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Registration Statement for Securities Offered Pursuant to a Transaction   —   Form S-3
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-3         Memberworks Incorporated                              19     73K 
 2: EX-5.1      Opinion of George W.M. Thomas                          1      8K 
 3: EX-23.1     Consent of Pricewaterhousecoopers LLP                  1      5K 

S-3   —   Memberworks Incorporated
Document Table of Contents

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 1999. 

                                                 Registration Statement No. 333-

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

MEMBERWORKS INCORPORATED
(Exact name of Registrant as specified in its charter)

DELAWARE                           06-1276882   
(State or other                    (I.R.S. Employer   
jurisdiction of                   Identification No.) 
incorporation or                                      
organization)                                         

 9 WEST BROAD STREET
STAMFORD, CT 06902
(203) 324-7635

(Address, including zip code, and telephone number, including area code, of 
Registrant's principal executive offices) 

 GARY A. JOHNSON
 PRESIDENT AND CHIEF EXECUTIVE OFFICER
 9 WEST BROAD STREET
STAMFORD, CT 06902
 TEL: (203) 324-7635

(Name, address, including zip code and telephone number, including area code, of
agent for service)

   APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective. 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|                                

If this Form is filed to register additional securities for an offering   
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registrations statement number of the earlier       
effective registration statement for the same offering. |_|                     

 If this Form is a post-effective statement amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act, check the following box and list the Securities Act registration statement 
number of the earlier effective registration statement for the same offering.   
|_|                                                                             

If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|                                             

 CALCULATION OF REGISTRATION FEE

                                                        [Enlarge/Download Table]

                                                                            PROPOSED MAXIMUM          AMOUNT OF   
       TITLE OF SHARES TO BE REGISTERED        AMOUNT TO BE REGISTERED  AGGREGATE OFFERING PRICE  REGISTRATION FEE

                                                                                                                  
Common Stock, par value $0.01 per share. . . .      41,666 Shares       $1,570,325                $436.55         

       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, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE     
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), SHALL DETERMINE.    
 NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
   COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.                                       

The date of this prospectus is April 27, 1999.

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Subject to completion dated April 27, 1999

 41,666 Shares

MEMBERWORKS INCORPORATED

Common Stock

  The 41,666 shares of common stock of MemberWorks Incorporated, a
Delaware corporation, offered by this prospectus were issued in connection with 
the merger of a wholly-owned subsidiary of MemberWorks with and into            
Quota-Phone, Inc., a New York corporation, which was consummated on April 9,    
1999. Certain former stockholders of Quota-Phone or their representatives may   
sell the shares from time to time as described in this prospectus under         
"Selling Stockholders." As part of the merger, MemberWorks has agreed to        
register the shares under the Securities Act of 1933, as amended. MemberWorks   
will not receive any of the proceeds from the sale of the shares by the selling 
stockholders. See "Use of Proceeds."                                            

        The selling stockholders may from time to time sell the shares covered
by this prospectus on the Nasdaq National Market in ordinary brokerage          
transactions, in negotiated transactions, or otherwise, at market prices        
prevailing at the time of sale or at negotiated prices. See "Plan of            
Distribution." The shares are quoted on the Nasdaq National Market under the    
symbol "MBRS".                                                                  

THE SHARES OFFERED BY THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. SEE "RISK  
FACTORS" BEGINNING ON PAGE 4.                                                   

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 TABLE OF CONTENTS

                                                                            PAGE

Where You Can Find More Information                                           3 
Risk Factors                                                                  4 
Use of Proceeds                                                              12 
Selling Stockholders                                                         12 
Plan of Distribution                                                         12 
Legal Matters                                                                14 
Experts                                                                      14 

 WHERE YOU CAN FIND MORE INFORMATION

   We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the     
SEC's public reference rooms in Washington, D.C., New York, New York and        
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public 
at the SEC's web site at http://www.sec.gov.                                    

    The SEC allows us to incorporate by reference the information that we file
with the SEC, which means that we can disclose important information to you by  
referring you to those documents. The information incorporated by reference is  
considered to be part of this prospectus, and information that we file later    
with the SEC will automatically update and supersede this information. We       
incorporate by reference the documents listed below and any future filings (File
No. 0-21527) we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of   
the Securities Exchange Act of 1934:                                            

     a.  our annual report on Form 10-K for the fiscal year ended June 30, 1998;

b. our quarterly reports on Form 10-Q, for the fiscal quarters ended  
September 30, 1998 and December 31, 1998; and                         

c. the description of our capital stock contained in our registration 
statement on Form 8-A, dated October 11, 1996, and any amendments or  
reports filed for the purpose of updating that description.           

