As filed with the Securities and Exchange Commission on
February 26, 1997
Registration No. 333-21077
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
FOOD COURT ENTERTAINMENT NETWORK, INC.
(Exact name of Registrant as specified in its charter)
Delaware 51-0338736
(State or other juris- (I.R.S. Employer
diction of incorporation Identification
or organization) Number)
Food Court Entertainment Network, Inc.
220 East 42nd Street, 16th Floor
New York, New York 10017
(212) 983-4500
(Address, including zip code, and telephone number,
including area code, of Registrant's
principal executive offices)
James N. Perkins
President and Chief Executive Officer
Food Court Entertainment Network, Inc.
220 East 42nd Street, 16th Floor
New York, New York 10017
(212) 983-4500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Stephen F. Ritner, Esquire
Stevens & Lee
One Glenhardie Corporate Center
1275 Drummers Lane
P.O. Box 236
Wayne, Pennsylvania 19087
(610) 964-1480
____________________
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
to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, check the following
box. [X]
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act of
1933, please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective registration statement
filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made
pursuant to Rule 434 please check the following box. [ ]
Pursuant to Rule 429(a) under the Securities Act of 1933,
this Registration Statement also relates to the Company's prior
Registration Statement on Form SB-2 (File No. 33-91054).
Pursuant to Rule 416 under the Securities Act of 1933, as
amended, there are also being registered such additional Warrants
and shares of Series A Common Stock as may become issuable
pursuant to anti-dilution provisions of the Warrants.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum Amount
Title of each Amount Offering Aggregate of
Class of Securities to be Price Offering Registration
to be Registered Registered(1) per Unit Price Fee(9)
<S> <C> <C> <C> <C>
Series A Common Stock, 28,073,764(2) $3.78 $40,940,425.63 $12,406.19(10)
par value $.01
per share
Class A Warrants 4,711,563 5.13(3) 24,170,318.19(4) 5,575.48(11)
Class B Warrants 12,133,660 6.85(5) 83,115,571(6) 18,502.60(12)
Furman Selz Warrants 401,321 2.00(7) 802,642(8) 243.22
Total $36,727.49
<FN>
(1) This Registration Statement also includes such
indeterminable number of additional Class A Warrants,
Class B Warrants and Furman Selz Warrants issuable as a
result of antidilution provisions contained therein.
(2) The registration fee for 17,246,544 shares of common stock
has been calculated in accordance with Rule 457(i) in
connection with the exercise of 4,711,563 Class A Warrants,
12,133,660 Class B Warrants and 401,321 Furman Selz
Warrants. The registration fee for the remaining 10,827,220
shares of common stock has been calculated in accordance
with Rule 457(c) and is based on the closing price of $3.78
as reported on the Nasdaq National Market System on
January 30, 1997.
(3) The exercise price of each Class A Warrant is $5.13.
(4) Calculated in accordance with Rule 457(i) based on an
exercise price of $5.13 for each Class A Warrant.
(5) The exercise price of each Class B Warrant is $6.85.
(6) Calculated in accordance with Rule 457(i) based on an
exercise price of $6.85 for each Class B Warrant.
(7) The exercise price of each Furman Selz Warrant is $2.00.
(8) Calculated in accordance with Rule 457(i) based on an
exercise price of $2.00 for each Furman Selz Warrant.
(9) Pursuant to Rule 429, the following securities are being
carried over from the Company's Registration Statement on
Form SB-2 (File No. 33-91054): (i) 6,440,000 shares of
common stock issuable upon exercise of 3,220,000 Class A
Warrants and 3,220,000 Class B Warrants; (ii) 3,220,000
Class B Warrants issuable upon exercise of 3,220,000 Class A
warrants; (iii) 1,125,000 Class A Warrants; and
(iv) 1,125,000 shares of common stock issuable upon the
exercise of 1,125,000 Class A Warrants.
(10) Pursuant to Rule 429, 6,440,000 shares of common stock are
being carried over from the Company's Registration Statement
on Form SB-2 (File No. 33-91054), and therefore, the
$15,544.83 filing fee associated with such securities that
was previously paid with such earlier Registration Statement
on Form SB-2 is carried forward.
(11) Pursuant to Rule 429, 1,125,000 Class A Warrants are being
carried over from the Company's Registration Statements on
Form SB-2 (File No. 33-91054), and therefore, the $2,327.59
filing fee associated with such securities that was
previously paid with such earlier Registration Statement on
Form SB-2 is carried forward.
(12) Pursuant to Rule 429, 3,220,000 Class B Warrants are being
carried over from the Company's Registration Statement on
Form SB-2 (File No. 33-91054), and therefore, the $6,662.07
filing fee associated with such securities that was
previously paid with such earlier Registration Statement on
Form SB-2 is carried forward.
</TABLE>
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(c) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(c), may
determine.
<PAGE>
FOOD COURT ENTERTAINMENT NETWORK,INC.
28,073,764 shares of Series A Common Stock,
4,711,563 Redeemable Class A Warrants and
12,133,660 Redeemable Class B Warrants
401,321 Furman Selz Warrants
This Prospectus relates to the resale, from time to time, by
certain securityholders of the following securities of Food Court
Entertainment Network, Inc. (the "Company") which the Company
issued in a private placement (the "Private Placement") on
November 14, 1996: (i) up to 2,857,189 shares of Series A Common
Stock, par value $.01 per share (the "Series A Common Stock");
(ii) up to 3,341,742 redeemable Class A Warrants (the "Class A
Warrants") (includes up to 484,553 Class A Warrants issued as a
result of antidilution provisions contained therein); and
(iii) up to 3,336,863 redeemable Class B Warrants (the "Class B
Warrants," and together with the Class A Warrants the "Warrants")
(includes up to 479,674 Class B Warrants issued as a result of
antidilution provisions contained therein). The shares of
Series A Common Stock, the Class A Warrants and the Class B
Warrants issued in the Private Placement are sometimes
hereinafter referred to as the "Private Placement Common Stock,"
the "Private Placement Class A Warrants," and the Private
Placement Class B Warrants," respectively, and collectively as
the "Private Placement Securities." The Selling Securityholders
have agreed not to sell certain percentages of the Private
Placement Securities for periods ranging from November 14, 1996
to July 15, 1997.
This Prospectus also relates to the resale, from time to
time, by certain securityholders of up to 1,369,821 Class A
Warrants (includes up to 198,633 Class A Warrants issued as a
result of antidilution provisions contained therein), which the
Company issued in exchange for certain bridge warrants and sub-
bridge warrants (collectively, the "Bridge Warrants") in
connection with its initial public offering (the "IPO") on
October 16, 1995. The Class A Warrants issued in exchange for
the Bridge Warrants in connection with the IPO are sometimes
hereinafter referred to as the "IPO Class A Warrants."
This Prospectus also relates to the resale, from time to
time, by Furman Selz LLC ("Furman Selz") of warrants to acquire
up to 401,321 shares of Series A Common Stock (the "Furman Selz
Warrants").
This Prospectus also relates to up to 16,295,565 shares of
Series A Common Stock issuable by the Company upon exercise of
(i) Class A and Class B Warrants issued as part of the units (the
"Units") issued in the IPO and the Private Placement, (ii) the
IPO Class A Warrants and (iii) the Furman Selz Warrants. This
Prospectus also relates to up to an additional 124,213 shares of
Series A Common Stock issuable by the Company upon exercise of
warrants issued to D.H. Blair Investment Banking Corp. ("Blair")
and certain of its designees in connection with the Company's
preferred stock unit offering in 1994 (the "Preferred Stock
Warrants").
This Prospectus also relates to (i) up to 8,796,797 Class B
Warrants issuable by the Company upon the exercise of all Class A
Warrants and (ii) up to 8,796,797 shares of Series A Common Stock
issuable by the Company upon exercise of all such Class B
Warrants issuable by the Company upon exercise of all Class A
Warrants.
Each Class A Warrant entitles the holder to purchase, at an
exercise price of $5.13, subject to adjustment, one share of
Series A Common Stock and one Class B Warrant. Each Class B
Warrant entitles the holder to purchase at an exercise price of
$6.85, subject to adjustment, one share of Series A Common Stock.
The Warrants are subject to redemption by the Company for
$.05 per Warrant, upon 30 days' written notice, if the average
closing bid price of the Series A Common Stock exceeds $9.00 per
share with respect to the Class A Warrants and $12.00 per share
with respect to the Class B Warrants (subject to adjustment in
each case) for 30 consecutive business days ending within five
days of the notice of redemption. See "Description of
Securities." The Warrants are immediately exercisable at any
time and until 5:00 p.m. (New York time) on October 11, 2000,
except the Private Placement Class A Warrants and the Private
Placement Class B Warrants can be exercised by the Selling
Securityholders only between November 14, 1997 and 5:00 p.m. (New
York time) on October 11, 2000.
The securityholders offering securities under this
Prospectus and the securities offered by such securityholders are
sometimes hereinafter referred to as the "Selling
Securityholders" and the "Selling Securityholder Securities,"
respectively. The Selling Securityholder Securities offered by
this Prospectus may be sold from time to time by the Selling
Securityholder or by their transferees. The distribution of the
Selling Securityholder Securities offered hereby by the Selling
Securityholders may be effected in one or more transactions that
may take place on the over-the-counter market, including ordinary
brokers' transactions, privately negotiated transactions or
through sales to one or more dealers for resale of such
securities as principals at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the
Selling Securityholders. The Selling Securityholders have also
agreed not to exercise the Private Placement Class A Warrants and
the Private Placement Class B Warrants before November 14, 1997;
provided, however, that purchasers of such Warrants are not
subject to such restrictions on exercisability.
The Company's Units, Series A Common Stock, Class A Warrants
and Class B Warrants are traded on the Nasdaq SmallCap Market
("Nasdaq") under the symbols FCENU, FCENA, FCENW and FCENZ. On
January 30, 1997 the closing bid prices of these securities on
Nasdaq was $6-9/16, $3-25/32, $1-9/16 and $1-5/16, respectively.
The Company has agreed to pay a solicitation fee (the
"Solicitation Fee") equal to 5% of the exercise price in
connection with the exercise of Warrants under certain
conditions. See "Plan of Distribution." The exercise prices of
the Warrants were determined by negotiation between the Company
and Blair, the underwriter of the Company's IPO, and are not
necessarily related to the Company's asset value, net worth or
other established criteria of value.
The Selling Securityholders, and intermediaries through whom
such securities are sold, may be deemed underwriters within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered, and
any profits realized or commissions received may be deemed
underwriting compensation. The Company has agreed to indemnify
the Selling Securityholders against certain liabilities,
including liabilities under the Securities Act.
The Company will not receive any of the proceeds from the
sale of securities by the Selling Securityholders. In the event
all of the outstanding Class A Warrants, Class B Warrants, Bridge
Warrants, Furman Selz Warrants and the Preferred Stock Warrants
are exercised, the Company will receive gross proceeds of
approximately $94,796,085.
The Series A Common Stock and the Series B Common Stock,
$.01 par value ("Series B Common Stock") of the Company are
essentially identical, except that the Series B Common Stock has
five votes per share and the Series A Common Stock has one vote
per share on all matters upon which stockholders may vote.
The securities offered hereby are speculative and involve a
substantial degree of risk. Prospective investors should
carefully consider the factors set forth under "RISK FACTORS."
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.
The date of this Prospectus is February __, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files proxy statements,
reports and other information with the Securities and Exchange
Commission (the "Commission"). This filed material can be
inspected and copied at the Commission's office at 450 Fifth
Street, N.W., Washington, D.C. 20549 and the Commission's
Regional Offices in New York (7 World Trade Center, Suite 1300,
New York, New York 10048) and Chicago (500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511) and copies of such
materials can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission
by the Company are incorporated in this Prospectus by reference
and made a part hereof:
(1) The Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995.
(2) The Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1996, June 30, 1996, and September 30,
1996.
