UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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Dreams, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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DREAMS, INC.

Two South University Drive

Suite 325

Plantation, Florida 33324

Telephone: (954) 377-0002

Facsimile: (954) 475-8785

November 3, 2011

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of Dreams, Inc. (the “Company”) on December 13, 2011, at 3:00 p.m. (EST) at the Company’s corporate offices at Two South University Drive, Suite 325, Plantation, Florida 33324. The accompanying formal Notice of Annual Meeting of Stockholders and Proxy Statement contain the items of business expected to be considered and acted upon at the meeting.

We hope you will be able to attend the Annual Meeting, but if you cannot, it is important that your shares be represented at the meeting. Thus, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY CARD AT YOUR EARLIEST CONVENIENCE SO THAT YOUR SHARES WILL BE REPRESENTED AT THE MEETING. If you desire, you can withdraw your proxy and vote in person at the meeting.

We welcome the opportunity to share our thoughts about the Company with our stockholders at this meeting and look forward to your questions and comments.

Sincerely,

/s/ Ross Tannenbaum

Ross Tannenbaum

President and Chief Executive Officer

DREAMS, INC.

Two South University Drive, Suite 325

Plantation, Florida 33324

Telephone: (954) 377-0002

Facsimile: (954) 475-8785

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 13, 2011

Notice is hereby given that the Annual Meeting of Stockholders of Dreams, Inc., a Utah corporation (the “Company”), will be held December 13, 2011, at 3:00 p.m. (EST) at the Company’s corporate offices at Two South University Drive, Suite 325, Plantation, Florida 33324, to consider and act upon the following items of business:

1. To elect directors to each serve until the next Annual Meeting of Stockholders of the Company and until their successors have been duly elected and qualified;

2. To ratify the appointment of Goldstein, Schechter & Koch, P.A. as independent auditors for the Company for the year ending December 31, 2011; and

3. To transact such other business that may properly come before the Annual Meeting or any adjournments thereof.

All of the above matters are more fully described in the accompanying Proxy Statement.

Only stockholders of record of the Company at the close of business on November 1, 2011, will be entitled to receive notice of and to vote at the Annual Meeting or any adjourned session. A list of all stockholders of record as of the record date will be open for inspection at the meeting.

The accompanying Proxy Statement is being mailed to the stockholders on or about November 3, 2011.

Important Notice Regarding the Availability of Proxy Material for the Shareholder Meeting to be Held on December 13, 2011 — The proxy statement, annual report on Form 10-K for the year ended December 31, 2010, and quarterly report on Form 10-Q for the six months ended June 30, 2011, are available on the Internet at http://www.rrdezproxy.com/2011/Dreams.

By Order of the Board of Directors

/s/ David Greene

David Greene

Secretary

Plantation, FL

November 3, 2011

ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY CARD SO THAT YOUR SHARES MAY BE REPRESENTED AT THIS MEETING AND TO ENSURE A QUORUM. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES USING THE ACCOMPANYING ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR SHARES. PROXIES CAN ALSO BE REVOKED BY SUBMITTING A NEW PROXY WITH A LATER DATE OR BY DELIVERING WRITTEN INSTRUCTIONS TO OUR CORPORATE SECRETARY.

WHEN COMPLETING YOUR PROXY CARD, PLEASE SIGN YOUR NAME AS IT APPEARS PRINTED. IF SIGNING AS AN ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL TITLE. A PROXY EXECUTED BY A CORPORATION MUST BE SIGNED BY AN AUTHORIZED OFFICER.

TABLE OF CONTENTS

GENERAL	1
REQUIRED VOTE	1
INSPECTOR OF ELECTIONS	1
VOTING	2
PROXIES	2
PROPOSAL NO. 1 - ELECTION OF DIRECTORS	2
Director Nominees	2
Board’s Leadership Structure and Role in Risk Management	4
Non-Director Executive Officers	4
Independence	5
Board Meetings and Attendance	5
Annual Meeting Attendance	5
Compensation of Directors	5
Committees of the Board of Directors	5
Selection of Board Nominees	6
Report of the Audit Committee of the Board of Directors	7
Review, Approval, or Ratification of Transactions with Related Parties	7
Executive Compensation	8
PROPOSAL NO. 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS	12
Change in Principal Accountant	12
Accounting Fees	13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE	15
OTHER MATTERS	15
COMMUNICATIONS WITH THE BOARD OF DIRECTORS	15
DEADLINE FOR FUTURE PROPOSALS OF STOCKHOLDERS	15
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS	15
ADDITIONAL MATERIALS	15
AVAILABLE INFORMATION	16

DREAMS, INC.

Two South University Drive, Suite 325

Plantation, Florida 33324

Telephone: (954) 377-0002

Facsimile: (954) 475-8785

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS TO BE HELD DECEMBER 13, 2011

This Proxy Statement and accompanying form of proxy is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Dreams, Inc., a Utah corporation (the “Company”), for the Annual Meeting of Stockholders of the Company (the “Annual Meeting”) to be held at the Company’s corporate offices at Two South University Drive, Suite 325, Plantation, Florida 33324.

At the Annual Meeting, stockholders will be asked: (1) to elect directors to each serve until the next Annual Meeting of Stockholders of the Company and until their successors have been duly elected and qualified; (2) to ratify the appointment of Goldstein, Schechter & Koch, P.A. as independent auditors for the Company for the year ending December 31, 2011; and (3) to transact such other business that may properly come before the Annual Meeting or any adjournments thereof.

GENERAL

The enclosed proxy is solicited by the Board for the purposes set forth in the Notice of Annual Meeting of Stockholders. The solicitation is being made primarily by mail, though we may also use our officers, employees and consultants to solicit proxies from stockholders either in person or by telephone, facsimile, e-mail, or letter, without additional compensation. We will pay the cost for solicitation of proxies, including preparation, assembly and mailing this Proxy Statement and form of proxy. Such costs normally include charges from brokers and other custodians, nominees and fiduciaries for the distribution of proxy materials to the beneficial owners of our common stock. The approximate mailing date of this Proxy Statement and Notice of Annual Meeting and form of proxy is November 3, 2011. These same materials are available on the Internet at: http://www.rrdezproxy.com/2011/Dreams.

Pursuant to a vote of the Board, each stockholder of record at the close of business on November 1, 2011 (the “record date”), is entitled to notice of and vote at the Annual Meeting. As of the close of business on the record date, we had 45,045,486 shares of common stock outstanding. Each share of common stock outstanding on the record date entitles the holder thereof to one vote. Consistent with Utah law and as provided under our Bylaws, the holders of a majority of the shares entitled to cast votes on a particular matter, present in person or represented by proxy, constitutes a quorum as to such matter.

