As filed with the Securities and Exchange Commission on February 6, 1998
Registration No. 0-19409
__________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________
FORM S-3
Registration Statement
Under the
Securities Act of 1933
_________________________________________
KRANTOR CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2993066
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification Number)
Organization)
10850 Perry Way
Suite 203
Wexford, PA 15090
(412) 980-6380
(Address, Including Zip Code, and Telephone
Number, Including Area Code of Registrant's
Principal Executive Offices)
Henry Platek, President
Krantor Corporation
10850 Perry Way
Suite 203
Wexford, PA 15090
(412) 980-6380
(Name, Address, Including Zip Code, and
Telephone Number, Including Area Code of
Agent for Service)
Copy to:
Randall J. Perry
159 Park Ave.
Rutherford, NJ 07070
<PAGE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective. If the only
securities being registered on this form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest-reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective Registration
Statement for the same offering: [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
Registration Statement number of the earlier effective Registration Statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum Proposed
Title of each class Amount Offering Aggregate Amount of
of Securities to be to be Price Offering Registration
Registered Registered Per Share (1) Price(1) Fee
- -------------------- ---------- ---------- ---------- ----------
Common Stock, $.001
<S> <C> <C> <C> <C>
par value per share, 1,000,000 2.00 2,000,000 $606.00
of Selling Securityholders (2)
Common Stock, $.001 par value
per share, related to the exercise
of Placement Agent Warrants (3) 228,000 2.00 456,000 138.00
Common Stock, $.001 par value,
of Selling Securityholders (4) 125,000 2.00 500,000 76.00
Total $820.00
----------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
Based upon the average of the bid and ask prices on January 27, 1998 of
the Common Stock pursuant to Rule 457(c).
<PAGE>
(2) Common Stock issued and held in escrow for conversion of Debentures
issued to Selling Securityholders and for exercise of Warrants issued
to Selling Securityholders which Debentures and Warrants were issued in
connection with a private placement of the Registrant.
(3) Common Stock issued and held in escrow for exercise of a Warrant issued
as part of finder's fee for introducing investors for the private
placement referenced in footnote (2) hereinabove and Warrants
previously issued to the same entity in connection with other services.
(4) Miscellaneous currently outstanding shares of the Common Stock being
registered for sale by Selling Securityholders, including 25,000 issued
to the same entity described in note (3) in connection with said
private placement.
(5) An undetermined number of securities is being registered pursuant to
Rule 416 under the Securities Act to cover any adjustment in the number
of shares issuable as a result of the anti-dilution provisions of the
Warrants and the Debentures.
The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall therefor become effective in accordance with Section 8(a) of
this Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
KRANTOR CORPORATION
Cross-Reference Sheet Showing Location in Prospectus of Information Required by
Part I of Form S-3 Pursuant to Item 501(b) of Regulation S-K
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus...........................Outside front cover page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus..................Inside front cover page of Prospectus;
Outside back cover page of Prospectus
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges...Risk Factors; otherwise Not
Applicable
4. Use of Proceeds......................Use of Proceeds
5. Determination of Offering Price......Not Applicable
6. Dilution.............................Not Applicable
7. Selling Security Holders.............Inside Front Cover; Concurrent Sales
by Selling Securityholders
8. Plan of Distribution.................Selling Securityholder Offering; Plan of
Distribution
9. Description of Securities to be
Registered..........................Description of Securities
10. Interests of Named Experts
and Counsel.........................Experts
11. Material Changes....................Recent Developments
12. Incorporation of Certain Information by
Reference.........................Documents Incorporated by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities....................Commission Position on Indemnification
<PAGE>
PROSPECTUS
KRANTOR CORPORATION
1,353,000 Shares of Common Stock
Offered by Selling Securityholders
The securityholders named on pages 16 and 17 of this Prospectus (the
"Selling Securityholders") of Krantor Corporation ("Krantor") will offer
pursuant to this Prospectus an aggregate of 1,353,000 shares (the "Registered
Stock") of Krantor's Common Stock, $.001 par value (the "Common Stock"),
consisting of (1) an aggregate of 1,000,000 shares of the Common Stock issued
and held in escrow pending conversion of Krantor's 10% Subordinated Convertible
Debentures due November 15, 2000 (the "Convertible Debentures"); and issued and
held in escrow pending exercise of Common Stock purchase warrants expiring
November 14, 2000 (the "Investor Warrants"); (2) an aggregate of 228,000 shares
of the Common Stock issued and held in escrow pending the exercise of Common
Stock purchase warrants expiring September 24, 2000, June 8, 2002 and November
14, 2002 (the "Placement Agent Warrants"; the Investor Warrants and the
Placement Agent Warrants being collectively referred to herein as the
"Warrants"); (3) 25,000 shares of the Common Stock owned by the holder of the
Placement Agent Warrants; and (4) 100,000 shares of the Common Stock received by
the holder in settlement of a claim. See "Selling Securityholders" and "Plan of
Distribution." Krantor will not receive any of the proceeds from the sales of
the Registered Stock by the Selling Securityholders, but will receive an
aggregate of $674,000 if the Warrants are exercised. Pursuant to agreements
between Krantor and the Selling Securityholders, Krantor has agreed to pay all
of the expenses of registering the shares of the Common Stock offered hereby,
which expenses are estimated to be $66,820. The Selling Securityholders will,
however, pay the other costs related to the sale of their securities, including
discounts, commissions and transfer fees, if any. Krantor has agreed to
indemnify the Selling Securityholders against certain liabilities, including
liabilities under the Securities Act.
The Selling Securityholders may offer all shares of the Registered
Stock in transactions in the over-the-counter market at market prices obtainable
at the time of sale, or in privately-negotiated transactions at prices
determined by negotiation. The Selling Securityholders may effect such
transactions by selling the shares of the Registered Stock to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Securityholders and/or
the purchasers of the shares for whom such broker-dealer may act as agent or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealers may be in excess of customary commissions.) See "Selling
Securityholders" and "Plan of Distribution." The Selling Securityholders may be
deemed to be "underwriters" as defined in the Securities Act of 1933, as amended
(the "Securities Act"). If any broker-dealers are used by the Selling
Securityholders, any commissions paid to such broker-dealers and, if
broker-dealers purchase any shares as principals, any profits received by such
broker-dealers on the resales of the shares, may be deemed to be underwriting
discounts or commissions under the Securities Act. In addition, any profits
realized by the Selling Securityholders may be deemed to be underwriting
compensation.
<PAGE>
The Common Stock is traded on the Nasdaq SmallCap Market under the
symbol KRAN. On January 27, 1998, the closing sales price of the Common Stock
was $2.00 per share as reported on the Nasdaq System.
The shares of the Registered Stock being offered by this Prospectus are
speculative in that they involve certain risks. See "Risks Factors" commencing
on page 4 hereof for a discussion of matters which should be considered by
purchasers of these shares. ________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is _______________, 1998
<PAGE>
ADDITIONAL INFORMATION
Krantor is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance with
the Exchange Act, files reports, proxy and information statements and other
information with the Commission. Reports, proxy and information statements and
other information concerning Krantor can be inspected and copied (at prescribed
rates) at the Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the following regional offices of the
Commission, 7 World Trade Center, New York, New York 10048. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants like Krantor that file electronically
with the Commission at the following Web site address: http://www.sec.gov. In
addition, the Common Stock is traded in the over-the-counter market on the
Nasdaq System, and reports, proxy and information statements and other
information concerning Krantor can be inspected and copied at the office of the
National Association of Securities Dealers, Inc. (the "NASD"), Nasdaq Reports
Section, 1735 K Street, N.W., Washington, D.C. 20006.
Krantor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3, File No. 0-19409 (the
"Registration Statement"), under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of the Common Stock offered
hereby. As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information contained in the Registration Statement.
