<PAGE>
As filed with the Securities and Exchange Commission on
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------
KRANTOR CORPORATION
-----------------------
(Exact name of Issuer as specified in its charter)
Delaware 22-2993066
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer ID No.)
incorporation or organization)
120 East Industry Court, Deer Park, New York 11729
- ----------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
KRANTOR CORPORATION 1994 SERVICES AND CONSULTING COMPENSATION PLAN
------------------------------------------------------------------
(full title of the plan)
Mr. Henry J. Platek, Jr., President
Krantor Corporation
120 East Industry Court, Deer Park, New York 11729
(516) 586-7500
------------------
telephone number, including area code, of agent for service
Please send all copies of all correspondence to:
Randall J. Perry, Esq.
159 Park Avenue, Rutherford, NJ 07070
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of maximum maximum Amount of
securities Amount offering aggregate registration
to be to be price offering fee
registered registered per share (1) price (1)
<S> <C> <C> <C> <C>
Common Stock 2,000,000 $ .13 $260,000 $52.00
$.001 par value shares
per share
Total 2,000,000 $ .13 $260,000 $52.00
shares
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(b) and (c) on the basis of the average of the high
($.15) and the low ($.12) sales price per share of the Common Stock of
Krantor corporation on February 5, 1997 as reported by the NASDAQ National
Market System.
Page 1 of pages contained in the sequential numbering system; the Exhibit
Index may be found on page 6 of the sequential numbering system.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation for Documents by Reference.
-----------------------------------------
The following documents, or portions thereof, heretofore filed by
Krantor Corporation, formerly Delta Ventures, Inc. (the "Company"), with the
U.S. Securities and Exchange Commission (the "Commission") are hereby
incorporated by reference in this Registration Statement on Form S-8 (the
"Registration Statement"):
(a) The latest Prospectus dated November 14, 1994, filed by the Company
with the Commission pursuant to Rule 424(b) under the Securities Act of 1933, as
amended (the "Securities Act"), on November 16, 1994 relating to the
Registration Statement on Form S-1 (File No. 33-83226) filed by the Company
with the Commission on August 24, 1994;
(b) All other reports filed by the Company with the Commission pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), since the end of the Company's latest fiscal year ended
December 31, 1993, covered by the Company's latest Prospectus referred to in (a)
above; and
(c) The description of the Company's Common Stock, $.001 par value per
share (the "Common Stock"), contained in the Company's Registration Statement on
Form 8-A (File No. 0-19409) filed by the Company with the Commission pursuant to
Section 12(g) of the Exchange Act on July 16, 1991, including any amendment or
report filed for the purpose of updating such description.
(d) The Registration Statement on Form S-8 filed by the Company with
the Commission on March 7, 1994 (File No. 33-76212) and all documents stated
therein as incorporated by reference, are hereby incorporated by reference.
(e) The Registration Statement on Form S-8 filed by the Company with
the Commission on August 6, 1996 (File No. 33-09629) and all documents stated
therein as incorporated by reference, are hereby incorporated by reference.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.
<PAGE>
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequent filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
Item 4. Description of Securities.
--------------------------
The Company's Common Stock is registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended. See Item 3(c) above.
Item 5. Interests of Names Experts and Counsel.
---------------------------------------
Not applicable
Item 6. Indemnification of Directors and Officers.
------------------------------------------
no change
Item 7. Exemption From Registration Claimed.
------------------------------------
no change
Item 8. Exhibits.
---------
The following are filed as exhibits to this Registration Statement or
incorporated herein by reference:
<PAGE>
Exhibit No. Description
5.1 Opinion of Randall J. Perry, Esq.
23.1 Consent of Belew, Averitt & Company, independent public
accountants
23.2 Consent of Randall J. Perry, Esq. (contained in the opinion
filed as Exhibit 5.1)
99.1 Krantor Corporation 1994 Services and Consulting Compensation
Plan as amended
99.2 Business Description update from 1995 10-K
- ------
Item 9. Undertakings.
-------------
no change
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Deer Park, State of New York, on this 6th day of
February, 1997.
KRANTOR CORPORATION
By:
------------------------------------
Henry J. Platek, Jr., Pres.
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Henry J. Platek and Mair Faibish, or
either one of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and re-substitution for him and in his name, place and
stead, in any and all capacities, to sign any and all pre or post effective
amendments to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them, or their or his substitutes, may lawfully do or cause to be done by
virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------------------------- Director and Pres. (Prin- February 6, 1997
Henry J. Platek, Jr. cipal Executive Officer)
- --------------------------- Director, Vice President and February 6, 1997
Mair Faibish Chief Financial Officer
- --------------------------- Director, Vice Pres., February 6, 1997
Mitchell Gerstein Secretary, and Treasurer
- --------------------------- Director
Dominic A. Marsicovetere
- --------------------------- Director
Michael Ferrone
<PAGE>
EXHIBIT INDEX
Page in
Sequentially
Exhibit No. Description
Numbered Doc.
5.1 Opinion of Randall J. Perry, Esq. 7
23.1 Consent of Belew, Averitt & Company, 9
independent public accountants
23.2 Consent of Randall J. Perry, Esq.
(contained in the opinion filed as
Exhibit 5.1)
99.1 Krantor Corporation 1994 Services and 11
Consulting Compensation Plan as amended
99.2 Business Description update from 1995 10-K 27
<PAGE>
EXHIBIT 5.1
RANDALL J. PERRY, ESQ.
Attorney at Law
159 Park Avenue * P.O. Box 108
Rutherford, New Jersey 07070
Telephone (201) 939-7200 Telefax: (201) 939-7348
February 5, 1997
Krantor Corporation
120 East Industry Court
Deer Park, New York 11729
Gentlemen:
We have acted as legal counsel to Krantor Corporation, a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-8 (the "Registration Statement') filed with the U.S. Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, on or about the date hereof. The Registration Statement relates to
2,000,000 shares of the Company's common stock $.001 par value per share (the
"Shares"), offered pursuant to the provisions of the company's 1994 Services and
Consulting compensation Plan, as amended (the "Plan").
In connection with this opinion, we have examined the Company's
Certificate of Incorporation; the Company's By-laws; minutes of the Company's
corporate proceedings, as made available to us by officers of the Company; the
Company's 1994 Services and Consulting Compensation Plan, as amended; an
executed copy of such Registration Statement, and all exhibits thereto in the
form filed with the Commission; and such matters of law deemed necessary by us
in order to deliver the within opinion.