(3) The Company's Current Reports on Form 8-K dated
April 16, 1996, and December 17, 1996.
Each document or report subsequently filed by the Company
with the Commission pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the securities under this
Prospectus shall be deemed to be incorporated by reference into
this Prospectus and to be a part of this Prospectus from the date
of filing of such document. Any statement contained herein, or
in the document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to
be modified or superseded for purposes of the Registration
Statement and this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement
or this Prospectus.
The Corporation will provide without charge to any person to
whom this Prospectus is delivered, on the written or oral request
of such person, a copy of any or all of the foregoing documents
incorporated by reference, other than certain exhibits to such
documents. Written requests should be directed to Food Court
Entertainment Network, Inc., 220 East 42nd Street, 16th Floor,
New York, New York 10017. Attention: Investor Relations Officer
(telephone: (212) 983-4500).
<PAGE>
THE COMPANY
The following discussion under the heading "The Company"
contains certain forward looking statements within the meaning of
the "safe harbor" provision of the Private Securities Litigation
Reform Act of 1995 that involve risks and uncertainties. The
Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in
"Risk Factors" below and in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995 and Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1996, which are incorporated herein
by reference. See "Incorporation of Certain Documents by
Reference."
Development. Food Court Entertainment Network, Inc. (the
"Company") was organized in February 1992. The Company's initial
plan has been to establish a national television network to
broadcast a high quality television program called Cafe USA to
large, enclosed shopping mall food courts ("Food Courts") across
the United States. While the development of a national
television network remains the core business of the Company,
management has determined that it is in the Company's best
interest to expand the Company's mission. The Company plans to
promote, introduce and operate electronic entertainment,
information and transaction systems in high-traffic consumer
areas such as shopping centers, multi-purpose malls, resorts,
travel facilities and entertainment and retail destinations,
utilizing both new and traditional media and contemporary
communications technologies.
The Company is in its development stage. The Company's
development activities to date have consisted primarily of
designing, developing and producing Cafe USA programming,
producing and evaluating three market tests of Cafe USA to
evaluate its acceptance in the market place, developing and
refining an end to end distribution system for the delivery and
management of Cafe USA programming into Food Courts, attracting
and engaging management employees, consultants and advisers for
marketing, operations and implementation of the Cafe USA network,
establishing contacts and entering into agreements with
advertisers and mall operators, and installing and operating Cafe
USA in 12 Food Courts.
In the fall of 1995, the Company began a ten-week evaluatory
period ("Evaluatory Period") of Cafe USA during which the Company
broadcast the Cafe USA program in four major enclosed malls in
the Chicago, Philadelphia, New York, and Greenville, South
Carolina market areas. The Company engaged A. C. Nielsen to
conduct a survey of 4,800 mall and Food Court visitors to the
four malls during the ten-week Evaluatory Period (the "1995
Nielsen Survey"). The purpose of the Evaluatory Period was to
gather data necessary to evaluate the acceptance of Cafe USA by
mall operators and Food Court visitors, and, assuming marketplace
acceptance, to determine the pricing structure for advertising,
since the Company's future viability and profitability are
dependent upon the generation of advertising revenue. To date,
the Company has generated very limited revenues from advertising
sales.
Based upon the results of the 1995 Nielsen Survey, the
Company believes sufficient support for the Cafe USA concept
exists in the marketplace to justify the expansion of Cafe USA in
Food Courts throughout the United States (the "Mall Buildout").
The conclusions drawn by the Company's management from the
Evaluatory Period, the 1995 Nielsen Survey and marketing and
sales activities during 1996 resulted in the Company's modifying
its business strategy. The Company determined that in order to
successfully sell Cafe USA to a substantial number of
advertisers, and thereby generate significant revenues, the
distribution network for Cafe USA must first be expanded.
Accordingly, the Company requires substantial funds in addition
to revenues from operations and financing available from external
sources in order to implement its business plan and reach
profitable operations. The Company intends to seek strategic
alliances, either through a joint venture, merger or acquisition
transaction, with other entities that have significant financial
or other resources, in order to provide the Company with the
necessary funding required to successfully complete the Mall
Buildout and to build its internal marketing and advertising
sales force. There can be no assurance that the Company will be
able to enter into any such arrangements. If the Company is
unsuccessful in securing any arrangements with third parties to
provide the necessary funding, the Company may be unable to
complete the Mall Buildout. See "Risk Factors-Capital Intensive
Nature of Business; Need for, and No Assurance of, Strategic
Alliances and Additional Financing to Develop Cafe USA."
Current Operations. The Company is currently producing its
own weekly television programming for Cafe USA and broadcasting
Cafe USA in 12 Food Courts. The Company has signed agreements
and begun the installation of Cafe USA in four additional Food
Courts. Management is presently in various stages of negotiation
for agreements or design plans to install Cafe USA in
16 additional Food Courts.
The Company currently has no paid advertisers. The Company
has an arrangement with Pan American World Airways, Inc.
("Pan Am") pursuant to which Pan Am advertising is broadcast on
the Cafe USA network in exchange for airline travel. Based upon
its current plan to proceed with the Mall Buildout, the Company
is attempting to obtain commitments from additional advertisers
for participation in mall expansion and is negotiating with mall
operators for installation and operation of Cafe USA in
additional malls.
<PAGE>
RECENT DEVELOPMENTS
On November 14, 1996, the Company completed the sale of
units comprised of an aggregate of 2,857,189 shares of Series A
Common Stock, 2,857,189 Class A warrants and 2,857,189 Class B
Warrants in a private placement (the "Private Placement") to
accredited investors for net cash proceeds of approximately
$7.8 million.
As a result of securities sold in the Private Placement, the
antidilution provisions set forth in the Warrants required the
Company (i) to issue an additional 1,275,545 Class A Warrants and
1,020,258 Class B Warrants and (ii) to adjust the exercise price
of the Class A and Class B Warrants from $6.00 to $5.13 and $8.00
to $6.85, respectively.
The net proceeds received by the Company from the Private
Placement will enable the Company to install Cafe USA in up to 31
new mall Food Courts and to continue operations through
approximately April 30, 1997.
Digital Equipment Corporation ("DEC") is developing software
applications and will provide hardware necessary to deliver the
Cafe USA program digitally through telephone wires into malls
nationwide. The Company and DEC are negotiating the details of
the arrangement including discounts on pricing, deferred payment
terms, and ownership of and marketing rights to the hardware/
software functionality. DEC has begun developing the software
and the Company has paid $150,000 as of January 22, 1997 towards
these services, and is currently negotiating the terms of a
formal written agreement. It is estimated that the total cost of
the software applications development will be approximately
$1,000,000.
On December 3, 1996, the Company terminated a programming
and sales agreement with Turner Private Networks, Inc.
("Turner"), pursuant to which Turner was the exclusive provider
of programming for Cafe USA and the exclusive advertising sales
agent for national advertising. The Company has assumed
exclusive control over the production of programming and
advertising sales for Cafe USA. Pursuant to the terms of the
agreement, upon termination Turner received 125,000 shares of
Series A Common Stock and approximately $72,000 in cash for work
completed and for the Company's right to reuse certain
programming. During the eight-month term of the agreement, the
Company paid Turner a total of 250,000 shares of Series A Common
Stock (including the 125,000 shares of Series A Common Stock paid
to Turner upon termination of the agreement).
On December 16, 1996, the Company entered into a financial
advisory agreement with Furman Selz LLC ("Furman Selz"), a New
York investment banking firm. Pursuant to the agreement Furman
Selz will provide financial advisory services to the Company for
a period of approximately 18 months. Furman Selz received
warrants to purchase 401,321 shares of Series A Common Stock,
which is equal to five percent of the outstanding shares of
Series A and Series B Common Stock, at an exercise price of $2.00
per share. The warrants contain certain antidilution provisions.
The Company will be required to recognize an aggregate charge to
operations of approximately $328,000 over an 18-month period for
the value of the Furman Selz Warrants. In the event additional
warrants are issued in accordance with antidilution provisions of
the Furman Selz Warrants, the fair value of such Warrants will be
charged to operations for the remaining term of the agreement.
On January 23, 1997, the Company entered into a sales
representation agreement with ABC New Media Sales ("ABC")
pursuant to which ABC will act as the Company's exclusive
advertising sales representative. Under the terms of the
agreement, ABC will receive a commission equal to 15% on the
first $15.0 million of net advertising revenue, 10% on the net
advertising revenue between $15.0 million and $30.0 million, and
7.5% on net advertising revenue over $30.0 million. The
agreement is for a period of six years, subject to the right of
the parties to terminate after two years.
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the
following information should be carefully considered by potential
investors in evaluating the Company, its business and the
securities offered hereby. An investment in the securities
offered hereby is highly speculative and subject to a high degree
of risk and only those who can bear the risk of the entire loss
of their investment should purchase securities of the Company.
Unproven Commercial Viability; Need for Market Acceptance.
There can be no assurance that the Company's television
programming and advertising in shopping mall Food Courts will be
accepted in the marketplace or that the Company's operations will
be commercially viable. The commercial viability of the Cafe USA
concept will be determined in large part by the acceptance of
Cafe USA by advertisers and mall operators. The Company is
currently broadcasting Cafe USA in 12 mall food courts. The
Company has no paid advertisers and is currently only
broadcasting advertisements for Pan Am in exchange for airline
travel. Without further acceptance by the marketplace, the
Company may be forced to cease operations. While the Company has
conducted testing of its Cafe USA concept, such testing was on a
limited basis. There can be no assurance that the test results
of the acceptance of Cafe USA in four malls are indicative of
widespread acceptance in the marketplace or that, if accepted,
will ever result in the Company achieving profitable operations.
See "The Company."
Capital Intensive Nature of Business; Need for, and No
Assurance of, Strategic Alliances and Additional Financing to
Develop Cafe USA. The Company currently receives no revenues
from operations and has relied on the proceeds of equity
financings to fund its operations. The net proceeds received by
the Company in the Private Placement will enable the Company to
continue operations through approximately April 30, 1997.
Management of the Company intends to pursue strategic alliances
through a combination of one or more joint venture, merger or
acquisition transactions because advertising revenues that may be
generated by Cafe USA and financing that may be available from
external sources may not provide the Company with sufficient
capital required to complete the Company's business plan for
expansion of Cafe USA. However, there can be no assurances that
the Company will be able to complete one or more of such
strategic alliances. Since the Company anticipates receiving
only limited revenues from advertisers during the early stages of
the Mall Buildout, the Company will remain dependent upon
external sources of financing, including this Offering, until
such time as the Company is able to complete one or more
strategic alliances. If the Company is unable to either complete
one or more strategic alliances or obtain additional financing on
acceptable terms, the Company will be unable to complete the
expansion of Cafe USA and will be forced to cease business.
Development Stage Company; Significant Losses. The Company
is a development stage company which has engaged primarily in the
development of the Cafe USA network. The Company has realized
only minimal revenues to date, has incurred substantial losses
since its inception and expects to continue incurring losses in
the foreseeable future. Accordingly, the Company, as of
September 30, 1996, had a deficit accumulated in the development
stage of approximately $13.8 million. The Company has continued
to incur substantial losses since such date. Furthermore, for
the foreseeable future, the Company expects losses to continue
and will be entirely dependent on public or private financing.
Requirement for Capital Equipment; Potential Negative Effect
on Statement of Operations. The Company's business is capital
intensive, requiring substantial outlays for the purchase and
installation of broadcasting equipment. The cost of "outfitting"
each mall with equipment necessary to transmit and receive Cafe
USA is currently costing approximately $150,000, consisting of
approximately $100,000 in equipment costs and $50,000 in
installation costs. There are no assurances, however, that
future costs will not exceed current costs. Although the Company
has been seeking financing for all or a portion of these costs in
view of the Company's limited cash resources, the Company has
been unsuccessful in securing such financing to date and there is
no assurance that this financing can be obtained on favorable
terms, if at all. Irrespective of whether financing is obtained,
the Company's future operations will be charged for the
depreciation of the equipment, including the installation costs,
and, if the Company has to remove the equipment for relocation
before the expiration of the expected life of the equipment, a
loss would have to be recognized equal to the undepreciated
installation costs because they would provide no future benefit.