You may request a copy of these filings, at no cost, by writing or    
telephoning us at the following address:                                        

MemberWorks Incorporated                    
9 West Broad Street                         
Stamford, CT 06902                          
203-324-7635                                
Attention: George W. M. Thomas              

       This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. We have not authorized anyone to provide information other than the 
information provided in this prospectus. We are not making an offer of these    
securities in any state where the offer is not permitted. You should not assume 
that the information in this prospectus is accurate as of any date other than   
the date on the front of this document.                                         

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RISK FACTORS

      From time to time, information provided by Memberworks or statements
made by its employees may contain forward-looking information. Our actual       
future results may differ materially from the projections or suggestions made   
in such forward-looking information as a result of various potential risks and  
uncertainties, including, but not limited to, the factors discussed below.      

MEMBERWORKS HAS A HISTORY OF OPERATING LOSSES. THERE CAN BE NO ASSURANCE THAT   
WE WILL MAINTAIN PROFITABILITY IN THE FUTURE.                                   

        MemberWorks has historically incurred significant operating losses. As
of December 31, 1998, we had an accumulated deficit of approximately $40.5      
million. For fiscal years 1998 and 1997, we reported net income of approximately
$3.1 million and a net loss of approximately $3.9 million, respectively.        
Although we have experienced revenue growth in recent periods, these growth     
rates may not be sustainable and are not indicative of future operating results.
There can be no assurance that we will maintain profitability in the future.    

THE SEC MAY ADOPT CHANGES IN ACCOUNTING RULES GOVERNING HOW REVENUES ARE        
RECOGNIZED. SOME CHANGES COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR REPORTED   
REVENUES.                                                                       

      On September 28, 1998, the SEC issued a press release and stated the
"SEC will formulate and augment new and existing accounting rules and           
interpretations covering revenue recognition, restructuring reserves,           
materiality, and disclosure" for all publicly traded companies. Until such time 
as the SEC staff issues those interpretative guidelines, it is unclear what, if 
any, impact such interpretative guidance will have on our current accounting    
practices. However, the potential changes in accounting practice being          
considered by the SEC staff could have a material impact on the manner in which 
we recognize revenue.                                                           

       Prior to the SEC's announcement, we asked the SEC staff whether their
views regarding the timing of revenue recognition for companies such as ours    
that sell services has changed in the wake of Cendant Corporation's agreement   
with the SEC to modify its revenue recognition practices. We have requested the 
SEC staff's comment on, and have provided the SEC staff with information        
demonstrating the continued appropriateness of, our revenue recognition         
practices. We have consistently followed these practices in accordance with     
generally accepted accounting practices and with the concurrence of             
PricewaterhouseCoopers LLP, our independent accountants. Following this review  
and several discussions with the SEC staff, the staff has not objected, except  
as noted below, to our decision to continue, for the time being, to follow our  
revenue recognition practices. The staff did request that we change, and we have
changed, our method of accounting for printing and mailing of membership        
materials, beginning as of July 1, 1998. We recorded a $3.4 million expense in  
the first quarter of fiscal 1999, reflecting the cumulative effect of this      
change in accounting principle. We cannot assure you, however, that any rules   
adopted by the SEC relating to the recognition of revenues will                 

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not require us to change our accounting for revenue recognition or otherwise    
adversely affect our results of operations.                                     

OUR MARKETING EFFORTS DEPEND ON CUSTOMER LISTS SUPPLIED BY OUR CLIENTS.         
WE CANNOT ASSURE THAT OUR CLIENTS WILL CONTINUE TO PROVIDE US THESE LISTS.      

   If our customers limit or stop providing us with those lists, our
marketing efforts would be hampered. We obtain substantially all of the         
information necessary to MemberWorks' marketing efforts from customer lists     
supplied by our clients. Clients provide the lists to us for use in marketing a 
single, specific program which has been pre-approved by the client. As a        
result, our ability to market a new program to an existing customer base or an  
existing program to a new customer base is dependent on first obtaining         
approval from a client. There can be no assurance that we will continue to      
obtain such approvals. If clients limit the use of the customer lists, our      
marketing efforts would be hampered.                                            

ALMOST HALF OF OUR REVENUE LAST YEAR WAS FROM CUSTOMER LISTS SUPPLIED BY THREE  
CLIENTS. THE LOSS OF ANY OF THOSE KEY CLIENTS WOULD HAVE A MATERIAL ADVERSE     
EFFECT ON FUTURE RESULTS.                                                       

      Approximately 49.5% of our revenues for the year ended June 30, 1998
was attributable to members solicited from the customer lists provided by three 
key clients. There can be no assurance that one or more of our key or other     
clients will not terminate their relationship with us or that clients will      
provide additional customer lists to us for use in further marketing new or     
existing membership programs.                                                   

     Termination or expiration of a key client relationship could have a
material adverse effect on the future revenues from existing programs of which  
that client's customers are members and on our ability to further market new or 
existing programs through that client.                                          

OUR PROFITABILITY DEPENDS ON MEMBERSHIP RENEWALS. CANCELLATIONS WOULD IMPAIR OUR
PROFITABILITY.                                                                  

     We generally incur losses and negative cash flow during the initial
year of an individual membership program, as compared to renewal years, due     
primarily to higher marketing costs associated with initial member procurement. 
In addition, we experience a higher percentage of cancellations during the      
initial membership period as compared to renewal periods. During an initial     
annual membership term or renewal term, a member may cancel his or her          
membership in the program, generally for a refund of the membership fee for     
that period. Accordingly, the profitability of each of our programs depends on  
recurring and sustained membership renewals.                                    

