BALLANTYNE OF OMAHA INC, S-8 POS, 1998-10-21

BALLANTYNE OF OMAHA INC
S-8 POS, 1998-10-21
PHOTOGRAPHIC EQUIPMENT & SUPPLIES

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<PAGE>

As filed with the Securities and Exchange Commission on May 16, 1996

Registration No. 33303849

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
FORM S-8

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

BALLANTYNE OF OMAHA, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

DELAWARE 47-0587703
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

4350 MCKINLEY STREET, OMAHA, NE 68112
---------------------------------------------------
(Address of Principal Executive Offices) (ZIP Code)

1995 STOCK OPTION PLAN (1)
--------------------------------------------
(Full title of the plan or written contract)

ROCHELLE A. MULLEN
CLINE, WILLIAMS, WRIGHT, JOHNSON & OLDFATHER
1125 SOUTH 103RD STREET, SUITE 720
OMAHA, NE 68124
--------------------------------------------
(Name and address of agent for service)

Telephone number, including area code, of agent for service: (402) 397-1700

(1) Ballantyne of Omaha, Inc. (the "Company") originally filed an S-8 to
register 440,000 shares of Common Stock (File No. 33303849), pursuant to its
1995 Stock Option Plan. Subsequent to that filing the Company effected a 3 for
2 stock split which increased the shares under the Stock Option Plan (the
"Plan") to 660,000. The shareholders voted in 1997 to increase the shares
eligible for reissuance by 400,000 shares and the Company subsequently
registered, pursuant to Amendment No. 1, the additional 400,000 shares. At the
1998 Annual Meeting, the Shareholders approved an amendment to the 1995 Stock
Option Plan whereby the shares authorized for grant increased by 260,000 shares.
The Company subsequently effected a second 3 for 2 stock split on June 12, 1998
which increased the additional 260,000 shares issuable pursuant to the Plan to
390,000 and increased the total number of shares issuable pursuant to the Plan
from 1,320,000 to 1,980,000. It is that 390,000 shares that the Company
registers with this Amendment No. 2. After filing of this Amendment No. 2, the
Company will have 1,980,000 shares in total which have been or may be issued
pursuant to the 1995 Stock Option Plan.

<PAGE>

ITEM 8. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
5 Opinion of Counsel

23.1 Consent of KPMG Peat Marwick, LLP

23.2 Consent of Counsel (included in Exhibit 5)
99.1 Amendment to 1995 Stock Option Plan

99.2 Amended and Restated Reoffer Prospectus for 1995 Stock Option
Plan dated September 30, 1998

99.3 Amended and Restated Reoffer Prospectus for 1995 Outside
Directors Stock Option Plan dated September 30, 1998
</TABLE>

The contents of the S-8 Registration Statement (File No. 33303849) and
Amendment No. 1 thereto is hereby incorporated by reference.

<PAGE>

SIGNATURES

THE REGISTRANT. Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Omaha, State of Nebraska on October, 14,
1998.

BALLANTYNE OF OMAHA, INC.

BY: /s/ Brad French
--------------------------------------------------
Brad French, Secretary, Treasurer, Chief Financial
Officer and Principal Accounting Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/S/ Chairman and 10/14/98
- ------------------------- Director
Arnold S. Tenney

/S/ Vice Chairman and 10/14/98
- ------------------------- Director
Ronald H. Echtenkamp

/S/ President, Chief 10/14/98
- ------------------------- Executive Officer
John P. Wilmers and Director

/S/ Director 10/14/98
- -------------------------
Jeffrey D. Chelin

/S/ Director 10/14/98
- -------------------------
Marshall S. Geller

/S/ Director 10/14/98
- -------------------------
Yale Richards

/S/ Director 10/14/98
- -------------------------
Colin G. Campbell
</TABLE>

<PAGE>

EXHIBIT 5

September 30, 1998

Mr. John P. Wilmers
President and Chief Executive Officer
Ballantyne of Omaha, Inc.
4350 McKinley Street
Omaha, NE. 68112

Re: Registration of 390,000 Additional Shares on Amendment No. 2 to Form
S-8 and filing of Amended and Restated Reoffer Prospectuses for the
1995 Stock Option Plan and the 1995 Outside Directors Stock Option
Plan

Dear Mr. Wilmers:

We have acted as legal counsel for Ballantyne of Omaha, Inc., a Delaware
corporation, (the "Company") in connection with the Company's preparation of the
above-referenced registration of additional shares on Form S-8 (the "Form S-8")
being filed with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended, (the "Act"), the prospectus which is not
filed, but is included as a part of the Form S-8 (the "Prospectus") and the
registration of the reoffer by certain affiliates and the two Amended and
Restated Reoffer Prospectuses prepared for the Company's 1995 Stock Option Plan
(the "1995 Plan") and the 1995 Outside Director's Stock Option Plan ("Outside
Director's Plan"). All of the shares are to be offered and sold, or reoffered
and resold by the Company or its affiliates pursuant to the Plan and in the
manner set forth in the Plan, Form S-8 and respective Prospectuses.

In connection herewith, we have examined: (i) the Form S-8 and the
Prospectus; (ii) the two Reoffer Prospectuses; (iii) the Certificate of
Incorporation, as amended, and the Bylaws, as amended, of the Company; (iv) the
corporate minutes and proceedings of the Company applicable to filing of the
Form S-8; and (v) such other proceedings, documents and records as we deemed
necessary or appropriate for the purposes of making this opinion. In making
such examinations, we have assumed the genuineness of all signatures on all
documents and conformed originals to all copies submitted to us as conformed or
photocopies. In addition to such examination, we have ascertained or verified
such additional facts as we deemed necessary or appropriate for purposes of this
opinion. However, as to various questions of fact material to our opinion, we
have relied upon representations, statements or certificates of officers,
directors, or representatives of the Company or others.

<PAGE>

Based upon the foregoing, we are of the opinion that: (i) the Company has
been legally incorporated and is validly existing under the laws of the state of
Delaware; and (ii) the shares issued pursuant to the Plan, upon issuance and
payment therefor, as contemplated by the Plan, Form S-8 and the Prospectus, will
be validly issued, fully paid and non-assessable common stock of the Company.

We hereby consent to the filing of the opinion as an exhibit to the Form
S-8 and to any references to our firm in the Prospectuses. In giving this
consent, we do not admit that we come within the category of persons whose
consent is required under Section 7 of the Act or the Rules and Regulations
of the Commission promulgated thereunder.

Very truly yours,

Cline, Williams, Wright, Johnson &
Oldfather

<PAGE>

EXHIBIT 23.1

KPMG Peat Marwick LLP

Two Central Park Plaza Telephone 402 348 1450 Telefax 402 348 0152
Suite 1501
Omaha, NE. 68102

233 South 13th Street, Suite 1600 Telephone 402 476 1216 Telefax 402 476 1944
Lincoln, NE. 68508-2041

ACCOUNTANTS' CONSENT

The Board of Directors
Ballantyne of Omaha, Inc.