Possible Need for Additional Statistical Data. To provide
the necessary data for the sale of advertising, the Company may
need additional testing and market research to develop reliable
statistical data. The Company retained A. C. Nielsen to conduct
the 1995 Nielsen Survey. The Company had previously conducted a
much smaller A. C. Nielsen survey during a one-week demonstration
of its programming and advertising in May, 1994 in the Haywood
Mall in Greenville, South Carolina and a more preliminary Audits
and Surveys research study in October, 1992. The 1995 Nielsen
Survey was still limited in scope (only four malls) and may not
provide sufficient data required for the sale of advertising.
Accordingly, the Company may still require substantial additional
data before it can determine whether it can charge commercially
viable rates to advertisers. Pricing for advertising is based
substantially on the number of visitors exposed to Cafe USA
programming and advertising and the impact of the advertising
upon those exposed. As with broadcast media, the validation
research will be on-going and will provide the basis for the
Company's pricing to advertisers. There is no assurance that all
of the necessary data will be obtained, or if obtained, will be
favorable or be accepted by advertisers.
New Enterprise. The Company was formed in February, 1992
and its success depends upon several factors, including the
quality of its programming and managing the technical aspects of
its operations. Investors should be aware of the difficulties
normally encountered by a new enterprise and the high rate of
failure of such enterprises. There is no history upon which to
base any assumption as to the likelihood that the Company will
prove successful, and as such, there can be no assurances that
the Company will be a viable and profitable business. The
likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays
encountered in connection with the development of a business in
the area in which the Company intends to operate and in
connection with the formation and commencement of operations of a
new business in general. The Company is unable to predict how
long it will be before it begins to generate revenues or how long
its losses will continue. There is a substantial risk that the
Company will have inadequate working capital to pay all of its
expenses during this start-up period.
Dependence Upon Others. The success of the Company's
operations will depend upon numerous factors, many of which are
beyond the Company's control, including (i) the ability of the
Company to enter into strategic alliances through a combination
of one or more joint venture, merger or acquisition transaction,
(ii) the ability of the Company to obtain contracts with
advertisers that will produce revenues; (iii) the ability to
produce or purchase programming; and (iv) the ability and the
operating resources to install, maintain and service the video
and audio system satisfactorily, to obtain and service
satisfactory network communication and to obtain the services of
and pay a sufficient number of representatives on a local basis
necessary to operate and service all facets of the Cafe USA
business. These and other factors will require the use of
outside suppliers as well as the talents and efforts of the
Company. There can be no assurance of success with any or all of
these factors on which the Company's operations will depend.
Lack of Programming and Production Experience. Because of
the absence of any operating history in connection with
broadcasting programming and advertising to mall Food Courts on
the part of the Company or advertising entities, there can be no
assurance that the Cafe USA programming and advertising will be
viewed favorably by consumers or that advertisers will be
attracted to either the concept of this medium or the specific
programming developed by the Company. Further, the Company has
broadcast during only approximately 12 months in a limited number
of Food Courts and there can be no assurances that the technology
associated with the broadcasting will prove to be manageable.
Risks Relating to Agreement with DEC. Although DEC has
agreed to develop software applications and provide hardware
necessary to deliver Cafe USA digitally through
telecommunications network into malls nationwide, the execution
of a definitive agreement, which is currently being negotiated,
is subject to certain conditions. There can be no assurance that
the Company will enter into a definitive agreement with DEC. To
date, the Company has made payments to DEC aggregating $150,000
and is currently negotiating the terms of a definitive agreement.
If a definitive agreement is not entered into, there can be no
assurance that the Company will have rights to the software
applications and the hardware developed by DEC. Accordingly, the
payments made to DEC by the Company, which are not returnable,
may not result in the Company having a digital delivery system
for Cafe USA or the ownership of the software applications and
related hardware.
Dependence Upon Mall Operators. The ability of the Company
to establish the Cafe USA network is dependent upon the Company
entering into agreements with mall operators for the installation
of Cafe USA in mall Food Courts. While agreements have been
entered into with several mall developers, there is no assurance
that mall operators will accept Cafe USA in Food Courts or
continue to accept it once it is installed.
Reliance on Senior Management and Key Employees. The
Company is substantially dependent on the efforts of its senior
management. The Company has entered into employment agreements
with its Chairman, Robert H. Lenz, and its President, James N.
Perkins, with terms ending September 30, 1999. Darren M.
Sardoff, the Company's Senior Vice President, Business Affairs
and Chief Financial Officer, has entered into an employment
agreement in September, 1995 which continues from year to year
unless terminated by either the Company or Mr. Sardoff upon
30 days' notice prior to October of each year. On January 17,
1997, the Company entered into a three-year employment agreement
with Jamie Korson who will serve as the Company's Senior Vice
President, Sales. The loss of services of any of such
individuals could have a material adverse effect on the Company's
prospects. The Company maintains key-person life insurance
coverage in the face amount of $2,000,000 for each of Messrs.
Lenz and Perkins naming the Company as beneficiary. See
"Management." Management of the Company believes that the future
success of Cafe USA will depend on the Company's ability to
attract additional key personnel in sales, marketing, technical
support, finance, programming and mall relations. However, there
can be no assurances that the Company will be successful in
attracting or retaining additional personnel necessary to conduct
its business.
Competition. While the Company is operating in a new
industry, it is aware of other companies which have
unsuccessfully attempted to utilize the shopping mall for point
of sale broadcast or video advertising. Entities which enter the
shopping mall Food Court business in the future may have
substantially greater marketing, financial and human resources
than the Company and may provide significant long term
competition. Since Cafe USA is a broadcasting medium, the
Company will also be competing for advertising revenue with other
established media. Furthermore, the Company does not possess any
patented or copyrighted trade secrets or intellectual property to
provide barriers to competition.
Charge to Income in the Event of Release of Escrow Shares.
If the Company attains certain earnings thresholds (which
thresholds will be increased as a result of this Offering) or the
Company is sold at certain prices, the Company will be required
to recognize additional compensation expense in connection with
the release from escrow to certain stockholders of the Company of
636,115 shares of Series B Common Stock (the "Escrow Shares").
Accordingly, the Company will, in the event of the release of the
Escrow Shares, recognize during the period in which the earnings
thresholds are met or such per share sales prices obtained, what
could be a substantial charge that would have the effect of
substantially increasing the Company's loss or reducing or
eliminating earnings, if any, at such time. Such charge will not
be deductible for income tax purposes. Although the amount of
compensation expense recognized by the Company will not affect
the Company's total stockholders' equity or cash flow, it may
have a depressive effect on the market price of the Company's
securities.
Restrictions on Exercise of Warrants. Holders of Warrants
will only be able to exercise the Warrants if (i) a current
prospectus under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the securities underlying the
Warrants is then in effect and (ii) such securities are qualified
for sale or exempt from qualification under the applicable
securities laws of the states in which the various holders of
such Warrants reside. The value of the Warrants may be greatly
reduced if a current prospectus covering the securities issuable
upon the exercise of the Warrants is not kept effective or if
such securities are not qualified, or exempt from qualification,
in the states in which the holders of the Warrants reside.
Influence by Management and Other Stockholders; Possible
Depressive Effect on the Company's Securities. One of the
Company's current directors (who is also an officer) and four
other stockholders own collectively 98.95% of the issued and
outstanding Series B Common Stock. All current officers and
directors, together with such four other stockholders of Series B
Common Stock, beneficially own in the aggregate approximately
27.72% of the total outstanding capital stock of the Company and
have approximately 51.03% of the total voting power thereof. As
a result, such individuals will be able to substantially
influence the election of all of the Company's directors and
otherwise substantially influence the Company's operations.
Furthermore, the disproportionate vote afforded the Series B
Common Stock could also serve to impede or prevent a change of
control of the Company thereof. As a result, potential acquirers
may be discouraged from seeking to acquire control of the Company
through the purchase of Series A Common Stock, which could have a
depressive effect on the price of the Company's securities.
Potential Adverse Effect of Redemption of Warrants. The
Class A Warrants, Class B Warrants and Furman Selz Warrants may
be redeemed by the Company at a redemption price of $.05 per
Warrant upon 30 days' notice if, the average closing bid price of
the Series A Common Stock exceeds $9.00 per share with respect to
the Class A Warrants and $12.00 per share with respect to the
Class B Warrants for 30 consecutive business days ending within
5 days of the notice of redemption. Redemption of the Warrants
could force the holders to exercise the Warrants and pay the
exercise price at a time when it may be disadvantageous for the
holders to do so, to sell the Warrants at the then current market
price when they might otherwise wish to hold the Warrants, or to
accept the redemption price, which, at the time the Warrants are
called for redemption is likely to be substantially less than the
market value of the warrants. See "Description of Securities --
Redeemable Warrants."
Possible Depressive Effect of Future Sales of Common Stock
and Exercise of Registration Rights. The Company has outstanding
6,950,714 shares of Series A Common Stock, 1,075,715 shares of
Series B Common Stock, 8,796,797 Class A Warrants and 7,097,447
Class B Warrants. The 3,220,000 shares of Series A Common Stock,
Class A Warrants and Class B Warrants sold in the IPO are freely
tradeable without restriction under the Securities Act, unless
acquired by "affiliates" of the Company as that term is defined
in the Securities Act. None of the 1,075,715 shares of Series B
Common Stock, 573,125 shares of Series A Common Stock issued
prior to the IPO and the 250,000 shares issued to Turner in
connection with the programming services provided by Turner have
been registered under the Securities Act, and all are "restricted
securities" under Rule 144 of the Act. The holders of the
573,125 shares of Series A Common Stock issued prior to the IPO
have certain "demand" and "piggyback" registration rights. The
current management holders of the Series B Common Stock have
placed 636,115 of their shares of Series B Common Stock in
escrow. The Company also has outstanding stock options and
warrants (or commitments to issue options, stock options and
warrants) to purchase 2,642,138 shares of Series A Common Stock
at prices ranging from $2.00 to $6.85 per share.
An additional 9,660,000 shares of Series A Common stock
issuable upon exercise of the Company's Class A and Class B
Warrants issued or issuable in connection with the Company's IPO
may be resold without restriction provided there is a current
prospectus under the Securities Act relating thereto and
applicable state securities laws are complied with. Furthermore,
1,120,000 shares of Series A Common Stock underlying the unit
purchase options issued to D. H. Blair Investment Banking Corp.
("Blair") in connection with the IPO are subject to restrictions
on transferability until October 11, 1998 and thereafter, are
freely transferable without restriction provided there is a
current prospectus under the Securities Act relating thereto and
applicable state securities laws are complied with. The
existence of the Unit Purchase Options issued in the IPO,
outstanding options and warrants, Class A Warrants, Class B
Warrants, and other options that may be issued by the Company may
hinder future financing by the Company, and exercise of these
securities may further dilute the interest of the persons holding
Series A Common Stock. Further, the holders of such options and
warrants may exercise them at a time when the Company would
otherwise be able to obtain additional equity capital on terms
more favorable to the Company. No prediction can be made as to
the effect, if any, that sale of these securities or the
availability of such securities for sale without restriction will
have on the market prices of the Company's securities prevailing
from time to time. Nevertheless, the possibility that
substantial amounts of securities may be sold in the public
market may adversely affect prevailing market prices for the
Company's securities and could impair the Company's ability to
raise capital through the sale of its securities.