OUR OPERATING RESULTS FLUCTUATE FROM QUARTER TO QUARTER.                        

    Our quarterly revenues, expenses and operating results have varied
significantly in the past and are likely to vary significantly from quarter to  
quarter in the future. Factors which affect our financial results include:      

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-        the timing and cancellation of customer orders;                        

-        our ability to introduce new programs on a timely basis;               

-        the introduction of programs by our competitors;                       

-        market acceptance of our and our clients' membership programs          
generally;                                                    

-        the timing of investments in program development;                      

-        personnel changes;                                                     

-        the demand for membership programs generally;                          

-        the mix of programs we offer;                                          

-        unanticipated service interruptions;                                   

-        increased costs associated with expansion of operations;               

-        the availability of vendors to support offered programs;               

-        the rate of renewal by existing members of programs;                   

-        the level of enthusiasm for health and fitness, travel, entertainment  
     and leisure activities, and other lifestyle elements underlying the
programs; and                                                 

-        competitive pressures on selling prices.                               

        Many of these factors are beyond our control. Because we determine our
expenditure levels in advance of each quarter, our ability to reduce costs      
quickly in response to any revenue shortfall is limited, and thus operating     
results would be adversely affected if projected revenues for a given quarter   
are not achieved. There can be no assurance that future acquisitions, such as   
the acquisition of Quota-Phone, and others, if any, by us will not have an      
adverse effect upon our results of operations, particularly in quarters         
immediately following consummation of those transactions, while the operations  
of the acquired business are being integrated into our operations.              

WE MAY BE UNABLE TO COMPETE WITH OTHER COMPANIES IN OUR INDUSTRY THAT HAVE      
FINANCIAL OR OTHER ADVANTAGES.                                                  

     We believe that the principal competitive factors in the membership
services industry include the ability to identify, develop and offer innovative 
service programs, the quality and breadth of service programs offered, price and
marketing expertise. Our competitors, including large retailers, travel         
agencies, insurance companies and financial service institutions, some of which 
have substantially larger customer bases and greater financial and other        
resources than we do, offer membership programs which provide services similar  
to, or which directly compete with, those provided by us. There can be no       
assurance that:                                                                 

-        our competitors will not increase their emphasis on programs similar to
those we offer and more directly compete with us, or          

-        our competitors will not provide programs comparable or superior to    
those we provide at lower membership prices, or               

-        our competitors will not adapt more quickly than us to evolving        
industry trends or changing market requirements, or           

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-        new competitors will not enter the market, or                          

-        other businesses will not themselves introduce competing programs.     

         Any increased competition may result in price reductions, reduced gross
margins and loss of market share, any of which could have a material adverse    
effect on our business, financial condition and results of operations.          
Additionally, because contracts between clients and program providers are often 
exclusive with respect to a particular service, potential clients may be        
prohibited from contracting with us to promote a program if the services we     
provide are similar to, or merely overlap with, the services provided by an     
existing program of a competitor.                                               

OUR BUSINESS DEPENDS ON NEW PROGRAM INTRODUCTIONS. IF WE FAIL TO INTRODUCE NEW  
PROGRAMS THAT ARE POPULAR, OUR BUSINESS WOULD SUFFER.                           

       Our business is substantially dependent on our ability to develop and
successfully introduce new programs which generate consumer interest. Failure to
introduce new programs in a timely manner could result in our competitors       
acquiring additional market share for a program in a particular area of consumer
interest. In addition, the introduction or announcement of new programs by us or
by others could render existing programs uncompetitive or obsolete, or result in
a delay or decrease in orders for existing programs as customers evaluate new   
programs or select the new programs as an alternative to existing programs.     
Therefore, the announcement or introduction of new programs by us or others, or 
our failure to introduce new programs which have broad consumer appeal, could   
have a material adverse effect on our business, financial condition and results 
of operations.                                                                  

WE DEPEND ON VENDORS AND TELEMARKETERS TO MARKET OUR PROGRAMS. THESE VENDORS AND
TELEMARKETERS MAY TERMINATE THEIR RELATIONSHIP WITH US, AND WE CANNOT CONTROL   
THE LEVEL AND THE QUALITY OF THE SERVICE THEY PROVIDE. ANY SERVICE INTERRUPTION 
OR QUALITY PROBLEMS WOULD ADVERSELY EFFECT US.                                  