In the course of our examination, we have assumed the genuineness of
all signatures, the authority of all signatories to sign on behalf of their
principals, if any, the authenticity of all documents submitted to us as
original documents, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the due execution and
delivery are a prerequisite to the effectiveness thereof. As to certain factual
matters, we have relied upon information furnished to us by officers of the
Company.
On the basis of the foregoing, and solely in reliance thereon, we are
of the opinion that the Shares have been duly authorized and, when issued, for
consideration received by the Company for shares granted or to be granted
pursuant to the Plan in accordance with the terms thereof, or upon the exercise
of, and payment of the exercise price as provided in, stock options granted or
to be granted pursuant to the Plan in accordance with the terms thereof, the
Shares will be validly issued, fully-paid and nonassessable.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement.
Very truly yours,
----------------------------------------
RANDALL J. PERRY
RJP:lv
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
Krantor Corporation
We consent to the incorporation by reference in this Registration Statement of
Krantor Corporation on Form S-8 of our report dated April 26, 1994 with respect
to the financial statements of Krantor Corporation appearing in the Prospectus,
which is a part of the Registration Statement of Form S-1 (File No. 33-83226)
filed with the Securities and Exchange Commission and declared effective on
November 14, 1994 as amended through the date hereof and of our reports dated
March 10, 1995, and April 5, 1996 included in the annual reports on Form 10-K of
Krantor Corporation on file with the Securities and Exchange Commission for the
fiscal years ended December 31, 1994 and December 31, 1995, respectively.
Our audits of the financial statements referred to in our aforementioned report
also included the financial statement schedules of Krantor Corporation, listed
in Item 16 of Form S-1. These financial statement schedules are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
----------------------------
BELEW AVERITT LLP
Dallas, Texas
February 6, 1997
<PAGE>
EXHIBIT 99.1
KRANTOR CORPORATION
1994 SERVICES AND CONSULTING COMPENSATION PLAN
TABLE OF CONTENTS
ARTICLE I
THE PLAN
1.1 Name................................................................ 1
1.2 Purpose ............................................................ 1
1.3 Definitions ........................................................ 1
1.4 Effective Date ..................................................... 2
1.5 Eligibility to Participate ......................................... 2
1.6 Shares Subject to the Plan ......................................... 2
1.7 Minimum Consideration or Exercise Price ............................ 2
1.8 Stock and Options Granted under the Plan ........................... 3
1.9 Reservation of Shares of Common Stock .............................. 3
1.10 Tax Withholding .................................................... 3
1.11 Exercise of Options ................................................ 4
1.12 Acceleration of Right to Exercise Options .......................... 4
1.13 Written Notice and Acknowledgment Required to Exercise Option....... 5
1.14 Compliance with Securities Laws .................................... 5
1.15 Employment of Employee ............................................. 5
1.16 Option Upon Termination of Employment .............................. 5
1.17 Termination of Employment for Cause ................................ 5
1.18 Option Upon Disability of Optionee ................................. 6
1.19 Stock or Option Upon Death of Optionee ............................. 6
1.20 Transferability .................................................... 6
1.21 Information to Optionees ........................................... 6
ARTICLE II
ADMINISTRATION
2.1 Committee .......................................................... 7
2.2 Action of Committee ................................................ 7
2.3 Report of Grant .................................................... 7
2.4 Company Assistance ................................................. 7
<PAGE>
ARTICLE III
REGISTRATION OF PLAN SHARES .............................................. 7
ARTICLE IV
PLAN SHARES; STOCK OPTIONS
4.1 Terms and Conditions of Stock and Option Grants .................... 8
4.2 Duration of Options ................................................ 8
4.3 Consideration; Exercise Price ...................................... 8
4.4 Individual Option Agreements ....................................... 9
ARTICLE V
TERMINATION, AMENDMENT AND ADJUSTMENT
5.1 Termination ........................................................ 9
5.2 Amendment .......................................................... 9
5.3 Adjustments ........................................................ 9
ARTICLE VI
MISCELLANEOUS
6.1 Rights Under Plan .................................................. 9
6.2 Other Option Plans ................................................. 10
6.3 Plan Binding on Successors ......................................... 10
6.4 Number and Gender .................................................. 10
6.5 Headings ........................................................... 10
<PAGE>
KRANTOR CORPORATION
1994 SERVICES AND CONSULTING COMPENSATION PLAN
ARTICLE I
THE PLAN
1. Name. This Plan shall be known as the "Krantor Corporation 1994 Services
and Consulting Compensation Plan."
1.2 Purpose. The purpose of this Plan is to promote the growth and general
prosperity of the Company by permitting the Company to grant to its and its
subsidiaries' and affiliates' employees, consultants and non-employee members of
the Board of Directors, (a) shares of Common Stock of the Company or (b) Options
to purchase shares of Common Stock of the Company, as defined in Section 1.3
below captioned "Definitions." This Plan is designed to assist the Company and
its subsidiaries and affiliates attract and retain superior personnel for
positions of substantial responsibility and to provide employees and
non-employee members of the Board with additional incentive to contribute to the
success of the Company.
1.3 Definitions. As used herein with initial capital letters, the following
terms shall have the meanings hereinafter set forth unless the context clearly
indicates to the contrary:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Committee appointed in accordance with
Section 2.1 or, if the Committee shall no longer be in existence or no such
Committee shall have been appointed, the Board.
(d) "Common Stock" shall mean (i) the Common Stock, $.001 par value per
share, of the Company or (ii) preferred stock of the Company intended by the
Committee to be convertible into shares of such Common Stock, $.001 par value
per share, or (iii) if the outstanding shares of such Common Stock, $.001 par
value per share, are hereinafter changed into or exchanged for shares of a
different stock or security of the Company or some other corporation, such
other stock or security.
(e) "Company" shall mean "Krantor Corporation," a Delaware corporation.
(f) "Disinterested Person" shall mean an individual who is a
"disinterested person" within the meaning of Rule 16b-3 promulgated under the
Exchange Act.
<PAGE>
(g) "Effective Date" shall mean the date of the approval of the Plan by
the Board; provided that Options may be granted under the Plan by the
Committee contingent upon their ratification and approval by the Board within
ten months of such action by the Committee and provided further that no such
Options may be exercised prior to such approval.