REQUIRED VOTE

The election of directors requires the plurality vote of the holders of shares entitled to be cast on the matter, present in person or represented by proxy, and voted at the Annual Meeting. The ratification of the appointment of Goldstein, Schechter & Koch, P.A. as independent auditors for the Company for the year ending December 31, 2011, requires the affirmative vote of the holders of a majority of shares entitled to be cast on the matter, present in person or represented by proxy, and voted at the Annual Meeting. The Board has approved each of Proposals 1 and 2 and recommends that you vote FOR each of the proposals.

INSPECTOR OF ELECTIONS

Votes cast by proxy or in person at the Annual Meeting will be tabulated by persons appointed by our Board to act as Inspector of Elections for the meeting. The Inspector of Elections will count the total number of votes cast for approval of each proposal for purposes of determining whether sufficient affirmative votes have been cast. The Inspector of Elections will count shares represented by proxies that reflect abstentions and “broker non-votes” (i.e., shares represented at the Annual Meeting held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have the discretionary voting power on a particular matter) as shares that are present and entitled to vote on the matter for purposes of determining the presence of a quorum. Abstentions and broker non-votes will have no effect on the election of directors or the ratification of the appointment of Goldstein, Schechter & Koch, P.A. as independent auditors for the Company for the year ending December 31, 2011.

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VOTING

Registered stockholders can vote in the following manners: (i) by mailing their signed proxy card; or (ii) by voting in person at the Annual Meeting.

PROXIES

Proxies returned to us or our transfer agent, Fidelity Stock Transfer (“Transfer Agent”), and properly executed will be voted in accordance with the stockholders’ instructions. You specify your choice by appropriately marking the enclosed proxy card. Brokers holding shares for the account of their clients may vote such shares in the manner directed by their clients.

Any proxy, which is timely signed and returned with no other markings, will be voted in accordance with the recommendation of our Board. The proxies also give our Board discretionary authority to vote the shares represented thereby on any matter which was not known as of the date of this Proxy Statement and is properly presented for action at the Annual Meeting.

The execution of a proxy will in no way affect your right to attend the Annual Meeting and vote in person. You have the right to revoke your proxy prior to the Annual Meeting by giving notice to our Corporate Secretary, David Greene, at our executive offices. You may also complete and submit a new proxy prior to the Annual Meeting or you may revoke a previously submitted proxy at the Annual Meeting by giving notice to our Secretary at the Annual Meeting.

For convenience in voting your shares on the enclosed proxy card, we have enclosed a postage-paid return envelope to our Transfer Agent, who will assist in tabulating the stockholder vote.

Our mailing address is Two South University Drive, Suite 325, Plantation, Florida 33324. Our telephone number is (954) 377-0002, and facsimile number is (954) 475-8785.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

Director Nominees

The Company’s Board currently consists of five members. The directors are elected annually by the stockholders of the Company. The Bylaws of the Company provide that the Board will determine the number of directors. The stockholders will elect five directors for the coming year. The nominees presently serve as directors of the Company. Should any nominee become unable or unwilling to accept nomination or election, the Board will either select a substitute nominee or will reduce the size of the Board. If you have submitted a proxy and a substitute nominee is selected, the holders of the proxy will vote your shares FOR the election of the substitute nominee. The Board has no reason to believe that any nominee will be unable or unwilling to serve if elected.

THE BOARD HAS NOMINATED THE BELOW-REFERENCED DIRECTORS FOR ELECTION BY THE STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED BELOW.

The name and age of each nominee, his principal occupation, and the period during which such person has served as a director is set forth below:

Name of Nominee	Age	First Became a Director of  the Company	Office(s) Held with the Company
Sam D. Battistone (1)(3)	72	1982	Chairman and Director
Ross Tannenbaum	49	1998	CEO, President and Director
Dale Larsson (1)(2)	67	1982	Director
David Malina (1)(2)	67	2006	Director
Steven Rubin (3)	51	2006	Director

(1) Member of Audit Committee.

(2) Member of Compensation Committee.

(3) Member of the Nominating and Corporate Governance Committee.

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Sam D. Battistone. Sam D. Battistone has been Chairman of the Board since our inception. Mr. Battistone served as president until November 1998. He also served as the Chairman and CEO of Pro Stars, Inc. from January 2005 until he resigned his position in January 2007. He was the principal owner, founder and served as Chairman of the Board, President and Governor of the New Orleans Jazz and Utah Jazz of the National Basketball Association (NBA) from 1974 to 1986. In 1983, he was appointed by the Commissioner of the NBA to the Advisory committee of the Board of Governors of the NBA. He held that position until the Company sold its interest in the team. He served as a founding director of Sambo’s Restaurants, Inc. and in each of the following capacities, from time to time, from 1967 to 1979: President, Chief Executive Officer, Vice-Chairman and Chairman of the Board of Directors. During that period, Sambo’s grew from a regional operation of 59 restaurants to a national chain of more than 1,100 units in 47 states. From 1971 to 1973, he served on the Board of Directors of the National Restaurant Association. We believe Mr. Battistone is well qualified to serve as a director on our board based on his prior service as an executive officer of Pro Stars, Inc., an integrated sports and celebrity memorabilia and live appearance company, as well as his unique and in depth knowledge of the business of sports as a former NBA franchise owner and his experience with professional athletes and sports leagues in general.

Ross Tannenbaum. Mr. Tannenbaum has served as President and a Director of the Company since November 1998. From August 1994 to November 1998, Mr. Tannenbaum was President, director and one-third owner of MMI. From May 1992 to July 1994, Mr. Tannenbaum was a co-founder of Video Depositions of Florida. From 1986 to 1992, Mr. Tannenbaum served in various capacities in the investment banking division of City National Bank of Florida. Mr. Tannenbaum earned a B.A. from the University of Florida in 1984. Mr. Tannenbaum is the brother-in-law of David M. Greene, the Company’s Senior Vice President. We believe Mr. Tannenbaum is well qualified to serve as a director on our board based on his extensive experience in the sports memorabilia industry both with the Company and prior thereto with MMI, and also his broad based investment banking experience.

Dale E. Larsson. Mr. Larsson has served as Director of our Company since 1982. From 1982 until September 1998, Mr. Larsson was our Secretary-Treasurer. Mr. Larsson served as a Director and CFO of Pro Stars, Inc. from January 2005 until he resigned his positions in January 2007. Mr. Larsson graduated from Brigham Young University in 1971 with a degree in business. From 1972 to 1980, Mr. Larsson served as controller of Invest West Financial Corporation; a Santa Barbara, California based Real Estate Company. From 1980 to 1981, he was employed by Invest West Financial Corporation as a real estate representative. From 1981 to 1982, he served as the corporate controller of WMS Famco, a Nevada corporation based in Salt Lake City, Utah, which engaged in the business of investing in land, restaurants and radio stations. Since 1998, Mr. Larsson has also served as the controller of Dreamstar, Inc., an investment and Retail Sports Memorabilia Company. We believe Mr. Larsson is well qualified to serve as a director on our board based on his prior service as an executive officer of Pro Stars, Inc., an integrated sports and celebrity memorabilia and live appearance company, and his extensive experience as a controller at a number of companies in different industries, particularly his experience as a controller for a sports memorabilia company.

