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Published: Friday, 4/15/2005

Ohio Art is one step closer to going private

BRYAN - Ohio Art Co., the only major toymaker in northwest Ohio, has taken steps becoming a private company.

In a move that is in keeping with its months-long effort to reduce its regulatory filings and its public disclosures, the Williams County company this week filed a notice with the U.S. Securities and Exchange Commission saying it intends to end its registered common stock.

By doing so, the firm known for its Etch A Sketch drawing toy and its once-popular Betty Spaghetty doll would be exempt from many quarterly financial filings with the SEC and would no longer be subject to regulatory rules regarding proxies.

Company officials were not available late yesterday to comment on the SEC filing, which occurred Wednesday.

The company has been financially struggling for a few years, and two years ago had its stock removed from the American Stock Exchange.

It has been traded on the Pink Sheets since. It closed yesterday $6.80 a share, down 4 cents.

In its filing, the company said it will continue to hold an annual meeting of shareholders and inform them of certain annual financial information.

However, it was unclear whether the same quarterly financial reports it has made for years will continue, and if those will be made public.

It also was unclear whether the Killgallon family, which controls much of Ohio Art's stock and runs the company, would attempt to buy out remaining shareholders and no longer have any publicly traded stock.

The Bryan company has yet to announce results of its last fiscal year, which ended Jan. 31.

It said in December it lost $158,000 for its third quarter and had lost $2.6 million for the first nine months of its fiscal year.

Its sales, at $28.7 million for it prior fiscal year, have been dwindling for about five years.

The company said its requirements under the federal Sarbanes-Oxley Act, intended to halt accounting and governance problems as occurred at Enron and Worldcom, were too costly.

It said this year its annual costs to comply with the law would be $550,000.

Ohio Art was able to de-register its stock and assume nonreporting status because it has fewer than 300 shareholders.

That figure is a threshold under which a company can seek fewer regulatory controls.

Over the past few months, the firm embarked on a tender offer to acquire stock from shareholders with fewer than 100 shares.

In its filing this week, it said it had just 285 shareholders.

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