(h) "Employee(s)" shall mean employee(s) and consultant(s) of the
Company or any of its subsidiaries or affiliates and any other person(s)
performing services for the Company or for any of its subsidiaries or
affiliates, with or without compensation, to whom the Company chooses to
grant shares of Common Stock or Options in accordance with this Plan.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Fair Market Value" shall mean such value as determined by the
Committee on the basis of such factors as it deems appropriate; provided that
if the Common Stock is listed on a national securities exchange or
transactions in the Common Stock are quoted on the NASDAQ National Market
System, such value shall be determined by the Committee on the basis of the
last reported sales price for the Common Stock on the date for which such
determination is relevant, as reported on the national securities exchange or
the NASDAQ National Market System, as the case may be; and provided further
that if the Common Stock is not listed on a national securities exchange or
quoted on the NASDAQ National Market System, but bid and asked quotations on
the Common Stock are available from NASDAQ or a recognized stock quotation
service, such value shall be determined by the Committee on the basis of the
mean between the closing bid and asked quotations for such stock on the date
for which such determination is relevant, as reported by NASDAQ or a
recognized stock quotation service or, in the event that there shall be no
bid or asked quotations on such stock on the date for which such
determination is relevant, then on the basis of the mean between the closing
bid and asked quotations on such stock on the date nearest preceding the date
for which such determination is relevant for which such bid and asked
quotations were available.
(k) "Option" shall mean an Option granted pursuant to Article III of
this Plan.
(l) "Optionee" shall mean an employee, consultant or non-employee
member of the Board to whom an Optionee has been granted hereunder.
(m) "Option Agreement" shall mean an agreement between the Company and
an Optionee with respect to one or more Options.
<PAGE>
(n) "Plan" shall mean the "Krantor Corporation 1994 Services and
Consulting Compensation Plan," the terms of which are set forth herein.
(o) "Plan Shares" shall mean the shares of Common Stock, as defined
herein, issuable pursuant to the Plan.
(p) "Securities Act" shall mean the Securities Act of 1933, as amended.
1.4 Effective Date. The Plan shall become effective upon the Effective
Date.
1.5 Eligibility to Participate. Any employee, consultant or non-employee
member of the Board of the Company or any of its subsidiaries or affiliates
shall be eligible to participate in the Plan.
1.6 Shares Subject to the Plan. The Plan Shares subject to the Plan shall be
600,000 shares of the Common Stock, $.001 par value per share, of the Company.
1.7 Minimum Consideration or Exercise Price. Notwithstanding anything to
the contrary contained herein, no share of Common Stock shall be granted
hereunder for consideration valued at less than the par value of the Company's
Common Stock and no Option shall be granted hereunder with an exercise price
which is less than the par value of the Company's Common Stock.
1.8 Stock and Options Granted Under the Plan. Plan Shares granted or with
respect to which Options shall have been exercised, shall not again be available
for grant hereunder. If Options terminate for any reason without being wholly
exercised, the Company may grant the number of Plan Shares to which the
termination of such Options relates or new Options covering such number of Plan
Shares.
1.9 Reservation of Shares of Common Stock. During the term of the Plan, the
Company will at all times reserve and keep available for issuance such number of
shares of Common Stock as shall be necessary to satisfy the requirements of the
Plan as to the number of Plan Shares; which shares may be issued in whole or in
part as the Committee shall from time to time determine from authorized but
unissued shares of Common Stock or issued shares of Common Stock which have been
reacquired by the Company and held in the treasury. In addition, the Company
will from time to time, as is necessary to accomplish the purposes of the Plan,
use its best efforts to obtain from any regulatory agency having jurisdiction
any requisite authority necessary to issue Plan Shares hereunder. The inability
of the Company to obtain from any regulatory agency having jurisdiction the
authority deemed by the Company's counsel to be necessary for the lawful
issuance of any Plan Shares shall relieve the Company of any liability in
respect of the non-issuance of Plan Shares as to which the requisite authority
shall not have been obtained.
<PAGE>
1.10 Tax Withholding
(a) Conditions Precedent. The issuance, delivery or exercise of any
Plan Shares or Options under the Plan is subject to the condition that if at any
time the Committee shall determine, in its discretion, that the satisfaction of
withholding tax or other withholding liabilities under any state or federal law
is necessary or desirable as a condition of, or in connection with, the
issuance, delivery or exercise of the Plan Shares or Options, then the issuance,
delivery or exercise of the Plan Shares or Options shall not be effective unless
the withholding shall have been effected or obtained in a manner acceptable to
the Committee.
(b) Manner of Satisfying Withholding Obligations. When an Employee
participating in the Plan is required to pay to the Company an amount required
to be withheld under applicable income tax laws in connection with the grant of
Plan Shares or the exercise of an Option, the Employee may satisfy the
obligation, in whole or in part, by electing to do either of the following: (i)
have the Company withhold a portion of the Plan Shares granted by the Company or
acquired upon the exercise of the Option which have a Fair Market Value on the
date the amount of tax to be withheld is to be determined (the "Tax Date") equal
to the amount required to be withheld or (ii) deliver to the Company shares of
Common Stock already owned by the Employee which have a Fair Market Value on the
Tax Date equal to the amount required to be withheld.
(c) Special Rules for Use of Stock. An election by an Employee subject
to Section 16 of the Exchange Act with respect to the Company's equity
securities to have Plan Shares or other shares of Common Stock withheld or
delivered out of already-owned Common Stock for this purpose will be subject to
the following restrictions, i.e., the election: (i) will be subject at all times
to the approval of the Committee; (ii) must be made on or prior to the Tax Date
and during the period beginning on the third business day following the date of
release of the financial information specified in paragraph (e)(1)(ii) of rule
16b-3 promulgated under the Exchange Act and ending on the twelfth day following
such date of release; (iii) will be irrevocable; (iv) may not be made within six
months after the date of grant of the Plan Shares or Option in question;
and (v) may not be made unless the Company has been subject to the reporting
requirements of Section 13(a) of the Exchange Act for at least one year prior to
the election and has filed all reports and statements required to be filed
pursuant to that Section for that year.
<PAGE>
1.11 Exercise of Options.
(a) Method of Exercise. Each Option shall be exercisable in accordance
with the terms of the Option Agreement pursuant to which the Option was granted.
No Option may be exercised for a fraction of a Plan Share.
