RAINFOREST CAFE INC, S-1, 1996-08-27

RAINFOREST CAFE INC
S-1, 1996-08-27
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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 27, 1996

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RAINFOREST CAFE, INC.
(Exact Name of Registrant as specified in its Charter)

<TABLE>
<S> <C> <C>
MINNESOTA 5812 41-1779527
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation) Classification Code Number) Identification Number)
</TABLE>

-------------------------

720 SOUTH FIFTH STREET
HOPKINS, MINNESOTA 55343
(612) 945-5400
(Address and Telephone Number of Principal Executive Offices)

MARTIN O'DOWD, PRESIDENT
RAINFOREST CAFE, INC.
720 SOUTH FIFTH STREET
HOPKINS, MINNESOTA 55343
(612) 945-5400
(Name, Address, and Telephone Number of Agent For Service)

Copies to:

<TABLE>
<S> <C>
NEIL I. SELL, ESQ. EDWARD S. ROSENTHAL, ESQ.
DOUGLAS T. HOLOD, ESQ. Fried, Frank, Harris, Shriver & Jacobson
Maslon Edelman Borman & Brand, 725 South Figueroa Street, 38th Floor
A Professional Limited Liability Partnership Los Angeles, CA 90017-5438
3300 Norwest Center
Minneapolis, MN 55402
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box: / /.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of 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 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. / /
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CALCULATION OF REGISTRATION FEE

<TABLE>
<S> <C> <C> <C>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE(1)(2) REGISTRATION FEE
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Common Stock, no par value...................... 2,875,000 shares $76,546,875 $26,395.47
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</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee.
(2) Pursuant to Rule 457(c) on the basis of the average of the high and low
sales price per share of such common stock on the Nasdaq National Market on
August 23, 1996.
-------------------------

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 THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE 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.
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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED AUGUST 27, 1996

2,500,000 SHARES

[RAINFOREST LOGO]
COMMON STOCK

Of the 2,500,000 shares of Common Stock offered hereby, 2,300,000 are being
sold by Rainforest Cafe, Inc. (the "Company") and 200,000 shares are being sold
by the Selling Shareholders. See "Principal and Selling Shareholders." The
Company will not receive any of the proceeds from the sale of shares by the
Selling Shareholders.

The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "RAIN." On August 26, 1996, the last sale price of the Common Stock
as reported on the Nasdaq National Market was $26 1/2 per share. See "Price
Range of Common Stock."

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<S> <C> <C> <C> <C>
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Proceeds to
Price Underwriting Proceeds to Selling
to Public Discount(1) Company(2) Shareholders
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Per Share.................. $ $ $ $
Total(3)................... $ $ $ $
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</TABLE>

(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.

(2) Before deducting expenses payable by the Company estimated at $400,000.

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to 375,000 additional shares of Common Stock solely to cover
over-allotments, if any. If the Underwriters exercise this option in full,
the Price to Public will total $ , the Underwriting Discount will
total $ and the Proceeds to Company will total $ . See
"Underwriting."

The shares of Common Stock are offered by the Underwriters named herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that delivery of the certificates
representing such shares will be made against payment therefor at the office of
Montgomery Securities on or about , 1996.
------------------------

MONTGOMERY SECURITIES

DAIN BOSWORTH
INCORPORATED

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

LADENBURG, THALMANN & CO. INC.

, 1996
<PAGE> 3

[PHOTOS]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ, IN THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME. IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
THE NASDAQ IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF
1934. SEE "UNDERWRITING."

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and Financial Statements, including the notes thereto,
appearing elsewhere in this Prospectus. All information in this Prospectus
reflects the Company's three-for-two stock split effective July 1, 1996. Except
as otherwise specified, all information in this Prospectus assumes no exercise
of the Underwriters' over-allotment option.

THE COMPANY

The Company owns and operates four large, high volume, themed
restaurant/retail facilities under the name "Rainforest Cafe -- A Wild Place to
Shop and Eat" (a "Rainforest Cafe" or "Unit"). The Company's Units are designed
to provide a visually and audibly stimulating and entertaining rainforest
environment that appeals to a broad range of customers of all ages. Each
Rainforest Cafe consists of a dining area (the "Restaurant") and a retail area
(the "Retail Village"). The Restaurant provides an attractive value to customers
by offering a full menu of high quality food and beverage items, generous
portions and excellent service in a unique and exciting environment. The Retail
Village features apparel and gifts with the Rainforest Cafe logo and eight
proprietary animal characters, and other items reflecting the rainforest theme.

The Company currently operates Rainforest Cafes at the Mall of America in
Bloomington, Minnesota, a suburb of Minneapolis, at the Woodfield Mall in
Schaumburg, Illinois and Gurnee Mills in Gurnee, Illinois, both suburbs of
Chicago, and at Walt Disney World Marketplace near Orlando, Florida. The Company
is developing two additional Rainforest Cafes in 1996, at Tysons Corner Center I
in McLean, Virginia, a suburb of Washington, D.C., and at Sawgrass Mills in Fort
Lauderdale, Florida, both scheduled to open in the fourth quarter of 1996. The
Company plans to open seven additional Rainforest Cafes during 1997. The Trump
Taj Mahal Casino and Hotel Unit in Atlantic City, New Jersey and the Palisades
Center Unit in West Nyack, New York are scheduled to open during the second
quarter of 1997. The Company plans to open Units at Stratosphere in Las Vegas,
Nevada, South Coast Plaza in Costa Mesa, California and The Source in Westbury,
Long Island, New York in the third quarter of 1997. Units located at the MGM
Grand Hotel and Casino in Las Vegas, Nevada and at Grapevine Mills near Dallas,
Texas are scheduled to open during the fourth quarter of 1997. The Company plans
to open six Units in 1998, including Units at Disney's Animal Kingdom near
Orlando, Florida and at the Aventura Mall in Miami, Florida, both scheduled to
open in the second quarter of 1998, and at Cherry Creek Mall in Denver,
Colorado, which is scheduled to open during the third quarter of 1998. The
Company has signed leases for all these Units, with the exception of the MGM
Grand Hotel and Casino and the Aventura Mall Units, with respect to which the
Company is negotiating leases.

The Company is currently negotiating an exclusive license agreement with
Empresas de Comunicacion y Entretenimiento ("ECE"), the owner and operator of
eight Hard Rock Cafes, five Planet Hollywoods and an Official All-Star Cafe in
Mexico, under which ECE will develop seven Rainforest Cafes in Mexico over a ten
year period. Pursuant to this agreement, the Company will receive a
non-refundable development fee at the time of execution of the agreement, per
Unit development fees, and license fees based on a percentage of gross sales.
The Company anticipates that the first Rainforest Cafe to be opened under the
ECE license agreement will be in Cancun in the second quarter of 1997. The
Company is also negotiating an exclusive license agreement with Glendola Leisure
Limited ("Glendola"), a wholly owned subsidiary of the Foundation Group, a
London-based hotel and restaurant operator, under which Glendola will develop
five Rainforest Cafes in the United Kingdom and Ireland over a ten year period.
Pursuant to this agreement, the Company will have the option to purchase up to
20% of the equity interest in any Unit developed by Glendola, will receive per
Unit development fees, and will receive license fees based on a percentage of
gross sales. The Company anticipates that the first Rainforest Cafe to be opened
under this joint venture will be in London during the third quarter of 1997.

The Company's rainforest theme is promoted by a simulated rainforest
environment throughout the Unit. Each Rainforest Cafe features a visually and
audibly exciting environment that includes a variety of live tropical birds,
exotic fish in large, custom-designed aquariums, animated artificial animals and
several sculpted banyan trees that create a canopy of foliage over diners and
shoppers. The dynamic rainforest atmosphere is further enhanced by simulated
thunder and lightning storms, tropical rain showers, waterfalls, mists that

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emanate from extensive rock formations, and specially-developed aromatic scents.
This entertaining rainforest environment makes each Rainforest Cafe "A Wild
Place to Shop and Eat."

The Restaurant features an assortment of theme-titled, casual menu items
including appetizers, salads, pastas, pizzas, sandwiches, burgers and full
entree platters all served in generous portions. Lunch and dinner entrees range
in price from $7.95 to $15.95, with an average check per person of approximately
$11.80 for the twenty-six week period ended June 30, 1996. Each Rainforest Cafe
also features a "Mushroom Bar," which, in addition to being a full bar, offers
tropical blends of fruit and vegetable juices, and coffees. Alcoholic beverages
are primarily served to complement meals and account for approximately 10% of
total Restaurant sales. Management believes that its high quality food and
customer service, combined with its exciting and entertaining rainforest theme
concept, have resulted in a high level of repeat business. In order to enter the
Restaurant, all customers must pass through the Unit's Retail Village. The
Retail Village offers over 4,000 stock keeping units ("SKUs") and includes
apparel and gifts with the Rainforest Cafe logo and other items reflecting the
rainforest theme such as toys and educational games. The Company has also
developed eight proprietary animal characters ("Animal Characters"), each with a
distinct personality, as an additional method of merchandising its retail
products. The Animal Characters appear on clothing and gift items. By offering
items featuring the Rainforest Cafe logo or an Animal Character, the Company
believes it is building "brand equity" in the Rainforest Cafe name that will
allow it to attract more customers and to enhance its competitive retail
position. For the twenty-six week period ended June 30, 1996, the Restaurants
and the Retail Villages in the Company's three operating Units accounted for
approximately 80% and 20% of the Units' total revenues, respectively.

For the twenty-six week period ended June 30, 1996, the Mall of America
Unit generated revenues of $5.2 million, operating income of $1.0 million, or
20.1% of revenues, and cash flow of $1.3 million, or 24.3% of revenues. Cash
flow represents the Unit's operating income before depreciation and
amortization. This 14,900 square foot Unit was developed at a cost of
approximately $3.9 million, including costs related to the expansion of its
Restaurant and net of landlord contributions. For this same period, the
Woodfield Mall Unit generated revenues of $6.7 million, operating income of $1.2
million or 18.5% of revenues (before amortization of pre-opening costs), and
cash flow of $1.6 million, or 23.8% of revenues. This 23,000 square foot Unit
was developed at a cost of approximately $5.9 million, net of landlord
contributions. Additionally, the Company incurred approximately $630,000 in
pre-opening costs and purchased approximately $320,000 of inventory in
connection with the Woodfield opening. The Gurnee Mills Unit opened June 2, 1996
and had revenues for the remainder of the second quarter of $918,000, which may
not be indicative of future results. This 20,000 square foot Unit was developed
at a cost of approximately $4.0 million, net of landlord contributions.
Additionally, the Company incurred approximately $550,000 in pre-opening costs
and purchased approximately $300,000 of inventory in connection with the Gurnee
Mills opening. The Walt Disney World Marketplace Unit opened July 25, 1996 and
had revenues for the four weeks ended August 25, 1996 of $2.2 million, which may
not be indicative of future results. This 30,000 square foot Unit was developed
at an estimated cost of approximately $11.5 million, net of landlord
contributions. Additionally, the Company estimates that it incurred
approximately $1.1 million in pre-opening costs and purchased approximately
$500,000 of inventory in connection with the Disney opening. The Company expects
that most of its future Units will be between 18,000 to 23,000 square feet and
cost between $4.0 and $6.0 million, net of anticipated landlord contributions.
The Company expects that pre-opening and inventory costs at its future locations
will be approximately $600,000 and $400,000, respectively. The Company also
expects to open selected Units, such as its planned Units at the Trump Taj Mahal
Casino and Hotel, the MGM Grand Hotel and Casino and Disney's Animal Kingdom,
which may cost significantly more.

The Company was incorporated in 1994 under the laws of the State of
Minnesota. Its executive offices are located at 720 South Fifth Street, Hopkins,
Minnesota 55343, and its telephone number is (612) 945-5400.

4
<PAGE> 6

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.............. 2,300,000 shares
Common Stock offered by the Selling 200,000 shares
Shareholders...................................
Common Stock to be outstanding after the 16,237,555 shares(1)
offering.......................................
Use of proceeds.................................. To finance the development and opening of
additional Rainforest Cafes, and to
provide working capital. See "Use of
Proceeds."
Nasdaq National Market Symbol.................... RAIN
</TABLE>

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(1) Does not include: (i) 1,500,000 shares reserved for issuance under the
Company's 1995 Stock Option and Compensation Plan, of which options to
purchase 1,036,244 shares are outstanding; (ii) options to purchase 275,001
shares of Common Stock issued to an officer employee and non-officer
employee of the Company; (iii) 137,500 shares reserved for issuance upon
exercise of Directors' Stock Options (as defined herein); and (iv) 225,000
shares reserved for issuance under the Company's 1996 Employee Stock
Purchase Plan, none of which shares have been issued.

SUMMARY OF SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
TWENTY-SIX
FEBRUARY 3, 1994 WEEKS ENDED
(INCEPTION) THROUGH YEAR ENDED -------------------
JANUARY 1, DECEMBER 31, JULY 2, JUNE 30,
1995 1995 1995 1996
-------------------- ------------ ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:(1)
Revenues:
Restaurant sales.............................. $ 1,337 $9,979 $ 3,312 $ 10,312
Retail sales.................................. 729 3,472 1,182 2,502
-------- ------- -------- --------
Total revenues............................. 2,066 13,451 4,494 12,814
Restaurant and retail operating income.......... (19) 2,166 616 2,176
Income (loss) before income taxes and
extraordinary item............................ (1,628) 1,169 2 2,131
Income (loss) before extraordinary item......... (1,628) 1,169 2 1,381
Extraordinary item(2)........................... -- 1,053 1,053 --
-------- ------- -------- --------
Net income (loss)............................... $ (1,628) $ 116 $(1,051) $ 1,381
Net income (loss) per common share before
extraordinary item............................ $ (0.46) $ 0.16 $ 0.00 $ 0.10
Net income (loss) per common share.............. $ (0.46) $ 0.02 $ (0.14) $ 0.10
Weighted average shares outstanding............. 3,543 7,312 7,630 14,027
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
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ACTUAL AS ADJUSTED(3)
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(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital................................................... $ 74,187 $131,690
Total assets...................................................... 114,986 172,489
Total liabilities................................................. 11,784 11,784
Shareholders' equity.............................................. 103,202 160,705
</TABLE>

(2) On April 7, 1995, the holders of $1,222,500 of promissory notes converted
such notes into shares of Common Stock at a conversion price of $2.67 per
share. The Company recorded the conversion as an extinguishment of debt
which resulted in an extraordinary charge to earnings of $1,053,128, or
$0.14 per share, at the date of conversion.

(3) As adjusted to give effect to the sale by the Company of 2,300,000 shares of
Common Stock at an assumed public offering price of $26.50 per share and
the application of the net proceeds therefrom.

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RISK FACTORS

The following factors should be considered, together with the other
information in this Prospectus, in evaluating an investment in the Company.

GROWTH FACTORS/EXPANSION STRATEGY

Future growth will depend to a substantial extent on the Company's ability
to increase the number of its Units. The Company presently plans to open two
Units in the fourth quarter of 1996, seven Units in 1997 and six Units in 1998.
The Company's primary strategy is to develop new Rainforest Cafes in shopping
malls, entertainment centers and Disney theme parks. Because of the relatively
large size of each Rainforest Cafe and the Company's site selection criteria,
the availability of desirable locations may be limited and the Company may be
hindered in finding suitable locations for the development of new Units.
Additionally, the Company's ability to open additional Units will depend upon a
number of other factors including the ability of the Company to negotiate leases
on acceptable terms, timely approval of local regulatory authorities, acceptance
of the Rainforest Cafe concept in new markets, and the general state of the
economy.

The capital resources required to develop each new Unit are significant.
The Company estimates that the costs of developing and opening most of its
future Units will range from $4.0 million to $6.0 million, net of anticipated
landlord contributions. The Company expects that it will incur approximately
$600,000 in pre-opening costs and purchase approximately $400,000 of inventory
in connection with the opening of future Units. The Company also expects to open
selected Units, such as its planned Units at the Trump Taj Mahal Casino and
Hotel, the MGM Grand Hotel and Casino and Disney's Animal Kingdom, which may
cost significantly more. The Company believes that the net proceeds of this
offering, combined with cash on hand and cash generated from future operations,
will provide the Company with the financing required to develop its Units
through 1998. The Company may require additional equity or debt financing to
continue expansion beyond the planned Units.

The Company's ability to open and successfully operate additional Units
will also depend upon the hiring and training of skilled Unit management
personnel and the general ability to successfully manage growth, including
monitoring Units and controlling costs, food quality and customer service.
Accordingly, there can be no assurance that the Company will be able to open new
Units or that, if opened, those Units can be operated profitably. See "Business
- -- Expansion Plans and Site Selection."

LIMITED BASE OF OPERATIONS

The Company currently operates four Units and plans to open two Units in
the fourth quarter of 1996, seven Units in 1997 and six Units in 1998. The
combination of the relatively small number of locations and the significant
investment associated with each new Unit may cause the operating results of the
Company to fluctuate significantly and adversely affect the profitability of the
Company. Due to this relatively small number of current and planned locations,
poor operating results at any one Unit or a delay in the planned opening or
nonopening of a Unit could materially affect the profitability of the entire
Company. Future growth in revenues and profits will depend to a substantial
extent on the Company's ability to increase the number of its Units. Because of
the substantial financial requirements associated with opening new Units, the
investment risk related to any one Rainforest Cafe is much larger than that
associated with most other companies' restaurant or retail venues. The Company's
history does not provide any meaningful basis for prediction as to whether
individual Units will tend to show increases or decreases in comparable Unit
sales or the future mix of restaurant and retail revenues. Other restaurant
companies opening to similarly high per unit sales often do not show significant
comparable store sales increases.

Two of the Company's four existing Units, Walt Disney World Marketplace and
Gurnee Mills, have been open for a very short time. In addition, the Walt Disney
World Marketplace Unit represents the Company's first Unit outside of a mall and
was opened during the summer vacation season. Accordingly, initial sales at
these Units may not be indicative of their future results. Three of the
Company's planned Units, at Palisades in West Nyack, New York, The Source in
Westbury, Long Island, New York and Grapevine Mills near Dallas, Texas, are
being developed at newly constructed shopping malls that have no operating
history. Any

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delay in the opening of such shopping malls or the poor performance of these
malls could negatively impact these Units and the financial performance of the
Company. Similarly, Disney's Animal Kingdom has no operating history and the
performance of this Unit and its scheduled opening are also subject to the risks
of new developments. The Company plans to open its Stratosphere Unit in the
third quarter of 1997. Stratosphere has limited operating history and to date
has performed lower than expectations. Stratosphere is currently exploring
various financial restructuring alternatives and such restructuring or a
continuation of lower than expected performance could delay the scheduled
opening or otherwise negatively impact the results of operations at this Unit
and the Company.

LACK OF SIGNIFICANT OPERATING HISTORY

The Company opened its first Rainforest Cafe in the Mall of America in
October 1994, which is the only Unit that has been open for more than one year.
Accordingly, the Company's operations are subject to several of the risks
inherent in the establishment of a new business enterprise, including the lack
of significant operating history. Although the Company has had an operating
profit since the second quarter of 1995, there can be no assurance that future
operations will be profitable. Future revenues and profits, if any, will depend
upon various factors, including market acceptance of the Rainforest Cafe
concept, the quality of Restaurant and Retail Village operations, and general
economic conditions.

LIMITED TRADING HISTORY OF COMMON STOCK; STOCK PRICE VOLATILITY

The Company's Common Stock has been traded on the Nasdaq SmallCap(SM)
Market or Nasdaq National Market since its IPO in April 1995 and the market
price of its Common Stock has risen substantially since that time. The market
price of the Common Stock could fluctuate substantially due to a variety of
factors, including market perception of the Company's ability to achieve
successfully its planned rapid growth, quarterly operating results of the
Company or other restaurant and retail companies, the trading volume in the
Company's Common Stock, changes in general conditions in the economy, the
financial markets or the restaurant or retail industries, or other developments
affecting the Company or its competitors. In addition, the stock market is
subject to extreme price and volume fluctuations. This volatility has had a
significant effect on the market prices of securities issued by many companies
for reasons unrelated to the operating performance of these companies. See
"Price Range of Common Stock."

