X0201 4 2004-01-14 0 0000878720 FAO INC FAOO 0000884413 KAYNE RICHARD A 1 0 1 0 Convertible Debt 1.95 2004-01-14 4 S 0 1 D 2003-04-23 Class J Convertible Preferred Stock 1703.244 0 D Class I Convertible Preferred Stock 1.5 2004-01-14 4 S 0 1514 1000 D 2003-04-23 Common Stock 1009083 0 I Various Class I Convertible Preferred Stock 1.5 2004-01-14 4 S 0 3900 1000 D 2003-04-23 Common Stock 2600000 0 D Sold in a private transaction. Represents one note (Equipment 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. The securities were originally issued in compromise of claims through the bankruptcy of the Issuer. 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. Richard A. Kayne 2004-01-16