(b) Payment of Exercise Price. The exercise price of any Option shall
be paid either (i) in cash, (ii) by cashier's check, (iii) by shares of Common
Stock, if permitted by the Committee, (iv) by cash or cashier's check for the
par value of the Plan Shares plus a promissory note for the balance of the
exercise price, which note shall (A) provide for full personal liability of the
maker, (B) bear interest at the lowest rate then possible without causing the
maker thereof to have income imputed in connection therewith, (C) be due and
payable both as to principal and interest five years from the date such note is
made, (D) be secured by the Plan Shares issued in connection therewith, (E) be
payable in advance in whole or in part (with the Plan Shares pledged in
connection therewith released in the same proportion as such pre-payment) and
(F) contain such other terms and provisions as the Committee may determine,
including without limitation the right to repay the note partially or wholly
with Common Stock or (v) by delivery of a copy of irrevocable instructions from
the Employee to a broker or dealer, reasonably acceptable to the Company, to
sell certain of the Plan Shares purchased upon exercise of the Option or to
pledge them as collateral for a loan and promptly deliver to the Company the
amount of sale or loan proceeds necessary to pay such purchase price. If any
portion of the exercise price or a note given at the time of exercise of the
Option is paid in shares of Common Stock, those shares shall be valued at the
then Fair Market Value.
1.12 Acceleration of Right to Exercise Options. Notwithstanding the
provisions of any Option Agreement regarding the time for exercise of an Option,
the following provisions shall apply:
(a) Mergers and Reorganizations. If the Company or its shareholders
enter into an agreement to dispose of all or substantially all of the assets of
the Company by means of a sale, merger or other reorganization or liquidation,
or otherwise in a transaction in which the Company is not the surviving
corporation, any Option shall become immediately exercisable with respect to the
full number of shares subject to that Option during the period commencing as of
the date of the agreement to dispose of all or substantially all of the assets
or stock of the Company and ending when the disposition of assets or stock
contemplated by that agreement is consummated or the Option is otherwise
terminated in accordance with its provisions or the provisions of the Article
pursuant to which it was granted, whichever occurs first. The Option shall not
become immediately exercisable, however, if the transaction contemplated in the
agreement is a merger or reorganization in which the Company will survive.
<PAGE>
(b) Change in Control. In the event of a change in control or
threatened change in control of the Company, all Options granted prior to the
change in control shall become immediately exercisable. The term "change in
control" for purposes of this Section shall refer to the acquisition of 20
percent or more of the voting securities of the Company by any person or by
persons acting as a group within the meaning of Section 13(d)(3) of the Exchange
Act; provided that no change in control or threatened change in control shall be
deemed to have occurred if, prior to the acquisition of, or offer to acquire 20
percent or more of the voting securities of the Company, the full Board of
Directors shall have adopted by not less than two-thirds vote a resolution
specifically approving such acquisition or offer. The term "person" refers, for
purposes of this Section, to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein. Whether
a change in control is threatened shall be determined solely by the Committee.
1.13 Written Notice and Acknowledgment Required to Exercise Option. Any
Option shall be deemed to be exercised for purposes of the Plan when written
notice of exercise has been received by the Company at its principal office from
the person entitled to exercise the Option and payment for the Plan Shares with
respect to which the Option is exercised has been received by the Company in
accordance with Section 1.11. The written notice of exercise of the Option must
be accompanied by a written acknowledgment by the Employee (a) of the taxable
nature of the event and that the Employee will not hold the Company responsible
for the reporting or payment of such taxes and (b) that, unless otherwise agreed
in writing, the Company will not be liable to the Employee for its failure or
inability to cause the Plan Shares purchased upon the exercise of the Option to
be registered with the Commission or any state securities authority.
1.14 Compliance with Securities Laws. Plan Shares shall not be granted by the
Company or issued with respect to any Option unless the grant, issuance and
delivery of the Plan Shares and the exercise of the Option shall comply with all
relevant provisions of federal and state law, including without limitation the
Securities Act, the rules and regulations promulgated thereunder and the
requirements of any stock exchange upon which the Plan Shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance. The Committee may also require an Employee to
furnish evidence satisfactory to the Company, including a written and signed
representation letter and consent to be bound by any transfer restrictions
imposed by law, legend, condition or otherwise, that the Plan Shares are being
acquired only for investment and without any present intention to sell or
distribute the shares in violation of any federal or state law, rule or
regulation. Further, each Employee shall consent to the imposition of a legend
on the certificate representing the Plan Shares granted by the Company or issued
upon the exercise of the Option, restricting their transferability as required
by law or by this Section.
<PAGE>
1.15 Employment of Employee. Nothing in the Plan or in any Option granted
hereunder shall confer upon any Employee any right to continued employment by
the Company, or any of its subsidiaries or affiliates, or limit in any way the
right at any time of the Company, or any subsidiary or affiliate, to terminate
or alter the terms and conditions of that employment without any liability to
the Company, or any of its subsidiaries or affiliates.
1.16 Option Upon Termination of Employment. If an Optionee ceases to be
employed by the Company or any of its subsidiaries or affiliates for any reason
other than termination for cause, retirement, death or disability, his Option
may be exercised, to the extent exercisable pursuant to the Option grant or as
otherwise provided by his employment agreement on the date of termination of
employment, at any time within three months after the date of termination of
employment, unless either the Option or the Article pursuant to which it was
granted provides for earlier termination. If an Optionee ceases to be employed
by the Company or any of its subsidiaries or affiliates because the Optionee has
retired under a qualified retirement plan of the Company, as determined by the
Committee, his Option shall be exercisable (to the extent exercisable on the
effective date of such retirement) at any time within twelve months after the
effective date of such retirement unless by its terms the Option expires sooner.
1.17 Termination of Employment for Cause. If an Optionee ceases to be
employed by the Company or any of the subsidiaries or affiliates of the Company
because the Optionee is terminated for cause, the Option shall automatically
expire. For purposes of this Section, "cause" shall mean an act or acts
involving a felony, fraud, willful misconduct, the commission of any act that
causes, or reasonably may be expected to cause substantial injury to
the Company or other good cause. The term "other good cause," as used in this
Section, shall include, but shall not be limited to, habitual impertinence, a
pattern of conduct that tends to hold the Company up to ridicule in the
community, conduct disloyal to the Company, conviction of any crime of moral
turpitude or substantial dependence, as judged by the Committee, on alcohol or
any controlled substance. "Controlled substance" means a drug, immediate
precursor or other substance listed in Schedules I-V of the New York State
Controlled Substances Act, as amended, or a drug, immediate precursor or other
substance listed in Schedules, I-V of the Federal Comprehensive Drug Abuse
Prevention and Control Act of 1970, as amended. Notwithstanding the foregoing,
if an Optionee is an Employee employed pursuant to a written employment
agreement, the Employee shall be deemed to be terminated for "cause" for
purposes of the Plan only if the Employee is considered under the circumstances
to have been terminated for cause for purposes of such employment agreement.