David Malina. Mr. Malina was named as a director of the Company in November 2006 and is currently Vice President of Business Development for Ladenburg Thalmann & Company, Inc., a full service investment banking and brokerage firm that has recently relocated its headquarters to Miami, Florida. From 2003 to 2006, Mr. Malina was corporate Vice President in charge of Investor Relations and Corporate Communications for IVAX Corporation, a multinational pharmaceutical company, with direct operations in 39 countries, sales in over 80 countries, and over 7000 employees. IVAX was sold to Teva Pharmaceuticals Industries Ltd in January 2006 for an enterprise value of $9.9 billion. Prior to his employment at IVAX, Mr. Malina was a Managing Director at the Kriegsman Group, a boutique investment bank in Los Angles, California that specialized in health care. From 1974 to 2000, Mr. Malina was a highly regarded screenplay and teleplay writer working for the major film studios and television networks and producing luminaries such as David Geffin, Arnold Koppelson, Roger Birnbaum, Larry Turman, and Frank Price. Mr. Malina is an honors graduate of the Wharton School at the University of Pennsylvania and attended graduate school at the London School of Economics and Political Science. We believe Mr. Malina is well qualified to serve as a director on our board based on his extensive investor relations, corporate communications and investment banking experience.

Steven Rubin. Mr. Rubin was named a director of the Company in November 2006. Mr. Rubin has served as Executive Vice President—Administration of OPKO Health, Inc., since May 2007 and a director of OPKO since February 2007. Mr. Rubin served as the Senior Vice President, General Counsel and Secretary of IVAX from

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August 2001 until September 2006. Mr. Rubin currently serves on the board of directors of Safestitch Medical, Inc., a medical device company, PROLOR Biotech, Inc., a development stage biopharmaceutical company, Kidville, Inc. (OTCBB:KVIL), which operates large, upscale facilities, catering to newborns through five-year-old children and their families and offers a wide range of developmental classes for newborns-5 year olds, Non-Invasive Monitoring Systems, Inc., a medical device company, Cardo Medical, Inc., an early-stage orthopedic medical device company specializing in designing, developing and marketing reconstructive joint devices and spinal surgical devices (OTCBB:CDOM), Castle Brands, Inc., a developer and marketer of premium brand spirits, SearchMedia Holdings Limited (NYSE Amex:IDI), a multi-platform media advertising company and in China, Cocrystal Discovery, Inc., a privately held biopharmaceutical company, and Neovasc, Inc., a company developing and marketing medical specialty vascular devices. Mr. Rubin holds a B.A. in Economics from Tulane University and a J.D. from the University of Florida. We believe Mr. Rubin is well qualified to serve as a director on our board based on his vast legal experience as in-house counsel for a large cap company, as well as his extensive experience serving as a director to a number of companies in various industries, many of which are small cap companies experiencing rapid growth.

Board’s Leadership Structure and Role in Risk Management

The Company is structured such that separate individuals fill the roles of Chairman of the Board and Chief Executive Officer.

The Board of Directors has an active role, as a whole and also at the committee level, in overseeing the management of Company risks. The Board regularly reviews information regarding the Company’s financial position, profitability, capital, liquidity and operations, as well as the risks associated with each. The Audit Committee oversees the management of financial risks. The Nominating Committee manages risks associated with management including the independence of the Board. The Company’s Compensation Committee is responsible for the oversight of risks related to the Company’s executive and director compensation plans, as is discussed below in the Compensation Discussion and Analysis section. The Compensation Committee has determined that any risks arising from the Company’s compensation policies and practices for its employees are not reasonably likely to have a material adverse effect on the Company. While each committee is responsible for the evaluation of certain risks and the oversight of the management of such risks, the entire Board of Directors is regularly informed through committee reports about such risks.

Non-Director Executive Officers

The name and age of each non-director executive officer, the period during which such person has served as an officer, and the offices held are set forth below:

Name of Officer	Age	First Became an Officer of  the Company	Office(s) Held with the Company
David M. Greene	49	2001	Senior V.P. and Corporate Secretary
Dorothy Sillano	54	2006	V.P. and Chief Financial Officer
Kevin Bates	44	2006	Divisional President - Retail
Mitch Adelstein	46	2006	Divisional President -Manufacturing

David M. Greene. David M. Greene has been Senior Vice President of Finance & Strategic Planning since June 2001 and our Corporate Secretary since August 2004. From May 1992 to May 2001, he was the President of Florida Tool & Gauge, Inc., an aerospace manufacturing company located in Fort Lauderdale, Florida that provided precision machined jet and rocket engine components for the Department of Defense, Pratt & Whitney Aircraft and NASA. From April 1987 to April 1992, he served as President of GGH Consultants, Inc., an investment and business consulting company that provided private and public companies with equity and debt financings, M & A advice, Initial Public Offering and Secondary Offering consultation. From May 1984 to March 1987, he worked as an investment executive at the investment banking firm of Drexel, Burnham, Lambert, Inc. in New York City and Ft. Lauderdale, Florida. Mr. Greene earned a B.A. from Tufts University in 1984 and a MBA from Nova University in 1993. Mr. Greene is the brother-in-law of Ross Tannenbaum, the Company’s President.

Dorothy Sillano. Ms. Sillano was promoted to Vice President and Chief Financial Officer of the Company in November 2007 after having served as the Company’s Controller since August 2005. From January 1987 until November 1996, Ms. Sillano was Second Vice President of Accounting at Chase Personal Financial Services, the

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upscale mortgage division of JP Morgan Chase. From 1997 through 1999, Ms. Sillano was the Controller of First American lending, a sub-prime auto finance company. From 2000 through May 2005, Ms. Sillano held the positions of Controller, acting CFO and CFO at three private educational institutions. Also, during this period, she served as a Sarbanes-Oxley consultant with MSI Consulting, Inc. In December 1990, Ms. Sillano earned a B.B.A. in Accounting from Florida Atlantic University, became a Certified Public Accountant in 1991 and was conferred with a MBA from DeVry University in July 2005.