       We depend on independent vendors to provide most program products and
services to members and on telemarketers to market our programs to prospective  
members. The vendors and telemarketers operate pursuant to agreements with us   
that may be terminated by the vendor or telemarketer with limited prior notice. 
There can be no assurance that, in the event a vendor or telemarketer ceases    
operations, or terminates, breaches or chooses not to renew its agreement with  
us, a replacement vendor or telemarketer could be retained on a timely basis, if
at all. In addition, vendors and telemarketers are independent contractors and  
the level and quality of services provided is outside our control. Any service  
interruptions, delays or quality problems could result in customer              
dissatisfaction and membership cancellations, which could have a material       
adverse effect on our business, financial condition and results of operations.  

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OUR FUTURE SUCCESS DEPENDS ON PROGRAMS WE MARKET THROUGH CREDIT CARD ISSUERS. A 
DOWNTURN IN THAT INDUSTRY WOULD ADVERSELY EFFECT US.                            

       Our future success is dependent in large part on continued demand for
our programs from businesses within the industries served by us. In particular, 
programs marketed through our credit card issuer clients accounted for          
substantially all of our revenues in fiscal 1998. A significant downturn in the 
credit card industry or a trend in that industry to reduce or eliminate its use 
of membership programs would have a material adverse effect on our business,    
financial condition and results of operations.                                  

WE HAVE GROWN RAPIDLY IN THE LAST FEW YEARS. WE CANNOT ASSURE OUR ABILITY TO    
MANAGE FUTURE GROWTH.                                                           

       We have recently experienced a period of rapid growth that has placed
significant demands on our management and other resources, and continued growth,
if any, could continue to place significant demands on such resources. Net sales
increased from approximately $9.4 million in fiscal 1992 to $120.8 million in   
fiscal 1998. In addition, the number of employees increased from 76 to          
approximately 661 during the same period. Our ability to compete effectively and
to manage future growth, if any, will depend on our ability to continue to      
implement and improve operational, financial and management information systems 
on a timely basis and to expand, train, motivate and manage its work force.     
There can be no assurance that our personnel, systems, procedures and controls  
will be adequate to support our operations, and the failure to support our      
operations effectively could have a material adverse effect on our business,    
financial condition and results of operations.                                  

OUR PROGRAMS FACE INCREASING COMPETITION FROM NEW FORMS OF DIRECT MARKETING.    

       Providers of membership service programs compete for client marketing
budget dollars with other marketing activities and, in particular, other forms  
of direct marketing activities, such as direct mail. In recent years, there have
been significant advances in new forms of direct marketing, such as the         
development of interactive shopping and data collection through television, the 
Internet and other media. Many industry experts predict that electronic         
interactive commerce, such as shopping and information exchange via the World   
Wide Web, will proliferate significantly in the foreseeable future. To the      
extent such proliferation occurs, it could have a material adverse effect on the
demand for membership service programs. Furthermore, as the telemarketing       
industry continues to grow, the effectiveness of telemarketing, which is our    
major means of marketing our programs, as a direct marketing tool may decrease  
as a result of increased consumer resistance to telemarketing in general.       

INTRODUCING NEW PROGRAMS REQUIRES SIGNIFICANT INVESTMENTS. WE MAY NOT HAVE      
ENOUGH FINANCIAL RESOURCES TO MEET ALL OF OUR NEEDS.                            

    We typically incur high costs in the year a program is introduced.
Principal elements of these costs relate to hiring personnel, developing program
content, contracting with vendors, drafting, testing and refining telemarketing 
scripts and creating                                                            

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membership kits for mailing to potential new program members. We must incur     
costs to market programs to each potential member, regardless of whether that   
individual actually becomes a paying member. Our capital base is smaller than   
that of many of our competitors, and there can be no assurance that our cash    
resources will be able to sustain our business, particularly if we experience a 
reduction in revenues for a prolonged period or if we face substantial          
unexpected capital requirements. To the extent that such cash resources are     
insufficient to fund our activities, additional funds will be required. There   
can be no assurance that additional financing will be available on reasonable   
terms or at all. If additional capital is raised through the sale of additional 
equity or convertible debt securities, dilution to our stockholders would occur.

WE EXPECT TO GROW THROUGH ACQUISITIONS. THESE ACQUISITIONS MAY NOT BE           
PROFITABLE.                                                                     

       As part of our growth strategy, we currently intend to expand through
the acquisition of other businesses or products. We regularly review potential  
acquisitions and business alliances, some of which may be material. There can be
no assurance that acquired businesses will be profitable.                       

WE RELY ON OUR COMPUTER AND COMMUNICATION SYSTEMS. IF SUCH SYSTEMS FAIL OR ARE  
UNABLE TO KEEP PACE WITH TECHNOLOGICAL ADVANCES, OUR BUSINESS WOULD SUFFER.     