<PAGE>
1.18 Option Upon Disability of Optionee. If an Optionee becomes disabled
within the meaning of Section 22(e)(3) of the Code while employed by the Company
or any subsidiaries or affiliates of the Company, his Option shall become fully
exercisable and shall expire twelve months after the date of such termination,
unless either the Option or the Article pursuant to which it was issued
otherwise provides for earlier termination.
1.19 Stock or Option Upon Death of Optionee. Except as otherwise limited by
the Committee at the time of the grant of an Option, if an Optionee dies while
employed by the Company or any of the subsidiaries or affiliates thereof, or
within three months after ceasing to be an Employee, his Option shall expire
twelve months after the date of death, unless by its terms it expires sooner.
During this twelve-month or shorter period, the Option may be fully exercised,
to the extent that it remains unexercised on the date of death, by the
Optionee's personal representative or by the distributees to whom the Optionee's
rights under the Option shall pass by will or by the laws of descent and
distribution. The estate of any Employee who dies while he is employed by the
Company or any subsidiary or affiliate of the Company, shall be eligible to
receive an award of Plan Shares or an Option for up to six months following the
Employee's death.
1.20 Transferability. Options may not be sold, assigned, transferred, pledged
or otherwise disposed of or encumbered in any manner otherwise than by will, the
laws of descent and distribution, or pursuant to a qualified domestic relations
order as defined by the Code; provided, however, that an Optionee may assign or
transfer Options to members of his immediate family or to a trust for the
benefit of such members of his immediate family and, during the lifetime of the
Optionee, Options may be exercised only by the Optionee or assignee, as the case
may be, or his legally authorized representative. No Employee shall have any
right to sell, assign, transfer, pledge or otherwise dispose of or encumber any
potential benefit which may be granted pursuant to the Plan, and any attempted
transfer, sale, assignment, pledge or encumbrance shall have no effect on the
Company or the Committee.
1.21 Information to Optionees. The Company shall furnish to each Optionee a
copy of the annual report, proxy statements and all other reports sent to the
Company's shareholders. Upon written request, the Company shall furnish to each
Optionee a copy of its most recent Annual Report on Form 10-K and each quarterly
report to shareholders issued since the end of the Company's most recent fiscal
year.
<PAGE>
ARTICLE II
ADMINISTRATION
2.1 Committee. The Plan shall be administered by the Board; provided,
however, that the Board may appoint a Committee consisting of not fewer than two
members, who shall be members of the Board and who are Disinterested Persons, to
administer this Plan on behalf of the Board, subject to such terms and
conditions as the Board may prescribe. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board. From time to time, the
Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause), appoint new members in
substitution therefor, fill vacancies however caused and remove all members of
the Committee and thereafter directly administer this Plan. Subject to the
express provisions of the Plan and the Board, the Committee shall have the sole
discretion and authority to determine the employees, consultants and
non-employee members of the Board to whom, and the time or times at which, Plan
Shares or Options may be granted and the number of Plan Shares to be granted or
subject to each Option. No member of the Committee shall be eligible to vote on,
or consent with respect to, any grant to him of Plan Shares or Options under the
Plan. Notwithstanding anything to the contrary contained herein, all
transactions under the Plan or with respect to any Plan Shares or Options (other
than the exercise of an outstanding Option in accordance with its terms) between
the Company, or any of its subsidiaries or affiliates, and any director or
officer of the Company, or any of its subsidiaries or affiliates, must be
approved by a majority vote of the Committee.
2.2 Action of Committee. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present or any action taken without a meeting evidenced by a writing
executed by all of the members of the Committee shall constitute the action of
the Committee; provided, however, that a member of the Committee may abstain
from voting on, or consenting to any action with respect to, any grant of Plan
Shares or Options to him, which will not affect any such action of the Committee
provided such action is by the Board. The Committee may appoint a secretary to
keep minutes of its meetings and may make such rules and regulations for the
conduct of its business as it shall deem advisable. Meetings of the Committee
may take place by conference telephone call.
2.3 Report of Grant. The Committee shall file with the Company's Secretary,
within ten days following the grant of Plan Shares or an Option to an Employee,
a written report of the grant; which report shall be made available to the other
members of the Board.
<PAGE>
2.4 Company Assistance. The Company shall supply full and timely information
to the Committee on all matters relating to Employees, their employment, death,
retirement, disability or other termination of employment, and such other
pertinent facts as the Committee may require. The Company shall furnish the
Committee with such clerical and other assistance as is necessary to the
performance of its duties.
ARTICLE III
REGISTRATION OF PLAN SHARES
The Company shall use its best efforts, in a commercially reasonable manner,
to cause a registration statement covering the Plan Shares to be (a) prepared
pursuant to the Plan and to be filed with the United States Securities and
Exchange Commission (the "Commission") and such state "blue sky" authorities as
may be required and (b) declared "effective" by the Commission and such state
authorities (and to remain "effective") for the purpose of enabling the
Employees who receive Plan Shares to have a readily salable or transferable
security. The Employees shall not be required to pay any costs or expenses
(other than sales commissions relating to the sale of Plan Shares) relating to
the registration and effectiveness of the registration statement relating to the
Plan Shares and the preparation and printing of any prospectus that is required
to be delivered in connection with the sale of such Plan Shares. The Company
shall advise each employee who receives a grant of Plan Shares or an Option of
the rights and privileges (or limitations) with respect to the sale or transfer
of such Plan Shares, and the stock certificates evidencing such Plan Shares
shall contain such legends as may be deemed appropriate or necessary by the
Company's counsel. The Company's intent to cause such Plan Shares to be
registered with the Commission so as to be freely salable and transferable does
not constitute a binding or enforceable agreement with, or commitment to, any
person (including any Employee) that the Company will be able to effect such
registration or effectiveness, or that such Plan Shares will be salable over any
extended period of time or that they will be salable at any particular price
over such period. The Company reserves the right, at any time, to terminate its
efforts to register the Plan Shares with the Commission or to discontinue the
effectiveness of such Registration Statement without any liability, obligation
or penalty to any person (including any Employee who may have been granted any
Plan Shares or an Option). The Committee, in its discretion, may determine that
the Company will provide and bear the expense (other than commissions) of an
underwriting or brokerage mechanism through which Employees may, at their
option, sell any Plan Shares awarded to them or purchased upon the exercise of
Options, subject to any restrictions or limitations imposed under any applicable
federal or state securities laws. If the Company has made any underwritings or
brokerage arrangements, the Company will advise the Employees of the terms and
conditions of such arrangements, but shall not be responsible for any action or
inaction on the part of such broker or underwriter with respect to the purchase
of any Plan Shares from the Employee.
