Filed by MDI Entertainment, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: MDI Entertainment, Inc.
Commission File Number: 0-24919
THE FOLLOWING IS THE TRANSCRIPT OF A TELEPHONE CONFERENCE WITH ANALYSTS AND
OTHERS HELD ON FEBRUARY 26, 2002.
Operator: Hello, everyone. Thank you for joining us this
morning. With us today are Lorne Weil, chairman and CEO of
Scientific Games and Steve Saferin, CEO and president of MDI
Entertainment. During the call today they will discuss
Scientific Games and MDI Entertainment's letter of intent
announcement released this morning. If you have not received
the information, please call Ed Fury, Expector Associates at
212-943-5858 and he will send you copies right away.
Details regarding the replay of the call are in the
Scientific Games press release. As a reminder this call is
being broadcast live and there will be a question and answer
session following the remarks.
Before turning the call over to the management, I would like
to remind you that investors and security holders are
advised to read the joint proxy statements prospective
regarding the proposed merger when it becomes available.
Investors and security holders are advised to read the joint
proxy statement/prospectus regarding the proposed merger
when it becomes available, because it will contain important
information. Such joint proxy statement/prospectus will be
filed with the Securities and Exchange Commission by
Scientific Games and MDI. Investors and security holders may
obtain a free copy of the joint proxy statement/prospectus
(when available) and other documents filed by Scientific
Games and MDI at the Securities and Exchange Commission's
web site at www.sec.gov. The joint proxy
statement/prospectus and such other documents may also be
obtained from Scientific Games and MDI.
MDI and its executive officers and directors may be deemed
to be participants in the solicitation of proxies from
stockholders of MDI with respect to the transactions
contemplated by the letter of intent. Information regarding
such officers and directors include MDI's proxy statement
for its 2001 annual meeting of stockholders filed with the
Securities and Exchange Commission of May 1, 2001. This
document is available free of charge at the Securities and
Exchange Commission's web site at http\\www.SEC.gov and from
MDI and Scientific Games.
This press release includes statements that consist of
forward-looking statements made pursuant to the Safe Harbor
provisions of the Private Securities Litigation Reform Act
of 1995. This information involves risks and uncertainties
that could cause actual results to differ materially from
the forward-looking statements. For certain information
regarding these risks and uncertainties, reference is to be
made to Scientific Games annual report on Form 10K for the
fiscal year ended October 31, 2000, the Transition Period
report on form 10Q for the period of November 1, 2000
through December 31, 2000 and the Quarterly Report on Form
10Q for the third quarter ended September 30, 2001 and to
the MDI Entertainment's Annual Report on Form 10KSB for the
fiscal year ended December 31, 2000 and the Quarterly Report
on Form 10QSB for the third quarter ended September 30,
2001.
Now let's turn the call over to Mr. Steve Saferin who will
review the MDI financial results. Mr. Saferin.
1
Lorne: Thank you, operator. Actually this is Lorne Weil
speaking and good morning, everyone. This is also Lorne Weil
speaking. I'm going to speak first for a few minutes to talk
about how we view this opportunity and then I'll turn it
over to Steve to discuss the transaction from his point of
view and then we'll leave a few minutes if we have some time
for questions.
We're obviously very excited about the opportunity to join
forces with MDI. We've had a relationship with MDI for a
number of years. We're one of the largest shareholders of
MDI. We've worked together quite well and quite extensively
and so clearly this is a relationship that both sides
understand about as well as two parties to a merger could
understand each other and I think we share each other's
optimism and enthusiasm for where this can take us.
We see all over the world that the opportunities for branded
instant lottery tickets is a terrific opportunity. We think
that MDI had done a great job, but we feel that with the
full weight of Scientific Games resources around the world,
game design resources, market resources, technology
resources and so forth that we can give a real great push to
the growth of the branded lottery business and help it
become a larger and much more vibrant business than it is at
the present time.
I also think because of our role increasingly as an
important player in the worldwide online lottery business
that we have a significant opportunity to take the basic
concepts that Steve Saferin has developed so cleverly and
brilliantly in the last few years in the instant ticket
business and apply that to the online lottery business as
well.