         Our business is highly dependent on our computer and telecommunications
systems and any temporary or permanent loss of either system, for whatever      
reason, could have a material adverse effect on our business, financial         
condition and results of operations. In addition, the technologies on which we  
are dependent to compete effectively and meet our clients' needs are rapidly    
evolving and in many instances are characterized by short product life cycles or
innovation. As a result, we are dependent on ongoing, significant investment in 
advanced computer and telecommunications technology, including automated call   
distributors and digital switches, and our ability to anticipate and adapt to   
technological shifts. There can be no assurance that we will be successful in   
anticipating or adapting to technological changes or in selecting and developing
new and enhanced technology on a timely basis.                                  

WE DEPEND ON THE TELEPHONE SERVICES THROUGH WHICH WE MARKET OUR PRODUCTS. AN    
INTERRUPTION OF, OR AN INCREASE IN THE BILLING RATE FOR, SUCH SERVICES WOULD    
ADVERSELY AFFECT OUR BUSINESS.                                                  

  We market and service our programs primarily telephonically, and
accordingly, our business is highly dependent on telephone services provided by 
various local and long distance telephone companies. Any significant            
interruption in telephone services could adversely affect us. Additionally,     
limitations on the ability of telephone companies to provide us with increased  
capacity that may be required in the future, if any, could adversely affect our 
business, financial condition and results of operations. Rate increases imposed 
by these telephone companies will increase our operating expenses and could     
have a material adverse effect our on business, financial condition and results 
of operations.                                                                  

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WE DEPEND ON KEY EXECUTIVE AND MARKETING PERSONNEL. A LOSS OF SUCH PERSONNEL    
WOULD NEGATIVELY IMPACT OUR OPERATIONS.                                         

        We are highly dependent on the members of our management and marketing
staff, the loss of one or more of whom could have a material adverse effect on  
us. In addition, we believe that our future access will depend in large part    
upon our ability to attract and retain highly skilled managerial and marketing  
personnel, particularly as we expand our activities. We face significant        
competition for such personnel, and there can be no assurance that we will be   
successful in hiring or retaining the personnel we require for continued growth,
if any. The failure to hire and retain such personnel could have a material     
adverse effect on our business, financial condition and results of operations.  

OUR INDUSTRY IS INCREASINGLY SUBJECT TO FEDERAL AND STATE GOVERNMENT REGULATION.
SUCH REGULATION COULD HINDER OUR OPERATIONS AND INCREASE OUR OPERATING COSTS.   

         The primary means which we use to market our programs is telemarketing.
The telemarketing industry has become subject to an increasing amount of Federal
and state regulation as well as general public scrutiny in the past several     
years. For example, the Federal Telephone Consumer Protection Act of 1991 limits
the hours during which telemarketers may call consumers and prohibits the use of
automated telephone dialing equipment to call certain telephone numbers.        
Additionally, the Federal Telemarketing and Consumer Fraud and Abuse Prevention 
Act of 1994 and Federal Trade Commission ("FTC") regulations promulgated        
thereunder, prohibit deceptive, unfair or abusive practices in telemarketing    
sales. Both the FTC and state attorneys general have authority to prevent       
telemarketing activities deemed by them to be "unfair or deceptive acts or      
practices." Further, some states have enacted laws and others are considering   
enacting laws targeted directly at regulating telemarketing practices, and there
can be no assurance that any such laws, if enacted, will not adversely affect or
limit our current or future operations. Compliance with these regulations is    
generally the responsibility of us, and we could be subject to a variety of     
enforcement or private actions for any failure to comply with such regulations. 
Our provision of membership programs requires us to comply with certain state   
regulations, changes in which could materially increase our operating costs     
associated with complying with such regulations. The risk of noncompliance by us
with any rules and regulations enforced by a Federal or state consumer          
protection authority may subject us or our management to fines or various forms 
of civil or criminal prosecution, any of which could materially adversely affect
our business, financial condition and results of operations. Also, the media    
often publicizes perceived noncompliance with consumer protection regulations   
and violations of notions of fair dealing with consumers, and the membership    
programs industry is susceptible to peremptory charges by the media of          
regulatory noncompliance and unfair dealing.                                    

WE MAY BE UNABLE TO ACHIEVE YEAR 2000 COMPLIANCE.                               

       Although management believes our systems will be Year 2000 compliant,
we have begun developing contingency plans to address any possible system       
failures. Because we use multiple vendors to process our billing transactions,  
our external risk is mitigated as vendors may be used interchangeably. However, 
there can be no assurance                                                       

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that these, or other companies on which we rely will be timely converted or that
any such failure to convert would not have an adverse effect on our systems and 
operations.                                                                     

THE MARKET PRICE OF OUR COMMON STOCK COULD FALL AS A RESULT OF THIS MERGER.     

      Sales of substantial amounts of shares of common stock in the public
market following this merger could adversely affect the market price of the     
common stock. As of April 26, 1999 we had 15,716,282 shares of common stock     
outstanding.                                                                    

OFFICERS AND DIRECTORS CAN CONTROL CORPORATE ACTIONS DUE TO THEIR COMBINED      
OWNERSHIP OF 36% OF THE OUTSTANDING COMMON STOCK.                               