For further information with respect to Krantor and this offering of shares of
the Common Stock, reference is hereby made to the Registration Statement and to
the exhibits and schedules filed therewith. Statements contained in this
Prospectus regarding the contents of any agreement or other document filed as an
exhibit to the Registration Statement are not necessarily complete and in each
instance reference is made to the copy of such agreement or document filed as an
exhibit to the Registration Statement, each statement being qualified in all
respects by such reference. The Registration Statement, including exhibits and
schedules thereto, may be inspected at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W. Washington, DC 20549, and
copies of all or any part thereof may be obtained from such office upon payment
of the prescribed fees.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference into this prospectus:
(1) Krantor's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(2) Krantor's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997;
(3) Krantor's definitive proxy statement dated April 30, 1997 for the
1996 Annual Meeting of Stockholders; and
<PAGE>
(4) Krantor's Registration Statement on Form 8-A, File No. 0-19409,
dated July 11, 1991.
All reports and definitive proxy or information subsequently filed by
Krantor pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the shares of the Common Stock shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Krantor will provide without charge to each person to whom a copy of
this Prospectus has been delivered on the written request of any such person, a
copy of any or all of the documents described above which have been incorporated
by reference in this Prospectus, other than exhibits to such documents. A
reasonable fee for duplicating and mailing will be charged for a copy of any
exhibit if such exhibit is requested. Written requests for copies of such
documents should be addressed to Mitchell Gerstein, Vice President, Krantor
Corporation, PO Box 996, Syosset, NY 11291-0996 or at (516) 682-1980.
THE COMPANY
BUSINESS
Krantor is engaged in the distribution of brand name grocery and health
and beauty aids products, premium hand-rolled cigars and frozen squid to major
wholesalers and retailers in the United States and the Caribbean. Krantor also
has an exclusive marketing agreement to sell and distribute prepaid long
distance telephone cards to Caribbean and select United States customers.
Recently Krantor has also become an exclusive distributor for a sizeable
Dominican Republic tobacco grower and cigar manufacturer to market such
company's major brands of cigars (see "Recent Developments"). Such businesses of
Krantor are conducted through corporate subsidiaries whose stock is wholly or
majority owned by Krantor, and the results of whose businesses are consolidated
for reporting purposes with the financial statements of the Krantor. See the
filed reports of Krantor incorporated by reference herein under "Documents
Incorporated by Reference" and "Recent Developments" for a further description
of the business of Krantor and its subsidiaries (collectively referred to herein
as the "Company").
<PAGE>
OFFERING
Krantor is not offering any securities pursuant to this offering. As
indicated on the Cover Page, the Selling Securityholders are offering an
aggregate of 1,353,000 shares of the Common Stock consisting of (1) an aggregate
of 1,000,000 shares to be offered following conversion of the Convertible
Debentures and exercise of the Investor Warrants; (2) an aggregate of 228,000
shares to be offered following exercise of the Placement Agent Warrants; (3)
25,000 shares to be offered by the holder of the Placement Agent Warrants; and
(4) an aggregate of 100,000 shares owned and being offered by a certain Selling
Securityholder. See also "Selling Securityholders" and "Plan of Distribution."
RISK FACTORS
The shares of the Common Stock offered by this Prospectus are
speculative, involve a high degree of risk and should not be purchased by anyone
unable to afford a loss of his, her or its entire investment. In analyzing this
offering prospective investors should review carefully the investment
considerations set forth below.
OPERATIONS
1. NEED FOR ADDITIONAL CAPITAL.
In the recent past, the Company has operated on limited capital
resources and has depended primarily on funds generated from the sales of shares
of the Common Stock and short-term loans. These cash shortages have continued to
adversely affect its business, and, accordingly, the Company requires additional
capital to finance its business activities. The Company will have to obtain such
additional capital through borrowings or from additional equity financings.
Additional future equity financing may occur through the sale of either
unregistered shares of the Common Stock or other securities in exempt offerings
or through the public offering of registered securities. In any case, any such
additional equity financing may result in additional dilution to existing
stockholders (including purchasers of the shares offered by this Prospectus).
There can be no assurance that any additional capital funding can satisfactorily
be arranged. The Company has no present arrangements for the acquisition of
additional capital.
2. RISKS OF BUSINESS DEVELOPMENT.
The Company has ventured into new lines of product distribution (see
"Recent Developments") and such product lines are expected to constitute a
material part of the Company's revenue stream. Because of the newness of these
lines of products to the Company, the Company's operations in these areas should
be considered subject to all of the risks inherent in a new business enterprise,
including the absence of a profitable operating history and the expense of new
product development. Various problems, expenses, complications and delays may be
encountered in connection with the development of the Company's new products.
These expenses must either be paid out of the proceeds of future offerings or
out of generated revenues and Company profits. There can be no assurance as to
the availability of funds from either of these sources.
<PAGE>
3. RAPIDLY CHANGING MARKET MAY IMPACT OPERATIONS.
The market for the Company's products is rapidly changing with evolving
industry standards and frequent new product introductions. The Company's future
success will depend in part upon its continued ability to enhance its existing
products and to introduce new products and features to meet changing customer
requirements and emerging industry standards. The Company will have to develop
and implement an appropriate marketing strategy for each of its products. There
can be no assurance that the Company will successfully complete the development
of future products or that the Company's current or future products will achieve
market acceptance levels conducive to the Company's fiscal needs. Any delay or
failure of these products to achieve market acceptance would adversely affect
the Company's business. In addition, there can be no assurance that the products
or technologies developed by others will not render the Company's products or
technologies non-competitive or obsolete.
4. COMPETITION.
While the business of the operating subsidiaries are significantly
diversified, each subsidiary independently faces competition from numerous
organizations which possess similar expertise and provide comparable products or
services as those furnished by the subsidiary. In most instances, the
competitors are larger organizations with substantially greater resources. This
is especially true in the cigar industry where the Company competes with various
small and large regional, national and international firms selling both
wholesale and retail. The ability of the Company to successfully compete within
each industry segment will depend upon numerous factors, including the Company's
ability to generate additional working capital to substantially expand both
domestic and international marketing activity and to identify additional
products which can either be developed internally or acquired from third parties
to improve the Company's competitive positions. There can be no assurance that
Krantor can successfully support the capital requirements of its subsidiaries to
enable them to achieve competitive parity or that, even if such capital is made
available, the subsidiaries will effectively compete.
5. DEPENDENCE UPON ATTRACTING AND HOLDING.
The Company's future success depends in large part on the continued
service of its key technical, marketing, sales and management personnel and on
its ability to continue to attract, motivate and retain highly qualified
employees. Although the Company's key employees have stock options, its key
employees may voluntarily terminate their employment with the Company at any
time. Competition for such employees is intense and the process of locating
technical and management personnel with the combination of skills and attributes
required to execute the Company's strategy is often lengthy. Accordingly, the
loss of the services of key personnel could have a material adverse effect upon
the Company's operating efforts and on its research and development efforts. The
Company does not have key person life insurance covering its management
personnel or other key employees.
<PAGE>
6. EXTENSIVE AND INCREASING REGULATION OF TOBACCO PRODUCTS AND
LITIGATION MAY IMPACT CIGAR INDUSTRY.
The tobacco industry in general has been subject to extensive
regulation at the federal, state and local levels. Recent trends have increased
regulation of the tobacco industry. Although regulation initially focused on
cigarette manufacturers, it has begun to have a broader impact on the industry
as a whole and may focus more directly on cigars in the future. The recent
increase in popularity of cigars could lead to an increase in regulation of
cigars. A variety of bills relating to tobacco issues have been introduced in
the U.S. Congress, including bills that would have (i) prohibited the
advertising and promotion of all tobacco products or restricted or eliminated
the deductibility of such advertising expense, (ii) increased labeling
requirements on tobacco products to include, among others things, addiction
warnings and lists of additives and toxins, (iii) shifted control of tobacco
products and advertisements from the Federal Trade Commission (the "FTC") to the
Food and Drug Administration (the "FDA"), (iv) increased tobacco excise taxes
and (v) required tobacco companies to pay for health care costs incurred by the
federal government in connection with tobacco related diseases. Future enactment
of such proposals or similar bills may have an adverse effect on the results of
operations or financial condition of the Company.
