MILBERG WEISS BERSHAD
  HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
KIRK B. HULETT (110726)
HENRY ROSEN (156963)
TOR GRONBORG (179109)
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058

LAW OFFICES OF LAWRENCE G.
  SOICHER
LAWRENCE G. SOICHER
300 Park Avenue, 20th Floor
New York, NY 10022
Telephone: 212/980-7000

Attorneys for Plaintiffs

TO: THE PARTIES AND THEIR ATTORNEYS OF RECORD

PLEASE TAKE NOTICE that, on September 26, 1997 at 10:30 a.m., in the Courtroom of the Honorable Marilyn Hall Patel, United States District Court, 450 Golden Gate Avenue, San Francisco, California, plaintiffs, Randall M. Harow, Larry Schuppan, Joseph Takats, EJA Management LLC, and Yair Tauman, individually and on behalf of Cale Consultants, Ltd., will, and hereby do, move the Court, under the Securities Exchange Act of 1934 (the "Exchange Act"), as amended by §21D(a)(3)(B) of the Private Securities Litigation Reform Act of 1995 ("PSLRA" or "New Act"), to be appointed lead plaintiffs in this action and to approve their selection of Milberg Weiss Bershad Hynes & Lerach LLP and Kaufman Malchman Kirby & Squire, LLP as lead counsel for the class.

This motion is based on this Notice of Motion and the attached Memorandum of Points and Authorities in support thereof, the accompanying Declaration of Tor Gronborg, the pleadings and other files herein, and such other written or oral argument as may be presented to the Court.

I. INTRODUCTION

Plaintiffs Randall M. Harow ("Harow") and Larry Schuppan ("Schuppan") bring this motion along with Joseph Takats ("Takats"), EJA Management LLC ("EJA Management"), and Yair Tauman, individually and on behalf of Cale Consultants, Ltd. ("Tauman") (collectively, "Movants"), who are class members and named plaintiffs in a related action.¹ Plaintiffs intend to soon move to consolidate these related actions.² Movants request, pursuant to §21D(a)(3)(B) of the Exchange Act, as amended by the PSLRA, that the Court appoint them as Lead Plaintiffs and approve their selection of Milberg Weiss and Kaufman Malchman Kirby & Squire, LLP ("Kaufman Malchman") to represent the Class.³ Each Movant purchased Yes! Entertainment Corp. ("Yes!") securities during the Class Period and suffered damages as a result of defendants' violations of federal securities laws. Collectively, Movants purchased 108,500 shares of Yes! stock. As set forth below, these facts entitle Movants to be appointed Lead Plaintiffs.

II. STATEMENT OF FACTS

During the Class Period, defendants' false and misleading statements induced Movants to purchase the artificially inflated stock of Yes!. Throughout the Class Period defendants violated federal securities laws, falsely representing both the status and expected success of newly introduced and existing products. Specifically, defendants asserted that their "flagship" product, the V-Link mobile telephone system, would "sell hundreds of thousands" of units "by the end of [1996]" generating revenue of $100 million. ¶1.⁴ In addition to misrepresenting the status of V-Link, defendants asserted that one of their few other products, Power Penz, was in strong demand and would also generate high revenues. ¶1. Finally, defendants failed to disclose drastically increased spending on marketing and advertising, significant problems with manufacturing delays and violations of covenants contained in Yes!'s Accounts Receivable Management agreement with BNY Financial Corporation. ¶39.

In late 1992, Yes! was founded by Defendant Donald Kingsborough ("Kingsborough"). Kingsborough understood the need to obfuscate negative information after watching the stock of his former corporation, Worlds of Wonder, plummet following the disclosure of multi-million dollar losses. ¶2. While Worlds of Wonder collapsed despite a highly successful product, Teddy Ruxpin, by late 1995 Yes! had not even been able to develop a "flagship" product. The inability to develop a successful product and the resulting continuous and enormous financial losses, (over $21 million in 1994 alone), put pressure on Kingsborough and Defendant Sol Kershner ("Kershner"), the Chief Financial Officer, to make it appear that at least Yes! was producing new toys and experiencing earnings and business growth. Unable to raise additional capital privately, and unwilling to use their own personal funds, defendants took Yes! public on June 7, 1995, selling 2.5 million units in a $9.5 million public offering. ¶4.

The failure of Yes! stock to perform as predicated by defendants, put additional pressure on Kingsborough and Kershner who collectively held almost 500,000 shares and options to purchase Yes! shares. ¶4. Moreover, private investors, who had made equity investments and/or loans to the defendants ("Venture Investors") prior to the public offering, were anxious to sell their Yes! securities, and had been assured by defendants that Yes! would perform well once it received the substantial cash infusion from the public offering. ¶4. By March 1996, defendants yielded to this pressure and embarked on their fraudulent scheme to artificially inflate the price of Yes! stock.

