Mr.
Kingsborough voluntarily terminates his employment with the Company, or is
terminated for cause, the Company will have the right to repurchase certain
shares of Common Stock owned by Mr. Kingsborough at a discount to the then-
current price of such stock, and that Mr. Kingsborough may not engage in
certain activities competitive with the Company for a period of one year
thereafter or upon after the expiration of his employment agreement. In the
event the Company terminates Mr. Kingsborough's employment without cause, such
provisions do not apply.
 
  Employment Agreement with Sol Kershner. The Company entered into an
employment agreement with Mr. Kershner effective June 10, 1995. Mr. Kershner
retired from the Company on December 31, 1997 and, therefore, such agreement
is no longer in effect.
 
  Employment Agreement with William Radin. In November 1995, the Company
entered into an employment agreement with William Radin, Executive Vice
President, Operations effective as of July 4, 1995. The Agreement
automatically renews for a one year period on July 1, 1997 and on each
anniversary thereof. During the renewal period, the Company may terminate Mr.
Radin's employment upon 30 days prior notice.
 
                                       9
<PAGE>
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 31, 1998 by: (i) each director; (ii)
each of the executive officers named in the Summary Compensation Table or;
(iii) all executive officers and directors of the Company as a group; and (iv)
all those known by the Company to be beneficial owners of more than five
percent of its Common Stock.
 
<TABLE>
<CAPTION>
                                                  BENEFICIAL OWNERSHIP (1)
                                              ---------------------------------
              BENEFICIAL OWNER                NUMBER OF SHARES PERCENT OF TOTAL
--------------------------------------------- ---------------- ----------------
<S>                                           <C>              <C>
PRINCIPAL STOCKHOLDERS
Barry Rubenstein (2)(3)......................    1,561,489           9.3%
 68 Wheatley Road
 Brookville, NY 11545
Sandler Capital Management (4)...............    1,417,477           8.4%
 767 Fifth Avenue
 New York, NY 10153
Andyla Yasa..................................    1,389,502           8.5%
 c/o P.T. Amanda Granitkusuma
 Chase Plaza Tower, 4th Floor
 Jln. Jend. Sudirman kav.21
 Jakarta 12910 Indonesia
Barry Fingerhut (2)(5).......................    1,329,957           7.9%
 767 Fifth Avenue
 New York, NY 10153
Irwin Lieber (2)(6)..........................    1,329,957           7.9%
 767 Fifth Avenue
 New York, NY 10153
Pitt & Company (7)...........................    1,120,797           6.8%
 c/o Bankers Trust Company
 P.O. Box 2444
 Church Street Station
 New York, NY 10008
DIRECTORS
Donald D. Kingsborough (8)...................      643,873           3.9%
David C. Costine (9).........................      450,763           2.7%
Gary L. Nemetz (10)..........................      425,566           2.6%
Esmond T. Goei (11)..........................       78,383              *
NAMED OFFICERS
Mark Bradlee (12)............................        1,424              *
Sharon Duncan (13)...........................        7,581              *
Sol Kershner (14)............................        1,487              *
William Radin (15)...........................       71,087              *
ALL EXECUTIVE OFFICERS AND DIRECTORS AS A        1,680,164           9.9%
 GROUP (8 persons) (16)......................
</TABLE>
 
                                      10