In addition, a majority of states restrict or prohibit smoking in
certain public places and restrict the sale of tobacco products to minors. Local
legislative and regulatory bodies also have increasingly moved to curtail
smoking by prohibiting smoking in certain buildings or areas or by designated
"smoking" areas. Further restrictions of a similar nature could have an adverse
effect on the Company's sales or operations, such as banning counter access to
or display of cigars, or decisions by retailers because of public pressure to
stop selling all tobacco products. Numerous proposals also have been considered
at the state and local level restricting smoking in certain public areas,
regulating point of sale placement and promotions and requiring warning labels.
Although federal law has required health warnings on cigarettes since
1965 and on smokeless tobacco since 1986, there is no federal law requiring that
cigars carry such warnings. California, however, requires "clear and reasonable"
warning to consumers who are exposed to chemicals determined by the State to
cause cancer on reproductive toxicity, including tobacco smoke and several of
its constituent chemicals. Similar legislation has been introduced in other
states, but did not pass. There can be no assurance that other states will not
enact similar legislation. Consideration at both the federal and state level
also has been given to consequences of tobacco smoke on others who are not
currently smoking (so called "second-hand" smoke). There can be no assurance
that regulations relating to second hand smoke will not be adopted or that such
regulation or related litigation would not have a material adverse effect on the
Company's results of operations or financial condition.
Increased cigar consumption and the publicity such increase has
received may increase the risk of additional regulation. The Company cannot
predict the ultimate content, timing or effect of any additional regulation of
tobacco products by any federal, state, local or regulatory body, and there can
be no assurance that any such legislation or regulation would not have a
material adverse effect on the Company's business. See "Recent Developments"
<PAGE>
On June 20, 1997 the Attorneys General of 40 states and the major
United States cigarette manufacturers announced a proposed settlement of a
lawsuit filed by the States. The proposed settlement, which will require that
the United States Congress take certain action, is complex and may change
significantly or be rejected. However, the proposal would require significant
changes in the way United States cigarette and tobacco companies do business.
Among other things: the tobacco companies will pay hundreds of billions of
dollars; the FDA could regulate nicotine as a drug; class action lawsuits and
punitive damages would be banned; and tobacco billboards and sporting event
sponsorships would be prohibited. The potential impact, if any, of the
settlement and related legislation on the cigar industry is uncertain.
In addition to the 40-state litigation referred to in the preceding
paragraph, the tobacco industry has experienced and is experiencing significant
health-related litigation involving tobacco and health issues. Plaintiffs in
such litigation have sought and are seeking compensatory, and in some cases
punitive, damages for various injuries claimed to result from the use of tobacco
products or exposure to tobacco smoke. The proposed settlement of the 40-state
litigation may have a material impact to limit litigation, but there can be no
assurance that there would not be an increase in health-related litigation
against the cigarette and smokeless tobacco industries or similar litigation in
the future against the cigar industry. Costs of defending prolonged litigation
and any settlement or successful prosecution of any material health-related
litigation against manufacturers of cigars, cigarettes or smokeless tobacco or
suppliers to the tobacco industry could have a material adverse effect on the
Company's results of operations and/or financial condition. The recent increase
in the sales of cigars and the publicity such increase has received may have the
effect of increasing the probability of legal claims. Also, a recent study
published in the journal Science reported that a chemical found in tobacco smoke
has been found to cause genetic damage in lung cells that is identical to damage
observed in many malignant tumors of the lung and thereby directly links lung
cancer to smoking. This study and other reports could affect pending and future
tobacco regulation or litigation relating to cigar smoking.
7. RISKS RELATING TO MARKETING OF CIGARS.
The Company primarily will distribute premium cigars which are
hand-rolled and use tobacco aged over one year. The Company believes that there
is an abundant supply of tobacco available through its supplier in the Dominican
Republic for the types of cigars the Company primarily will sell. However, there
can be no assurance that increases in demand would not adversely affect the
Company's ability to acquire higher priced premium cigars.
While the cigar industry has experienced increasing demand for cigars
during the last several years, there can be no assurance that the trend will
continue. If the industry does not continue as the Company anticipates or if the
Company experiences a reduction in demand for whatever reason, the Company's
supplier may temporarily accumulate excess inventory which could have an adverse
effect on the Company's business or results of operations.
<PAGE>
8. SOCIAL, POLITICAL, AND ECONOMIC RISKS ASSOCIATED WITH FOREIGN
TRADE MAY ADVERSELY IMPACT BUSINESS.
The Company purchases all of its premium cigars from manufacturers
located in countries outside the United States. In addition, the Company
acquires squid through the People's Republic of China ("PRC"). Social and
economic conditions inherent in foreign operations and international trade may
change, including changes in the laws and policies that govern foreign
investment and international trade. To a lesser extent social, political and
economic conditions may cause changes in United States laws and regulations
relating to foreign investment and trade. Social, political or economic changes
could, among other things, interrupt cigar supply or cause significant increases
in cigar prices. In particular, political or labor unrest in the Dominican
Republic could interrupt the production of premium cigars, which would inhibit
the Company from buying inventory. Any government sanctions that cause an
interruption of trade or prohibit trade with the PRC through higher duties or
quotas could have a material adverse effect on the Company's business.
Accordingly, there can be no assurance that changes in social, political or
economic conditions will not have a material adverse affect on the Company's
business.
9. SEASONALITY.
Seasonality affects the demand for certain products sold by the
Company, such as juice drinks in the summer months or hot cereals in fall and
winter months. However, all these products are available to the Company
throughout the year. Manufacturers also tend to promote more heavily towards the
close of the fiscal quarters and during the spring and early summer months.
Accordingly, the Company is able during these periods to purchase more products,
increase sales during these periods and reduce its product cost due to these
promotions. The Company generally experiences lower sales volume in the fourth
quarter due to the reduced number of selling days resulting from the
concentration of holidays in the quarter. Sale of frozen squid is more
significant in the third and fourth quarters due to the seasonal catch which
occurs in the second quarter.
<PAGE>
10. DEPENDENCE ON PUBLIC TRENDS.
The Company's business is subject to the effects of changing customer
preferences and the economy, both of which are difficult to predict and over
which the Company has no control. A change in either consumer preferences or a
down-turn in the economy would affect the Company's business prospects. Because
the Company is dependent on financing, any increase in interest rates will
increase the Company's credit costs, thus reducing potential profits.
11. POTENTIAL PRODUCT LIABILITY.
As a participant in the distribution chain between the manufacturer and
consumer, the Company would likely be named as a defendant in any product
liability action brought by a consumer. To date, no claims have been asserted
against the Company for products liability; however, there can be no assurance
that such claims will not arise in the future. Currently, the Company does not
carry product liability insurance. Because no products liability claim is
currently covered by insurance and if the Company is unable to recover damages
from the manufacturer or supplier of the product that caused such injury, the
Company may be required to pay some or all of such claim from its own funds. Any
such payment could have a material adverse impact on the Company.
12. RELIANCE ON COMMON CARRIERS MAY IMPACT BUSINESS.
The Company does not utilize its own trucks in its business and is
dependent, for shipping of product purchases, on common carriers in the trucking
industry. Although the Company uses several hundred common carriers, the
trucking industry is subject to strikes from time to time, which could have a
material adverse effect on the Company's operations if alternative modes of
shipping are not then available. Additionally the trucking industry is
susceptible to various natural disasters which can close transportation lanes in
any given region of the country. To the extent common carriers are prevented
from or delayed in utilizing local transportation lanes, the Company will likely
incur higher freight costs due to the limited availability of trucks during any
such period that transportation lanes are restricted.
13. LITIGATION.
The Company is named as a defendant in various lawsuits arising from
the liquidation of Island Frozen Dairy ("IFD"), a previous wholly-owned
subsidiary of the Company. While it is not reasonably possible to estimate the
amount of losses in excess of amounts accrued and reserved for such losses, if
any, that may arise out of such litigation, management believes that the outcome
may have a material effect on the operations of the Company. The extent of the
above mentioned litigation does not exceed $100,000.