<PAGE>
ARTICLE IV
PLAN SHARES; STOCK OPTIONS
4.1 Terms and Conditions of Stock and Option Grants. The terms and conditions
relating to grants of Plan Shares and Options under this Article may differ from
one another as the Committee shall in its discretion determine, as long as all
grants of Plan Shares and Options under this Article satisfy the requirements of
this Article. No Employee shall have any rights as a shareholder until the Plan
Shares have been granted to him by the Committee and the grant of Plan Shares
has been accepted in writing by the Employee or the Option granted to him by the
Committee has been exercised pursuant to Section 1.11. In either case, the
written notice of acceptance of grant or the notice of exercise of the Option
must be accompanied by a written acknowledgment by the Employee (a) of the
taxable nature of the event and that the Employee will not hold the Company
responsible for the reporting or payment of such taxes and (b) that, unless
otherwise agreed in writing, the Company shall not be liable to the Employee for
its failure or inability to cause the Plan Shares granted to such Employee or
purchased upon the exercise of an Option to be registered with the Commission or
any state securities authority. Certificates representing any Plan Shares
awarded or purchased upon the exercise of an Option shall be issued to the
Employee as promptly as possible after the receipt of the Employee's
acknowledgment and, with respect to Plan Shares purchased upon the exercise of
Options, compliance with the provisions of Section 1.11.
4.2 Duration of Options. Each Option granted pursuant to this Article and all
rights thereunder shall expire on the date determined by the Committee, but in
no event shall any Option granted under this Article expire later than ten years
after the date on which the Option is granted. In addition, each Option shall be
subject to early termination as provided elsewhere in the Plan.
4.3 Consideration; Exercise Price. The consideration received by the
Company for Plan Shares granted under this Article and the exercise price for
Plan Shares acquired pursuant to the exercise, in whole or in part, of any
Option granted under this Article, shall not be less than the Fair Market Value
of the Plan Shares at the time of grant of the Plan Shares or Option.
<PAGE>
4.4 Individual Option Agreements. Each Optionee receiving Options pursuant to
this Article shall be required to enter into a written Option Agreement with the
Company as a precondition to receiving an Option under this Article. In such
Option Agreement, the Employee shall agree to be bound by the terms and
conditions of the Plan and such other matters as the Committee deems
appropriate.
ARTICLE V
TERMINATION, AMENDMENT AND ADJUSTMENT
5.1 Termination. The Plan shall terminate ten years after the Effective Date.
No Plan Shares or Options shall be granted under the Plan after the date of
termination.
5.2 Amendment. Subject to the limitations contained in this Section, the
Committee, at any time and without any notice, may suspend or terminate the Plan
or amend or modify the terms and conditions of the Plan, including the form and
substance of the Option Agreements to be used in connection herewith; provided,
however, that no amendment or modification shall (a) increase the maximum term
established under the Plan for any Option or (b) permit the granting of Plan
Shares or an Option to anyone other than as provided in the Plan. No amendment,
suspension, modification or termination of the Plan shall, without the consent
of an Employee, alter or impair any of such Employee's rights or obligations
with respect to any Plan Shares or under any Option granted under the Plan prior
to such amendment, suspension, modification or termination.
5.3 Adjustments. If the outstanding Common Stock is increased, decreased,
changed into or exchanged for a different number or kind of shares or other
securities through merger, consolidation, combination, exchange of shares, other
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or any other change in the capital structure of the Company,
the Committee may make such appropriate and proportionate adjustment, if any, as
it deems appropriate in the maximum number and kind of shares or other
securities which may be granted or as to which Options may be granted under the
Plan. A corresponding adjustment changing the number or kind of shares or other
securities allocated to unexercised Options or portions thereof, which shall
have been granted prior to any such change, may likewise be made. Any such
adjustment in outstanding Options shall be made without change in the aggregate
purchase price applicable to the unexercised portion of the Option, but with a
corresponding adjustment in the price for each share of Common Stock covered by
the Option. The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined solely by the Committee, and any such
adjustment may provide for the elimination of fractional share interests.
<PAGE>
ARTICLE VI
MISCELLANEOUS
6.1 Rights Under Plan. No Employee shall have any rights in any provision,
term or obligation of the Company as set forth in the Plan, whether directly
or as a third party beneficiary.
6.2 Other Option Plans. The adoption of the Plan shall not affect any other
stock option or incentive or other compensation plans in effect for the Company
or any subsidiaries or affiliates of the Company, nor shall the Plan preclude
the Company or any of its subsidiaries or affiliates from establishing any other
forms of incentive or other compensation for Employees.
6.3 Plan Binding on Successors. The Plan shall be binding upon the
successors and assigns of the Company and any of its subsidiaries or affiliates
that adopt the Plan.
6.4 Number and Gender. Whenever used herein, nouns in the singular shall
include the plural where appropriate, and the masculine pronoun shall include
the feminine gender.
6.5 Headings. Headings of articles and sections hereof are inserted for
convenience of reference and constitute no part of the Plan.
The following are amendments to the Company's 1994 Services and Consulting
Compensation Plan (the "Plan"):
1. Paragraph 1.3(g) "Effective Date" is amended to define Effective Date as
also the date the Plan may be amended by approval of the Committee or the Board.
2. Paragraph 1.6 of the Plan is hereby amended to delete "600,000" and
replace it with "4,500,000"
3. Paragraph 5.2 of the Plan is amended to delete the paragraph in its
entirety and replace it with the following language:
"5.2 Amendment. Subject to the limitations contained in this Section, the
Committee, at any time and without any notice, may suspend or terminate
the Plan or amend or modify the terms and conditions of the Plan,
including the form and substance of the Option Agreements to be used in
connection herewith; provided, however, that no amendment or modification
shall (a) increase the maximum term established under the Plan for any
Option or (b) expand the classes of persons eligible to receive Options
or Plan Shares. Stockholder approval shall be required for any amendment
or modification (i) if necessary to maintain compliance of the Plan with
Rule 16b-3 promulgated under the Exchange Act or Section 422 of the Code
or (ii) if otherwise deemed advisable by the Committee."
