EXHIBIT 10.22
                         SECOND AMENDMENT TO AMENDED AND
                         RESTATED LETTER LOAN AGREEMENT

      THIS SECOND AMENDMENT TO AMENDED AND RESTATED LETTER LOAN AGREEMENT
("AMENDMENT") is made and entered into effective the 30th day of September,
1998, by and between DSI TOYS, INC., a Texas corporation (herein called
"BORROWER"), BANK ONE, TEXAS, N.A., with offices in Houston, Texas (herein
called "LENDER").

                                R E C I T A L S:

      WHEREAS, Borrower and Lender entered into an Amended and Restated Letter
Loan Agreement dated October ___, 1997, and a First Amendment to Amended and
Restated Letter Loan Agreement dated effective January 31, 1998 (collectively,
the "LOAN AGREEMENT"; the terms defined therein being used herein as therein
defined unless otherwise defined herein); and

      WHEREAS, Borrower and Lender desire to amend certain terms and provisions
of the Loan Agreement, which include (i) modifying some existing financial
covenants, and (ii) amending certain other terms and provisions of the Loan
Agreement.

                               A G R E E M E N T:

      NOW, THEREFORE, in consideration of the mutual promises herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, Borrower and Lender hereby agree to amend the Loan Agreement as
hereinafter set forth.

      1. AMENDMENT TO LOAN AGREEMENT. The Loan Agreement is, effective the date
hereof, and subject to the satisfaction of the conditions precedent set forth in
Section 2 hereof, hereby amended as follows:

      (a) Section 5(o), AFFIRMATIVE COVENANTS, of the Loan Agreement is amended
by deleting the same in its entirety and substituting the following therefor:

            "(o) Borrower shall timely make the payments to advertisers, as set
      forth in the schedule below (without prepayment):


       =============----------------------------------------===============
                                            Nickelodeon
       Month/Year    Turner Broadcasting      Network           Totals
       =============----------------------------------------===============
           09/98         $63,803.04         $131,808.70       $195,611.74
       =============----------------------------------------===============
           10/98         $64,281.53         $120,000.00       $184,281.53
       =============----------------------------------------===============
           11/98         $64,763.64         $120,000.00       $184,763.64
       =============----------------------------------------===============
           12/98         $65,249.37         $120,000.00       $185,249.37
<PAGE>
       =============----------------------------------------===============
           01/99         $65,738.74         $120,000.00       $185,738.74
       =============----------------------------------------===============
           02/99         $66,231.78         $120,000.00       $186,231.78
       =============----------------------------------------===============
           03/99         $66,728.52         $250,000.00       $316,728.52
       =============----------------------------------------===============
           04/99         $67,228.98         $250,000.00       $317,228.98
       =============----------------------------------------===============
           05/99         $67,733.20         $250,000.00       $317,733.20
       =============----------------------------------------===============
           06/99         $68,241.20         $250,000.00       $318,241.20
       =============----------------------------------------===============
           07/99                            $250,000.00       $250,000.00
       =============----------------------------------------===============
           08/99                            $250,000.00       $250,000.00
       =============----------------------------------------===============
           09/99                            $250,000.00       $250,000.00
       =============----------------------------------------===============
           10/99                            $250,000.00       $250,000.00
       =============----------------------------------------===============
           11/99                            $250,000.00       $250,000.00
       =============----------------------------------------===============
           12/99                            $250,000.00       $250,000.00
       ====================================================================
       TOTALS:           $660,000.00       $3,231,808.70     $3,891,808.70
       ====================================================================

            Borrower will promptly notify Lender if it cannot adhere to its
            payment obligations relating to this advertising payment schedule."

     (b) Section 5, AFFIRMATIVE COVENANTS, is hereby modified by including the
following additional subparagraph (p), Year 2000 Compliance:

            "(p) YEAR 2000 COMPLIANCE. Borrower shall perform all acts
            reasonably necessary to ensure that (i) Borrower and any business in
            which Borrower holds a substantial interest, and (ii) all customers,
            suppliers and vendors that are material to Borrower's business,
            become Year 2000 Compliant in a timely manner. Such acts shall
            include, without limitation, performing a comprehensive review and
            assessment of all of Borrower's systems and adopting a detailed
            plan, with itemized budget, for the remediation, monitoring and
            testing of such systems. As used in this paragraph, "Year 2000
            Compliant" shall mean, in regard to any entity, that all software,
            hardware, firmware, equipment, goods or systems utilized by or
            material to the business operations or financial condition of such
            entity, will properly perform date sensitive functions before,
            during and after the year 2000. Borrower shall, immediately upon
            request, provide to Bank such certifications or other evidence of
            Borrower's compliance with the terms of this paragraph as Bank may
            from time to time require."

