X0201 4/A 2003-04-23 2003-04-25 0 0000878720 FAO INC FAOO 0000884413 KAYNE RICHARD A 1 0 1 0 Non-Employee Director Options (right to buy) 2003-04-23 4 J 0 2285 D Common Stock 2285 0 D Warrants 1.95 2003-04-23 4 J 0 2852 A 2003-04-23 2007-10-08 Common Stock 2852 2852 I Various Warrants 1.95 2003-04-23 4 J 0 8641 A 2003-04-23 2007-10-08 Common Stock 8641 8641 D Warrants 1.95 2003-04-23 4 J 0 30805 A 2003-04-23 2007-10-08 Common Stock 30805 30805 D Convertible Debt 1.95 2003-04-23 4 J 0 1 A 2003-04-23 Class J Convertible Preferred Stock 1703.244 1703.244 D Class I Convertible Preferred Stock 1.5 2003-04-23 4 J 0 553 1000 A 2003-04-23 Common Stock 368735 553 I Various Class I Convertible Preferred Stock 1.5 2003-04-23 4 J 0 4900 1000 A 2003-04-23 Common Stock 3266667 4900 D Obligation to buy Warrants 2003-04-23 4 J 0 18243 A 2003-05-01 2003-11-30 Warrants to Buy 18243 18243 I Various Obligation to buy Warrants 2003-04-23 4 J 0 161621 A 2003-05-01 2003-11-30 Warrants to Buy 161621 161621 D Obligation to buy Warrants 2003-04-23 4 J 0 24325 A 2003-11-30 2003-11-30 Warrants to Buy 24325 24325 I Various Obligation to buy Warrants 2003-04-23 4 J 0 215494 A 2003-11-30 2003-11-30 Warrants to Buy 215494 215494 D Common Share equivalents and prices take into account a 1:15 Reverse Stock Split completed on April 23, 2003. In connection with the bankruptcy of the Issuer (Case No. 03-10119(LK), District of Delaware), all outstanding options and warrants of the Issuer (other than those disclosed herein) held by Mr. Kayne were cancelled. The cancelled securities have various exercise and expiration dates and various conversion and purchase prices. Includes shares in which Mr. Kayne has an indirect pecuniary interest through his interests in Kayne Anderson Capital Advisors, L.P. (KACALP) and investment partnerships for which KACALP is the general partner. Mr. Kayne is the controlling shareholder of the corporate owner of the general partner of KACALP; a limited partner of each of the limited partnerships; and the trustee of the employee benefit plan account. Mr. Kayne has indirect control of additional shares held by the investment partnerships and other managed investment accounts, but he does not have any pecuniary interest, direct or indirect, in such shares and accordingly they are not reported here. The Warrants were originally issued in connection with the purchase of notes of the Issuer without separate consideration being paid, and were repriced in the bankruptcy. The securities were originally issued in compromise of claims through the bankruptcy of the Issuer. The Series I Convertible Preferred Stock was acquired in a private transaction with the Issuer in connection with the Issuer’s emergence from bankruptcy. The obligation to buy Warrants represents a contractual right to the Issuer to require (by exercise of the obligation) Mr. Kayne to secure a letter of credit in favor of the Issuer, for which the Issuer must then issue to Mr. Kayne the specified number of Warrants. The Warrants would be exercisable at $1.50 per share, be immediately exercisable and expire on the fifth anniversary of the date of issuance. The obligation to buy Warrants represents a contractual right of the Issuer to elect (by exercise of the obligation) not to repay certain senior notes issuable by the Issuer to Mr. Kayne if the beneficiary of the letter of credit referenced in Note 7 draws upon the letter of credit. If, at November 30, 2003, such senior notes are outstanding and the Issuer has not repaid them, the Issuer must then issue to Mr. Kayne the specified number of Warrants. The Warrants would be exercisable at $1.50 per share, be immediately exercisable and expire on the fifth anniversary of the date of issuance. The acquisitions of securities from the Issuer reported above are exempt from liability under Rule 16b-3 (transaction Code A would also apply). Represents one note in the aggregate principal amount of $1,703,244. The note converts to Class J Convertible Preferred Stock at the rate of one share for every $1,000 of principal amount converted. The Class J Convertible Preferred Stock converts to common stock at the rate of $1.95 per common share. No expiration date applies. Richard A. Kayne 2003-10-24