ADVANCED THERMAL SCIENCES CORP, S-1/A, 2000-10-18

ADVANCED THERMAL SCIENCES CORP
S-1/A, 2000-10-18
SPECIAL INDUSTRY MACHINERY, NEC

Previous: MORGAN STANLEY DEAN WIT SEL EQ TR STR SM CA POR 2000-1, 487, EX-23.1, 2000-10-18

Next: ADVANCED THERMAL SCIENCES CORP, S-1/A, EX-4.1, 2000-10-18

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 18, 2000

REGISTRATION NO. 333-44384
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 3

TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ADVANCED THERMAL SCIENCES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

<TABLE>
<S> <C> <C>
DELAWARE 3559 58-2367120
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

3355 EAST LA PALMA AVENUE

ANAHEIM, CA 92806
(714) 688-4200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
AMIN J. KHOURY, CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ADVANCED THERMAL SCIENCES CORPORATION
3355 EAST LA PALMA AVENUE
ANAHEIM, CA 92806
(714) 688-4200
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:

<TABLE>
<S> <C>
ROHAN S. WEERASINGHE VICTOR A. HEBERT
SHEARMAN & STERLING HELLER EHRMAN WHITE & MCAULIFFE LLP
599 LEXINGTON AVENUE 333 BUSH STREET
NEW YORK, NY 10022-6069 SAN FRANCISCO, CA 94104
(212) 848-4000 (415) 772-6000
</TABLE>

------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after the effective date of this registration
statement.

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, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under 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 this form is a post-effective amendment filed pursuant to Rule 462(c)
under 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
under 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

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE(2)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A common stock, $0.01 par value..... $50,600,000 $13,359
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(o) under the Securities Act.
(2) Previously paid.

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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO
BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.

SUBJECT TO COMPLETION, DATED OCTOBER 18, 2000

PROSPECTUS

4,000,000 Shares

Advanced Thermal Sciences Corporation

Class A Common Stock

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

We are offering 4,000,000 shares of our Class A common stock. This is our
initial public offering and no public market currently exists for our Class A
common stock. We estimate that the initial public offering price will be between
$9.00 and $11.00 per share. We have applied to qualify our Class A common stock
for quotation on the Nasdaq National Market under the symbol "ATSC."

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

INVESTING IN OUR CLASS A COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.

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

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
PER SHARE TOTAL
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Public Price................................. $ $
Underwriting Discounts....................... $ $
Proceeds, before expenses, to Advanced
Thermal Sciences........................... $ $
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
</TABLE>

B/E Aerospace, our sole stockholder, has granted the underwriters the right
to purchase up to an additional 600,000 shares of Class A common stock to cover
over-allotments.

The Securities and Exchange Commission and state securities regulators have
not approved or disapproved of these securities or determined if this prospectus
is truthful or complete. It is illegal for any person to tell you otherwise.

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

Needham & Company, Inc.

A.G. Edwards & Sons, Inc.
First Security Van Kasper
The date of this prospectus is , 2000
<PAGE> 3

[INSIDE FRONT COVER]

[Schematic representation of the inside of a semiconductor fabrication facility
depicting the locations of temperature control systems.]

[Description of key market drivers, our technology and key features of our
temperature control systems and their benefits.]

[Comparison of our temperature control system design with the design of leading
competitive temperature control systems and a picture and a graphic of our
modular, configurable temperature control system.]
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 1
Risk Factors................................................ 5
Special Note Regarding Forward Looking Statements........... 16
Use of Proceeds............................................. 16
Dividend Policy............................................. 16
Capitalization.............................................. 17
Dilution.................................................... 18
Selected Financial Information.............................. 19
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 20
Business.................................................... 26
Management.................................................. 38
Relationships and Transactions with Related Parties......... 48
Principal Shareholders...................................... 51
Description of Capital Stock................................ 53
Shares Eligible for Future Sale............................. 56
Underwriting................................................ 57
Legal Matters............................................... 59
Experts..................................................... 59
Available Information....................................... 60
Index to Financial Statements............................... F-1
</TABLE>

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

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to
buy, shares of our Class A common stock only in jurisdictions where offers and
sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of
this prospectus or of any sale of our Class A common stock.