The Company has negotiated a settlement agreement with Proctor & Gamble
Distributor Company in connection with disputes relating to promotional rebates
that are due the Company and outstanding accounts payable due Proctor & Gamble.
Failure to honor the terms of the settlement agreement may have a material
adverse effect on the Company's business.
<PAGE>
Two former officers of IFD were awarded through arbitration $467,000
under disputed employment contracts. The award has been converted to a judgment
against Krantor and Affiliated Island Grocers d/b/a Island Frozen & Dairy. The
Company settled all actions relating to this case for $300,000 in shares of the
Common Stock on November 6, 1997. Failure to honor the terms of the settlement
will have an adverse effect on the Company.
The Company is subject to other legal proceedings and claims which
arise in the ordinary course of its business. In the opinion of management, the
amount of ultimate liability with respect to these actions will not materially
affect the financial position, results of operations or cash flows of the
Company, but there can be no assurance as to this.
COMMON STOCK
1. POSSIBLE LOSS OF NASDAQ SMALL CAP LISTING.
Krantor currently qualifies for trading on the Nasdaq SmallCap system.
Nasdaq has adopted, and the Commission has approved, certain changes to its
maintenance requirements which will become applicable to Krantor on February 28,
1998, including the requirement that a stock listed in such market have a bid
price greater than or equal to $1.00. The bid price per share for the Common
Stock has been below $1.00 in the past and the Common Stock has remained on the
Nasdaq Small Cap System because Krantor has complied with the alternative
criteria which will be eliminated under the new rules. If the bid price
continues below $1.00 per share after February 28, 1998, the Common Stock could
be delisted from the Nasdaq Small Cap System and thereafter trading would be
reported in the NASD's OTC Bulletin Board or in the "pink sheets." In the event
of delisting from the Nasdaq Small Cap System, the Common Stock would become
subject to rules adopted by the Commission regulating broker-dealer practices in
connection with transactions in "penny stocks." The disclosure rules applicable
to penny stocks require a broker-dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized list disclosure
document prepared by the Commission that provides information about penny stocks
and the nature and level of risks in the penny stock market. In addition, the
broker-dealer must identify its role, if any, as a market maker in the
particular stock, provide information with respect to market prices of the
Common Stock and the amount of compensation that the broker-dealer will earn in
the proposed transaction. The broker-dealer must also provide the customer with
certain other information and must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. Further, the rules require
that following the proposed transaction the broker-dealer provide the customer
with monthly account statements containing market information about the prices
of the securities. These disclosure requirements may have the effect of reducing
the level of trading activity in the secondary market for a stock that becomes
subject to the penny stock rules. If the Common Stock became subject to the
penny stock rules, many broker-dealers may be unwilling to engage in
transactions in the Company's securities because of the added disclosure
requirements, thereby making it more difficult for purchasers of the Common
Stock in this offering to dispose of their shares of the Common Stock.
<PAGE>
2. SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY IMPACT MARKET FOR COMMON
STOCK.
As of January 31, 1998, 4,562,515 shares of the Common Stock were
issued and outstanding. Except for the shares being registered hereunder, no
other shares were "restricted securities" (as such term is defined in Rule
144(a)(3) under the Securities Act) and need to be sold in compliance with Rule
144 or another exemption from the registration requirements under the Securities
Act. Pursuant to this Prospectus, the Selling Securityholders may, from time to
time, offer an aggregate of 1,353,000 shares of the Common Stock, subject to the
Company's possible right to redeem part of such shares (see "Plan of
Distribution"). The possibility that substantial amounts of the Common Stock may
be sold in the public market may have a depressive effect on prevailing market
prices for the Common Stock and, in such event, could impair Krantor's ability
to raise capital in the future through the sale of equity securities.
3. NEGATIVE IMPACT ON VOTING OF PREFERRED STOCK.
The Class A Preferred Stock, $.001 par value (the "Series A Preferred
Stock"), currently entitles the holder to 13 votes for every one share of Class
A Preferred held on all matters on which the holders of the Common Stock may
vote. Accordingly, the holder thereof will, when voting its Class A Preferred
Stock as a single class, currently control approximately 30% of the voting power
of the Company and, therefore, may effectively control the election of all of
the members of the Board of Directors and the business affairs and policies of
Krantor. Such control may also have the effect of delaying, deferring or
preventing a change in control of the Company. The terms of the Class A
Preferred Stock also provide that no additional shares of Class A Preferred
Stock or other preferred stock of the Company may be issued without the approval
of a majority of the holders of the Class A Preferred Stock.
4. NO DIVIDENDS LIKELY.
No dividends have been paid on the Common Stock since inception, nor,
by reason of its current financial status and its contemplated financial
requirements, does Krantor contemplate or anticipate paying any dividends upon
its Common Stock in the foreseeable future.
<PAGE>
RECENT DEVELOPMENTS
CIGAR PRODUCTION AND SALE
DISTRIBUTION RIGHTS
Krantor, through one of its wholly owned subsidiaries (the
"Affiliate"), entered into an exclusive distributorship agreement dated December
31, 1997 (the "Distribution Agreement") with Fabrica De Tobaco Valle Dorado, SA,
a Dominican Republic corporation (the "DR Company") for the sale and
distribution of premium cigars manufactured in and from tobacco grown in the
Dominican Republic. The Affiliate will retain 50% of the profits from the sale
of the cigars and will have discretion as to marketing strategies. The DR
Company owns and/or exclusively leases, for at least the period of the
Distribution Agreement, sufficient land and factory facilities in the Dominican
Republic capable of producing premium hand-made cigars at a capacity of at least
500,000 cigars per month. The Affiliate will have the right to sell the premium
cigars under the several brand names developed to date by the DR Company, as
well as the right to sell brands developed by the Affiliate to fit market niches
which it may locate. The Distribution Agreement is for a term of 25 years with
an option for a second 25 years, for worldwide distribution to locations
directed by the Affiliate. The DR Company, which has shipped over 1,000,000
cigars to the United States since January 1, 1997, has present tobacco inventory
on hand to produce approximately 3,500,000 cigars. The cigars presently marketed
by the DR Company range from hand made short fillers that retail around $2.00
each to premium hand-made long filler cigars that retail as high as $6.00 each.
Under the terms of the Distribution Agreement the Affiliate is to pay the DR
Company for the cigars at cost and to split the profit derived from their
resale. In addition, the Affiliate is to advance the costs needed for the sale,
promotion, marketing, advertising, shipping to customers and all applicable
taxes, and would be responsible for exhibition of the goods at trade shows and
other advertising shows and publicity vehicles, all of which expenses would be
deducted as costs, together with other costs of goods, including but not limited
to delivery expense, distribution, selling, marketing, tobacco taxes and excise
taxes, before arriving at the "profit" to be split. Management of the Company
believes that the Company's historical inroads into the consumer goods
distribution network will provide advantageous opportunity for establishment and
enhancement of distribution channels for the cigars. There can be, of course, no
assurance that the Affiliate will be successful in marketing cigars, especially
in view of the various factors discussed under this caption "Recent
Developments" and certain of the risks discussed under "Risk Factors."
CIGAR PRODUCTION
According to statistics compiled by The Cigar Insider, the Dominican
Republic produces and exports more premium cigars into the United States than
any other country in the world. It has a strong lead over all other cigar
exporting nations, with nearly 50% of the market. Industry experts rate cigars
manufactured in the Dominican Republic third in the world in quality, trailing
only those from Cuba and Jamaica.
<PAGE>
Cuban cigars cannot be exported into the United States as a result of
the 1962 trade embargo. Neither Krantor nor any of its wholly-owned subsidiaries
currently distribute or engage in any transactions involving Cuban cigars or any
other products of Cuban origin. Removal of the trade embargo and the resultant
distribution of Cuban cigars into the United States could have a material
adverse effect on the prospective business for the Affiliate.