During the Class Period, defendants repeatedly misrepresented the status and potential for success of certain Yes! products, particularly their "flagship," V-Link. Defendants were aware that the V-Link was suffering from extensive manufacturing problems, that if it ever was developed, V-Link would only operate as an expensive walkie-talkie and not as a "cell phone/voice mail" device as promised and that V-Link could not legally be sold without FCC approval. ¶33. Defendants also failed to disclose similar manufacturing and shipping problems that plagued Yes!'s Power Penz product. ¶33.

Defendants' false and misleading statements operated to artificially inflate the price of Yes!'s stock to a high of $16.75 per share by July 1996. ¶1. At the same time, GKN Securities, Yes!'s underwriters for the June 1995 public offering, indicated that a second offering of 2 to 3 million shares was being considered. Defendants continued to issue fraudulent statements, permitting the Venture Investors to profit from their pre-public offering investment in Yes! and driving the stock price up for a potential secondary offering.

Through the rest of 1996, defendants continued to represent that V-Link would be in stores before the critical holiday buying season. In order to create the impression that V-Link would be shipped in time for the holiday buying season, defendants falsely stated that FCC approval was not necessary prior to shipping. Moreover, at the same time defendants announced FCC approval for Yes!'s "overscan" video product, defendants, in their efforts to falsely mislead investors, represented that FCC approval of V-Link was not necessary prior to distribution. To the shock of investors, and the feigned surprise of defendants, the San Francisco Chronicle revealed on December 12, 1996 that V-Link required FCC approval prior to sale and that Yes! would be subject to federal sanctions for illegally shipping those V-Link units that had been manufactured. ¶8. This revelation, and subsequent disclosures by defendants revealing extensive operational and manufacturing problems, caused Yes!'s stock to collapse to $6.75 per share. Yes! stock has not recovered to date, and currently trades at approximately $3.19 per share.

III. MOVANTS SHOULD BE APPOINTED LEAD PLAINTIFFS

A. The Procedure Required By The Private Securities Litigation Reform Act Of 1995

On December 22, 1995, Congress enacted the PSLRA which applies to actions filed after that date. Exchange Act §21D(a) (as amended by PSLRA, Pub. L. 104-67, §101, 109 Stat. 737 (1995)⁵). Plaintiffs' Complaint was filed on April 18, 1997, thus, this litigation is governed by the PSLRA. The PSLRA establishes a procedure for the appointment of lead plaintiff in "each private action arising under [the Exchange Act] that is brought as a plaintiff class action pursuant to the Federal Rules of Civil Procedure." §21D(a)(1).

First, the plaintiff who files the initial action must publish a notice to the Class, within 20 days of filing the action, informing class members of their right to file a motion for appointment as lead plaintiff. §21D(a)(3)(A)(i). Plaintiffs in this case caused the notice to be published on April 18, 1997. See Declaration of Tor Gronborg in Support of Plaintiffs' Motion to be Appointed Lead Plaintiffs Pursuant to §21D(a)(3)(B) of the Securities Exchange Act of 1934 and for Appointment of Lead Plaintiffs' Lead Counsel ("Gronborg Decl."), Ex. A. Within 60 days after publication of the notice, any person or group of persons who are members of the proposed class may apply to the court to be appointed lead plaintiff. §21D(a)(3)(A)(i)(II).

Second, PSLRA provides that within 90 days after publication of the notice, the court shall consider any motion made by a class member and shall appoint as lead plaintiff the member or members of the Class that the court determines to be most capable of adequately representing the interests of class members. §21D(a)(3)(B)(i). In determining the "most adequate plaintiff," PSLRA provides:

     [T]he court shall adopt a presumption that the most
     adequate plaintiff in any private action arising under this
     title is the person or group of persons that --

          (aa) has either filed the complaint or made a motion in
     response to a notice under subparagraph (A)(i);

          (bb) in the determination of the court, has the largest
     financial interest in the relief sought by the class; and

          (cc) otherwise satisfies the requirements of Rule 23 of
     the Federal Rules of Civil Procedure [pertaining to class
     actions].

§21D(a)(3)(B)(iii)(I).

B. Movants Satisfy The "Lead Plaintiff" Requirements Of The PSLRA

1. Movants Have Complied With The PSLRA, And Are Entitled To Be Appointed Lead Plaintiffs

Plaintiffs Harow and Schuppan published notice to the Class of their right to file a motion as lead plaintiff on April 18, 1997, within 20 days after filing their Complaint. The time period in which class members may move to be appointed lead plaintiff in this case closes on June 17, 1997.

Plaintiffs Harow and Schuppan timely published the required notice and have been joined in this motion by Takats, EJA Management, and Tauman to be appointed as lead plaintiffs. To Movants' knowledge, no other class member has filed a complaint or competing application to be appointed lead plaintiff.

Movants are qualified to represent the Class. Each Movant has signed a certification stating that they have reviewed the Complaint, approve of its filing and are willing and able to serve as a representative party on behalf of the class. Plaintiffs Harrow and Schuppan filed their certifications with the complaint. See Gronborg Decl., Ex. B. Movants Tauman, Takats and EJA Management filed their certificates with the related complaint, a copy of which is attached as Ex. C to the Gronborg Decl. Movants have thus satisfied the requirements of §21D(a)(3)(B)(iii)(I)(aa).