<PAGE>
4. Paragraph 1.18 of the Plan is amended to delete the paragraph in its
entirety and replace it with the following language:
"1.18 Option Upon Disability of Optionee. If an Optionee becomes disabled
within the meaning of Section 22(e)(3) of the Code while employed by the
Company or any subsidiaries or affiliates of the Company, his Option
(unless otherwise determined by the Committee) shall be exercisable only
to the extent of those Options which have vested on the date of
disability (as determined by the Company's disability insurance carrier,
or if no carrier insures the Optionee, as determined by the Committee)
and only to the extent the Option remains unexercised at such date, and
shall expire twelve months after the date of such determination, unless
either the Option or the resolution pursuant to which it was issued
otherwise provides for earlier termination."
5. Paragraph 1.19 of the Plan is amended to delete the paragraph in its
entirety and replace it with the following language:
"1.19 Stock or Option Upon Death of Optionee. If an Optionee dies while
employed by the Company or any of the subsidiaries or affiliates thereof,
or within three months after ceasing to be an Employee, his Option shall
expire twelve months after the date of death, unless by its terms it
expires sooner. During this twelve-month or shorter period, the Option
(unless otherwise determined by the Committee) may be exercised only to
the extent the Option has vested on the date of death, and only to the
extent the Option remains unexercised on such date, by the Optionee's
personal representative or by the distributees to whom the Optionee's
rights under the Option shall pass by will or by the laws of descent and
distribution. The estate of any Employee who dies while he is employed by
the Company, or any subsidiary or affiliate of the Company, shall be
eligible to receive an award of Plan Shares or an Option for up to six
months following the Employee's death."
<PAGE>
EXHIBIT 99.2
BUSINESS
The business of the Company is substantially the same as of the date of
the Company's published Form 10-K report for the year ended December 31, 1995 a
copy of which is included in this Memorandum as an Exhibit, and reference
therein should be made for a summary of the Company's business, except that
certain changes and additions to the company's business have been made and such
are summarized in this Section of the Offering Memorandum. Disclosure in the
10-K Exhibit to the contrary of that specifically stated herein should be
considered for historical purposes only and not as continuing facts regarding
the Company's business. Information supplied in this Section follows in sequence
the disclosure in the referenced 10-K Exhibit foe ease of reference.
Overview
- --------
Affiliated Island Grocers d/b/a Island Frozen and Dairy ("IFD") has
ceased functioning as an active subsidiary of the Company. The Company has
terminated its Kosher Foods and Specialty Foods business as previously operated
by IFD, has significantly curtailed its wholesaler operations in general, and is
attempting to re-focus its business back to its traditional business as a
Promotional Product distributor, together with its expansion into distribution,
presently on an agency basis, of frozen squid and other particular seafood
through agreements with the Company's established Chinese joint venture partner
(see "Chinese Joint Venture " infra).
Presently Krantor has resumed its basic grocery business, which has
been reinforced and the Company believes strengthened by their 10 year exclusive
U.S. distribution agreement with its Chineses trading partner. the agreement
presently calls for the Company to distribute frozen squid, also known as
calamari, exclusively in the United States. The agreement provides the Company
with the opportunity to earn royalties on both squid and grocery sales
distributed in the United States. It also allows the Company to utilize the
purchasing power and financing capabilities of its trading partner to support
the distribution of its products in the United States. In addition, the Chinese
trading company is developing products to be marketed by the Company in the
United States. Sale of calamari by the Company on behalf of its Chinese trading
partner provides for high profit margins due to the Company's resultant direct
buying presence in China. As part of the distribution agreement, the Company
completed $3.3 million in equity financings designed to secure commitments for
the purchase and sale of the frozen squid and grocery items, as well as
replenish its capital base due to losses experienced in the kosher food
business.
<PAGE>
The Company plans on expanding its core grocery and frozen seafood market
through its subsidiaries. The Company believes that by discontinuing IFD's
operation it should enable it to support the capital requirements of its
continuing operation through NEF and IWG. However, the Company believes it will
need additional financing in the form of subordinated debt or equity to finance
its expansion plans and such is partly the reason for this Offering.
Chinese Trading Partner
- -----------------------
The Company in the last quarter of 1996 has entered a 10 year exclusive
agreement with a major Chinese trading company to distribute frozen squid (also
known as calamari) in the United States (also being non-exclusive elsewhere). In
such agreement and under such arrangement as provided therein, the Company acts
as a distribution agent (on a licensing/royalty independent contractor basis)
for the Chinese trading company and seeks to expand the demand for products
offered by such Chinese company in the United States, including primarily squid,
but also for other seafood and grocery items marketed by such Chinese company.
In return for such services the Company is given a royalty and, further, such
Chinese trading partner has agreed to significantly finance the operations of
the Company, trough subsidiaries where provided, in acting as their marketing
and distribution agent, including financing the purchase/sale of products
marketed for the Chinese trade partner. Currently the Company distributes squid
in the Northeastern United States, which is presently the largest U.S. market
area for such product.
Promotional Distribution Business
- ---------------------------------
See 10-K description
Wholesale Activities
- --------------------
Eliminated - such business activities were terminated by the Company effective
June 30, 1996.
<PAGE>
Seasonality
- -----------
See 10-K description
Seasonality also effects the squid market (and seafood in general) of products
originating in China. Because of time and locality differences, the optimum
timing for catching the seafood and the most popular times for re-sale in the
United States differ significantly and such requires that the seafood be
delivered and stored frozen, in many cases for a significant time, and purchase
and sales are likely to be affected thereby.
Expansion Strategy
- ------------------
See 10-K description (as pertains to Promotional Business; Wholesale Business
has been terminated -see supra)
Krantor plans to expand its core grocery and frozen seafood market through its
ten year distribution agreement (see supra) . Subject to available financing,
the Company plans to expand its continuing business by purchasing and
maintaining short term inventories of well accepted, readily marketable
promotional brand grocery products and frozen seafood.
In the second half of 1996, Krantor enhanced its expansion into the frozen squid
business. As a result of this expansion, the Company believes it can obtain
better margins on its sales of frozen seafood products.
Company's management's plans are to focus on growth through internal operations.
The Company believes that internal sales growth of at least 20 percent can be
achieved over the next five years. The existing sales force can continue to add
new customers to its base, in addition to increasing sales volume sold to
existing customers. The Company plans to expand its sales territory by
recruiting additional qualified sales personnel. The Company would
consider acquisitions in related businesses only.