Effect of Outstanding Options and Warrants; Registration
Rights. The Company currently has outstanding a substantial
number of Class A Warrants, Class B Warrants and other options to
purchase shares of Series A Common Stock. For the terms of
outstanding options and warrants, the holders thereof are given
an opportunity to profit from a rise in the market price of the
Series A Common Stock with a resulting dilution in the interest
of the other stockholders. Further, the terms on which the
Company may obtain additional financing during that period may be
adversely affected by the existence of such options and warrants.
The holders of such options and warrants may exercise them at a
time when the Company might be able to obtain additional capital
through a new offering of securities on terms more favorable than
those provided by such securities. In addition, certain holders
have registration rights with respect to their securities, the
exercise of which may involve substantial expense to the Company.
Authorization of Preferred Stock. The Company's Certificate
of Incorporation authorizes the issuance of up to
5,000,000 shares of preferred stock, par value $.01 per share,
with such designation, rights and preferences as may be
determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without
stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could
adversely affect the voting power or other rights of the holders
of the Company's Series A and Series B Common Stock. In the
event of issuance, preferred stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company. There can be no
assurance that the Company will not issue shares of preferred
stock in the future.
No Dividends Anticipated. The Company has never paid any
cash dividends on its Series A and Series B Common Stock and does
not anticipate the payment of cash dividends in the foreseeable
future.
Possible Restrictions on Market-Making Activities in the
Company's Securities. D.H. Blair & Co., Inc. ("Blair & Co.") is
currently, and the Company believes that it intends in the future
to continue to be, a market maker in the Company's securities.
Regulation M, which was recently adopted to replace Rule 10b-6
and certain other rules promulgated under the Exchange Act may
prohibit Blair & Co. from engaging in any market-making
activities with regard to the Company's securities for the period
from five business days (or such other applicable period as
Regulation M may provide) prior to any solicitation by Blair of
the exercise of Warrants until the later of the termination of
such solicitation activity or the termination (by waiver or
otherwise) of any right that Blair may have to receive a fee for
the exercise of such Warrants following such solicitation. As a
result, Blair & Co. may be unable to provide a market for the
Company's securities during certain periods while the Warrants
are exercisable. In addition, under applicable rules and
regulations under the Exchange Act, any person engaged in the
distribution of Warrants offered by Selling Securityholders may
not simultaneously engage in market-making activities with
respect to any securities of the Company for the applicable
"cooling off" period (currently at least two and possibly nine
business days) prior to the commencement of such distribution.
Accordingly, in the event Blair & Co. is engaged in a
distribution of the Selling Securityholder Warrants, Blair & Co.
will not be able to make a market in the Company's securities
during the applicable restrictive period. Any temporary
cessation of such market-making activities could have an adverse
effect on the market price of the Company's securities.
Investigation of the Placement Agent by the Securities and
Exchange Commission. The Company has been advised that the
Securities and Exchange Commission (the "Commission") is
conducting an investigation concerning various business
activities of Blair and Blair & Co. The investigation appears to
be broad in scope, involving numerous aspects of Blair and
Blair & Co.'s compliance with the federal securities laws and
compliance with the federal securities laws by issuers whose
securities were underwritten by Blair or Blair & Co., or in which
Blair or Blair & Co. made over-the-counter markets, and persons
associated with Blair or Blair & Co., such issuers and other
persons. The Company has been advised by Blair that the
investigation has been ongoing since at least 1989 and that it is
cooperating with the investigation. Neither the Company, Blair
nor Blair & Co. can predict whether this investigation will ever
result in any type of formal enforcement action against Blair or
Blair & Co. An unfavorable resolution of this investigation
could have the effect of limiting Blair & Co.'s ability to make a
market in the Company's securities, which could affect the
liquidity or price of such securities. Any temporary cessation
of such market making activities could have a material adverse
effect on the market prices of the Company's securities.
<PAGE>
USE OF PROCEEDS
The Company will receive none of the proceeds from the sale
of the Selling Securityholder Securities, which are being sold by
the Selling Securityholders. Any proceeds from the exercise of
the Warrants, to the extent that the Warrants are exercised, will
be utilized by the Company for general corporate purposes.
<PAGE>
PLAN OF DISTRIBUTION
The Selling Securityholder Securities may be sold from time
to time to purchasers directly by any of the Selling
Securityholders, or, alternatively, any of the Selling
Securityholders may from time to time offer the Selling
Securityholder Securities through dealers or agents, who may
receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Securityholders
and/or purchasers of the Selling Securityholder Securities from
whom they may act as agent. Sales will be made at prices and on
terms then prevailing or at prices related to the current market
price, or in negotiated transactions. A Selling Securityholder
that sells such Selling Securityholder Securities pursuant to the
Registration Statement of which this Prospectus is a part will be
required to deliver such Prospectus to purchasers and will be
subject to certain of the civil liability provisions under the
Securities Act in connection with such sales. There can be no
assurance that any of the Selling Securityholder Securities will
be sold by the Selling Securityholders.
Under applicable rules and regulations under the Exchange
Act, any person engaged in the distribution of the Selling
Securityholder Warrants may not simultaneously engage in market-
making activities with respect to any securities of the Company
during the applicable "cooling off" period (currently at least
two and possibly nine business days) prior to the commencement of
such distribution. Accordingly, in the event Blair or Blair &
Co. is engaged in a distribution of the Selling Securityholder
Warrants, neither of such firms will be able to make a market in
the Company's securities during the applicable restrictive
period. However, neither Blair nor Blair & Co. have agreed to
nor are either of them obligated to act as a broker-dealer in the
sale of the Selling Securityholder Warrants and the Selling
Securityholders may be required, and in the event Blair & Co. is
a market maker, will likely be required, to sell such securities
through another broker-dealer. In addition, each Selling
Securityholder desiring to sell Warrants will be subject to the
applicable provisions of the Exchange Act and the rules and
regulations thereunder, which provisions may limit the timing of
the purchases and sales of shares of the Company's securities by
such Selling Securityholders.
The Commission has recently adopted Regulation M which will
replace Rule 10b-6 and certain other rules promulgated under the
Exchange Act. Regulation M may prohibit Blair & Co. from
engaging in any market-making activities with regard to the
Company's securities for the period from five business days (or
such other applicable period as Regulation M may provide) prior
to any solicitation by Blair & Co. of the exercise of Warrants
until the later of the termination of such solicitation activity
or the termination (by waiver or otherwise) of any right that
Blair & Co. may be unable to provide a market for the Company's
securities during certain periods while the Warrants are
exercisable.
Holders of outstanding Warrants can exercise their Warrants
for their applicable underlying securities upon payment of the
exercise prices therefor to the Company. The Company has agreed
not to solicit Warrant exercises other than through Blair unless
Blair declines or is unable to make such solicitation. Except
for any Warrants held by the Blair at the time of exercise, upon
any exercise of the Class A and Class B Warrants, the Company
will pay a fee to Blair (the "Solicitation Fee") of 5% of the
aggregate exercise price if (i) the market price of the Company's
Series A Common Stock on the date the Warrants are exercised is
greater than the then exercise price of the Warrants; (ii) the
exercise of the Warrants was solicited by a member of the
National Association of Securities Dealers, Inc. designated in
writing by the warrantholder as having solicited the exercise;
(iii) the Warrants are not held in a discretionary account;
(iv) disclosure of compensation arrangements is made both at the
time of the offering and at the time of exercise of the Warrants;
and (v) the solicitation of exercise of the Warrants was not in
violation of Rule 10b-6 promulgated under the Exchange Act.
Blair may reallow a portion of the Solicitation Fee to members of
the National Association of Securities Dealers, Inc. The costs
of Blair's solicitation will be borne by the Company.
The Selling Securityholders and broker-dealers, if any,
acting in connection with such sale might be deemed to be
underwriters within the meaning of Section 2(11) of the
Securities Act and any commission received by them and any profit
on the resale of the securities might be deemed to be
underwriting discounts and commissions under the Securities Act.
The Company has agreed to pay substantially all of the
expenses incident to the registration of all of the securities
covered under this Prospectus, other than transfer taxes, if any,
and commissions and discounts of dealers and agents.
<PAGE>
SELLING SECURITYHOLDERS
This Prospectus relates to an offering by the Selling
Securityholders of (i) up to 2,857,189 shares of Private
Placement Series A Common Stock (ii) up to 3,341,742 Private
Placement Class A Warrants, (iii) up to 3,336,863 Private
Placement Class B Warrants, (iv) up to 1,369,821 IPO Class A
Warrants and (v) up to 401,321 Furman Selz Warrants. The Selling
Securityholder Securities are being registered to permit public
secondary trading of the shares of Series A Common Stock and/or
Warrants, and the Selling Securityholders may offer such shares
of Series A Common Stock and Warrants for resale from time to
time. See "Plan of Distribution." For a description of the
Company's Common Stock, Class A Warrants, Class B Warrants and
Furman Selz Warrants, see "Description of Securities."
The Company has filed with the Commission under the
Securities Act a Registration Statement on Form S-3, of which
this Prospectus forms a part, with respect to the resale of the
Selling Securityholder Securities. The Company has agreed, among
other things, to bear certain expenses in connection with the
registration and sale of the shares of Series A Common Stock and
Warrants being offered by the Selling Securityholders. See "Plan
of Distribution."
Set forth below is certain information with respect to each
Selling Securityholder as of December 31, 1996. Except as
indicated below, to the best of the Company's knowledge, there
have been no material relationships between any of the Selling
Securityholders and the Company within the past three years.
<TABLE>
Private Placement Series A Common Stock
<CAPTION>
Number of Number of
Shares Owned at Shares Offered
Commencement by the Selling
Selling Securityholder of Offering Securityholder
<S> <C> <C>
Magid Abraham 31,746 31,746
R. Peter & Hanna Altman 7,937 7,937
Alan & Chris Balfour 7,937 7,937
Rudy & Betty Ballato 15,873 15,873
Geoffrey W. Baylor 7,937 7,937
John H.K. Belt 7,937 7,937
Bruce W. & Julie A. Bennett 7,937 7,937
Charles M. Berger 15,873 15,873
Robert Berger 7,937 7,937
Ronald J. Berk 7,937 7,937
Mitchell & Kathryn W. Birzon 15,873 15,873
Baxter J. Braband 15,873 15,873
Joan Brout 15,873 15,873
John N. Burdette 3,969 3,969
Robert D. Burke, M.D. 7,937 7,937
Gloria M. Buzi 3,969 3,969
Chelsea Associates, Inc. 15,873 15,873
CLFS Equities Ltd. 15,873 15,873
Kenneth & Sherry Cohen 15,873 15,873
Martin A. Cooper, M.D. 7,937 7,937
Lee R. Curtis 7,937 7,937
Steven A. Dawes 15,873 15,873
Errett & Evelyn Deck 15,873 15,873
Thomas J. & Joanne DeLuca 7,937 7,937
Milton I. Drucker, as Trustee
for The Drucker Group Inc.