We also feel that the MDI team has a great amount of
creativity and great amount of knowledge and experience in
this business and we think that they can help as well in the
whole area of the development of proprietary games and
proprietary kinds of lottery tickets. So from a marketing
and product development and from a branding point of view, I
think the synergies between the two companies are clear and
I think that we're very optimistic and enthusiastic about
where it's going.
In terms of our anticipated financial impact, I assume that
a number of you were on the earnings call that we had just
in the last week or ten days and we indicated at that time
that we expected over the next several months to becoming
involved in some acquisitions. And we indicated that all of
these acquisitions would meet a fairly rigorous set of
business and financial criteria. The business criteria
obviously having to do with fit marketplace overlap,
technology and so forth and from a financial point of view,
that they be accretive financially in deals that we would do
with stock so that we could also improve our balance sheet.
And I think we can say here comfortably that we expect the
transaction to be accretive. I think at this point we don't
want to go too much into a discussion of financial
projections, although I do understand that - and I guess
Steve Saferin will mention this in a moment - MDI will be
filing a proxy in the fullness of time, which will contain
certainly significant information with regard to
projections.
But as far as we're concerned, let me simply say that number
one, and Steve will talk a little more about this. We
anticipate quite significant financial synergies between the
two companies that should meaningfully and importantly
enhance the profitability of - actually the profitability of
both companies.
2
And I take a great degree of comfort in the knowledge that
Steve Saferin has put a major portion of what he will be
receiving in this transaction in effect at risk with respect
to meeting certain, you know, profitability projections
going forward. I think Steve would probably not feel
comfortable doing that if he weren't also comfortable in his
ability to meet those projections with the two companies
merged and as part of the Scientific Games overall family.
And so again, I think that tends to give us a lot of comfort
and confidence that from a purely financial point of view
that this transaction will be very nicely accretive at both
the EBITDA level and the net income level, you know, for our
own shareholders, but certainly in the - and we wouldn't do
it if it weren't.
But in the larger scheme, we see this as a piece of a much
larger puzzle that we feel anybody in the long run trying to
compete in the lottery business is going to have to
complete. It's becoming a much more complicated business and
much more demanding business. Clearly the lottery industry
as the gaming industry overall is going through a period of
consolidation and I think that success in the long run is
going to involve really only a relatively few companies that
are able to bring all of the necessary expertise and
resources together under one roof. This is what we're trying
to do.
We're obviously very grateful that we're able to have MDI
play a critical role in that strategy and of course only
time will tell where we come out financially. But certainly
from our perspective right now and for what we see, we think
this is going to turn out to be an excellent transaction for
everyone.
Obviously, again if you were on our call the other day, we
at Scientific Games are extremely optimistic, extremely
enthusiastic about our own outlook. We have a tremendous
backlog of business building. We continue to take
significant steps to improve the company's profitability. I
think, again, if you were on the call we offered guidance
quite early on in 2002 indicating quite a significant
improvement from 2001. I think the addition of MDI to that
will only further strengthen the performance that we talked
about in the guidance.
And therefore, let me in closing and before I hand it off to
Steve say that we warmly welcome or will shortly down the
road warmly welcome all of the current MDI shareholders into
the Scientific Games shareholder family. Obviously a number
of you already are shareholders of both companies. And we
hope and we're quite confident that those of you who are
becoming new Scientific Games shareholders are not going to
be disappointed in your investment.
And with that, I'll turn it over to Steve Saferin to give
you his view of things, which will hopefully not be too
terribly different than mine.
3
Steve: Thanks, Lorne. Good afternoon to everybody in the
East and good morning to the rest of you. The letter of
intent, which MDI and Sci Games signed last evening and
announced this morning, provides what the MDI board believes
is the absolute best opportunity for MDI shareholders to
realize the significant upside.
This decision was not reached easily. We spent a lot of
time, the board, looking at Sci Games' business and our
business, how they could mesh together, what the impact
might be, what our future was, and we determined that this
was in fact the best course.
There were, I guess, four basic reasons that we came to that
conclusion. First and quite simply, the complexity and now
some added competition in the global lottery market really
requires that a company of our size align itself with a
larger company to be able to do what we need to do. And Sci
Games is the absolute best company when it comes to instant
tickets and many other lottery services and we look forward
to helping them grow even more.
In the past as most of you know that have followed our
business, it is almost all is focused on instant games. But
this new agreement with Sci Games will provide us a platform
to develop online lottery games featuring our various
brands. We look forward to doing that in the months ahead.