Kevin Bates. Kevin Bates founded FansEdge^® in 1998, serving as its CEO. When Dreams, Inc. acquired FansEdge in 2003, he became President of our e-commerce division and now serves as President of our retail division. From 1996 to 1999, Mr. Bates was President of Galvin and Wright, Inc., a consulting firm based in Glenview, Illinois. Prior to that he worked on a contract basis for a wide range of firms including Republic Mortgage Insurance Company of Winston-Salem, North Carolina, Allegiance Health Care of McGaw Park, Illinois, Cincinnati Bell Information Systems of Itasca, Illinois, A.C. Nielson of Bannockburn, Illinois, and others. Mr. Bates holds a B.S. degree in computer science from Northern Illinois University in DeKalb, Illinois. He also holds various technology certificates from DePaul University in Chicago, Illinois, and Internet Webmaster E-commerce Professional from Net Guru Technologies of Oak Brook, Illinois.

Mitch Adelstein. Mitch Adelstein was the founder of Mounted Memories in 1989 and has served as its president since its inception. He is considered a true pioneer of the sports collectibles industry with over 30 years of sports collectible and memorabilia knowledge. Mr. Adelstein has been responsible for all new product designs and day-to-day activities of Mounted Memories for the past 18 years. In 1998, Mounted Memories was acquired by Dreams, Inc. at which time Mr. Adelstein remained on as a member of the management team, until he was renamed its president in 2000. Under Mr. Adelstein, Mounted Memories has evolved into the leader in the autographed sports memorabilia and collectibles industry.

Independence

Our Board has determined that Messrs. Larsson, Battistone, Malina, and Rubin are independent under applicable NYSE AMEX Equities rules and federal securities laws.

Board Meetings and Attendance

During the fiscal year ended December 31, 2010, the Board held four meetings and acted by unanimous written consent on two occasions. A quorum of directors participated in all board meetings.

Annual Meeting Attendance

The Company encourages all directors to attend the Annual Meeting of Stockholders either in person or by telephone. Last year all directors attended the Annual Meeting either in person or by telephone.

Compensation of Directors

In addition to reimbursing outside Directors for their out-of-pocket expenses associated with attending Board and or Committee Meetings, the following compensation was paid to our outside Board and Committee Members in 2010:

Sam Battistone – $10,000

Dale Larsson – $15,000

David Malina – $10,000

Steven Rubin – $10,000

Committees of the Board of Directors

The Company has established a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.

Audit Committee

The Audit Committee presently consists of Messrs. Larsson, Battistone and Malina; with Mr. Larsson serving as chairman. Our Board has determined that Mr. Larsson qualifies as an “audit committee financial expert” as defined under the federal securities laws. The Audit Committee is responsible for monitoring and reviewing our financial statements and internal controls over financial reporting. In addition, they recommend the selection of the independent auditors and consult with management and our independent auditors prior to the presentation of

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financial statements to stockholders and the filing of our forms 10-Q and 10-K. The Audit Committee’s responsibilities are set forth in an Audit Committee Charter, a copy of which is posted on our web site at www.dreamscorp.com. During the fiscal year ended December 31, 2010, the Audit Committee met 4 times. Each member of the Audit Committee participated in each such meeting.

Compensation Committee

The Compensation Committee presently consists of Messrs. Larsson and Malina. The Compensation Committee is responsible for reviewing and recommending to the Board the compensation and over-all benefits of our executive officers, including administering the Company’s Equity Incentive Stock Option Plan. The Compensation Committee Charter, a copy of which is currently available from the Company, is posted on our web site at www.dreamscorp.com. During the fiscal year ended December 31, 2010, the Compensation Committee met two times. Each member of the Compensation Committee participated in each such meeting.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee presently consists of Messrs. Battistone and Rubin. The Nominating and Corporate Governance Committee is responsible for identifying prospective qualified Board candidates. In addition, the Committee provides recommendations to the Board as to a proper set of corporate governance guidelines and principles to adopt. The Nominating and Corporate Governance Committee Charter, a copy of which is currently available from the Company, is posted on our web site at www.dreamscorp.com. During the year ended December 31, 2010, the Nominating and Corporate Governance Committee met two times. Each member of the Nominating and Corporate Governance Committee participated in each such meeting.

Selection of Board Nominees

The Company’s Nominating and Corporate Governance Committee recommends to the Board nominees for election as directors. While no single factor is determinative, in order to have a Board with skills and attributes needed to function effectively, the following factors are considered by the Committee:

• if not a Company employee, the ability to be an independent director;

• educational background, work experience and business knowledge generally;

• willingness and ability to dedicate the time and resources necessary for the diligent performance of the duties of a director of the Company;

• professional experience that is relevant to the Company’s business;

• character and ethics;

• reputation in the business community;

• previous service on boards, including public companies;

• actual or potential conflicts of interest;

• whether the person has any history of criminal convictions or violations of governmental rules and regulations; and

• other criteria that are relevant to determining whether the person will function effectively as a director.

In determining whether to elect a director or to nominate any person for election by the stockholders, the Committee assesses the appropriate size of the Board, consistent with its Bylaws, and whether any vacancies on the Board are expected due to retirement or otherwise. If vacancies are anticipated, or otherwise arise, the Committee will consider various potential candidates to fill each vacancy. Candidates may come to the attention of the Committee through a variety of sources, including from current members of the Board, stockholders, or other persons.

The Committee has not yet had the occasion to, but will, consider properly submitted proposed nominations by stockholders who are not directors, officers, or employees of the Company on the same basis as candidates proposed by any other person. A stockholder may nominate a person for election as a director at an annual meeting of the stockholders only if written notice of such stockholder’s intent to make such nomination has been given the Company’s Secretary as described in the applicable proxy statement for the previous year’s annual meeting of stockholders. Each written notice must set forth: (a) as to each person whom the stockholder proposes to nominate for election as a director, (i) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or that is otherwise required, in each case pursuant to and in

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accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended, and (ii) such person’s written consent to being named in the proxy statement as a nominee and to serve as a director if elected; and (b) as to the stockholder making such nomination, (i) the name and address of such stockholder, as they appear on the Company’s books, (ii) the class and number of shares of stock of the Company which are owned by such stockholder, (iii) a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination, and (iv) a representation whether the stockholder intends or is a part of a group which intends (y) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee and/or (z) otherwise to solicit proxies from stockholders in support of such nomination. The Committee will evaluate the suitability of potential candidates nominated by stockholders in the same manner as other candidates identified to the Committee.

Report of the Audit Committee of the Board of Directors

November 1, 2011

To the Board of Directors of Dreams, Inc.:

Management is responsible for the Company’s financial reporting process, including its system of internal control, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles. The Company’s independent auditors are responsible for auditing those financial statements.

In performing our oversight duties we rely on management’s representation that the financial statements have been prepared with integrity and objectivity and in conformity with accounting principles generally accepted in the United States. We also rely on the representations of the independent auditors included in their report on the Company’s financial statements.

Our oversight does not provide us with an independent basis to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures. Furthermore, our contacts with management and the independent auditors do not assure that:

• the Company’s financial statements are presented in accordance with generally accepted accounting principles,

• the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, or

• the Company’s independent accountants are in fact “independent.”