DEPENDENCE ON DISCRETIONARY CONSUMER SPENDING

The success of the Company's operations depends to a significant extent on
a number of factors relating to discretionary consumer spending, including
economic conditions affecting disposable consumer income, the overall success of
the malls, entertainment centers and Disney theme parks in which Units are
located and the continued popularity of theme restaurants generally and the
Company's rainforest concept in particular. Theme restaurants are more
susceptible to shifts in consumer preferences and frequently experience a
decline of revenue growth or of actual revenues as consumers tire of the related
theme.

COMPETITION

The restaurant and specialty retail businesses are highly competitive. In
the restaurant industry, competition is based primarily upon price, service,
food quality and location. There are numerous well-established competitors,
including national, regional and local restaurant chains, possessing
substantially greater financial, marketing, personnel and other resources than
the Company. The Company also competes on a general basis with a large variety
of national and regional restaurant operations, as well as with locally owned
restaurants, diners, and other establishments that offer moderately priced food.
The Company competes with other theme restaurants in the highly competitive and
developing theme restaurant market. Other restaurants and companies utilize the
rainforest or related themes. Additionally, the Company competes with a number
of well-established specialty retailers possessing substantially greater
financial, marketing, personnel and other resources than the Company. In the
retail industry, competition is based primarily upon merchandise selection,
price and customer service. There can be no assurance that the Company will be
able to respond to various competitive factors affecting the restaurant and
retail industries.

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The performance of individual Units may also be affected by factors such as
traffic patterns, demographic considerations, and the type, number and location
of competing restaurants. In addition, factors such as inflation, increased
food, labor and employee benefit costs, and the availability of experienced
management and hourly employees may also adversely affect the restaurant and
retail industries in general and the Company's Units in particular. Restaurant
and retail operating costs are further affected by increases in the minimum
hourly wage, unemployment tax rates and similar matters over which the Company
has no control. See "Business -- Competition."

UNCERTAIN TRADEMARK PROTECTION; PROPRIETARY MARKS; TRADE DRESS; COPYRIGHTS

The Company's ability to implement successfully its Rainforest Cafe concept
will depend in part on its ability to further establish "brand equity" through
the use of its trademarks, service marks, trade dress and other proprietary
intellectual property, including its name and logos, the Animal Characters and
unique features of its rainforest theme decor. It is the Company's policy to
seek to protect and to defend vigorously its rights to this intellectual
property; any failure to do so could have a material adverse effect on the
Company's operations.

The Company's mark "A WILD PLACE TO SHOP AND EAT" is now a federally
registered service mark for its restaurant and retail store services.
Additionally, the Company has recently filed federal trademark applications for
"RAINFOREST CAFE A WILD PLACE TO SHOP AND EAT" and the related design, which
includes the Company's new logo, illustrating six of the Company's eight
proprietary Animal Characters. These applications cover the Company's use of
this mark on restaurant and associated retail services and a wide range of
retail products. The PTO previously determined that the Company's original logo
incorporating "RAINFOREST CAFE" was likely to be confused with another
registered mark. The Company has since acquired the registered mark cited by the
PTO and has filed a response in the PTO requesting that the refusal to register
the Company's original logo be withdrawn in view of the Company's ownership of
the potentially conflicting registered mark. The Company intends also to protect
its proprietary Animal Characters by the filing of copyright applications and,
in certain instances, trademark registration applications. There is no
assurance, however, that any such registrations, including the registration of
the name and logo, will be obtained.

There is also no assurance that any of the Company's rights in any of its
intellectual property will be enforceable, even if registered, against any prior
users of similar intellectual property or competitors of the Company who seek to
utilize similar intellectual property in areas where the Company operates or
intends to conduct operations. The failure to enforce any of the Company's
intellectual property rights could have the effect of reducing the Company's
ability to capitalize on its efforts to establish brand equity. It is also
possible that the Company will encounter claims from prior users of similar
intellectual property in areas where the Company operates or intends to conduct
operations, thereby limiting the Company's operations, and possibly causing the
Company to pay damages to a prior user. In this regard, the Company has
communicated with other businesses with respect to their use of a rainforest
theme decor that may constitute infringement of, or that may be infringed upon
by, the Company's trade dress.

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

The Company is currently negotiating license agreements for the development
of Units in Mexico and the United Kingdom. The Company's concept is untested
outside of the United States, and no assurance can be given that any
international location will be successful. In addition, the Company's continued
success is dependent to a substantial extent on its reputation, and its
reputation may be affected by the performance of licensee-owned Units over which
the Company will not have direct control. Any international operations of the
Company will also be subject to certain external business risks such as exchange
rate fluctuations, political instability and a significant weakening of a local
economy in which a foreign Unit is located. In addition, it may be more
difficult to register and protect the Company's intellectual property rights in
certain foreign countries. The Company has not yet completed agreements with
either of its proposed foreign licensees, and accordingly, the Company is
subject to the risks that it will be unable to complete one or both of these
agreements or that either of them will ultimately contain terms materially
different from those currently anticipated.

8
<PAGE> 10

LONG-TERM, NON-CANCELABLE LEASES

The Company has entered into leases relating to each of its existing and
planned Units, except with respect to the Company's planned Units at the MGM
Grand Hotel and Casino and the Aventura Mall, with respect to which the Company
is negotiating leases. These leases are non-cancelable by the Company (except in
limited circumstances) and have annual base rents ranging from $200,000 to $1
million (except for the MGM Grand Hotel and Casino lease, which the Company
expects to have an annual base rent of $2.1 million, and the Trump Taj Mahal
Casino and Hotel lease which has an annual base rent of $2.5 million).
Additional facilities developed by the Company are likely to be subject to
similar long-term, non-cancelable leases. If an existing or future Unit does not
perform at a profitable level, and the decision is made to close the Unit, the
Company may nonetheless be committed to perform its obligations under the
applicable lease which would include, among other things, payment of the
respective base rent for the balance of the respective lease term. The leases
related to the Walt Disney World Marketplace and Disney's Animal Kingdom Units
are cancelable by the landlord at any time upon sixty days notice and payment of
the Company's unamortized value of leasehold improvements and an amount equal to
the net operating income generated by such Unit for the previous lease year.
With regard to the Tysons Corner Center I and Cherry Creek Mall leases, in the
event the Company fails to achieve specified gross sales by a certain date, such
leases may be terminated by the landlord. If such a termination were to occur at
these locations, the Company would lose a Unit without necessarily receiving an
adequate return on its investment. See "Business -- Properties."

GOVERNMENT REGULATION

The Company's business is subject to various federal, state and local
government regulations, including those relating to the sale of food and
alcoholic beverages. While the Company to date has not experienced an inability
to obtain or maintain any necessary governmental licenses, permits or approvals,
the failure to maintain food and liquor licenses could have a material adverse
effect on the Company's operating results. In addition, a facility's operating
costs are affected by increases in the minimum hourly wage, unemployment tax
rates, sales taxes and similar costs over which the Company has no control.
Since many of the Company's Restaurant and Retail Village personnel are paid at
rates based on the federal minimum wage, increases in the minimum wage will
result in an increase in the Company's labor costs. The Company is subject in
Minnesota, Illinois and Florida, and is likely to be subject in other states, to
"dram shop" statutes which generally provide a person injured by an intoxicated
person with the right to recover damages from an establishment that served
alcoholic beverages to the intoxicated person. Difficulties or failure in
obtaining required licenses and approvals will result in delays in, or
cancellation of, the opening of new Units. Although the Company has satisfied
restaurant, liquor and retail licensing for its existing Units, no assurance can
be given that the Company will be able to maintain existing approvals or obtain
such further approvals at other locations. In addition, Units that are located
in casinos may require the Company to be licensed by gaming regulatory
authorities.

Businesses that maintain or sell animals are subject to additional levels
of state and local health and sanitation regulations. Having tropical birds as
part of the Rainforest Cafe concept requires the Company to adhere to stringent
health codes that prohibit crossover between kitchen workers and animal
handlers, and the exchange of air from the bird areas to the rest of the Unit.
The Company overcame this problem at its existing Units by installing specially
designed air exhaust hoods for the birds' perch area. Additionally, a separate
waste disposal system is provided for the birds. Although, to date, the Company
has satisfied animal-related licensing for its existing Units, no assurance can
be given that the Company will be able to maintain such approvals or obtain
similar approvals at other locations. Difficulties or failure in obtaining
required licenses and approvals may increase the cost of, result in delays in,
or cause the cancellation of the opening of Units.

The Federal Americans With Disabilities Act prohibits discrimination on the
basis of disability in public accommodations and employment. The Company could
be required to expend funds to modify its Units in order to provide service to
or make reasonable accommodations for disabled persons. The Company's Units are
currently designed to be accessible to the disabled. The Company believes it is
in substantial compliance with all current applicable regulations relating to
accommodations for the disabled.

9
<PAGE> 11

DEPENDENCE ON KEY PERSONNEL

The Company's future success will depend largely on the efforts and
abilities of the Company's senior corporate management, particularly Martin J.
O'Dowd, President and Chief Operating Officer. The loss of the services of Mr.
O'Dowd or other members of senior corporate management could have a substantial
adverse effect on the Company. The Company has an employment agreement with Mr.
O'Dowd that provides, among other things, that he may terminate his employment
upon 30 days written notice to the Company's Board of Directors. The Company has
not obtained life insurance policies on any of its officers. The success of the
Company will also depend upon its ability to attract and retain a highly
qualified corporate and Unit level management team. Lyle Berman, the Company's
Chairman and Chief Executive Officer, devotes less than 10% of his time to the
Company's business.

CONTROL BY EXISTING MANAGEMENT

Upon completion of this offering, the Company's officers and directors,
together with trusts for certain of their children, will own approximately 18.6%
of the issued and outstanding shares of the Common Stock of the Company.
Accordingly, the Company's management will be able to substantially influence
the Company's affairs, including, without limitation, the sale of equity or debt
securities of the Company, the appointment of officers, and the determination of
officers' salaries. See "Management" and "Principal and Selling Shareholders."

EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS

The Company's authorized capital consists of 50,000,000 shares of capital
stock. The Board of Directors, without any action by the Company's shareholders,
is authorized to designate and issue shares in such classes or series (including
classes or series of preferred stock) as it deems appropriate and to establish
the rights, preferences and privileges of such shares, including dividends,
liquidation and voting rights. No class other than the Common Stock is currently
designated and there is no current plan to designate or issue any such
securities. The rights of holders of preferred stock and other classes of common
stock that may be issued may be superior to the rights granted to the holders of
the existing Common Stock. Further, the ability of the Board of Directors to
designate and issue such undesignated shares could impede or deter an
unsolicited tender offer or takeover proposal regarding the Company and the
issuance of additional shares having preferential rights could adversely affect
the voting power and other rights of holders of Common Stock. Furthermore, as a
Minnesota corporation, the Company is subject to various Minnesota statutes
which may hinder or delay a change in control of the Company including: (i) a
control share acquisition statute; (ii) a business combination statute; (iii) a
fair price statute; (iv) a greenmail statute; and (v) a non-monetary factors
statute. See "Description of Securities."

SHARES ELIGIBLE FOR FUTURE SALE

The Company will have 16,237,555 shares of Common Stock outstanding
immediately following the Offering, 1,574,225 shares of which are restricted
securities under Rule 144 of the Securities Act of 1933, as amended (the
"Securities Act"). All such shares have satisfied the two-year holding period
required by Rule 144 and may be sold pursuant to Rule 144 or pursuant to a
registration statement registering the shares under the Securities Act which
could have an adverse effect on the price of the Common Stock. The Company and
all of the Company's present executive officers, directors and trusts for the
benefit of certain of their children (which together hold an aggregate of
2,799,760 shares) have agreed not to offer, sell, contract to sell or otherwise
dispose of, any shares of Common Stock or any securities convertible into or
exercisable for Common Stock for a period of 90 days after the date of this
Prospectus without the prior written consent of the Underwriters. Furthermore,
2,556,375 of such shares (including options to purchase 262,500 shares of the
Company's Common Stock) are subject to an escrow agreement with the State of
Minnesota that does not allow sale of such shares until the earlier of (i) April
7, 1998, (ii) the time the Company meets certain earnings requirements or (iii)
the time the State of Minnesota determines such escrow is no longer necessary.

10
<PAGE> 12

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,300,000 shares of
Common Stock offered by the Company hereby at an assumed public offering price
of $26.50 per share are estimated to be approximately $57.5 million ($66.9
million if the over-allotment option is exercised in full). The Company will not
receive any of the proceeds from the sale of the 200,000 shares of Common Stock
by the Selling Shareholders. The net proceeds of the offering will be used
principally for the development and opening of additional Rainforest Cafes. The
Company intends to open two additional Units in 1996, seven additional Units in
1997 and six additional Units in 1998. The remaining net proceeds, if any, will
be used for working capital purposes. Pending such uses, the Company plans to
invest the net proceeds of this offering in short-term, investment grade,
interest-bearing securities.

PRICE RANGE OF COMMON STOCK

The Company completed its initial public offering ("IPO") on April 7, 1995.
Since that date the Common Stock has traded on the over-the-counter market. From
April 7, 1995 through December 11, 1995, the Company's Common Stock was quoted
on the Nasdaq SmallCap(SM) Market under the symbol RAIN. Since December 12,
1995, the Company's Common Stock has been quoted on the Nasdaq National Market
under the symbol RAIN.

The following table summarizes the high and low sale prices per share of
the Common Stock for the periods indicated, as reported on the Nasdaq
SmallCap(SM) Market or the Nasdaq National Market and reflects the Company's
three-for-two stock split effective July 1, 1996:

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1995
Second Quarter (since April 7, 1995)..................... $11.67 $ 3.17
Third Quarter............................................ 15.50 8.08
Fourth Quarter........................................... 23.17 13.33
1996
First Quarter............................................ $22.67 $14.83
Second Quarter........................................... 34.17 20.00
Third Quarter (through August 26, 1996).................. 34.25 20.00
</TABLE>

On August 26, 1996, the last reported sale price for the Common Stock was
$26.50 per share. As of August 26, 1996, the Company had approximately 580
recordholders of Common Stock.

DIVIDEND POLICY

The Company's Board of Directors has not declared any dividends on the
Company's Common Stock since its inception, and does not intend to pay out any
cash dividends on its Common Stock in the foreseeable future. The Board of
Directors presently intends to retain all earnings, if any, to finance the
development and opening of additional Units. The payment of cash dividends in
the future, if any, will be at the discretion of the Board of Directors and will
depend upon such factors as earnings levels, capital requirements, financial
condition and other factors deemed relevant by the Board of Directors.

11
<PAGE> 13

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1996 and as adjusted to reflect the sale by the Company of 2,300,000 shares
of Common Stock offered hereby at an assumed public offering price of $26.50 per
share and the application of the net proceeds therefrom. This table should be
read in conjunction with the Financial Statements and notes thereto appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt, including current maturities of long-term debt...... $ 0 $ 0
======== ========
Long-term debt, less current maturities.............................. $ 0 $ 0
Shareholders' equity:
Common stock, no par value, 50,000,000 shares authorized;
13,937,055 shares issued and outstanding; 16,237,055 shares
issued and outstanding, as adjusted(1).......................... 103,333 160,836
Accumulated deficit................................................ (131) (131)
-------- --------
Total shareholders' equity...................................... 103,202 160,705
-------- --------
Total capitalization.......................................... $103,202 $ 160,705
======== ========
</TABLE>

- -------------------------
(1) Does not include: (i) 1,500,000 shares reserved for issuance under the
Company's 1995 Stock Option and Compensation Plan, of which options to
purchase 1,036,744 shares were outstanding; (ii) options to purchase 275,001
shares of Common Stock issued to an officer employee and non-officer
employee of the Company; (iii) 137,500 shares reserved for issuance upon
exercise of Directors' Stock Options (as defined herein); and (iv) 225,000
shares reserved for issuance under the Company's 1996 Employee Stock
Purchase Plan, none of which shares have been issued.

12
<PAGE> 14

SELECTED FINANCIAL DATA

The Selected Financial Data presented below should be read in conjunction
with the Financial Statements and notes thereto included elsewhere in this
Prospectus, and in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus. The selected financial data for the period February 3, 1994
(Inception) through January 1, 1995 have been derived from the financial
statements of the Company audited by Lund Koehler Cox & Company, PLLP. The
selected financial data as of December 31, 1995 have been derived from the
financial statements of the Company audited by Arthur Andersen LLP. The selected
financial data for the twenty-six weeks ended July 2, 1995 and June 30, 1996
have been derived from the Company's unaudited financial statements, which, in
the opinion of the Company's management, contain all adjustments, consisting of
normal recurring adjustments necessary for a fair presentation of the financial
position and results of operations. The twenty-six weeks ended June 30, 1996 are
not necessarily indicative of the results that would actually occur for a full
fiscal year of operations.

<TABLE>
<CAPTION>
TWENTY-SIX
FEBRUARY 3, 1994 WEEKS ENDED
(INCEPTION) THROUGH YEAR ENDED --------------------
JANUARY 1, DECEMBER 31, JULY 2, JUNE 30,
1995 1995 1995 1996
------------------- ------------ -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:(1)
Revenues:
Restaurant sales................................... $ 1,337 $ 9,979 $ 3,312 $ 10,312
Retail sales....................................... 729 3,472 1,182 2,502
-------- -------- -------- ---------
Total revenues................................... 2,066 13,451 4,494 12,814
-------- -------- -------- ---------
Costs and expenses:
Food and beverage costs............................ 450 2,778 958 2,624
Cost of retail goods sold.......................... 393 1,548 587 1,137
Restaurant operating expenses...................... 769 5,366 1,839 5,098
Retail operating expenses.......................... 403 1,004 340 832
Depreciation and amortization...................... 70 475 154 605
Preopening amortization............................ -- 114 -- 342
-------- -------- -------- ---------
Total costs and expenses......................... 2,085 11,285 3,878 10,638
-------- -------- -------- ---------
Restaurant and retail operating income............... (19) 2,166 616 2,176
Other expenses:
General, administrative and development............ 1,355 1,265 478 1,982
Interest income.................................... (3) (496) (92) (1,937)
Interest expense, including amortization of loan
discount......................................... 257 228 228 --
-------- -------- -------- ---------
Total other expenses............................. 1,609 997 614 45
-------- -------- -------- ---------
Income (loss) before income taxes and extraordinary
item............................................... (1,628) 1,169 2 2,131
Provision for income taxes........................... -- -- -- 750
-------- -------- -------- ---------
Income (loss) before extraordinary item.............. (1,628) 1,169 2 1,381
Extraordinary item(2):
Extinguishment of debt............................. -- 1,053 1,053 --
-------- -------- -------- ---------
Net income (loss)................................ $(1,628) $ 116 $(1,051) $ 1,381
======== ======== ======== =========
Net income (loss) per common share:
Earnings (loss) before extraordinary item.......... $ (0.46) $ 0.16 $ 0.00 $ 0.10
Extraordinary item................................. -- (0.14) (0.14) --
-------- -------- -------- ---------
Net income (loss) per common share................. $ (0.46) $ 0.02 $ (0.14) $ 0.10
======== ======== ======== =========
Weighted average shares outstanding.................. 3,543 7,312 7,630 14,027
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital...................................... $ (467) $ 15,490 $ 8,181 $ 74,187
Total assets......................................... 3,837 31,209 12,642 114,986
Total liabilities.................................... 2,044 4,854 1,652 11,784
Shareholders' equity................................. 1,793 26,355 10,990 103,202
</TABLE>

- -------------------------
(1) The Mall of America Unit began operations on October 3, 1994. Prior thereto,
the Company had no operating Units or revenues. The Mall of America Unit was
the only operating Unit until October 20, 1995, when the Woodfield Mall Unit
began operations. The Company's third Unit opened on June 2, 1996 at Gurnee
Mills. The Company's fourth Unit opened on July 25, 1996 at Walt Disney
World Marketplace.
(2) On April 7, 1995, the holders of $1,222,500 of promissory notes converted
such notes into shares of Common Stock at a conversion price of $2.67 per
share. The Company recorded the conversion as an extinguishment of debt
which resulted in an extraordinary charge to earnings of $1,053,128, or
$0.14 per share, at the date of conversion.