We consent to incorporation by reference in the registration statement
(No. 333-03849) on Form S-8 of Ballantyne of Omaha, Inc. of our report, dated
January 23, 1998, relating to the consolidated balance sheets of Ballantyne
of Omaha and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of income, retained earnings and cash flows for each
of the years in the three-year period ended December 31, 1997, and related
schedule, which report appears in the December 31, 1997 annual report on Form
10-K of Ballantyne of Omaha, Inc.

KPMG Peat Marwick LLP

Omaha, Nebraska
October 14, 1998

<PAGE>
EXHIBIT 99.1

SECOND AMENDMENT TO BALLANTYNE OF OMAHA, INC.
1995 STOCK OPTION PLAN

The Ballantyne of Omaha, Inc., 1995 Stock Option Plan is hereby amended as
follows:

1. The second paragraph of Section 6 of the Plan as amended on June 25,
1997, is hereby further amended to read as follows:

"The maximum aggregate number of shares that may be issued under the
Plan is 1,320,000 shares."

2. All other terms, conditions and provisions of said Plan remain the
same.

DATED this 27th day of May, 1998.

BALLANTYNE OF OMAHA, INC.

By: /s/
--------------------------------
John Wilmers, President

Attest:

/s/
- -------------------------
Brad French, Secretary

I hereby certify that the above amendment to the Ballantyne of Omaha, Inc.,
1995 Stock Option Plan was approved by the Board of Directors of the corporation
at a special meeting of the Board of Directors duly called and held on the 24th
day of March, 1998, and was approved by the Stockholders of the corporation at
the Annual Meeting of Stockholders held on the 27th day of May, 1998.

DATED at Omaha, Nebraska, this 28th day of May, 1998.

/s/
---------------------------------
Brad French, Secretary

<PAGE>

EXHIBIT 99.2

AMENDED AND RESTATED REOFFER PROSPECTUS

BALLANTYNE OF OMAHA, INC.

This Amended and Restated Reoffer Prospectus replaces the Reoffer
Prospectus dated October 3, 1997 and relates to the reoffering or resale by
certain "affiliates" as set forth herein on Page 9 (the "Selling Stockholders")
of 243,000 shares of common stock of Ballantyne of Omaha, Inc. (the "Company"),
par value $0.01 (the "Common Stock"). Each Selling Stockholder holds stock
options ("Stock Options") issued pursuant to the Company's 1995 Stock Option
Plan. The shares issuable pursuant to the 1995 Stock Option Plan were registered
on Form S-8 and amendments thereto (File No. 33303849). The exercise price of
the Stock Options and the number of securities issuable upon exercise of the
Stock Options have been adjusted and are subject to further adjustment as a
result of the application of certain anti-dilution provisions contained therein.

The Common Stock of the Company is listed on the New York Stock Exchange
("NYSE") under the symbol "BTN". On October 13, 1998, the last reported sale
price of the Common Stock as quoted on NYSE was $6.125 per share.

The Company will not receive any of the proceeds from the resale of the
shares of Common Stock being sold by the Selling Stockholders. See "Use of
Proceeds".

All expenses relating to the filing of this Amendment No. 2 and the
registration of securities covered by this Reoffer Prospectus, estimated to be
approximately $6,150 are to be borne by the Company.

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. SEE "RISK FACTORS", BEGINNING ON PAGE 3 OF THIS AMENDED AND RESTATED
REOFFER PROSPECTUS.

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

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 REOFFER PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

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

The date of this Amended and Restated Reoffer Prospectus is September 30, 1998.

-1-

<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 reports and other information with the Securities and Exchange
Commission (the "Commission"). Proxy statements, reports and other information
concerning the Company can be inspected and copied at Room 1024 of the
Commission's office at 450 Fifth Street, N.W., Washington, D.C. 20549, and the
Commission's Regional Offices in New York (Room 1228, 75 Park Place, New York,
New York 10007), and Chicago (Suite 1400, Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60621-2511), and copies of such material can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a Web site that contains reports, proxy and information statements and
other materials that are filed through the Commission's Electronic Data
Gathering Analysis and Retrieval (EDGAR) System. This Web site can be accessed
at http:\\www.sec.gov. This Amended and Restated Reoffer Prospectus does not
contain all information set forth in the Registration Statement of which the
Amended and Restated Reoffer Prospectus form a part and exhibits thereto which
the Company has filed with the Commission under the Securities Act of 1933, as
amended (the "Securities Act") and to which reference is hereby made.

DOCUMENTS INCORPORATED BY REFERENCE

The Company has provided, without charge, to each recordholder a copy of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997. The Company will also provide, without charge, to each person to whom a
copy of this Amended and Restated Reoffer Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the other
documents incorporated by reference herein (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the information that the Amended and Restated Reoffer Prospectus incorporates).
Requests should be directed to:

Ballantyne of Omaha, Inc.
4350 McKinley Street
Omaha, Nebraska 68112
Attention: Brad French, Chief Financial Officer
Phone: (402) 453-4444

The following documents filed with the Commission by the Company are hereby
incorporated by reference into this Amended and Restated Reoffer Prospectus:

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<PAGE>

(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;

(2) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1998.

(3) Certificate of Incorporation, as amended (incorporated by reference to
Exhibit 3.1 and 3.3 to the Registration Statement on Form S-1 (File
No. 33-93244) and recent amendment incorporated by reference to
Exhibit 3.1.1 to the 10-Q filed for the period ended June 30, 1997).

All documents filed with the Commission by the Company pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent on the date of this
Amended and Restated Reoffer Prospectus and prior to the termination of the
offering registered hereby shall be deemed to be incorporated by reference into
this Amended and Restated Reoffer Prospectus and to be a part hereof from the
date of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Amended and Restated Reoffer
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Amended and Restated Reoffer Prospectus.

RISK FACTORS

IN ADDITION TO THE OTHER INFORMATION IN THIS AMENDED AND RESTATED REOFFER
PROSPECTUS, THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN
EVALUATING AN INVESTMENT IN THE COMPANY BEFORE PURCHASING THE SHARES OF COMMON
STOCK OFFERED HEREBY.

DEPENDENCE ON MOTION PICTURE SCREEN GROWTH

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<PAGE>

of motion picture screens as a result of the trend toward multiplexing and
megaplexing and the introduction of new forms of motion picture-based
entertainment, there can be no assurance that this expectation will prove
accurate. Growth in the number of new motion picture screens may be
adversely affected by the availability of home entertainment systems and
recent trends toward industry consolidation, which may also have an adverse
effect on the Company's customer base. A lack of motion picture screen
growth and/or widespread acceptance of new technology being developed for
alternate methods of projecting motion pictures on the screen, would have a
material adverse effect on the Company's business, results of operations and
financial condition.