Retirement Trust 7,937 7,937
Edmund H. Shea, Jr., as
Trustee for E&M RP Trust 31,746 31,746
Eastern Shore Radiation
Oncology Associates 15,873 15,873
Elvin E. & Genevieve M. Eberle 7,937 7,937
Jonathan & Irene Elias 15,873 15,873
William G. Everett 23,810 23,810
Fairfield-Maxwell, Ltd. 31,746 31,746
Edward J. Farrell 15,873 15,873
Shaban & Shaista Faruqui 15,873 15,873
Jeffrey A. Feibelman 39,683 39,683
Mark Fischgrund 7,937 7,937
David Fohrman 23,810 23,810
John S. & Elsie C. Fok 11,905 11,905
Tanya Gayle Foreman 15,873 15,873
Dr. Dalia Fried 3,969 3,969
Erwin & Jenny Fried 3,969 3,969
E. Kipp Friedle 7,937 7,937
Marshall Froker 3,969 3,969
James E. Galton 15,873 15,873
Martin R. Garfield 3,969 3,969
Lisa Susan Gatschet 31,746 31,746
Jonathan Goldstein 31,746 31,746
Morton E. Goulder 7,937 7,937
Richard Grant 3,969 3,969
Harold Greenberg 7,937 7,937
Alexander & Laura Gryschuk 31,746 31,746
Stuart E. Feick, as Trustee for
Gulfstream Asset Management
Corp. Retirement Trust 7,937 7,937
Daniel Gutkin 7,937 7,937
Philip N. Haddad, III 7,937 7,937
Arthur H. Halper 7,937 7,937
Bruce B. Hanson 7,937 7,937
Dennis & Marcia Harrington 7,937 7,937
Bill R. Hay 15,873 15,873
Bruce A. Herman 7,937 7,937
Blake A. Hershey 7,937 7,937
Julian Herskowitz 3,969 3,969
Morris Hodkin 3,969 3,969
Stanley D. Hoffman 63,492 63,492
International Foam Products,
Inc. 7,937 7,937
Jack L. Irwin 15,873 15,873
George R. & Judith A. Isley 15,873 15,873
Jacob Katz, as Trustee for Jack
Katz DFP, Inc. Defined
Benefit Plan 15,873 15,873
Ivan Jacobs, M.D. 7,937 7,937
Stephen Baldwin Jayne 7,937 7,937
John and Anita Mastandrea, as
Trustees for John and Anita
Mastandrea Revokable Living
Trust 47,619 47,619
Wesley P. Jones 7,937 7,937
Jeff Riemer, as Trustee for
J.S. Riemer, Inc.
Employees' Pension Trust 31,746 31,746
Robert Jung 7,937 7,937
Louis & Irene Katz 47,619 47,619
Kathleen W. Katzmann 7,937 7,937
Leonard & Eileen Keller 47,619 47,619
Gerald Kesselman 7,937 7,937
Dr. Robert & Myriam Klein 31,746 31,746
Paul J. Kuehn 3,969 3,969
Joseph S. Kulpa 7,937 7,937
Clyde Kurlander 7,937 7,937
Robert H. Lenz (1) 15,873 15,873
Leon Sutton, as Trustee for
Leon Sutton Defined Benefit
Plan 7,937 7,937
Theodore A. Livingston 7,937 7,937
Martin Cooper, M.D., as Trustee
for Martin Cooper, M.D., A
Professional Corp. Defined
Benefit Pension Plan 7,937 7,937
Brian McLean 15,873 15,873
Martin & Lynn Mendelssohn 7,937 7,937
Alan E. Messenschmidt 3,969 3,969
Ira Michaels 7,937 7,937
Sheri Migdol 7,937 7,937
Richard & Maria Molinsky 15,873 15,873
Robin Morris 15,873 15,873
George & Irene Motonaga 7,937 7,937
John B. Muller 3,969 3,969
Nano-Cap Hyper Growth
Partnership L.P. 7,937 7,937
Concetta Neff 7,937 7,937
New Jersey Wolfson Trust 476,190 476,190
James Nigro 47,619 47,619
Stephen Osman 31,746 31,746
Timothy & Elizabeth O'Sullivan 7,937 7,937
John & Paula Pataki 7,937 7,937
Wayne Pensenstadler 7,937 7,937
James N. & Judith W. Perkins (2) 15,873 15,873
Robert Perl 3,969 3,969
David J. Pokoski, M.D. 31,746 31,746
Jesse D. Roggen, as Trustee for
Poseidon Capital Pension &
Profit Sharing Plan 7,937 7,937
Daniel A. Potter 7,937 7,937
Rajesh & Noopur Prasad 7,937 7,937
Hosny Selim, as Trustee for
Radiation Therapists
Associates P.C. Profit
Sharing Plan 7,937 7,937
Pattabhirama & Pindi Rajendran 15,873 15,873
Jeff Riemer 31,746 31,746
Denis J. Rinello 7,937 7,937
Robert S. Bogatin, as Trustee
for Robert S. Bogatin Trust 7,937 7,937
Mark E. & Connie E. Roman 3,969 3,969
Mark E. Roman 3,969 3,969
Norton A. Rosenberg 3,969 3,969
Alan H. & Linda S. Rosenthal 7,937 7,937
Alan J. Rubin 31,746 31,746
David W. Ruttenberg 7,937 7,937
Jacob Safier 47,619 47,619
Alan & Leah Sakowitz 15,873 15,873
Samuel J. Holtzman Trust 31,746 31,746
Nicolo & Maddalena Saulle 3,969 3,969
Louise Schrier 15,873 15,873
Kenneth W. Scott 15,873 15,873
David R. Simon 7,937 7,937
Herschel J. Sklaroff 7,937 7,937
Steven Sklow 15,873 15,873
Gary E. Sommer 7,937 7,937
Stanley D. Hoffman, M.D., as
Trustee for Stanley D.
Hoffman, M.D. Profit
Sharing Plan 31,746 31,746
Doug Terry 47,619 47,619
Lance James Thomas 15,873 15,873
Harry Tobiassen 7,937 7,937
Elmer A. Triplett 15,873 15,873
Vail Corporation of
Louisiana, Inc. 7,937 7,937
Donald J. Vernine 15,873 15,873
Johnny D. & Norma Jean Walker 3,969 3,969
Warren A. Noden, as Trustee for
Warren A. Noden Trust 7,937 7,937
Wayne D. Eig, as Trustee for
Wayne D. Eig, Chartered
Defined Benefit Pension
Plan & Trust 3,969 3,969
Dr. Robert M. Weiss 31,746 31,746
Aaron Wolfson 71,429 71,429
Abraham Wolfson 63,492 63,492
Martin & Rivka Wolmark 23,810 23,810
Joseph Yasgur 7,937 7,937
Harry Young 15,873 15,873
Harry & Miriam Zarin 7,937 7,937
Robert Zarin 7,937 7,937
Kal Zeff 158,730 158,730
Seymour H. Zisook 7,937 7,937
Robert D. Zucker 15,873 15,873
Total 2,857,189 2,857,189
<FN>
____________
(1) Mr. Lenz is the Chairman of the Board of Directors of the
Company.
(2) Mr. Perkins is President, Chief Executive Officer and
Director of the Company.
</TABLE>
<TABLE>
Private Placement Class A Warrants
<CAPTION>
Number of Number of
Warrants Warrants
Owned at Offered by
Commencement the Selling
Selling Securityholder of Offering Securityholder
<S> <C> <C>
Magid Abraham 37,130 37,130
R. Peter & Hanna Altman 9,283 9,283
Alan & Chris Balfour 9,283 9,283
Rudy & Betty Ballato 18,565 18,565
Geoffrey W. Baylor 9,283 9,283
John H.K. Belt 9,283 9,283
Bruce W. & Julie A. Bennett 9,283 9,283
Charles M. Berger 18,565 18,565
Robert Berger 9,283 9,283
Ronald J. Berk 9,283 9,283
Mitchell & Kathryn W. Birzon 18,565 18,565
Baxter J. Braband 18,565 18,565
Joan Brout 18,565 18,565
John N. Burdette 4,642 4,642
Robert D. Burke, M.D. 9,283 9,283
Gloria M. Buzi 4,642 4,642
Chelsea Associates, Inc. 18,565 18,565
CLFS Equities Ltd. 18,565 18,565
Kenneth & Sherry Cohen 18,565 18,565
Martin A. Cooper, M.D. 9,283 9,283
Lee R. Curtis 9,283 9,283
Steven A. Dawes 18,565 18,565
Errett & Evelyn Deck 18,565 18,565
Thomas J. & Joanne DeLuca 9,283 9,283
Milton I. Drucker, as Trustee
for The Drucker Group Inc.
Retirement Trust 9,283 9,283
Edmund H. Shea, Jr., as
Trustee for E&M RP Trust 37,130 37,130
Eastern Shore Radiation Oncology
Associates 18,565 18,565
Elvin E. & Genevieve M. Eberle 9,283 9,283
Jonathan & Irene Elias 18,565 18,565
William G. Everett 27,848 27,848
Fairfield-Maxwell, Ltd. 37,130 37,130
Edward J. Farrell 18,565 18,565
Shaban & Shaista Faruqui 18,565 18,565
Jeffrey A. Feibelman 46,413 46,413
Mark Fischgrund 9,283 9,283
David Fohrman 27,848 27,848
John S. & Elsie C. Fok 13,924 13,924
Tanya Gayle Foreman 18,565 18,565
Dr. Dalia Fried 4,642 4,642
Erwin & Jenny Fried 4,642 4,642
E. Kipp Friedle 9,283 9,283
Marshall Froker 4,642 4,642
James E. Galton 18,565 18,565
Martin R. Garfield 4,642 4,642
Lisa Susan Gatschet 37,130 37,130
Jonathan Goldstein 37,130 37,130
Morton E. Goulder 9,283 9,283
Richard Grant 4,642 4,642
Harold Greenberg 9,283 9,283
Alexander & Laura Gryschuk 37,130 37,130
Stuart E. Feick, as Trustee for
Gulfstream Asset Management
Corp. Retirement Trust 9,283 9,283
Daniel Gutkin 9,283 9,283
Philip N. Haddad, III 9,283 9,283
Arthur H. Halper 9,283 9,283
Bruce B. Hanson 9,283 9,283
Dennis & Marcia Harrington 9,283 9,283
Bill R. Hay 18,565 18,565
Bruce A. Herman 9,283 9,283
Blake A. Hershey 9,283 9,283
Julian Herskowitz 4,642 4,642
Morris Hodkin 4,642 4,642
Stanley D. Hoffman 74,260 74,260
International Foam Products, Inc. 9,283 9,283
Jack L. Irwin 18,565 18,565
George R. & Judith A. Isley 18,565 18,565
Jacob Katz, as Trustee for
Jack Katz DFP, Inc. Defined
Benefit Plan 18,565 18,565
Ivan Jacobs, M.D. 9,283 9,283
Stephen Baldwin Jayne 9,283 9,283
John and Anita Mastandrea as
Trustees for John and Anita
Mastandrea Revokable Living
Trust of 4-29-96 55,695 55,695
Wesley P. Jones 9,283 9,283
Jeff Riemer, as Trustee for
J.S. Riemer, Inc.
Employees' Pension Trust 37,130 37,130
Robert Jung 9,283 9,283
Louis & Irene Katz 55,695 55,695
Kathleen W. Katzmann 9,283 9,283
Leonard & Eileen Keller 55,613 55,613
Gerald Kesselman 9,269 9,269
Dr. Robert & Myriam Klein 37,130 37,130
Paul J. Kuehn 4,642 4,642
Joseph S. Kulpa 9,283 9,283
Clyde Kurlander 9,283 9,283
Robert H. Lenz (1) 18,565 18,565
Leon Sutton, as Trustee for
Leon Sutton Defined Benefit
Plan 9,283 9,283
Theodore A. Livingston 9,283 9,283
Martin Cooper, M.D., as Trustee
for Martin Cooper, M.D., A
Professional Corp. Defined
Benefit Pension Plan 9,283 9,283
Brian McLean 18,565 18,565
Martin & Lynn Mendelssohn 9,283 9,283
Alan E. Messenschmidt 4,642 4,642
Ira Michaels 9,283 9,283
Sheri Migdol 9,283 9,283
Richard & Maria Molinsky 18,565 18,565
Robin Morris 18,565 18,565
George & Irene Motonaga 9,283 9,283
John B. Muller 4,642 4,642
Nano-Cap Hyper Growth
Partnership L.P. 9,283 9,283
Concetta Neff 9,283 9,283
New Jersey Wolfson Trust 556,947 556,947
James Nigro 55,695 55,695
Stephen Osman 37,130 37,130
Timothy & Elizabeth O'Sullivan 9,283 9,283
John & Paula Pataki 9,283 9,283
Wayne Pensenstadler 9,283 9,283
James N. & Judith W. Perkins (2) 18,565 18,565
Robert Perl 4,642 4,642
David J. Pokoski, M.D. 37,130 37,130
Jesse D. Roggen, as Trustee for
Poseidon Capital Pension &
Profit Sharing Plan 9,283 9,283
Daniel A. Potter 9,283 9,283
Rajesh & Noopur Prasad 9,283 9,283
Hosny Selim, as Trustee for
Radiation Therapists
Associates P.C. Profit
Sharing Plan 9,283 9,283
Pattabhirama & Pindi Rajendran 18,565 18,565
Jeff Riemer 37,130 37,130
Denis J. Rinello 9,283 9,283
Robert S. Bogatin, as Trustee
for Robert S. Bogatin Trust 9,283 9,283
Mark E. & Connie E. Roman 4,642 4,642
Mark E. Roman 4,642 4,642
Norton A. Rosenberg 4,642 4,642
Alan H. & Linda S. Rosenthal 9,283 9,283
Alan J. Rubin 37,130 37,130
David W. Ruttenberg 9,283 9,283
Jacob Safier 55,695 55,695
Alan & Leah Sakowitz 18,565 18,565
Samuel J. Holtzman Trust 37,130 37,130
Nicolo & Maddalena Saulle 4,642 4,642
Louise Schrier 18,565 18,565
Kenneth W. Scott 18,565 18,565
David R. Simon 9,283 9,283
Herschel J. Sklaroff 9,283 9,283
Steven Sklow 18,565 18,565
Gary E. Sommer 9,283 9,283
Stanley D. Hoffman, M.D., as
Trustee for Stanley D.