13
<PAGE> 15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company was founded in February 1994 to own and operate themed
restaurant/retail facilities under the name "Rainforest Cafe -- A Wild Place to
Shop and Eat." As of June 30, 1996, the Company operated three Rainforest Cafe
Units. The Company's initial Unit opened on October 3, 1994 in the Mall of
America in Bloomington, Minnesota. The Company's second Unit opened on October
20, 1995 in the Woodfield Mall in Schaumburg, Illinois, a suburb of Chicago. The
Company's third Unit opened June 2, 1996, in the Gurnee Mills Mall in Gurnee,
Illinois, a suburb of Chicago.

The Company opened its fourth Unit on July 25, 1996, at Walt Disney World
Marketplace near Orlando, Florida. The Walt Disney World Marketplace Unit is
approximately 30,000 square feet, with approximately 6,000 square feet of retail
selling floor. The Walt Disney World Marketplace Unit had revenues for the four
weeks ended August 25, 1996 of $2.2 million, which is not necessarily indicative
of the results that would actually occur for a full fiscal year of operations.
The financial data for the twenty-six weeks ended June 30, 1996 does not reflect
any of the operations for this Unit.

The Company is developing two additional Units in 1996, seven Units in 1997
and six Units in 1998. See "Business -- Unit Locations." Because the Company
anticipates rapid expansion, period to period comparisons may not be meaningful.
The Company intends to lease its Units and anticipates that most of its future
Units will range in size from approximately 18,000 to 23,000 square feet, with
between 300 and 425 restaurant seats and approximately 20-25% of square footage
dedicated to retail selling floor. However, some Units may be significantly
larger, such as the free-standing Walt Disney World Marketplace Unit, the Trump
Taj Mahal Unit, and the free-standing Disney's Animal Kingdom Unit, which are
expected to comprise approximately 30,000 to 36,000 square feet and have
approximately 500 restaurant seats.

The Company is currently negotiating an exclusive license agreement with
ECE, the owner and operator of eight Hard Rock Cafes, five Planet Hollywoods and
an Official All-Star Cafe in Mexico, under which ECE will develop seven
Rainforest Cafes in Mexico over a ten year period. Pursuant to this agreement,
the Company will receive a non-refundable development fee at the time of
execution of the agreement, per Unit development fees, and license fees based on
a percentage of gross sales. The Company anticipates that the first Rainforest
Cafe to be opened under the ECE license agreement will be in Cancun in the
second quarter of 1997. The Company is also negotiating an exclusive license
agreement with Glendola, a wholly owned subsidiary of the Foundation Group, a
London-based hotel and restaurant operator, under which Glendola will develop
five Rainforest Cafes in the United Kingdom and Ireland over a ten year period.
Pursuant to this agreement, the Company will have the option to purchase up to
20% of the equity interest in any Unit developed by Glendola, will receive per
Unit development fees, and will receive license fees based on a percentage of
gross sales. The Company anticipates that the first Rainforest Cafe to be opened
under this joint venture will be in London during the third quarter of 1997.

Components of operating expenses include operating payroll and fringe
benefit costs, occupancy costs, maintenance costs related to the bird habitat
and aquariums, and advertising and promotion costs. The majority of these costs
are variable and will increase with sales volume. Management projects that when
a new Unit opens, it will incur higher than normal levels of labor and food
costs as Unit personnel complete training. Management believes, however, that as
new staff gain experience, hourly labor schedules over the ensuing 30-60 day
period will be gradually adjusted to provide operating efficiencies similar to
those at established Units. Each of the Company's current leases includes both
fixed rate and percentage rent provisions.

The Company's policy is to capitalize costs associated with the opening of
Units, including the cost of hiring and training the initial workforce, travel
and other direct costs, if it is determined these costs are recoverable. These
costs are then amortized over the eleven month period following the opening of a
Unit beginning in the first full month of operation. The Company charged to
operations all pre-opening costs for the Mall of America Unit during the period
ended October 2, 1994 due to the developmental nature of this Unit. For the
Woodfield Mall Unit and Gurnee Mills Unit, the Company capitalized approximately
$630,000 and

14
<PAGE> 16

$550,000, respectively of pre-opening costs and is amortizing these expenses
over the eleven month period beginning November 1995 for the Woodfield Unit and
over the eleven month period beginning July 1996 for the Gurnee Mills Unit.

General, administrative and development expenses include all corporate and
administrative functions that serve to support existing operations and provide
an infrastructure to support future growth. In addition, certain expenses of
recruiting and training Unit management personnel prior to meeting the criteria
to be capitalized as pre-opening expenses are also included. Management,
supervisory and staff salaries, employee benefits, travel, information systems,
training, rent and office supplies are major items of costs in this category.

The Company uses a 52 or 53 week fiscal year ending on the Sunday nearest
December 31.

This Prospectus contains forward looking statements which involve risks and
uncertainties relating to future events. Prospective investors are cautioned
that actual events or the Company's results may differ materially from the
results discussed in the forward looking statements. Factors that might cause
actual results to differ materially from those indicated by such forward looking
statements include the matters set forth under the caption "Risk Factors."

RESULTS OF OPERATIONS

The operating results of the Company expressed as a percentage of total
revenues (except where noted) were as follows:

<TABLE>
<CAPTION>
TWENTY-SIX
FEBRUARY 3, 1994 WEEKS ENDED
(INCEPTION) THROUGH YEAR ENDED --------------------
JANUARY 1, DECEMBER 31, JULY 2, JUNE 30,
1995 1995 1995 1996
------------------- ------------ ------- --------
<S> <C> <C> <C> <C>
Revenues:
Restaurant sales............................... 64.7% 74.2% 73.7% 80.5%
Retail sales................................... 35.3 25.8 26.3 19.5
----- ----- ----- -----
Total revenues.............................. 100.0 100.0 100.0 100.0
----- ----- ----- -----
Costs and expenses:
Food and beverage costs(1)..................... 33.7 27.8 28.9 25.4
Cost of retail goods sold(2)................... 53.9 44.6 49.7 45.4
Restaurant operating expenses(1)............... 57.5 53.8 55.5 49.4
Retail operating expenses(2)................... 55.3 28.9 28.7 33.2
Depreciation and amortization.................. 3.4 3.5 3.4 4.7
Preopening amortization........................ -- 0.8 -- 2.7
----- ----- ----- -----
Total costs and expenses.................... 100.9 83.9 86.3 83.0
----- ----- ----- -----
Restaurant and retail operating income........... (0.9) 16.1 13.7 17.0
----- ----- ----- -----
Other expenses:
General, administrative and development........ 65.6 9.4 10.6 15.5
Interest income................................ (0.1) (3.7) (2.0) (15.1)
Interest expense, including amortization of
loan discount............................... 12.4 1.7 5.1 --
----- ----- ----- -----
Total other expenses........................ 77.9 7.4 13.7 0.4
----- ----- ----- -----
Income (loss) before income taxes and
extraordinary item............................. (78.8) 8.7 0.0 16.6
Provision for income taxes....................... -- -- -- 5.8
----- ----- ----- -----
Income (loss) before extraordinary item.......... (78.8) 8.7 0.0 10.8
Extraordinary item............................... -- 7.8 23.4 --
----- ----- ----- -----
Net income (loss)................................ (78.8)% 0.9% (23.4)% 10.8%
===== ===== ===== =====
</TABLE>

- -------------------------
(1) Percentage of restaurant sales.

(2) Percentage of retail sales.

15
<PAGE> 17

TWENTY-SIX WEEKS ENDED JUNE 30, 1996 COMPARED TO THE TWENTY-SIX WEEKS ENDED JULY
2, 1995

Results of operations for the twenty-six week period ended July 2, 1995
(the "1995 Period") reflect operations of the Mall of America Unit only, while
results of operations for the twenty-six week period ended June 30, 1996 (the
"1996 Period") reflect operations of the Mall of America Unit and the Woodfield
Mall Unit for the entire 1996 Period and results of operations for the Gurnee
Mills Unit beginning June 2, 1996.

Total revenues increased 185% to $12.8 million for the 1996 Period from
$4.5 million for the 1995 Period. The increase in revenues was primarily due to
the addition of the Woodfield Mall Unit ($6.7 million), the addition of the
Gurnee Mills Unit ($918,000), and the addition of 85 restaurant seats at the
Mall of America Unit ($900,000). This was offset by a decrease in retail sales
at the Mall of America Unit of $204,000 for the 1996 Period compared to the 1995
Period. Retail sales decreased as a percentage of total revenues from 26.3% for
the 1995 Period to 19.5% for the 1996 Period, primarily due to the increase in
restaurant seating capacity, the decrease in retail sales area at the Mall of
America Unit and the addition of the Woodfield Mall Unit where retail sales as a
percentage of retail revenues was approximately 20%.

Food and beverage costs increased 174% to $2.6 million for the 1996 Period
from $1.0 million for the 1995 Period. The increase in food and beverage costs
was due to the addition of the Woodfield Mall and Gurnee Mills Units, and the
Mall of America Unit expansion. Food and beverage costs decreased as a
percentage of restaurant sales from 28.9% for the 1995 Period to 25.4% for the
1996 Period due to price increases at the Mall of America Unit and overall
improvements in food preparation and purchasing efficiencies.

Cost of retail goods sold increased 94% to $1.1 million for the 1996 Period
from $587,000 for the 1995 Period. The increase was due to the addition of the
Woodfield Mall and Gurnee Mills Units. Cost of retail goods sold as a percentage
of retail sales decreased from 49.7% for the 1995 Period to 45.4% for the 1996
Period primarily as a result of purchase price decreases, retail price increases
and higher margin product additions to the retail product line.

Restaurant and retail operating expenses increased 172% to $5.9 million for
the 1996 Period from $2.2 million for the 1995 Period. The increase in
restaurant operating expenses was primarily due to the Mall of America Unit
expansion and the addition of the Woodfield Mall and Gurnee Mills Units. The
increase in retail operating expenses was primarily due to the addition of the
Woodfield Mall and Gurnee Mills Units. Restaurant operating expenses decreased
as a percentage of restaurant sales from 55.5% for the 1995 Period to 49.4% for
the 1996 Period due to increased leverage of fixed costs and restaurant labor.
Retail operating expenses increased as a percentage of sales from 28.7% for the
1995 Period to 33.2% for the 1996 Period due to the decrease in retail sales at
the Mall of America Unit and higher fixed costs of Unit retail operations.

Depreciation and amortization expenses increased 292% to $605,000 for the
1996 Period from $154,000 for the 1995 Period. The increase in depreciation and
amortization expense was due to the Mall of America Unit expansion and the
addition of the Woodfield Mall and Gurnee Mills Units.

General, administrative and development expenses increased 315% to $2.0
million for the 1996 Period from $476,000 for the 1995 Period. General,
administrative and development expenses primarily increased as a percentage of
revenues from 10.6% for the 1995 Period to 15.5% for the 1996 Period as a result
of the addition of senior management, corporate employees and unit management
personnel in training, all of whom the Company hired to execute its growth
strategy for 1996 and beyond.

Interest income was $1.9 million for the 1996 Period. Interest income was
generated by investing the net proceeds from the Company's IPO, follow-on public
offering, and the exercise of its Class A Warrants. For the 1995 Period, the
Company incurred $228,000 of interest expense including amortization of loan
discount totaling $186,000.

The provision for income taxes in 1996 is based upon the Company's
anticipated tax rate, including benefit for approximately $350,000 in net
operating loss carryforwards. The Company did not record a provision for federal
or state income taxes in 1995 because net operating loss carryforwards were used
to offset income tax liabilities.

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<PAGE> 18

YEAR ENDED DECEMBER 31, 1995

The fiscal year ended December 31, 1995 reflects operations for the Mall of
America Unit, which was open during the entire period, and the operations of the
Woodfield Mall Unit from its opening on October 20, 1995. For 1995, total
revenues were $13.5 million, including $10.0 million in restaurant sales, or 74%
of total revenues, and $3.5 million in retail sales, or 26% of total revenues.

Mall of America Unit

Revenues for the Mall of America Unit for 1995 were $10.4 million,
including $7.7 million in restaurant sales, or 74.0% of total revenues, and $2.7
million in retail sales, or 26.0% of total revenues. The Company has expanded
the Restaurant in the Mall of America Unit three times since its opening. The
first two expansions slightly reduced available square footage of the Retail
Village by adding 22 seats in February 1995 and 24 seats in April 1995. In
August 1995, the Company added 61 seats by expanding the total available square
footage of the Mall of America Unit by approximately 1,100 square feet.
Restaurant sales increased from 65.0% of total revenue for the thirteen week
period ended January 1, 1995 to 77.6% of total revenues for the thirteen week
period ended December 31, 1995.

Food and beverage costs for 1995 were $2.1 million, or 27.2% of restaurant
sales. Food and beverage costs generally decreased as a percentage of restaurant
sales during this period as the result of increased operating efficiencies in
the Restaurant, periodic price increases and improvements in food preparation
and purchasing systems.

Cost of retail goods sold during 1995 were $1.2 million, or 45.2% of retail
sales. Cost of retail goods sold generally decreased as a percentage of retail
sales during this period as the result of purchasing efficiencies, periodic
price increases, and a more balanced product mix that more closely reflected
customer purchasing preferences.

Restaurant operating expenses for 1995 were $4.2 million, or 55.4% of
restaurant sales. Retail operating expenses for 1995 were $832,000, or 30.9% of
retail sales. Operating expenses generally decreased as a percentage of total
revenues during this period due to fixed costs being spread over higher sales
volume.

Woodfield Mall Unit

Results of operations include the Woodfield Mall Unit which commenced
operations on October 20, 1995. Revenues included $3.1 million from this Unit,
comprised of $2.3 million of Restaurant sales, or 73.3% of total Unit revenues,
and $836,000 of retail sales, or 26.7% of total Unit revenues. All operation
costs at the Woodfield Mall Unit reflected the absence of operational
efficiencies generally associated with the startup of a new Unit. The Company
incurred $629,000 in pre-opening costs associated with the opening of this Unit.

General, Administrative and Development Expenses

General, administrative and development expenses for 1995 were $1.3
million, or 9.4% of total revenues. General, administrative and development
expenses generally increased as a percentage of revenues during this period as a
result of the addition of senior corporate management and Unit personnel whom
the Company hired to position itself to execute its growth strategy.

Other Income and Expenses

Interest income during 1995 was $496,000, or 3.7% of total revenues, which
resulted from investing the net proceeds of both the Company's IPO and the
exercise of its Class A Warrants. Interest expense for 1995 was $228,000
including amortization of loan discount totaling $186,000. On April 7, 1995, the
holders of $1,222,500 of promissory notes converted their notes into Common
Stock at a conversion price of $2.67 per share. The Company recorded the
conversion as an extinguishment of debt, which resulted in an extraordinary
charge to earnings of $1,053,128, or $0.14 per share, at the date of conversion.

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<PAGE> 19

PERIOD FROM FEBRUARY 3, 1994 (INCEPTION) THROUGH JANUARY 1, 1995

The Company had no revenues for the period from February 3, 1994
(Inception) through October 2, 1994. During this period, the Company developed
the Rainforest Cafe concept and completed construction of the Mall of America
Unit which opened on October 3, 1994. The Company charged to operations all pre-
opening costs for the Mall of America Unit during the period ended January 1,
1995.

For the period from February 3, 1994 (Inception) through January 1, 1995,
the Company reported total revenues of $2.1 million, a loss from operations of
$1.4 million and a net loss of $1.6 million. This loss can be attributed
primarily to the costs and expenses related to the Rainforest Cafe concept, the
Mall of America Unit and the development of the Company's operating structure.
Accordingly, comparisons between this period and the corresponding 1995 period
are not meaningful.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal capital needs arise from the development and
opening of new Units. Prior to the IPO, completed on April 7, 1995, the Company
met its capital requirements through the private placement of debt and common
stock, landlord contributions and cash flow from operations. During the period
from February 3, 1994 (Inception) through July 2, 1994, the Company sold
2,969,400 shares of Common Stock in private transactions resulting in net
proceeds to the Company of approximately $2.0 million. The Company also received
approximately $1.3 million from the issuance of promissory notes to certain of
its shareholders. In addition, the Company acquired certain assets from a
principal shareholder in exchange for a $370,125 promissory note (the "Notes").

In April 1995, the Company completed an IPO of 2,587,500 units with each
unit consisting of one share of Common Stock and one Class A Warrant. The IPO
resulted in net proceeds to the Company of approximately $9.0 million.
Simultaneous with the IPO, approximately $1.2 million owed under the Notes was
converted into 458,437 shares of Common Stock. The conversion of the Notes to
equity resulted in an extraordinary charge to earnings of approximately $1.1
million for the early extinguishment of debt. In August 1995, the Company
received additional net proceeds of approximately $14.2 million resulting from
the exercise of its Class A Warrants, at an exercise price of $5.50 per share.

From its IPO in April 1995 through December 31, 1995, the Company financed
its capital requirements through the proceeds from that offering, the exercise
of the Class A Warrants and cash flow from operations. In January 1996, the
Company issued an aggregate of 4,140,000 shares of Common Stock pursuant to a
follow-on public offering at $19.00 per share. The net proceeds to the Company,
after payment of underwriting fees and offering expenses, were approximately
$73.6 million. In May 1996, the Company received approximately $1.0 million net
proceeds from the exercise of warrants at $4.80 per share issued to Underwriters
of the Company's IPO. At June 30, 1996, the Company had working capital of
approximately $74.2 million.

During the 1996 period, the Company generated $5.0 million in cash flow
from operating activities compared to $2.6 million in cash flow from operating
activities for the year ended December 31, 1995. The Company believes that it
will continue to generate cash from operating activities which will be utilized
for future development and working capital purposes.

The Company's total expenditures required to develop the Mall of America
Unit were approximately $3.9 million, including costs related to the expansions
of its restaurant and net of landlord contributions. Total expenditures required
to open the Woodfield Mall Unit and Gurnee Mills Unit were approximately $5.9
million and $4.0 million, respectively, net of landlord contributions.
Additionally, the Company incurred $630,000 in pre-opening costs and purchased
approximately $320,000 of inventory in connection with the opening of its
Woodfield Mall Unit and incurred approximately $550,000 in pre-opening costs and
purchased approximately $300,000 of inventory in connection with the opening of
its Gurnee Mills Unit.

In addition to the expenditures related to the development of the Gurnee
Mills Unit, the Company spent approximately $16.6 million during the 1996 Period
related to the Walt Disney World Marketplace Unit, Tysons Corner Center I Unit
and other Units currently in development, before deducting landlord
contributions.

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<PAGE> 20

Management anticipates capital expenditures of approximately $20.0 million,
net of landlord contributions, for the remaining twenty-six weeks in fiscal
1996, related to the development and opening of two additional Units in 1996, a
portion of the costs associated with the opening of Units in 1997 and capital
expenditures associated with maintenance of its existing Units. The Company
expects that future locations will cost between $4.0 million and $6.0 million,
net of anticipated landlord contributions. In addition, the Company expects that
it will incur approximately $600,000 in pre-opening costs and purchase
approximately $400,000 of inventory in connection with the opening of future
Units. The Company also expects to open selected Units, such as its planned
Units at the Trump Taj Mahal Casino, the MGM Grand Hotel and Casino and Disney's
Animal Kingdom, which may cost significantly more. In connection with the Mall
of America, Woodfield Mall and Gurnee Mills Units, the Company has received
landlord contributions, reducing the cost of opening these Units. There can be
no assurance, however, that landlord contributions will be available in the
future or that the Company will be able to raise additional capital on terms
satisfactory to the Company or at all.

The Company contemplates that the development and opening of each of its
Units in 1996 through 1998 will be financed with existing cash on hand, cash
flow from operations and the net proceeds from this offering. The Company may
require additional equity or debt financing for expansion beyond 1998.