UNCERTAINTIES REGARDING INTERNATIONAL SALES: FOREIGN CURRENCY FLUCTUATIONS

For 1995, 1996 and 1997, the Company generated net sales to foreign
customers of $11.3 million, $14.1 million and $18.5 million , respectively,
which accounted for approximately 29%, 27% and 26% of the Company's total net
sales for each of such years, respectively. For the six months ended June 30,
1997 and 1998, respectively, the Company generated net sales to foreign
customers of $9.1 million and $8.0 million respectively. These amounts include
net sales of Westrex Company, Asia ("Westrex") which was acquired in December
1994, but exclude sales to domestic export dealers of both theatre and
restaurant products and domestic theatre chains of products which are ultimately
exported. The Company is seeking to expand its share of international sales,
which it expects will continue to account for a substantial portion of its
revenues. International sales may be subject to political and economic risks,
including political instability, currency controls, fluctuating exchange rates
with respect to sales not denominated in U.S. dollars and changes in
import/export regulations, tariffs and freight rates. To date, all of the
Company's international sales have been denominated in U.S. dollars, exclusive
of Westrex sales ($2.3 million in 1997) which are denominated in Hong Kong
dollars. A weakening in the value of foreign currencies relative to the U.S.
dollar, which is currently occurring in Asia, could have an adverse impact on
the Company by increasing the effective price of the Company's products and
making it more difficult to collect open accounts receivable in its
international markets. In addition, there can be no assurance that the
Company's international customers will continue to accept orders denominated in
U.S. dollars. To the extent that orders are denominated in foreign currencies,
the Company's reported sales and earnings are more directly subject to foreign
exchange fluctuations. There can be no assurance that these factors will not
adversely affect the Company's international sales in the future.

COMPETITION

The market for commercial motion picture projection equipment is highly
competitive. In the international market, where the Company has a smaller

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<PAGE>

market share than in the domestic market, the Company believes that its largest
competitor has significantly greater market share than the Company. In addition
to existing commercial motion picture projection equipment manufacturers, the
Company may also encounter competition from new competitors, as well as from new
types of equipment. No assurance can be given that the commercial motion
picture projection equipment manufactured by the Company will not become
obsolete as technology advances. In addition, the markets for the Company's
long-range follow spotlight and other illumination and restaurant products are
highly competitive. Competitors of the Company may also have significantly
greater financial resources than the Company which may impede the ability of the
Company to compete effectively.

DEPENDENCE ON KEY MANAGEMENT

The Company's success depends, in substantial part, on the efforts and
abilities of John P. Wilmers, the Company's President and Chief Executive
Officer, Ray F. Boegner, the Company's Senior Vice President and Brad French,
Chief Financial Officer, Secretary and Treasurer. In January 1997, Mr. Wilmers
entered into a new employment contract with the Company which provides for an
initial term of five years. In November 1996, Mr. Boegner entered into a new
employment contract with the Company which provides for an initial term of five
years. In May 1998, Brad French entered into an employment contract with the
Company which provides for an initial term of five years. Failure to retain the
services of Messrs. Wilmers, Boegner and French could have a material adverse
effect on the Company. The Company does not maintain key man life insurance on
the life of Mr. Wilmers, Mr. Boegner or Mr. French.

LIMITED SOURCES FOR CERTAIN COMPONENTS

The Company does not manufacture certain of its components, including
lenses, electroformed reflectors, and intermittent movement components for its
commercial motion picture projection equipment and the aluminum kettles for its
pressure fryers. With the exception of the electroformed reflectors, each such
component is sourced by the Company from a single contract manufacturer.
Although to date the Company has not experienced any significant difficulty in
obtaining these components, there can be no assurance that shortages will not
arise in the future. The loss of one or more of the current suppliers of any
such components would have an adverse effect on the Company's business until
alternative supplies could be secured.

ENVIRONMENTAL MATTERS

The Company's operations involve the handling and use of substances that
are subject to Federal, state and local environmental laws and regulations that
impose

-5-

<PAGE>

limitations on the discharge of pollutants into the soil, air and water and
establish standards for their discharge and disposal. Although the Company
believes it is in material compliance with these laws, the violation of these
laws could have a material adverse effect on the Company. There can be no
assurance that additional environmental or remediation obligations will not
be incurred in the future, that existing or future environmental liabilities
could not have a material adverse effect on the Company, or that currently
unknown matters, new laws and regulations or stricter interpretations of
existing laws or regulations will not have a material adverse effect on the
Company's business.

YEAR 2000

The Company has developed a plan to deal with the year 2000 problem in
connection with its systems and has begun converting its systems to be year 2000
compliant. The plan provides for the conversion to be completed and tested well
before the 1999 year-end. The year 2000 problem, frequently referred to as the
"millennium bug", results from the fact that computer programs in the past have
been written using only two digits to identify a year, rather than four digits.
Because of this, the computer would not recognize years commencing with the
digits "20", instead of "19", and could produce erroneous calculations resulting
in interruptions and crashes in business operating systems. The Company's
information technology systems contain inventory and accounting systems,
electronic data interchange, and mechanical systems affecting machinery and
equipment. There are four phases involved in assessing the year 2000 problem
described by the Company as follows:

AWARENESS. Identify all data-impacted systems, equipment and products;
contact vendors concerning compliance status and plans.

ASSESSMENT. Identify compliance status of all data-impacted systems,
equipment and products; prioritize systems, equipment and products based on
business risk; estimate cost and feasibility of repairing or replacing
non-compliant systems, equipment and products and finally, establish a
testing approach for each.

IMPLEMENTATION. Repair, or replace non-compliant systems, equipment and
products; create contingency plans.

TESTING. Test the Company's systems, equipment and products to gain
assurance that the year 2000 problem is fixed.

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<PAGE>

products, it believes that the products and equipment are already year 2000
compliant. The Company has currently incurred an inconsequential amount of
costs relating to the year 2000 problem and believes that the overall costs
will be inconsequential. The Company's risks of its most likely worst case
year 2000 scenarios are not yet known, but the Company is making efforts to
analyze the uncertainty and intends to address this uncertainty by the second
quarter of 1999. The Company does not currently have contingency plans for a
year 2000 scenario, however, the Company's management team is working on a
contingency plan. The Company's contingency plan will be completed by the
end of the second quarter of 1999.

If the Company's conversion efforts or the conversion efforts of any of its
suppliers do not adequately solve all potential problems, or if the automation
products which the Company sells do not operate satisfactorily because of the
"Millennium bug", the Company could incur substantial liabilities and potential
losses.