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<PAGE>
     (c) Section 11, MISCELLANEOUS, is hereby modified by including the
following additional subparagraph (m), Jury Waiver:

            "(m) JURY WAIVER. THE UNDERSIGNED AND BANK (BY ITS ACCEPTANCE
            HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
            UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
            RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR
            OTHERWISE) BETWEEN OR AMONG THE UNDERSIGNED AND BANK ARISING OUT OF
            OR IN ANY WAY RELATED TO THIS DOCUMENT ANY OTHER LOAN DOCUMENT, OR
            ANY RELATIONSHIP BETWEEN BANK AND THE UNDERSIGNED. THIS PROVISION IS
            A MATERIAL INDUCEMENT TO BANK TO PROVIDE THE FINANCING DESCRIBED
            HEREIN OR IN THE OTHER LOAN DOCUMENT."

     (d) Section 11, MISCELLANEOUS, is hereby modified by including the
following additional subparagraph (n), Arbitration:

            "(n) ARBITRATION. Bank and Borrower agree that upon the written
            demand of either party, whether made before or after the institution
            of any legal proceedings, but prior to the rendering of any judgment
            in that proceeding, all disputes, claims and controversies between
            them, whether individual, joint or class in nature, arising from the
            Revolving Note or the Term Note, any Loan Document or otherwise,
            including without limitation contract disputes and tort claims.,
            shall be resolved by binding arbitration pursuant to the Commercial
            Rules of the American Arbitration Association ("AAA"). Any
            arbitration proceeding held pursuant to this arbitration provision
            shall be conducted in the city nearest the Borrower's address having
            an AAA regional office, or at any other place selected by mutual
            agreement of the parties. No act to take or dispose of any
            Collateral shall constitute a waiver of this arbitration agreement
            or be prohibited by this arbitration agreement. This arbitration
            provision shall not limit the right of either party during any
            dispute, claim or controversy to seek, use, and employ ancillary, or
            preliminary rights and/or remedies, judicial or otherwise, for the
            purposes of realizing upon, preserving, protecting, foreclosing upon
            or proceeding under forcible entry and detainer for possession of,
            any real or personal property, and any such action shall not be
            deemed an election of remedies. Such remedies include, without
            limitation, obtaining injunctive relief or a temporary restraining
            order, invoking a power of sale under any deed of trust or mortgage,
            obtaining a writ of attachment or imposition of a receivership, or
            exercising any rights relating to personal property, including
            exercising the right of set-off, or taking 

                                      -3-
<PAGE>
            or disposing of such property with or without judicial process
            pursuant to the Uniform Commercial Code. Any disputes, claims or
            controversies concerning the lawfulness or reasonableness of an act,
            or exercise of any right or remedy concerning any Collateral,
            including any claim to rescind, reform or otherwise modify any
            agreement relating to the Collateral, shall also be arbitrated;
            provided, however that no arbitrator shall have the right or the
            power to enjoin or restrain any act of either party. Judgment upon
            any award rendered by any arbitrator may be entered in any court
            having jurisdiction. The statute of limitations, estoppel, waiver,
            laches and similar doctrines which would otherwise be applicable in
            an action brought by a party shall be applicable in any arbitration
            proceeding, and the commencement of an arbitration proceeding shall
            be deemed the commencement of any action for these purposes. The
            Federal Arbitration Act (Title 9 of the United States Code) shall
            apply to the construction, interpretation, and enforcement of this
            arbitration provision."

     2. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective when,
and only when, Lender shall have received counterparts of this Amendment
executed by Borrower, and Section 1 hereof shall become effective when, and only
when, Lender shall have additionally received all of the following:

            (a) Certificate of the Boards of Directors of Borrower authorizing
     the execution, delivery and performance of this Amendment, and the matters
     contemplated hereby; and

            (b) Any and all other documentation as Lender may reasonably
     require.