Hoffman, M.D. Profit
Sharing Plan 37,130 37,130
Doug Terry 55,695 55,695
Lance James Thomas 18,565 18,565
Harry Tobiassen 9,283 9,283
Elmer A. Triplett 18,565 18,565
Vail Corporation of Louisiana,
Inc. 9,283 9,283
Donald J. Vernine 18,565 18,565
Johnny D. & Norma Jean Walker 4,642 4,642
Warren A. Noden, as Trustee for
Warren A. Noden Trust 9,283 9,283
Wayne D. Eig as Trustee for
Wayne D. Eig, Chartered
Defined Benefit Pension
Plan & Trust 4,642 4,642
Dr. Robert M. Weiss 37,130 37,130
Aaron Wolfson 83,543 93,543
Abraham Wolfson 74,260 74,260
Martin & Rivka Wolmark 27,848 27,848
Joseph Yasgur 9,283 9,283
Harry Young 18,565 18,565
Harry & Miriam Zarin 9,283 9,283
Robert Zarin 9,283 9,283
Kal Zeff 185,649 185,649
Seymour H. Zisook 9,283 9,283
Robert D. Zucker 18,565 18,565
Total 3,341,742 3,341,742
<FN>
____________
(1) Mr. Lenz is the Chairman of the Board of Directors of the
Company.
(2) Mr. Perkins is President, Chief Executive Officer and
Director of the Company.
</TABLE>
<TABLE>
Private Placement Class B Warrants
<CAPTION>
Number of Number of
Warrants Warrants
Owned at Offered by
Commencement the Selling
Selling Securityholder of Offering Securityholder
<S> <C> <C>
Magid Abraham 37,076 37,076
R. Peter & Hanna Altman 9,269 9,269
Alan & Chris Balfour 9,269 9,269
Rudy & Betty Ballato 18,538 18,538
Geoffrey W. Baylor 9,269 9,269
John H.K. Belt 9,269 9,269
Bruce W. & Julie A. Bennett 9,269 9,269
Charles M. Berger 18,538 18,538
Robert Berger 9,269 9,269
Ronald J. Berk 9,269 9,269
Mitchell & Kathryn W. Birzon 18,538 18,538
Baxter J. Braband 18,538 18,538
Joan Brout 18,538 18,538
John N. Burdette 4,635 4,635
Robert D. Burke, M.D. 9,269 9,269
Gloria M. Buzi 4,635 4,635
Chelsea Associates, Inc. 18,538 18,538
CLFS Equities Ltd. 18,538 18,538
Kenneth & Sherry Cohen 18,538 18,538
Martin A. Cooper, M.D. 9,269 9,269
Lee R. Curtis 9,269 9,269
Steven A. Dawes 18,538 18,538
Errett & Evelyn Deck 18,538 18,538
Thomas J. & Joanne DeLuca 9,269 9,269
Milton I. Drucker, as Trustee
for The Drucker Group Inc.
Retirement Trust 9,269 9,269
Edmund H. Shea, Jr., as
Trustee for E&M RP Trust 37,076 37,076
Eastern Shore Radiation Oncology
Associates 18,538 18,538
Elvin E. & Genevieve M. Eberle 9,269 9,269
Jonathan & Irene Elias 18,538 18,538
William G. Everett 27,807 27,807
Fairfield-Maxwell, Ltd. 37,076 37,076
Edward J. Farrell 18,538 18,538
Shaban & Shaista Faruqui 18,538 18,538
Jeffrey A. Feibelman 46,345 46,345
Mark Fischgrund 9,269 9,269
David Fohrman 27,807 27,807
John S. & Elsie C. Fok 13,904 13,904
Tanya Gayle Foreman 18,538 18,538
Dr. Dalia Fried 4,635 4,635
Erwin & Jenny Fried 4,635 4,635
E. Kipp Friedle 9,269 9,269
Marshall Froker 4,635 4,635
James E. Galton 18,538 18,538
Martin R. Garfield 4,635 4,635
Lisa Susan Gatschet 37,076 37,076
Jonathan Goldstein 37,076 37,076
Morton E. Goulder 9,269 9,269
Richard Grant 4,635 4,635
Harold Greenberg 9,269 9,269
Alexander & Laura Gryschuk 37,076 37,076
Stuart E. Feick, as Trustee for
Gulfstream Asset Management
Corp. Retirement Trust 9,269 9,269
Daniel Gutkin 9,269 9,269
Philip N. Haddad, III 9,269 9,269
Arthur H. Halper 9,269 9,269
Bruce B. Hanson 9,269 9,269
Dennis & Marcia Harrington 9,269 9,269
Bill R. Hay 18,538 18,538
Bruce A. Herman 9,269 9,269
Blake A. Hershey 9,269 9,269
Julian Herskowitz 4,635 4,635
Morris Hodkin 4,635 4,635
Stanley D. Hoffman 74,151 74,151
International Foam Products, Inc. 9,269 9,269
Jack L. Irwin 18,538 18,538
George R. & Judith A. Isley 18,538 18,538
Jacob Katz, as Trustee for
Jack Katz DFP, Inc. Defined
Benefit Plan 18,538 18,538
Ivan Jacobs, M.D. 9,269 9,269
Stephen Baldwin Jayne 9,269 9,269
John and Anita Mastandrea, as
Trustees for John and Anita
Mastandrea Revokable Living
Trust 55,613 55,613
Wesley P. Jones 9,269 9,269
Jeff Riemer 37,076 37,076
Robert Jung 9,269 9,269
Louis & Irene Katz 55,613 55,613
Kathleen W. Katzmann 9,269 9,269
Leonard & Eileen Keller 55,613 55,613
Gerald Kesselman 9,269 9,269
Dr. Robert & Myriam Klein 37,076 37,076
Paul J. Kuehn 4,635 4,635
Joseph S. Kulpa 9,269 9,269
Clyde Kurlander 9,269 9,269
Robert H. Lenz (1) 18,538 18,538
Leon Sutton, as Trustee for
Leon Sutton Defined Benefit
Plan 9,269 9,269
Theodore A. Livingston 9,269 9,269
Martin Cooper, M.D., as Trustee
for Martin Cooper, M.D., A
Professional Corp. Defined
Benefit Pension Plan 9,269 9,269
Brian McLean 18,538 18,538
Martin & Lynn Mendelssohn 9,269 9,269
Alan E. Messenschmidt 4,635 4,635
Ira Michaels 9,269 9,269
Sheri Migdol 9,269 9,269
Richard & Maria Molinsky 18,538 18,538
Robin Morris 18,538 18,538
George & Irene Motonaga 9,269 9,269
John B. Muller 4,635 4,635
Nano-Cap Hyper Growth
Partnership L.P. 9,269 9,269
Concetta Neff 9,269 9,269
New Jersey Wolfson Trust 556,134 556,134
James Nigro 55,613 55,613
Stephen Osman 37,076 37,076
Timothy & Elizabeth O'Sullivan 9,269 9,269
John & Paula Pataki 9,269 9,269
Wayne Pensenstadler 9,269 9,269
James N. & Judith W. Perkins (2) 18,538 18,538
Robert Perl 4,635 4,635
David J. Pokoski, M.D. 37,076 37,076
Jesse D. Roggen, as Trustee for
Poseidon Capital Pension &
Profit Sharing Plan 9,269 9,269
Daniel A. Potter 9,269 9,269
Rajesh & Noopur Prasad 9,269 9,269
Hosny Selim, as Trustee for
Radiation Therapists
Associates P.C. Profit
Sharing Plan 9,269 9,269
Pattabhirama & Pindi Rajendran 18,538 18,538
Jeff Riemer 37,076 37,076
Denis J. Rinello 9,269 9,269
Robert S. Bogatin, as Trustee
for Robert S. Bogatin Trust 9,269 9,269
Mark E. & Connie E. Roman 4,635 4,635
Mark E. Roman 4,635 4,635
Norton A. Rosenberg 4,635 4,635
Alan H. & Linda S. Rosenthal 9,269 9,269
Alan J. Rubin 37,076 37,076
David W. Ruttenberg 9,269 9,269
Jacob Safier 55,613 55,613
Alan & Leah Sakowitz 18,538 18,538
Samuel J. Holtzman Trust 37,076 37,076
Nicolo & Maddalena Saulle 4,635 4,635
Louise Schrier 18,538 18,538
Kenneth W. Scott 18,538 18,538
David R. Simon 9,269 9,269
Herschel J. Sklaroff 9,269 9,269
Steven Sklow 18,538 18,538
Gary E. Sommer 9,269 9,269
Stanley D. Hoffman, M.D., as
Trustee for Stanley D.
Hoffman, M.D. Profit
Sharing Plan 37,076 37,076
Doug Terry 55,613 55,613
Lance James Thomas 18,538 18,538
Harry Tobiassen 9,269 9,269
Elmer A. Triplett 18,538 18,538
Vail Corporation of Louisiana,
Inc. 9,269 9,269
Donald J. Vernine 18,538 18,538
Johnny D. & Norma Jean Walker 4,635 4,635
Warren A. Noden, as Trustee for
Warren A. Noden Trust 9,269 9,269
Wayne D. Eig, as Trustee for
Wayne D. Eig, Chartered
Defined Benefit Pension
Plan & Trust 4,635 4,635
Dr. Robert M. Weiss 37,076 37,076
Aaron Wolfson 83,421 83,421
Abraham Wolfson 74,151 74,151
Martin & Rivka Wolmark 27,807 27,807
Joseph Yasgur 9,269 9,269
Harry Young 18,538 18,538
Harry & Miriam Zarin 9,269 9,269
Robert Zarin 9,269 9,269
Kal Zeff 185,378 185,378
Seymour H. Zisook 9,269 9,269
Robert D. Zucker 18,538 18,538
Total 3,336,863 3,336,863
<FN>
____________
(1) Mr. Lenz is the Chairman of the Board of Directors of the
Company.
(2) Mr. Perkins is President, Chief Executive Officer and
Director of the Company.
</TABLE>
The Selling Securityholders have agreed not to sell the
Private Placement Common Stock, the Private Placement Class A
Warrants and the Private Placement Class B Warrants except after
the time periods and in the percentage amounts set forth below
and not to exercise the Private Placement Class A Warrants and
the Private Placement Class B Warrants prior to November 14,
1997.