SIGNIFICANT STOCKHOLDER

ARC, through its ownership of Canrad Delaware, is the beneficial owner of
22.5% of the outstanding shares of Common Stock. As a result of the level of
its beneficial ownership of the Common Stock, ARC is in a position to exercise
substantial influence over all corporate matters requiring stockholder approval,
including the election of directors and merger and consolidation proposals. In
addition, two members of the Board of Directors (the "Board") of the Company are
directors and employees of ARC or its affiliates (other than the Company), and
one of such directors has substantial shareholdings in ARC.

SHARES ELIGIBLE FOR FUTURE SALE; POSSIBLE ADVERSE EFFECT ON MARKET PRICE

Future sales of Common Stock in the public market, or the perception that
such sales could occur, could adversely affect the market price of the Common
Stock or the Company's ability to raise additional capital through sales of its
equity securities. The Company has:(i) 3,084,616 shares of Common Stock
outstanding owned by Canrad Delaware, (ii) 10,647,752 shares of Common Stock
outstanding owned by others, (iii) 1,746,675 shares of Common Stock reserved
for issuance under the Company's two stock option plans, of which 927,675 shares
are issuable pursuant to currently outstanding options thereunder, (iv) 384,975
shares of Common Stock issuable pursuant to an outstanding warrant and other
outstanding options to purchase Common Stock and (v) 200,592 shares of Common
Stock reserved for issuance pursuant to the Company's employee stock purchase
plan. Of the shares outstanding or subject to outstanding options or the
outstanding warrant, 14,740,961 are immediately eligible for resale in the
public market without restriction under the Securities Act and substantially all
of the remaining shares will be eligible for resale in the public market subject
to compliance with the applicable provisions of Rule 144 under the Securities
Act.

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<PAGE>

The Company is unable to predict the effect that sales made under Rule 144,
or otherwise, may have on the then prevailing market price of the Common
Stock.

All of the shares of Common Stock owned by Canrad Delaware, as well as the
stock of certain other subsidiaries of ARC (including Cabletel Communications
Corp. ("Cabletel")), have been pledged to BNY Financial Corporation and BNY
Financial Corporation--Canada (collectively, "BNY") to secure indebtedness
incurred by certain subsidiaries of ARC, including Canrad Delaware and ARC Ice,
under two revolving credit facilities (collectively, the "BNY Credit Facility").
The Company has been advised by ARC that, as of September 15, 1998, the
principal amount of indebtedness outstanding under the BNY Credit Facility was
approximately $11.78 million. In the event of a default under the BNY Credit
Facility, BNY has certain rights as a secured creditor under the terms of the
BNY Credit Facility to vote and to sell or otherwise dispose of all or a portion
of the pledged shares, including the Common Stock pledged by Canrad Delaware.

UNCERTAINTY OF FUTURE ACQUISITIONS

Although the Company does not currently have any specific acquisition under
consideration, the Company may make acquisitions in the future. The significant
uncertainties which accompany any acquisition and its integration into the
Company's existing operations could have an adverse effect on the Company.
There can be no assurance that the Company will be able to locate appropriate
acquisition candidates, that any identified candidates will be acquired or that
acquired operations will be effectively integrated or prove profitable. The
Company's revolving credit facility (the "Norwest Facility") with Norwest Bank
Nebraska N.A. ("Norwest Bank") currently prohibits the Company from making
acquisitions without the consent of Norwest Bank.

CERTAIN ANTI-TAKEOVER PROVISIONS

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<PAGE>

and to change the authority of the Board, without further action by
stockholders, to cause the Company to issue shares of preferred stock. The
Company's Certificate of Incorporation further provides for the division of
the Board into three classes. One class of directors is elected at each
annual meeting of stockholders for three-year terms. The Company's By-Laws
contain certain advance notice requirements relating to stockholder proposals
and stockholder nomination of directors. These provisions may have the
effect of making more difficult or discouraging transactions that could give
stockholders of the Company the opportunity to realize a premium over the
then prevailing market price for their shares of Common Stock.

POSSIBLE VOLATILITY OF STOCK PRICE; LIMITED TRADING VOLUME

The trading price of the Common Stock may be highly volatile and could be
subject to significant fluctuations in response to variations in the Company's
quarterly operating results, general conditions in the industries in which the
Company operates and other factors. In addition, the stock market is subject to
price and volume fluctuations affecting the market price for the stock of many
companies generally, which fluctuations often are unrelated to operating
performance. Although the Common Stock is listed on the NYSE, daily trading
volume of the Common Stock has generally been limited and accordingly the
trading price is more vulnerable to significant fluctuations.

USE OF PROCEEDS

The Company will receive no proceeds from the reoffer or resale of Common
Stock.

DIVIDEND POLICY

The Company intends to retain its earnings to assist in financing its
business and does not anticipate paying any dividends on its Common Stock in the
foreseeable future. The Norwest Facility contains certain prohibitions on the
payment of cash dividends. The declaration and payment of dividends by the
Company are also subject to the discretion of the Board. Any determination by
the Board as to the payment of dividends in the future will depend upon, among
other things, business conditions and the Company's financial condition and
capital requirements, as well as any other factors deemed relevant by the Board.

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<PAGE>

SELLING STOCKHOLDERS

The following table sets forth the beneficial ownership of Common Stock of
the Company for the Selling Stockholders as of September 30, 1998, (assuming the
Options had been exercised in full) and as adjusted to reflect the sale of
shares offered hereby by the Selling Stockholders (assuming 100% of the shares
offered hereby are sold).

<TABLE>
<CAPTION>
Name of Amount of Beneficial Number Beneficial Ownership of
Beneficial Ownership of Common of Shares Common Stock After
Owner Stock Prior to to be Offering(1)
Offering (1) Offered
------------------------- --------------------------
Number of Percentage Number of Percentage of
Shares of Shares(2) Outstanding
Outstanding Shares
Shares
- ---------- --------- ----------- --------- --------- --------------
<S> <C> <C> <C> <C> <C>
Arnold S. Tenney 306,462 (3) 2.23 % 150,000 78,462 *

John P. Wilmers 186,468 (4) 1.36 % 22,500 13,968 *

Ray F. Boegner 93,405 (5) * 10,500 7,905 *

Brad J. French 82,962 (6) * 15,000 9,462 *

Jeffrey Chelin 34,125 (7) * 15,000 0 *

Ronald Echtenkamp 100,009 (8) * 30,000 70,009 *
</TABLE>

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

(1) Based upon 13,732,368 shares of Common Stock outstanding as of September
30, 1998. A person is deemed to be the beneficial owner of securities that
can be acquired by such person within 60 days from the date of this Amended
and Restated Reoffer Prospectus upon exercise of options or warrants. Each
beneficial owner's percentage ownership is determined by assuming that
options or warrants that are held by such person and that are exercisable
within 60 days from the date of this Amended and Restated Reoffer
Prospectus have been exercised. However, the shares of Common Stock so
issuable upon such exercise by any such person are not included in

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<PAGE>

calculating the percentage of Common Stock beneficially owned by any other
stockholder.