In addition, we believe the time is not too distant when
lottery players will be able to play lottery on the Internet
while buying their tickets at brick and mortar retailers.
This agreement will give us the resources to develop
sophisticated computer like games built around some of our
brands. As you also probably know, we have recently
announced a significant international marketing effort
spurred on by our acquisition to exclusive rights for the
2002 World Cup. And while we believe that we will be
successful in the long run, this agreement provides us with
far more resources to quickly penetrate this market and I
will tell you there is lots of interest in our brands all
over the world.
While MDI will continue to operate as an autonomous unit,
there are tremendous synergies that can be achieved between
the two companies and intended cost savings. Some of the
most significant would be from MDI ridding itself of the
cost of being a public company and a second is a significant
reduction in my salary.
To that point and as Lorne stated earlier, I as a member of
the board and principle shareholder in the company believe
very, very strongly in this deal and it's potential. So much
so that I've escrowed nearly a quarter of the shares that I
was to receive at closing only to be earned upon the MDI
business unit hitting certain EBITDA targets. And as stated
earlier, I have taken a significant pay cut going forward.
One of the primary reasons I have done this is because I
believe not only was this deal right for MDI, but that the
upside potential for all Sci Games shareholders of which MDI
shareholders will become, myself included, is very, very
significant.
And with that, I guess, we'd like to open it to questions.
4
Lorne: Yeah. Thanks, Steve. Operator, if you could now go
into Q&A mode. Everyone, let me just say we'd like to limit
the Q&A, if we can to about a half an hour and if each
person asking a question could please limit their questions
to just two so that we give as many people as we can a
chance. When we're down to our last couple of questions,
I'll inform the operator of that. So operator, if you could
start the Q&A please.
Operator: At this time, if you would like to ask a question,
please press star then the number one on your telephone
keypad. If you are on a speakerphone, please pick up the
handset before asking your question. Your first question
comes from Jay Leonard of CIBC World Market.
Jay: Gentlemen, just so I understand and just help me and
the other investors understand - and this is really coming
from the lottery - the MDI board of directors, would the
business that you have improving revenues in the fourth
quarter up 460% and to quote you Steve, our business model
is gaining more and more acceptance as is evidenced by the
increased number of games introduced by our lottery
customers in 2000, World Cup, MBA, etc. Talking to new
investors volume in the stock increasing, finally, stock
trading at $3.25 last Friday, I'm just, you know, miffed by
A) why we would do the deal at this price. There's no
mention as to what the ratio is or if there's a
[UNINTELLIGIBLE]. You know, just as a shareholder and with
clients who have significant positions in the company, this
has not been well received. That's my first question.
Steve: Okay.
Jay: Follow-up question after that.
Steve: Okay. Well, first of all, let me say this that no one
has a bigger position in this company than I do and we gave
this - the board spent literally hours and hours on this
issue. We certainly recognize that the price that we have
agreed to with Scientific Games and the price the stock was
trading at at the time we entered into this agreement. But
we - the board believes that this is a much better long term
deal for investors in MDI than anything else around. We need
to have this kind of synergistic relationship with a larger
company to maximize the potential of our business. There are
- our business is good. There's no doubt about it. It can be
significantly better with this combination rather than
without it.
We're going to be filing a proxy statement. You'll have
access to all the information that we considered and the
shareholders will be asked to vote on this. We hope that
you'll vote in the favor of it. That will be your choice.
Jay: Okay. Well, in keeping with that, will that be filed
with the collar? Is there a collar? I know you can't state
it right now until it's out, but is there a collar on the
deal?
Steve: Really can't comment on it.
5
Jay: All right. Understand - and I appreciate that you
believe very firmly in this thing and I have no doubt that
an alliance with Sci Games is the right way to go and
probably a merger is fine. It's just that I don't see where
as a shareholder, you know, getting - coming in at this
price point, we're going to need, you know, Sci Games
probably to go to a double to get the equivalent of rate of
return on our lottery stock from where we are right now. And
you know, as a shareholder with things going up, it just
seems that since this is a stock deal and Sci Games has, you
know, escalated the price dramatically of recent that we
could have struck on a stock basis a much better deal. You
know, it's not cash changing hands here. It's stock. And
since Sci Games already is a shareholder of the company, it
does not look to be - or I will not - it is not being
perceived as being as attractive to the existing
shareholders as the deal might be with all these good things
happening. It's not like, you know, the company was doing
poorly. The company was really turning the corner. We had
just made it or starting to make it.