2. Movants Have A Significant Financial Interest In The Relief Sought By The Class

During the proposed Class Period, Movants collectively purchased 108,500 shares of Yes! common stock at prices artificially inflated by defendants' false and misleading statements and were damaged thereby. Between September 25, 1996 and November 22, 1996, Randall Harow purchased 45,000 shares at prices up to $14.00 per share. Larry Schuppan purchased 5,000 shares on May 31, 1996 at a price of $13.50 per share. Between July 16, 1996 and November 11, 1996, Yair Tauman, on behalf of himself and Cale Consultants, Ltd., purchased 44,000 shares at prices up to $14.81 per share. Between April 25, 1996 and October 11, 1996 Joseph Takats purchased 13,500 shares at prices up to $14.75 per share. And, EJA Management LLC purchased 2,000 shares on September 18, 1996 at $11.62 and another 1,000 shares on October 22, 1996 at $14.87. Movants purchased Yes! securities during the Class Period and suffered losses in excess of $452,000. The stock purchase information of the Movants is summarized at Table 1, attached as Ex. D to the Gronborg Decl. No other class member or members has moved to be Lead Plaintiff. Movants thus satisfy the requirements of §21D(a)(3)(B)(iii)(I)(bb).

3. Movants Otherwise Satisfy Rule 23

Movants satisfy the commonality and typicality requirements of Rule 23 because, just like other class members, they (i) purchased Yes! stock on the open market during the Class Period; (ii) at prices artificially inflated by the false and misleading statements issued by defendants; and (iii) were damaged by the alleged fraud. Consequently, Movants' claims turn on facts relating to defendants' fraudulent conduct and legal issues common to other class members. Movants are also adequate representatives of the Class as they have taken significant steps which demonstrate that they have and will protect the interest of the Class. In addition, Movants retained competent counsel in these actions. Thus, Movants "otherwise satisf[y] the requirements of Rule 23," pursuant to §21D(a)(3)(B)(iii)(I)(cc).

Accordingly, Movants satisfy each of the prerequisites of §21D(a)(3)(B)(iii) and are entitled to be appointed as Lead Plaintiffs.

C. Counsel Selected By Movants Are Qualified, Experienced Class Counsel And Should Be Appointed As Lead Counsel For The Class

Pursuant to §21D(a)(3)(B)(v), the lead plaintiffs shall, subject to Court approval, select and retain counsel to represent the Class. Movants have selected and retained Milberg Weiss and Kaufman Malchman to represent the Class as Lead Counsel. Milberg Weiss and Kaufman Malchman have extensive experience in successfully prosecuting complex securities actions and are well qualified to represent the Class. Copies of the firms' resumes are attached as Ex. E to the Gronborg Decl. Movants hereby request that the Court approve their selection of counsel.

IV. CONCLUSION

For all of the above reasons, Movants respectfully request the Court grant this motion to appoint Movants as Lead Plaintiffs and to approve their selection of counsel.

¹ On June 11, 1997, the related class action entitled Takats, et al. v. Yes! Entertainment Corp., et al., Civ. No. C-97-2185-FWS, was filed in the U.S. District Court for the Northern District of California. A Notice of Related Case was filed on June 11, 1997. Proposed lead counsel Milberg Weiss Bershad Hynes & Lerach LLP ("Milberg Weiss) is counsel of record for plaintiffs in both the above-captioned Harow and the related Takats actions.

² Section 21D(a)(3)(B)(i) of the PSLRA states that "the court shall consider any motion made by a purported class member in response to the notice, including any motion by a class member who is not individually named as a plaintiff in the complaint or complaints."

³ Purchasers of Yes! Entertainment Corp. common stock during the period March 29, 1996 through December 12, 1996 (the "Class Period"), excluding certain insiders, are referred to herein as the "Class."

⁴ All paragraph references ("¶__") are to the Complaint for Violation of the Securities Exchange Act of 1934 filed by Randall M. Harow and Larry Schuppan on April 18, 1997 (the "Complaint").

⁵ All references to sections of PSLRA, shall appear as "§__."

I, the undersigned, declare:

1. That declarant is and was, at all times herein mentioned, a citizen of the United States and a resident of the County of San Diego, over the age of 18 years, and not a party to or interested in the within action; that declarant's business address is 600 West Broadway, Suite 1800, San Diego, California 92101.

2. That on June 13, 1997, declarant served the PLAINTIFFS' NOTICE OF MOTION AND MOTION, AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO BE APPOINTED LEAD PLAINTIFFS PURSUANT TO §21D(a)(3)(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND FOR APPOINTMENT OF LEAD PLAINTIFFS' LEAD COUNSEL by depositing a true copy thereof in a United States mailbox at San Diego, California in a sealed envelope with postage thereon fully prepaid and addressed to the parties listed on the attached Service List.

3. That there is a regular communication by mail between the place of mailing and the places so addressed.

I declare under penalty of perjury that the foregoing is true and correct. Executed this 13th day of June, 1997, at San Diego, California.