It is not anticipated that the Company's business will require substantial
working capital to meet its operating requirements. Virtually all of the
Company's revenues are collected in cash or pursuant to credit card processing.
Food and beverage inventories and merchandise inventories are expected to
increase in relation to trade accounts payable.

QUARTERLY FLUCTUATIONS, SEASONALITY AND INFLATION

As a result of the substantial revenues associated with each new Unit, the
timing of new Unit openings will result in significant fluctuations in quarterly
results. The mall-based Units may also have higher third or fourth quarter
revenues than the other two quarters as a result of seasonal traffic increases
at mall locations and seasonally stronger retail sales. Units at entertainment
centers or Disney theme parks may show fluctuations in accordance with any
overall seasonality at these locations.

The primary inflationary factors affecting the Company's operations include
food and beverage and labor costs. In addition, the Company's leases require the
Company to pay taxes, maintenance, repairs and utilities, and these costs are
subject to inflationary increases. The Company believes low inflation rates have
contributed to relatively stable costs. There is no assurance, however, that low
inflation rates will continue.

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<PAGE> 21

BUSINESS

GENERAL

The Company owns and operates four large, high volume, themed
restaurant/retail facilities under the name "Rainforest Cafe -- A Wild Place to
Shop and Eat." The Company's Units are designed to provide a visually and
audibly stimulating and entertaining rainforest environment that appeals to a
broad range of customers of all ages. Each Rainforest Cafe consists of a
Restaurant and a Retail Village. The Restaurant provides an attractive value to
customers by offering a full menu of high quality food and beverage items,
generous portions and excellent service in a unique and exciting environment.
The Retail Village features apparel and gifts with the Rainforest Cafe logo and
eight proprietary Animal Characters, and other items reflecting the rainforest
theme.

THE RAINFOREST CONCEPT AND STRATEGY

The Company seeks to differentiate itself by providing high quality food
and retail merchandise in a themed environment. The key factors of the Company's
market positioning and operating strategy are as follows:

Distinctive Concept. The Company's rainforest theme is promoted by a
simulated rainforest environment throughout the Unit. Each Rainforest Cafe
features a visually and audibly exciting environment that includes a variety of
live tropical birds, exotic fish in large custom-designed aquariums, animated
artificial animals and several sculpted banyan trees that create a canopy of
foliage. The dynamic rainforest atmosphere is further enhanced by simulated
thunder and lightning storms, tropical rain showers, waterfalls, mists that
emanate from extensive rock formations, and specially-developed aromatic scents.
This entertaining rainforest environment makes each Rainforest Cafe "A Wild
Place to Shop and Eat."

Broad-Based Appeal. Management believes that the Company's Rainforest Cafe
concept has broader appeal than other theme-based restaurant concepts because it
attracts customers of all ages. The Company's distinctive concept, combined with
high quality food and retail merchandise, make the Rainforest Cafe appealing to
children, teenagers and adults, and to both local mall shoppers and tourists.

High Profile Unit Locations. In order to take maximum advantage of the
Company's broad-based appeal, the Company believes that the placement of its
Units in high profile, heavy-traffic locations is critical to its success. By
being in such locations, the Company believes its Units appeal to both
destination customers as well as passers-by who are drawn to its visually and
audibly exciting environment. The Company believes that its format, as developed
at the Mall of America, Woodfield Mall, Gurnee Mills and Walt Disney World
Marketplace Units, can be utilized in a number of high traffic venues with
favorable demographics such as shopping malls, entertainment centers and Disney
theme parks.

High Quality Food. The Restaurant provides an attractive value to customers
by offering a moderately-priced, full menu of high quality food and beverage
items served in generous portions in a distinctive environment. The Restaurant
features a wide variety of appetizers, pastas, sandwiches, salads, pizzas,
burgers and full-platter entrees, presented in a visually appealing manner. Menu
items are prepared on-site using fresh, high quality ingredients. Lunch and
dinner entrees range in price from $7.95 to $15.95 and the average guest check
was approximately $11.80 for the twenty-six week period ended June 30, 1996.
Management believes that its high quality food contributes to a significant
level of repeat business.

Commitment to Retail and Building Brand Awareness. In order to enter the
Restaurant, all customers must pass through the Unit's Retail Village. The
Retail Village offers over 4,000 SKUs and includes apparel and gifts with the
Rainforest Cafe logo and other items suggesting the rainforest theme such as
toys and educational games. The Company has also developed eight proprietary
Animal Characters, each with a distinct personality, as an additional method of
merchandising its retail products. The Company intends to utilize each Animal
Character for clothing and gifts. By offering items featuring the Rainforest
Cafe logo and Animal Characters, the Company believes it is building "brand
equity" in the Rainforest Cafe name that will allow it to attract more customers
and to enhance its competitive retail position. The Retail Village is also

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<PAGE> 22

intended to be educational, with displays of live exotic tropical birds and fish
and an animated talking tree that gives environmental messages.

Focus on Customer Satisfaction. The Company is committed to staffing each
Unit with an experienced management team and providing its customers with
prompt, friendly and efficient service. A customer's experience is also enhanced
by the attitude and attention of Unit personnel, including "tour guides"
(greeters), "safari guides" (food servers), "navigators" (bartenders),
"pathfinders" (retail staff) and tropical bird curators. The Company recognizes
that, in order to maintain a high level of repeat customers and to attract new
business through word of mouth, it must provide superior customer service.

Commitment to Attracting and Retaining Quality Employees. By providing
extensive training and attractive compensation, the Company fosters a strong
corporate culture and encourages a sense of personal commitment from its
employees. The Company believes its compensation structure and positive
corporate culture enable it to attract and maintain quality employees. The
Company believes that Unit management is important for the profitability of each
Rainforest Cafe and accordingly, places particular emphasis on recruiting
Unit-level Directors of Operations that have significant restaurant and
management experience. The Company anticipates that, prior to opening a Unit, a
Director of Operations will have been trained at one or more Rainforest Cafes
for four to six months.

UNIT ECONOMICS

For the twenty-six week period ended June 30, 1996, the Mall of America
Unit generated revenues of $5.2 million, operating income of $1.0 million, or
20.1% of revenues, and cash flow of $1.3 million, or 24.3% of revenues. Cash
flow represents the Unit's operating income before depreciation and
amortization. Although cash flow should not be considered an alternative to
operating income as an indicator of the Company's operating performance or an
alternative to cash flow from operating activities as a measure of liquidity,
cash flow is commonly used as an additional measure of operating profitability
in the restaurant and certain other related industries. The 14,900 square foot
Mall of America Unit was developed at a cost of approximately $3.9 million,
including costs related to the expansion of its Restaurant and net of landlord
contributions. For this same period, the Woodfield Mall Unit generated revenues
of $6.7 million, operating income of $1.2 million or 18.5% of revenues (before
amortization of pre-opening costs), and cash flow of $1.6 million, or 23.8% of
revenues. This 23,000 square foot Unit was developed at a cost of approximately
$5.9 million, net of landlord contributions. Additionally, the Company incurred
approximately $630,000 in pre-opening costs and purchased approximately $320,000
of inventory in connection with the Woodfield opening. The Gurnee Mills Unit
opened June 2, 1996 and had revenues for the remainder of the second quarter of
$918,000, which may not be indicative of future results. This 20,000 square foot
Unit was developed at a cost of approximately $4.0 million, net of landlord
contributions. Additionally, the Company incurred approximately $550,000 in
pre-opening costs and purchased approximately $300,000 of inventory in
connection with the Gurnee Mills opening. The Walt Disney World Marketplace Unit
opened July 25, 1996 and had revenues for the four weeks ended August 25, 1996
of $2.2 million, which may not be indicative of future results. This 30,000
square foot Unit was developed at an estimated cost of approximately $11.5
million, net of landlord contributions. Additionally, the Company estimates that
it incurred approximately $1.1 million in pre-opening costs and purchased
approximately $500,000 of inventory in connection with the Disney opening. The
Company expects that most of its future Units will be between 18,000 to 23,000
square feet and cost between $4.0 and $6.0 million, net of anticipated landlord
contributions. The Company expects that pre-opening and inventory costs at its
future locations will be approximately $600,000 and $400,000, respectively. The
Company also expects to open selected Units, such as its planned Units at the
Trump Taj Mahal Casino and Hotel, the MGM Grand Hotel and Casino and Disney's
Animal Kingdom, which may cost significantly more.

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<PAGE> 23

UNIT LOCATIONS

The following table sets forth certain information about the Company's
existing and planned Units:

<TABLE>
<CAPTION>
DATE OPENED OR
RESTAURANT PLANNED
LOCATION SQUARE FOOTAGE SEATS TO BE OPENED
- ------------------------------------------- -------------- ---------- --------------------
<S> <C> <C> <C>
Mall of America............................ 14,900 295 October 1994
Bloomington, MN
Woodfield Mall............................. 23,000 425 October 1995
Schaumburg, IL
Gurnee Mills............................... 20,000 300 June 1996
Gurnee, IL
Walt Disney World Marketplace.............. 30,000 550 July 1996
Orlando, FL
Tysons Corner Center I..................... 19,500 350 Fourth Quarter 1996
McLean, VA
Sawgrass Mills............................. 20,000 350 Fourth Quarter 1996
Ft. Lauderdale, FL
Palisades Center........................... 22,500 375 Second Quarter 1997
West Nyack, NY
Trump Taj Mahal Casino and Hotel........... 36,000 500 Second Quarter 1997
Atlantic City, NJ
Stratosphere............................... 17,000 300 Third Quarter 1997
Las Vegas, NV
South Coast Plaza.......................... 15,000 300 Third Quarter 1997
Costa Mesa, CA
The Source................................. 20,000 375 Third Quarter 1997
Westbury, Long Island, NY
MGM Grand Hotel and Casino................. 20,000 400 Fourth Quarter 1997
Las Vegas, NV
Grapevine Mills............................ 20,000 300 Fourth Quarter 1997
Dallas, TX
Disney's Animal Kingdom.................... 34,000 500 Second Quarter 1998
Orlando, FL
Aventura Mall.............................. 21,500 350 Second Quarter 1998
Miami, FL
Cherry Creek Mall.......................... 23,000 375 Third Quarter 1998
Denver, CO
</TABLE>

The Company has executed leases for all these planned Units, except for the MGM
Grand Hotel and Casino and Aventura Mall Units with respect to which the Company
is negotiating leases.

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<PAGE> 24

develop five Rainforest Cafes in the United Kingdom and Ireland over a ten year
period. Pursuant to this agreement, the Company will have the option to purchase
up to 20% of the equity interest in any Unit developed by Glendola, will receive
per Unit development fees and will receive license fees based on a percentage of
gross sales. The Company anticipates that the first Rainforest Cafe to be opened
under this joint venture will be in London during the third quarter of 1997.

EXPANSION PLANS AND SITE SELECTION

The Company is developing two additional Rainforest Cafes in 1996, seven
during 1997, and six in 1998. See "-- Unit Locations." The Company is currently
engaged in discussions with other landlords that have facilities which meet the
Company's site selection criteria, including, in certain instances, landlords
who have approached the Company.

The Company's site selection strategy is to locate its Units in high
profile, heavy traffic locations. A variety of factors are analyzed in the site
selection process, including local market demographics, site visibility and
projected Unit economics. By being in high profile, heavy traffic locations, the
Company believes its Units appeal to both destination customers as well as
passers-by who are drawn to its visually and audibly exciting environment. The
Company believes that its format, as developed at its existing Units, can be
utilized in a number of high traffic venues with favorable demographics such as
shopping malls, entertainment centers and Disney theme parks.

While most of the future Rainforest Cafes will be located in shopping malls
or entertainment centers, the Walt Disney World Marketplace Unit is a
stand-alone facility located near Orlando, Florida. Customers are able to enter
the Walt Disney World Marketplace Unit without having to enter Disney's adjacent
theme parks. Additionally, the Walt Disney World Marketplace Unit is visible
from Disney's adjacent theme park. The Rainforest Cafe at Disney's Animal
Kingdom, will also be a stand-alone facility and will be at the entrance of
Disney's Animal Kingdom so patrons will pass the Rainforest Cafe upon entering
and leaving the park. Disney's Animal Kingdom, scheduled to open in 1998, will
be approximately five times larger than Disney's Magic Kingdom, and will feature
live and simulated animal attractions. The 35,000 square foot, 500 seat Unit
will be the only sit-down restaurant at Disney's Animal Kingdom. The Company is
continuing discussions with Disney regarding opening Rainforest Cafes at other
locations; however, no assurance can be given that other Disney sites will be
developed. The Company's Disney leases provide, among other things, that the
Company will not own, operate, develop or manage a restaurant: (i) within a 75
mile radius of Walt Disney World Marketplace or Disney's Animal Kingdom or (ii)
in a theme park located anywhere in the world that is not affiliated with Disney
or its affiliates. The Company also agreed that it would not open a Unit within
50 miles of current or future theme parks owned by Disney without giving Disney
the right of first refusal with regard to such proposed Unit. The Company
believes that it is currently in compliance with its contractual obligations to
Disney.

The Company's Trump Taj Mahal Casino and Hotel lease provides, among other
things, that the Company will not operate a rainforest theme restaurant or
retail store: (i) within a 70 mile radius of the Trump Taj Mahal Casino and
Hotel or (ii) in the City of Philadelphia, Pennsylvania and its four contiguous
counties (other than the King of Prussia Mall).

Typical future locations are expected to be between 18,000 and 23,000
square feet and cost between $4.0 million and $6.0 million, net of anticipated
landlord contributions. The Company expects to receive significant landlord
contributions given what the Company believes is the increasing prominence and
success of the Company's Units. In addition, the Company anticipates that it
will incur approximately $600,000 in pre-opening costs and purchase
approximately $400,000 of inventory in connection with the opening of future
Units. There is no assurance, however, that additional facilities will be
developed at such costs or that any additional Rainforest Cafes, if developed,
would be profitable. The Company also expects to open selected Units, such as
its planned Units at the Trump Taj Mahal Casino and Hotel, the MGM Grand Hotel
and Casino and Disney's Animal Kingdom, which may cost significantly more.

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<PAGE> 25

RAINFOREST FEATURES

To create a simulated rainforest environment, each Rainforest Cafe includes
the following:

Live Exotic Birds -- Rainforest Cafes display live exotic birds such
as macaws and cockatoos in the Retail Village. The Company has curators
specifically devoted to caring for the birds and for answering guest
questions. When the exotic birds are not on display they are kept and
maintained in a "habitat room."

Aquariums -- Rainforest Cafes have large aquarium systems, including
walk-through aquariums that contain several varieties of saltwater fish
from locales such as Africa and South America. Aquariums range in size from
750 to 10,000 gallons and are placed throughout each Unit to maximize
visibility to customers.

Tropical Rainstorms and Waterfalls -- Simulated lightning and
thunderstorms "sweep" across each Rainforest Cafe every 20 to 30 minutes.
Rainforest Cafes also contain a mist system emanating from rock formations
throughout the Unit and rain showers around the perimeter of the
Restaurant. Other Rainforest Cafe features include cascading waterfalls,
fountains and a ventilation system emitting a light floral aroma.

Trees, Foliage and Animated Animals -- The ceiling level of the
Restaurant and Retail Village of a Rainforest Cafe are intertwined with a
"forest" of sculpted life-like banyan trees that creates a canopy of
foliage over diners and shoppers. Each banyan tree is hand-sculpted for a
very realistic presentation of its overgrown rooting system. The floor
level of the Restaurant and Retail Village contains several rock
formations, abundant foliage and jungle-like scenes. Interspersed
throughout the facility are mechanical animals such as life-size
crocodiles, elephants, gorillas, dolphins, snakes, butterflies and frogs.

Educational Commitment -- The Company attempts to make each Rainforest
Cafe an environmentally educational experience. The Rainforest Cafe's
talking banyan tree gives environmental messages to help educate and
entertain children. Each Rainforest Cafe has an on-site curator who
educates customers, including school groups, on the tropical birds and the
rainforest. The curator also makes presentations at schools.

RESTAURANT

For the twenty-six week period ended June 30, 1996, approximately 80% of
the Company's total revenues were derived from Restaurant sales. The Company
believes that Rainforest Cafes enjoy a high level of repeat business and
customer diversity because of the Company's commitment to providing high quality
food and customer service in an exciting and entertaining environment. Features
of the Restaurant are as follows:

Menu -- The Company considers its extensive menu selection to be an
important factor in the appeal of its Restaurant and, accordingly,
continuous attention is devoted to the development of new menu items. The
Restaurant features casual cuisine that caters to broad customer
preferences. The menu presently offers several types of appetizers such as
"Jungle Chowder," "Rainforest Pita Quesadillas" and "Caribbean Chicken
Tenders." The menu also offers different types of pastas, sandwiches,
salads, pizzas, burgers and full-platter entrees, such as "Rasta Pasta"
(bow tie pasta tossed in a garlic cream sauce with grilled chicken,
broccoli and pesto), "The Old Man and the Sea" (swordfish sauteed in cajun
spices topped with corn and shrimp salsa), and "Rumble in the Jungle"
(grilled pita bread stuffed with roasted turkey and Caesar salad). A
children's menu and complete dessert selection are also available. Lunch
and dinner entrees range in price from $7.95 to $15.95. The Restaurant's
full-service bar, the "Mushroom Bar," features a number of customized
alcoholic and non-alcoholic drinks, such as the "Don't Panic It's Organic"
(carrot juice), the "Margarilla" (a margarita blended with orange sherbet)
and the "Spotted Chocolate Monkey" (fresh banana-chocolate syrup, vanilla
ice cream and banana liqueur). Alcoholic beverages are primarily served to
complement meals and account for approximately 10% of total restaurant
sales. The average check per person for the twenty-six week period ended
June 30, 1996 was approximately $11.80. Portions are generous and
significant attention is placed on presentation and the quality of
preparation. Because the Unit's menu is not tied to any particular type of
food or beverage, the

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<PAGE> 26

Company can introduce and eliminate items based on local or current
consumer trends without altering its rainforest theme. The Company
endeavors to hire experienced chefs and invests substantial time training
kitchen employees to maintain consistent food preparation.

Decor -- Restaurant decor is divided into distinctive dining
environments developed around the rainforest and other nature themes.
Current themes include dolphins, gorillas, elephants, tropical fish and
star gazing. Table decor complements the rainforest theme through the use
of brilliantly-colored tablecloths and upholstery with patterns of animals
and wildlife. In an effort to enhance the dining experience, attempts are
made to maximize restaurant seating near aquariums, waterfalls, sculpted
rock formations or one of the Restaurant's several banyan trees. An
integral part of the Restaurant is the "Mushroom Bar," the "stem" of which
consists of the bar with a "cap" extending over the customers. Seating at
the bar is provided by customized stools designed to resemble the legs of
wild animals.

Staffing -- An important part of the Company's mission is to ensure
that during each visit to a Rainforest Cafe, customers receive excellent
service. To extend the adventure theme, Restaurant customers are greeted at
the entrance by "tour guides", food servers are known as "safari guides"
and the bartenders are known as "navigators." The "tour guides" at the
front desk are trained to communicate, via headsets, with the "safari
guides" who greet Restaurant customers and seat them at their tables. The
Company believes that a customer's experience is enhanced by the attitude
and attention of its personnel. Customer service is based on a team
approach so that each customer is continually attended to, and employees go
through extensive ongoing training to ensure consistent service.