(2) Each beneficial owner has previously had the reoffer or resale of certain
option shares registered pursuant to the filing of a post-effective
amendment and Reoffer Prospectus. Said shares previously registered to be
reoffered or resold were also adjusted for the 3 for 2 stock split effected
by the Company on June 12, 1998.

(3) Consists of 45,000 shares of Common Stock held indirectly by Mr. Tenney
through Arnmart Investments Limited, a corporation controlled by Mr.
Tenney and members of his family, 29,750 shares of Common Stock owned
directly by Mr. Tenney, 3,712 shares of Common Stock owned indirectly by
Mr. Tenney through his wife and 228,000 shares of Common Stock underlying
presently exercisable options. Does not include 3,084,616 shares of Common
Stock owned beneficially by ARC.

(4) Consists of 13,968 shares of Common Stock owned directly by Mr. Wilmers and
172,500 shares of Common Stock underlying presently exercisable options.

(5) Consists of 7,905 shares of Common Stock owned directly by Mr. Boegner and
85,500 shares of Common Stock underlying presently exercisable options.

(6) Consists of 9,462 shares of Common Stock owned directly by Mr. French and
73,500 shares of Common Stock underlying presently exercisable options.

(7) Consists of 34,125 shares of Common Stock underlying presently exercisable
options.

(8) Consists of 70,009 shares of Common Stock owned directly by Mr. Echtenkamp
and 30,000 shares underlying presently exercisable options.

PLAN OF DISTRIBUTION

The distribution of shares of Common Stock by the Selling Stockholders may
be effected in one or more transactions that may take place in ordinary broker
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 Stockholders in connection with
such sales of securities.

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<PAGE>

In order to comply with certain state securities laws, if applicable, the
securities offered hereby will not be sold in a particular state unless such
securities have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and complied with.

DESCRIPTION OF CAPITAL STOCK

The total number of shares the Company is authorized to issue is
26,000,000, consisting of 25,000,000 shares of Common Stock, par value $.01 per
share, and 1,000,000 shares of Preferred Stock, par value $.01 per share. As of
September 30, 1998, there were 13,732,368 shares of Common Stock outstanding and
no shares of Preferred Stock outstanding.

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by the stockholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of a majority of the shares of Common Stock voting for the
election of directors can elect all of the directors then up for election. The
holders of Common Stock are entitled to receive dividends, subject to the senior
rights of preferred stockholders, when, as and if declared by the Board out of
funds legally available therefor. In the event of liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining which are available for distribution to them
after payment of liabilities and after provision has been made for each class of
stock having preference over the Common Stock. Holders of shares of Common
Stock, as such, have no conversion, preemptive or other subscription rights, and
there are no redemption provisions applicable to the Common Stock. All of the
outstanding shares of Common Stock are, and, upon completion of the offering,
all shares of Common Stock offered hereby will be, duly authorized, fully paid
and non-assessable.

The Delaware General Corporation Law provides that stockholders may take
action without the holding of a meeting by written consent or consents signed by
the holders of a majority of the outstanding shares of the capital stock of the
Company entitled to vote thereon. Prompt notice of the taking of any action
without a meeting by less than unanimous consent of the stockholders will be
given to those stockholders who do not consent in writing to the action. The
purposes of this provision are to facilitate action by stockholders and to
reduce the corporate expense associated with annual and special meetings of
stockholders. Pursuant to the rules and regulations of the Commission, if
stockholder action is taken by written consent, the Company will be required to
send each stockholder entitled to vote on the matter voted on, but whose consent
was not solicited, an information statement containing information substantially
similar to that which would have been contained in a proxy statement.

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<PAGE>

PREFERRED STOCK

The Board is authorized, without further approval or action by the
stockholders, to issue shares of Preferred Stock in one or more series and to
determine the rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences, sinking fund terms and number of shares
constituting any series of Preferred Stock or the designation of such series.

The rights of the holders of Common Stock will generally be subject to the
prior rights of the holders of any outstanding shares of Preferred Stock with
respect to dividends, liquidation preferences and other matters. Among other
things, the Preferred Stock could be issued by the Company to raise capital or
finance acquisitions. The Preferred Stock could have certain anti-takeover
effects under certain circumstances. The issuance of shares of Preferred Stock
could enable the Board to render more difficult or discourage an attempt to
obtain control of the Company by means of a merger, tender offer or other
business combination transaction directed at the Company by, among other things,
placing shares of Preferred Stock with investors who might align themselves with
the Board, issuing new shares to dilute stock ownership of a person or entity
seeking control of the Company or creating a class or series of Preferred Stock
with class voting rights.

The Company has no current plans to issue any shares of its Preferred
Stock.

WARRANT AND OPTIONS TO PURCHASE COMMON STOCK

As partial consideration for providing certain financial assistance in
connection with the Company's acquisition of the Cinema Products Division of
ORC, on September 12, 1995, the Company issued to Merita Bank Ltd. a warrant
(the "Merita Warrant") to purchase up to 485,100 shares of Common Stock at a per
share exercise price equal to $2.63 of which 162,000 shares has been purchased.
The Merita Warrant first became exercisable on October 12, 1996 and expires on
September 12, 2000. The Company has granted to Jaffoni & Collins, Inc. an
option to purchase 61,875 shares of Common Stock at an exercise price of $2.83
per share as consideration for investor relations and financial relations
services provided to the Company. The option is currently exercisable and
terminates on October 7, 1999. A registration statement filed under the
Securities Act registering the resale of all of the shares of Common Stock
underlying the Merita Warrant and the aforesaid option was declared effective on
March 6, 1997.

DELAWARE ANTI-TAKEOVER LAW

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<PAGE>

for a period of three years from the date such person became an interested
stockholder unless: (i) the transaction resulting in the acquiring person's
becoming an interested stockholder, or the business combination, is approved
by the board of directors of the corporation before the person becomes an
interested stockholder; (ii) the interested stockholder acquires 85% or more
of the outstanding voting stock of the corporation in the same transaction
which makes it an interested stockholder (excluding shares owned by directors
who are also officers, and excluding certain employee stock option plans);
and (iii) on or after the date the person becomes an interested stockholder,
the business combination is approved by the corporation's board of directors
and by the holders of at least 66-2/3% of the corporation's outstanding voting
stock at an annual or special meeting, excluding shares owned by the
interested stockholder. Except as otherwise specified in Section 203, an
"interested stockholder" is defined as (a) any person that is the owner of
15% or more of the outstanding voting stock of the corporation, (b) any
person that is an affiliate or associate of the corporation and was the owner
of 15% or more of the outstanding voting stock of the corporation at any time
within the three year period immediately prior to the date on which it is
sought to be determined whether such person is an interested stockholder, or
(c) the affiliates and associates of any such person. By restricting the
ability of the Company to engage in business combinations with an interested
person, the application of Section 203 to the Company may provide a barrier
to hostile or unwanted takeovers. Under Delaware law, the Company could have
opted out of Section 203 but elected to be subject to its provision.

CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BY-LAWS

CLASSIFIED BOARD OF DIRECTORS. The Company's Certificate of Incorporation
and By-Laws provide that the Board shall be divided into three classes of
directors serving staggered terms. One class of directors will be elected at
each annual meeting of stockholders for a three-year term. Thus, at least two
annual meetings of stockholders, instead of one, generally will be required to
change the majority of the Board. Directors can be removed from office only for
cause and only by the affirmative vote of at least 66-2/3% of the then
outstanding shares of capital stock entitled to vote generally in the election
of directors, voting as a single class. Vacancies on the Board may be filled
only by the remaining directors and not the stockholders. The foregoing
provisions may have the effect of making it more difficult to acquire control of
the Company by means of a hostile tender offer, open market purchases, a proxy
contest or otherwise.

REQUIREMENT FOR ADVANCE NOTIFICATION OF STOCKHOLDER NOMINATION AND
PROPOSALS. The Company's By-Laws require 60 to 90 days' notice to the Company
with regard to stockholder proposals and the nomination, other than by or at the
direction of the board or a committee thereof, of candidates for election as
directors. Such notice must provide specified information, including
information regarding the ownership of Common Stock by the person giving the
notice, information regarding the proposal or the nominees and information
regarding the interest of the proponent in the proposal or the nominations.

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<PAGE>

SPECIAL MEETINGS OF STOCKHOLDERS. The Company's Certificate of
Incorporation and By-Laws provide that special meetings of stockholders of the
Company may only be called by the Chairman of the Board, the President or a
majority of the then authorized number of directors. This provision precludes
stockholders from calling a special meeting and taking actions opposed by the
Board.

LIMITATION OF DIRECTOR LIABILITY. The Company's Certificate of
Incorporation limits the liability of directors to the Company or its
stockholders to the fullest extent permitted by Delaware law. Specifically,
under current Delaware law, a director will not be personally liable for
monetary damages for breach of the director's fiduciary duty or care as a
director, except liability (i) for a breach of the director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions by a director not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) for liability arising under Section 174 of the Delaware General
Corporation Law (relating to the declaration of dividends and purchase or
redemption of shares in violation of the Delaware General Corporation Law) or
(iv) for any transaction from which the director derived an improper personal
benefit. The inclusion of this provision in the Company's Certificate of
Incorporation may have the effect of reducing the likelihood of derivative
litigation against directors and may discourage or deter stockholders or
management from bringing a lawsuit against directors for breach of their duty of
care.

SUPERMAJORITY PROVISIONS. The Company's Certificate of Incorporation
provides that the vote of the Board or the affirmative vote of at least 66-2/3%
of the then outstanding shares of capital stock entitled to vote generally in
the election of directors, voting as a single class, is required to amend,
repeal or alter any of the Company's By-Laws or the foregoing provisions
contained in the Company's Certificate of Incorporation.

TRANSFER AGENT

The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, LLC whose address is 85 Challenger Road, Overpeck Center,
Ridgefield Park, NJ 07660.

LEGAL MATTERS

The legality of the shares of Common Stock offered hereby will be passed
upon for the Company by Cline, Williams, Wright, Johnson and Oldfather, Omaha,
Nebraska.

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<PAGE>

EXHIBIT 99.3

AMENDED AND RESTATED REOFFER PROSPECTUS

BALLANTYNE OF OMAHA, INC.

This Amended and Restated Reoffer Prospectus replaces the Reoffer
Prospectus dated October 3, 1997 and relates to the reoffering or resale by
certain "affiliates" as set forth herein on Page 9 (the "Selling Stockholders")
of 67,500 shares of common stock of Ballantyne of Omaha, Inc. (the "Company"),
par value $0.01 (the "Common Stock"). Each Selling Stockholder holds stock
options ("Stock Options") issued pursuant to the Company's 1995 Outside
Directors Stock Option Plan. The shares issuable pursuant to the 1995 Outside
Directors Stock Option Plan were registered on Form S-8 and amendments thereto
(File No. 33303849). The exercise price of the Stock Options and the number of
securities issuable upon exercise of the Stock Options have been adjusted and
are subject to further adjustment as a result of the application of certain
anti-dilution provisions contained therein.

The Company will not receive any of the proceeds from the resale of the
shares of Common Stock being sold by the Selling Stockholders. See "Use of
Proceeds".

All expenses relating to the filing of this Amendment No. 2 and the
registration of securities covered by this Reoffer Prospectus, estimated to be
approximately $6,150 are to be borne by the Company.

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. SEE "RISK FACTORS", BEGINNING ON PAGE 3 OF THIS AMENDED AND RESTATED
REOFFER PROSPECTUS.

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

The date of this Amended and Restated Reoffer Prospectus is September 30, 1998.

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<PAGE>
AVAILABLE INFORMATION

DOCUMENTS INCORPORATED BY REFERENCE

The Company has provided, without charge, to each recordholder a copy of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997. The Company will also provide, without charge, to each person to whom a
copy of this Amended and Restated Reoffer Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the other
documents incorporated by reference herein (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference
into the information that the Amended and Restated Reoffer Prospectus
incorporates). Requests should be directed to:

Ballantyne of Omaha, Inc.
4350 McKinley Street
Omaha, Nebraska 68112
Attention: Brad French, Chief Financial Officer
Phone: (402) 453-4444

The following documents filed with the Commission by the Company are hereby
incorporated by reference into this Amended and Restated Reoffer Prospectus:

(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;

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<PAGE>

(2) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1998.

RISK FACTORS

DEPENDENCE ON MOTION PICTURE SCREEN GROWTH

Because the Company's commercial motion picture projectors have an
estimated useful life of approximately 20 years, the Company's net sales and
profitability are dependent primarily upon growth in the number of motion
picture screens, the renovation and replacement of commercial motion picture
projection equipment in existing theatres, and the continued use of film
projection as the method of delivery of the motion picture to the screen.
For 1995, 1996 and 1997, approximately 87%, 91% and 89%, respectively, and
90% and 87% for the six months ended June 30, 1997 and 1998, respectively, of
the Company's total net sales were derived from sales of its commercial
motion picture projection equipment. Although industry analysts foresee
continued growth in the number of motion picture screens as a result of the
trend toward multiplexing and megaplexing and the introduction of new forms
of motion picture-based entertainment, there can be no assurance that this
expectation will prove accurate. Growth in the number of new motion picture
screens may be adversely affected by the availability of home entertainment
systems and recent trends toward industry consolidation, which may also have
an adverse effect on the

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<PAGE>

Company's customer base. A lack of motion picture screen growth and/or
widespread acceptance of new technology being developed for alternate methods
of projecting motion pictures on the screen, would have a material adverse
effect on the Company's business, results of operations and financial
condition.