In connection with the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, the Audit Committee:

• reviewed and discussed the audited financial statements with management,

• discussed with our independent auditors the materials required to be discussed by SAS 61,

• reviewed the written disclosures and the letter from our independent auditors required by Independent Standards Board Standard No. 1 and discussed with our independent auditors their independence, and

• based on the foregoing review and discussion, recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K.

By the Audit Committee of the Board of Directors of Dreams, Inc.

Dale Larsson, Chairman

Sam D. Battistone

David Malina

Review, Approval, or Ratification of Transactions with Related Parties

In accordance with the provisions of the written charter of the Audit Committee of the Board, the Audit Committee is to approve all related party transactions that are required to be disclosed pursuant to the rules and regulations of the SEC. In determining whether to approve or ratify a transaction, the Audit Committee takes into account, among other factors it deems to be appropriate, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated person under the same or similar circumstances and the extent of the related person’s direct or interest in the transaction.

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Executive Compensation

Compensation Discussion and Analysis

Overview and Philosophy of Compensation

The Compensation Committee has the responsibility to review, recommend, and approve all executive officer compensation arrangements. The Compensation Committee has the specific responsibility to (i) review and approve corporate goals and objectives relevant to the compensation of our Chief Executive Officer (“CEO”), (ii) evaluate the performance of our CEO in light of those goals and objectives, and (iii) determine and approve the compensation level of our CEO based upon that evaluation. The Compensation Committee also has the responsibility to annually review the compensation of our other executive officers and to determine whether such compensation is reasonable under existing facts and circumstances. In making such determinations, the Compensation Committee seeks to ensure that the compensation of our executive officers aligns the executives’ interests with the interests of our shareholders. The Compensation Committee must also review and approve all forms of incentive compensation, including stock option grants, stock grants, and other forms of incentive compensation granted to our executive officers. The Compensation Committee takes into account the recommendations of our CEO in reviewing and approving the overall compensation of the other executive officers.

We believe that the quality, skills, and dedication of our executive officers are critical factors affecting our long-term value and success. Thus, one of our primary executive compensation goals is to attract, motivate, and retain qualified executive officers. We seek to accomplish this goal by rewarding past performance, providing an incentive for future performance, and aligning our executive officers’ long-term interests with those of our shareholders. Our compensation program is specifically designed to reward our executive officers for individual performance, years of experience, contributions to our financial success, and creation of shareholder value. Our compensation philosophy is to provide overall compensation levels that (i) attract and retain talented executives and motivate those executives to achieve superior results, and (ii) align executives’ interests with our corporate strategies, our business objectives, and the long-term interests of our shareholders, and (iii) enhance executives’ incentives to increase our stock price and maximize shareholder value. In addition we strive to ensure that our compensation, particularly salary compensation, is consistent with our constant focus on controlling costs. Our primary strategy for building senior management depth is to develop personnel from within our company to ensure that our executive team as a whole remains dedicated to our customs, practices, and culture, recognizing, however, that we may gain talent and new perspectives from external sources.

Elements of Compensation

Our compensation program for executive officers generally consists of the following five elements:

• Base salary;

• performance based annual cash bonuses;

• long-term equity incentives in the form of stock options and other stock-based awards and grants;

• specified perquisites; and

• employee benefits available generally to all of our employees.

The Compensation Committee has the responsibility to make and approve changes in the total compensation of our executive officers, including the mix of compensation elements. In making decisions regarding an executive’s total compensation, the Compensation Committee considers whether the total compensation is (i) fair and reasonable to us, (ii) internally appropriate based upon our culture and the compensation of our other employees, and (iii) within a reasonable range of the compensation afforded by other opportunities. The Compensation Committee also bases its decisions regarding compensation upon its assessment of the executive’s leadership, individual performance, years of experience, skill set, level of commitment and responsibility required in the position, contributions to our financial success, the creation of shareholder value, and current and past compensation. In determining the mix of compensation elements, the Compensation Committee considers the effect of each element in relation to total compensation. Consistent with our desired culture of industry leading performance and cost control, the Compensation Committee has attempted to keep base salaries at moderate levels for companies within our market and total capitalization. The Compensation Committee specifically considers whether each particular element provides an appropriate incentive and reward for performance that sustains and enhances long-term shareholder value. In determining whether to increase or decrease an element of compensation, we rely upon the Compensation Committee’s judgment concerning the contributions of each executive and, with respect to executives

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other than the CEO, we consider the recommendations of the CEO. We generally do not rely on rigid formulas or short-term changes in business performance when setting compensation.

The following is a discussion of each element of our compensation program, including (i) why we choose to pay each element, (ii) how we determine the specific amount to pay for each element, and (iii) how each element, and our decisions regarding each element, fit into our overall compensation objectives and affect decisions regarding other elements. We also discuss the specific decisions we made with respect to the compensation of our Chief Executive Officer, and the remaining executive officers for the twelve months ended December 31, 2009 and December 31, 2010 (collectively, the “Named Executive Officers” or “NEO’s”).

Base Salary

We pay base salaries at levels that reward executive officers for ongoing performance and that enable us to attract and retain highly qualified executives, but not at a level that allows them to achieve the overall compensation they desire. Base pay is a critical element of our compensation program because it provides our executive officers with stability. Such stability allows our executives to focus their attention and efforts on creating shareholder value and on our other business objectives. In determining base salaries, we consider an executive’s qualifications and experience, including, but not limited to, the executive’s industry knowledge and the quality and effectiveness of the executive’s leadership, scope of responsibilities, past performance, and future potential of providing value to our shareholders. Although we do not believe it is appropriate to establish compensation levels based solely on benchmarking because of geographic and incentive compensation differences, we consider base salaries of executives having similar qualifications and holding comparable positions in companies similarly situated to ours. We set our base salaries at a level that allows us to pay a portion of an executive officer’s total compensation in the form of perquisites, cash bonuses, and long-term incentives. We believe that such a mix of compensation helps us to provide an incentive to our executives to maximize shareholder value. We consider adjustments to base salaries annually to reflect the foregoing factors but do not apply a specific weighting to such factors.

Base Salary of Our Chief Executive Officer

The Compensation Committee reviewed the compensation of numerous publicly traded companies similarly situated to ours, and based upon this review set Ross Tannenbaum’s, our President & CEO, base salary at $350,000 effective April 1, 2007, and $370,000 effective April 1, 2008. Mr. Tannenbaum’s base salary was reduced to $333,000 in 2009 to coincide with a company-wide, management and employee salary reduction effort to lower operating expenses for the year. Mr. Tannenbaum’s salary was revised back to $370,000 in 2010.