COMPETITION
The cigar distribution industry is dominated by a small number of large
companies which are well known to the public. Management believes that, as a
distributor of premium cigars, the Affiliate will compete with a smaller number
of primarily regional distributors, including Southern Wine and Spirits,
Specialty Cigars, Inc., Cohabico and Old Scottsdale Cigar Company, Inc. and many
other small tobacco distributors and jobbers. A number of larger, well-known
cigar manufacturing and wholesale companies, along with major cigarette
manufacturers, have not yet entered the retail distribution market to any
appreciable degree, but may do so in the future. Such potential competitors
including JR Cigar Company, Inc., Consolidated Cigar Corporation, Culbro
Corporation, General Cigar Company, Swisher International Inc., Caribbean Cigar
Company and US Tobacco. Many existing and potential competitors have larger
resources than the Company and would, if they enter the cigar distribution
market, constitute formidable competition for the Affiliate's business. There
can be no assurance that the Affiliate will compete successfully in any market.
GOVERNMENT REGULATION AND TOBACCO INDUSTRY LITIGATION
GENERAL. The tobacco industry in general has been subject to regulation
by federal, state and local governments, and recent trends have been toward
increased regulation. Regulations include labeling requirements, limitations on
advertising and prohibition of sales to minors, laws restricting smoking from
public places including office, office buildings, restaurants and other eating
establishments. In addition, cigars have been subject to excise taxation at the
federal, state and local level, and those taxes may increase in the future.
Tobacco products are especially likely to be subject to increases in excise
taxation. Future regulations and tax policies may have a material adverse affect
upon the ability of cigar companies, including the Company, to generate revenue
and profits.
<PAGE>
EXCISE TAXES.
FEDERAL TAXES. Effective January 1, 1991, the federal excise tax rate
on large cigars (weighing more than three pounds per 1,000 cigars) was increased
to 10.625%, capped at $25.00 per 1,000 cigars, and again increased to 12.75%,
capped at $30.00 per 1,000 cigars, effective January 1, 1993. However, the base
on which the federal excise tax is calculated was lowered effective January 1,
1991 to the manufacturer's selling price, net of the federal excise tax and
certain other exclusions. The excise tax on pipe tobacco increased effective
January 1, 1993 to $0.675 per pound. The federal excise tax on little cigars
(weighing less than three pounds per 1,000 cigars) increased from $0.75 per
1,000 cigars to $0.9375 per 1,000 cigars effective January 1, 1993. Management
does not believe that the current level of excise taxes will have a material
adverse effect on the Affiliate's business, but it cannot assure that additional
increases will not have a material adverse effect on the Affiliate's business.
STATE AND LOCAL TAXES. Cigars and pipe tobacco are also subject to
certain state and local taxes. Deficit concerns at the state level continue to
exert pressure to increase tobacco taxes. Since 1964, the number of states that
tax cigars has risen from six to 42. State excise taxes generally range from 2%
to 75% of the wholesale purchase price, and are not subject to caps similar to
the federal cigar excise tax. In addition, seven states have increased existing
taxes on large cigars since 1988. Five states tax little cigars at the same
rates as cigarettes, and four of these states have increased their cigarette
taxes since 1988. Increases in such state excise taxes or new state excise taxes
may in the future have a material adverse effect on the Affiliate's business.
HEALTH REGULATIONS. Cigars, like other tobacco products, are subject to
regulation in the United States at the federal, state and local levels. Together
with changing public attitudes toward smoking, a constant expansion of smoking
regulations since the early 1970s has been a major cause for a substantial
decline in consumption. Moreover, the trend is toward increasing regulation of
the tobacco industry.
<PAGE>
FEDERAL REGULATION. In recent years, a variety of bills relating to
tobacco issues have been introduced in the Congress of the United States,
including bills that would have prohibited the advertising and promotion of all
tobacco products and/or restricted or eliminated the deductibility of
advertising expenses; would have set a federal minimum age of 18 years for use
of tobacco products; would have increased labelling requirements on tobacco
products to include, among other things, addiction warnings and lists of
additives and toxins; would have modified federal preemption of state laws to
allow state courts to hold tobacco manufacturers liable under common law or
state statutes; and would have shifted regulatory control of tobacco products
and advertisements from the FTC to the FDA. In some cases, hearings were held,
but only one of these proposals was enacted. That law requires states, in order
to receive full funding for federal substance abuse block grants, to establish a
minimum age of 18 years for the sale of tobacco products along with an
appropriate enforcement program. The law requires that states report on their
enforcement efforts. Future enactment of the other bills may have an adverse
effect on the sales or operations of the Affiliate.
EPA LITIGATION. The U.S. Environmental Protection Agency (the "EPA")
has recently published a report with respect to the respiratory effects of
passive smoking, which report concluded that widespread exposure to
environmental tobacco smoke presents a serious and substantial public health
impact. In June 1993, Philip Morris Companies Inc. and five other
representatives of the tobacco manufacturing and distribution industries filed
suit against the EPA seeking a declaration that the EPA does not have the
statutory authority to regulate environmental tobacco smoke and that, in view of
the available scientific evidence and the EPA's failure to follow its own
guidelines in making the determination, the EPA 's final risk assessment was
arbitrary and capricious. The litigation is still pending.
FDA REGULATION. The FDA has proposed rules to regulate cigarettes and
smokeless tobacco in order to protect minors. Although the FDA has defined
cigarettes in such a way as to include little cigars, the ruling does not
directly impact large cigars. However, once the FDA has successfully exerted
authority over any tobacco product, the practical impact may be felt by
distributors and manufacturers of any tobacco product. If the FDA is successful,
this may have long-term repercussions on the larger cigar industry. The major
tobacco companies and advertising companies recently brought an action in
federal court in North Carolina challenging FDA regulation of tobacco products.
The court certified its order for immediate appeal and the ultimate resolution
of the litigation is still pending.
STATE REGULATION. In addition, the majority of states restrict or
prohibit smoking in certain public places and restrict the sale of tobacco
products to minors. Places where the majority of states have prohibited smoking
include: any public building designated as non-smoking; elevators; public
transportation; educational facilities; health care facilities; restaurants and
workplaces. Local legislative and regulatory bodies have also increasingly moved
to curtail smoking by prohibiting smoking in certain buildings or areas or by
requiring designated "smoking" areas. In a few states, legislation has been
introduced, but has not passed, which would require all little cigars sold in
those states to be "fire-safe" little cigars, i.e., cigars which extinguish
themselves if not continuously smoked. Passage of this type of legislation and
any other related legislation could have a materially adverse effect on the
Affiliate's cigar business. Currently, the federal Consumer Product Safety
Commission is working to establish such standards for cigarettes. The enabling
legislation, as originally proposed, included little cigars. However, little
cigars were deleted due to the lack of information on fires by these products.
CALIFORNIA-PROPOSITION 65. Although federal law has required health
warnings on cigarettes since 1965, there is no federal law requiring that cigars
or pipe tobacco carry such warnings. However, California requires "clear and
reasonable" warnings to consumers who are exposed to chemicals known to the
state to cause cancer or reproductive toxicity, including tobacco smoke and
several of its constituent chemicals. Violations of its law, Proposition 65, can
result in a civil penalty not to exceed $2,500 per day for each violation.
Although similar legislation has been introduced in other states, no action has
been taken.
<PAGE>
During 1988, 26 manufacturers of tobacco products, including the
largest mass-marketers of cigars, entered into a settlement of legal proceedings
filed against them pursuant to Proposition 65. Under the terms of the
settlement, the defendants agreed to label retail packages or containers of
cigars, pipe tobaccos and other smoking tobaccos other than cigarettes
manufactured or imported for sale in California with the following specified
warning label: "This Product Contains/Produces Chemicals Known To The State of
California To Cause Cancer, And Birth Defects or Other Reproductive Harm."
Although the settlement of the Proposition 65 litigation by its terms only
impacts California, it is not practical for national cigar manufacturers to
confine their warnings labels to cigars earmarked for sale in California.
Consequently, since 1988, most boxes of mass marked cigars manufactured in the
United States carry cancer warning labels.
TOBACCO INDUSTRY LITIGATION. Historically, the cigar industry has not
experienced material health-related litigation. However, litigation against
leading United States cigarette manufacturers seeking compensatory and, in some
cases, punitive damages for cancer and other health effects alleged to have
resulted from cigarette smoking is pending.