  Our officers and directors and their affiliates beneficially own
approximately 36% of our outstanding common stock. These stockholders, acting   
together, would have the ability to significantly influence the election of     
directors and also may have the ability to determine the outcome of corporate   
actions requiring stockholder approval. This concentration of ownership also    
may have the effect of delaying or preventing a change in control.              

THE ANTI-TAKEOVER PROVISIONS IN OUR COMPANY CHARTER MAY PREVENT A TRANSACTION   
THAT IS IN THE BEST INTEREST OF THE STOCKHOLDERS.                               

         Our Restated Certificate of Incorporation (the "Charter") requires that
any action required or permitted to be taken by MemberWorks' stockholders must  
be effected at a duly called annual or special meeting of stockholders and may  
not be effected by any consent in writing, and requires reasonable advance      
notice by a stockholder of a proposal or director nomination which such         
stockholder desires to present at any annual or special meeting of stockholders.
Special meetings of stockholders may be called only by the Chairman of the      
Board, the Chief Executive Officer or, if none, the President of MemberWorks or 
by the board of directors. The Charter provides for a classified board of       
directors, and members of the board of directors may be removed only for cause  
upon the affirmative vote of holders of at least two-thirds of the shares of    
capital stock of MemberWorks entitled to vote. In addition, shares of preferred 
stock may be issued in the future without further stockholder approval and upon 
such terms and conditions, and having such rights, privileges and preferences,  
as the board of directors may determine. The rights of the holders of common    
stock will be subject to, and may be adversely affected by, the rights of any   
holders of preferred stock that may be issued in the future. We have no present 
plans to issue any shares of preferred stock. In addition, MemberWorks is       
subject to the anti-takeover provisions of Section 203 of the Delaware General  
Corporation Law which prohibits MemberWorks from engaging in a "business        
combination" with an "interested stockholder" for a period of three years after 
the date of the transaction in which the person became an interested            
stockholder, unless the business combination is approved in a prescribed manner.
These provisions, and other provisions of the Charter, may have the effect of   
deterring hostile takeovers or delaying or preventing changes in control or     
management of MemberWorks, including transactions in which stockholders might   
otherwise receive a premium for their shares over then                          

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current market prices. In addition, these provisions may limit the ability of   
stockholders to approve transactions that they may deem to be in their best     
interests.                                                                      

WE ARE UNLIKELY TO PAY A DIVIDEND ON THE COMMON STOCK.                          

       We do not anticipate paying any cash dividends on the common stock in
the foreseeable future.                                                         

 USE OF PROCEEDS

         We will not receive any proceeds from the sale of shares by the selling
stockholders.                                                                   

SELLING STOCKHOLDERS

         The selling stockholders hold shares that were issued by MemberWorks in
our acquisition of Quote-Phone, Inc. If all shares offered by the selling       
stockholders are sold, the selling stockholders will no longer own any shares.  
The selling stockholders have not held any positions or offices with, been      
employed by, or otherwise had a material relationship with MemberWorks within   
the last three years.                                                           

     The information in the following table provides certain information
with respect to the shares beneficially owned by the selling stockholders as of 
the date of this prospectus. The shares registered under the registration       
statement of which this prospectus is a part may be offered from time to time by
the selling stockholders. However, the selling stockholders are under no        
obligation to sell all or any portion of those shares, nor are the selling      
stockholders obligated to sell any shares immediately under this prospectus. We 
will not receive any proceeds from any sales of shares by the selling           
stockholders. All information with respect to share ownership has been furnished
by the selling stockholders.                                                    

                                                                [Download Table]

                                    Number of                        
          Name of Selling      Shares Beneficially         Shares    
             Stockholder   Owned Prior to the Offering  Being Offered
             -----------   ---------------------------  -------------
                                                                     
Barry Lewisohn                          20,833             20,833    
Stuart Berger                           20,833             20,833    

PLAN OF DISTRIBUTION

        The shares offered by this prospectus may be sold from time to time by
the selling stockholders. We will not receive any proceeds from this offering.  
The selling stockholders may offer the shares from time to time in the open     
market, on the Nasdaq                                                           

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National Market, in privately negotiated transactions, or in a combination of   
such methods, at market prices that prevail at the time of sale or at privately 
negotiated prices. The selling stockholders may sell these shares through one or
more brokers or dealers or directly to purchasers. These broker-dealers may     
receive compensation in the form of commissions, discounts or concessions from  
the selling stockholders and/or purchasers of the shares for whom those         
broker-dealers may act as agent, or to whom they may sell as principal, or both.
Compensation as to a particular broker-dealer may exceed customary commissions. 
The selling stockholders and any broker-dealers who act in connection with the  
sale of the shares under this prospectus may be deemed to be "underwriters"     
within the meaning of the Securities Act. Any commissions they receive and      
proceeds of any sale of shares may be deemed to be underwriting discounts and   
commissions under the Securities Act. Under Exchange Act rules and regulations, 
no distribution participant or its affiliated purchasers (as defined in         
Regulation M adopted under the Exchange Act) may simultaneously engage in       
market making activities with respect to such shares for a restricted period    
beginning on the day proxy solicitation or offering materials are first         
disseminated to security holders and ending upon the completion of the          
distribution, except under certain limited circumstances. The selling           
stockholders, their affiliated purchasers and any other person participating in 
the distribution will be subject to certain provisions of the Exchange Act and  
related rules and regulations. These provisions prohibit, except under certain  
limited circumstances, the purchase and sale of any of the shares by the        
selling stockholders, their affiliated purchasers and any other person          
participating in the distribution during the restricted period described above. 
These restrictions may affect the marketability of the shares and the ability   
of any person or entity to engage in market making activities with respect to   
the shares.                                                                     