UNCERTAINTIES REGARDING INTERNATIONAL SALES: FOREIGN CURRENCY FLUCTUATIONS

For 1995, 1996 and 1997, the Company generated net sales to foreign
customers of $11.3 million, $14.1 million and $18.5 million, respectively,
which accounted for approximately 29%, 27% and 26% of the Company's total net
sales for each of such years, respectively. For the six months ended June 30,
1997 and 1998, respectively, the Company generated net sales to foreign
customers of 9.1 million and 8.0 million respectively. These amounts include
net sales of Westrex Company, Asia ("Westrex") which was acquired in December
1994, but exclude sales to domestic export dealers of both theatre and
restaurant products and domestic theatre chains of products which are ultimately
exported. The Company is seeking to expand its share of international sales,
which it expects will continue to account for a substantial portion of its
revenues. International sales may be subject to political and economic risks,
including political instability, currency controls, fluctuating exchange rates
with respect to sales not denominated in U.S. dollars and changes in
import/export regulations, tariffs and freight rates. To date, all of the
Company's international sales have been denominated in U.S. dollars, exclusive
of Westrex sales ($2.3 million in 1997) which are denominated in Hong Kong
dollars. A weakening in the value of foreign currencies relative to the U.S.
dollar, which is currently occurring in Asia, could have an adverse impact on
the Company by increasing the effective price of the Company's products and
making it more difficult to collect open accounts receivable in its
international markets. In addition, there can be no assurance that the
Company's international customers will continue to accept orders denominated in
U.S. dollars. To the extent that orders are denominated in foreign currencies,
the Company's reported sales and earnings are more directly subject to foreign
exchange fluctuations. There can be no assurance that these factors will not
adversely affect the Company's international sales in the future.

COMPETITION

The market for commercial motion picture projection equipment is highly
competitive. In the international market, where the Company has a smaller
market share than in the domestic market, the Company believes that its largest
competitor has significantly greater market share than the Company. In addition
to existing commercial motion picture projection equipment manufacturers, the
Company may also encounter competition from new competitors, as well as from new
types of equipment. No assurance can be given that the commercial motion
picture projection equipment manufactured by the Company will not become
obsolete as technology advances. In addition, the markets for the Company's
long-range follow spotlight and other illumination and restaurant products are
highly competitive. Competitors of the Company may also have significantly

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<PAGE>

greater financial resources than the Company which may impede the ability of the
Company to compete effectively.

DEPENDENCE ON KEY MANAGEMENT

The Company's success depends, in substantial part, on the efforts and
abilities of John P. Wilmers, the Company's President and Chief Executive
Officer, and Ray F. Boegner, the Company's Senior Vice President and Brad
French, Chief Financial Officer, Secretary and Treasurer. In January 1997, Mr.
Wilmers entered into a new employment contract with the Company which provides
for an initial term of five years. In November 1996, Mr. Boegner entered into a
new employment contract with the Company which provides for an initial term of
five years. In May 1998, Brad French entered into an employment contract with
the Company which provides for an initial term of five years. Failure to retain
the services of Messrs. Wilmers and Boegner could have a material adverse effect
on the Company. The Company does not maintain key man life insurance on the
life of Mr. Wilmers, Mr. Boegner or Mr. French.

LIMITED SOURCES FOR CERTAIN COMPONENTS

ENVIRONMENTAL MATTERS

The Company's operations involve the handling and use of substances that
are subject to Federal, state and local environmental laws and regulations that
impose limitations on the discharge of pollutants into the soil, air and water
and establish standards for their discharge and disposal. Although the Company
believes it is in material compliance with these laws, the violation of these
laws could have a material adverse effect on the Company. There can be no
assurance that additional environmental or remediation obligations will not be
incurred in the future, that existing or future environmental liabilities could
not have a material adverse effect on the Company, or that currently unknown
matters, new laws and regulations or stricter interpretations of existing laws
or regulations will not have a material adverse effect on the Company's
business.

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<PAGE>

YEAR 2000

AWARENESS. Identify all data-impacted systems, equipment and products;
contact vendors concerning compliance status and plans.

ASSESSMENT. Identify compliance status of all data-impacted systems,
equipment and products; prioritize systems, equipment and products based on
business risk; estimate cost and feasibility of repairing or replacing
non-compliant systems, equipment and products; and finally, establish a
testing approach for each.

IMPLEMENTATION. Repair, or replace non-compliant systems, equipment and
products; create contingency plans.

TESTING. Test the Company's systems, equipment and products to gain
assurance that the year 2000 problem is fixed.

The information technology systems are currently in the implementation
phase with an expected completion date in the second quarter of 1999. Year 2000
issues relating to third parties relate to the automated products which the
Company sells to its customers and equipment used in its manufacturing process.
While the Company is currently assessing the impact of the year 2000 relating to
these products, it believes that the products and equipment are already year
2000 compliant. The Company has currently incurred an inconsequential amount of
costs relating to the year 2000 problem and believes that the overall costs will
be inconsequential. The Company's risks of its most reasonable likely worst
case year 2000 scenarios are not yet known, but the Company is making efforts to
analyze the uncertainty and intends to address this uncertainty by the second
quarter of 1999. The Company does not currently have contingency plans for a
year 2000 scenario, however, the Company's management team is working on a
contingency plan. The Company's contingency plan will be completed by the end
of the second quarter of 1999.

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<PAGE>

SIGNIFICANT STOCKHOLDER

SHARES ELIGIBLE FOR FUTURE SALE; POSSIBLE ADVERSE EFFECT ON MARKET PRICE

Future sales of Common Stock in the public market, or the perception that
such sales could occur, could adversely affect the market price of the Common
Stock or the Company's ability to raise additional capital through sales of its
equity securities. The Company has: (i)3,084,616 shares of Common Stock
outstanding owned by Canrad Delaware, (ii) 10,647,752 shares of Common Stock
outstanding owned by others, (iii) 1,746,675 shares of Common Stock reserved
for issuance under the Company's two stock option plans, of which 927,675 shares
are issuable pursuant to currently outstanding options thereunder, (iv) 384,975
shares of Common Stock issuable pursuant to an outstanding warrant and other
outstanding options to purchase Common Stock and (v) 200,592 shares of Common
Stock reserved for issuance pursuant to the Company's employee stock purchase
plan. Of the shares outstanding or subject to outstanding options or the
outstanding warrant, 14,740,961 are immediately eligible for resale in the
public market without restriction under the Securities Act and substantially all
of the remaining shares will be eligible for resale in the public market subject
to compliance with the applicable provisions of Rule 144 under the Securities
Act. The Company is unable to predict the effect that sales made under Rule
144, or otherwise, may have on the then prevailing market price of the Common
Stock.