<TABLE>
<CAPTION>
Lock-Up Period Percentage Eligible for Resale
<S> <C>
Prior to March 15, 1997 . . . None
Period from March 15, 1997
to July 15, 1997 . . . . . 50%
After July 15, 1997 . . . . . 100%
</TABLE>
<TABLE>
IPO Class A Warrants
<CAPTION>
Number of IPO Number of
Class A Warrants
Warrants Owned Offered by
at Commencement the Selling
Selling Securityholder of Offering Securityholder
<S> <C> <C>
George T. Barton & Nancy L.
Barton 58,480 58,480
John S. Fok and Alice J. Fok 52,632 52,632
Farrell C. Gay 3,655 3,655
Arnold D. Flam, DDS & Harvey
Glicker, DDS Profit Sharing
Trust 29,240 29,240
Jay B. Gutkin 14,620 14,620
Bruce A. Herman 29,240 29,240
Sheela Idnani 14,620 14,620
James W. Johnson 14,620 14,620
Robert Klein 29,240 29,240
John E. Milne 14,620 14,620
Stephen Osman 29,240 29,240
J. Lindsey Roberts, Sr. 29,240 29,240
David Scannell 14,620 14,620
Steven Sklow 14,620 14,620
Kaytaro G. Sugahara 29,240 29,240
Seymour H. Zisook 29,240 29,240
Terry Clark 29,240 29,240
Dr. Harvey Glicker 58,480 58,480
Stanley D. Hoffmann 29,240 29,240
William G. Hylind &
Patricia B. Hylind 58,480 58,480
William Marginson &
Rose Marginson 14,620 14,620
John A. McNett 14,620 14,620
John Muller 29,240 29,240
Melvin Paradise 14,620 14,620
Retail Advisory Group 14,620 14,620
Robert H. Vonderohe &
Mardelle Vonderohe 14,620 14,620
Andrew Bressman 13,451 13,451
The Chana Shasha Foundation 29,240 29,240
Chesed Congregation of America 116,960 116,960
Joel D. Fedder 14,620 14,620
Andrew Holder 14,620 14,620
Lechaim Investment Corp. 14,620 14,620
Thomas A. Masci., Jr, 14,620 14,620
Joan Radocchio 14,620 14,620
Moshe M. Rothkopf and
Bongja K. Rothkopf 14,620 14,620
Eugene Silverman 5,848 5,848
Aaron Wolfson 29,240 29,240
Abraham Wolfson 29,240 29,240
Rubin Organization(1) 29,240 29,240
Robert H. Lenz(2) 317,457 317,457
Stephen G. Bowen(3) 14,620 14,620
Harvey S. Wilson(4) 8,203 8,203
Tendrel, Inc.(5) 3,655 3,655
Total 1,369,821 1,369,821
<FN>
____________
(1) Rubin Organization is a mall developer and operator of one
of the first four malls in which Cafe USA was installed and
broadcast.
(2) Mr. Lenz is the Chairman of the Board of Directors of the
Company.
(3) Mr. Bowen served as President, Chief Executive Officer and
Director of the Company from May, 1993 to November, 1996.
(4) Mr. Wilson served as Executive Vice President and Director
of the Company from October, 1993 to June, 1996. Mr. Wilson
also served as Secretary of the Company from April, 1995 to
June, 1996.
(5) Tendrel, Inc. is a financial consulting company that
previously provided financial advisory services to the
Company.
</TABLE>
<TABLE>
Furman Selz Warrants
<CAPTION>
Number of Number of
Warrants Warrants
Owned at Offered by
Commencement the Selling
Selling Securityholder of Offering Securityholder
<S> <C> <C>
Furman Selz LLC(1) 401,321 401,321
<FN>
____________
(1) On December 16, 1996, the Company and Furman Selz entered
into a financial advisory agreement pursuant to which Furman
Selz will provide financial advisory services to the Company
for approximately 18 months. See "Recent Developments."
</TABLE>
<PAGE>
DESCRIPTION OF SECURITIES
General
The Company's authorized capital stock consists of
200,000,000 shares of Series A Common Stock, $.01 par value per
share, 1,250,000 shares of Series B Common Stock, $.01 par value
per share, and 5,000,000 shares of undesignated Preferred Stock.
As of the date of this Prospectus, there were issued and
outstanding, 6,950,714 shares of Series A Common Stock and
1,075,715 shares of Series B Common Stock. The Series A Common
Stock and Series B Common Stock are held of record by
approximately 173 and 6 stockholders, respectively.
Units
Each Unit consists of one share of Series A Common Stock,
one Class A Warrant and one Class B Warrant. Each Class A
Warrant entitles the holder thereof to purchase one share of
Series A Common Stock and one Class B Warrant, and each Class B
Warrant entitles the holder thereof to purchase one share of
Series A Common Stock. The Series A Common Stock, the Class A
Warrants and the Class B Warrants included in the Units are
transferable separately.
Common Stock
The Series A Common Stock and Series B Common Stock are
substantially identical except that holders of Series A Common
Stock have the right to cast one vote for each share held of
record and holders of Series B Common Stock have the right to
cast five votes for each share held of record on all matters,
submitted to a vote of the holders of Common Stock. The Series A
Common Stock and Series B Common Stock vote together as a single
class on all matters on which stockholders may vote, including
the election of directors, except when class voting is required
by applicable law. Holders of Common Stock do not have
cumulative voting rights.
Holders of the Series A Common Stock and Series B Common
Stock have equal ratable rights to dividends from funds legally
available therefor, when, as and if declared by the Board of
Directors and are entitled to share ratably, as a single class,
in all of the assets of the Company available for distribution to
holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the affairs of the Company. Holders
of Series A Common Stock or Series B Common Stock do not have
preemptive, subscription or conversion rights except that the
Series B Common Stock will be automatically convertible into an
equivalent number of fully paid and non-assessable shares of
Series A Common Stock upon the sale or transfer of such shares by
the record holder thereof except to another holder of Series B
Common Stock. Each share of Series B Common Stock will also be
convertible at any time upon the option of the holder into one
share of Series A Common Stock. No redemption or sinking fund
provisions exist for the benefit of the Series A Common Stock or
Series B Common Stock. All outstanding shares of Series A and
Series B Common Stock are, and those shares of Series A Common
Stock offered hereby, will be validly issued, fully paid and non-
assessable. The Series B Common stockholders have the power to
retain control over the Company, until substantial exercise of
the Warrants are effected.
The difference in voting rights described above increases
the voting power of the Series B Common stockholders and
accordingly has an anti-takeover effect. The existence of the
Series B Common Stock may make the Company a less attractive
target for a hostile takeover bid or render more difficult or
discourage a merger proposal, an unfriendly tender offer, a proxy
contest, or the removal of incumbent management, even if such
transactions were favored by the stockholders of the Company
other than the Series B Common stockholders. Thus, the
stockholders may be deprived of an opportunity to sell their
shares at a premium over prevailing market prices in the event of
a hostile takeover bid. Those seeking to acquire the Company
through a business combination will be compelled to consult first
with the Series B Common Stockholders in order to negotiate the
terms of such business combination. Any such proposed business
combination will have to be approved by the Board of Directors,
which may be under the control of the Series B Common
stockholders, and if stockholder approval is required, the
approval of the Series B Common stockholders will be necessary
before any such business combination can be consummated.
Redeemable Warrants
Class A Warrants. The holder of each Class A Warrant is
entitled, upon payment of the exercise price of $5.13 to purchase
one share of Series A Common Stock and one Class B Warrant.
Unless previously redeemed, the Class A Warrants are presently
exercisable at any time and until 5:00 p.m. (New York time) on
October 11, 2000, except the Private Placement Class A Warrants
can be exercised by the Selling Securityholders only between
November 14, 1997 and 5:00 p.m. (New York time) on October 11,
2000. The Class A Warrants included in the Units are immediately
transferable separately from the Series A Common Stock and the
Class B Warrants issued with such Class A Warrants as part of the
Units. The Class A Warrants are subject to redemption, as
described below.
Class B Warrants. The holder of each Class B Warrant is
entitled to purchase one share of Series A Common Stock at an
exercise price of $6.85. Unless previously redeemed, the Class B
Warrants are presently exercisable at any time and until
5:00 p.m. (New York time) on October 11, 2000, except the Private
Placement Class B Warrants can be exercised by the Selling
Securityholders only between November 14, 1997 and 5:00 p.m. (New
York time) on October 11, 2000. The Class B Warrants included in
the Units are immediately transferable separately from the
Series A Common Stock and the Class A Warrants issued with such
Class B Warrants as part of the Units. The Class B Warrants
underlying the Class A Warrants will be transferable separately
from the Series A Common Stock received upon exercise of the
Class A Warrants. The Class B Warrants are subject to
redemption, as described below.
Redemption. The Warrants are subject to redemption by the
Company, upon 30 days' written notice, at a price of $.05 per
Warrant if the average closing bid price of the Series A Common
Stock for any 30 consecutive business days ending within five
days of the date on which the notice of redemption is given shall
have exceeded $9.00 per share with respect to the Class A
Warrants and $12.00 per share with respect to the Class B
Warrants. Holders of Warrants will automatically forfeit their
rights to purchase the shares of Series A Common Stock issuable
upon exercise of such Warrants unless the Warrants are exercised
before the close of business on the business day immediately
prior to the date set for redemption. All of the outstanding
Warrants of a class, except for those underlying the Unit
Purchase Options, must be redeemed if any of that class are
redeemed. The Warrants underlying the Unit Purchase Options are
not subject to redemption by the Company unless, on the date
fixed for redemption, the Unit Purchase Options have been
exercised and the underlying warrants are outstanding. A notice
of redemption shall be mailed to each of the registered holders
of the Warrants by first class mail, postage prepaid, upon
30 days' notice before the date fixed for redemption. The notice
of redemption shall specify the redemption price, the date fixed
for redemption, the place where the Warrant certificates shall be
delivered and the redemption price to be paid, and that the right
to exercise the Warrants shall terminate at 5:00 p.m. (New York
City time) on the business day immediately preceding the date
fixed for redemption.
General. The Warrants may be exercised upon surrender of
the certificate(s) therefor on or prior to the expiration or the
redemption date (as explained above) at the offices of the
Company's warrant agent (the "Warrant Agent") with the form of
"Election to Purchase" on the reverse side of the certificate(s)
completed and executed as indicated, accompanied by payment (in
the form of certified or cashier's check payable to the order of
the Company) of the full exercise price for the number of
Warrants being exercised.
The Warrants contain provisions that protect the holders
thereof against dilution by adjustment of the exercise price per
share and the number of shares issuable upon exercise thereof
upon the occurrence of certain events, including issuances of
Series A Common Stock (or securities convertible, exchangeable or
exercisable into Series A Common Stock) at less than market
value, stock dividends, stock splits, mergers, a sale of
substantially all of the Company's assets, and for other
extraordinary events; provided, however, that no such adjustment
shall be made upon, among other things, (i) the issuance or
exercise of options or other securities under the Company's stock
option plans or other employee benefit plans, or (ii) the sale or
exercise of outstanding options or warrants.
The Company is not required to issue fractional shares of
Series A Common Stock, and in lieu thereof will make a cash
payment based upon the current market value of such fractional
shares. A holder of Warrants will not possess any rights as a
stockholder of the Company unless and until the Warrants are
exercised.
Furman Selz Warrants
The holder of each Furman Selz Warrant is entitled, upon
payment of the exercise price of $2.00 to purchase one share of
Series A Common Stock. The Furman Selz Warrants are presently
exercisable at any time and until 5:00 p.m. (New York time) on
December 16, 2001.