RETAIL VILLAGE

For the twenty-six week period ended June 30, 1996, approximately 20% of
the Company's total revenues were derived from retail sales. In order to enter
the Restaurant, all customers must pass through the Unit's Retail Village. The
Retail Village offers over 4,000 SKUs and includes apparel and gifts with the
Rainforest Cafe logo and other items with a rainforest theme such as toys and
educational games. The Company has also developed eight proprietary Animal
Characters, each with a distinct personality including Ozzie, a rascally
orangutan; Rio, a colorful, tropical macaw; Tuki Makeeta, an imaginative baby
elephant; Cha! Cha!, an adventuresome tree frog; Nile, a proud crocodile; Maya,
a regal jaguar; Bamba, a gentle gorilla; and Iggy, a philosophical iguana. These
Animal Characters are designed to appeal to a broad range of customers, thereby
increasing retail sales and repeat business. The Company intends to utilize each
Animal Character for clothing and gifts. Custom designed t-shirts and
sweatshirts with colorful animals spelling out the "Rainforest Cafe" logo and
Animal Characters are signature items. By offering items featuring the
Rainforest Cafe logo and Animal Characters, the Company believes it is building
"brand equity" in the Rainforest Cafe name that will allow it to attract more
customers and to enhance its competitive retail position. The Retail Village
also includes a large selection of colorful rocks, plush and animated toys and
puppets, and educational and entertaining games and puzzles. Gift items and
other artifacts suggesting the rainforest theme, including colorful animal
figurines and prints, kitchen magnets, serving plates and other tableware,
handmade wood products and other unique rainforest related home accessories, are
also available. The Company varies approximately 30% of its retail items every
60 to 90 days, which management believes provides the Company with an increased
opportunity to generate repeat customer sales. The Company is also increasing
its commitment to private label products, which the Company expects will improve
the Company's retail margins due to the lower cost of private label products.

OPERATIONS, MANAGEMENT AND EMPLOYEES

The Company's ability to manage complex operations including high volume
Restaurants and Retail Villages has been, and will continue to be, central to
its overall success. The Company believes that its management must include
skilled personnel at all levels, including senior corporate management,
Directors of Operations, and other Unit employees. The Company's senior
corporate management, including the Company's Chairman and Chief Executive
Officer, Lyle Berman, and the Company's President and Chief Operating Officer,
Martin O'Dowd, has significant restaurant and retail experience. The Company
believes that Unit management is important for the profitability of each
Rainforest Cafe and accordingly, places

25
<PAGE> 27

particular emphasis on recruiting Directors of Operations that have significant
restaurant and management experience. The Company anticipates that, prior to
opening a Unit, a Director of Operations will have been trained at one or more
Rainforest Cafes for four to six months.

The Company strives to maintain quality and consistency in each of its
Units through the careful training and supervision of personnel and the
establishment of, and adherence to, high standards relating to personnel
performance, food and beverage preparation, and maintenance of facilities. All
managers must complete a twelve-week training program during which they are
instructed in areas such as food quality and preparation, customer service, and
employee relations. New staff members participate in approximately three weeks
of training under the close supervision of Company management. The Company has
also prepared operations manuals relating to food and beverage quality and
service standards. Management strives to instill enthusiasm and dedication in
its employees, regularly solicits employee suggestions concerning Company
operations and endeavors to be responsive to employees' concerns. In addition,
the Company has extensive and varied programs designed to recognize and reward
employees for superior performance. The Company believes that it has been able
to attract high quality, experienced restaurant and retail management and
personnel with its competitive compensation and bonus programs.

In general, each Unit has between 250 and 400 employees, although staffing
levels vary according to the size of the Unit. As of the date of this
Prospectus, the Company had approximately 1,800 employees, including 40
employees at its corporate headquarters. The Company believes that its
relationship with its employees is good.

PURCHASING

The Company strives to obtain consistent quality items at competitive
prices from reliable sources. In order to maximize operating efficiencies and to
provide the freshest ingredients for its food products while obtaining the
lowest possible prices for the required quality, each Restaurant's management
team determines the daily quantities of food items needed and orders such
quantities from major suppliers at prices often negotiated directly with the
Company's corporate office. Food and supplies are shipped directly to the Units.
The Company purchases perishable food products locally. The Company does not
maintain a central food product warehouse or commissary. With respect to retail
products, the Company maintains over 4,000 SKUs, which it purchases from several
suppliers. The Company maintains a centralized warehouse for retail product
distribution. The Company is committed to private label manufacturing which it
believes will improve the Company's retail margins due to the lower cost of
private label products. The Company has not experienced any significant delays
in receiving restaurant or retail supplies and equipment. The Company is not
dependent on any one supplier for its restaurant or retail goods.

MANAGEMENT INFORMATION SYSTEMS/ACCOUNTING

The Company uses integrated management information systems that are
designed to be utilized in future Units. These systems include a computerized
point-of-sale system which facilitates the movement of customer food and
beverage orders between the customer areas and kitchen operations, controls
cash, handles credit card authorizations, keeps track of revenues on a per
employee basis and provides management with revenue and inventory data. The
Company's retail/bar coding system allows management to track inventory daily.
The point-of-sale system is accessed by service personnel who are assigned
individual identification keys and appropriate information is printed in the
kitchen and bar areas which eliminates the need to read handwritten tickets. The
point-of-sale system electronically transfers data nightly to Company
headquarters. The Company also uses a computerized time management system which
determines the time worked by each employee, allows management to gather data
and schedule work hours, and produces payroll reports. Each Unit also uses
computerized systems to control and gather data with respect to food, beverage,
retail and supplies inventories.

The Company's automated Unit-level point-of-sale, time management and
inventory management systems provide data for posting directly to the Company's
general ledger and to other accounting subsystems. The automated general ledger
system provides various management reports comparing current and prior operating
results as well as measuring performance against predetermined operating
budgets. The results are

26
<PAGE> 28

reported to and reviewed with Company management by accounting personnel. Such
reporting includes (i) weekly reports of revenues, cost of revenues and selected
controllable Unit expenses, (ii) detailed monthly Unit performance reports of
revenues and expenses and (iii) monthly reports of Unit-by-Unit and
administrative expense performance.

MARKETING AND PROMOTION

To date, the Company has primarily relied upon "word of mouth" advertising
to attract customers to its Rainforest Cafes. The Company also utilizes limited
outdoor billboards and distinctive exterior signage. The unique and dynamic
environment of the Rainforest Cafe and its tropical bird habitat have resulted
in a significant amount of unsolicited positive media publicity. Additionally,
the Company has attempted to create equity in its "Rainforest Cafe" name by
offering items featuring the Rainforest Cafe logo and Animal Characters. The
Company employs at its open Units, and intends to employ at future Units, a
Group Sales Manager who is responsible for promoting and arranging corporate and
other group catering events at the Unit.

COMPETITION

REGULATION

Restaurants are subject to licensing and regulation by state and local
health, sanitation, safety, fire, and other authorities and are also subject to
state and local licensing and regulation of the sale of alcoholic beverages and
food. Additionally, businesses that maintain or sell animals are subject to
additional levels of state and local health and sanitation regulations. Having
tropical birds as part of the Rainforest Cafe concept requires the Company to
adhere to stringent health codes that prohibit crossover between kitchen workers
and animal handlers, and any exchange of air from the bird areas to the rest of
the Unit. The Company overcame this problem at its existing Units by installing
specially designed air exhaust hoods for the birds' perch area. Additionally, a
separate waste disposal system is provided for the birds. Although, to date, the
Company has satisfied animal-related licensing for its existing Units, no
assurance can be given that the Company will be able to maintain such approvals
or obtain such approvals at other locations. Difficulties or failure in
obtaining required licenses and approvals will result in delays in, or
cancellation of, the opening of Units. See "Risk Factors."

PROPERTIES

The Company intends to lease the facilities for each of its Units. It has
entered into long-term leases with respect to its existing Mall of America,
Woodfield Mall, Gurnee Mills and Walt Disney World Units and its planned Units
at Tysons Corner Center I, Sawgrass Mills, Palisades Center, Trump Taj Mahal
Casino and

27
<PAGE> 29

Hotel, Stratosphere, South Coast Plaza, The Source, Grapevine Mills, Disney's
Animal Kingdom, and Cherry Creek Mall. The Company's leases with Disney are
cancelable by the landlord at any time upon 60 days notice and payment by Disney
of the Company's unamortized value of leasehold improvements at the Walt Disney
World Unit or Disney's Animal Kingdom Units, respectively, and an amount equal
to the net operating income generated by such Unit for the previous lease year.
With regard to the Tysons Corner Center I and Cherry Creek Mall leases, in the
event the Company fails to achieve specified gross sales by a certain date, the
lease may be terminated by the landlords. The Company is currently negotiating
leases with respect to its planned Units at the MGM Grand Hotel and Casino and
the Aventura Mall.

The Company's executive offices, including retail warehouse space, are
located in Hopkins, Minnesota, under a lease which terminates in June 2000.

TRADEMARKS

LEGAL PROCEEDINGS

The Company is not a party to any material litigation and is not aware of
any threatened litigation that would have a material adverse effect on its
business.

28
<PAGE> 30

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following sets forth certain information with respect to each person
who is a director or executive officer of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- ------------------------------------------------
<S> <C> <C>
Lyle Berman.......................... 55 Chairman of the Board and Chief Executive
Officer
Martin J. O'Dowd..................... 48 President, Chief Operating Officer, Secretary
and Director
Steven W. Schussler.................. 41 Executive Vice President-Development and
Director
Ercu Ucan............................ 40 Executive Vice President-Retail and Director
Mark S. Robinow...................... 40 Chief Financial Officer
Gregory C. Carey..................... 44 Vice President-Operations
David W. Anderson.................... 43 Director
Kenneth W. Brimmer................... 41 Director
David L. Rogers...................... 53 Director
Joel N. Waller....................... 57 Director
</TABLE>

Mr. Berman has been Chairman of the Board and Chief Executive Officer of
the Company since its inception in February 1994. Mr. Berman has been Chief
Executive Officer and Chairman of the Board of Grand Casinos, Inc. and its
predecessor since October 1990. Mr. Berman is also Chief Executive Officer and
Chairman of the Board of Stratosphere Corporation, and a director of G-III
Apparel Group Ltd., Innovative Gaming Corporation of America and New Horizon
Kids Quest, Inc.

Mr. O'Dowd has been President and Chief Operating Officer since May 1995
and has served as a director and Secretary since June 1995. From July 1987 to
May 1995, Mr. O'Dowd was Corporate Director, Food & Beverage Services for
Holiday Inn Worldwide. From August 1985 to July 1987, Mr. O'Dowd was Vice
President and General Operations Manager for the Hard Rock Cafe in New York. Mr.
O'Dowd is also a director of Elephant & Castle Group, Inc. and Famous Dave's of
America, Inc., two companies involved in the restaurant business.

Mr. Schussler has been Executive Vice President-Development of the Company
since its inception and a director of the Company since January 1995. From 1983
to February 1992, Mr. Schussler was an officer of Juke Box Saturday Night of
Minneapolis, Inc. ("JBSN"), a 1950's and 1960's theme restaurant and nightclub.
JBSN filed for bankruptcy in January 1992.

Mr. Ucan has been Executive Vice President-Retail of the Company since its
inception and a director of the Company since January 1995. From September 1992
until December 1993, Mr. Ucan served as President of the Orjin Textile Group in
Istanbul, Turkey, a garment factory employing approximately 150 persons. From
January 1989 until August 1992, Mr. Ucan served as Director of Trend
Merchandising and Director of Product Development for Wilsons.

Mr. Robinow has been Chief Financial Officer since November 1995. From
August 1993 to June 1995, Mr. Robinow served as Senior Vice President and Chief
Financial Officer of Edina Realty, Inc., the country's fourth largest
residential real estate brokerage company. From December 1986 to August 1993,
Mr. Robinow served as Chief Financial Officer, Secretary and Treasurer of Ringer
Corporation, a publicly held manufacturer of natural lawn and garden products
for the consumer market. Mr. Robinow is a certified public accountant.

Mr. Carey has been Vice President-Operations since August 1996. From May
1996 to August 1996, Mr. Carey served as Director of Operations at the Company's
Walt Disney World Marketplace Unit. From June 1994 to May 1996, Mr. Carey served
as Director of Operations at the Company's Mall of America Unit. From July 1989
to June 1994, Mr. Carey served as Senior General Manager at Restaurants
Unlimited, Inc.,

29
<PAGE> 31

an upscale restaurant operating company. From November 1987 to July 1989, Mr.
Carey served as Regional Manager at General Mills Restaurants, Inc.

Mr. Anderson has been a director of the Company since September 1995. Mr.
Anderson has been a director and Executive Vice President of Grand Casinos, Inc.
and its predecessor since October 1990. Mr. Anderson also is Chairman and Chief
Executive Officer of Famous Dave's of America, Inc., a Minnesota-based barbeque
restaurant company.

Mr. Brimmer has been a director of the Company since August 1996. Mr.
Brimmer has been employed by Grand Casinos, Inc. and its predecessor since
October 1990 as Special Assistant to the Chairman and Chief Executive Officer,
Lyle Berman. In addition, Mr. Brimmer served as Treasurer of the Company from
September 5, 1995 until August 1996.

Mr. Rogers has been a director of the Company since January 1995. Since
November 1988, Mr. Rogers has been Executive Vice President and Chief Operating
Officer of Wilsons Suede and Leather ("Wilsons"). Mr. Rogers held positions of
increasing responsibility at Bermans Specialty Stores, Inc. from 1980 until
November 1988, when Bermans was acquired by Wilsons. Mr. Rogers is a director of
Grand Casinos, Inc.

Mr. Waller has been a director of the Company since January 1995. Mr.
Waller has been President of Wilsons since 1983 and Chairman of Wilsons since
1992. Mr. Waller is also a director of Grand Casinos, Inc. and Damark
International, Inc.

The Company's executive officers are appointed annually by the Company's
directors. Each of the Company's directors continues to serve until his or her
successor has been designated and qualified. Directors currently receive no fees
for serving as directors. The Company has granted options to acquire an
aggregate of 137,500 shares of the Common Stock at prices ranging from $3.40 to
$24.65 per share to the Company's outside directors (the "Directors' Stock
Options").

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has an Audit Committee comprised of Messrs. Rogers
and Waller. The Audit Committee recommends to the Board of Directors the
appointment of independent auditors, reviews and approves the scope of the
annual audit of the Company's financial statements, reviews and approves any
non-audit services performed by the independent auditors, reviews the findings
and recommendations of the internal and independent auditors and periodically
reviews and approves major accounting policies and significant internal
accounting control procedures.

The Board of Directors also has a Compensation Committee comprised of
Messrs. Rogers and Waller. The Compensation Committee reviews and recommends
compensation of officers and directors, administers stock option plans and
reviews major personnel matters.

30
<PAGE> 32

EXECUTIVE COMPENSATION

The following table summarizes the compensation earned by the Company's
Chief Executive Officer and all executive officers who served in such capacities
from February 3, 1994 (Inception) through December 31, 1995 (the "Named
Executive Officers"):

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
---------------------------------- SECURITIES
FISCAL OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS
- --------------------------------------------------- ------ -------- ------------ ------------
<S> <C> <C> <C> <C>
Lyle Berman........................................ 1994 $ 0 $ 0 0
Chairman of the Board and Chief Executive Officer 1995 0 0 0
Martin J. O'Dowd................................... 1995 95,385(1) 0 300,000
President and Chief Operating Officer
Steven W. Schussler................................ 1994 21,153 66,308(2) 0
Executive Vice President - Development 1995 110,769 0 75,000
Ercu Ucan.......................................... 1994 41,857 59,231(2) 262,500(3)
Executive Vice President - Retail 1995 115,000 0 75,000
Mark S. Robinow.................................... 1995 6,346(4) 0 90,000
Chief Financial Officer
</TABLE>

- -------------------------
(1) Mr. O'Dowd began his employment with the Company on May 15, 1995. Mr.
O'Dowd's annual salary during 1995 was $160,000. Mr. O'Dowd's current annual
salary is $175,000.

(2) Includes amounts paid to Messrs. Schussler and Ucan pursuant to consulting
arrangements prior to each becoming employees of the Company.

(3) Options to purchase 262,500 shares of Common Stock at $.01 per share. Such
options vest on a pro-rata basis over a three year period beginning February
3, 1995.

(4) Mr. Robinow began his employment with the Company on November 27, 1995. Mr.
Robinow's annual salary during 1995 was $110,000. Mr. Robinow's current
annual salary is $118,000.

31
<PAGE> 33

STOCK OPTION GRANTS

The following table sets forth certain information concerning the grant of
stock options from February 3, 1994 (Inception) through December 31, 1995 to the
Named Executive Officers:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------------- VALUE AT ASSUMED ANNUAL
PERCENT OF RATES OF STOCK PRICE
NUMBER OF TOTAL OPTIONS APPRECIATION FOR OPTION
SECURITIES GRANTED TO EXERCISE OR TERM(1)
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION ------------------------
NAME OPTIONS GRANTED FISCAL YEAR ($/SH) DATE 5% 10%
- ----------------------------- --------------- --------------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Lyle Berman.................. -- --% $ -- -- $ -- $ --
Martin J. O'Dowd............. 300,000(2) 40.2 3.40 May 2005 8,277,160 12,323,840
Steven W. Schussler.......... 75,000(3) 10.1 3.40 April 2005 2,044,290 3,080,960
Ercu Ucan.................... 75,000(3) 10.1 3.40 April 2005 2,044,290 3,080,960
Mark S. Robinow.............. 90,000(2) 12.1 13.60 November 2005 1,673,105 3,179,467
</TABLE>

- -------------------------
(1) The Potential Realizable Value is the product of (a) the difference between
(i) the product of the per share market price at the date of grant and the
sum of 1 plus the assumed rate of appreciation of the Common Stock
compounded annually over the term of the option and (ii) the per share
exercise price of the option and (b) the number of shares of Common Stock
underlying the option at December 31, 1995. These amounts represent certain
assumed rates of appreciation only.

(2) All options were granted at a price equal to the fair market value of the
Company's Common Stock on the date of grant. One-fifth of such options
vested immediately and the balance vest on a pro-rata basis over a four year
period beginning the first anniversary of the date of grant.

(3) All options were granted at a price equal to the fair market value of the
Company's Common Stock on the date of grant. Options become exercisable in
three equal annual increments beginning on the first anniversary of the date
of grant.

32
<PAGE> 34

The following table sets forth certain information concerning unexercised
stock options held by the Named Executive Officers as of December 31, 1995. No
options were exercised by the executive officers named in the Summary
Compensation Table during fiscal 1995.

AGGREGATE OPTION EXERCISES IN FISCAL 1995
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END FISCAL YEAR END
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Lyle Berman......................... -- -- $ -- $ --
Martin O'Dowd....................... 60,000 240,000 1,205,000 4,820,000
Steven W. Schussler................. 0 75,000 0 1,506,250
Ercu Ucan........................... 87,499 250,000 1,757,282 5,020,843
Mark S. Robinow..................... 18,000 72,000 361,500 1,446,000
</TABLE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Stock Option and Compensation Committee (the "Compensation
Committee") consists of Messrs. Rogers and Waller.

EMPLOYMENT AGREEMENTS

In February 1995, the Company entered into a three-year employment
agreement with Steven W. Schussler pursuant to which Mr. Schussler serves the
Company as Executive Vice President-Development. Mr. Schussler currently
receives an annual base salary of $140,000 and has the opportunity to earn
performance-related bonuses, including stock options issued pursuant to the
Company's 1995 Stock Option and Compensation Plan. Pursuant to such agreement,
Mr. Schussler may not disclose confidential information about the Company and
has agreed not to compete with the Company for a one-year period after any
termination of employment. Mr. Schussler may terminate his employment upon 30
days' written notice to the Board of Directors. If Mr. Schussler is terminated
by the Company without "good cause," Mr. Schussler is entitled to receive his
base salary and benefits for 12 months.

In April 1995, the Company entered into a two-year employment agreement
with Martin J. O'Dowd pursuant to which Mr. O'Dowd serves as President and Chief
Operating Officer. Mr. O'Dowd currently receives an annual base salary of
$175,000, with a discretionary bonus of up to 20% of such annual salary
($35,000, with a minimum guaranteed bonus of $15,000). Mr. O'Dowd was also
granted options to purchase 300,000 shares of Common Stock, vesting over a
four-year period, and exercisable at $3.40 per share. Pursuant to such
agreement, Mr. O'Dowd may not disclose any confidential information about the
Company and has agreed not to compete with the Company for a one-year period
after termination of employment. Mr. O'Dowd may terminate his employment upon 30
days' written notice to the Board of Directors. If Mr. O'Dowd is terminated by
the Company without "good cause," Mr. O'Dowd is entitled to receive his base
salary for six months.