Base Salary of Our Other Named Executive Officers

The Compensation Committee approved the base salary of David Greene, our Senior Vice-President of Finance and Corporate Secretary of $165,000 effective April 1, 2007, and $175,000 effective April 1, 2008, approved the base salary of Dorothy Sillano, our V.P. and Chief Financial Officer of $145,000, effective January 1, 2008 in continued recognition of their corporate initiative results and level of responsibilities as our Senior Vice President and Corporate Secretary and V.P. and CFO. Mr. Greene’s and Ms. Sillano’s salaries were reduced to $157,500 and $130,500, respectively, in 2009, to coincide with a company-wide, management and employee salary reduction effort to lower operating expenses for the year. Mr Greene’s and Ms. Sillano’s salaries were revised back to $175,000 and $145,000, respectively, in 2010.

The following table reflects the adjustments we made to the base salaries of our Named Executive Officers. Base salaries of our NEO’s are reviewed, and if warranted adjusted by the Compensation Committee and Board of Directors. The amounts reflected within the columns represent the amount of base salary for each NEO as of March 31 for Fiscal Year 2007 and December 31 of each respective year represented.

Named Executive Officer and Position	2008 Base		2009 Base		2010 Base
Ross Tannenbaum, President and CEO	$	370,000	$	333,000	$	370,000
David Greene, Senior V.P.	$	175,000	$	157,500	$	175,000
Dorothy Sillano, V.P. and CFO	$	145,000		130,500	$	145,000

Performance-Based Annual Cash Bonuses

In April, 2006 our Board of Directors approved our Executive Cash Bonus Plan (“Cash Bonus Plan”). We use our Cash Bonus Plan to provide annual incentives to executive officers and members of our senior management

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team in a manner designed to (i) link increases in compensation to increases in our revenues and income in order to reinforce our focus on creating shareholder value, (ii) reinforce our desire to control costs, and (iii) link a significant portion of our executives’ compensation to the achievement of such goals. Cash bonuses are designed to reward officers for their contributions to our financial and operating results. The bonus remains discretionary, and may be adjusted at the sole discretion of the Board of Directors.

Performance-Based Annual Cash Bonuses Paid to Our Named Executive Officers

For the year ended December 31, 2009, there were no bonuses earned. However, in 2010, the Company paid Mr. Tannenbaum a $100,000 bonus; Mr. Greene a $50,000 bonus; Mr. Bates a $373,000 bonus; and Ms. Sillano a $25,000 bonus.

Long-Term Incentives

On January 15, 2007, our shareholders approved and ratified our 2006 Equity Incentive Plan (“Equity Plan”). Our Equity Plan is a broad-based equity compensation plan that we use to attract, motivate, and retain qualified executive officers by providing them with long-term incentives. We also use the Equity Plan to align our executives’ and shareholders’ long-term interests by creating a strong and direct link between executive pay and shareholder return.

The Equity Plan allows the Compensation Committee to link compensation to performance over a period of time by granting awards that have multiple-year vesting schedules. Awards with multiple-year vesting schedules, such as stock options, provide balance to the other elements of our compensation program that otherwise link compensation to annual performance. Awards with multiple-year vesting schedules create incentives for executive officers to increase shareholder value over an extended period of time because the value received from such awards is based on the growth of the stock price above the grant price. Such awards also provide our executives with an incentive to remain with us over an extended period of time. Thus, we believe our Equity Plan is an effective way of aligning the interests of our executive officers with those of our shareholders.

Under the Equity Plan, the Compensation Committee may grant incentive stock options or nonqualified stock options, stock purchase rights, stock appreciation rights and restricted and unrestricted stock awards as forms of executive officer compensation. To date, the Compensation Committee has not made any awards under the Equity Plan.

The Compensation Committee will consider several factors when determining the number of awards to be made to our executive officers under the Equity Plan, including, but not limited to, the following: (i) the recommendations of our CEO; (ii) the value of the award in relation to other elements of total compensation; (iii) the number of options, stock purchase rights, stock appreciation rights, and stock awards currently held by the executive; (iv) the number of options, stock purchase rights, stock appreciation rights, and stock awards granted to the executive in prior years; and (v) the executive’s position, scope of responsibility, ability to affect our profits, ability to create shareholder value, and historic and recent performance.

Other Compensation

We provide our Named Executive Officers with certain other benefits that we believe are reasonable, competitive, and consistent with our overall executive compensation program. We believe that these benefits generally allow our executives to work more efficiently. The costs of these benefits generally constitute only a small percentage of each executive’s total compensation. In setting the amount of these benefits, the Compensation Committee considers (i) each executive’s position and scope of responsibilities, and (ii) all other elements comprising the executive’s compensation. For the twelve months ended December 31, 2010, we provided an automotive allowance to certain of our NEO’s. We report these costs as personal benefits for the NEO’s in the “Non-equity Deferred Compensation” and “All Other Compensation” columns in the Summary Compensation Table below.

Employee Benefits

Our NEO’s are eligible to participate in all of our employee benefit plans, such as our 401(k) Plan and medical, dental, and group life insurance plans, in each case on the same basis as our other employees.

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Employment Agreements

We do not currently have employment contracts in place with any of our Named Executive Officers. It is the position of the Compensation Committee to explore whether it is strategically favorable for the Company to enter into employment contracts with various key executives.

Summary Compensation Table

							Stock	Option		All Other
			Salary		Bonus		Awards	Awards		Compensation		Total
Name and Principal Position	Year		($)		($)		($)	($)		($)		($)
Ross Tannenbaum
PEO		2010		370,000		100,000			—		9,600		479,600
		2009		333,000		—			69,161		9,600		411,761
David M. Greene
Senior V.P Finance		2010		175,000		50,000			—		7,200		232,200
		2009		157,500		—			27,914		7,200		192,614
Kevin Bates
Division President-Retail		2010		360,000		373,000			—				733,000
		2009		324,000		225,000			25,186				574,186
Mitch Adelstein
Division President—Mfg		2010		194,400		—			—		7,200		201,600
		2009		194,400		—			33,623		7,200		235,223
Dorothy Sillano
V.P, PFO		2010		145,000		25,000			—				170,000
		2009		130,500		—			9,753				140,253

None of the option awards set forth in the Summary Compensation Table is subject to performance conditions. The dollar amount of said option awards as set forth in the Summary Compensation Table is the aggregate grant date fair value of said option awards computed in accordance with FASB ASC Topic 718.

Outstanding Equity Awards Table as of December 31, 2010

Option Awards

Stock Awards

Number of Securities Underlying Unexercised Options (#)

Number of Securities Underlying Unexercised Options (#)

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other rights That Have Not Vested ($)

Name

Exercisable

Unexercisable

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options

Option Exercise Price ($)

Option Expiration Date

Number of Shares  or Units of Stock That Have  Not Vested (#)

Market Value of Shares or Units of Stock That Have Not Vested ($)

Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other rights That Have Not Vested (#)

(#)

Ross Tannenbaum

153,692

.45

6/12

PEO

David Greene

68,083

.41

6/12

Senior V.P.