PROPOSED SETTLEMENT WITH STATES. Several states have sued tobacco
companies seeking to recover the monetary benefits paid under Medicaid to treat
residents allegedly suffering from tobacco-related illnesses. On June 20, 1997,
the Attorneys General of 40 states and the major United States tobacco companies
announced a proposed settlement of the litigation, which, if approved by the
United States Congress, would require significant changes in the way United
States cigarette and tobacco companies do business. The potential impact, if
any, on the cigar industry is uncertain, especially in view of the fact that it
is not certain as to what the final terms of the settlement will be even as to
cigarettes. However, the potential limitations on advertising, the distribution
of anti-nicotine literature and the limitations on smoking areas are just
examples of provisions which could, if adopted, adversely impact the cigar
industry and thus the operations of the Affiliate..
OTHER STATE ACTIONS. Florida and Massachusetts have enacted statutes
permitting suit against the tobacco companies to recoup Medicaid costs and,
recently, one defendant has entered into a settlement with such plaintiff
states, which provides that the settling defendant will, among other things, pay
a portion of its profits in the future to the plaintiff. Under the Florida
statue, any of the tobacco companies' traditional defenses, such as assumption
of risk, are vitiated. The statute also permits the State to establish causation
(that smoking causes cancer, heart disease and other ailments) through the use
of purely statistical evidence. The tobacco companies have filed suit
challenging the Florida law as unconstitutional.
CLASS ACTIONS. There have been various class actions instituted against
the tobacco companies relating to cigarette smoking, certain of which are still
pending. Although management does not believe that any of the deciding or
pending actions will have a material adverse effect on the Affiliate's cigar
business, there can be no assurance that management's evaluation will be correct
as this litigation evolves. Although there are numerous differences between the
cigar and cigarette industries, the outcome of pending and future cigarette
litigation may encourage various parties to bring suits on various grounds
against cigar industry participants. While it is impossible to quantify what
effect, if any, any such litigation may have on the Affiliate's operations,
there can be no assurance that such litigation would not have a material adverse
effect on its operations.
<PAGE>
OSHA REGULATIONS. The Occupational Safety and Health Administration
("OSHA") has proposed an indoor air quality regulation covering the workplace
that seeks to eliminate nonsmoker exposure to environmental tobacco smoke. Under
the proposed regulation, smoking must be banned entirely from the workplace or
restricted to designated areas of the workplace that meet certain criteria. The
proposed regulation covers all indoor workplaces under OSHA jurisdiction,
including, for example, private residences used as workplaces, hotels and
motels, private offices, restaurants, bars and vehicles used as workplaces. The
tobacco industry is challenging the proposed OSHA regulation on legal,
scientific and practical grounds. It also contends that the proposed regulation
ignores reasonable alternatives . There is no guaranty, however, that this
challenge will be successful. Although management does not believe that the
proposed OSHA regulation would have a material adverse effect on the cigar
industry or the Affiliate, there can be no assurance that such regulation would
not adversely impact the Affiliate.
FACILITIES
The Company has relocated its principal offices to 10850 Perry Way,
Suite 203, Wexford, Pennsylvania near Pittsburgh, Pennsylvania and has arranged
for warehousing, where necessary, on a contract basis. Such facility change was
accomplished because of the lesser need for larger facilities in the wake of the
Company's entering into its distributorship arrangement with its Chinese trading
partner, the latter company being responsible for purchasing, financing,
shipping and handling of all goods distributed for them by the Company. The new
principal offices for the Company were established in Pennsylvania, closer to
the domicile of Krantor's president, Henry Platek, which offices continue to be
used principally as a contact point and are fully accessible by modern
telecommunications. The Company maintains satellite offices in New York, New
Jersey, Florida and the Dominican Republic.
REDEMPTION OF PREFERRED STOCK AND SETTLEMENT ON DIVIDENDS
In December 1997, the Company, by agreement with the holder thereof,
redeemed all o its outstanding Preferred Stock and reached agreement regarding
settlement on outstanding accrued dividends thereon, issuing to such holder
400,000 shares of unlegended common stock (as and for redemption), and an option
(the "Option") to purchase 500,000 additional shares of legended common stock
exercisable at $1.00 per share, together with payment of $350,000 from the
Company to the holder (as settlement on accrued dividends). The Option does not
vest until the Company has reached a pre-tax profit of $1,000,000 and if and
when vested shall be for a five year term. The Preferred Stock was thereafter
re-issued to an affiliate of the Company in recognition of services rendered,
but dividends associated with such Stock have been waived and there will be no
acceptance of redemption thereof unless same is done with the written consent of
the Company's full Board of Directors, such alteration in the terms of the
Preferred Stock being agreeable to the new holder evidenced by written agreement
reached with the Company.
<PAGE>
USE OF PROCEEDS
Krantor will not receive any proceeds from the sale of the Registered
Stock being offered for resale on behalf of the Selling Securityholders. Krantor
will, however, receive $674,000 if all of the Warrants are exercised, which
proceeds will be added to working capital when and if received.
SELLING SECURITYHOLDERS
The following table sets forth certain information regarding the Common
Stock held by Selling Securityholders as of January 31, 1998 and to be owned
after the offering pursuant to this Prospectus. To the best knowledge of
Krantor, the Selling Securityholders have had no material relationship with
Krantor within the past three years, other than as a result of ownership of
securities of Krantor, except as expressly noted. The information in the table
as to a Selling Securityholder has been furnished to Krantor by the respective
Securityholder.
<TABLE>
<CAPTION>
Name & address Number of Shares Percentage (1)
-------------------------------- ---------------------
of Beneficial Owner Before Offered After Before After
- -------------------- ------ ------- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Lorenzo Cocco 142,857(2) 142,857 -0- 3.1% -0-
Via S. Spirito N 14
Milan, Italy 20121
Tullio Petrolini 142,857(2) 142,857 -0- 3.1% -0-
Via S. Spirito N 14
Milan, Italy 20121
Alberto Adrissone 178,570(2) 178,570 -0- 3.9% -0-
39 Avenue Princesse
Grace,
9800 Principautr De Monaco
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name & address Number of Shares Percentage (1)
-------------------------------- ---------------------
of Beneficial Owner Before Offered After Before After
- -------------------- ------ ------- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Quimby Limited 214,287(2) 214,287 -0- 4.7% -0-
Apartado Postal 1777,
35 Barrak Rd., Offshore Center
3rd Floor
Belize City, Belize
Spiga Limited 107,142(2) 107,142 -0- 2.3% -0-
Skelton Building
Road Town
Tortola, British Virgin Islands
Strata Equities Limited 214,287(2) 214,287 -0- 4.7% -0-
East Asia Chambers
Road Town
Tortola, British Virgin Islands
New Millenium Financial 100,000(3) 100,000 -0- 2.2% -0-
Services Ltd.
Wickhams Cay
P.O. Box 662
Road Town
Tortolo, British Virgin Islands
Baytree Associates, Inc. 253,000(4) 253,000 -0- 5.5% -0-
40 Wall Street
New York, New York 10005
</TABLE>
(1) The percentages computed in this column of the table are based upon
4,562,515 shares of the Common Stock outstanding on January 31, 1998
and effect being given, where appropriate, pursuant to Rule
13d-3(d)(1)(i) under the Exchange Act, to shares issuable upon the
exercise of Common Stock purchase warrants and the conversion of the
Convertible Debentures which are currently exercisable or convertible
or exercisable or convertible within 60 days of January 26, 1998.
(2) The shares reported in the table reflect those issued and held in
escrow pending the conversion of a Convertible Debenture and the
exercise of an Investor Warrant.
<PAGE>
(3) The shares reported in this table reflect these issued to settle
Krantor's obligation with respect to a previously outstanding
convertible debenture in the principal amount of $100,000 which was not
converted although eligible for such conversion.
(4) The shares reported in the table reflect (a) 25,000 issued in payment
of certain fees related to a bridge financing and (b) 228,000 shares
issued and held in escrow pending the exercise of the Placement Agent
Warrants.