     3. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents and
warrants as follows:

            (a) That Borrower is duly authorized and empowered to execute,
     deliver and perform this Amendment and all other instruments referred to or
     mentioned herein to which it is a party, and all action on its part
     requisite for the due execution, delivery and the performance of this
     Amendment has been duly and effectively taken. This Amendment, when
     executed and delivered, will constitute valid and binding obligations of
     Borrower enforceable in accordance with its terms. This Amendment does not
     violate any provisions of Borrower's Articles of Incorporation, By-Laws, or
     any contract, agreement, law or regulation to which Borrower is subject,
     and does not require the consent or approval of any regulatory authority or
     governmental body of the United States or any state.

            (b) That the representations and warranties made by Borrower in the
     Loan Agreement are true and correct as of the date of this Amendment.

            (c) No event has occurred and is continuing which constitutes an
     Event of Default or would constitute an Event of Default but for the
     requirement that notice be given or time elapse or both.
<PAGE>
     4. REFERENCE TO AND EFFECT ON THE SECURITY INSTRUMENTS.

            (a) Upon the effectiveness of Section 1 hereof, on and after the
     date hereof each reference in the Loan Agreement to "this Agreement",
     "hereunder", "hereof", "herein" or words of like import, and each reference
     in the other Security Instruments (hereinafter defined) to the Loan
     Agreement, shall mean and be a reference to the Loan Agreement as amended
     hereby.

            (b) Except as specifically amended above, the Loan Agreement and all
     other instruments securing or guaranteeing Borrower's obligations to Lender
     (the "SECURITY INSTRUMENTS") shall remain in full force and effect and are
     hereby ratified and confirmed. Without limiting the generality of the
     foregoing, the Security Instruments and all collateral described therein do
     and shall continue to secure the payment of all obligations of Borrower
     under the Loan Agreement, as amended hereby, and under the other Security
     Instruments.

            (c) The execution, delivery and effectiveness of this Amendment
     shall not, except as expressly provided herein, operate as a waiver of any
     right, power or remedy of Lender under any of the Security Instruments, nor
     constitute a waiver of any provision of any of the Security Instruments.

     5. WAIVER. As additional consideration for the execution, delivery and
performance of this Amendment by the parties hereto and to induce Lender to
enter into this Amendment, Borrower warrants and represents to Lender that no
facts, events, statuses or conditions exist or have existed which, either now or
with the passage of time or giving of notice, or both, constitute or will
constitute a basis for any claim or cause of action against Lender or any
defense to (i) the payment of any obligations and indebtedness under the Note
and/or the Security Instruments or (ii) the performance of any of its
obligations with respect to the Note and/or the Security Instruments, and in the
event any such facts, events, statuses or conditions exist or have existed,
Borrower unconditionally and irrevocably waives any and all claims and causes of
action against Lender and any defenses to its payment and performance
obligations in respect to the Note and the Security Instruments.

     6. COSTS AND EXPENSES. Borrower agrees to pay on demand all costs and
expenses of Lender in connection with the preparation, reproduction, execution
and delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses of
counsel for Lender. In addition, Borrower shall pay any and all fees payable or
determined to be payable in connection with the execution and delivery, filing
or recording of this Amendment and the other instruments and documents to be
delivered hereunder, and agrees to save Lender harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such fees.

     7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same instrument.

                                      -5-
<PAGE>
     8. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Texas.

     9. DUE ON MATURITY. THIS LOAN IS PAYABLE IN FULL AT MATURITY. BORROWER MUST
REPAY THE ENTIRE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN AND ANY UNPAID
INTEREST THEN DUE. LENDER IS UNDER NO OBLIGATION TO REFINANCE THE LOAN AT THAT
TIME, AND DOES NOT PLAN TO REFINANCE THE LOAN AT THAT TIME. BORROWER WILL,
THEREFORE, BE REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS THAT BORROWER MAY
OWN, OR BORROWER WILL HAVE TO FIND A LENDER, WHICH IS WILLING TO LEND BORROWER
THE MONEY TO MAKE SUCH PAYMENT.

     10. FINAL AGREEMENT. THIS WRITTEN SECOND AMENDMENT TO AMENDED AND RESTATED
LETTER LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

     IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed in multiple counterparts, each of which is an original instrument
for all purposes, all as of the day and year first above written.

                                    BORROWER:

                                    DSI TOYS, INC.

                                    By:   /s/ M. D. DAVIS
                                    Name:    M. D. DAVIS
                                    Title:     CHIEF EXECUTIVE OFFICER

                                    LENDER:

                                    BANK ONE, TEXAS, N.A.

                                    By:    /s/ GAIL WAGGONER
                                    Name:    GAIL WAGGONER
                                    Title:    VICE PRESIDENT


                                      -6-