The Furman Selz Warrants are subject to redemption by the
Company, upon 30 days' written notice, at a price of $.05 per
Warrant if the average closing bid price of the Series A Common
Stock for any 30 consecutive business days ending within five
days of the date on which the notice of redemption is given shall
have exceeded $9.00 per share. Holders of Furman Selz Warrants
will automatically forfeit their rights to purchase the shares of
Series A Common Stock issuable upon exercise of such Warrants
unless the Warrants are exercised before the close of business on
the business day immediately prior to the date set for
redemption. All of the outstanding Furman Selz Warrants must be
redeemed if any are redeemed. A notice of redemption shall be
mailed to each of the registered holders of the Furman Selz
Warrants by first class mail, postage prepaid, upon 30 days'
notice before the date fixed for redemption. The notice of
redemption shall specify the redemption price, the date fixed for
redemption, the place where the Warrant certificates shall be
delivered and the redemption price to be paid, and that the right
to exercise the Furman Selz Warrants shall terminate at 5:00 p.m.
(New York City time) on the business day immediately preceding
the date fixed for redemption.
The Furman Selz Warrants may be exercised upon surrender of
the certificate(s) therefor on or prior to the expiration or the
redemption date (as explained above) at the offices of the
Warrant Agent with the form of "Election to Purchase" on the
reverse side of the certificate(s) completed and executed as
indicated, accompanied by payment (in the form of certified or
cashier's check payable to the order of the Company) of the full
exercise price for the number of Furman Selz Warrants being
exercised.
The Warrants contain provisions that protect the holders
thereof against dilution by adjustment of the exercise price per
share and the number of shares issuable upon exercise thereof
upon the occurrence of certain events, including issuances of
Series A Common Stock (or securities convertible, exchangeable or
exercisable into Series A Common Stock) at less than market
value, stock dividends, stock splits, mergers, a sale of
substantially all of the Company's assets, and for other
extraordinary events; provided, however, that no such adjustment
shall be made upon, among other things, the issuance or exercise
of options or other securities under the Company's stock option
plans or other employee benefit plans.
A holder of Furman Selz Warrants will not possess any
rights as a stockholder of the Company unless and until the
Warrants are exercised.
Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of
undesignated Preferred Stock ("Undesignated Preferred Stock").
Undesignated Preferred Stock. The Undesignated Preferred
Stock may be issued in series, and shares of each series will
have such rights and preferences as are fixed by the Board of
Directors in the resolutions authorizing the issuance of that
particular series. In designating any series of Undesignated
Preferred Stock, the Board of Directors may, without further
action by the holders of Common Stock, fix the number of shares
constituting that series and fix the dividend rights, dividend
rate, conversion rights, voting rights (which may be greater or
lesser than the voting rights of the Common Stock), rights and
terms of redemption (including any sinking fund provisions), and
the liquidation preferences of the series of Undesignated
Preferred Stock. The holders of any series of Undesignated
Preferred Stock, when and if issued, are expected to have
priority claims to dividends and to any distributions upon
liquidation of the Company, and they may have other preferences
over the holders of the Common Stock.
The Board of Directors may issue series of Undesignated
Preferred Stock without action by the stockholders of the
Company. Accordingly, the issuance of Undesignated Preferred
Stock may adversely affect the rights of the holders of the
Common Stock. In addition, the issuance of Undesignated
Preferred Stock may be used as an "anti-takeover" device without
further action on the part of the stockholders. Issuance of
Undesignated Preferred Stock may dilute the voting power of
holders of Common Stock (such as by issuing Undesignated
Preferred Stock with super-voting rights) and may render more
difficult the removal of current management, even if such removal
may be in the stockholders' best interest.
Business Combination Provisions
The Company is subject to a Delaware statute regulating
"business combinations," defined to include a broad range of
transactions, between Delaware corporations and "interested
stockholders," defined as persons who have acquired at least 15%
of a corporation's stock. Under the law, a corporation may not
engage in any business combination with any interested
stockholder for a period of three years from the date such person
became an interested stockholder unless certain conditions are
satisfied. The statute contains provisions enabling a
corporation to avoid the statute's restrictions.
The Company has not sought to "elect out" of the statute
and, therefore, the restrictions imposed by such statute apply to
the Company.
LEGAL MATTERS
Certain legal matters relating to the Series A Common Stock
and the Warrants offered hereby have been passed upon for the
Company by Stevens & Lee, Wayne, Pennsylvania.
EXPERTS
The financial statements incorporated in this Prospectus by
reference to the Company's latest Annual Report on Form 10-KSB
have been audited by Richard A. Eisner & Company, LLP,
independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated
in reliance upon such report given upon the authority of that
firm as experts in accounting and auditing.
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses payable by the
Company in connection with this Registration Statement. All
amounts are estimated except the SEC filing fees.
Securities and Exchange Commission filing fee . . $ 36,727
National Association of Securities Dealers, Inc.
filing fee. . . . . . . . . . . . . . . . . . . 0
Nasdaq listing fee. . . . . . . . . . . . . . . . 0
Printing and Engraving Expenses . . . . . . . . . 20,000
Accounting Fee and Expenses . . . . . . . . . . . 10,000
Legal Fees and Expenses . . . . . . . . . . . . . 10,000
Blue Sky Qualification Fees and Expenses. . . . . 0
Underwriters Expense Allowance. . . . . . . . . . 0
Transfer Agent Fees and Expenses. . . . . . . . . 0
Miscellaneous . . . . . . . . . . . . . . . . . . 5,000
Total . . . . . . . . . . . . . . . . . . . . . . $ 81,727
=======
Item 15. Indemnification of Directors and Officers.
Section 145 ("Section 145") of the Delaware General
Corporation Law (the "DGCL") permits indemnification of
directors, officers, agents and controlling persons of a
corporation under certain conditions and subject to certain
limitations. Article VIII of the Company's By-laws (Exhibit 3.2
hereto) provide for the indemnification of directors, officers
and other authorized representatives of the Company to the
maximum extent permitted by the DGCL. Section 145 empowers a
corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed actions, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such
person is or was a director, officer or agent of the corporation
or another enterprise if serving at the request of the
corporation. Depending on the character of the proceeding, a
corporation may indemnify against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred in connection with such actions, suit or
proceeding if the person indemnified acted in good faith and in a
manner such person reasonably believed to be in or not opposed
to, the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe such person's conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification
may be made with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought
shall determine that despite the adjudication of liability such
person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Section 145 further
provides that to the extent a director or officer of a
corporation has been successful in the defense of any action,
suit or proceeding referred to above or in the defense of any
claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith. The
Company's By-laws do not differentiate between derivative actions
and other actions.
<PAGE>
Item 16. Exhibits
Exhibits:
Number Title
- ------ -----
4.1 Specimen Form of Series A Common Stock Certificate
(Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form SB-2 (File No. 33-91054)
of Food Court Entertainment Network, Inc.)
4.2 Form of Warrant Agreement for Class A Warrants and
Class B Warrants, with Specimen Form of Class A and
Class B Warrant Certificate attached*
4.3 Form of Warrant Agreement, between Food Court
Entertainment Network, Inc. and Furman Selz LLC*
5.1 Opinion of Stevens & Lee
23.1 Consent of Stevens & Lee (included in Exhibit 5.1)
23.2 Consent of Richard A. Eisner & Company, LLP*
24.1 Power of Attorney (included on signature page)*
_____
* Previously filed.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(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 set forth in the registration
statement.
(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) That the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment 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.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) 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 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 of controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements of filing on
Form S-3 and authorized this registration statement to be signed
on its behalf by the undersigned in the City of New York, State
of New York on February 25, 1997.
FOOD COURT ENTERTAINMENT NETWORK, INC.
By: /s/ James N. Perkins
James N. Perkins,
President and
Chief Executive Officer
In accordance with the requirements of the Securities Act of
1933, as amended, this Registration Statement was signed below by
the following persons and in the capacities and on the dates
stated.
Signature
/s/ James N. Perkins President, Chief February 25, 1997
James N. Perkins Executive Officer,
and Director
(principal executive
officer)
/s/ Robert H. Lenz* Chairman of the February 25, 1997
Robert H. Lenz Board of Directors
/s/ Gary D. Penisten* Director February 25, 1997
Gary D. Penisten
/s/ Howard W. Phillips* Director February 25, 1997
Howard W. Phillips
/s/ Robert J. Wussler* Director February 25, 1997
Robert J. Wussler
/s/ Benjamin Frank* Director February 25, 1997
Benjamin Frank
/s/ E. Donald Shapiro* Director February 25, 1997
E. Donald Shapiro
/s/ Darren M. Sardoff Senior Vice February 25, 1997
Darren M. Sardoff President, Chief
Financial Officer
(principal accounting
and financial officer)
* By /s/ James N. Perkins
James N. Perkins
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Number Title
- ------ -----
4.1 Specimen Form of Series A Common Stock Certificate
(Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form SB-2 (File
No. 33-91054) of Food Court Entertainment Network,
Inc.)
4.2 Form of Warrant Agreement for Class A Warrants and
Class B Warrants, with Specimen Form of Class A
and Class B Warrant Certificate attached*
4.3 Form of Warrant Agreement, between Food Court
Entertainment Network, Inc. and Furman Selz LLC*
5.1 Opinion of Stevens & Lee
23.1 Consent of Stevens & Lee (included in Exhibit 5.1)
23.2 Consent of Richard A. Eisner & Company, LLP*
24.1 Power of Attorney (included on signature page)*
____
* Previously filed.
(610) 478-2000
February 26, 1997
Board of Directors
Food Court Entertainment Network, Inc.
220 East 42nd Street, 16th Floor
New York, New York 10017
Re: Registration Statement on Form S-3
Gentlemen:
In connection with the proposed offer and sale (A) by
certain securityholders (the "Selling Securityholders") of Food
Court Entertainment Network, Inc. (the "Company") of (i) up to
2,857,189 shares of Series A common stock, par value $.01 per
share (the "Common Stock"), (ii) up to 4,711,563 Redeemable
Class A Warrants (the "Class A Warrants"), (iii) up to 3,336,863
Redeemable Class B Warrants (the "Class B Warrants") and (iv) up
to 401,321 warrants issued by the Company to Furman Selz LLC (the
"Furman Selz Warrants"), and (B) by the Company of (i) up to
25,216,575 shares of Common Stock issuable by the Company upon
the exercise of the outstanding Class A Warrants, Class B
Warrants, Furman Selz Warrants and warrants issued by the Company
to D.H. Blair Investment Banking Corp. ("Blair") and certain of
Blair's designees in connection with the Company's preferred
stock offering in 1994 (the "Blair Warrants") and (ii) up to
8,796,797 Class B Warrants issuable by the Company upon the
exercise of all outstanding Class A Warrants, covered by the
Company's Registration Statement on Form S-3 (File No. 333-21077)
(the "Registration Statement"), we, as counsel to the Company,
have reviewed:
(1) the Amended and Restated Certificate of Incorporation
of the Company;
(2) the Bylaws of the Company;
(3) resolutions of the Board of Directors of the Company;
and
(4) the Registration Statement.
Based upon the examination and subject to the qualifications
set forth below, it is our opinion that:
(i) The shares of Common Stock, the Class A Warrants, the
Class B Warrants and the Furman Selz Warrants currently
held by the Selling Securityholders and covered by the
Registration Statement have been duly authorized and
legally issued and are fully paid and non-assessable.
(ii) The Class B Warrants issuable upon the exercise of the
Class A Warrants will, upon issuance and payment in
accordance with the terms of the Class A Warrants, be
duly authorized, legally issued, fully paid and non-
assessable.
(iii) The Series A Common Stock issuable upon the exercise of
the Class A Warrants, the Class B Warrants, the Furman
Selz Warrants and the Blair Warrants will, upon
issuance and payment in accordance with the terms of
such Warrants, be duly authorized, legally issued,
fully paid and non-assessable.
This opinion is given as of the date hereof. We assume no
obligation to update or supplement this opinion to reflect any
facts or circumstances which may hereafter come to our attention
or any changes in laws which may hereafter occur.
We consent to the filing of this opinion as an exhibit to
the Registration Statement, and to the reference to us under the
heading "Legal Matters" in the related Prospectus. In giving
this consent, we do not thereby admit that we come within the
category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ STEVENS & LEE