Steve: And look, I think we'll continue to improve with this
alliance. And I think a double in Sci Games stock may not be
too far fetched.
Jay: I mean, God willing I think that would be terrific. But
again, it just doesn't seem to - you know, there's no extra
pay out to us if you do your job and I'm sure you will and
MDI will be the driving force and that this is a screaming
steal for Sci Games at this price point, but, you know,
where is the - I mean, are there - you know, if there were
even warrants or something that was attached to, you know,
the performance that, you know, the MDI division did or
something that we would benefit. Other than you doing, you
know, which I believe you will be able to do and that your
division will do extremely well, you know, what if other
divisions within Sci Games doesn't. You know, we're not
getting that pure play.
Lorne: Steve, this is Lorne Weil speaking and then I think
we need to give someone else a chance. Let me just say that
you really do need to at least consider, you know, in the
long run there's always the, you know - we hope it won't
happen, of course, and we don't think it'll happen, that
things in fact turn out not to go so well with MDI, but now
you have the security of all the other divisions of
Scientific Games that are doing well. So I appreciate your
point and I understand why you're making the case you're
making. But I think you have to at least consider the fact
that, you know, MDI is coming into a pretty special company
and that it certainly offers a degree of security and a
degree of comfort for both MDI the company and MDI
shareholders that it doesn't have now.
And I think if we could go on the next question, I would
appreciate it please.
Operator: Your next question comes from Mr. Neil Gore of UBS
Payne Webber.
Neil: Good afternoon. Several questions. First, Lorne, what
percentage of your -
Lorne: This is Lorne. You only get to ask two questions.
Neil: Well, I got two and a half.
Lorne: Okay.
Neil: Okay. What percentage of your current instant tickets are
licensed?
6
Lorne: Of our instant tickets at Scientific Games?
Neil: Right. That's correct.
Lorne: You know, I don't know that -
Neil: Is it large? Small? I really -
Lorne: It's quite small. It's quite small.
Neil: Okay. And Steve?
Steve: Yes, sir.
Neil: Your sales were great last quarter. What percent of
your sales were to Scientific Games and what percent were to
like a GTech or any of the other people who print instant
tickets?
Steve: Well, G-Tech doesn't print instant tickets -
Neil: Okay.
Steve: So there's a couple of other companies -
Neil: Okay. Any of the others.
Steve: I'd say we - Scientific Games has less than it's
proportion of marketshare, probably in the 35 to 45% range
of the revenue was from games that Sci Games printed. The
remainder from other printers.
Neil: Okay. So therefore, the people who once this merger is
complete, who is your competition that these other people
might have to run to? If they want to license something.
Steve: Well, there's a couple other companies that have some
licenses in the business, but for the most part the main -
we control about 85% of the license game market.
Lorne: Actually, Neil, its Lorne. Let me answer that
question in a slightly different way, because I think that
there's a pre-supposition in what you're saying, which is
not correct. One of the things that we Scientific Games like
and like a lot about MDI is the fact that it gives us an
opportunity to sell things to state lotteries with - who are
not currently our customers. You know, normally in this
business, it's one of the good things about the business is
most of our business tends to be based on multi-year
contracts. But when one of our competitors has a multi-year
contract with a major lottery, take the California lottery,
for example, which happens not to be a customer of ours in
instant tickets. And there really isn't anything that we can
sell that lottery until the next time their contract becomes
available and goes out for RFP.
But what MDI offers us is an opportunity to go to that
lottery with the license properties that MDI has and get
revenue from that lottery even though it is in fact not one
of our customers. So the -
7
Steve: I was going to say as an example of that in the last
18 months, we've recognized about $3 million in revenue from
the California lottery. And there is no requirement here, as
Lorne is saying, that just because we sell a game to someone
that Sci Games has to print the game. Whoever their printer
is can print it. And I think if you take a look at the fact
that Sci Games is sort of under-represented in our total
volume, it says that this combination can really have a lot
of room for growth because we can bring in business from
other lotteries that Sci Games doesn't print for and Sci
Games can deliver more of their business to us as licensed
games.
Neil: Well, I understood that. In fact, I actually thought
that the license games were a larger percentage than they
actually were.
Steve: No. It's a reasonably new development in the lottery
business. And I'd be surprised if it's over 5% of the total
games that are on the street.
Neil: I see. Thank you very much.
Lorne: Sure.
Operator: Your next question comes from Mr. Chris Nicodemou of
UBS Warburg.
Chris: I just had my question answered. Thank you very much.
Operator: Your next question comes from Mr. Brian Frickman [PHONETIC].
Brian: I just got - I'm traveling on the road, but dialing
in on the conference call. Apparently you guys are buying -
is this a cash deal or is there a stock -
Lorne: It's a stock deal and the basic idea of the deal is
that MDI shareholders will receive $2.10 in value per MDI
share and they will receive it in Scientific Games stock
based upon the average closing price of Scientific Games
over the previous 30 days.
Brian: And when are you expecting to close?
Male Speaker: Close between 60 and 90 days, probably closer to 90.
Lorne: Did - were you able to hear that. That was our general
counsel speaking.
Brian: 60 to 90 days, closer to 90.
Lorne: Yes. Between 60 and 90 days from now.
Brian: Thank you.
Lorne: Yep.
Operator: Your next question comes from [UNINTELLIGIBLE] of
International Capital Partners.
Mack: Hello. Good morning, Steve.
Steve: Good morning, Mack. How are you?
Mack: Okay. Yes. I just want to make a comment here and I
want to say I oppose the deal. I don't think it's good for
MDI shareholders and I hope they'll vote along with me.
Thank you.
Lorne: Thank you.
Steve: Okay.
Operator: Your next question comes from Mr. Randy Purdell
[PHONETIC] of RS Purdell and Associates.
8
Randy: Good morning, gentlemen.
Lorne: Good morning.
Randy: This is basically addressed to Steve. I've talked to
many times over the last, I guess, three plus years. We've
been shareholders prior to Scientific Games, I believe.
Couple of questions, one given your own shares board of
director shares and Scientific Games, what percentage does
that represent of the total outstanding shares?
Steve: I think it's probably about 43 or 44%.
Randy: Okay. So you're going to need -
Steve: It's over 40.
Randy: Okay. So you're going to need a lot of individual
shareholders to vote the deal so that it would conclude, I
would imagine.
Steve: We'll need over 50%.
Randy: Right. Okay. I'm just a little perplexed the timing
of this given the fact that the company has turned around.
The stock was trading as high as $3.65 last week. Obviously
your negotiations probably had transpired much earlier than
the last few weeks when the stock has been going up on heavy
volume. But we are absolutely opposed to the deal as well as
many of the other shareholders that I've been talking to.
And I'm absolutely perplexed as to the timing. The synergies
between the two companies - when Scientific Games took a
position in the company it was stated back then on
conference calls and individual discussions that by them
taking the position in the company you were going to be
working together anyway, so I really don't understand the
necessity to merge with them at this point. Do you have any
comment?
Steve: No, not really. I mean, you're entitled to your
opinion. I hope you take the time to read the proxy and
consider it fully before you make a final decision. But I
understand.
Randy: Well, Steve, you know there's many shareholders that
are in to this stock for as high as $14 a share that have
been riding, you know, the company up and down and it has
turned the corner and from my perspective, I don't see why
they should even consider a buy out at $2.10 when the
company was doing so well for the last year. I'm talking
about this stage. I can see down the road, you know, after
you build shareholder value to get a fair price for the
company. But I really don't understand the necessity of
doing it now.
9
Steve: I understand.
Randy: Okay. Well, that's my - you know, basically all I have to
say on the deal.
Steve: Thank you.
Operator: Your next question comes from Roger Fitzpatrick of Berthal
Fishel [PHONETIC] and Company
Roger: My question is for Mr. Steve Saferin. What will be
your position with the new combined operations and will you
be brining investor awareness with you to keep the financial
community up to date on the upcoming events of the combined
operations?
Steve: Well, I will be the president and CEO of MDI, which
will operate as a wholly owned subsidiary of Scientific
Games and we haven't made any decision yet on - I mean, we
will no longer be a public company so there - we really
won't have any need to have any sort of investor relations
work going on. I mean, Sci Games will be doing theirs and
will encompass all the new shareholders. We may do something
on the public relations standpoint with investor - we
haven't made that decision yet.
Roger: Well, there some brokers like myself that know of
Scientific Games, but not as close to them as we are to your
company. We've been - have good relationships with Tony
Shore and he's been able to bring us some real good updates
on this and it'd be nice to be able to get the same kind of
updates from a new company.
Steve: Well, I'm sure they will do their best to make sure that you
get them.
Roger: Thank you, sir.
Steve: Thank you very much.
Operator: Okay. And I would like to remind everyone if you
would like to ask a question [INAUDIBLE] on your telephone
keypad. You do have a follow-up question from Mr. Brian
Frickman of Wells Fargo Securities.
Brian: Yeah. I just wanted to state, Steve, that for the
record, you know, I will be voting against this unfortunate
deal because I think there is more shareholder value. I just
don't think it was fully flushed out in terms of when this
acquisition made in the shareholder's best interest.
Steve: Okay.
Brian: Thanks.
Steve: Thank you.
Operator: Your next question comes from Mr. Carter Dunlap of
Dunlap Equity Management.
Carter: A housekeeping question. I heard the 60 to 90
anticipated close with a emphasis on 90, but what do you
think of the timing for the production of the proxy?
Lorne: I don't really know at this point. You know, I just don't
know. I can't comment.
Carter: Okay.
Operator: At this time, there are no further questions.
10
Lorne: Okay. Well, let me just say again one more time that
we in Scientific Games are, you know, very enthusiastic
about this. We're certainly as enthusiastic and optimistic
as we've ever been concerning the outlook for Scientific
Games itself. The addition of MDI to it makes it, I think,
that much more of a special opportunity.
As Steve said, I hope that each of you who is considering
not supporting this merger will give it fair thought and
fair analysis and give yourself an opportunity to understand
what we're trying to do. Because I think when you've done
that and when you've had a chance to study the material that
Steve will be sending out shortly I think you'll come to the
conclusion that this makes for a terrific company and that
it's worth supporting.
And with that, again, let me thank you all for calling in.
It was a terrific turn out considering the awkwardness of
the hour and I look forward in future investor conference
calls to having at least 51% of you who are on this call
participating in the future calls. Thank you and we'll talk
to you soon.
Operator: Thank you for participating in today's conference call. You
may now disconnect.
[END OF RECORDING]
Investors and security holders are advised to read the joint proxy
statement/prospectus regarding the proposed merger when it becomes available,
because it will contain important information. Such joint proxy
statement/prospectus will be filed with the Securities and Exchange Commission
by Scientific Games and MDI. Investors and security holders may obtain a free
copy of the joint proxy statement/prospectus (when available) and other
documents filed by Scientific Games and MDI at the Securities and Exchange
Commission's web site at www.sec.gov. The joint proxy statement/prospectus and
such other documents may also be obtained from Scientific Games by directing
such request to Scientific Games, 750 Lexington Avenue, New York, NY 10022,
Attn: Investor Relations, tel: 212-754-2233. The joint proxy
statement/prospectus and such other documents may also be obtained from MDI by
directing such request to MDI Entertainment, Inc., 201 Ann Street, 5th Fl.,
Hartford, CT 06103, Attn: Investor Relations; tel: 860-527-5359.
MDI and its executive officers and directors may be deemed to be participants in
the solicitation of proxies from stockholders of MDI with respect to the
transactions contemplated by the Letter of Intent. Information regarding such
officers and directors is included in MDI's Proxy Statement for its 2001 Annual
Meeting of Stockholders filed with the Securities and Exchange Commission on May
1, 2001. This document is available free of charge at the Securities and
Exchange Commission's web site at http//www.sec.gov and from MDI and Scientific
Games.
SAFE HARBOR
This communication includes statements that constitute forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. This information involves risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements. For certain information regarding these risks and uncertainties,
reference is made to Scientific Games' Annual Report on Form 10-K for the fiscal
year ended October 31, 2000, the Transition Period Report on Form 10-Q for the
period from November 1, 2000 through December 31, 2000 and the Quarterly Report
on Form 10-Q for the third quarter ended September 30, 2001, and to MDI
Entertainment's Annual Report on Form 10-KSB for the fiscal year ended December
31, 2000 and the Quarterly Report on Form 10-QSB for the third quarter ended
September 30, 2001.
11