STOCK OPTION AND COMPENSATION PLAN

The Company's 1995 Stock Option and Compensation Plan (the "Plan") has
1,500,000 shares reserved for issuance, of which options to acquire 1,121,500
shares have been granted as of the date of this Prospectus. Stock options, stock
appreciation rights, restricted stock, other stock and cash awards may be
granted under the Plan. The Plan is administered by the Compensation Committee
which has the discretion to determine the number and purchase price of shares
subject to stock options, the term of each option, and the time or times during
its term when the option becomes exercisable. Under the Plan, the Company has
granted options to

33
<PAGE> 35

purchase 75,000 shares of Common Stock to each of Messrs. Schussler and Ucan and
options to purchase 300,000 shares of Common Stock to Mr. O'Dowd. The exercise
price of such options is $3.40 per share and, with the exception of options
granted to Mr. O'Dowd, such options will vest on a pro-rata basis on the first,
second and third anniversaries of the date of grant. With respect to Mr. O'Dowd,
one-fifth of such options vested immediately and the balance vest on a pro-rata
basis over a four-year period beginning on the first anniversary of the grant
date and will terminate in 10 years; provided, however, that if Mr. O'Dowd's
employment is terminated at any time prior to May 15, 1997, an aggregate of
180,000 of such options shall immediately vest. As of the date of this
Prospectus, Mr. O'Dowd has exercised options with respect to 12,000 shares. The
Company has granted to Mark S. Robinow options to purchase 90,000 shares of
Common Stock. These options have an exercise price of $13.60 and one-fifth of
such options vested immediately and the balance vest over a four year period
beginning on the first anniversary of the grant date.

1996 EMPLOYEE STOCK PURCHASE PLAN

On May 21, 1996 the shareholders of the Company approved the 1996 Employee
Stock Purchase Plan (the "1996 Employee Plan"). The Board of Directors believes
that the ownership of the Company's Common Stock by employees is a desirable and
useful means to strengthen further the interests of the employees and the future
success of the Company.

Subject to certain exceptions set forth in the 1996 Employee Plan, each
regular, full-time employee (including officers and employee Directors but not
including non-employee Directors or holders of five percent or more of the total
combined voting power or volume of all classes of stock of the Company) of the
Company who has been continuously employed for at least three months is eligible
to participate in the 1996 Employee Plan. In order to participate in the 1996
Employee Plan, an eligible employee must execute and deliver to the Company
certain authorization forms directing a payroll deduction of a specified whole
percentage of his or her gross earnings. Such percentage may not be less than
two percent nor more than fifteen percent of such gross earnings. The maximum
dollar value of shares that a participating employee may purchase per year under
the Plan is $25,000. The 1996 Employee Plan commenced on July 1, 1996 and is
administered by the Compensation Committee and an agent (the "Agent") designated
by the Compensation Committee. Members of the Compensation Committee are subject
to removal by the Board of Directors. The Compensation Committee may adopt,
amend and rescind rules and regulations not inconsistent with the 1996 Employee
Plan. The Agent will provide each Participant with a periodic statement showing
the cash withheld and invested, purchase price per share and shares purchased.

The Board of Directors may terminate the 1996 Employee Plan at any time.
Any such termination will not impair any purchase rights which were granted
prior to such termination. Unless sooner terminated, the 1996 Employee Plan will
terminate when the maximum number of shares covered by the 1996 Employee Plan
has been purchased. The Board may also amend the 1996 Employee Plan from time to
time in any respect in order to meet changes and legal requirements or for any
other reasons. The total number of shares of Common Stock that may be subject to
options issued pursuant to the 1996 Employee Plan is 225,000.

CERTAIN TRANSACTIONS

Prior to the Company's IPO, the Company owed Steven W. Schussler, Executive
Vice President-Development and a director of the Company, approximately $370,000
for Mr. Schussler's costs in developing the Rainforest Cafe concept, and for
certain items of inventory, equipment and live birds purchased by the Company
from Mr. Schussler. The Company repaid Mr. Schussler such amount, less $10,000,
representing an amount he owed to the Company, out of the proceeds of the IPO.
Pursuant to a personal loan from Lyle Berman to Mr. Schussler, Mr. Schussler had
pledged 750,000 shares of the Company's Common Stock beneficially owned by him
to Mr. Berman. Mr. Schussler repaid such loan and obtained the release of his
pledged shares of the Company's Common Stock immediately following the closing
of the IPO. Mr. Schussler has also agreed to indemnify the Company against any
and all potential claims made against the Company for actions allegedly taken by
Mr. Schussler prior to the Company's incorporation.

34
<PAGE> 36

During a private placement of the Company's Common Stock in March 1994, the
Company entered into a loan commitment agreement with Lyle Berman, Chairman and
Chief Executive Officer of the Company, pursuant to which Mr. Berman agreed to
loan the Company the difference between the maximum amount intended to be raised
pursuant to such private placement ($1,500,000) and the amount actually raised.
Pursuant to this agreement, Mr. Berman loaned the Company $865,500 for which he
received 574,125 shares of the Company's Common Stock and promissory notes for
such aggregate principal amount. In connection with the IPO, Mr. Berman
converted his notes into shares of Common Stock. Prior to the IPO, the Company
also borrowed $100,000 for working capital purposes and for expansion of
Restaurant seating at the Mall of America Unit. Such loan was repaid with the
proceeds of the IPO.

From February 3, 1994 (Inception) through October 1, 1995, the Company paid
an aggregate of approximately $183,000 to Grand Media and Electronics
Distributing, Inc. ("Grand Media") for consulting fees and purchases of certain
media and computer equipment. Grand Media is a Minnesota corporation wholly
owned by Grand Casinos, Inc., of which Mr. Berman is Chairman and Chief
Executive Officer. There is no written agreement between the Company and Grand
Media.

The Company has entered into a lease to develop and open a Rainforest Cafe
at Stratosphere in Las Vegas, Nevada. Lyle Berman is Chairman of the Board and
Chief Executive Officer of each of the Company, Stratosphere Corporation and
Grand Casinos, Inc. Grand Casinos, Inc. owns a controlling interest in
Stratosphere Corporation. Stratosphere Corporation is currently exploring
various financial restructuring alternatives and such restructuring could delay
the scheduled opening or otherwise negatively impact the results of operations
at this Unit and the Company.

35
<PAGE> 37

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information with regard to the
beneficial ownership of the shares of the Company's Common Stock as of the date
of this Prospectus by (i) each person known by the Company to be the beneficial
owner of more than 5% of the outstanding Common Stock, (ii) each director and
executive officer of the Company, (iii) all executive officers and directors as
a group and (iv) each selling shareholder. Unless otherwise indicated, each of
the following persons has sole voting and investment power with respect to the
shares of Common Stock set forth opposite their respective names. Unless
otherwise indicated, the address of 5% shareholders, directors and executive
officers is 720 South Fifth Street, Hopkins, Minnesota 55343.

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
PRIOR TO THE OFFERING SHARES TO AFTER THE OFFERING
---------------------- BE SOLD IN ----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE THE OFFERING NUMBER PERCENTAGE
- -------------------------------------------- --------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Lyle Berman(1).............................. 1,194,687 8.6% 0 1,194,687 7.4%
Martin J. O'Dowd(2)......................... 63,000 * 0 63,000 *
Steven W. Schussler(3)...................... 720,999 5.2% 50,000 670,999 4.1%
Ercu Ucan(4)................................ 199,998 1.4% 0 199,998 1.2%
Mark S. Robinow(5).......................... 18,000 * 0 18,000 *
Gregory C. Carey(6)......................... 700 * 0 700 *
David W. Anderson(7)........................ 318,750 2.3% 50,000 268,750 1.7%
Kenneth W. Brimmer(8)....................... 52,500 * 0 52,500 *
David L. Rogers(9).......................... 42,499 * 0 42,499 *
Joel N. Waller(10).......................... 55,624 * 0 55,624 *
Neil I. Sell, as sole trustee of four
irrevocable trusts for the benefit of Lyle
Berman's children(11)..................... 600,000 4.3% 100,000 500,000 3.1%
All directors and executive officers as a
group (10 persons)........................ 2,666,757 18.7% 100,000 2,566,757 15.5%
</TABLE>

- -------------------------
* Less than 1%.

(1) Does not include an aggregate of 90,375 shares of Common Stock owned by Mr.
Berman's adult children and father. The address of such reporting person is
13705 First Avenue North, Plymouth, Minnesota 55441.

(2) Shares not outstanding but deemed beneficially owned by virtue of Mr.
O'Dowd's right to acquire such shares within 60 days. Does not include
225,000 shares of Common Stock issuable upon exercise of options granted to
Mr. O'Dowd.

(3) Includes 999 shares not outstanding but deemed beneficially owned by virtue
of Mr. Schussler's right to acquire such shares within 60 days. Does not
include 50,001 shares of Common Stock issuable upon exercise of options
granted to Mr. Schussler.

(4) Shares not outstanding but deemed beneficially owned by virtue of Mr.
Ucan's right to acquire such shares within 60 days. Does not include
137,502 shares of Common Stock issuable upon exercise of options granted to
Mr. Ucan.

(5) Shares not outstanding but deemed beneficially owned by virtue of Mr.
Robinow's right to acquire such shares within 60 days. Does not include
72,000 shares of Common Stock issuable upon exercise of options granted to
Mr. Robinow.

(6) Shares owned by Mr. Carey's minor children. Does not include 40,000 shares
of Common Stock issuable upon exercise of options granted to Mr. Carey.

(7) Does not include 37,500 shares of Common Stock issuable upon exercise of
options granted to Mr. Anderson.

(8) Does not include 25,000 shares of Common Stock issuable upon exercise of
options granted to Mr. Brimmer.

(9) Does not include 25,000 shares of Common Stock issuable upon exercise of
options granted to Mr. Rogers.

(10) Mr. Waller has disclaimed beneficial ownership of 1,400 shares owned by Mr.
Waller's mother and spouse. Does not include 25,000 shares of Common Stock
issuable upon exercise of options granted to Mr. Waller.

(11) Mr. Sell has disclaimed beneficial ownership of such shares. The address of
such reporting person is 3300 Norwest Center, Minneapolis, Minnesota 55402.

36
<PAGE> 38

DESCRIPTION OF SECURITIES

The Company's authorized capital stock consists of 50,000,000 undesignated
shares, no par value per share in the case of Common Stock, and a par value as
determined by the Board of Directors in the case of Preferred Stock.

Prior to this offering, there were 13,937,555 shares of Common Stock issued
and outstanding and 1,448,745 shares reserved for issuance upon exercise of
outstanding options and warrants. The rights of holders of the shares of Common
Stock may become subject in the future to prior and superior rights and
preferences in the event the Board of Directors establishes one or more
additional classes of Common Stock, or one or more series of Preferred Stock.
The Board of Directors has no present plan to establish any such additional
class or series. See "Risk Factors -- Effect of Certain Anti-Takeover
Provisions." Holders of the Common Stock are entitled to receive such dividends
as may be declared by the Board of Directors out of assets legally available
therefore, and to share ratably in the assets of the Company available upon
liquidation.

Each share of Common Stock is entitled to one vote for all purposes.
Accordingly, the holders of more than fifty percent of all of the outstanding
shares of Common Stock can elect all of the directors. Significant corporate
transactions such as mergers, sales of assets and dissolution or liquidation
require approval by the affirmative vote of the majority of the outstanding
shares of Common Stock. Other matters to be voted upon by the holders of Common
Stock normally require the affirmative vote of a majority of the shares present
or represented by proxy at the particular shareholders' meeting. The Company's
directors and officers, together with trusts for certain of their children, as a
group beneficially own approximately 23.0% of the outstanding Common Stock of
the Company. Upon completion of this Offering, such persons will beneficially
own approximately 18.6% of the outstanding shares (18.2% if the Underwriters'
over-allotment option is exercised in full). See "Principal and Selling
Shareholders." Accordingly, such persons will continue to be able to
substantially control the Company's affairs, including, without limitation, the
sale of equity or debt securities of the Company, the appointment of officers,
the determination of officers' compensation and the determination whether to
cause a registration statement to be filed.

TRANSFER AGENT AND REGISTRAR

Norwest Bank Minnesota, N.A., is the transfer agent and registrar for the
Common Stock.

REPORTS TO SHAREHOLDERS

The Company will furnish to its shareholders annual reports containing
audited financial statements and quarterly reports containing unaudited
financial information.

37
<PAGE> 39

UNDERWRITING

The Underwriters named below (the "Underwriters"), have severally agreed,
subject to the terms and conditions contained in the underwriting agreement (the
"Underwriting Agreement") by and among the Company, the Selling Shareholders and
the Underwriters, to purchase from the Company and the Selling Shareholders the
number of shares of Common Stock indicated below opposite their respective names
at the public offering price less the underwriting discount set forth on the
cover page of this Prospectus. The Underwriting Agreement provides that the
obligations of the Underwriters to pay for and accept delivery of the shares of
Common Stock are subject to certain conditions precedent and that the
Underwriters are committed to purchase all of the shares if they purchase any.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
------------------------------------------------------------------- ---------
<S> <C>
Montgomery Securities..............................................
Dain Bosworth Incorporated.........................................
Donaldson, Lufkin & Jenrette Securities Corporation................
Ladenburg, Thalmann & Co. Inc......................................
---------
Total......................................................... 2,500,000
=========
</TABLE>

The Underwriters have advised the Company and the Selling Shareholders that
they propose initially to offer the Common Stock directly to the public on the
terms set forth on the cover page of this Prospectus. The Underwriters may allow
to selected dealers a concession of not more than $ per share; and the
Underwriters may allow, and such dealers may reallow, a concession of not in
excess of $ per share to certain other dealers. After the public offering,
the offering price and other selling terms may be changed by the Underwriters.
The Common Stock is offered subject to receipt and acceptance by the
Underwriters and to certain other conditions, including the right to reject
orders in whole or in part. The Underwriters have advised the Company and the
Selling Shareholders that they intend to make a market in the Common Stock after
the effective date of this offering.

The Company has granted an option to the Underwriters, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 375,000 additional shares of Common Stock to cover over-allotments, if any,
at the same price per share as the initial shares to be purchased by the
Underwriters. To the extent the Underwriters exercise this option, the
Underwriters will be committed, subject to certain conditions, to purchase such
additional shares in approximately the same proportion as set forth in the above
table. The Underwriters may purchase such shares only to cover over-allotments
made in connection with this offering.

The Underwriting Agreement provides that the Company and the Selling
Shareholders will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or will contribute to
payments the Underwriters may be required to make in respect thereof.

All of the Company's executive officers, directors and certain selected
shareholders have agreed that, for a period of 90 days after the date of this
Prospectus, they will not, without the prior written consent of Montgomery
Securities, directly or indirectly offer to sell, sell or otherwise dispose of
any shares of Common Stock or any rights to acquire such shares. In addition,
the Company has agreed that, for a period of 90 days after the date of this
Prospectus, it will not, without the prior written consent of Montgomery
Securities, offer, sell, issue, grant options to purchase or otherwise dispose
of any of the Company's equity securities or any other securities convertible
into or exchangeable with its Common Stock or other equity securities (other
than pursuant to outstanding stock options disclosed in this Prospectus).

The Underwriters have informed the Company that they do not expect to make
sales of Common Stock offered by this Prospectus to accounts over which they
exercise discretionary authority in excess of 5% of the offering.

Certain of the Underwriters that currently act as market makers for the
Common Stock may engage in "passive market making" in the Common Stock on Nasdaq
in accordance with Rule 10b-6A under the

38
<PAGE> 40

Exchange Act. Rule 10b-6A permits, upon the satisfaction of certain conditions,
underwriters participating in a distribution that are also Nasdaq market makers
in the security being distributed to engage in limited market making
transactions during the period when Rule 10b-6A under the Exchange Act would
otherwise prohibit such activity. Rule 10b-6A prohibits underwriters engaged in
passive market making generally from entering a bid or effecting purchase at a
price that exceeds the highest bid for those securities displayed on Nasdaq by a
market maker that is not participating in the distribution. Under Rule 10b-6A,
each underwriter engaged in passive market making is subject to a daily net
purchase limitation equal to 30% of such entity's average daily trading volume
during the two full consecutive calendar months immediately preceding the date
of the filing of the registration statement under the Securities Act pertaining
to the securities to be distributed.

LEGAL MATTERS

The validity of the shares of Common Stock being sold in this offering will
be passed upon for the Company by Maslon Edelman Borman & Brand, a Professional
Limited Liability Partnership ("Maslon"), Minneapolis, Minnesota. Neil I. Sell,
a partner of Maslon, is deemed to be the beneficial owner of 600,000 shares of
Common Stock as sole trustee for the benefit of Lyle Berman's children, 100,000
of which shares are being sold pursuant to this offering. Mr. Sell has
disclaimed beneficial ownership of all shares beneficially owned as trustee.
Certain legal matters in connection with the sale of the shares of Common Stock
by the Selling Shareholders offered hereby will also be passed upon for the
Selling Shareholders by Maslon. Certain legal matters in connection with the
sale of the shares of Common Stock offered hereby will be passed upon for the
Underwriters by Fried, Frank, Harris, Shriver & Jacobson, a partnership
including professional corporations, Los Angeles, California.

EXPERTS

The financial statements as of December 31, 1995 and for the year then
ended included herein have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto and are
included herein in reliance upon the authority of said firm as experts in giving
said report.

The financial statements as of January 1, 1995 and for the period from
February 3, 1994 (inception) through January 1, 1995 included herein have been
audited by Lund Koehler Cox & Company, PLLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.

On November 10, 1995, the Company, with the approval of its Board of
Directors and Audit Committee, engaged Arthur Andersen LLP as the independent
public accountants for Rainforest Cafe. Prior to the engagement of Arthur
Andersen LLP, Lund Koehler Cox & Company, PLLP had served as the independent
public accountants for the Company. The report prepared by Lund Koehler Cox &
Company, PLLP as of January 1, 1995 and for the periods February 3, 1994
(Inception) through January 1, 1995 contained no adverse opinion or disclaimer
of opinion and was not qualified or modified as to uncertainty of audit scope or
accounting principles. In connection with the audits as of January 1, 1995, and
through November 10, 1995, there were no disagreements with Lund Koehler Cox &
Company, PLLP on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of Lund Koehler Cox & Company, PLLP, would have
caused Lund Koehler Cox & Company, PLLP to make reference to the subject matter
of the disagreements in its reports.

39
<PAGE> 41

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statement and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the following
regional offices: 14th Floor, Seven World Trade Center, New York, New York
10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can also be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Company's Common Stock is traded on the
Nasdaq National Market. The foregoing material also should be available for
inspection at the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.

The Company has also filed with the Commission a Registration Statement on
Form S-1 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the shares offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement, copies of which may be obtained from the
Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, upon payment of the fees prescribed
by the Commission.