Kevin Bates

166,667

.60

2/11

Division President

Mitch Adelstein

82,009

.41

6/12

Division President

Dorothy Sillano

23,790

.41

6/12

PFO

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Director Compensation Table

	Year		Fees Earned or Paid in Cash ($)		Stock Awards ($)	Option Awards ($)	Total ($)
Sam Battistone		2010	$	10,000			$	10,000
Dale Larsson		2010	$	15,000			$	15,000
Steven Rubin		2010	$	10,000			$	10,000
David Malina		2010	$	10,000			$	10,000

Compensation Committee Report

The information contained in this report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934.

The members of the Compensation Committee of the Company’s Board of Directors have reviewed and discussed the Compensation Discussion and Analysis with management, and based upon such review and discussion, the Compensation Committee recommended to the Company’s Board of Directors that such Compensation Discussion and Analysis be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

The Compensation Committee — Dale Larsson, David Malina

PROPOSAL NO. 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Audit Committee has selected Goldstein, Schechter & Koch, P.A. to serve as the Company’s independent accountants for the year ending December 31, 2011. Goldstein, Schechter & Koch, P.A. was engaged on January 11, 2011, by the Company. A representative of Goldstein, Schechter & Koch, P.A. is expected to be present at the Annual Meeting, will have an opportunity to make a statement if he or she so desires, and is expected to be available to respond to appropriate questions from stockholders.

Change in Principal Accountants

Dismissal of Kramer, Weisman and Associates

On January 11, 2011, we received notification that Kramer, Weisman and Associates LLP, which served as the Company’s independent registered public accounting firm with respect to our financial statements as at and for the year ended December 31, 2009, was winding down its operations, and that Jeff Kramer, the principal of Kramer Weisman and Associates LLP primarily responsible for our account, had joined Goldstein, Schechter & Koch, P.A. As a result of the foregoing, effective January 11, 2011, we dismissed Kramer Weisman and Associates LLP as the Company’s independent registered public accounting firm, and engaged Goldstein, Schechter & Koch, P.A. as the Company’s independent registered public accounting firm. This change in our independent registered public accounting firm was approved by the Audit Committee of the Company’s Board of Directors.

Kramer Weisman and Associates’ report on our financial statements as at and for the years ended December 31, 2009 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the year ended December 31, 2009 and the subsequent period through January 11, 2011 (i) there have been no disagreements with Kramer, Weisman and Associates, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Kramer, Weisman and Associates, would have caused Kramer, Weisman and Associates to make reference to the subject matter of the disagreement in connection with its reports, (ii) no such disagreement was discussed with the Company’s Board of

12

Directors or any committee of the Board of Directors of the Company and (iii) there have been no “reportable events” as described in Item 304(a)(1)(v) of Regulation S-K.

The Company provided Kramer, Weisman and Associates with a copy of the foregoing disclosures and requested that Kramer, Weisman and Associates review such disclosures and furnish a letter addressed to the Securities and Exchange Commission stating whether or not Kramer, Weisman and Associates agrees with such statements. The response letter from Kramer, Weisman and Associates was attached as an Exhibit to the Form 8-k/a filed January 20, 2011.

Consultations with Goldstein, Schechter & Koch, P.A. Prior to Engagement

Neither the Company nor anyone on behalf of the Company consulted Goldstein, Schechter & Koch, P.A. regarding either (a) the application of accounting principles to a specified transaction, either completed or contemplated, or the type of audit opinion that might be rendered on the financial statements of the Company, and no written or oral advice of Goldstein, Schechter & Koch, P.A. was provided with respect to any accounting, auditing, or financial reporting issue or (b) any matter that was either the subject of a disagreement of the type described in Item 304(a)(iv) of Regulation S-K or any “reportable event” described in Item 304(a)(1)(v) of Regulation S-K.

Accounting Fees

The following table shows what Kramer, Weisman and Associates billed for the audit and other services for the year ended December 31, 2010, and what Friedman, Cohen, Taubman & Company billed for the audit and other services for the year ended December 31, 2009.

	Year Ended 12/31/ 2009		Year Ended 12/31/10
Audit Fees	$	62,500	$	71,000
Audit-Related Fees		—		—
Tax Fees		—		—
All Other Fees		—		—
Total	$	62,500	$	71,000

Audit Fees — This category includes the audit of the Company’s annual financial statements, review of financial statements included in the Company’s Form 10-Q Quarterly Reports and services that are normally provided by the independent auditors in connection with engagements for those years.

Audit-Related Fees — N/A

Tax Fees — N/A

Overview — The Company’s Audit Committee, reviews, and in its sole discretion pre-approves, our independent auditors’ annual engagement letter including proposed fees and all audit and non-audit services provided by the independent auditors. Accordingly, all services described under “Audit Fees,” “Audit-Related Fees,” and “Tax Fees” were pre-approved by our Company’s Audit Committee. The Audit Committee may not engage the independent auditors to perform the non-audit services proscribed by law or regulation. The Company’s Audit Committee may delegate pre-approval authority to a member of the Board of Directors, and authority delegated in such manner must be reported at the next scheduled meeting of the Board of Directors.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of November 1, 2011 the number of the Company’s common stock beneficially owned by persons who own five percent or more of the Company’s voting stock, by each director, by each executive officer, and by all executive officers and directors as a group. The table presented below includes shares issued and outstanding and options exercisable within 60 days.

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Name and Address of Beneficial Owner(1)	Number of Shares Owned			Percent of Class
Sam D. Battistone		1,919,505	(2)		4.3	%
Ross Tannenbaum		7,830,515	(3)		17.3	%
Dorothy Sillano		24,539			*
Dale Larsson 1776 North State Street, ste #160 Orem, UT 84057		103,391	(4)		*
Mitch Adelstein		377,714			*
Kevin Bates		254,364			*
David M. Greene		469,083	(5)		1.0	%
Steven Rubin 4400 Biscayne Blvd Miami, FL 33137		72,051	(6)		*
David Malina 4400 Biscayne Blvd Miami, FL 33137		40,000	(7)		*
Frost Gamma Investment Trust (8) 4400 Biscayne Blvd, 15th Floor Miami, FL 33137		4,244,872			9.4	%
William Blair & Company, LLC(9) 222 West Adams Chicago, IL 60606		5,950,796			13.2	%
All Executive Officers and Directors as a group (9 persons)(10)		10,729,450			24.3	%

See footnotes below.

* Less than 1.0%

⁽¹⁾  Unless otherwise indicated, the address for each person is 2 South University Drive, suite 325 Plantation, Florida 33324.