PLAN OF DISTRIBUTION
GENERAL
The Selling Securityholders have advised Krantor that sales of the
shares of the Registered Stock may be effected from time to time in transactions
(which may include block transactions) in the over-the-counter market at market
prices prevailing at the time of sale or in negotiated transactions at
negotiated prices. The Selling Securityholders may effect such transactions by
selling shares of the Registered Stock directly to purchasers or through
broker-dealers that may act as agents or principals. Such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Securityholders and/or the purchasers of the shares of Registered
Stock for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
The Selling Securityholders and any broker-dealers that act in
connection with the sale of the shares of the Registered Stock as principals may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act and any commissions received by them and any profit on the resale
of the shares of the Registered Stock as principals might be deemed to be
underwriting discounts and commissions under the Securities Act. Krantor has
agreed to indemnify the Selling Securityholders against certain liabilities,
including liabilities arising under the Securities Act. Krantor will not receive
any proceeds from the sale of shares of the Registered Stock by the Selling
Securityholders. Sales of the shares of the Registered Stock by the Selling
Securityholders, or even the potential of such sales, would likely have an
adverse effect on the market price of the Common Stock.
The shares of the Registered Stock are offered by the Selling
Securityholders on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act. Krantor has agreed to pay all expenses incurred in connection
with the registration of the shares offered by the Selling Securityholders;
provided, however, that the Selling Securityholders shall be exclusively liable
to pay any and all commissions, discounts and other payments to broker-dealers
incurred in connection with their sale of the shares.
Krantor, its officers, directors, affiliates and the Selling
Securityholders are obligated to take such steps as may be necessary to ensure
that the offer and sale by the Selling Securityholders of the shares of the
Registered Stock offered by this Prospectus (the "Distribution") shall comply
with the requirements of the federal securities laws, including Regulation M
under the Securities Act and the Exchange Act.
<PAGE>
In general, Regulation M prohibits any Selling Securityholder or a
broker-dealer acting for such Selling Securityholder from directly or indirectly
bidding for, or purchasing any shares of the Common Stock or attempting to
induce any person to bid for or to purchase shares of the Common Stock until
after he, or it has completed his, or its participation in the Distribution.
Rule 102 sets forth certain exceptions for the Selling Securityholders including
exercising a Common Stock purchase warrant.
PRIVATE PLACEMENT ISSUANCE.
1,000,000 of the shares of the Common Stock being offered pursuant to
this Prospectus have been issued and are being held in escrow pending the
conversion of the Convertible Debentures and the exercise of the Investor
Warrants. The holders of the Convertible Debentures and the Investor Warrants
received these securities in connection with a private placement of such
securities pursuant to Rule 506 of Regulation D under the Securities Act in
December 1997 in which Krantor offered and sold seven units for $700,000, each
unit consisting of a Convertible Debenture in the principal amount of $100,000
and an Investor Warrant to purchase 50,000 shares of the Common Stock at $1.10
per share. The principal purpose of this financing was to assist Krantor in
furthering its plans regarding the cigar distribution business (see "Recent
Developments"). The Convertible Debentures are convertible at a conversion price
equal to 70% of the average closing bid price of the Common Stock for the five
trading days immediately preceding the date of conversion as reported on the
Nasdaq SmallCap System or a similar organization if Nasdaq is no longer
reporting such information, or by the National Daily Quotation Bureau, Inc. or a
similar organization if the Common Stock is not quoted on an inter-dealer
quotation system or a national securities exchange. The Convertible Debentures
bear interest at the annual rate of 10%, which amounts of interest are also
convertible on the same basis as the principal amount of the Convertible
Debentures. Any of the shares of the Common Stock held in escrow which are not
delivered to the Selling Securityholders on conversion of the Convertible
Debentures or on exercise of the Investor Warrants and one of the Placement
Agent Warrants (see the succeeding paragraph) will be redeemed by Krantor.
In connection with the private placement, Baytree Associates, Inc.
("Baytree"), in lieu of certain fees for acting as the placement agent, received
25,000 shares of the Common Stock from Krantor. Krantor also issued to Baytree,
as a finder's fee, a Common Stock purchase warrant expiring October 14, 2002 to
purchase 70,000 shares at $1.10 per share, which is the Placement Agent Warrant
mentioned in the preceding paragraph. Baytree is offering the 25,000 shares and
the 70,000 shares issued and being held in escrow pending exercise of the
Placement Agent Warrant pursuant to this Prospectus as a Selling Securityholder.
Baytree is also offering (1) 8,000 shares of the Common Stock relating to the
exercise at $4.00 per share of a Common Stock purchase warrant expiring
September 24, 2000 and (2) 150,000 shares of the Common Stock relating to the
exercise at $1.20 per share of a Common Stock purchase warrant expiring June 8,
2000, both of these Placement Agent Warrants having been issued to Baytree in
connection with prior services to Krantor and the underlying shares of which
having been issued and held in escrow.
<PAGE>
CANCELLATION OF DEBENTURES BY VOLUNTARY SETTLEMENT.
100,000 shares of the Common Stock being offered pursuant to this
Prospectus for sale by the Selling Securityholders were issued by Krantor to New
Millenium Financial Services Ltd. to settle its obligation with respect to a
previously outstanding convertible debenture in the principal amount of $100,000
which was never converted although eligible for such conversion.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed on for Krantor by Randall J. Perry, Esq., Rutherford, New Jersey.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996, and for the year then ended and the consolidated financial statements and
related financial schedules of the Company as of December 31, 1994 and for each
of the two years in the period ended December 31, 1994 and 1995 which were
included in Krantor's Annual Report on Form 10-K for the year ended December 31,
1996, and incorporated herein by reference, have been audited by Belew, Averitt
LLP, independent auditors, as stated in their report appearing therein. In each
case, these financial statements have been so incorporated herein by reference
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
COMMISSION POSITION ON INDEMNIFICATION
The by-laws of Krantor provide for the indemnification of officers and
directors to the maximum extent allowable under Delaware law. Insofar as the
indemnification for liabilities arising under the Securities Act may be
permitted to directors and officers or persons controlling Krantor pursuant to
such provisions, Krantor has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Krantor of expenses incurred
or paid by a director, officer or controlling person of Krantor in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Krantor will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
=======================
No dealer, salesperson or other person has been
authorized to give any information or to make any
representations in connection with this offering KRANTOR CORPORATION
other than those contained in this Prospectus and, if
given or made, such information or representations 1,353,000 Shares Of Common Stock Offered By Selling
must not be relied upon as having been authorized by Securityholders
the Company. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy
the securities offered hereby to any person in any
state or other jurisdiction in which such offer or
solicitation would be unlawful. Neither the delivery
of this Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that
the information contained herein is correct as of any
time subsequent to the date hereof.
__________________
TABLE OF CONTENTS
Page
Additional Information............. 2 _______________
Documents Incorporated
By Reference..................... 2 PROSPECTUS
The Company........................ 3 _______________
Risk Factors....................... 4
Recent Developments................ 11
Use of Proceeds.................... 16
Selling Stockholders............... 16
Plan of Distribution............... 18
Legal Matters...................... 20
Experts............................ 20
Commission Position on
Indemnification................. 20
Until ___________, 1998 (___ days after the ___, 1998
date of the Prospectus), all dealers effecting
transactions in securities offered hereby, whether or
not participating in this
=======================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Estimated expenses payable in connection with the sale of shares of the
Common Stock, $.001 par value, of Krantor Corporation (the "Registrant") offered
hereby are as follows:
Amount
Securities and Exchange Commission Registration Fee $ 820.00
Legal Fees and Expenses $ 40,000.00
Accounting Fees and Expenses $ 2,500.00
Printing and Engraving Expenses $ 1,000.00
Transfer Agent and Escrow Agents Fees and Expenses $ 5,000.00
Listing Fees $ 12,500.00
Miscellaneous $ 5,000.00
-------------
Total $ 66,820.00
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Section 145 of the General Corporation Law of the State of Delaware
provides as follows:
(a) A corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgment, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the corporation, and with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
<PAGE>
(b) A corporation shall have the power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of this
section or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsections (a) and (b)
of this section. Such determination shall be made (1) by the board of directors
by a majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
<PAGE>
(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement or expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under this section.