40
<PAGE> 42

RAINFOREST CAFE, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports of Independent Public Accountants............................................ F-2
Balance Sheets as of January 1, 1995 and December 31, 1995........................... F-4
Statements of Operations for the Period from February 3, 1994 (Inception) Through
January 1, 1995 and for the Year Ended December 31, 1995........................... F-5
Statements of Shareholders' Equity for the Period from February 3, 1994 (Inception)
Through January 1, 1995 and for the Year Ended December 31, 1995................... F-6
Statements of Cash Flows for the Period from February 3, 1994 (Inception) Through
January 1, 1995 and for the Year Ended December 31, 1995........................... F-7
Notes to Financial Statements -- December 31, 1995................................... F-8
Balance Sheets as of December 31, 1995 and June 30, 1996 (unaudited)................. F-13
Statements of Operations for the Twenty-Six Weeks Ended July 2, 1995 and June 30,
1996 (unaudited)................................................................... F-14
Statements of Cash Flows for the Twenty-Six Weeks Ended July 2, 1995 and June 30,
1996 (unaudited)................................................................... F-15
Notes to Financial Statements -- June 30, 1996 (unaudited)........................... F-16
</TABLE>

F-1
<PAGE> 43

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Rainforest Cafe, Inc.:

We have audited the accompanying balance sheet of Rainforest Cafe, Inc. (a
Minnesota corporation) as of December 31, 1995, and the related statements of
operations, shareholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rainforest Cafe, Inc. as of
January 1, 1995, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Minneapolis, Minnesota,
February 9, 1996 (except for Note 8,
as to which the date is July 1, 1996)

F-2
<PAGE> 44

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Rainforest Cafe, Inc.:

We have audited the accompanying balance sheet of Rainforest Cafe, Inc. (a
Minnesota corporation) as of January 1, 1995, and the related statements of
operations, shareholders' equity and cash flows for the period from February 3,
1994 (inception) through January 1, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rainforest Cafe, Inc. as of
January 1, 1995, and the results of its operations and its cash flows for the
period from February 3, 1994 (inception) through January 1, 1995, in conformity
with generally accepted accounting principles.

LUND KOEHLER COX & COMPANY, PLLP

Minneapolis, Minnesota,
February 17, 1995

F-3
<PAGE> 45

RAINFOREST CAFE, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................ $ 465,967 $ 16,323,178
Accounts receivable and other.................................... 105,493 1,447,610
Inventories...................................................... 439,957 1,075,857
Preopening expenses.............................................. -- 514,636
----------- -----------
Total current assets........................................ 1,011,417 19,361,281
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET................ 2,825,346 11,847,675
----------- -----------
$ 3,836,763 $ 31,208,956
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................................. $ 890,079 $ 3,213,330
Accrued expenses --
Payroll and payroll taxes..................................... 94,152 288,758
Other......................................................... 178,726 368,849
Current portion of long-term debt................................ 315,500 --
----------- -----------
Total current liabilities................................... 1,478,457 3,870,937
----------- -----------
LONG-TERM DEBT TO SHAREHOLDERS..................................... 1,632,125 --
Less -- Unamortized discount..................................... (1,239,317) --
Less -- Current portion.......................................... (315,500) --
DEFERRED RENT...................................................... 487,500 982,638
----------- -----------
Long-term debt to shareholders, net......................... 564,808 982,638
----------- -----------
Total liabilities........................................... 2,043,265 4,853,575
----------- -----------
COMMITMENTS AND CONTINGENCIES (Note 6)
SHAREHOLDERS' EQUITY:
Common stock, no par value, 50,000,000 shares authorized;
3,840,900 and 9,484,347 shares issued and outstanding......... 3,421,550 27,867,419
Accumulated deficit.............................................. (1,628,052) (1,512,038)
----------- -----------
Total shareholders' equity.................................. 1,793,498 26,355,381
----------- -----------
$ 3,836,763 $ 31,208,956
=========== ===========
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-4
<PAGE> 46

RAINFOREST CAFE, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FEBRUARY 3, 1994
(INCEPTION)
THROUGH YEAR ENDED
JANUARY 1, 1995 DECEMBER 31, 1995
---------------- -----------------
<S> <C> <C>
REVENUES:
Restaurant sales........................................... $ 1,336,731 $ 9,978,739
Retail sales............................................... 729,180 3,471,902
----------- -----------
Total revenues.......................................... 2,065,911 13,450,641
----------- -----------
COSTS AND EXPENSES:
Food and beverage costs.................................... 450,043 2,777,754
Cost of retail goods sold.................................. 393,102 1,548,373
Restaurant operating expenses.............................. 769,073 5,365,882
Retail operating expenses.................................. 403,314 1,003,206
Depreciation and amortization.............................. 69,750 475,226
Preopening amortization.................................... -- 114,246
----------- -----------
Total costs and expenses................................ 2,085,282 11,284,687
----------- -----------
RESTAURANT AND RETAIL OPERATING INCOME....................... (19,371) 2,165,954
----------- -----------
OTHER EXPENSES:
General, administrative and development.................... 1,354,474 1,264,918
Interest income............................................ (3,023) (496,255)
Interest expense, including amortization of loan
discount................................................ 257,230 228,149
----------- -----------
Total other expenses.................................... 1,608,681 996,812
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM..... (1,628,052) 1,169,142
PROVISION FOR INCOME TAXES................................... -- --
----------- -----------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM...................... (1,628,052) 1,169,142
EXTRAORDINARY ITEM:
Extinguishment of debt..................................... -- 1,053,128
----------- -----------
Net income (loss)....................................... $ (1,628,052) $ 116,014
=========== ===========
NET INCOME (LOSS) PER COMMON SHARE:
Earnings (loss) before extraordinary item.................. $(0.46) $ 0.16
Extraordinary item......................................... -- (0.14)
----------- -----------
Net income (loss) per common share......................... $(0.46) $ 0.02
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING.......................... 3,543,134 7,312,379
=========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE> 47

RAINFOREST CAFE, INC.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK
------------------------ ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, February 3, 1994 (inception)....... -- $ -- $ -- $ --
Issuance of common stock for $0 to
$.95 per share......................... 2,362,500 1,000,050 -- 1,000,050
Issuance of common stock for $1.67 per
share, net of offering costs of
$42,500................................ 606,900 969,000 -- 969,000
Issuance of common stock in connection
with issuance of debt.................. 871,500 1,452,500 -- 1,452,500
Net loss.................................. -- -- (1,628,052) (1,628,052)
--------- ----------- ----------- -----------
BALANCE, January 1, 1995.................... 3,840,900 3,421,550 (1,628,052) 1,793,498
Conversion of debt to common stock at
$2.67 per share........................ 458,437 1,222,500 -- 1,222,500
Initial public offering................... 2,587,500 9,025,286 -- 9,025,286
Common stock issued upon exercise of
warrants............................... 2,585,010 14,198,000 -- 14,198,000
Stock options exercised................... 12,500 83 -- 83
Net income................................ -- -- 116,014 116,014
--------- ----------- ----------- -----------
BALANCE, December 31, 1995.................. 9,484,347 $27,867,419 $(1,512,038) $26,355,381
========= =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE> 48

RAINFOREST CAFE, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FEBRUARY 3, 1994
(INCEPTION)
THROUGH YEAR ENDED
JANUARY 1, 1995 DECEMBER 31, 1995
---------------- -----------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)............................................ $ (1,628,052) $ 116,014
Adjustments to reconcile net loss to cash flows provided by
(used in) operating activities --
Depreciation and amortization........................... 71,750 719,873
Amortization of long-term debt discount................. 213,183 186,189
Loss on extinguishment of debt.......................... -- 1,053,128
Expenses paid with note payable......................... 279,725 --
Change in operating assets and liabilities --
Accounts receivable and other........................ (105,493) (942,117)
Inventories.......................................... (439,957) (635,900)
Preopening expenses.................................. -- (629,000)
Accounts payable..................................... 890,079 2,323,251
Accrued expenses..................................... 272,878 384,729
------------ ------------
Net cash provided by (used in) operating
activities......................................... (445,887) 2,576,167
------------ ------------
INVESTING ACTIVITIES:
Purchases of furniture, equipment and leasehold improvements,
net....................................................... (2,319,196) (9,532,700)
------------ ------------
FINANCING ACTIVITIES:
Proceeds from the issuance of debt to shareholders........... 1,262,000 100,000
Payments on long-term debt to shareholders................... -- (509,625)
Proceeds from the sale of common stock, net.................. 1,969,050 9,025,286
Proceeds from the exercise of warrants, net.................. -- 14,198,000
Proceeds from stock options exercised........................ -- 83
------------ ------------
Net cash provided by financing activities............ 3,231,050 22,813,744
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS.......................... 465,967 15,857,211
CASH AND CASH EQUIVALENTS, beginning of period................. -- 465,967
------------ ------------
CASH AND CASH EQUIVALENTS, ending of period.................... $ 465,967 $16,323,178
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for --
Interest................................................ $ -- $ 85,922
Income taxes............................................ -- --
Noncash investing and financing activities --
Deferred rent from tenant allowances.................... 500,000 400,000
Conversion of debt to common stock...................... -- 1,222,500
Common stock issued in connection with debt............. 1,452,500 --
Decoration and birds purchased with note payable........ 90,400 --
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-7
<PAGE> 49

RAINFOREST CAFE, INC.

NOTES TO FINANCIAL STATEMENTS
JANUARY 1, 1995 AND DECEMBER 31, 1995

(1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS -- Rainforest Cafe, Inc. (the Company) was incorporated
in the state of Minnesota on February 3, 1994. The Company currently owns and
operates two Rainforest Cafe restaurant and retail stores. One unit is in the
Mall of America (the Mall of America Unit) in Bloomington, Minnesota, a suburb
of Minneapolis, and opened to the general public on October 3, 1994. Prior to
the opening of this unit, the Company was in the development stage. The second
unit opened in the Woodfield Mall (the Woodfield Mall Unit) in Schaumburg,
Illinois, a suburb of Chicago, on October 20, 1995.

FISCAL YEAR -- The Company has adopted a 52-/53-week accounting period
ending on the Sunday nearest December 31 of each year. The Company's year ended
December 31, 1995 contained 52 weeks.

CASH AND CASH EQUIVALENTS -- The Company includes as cash equivalents all
highly liquid investments with original maturities of three months or less when
purchased, which are recorded at the lower of cost or market. At December 31,
1995, certain marketable securities, consisting of a money market fund and a
government securities fund, carried at market value, were recorded as cash
equivalents in the accompanying balance sheet.

INVENTORIES -- Inventories consist primarily of retail goods for resale and
food and beverages used in restaurant operations and are recorded at the lower
of cost (average cost) or market value. Inventories consisted of the following
at:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ------------
<S> <C> <C>
Food and beverage....................................... $ 13,543 $ 87,418
Retail goods............................................ 426,414 988,439
-------- ----------
$ 439,957 $1,075,857
======== ==========
</TABLE>

PREOPENING EXPENSES -- It is the Company's policy to capitalize the direct
and incremental costs associated with opening a new unit, which consist
primarily of hiring and training the initial work force, mock service and other
direct costs. These costs are amortized over the 11 months of each unit's
operations beginning in the first full month of operation, if the recoverability
of such costs can be reasonably assured. Expenses incurred prior to opening the
Mall of America Unit were charged to operations when incurred due to the
developmental nature of the first unit.

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS -- Property, equipment and
leasehold improvements are recorded at cost. Improvements are capitalized, while
repair and maintenance costs are charged to operations when incurred. Furniture,
fixtures and equipment are depreciated using the straight-line method over their
estimated useful lives of 5 to 15 years. Leasehold improvements are amortized
using the straight-line method over the shorter of their estimated useful lives
or the lease term.

F-8
<PAGE> 50

RAINFOREST CAFE, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

Property and equipment consisted of the following at:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ------------
<S> <C> <C>
Live birds.......................................................... $ 30,000 $ 30,000
Furniture, fixtures and equipment -- office......................... 39,221 379,897
Furniture, fixtures and equipment -- retail and restaurant.......... 939,192 2,990,586
Leasehold improvements -- office.................................... 25,231 36,523
Leasehold improvements -- retail and restaurant..................... 1,863,452 7,130,073
Construction in progress............................................ -- 1,824,516
---------- -----------
2,897,096 12,391,595
Accumulated depreciation and amortization........................... (71,750) (543,920)
---------- -----------
$2,825,346 $ 11,847,675
========== ===========
</TABLE>

LONG-TERM DEBT DISCOUNT -- The Company amortized long-term debt discounts
over the life of the related debt using a method which approximated the interest
method.

NET INCOME (LOSS) PER COMMON SHARE -- Net income (loss) per common share is
computed by dividing net income (loss) by the weighted average number of common
shares outstanding and dilutive common equivalent shares assumed to be
outstanding during each period. Common equivalent shares consist of dilutive
options and warrants to purchase common stock. However, pursuant to rules of the
Securities and Exchange Commission, the calculation also includes equity
securities, including options and warrants, issued within one year of an initial
public offering with an issue price less than the initial public offering price,
even if the effect is antidilutive. The treasury stock method was used in
determining the dilutive effect of such issuances.

USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The ultimate outcomes could differ from those
estimates.

RECENTLY ISSUED ACCOUNTING STANDARD -- During 1995, the Company adopted the
provisions of Financial Accounting Standards Board Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of" (SFAS No. 121), which establishes accounting standards for the
recognition and measurement of impairment of long-lived assets, certain
identifiable intangibles and goodwill either to be held or disposed of. The
adoption of SFAS No. 121 had no impact on the Company's financial position or
results of operations.

(2) RELATED-PARTY TRANSACTIONS

DUE TO OFFICER AND SHAREHOLDER -- Due to officer and shareholder consisted
of amounts for development costs and certain items of inventory, equipment and
live birds purchased by the Company from the officer. The total due as of
January 1, 1995 was $370,125 and was repaid during the year ended December 31,
1995 (see Note 3).

PROMISSORY NOTES ISSUED TO OFFICER AND SHAREHOLDER -- Certain of the
promissory notes discussed at Note 3 were issued to an officer and shareholder
of the Company. Of the total amount due under the promissory notes, $865,500 was
due to this officer and shareholder as of January 1, 1995, and was repaid during
the year ended December 31, 1995.

PURCHASES OF EQUIPMENT AND SERVICES -- During the period from February 3,
1994 (inception) through January 1, 1995 and the year ended December 31, 1995,
the Company purchased approximately $66,000 and

F-9
<PAGE> 51

RAINFOREST CAFE, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

$117,000, respectively, of equipment, consulting and other services from Grand
Media and Electronics Distributing, Inc. (Grand Media). The Company's Chief
Executive Officer is the Chairman and Chief Executive Officer of Grand Media's
parent company.

(3) LONG-TERM DEBT TO SHAREHOLDERS

DUE TO OFFICER AND SHAREHOLDER -- The amount due under this obligation was
$370,125 at January 1, 1995. Interest accrued at an annual rate of 6% and the
obligation was repaid during the year ended December 31, 1995.

PROMISSORY NOTES TO SHAREHOLDERS -- The aggregate amount of promissory
notes to shareholders was $1,262,000 at January 1, 1995. Interest accrued at the
annual rate of 9.25% and was paid quarterly commencing December 31, 1994. In
addition, the Company issued to shareholders 871,500 shares of common stock
valued at $1,452,500 ($1.67 per share), which was recorded as a long-term debt
discount and amortized over the life of the debt, creating an effective interest
rate of approximately 84%.

On April 7, 1995, the holders of $1,222,500 of promissory notes made an
irrevocable election, effective upon the effective date of an initial public
offering, to convert their notes into shares of the Company's common stock at a
conversion price of $2.67 per share. The Company recorded the conversion as an
extinguishment of debt, which resulted in an extraordinary charge to earnings of
$1,053,128 at the date of conversion.

(4) SHAREHOLDERS' EQUITY

ORIGINAL ISSUANCES -- At the inception and during the development of the
Company, 2,362,500 shares of common stock were issued for consideration ranging
from $0 to $.95 per share.

PRIVATE PLACEMENT -- The Company sold 606,900 shares of common stock at
$1.67 per share in a private placement during 1994. This private placement
provided the Company $969,000 in net proceeds.

DEBT ISSUANCE -- In connection with the issuance of certain promissory
notes (see Note 3), the Company issued 871,500 shares (valued at $1.67 per
share) of common stock to the noteholders.

INITIAL PUBLIC STOCK OFFERING -- On April 7, 1995, the Securities and
Exchange Commission declared effective a Registration Statement relating to the
initial public offering of 2,587,500 units at an offering price of $4.00 per
unit, including 337,500 units from the exercise of the underwriters'
overallotment option which occurred in May 1995. Each unit consisted of one
share of common stock and one Redeemable Class A Warrant. The Company received
net proceeds of $9,025,286 after the payment of $1,324,714 in related
underwriting discount and offering costs.

EXERCISE OF WARRANTS -- In August 1995, the holders of 2,585,010 of the
Redeemable Class A Warrants (the Warrants) discussed above exercised the
Warrants at an exercise price of $5.50. A total of 2,490 warrants were not
exercised, and the Company redeemed these 2,490 warrants at $.01 per warrant.
The Company received net proceeds of $14,198,000 after the payment of $19,556 in
related costs.

(5) STOCK OPTIONS

STOCK OPTION AND COMPENSATION PLAN -- The Company has adopted a Stock
Option and Compensation Plan (the Plan), pursuant to which options and other
awards to acquire an aggregate of 750,000 shares of the Company's common stock
may be granted to full-time employees of the Company. Stock options, stock
appreciation rights, restricted stock, other stock and cash awards may be
granted under the Plan.

The Plan is administered by a stock option committee which has the
discretion to determine the number and purchase price of shares subject to stock
options, which may not be below 85% of the fair market value of

F-10
<PAGE> 52

RAINFOREST CAFE, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

the common stock on the date granted, the term of each option, and the time or
times during its term when the option becomes exercisable. During the year ended
December 31, 1995, 729,000 options were granted at prices of $3.40 and $13.60
per share.

During 1995, 1,500 options were canceled and no options expired and, as of
December 31, 1995, 60,000 options were exercisable.

OTHER STOCK OPTIONS -- As of its inception (February 3, 1994), the Company
granted options to acquire an aggregate of 300,000 shares of common stock with
an exercise price of $.01 per share to two of its employees. Of the options
granted, 262,500 are to an employee who is an officer and director of the
Company. These options vest on a pro rata basis on the first, second and third
anniversaries of the grant and are exercisable for a period of ten years from
the date of grant. As of December 31, 1995, 12,500 of these options had been
exercised and 87,500 options were exercisable, and no options were canceled
during the year ended December 31, 1995.

During the year ended December 31, 1995, the Company granted options to
acquire an aggregate of 75,000 shares of common stock with an exercise price of
$3.40 per share to two of its outside directors. These options vest on a pro
rata basis over three years and are exercisable for a period of ten years from
the date of grant. No options were canceled or expired during the year ended
December 31, 1995 and, as of December 31, 1995, no options were exercisable.

WARRANTS -- In connection with its initial public offering on April 7,
1995, the Company issued a warrant to the underwriters to purchase 225,000
shares of common stock at $4.80 per share. The warrant becomes exercisable on
April 7, 1996 and is exercisable until April 2000.

(6) COMMITMENTS AND CONTINGENCIES

OPERATING LEASES -- The Company has entered into various operating leases
for its existing and future units which typically have an initial lease term of
ten years with an option for renewal. All of these leases contain provisions for
contingent rentals based on a percentage of gross revenues, as defined, and
contain renewal options and provisions for payments of real estate taxes,
insurance and common area costs. In addition, certain of the leases provide for
tenant inducements and rent abatement.

Total rent expense, including common area costs, real estate taxes and
percentage rent, was $260,000 and $793,000 for the period from February 3, 1994
(inception) and for the year ended December 31, 1995 through January 1, 1995,
respectively.

Future minimum rental payments (including six units which are not yet open
and excluding percentage rents) are as follows:

<TABLE>
<S> <C>
Fiscal year 1996................................................. $ 1,885,000
Fiscal year 1997................................................. 6,409,000
Fiscal year 1998................................................. 6,409,000
Fiscal year 1999................................................. 6,409,000
Fiscal year 2000................................................. 6,381,000
Thereafter....................................................... 35,830,000
-----------
Total....................................................... $63,323,000
===========
</TABLE>

EMPLOYMENT AGREEMENTS -- The Company entered into employment agreements
with two of its officers which require the payment of annual compensation of
$120,000 and $160,000 per year for up to three years and include bonus
provisions. If terminated by the Company during this period, the employees are
entitled to up to one year's base compensation.