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<PAGE>

approximately $11.78 million. In the event of a default under the BNY Credit
Facility, BNY has certain rights as a secured creditor under the terms of the
BNY Credit Facility to vote and to sell or otherwise dispose of all or a portion
of the pledged shares, including the Common Stock pledged by Canrad Delaware.

UNCERTAINTY OF FUTURE ACQUISITIONS

CERTAIN ANTI-TAKEOVER PROVISIONS

The Company's Certificate of Incorporation provides for, among other
things, the issuance of 1,000,000 shares of preferred stock, par value $0.01 per
share ("Preferred Stock"). The Board is authorized, without stockholder
approval, to cause the Company to issue such preferred stock in one or more
series and to fix the voting powers and the designations, preferences and
relative, participating, optional or other rights and restrictions thereof.
Accordingly, the Company may issue a series of preferred stock in the future
that will have preference over the Common Stock with respect to the payment of
dividends and upon the Company's liquidation, dissolution or winding up or have
voting or conversion rights that could adversely affect the voting power and
ownership percentages of the holders of Common Stock. The Company's Certificate
of Incorporation also provides for the affirmative vote of at least 66-2/3% of
all outstanding shares of capital stock entitled to vote generally in the
election of directors, voting as a single class, to change certain provisions of
such Certificate of Incorporation and the Company's By-Laws, and to change the
authority of the Board, without further action by stockholders, to cause the
Company to issue shares of preferred stock. The Company's Certificate of
Incorporation further provides for the division of the Board into three classes.
One class of directors is elected at each annual meeting of stockholders for
three-year terms. The Company's By-Laws contain certain advance notice
requirements relating to stockholder proposals and stockholder nomination of
directors. These provisions may have the effect of making more difficult or
discouraging transactions that could give stockholders of the Company the
opportunity to realize a premium over the then prevailing market price for their
shares of Common Stock.

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<PAGE>

POSSIBLE VOLATILITY OF STOCK PRICE; LIMITED TRADING VOLUME

USE OF PROCEEDS

The Company will receive no proceeds from the reoffer or resale of Common
Stock.

DIVIDEND POLICY

SELLING STOCKHOLDERS

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<PAGE>

Name of Beneficial Amount of Beneficial Number Beneficial Ownership of
Owner Ownership of Common of Shares Common Stock After
Stock Prior to to be Offering (1)
Offering (1) Offered

Number of Percentage of Number of Percentage of
Shares Outstanding Shares (2) Outstanding
Shares Shares
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Marshall S. Geller 65,385(3) * 22,500 23,760 *

Colin G. Campbell 41,625(4) * 22,500 0.00 *

Yale Richards 43,875(5) * 22,500 1,500 *
</TABLE>

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

(3) Consists of 23,760 shares of Common Stock held directly by Mr. Geller and
26,625 shares of Common Stock underlying presently exercisable options and
15,000 options which are granted but currently not exercisable.

(4) Consists of 26,625 shares of Common Stock underlying presently exercisable
options and 15,000 options which are granted but currently not exercisable.

(5) Consists of 1,500 shares of Common Stock owned directly by Mr. Richards,
27,375 shares of Common Stock underlying presently exercisable options and
15,000 options which are granted but currently not exercisable.

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<PAGE>

PLAN OF DISTRIBUTION

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

-11-

<PAGE>

without a meeting by less than unanimous consent of the stockholders will be
given to those stockholders who do not consent in writing to the action. The
purposes of this provision are to facilitate action by stockholders and to
reduce the corporate expense associated with annual and special meetings of
stockholders. Pursuant to the rules and regulations of the Commission, if
stockholder action is taken by written consent, the Company will be required to
send each stockholder entitled to vote on the matter voted on, but whose consent
was not solicited, an information statement containing information substantially
similar to that which would have been contained in a proxy statement.

PREFERRED STOCK

The Company has no current plans to issue any shares of its Preferred
Stock.

WARRANT AND OPTIONS TO PURCHASE COMMON STOCK

As partial consideration for providing certain financial assistance in
connection with the Company's acquisition of the Cinema Products Division of
ORC, on September 12, 1995, the Company issued to Merita Bank Ltd. a warrant
(the "Merita Warrant") to purchase up to 485,100 shares of Common Stock at a
per share exercise price equal to $2.63 of which 162,000 shares has been
purchased. The Merita Warrant first became exercisable on October 12, 1996
and expires on September 12, 2000. The Company has granted to Jaffoni &
Collins, Inc. an option to purchase 61,875 shares of Common Stock at an
exercise price of $2.83 per share as consideration for investor relations and
financial relations services provided to the Company. The option is
currently exercisable and terminates on October 7, 1999. A registration
statement filed under the Securities

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<PAGE>

Act registering the resale of all of the shares of Common Stock underlying
the Merita Warrant and the aforesaid option was declared effective on
March 6, 1997.

DELAWARE ANTI-TAKEOVER LAW

The Company is subject to the provisions of Section 203 of the Delaware
General Corporation Law. Section 203 provides, with certain exceptions, that a
Delaware corporation may not engage in certain business combinations with a
person or affiliate or associate of such person who is an "interested
stockholder" for a period of three years from the date such person became an
interested stockholder unless: (i) the transaction resulting in the acquiring
person's becoming an interested stockholder, or the business combination, is
approved by the board of directors of the corporation before the person becomes
an interested stockholder; (ii) the interested stockholder acquires 85% or more
of the outstanding voting stock of the corporation in the same transaction which
makes it an interested stockholder (excluding shares owned by directors who are
also officers, and excluding certain employee stock option plans); and (iii) on
or after the date the person becomes an interested stockholder, the business
combination is approved by the corporation's board of directors and by the
holders of at least 66-2/3% of the corporation's outstanding voting stock at an
annual or special meeting, excluding shares owned by the interested stockholder.
Except as otherwise specified in Section 203, an "interested stockholder" is
defined as (a) any person that is the owner of 15% or more of the outstanding
voting stock of the corporation, (b) any person that is an affiliate or
associate of the corporation and was the owner of 15% or more of the outstanding
voting stock of the corporation at any time within the three year period
immediately prior to the date on which it is sought to be determined whether
such person is an interested stockholder, or (c) the affiliates and associates
of any such person. By restricting the ability of the Company to engage in
business combinations with an interested person, the application of Section 203
to the Company may provide a barrier to hostile or unwanted takeovers. Under
Delaware law, the Company could have opted out of Section 203 but elected to be
subject to its provision.

CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE OF INCORPORATION AND BY-LAWS

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TRANSFER AGENT

The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services, LLC whose address is 85 Challenger Road, Overpeck Center,
Ridgefield Park, NJ 07660.

LEGAL MATTERS

The legality of the shares of Common Stock offered hereby will be passed
upon for the Company by Cline, Williams, Wright, Johnson and Oldfather, Omaha,
Nebraska

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