(h) For purposes of this Section, references to "the
corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent corporation, or is or was serving at the request of
such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this Section, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this section.
(j) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person."
<PAGE>
(b) As permitted by Section 145 of the Delaware General Corporation
Law, the Registrant's Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit. In addition, as
permitted by Section 145 of the Delaware General Corporation Law, the Bylaws of
the Registrant provide that (i) the Registrant is required to indemnify its
directors, executive officers and employees with respect to any action, suit or
proceeding by reason of the fact that he is or was a director, officer or
employee of the Registrant, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him in connection with such action, suit or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Registrant, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful; (ii)
upon receipt of an undertaking to repay such advances if indemnification is
determined to be unavailable, the Registrant may advance expenses as incurred,
to its directors and executive officers to the fullest extent permitted by the
Delaware General Corporation Law in connection with a proceeding (except if a
determination is reasonably and promptly made by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to the
proceeding or, in certain circumstances, by independent legal counsel in a
written opinion that the facts known to the decision making party demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to the best interests of the
corporation); (iii) the rights conferred in the Bylaws are not exclusive and the
Registrant is authorized to enter into indemnification agreements with its
directors, officers, employees and agents; (iv) the Registrant may not
retroactively amend the By-law provisions relating to indemnification; and (vi)
to the fullest extent permitted by the Delaware General Corporation Law, a
director or executive officer will be deemed to have acted in good faith and in
a manner he or she reasonably believed to be in or not opposed to the best
interest of the Registrant, and, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe that his or her conduct
was unlawful, if his or her action is based on information, opinions, reports
and statements, including financial statements and other financial data, in each
case prepared or presented by:
(i) one or more officers or employees of the corporation whom
the director or executive officer believed to be reliable and competent in the
matters presented;
(ii) counsel, independent accountants or other persons as to
matters which the director or executive officer believed to be within such
person's professional competence; and
(iii) with respect to a director, a committee of the Board
upon which such director does not serve, as to matters within such Committee's
designated authority, which committee the director believes to merit confidence;
so long as, in each case, the director or executive officer acts without
knowledge that would cause such reliance to be unwarranted.
The indemnification provisions contained in the By-Laws may be
sufficiently broad to permit indemnification of the Registrant's executive
officers and directors for liabilities arising under the Securities Act of 1933,
as amended (the "Securities Act"). For information as to a limitation on
indemnification of directors, officers and controlling persons of the
Registrant, see the last undertaking in Item 17 to this Registration Statement.
<PAGE>
ITEM 16. EXHIBITS.
Exhibit No. Description of Exhibit
- ----------- ----------------------
5 Opinion of Randall J. Perry, Esq.
23.1 Consent of Belew Averitt L.L.P.
Exhibit No. Description of Exhibit
- ----------- ----------------------
23.2 Consent of Randall J. Perry, Esq. (included in Exhibit 5)
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(a) To include any Prospectus required by Section 10(a)(3) of
the Securities Act;
(b) To reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(c) To include any material information with respect to the
plan or distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;provided,
however, that paragraphs (1)(a) and (1)(b) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission (the "Commission") by the Registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that are incorporated by reference in the Registration Statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for the purpose of determining any liability under the
Securities Act, each filing of the Registrant's Annual Report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) To deliver or cause to be delivered with the Prospectus, to each
person to whom the Prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the Prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the Prospectus,
deliver, or cause to be delivered to each person to whom the Prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
<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
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in Deer Park, State of New York, on February 4, 1998.
KRANTOR CORPORATION
By: /s/ Henry Platek, President
------------------------------------
Henry Platek, President
<PAGE>
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Krantor Corporation,
hereby severally and jointly constitute and appoint Henry Platek and/or Mair
Faibish and/or Mitchell Gerstein, and each of them singly, our true and lawful
attorneys, with full power to them and each of them singly, to sign for us in
our names in the capacities indicated below, all pre-effective and
post-effective amendments to this Registration Statement, and generally do all
things in our names and on our behalf in such capacities to enable Krantor
Corporation to comply with the provisions of the Securities Act of 1933, as
amended, and all requirements of the Securities and Exchange Commission.
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.
<TABLE>
<CAPTION>
Name and Signature Title(s) Date
- ------------------ -------- ----
/s/ Henry Platek
- ----------------------------
<S> <C> <C>
Henry Platek President, Chief Executive Officer February 4, 1998
and Chairman of the Board
(Principal Executive Officer)
/s/ Mair Faibish
- ----------------------------
Mair Faibish Executive Vice President, February 4, 1998
Chief Financial Officer, and Director
/s/ Mitchell Gerstein
- ----------------------------
Mitchell Gerstein Secretary, Chief Accounting Officer February 4, 1998
Chief Financial Officer, and Director
/s/ Dominic A. Marsicovetere
- ----------------------------
Dominic A. Marsicovetere Director February 4, 1998
/s/ Michael V. Ferrone
- ----------------------------
Michael V. Feronne Director February 4, 1998
</TABLE>
EXHIBIT 5
Krantor Corporation
10850 Perry Way
Suite 203
Wexford, PA 15090
Re: Registration Statement on Form S-3
--------------------------------------
Gentlemen:
We have acted as special counsel to Krantor Corporation (the "Company")
in connection with the registration under the Securities Act of 1933, as amended
(the "Act"), of 1,353,000 shares of the Company's Common Stock, $.001 par value
(the "Common Stock"), to be sold by certain securityholders of the Company,
including the holder of the Company's 10% Subordinated Debentures due October
15, 2000 (the "Convertible Debentures") and certain Common Stock purchase
warrants (the "Warrants") pursuant to a Registration Statement to be filed on
Form S-3 (the "Registration Statement").
In rendering the opinion set forth below, we have examined certain
corporate records of the Company, including its Certificate of Incorporation, as
amended, its By-laws, minutes of meetings of its Board of Directors and
shareholders and such other documents, instruments and certificates of
government officials and officers of the Company as we have deemed necessary.
In making our examination as set forth above, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic copies, the authenticity of the originals of such
latter documents, the legal capacity of all natural persons executing the
documents and the accuracy and completeness of all corporate records made
available to us by the Company.
We have made such examination of the General Corporation Law of the
State of Delaware as we have deemed relevant for purposes of this opinion, but
we have not made any review of the laws of any other state or jurisdiction.
Accordingly, this opinion is limited to the General Corporation Law of the State
of Delaware.
<PAGE>
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is validly existing as a corporation under said General
Corporation Law; and
2. The shares of the Common Stock to be delivered pursuant to the
conversion or exercise of the Debentures or the Warrants, as further described
in the Prospectus to be included in the Registration Statement, are duly
authorized, and, when delivered upon conversion of the Debentures and/or the
exercise of the Warrants will be validly issued, fully paid and non-assessable.
The other shares of the Common Stock offered by the Prospectus are duly
authorized, validly issued, fully paid and non-assessable..
We consent to the filing of the opinion as an exhibit to the
Registration Statement and the reference to our firm in the Registration
Statement in the section entitled "Legal Matters".
Very truly yours,
By: /s/ Randall J. Perry
---------------------------
RANDALL J. PERRY
February 4, 1998
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to (a) the incorporation by reference in this registration
statement of Krantor Corporation on Form S-3 of our report dated April 4, 1997
on our audit of the consolidated financial statements and financial statement
schedules of Krantor Corporation as of December 31, 1996 and for the year then
ended and as of December 31, 1995 and for the year then ended and that ended
December 31, 1994 which report is included in the 1996 Annual Report on Form
10-K, which is incorporated by reference in this Registration Statement on Form
S-3 and (b) the reference to us under the heading "Experts" in the Prospectus
which is part of said Registration Statement.
BELEW AVERITT L.L.P.
Dallas, Texas
January 30, 1998