<PAGE>
Operations and Information System Network
- -----------------------------------------
See 10-K description
IFD systems have been eliminated. Krantor has sufficient computer systems to
achieve sales and growth.
Employees
- ---------
The Company as of the date of this Memorandum employs 12 full time persons of
whom 7 work in executive, administrative or clerical activities. The Company's
sales force consists presently of 5 persons, all of whom receive commissions as
compensation.
Competition
- -----------
The Company is small in both physical and financial attributes in comparison to
many of its competitors in the grocery industry, and, although it plans an
expansion to increase its position, the Company also competes with other more
substantial companies in the sale and distribution of frozen seafood, including
squid, although in this latter area of business the Company believes it may be
among the largest distributors of squid from China. The Company's knowledge and
experience in and devotion to its business, receptiveness to customers and
general customer service, and its exclusivity arrangement with a major Chinese
trading entity, the Company believes shall and shall continue to benefit its
operations and continue to allow it to compete with its more financially endowed
competitors.
Facilities (reference to "Properties" in 10-K)
- ----------
The Company's central headquarters is subdivided into approximately 5,000 square
feet of office space and 55,000 square feet of warehousing space. Approximately
8 of the Company employees work at this facility. The warehouse facilities in
Newark, New Jersey have been terminated as Company facilities. The Company may
expand its warehousing activities to other facilities if and when same may be
deemed advisable for easy access to goods at various locations in the United
States and/or abroad or for other reasons associated with the nature of goods
sold. Currently squid from China is stored in freezers at warehousing facilities
of the Company in New Jersey. The company utilizes 3 sales offices located in
New York and Maine.
<PAGE>
LEGAL PROCEEDINGS
See Note 8 - Litigation in the Notes to Consolidated Financial Statements
included in the 9/30/96 10-Q included herein as an Exhibit. Otherwise the
disclosure in the 1995 10-K remains effective.
<PAGE>
SHAREHOLDER MATTERS
(Refer to 1995 10-K for information from 1995). In 1996 the only matter
submitted for shareholder approval was the increase in the Company's authorized
common stock, increased to 29,000,000 shares, which proposition received
sufficient shareholder approval to implement and such was accomplished by an
amendment to the Company's certificate of incorporation filed July 29, 1996.
MARKET FOR COMPANY'S COMMON STOCK
See 1995 10-K for historical information; such information, as pertains to the
common stock of the Company, is updated herein
Quarter Ended High Bid Low Bid
- ------------- -------- -------
March 31, 1996 1 17/32 1 3/8
June 30, 1996 1 7/16 1 11/32
September 30, 1996 3/8 5/16
December 31, 1996* 1/8 3/32
(as of December 11, 1996)
On December 11, 1996, the Company had approximately 1,300 shareholders of
record, with much of the stock being held in street name. The total outstanding
common stock shares as of such date was 13,547,685. The Company is currently
listed on NASDAQ but its listing may be jeopardized by the proposed change in
NASDAQ listing requirements to mandate maintenance of a $1 bid price for listed
stock without alternative listing criteria as is presently the case. The said
proposal by NASDAQ is likely to be implemented in late 1997 and the Company is
striving to increase the market quotes for its common stock to reach the level
required by NASDAQ, of which, however, there can be no assurance. As a provision
of the Debentures, the Company has covenanted to use its best efforts to
maintain its NASDAQ listing.
<PAGE>
MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
See disclosure in 1995 10-K for the Company as updated in the 9/30/96 10-Q for
the Company.
MANAGEMENT
See 1995 10-K - except that Irwin Simon has resigned and been replaced by
Michael Ferrone by vote of the remaining members of the Company's Board of
Directors, Mr. Ferrone to sit as a director until his successor shall be elected
and qualified, unless and until Mr. Ferrone shall be deceased or shall resign or
otherwise be legally terminated. Mr. Ferrone has replaced Mr. Simon on the
Compensation Committee
Michael Ferrone, age 45, has for more than eight years last past been a
financial planner with Alliance Financial Group, Inc. of Rutherford, New Jersey.
Mr. Ferrone is a graduate of Rutgers University with a BA in history.
PRINCIPAL STOCKHOLDERS
The following able sets forth as of December 11, 1996 information
regarding the beneficial ownership of the Company's voting securities (i) by
each person who is known by the Company to be the owner of more than five
percent of the Company's voting stock, (ii) by each executive officers of the
company, (iii) by each of the directors of the Company, and (iv) by all of the
Company's present executive officers and directors as a group.
Henry Platek - 64,116 shares of common stock
Mair Faibish - 1,102,173 shares of common stock (1)
Mitchell Gerstein - 26,282 shares of common stock
Dominic Marcicovetere - -0-
Michael Ferrone - -0-
Jemini Investments, Inc - 1,056,073 shares of common stock (1)
Star High Yield (2)
Investment Management
Corporation - 2,380,146 shares of common stock
c/o Fitzpatrick
Eilenberg & Zivian
666 Third Ave., 3rd Fl.
New York, NY 10017
<PAGE>
Joseph Chitrik (2) - 704,301 shares of common stock
c/o Fitzpatrick
Eilenberg & Zivian
666 Third Ave., 3rd Fl.
New York, NY 10017
UC Financial Ltd. (2) - 823,632 shares of common stock
c/o Fitzpatrick
Eilenberg & Zivian
666 Third Ave., 3rd Fl.
New York, NY 10017
Leb Stein (2) - 2,380,146 shares of common stock
c/o Fitzpatrick
Eilenberg & Zivian
666 Third Ave., 3rd Fl.
New York, NY 10017
CYGNI S.A. (2) - 1,197,279 shares of common stock
c/o Soreq Inc.
620 Wilson Ave., Ste 501
Toronto, Ontario
Canada MeK1Z3
Faisal Finance (2)
(Switzerland) S.A. - 960,132 of shares common stock
c/o Commonwealth Associates
733 Third Ave.
New York, NY 10017
Quimby Ltd. (2) - 1,465,201 shares of common stock
c/o First Allied
Securities Inc.
2875 N.E. 191st Street, Ste 601
North Miami Beach, Fla.33180
- -------------------------------------------------------------------------------
(1) Mair Faibish is a shareholder of and has the voting rights regarding stock
in the Company owned by Jemini Investments Inc.
(2) These shareholders have no other official connection to the
Company
FOR FURTHER INFORMATION REGARDING PRINCIPAL SHAREHOLDERS SEE
DESCRIPTION IN 1995 10K INCLUDED BY REFERENCE HEREIN