⁽²⁾  Includes 20,000 shares which are the subject of stock options.

⁽³⁾  Includes 153,692 shares which are the subject of stock options.

⁽⁴⁾  Includes 30,000 shares which are the subject of stock options.

⁽⁵⁾  Includes 68,083 shares which are the subject of stock options.

⁽⁶⁾  Includes 40,000 shares which are the subject of stock options.

⁽⁷⁾  Includes 40,000 shares which are the subject of stock options.

⁽⁸⁾  Dr. Phillip Frost has ultimate voting and investment control over the shares held by Frost Gamma Investment Trust.

⁽⁹⁾  Mr. Mike Balkin and Karl Brewer have investment control over the shares held by William Blair & Company, LLC. William Blair & Company’s policy is to vote proxies of its clients solely in the interest of their participants and beneficiaries and for the exclusive purpose of providing benefits to them. The firm’s written procedures contain steps for complying with this policy and specifically address the resolution of conflicts of interest, disclosure to clients, and the provision of requested copies of the proxy voting policy statement and procedures, as required by Rule206(4)-6 under the Investment Advisers Act of 1940. William Blair & Company’s Proxy Committee (composed of representatives from Operations, Compliance, Research and Trading) meets to discuss and vote on proposals not addressed by its proxy voting guidelines.

⁽¹⁰⁾  The directors and officers have sole voting and investment power as to the shares beneficially owned by them.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, and persons who beneficially own more than 10% of the Company’s common stock, to file with the Securities and Exchange Commission initial reports of ownerships and reports of changes in ownership, and to furnish the Company with copies of all Section 16(a) reports they file. To the Company’s knowledge, based solely on review of the copies of such reports and written statements from officers and directors furnished to the Company, all Section 16(a) filing requirements applicable to its officers, directors and beneficial owners of more than 10% of our common stock were complied with during the year ended December 31, 2010.

OTHER MATTERS

It is not expected that any matters other than those in the Notice of Annual Meeting, as described in this Proxy Statement, will be brought before the Annual Meeting. If any other matters are presented, however, it is the intention of the persons named in the proxy to vote the proxies in accordance with the discretion of the persons named in such proxy.

COMMUNICATIONS WITH THE BOARD OF DIRECTORS

Stockholders wishing to communicate with the Company’s Board as a whole or with certain directors, including committee chairpersons or the Chairman of the Board, individually, may do so by writing the Corporate Secretary at the Company’s headquarters at Two South University Drive, Suite 325, Plantation, Florida 33324. Each stockholder communication should include an indication of the submitting stockholder’s status as a stockholder of the Company and eligibility to submit such communication. Each such communication will be received for handling by the Corporate Secretary, who will maintain originals of each communication received and provide copies to (i) the Chairman and (ii) any other appropriate committee(s) or director(s) based on the expressed desire of the communicating stockholder and content of the subject communication. The Corporate Secretary also will coordinate with the Chairman to facilitate a response, if it is believed that a response is appropriate or necessary, to each communication received. The Board, or a designated committee of the Board, will review all stockholder communications received on a periodic basis. The Board reserves the right to revise this policy in the event that this process is abused, becomes unworkable or otherwise does not efficiently serve the purpose of the policy.

DEADLINE FOR FUTURE PROPOSALS OF STOCKHOLDERS

Proposals of stockholders of the Company which are intended to be presented by such stockholders at the 2012 Annual Meeting must be received by the Company no later than July 6, 2012, in order to have them included in the proxy statement and form of proxy relating to that meeting. Any such proposals should be sent in writing to Two South University Drive, Suite 325, Plantation, Florida 33324, attention Corporate Secretary.

DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS

The Securities and Exchange Commission has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to multiple stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process of “householding” potentially provides extra convenience for stockholders and cost savings for companies. The Company and some brokers household proxy materials, delivering a single proxy statement to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders.

Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account or us if you hold registered shares. You can notify us by sending a written request to our Corporate Secretary, at Two South University Drive, Suite 325, Plantation, Florida 33324, (954) 377-0002.

ADDITIONAL MATERIALS

Included herewith please find a copy of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, without exhibits, filed with the SEC on March 30, 2011, and our most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, filed with the SEC on August 15, 2011. These documents do not

15

form any part of the material for solicitation of proxies. The Company will provide, without charge, a copy of the exhibits to its Form 10-K, upon written request to our Corporate Secretary, at Two South University Drive, Suite 325, Plantation, Florida 33324.

AVAILABLE INFORMATION

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, which requires us to file reports, proxy statements and other information with the SEC. You may inspect and request copies (at prescribed rates) of our reports, proxy statements and other information filed by us at the public reference facilities at the SEC’s office at Judiciary Plaza, 100 F Street, N.E., Washington, D.C. 20549. Our reports, proxy statements and other information can also be accessed electronically by means of the SEC’s home page on the Internet at http://www.sec.gov.

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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

DREAMS, INC.

PROXY - ANNUAL MEETING OF STOCKHOLDERS

DECEMBER 13, 2011

The undersigned hereby appoints Ross Tannenbaum and David Greene, and each of them, the true and lawful attorneys and proxies of the undersigned, with full power of substitution, to vote all of the shares of common stock of Dreams, Inc. (the “Company”) which the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company to be held on December 13, 2011, at 3:00 p.m. (EST) at the Company’s corporate offices at Two South University Drive, Suite 325, Plantation, Florida 33324.

The undersigned hereby revokes any proxy or proxies heretofore given and acknowledges receipt of a copy of the Notice of Annual Meeting and Proxy Statement, both dated November 3, 2011.

THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREIN GIVEN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL NOMINEES FOR DIRECTOR, AND FOR THE RATIFICATION OF THE APPOINTMENT OF GOLDSTEIN, SCHECHTER & KOCH, P.A. AS THE INDEPENDENT AUDITORS FOR THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 2011.

1. To elect the five nominees listed below to the Board of Directors of the Company.

FOR all nominees (except as marked)  ¨ WITHHOLD AUTHORITY to vote for all nominees  ¨

Nominees: Sam D. Battistone, Ross Tannenbaum, Dale Larsson,

David Malina, and Steven Rubin

INSTRUCTIONS: To withhold authority to vote for any nominee,

enter the name of such nominee in the following space:

2. To ratify the appointment of Goldstein, Schechter & Koch, P.A. as independent auditors for the Company for the year ending December 31, 2011.

FOR  ¨ AGAINST  ¨ ABSTAIN  ¨

NOTE: Your signature should appear the same as your name appears hereon. If signing as attorney, executor, administrator, trustee or guardian, please indicate the capacity in which signing. When signing as joint tenants, all parties in the joint tenancy must sign. When a corporation gives a proxy, an authorized officer should sign it.

Signature:	Date:
Signature:	Date: