Global Technologies Ltd · S-3/A · On 10/18/96

Filed On 10/18/96   ·   SEC File 333-14013   ·   Accession Number 944209-96-381

Pre-Effective Amendment to Registration Statement for Securities Offered Pursuant to a Transaction   ·   Form S-3
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-3/A       Pre-Effective Amendment to Registration Statement     55    361K 
                          for Securities Offered Pursuant to a                   
                          Transaction                                            
 2: EX-23.2     Independent Auditors' Consent                          1      5K 
 3: EX-23.3     Consent of Independent Auditors                        1      5K 

S-3/A   ·   Pre-Effective Amendment to Registration Statement for Securities Offered Pursuant to a Transaction
Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 18, 1996      

                                          REGISTRATION NO. 333-14013
------------------------------------------------------------------------------- 
------------------------------------------------------------------------------- 
SECURITIES AND EXCHANGE COMMISSION  
WASHINGTON, D.C. 20549  

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

AMENDMENT NO. 1       

TO      
FORM S-3  
REGISTRATION STATEMENT  
UNDER 
THE SECURITIES ACT OF 1933  

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

INTERACTIVE FLIGHT TECHNOLOGIES, INC. 

                                                                · Download Table
                                                                         
          DELAWARE                                      11-3197148       
  (STATE OF INCORPORATION)                           (I.R.S. EMPLOYER    
                                                   IDENTIFICATION NUMBER)

4041 N. CENTRAL AVENUE, SUITE 2000  
PHOENIX, ARIZONA 85012  
(602) 200-8900  

--------------- 
MICHAIL ITKIS 
INTERACTIVE FLIGHT TECHNOLOGIES, INC. 
4041 N. CENTRAL AVENUE, SUITE 2000  
PHOENIX, ARIZONA 85012  
(602) 200-8900  
(AGENT FOR SERVICE) 

--------------- 
It is requested that copies of communications be sent to: 
THEODORE E. GUTH, ESQ.  
IRELL & MANELLA LLP 
1800 AVENUE OF THE STARS  
SUITE 900 
LOS ANGELES, CALIFORNIA 90067 
(310) 277-1010  

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time  
to time after the effective date of the Registration Statement as determined    
by market conditions.                                                           
If the only securities being registered on this form are being offered      
pursuant to dividend or interest reinvestment plans, please check the           
following box. [_]                                                              
If any of the securities being registered on this form are to be offered on 
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of  
1933, other than securities offered only in connection with dividend or         
interest reinvestment plans, check the following box. [X]                       

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

CALCULATION OF REGISTRATION FEE 

                                                        · Enlarge/Download Table
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                                                      PROPOSED MAXIMUM                               
                                                       OFFERING PRICE  PROPOSED MAXIMUM  AMOUNT OF   
  TITLE OF EACH CLASS OF SECURITIES    AMOUNT TO BE    PER WARRANT OR     AGGREGATE     REGISTRATION 
           TO BE REGISTERED             REGISTERED       PER SHARE      OFFERING PRICE      FEE      
-----------------------------------------------------------------------------------------------------
                                                                                                     
Redeemable Class B Warrants...........    275,000(2)       $ 6.50(1)      $1,787,500(1)  $  616.38*  
-----------------------------------------------------------------------------------------------------
Class A Common Stock ($.01 par                                                                       
 value)(3)............................    275,000(3)       $14.69(1)      $4,039,750(1)  $1,393.02*  
-----------------------------------------------------------------------------------------------------
Class A Common Stock ($.01 par                                                                       
 value)(4)............................  8,765,196(4)       $  --          $      --            -- (4)
-----------------------------------------------------------------------------------------------------
Redeemable Class B Warrants(5)........  1,550,000(5)       $  --          $      --            -- (5)
-----------------------------------------------------------------------------------------------------
Class A Common Stock ($0.1 par                                                                       
 value)(5)............................  3,100,000(5)       $  --          $      --            -- (5)
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------

(1) Estimated solely for purpose of determining the registration fee pursuant   
 to Rule 457(c) on the basis of the average of the high and low prices per
share of the Redeemable Class B Warrants and the Class A Common Stock   
reported on the Nasdaq SmallCap Market on October 8, 1996.              
(2) Warrants issued in an April 1996 private placement and registered for       
resale hereunder by the holders thereof.                                
(3) Shares issuable upon exercise of the Redeemable Class B Warrants described  
in (2) above.                                                           

(4) Shares issuable upon exercise of up to 8,765,196 outstanding Class B        
Warrants issued in prior public offerings and previously registered on  
Form SB-2, Registration Nos. 33-86926 and 333-02044, for which          
registration fees were previously paid. Pursuant to Rule 429, no        
additional registration fee is due.                                     
(5) Represents 1,550,000 Class B Warrants and 1,550,000 shares of Class A       
 Common Stock held by certain securityholders, and an additional 1,550,000
  shares of Class A Common Stock issuable upon exercise of such warrants, in
 each case previously registered for resale by the Selling Securityholders
on Form SB-2, Registration Nos. 33-86926 and 333-02044, for which       
registration fees were previously paid. Pursuant to Rule 429, no        
additional registration fee is due.                                     

* Paid in connection with October 11, 1996 filing.                            
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR  
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT      
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS              
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH     
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT  
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID  
SECTION 8(A), MAY DETERMINE.                                                    

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EXPLANATORY NOTE  

Pursuant to Rule 429 of the Securities Act of 1933, as amended, this        
Registration Statement relates to three different offerings, as follows:        

OFFERING #1: This Registration Statement relates to (i) 275,000 of the      
Company's redeemable class B warrants ("Class B Warrants") acquired by certain  
selling securityholders in a private placement in April 1996, and (iii)         
275,000 shares of Class A Common Stock underlying such Class B Warrants, all    
for resale from time to time by the selling securityholders.                    

The complete Prospectus relating to Offering #1 follows immediately after   
this Explanatory Note.                                                          

OFFERING #2: This Registration Statement also relates to the offer (the     
"Exercise Offer") by the Company to holders of all of its 10,590,196            
outstanding Class B Warrants to reduce to $7.50 the exercise price of such      
Class B Warrants during an as yet undetermined period following the             
effectiveness of this Registration Statement. This Registration Statement also  
relates to the issuance of up to 10,590,196 shares of Class A Common Stock      
(the "Class B Warrant Stock") issuable upon exercise of the Company's           
outstanding Class B Warrants during and after the Exercise Offer (excluding,    
after the Exercise Offer, Class B Warrants held by the selling securityholders  
in Offerings #1 and #3). The issuance of the Class B Warrant Stock was          
previously registered in the Company's Registration Statements on Form SB-2,    
Registration Nos. 333-02044 and 33-86928 (the "SB-2"), and is included in this  
Registration Statement to satisfy the Company's undertaking to file a post-     
effective amendment to the SB-2.                                                

The complete Prospectus relating to Offering #1 follows immediately after   
this Explanatory Note. Following the Prospectus for Offering #1 are pages       
(denoted as Alternate Offering #2 Pages) of the Prospectus relating solely to   
the Class B Warrant Stock, including alternative front and back cover pages,    
and sections entitled "Documents Incorporated by Reference," "Prospectus        
Summary," "The Exercise Offer and Warrant Redemption," "Purpose of Exercise     
Offer and Use of Proceeds," "Capitalization," "Price Range of Securities,"      
"Summary and Pro Forma Financial Data," "Dilution," "Plan of Distribution,"     
"Concurrent Offerings" and "Legal Matters" to be used in lieu of the sections   
entitled "Dilution," "Selling Securityholders," "Plan of Distribution," "Blair  
Commission," "Concurrent Offerings" and "Legal Matters" in the Prospectus       
relating to Offering #1.                                                        

OFFERING #3: This Registration Statement also relates to (i) 1,550,000 Class
B Warrants and 1,550,000 shares of Class A Common Stock issued upon exercise    
of certain redeemable class A warrants acquired by certain selling              
securityholders in connection with the Company's 1994 Bridge Financing and      
(ii) an additional 1,550,000 shares of Class A Common Stock underlying the      
aforementioned Class B Warrants, all for resale from time to time by the        
selling securityholders. The resale of the selling securityholder securities    
offered in Offering #3 was previously registered in the Company's Registration  
Statement on the above-described SB-2, and is included in this Registration     
Statement to satisfy the Company's undertaking to file a post-effective         
amendment to the SB-2.                                                          

The complete Prospectus relating to Offering #1 follows immediately after   
this Explanatory Note. Following the Prospectus for Offering #1 are pages       
(denoted as Alternate Offering #3 Pages) of the Prospectus relating solely to   
the resale of the selling securityholder securities offered in Offering #3,     
including an alternative cover page, and sections entitled "Use of Proceeds,"   
"Dilution," "Selling Securityholders," "Concurrent Offerings" and "Legal        
Matters" to be used in lieu of the sections entitled "Use of Proceeds,"         
"Dilution," "Selling Securityholders," "Concurrent Offerings" and "Legal        
Matters" in the Prospectus relating to Offering #1.                             

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED OCTOBER   , 1996 
PROSPECTUS

INTERACTIVE FLIGHT TECHNOLOGIES, INC. 

275,000 REDEEMABLE CLASS B WARRANTS 
275,000 SHARES OF CLASS A COMMON STOCK

This Prospectus relates to 275,000 Redeemable Class B Warrants (the "Class B
Warrants") of Interactive Flight Technologies, Inc., a Delaware corporation     
(the "Company"), held by two holders (the "Selling Securityholders"), and the   
275,000 shares of Class A Common Stock, $.01 par value ("Class A Common         
Stock"), issuable upon the exercise of such 275,000 Class B Warrants. The       
275,000 Class B Warrants held by the Selling Securityholders are sometimes      
referred to herein as the "Selling Securityholder Warrants" and, together with  
the shares of Class A Common Stock issuable upon exercise of the Selling        
Securityholder Warrants, the "Selling Securityholder Securities." The Selling   
Securityholder Warrants were issued to the Selling Securityholders in exchange  
for certain services rendered to the Company. See "Selling Securityholders" and 
"Plan of Distribution." Each Class B Warrant entitles the holder to purchase    
one share of Class A Common Stock, at an exercise price of $9.75, subject to    
adjustment, at any time until March 6, 2000. However, concurrently herewith,    
the Company is offering (the "Exercise Offer") to the holders of the Company's  
outstanding Class B Warrants to reduce the exercise price of the outstanding    
Class B Warrants to $7.50 per share in each case if and only if a holder        
exercises his or her Class B Warrants prior to 5:00 P.M., New York City time,   
on      , 1996, unless such date is extended by the Company. Following such     
date through January 17, 1997, a holder will continue to have the right to      
exercise his or her Class B Warrants (in accordance with the terms thereof) at  
the re-set exercise price of $9.75 per share. The Class B Warrants are subject  
to redemption by the Company for $.05 per Warrant, upon 30 days' written        
notice, if the average closing bid price of the Class A Common Stock exceeds    
$13.65 per share (subject to adjustment) for 30 consecutive business days       
ending within 5 days of the date of the notice of redemption. This condition    
has been met, and by notice dated [       ], 1996, the Company has exercised    
its right pursuant to the terms of the Warrants to redeem on January 20, 1997   
each Class B Warrant not exercised by January 17, 1997, at 5:00 P.M. New York   
City time.                                                                      

----------- 

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 6. 

----------- 

The Class A Common Stock and the Company's Class B Common Stock, $.01 par   
value (the "Class B Common Stock"), are essentially identical, except that the  
Class B Common Stock has six votes per share and the Class A Common Stock has   
one vote per share on all matters upon which stockholders may vote. The holders 
of Class B Common Stock, the majority of whom are executive officers, directors 
and/or principal stockholders of the Company, control approximately 65% of the  
total voting power and therefore are able to elect all of the Company's         
directors and control the Company.                                              

The securities offered by the Selling Securityholders by this Prospectus may
be sold from time to time by the Selling Securityholders or by their            
transferees. The distribution of the Selling Securityholder Warrants and the    
Class A Common Stock offered hereby by the Selling Securityholders may be       
effected in one or more transactions that may take place on the over-the-       
counter market, including ordinary brokers' transactions, privately negotiated  
transactions or through sales to one or more dealers for resale of such         
securities as principals, at market prices prevailing at the time of sale, at   
prices related to such prevailing market prices or at negotiated prices. Usual  
and customary or specifically negotiated brokerage fees or commissions may be   
paid by the Selling Securityholders.                                            

The Selling Securityholders, and intermediaries through whom such securities
are sold, may be deemed underwriters within the meaning of the Securities Act   
of 1933, as amended (the "Securities Act"), with respect to the securities      
offered, and any profits realized or commissions received may be deemed         
underwriting compensation. The Company has agreed to indemnify the Selling      
Securityholders against certain liabilities, including liabilities under the    
Securities Act.                                                                 

The Company will not receive any of the proceeds from the sale of securities
by the Selling Securityholders. In the event all of the Selling Securityholder  
Warrants are exercised, the Company will receive gross proceeds of $2,681,250,  
less payment of applicable commissions to D.H. Blair Investment Banking Corp    
("Blair"). See "Selling Securityholders," "Plan of Distribution" and "Blair     
Commission."                                                                    

The Class A Common Stock and the Class B Warrants are traded on the Nasdaq  
SmallCap Market ("Nasdaq"). On October  , 1996, the closing sale price of the   
Class A Common Stock on Nasdaq was $   per share and the closing sale price of  
the Class B Warrants on Nasdaq was $  .                                         

THESE  SECURITIES HAVE NOT BEEN APPROVED  OR DISAPPROVED BY THE  SECURITIES AND 
EXCHANGE  COMMISSION  OR   ANY  STATE  SECURITIES  COMMISSION   NOR  HAS  THE 
SECURITIES  AND EXCHANGE  COMMISSION  OR  ANY  STATE SECURITIES  COMMISSION 
PASSED  UPON   THE  ACCURACY   OR  ADEQUACY   OF  THIS   PROSPECTUS.  ANY 
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.                     

The date of this Prospectus is     , 1996.

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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY      
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS   
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN   
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING  
BEEN AUTHORIZED BY THE COMPANY, THE SELLING SECURITYHOLDERS OR ANY              
UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE          
HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THERE HAS    
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS        
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY        
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH  
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO    
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH SOLICITATION.                        

AVAILABLE INFORMATION 

The Company is subject to the informational requirements of the Securities  
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance        
therewith, files reports and other information with the Securities and          
Exchange Commission (the "Commission"). Reports and other information filed by  
the Company with the Commission pursuant to the informational requirements of   
the Exchange Act may be inspected and copied at the public reference            
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,   
Washington, D.C. 20549, and at its Regional Offices at (i) Northwest Atrium     
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, (ii) 7    
World Trade Center, 13th Floor, New York, New York 10048, and (iii) 5757        
Wilshire Boulevard, Suite 500, Los Angeles, California 90036. Copies of such    
material may 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 also maintains a Web site that contains reports, proxy statements,   
information statements and other information regarding registrants that file    
electronically with the Commission. Such reports, proxy statements,             
information statements and other information may be found the Commission's      
site address, http://www.sec.gov. The Class A Common Stock and the Class B      
Warrants are listed on the Nasdaq SmallCap Market ("Nasdaq") and reports,       
proxy statements and other information regarding the Company can be inspected   
at the offices of such exchange.                                                

The Company has filed with the Commission a Registration Statement on Form  
S-3 (together with all amendments and exhibits thereto, the "Registration       
Statement") under the Securities Act, with respect to the Securities offered    
hereby. This Prospectus does not contain all of the information set forth in    
the Registration Statement and the exhibits thereto, as permitted by the rules  
and regulations of the Commission. For further information with respect to the  
Company and the Securities, reference is hereby made to the Registration        
Statement, including the exhibits filed or incorporated as a part thereof.      
Statements contained herein concerning the provisions of any document are not   
necessarily complete and in each instance reference is made to the copy of the  
document filed as an exhibit to the Registration Statement. Each such           
statement is qualified in its entirety by reference to the copy of the          
applicable documents filed with the Commission.                                 

DOCUMENTS INCORPORATED BY REFERENCE 

The following documents heretofore filed by the Company under the Exchange  
Act with the Commission are incorporated herein by reference: (1) the           
Company's Annual Report on Form 10-KSB for the fiscal year ended October 31,    
1995, and Amendment No. 1 to the Annual Report on Form 10-KSB/A for the fiscal  
year ended October 31, 1995; (2) the Company's Quarterly Reports on Form 10-    
QSB dated January 31, 1996, April 30, 1996 and July 31, 1996; and (3) the       
description of the Company's Common Stock as set forth in the Company's         
registration statement on Form 8-A filed with the Commission on December 31,    
1994, as amended by the Company's registration statement on Form 8-A/A filed    
with the Commission on March 8, 1995, and any other amendments or reports       
thereto filed with the Commission for the purpose of updating such              
description.                                                                    

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All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 
15(d) of the Exchange Act after the date of this Prospectus and prior to the    
termination of the offering of the shares of Common Stock made hereby shall be  
deemed to be incorporated in this Prospectus by reference and to be a part      
hereof from the date of filing of such documents. Any statement incorporated    
herein shall be deemed to be modified or superseded for purposes of this        
prospectus to the extent that a statement contained herein or in any other      
subsequently filed document that also is or is deemed to be incorporated by     
reference herein modifies or supersedes such statement. Any such statement so   
modified or superseded shall not be deemed, except as so modified or            
superseded, to constitute a part of this Prospectus.                            

The Company will provide, without charge, to each person to whom a copy of  
this Prospectus has been delivered, on the request of such person, a copy of    
any and all of the information that has been or may be incorporated by          
reference in this Prospectus, other than exhibits thereto. Written or oral      
requests for such copies should be directed to Interactive Flight               
Technologies, Inc., 4041 N. Central Avenue, Suite 2000, Phoenix, Arizona        
85012, Attention: Chief Financial Officer. The telephone number is (602) 200-   
8900.                                                                           

FORWARD-LOOKING INFORMATION 

Except for historical information contained herein, the matters discussed in
this Prospectus and in the documents incorporated by reference herein are       
forward-looking statements (within the meaning of Section 27A of the            
Securities Act and Section 21E of the Exchange Act) that are subject to         
certain risks and uncertainties that could cause actual results to differ       
materially from those set forth in such forward-looking statements. Such risks  
and uncertainties include, without limitation, the failure of passenger use of  
the Entertainment Network to generate sufficient revenues, the failure to       
execute definitive agreements with additional airlines (or, in the case of      
Swissair, with the Swiss lottery organization) on favorable terms or at all,    
the failure of the Company to receive sufficient financing to perform its       
obligations under its existing and contemplated agreements, the risk of errors  
in the assumptions regarding the Company's future capital requirements, the     
impact of competition and downward pricing pressures, the effect of changing    
economic conditions, risks in technology development, the risks involved in     
currency fluctuations, and the other risks and uncertainties detailed in "Risk  
Factors" below and in the Company's Registration Statement on Form SB-2 dated   
April 4, 1996, the Company's Annual Report on Form 10-KSB and Amendment No. 1   
to the Annual Report on Form 10-KSB/A for the fiscal year ended October 31,     
1995.                                                                           

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THE COMPANY 

Interactive Flight Technologies, Inc. (the "Company") is engaged in the     
development, assembly, installation and operation of a computer-based in-       
flight entertainment network (the "Entertainment Network"). The first           
generation of the Entertainment Network provided aircraft passengers the        
opportunity to view movies, to play computer games and, in certain cases where  
permitted by applicable law, to gamble through a high-resolution video touch    
screen. The Company has also recently developed a second generation of the      
Entertainment Network (the "IFEN-2") which includes additional features such    
as secure casino gaming, in-flight shopping, a telephone interface system, the  
ability for passengers to pay for IFEN-2 usage through their credit cards, and  
increased video-on-demand capacity.                                             

To date, the Company has entered into contracts to install and operate the  
Entertainment Network on the aircraft of three airlines--Alitalia Airlines      
S.p.A. ("Alitalia"), Debonair Airlines ("Debonair"), and Swissair VKB           
("Swissair"). Under the Company's agreement with Alitalia (the "Alitalia        
Agreement"), the first generation of the Entertainment Network system was       
installed in November 1995 in the first class and business class seats of an    
Alitalia MD-11 aircraft. Following completion of the test period of this first  
installed Entertainment Network system, Alitalia accepted the remainder of the  
Alitalia Agreement and the Company accordingly delivered first generation       
Entertainment Network systems for installation on an additional four Alitalia   
MD-11 aircraft. The agreement provides for the Company to operate the           
Entertainment Networks on all five aircraft over a period of approximately      
eight years. The Alitalia Agreement does not presently provide for, and is not  
expected to provide for, passenger use of gambling features of the              
Entertainment Network. Under the Alitalia Agreement, Alitalia is to pay an      
aggregate of approximately $2.7 million for the hardware components of the      
five Entertainment Network systems, of which $1.1 million has been paid to      
date and $1.6 million is currently due and payable.                             

In March 1996, the Company entered into a second airline contract (the      
"Debonair Agreement") with Debonair, a start-up European airline. The Debonair  
Agreement provides for the Company to deliver and install IFEN-2 systems        
(including video casino style gambling) for all seats on Debonair's entire      
fleet, which consists of six RJ-146 aircraft. The aggregate purchase price to   
be paid by Debonair for the hardware components of the six IFEN-2 systems and   
related spare parts is approximately $5.8 million. However, the Debonair        
Agreement provides that, provided Debonair utilizes the casino gaming feature   
of the Entertainment Networks, Debonair is not required to pay any up-front     
funds to the Company for the six Entertainment Networks. Instead, payments to   
the Company will be made solely through a revenue-sharing arrangement, which    
provides that the Company will receive a percentage of revenues generated by    
the Entertainment Networks, principally casino gaming revenues, until the       
aggregate purchase price plus accrued interest for all six Entertainment        
Networks is paid, and thereafter the Company will receive a reduced percentage  
of such revenues. The Debonair Agreement further provides that if the use of    
the casino gaming features of the IFEN-2 systems is ordered by law to cease,    
then no further payments of purchase price for each installed system shall be   
due.                                                                            

Effective July 18, 1996, the Company entered into an agreement with Swissair
to provide for delivery and installation by the Company of IFEN-2 systems on    
sixteen Swissair MD-11 aircraft and five Swissair B-747 aircraft. The Company   
will also provide various maintenance and operational services for the          
installed IFEN-2 systems. Subject to execution of an agreement with             
Interkantonale Landeslotterie ("ILL"), the operator of the Swiss lottery based  
in Zurich, Switzerland, the IFEN-2 systems installed on Swissair aircraft will  
allow passengers to participate in various Swiss lottery games, but are not     
expected to allow use of the traditional casino style gaming features such as   
slots or poker. In the event that no agreement is reached with ILL, either      
Swissair or the Company may terminate the Swissair Agreement.                   

Under the Swissair Agreement, subject to the terms thereof, the Company is  
entitled to receive an aggregate of approximately $72 million for the IFEN-2    
hardware, plus the costs of installation and certain upgrades. The Company      
will also be reimbursed for its projected costs in connection with maintaining  
and operating the systems. However, the hardware purchase price and the         
operating expenses are payable only out of net revenues received from           
passenger participation in the aforementioned lottery games. Further, the       
Company may receive                                                             

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such amounts only after Swissair is first reimbursed from the net lottery       
revenues for certain expenses incurred in connection with the installation and  
operation of the IFEN-2 systems. Any amounts remaining after payment of the     
Company's operating costs and the hardware purchase price will be paid over to  
ILL. The Company will also receive a percentage of revenues and commissions     
from advertising and shopping services available on the installed IFEN-2        
systems.                                                                        

The Company is aggressively marketing the Entertainment Network to numerous 
additional airlines, focusing primarily on international carriers or domestic   
carriers with international routes. However, there can be no assurance that     
definitive agreements will be executed with any other airlines. See "Risk       
Factors."                                                                       

On September 5, 1996, the Company signed a Letter of Intent to form a       
strategic alliance (the "Alliance") with interests of the Pritzker family of    
Chicago (the "Pritzker Interests"). The Letter of Intent contemplates that the  
Pritzker Interests would use their marketing resources to enhance IFT's         
relationship with international and domestic air carriers. In addition, the     
Letter of Intent provides for the Pritzker Interests to help develop and        
coordinate financing sources for IFT.                                           

Subject to the satisfaction of certain conditions, the Pritzker Interests   
would invest up to $20 million in a proposed joint venture in order to raise    
one-third of the money required for a potential future airline project          
currently under consideration (which amount would not be available to fund the  
Company's currently existing airline obligations). The Pritzker Interests       
would also have the option to invest in up to six similar ventures for future   
airline projects. Under the Alliance, the Pritzker Interests would purchase up  
to $1 million of IFT stock in the open market and would receive warrants to     
purchase up to 10% of IFT (on a fully-diluted basis). These warrants would be   
issued in specified increments as future airline contracts are executed by      
IFT. Finally, the Alliance would provide for John Pritzker and one other        
Pritzker nominee to join the Board of Directors of IFT, and for additional      
Pritzker nominees if the size of the Board is increased.                        

Completion of the transaction and formation of the Alliance are subject to  
customary conditions precedent, including the negotiation and execution of      
definitive documentation. There can be no assurance that the parties will       
agree upon and execute such definitive documents or that the Alliance, if       
formed, will produce the desired results.                                       

Since commencement of operations, the Company has developed a substantial   
catalogue of proprietary technology and know-how relating to the Entertainment  
Network and its related systems. In addition, the Company has an exclusive      
license (the "FortuNet License") for technology for airline use from FortuNet,  
Inc. ("FortuNet"), a gaming equipment manufacturer that distributes video       
gaming networks to casinos and other gaming establishments. The Chief           
Executive Officer of the Company, who is also a director and principal          
stockholder of the Company, is a former employee of FortuNet and was a          
substantial contributor to the development of the technology licensed from      
FortuNet.                                                                       

In July 1996, the Company relocated its principal executive offices and its 
primary manufacturing and development facilities from Las Vegas, Nevada to      
Phoenix, Arizona.                                                               

The Company was incorporated in Delaware in August 1994 and is the successor
by merger to In-Flight Entertainment Services Corp., a New York corporation     
incorporated in February 1994. The Company completed an initial public          
offering of its securities in March 1995. Unless the context requires or as     
otherwise indicated, all references to the "Company" include the predecessor    
company. The Company's principal executive offices are located at 4041 N.       
Central Avenue, Suite 2000, Phoenix, Arizona 85012, and its telephone number    
is (602) 200-8900.                                                              

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RISK FACTORS  

An investment in the securities offered hereby involves a high degree of    
risk. In addition to the other information contained in this Prospectus,        
prospective investors should carefully consider the following risk factors      
before purchasing the securities offered hereby.                                

Limited Operating History; Unproven Viability of Entertainment Network. The 
Company was organized in February 1994 and completed its initial public         
offering in March 1995. To date, the Company has secured agreements with        
Alitalia (for the provision of five first generation Entertainment Network      
systems for a total purchase price of approximately $2.7 million plus amounts   
received from the sale of service parts, if any), with Debonair (for the        
provision of six IFEN-2 Entertainment Networks for a total purchase price of    
approximately $5.8 million) and with Swissair (for the provision of twenty-one  
IFEN-2 Entertainment Networks for a total purchase price of $72 million), in    
the last case subject to agreement with ILL (the Swiss lottery organization).   
However, as of the date hereof, the Company has installed systems and received  
revenues only under the Alitalia agreement and, with respect to the other       
agreements and any future agreements, may experience many of the problems,      
delays, expenses and difficulties commonly encountered by early stage           
companies, many of which are beyond the Company's control. These include, but   
are not limited to, unanticipated problems related to product development,      
regulatory compliance, manufacturing, marketing, additional costs and           
competition and technological obsolescence, as well as problems associated      
with sales or operations in foreign countries. There can be no assurance that   
the Company will be able to market the IFEN-2 Entertainment Network to          
additional airlines or that once installed, the IFEN-2 Entertainment Networks   
will function as intended, meet with customer acceptance or generate any        
revenue, or that the Company will ultimately achieve profitability. The         
Company has incurred significant development and marketing operating losses to  
date and there can be no assurance of future revenues or profits.               

The acceptance of the Entertainment Network is dependent on a number of     
factors, including the technological quality and features of such product       
compared to competitive products, the actual and the perceived ability of the   
Company to service the Entertainment Network, consumer demand and the           
purchasing patterns of airlines. Many of these factors are beyond the           
Company's control. As a result of all of these factors, as well as              
unanticipated problems which may be experienced by the Company, the Company is  
unable to predict when, if ever, the Entertainment Network will be              
commercially successful.                                                        

Accumulated Deficit; Operating Losses and Charges to Operations. At July 31,
1996, the Company had an accumulated deficit of approximately $13.3 million.    
The Company will be required to continue to expend significant funds in         
connection with continued development, manufacturing and marketing activities   
with respect to the Entertainment Network which to date have resulted in, and   
are expected to continue to result in, operating losses and reductions in       
working capital. The extent of future losses and the time required to achieve   
profitability are highly uncertain. There can be no assurance that the Company  
will be able to achieve profitability on a sustained basis, if at all.          

Need for Additional Financing; Potential Cash Shortages. At July 31, 1996,  
the Company had working capital of approximately $25.0 million. The Company     
increased its working capital in May 1996 from the proceeds of its Class A      
Warrant Exercise Offer, its third financing, from which the Company received    
net proceeds of approximately $25.2 Million. However, the Company has incurred  
additional losses since the Exercise Offer which have again reduced working     
capital, and the Company expects that losses will continue for the foreseeable  
future. As a result, unless funds are received from additional financing,       
working capital is expected to continue to decrease following the initial       
increase attributable to receipt of proceeds from the aforementioned Exercise   
Offer.                                                                          

The Company's revenues have been generated, and are anticipated to be       
generated in the future, from sales, installation and servicing of the          
Entertainment Network aboard commercial and charter aircraft. The contracts     
the Company has executed and is currently negotiating generally provide for     
the Company to install the Entertainment Network on an aircraft and to be paid  
for the equipment and for its installation and maintenance out of revenue       
generated by passenger use of the installed network on the aircraft. As a       
result, the Company                                                             

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must expend significant capital amounts for the assembly, installation and      
maintenance of the Entertainment Network on each aircraft, but revenue as       
payment for the system will be received, if at all, only as a result of the     
use of the system over a potentially significant period of time. The Company    
will be required to incur substantial up-front costs required to perform the    
Debonair Agreement and the Swissair Agreement. Moreover, the Company may also   
enter into commitments to purchase equipment necessary for additional           
installations, even in the absence of a purchase commitment from an airline,    
if such action is determined to be necessary or desirable to pursue business    
opportunities. The Company also expects its cash requirements to increase in    
future periods due to higher expenses associated with increased sales and       
marketing activities and financing of inventory purchases, installations and    
accounts receivable.                                                            

As a consequence, the Company will need additional financing to perform     
under its existing contracts (i.e., the Alitalia Agreement, the Debonair        
Agreement and the Swissair Agreement) in addition to any future contracts that  
it may enter into, including those it is currently negotiating. Although the    
Company has been in discussions with a number of external sources of capital    
to raise portions of the funds needed, there can be no assurances that such     
funds will be available in the near future when they will be needed for the     
contracts involved. Without additional funding from external capital sources    
or from exercise of the Company's outstanding warrants, the Company will not    
have sufficient cash to complete all of its existing and pending contracts.     

Risks Relating to Growth and Expansion. Growth of the Company's business may
place significant pressure on the Company's management, operational and         
technical resources. The Company believes that for competitive reasons, it is   
important to obtain an installed customer base as early as possible and,        
accordingly, the failure to expand operations in the early years of the         
Company's business may hinder or preclude significant future growth. If the     
Company is successful in obtaining additional agreements with airlines          
relating to the installation of Entertainment Networks, the Company will be     
required to raise substantial additional funds and deliver large volumes of     
quality products to its airline customers on a timely basis at a reasonable     
cost to the Company. The Company has no experience in delivering large volumes  
of its products and does not have the capacity and may not have the capital     
resources to meet wide scale production requirements. The Company currently     
has contracts with domestic manufacturers for high-volume production, and may   
enter into additional contracts with such domestic and foreign manufacturers.   
However, there can be no assurance that any manufacturing arrangement will be   
entered into or will be successful, that the Company's efforts to conduct       
manufacturing activities will be successful or that the Company or any          
supplier will be able to satisfy commercial scale production requirements on a  
timely and cost-effective basis. The Company's success will also depend in      
part upon its ability to provide its airline customers with timely service and  
support. The Company will also be required to develop and improve operational,  
management and financial systems and controls. Failure to manage growth would   
have a material adverse effect on the business of the Company. Expenses         
arising from Company activities to increase market penetration and support      
growth will have a negative impact on operating results.                        

Risks Relating to the Debonair and Swissair Agreements. There are numerous  
risks associated with the Debonair Agreement and the Swissair Agreements of     
which investors should be aware. First, the Company will be required to incur   
substantial up-front costs to perform under these agreements in advance of      
receiving any significant payments from Debonair or Swissair. Further, the      
Debonair Agreement provides that the only funds to be received by the Company   
from Debonair will be in the form of revenue-sharing of the revenues from the   
six Entertainment Networks (primarily revenues from the casino gaming).         
Likewise, the Swissair Agreement provides that the purchase price for the       
hardware, as well as the Company's operating costs, will be paid only out of    
lottery revenues from the twenty-one Entertainment Networks (with ILL first     
receiving a portion thereof and Swissair then receiving first priority for its  
expenses prior to payment of the Company's expenses and the purchase price for  
the hardware). Thus, the Company's ability to recoup its up-front costs and/or  
derive any profit under the either of these agreements will be dependent upon   
a number of factors, including the success of the airlines' respective          
businesses, the extent to which passengers utilize the casino and lottery       
gaming features of the Entertainment Networks and numerous other factors, most  
of which are beyond the Company's control. In fact, Debonair is a start-up      
airline and, consequently, there is no assurance that it will ever commence     
operations or, if it does, that its operations will be successful. To the       
extent that there are any unanticipated problems                                

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relating to product development, regulatory compliance, manufacturing and       
other factors, the costs estimates described above to perform the Debonair      
Agreement and the Swissair Agreement may increase significantly, thereby        
utilizing a substantially higher amount of the Company's working capital than   
currently contemplated.                                                         

Second, since these agreements contemplate that the Entertainment Network   
will be installed in coach class and will feature casino gaming, the Company    
must install and operate the newly-developed IFEN-2 system on both Debonair     
and Swissair aircraft. These will represent the first commercial installations  
of the IFEN-2 system, and there can be no assurance that the IFEN-2 systems,    
once installed, will function properly or meet with customer acceptance.        

Third, both of the contracts are subject to the gaming laws of various      
jurisdictions. See "--Regulatory Restrictions on Gaming Devices."               

Dependence Upon Limited Number of Potential Customers. The sole market for  
the Company's products is expected to be commercial airlines. There are a       
limited number of major commercial airlines worldwide. Accordingly, even        
assuming a sustained commercial viability and the successful marketing of the   
Entertainment Network, the Company expects to have contracts with only a        
limited number of customers, each of which may account for a substantial        
portion of the Company's revenues. The inability to generate new contracts to   
replace completed contracts could result in substantial losses in future        
fiscal periods. Moreover, because gaming is prohibited on all United States     
air carriers and on aircraft operated to or from the United States by foreign   
carriers, the Entertainment Network may be commercially less attractive to a    
significant segment of the commercial airline market.                           

Regulatory Restrictions on Gaming Devices. United States law, with certain  
exceptions, currently prohibits the knowing transportation of gaming devices    
on aircraft operated in interstate air transportation. In addition, states may  
prohibit the transportation and use of gaming devices on flights operating      
between two points in a single state. Federal law also prohibits the            
installation, transportation or operation of gaming devices by any U.S. or      
foreign air carrier or for such carriers to permit their use on aircraft        
operated to or from the United States in foreign air transportation. The        
United States Secretary of Transportation has conducted a study and has         
reported to Congress in March 1996, regarding the safety, commercial and        
operational issues posed by gaming devices aboard commercial aircraft.          
However, this report did recommend that Congress take immediate action to       
modify Federal law regarding gaming devices on commercial aircraft and it is    
uncertain what effect the report will have, if any. Moreover, the laws          
regarding the transmission of gaming data into, out of, or within United        
States territory, even where such data was lawfully obtained in another         
jurisdiction, are unclear. As a result, there can be no assurance that the      
transmission of such data will not be restricted or prohibited. Because gaming  
can generally be expected to generate significantly greater revenues and        
profitability than other entertainment options expected to be available on the  
Entertainment Network, the inability to offer gaming on flights would have a    
material adverse impact on the Company's business and on the market acceptance  
by airlines of the Entertainment Network. The Company will also be subject to   
the laws of foreign jurisdictions which may similarly restrict or prohibit the  
gaming or other activities offered on the Entertainment Network.                

Requirement For and Uncertainty of Regulatory Approval of Entertainment     
Network. The installation and use of the Entertainment Network in each          
aircraft type will require prior certification and approvals from the Federal   
Aviation Administration ("FAA") and from aeronautical agencies of foreign       
governments. Prior to certification and approval, the Entertainment Network     
must be installed on an aircraft and tested, including an in-flight test. The   
Company has received FAA certification for the Entertainment Network on         
Alitalia MD-11 aircraft, and has completed delivery of the Entertainment        
Network for installation on five Alitalia MD-11 aircraft. The Company will      
require FAA and comparable foreign certification prior to installing the        
Entertainment Network on the Debonair RJ-146 and the Swissair MD-11 and B-747   
aircraft, and the aircraft of any other airlines with which the Company may     
execute agreements in the future. However, there can be no assurance that       
further FAA and foreign certifications and approvals will be obtained, or       
obtained in a timely fashion in connection with the Swissair Agreement or       
thereafter. In addition, even if FAA certification is obtained, federal         

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law grants to the FAA the authority to reexamine at any time the basis upon     
which certification and approval of the Entertainment Network may be granted    
and, if appropriate, to amend or revoke such certifications and approvals,      
subject to certain appeal rights.                                               

Risks of Patent Infringement. The use of the Company's technology, including
the patented technology licensed from FortuNet, may give rise to claims that    
the Company's products infringe the patents of others. The Company is aware of  
a number of United States and foreign patents which include claims relating to  
technologies similar to those included in the Entertainment Network. Although   
the Company is aware of a foreign patent (and a corresponding U.S.              
application) that may cover the Entertainment Network, the Company believes     
that this patent is currently unenforceable and cannot be revived because of    
the failure to pay certain renewal fees and that, even if this patent were to   
become enforceable, the Company can take steps to help ensure that its          
activities would not be infringing. However, in the event such patent became    
enforceable and an infringement claim were brought against the Company and any  
such claim were successful, in addition to any potential liability for          
damages, the Company could be required to obtain a license in order to          
continue to market the Entertainment Network. There can be no assurance that    
the Company would prevail against any such claim or that any license required   
would be made available on acceptable terms or at all. In addition, if the      
Company becomes involved in any such litigation, it could consume a             
substantial portion of the Company's resources and management time and any      
resulting liability of the Company may have a material adverse effect on the    
Company's results of operations and financial condition. The Company has        
agreed to pay all costs and damages associated with any patent infringement     
litigation initiated against Alitalia, Debonair, Swissair and ILL.              

Uncertainty of Patent Protection; No Assurance of Significant Competitive   
Advantage. The Entertainment Network is dependent upon unpatented proprietary   
technology and know-how developed by the Company and, to a lesser extent,       
patented technology that the Company has licensed from FortuNet. There can be   
no assurance that FortuNet's issued patents (or any issued to the Company in    
the future) will provide the Company with any significant competitive           
advantage or that challenges will not be instituted against the validity or     
enforceability of any patent licensed or owned by the Company or, if            
instituted, that such challenges will not be successful. The cost of            
litigation to uphold the validity and protect against infringement of patents   
can be substantial. FortuNet's obligations to indemnify the Company under the   
FortuNet License are limited to the amount of license fees payable to FortuNet  
under the FortuNet License. Furthermore, there can be no assurance that others  
will not independently develop substantially equivalent or more advanced        
proprietary information and techniques or otherwise gain access to the          
Company's trade secrets or obtain such technology or duplicate the              
Entertainment Network. In addition, to the extent that consultants (including   
FortuNet), key employees or other third parties apply technological             
information developed by them or by others to Company projects, disputes may    
arise as to the proprietary rights to such information which may not be         
resolved in favor of the Company. There can also be no assurance that the       
Company can meaningfully protect its intellectual property (particularly in     
countries where there are no patents corresponding to those patents licensed    
from FortuNet).                                                                 

Risks of Foreign Operations; Dependence on Foreign Sales                    
Representatives. Because the Company believes the Entertainment Network is      
commercially more viable on international flights, the Company's principal      
customers are expected to be foreign airlines. Moreover, the Company uses and   
intends to continue to use the services of sales representatives to negotiate   
contracts with foreign airlines. As a result, the Company may become obligated  
to pay significant fees to such representatives, who typically charge a         
percentage of the contract purchase price. Accordingly, the Company's control   
over the negotiating process may be reduced. Further, a substantial portion of  
the Company's operations will be subject to various factors characteristic of   
conducting business outside the United States, such as import duties, trade     
restrictions, work stoppages, foreign currency fluctuations, export controls    
or license requirements, political or economic instability, imposition of       
government controls and other factors, any or all of which could have a         
material adverse effect on the business of the Company. Agreements may also be  
more difficult to enforce and receivables more difficult to collect through a   
foreign country's legal or currency expatriation systems. In addition, the      
laws of certain countries relating to proprietary rights do not protect the     
Company's products and intellectual property rights to the same extent as do    
the laws of the United States.                                                  

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Capital Intensive Purchase; Extensive Sales Cycle; Fluctuations in Revenues 
and Operating Results. The outright purchase of an Entertainment Network by an  
airline would represent a significant capital investment by such airline.       
Airlines are generally faced with increasing pressures to cut costs,            
particularly in non-safety related areas, and their ability to pass increased   
costs to consumers is limited. Accordingly, the Company anticipates that an     
extensive time period will be involved in negotiating and obtaining any actual  
purchase commitments from airlines, which may include a test installation in    
addition to an evaluation of the technology. In addition, installations are     
expected to be conducted in incremental deployments and revenues expected to    
be recognized as the installations are completed, so that related receivables   
may not be collected for an extended period after installation. As a result,    
the Company is unable to predict whether or when any additional purchase        
agreements with airlines will be entered into, and the Company may experience   
significant fluctuations in revenue and cash flow or periods in which no        
revenues are recognized and cash flow shortages are experienced. In addition,   
if anticipated sales and installations do not occur when expected,              
expenditures and inventory levels could be disproportionately high and the      
Company's operating results for that quarter may be adversely affected.         
Particularly during the early years of operations, if the Company obtains any   
such additional purchase agreements, a limited number of customers may account  
for all or substantially all of the Company's revenues.                         

Seasonality. Because the installation of the Entertainment Network requires 
that the aircraft be taken out of service temporarily, and because the          
grounding of an aircraft represents a significant lost revenue opportunity for  
an airline, the Company believes that a significant portion of installations    
will occur during the winter months when air traffic is typically reduced.      
Additional variability in revenues and operating results may arise from         
budgeting and purchasing patterns of airlines.                                  

Competition. The Company currently competes and will compete with a number  
of companies offering in-flight entertainment systems, most of whom (including  
but not limited to Sony Transcom, Hughes Avicom, BE Aerospace, Matsushita and   
TNCI) have substantially greater financial, management, technical and other     
resources than the Company and who offer products, systems or services similar  
to the Entertainment Network. There can be no assurance that the Company will   
compete effectively with such other companies, or that other companies will     
not develop products which are superior to the Company's or which achieve       
greater market penetration.                                                     

Rapid Technological Change; Need to Introduce New Programming Software. The 
markets for in-flight entertainment systems and interactive products are        
characterized by rapid technological developments and changes in customer       
preferences and requirements. As a result, the Company's success is dependent   
upon its ability to update on a regular basis and enhance the Entertainment     
Network and to develop or acquire and introduce in a timely manner new          
entertainment options and programming software for incorporation in the         
Entertainment Network. There can be no assurance that the Company will be       
successful in developing or licensing and marketing enhancements of the         
Entertainment Network on a timely basis, or at all, that any enhancements will  
adequately address changing airline or passenger preferences and demands or     
gain the acceptance of the Company's customers or that the cost of licensing    
programming software from third parties or developing its own software will     
not become prohibitive. If the Entertainment Network does not incorporate       
newer technologies and programming software, the Company's business and         
operating results may be adversely affected.                                    

Dependence on Programming Software and Product Distributors. The Company    
will be required to obtain rights from vendors of programming software to       
include such programming software on the Entertainment Network. The Company     
has arrangements with certain movie distributors pursuant to which the Company  
chooses from lists of available movies from each distributor and compiles the   
lists for presentation to the airlines. In addition, in order to provide        
shopping channel services, the Company will be required to enter into           
arrangements with distributors capable of providing delivery of products        
throughout international markets. There can be no assurance that the Company    
will be able to negotiate any such agreements or that such agreements will be   
on terms favorable to the Company.                                              

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Dependence on Third Party Suppliers and Contractors. The Company assembles  
the hardware constituting its Entertainment Network from components purchased   
from third party suppliers, and its dependence on such suppliers will reduce    
its control over the manufacturing process. In addition, the Company currently  
uses single suppliers for certain of the hardware comprising the Entertainment  
Network. Although the Company believes that other sources of supply are         
available, delays or increased costs associated with locating and procuring     
such supplies could have a material adverse effect on the Company.              

Further, because the Company lacks the FAA authorization to perform these   
functions, the Company must contract with third parties to obtain FAA           
certifications of the Entertainment Network on each proposed type of host       
aircraft, and to install the Entertainment Networks on customers aircraft. The  
Company has contracted with Elsinore Aerospace Services ("Elsinore"), an FAA-   
designated engineering representative experienced in flight entertainment       
systems, to assist the Company in the application and approval process in       
connection with the Debonair systems. Similarly, the Company has contracted     
with Hollingsead International to assist with such process in connection with   
the Swissair systems and to perform the installation of the Entertainment       
Networks on Swissair aircraft. Any breach or delay in performance by either of  
these contractors could have a material adverse effect on the Company's         
results of operations and its relationships with its airline customers.         

Dependence on Key Personnel. The Company's success depends upon the         
continued contributions of its executive officers, most of whom are also        
principal stockholders of the Company. Because of a medical disability, Steven  
M. Fieldman, the Company's Vice President--Business Development, devotes        
approximately 20 hours per week to business activities, all of which relate to  
the affairs of the Company. The Company does not have key man insurance on Mr.  
Fieldman. The Company has obtained key man insurance on the life of Michail     
Itkis, the Company's Chief Executive Officer. The loss of services of, or a     
material reduction in the amount of time devoted to, the Company by its         
executive officers could adversely affect the business of the Company.          

Control by Existing Stockholders; Potential Anti-takeover Provisions. The   
Company's executive officers and/or directors (together with their relatives)   
control approximately 65% of the total voting power of the Company, reflecting  
the multiple votes afforded to the Class B Common Stock. As a result, such      
stockholders are able to elect all of the Company's directors and otherwise     
control the Company's operations. The Company and each of its principal         
stockholders have entered into a stockholders' agreement (the "Stockholders'    
Agreement") which grants to such stockholders certain rights with respect to    
the sale of shares by the other stockholders and the Company and other matters  
affecting corporate governance, including an agreement by such stockholders to  
vote for the current members of the Board of Directors of the Company or        
nominees of such stockholders. The existence of such rights will solidify the   
control over the Company by its executive officers and directors. The           
Company's Board of Directors is also authorized to issue from time to time,     
without stockholder authorization, shares of preferred stock, in one or more    
designated series or classes. The Company is also subject to a Delaware         
statute regulating business combinations. Any of these provisions could         
discourage, hinder or preclude an unsolicited acquisition of the Company and    
could make it less likely that stockholders would receive a premium for their   
shares as a result of any such attempt.                                         

Charge to Earnings in the Event of Release of Escrow Shares. Currently,     
3,200,000 shares of Class B Common Stock owned by officers, directors and       
principal stockholders of the Company are held in escrow (the "Escrow           
Shares"), and such shares will be released from escrow if the Company attains   
certain earnings levels over the next two years or if the Class A Common Stock  
trades at certain levels over the next year. In addition, in accordance with    
the terms of the governing escrow agreement, Blair has consented to the         
modification of the terms of such release of the Escrow Shares, subject to      
obtaining the approval therefor from the holders of a majority of the           
Company's Class A Common Stock (other than holders of Escrow Shares). The       
position of the Securities and Exchange Commission (the "Commission") with      
respect to such escrow arrangements provides that in the event any shares are   
released from escrow to the stockholders of the Company who are officers,       
directors, employees or consultants of the Company, a compensation expense to   
the Company will be recorded for financial reporting purposes. Accordingly,     
the Company will, in the event of the release of the Escrow Shares, recognize   
during the period in which the earnings thresholds are met or such stock        
levels achieved, a substantial                                                  

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noncash charge to earnings equal to the fair value of such shares on the date   
of their release, which would have the effect of significantly increasing the   
Company's loss or reducing or eliminating earnings, if any, at such time. The   
recognition of such compensation expense may have a depressive effect on the    
market price of the Company's securities. Notwithstanding the foregoing         
discussion, there can be no assurance that the Escrow Shares will be released   
from escrow.                                                                    

Outstanding Warrants and Options. The Company has outstanding (i) 10,590,196
Class B Warrants (including the Selling Securityholder Warrants) to purchase    
10,590,209 shares of Class A Common Stock; (ii) 165,000 Class C Warrants held   
by the Selling Securityholders, each of which entitles the holder to purchase   
one share of Class A Common Stock for an exercise price of $11.00; (iii)        
165,000 Class D Warrants held by the Selling Securityholders, each of which     
entitles the holder to purchase one share of Class A Common Stock for an        
exercise price of $14.00 and (iv) unit purchase options granted to Blair and    
its affiliates in connection with the Company's initial public offering (the    
"Unit Purchase Options") to purchase an aggregate of 1,120,000 shares of Class  
A Common Stock, assuming exercise of the underlying Warrants. In addition, as   
of October 17, 1996, the Company had 2,345,000 shares of Class A Common Stock   
reserved for issuance upon exercise of options granted under the Company's      
Stock Option Plan, and 1,472,700 options were then outstanding under the Stock  
Option Plan. Holders of such warrants and options are likely to exercise them   
when, in all likelihood, the Company could obtain additional capital on terms   
more favorable than those provided by warrants and options. Further, while      
these warrants and options are outstanding, the Company's ability to obtain     
additional financing on favorable terms may be adversely affected.              

Potential Adverse Effect of Redemption of Class B Warrants. The Class B     
Warrants are subject to redemption by the Company at a redemption price of      
$.05 per Warrant upon not less than 30 days' prior written notice if the        
closing bid price of the Class A Common Stock shall have averaged in excess of  
$13.65 per share for 30 consecutive trading days ending within 5 days of the    
notice. Redemption of the Class B Warrants could force the holders to exercise  
the Class B Warrants and pay the exercise price therefor at a time when it may  
be disadvantageous for the holders to do so, to sell the Class B Warrants at    
the then current market price when they might otherwise wish to hold the Class  
B Warrants, or to accept the redemption price which, at the time the Class B    
Warrants are called for redemption, is likely to be substantially less than     
the market value of the Class B Warrants.                                       

Current Prospectus and State Registration to Exercise Class B               
Warrants. Holders of Class B Warrants will only be able to exercise the Class   
B Warrants if (i) a current prospectus under the Securities Act relating to     
the securities underlying the Class B Warrants is then in effect, and (ii)      
such securities are qualified for sale or exempt from qualification under the   
applicable securities laws of the states in which the various holders of        
Class B Warrants reside. With respect to the Selling Securityholder Warrants,   
this Prospectus is the prospectus required to be in effect. Although the        
Company has undertaken and intends to use its best efforts to maintain a        
current prospectus covering the securities underlying the Class B Warrants to   
the extent required by Federal securities laws, there can be no assurance that  
the Company will be able to do so. The value of the Class B Warrants may be     
greatly reduced if a prospectus covering the securities issuable upon the       
exercise of the Class B Warrants is not kept current or if the securities are   
not qualified, or exempt from qualification, in the states in which the         
holders of Class B Warrants reside. If and when the Class B Warrants become     
redeemable by the terms thereof, the Company may exercise its redemption right  
even if it is unable to qualify the underlying securities for sale under all    
applicable state securities laws. Holders of Class B Warrants called for        
redemption residing in states where the underlying securities have not been     
qualified for sale would generally still be able to sell their Class B          
Warrants at the then market price thereof.                                      

Possible Delisting of Securities from the Nasdaq Stock Market. While the    
Company's Class A Common Stock and Class B Warrants are listed on the Nasdaq    
SmallCap Market, there can be no assurance that the Company will meet the       
criteria for continued listing. Continued inclusion on Nasdaq generally         
requires that (i) the Company maintain at least $2,000,000 in total assets and  
$1,000,000 in capital and surplus, (ii) the minimum bid price of the Class A    
Common Stock be $1.00 per share, (iii) there be at least 100,000 shares in the  
public float valued at $1,000,000 or more, (iv) the Class A Common Stock have   
at least two active market makers, and (v) the Class A Common Stock be held by  
at least 300 holders.                                                           

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If the Company is unable to satisfy Nasdaq's maintenance requirements, its  
securities may be delisted from Nasdaq. In such event, trading, if any, in the  
Class A Common Stock and Class B Warrants would thereafter be conducted in the  
over-the-counter market in the so-called "pink sheets" or the NASD's            
"Electronic Bulletin Board." Consequently, the liquidity of the Company's       
securities could be impaired, not only in the number of securities which could  
be bought and sold, but also through delays in the timing of transactions,      
reduction in security analysts' and the news media's coverage of the Company    
and lower prices for the Company's securities than might otherwise be           
attained.                                                                       

Possible Adverse Effect on Liquidity of the Company's Securities Due to the 
Investigation of D.H. Blair Investment Banking Corp. and D.H. Blair & Co.,      
Inc. by the Securities and Exchange Commission. The Commission is conducting    
an investigation concerning various business activities of Blair and D.H.       
Blair & Co., Inc. ("Blair & Co."), the dominant market maker in the Company's   
securities. The investigation appears to be broad in scope, involving numerous  
aspects of Blair's and Blair & Co.'s compliance with the Federal securities     
laws and compliance with the Federal securities laws by issuers whose           
securities were underwritten by Blair or Blair & Co., or in which Blair or      
Blair & Co. make over-the-counter markets, persons associated with Blair or     
Blair & Co., such issuers and other persons. The Company has been advised by    
Blair that the investigation has been ongoing since at least 1989 and that it   
is cooperating with the investigation. Blair cannot predict whether this        
investigation will ever result in any type of formal enforcement action         
against Blair or Blair & Co., or, if so, whether any such action might have an  
adverse effect on Blair or the Company's securities. An unfavorable resolution  
of the Commission's investigation could have the effect of limiting Blair &     
Co.'s ability to continue to make a market in the Company's securities, which   
could affect the liquidity or price of such securities.                         

Shares Eligible for Future Sale. Future sales of Class A Common Stock by    
existing stockholders pursuant to Rule 144 under the Securities Act of 1933,    
as amended (the "Securities Act"), or pursuant to a separate prospectus         
included a registration statement filed by the Company or otherwise, could      
have an adverse effect on the price of the Company's securities. In addition    
to the registration statement of which this Prospectus forms a part, the        
Company has filed a registration statement under the Securities Act for the     
benefit of certain other security holders and which currently covers the        
resale of 1,550,000 Class B Warrants and up to 3,100,000 shares of Class A      
Common Stock (including those shares purchasable upon exercise of the such      
1,550,000 Class B Warrants). In addition, the Company has registered for        
resale 2,345,000 shares of Class A Common Stock issuable upon exercise of       
options granted or to be granted under the Company's Stock Option Plan. As of   
October 17, 1996, 1,472,700 options were outstanding under the Stock Option     
Plan. Further, all of the shares of Class A Common Stock issuable upon          
conversion of the 3,960,000 shares of Class B Common Stock are eligible for     
resale under Rule 144, subject to volume and manner of sale limitations. Blair  
has demand and "piggy-back" registration rights covering the securities         
underlying the Unit Purchase Option, and the holders of Class C and Class D     
Warrants have "piggy-back" registration rights covering the shares underlying   
such warrants. Sales of Class A Common Stock, or the possibility of such        
sales, in the public market in any of the foregoing manners may adversely       
affect the market price of the securities offered hereby.                       

USE OF PROCEEDS 

The Company will not receive any of the proceeds from the sale by the       
Selling Securityholders of the Selling Securityholder Securities offered        
hereby; however, to the extent that the Selling Securityholder Warrants are     
exercised, the Company will receive proceeds equal to the exercise price        
thereof multiplied by the number of warrants exercised. If all of the Selling   
Securityholder Warrants are exercised, the Company would receive gross          
proceeds of $2,681,250, less payment of the Blair Commission. The Company       
presently intends to use such proceeds for working capital and general          
corporate purposes.                                                             

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DILUTION  

The net tangible book value of the Company as of July 31, 1996 was          
$27,201,088 million or $2.27 per share. Net tangible book value per share       
represents the amount of total tangible assets less total liabilities of the    
Company, divided by the number of shares of Common Stock outstanding. After     
giving effect to the sale of the 275,000 shares of Common Stock offered hereby  
(and after deduction of estimated commissions and offering expenses), the pro   
forma net tangible book value of the Company at July 31, 1996 would have been   
$29,703,238 million, or $2.42 per share. This represents an immediate increase  
in such net tangible net book value of $0.15 per share to existing              
stockholders and an immediate dilution of $7.33 per share to new investors      
purchasing shares in this offering. The following table illustrates this per    
share dilution:                                                                 

                                                                · Download Table
                                                                          
Assumed offering price........................................       $9.75
  Net tangible book value before this offering................ $2.27      
  Increase attributable to new investors......................   .15      
                                                               -----      
Pro forma net tangible book value after this offering.........       $2.42
                                                                     -----
Dilution of net tangible book value to new investors..........       $7.33
                                                                     =====

The foregoing excludes 1,472,000 shares that are issuable upon the exercise 
of outstanding employee options under the Company's Stock Option Plan as of     
October 17, 1996. To the extent that these and other options, stock awards or   
warrants that may be issued are exercised in the future, there will be further  
dilution to new investors.                                                      

The following table summarizes, on a pro forma basis as of August 31, 1996, 
the differences between existing stockholders and new investors with respect    
to the number of shares of Class A Common Stock purchased from the Company,     
the total consideration paid to the Company, and the average consideration      
paid per share (before deduction of underwriting discounts and commissions and  
estimated offering expenses):                                                   

                                                                · Download Table

                              SHARES PURCHASED  TOTAL CONSIDERATION  AVERAGE 
                              ----------------- -------------------   PRICE  
                               NUMBER   PERCENT   AMOUNT    PERCENT PER SHARE
                              --------- ------- ----------- ------- ---------
                                                                             
Existing stockholders........ 8,074,329   96.7% $44,129,000   94.3%   $5.47  
New investors................   275,000    3.3    2,681,250    5.7    $9.75  
                              ---------  -----  -----------  -----           
  Total...................... 8,349,329  100.0% $46,810,250  100.0%          
                              =========  =====  ===========  =====           

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SELLING SECURITYHOLDERS 

The Selling Securityholders are Banner Aerospace, Inc. ("Banner"), a        
Delaware corporation, and Leonard Toboroff ("Toboroff"). Banner and Toboroff    
received their respective Class B Warrants in exchange for certain services     
rendered to the Company in connection with the Company's proposals to           
Swissair, leading up to the execution of the Swissair Agreement.                

The following table sets forth the number of Class B Warrants and underlying
shares of Class A Common Stock beneficially owned by each of the Selling        
Securityholders and included herein. Because the Selling Securityholders may    
offer all or some of the Selling Securityholder Securities which they own       
pursuant to the offering contemplated by this Prospectus, and because there     
are currently no agreements, arrangements or understandings with respect to     
the sale of any of the Securityholder Securities, no estimate can be given as   
to the amount of Selling Securityholder Securities that will be held by the     
Selling Securityholders after completion of this offering. The Selling          
Securityholder Securities offered by this Prospectus may be offered from time   
to time by the Selling Securityholders named below.                             

                                                                · Download Table

                                                              NUMBER OF    
                                                          SHARES OF CLASS A
                                            NUMBER OF       COMMON STOCK   
                                        CLASS B WARRANTS    BENEFICIALLY   
                                        BENEFICIALLY HELD HELD AND MAXIMUM 
                                           AND MAXIMUM      AMOUNT TO BE   
NAMES OF SELLING SECURITYHOLDERS        AMOUNT TO BE SOLD      SOLD(1)     
--------------------------------        ----------------- -----------------
                                                                           
Banner Aerospace, Inc..................      187,500           187,500     
Leonard Toboroff.......................       87,500            87,500     

--------                                                                        
(1) Represents shares to be issued upon exercise of the Selling Securityholder  
Warrants.                                                               

PLAN OF DISTRIBUTION  

The sale of all or a portion of the Selling Securityholder Securities       
offered hereby by the Selling Securityholders may be effected from time to      
time on Nasdaq at prevailing prices at the time of such sales, at prices        
related to such prevailing prices or at negotiated prices. The Selling          
Securityholders may sell all or a portion of the Selling Securityholder         
Securities in private transactions or in the over-the-counter market at prices  
related to the prevailing prices of the Selling Securityholder Securities on    
Nasdaq at the time of the sale. The Selling Securityholders may effect such     
transactions by selling to or through one or more broker-dealers, and such      
broker-dealers may receive compensation in the form of underwriting discounts,  
concessions or commissions from the Selling Securityholders. For example, the   
Selling Securityholder Securities may be sold by one or more of the following   
without limitation: (a) a block trade in which the broker or dealer so engaged  
will attempt to sell the Selling Securityholder Securities as agent but may     
position and resell a portion of the block as principal to facilitate the       
transaction; (b) purchases by a broker or dealer as principal and resale by     
such broker or dealer for its account pursuant to this Prospectus; (c)          
ordinary brokerage transactions and transactions in which the broker solicits   
purchasers; and (d) face to face transactions between sellers and purchasers    
without a broker-dealer. In effecting sales, brokers or dealers engaged by the  
Selling Securityholders may arrange for other brokers or dealers to             
participate in the resales.                                                     

The Selling Securityholders and any broker-dealers that participate in the  
distribution may under certain circumstances be deemed to be "underwriters"     
within the meaning of the Securities Act, and any commissions received by such  
broker-dealers and any profits realized on the resale of shares by them may be  
deemed to be underwriting discounts and commissions under the Securities Act.   
To the extent required under the Securities Act, a supplemental prospectus      
will be filed disclosing (a) the name of any such broker-dealers, (b) the       
number of Selling Securityholder Securities involved, (c) the price at which    
such Selling Securityholder Securities are to                                   

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be sold, (d) the commissions paid or discounts or concessions allowed to such   
broker-dealers, where applicable, (e) that such broker-dealers did not conduct  
any investigation to verify the information set out or incorporated by          
reference in this prospectus, as supplemented, and (f) other facts material to  
the transaction.                                                                

The Company and the Selling Securityholders may agree to indemnify such     
broker-dealers against certain liabilities, including liabilities under the     
Securities Act. In addition, the Company has agreed to indemnify the Selling    
Securityholders and any underwriter with respect to the Selling Securityholder  
Securities against certain liabilities, including, without limitation, certain  
liabilities under the Securities Act, or, if such indemnity is unavailable, to  
contribute toward amounts required to be paid in respect of such liabilities.   

The Company has agreed to pay certain costs and expenses incurred in        
connection with the registration of the Selling Securityholder Securities,      
except that the Selling Securityholders shall be responsible for all selling    
commissions, transfer taxes and related charges in connection with the offer    
and sale of such Selling Securityholder Securities.                             

There is no assurance that any of the Selling Securityholders will sell any 
or all of the Selling Securityholder Securities. The Company has agreed to      
keep the registration statement relating to the offering and sale by the        
Selling Securityholders of the Selling Securityholder Securities continuously   
effective for a period of two (2) years from the date of this Prospectus.       

BLAIR COMMISSION  

Pursuant to the Warrant Agreement, the Company has agreed not to solicit    
Warrant exercises other than through Blair, unless Blair declines to make such  
solicitation. Blair has agreed to assist the Company in effecting the Exercise  
Offer. Upon any exercise of the Warrants, the Company will pay Blair a fee of   
5% of the aggregate Warrant exercise price (the "Blair Commission"), if (i)     
the market price of the Company's Class A Common Stock on the date the          
Warrants are exercised is greater than the then exercise price of the           
Warrants; (ii) the exercise of the Warrants was solicited by a member of the    
NASD as designated in writing on the Warrant Certificate subscription form;     
(iii) the Warrants are not held in a discretionary account; (iv) disclosure of  
compensation arrangements was made both at the time of the offering and at the  
time of exercise of the Warrants; and (v) the solicitation of exercise of the   
Warrant was not in violation of Rule 10b-6 promulgated under the Exchange Act.  

As of October 1, 1996, there were seven market makers in the Company's      
securities. Rule 10b-6 may prohibit Blair from engaging in any market making    
activities with regard to the Company's securities for the period from nine     
business days (or such other applicable period as Rule 10b-6 may provide)       
prior to any solicitation by Blair of the exercise of Class A Warrants until    
the later of the termination of such solicitation activity or the termination   
(by waiver or otherwise) of any right that Blair may have to receive a fee for  
the exercise of Warrants following such solicitation. As a result, Blair may    
be unable to provide a market for the Company's securities during certain       
periods while the Warrants are exercisable.                                     

CONCURRENT OFFERINGS  

Pursuant to the registration statement of which this Prospectus forms a     
part, the Company has registered (i) up to 10,590,196 shares of Class A Common  
Stock of the Company, which are issuable upon exercise of the Company's         
outstanding Class B Warrants pursuant to the Company's Exercise Offer in which  
it has reduced the exercise price of the Class B Warrants to $7.50 until        
, 1996, (ii) the resale of 1,550,000 Class B Warrants held by certain 
other selling securityholders and the 1,550,000 shares of Class A Common Stock  
underlying such Class B Warrants. Sales of such securities, or the potential    
of such sales, may have an adverse effect on the market price of the            
securities offered hereby.                                                      

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DESCRIPTION OF CAPITAL STOCK AND WARRANTS 

COMMON STOCK                                                                    

Class A Common Stock. Holders of Class A Common Stock have the right to cast
one vote for each share held of record on all matters submitted to a vote of    
holders of Class A Common Stock, including the election of directors. The       
Class A and Class B Common Stock vote together as a single class on all         
matters on which stockholders may vote, except when class voting is required    
by applicable law.                                                              

Holders of Class A Common Stock are entitled to receive such dividends,     
together with the holders of Class B Common Stock, pro rata based on the        
number of shares held, when, as and if declared by the Board of Directors,      
from funds legally available therefor, subject to the rights of holders of any  
outstanding Preferred Stock. In the case of dividends or other distributions    
payable in stock of the Company, including distributions pursuant to stock      
splits or division of stock of the Company, only shares of Class A Common       
Stock will be distributed. In the event of the liquidation, dissolution or      
winding up of the affairs of the Company, all assets and funds of the Company   
remaining after the payment of all debts and other liabilities, subject to the  
rights of the holders of any outstanding Preferred Stock, shall be              
distributed, pro rata, among the holders of the Class A and Class B Common      
Stock. Holders of Class A Common Stock are not entitled to preemptive,          
subscription, cumulative voting or conversion rights, and there are no          
redemption or sinking fund provisions applicable to the Class A Common Stock.   
All outstanding shares of Class A Common Stock are, and the shares of Class A   
Common Stock offered hereby will be when issued, fully paid and non-            
assessable.                                                                     

Class B Common Stock. Immediately prior to the date hereof there were       
3,960,000 shares of Class B Common Stock outstanding held by six stockholders   
of record. Each share of Class B Common Stock is entitled to six votes on all   
matters on which stockholders may vote, including the election of directors.    
The Class A and Class B Common Stock vote together as a single class on all     
matters on which stockholders may vote, except when class voting is required    
by applicable law.                                                              

Holders of Class B Common Stock are entitled to participate together with   
the holders of Class A Common Stock, pro rata based on the number of shares     
held, in the payment of cash dividends and in the liquidation, dissolution and  
winding up of the Company, subject to the rights of holders of any outstanding  
Preferred Stock. In the case of dividends, or other distributions payable in    
stock of the Company, including distributions pursuant to stock splits or       
divisions of stock of the Company, only shares of Class A Common Stock shall    
be distributed with respect to Class B Common Stock.                            

Shares of Class B Common Stock are automatically convertible into an        
equivalent number of fully paid and non-assessable shares of Class A Common     
Stock upon the sale or transfer of such shares by the original record holder    
thereof except to another holder of Class B Common Stock. Each share of Class   
B Common Stock also is convertible at any time upon the option of the holder    
into one share of Class A Common Stock. There are no preemptive, subscription,  
redemption, conversion or cumulative voting rights applicable to the Class B    
Common Stock except under the Stockholders' Agreement.                          

REDEEMABLE CLASS B WARRANTS                                                     

Each Class B Warrant entitles the registered holder to purchase one share of
Class A Common Stock at an exercise price of $9.75 at any time after issuance   
until 5:00 P.M., New York City Time, on March 6, 2000. However, concurrently    
herewith, the Company has made the Exercise Offer to the holders of the         
Company's outstanding Class B Warrants to reduce the exercise price of the      
outstanding Class B Warrants to $7.50 per share to the extent that a holder     
exercises his or her Class B Warrants prior to 5:00 P.M., New York City time,   
on     , 1996, unless such date is extended by the Company. Following such      
date through January 17, 1997, a holder will continue to have the right to      
exercise his or her Class B Warrants (in accordance with the terms thereof) at  
the re-set exercise price of $9.75 per share. In addition, the Class B          
Warrants are subject to redemption by the Company upon 30 days' written notice  
at a redemption price of $.05 per Class B Warrant, if the closing               

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price of the Company's Class A Common Stock for any 30 consecutive trading days 
ending within 5 days of the notice of redemption averages in excess of $13.65   
per share. This condition has been met, and by notice dated [    ], 1996, the   
Company has exercised its right pursuant to the terms of the Warrants to redeem 
on January 20, 1997 each Class B Warrant not exercised by January 17, 1997, at  
5:00 P.M. New York City time.                                                   

The Class B Warrants are issued pursuant to the Warrant Agreement among the 
Company, Blair and American Stock Transfer & Trust Company, New York, New York, 
as Warrant Agent, and are evidenced by warrant certificates in registered form. 
The Class B Warrants provide for adjustment of the exercise price and for a     
change in the number of shares issuable upon exercise to protect holders        
against dilution in the event of a stock dividend, stock split, combination or  
reclassification of the Class A Common Stock or upon issuance of shares of      
Class A Common Stock at prices lower than the market price of the Class A       
Common Stock, with certain exceptions.                                          

The exercise price of the Class B Warrants was determined by negotiation    
between the Company and the Underwriter in the Company's initial public         
offering and should not be construed to be predictive of or to imply that any   
price increases in the Company's securities will occur.                         

A Class B Warrant may be exercised upon surrender of the Class B Warrant    
certificate on or prior to its expiration date (or earlier redemption date) at  
the offices of American Stock Transfer & Trust Company, New York, New York, the 
Warrant Agent, with the form of "Election to Purchase" on the reverse side of   
the Class B Warrant certificate completed and executed as indicated,            
accompanied by payment of the full exercise price (by certified or bank check   
payable to the order of the Company) for the number of shares with respect to   
which the Class B Warrant is being exercised. Shares issued upon exercise of    
Class B Warrants and payment in accordance with the terms of the Class B        
Warrants will be fully paid and non-assessable.                                 

The Class B Warrants do not confer upon the Class B Warrantholder any voting
or other rights of a stockholder of the Company. Upon notice to the Class B     
Warrantholders, the Company has the right to reduce the exercise price or       
extend the expiration date of the Class B Warrants.                             

LEGAL MATTERS 

The validity of the securities offered hereby will be passed upon for the   
Company by the law firm of Irell & Manella LLP, Los Angeles, California.        

EXPERTS 

The financial statements of Interactive Flight Technologies, Inc., as of    
October 31, 1995 and for the year then ended, and the cumulative statements of  
operations, stockholders' equity (deficiency), and cash flows for the period    
February 1, 1994 (inception) through October 31, 1995, have been incorporated   
by reference herein and in the registration statement in reliance upon the      
reports of KPMG Peat Marwick LLP and Richard A. Eisner & Company LLP,           
independent certified public accountants incorporated by reference herein       
(insofar as such report of Richard A. Eisner & Company LLP relates to the       
amounts included for the period from February 1, 1994 (inception) to October    
31, 1994), and upon the authority of said firms as experts in accounting and    
auditing.                                                                       

The balance sheet of the Company at October 31, 1994 and the related        
statements of operations, stockholders' equity (deficiency) and cash flows for  
the period from inception (February 1, 1994) through October 31, 1994           
incorporated herein by reference have been audited by, and are incorporated     
herein by reference in reliance upon the report of, Richard A. Eisner & Company 
LLP, independent certified public accountants, given on the authority of that   
firm as experts in accounting and auditing.                                     

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Effective May 10, 1995, the Company changed its independent accountants from
Richard A. Eisner & Company LLP ("Eisner") to KPMG Peat Marwick LLP ("Peat      
Marwick"). Prior to the retention of Peat Marwick, neither the Company, nor     
any person on its behalf, consulted with Peat Marwick regarding the             
application of accounting principles to any transaction or the types of audit   
opinion that might be rendered on the Company's financial statements. The       
decision to change accountants was recommended by the Board of Directors of     
the Company. There were no disagreements with Eisner on any matter of           
accounting principles or practices, financial statement disclosure or auditing  
scope or procedures, which disagreements, if not resolved to their              
satisfaction, would have caused them to make reference in connection with       
their opinion to the subject matter of the disagreement.                        

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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED OCTOBER   , 1996 

                                                    ALTERNATE OFFERING

                                                              #2 PAGES

INTERACTIVE FLIGHT TECHNOLOGIES, INC. 

EXERCISE OFFER/PROSPECTUS     

OFFER TO REDUCE THE EXERCISE PRICE OF CLASS B WARRANTS TO $7.50 
TO HOLDERS OF THE COMPANY'S 10,590,196 CLASS B WARRANTS 
FOR EXERCISES BEFORE          , 1996

ISSUANCE OF UP TO 10,590,196 SHARES OF CLASS A COMMON STOCK 
UNDERLYING OUTSTANDING REDEEMABLE CLASS B WARRANTS

Interactive Flight Technologies, Inc. (the "Company"), hereby offers (the   
"Exercise Offer"), to the holders (the "Holders") of the Company's outstanding  
Class B Redeemable Stock Purchase Warrants (the "Class B Warrants" or           
"Warrants") who exercise their Class B Warrants pursuant to the Exercise Offer, 
to reduce the exercise price of the outstanding Class B Warrants to $7.50 per   
share (from $9.75 per share) for each Class B Warrant so exercised, in each     
case if and only if a Holder exercises his or her Class B Warrants prior to     
5:00 P.M., New York City time, on         , 1996, unless such date is extended  
by the Company as described herein (such date, or such date as so extended,     
being referred to as the "Expiration Date"). Following the Expiration Date and  
until the Redemption Date described below, a Holder will continue to have the   
right to exercise his or her Class B Warrants (in accordance with the terms     
thereof) at the re-set exercise price of $9.75 per share. However, by notice    
dated       , 1996, the Company has exercised its right pursuant to the terms   
of the Warrants to redeem (the "Warrant Redemption") on January 20, 1997 (the   
"Redemption Date"), each Class B Warrant not exercised by January 17, 1997, at  
5:00 P.M., New York City time. ACCORDINGLY, ALL CLASS B WARRANTS NOT EXERCISED  
PRIOR TO 5:00 P.M. NEW YORK TIME ON JANUARY 17, 1997, WILL CEASE TO BE          
EXERCISABLE AND WILL REPRESENT ONLY THE RIGHT TO RECEIVE, ON OR AFTER THE       
REDEMPTION DATE, $.05 PER WARRANT UPON SURRENDER THEREOF.                       

THE EXERCISE OFFER WILL EXPIRE ON [          ],                               
1996, AT 5:00 P.M., NEW YORK CITY TIME, UNLESS                                
EXTENDED. WITHDRAWAL RIGHTS WILL ALSO EXPIRE AT                               
5:00 P.M., NEW YORK CITY TIME, ON [          ],                               
1996. FURTHER, ANY CLASS B WARRANTS NOT EXERCISED                             
BY JANUARY 17, 1997, AT 5:00 P.M. NEW YORK CITY                               
TIME, WILL CEASE TO BE EXERCISABLE AND WILL                                   
THEREAFTER BE REDEEMED ON JANUARY 20, 1997 FOR                                
$.05 PER WARRANT.                                                             

This Exercise Offer/Prospectus also relates to the issuance of up to        
10,590,196 shares of the Company's Class A Common Stock, $.01 par value ("Class 
A Common Stock"), issuable upon exercise of the outstanding Class B Warrants    
during and following the Exercise Offer, except that this Exercise              
Offer/Prospectus does not relate to the issuance of such shares following the   
Exercise Offer to Holders who acquired their Class B Warrants in a transaction  
or chain of transactions not involving any public offering.                     

----------- 

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE 
OF RISK. SEE "RISK FACTORS" ON PAGE 8.      

----------- 

The Class A Common Stock and the Company's Class B Common Stock, $.01 par   
value (the "Class B Common Stock"), are essentially identical in all respects,  
except that the Class B Common Stock has six votes per share and the Class A    
Common Stock has one vote per share. The Class B Common Stock is convertible    
into Class A Common stock on a share-for-share basis. The holders of the Class  
B Common Stock, all of whom are executive officers, directors and/or principal  
stockholders of the Company, control approximately 65% of the total voting      
power of the Company and are therefore able to elect all of the Company's       
directors and to control the Company.                                           

----------- 

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 EXERCISE OFFER/  PROSPECTUS. ANY REPRESENTATION   
TO THE CONTRARY IS A CRIMINAL OFFENSE.                                          

The date of this Exercise Offer/Prospectus is          , 1996     

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On March 14, 1995, the Company completed an initial public offering (the    
"IPO") of 3,220,000 Units (the "Units"), each Unit consisting of one share of   
Class A Common Stock, one redeemable class A warrant (each, a "Class A          
Warrant") and one Class B Warrant. Each Class A Warrant entitles the holder to  
purchase one share of Class A Common Stock and one Class B Warrant for an       
exercise price of $7.00. The components of the Units were transferrable         
separately upon issuance. On May 17, 1996, the Company completed an Exercise    
Offer pursuant to which the Company offered holders of its redeemable Class A   
Warrants who exercised their Class A Warrants (i) to issue an extra 1/2 of a    
Class B Warrant for each Class A Warrant exercised by such holder on or prior   
to May 17, 1996 (in addition to the one share of Class A Common Stock and one   
Class B Warrant issuable upon exercise of the Class A Warrants pursuant to the  
terms of the Class A Warrants), and (ii) to reduce the exercise price of the    
Class A Warrants to $5.75 per share (from $7.00 per share) with respect to any  
such exercise. On July 26, 1996, pursuant to the terms of the Class A           
Warrants, the Company redeemed its remaining Class A Warrants for $.05 per      
Class A Warrant.                                                                

The Class A Common Stock and the Class B Warrants are traded on the Nasdaq  
SmallCap Market ("Nasdaq"). On October     , 1996, the closing sale price of    
the Class A Common Stock on Nasdaq was $        per share, and the closing      
sale price of the Class B Warrants on Nasdaq was $       .                      

IMPORTANT 

Any Holder desiring to exercise all or any portion of his or her Class B    
Warrants should either (1) complete and sign the Letter of Transmittal or a     
facsimile copy thereof in accordance with the instructions in the Letter of     
Transmittal, mail or deliver it together with a certified or bank check         
payable to "Interactive Flight Technologies, Inc." in the amount of $7.50 per   
share exercised in the Exercise Offer and any other required documents to       
American Stock Transfer & Trust Company (the "Warrant Agent") and either mail   
or deliver the Holder's Class B Warrant certificate(s) to the Warrant Agent or  
follow the procedure for book-entry exercise set forth under the caption "The   
Exercise Offer--Procedures for Exercising Class B Warrants--Book Entry          
Exercise," or (2) request the Holder's broker, dealer, commercial bank, trust   
company or other nominee to effect the transaction for him or her. A Holder     
having Class B Warrants registered in the name of a broker, dealer, commercial  
bank, trust company or other nominee must contact that broker, dealer,          
commercial bank, trust company or other nominee if such Holder desires to       
exercise such Class B Warrants. Holders who desire to exercise Class B          
Warrants and whose certificates for such Class B Warrants are not immediately   
available should exercise such Class B Warrants by following the procedures     
for guaranteed delivery set forth under the caption "The Exercise Offer--       
Procedures for Exercising Class B Warrants--Guaranteed Delivery."               

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

THE BOARD OF  DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED  THE MAKING OF  
THE EXERCISE OFFER. HOWEVER, NEITHER THE  COMPANY NOR ITS BOARD OF DIRECTORS  
IS MAKING  ANY RECOMMENDATION TO ANY HOLDER AS TO WHETHER  TO EXERCISE CLASS  
B WARRANTS PURSUANT TO THE EXERCISE  OFFER. EACH HOLDER SHOULD MAKE HIS OR  
HER OWN DECISION,  AFTER READING  THIS EXERCISE  OFFER/PROSPECTUS, AS  TO 
WHETHER  TO EXERCISE  CLASS B  WARRANTS  AND, IF  SO, HOW  MANY CLASS  B  
WARRANTS TO EXERCISE. THE COMPANY HAS BEEN ADVISED THAT CERTAIN OF ITS  
EXECUTIVE  OFFICERS  OR DIRECTORS  INTEND TO  EXERCISE  THEIR CLASS  B  
WARRANTS PURSUANT TO THE EXERCISE OFFER.                              

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

Questions and requests for assistance or for additional copies of this      
Exercise Offer/Prospectus, the Letter of Transmittal or the Notice of           
Guaranteed Delivery may be directed to the Warrant Agent at its address and     
telephone number set forth in "The Exercise Offer and Warrant Redemption--      
Warrant Agent."                                                                 

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DOCUMENTS INCORPORATED BY REFERENCE 

The following documents heretofore filed by the Company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") with the Commission are   
incorporated herein by reference: (1) the Company's Annual Report on Form 10-   
KSB for the fiscal year ended October 31, 1995, and Amendment No. 1 to the      
Annual Report on Form 10-KSB/A for the fiscal year ended October 31, 1995       
(including, but not limited to, the Financial Statements and notes thereto      
commencing on page F-1 thereof); (2) the Company's Quarterly Reports on Form    
10-QSB dated January 31, 1996, April 30, 1996, and July 31, 1996 (including,    
but not limited to, the Financial Statements and notes thereto commencing on    
page 3 of each such Quarterly Report); and (3) the description of the           
Company's Common Stock as set forth in the Company's registration statement on  
Form 8-A filed with the Commission on December 31, 1994, as amended by the      
Company's registration statement on Form 8-A/A filed with the Commission on     
March 8, 1995, and any other amendments or reports thereto filed with the       
Commission for the purpose of updating such description.                        

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 
15(d) of the Exchange Act after the date of this Exercise Offer/Prospectus and  
prior to the termination of the offering of the shares of Common Stock made     
hereby shall be deemed to be incorporated in this Exercise Offer/Prospectus by  
reference and to be a part hereof from the date of filing of such documents.    
Any statement incorporated herein shall be deemed to be modified or superseded  
for purposes of this prospectus to the extent that a statement contained        
herein or in any other subsequently filed document that also is or is deemed    
to be incorporated by reference herein modifies or supersedes such statement.   
Any such statement so modified or superseded shall not be deemed, except as so  
modified or superseded, to constitute a part of this Exercise                   
Offer/Prospectus.                                                               

The Company will provide, without charge, to each person to whom a copy of  
this Exercise Offer/Prospectus has been delivered, on the request of such       
person, a copy of any and all of the information that has been or may be        
incorporated by reference in this Exercise Offer/Prospectus, other than         
exhibits thereto. Written or oral requests for such copies should be directed   
to Interactive Flight Technologies, Inc., 4041 N. Central Avenue, Suite 2000,   
Phoenix, Arizona 85012, Attention: Chief Financial Officer. The telephone       
number is (602) 200-8900.                                                       

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SUMMARY       

The following summary is qualified in its entirety by reference to, and     
should be read in conjunction with, the more detailed information and           
financial statements (including the notes thereto) incorporated by reference    
into this Exercise Offer/Prospectus.                                            

THE COMPANY 

Interactive Flight Technologies, Inc. (the "Company") is engaged in the     
development, assembly, installation and operation of a computer-based in-       
flight entertainment network (the "Entertainment Network"). The first           
generation of the Entertainment Network provided aircraft passengers the        
opportunity to view movies, to play computer games and, in certain cases where  
permitted by applicable law, to gamble through a high-resolution video touch    
screen. The Company has also recently developed a second generation of the      
Entertainment Network (the "IFEN-2") which includes additional features such    
as secure casino gaming, in-flight shopping, a telephone interface system, the  
ability for passengers to pay for IFEN-2 usage through their credit cards, and  
increased video-on-demand capacity.                                             

To date, the Company has entered into contracts to install and operate the  
Entertainment Network on the aircraft of three airlines--Alitalia Airlines      
S.p.A. ("Alitalia"), Debonair Airlines ("Debonair"), and Swissair VKB           
("Swissair"). Under the Company's agreement with Alitalia (the "Alitalia        
Agreement"), the first generation of the Entertainment Network system was       
installed in November 1995 in the first class and business class seats of an    
Alitalia MD-11 aircraft. Following completion of the test period of this first  
installed Entertainment Network system, Alitalia accepted the remainder of the  
Alitalia Agreement and the Company accordingly delivered first generation       
Entertainment Network systems for installation on an additional four Alitalia   
MD-11 aircraft. The agreement provides for the Company to operate the           
Entertainment Networks on all five aircraft over a period of approximately      
eight years. The Alitalia Agreement does not presently provide for, and is not  
expected to provide for, passenger use of gambling features of the              
Entertainment Network. Under the Alitalia Agreement, Alitalia is to pay an      
aggregate of approximately $2.7 million for the hardware components of the      
five Entertainment Network systems, of which $1.1 million has been paid to      
date and $1.6 million is currently due and payable.                             

In March 1996, the Company entered into a second airline contract (the      
"Debonair Agreement") with Debonair, a start-up European airline. The Debonair  
Agreement provides for the Company to deliver and install IFEN-2 systems        
(including video casino style gambling) for all seats on Debonair's entire      
fleet, which consists of six RJ-146 aircraft. The aggregate purchase price to   
be paid by Debonair for the hardware components of the six IFEN-2 systems and   
related spare parts is approximately $5.8 million. However, the Debonair        
Agreement provides that, provided Debonair utilizes the casino gaming feature   
of the Entertainment Networks, Debonair is not required to pay any up-front     
funds to the Company for the six Entertainment Networks. Instead, payments to   
the Company will be made solely through a revenue-sharing arrangement, which    
provides that the Company will receive a percentage of revenues generated by    
the Entertainment Networks, principally casino gaming revenues, until the       
aggregate purchase price plus accrued interest for all six Entertainment        
Networks is paid, and thereafter the Company will receive a reduced percentage  
of such revenues. The Debonair Agreement further provides that if the use of    
the casino gaming features of the IFEN-2 systems is ordered by law to cease,    
then no further payments of purchase price for each installed system shall be   
due.                                                                            

Effective July 18, 1996, the Company entered into an agreement with Swissair
to provide for delivery and installation by the Company of IFEN-2 systems on    
sixteen Swissair MD-11 aircraft and five Swissair B-747 aircraft. The Company   
will also provide various maintenance and operational services for the          
installed IFEN-2 systems. Subject to execution of an agreement with             
Interkantonale Landeslotterie ("ILL"), the operator of the Swiss lottery based  
in Zurich, Switzerland, the IFEN-2 systems installed on Swissair aircraft will  
allow passengers to participate in various Swiss lottery games, but are not     
expected to allow use of the traditional casino style gaming features such as   
slots or poker. In the event that no agreement is reached with ILL, either      
Swissair or the Company may terminate the Swissair Agreement.                   

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Under the Swissair Agreement, subject to the terms thereof, the Company is  
entitled to receive an aggregate of approximately $72 million for the IFEN-2    
hardware, plus the costs of installation and certain upgrades. The Company      
will also be reimbursed for its projected costs in connection with maintaining  
and operating the systems. However, the hardware purchase price and the         
operating expenses are payable only out of net revenues received from           
passenger participation in the aforementioned lottery games. Further, the       
Company may receive such amounts only after Swissair is first reimbursed from   
the net lottery revenues for certain expenses incurred in connection with the   
installation and operation of the IFEN-2 systems. Any amounts remaining after   
payment of the Company's operating costs and the hardware purchase price will   
be paid over to ILL. The Company will also receive a percentage of revenues     
and commissions from advertising and shopping services available on the         
installed IFEN-2 systems.                                                       

The Company is aggressively marketing the Entertainment Network to numerous 
additional airlines, focusing primarily on international carriers or domestic   
carriers with international routes. However, there can be no assurance that     
definitive agreements will be executed with any other airlines. See "Risk       
Factors."                                                                       

On September 5, 1996, the Company signed a Letter of Intent to form a       
strategic alliance (the "Alliance") with interests of the Pritzker family of    
Chicago (the "Pritzker Interests"). The Letter of Intent contemplates that the  
Pritzker Interests would use their marketing resources to enhance IFT's         
relationship with international and domestic air carriers. In addition, the     
Letter of Intent provides for the Pritzker Interests to help develop and        
coordinate financing sources for IFT.                                           

Subject to the satisfaction of certain conditions, the Pritzker Interests   
would invest up to $20 million in a proposed joint venture in order to raise    
one-third of the money required for a potential future airline project          
currently under consideration (which amount would not be available to fund the  
Company's currently existing airline obligations). The Pritzker Interests       
would also have the option to invest in up to six similar ventures for future   
airline projects. Under the Alliance, the Pritzker Interests would purchase up  
to $1 million of IFT stock in the open market and would receive warrants to     
purchase up to 10% of IFT (on a fully-diluted basis). These warrants would be   
issued in specified increments as future airline contracts are executed by      
IFT. Finally, the Alliance would provide for John Pritzker and one other        
Pritzker nominee to join the Board of Directors of IFT, and for additional      
Pritzker nominees if the size of the Board is increased.                        

Completion of the transaction and formation of the Alliance are subject to  
customary conditions precedent, including the negotiation and execution of      
definitive documentation. There can be no assurance that the parties will       
agree upon and execute such definitive documents or that the Alliance, if       
formed, will produce the desired results.                                       

Since commencement of operations, the Company has developed a substantial   
catalogue of proprietary technology and know-how relating to the Entertainment  
Network and its related systems. In addition, the Company has an exclusive      
license (the "FortuNet License") for technology for airline use from FortuNet,  
Inc. ("FortuNet"), a gaming equipment manufacturer that distributes video       
gaming networks to casinos and other gaming establishments. The Chief           
Executive Officer of the Company, who is also a director and principal          
stockholder of the Company, is a former employee of FortuNet and was a          
substantial contributor to the development of the technology licensed from      
FortuNet.                                                                       

In July 1996, the Company relocated its principal executive offices and its 
primary manufacturing and development facilities from Las Vegas, Nevada to      
Phoenix, Arizona.                                                               

The purpose of the Exercise Offer is to raise additional capital by         
encouraging Holders to exercise their Class B Warrants. In the absence of the   
Exercise Offer, the Company anticipates that its current cash reserves,         
together with funds to be received from its current contracts (described        
above), will be sufficient to fund the Company's currently-budgeted operations  
through December 1996. The Company will require significant additional          
financing to continue its operations beyond such date. In the absence of the    
Exercise Offer, the                                                             

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Company will not have sufficient resources to deliver all the Entertainment     
Networks to Debonair and Swissair as currently contemplated under the Debonair  
Agreement and the Swissair Agreement and, therefore, the ability of the         
Company to successfully perform under those contracts is dependent upon         
raising capital through the Exercise Offer or otherwise.                        

The Exercise Offer represents, in the opinion of the Company, a critical    
opportunity to raise the needed significant capital, particularly in light of   
the fact that there is no assurance that the Company will be able to secure     
significant capital through other sources. Assuming that 100%, 75% and 50% of   
the Class B Warrants are exercised in the Exercise Offer, the Company will      
receive net proceeds (after payment of a 5% solicitation fee and estimated      
expenses of approximately $80,000) of approximately $75,375,147, $56,511,360    
and $37,647,573, respectively. These proceeds, together with the revenues       
assumed to be derived under the Company's contracts, would be expected to be    
sufficient to fund the Company's operations through approximately October       
1998, December 1997, and March 1997, respectively. However, the Company is      
engaged in discussions with a number of airlines and, in the event that the     
Company obtains commitments from one or more airlines for the purchase of       
additional Entertainment Networks financed by the Company, the foregoing        
estimates of the Company's liquidity are likely to be significantly shortened,  
since the Company anticipates that such agreements will contain extended        
payment terms similar to those of its current contracts. See "Risk Factors --   
Need for Additional Financing; Potential Cash Shortages."                       

The Company was incorporated in Delaware in August 1994 and is the successor
by merger to In-Flight Entertainment Services Corp., a New York corporation     
incorporated in February 1994. The Company completed an initial public          
offering of its securities in March 1995. Unless the context requires or as     
otherwise indicated, all references to the "Company" include the predecessor    
company. The Company's principal executive offices are located at 4041 N.       
Central Avenue, Suite 2000, Phoenix, Arizona 85012, and its telephone number    
is (602) 200-8900.                                                              

SUMMARY OF THE OFFERING 

                                                        · Enlarge/Download Table
                                                                                          
Securities Offered...............  10,590,196 shares of Class A Common Stock underlying   
                                   outstanding Class B Warrants.                          
Expiration Date..................       , 1996, unless extended by the Company. The       
                                   "Expiration Date" is the original expiration date of   
                                   the Exercise Offer or as that date may be extended. See
                                   "The Exercise Offer--Terms of the Exercise Offer."     
Redemption Date..................  January 20, 1997                                       
Class B Warrant Exercise Price:                                                           
During the Exercise Offer........  $7.50 per share.                                       
After the Exercise Offer (but                                                             
 prior to the Redemption Date)...  $9.75 per share.                                       
Redemption Price of Class B War-                                                          
 rants Not Exercised Prior to Re-                                                         
 demption Date...................  $0.05 per Class B Warrant                              
Shares of Class A Common Stock                                                            
 Outstanding:                                                                             
Prior to the Exercise Offer......  8,074,329 shares(1)                                    
After the Exercise Offer.........  18,664,525 shares(1)(2)                                
Class B Warrants Outstanding:                                                             
Prior to the Exercise Offer......  10,590,196 Class B Warrants                            
After the Exercise Offer.........      (3)                                                

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                                                        · Enlarge/Download Table
                                                                                         
Closing Sale Price Prior to                                                              
 Announcement of Exercise Offer                                                          
 and Warrant Redemption                                                                  
 (       , 1996)................. Class A Common Stock: $                                
                                  Class B Warrants: $                                    
Current Closing Sale Price                                                               
 (        , 1996)................ Class A Common Stock: $                                
                                  Class B Warrants: $                                    
Ownership of Class B Warrants.... Certain officers and directors of the Company own Class
                                  B Warrants, and some of these individuals have advised 
                                  the Company that they intend to exercise their Class B 
                                  Warrants in the Exercise Offer.                        
Warrant Agent.................... American Stock Transfer and Trust Company, 40 Wall     
                                  Street, 46th Floor, New York, NY 10005, 1-800-937-5449 
                                  (Reorganization Department).                           
Method of Exercising............. In order to exercise Class B Warrants, Holders must    
                                  follow the procedures set forth under the caption "The 
                                  Exercise Offer--Procedures for Exercising Class B      
                                  Warrants."                                             
Warrant Solicitation Fee......... Pursuant to the terms of the warrant agreement         
                                  governing the Class B Warrants, the Company will be    
                                  required to pay to D.H. Blair Investment Banking Corp.,
                                  the underwriter of the Company's initial public        
                                  offering ("Blair"), a warrant solicitation fee equal to
                                  5% of the gross proceeds received by the Company from  
                                  the exercise of Class B Warrants in the Exercise Offer.
                                  See "Plan of Distribution."                            
Use of Proceeds.................. The net proceeds to the Company will be utilized to    
                                  implement the Company's plan of operation, including   
                                  performing under its current contracts; marketing the  
                                  Entertainment Network to additional airlines and       
                                  performing under any contracts executed with such      
                                  airlines; and continuing the development of the        
                                  Entertainment Network. See "Purpose of Exercise Offer  
                                  and Use of Proceeds."                                  
Risk Factors..................... The securities offered hereby involve a high degree of 
                                  risk and should not be purchased by investors who      
                                  cannot afford the loss of their entire investment. See 
                                  "Risk Factors."                                        

--------                                                                        

(Footnotes from page 6)                                                         

(1) Excludes (i) 10,590,196 shares of Class A Common Stock issuable upon        
  exercise of the outstanding Class B Warrants; (ii) 165,000 shares of Class
A Common Stock issuable upon outstanding Class C Warrants; (iii) 165,000
  shares of Class A Common Stock issuable upon outstanding Class D Warrants;
(iv) 1,120,000 shares of Class A Common Stock issuable upon exercise of 
unit purchase options and the Class A and Class B Warrants contained    
therein issued to Blair in the Company's initial public offering; and   
(v) 2,345,000 shares of Class A Common Stock reserved for issuance under
the Company's Stock Option Plan, under which, as of the date of this    
  Exercise Offer/Prospectus, options to purchase 1,472,700 shares of Class A
 Common Stock are outstanding. See "Concurrent Offerings" and "Description
of Securities."                                                         
(2) Assumes the issuance of 10,590,196 shares of Class A Common Stock, the      
 maximum number of shares issuable upon the exercise of the maximum number
of Class B Warrants exercisable under the terms of the Exercise Offer.  
(3) If 100%, 75% and 50% of the Class B Warrants are exercised in the Exercise  
Offer, 0, 2,647,549 and 5,295,098 Class B Warrants, respectively, would 
remain outstanding after the Exercise Offer. However, any such remaining
Class B Warrants will be redeemed for $.05 on January 20, 1997, unless  
exercised prior thereto.                                                

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THE EXERCISE OFFER AND WARRANT REDEMPTION 

THE CLASS B WARRANTS                                                            

The Class B Warrants are subject to a Warrant Agreement (the "Warrant       
Agreement") by and among the Company, Blair and American Stock Transfer and     
Trust Company, as Warrant Agent. Pursuant to the terms of the Warrant Agreement,
the Class B Warrants are exercisable for one share of Class A Common Stock (the 
"Underlying Stock") at an exercise price of $9.75, subject to adjustment, at any
time prior to the Redemption Date. See "Description of Securities--Redeemable   
Class B Warrants."                                                              

THE COMPANY IS HEREBY OFFERING, TO HOLDERS WHO EXERCISE THEIR CLASS B       
WARRANTS PURSUANT TO THE EXERCISE OFFER, TO REDUCE THE EXERCISE PRICE OF CLASS  
B WARRANTS TO $7.50 PER SHARE (FROM $9.75 PER SHARE) FOR EACH CLASS B WARRANT   
SO EXERCISED, IF AND ONLY IF A HOLDER EXERCISES HIS OR HER CLASS B WARRANTS     
PRIOR TO THE EXPIRATION DATE (AS HEREINAFTER DEFINED).                          

IN ADDITION, BY NOTICE DATED          , 1996, THE COMPANY HAS EXERCISED ITS 
RIGHT TO REDEEM FOR $.05 ANY CLASS B WARRANT WHICH IS NOT EXERCISED PRIOR TO    
JANUARY 17, 1997, AT 5:00 P.M. NEW YORK CITY TIME.                              

TERMS OF THE EXERCISE OFFER                                                     

Pursuant to the Exercise Offer, the Company has offered to reduce to $7.50  
the Exercise Price of Class B Warrants to Holders of the Company's 10,590,196   
Class B Warrants, for exercises before          , 1996. The reduced per share   
exercise price of $7.50 was selected by the Company, after consultation with    
Blair, as the highest exercise price which would be expected to induce all or   
a substantial portion of the Holders to exercise their Class B Warrants in the  
Exercise Offer. However, there can be no assurance that the reduction in        
exercise price will be sufficient to induce Holders to exercise their           
Warrants.                                                                       

Upon the terms and subject to the conditions of the Exercise Offer, the     
Company will accept exercises for any and all Class B Warrants that are         
validly exercised in accordance with the terms of the Exercise Offer prior to   
the Expiration Date (as hereinafter defined) and not withdrawn in accordance    
with the procedures set forth under the caption "--Withdrawal Rights." As used  
in the Exercise Offer, the term "Expiration Date" means 5:00 p.m., New York     
City time, on         , 1996; provided, however, that if the Company, in its    
sole discretion, has extended the period of time during which the Exercise      
Offer will be open, the term "Expiration Date" means the latest time and date   
on which the Exercise Offer, as so extended, will expire.                       

The Company reserves the right, in its sole discretion, at any time and from
time to time, to extend the period of time during which the Exercise Offer is   
open by giving oral or written notice of such extension to the Warrant Agent.   
There can be no assurance that the Company will exercise its right to extend    
the Exercise Offer. If the Company decides, in its sole discretion, to          
decrease the number of Class B Warrants exercisable in the Exercise Offer or    
to increase or decrease the $7.50 exercise price applicable in the Exercise     
Offer and, at the time that notice of such increase or decrease is first        
published, sent or given to holders of Class B Warrants in the manner           
specified below, the Exercise Offer is scheduled to expire at any time earlier  
than the tenth business day from the date that such notice is first so          
published, sent or given, the Exercise Offer will be extended until the         
expiration of such period of ten business days.                                 

The Company also expressly reserves the right to (i) delay the acceptance of
exercises of any Class B Warrants not theretofore accepted for exercise in      
order to comply in whole or in part with applicable law, (ii) terminate the     
Exercise Offer and not accept for exercise any Class B Warrants not             
theretofore accepted for exercise upon the occurrence of any of the conditions  
specified under the caption "--Certain Conditions of the Exercise Offer," and   
(iii) amend the Exercise Offer in any respect at any time and from time to      
time.                                                                           

Any extension, delay, termination or amendment will be followed as promptly 
as practicable by public announcement thereof, such announcement in the case    
of an extension to be issued no later than 9:00 a.m., New York City time, on    
the next business day after the previously scheduled Expiration Date. For       
purposes of the                                                                 

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Exercise Offer, a "business day" means any day, other than a Saturday, Sunday   
or Federal holiday, on which the principal office of the Commission in          
Washington, D.C. is scheduled to be open for business and consists of the time  
period from 12:01 a.m. through 12:00 midnight, New York City time. Without      
limiting the manner in which the Company may choose to make any public          
announcement, except as provided by applicable law (including Rule 13e-4(e)(2)  
under the Exchange Act), the Company shall have no obligation to publish,       
advertise or otherwise communicate any such public announcement other than by   
issuing a release to the Dow Jones News Service.                                

The Company confirms that if it makes a material change in the terms of the 
Exercise Offer or the information concerning the Exercise Offer, or if it       
waives a material condition of the Exercise Offer, the Company will extend the  
Exercise Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2)      
under the Exchange Act, which require that the minimum period during which an   
offer must remain open (to allow for adequate dissemination to Holders and      
Holder response) following material changes in the terms of the Exercise Offer  
or information concerning the Exercise Offer, other than a change in            
percentage of securities exercisable or the $7.50 exercise price applicable in  
the Exercise Offer, will depend upon the facts and circumstances, including     
the relative materiality of the terms or information. The Company confirms      
that its reservation of the right to delay issuance to Holders of the           
Underlying Stock in respect of exercise of Class B Warrants which it has        
accepted for exercise is limited by Rule 13e-4(f)(5) under the Exchange Act,    
which requires that an issuer pay the consideration offered or return the       
exercised securities promptly after the termination or withdrawal of the        
Exercise Offer.                                                                 

ACCEPTANCE FOR PAYMENT; PAYMENT OF PURCHASE PRICE                               

Upon the terms and subject to the conditions of the Exercise Offer          
(including, if the Exercise Offer is extended or amended, the terms and         
conditions of the Exercise Offer as so extended or amended), the Company will   
accept for exercise any and all Class B Warrants validly exercised prior to     
the Expiration Date and not withdrawn, as soon as practicable after the         
Expiration Date. In all cases, acceptance of exercises of Class B Warrants      
pursuant to the Exercise Offer will only be made, and the Underlying Stock      
will only be issued, after timely receipt by the Warrant Agent of (i)           
certificates for such Class B Warrants or confirmation (a "Book-Entry           
Confirmation") of such Class B Warrants in the Warrant Agent's account at The   
Depository Trust Company ("DTC"), the Pacific Securities Depository Trust       
Company ("PSDTC") or the Philadelphia Depository Trust Company ("Philadep")     
(DTC, PSDTC and Philadep being sometimes collectively referred to as the        
"Book-Entry Transfer Facilities" or individually referred to as a "Book-Entry   
Transfer Facility") pursuant to the procedure set forth under the caption "--   
Procedures for Exercising Class B Warrants--Book-Entry Exercise," (ii) a        
properly completed and duly executed Letter of Transmittal or manually signed   
facsimile thereof (with any required signature guarantees) or, in the case of   
book-entry exercise, an Agent's Message (as defined below), (iii) a certified   
or bank check payable to "Interactive Flight Technologies, Inc." in the amount  
of $7.50 per share exercised in the Exercise Offer, and (iv) any other          
documents required by the Letter of Transmittal to American Stock Transfer &    
Trust Company (the "Warrant Agent").                                            

The term "Agent's Message" means a message, transmitted by a Book-Entry     
Transfer Facility to, and received by, the Warrant Agent and forming a part of  
a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility  
has received an express acknowledgment from the participant in such Book-Entry  
Transfer Facility's system exercising the Class B Warrants which are the        
subject of such Book-Entry Confirmation, that such participant has received     
and agrees to be bound by the terms of the Letter of Transmittal, and that the  
Company may enforce such agreement against such participant.                    

For purposes of the Exercise Offer, the Company shall be deemed to have     
accepted for exercise Class B Warrants as, if and when the Company gives oral   
or written notice to the Warrant Agent, as agent for the exercising Holders,    
of the Company's acceptance for exercise of such Class B Warrants pursuant to   
the Exercise Offer. Subject to the terms and conditions of the Exercise Offer,  
issuance of the Underlying Stock with respect to Class B Warrants accepted for  
exercise pursuant to the Exercise Offer will be made by the Warrant Agent,      
which will act as agent for the exercising Holders for the purpose of           
receiving such securities from the Company                                      

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and transmitting such securities to exercising Holders. If any exercised Class  
B Warrants are not accepted for exercise for any reason, or if certificates     
are submitted for more Class B Warrants than are exercised, then certificates   
for such Class B Warrants not accepted for exercise or not exercised will be    
returned (or, in the case of Class B Warrants exercised by book-entry transfer  
into the Warrant Agent's account at a Book-Entry Transfer Facility, such Class  
B Warrants will be credited to an account maintained at such Book-Entry         
Transfer Facility), without expense to the exercising Holder, as soon as        
practicable after the expiration or termination of the Exercise Offer.          

If, prior to the Expiration Date, the Company shall increase or decrease the
$7.50 exercise price applicable in the Exercise Offer, the Company will make    
applicable the increased or decreased exercise price in respect of, all         
Holders whose Class B Warrants are accepted for exercise pursuant to the        
Exercise Offer.                                                                 

PROCEDURES FOR EXERCISING CLASS B WARRANTS                                      

Valid Exercise. For Class B Warrants to be validly exercised pursuant to the
Exercise Offer, a properly completed and duly executed Letter of Transmittal    
or manually signed facsimile thereof (with any required signature guarantees),  
together with a certified or bank check payable to "Interactive Flight          
Technologies, Inc." in the amount of $7.50 per share so exercised in the        
Exercise Offer and any other documents required by the Letter of Transmittal,   
or, solely in connection with a book-entry exercise of the Class B Warrants,    
an Agent's Message must be received by the Warrant Agent prior to the           
Expiration Date at its address set forth in "The Exercise Offer and Warrant     
Redemption--Warrant Agent," and either the certificates for such Class B        
Warrants must be delivered to the Warrant Agent along with the Letter of        
Transmittal, or such Class B Warrants must be delivered pursuant to the         
procedure for book-entry transfer set forth below and a Book-Entry              
Confirmation of receipt of such Class B Warrants must be received by the        
Warrant Agent, in each case prior to the Expiration Date. Holders who are       
unable to comply with the foregoing procedures prior to the Expiration Date     
may exercise Class B Warrants pursuant to the guaranteed delivery procedures    
set forth below.                                                                

IN ORDER FOR AN EXERCISING HOLDER TO PARTICIPATE IN THE EXERCISE OFFER,     
CLASS B WARRANTS MUST BE VALIDLY EXERCISED PRIOR TO THE EXPIRATION DATE, WHICH  
IS CURRENTLY 5:00 P.M., NEW YORK CITY TIME, ON [  ],         , 1996.            

Book-Entry Exercise. The Warrant Agent will establish accounts with respect 
to the Class B Warrants at each of the Book-Entry Transfer Facilities for       
purposes of the Exercise Offer within two business days after the date of this  
Exercise Offer/Prospectus, and any financial institution that is a participant  
in a Book-Entry Transfer Facility system may make book-entry exercises of       
Class B Warrants by causing the Book-Entry Transfer Facility to exercise such   
Class B Warrants in the Warrant Agent's account at such Book-Entry Transfer     
Facility in accordance with such Book-Entry Transfer Facility's procedures for  
such exercise. However, although exercise of Class B Warrants may be effected   
through book-entry at a Book-Entry Transfer Facility, the Letter of             
Transmittal (or manually signed facsimile thereof), properly completed and      
duly executed (with any required signature guarantees), together with a         
certified or bank check payable to "Interactive Flight Technologies, Inc." in   
the amount of $7.50 per share so exercised in the Exercise Offer and any other  
required documents must, in any case, be transmitted to and received by the     
Warrant Agent at its address set forth in "The Exercise Offer and Warrant       
Redemption--Warrant Agent" prior to the Expiration Date, or exercising Holders  
must comply with the guaranteed delivery procedures set forth below. DELIVERY   
OF SUCH DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH     
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE   
WARRANT AGENT.                                                                  

Signature Guarantees. Signatures on all Letters of Transmittal must be      
guaranteed by a firm which is a member of a registered national securities      
exchange or of the National Association of Securities Dealers, Inc. or by a     
bank, credit union, savings association or other entity which is a member in    
good standing of the Securities Transfer Agent's Medallion Program              
(collectively, "Eligible Institutions") unless the Class B Warrants exercised   
thereby are exercised (i) by a registered Holder of such Class B Warrants       
(which term shall include                                                       

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any participant in a Book-Entry Transfer Facility whose name appears on a       
security position listing as the owner) who has not completed the box entitled  
"Special Issuance Instructions" on the Letter of Transmittal, or (ii) for the   
account of an Eligible Institution. See Instruction 1 of the Letter of          
Transmittal. If the certificates are registered in the name of a person other   
than the signer of the Letter of Transmittal, or if payment is to be made, or   
Class B Warrants not exercised or not accepted for exercise are to be issued,   
to a person other than the registered Holder, then the certificates must be     
endorsed or accompanied by appropriate transfer powers, in either case signed   
exactly as the names of the registered Holder appears on the certificates, and  
the signatures on the certificates or stock powers must be guaranteed as        
aforesaid. See Instruction 5 of the Letter of Transmittal.                      

Guaranteed Delivery. If a Holder desires to exercise Class B Warrants       
pursuant to the Exercise Offer and certificates for such Class B Warrants are   
not immediately available, or the procedure for book-entry transfer cannot be   
completed on a timely basis, or time will not permit all required documents to  
reach the Warrant Agent prior to the Expiration Date, such Class B Warrants     
may nevertheless be exercised if all of the following conditions are met:       

(i) such exercise is made by or through an Eligible Institution;        

 (ii) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided herewith is delivered to the Warrant     
Agent in the manner provided below and received by the Warrant Agent prior  
to the Expiration Date; and                                                 

(iii) the certificates for all exercised Class B Warrants in proper form
for exercise (or Book-Entry Confirmation of exercise of such Class B        
Warrants in the Warrant Agent's account at a Book-Entry Transfer Facility   
as described above), together with a properly completed and duly executed   
Letter of Transmittal (or manually signed facsimile thereof), a certified   
or bank check payable to "Interactive Flight Technologies, Inc." in the     
amount of $7.50 per share so exercised in the Exercise Offer and any other  
documents required by the Letter of Transmittal (or, in the case of book-   
entry exercise, an Agent's Message), are received by the Warrant Agent      
within five New York Stock Exchange trading days after the date of          
execution of the Notice of Guaranteed Delivery.                             

The Notice of Guaranteed Delivery may be delivered by hand, or transmitted  
by telegram, telex, facsimile transmission or mail, to the Warrant Agent and    
must include a guarantee by an Eligible Institution in the form set forth in    
such Notice of Guaranteed Delivery. In all cases, issuance of the Underlying    
Stock in respect of Class B Warrants accepted for exercise will be made only    
after timely receipt by the Warrant Agent of (i) certificates for such Class B  
Warrants (or Book-Entry Confirmation of exercise of such Class B Warrants in    
the Warrant Agent's account at a Book-Entry Transfer Facility as described      
above), (ii) a properly completed and duly executed Letter of Transmittal or    
manually signed facsimile thereof (with any required signature guarantees) or,  
in the case of book-entry exercises, an Agent's Message, (iii) a certified or   
bank check payable to "Interactive Flight Technologies, Inc." in the amount of  
$7.50 per share so exercised in the Exercise Offer, and (iv) any other          
documents required by the Letter of Transmittal.                                

The method of delivery of all documents, including certificates for Class B 
Warrants, is at the election and risk of the exercising Holder. If delivery is  
by mail, registered or certified mail with return receipt requested, properly   
insured, is recommended and sufficient time should be allowed to ensure timely  
delivery.                                                                       

Other Requirements. All questions as to the validity, form, eligibility     
(including time of receipt) and acceptance for exercise of Class B Warrants     
pursuant to any of the procedures described above will be determined in the     
sole discretion of the Company, whose determination shall be final and          
binding. The Company reserves the absolute right to reject any or all           
exercises determined by it not to be in proper form or the acceptance of which  
would, in the opinion of the Company's counsel, be unlawful. The Company also   
reserves the absolute right to waive any of the conditions of the Exercise      
Offer or any defect or irregularity in any exercise with respect to any         
particular Class B Warrants of any particular Holder. The Company's             
interpretation of the terms and conditions of the Exercise Offer (including     
the Letter of Transmittal and the instructions thereto) will be final and       
binding. No exercise of Class B Warrants will be deemed to have been validly    
made until all defects                                                          

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and irregularities have been cured or waived. Neither the Company or the        
Warrant Agent or any other person will be under any duty to give notification   
of any defects or irregularities in exercises nor will any of them incur any    
liability for failure to give any such notification.                            

If, on or after [  ], 1996, the Company should split, combine or otherwise  
change the Class A Common Stock or Class B Warrants, or shall disclose that it  
has taken any such action or if there shall occur any antidilution adjustment   
pursuant to the terms of the Class B Warrants or other adjustment affecting     
the exercise price or the number of shares of Class A Common Stock obtainable   
upon exercise of the Class B Warrants, then, without prejudice to the           
Company's rights set forth under the captions "--Terms of the Exercise Offer"   
and "--Certain Conditions of the Exercise Offer," the Company, in its sole      
discretion, may make such adjustments in the exercise price, the amount and     
nature of the securities issuable upon exercise thereof and other terms of the  
Exercise Offer as it deems appropriate to reflect such split, combination or    
other change.                                                                   

WITHDRAWAL RIGHTS                                                               

Except as stated herein, exercises of Class B Warrants made pursuant to the 
Exercise Offer are irrevocable. Class B Warrants exercised pursuant to the      
Exercise Offer may be withdrawn at any time prior to the Expiration Date and,   
unless theretofore accepted for exercise by the Company, may also be withdrawn  
after         , 1996. If, for any reason, the Company is delayed in its         
acceptance for exercise of any Class B Warrants, or is unable to accept Class   
B Warrants for exercise pursuant to the Exercise Offer then, without prejudice  
to the Company's rights under the Exercise Offer, exercised Class B Warrants    
may be retained by the Warrant Agent on behalf of the Company and may not be    
withdrawn, except to the extent that exercising Holders are entitled to         
withdrawal rights as set forth herein.                                          

For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Warrant Agent  
at its address set forth in "The Exercise Offer and Warrant Redemption--        
Warrant Agent." Any such notice of withdrawal must specify the name of the      
person who exercised the Class B Warrants, the name of the registered           
holder(s), if different from the name of the person who exercised the Class B   
Warrants, the number of Class B Warrants exercised and the number of Class B    
Warrants to be withdrawn. If certificates for Class B Warrants to be withdrawn  
have been delivered or otherwise identified to the Warrant Agent, the serial    
numbers shown on the particular certificates evidencing the Class B Warrants    
to be withdrawn and a signed notice of withdrawal with the signature            
guaranteed by an Eligible Institution (except in the case of Class B Warrants   
exercised by an Eligible Institution) must be submitted prior to the physical   
release of the certificates for the Class B Warrants to be withdrawn. If Class  
B Warrants have been exercised pursuant to the procedure for book-entry         
transfer described under the caption "--Procedures for Exercising Class B       
Warrants--Book-Entry Exercise," the notice of withdrawal must specify the name  
and number of the account at the applicable Book-Entry Transfer Facility to be  
credited with the withdrawn Class B Warrants.                                   

All questions as to the form and validity (including time of receipt) of    
notices of withdrawal will be determined in the sole discretion of the          
Company, whose determination shall be final and binding. Neither the Company    
nor the Warrant Agent or any other person will be under any duty to give        
notification of any defects or irregularities in any notice of withdrawal nor   
will any of them incur any liability for failure to give any such               
notification.                                                                   

Any Class B Warrants withdrawn will be deemed not validly exercised for     
purposes of the Exercise Offer. However, withdrawn Class B Warrants may be      
reexercised at any subsequent time prior to the Expiration Date by following    
any of the procedures described under the caption "--Procedures for Exercising  
Class B Warrants."                                                              

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CERTAIN CONDITIONS OF THE EXERCISE OFFER                                        

Notwithstanding any other provision of the Exercise Offer, the Company shall    
not be required to accept for exercise any Class B Warrants exercised, or may   
terminate the Exercise Offer, or may delay the acceptance for exercise of       
Class B Warrants pursuant to the Exercise Offer, if at any time on or after     
 , 1996 and before the acceptance for exercise of any such Class B
Warrants or the payment therefor any one or more of the following shall occur:  

(a) there shall have occurred (i) any general suspension of, or general 
limitation on prices for, or trading in, securities on the Nasdaq SmallCap  
Market, (ii) a declaration of a banking moratorium or any suspension of     
payments in respect of banks in the United States or any limitation         
(whether or not mandatory) by any governmental agency or authority on, or   
any other event that adversely affects, the extension of credit by banks or 
other financial institutions, (iii) a material change in United States or   
any other currency exchange rates or a suspension of or limitation on the   
markets therefor, (iv) a commencement of a war, armed hostilities or other  
similar international calamity directly or indirectly involving the United  
States, or, (v) in the case of any of the foregoing existing at the time of 
the commencement of the Exercise Offer, a material acceleration or          
worsening thereof; or                                                       

 (b) any change (or development involving a prospective change) shall have
occurred or been threatened in the business, properties, assets, financial  
condition, operations, results of operation or prospects of the Company     
that is or may be materially adverse to the Company, or the Company shall   
have become aware of any fact that is or may be materially adverse with     
respect to the value of the Class B Warrants; or                            

(c) there shall have been threatened or instituted or there shall be    
pending any action, proceeding, order, decree or injunction by or before    
any court, government or governmental agency or other regulatory or         
administrative authority, domestic or foreign, that (i) challenges the      
exercise of Class B Warrants pursuant to the Exercise Offer or otherwise    
relates in any manner to the Exercise Offer, (ii) otherwise could           
materially adversely affect the business, properties, assets, stock         
ownership, liabilities, financial condition, operations, results of         
operations or prospects of the Company, or (iii) in the case of any of the  
foregoing existing at the time of the commencement of the Exercise Offer,   
any development shall have occurred that the Company, in its sole judgment, 
determines to be adverse; or                                                

(d) any action shall have been taken or any statute, rule, regulation or
order shall have been proposed, enacted, promulgated, enforced or deemed to 
be applicable to the Exercise Offer by any court, government or             
governmental agency or other regulatory or administrative authority,        
domestic or foreign, which would or might prohibit, restrict or delay       
consummation of the Exercise Offer or materially impair the contemplated    
benefits to the Company of the Exercise Offer; or                           

 (e) a tender or exchange offer with respect to some or all of the Class B
Warrants and/or Class A Common Stock, or a merger or acquisition proposal   
for the Company, shall have been proposed, announced or made by any group   
or person, or the Company shall enter into any agreement with respect to a  
merger, other business combination, disposition of assets other than in the 
ordinary course of business or issuance of securities with any person;      

which, in the sole judgment of the Company in any such case, and regardless of  
the circumstances (including any action by the Company) giving rise to any      
such condition, makes it inadvisable to proceed with the Exercise Offer or      
with such acceptance for exercise.                                              

All the foregoing conditions are for the sole benefit of the Company and may
be asserted by the Company regardless of the circumstances giving rise to such  
condition (including any action or inaction by the Company) or may be waived    
by the Company in whole or in part at any time and from time to time in its     
sole discretion. The failure by the Company at any time to exercise any of the  
foregoing rights shall not be deemed a waiver of any such right and each such   
right shall be deemed an ongoing right which may be asserted at any time and    
from time to time. Any determination by the Company concerning the events       
described herein will be final and binding.                                     

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WARRANT AGENT                                                                   

The Warrant Agent is American Stock Transfer & Trust Company. The Warrant   
Agent's telephone number is 1-800-937-5449 (Reorganization Department). The     
address to which the Warrants, payments of the exercise price of Class B        
Warrants and Letters of Transmittal should be mailed or delivered is: 40 Wall   
Street, 46th Floor, New York, New York 10005.                                   

FEES AND EXPENSES                                                               

The Warrant Agent will receive reasonable and customary compensation for its
services and will be reimbursed for certain out-of-pocket expenses estimated    
to total $     .                                                                

Pursuant to the terms of the Warrant Agreement, the Company has agreed not  
to solicit Class B Warrant exercises other than through Blair, unless Blair     
declines to make such solicitation. Blair has agreed to assist the Company in   
effecting the Exercise Offer. Upon any exercise of the Class B Warrants         
commencing March 7, 1996, the Company will pay Blair a fee of 5% of the         
aggregate Warrant exercise price, if (i) the market price of the Company's      
Class A Common Stock on the date the Warrants are exercised is greater than     
the then exercise price of the Warrants; (ii) the exercise of the Warrants was  
solicited by a member of the NASD as designated in writing on the Warrant       
Certificate subscription form; (iii) the Warrants are not held in a             
discretionary account; (iv) disclosure of compensation arrangements was made    
both at the time of the offering and at the time of exercise of the Warrants;   
and (v) the solicitation of exercise of the Warrant was not in violation of     
Rule 10b-6 promulgated under the Exchange Act.                                  

Rule 10b-6 may prohibit Blair from engaging in any market making activities 
with regard to the Company's securities for the period from nine business days  
(or such other applicable period as Rule 10b-6 may provide) prior to any        
solicitation by Blair of the exercise of the Class B Warrants until the later   
of the termination of such solicitation activity or the termination (by waiver  
or otherwise) of any right that Blair may have to receive a fee for the         
exercise of the Class B Warrants following such solicitation. As a result,      
Blair may be unable to provide a market for the Company's securities during     
the Exercise Offer.                                                             

The Company will also reimburse brokerage houses and other custodians,      
nominees and fiduciaries for their reasonable out-of-pocket expenses in         
forwarding copies of this Exercise Offer/Prospectus to the beneficial owners    
of Class B Warrants held in their names or in forwarding tenders for their      
customers.                                                                      

The expenses of making the Exercise Offer to be incurred by the Company are 
estimated at approximately $80,000 (not including the 5% fee payable to         
Blair).                                                                         

WARRANT REDEMPTION                                                              

Under the Warrant Agreement, the Class B Warrants are subject to redemption 
by the Company for $.05 per Warrant, upon at least 30 days' written notice, if  
the average closing bid price of the Class A Common Stock exceeds $13.65 per    
share (subject to adjustment) for 30 consecutive business days ending within 5  
days of the date of the notice of redemption. This condition was satisfied      
during the 30 business day period which commenced          , 1996, and ended    
, 1996. Accordingly, by notice to Holders dated      , 1996, the
Company exercised its right to redeem the Class B Warrants on January 20, 1997  
(the "Redemption Date"). As a result, the right of Holders to exercise their    
Class B Warrants to purchase shares of the Class A Common Stock of the Company  
will terminate at 5:00 p.m., New York Time on January 17, 1997 (i.e., the last  
business day prior to the Redemption Date). After such time, Holders will have  
no rights except to receive $.05 for each Class B Warrant upon surrender        
thereof.                                                                        

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PURPOSE OF EXERCISE OFFER AND USE OF PROCEEDS 

The purpose of the Exercise Offer is to raise additional capital by         
encouraging holders of the Class B Warrants to make an investment in the        
Company. In the event that 100%, 75% and 50% of the outstanding Class B         
Warrants are exercised in the Exercise Offer, the estimated net proceeds to     
the Company would be $75,375,147, $56,511,360 and $37,647,573, respectively,    
after deducting fees and estimated expenses and without giving effect to the    
exercise of remaining Warrants, if any, subsequent to completion of the         
Exercise Offer.                                                                 

The Company anticipates that, in the absence of the Exercise Offer, the     
Company's current cash reserves, together with the funds to be received from    
its current contracts (described above), will be sufficient to fund the         
Company's currently-budgeted operations through December 1996. Beyond such      
date, however, the Company will require significant additional financing to     
continue its operations. Accordingly, the Exercise Offer represents, in the     
opinion of the Company, a critical opportunity to raise the needed significant  
capital, particularly in light of the fact that there is no assurance that the  
Company will be able to secure significant capital through other sources.       

The net proceeds to the Company from the exercise of the Class B Warrants   
will be added to the Company's working capital and will be available for any    
general corporate uses. The Company intends to utilize the net proceeds from    
the Exercise Offer to implement its plan of operation, including performing     
its current contracts; marketing the Entertainment Network to additional        
airlines and performing under any contracts executed with such airlines; and    
continuing the development of the Entertainment Network.                        

Assuming that 100%, 75% and 50% of the Class B Warrants are exercised in the
Exercise Offer, and without giving effect to the subsequent exercise of         
remaining Class B Warrants, if any, prior to the Redemption Date, the Company   
currently estimates that net proceeds therefrom, together with its current      
cash reserves and anticipated funds to be received from its current contracts,  
will be sufficient to fund its currently-budgeted operations until              
approximately October 1998, December 1997 and March 1997, respectively.         
However, in the event the Company receives any additional purchase orders from  
airlines for any significant number of Entertainment Networks in excess of      
those currently contracted for, the foregoing estimate of the Company's         
liquidity is likely to be significantly shortened, since the Company            
anticipates that any future agreement with airlines, particularly foreign       
airlines, will contain extended payment terms similar to those of its current   
contracts and require the Company to fund equipment purchases for additional    
Entertainment Networks prior to obtaining any payments from such airlines. As   
a result, or in the further event of delays in product development or           
regulatory approvals, cost overruns or other unanticipated expenses commonly    
associated with a company in an early stage of development, the Company may     
require additional capital. In addition, the Company will need additional       
financing following such periods if it has not obtained a significant number    
of additional purchase commitments from airlines and, even if such commitments  
are obtained, to fund equipment purchases and installations prior to            
collection of related receivables from airline customers. In the event such     
financing is not obtained, the Company may be materially adversely affected     
and may have to cease or substantially reduce operations.                       

The foregoing represents the Company's best estimate of its utilization of  
the net proceeds from the Exercise Offer and its capital requirements and       
contains forward-looking statements within the meaning of Section 27A of the    
Securities Act and Section 21E of the Exchange Act. This estimate is based on   
certain assumptions, including that development, testing, regulatory,           
manufacturing and installation activities can be completed at budgeted costs.   
The estimates are also based upon the current status of the Company's business  
operations, its current plans, and current economic, regulatory and industry    
conditions. Future events, as well as changes in economic, regulatory or        
competitive conditions or the Company's business and the results of the         
Company's sales and marketing activities, may make shifts in the allocation of  
funds necessary or desirable. In addition, the Company may utilize funds        
allocated to working capital for acquisitions of new products or product lines  
or other companies and to fund inventory purchases and installations prior to   
collection of receivables. The Company does not currently have any agreements,  
commitments or arrangements with respect to any proposed acquisitions and       
there can be no assurance that any acquisition will be consummated. See         
"Forward-Looking Information."                                                  

The Company further anticipates a need for additional funding beyond the    
proceeds of the Exercise Offer, and may attempt to procure such funds either    
in the form of debt or equity financing or both. There can be no assurance      
that necessary financing will be obtained. See "Risk Factors--Need for          
Additional Financing; Potential Cash Shortages."                                

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CAPITALIZATION  

The following table sets forth the capitalization of the Company (i) as of  
July 31, 1996, and (ii) pro forma as of July 31, 1996 to reflect the exercise   
of 100%, 75% and 50% of the outstanding Class B Warrants in the Exercise        
Offer, and the application of the estimated net proceeds therefrom of           
$75,375,147, $56,511,360 and $37,647,573, respectively. This table should be    
read in conjunction with the Financial Statements and the Notes thereto         
incorporated by reference herein.                                               

                                                        · Enlarge/Download Table

                           JULY 31,    PRO FORMA(4)(5) PRO FORMA(4)(6) PRO FORMA(4)(7)
                             1996       JULY 31, 1996   JULY 31, 1996   JULY 31, 1996 
                         ------------  --------------- --------------- ---------------
                                                                                      
Stockholders' Equity:                                                                 
  Preferred Stock, $.01                                                               
   par value; 5,000,000                                                               
   shares authorized; no                                                              
   shares issued and                                                                  
   outstanding..........          --             --              --              --   
  Class A Common Stock,                                                               
   $.01 par value;                                                                    
   40,000,000 shares                                                                  
   authorized; 8,046,610                                                              
   shares issued and                                                                  
   Outstanding(1)(2)....       80,466        186,368         159,893         133,417  
  Class B Common Stock,                                                               
   $.01 par value;                                                                    
   3,960,000 shares                                                                   
   authorized; 3,960,000                                                              
   shares issued and                                                                  
   outstanding(1)(3)....       39,600         39,600          39,600          39,600  
  Additional paid-in                                                                  
   capital..............   40,395,426    115,664,671      96,827,359      77,990,048  
  Accumulated deficit...  (13,314,404)   (13,314,404)    (13,314,404)    (13,314,404) 
    Total stockholders'                                                               
     equity.............   27,201,088    102,576,235      83,712,448      64,848,661  
    Total                                                                             
     capitalization..... $ 27,201,088   $102,576,235    $ 83,712,448    $ 64,848,661  
                         ============   ============    ============    ============  

--------                                                                        

(1) The Class A Common Stock and Class B Common Stock are essentially           
identical except that each share of Class A Common Stock is entitled to 
 one vote and each share of Class B Common Stock is entitled to six votes.
Each share of Class B Common Stock is convertible at any time, and will 
 convert automatically upon its transfer, into one share of Class A Common
Stock. See "Description of Securities--Common Stock."                   

(2) Excludes (i) 10,590,196 shares of Class A Common Stock issuable upon        
  exercise of the outstanding Class B Warrants; (ii) 165,000 shares of Class
A Common Stock issuable upon outstanding Class C Warrants; (iii) 165,000
  shares of Class A Common Stock issuable upon outstanding Class D Warrants;
(iv) 1,120,000 shares of Class A Common Stock issuable upon exercise of 
the Unit Purchase Option and the Class A and Class B Warrants contained 
therein; (v) 2,345,000 shares of Class A Common Stock reserved for      
issuance under the Company's Stock Option Plan, under which, as of the  
date of this Exercise Offer/Prospectus, options to purchase             
 1,472,700 shares of Class A Common Stock are outstanding. See "Concurrent
Offerings" and "Description of Securities."                             
(3) Includes 3,200,000 shares of Class B Common Stock owned by officers,        
directors and principal stockholders of the Company which are currently 
held in escrow until the Company reaches certain specified performance  
levels ("Escrow Shares").                                               

(4) Gives pro forma effect to the exercise of Class B Warrants in the Exercise  
Offer net of (i) expenses of the offering estimated to be approximately 
$80,000 and (ii) a fee payable to Blair equal to 5% of the aggregate    
  Warrant exercise price. See "Plan of Distribution." Excludes 27,719 shares
 of Class A Common Stock issued between July 31, 1996 and August 31, 1996.

(5) Assumes exercise of 100% of the outstanding Class B Warrants pursuant to    
the Exercise Offer, and 18,636,806 shares of Class A Common Stock       
outstanding subsequent to the Exercise Offer.                           
(6) Assumes exercise of 75% of the outstanding Class B Warrants pursuant to     
the Exercise Offer, and 15,989,257 shares of Class A Common Stock       
 outstanding subsequent to the Exercise Offer, but does not give effect to
the exercise or redemption of any Class B Warrants following the        
completion of the Exercise Offer.                                       
(7) Assumes exercise of 50% of the outstanding Class B Warrants pursuant to     
the Exercise Offer, and 13,341,708 shares of Class A Common Stock       
 outstanding subsequent to the Exercise Offer, but does not give effect to
the exercise or redemption of any Class B Warrants following the        
completion of the Exercise Offer.                                       

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PRICE RANGE OF SECURITIES 

The Company's Class A Common Stock and Class B Warrants have traded on the  
Nasdaq SmallCap Market under the symbols FLYT and FLYTZ, respectively, since    
March 7, 1995, the date of the Company's initial public offering. The           
following table sets forth the high and low last sale prices for the Company's  
securities for the periods commencing March 7, 1995 as reported by the Nasdaq   
SmallCap Market. These prices do not reflect retail mark-ups, markdowns or      
commissions.                                                                    

                                                                · Download Table

                                                              HIGH    LOW   
                                                              ----    ---   
                                                                            
CLASS A COMMON STOCK                                                        
March 7, 1995 through April 30, 1995......................... $ 5 1/2 $4 1/2
May 1, 1995 through July 31, 1995............................   6 1/4  4 7/8
August 1, 1995 through October 31, 1995......................  10 5/8   5   
November 1, 1995 through January 31, 1996....................  12 1/4  7 1/2
February 1, 1996 through April 30, 1996......................  12 3/4  9 1/4
May 1, 1996 through July 31, 1996............................  16 1/8  8 3/8
August 1, 1996 through October    , 1996.....................               

                                                              HIGH    LOW   
                                                              ----    ---   
                                                                            
CLASS B WARRANTS                                                            
March 7, 1995 through April 30, 1995......................... $   5/8 $  1/2
May 1, 1995 through July 31, 1995............................   1 1/8    1/2
August 1, 1995 through October 31, 1995......................   4 1/2  1 1/8
November 1, 1995 through January 31, 1996....................   6 5/8  3 5/8
February 1, 1996 through April 30, 1996......................   7 7/8  3 1/8
May 1, 1996 through July 31, 1996............................    8     5 1/8
August 1, 1996 through October    , 1996.....................               

The closing sales prices of these securities as of             , 1996 (two  
days prior to announcement of the Exercise Offer and Warrant Redemption) as     
reported by the Nasdaq SmallCap Market were $      per share of Class A Common  
Stock and $      per Class B Warrant.                                           

The closing sales prices of these securities as of         , 1996 as        
reported by the Nasdaq SmallCap Market were $     per share of Class A Common   
Stock and $      per Class B Warrant.                                           

As of         , 1996, there were      record holders of Class A Common Stock
and     record holders of Class B Warrants.                                     

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SUMMARY AND PRO FORMA FINANCIAL DATA  

The summary and pro form a financial data set forth below are derived from, 
and are qualified by reference to, the audited Financial Statements             
incorporated by reference elsewhere in this Exercise Offer/Prospectus and       
should be read in conjunction with those Financial Statements and the notes     
thereto.                                                                        

                                                        · Enlarge/Download Table

                                                                NINE MONTHS ENDED    
                                                                    JULY 31,         
                                                              ---------------------- 
                             PERIOD FROM                                             
                          FEBRUARY 1, 1994                                           
                         (INCEPTION) THROUGH    YEAR ENDED                           
                          OCTOBER 31, 1994   OCTOBER 31, 1995    1995        1996    
                         ------------------- ---------------- ----------  ---------- 
                                                                                     
STATEMENT OF OPERATIONS                                                              
 DATA:                                                                               
  Revenues..............           --                  --            --   $2,920,835 
  Research and                                                                       
   development expenses.      $175,872          $2,380,194    $1,836,607  $2,910,603 
  Marketing and                                                                      
   administrative                                                                    
   expenses.............       218,770           2,442,415     1,571,485   5,051,234 
  Interest and debt                                                                  
   expense..............         7,640             851,218       851,218         --  
  Net loss..............      (402,282)         (5,331,278)   (4,027,138) (7,580,847)
  Net loss per share....          (.49)              (1.86)        (1.64)      (1.42)
  Weighted average                                                                   
   common shares(1).....       816,200           2,859,384     2,448,205   5,325,487 

                                                        · Enlarge/Download Table

                                         UNAUDITED       UNAUDITED       UNAUDITED   
                             AT       PRO FORMA(2)(3) PRO FORMA(2)(4) PRO FORMA(2)(5)
                         OCTOBER 31,  AT OCTOBER 31,  AT OCTOBER 31,  AT OCTOBER 31, 
                            1995           1995            1995            1995      
                         -----------  --------------- --------------- ---------------
                                                                                     
BALANCE SHEET DATA:                                                                  
  Working capital                                                                    
   (deficit)............ $6,902,956     $82,278,103     $63,414,316     $44,550,529  
  Total assets..........  9,314,802      84,689,949      65,826,162      46,962,375  
  Total liabilities.....    745,730         745,730         745,730         745,730  
  Accumulated deficit... (5,733,560)     (5,733,560)     (5,733,560)     (5,733,560) 
  Total stockholders'                                                                
   equity (deficit).....  8,569,072      83,944,219      65,080,432      46,216,645  

                                                        · Enlarge/Download Table

                                         UNAUDITED       UNAUDITED       UNAUDITED   
                                      PRO FORMA(2)(3) PRO FORMA(2)(4) PRO FORMA(2)(5)
                         AT JULY 31,    AT JULY 31,     AT JULY 31,     AT JULY 31,  
                            1996           1996            1996            1996      
                         -----------  --------------- --------------- ---------------
                                                                                     
BALANCE SHEET DATA:                                                                  
  Working capital....... $25,045,254   $100,420,401     $81,556,614     $62,692,827  
  Total assets..........  29,019,580    104,394,727      85,530,940      66,667,153  
  Total liabilities.....   1,818,492      1,818,492       1,818,492       1,818,492  
  Accumulated deficit... (13,314,404)   (13,314,404)    (13,314,404)    (13,314,404) 
  Total stockholders'                                                                
   equity...............  27,201,088    102,576,235      83,712,448      64,848,661  

--------                                                                        
(1) Excludes the 3,200,000 Escrow Shares.                                       
(2) Gives pro forma effect to the exercise of Class B Warrants in the Exercise  
Offer, net of (i) expenses of the offering estimated to be approximately
$80,000, and (ii) a fee payable to Blair equal to 5% of the aggregate   
  Warrant exercise price. See "Plan of Distribution." Excludes 27,719 shares
 of Class A Common Stock issued between July 31, 1996 and August 31, 1996.
(3) Assumes exercise of 100% of the outstanding Class B Warrants pursuant to    
the Exercise Offer, and 18,636,806 shares of Class A Common Stock       
outstanding subsequent to the Exercise Offer.                           
(4) Assumes exercise of 75% of the outstanding Class B Warrants pursuant to     
the Exercise Offer, and 15,989,257 shares of Class A Common Stock       
 outstanding subsequent to the Exercise Offer, but does not give effect to
the exercise or redemption of any Class B Warrants following the        
completion of the Exercise Offer.                                       
(5) Assumes exercise of 50% of the outstanding Class B Warrants pursuant to     
the Exercise Offer, and 13,341,708 shares of Class A Common Stock       
 outstanding subsequent to the Exercise Offer, but does not give effect to
the exercise or redemption of any Class B Warrants following the        
completion of the Exercise Offer.                                       

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TRANSFER AGENT AND WARRANT AGENT                                                

American Stock Transfer & Trust Company, New York, New York, serves as      
Transfer Agent for the shares of Common Stock and Warrant Agent for the         
Warrants, and is acting as Warrant Agent in the Exercise Offer.                 

BUSINESS COMBINATION PROVISIONS                                                 

The Company is subject to a Delaware statute regulating "business           
combinations," defined to include a broad range of transactions, between        
Delaware corporations and "interested stockholders," defined as persons who     
have acquired at least 15% of a corporation's stock. Under the law, a           
corporation may not engage in any business combination with any interested      
stockholder for a period of three years from the date such person became an     
interested stockholder unless certain conditions are satisfied. The statute     
contains provisions enabling a corporation to avoid the statute's               
restrictions.                                                                   

The Company has not sought to "elect out" of the statute and, therefore,    
upon completion of this offering and the registration of its shares of Class A  
Common Stock under the Exchange Act, the restrictions imposed by such statute   
will apply to the Company.                                                      

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS                                       

The following summary is a general discussion of certain of the anticipated 
federal income tax consequences of the purchase, ownership, exercise and        
disposition of the Warrants and the Class A Common Stock. No representation is  
made regarding the continued applicability of the current federal income tax    
laws or of the current interpretation thereof, and no attempt is made to        
consider any applicable state, local or foreign tax laws. Furthermore, the      
summary is intended for investors who will hold the Warrants or the Class A     
Common Stock as "capital assets" (generally, property held for investment)      
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as     
amended (the "Code"). The tax consequences to any particular investor may be    
affected by matters not discussed below.                                        

Determination of Basis. For federal income tax purposes, the basis of a     
share of Class A Common Stock received on exercise of a Class B Warrant will    
equal the Holder's basis in the Class B Warrant, plus the amount paid on        
exercise of the Class B Warrant. This summary is not intended for a holder of   
Warrants who is a dealer in warrants or in the property that would be received  
upon exercise of a Warrant, or a holder who received a Warrant as compensation  
for services. In general, the Holder's tax basis in each Class B Warrant is     
the purchase price paid for the Class B Warrant. If the Class B Warrant was     
purchased as part of a Unit, the purchase price of a Unit must be allocated     
among the Class A Common Stock and the Class A and Class B Warrants comprising  
such Unit in proportion to their relative fair market values at the time of     
issuance. Normally this allocation would be made on the basis of the trading    
values of each element of a Unit immediately after the purchase, but the        
allocation must nevertheless be independently made by each investor whether or  
not such separate trading values are readily determinable. The amount           
allocated to each element of the Unit will constitute the tax basis of that     
element.                                                                        

Consequences to Holder on Exercise, Sale, Lapse or Redemption of a Warrant. 
Except as described below, no gain or loss will be recognized upon the          
exercise of a Warrant. The holding period of the Class A Common Stock acquired  
on the exercise of a Warrant will commence on the day following the date of     
exercise. Assuming that the Holder of a Warrant is not a dealer in warrants     
and that the property that would have been received on exercise of the Warrant  
(i.e., the Class A Common Stock) would have constituted a capital asset in the  
hands of the holder of the Warrant, any gain or loss realized on a sale or      
exchange of a Warrant (including a loss realized due to a failure of a Holder   
to exercise a Warrant prior to its expiration) will generally be treated as a   
capital gain or capital loss. For federal income tax purposes, this gain or     
loss will be long-term or short-term depending on whether or not the Warrant    
has been held for more than one year prior to the time of the sale or           
exchange. The holding period of Class A Common Stock purchased upon exercise    
of a Warrant will not include the time during which the stockholder held such   
Warrant. Under current law, capital gains are taxed at a maximum rate of 28%    
for federal income tax purposes while ordinary income is taxed at a maximum     
rate of 39.6%. However, capital losses will be allowed only against capital     
gains and up to $3,000 of ordinary income in each tax year. Gain or loss will   
be measured by the difference between the amount realized on the sale,          
exchange or expiration and the Holder's basis in the Warrant.                   

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Upon redemption of the Warrants by the Company, the Holder of a redeemed    
Warrant will recognize gain or loss equal to the difference between his or her  
basis in the Warrant and the redemption price of the Warrant. If the            
redemption of a Warrant constitutes a sale or exchange for federal income tax   
purposes, and if the Holder of the Warrant is not a dealer in warrants and the  
property that would have been received on exercise of the Warrant (i.e., the    
Class A Common Stock) would have constituted a capital asset in the hands of    
the Holder of the Warrant, then any gain or loss realized by the Holder will    
be long-term or short-term capital gain or loss depending on whether or not     
the Warrant had been held for more than one year prior to its redemption.       

Changes in Law. The tax consequences referred to in the preceding paragraphs
are based on the current provisions of the Code. There can be no assurance,     
however, that any such provisions may not change in the future, either          
retroactively or prospectively, resulting in changes in such tax consequences.  

THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS NOT  
TAX ADVICE. ACCORDINGLY, EACH HOLDER OR POTENTIAL PURCHASER OF THE COMPANY'S    
SECURITIES SHOULD CONSULT HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE TAX    
CONSEQUENCES TO HIM OR HER OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE    
UNITS, THE WARRANTS AND THE CLASS A COMMON STOCK, INCLUDING THE APPLICABILITY   
AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS AND OF CHANGES IN APPLICABLE    
TAX LAWS.                                                                       

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DILUTION  

The net tangible book value of the Company as of July 31, 1996 was          
$27,201,088 or $2.27 per share. Net tangible book value per share represents    
the amount of total tangible assets less total liabilities of the Company,      
divided by the number of shares of Common Stock outstanding. Assuming that      
100%, 75% and 50% of the Class B Warrants are exercised in the Exercise Offer,  
after giving effect to the resulting sale of the 10,590,196, 7,942,647, or      
5,295,098 shares of Common Stock, respectively (and after deduction of          
estimated commissions and offering expenses), the pro forma net tangible book   
value of the Company at July 31, 1996 would have been $102,576,235,             
$83,712,448, or $64,848,661 respectively, or $4.54, $4.20, or $3.75 per share,  
respectively. This represents an immediate increase in such net tangible net    
book value of $2.27, $1.93, or $1.48 per share, respectively, to existing       
stockholders and an immediate dilution of $2.96, $3.30, or $3.75 per share,     
respectively, to new investors purchasing shares in this offering. The          
following table illustrates this per share dilution:                            

                                                                · Download Table

                                                              PERCENTAGE OF  
                                                            CLASS B WARRANTS 
                                                            EXERCISED IN THE 
                                                             EXERCISE OFFER  
                                                            -----------------
                                                             100%  75%   50% 
                                                            ----- ----- -----
                                                                             
Assumed offering price..................................... $7.50 $7.50 $7.50
  Net tangible book value before this offering.............  2.27  2.27  2.27
  Increase attributable to new investors...................  2.27  1.93  1.48
Pro forma net tangible book value after this offering......  4.54  4.20  3.75
                                                            ----- ----- -----
Dilution of net tangible book value to new investors....... $2.96 $3.30 $3.75
                                                            ===== ===== =====

The foregoing excludes 1,472,000 shares that are issuable upon the exercise 
of outstanding employee options under the Company's Stock Option Plan as of     
October 17, 1996. To the extent that these and other options, stock awards or   
warrants that may be issued are exercised in the future, there will be further  
dilution to new investors.                                                      

The following table summarizes, on a pro forma basis as of August 31, 1996, 
the differences between existing stockholders and new investors with respect    
to the number of shares of Class A Common Stock purchased from the Company,     
the total consideration paid to the Company, and the average consideration      
paid per share (before deduction of underwriting discounts and commissions and  
estimated offering expenses):                                                   

                                                        · Enlarge/Download Table

 PERCENTAGE OF                                                                    AVERAGE
CLASS B WARRANTS                           SHARES PURCHASED  TOTAL CONSIDERATION   PRICE 
EXERCISED IN THE                          ------------------ --------------------   PER  
 EXERCISE OFFER                             NUMBER   PERCENT    AMOUNT    PERCENT  SHARE 
----------------                          ---------- ------- ------------ ------- -------
                                                                                         
      100%       Existing stockholders...  8,074,329   43.3% $ 44,129,000   35.7%  $5.47 
                 New investors........... 10,590,196   56.7    79,426,470   64.3   $7.50 
                                          ----------  -----  ------------  -----         
                 Total................... 18,664,525  100.0% $123,555,470  100.0%        
                                          ==========  =====  ============  =====         
       75%       Existing stockholders...  8,074,329   50.4% $ 44,129,000   42.6%  $5.47 
                 New investors...........  7,942,647   49.6    59,569,853   57.4   $7.50 
                                          ----------  -----  ------------  -----         
                 Total................... 16,016,976  100.0% $103,698,853  100.0%        
                                          ==========  =====  ============  =====         
       50%       Existing stockholders...  8,074,329   60.4% $ 44,129,000   52.6%  $5.47 
                 New investors...........  5,295,098   39.6    39,713,235   47.4   $7.50 
                                          ----------  -----  ------------  -----         
                 Total................... 13,369,427  100.0% $ 83,842,235  100.0%        
                                          ==========  =====  ============  =====         

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PLAN OF DISTRIBUTION  

Pursuant to the Warrant Agreement, the Company has agreed not to solicit    
Warrant exercises other than through Blair, unless Blair declines to make such  
solicitation. Blair has agreed to assist the Company in effecting the Exercise  
Offer. The Company will pay Blair a fee of 5% of the aggregate Warrant          
exercise price, if (i) the market price of the Company's Class A Common Stock   
on the date the Warrants are exercised is greater than the then exercise price  
of the Warrants; (ii) the exercise of the Warrants was solicited by a member    
of the NASD as designated in writing on the Warrant Certificate subscription    
form; (iii) the Warrants are not held in a discretionary account; (iv)          
disclosure of compensation arrangements was made both at the time of the        
offering and at the time of exercise of the Warrants; and (v) the solicitation  
of exercise of the Warrant was not in violation of Rule 10b-6 promulgated       
under the Exchange Act.                                                         

As of October 1, 1996, there were seven market makers in the Company's      
securities. Rule 10b-6 may prohibit Blair from engaging in any market making    
activities with regard to the Company's securities for the period from nine     
business days (or such other applicable period as Rule 10b-6 may provide)       
prior to any solicitation by Blair of the exercise of Class B Warrants until    
the later of the termination of such solicitation activity or the termination   
(by waiver or otherwise) of any right that Blair may have to receive a fee for  
the exercise of Warrants following such solicitation. As a result, Blair may    
be unable to provide a market for the Company's securities during certain       
periods while the Warrants are exercisable.                                     

In connection with the IPO the Company sold to Blair or its designees, for  
nominal consideration, the Unit Purchase Option to purchase up to 280,000       
Units substantially identical to the Units sold in the IPO, except that the     
warrants included therein are not subject to redemption by the Company unless,  
on the redemption date, the Unit Purchase Option has been exercised and the     
underlying warrants are outstanding. The Unit Purchase Option is exercisable    
during the three year period commencing March 7, 1997 at an exercise price of   
$6.00 per Unit, subject to adjustment in certain events, and the Unit Purchase  
Option and the underlying securities are not transferable for a period of       
three years from March 7, 1995 except to officers of the Underwriter or to      
members of the selling group. The Unit Purchase Option includes a provision     
permitting Blair or its designees to elect a cashless exercise. The Company     
has agreed to register during the four-year period commencing March 7, 1996,    
on two separate occasions, the securities issuable upon exercise thereof under  
the Securities Act, the initial such registration to be at the Company's        
expense and the second at the expense of the holders. The Company has also      
granted certain "piggy-back" registration rights to holders of the Unit         
Purchase Option.                                                                

Blair has the right to designate one director to the Company's Board of     
Directors for a period of five years from the completion of the IPO. Such       
designee may be a director, officer, partner, employee or affiliate of Blair.   
As of the date of this Exercise Offer/Prospectus, Blair had not designated a    
director to serve on the Board of Directors.                                    

During the five-year period from March 7, 1995, in the event Blair          
originates a financing or a merger, acquisition or transaction to which the     
Company is a party, Blair will be entitled to receive a finder's fee in         
consideration for origination of such transaction. The fee is based on a        
percentage of the consideration paid in the transaction ranging from 7% of the  
first $1,000,000 to 2 1/2% of any consideration in excess of $9,000,000.        

Blair acted as Placement Agent for the Bridge Financing in October and      
November 1994 for which it received a Placement Agent fee of $310,000 and a     
non-accountable expense allowance of $93,000.                                   

The Commission is conducting an investigation concerning various business   
activities of Blair. The investigation appears to be broad in scope, involving  
numerous aspects of Blair's compliance with the Federal securities laws and     
compliance with the Federal securities laws by issuers whose securities were    
underwritten by Blair, or in which Blair made over-the-counter markets,         
persons associated with Blair, such issuers and other persons. The Company has  
been advised by Blair that the investigation has been ongoing since at least    
1989 and that it is cooperating with the investigation. Blair cannot predict    
whether this investigation will ever result in any type of formal enforcement   
action against Blair or, if so, whether any such action might have an adverse   
effect                                                                          

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on the Company's securities. An unfavorable resolution of the Commission's      
investigation could have the effect of limiting such firm's ability to make a   
market in the Company's securities, which could affect the liquidity or price   
of such securities.                                                             

CONCURRENT OFFERINGS  

The Company has registered for resale by certain securityholders (the       
"Selling Securityholders") an aggregate of 1,550,000 shares of Class A Common   
Stock and 1,825,000 Class B Warrants (and the 1,825,000 shares of Class A       
Common Stock issuable upon exercise of such Class B Warrants). Sales of such    
securities, or the potential of such sales, may have an adverse effect on the   
market price of the securities offered hereby.                                  

LEGAL MATTERS 

The validity of the securities offered hereby will be passed upon for the   
Company by Irell & Manella LLP, Los Angeles, California.                        

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

SUBJECT TO COMPLETION, DATED OCTOBER   , 1996 

                                                              ALTERNATE OFFERING
                                                                        #3 PAGES

PROSPECTUS

INTERACTIVE FLIGHT TECHNOLOGIES, INC. 

1,550,000 SHARES OF CLASS A COMMON STOCK
1,550,000 REDEEMABLE CLASS B WARRANTS AND 
1,550,000 SHARES OF CLASS A COMMON STOCK ISSUABLE 
UPON EXERCISE OF THE REDEEMABLE CLASS B WARRANTS

This Prospectus relates to up to 1,550,000 shares of Class A Common Stock,  
$.01 par value ("Class A Common Stock") and up to 1,550,000 Redeemable Class B  
Warrants (the "Class B Warrants") of Interactive Flight Technologies, Inc., a   
Delaware corporation (the "Company"), held by 51 holders (the "Selling          
Securityholders"), and up to 1,550,000 additional shares of Class A Common      
Stock issuable upon exercise of such Class B Warrants. The 1,550,000 Class B    
Warrants held by the Selling Securityholders are sometimes referred to herein   
as the "Selling Securityholder Warrants" and, together with the 1,550,000       
shares of Class A Common Stock held by the Selling Security Holders and the     
1,550,000 shares of Class A Common Stock issuable upon exercise of the Selling  
Securityholder Warrants, the "Selling Securityholder Securities." The Selling   
Securityholder Warrants and the 1,550,000 shares of Class A Common Stock held   
by the Selling Securityholders were acquired upon exercise of redeemable class  
A warrants ("Class A Warrants") which were issued to the Selling                
Securityholders in exchange for warrants they received in a private placement   
by the Company in October and November 1994 (the "Bridge Financing"). See       
"Selling Securityholders" and "Plan of Distribution." Each Class B Warrant      
entitles the holder to purchase one share of Class A Common Stock, at an        
exercise price of $9.75, subject to adjustment, at any time until March 6,      
2006. However, concurrently herewith, the Company is offering (the "Exercise    
Offer") to the holders of the Company's outstanding Class B Warrants to reduce  
the exercise price of the outstanding Class B Warrants to $7.50 per share in    
each case if and only if a holder exercises his or her Class B Warrants prior   
to 5:00 P.M., New York City time, on    , 1996, unless such date is extended by 
the Company. Following such date through January 17, 1997, a holder will        
continue to have the right to exercise his or her Class B Warrants (in          
accordance with the terms thereof) at the re-set exercise price of $9.75 per    
share. The Class B Warrants are subject to redemption by the Company for $.05   
per Warrant, upon 30 days' written notice, if the average closing bid price of  
the Class A Common Stock exceeds $13.65 share (subject to adjustment) for 30    
consecutive business days ending within 5 days of the date of the notice of     
redemption.This condition has been met, and by notice dated [    ], 1996, the   
Company has exercised its right pursuant to the terms of the Warrants to redeem 
on January 20, 1997 each Class B Warrant not exercised by January 17, 1997, at  
5:00 P.M. New York City time.                                                   

----------- 

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 6. 

----------- 

The Class A Common Stock and the Company's class B common stock, $.01 par   
value (the "Class B Common Stock"), of the Company are essentially identical,   
except that the Class B Common Stock has six votes per share and the Class A    
Common Stock has one vote per share on all matters upon which stockholders may  
vote. The holders of Class B Common Stock, the majority of whom are executive   
officers, directors and/or principal stockholders of the Company, control       
approximately 65% of the total voting power and therefore are able to elect all 
of the Company's directors and control the Company.                             

The securities offered by the Selling Securityholders by this Prospectus may
be sold from time to time by the Selling Securityholders or by their            
transferees. The distribution of the Selling Securityholder Warrants and the    
Class A Common Stock offered hereby by the Selling Securityholders may be       
effected in one or more transactions that may take place on the over-the-       
counter market, including ordinary brokers' transactions, privately negotiated  
transactions or through sales to one or more dealers for resale of such         
securities as principals, at market prices prevailing at the time of sale, at   
prices related to such prevailing market prices or at negotiated prices. Usual  
and customary or specifically negotiated brokerage fees or commissions may be   
paid by the Selling Securityholders.                                            

The Selling Securityholders, and intermediaries through whom such securities
are sold, may be deemed underwriters within the meaning of the Securities Act   
of 1933, as amended (the "Securities Act"), with respect to the securities      
offered, and any profits realized or commissions received may be deemed         
underwriting compensation. The Company has agreed to indemnify the Selling      
Securityholders against certain liabilities, including liabilities under the    
Securities Act.                                                                 

The Company will not receive any of the proceeds from the sale of securities
by the Selling Securityholders. In the event all of the Selling Securityholder  
Warrants are exercised, the Company will receive gross proceeds of $15,112,500, 
less payment of applicable commissions to D.H. Blair Investment Banking Corp    
("Blair"). See "Selling Securityholders," "Plan of Distribution" and "Blair     
Commission."                                                                    

The Class A Common Stock and the Class B Warrants are traded on the Nasdaq  
SmallCap Market ("Nasdaq"). On October   , 1996, the closing sale price of the  
Class A Common Stock on Nasdaq was $      per share and the closing sale price  
of the Class B Warrants on Nasdaq was $     .                                   

THESE  SECURITIES HAVE NOT BEEN APPROVED  OR DISAPPROVED BY THE  SECURITIES AND 
EXCHANGE  COMMISSION  OR   ANY  STATE  SECURITIES  COMMISSION   NOR  HAS  THE 
SECURITIES  AND EXCHANGE  COMMISSION  OR  ANY  STATE SECURITIES  COMMISSION 
PASSED  UPON   THE  ACCURACY   OR  ADEQUACY   OF  THIS   PROSPECTUS.  ANY 
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.                     

The date of this Prospectus is       , 1996.

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USE OF PROCEEDS 

The Company will not receive any of the proceeds from the sale by the       
Selling Securityholders of the Selling Securityholder Securities offered        
hereby; however, to the extent that the Selling Securityholder Warrants are     
exercised, the Company will receive proceeds equal to the exercise price        
thereof multiplied by the number of warrants exercised. If all of the Selling   
Securityholder Warrants are exercised, the Company would receive gross          
proceeds of $15,112,500, less payment of the Blair Commission. The Company      
presently intends to use such proceeds for working capital and general          
corporate purposes.                                                             

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DILUTION  

The net tangible book value of the Company as of July 31, 1996 was          
$27,201,088 million or $2.27 per share. Net tangible book value per share       
represents the amount of total tangible assets less total liabilities of the    
Company, divided by the number of shares of Common Stock outstanding. After     
giving effect to the sale of the 1,550,000 shares of Common Stock underlying    
the Selling Securityholder Warrants (and after deduction of estimated           
commissions and offering expenses), the pro forma net tangible book value of    
the Company at July 31, 1996 would have been $41,512,963 million, or $3.06 per  
share. This represents an immediate increase in such net tangible net book      
value of $.79 per share to existing stockholders and an immediate dilution of   
$6.69 per share to new investors purchasing shares in this offering. The        
following table illustrates this per share dilution:                            

                                                                · Download Table
                                                                            
Assumed offering price..........................................       $9.75
  Net tangible book value before this offering.................. $2.27      
  Increase attributable to new investors........................   .79      
                                                                 -----      
Pro forma net tangible book value after this offering...........        3.06
                                                                       -----
Dilution of net tangible book value to new investors............       $6.69
                                                                       =====

The foregoing excludes 1,472,000 shares that are issuable upon the exercise 
of outstanding employee options under the Company's Stock Option Plan as of     
October 17, 1996. To the extent that these and other options, stock awards or   
warrants that may be issued are exercised in the future, there will be further  
dilution to new investors.                                                      

The following table summarizes, on a pro forma basis as of August 31, 1996, 
the differences between existing stockholders and new investors with respect    
to the number of shares of Class A Common Stock purchased from the Company,     
the total consideration paid to the Company, and the average consideration      
paid per share (before deduction of underwriting discounts and commissions and  
estimated offering expenses):                                                   

                                                                · Download Table

                              SHARES PURCHASED  TOTAL CONSIDERATION  AVERAGE 
                              ----------------- -------------------   PRICE  
                               NUMBER   PERCENT   AMOUNT    PERCENT PER SHARE
                              --------- ------- ----------- ------- ---------
                                                                             
Existing stockholders........ 8,074,329   83.9% $44,129,000   74.5%   $5.47  
New investors................ 1,550,000   16.1   15,112,500   25.5    $9.75  
                              ---------  -----  -----------  -----           
  Total...................... 9,624,329  100.0% $59,241,500  100.0%          
                              =========  =====  ===========  =====           

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SELLING SECURITYHOLDERS 

The Selling Securityholders are various investors who received redeemable   
Class A Warrants of the Company in exchange for warrants received in the        
Company's 1994 Bridge Financing. The Selling Securityholder Securities were     
acquired upon exercise of those Class A Warrants.                               

The following table set forth certain information with respect to each      
Selling Securityholder for whom the Company is registering the Selling          
Securityholder Securities for resale to the public. The Company will not        
receive any of the proceeds from the sale of such securities. Except for the    
relationships noted in footnotes (2) and (3) below, to the Company's knowledge  
there are no material relationships between any of the Selling Securityholders  
and the Company, nor have any such material relationships existed within the    
past three years.                                                               

                                                                · Download Table

                                                              NUMBER OF CLASS B 
                                                             WARRANTS AND SHARES
                                                              OF CLASS A COMMON 
                                                             STOCK BENEFICIALLY 
                                                              OWNED AND MAXIMUM 
                                                                NUMBER TO BE    
SELLING SECURITYHOLDERS                                            SOLD(1)      
-----------------------                                      -------------------
                                                                                
Alan S. Abrams..............................................        12,500      
Jeffrey W. Abrams and Josette M. Abrams, JTWROS.............        12,500      
Jerome Ansel................................................        50,000      
Michael A. Asch.............................................        12,500      
Arthur F. Backal............................................         6,250      
James J. Binns, Esq. IRA Rollover...........................         6,250      
Andrew Bressman.............................................        25,000      
Michael Cantor..............................................        18,750      
Chesed Congregation.........................................       150,000      
Kenneth Cohen and Sherry Cohen, JTWROS......................        12,500      
Isaac Dweck.................................................        50,000      
Raymond Drapkin, M.D........................................        12,500      
Jules H. Dreyfuss...........................................        31,250      
EBLW Associates.............................................        12,500      
Steven M. Fieldman and Marjorie Fieldman, JTWROS(2).........        25,000      
Robert A. Foisie............................................        50,000      
Sandy Frank.................................................        25,000      
William Frankel.............................................        12,500      
Dr. Harvey Glicker..........................................        25,000      
Donald H. Goldman(3)........................................        25,000      
Morton Goulder..............................................        25,000      
Steven R. Hurlburt..........................................        37,500      
Boris Itkis(2)..............................................        25,000      
Michail Itkis and Lauren Snopkowski, JTWROS(2)..............        25,000      
Leonard Keller and Eileen Keller, JTWROS....................        75,000      
Robert E. Kirby.............................................        37,500      
Harmat Capital Corp.........................................        50,000      
David Hoffman and Jerri Hoffman, JTWROS.....................        75,000      
Lenny Corp..................................................        12,500      
Phil Lifschitz..............................................        25,000      
Gary Lustberg...............................................        12,500      
Harvey Mininberg and Susan Mininberg, JTWROS................        12,500      
Momentum Enterprises Inc. Money Purchase Trust..............        12,500      
Richard A. Nelson and Elaine M. Nelson, JTWROS..............        50,000      
Marc Roberts and Ron Cantor, JTWROS.........................        50,000      
The Rubin Family Foundation, Inc............................        18,750      

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                                                                · Download Table

                                                              NUMBER OF CLASS B 
                                                             WARRANTS AND SHARES
                                                              OF CLASS A COMMON 
                                                             STOCK BENEFICIALLY 
                                                              OWNED AND MAXIMUM 
                                                                NUMBER TO BE    
  SELLING SECURITYHOLDERS                                          SOLD(1)      
  -----------------------                                    -------------------
                                                                                
E. Donald Shapiro...........................................          6,250     
Dr. George Spiegel..........................................         37,500     
Gary J. Strauss.............................................         12,500     
Morris Talansky.............................................         50,000     
Ervin Tausky................................................         50,000     
Henry G. Warner.............................................         18,750     
Henry G. Warner Special No. 2...............................         12,500     
Adam R. Wolfensohn..........................................         18,750     
Naomi R. Wolfensohn.........................................         18,750     
Sara R. Wolfensohn..........................................         18,750     
Joel Wolff..................................................         75,000     
Aaron Wolfson...............................................         25,000     
Abraham Wolfson.............................................         25,000     
Morris Wolfson..............................................         50,000     
Seth Zachary................................................         12,500     
                                                                  ---------     
  Total.....................................................      1,550,000     
                                                                  =========     

--------                                                                        
(1) Does not include shares of Class A Common Stock issuable upon exercise of   
the Class B Warrants. Except for the individuals set forth in footnotes 
(2) and (3), none of the Selling Securityholders beneficially own in    
excess of 1% of the outstanding shares of Common Stock.                 

(2) Each of Steven M. Fieldman, Michail Itkis and Boris Itkis are directors     
  and, with the exception of Boris Itkis, executive officers of the Company.

(3) Mr. Goldman is a former director and executive officer of the Company.      

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CONCURRENT OFFERINGS  

Pursuant to the registration statement of which this Prospectus forms a     
part, the Company has registered (i) up to 10,590,196 shares of Class A Common  
Stock of the Company, which are issuable upon exercise of the Company's         
outstanding Class B Warrants pursuant to the Company's Exercise Offer in which  
it has reduced the exercise price of the Class B Warrants to $7.50 until        
, 1996, (ii) the resale of 275,000 Class B Warrants acquired by certain     
other selling securityholders in a private placement and the 275,000 shares of  
Class A Common Stock underlying such Class B Warrants. Sales of such            
securities, or the potential of such sales, may have an adverse effect on the   
market price of the securities offered hereby.                                  

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LEGAL MATTERS 

The validity of the securities offered hereby has been passed upon for the  
Company by Baer Marks & Upham LLP, New York, New York.                          

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PART II 

INFORMATION NOT REQUIRED IN PROSPECTUS  

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION                            

The expenses to be paid by the Company in connection with the distribution  
of securities being registered are estimated as follows:                        

                                                                · Download Table
                                                                         
Accounting Fees and Expenses............................... $   25,000   
Legal Fees and Expenses....................................     35,000   
Miscellaneous Expenses.....................................     20,000   
Blair Commission...........................................  3,971,323(1)
                                                            ----------   
  Total.................................................... $4,051,323   
                                                            ==========   

--------                                                                        

(1) Represents commissions on exercise of all Class B Warrants in the Exercise  
Offer.                                                                  

The Selling Securityholders will be responsible for all selling commissions,
transfer taxes and related charges in connection with the offer and sale of     
the Selling Securityholder Securities.                                          

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS                              

Section 145 of the Delaware General Corporation Law empowers a corporation  
to indemnify any person who was or is a party or is threatened to by made a     
party to any threatened, pending or completed action, suit or proceeding,       
whether civil, criminal, administrative or investigative (other than a suit by  
or in the right of the corporation) by reason of the fact that he or she is or  
was a director, officer, employee or agent of the corporation or is or was      
serving at the request of the corporation as an officer, employee or agent of   
another corporation or enterprise. Depending on the character of the            
proceeding, a corporation may indemnify against expenses (including attorneys'  
fees), judgments, fines and amounts paid in settlement actually and reasonably  
incurred in connection with such action, suit or proceeding if the person       
indemnified acted in good faith and in a manner he or she reasonably believed   
to be in and not opposed to the best interests of the corporation, and, with    
respect to any criminal action or proceeding, had no cause to believe his or    
her conduct was unlawful. In the case of an action by or in the right of the    
corporation, no indemnification may be made with respect to any claim, issue    
or manner as to which such person has been adjudged to be liable to the         
corporation unless the Court of Chancery or the court in which such action or   
suit was brought determines that despite the adjudication of liability, such    
person is fairly and reasonably entitled to indemnity for such expenses which   
the court deems proper. Section 145 further provides that to the extent a       
director or officer of a corporation has been successful in the defense of any  
action, suit or proceeding referred to above or in the defense of any claim     
issue or manner therein, he or she shall be indemnified against expenses        
(including attorneys' fees) actually and reasonably incurred by him or her in   
connection therewith. Corporations may also advance expenses incurred in        
defending proceedings against corporate agents upon receipt of an undertaking   
that the agent will reimburse the corporation if it is ultimately determined    
that the agent is not entitled to be indemnified against expenses reasonably    
incurred.                                                                       

The Company's Certificate of Incorporation provides, in effect, that, to the
extent and under the circumstances permitted by Section 145 of the Delaware     
General Corporation Law, the Company shall indemnify any person who was or is   
a party or is threatened to be made a party to any action, suit or proceeding   
of the type described above by reason of the fact that he or she is or was a    
director, officer, employee or agent of the Company or is or was serving at     
the request of the Company as director, officer, employee or agent of another   
corporation or enterprise.                                                      

As permitted by the Delaware General Corporation Law, the Company's         
Certificate of Incorporation limits the personal liability of its directors     
for violations of their fiduciary duty. This eliminates each director's         
liability to the corporation or its stockholders for monetary damages except    
(i) for any breach of the director's duty of loyalty; (ii) for acts or          
omissions not in good faith or which involve intentional misconduct or a        
knowing                                                                         

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violation of law; (iii) pursuant to Section 174 of the Delaware General         
Corporation Law providing for liability of directors for unlawful payment of    
dividends or unlawful stock purchases or redemptions; or (iv) for any           
transaction from which a director derived an improper personal benefit. The     
effect of this provision is to eliminate the personal liability of directors    
for monetary damages for actions involving a breach of their fiduciary duty of  
care, including any such actions involving gross negligence.                    

ITEM 16. EXHIBITS                                                               

                                                                · Download Table

EXHIBIT                                                                       
NUMBER                                DESCRIPTION                             
-------                               -----------                             
                                                                              
 1.1(1)  Revised Form of Underwriting Agreement                               
 3.1(1)  Certificate of Ownership and Merger                                  
 3.2(1)  Amended and Restated Certificate of Incorporation of the Registrant  
 3.3(1)  Certificate of Amendment of Amended and Restated Certificate of      
         Incorporation of Registrant                                          
 3.4(1)  By-laws of the Registrant                                            
 4.1(1)  Form of Bridge Note                                                  
 4.2(1)  Revised Form of Warrant Agreement                                    
 4.3(1)  Revised Form of Underwriter's Unit Purchase Option                   
 4.4(1)  Specimen of Class A Common Stock Certificate                         
 4.5(1)  Specimen of Class B Common Stock Certificate                         
 4.6**   Specimen of Class B Warrant Certificate                              
 4.7(3)  Specimen of Class C Warrant Certificate                              
 4.8(3)  Specimen of Class D Warrant Certificate                              
 5.1*    Legal Opinion of Irell & Manella LLP                                 
 5.2(4)  Legal Opinion of Baer Marks & Upham LLP                              
10.1(1)  1994 Stock Option Plan                                               
10.2*    Employment Agreement between Registrant and Steven M. Fieldman dated 
         as of August 27, 1996                                                
10.3(1)  Employment Agreement between Registrant and Michail Itkis dated as of
         October 31, 1994                                                     
10.4(2)  Employment Agreement between the Registrant and Robert J. Aten dated 
         as of April 1, 1995                                                  
10.5(2)  Employment Agreement between the Registrant and Lance Fieldman dated 
         as of May 1, 1995                                                    
10.6(1)  Amended and Restated Shareholders' Agreement by and among Yuri Itkis,
         Michael Itkis, Boris Itkis, Steven M. Fieldman, Donald H. Goldman,   
         Lance Fieldman and Registrant dated as of October 6, 1994            
10.7(1)  Intellectual Property License and Support Services Agreement by and  
         between FortuNet, Inc. and Registrant dated as of October 6, 1994    
10.8(1)  Amended and Restated Consulting Agreement by and between Registrant  
         and Yuri Itkis dated as of October 6, 1994                           
10.9(1)  Amended and Restated Escrow Agreement by and between the Registrant, 
         American Stock Transfer & Trust Company, Yuri Itkis, Michael Itkis,  
         Boris Itkis, Steven M. Fieldman, Donald H. Goldman and Lance Fieldman
10.10(1) Sublease between Registrant and Key Products Co., Inc.               
10.11(2) Lease between Registrant and 44 West 55th Street Associates dated as 
         of May 1, 1995                                                       
10.12(1) Form of Indemnification Agreement                                    
10.13(1) Form of International Sales Representative Agreement                 
10.14(4) Form of Amendment of Amended and Restated Escrow Agreement           
23.1*    Consent of Irell & Manella LLP (included in legal opinion filed as   
         Exhibit 5.1)                                                         
23.2     Consent of KPMG Peat Marwick LLP                                     
23.3     Consent of Richard A. Eisner & Company LLP                           
23.4(1)  Consent of Baer Marks & Upham LLP (included in Exhibit 5.2)          
24.1     Power of Attorney (included on signature page)                       
99.1**   Letter of Transmittal                                                

--------                                                                        
(1) Incorporated by Reference from the Registrant's Registration Statement on   
Form SB-2, Registration No. 33-86928.                                   

(2) Incorporated by reference from the Registrant's Annual Report on Form 10-   
 KSB for the fiscal year ended October 31, 1995, filed with the Securities
and Exchange Commission on February 13, 1996, File No. 0-25668.         

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(3) Incorporated by reference from the Registrant's Quarterly Report on Form    
 10-QSB for the fiscal year ended July 31, 1996, filed with the Securities
and Exchange Commission on September 16, 1996, File No. 0-25668.        

(4) Incorporated by Reference from the Registrant's Registration Statement on   
Form SB-2, Registration No. 333-02044.                                  

*   Previously filed.                                                           

**  To be filed by amendment.                                                   

ITEM 17. UNDERTAKINGS                                                           

(a) The undersigned registrant hereby undertakes:                           

 (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:                    

(i) To include any prospectus required by section 10(a)(3) of the   
Securities Act of 1933;                                                 

(ii) To reflect in the prospectus any facts or events arising after 
the effective date of the registration statement (or the most recent    
post-effective amendment thereof) which, individually or in the         
aggregate, represent a fundamental change in the information set forth  
in the registration statement;                                          

 (iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or  
any material change to such information in the registration statement;  

provided, however, that paragraphs 1(i) and 1(ii) do not apply if the       
information required to be included in a post-effective amendment by those  
paragraphs is contained in periodic reports filed by the registrant         
pursuant to section 13 or section 15(d) of the Securities Exchange Act of   
1934 that are incorporated by reference in the registration statement.      

(2) That, for the purpose of determining any liability under the        
Securities Act of 1933, each such post-effective amendment shall be deemed  
to be a new registration statement relating to the securities offered       
therein, and the offering of such securities at that time shall be deemed   
to be the initial bona fide offering thereof.                               

(3) To remove from registration by means of a post-effective amendment  
any of the securities being registered which remain unsold at the           
termination of the offering.                                                

(b) The undersigned registrant hereby undertakes that, for purposes of      
determining any liability under the Securities Act of 1933, each filing of the  
registrant's annual report pursuant to section 13(a) or section 15(d) of the    
Securities Exchange Act of 1934 (and, where applicable, each filing of an       
employee benefit plan's annual report pursuant to section 15(d) of the          
Securities Act of 1934) that is incorporated by reference in the registration   
statement shall be deemed to be a new registration statement relating to the    
securities offered therein, and the offering of such securities at that time    
shall be deemed to be the initial bona fide offering thereof.                   

(c) Insofar as indemnification for liabilities arising under the Securities 
Act may be permitted to directors, officers and controlling persons of the      
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant   
has been advised that in the opinion of the Commission such indemnification is  
against public policy as expressed in the Securities Act and is, therefore,     
unenforceable. In the event that a claim for indemnification against such       
liabilities (other than the payment by the registrant of expenses incurred or   
paid by a director, officer or controlling person of the registrant in the      
successful defense of any action, suit or proceeding) is asserted by such       
director, officer or controlling person in connection with the securities       
being registered, the registrant will, unless in the opinion of its counsel     
the matter has been settled by controlling precedent, submit to a court of      
appropriate jurisdiction the question whether such indemnification by it is     
against public policy as expressed in the Securities Act and will be governed   
by the final adjudication of such issue.                                        

II-3  

S-3/A
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SIGNATURES  

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT  
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE    
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT TO THE   
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,           
THEREUNTO DULY AUTHORIZED, IN THE CITY OF LOS ANGELES, STATE OF CALIFORNIA, ON  
THE 18TH DAY OF OCTOBER, 1996.                                                  

                                    INTERACTIVE FLIGHT TECHNOLOGIES,
          INC.

                              By:      /s/ Michail Itkis
                                            __________________________________
                                           Michail Itkis
                                           Chief Executive 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.                                          

                                                                · Download Table

             SIGNATURE                           TITLE                    DATE      
             ---------                           -----                    ----      
                                                                                    
           /s/    *                  Chief Executive Officer and    October 18, 1996
____________________________________  Director                                      
           Michail Itkis                                                            

           /s/    *                  Director                       October 18, 1996
____________________________________                                                
        Steven M. Fieldman                                                          

           /s/    *                  Director                       October 18, 1996
____________________________________                                                
            Yuri Itkis                                                              

           /s/    *                  Director                       October 18, 1996
____________________________________                                                
           Boris Itkis                                                              

           /s/    *                  Director                       October 18, 1996
____________________________________                                                
           James H. Zukin                                                           

           /s/    *                  Director                       October 18, 1996
____________________________________                                                
  General Alexander M. Haig, Jr.                                                    

  KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears          
below constitutes and appoints each of Michail Itkis and Steven M. Fieldman,        
jointly and severally, as his true and lawful attorneys-in-fact and agents,         
each with full power of substitution for him and in his name, place and stead,      
in any and all capacities, to sign any and all amendments and post-effective        
amendments to this Registration Statement, and to file the same, with all           
exhibits thereto, and other documents in connection therewith, with the             
Securities and Exchange Commission, granting unto each said attorney-in-fact        
and agent full power and authority to do and perform each and every act and         
thing requisite and necessary to be done in and about the premises, as fully to     
all intents and purposes as he might or could do in person, thereby ratifying       
and confirming all that each said attorney-in-fact and agent, or his                
substitutes, may lawfully do or cause to be done by virtue thereof.                 

      * /s/ Michail Itkis                                           October 18, 1996
____________________________________                                                
           Michail Itkis                                                            
          Attorney-in-fact                                                          

        /s/ John Alderfer            Chief Financial Officer        October 18, 1996
____________________________________  (Principal Financial and                      
           John Alderfer              Accounting Officer)                           

II-4  

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This S-3/A Filing		Date		First		Last			Other Filings
		2/1/94		20		39
		10/6/94		53
		10/31/94		20		53
		12/31/94		4		24
		3/7/95		38		43
		3/8/95		4		24
		3/14/95		23
		4/1/95		53
		4/30/95		38
		5/1/95		38		53
		5/10/95		21
		7/31/95		38
		8/1/95		38
		10/31/95		4		53
		11/1/95		38
		1/31/96		4		38
		2/1/96		38
		2/13/96		53
		3/7/96		35		43
		4/4/96		5
		4/30/96		4		38			10QSB, 10QSB/A
		5/1/96		38
		5/17/96		23					SC 13E4/A
		7/18/96		6		25
		7/26/96		23
		7/31/96		4		54			10QSB, 10QSB/A
		8/1/96		38
		8/27/96		53
		8/31/96		16		47
		9/5/96		7		26
		9/16/96		54					10QSB
		10/1/96		18		43
		10/8/96		1
		10/11/96		1					S-3
		10/17/96		14		47
Filed On / Filed As Of		10/18/96		1		55
		1/17/97		3		45
		1/20/97		3		45
		3/7/97		43
		3/6/0		3		19
		3/6/6		45
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