         We have agreed to pay all of the expenses incident to the registration,
offering and sale of these shares to the public other than commissions or       
discounts of underwriters, broker-dealers or agents. We have agreed to indemnify
the selling stockholders against certain liabilities, including certain         
liabilities under the Securities Act.                                           

        From time to time, the selling stockholders may pledge, hypothecate or
grant a security interest in some or all of the shares they own. In the event of
a foreclosure or event of default in connection with those pledges, the shares  
may be transferred to the persons to whom the shares were pledged. If such a    
transfer occurs, the transferees will be deemed to have the rights of the       
selling stockholders under this plan of distribution. At the same time, the     
selling stockholders will beneficially own fewer shares. The plan of            
distribution for the selling stockholders' shares will otherwise remain         
unchanged.                                                                      

         This offering will terminate on the earlier of (a) June 30, 1999 or (b)
the date on which all shares offered by this prospectus have been sold by the   
selling stockholders.                                                           

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 LEGAL MATTERS

         The validity of the shares offered hereby will be passed upon by George
W. M. Thomas, General Counsel of MemberWorks.                                   

 EXPERTS

The consolidated financial statements incorporated in this    
Registration Statement by reference to the Annual Report on Form 10-K for the   
year ended June 30, 1998, have been so incorporated in reliance on the report   
of PricewaterhouseCoopers LLP, independent accountants, given on the authority  
of said firm as experts in auditing and accounting.                             

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 PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Nature of Expense                                                               

                                                                [Download Table]
                                                                         
SEC Registration Fee ...................................       $   437.00
Legal Fees and Expenses ................................       $        *
Miscellaneous ..........................................       $        *
                                                               ----------
TOTAL                                                          $   437.00

* To be filed by Amendment                                               

Item 15.  Indemnification of Directors and Officers.                            

Except as hereinafter set forth, there is no provision of our 
Certificate of Incorporation or any contract, arrangement or statute under which
any director or officer of Memberworks is insured or indemnified in any manner  
against any liability that he may incur in his capacity as such.                

       Article Eight of the Registrant's Amended and Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation") provides that no    
director of the Registrant shall be personally liable for any monetary damages  
for any breach of fiduciary duty as a director, except to the extent that the   
Delaware General Corporation Law prohibits the elimination or limitation of     
liability of directors for breach of fiduciary duty.                            

        Article Nine of the Registrant's Restated Certificate of Incorporation
provides that a director or officer of the Registrant (a) shall be indemnified  
by the Registrant against all expenses (including attorney's fees), judgments,  
fines and amounts paid in settlement incurred in connection with any litigation 
or other legal proceeding (other than an action by or in the right of the       
Registrant) brought against him by virtue of his position as a director or      
officer of the Registrant if he acted in good faith and in a manner he          
reasonably believed to be in, or not opposed to, the best interests of the      
Registrant, and, with respect to any criminal action or proceeding, had no      
reasonable cause to believe his conduct was unlawful and (b) shall be           
indemnified by the Registrant against all expenses (including attorneys' fees)  
and amounts paid in settlement incurred in connection with any action by or in  
the right of the Registrant brought against him by virtue of his position as a  
director or officer of the Registrant if he acted in good faith and in a manner 
he reasonably believed to be in, or not opposed to, the best interests of the   
Registrant, except that no indemnification shall be made with respect to any    
matter as to which such person shall have been adjudged to be liable to the     
Registrant, unless a court determined that, despite such adjudication but in    
view of all of the circumstances, he is entitled to indemnification of such     
expenses. Notwithstanding the foregoing, to the extent that a director or       
officer has been successful, on the merits or otherwise, including, without     
limitation, the dismissal of an action without prejudice, he is required to be  
indemnified by the Registrant against all expenses (including attorneys' fees)  
incurred in                                                                     

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connection therewith. Expenses shall be advanced to a Director or office at his 
request, provided that he undertakes to repay the amount advanced if it is      
ultimately determined that he is not entitled to indemnification for such       
expenses.                                                                       

         Indemnification is required to be made unless the Registrant determines
that the applicable standard of conduct required for indemnification has not    
been met. In the event of a determination by the Registrant that the director or
officer did not meet the applicable standard of conduct required for            
indemnification, or if the Registrant fails to make an indemnification payment  
within 60 days after such payment is claimed by such person, such person is     
permitted to petition the court to make an independent determination as to      
whether such person is entitled to indemnification. As a condition precedent to 
the right of indemnification, the director or officer must give the Registrant  
notice of the action for which indemnity is sought and the Registrant has the   
right to participate in such action or assume the defense thereof.              