F-11
<PAGE> 53

RAINFOREST CAFE, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED

(7) INCOME TAXES

Deferred income taxes are provided for differences between the financial
reporting basis and tax basis of the Company's assets and liabilities at
currently enacted tax rates. As of December 31, 1995, the Company has recorded a
full valuation allowance against the net deferred tax asset due to the
uncertainty of realizing the related benefits. The tax effect of significant
temporary differences representing deferred tax assets and liabilities are as
follows:

<TABLE>
<CAPTION>
JANUARY 1, DECEMBER 31,
1995 1995
---------- ------------
<S> <C> <C>
Preopening costs....................................... $ 38,000 $ (191,000)
Accelerated depreciation............................... (29,000) (49,000)
Landlord inducements................................... -- 175,000
Net operating loss carryforwards....................... 560,000 139,000
Other.................................................. 13,000 27,000
Valuation allowance.................................... (582,000) (101,000)
--------- ---------
Net deferred taxes................................ $ -- $ --
========= =========
</TABLE>

The reduction in the valuation allowance was due primarily to the
utilization of net operating loss carryforwards during 1995. As of December 31,
1995, the Company had net operating loss carryforwards of approximately
$350,000, which, if not used, will expire in 2009.

(8) SUBSEQUENT EVENT

On January 16, 1996, the Securities and Exchange Commission declared
effective a Registration Statement relating to the public offering of 4,140,000
shares of common stock at an offering price of $19.00 per share, including
540,000 shares of common stock from the exercise of the underwriters'
overallotment option, which occurred in late January 1996. The Company received
net proceeds of $73.6 million after the payment of approximately $5.1 million in
related underwriting discount and offering costs. The proceeds from the offering
will be used to finance the development of additional facilities and for working
capital.

On May 21, 1996, the Company's Board of Directors approved a three-for-two
stock split in the form of a fifty percent stock dividend which has been
retroactively reflected in the accompanying financial statements.

F-12
<PAGE> 54

RAINFOREST CAFE, INC.

BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
1996
DECEMBER 31, ------------
1995
------------ (UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....................................... $ 16,323,178 $ 76,593,268
Accounts receivable and other................................... 1,447,610 2,628,811
Inventories..................................................... 1,075,857 1,474,510
Preopening expenses............................................. 514,636 1,738,755
----------- ------------
Total current assets....................................... 19,361,281 82,435,344
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET............... 11,847,675 32,550,872
----------- ------------
$ 31,208,956 $114,986,216
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable................................................ $ 3,213,330 $ 7,140,322
Accrued expenses --
Payroll and payroll taxes.................................... 288,758 164,194
Other........................................................ 368,849 943,181
----------- ------------
Total current liabilities.................................. 3,870,937 8,247,697
DEFERRED RENT..................................................... 982,638 3,536,704
----------- ------------
Total liabilities.......................................... 4,853,575 11,784,401
----------- ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, no par value, 50,000,000 shares authorized;
9,484,347 and 13,937,055 shares issued and outstanding....... 27,867,419 103,332,572
Accumulated deficit............................................. (1,512,038) (130,757)
----------- ------------
Total shareholders' equity................................. 26,355,381 103,201,815
----------- ------------
$ 31,208,956 $114,986,216
=========== ============
</TABLE>

The accompanying notes are an integral part of these balance sheets.

F-13
<PAGE> 55

RAINFOREST CAFE, INC.

STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
--------------------------
JULY 2, JUNE 30,
1995 1996
----------- -----------
<S> <C> <C>
REVENUES:
Restaurant sales................................................. $ 3,311,642 $10,312,041
Retail sales..................................................... 1,182,330 2,502,320
----------- -----------
Total revenues................................................ 4,493,972 12,814,361
----------- -----------
COSTS AND EXPENSES:
Food and beverage costs.......................................... 958,104 2,624,228
Cost of retail goods sold........................................ 587,130 1,137,451
Restaurant operating expenses.................................... 1,839,420 5,097,875
Retail operating expenses........................................ 339,376 831,929
Depreciation and amortization.................................... 154,130 604,879
Preopening amortization.......................................... -- 341,738
----------- -----------
Total costs and expenses...................................... 3,878,160 10,638,100
----------- -----------
Restaurant and retail operating income........................ 615,812 2,176,261
----------- -----------
OTHER EXPENSES
General, administrative and development.......................... 477,349 1,981,723
Interest income.................................................. (91,596) (1,936,743)
Interest expense, including amortization of loan discount........ 228,149 --
----------- -----------
Total other expenses.......................................... 613,902 44,980
----------- -----------
Income before income taxes and extraordinary item.................. 1,910 2,131,281
Provision for income taxes......................................... -- 750,000
----------- -----------
Income before extraordinary item................................... 1,910 1,381,281
EXTRAORDINARY ITEM................................................. 1,053,128 --
----------- -----------
Net income (loss)............................................. $(1,051,218) $ 1,381,281
=========== ===========
$0.00 $0.10
Net income per common share before extraordinary item.............. =========== ===========
Net income (loss) per common share................................. $(0.14) $0.10
=========== ===========
7,630,308 14,026,655
WEIGHTED AVERAGE SHARES OUTSTANDING................................ =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-14
<PAGE> 56

RAINFOREST CAFE, INC.

STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
-----------------------------
JULY 2, 1995 JUNE 30, 1996
------------ -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).............................................. $(1,051,218) $ 1,381,281
Adjustments to reconcile net income (loss) to cash flows
provided by (used in) operating activities --
Depreciation and amortization............................. 158,535 1,147,994
Amortization of long-term debt discount................... 186,189 --
Extinguishment of debt -- long-term debt discount......... 1,053,128 --
Loss on sale of equipment................................. 1,763 --
Change in operating assets and liabilities --
Accounts receivable and other.......................... (349,855) (658,534)
Inventories............................................ 60,508 (398,653)
Preopening expenses.................................... -- (1,542,885)
Accounts payable....................................... 526,476 3,926,992
Accrued expenses....................................... (37,976) 1,093,816
----------- ------------
Net cash provided by operating activities................. 547,550 4,950,011
----------- ------------
INVESTING ACTIVITIES:
Proceeds from sale of equipment................................ 4,500 --
Purchases of property, equipment and leasehold improvements,
net......................................................... (1,647,285) (21,728,359)
----------- ------------
Net cash used in financing activities..................... (1,642,785) (21,728,359)
----------- ------------
FINANCING ACTIVITIES:
Payments on long-term debt to stockholders..................... (509,625) --
Proceeds from the issuance of debt to shareholders............. 100,000 --
Proceeds from the sale of common stock, net.................... 9,025,286 73,550,734
Proceeds from stock options exercised.......................... -- 267,464
Proceeds from warrants exercised............................... -- 1,002,907
Tenant allowances collected.................................... -- 2,227,333
----------- ------------
Net cash provided by financing activities................. 8,615,661 77,048,438
----------- ------------
INCREASE IN CASH AND CASH EQUIVALENTS............................ 7,520,426 60,270,090
CASH AND CASH EQUIVALENTS, beginning of period................... 465,967 16,323,178
----------- ------------
CASH AND CASH EQUIVALENTS, ending of period...................... $ 7,986,393 $ 76,593,268
=========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for --
Interest.................................................... $ 85,922 $ --
Income taxes................................................ -- 45,000
Noncash investing and financing activities --
Conversion of debt to common stock.......................... 169,372 --
</TABLE>

These accompanying notes are an integral part of these financial statements.

F-15
<PAGE> 57

RAINFOREST CAFE, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)

(1) BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosure normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. Although management believes that the disclosures are adequate to
make the information presented not misleading, it is suggested that these
interim condensed financial statements be read in conjunction with the Company's
most recent audited financial statements and notes thereto. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary for a fair presentation of the financial position, results of
operations and cash flows for the interim periods presented have been made.
Operating results for the twenty-six weeks ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 29, 1996.

(2) COMPLETED STOCK OFFERING AND STOCK SPLIT

In January 1996, the Company completed a secondary offering of 4,140,000
shares of common stock at an offering price of $19.00 per share, including
540,000 shares from the exercise of the Underwriters' overallotment option. The
Company received net proceeds of approximately $73.6 million after the payment
of approximately $5.1 million in related underwriting discount and offering
costs. On May 21, 1996, the Company's Board of Directors approved a
three-for-two stock split in the form of a fifty percent stock dividend. The
stock split has been retroactively reflected in the accompanying financial
statements and disclosures.

(3) INCOME (LOSS) PER COMMON SHARE

Income (loss) per common share is based on the weighted average number of
common shares outstanding during each period. However, pursuant to certain rules
of the Securities and Exchange Commission, the calculations for the twenty-six
week period ended July 2, 1995 also includes equity securities, including
options and warrants, issued within one year of an initial public offering with
an issue price less than the initial public offering price, even if the effect
is anti-dilutive. The treasury stock approach was used in determining the
dilutive effect of such issuances. Common stock equivalents (other than those
issued within one year of an initial public offering with an issue price less
than the initial public offering price) including options and warrants are
assumed to be exercised or converted into common shares at the beginning of each
period unless the aggregate effect of such inclusion is anti-dilutive. Primary
and fully diluted income (loss) per share are the same.

(4) INCOME TAXES

As of December 31, 1995, the Company had a net operating loss carryforward
of approximately $350,000 which, if not used, would have expired in 2009. At
June 30, 1996, the net operating loss carryforward was exhausted and the Company
recorded a provision for federal and state income taxes of $750,000.

F-16
<PAGE> 58

------------------------------------------------------
------------------------------------------------------

No dealer, sales representative or any other person has been authorized to
give any information or to make any representations in connection with this
offering other than those contained in this Prospectus, and, if given or made,
such information or representations must not be relied upon as having been
authorized by the Company or any of the Underwriters. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the shares of Common Stock to which it relates or an offer to, or a
solicitation of, any person in any jurisdiction in which such an 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
there has been no change in the affairs of the Company since the date hereof or
that the information contained herein is correct as of any time subsequent to
the date hereof.

----------------------------

TABLE OF CONTENTS

----------------------------

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 6
Use of Proceeds........................ 11
Price Range of Common Stock............ 11
Dividend Policy........................ 11
Capitalization......................... 12
Selected Financial Data................ 13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 14
Business............................... 20
Management............................. 29
Certain Transactions................... 34
Principal and Selling Shareholders..... 36
Description of Securities.............. 37
Transfer Agent and Registrar........... 37
Reports to Shareholders................ 37
Underwriting........................... 38
Legal Matters.......................... 39
Experts................................ 39
Additional Information................. 40
Index to Financial Statements.......... F-1
</TABLE>

------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------

2,500,000 SHARES

RAINFOREST LOGO

COMMON STOCK

------------------------

PROSPECTUS

------------------------
MONTGOMERY SECURITIES
DAIN BOSWORTH
INCORPORATED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LADENBURG, THALMANN & CO. INC.

, 1996

------------------------------------------------------
------------------------------------------------------
<PAGE> 59

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with the issuance and distribution of
the shares of Common Stock registered hereby and the shares of Common Stock
registered on Form S-1, Registration No. 33-99836 and included pursuant to Rule
429 under the Securities Act of 1933, other than underwriting discounts and
fees, are set forth in the following table:

<TABLE>
<S> <C>
SEC registration fee............................................... $ 26,395
NASD filing fee.................................................... 7,754
Nasdaq listing fee................................................. 7,500
Legal fees and expenses............................................ 125,000
Accounting fees and expenses....................................... 75,000
Blue Sky fees and expenses......................................... 20,000
Transfer agent fees and expenses................................... 10,000
Printing and engraving expenses.................................... 125,000
Miscellaneous...................................................... 3,351
--------
Total:........................................................ $400,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company is governed by Minnesota Statutes Chapter 302A. Minnesota
Statutes Section 302A.521 provides that a corporation shall indemnify any person
made or threatened to be made a party to any proceeding by reason of the former
or present official capacity of such person against judgments, penalties, fines,
including, without limitation, excise taxes assessed against such person with
respect to an employee benefit plan, settlements, and reasonable expenses,
including attorney's fees and disbursements, incurred by such person in
connection with the proceeding, if, with respect to the acts or omissions of
such person complained of in the proceeding, such person has not been
indemnified by another organization or employee benefit plan for the same
expenses with respect to the same acts or omissions; acted in good faith;
received no improper personal benefit and Section 302A.255, if applicable, has
been satisfied; in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and in the case of acts or omissions by
persons in their official capacity for the corporation, reasonably believed that
the conduct was in the best interests of the corporation, or in the case of acts
or omissions by persons in their capacity for other organizations, reasonably
believed that the conduct was not opposed to the best interests of the
corporation. Subdivision 4 of Section 302A.521 of the Minnesota Statutes
provides that a company's articles of incorporation or bylaws may prohibit such
indemnification or place limits upon the same. The Company's articles and bylaws
do not include any such prohibition or limitation. As a result, the Company is
bound by the indemnification provisions set forth in Section 302A.521 of the
Minnesota Statutes.

As permitted by Section 302A.251 of the Minnesota Statutes, the Articles of
Incorporation of the Company provide that a director shall have no personal
liability to the Company and its shareholders for breach of his fiduciary duty
as a director, to the fullest extent permitted by law. The Underwriting
Agreement contains provisions under which the Company, on the one hand, and the
Underwriters, on the other hand, have agreed to indemnify each other (including
officers and directors of the Company and the Underwriters, and any person who
may be deemed to control the Company or the Underwriters) against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In connection with the initial capitalization of the Company during various
dates in February and March 1994, the Company sold an aggregate 1,575,000 shares
of Common Stock to certain "Accredited Investors" as defined in Regulation D of
the Securities Act of 1933, as amended (the "Securities Act"), for a total

II-1
<PAGE> 60

aggregate consideration of $1,000,050. No underwriter was involved in such
offering. The Company believes that each and every such sale of such securities
was exempt from registration pursuant to Section 4(2) of the Securities Act.

On May 31, 1994, the Company sold an aggregate of 394,600 shares of Common
Stock to certain Accredited Investors (as defined in Regulation D of the
Securities Act) for a total aggregate consideration of $986,500. In connection
with such transaction, the Company paid $30,500 in commissions to Marche
Securities, Inc., placement agent for such offering. On October 12, 1994, the
Company sold 10,000 shares of Common Stock to an Accredited Investor for a total
aggregate consideration of $25,000. Pursuant to Rule 502 of Regulation D of the
Securities Act, such sale of securities is integrated with the private placement
relating to the May 31, 1994 sale. The Company believes that each and every such
sale of such securities was exempt from registration pursuant to Rules 505 and
506 of Regulation D of the Securities Act.

In August, September and October of 1994, the Company sold to certain
existing shareholders of the Company an aggregate of 581,000 shares of Common
Stock and an aggregate principal amount of $1,262,000 of promissory notes for a
total aggregate consideration of $1,262,000. No underwriter was involved in such
offering. The Company believes that each and every such sale of such securities
was exempt from registration pursuant to Rules 505 and 506 of Regulation D of
the Securities Act.

On April 7, 1995, the Company converted an aggregate of $1,222,500
principal amount of promissory notes into 305,625 shares of Common Stock at a
conversion price of $4.00 per share. No underwriter was involved in such
offering. The Company believes that each and every such sale of such securities
was exempt from registration pursuant to Section 4(2) of the Securities Act.

The foregoing share amounts and share prices have not been adjusted to give
effect to the Company's 3-2 stock split effective July 1, 1996.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement.(2)
3.1 Articles of Incorporation, as amended.(1)
3.2 By-laws.(1)
5 Opinion of Maslon Edelman Borman & Brand, a Professional Limited Liability
Partnership.(2)
10.1 Lease Agreement by and between Mall of America, Inc. and the Company dated
March 31, 1994.(1)
10.2 Lease Agreement by and between the Company and Woodfield Mall dated April 1995.(3)
10.3 Lease Agreement by and between the Company and Walt Disney World dated
September 6, 1995.(4)
10.4 Company's 1995 Stock Option and Compensation Plan.(1)
10.5 Employment Agreement dated February 1, 1995 by and between the Company and Steven W.
Schussler.(1)
10.6 Employment Agreement dated April 6, 1995 by and between the Company and Martin J.
O'Dowd.(1)
10.7 Indemnification Agreement dated April 6, 1995 by and between the Company and Steven
Schussler.(1)
10.8 Form of Director Stock Option Agreement dated April 7, 1995.(1)
10.9 Form of Escrow Agreement dated April 7, 1995 by and among the Company, the
Commissioner of Commerce of the State of Minnesota, Lyle Berman, Steve Schussler,
Ercu Ucan, David Rogers and Joel Waller.(1)
</TABLE>

II-2
<PAGE> 61

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <S>
10.10 Lease Agreement by and between the Company and Trump Taj Mahal Associates dated
December 6, 1995.(4)
21. Subsidiaries of Company.
23.1 Consent of Maslon Edelman Borman & Brand, a Professional Limited Liability
Partnership.(2)
23.2 Consent of Lund Koehler Cox & Company, PLLP.
23.3 Consent of Arthur Andersen LLP.
25.1 Powers of Attorney. (Included on page II-4)
</TABLE>

- -------------------------
(1) Previously filed with Registration Statement on Form SB-2, File No.
33-89256C.

(2) To be filed by amendment.

(3) Previously filed as an exhibit to the Company's Form 10-QSB for the quarter
ended April 2, 1995.

(4) Previously filed with Registration Statement on Form S-1, File No. 33-99836.

ITEM 17. UNDERTAKINGS.

The undersigned Company hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement (i) to
include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) 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 in the registration
statement; and (iii) to include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.

(2) 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
Securities and Exchange 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.

(3) That, for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant under Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.

(4) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus 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.

II-3
<PAGE> 62

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Minneapolis, State of
Minnesota, on August 26, 1996.

RAINFOREST CAFE, INC.
Registrant

By:
/s/ MARTIN J. O'DOWD

------------------------------------
NAME: MARTIN J. O'DOWD
TITLE: PRESIDENT

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Mark S. Robinow and Kenneth W. Brimmer, each or
either of them, his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and to file
the same with all exhibits thereto, and other documents in connection therewith
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his or her substitutes,
may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 26th day of August, 1996 by
the following persons in the capacities indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------------------------
<C> <S>
/s/ LYLE BERMAN Chairman of the Board, Chief Executive
- --------------------------------------------- Officer, and Secretary (executive officer)
Lyle Berman
/s/ STEVEN W. SCHUSSLER Executive Vice President and Director
- ---------------------------------------------
Steven W. Schussler
/s/ MARTIN J. O'DOWD President, Chief Operating Officer and
- --------------------------------------------- Director
Martin J. O'Dowd
/s/ ERCU UCAN Executive Vice President and Director
- ---------------------------------------------
Ercu Ucan
/s/ DAVID W. ANDERSON Director
- ---------------------------------------------
David W. Anderson
/s/ KENNETH W. BRIMMER Director
- ---------------------------------------------
Kenneth W. Brimmer
/s/ DAVID L. ROGERS Director
- ---------------------------------------------
David L. Rogers
/s/ JOEL N. WALLER Director
- ---------------------------------------------
Joel N. Waller
/s/ MARK S. ROBINOW Chief Financial Officer (financial officer and
- --------------------------------------------- accounting officer)
Mark S. Robinow
</TABLE>

II-4
<PAGE> 63

EXHIBITS

<TABLE>
<CAPTION>
NUMBER DESCRIPTION PAGE
- ------ ------------------------------------------------------------------------------ ----
<S> <C> <C>
21. Subsidiaries of Company
23.2 Consent of Lund Koehler Cox & Company, PLLP
23.3 Consent of Arthur Andersen LLP.
</TABLE>

II-5

<PAGE> 1

EXHIBIT 21

RAINFOREST SUBSIDIARIES

Rainforest Cafe, Inc.-Atlantic City
Rainforest Cafe, Inc.-Thunder
Rainforest Cafe, Inc.-Lightening
Rainforest Cafe, Inc.-Rain
Rainforest Cafe, Inc.-Mist

<PAGE> 1
EXHIBIT 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report and to all references to our firm included in or made a part of this
registration statement.

LUND KOEHLER COX & COMPANY, PLLP

Minneapolis, Minnesota
August 27, 1996

<PAGE> 1
EXHIBIT 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report and to all references to our firm included in or made a part of this
registration statement.

ARTHUR ANDERSEN LLP

Minneapolis, Minnesota
August 27, 1996