        Article Nine of the Registrant's Restated Certificate of Incorporation
further provides that the indemnification provided therein is not exclusive, and
provides that in the event that the Delaware General Corporation Law is amended 
to expand the indemnification permitted to directors or officers the Registrant 
must indemnify those persons to the fullest extent permitted by such law as so  
amended.                                                                        

     Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the         
corporation in related capacities against amounts paid and expenses incurred in 
connection with an action or proceeding to which he is or is threatened to be   
made a party by reason of such position, if such person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person   
had no reasonable cause to believe his conduct was unlawful; provided that, in  
the case of actions brought by or in the right of the corporation, no           
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the 
extent that the adjudicating court determines that such indemnification is      
proper under the circumstances.                                                 

Item 16.  Exhibits.                                                             

Exhibit  Description of Exhibit                                            Page 

5.1      Opinion of George W. M. Thomas                                    II-6 
23.1     Consent of PricewaterhouseCoopers LLP                             II-7 
24.1     Power of Attorney (included as part of the signature page)        II-4 

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Item 17.  Undertakings.                                                         

The Company hereby undertakes:                                

         (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any        
material information with respect to the plan of distribution not previously    
disclosed in this Registration Statement or any material change to such         
information in this Registration Statement.                                     

   (2) That, for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities   
offered therein, and the offering of such securities at the 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.                                                                   

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

Insofar as indemnification for liabilities arising under the Securities Act may 
be permitted to directors, officers and controlling persons of Memberworks      
pursuant to the indemnification provisions described herein, or otherwise,      
Memberworks has been advised that in the opinion of the Securities and          
Exchange Commission such indemnification is against public policy as expressed  
in the Securities Act and is, therefore, unenforceable. In the event that a     
claim for indemnification against such liabilities (other than the payment by   
Memberworks of expenses incurred or paid by a director, officer or controlling  
person of Memberworks 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, Memberworks will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,    
submit to a court 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.               

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933,   
Memberworks 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         
Registration Statement to be signed on its behalf by the undersigned, thereunto 
duly authorized, in the City of Stamford, State of Connecticut on the 27th day  
of April, 1999.                                                                 

                      MemberWorks Incorporated

                     By: /s/ Gary A. Johnson
                                --------------------------
                     Gary A. Johnson
                         President and Chief
                       Executive Officer

  KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gary A. Johnson and James B. Duffy, and  
each of them each with full power to act without the other, his true and lawful 
attorney-in-fact and agent, each with full power of substitution and            
resubstitution, for such person and in his name, place and stead, in any and all
capacities, to sign any or all further amendments or supplements (including     
post-effective amendments) to this Form S-3 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 of   
said attorneys-in-fact and agents 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 as to all intent and purposes as he might or could do in     
person, hereby ratifying and confirming all that each of said attorneys-in-fact 
and agents, or his substitutes, may lawfully do or cause to be done by virtue   
thereof.                                                                        

  Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the          
capacities indicated on the 27th day of April, 1999.                            

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                                                                [Download Table]

         SIGNATURE                                     TITLE                  
         ---------                                     -----                  
                                                                              
/s/ Gary A. Johnson                         President, Chief Executive Officer
-----------------------------               and Director                      
Gary A. Johnson                             (Principal Executive Officer)     

/s/ Dennis P. Walker                        Executive Vice President and      
-----------------------------               Director                          
Dennis P. Walker                                                              

/s/ James B. Duffy                          Senior Vice President and Chief   
-----------------------------               Financial Officer                 
James B. Duffy                              (Principal Financial and          
                                            Accounting Officer)               

/s/ Stephen J. Clearman                     Director                          
-----------------------------                                                 
Stephen J. Clearman                                                           

/s/ Alex L. Ellison                         Director                          
-----------------------------                                                 
Alec L. Ellison                                                               

/s/ Michael R. O'Brien                      Director                          
-----------------------------                                                 
Michael R. O'Brien                                                            

/s/ Marc S. Tesler                          Director                          
-----------------------------                                                 
Marc S. Tesler                                                                

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Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-3’ Filing		Date		First		Last			Other Filings
		6/30/99		13					10-K
Filed on:		4/27/99		1		2			8-K
		4/26/99		11
		4/9/99		2					8-K
		12/31/98		3		4			10-Q
		9/30/98		3					10-Q,  NT 10-K
		9/28/98		4
		7/1/98		4
		6/30/98		3		14			10-K,  10-K/A,  NT 10-K
		10/11/96		3					8-A12G
									List all Filings