UNTIL , 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS THAT BUY, SELL OR TRADE OUR CLASS A COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

i
<PAGE> 5

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding Advanced Thermal Sciences Corporation and the financial
statements appearing elsewhere in this prospectus. When we refer to our 1997,
1998 and 1999 fiscal years, we are referring to the years ended February 28,
1998, February 27, 1999 and February 26, 2000. In this prospectus, we make
estimates of the size of the market for temperature control systems based on a
combination of third party projections and historical data regarding
semiconductor equipment sales and our management's knowledge of the number and
cost of temperature control systems used in that equipment. In addition, we make
statements regarding the competitive position of our systems based on our review
of information published by our leading competitors. Although we believe our
basis for making these estimates and statements is reasonable, neither we nor
the underwriters have independently verified these estimates and statements.

ADVANCED THERMAL SCIENCES CORPORATION

We design, manufacture and sell systems that precisely control the
temperature of processes used to manufacture semiconductors. Our patented
technology has advanced the state of the art in temperature control systems. We
believe our systems operate with higher performance, are more reliable and cost-
effective and enable semiconductor manufacturers to increase wafer output
significantly compared to leading competitive systems.

Our systems are included in several recently introduced Applied Materials
tools used in semiconductor manufacturing. In addition, our systems are
currently available to replace temperature control systems in several types of
equipment manufactured by Applied Materials, Inc. and LAM Research Corporation
and installed in existing semiconductor manufacturing facilities. Substantially
all of our sales to date have been to Applied Materials and the remainder to end
users. We have shipped over 450 systems as of August 2000. Through our sales to
Applied Materials, our systems are installed in more than 40 semiconductor
manufacturing facilities worldwide.

A semiconductor manufacturing facility has a large number of temperature
control systems incorporated in its wafer processing tools. The worldwide
semiconductor manufacturing equipment market is projected to be $30.3 billion in
2000, according to Dataquest. We estimate the market for temperature control
systems for new wafer processing equipment alone will be over $300 million in
2000. In addition, we believe a substantial replacement and retrofit market
exists for a superior temperature control solution. We estimate that there are
approximately 60,000 temperature control systems in semiconductor manufacturing
facilities constructed since 1993, which had an aggregate purchase price in
excess of $1.5 billion.

The trend towards semiconductor devices with smaller size circuit features
(0.18 micron and below) and more complex circuitry has increased technological
requirements and tightened specifications for the subsystems and materials used
to manufacture semiconductors. As a consequence, temperature control systems are
being required to cool and heat more reliably and more precisely over a greater
range of temperatures.

We estimate that our systems will achieve continuous operation of more than
30,000 hours without requiring maintenance. We believe leading competitive
temperature control systems require frequent maintenance, often every 2,000
hours. In addition, other compelling attributes of our temperature control
systems as contrasted with leading competitive systems are that they:

-- cool at least four times faster;

-- heat at least two times faster;

-- reduce floor space per channel of coolant fluid by over 70%;

-- increase temperature range by 40 degreesC; and

-- have substantially lower operating costs.
1
<PAGE> 6

Our objective is to be the leading provider of temperature control systems
for semiconductor manufacturing. Key elements of our strategy include:

-- targeting the end user market;

-- expanding the applications for our technology to address a broader
range of semiconductor manufacturing processes;

-- broadening our OEM customer base; and

-- providing global customer support.

We were incorporated in Delaware as a wholly owned subsidiary of B/E
Aerospace in December 1997. B/E Aerospace and its predecessor have supplied
refrigeration systems for the commercial aircraft market for more than 20 years
and have achieved a worldwide market share of more than 90%. B/E Aerospace has
funded our operations since inception and sold to us its refrigeration
technology for use in semiconductor manufacturing and in several other markets.
Our principal executive offices are located at 3355 East La Palma Avenue,
Anaheim, California 92806 and our telephone number is (714) 688-4200.

2
<PAGE> 7

THE OFFERING

Class A common stock
offered....................... 4,000,000 shares

Common stock to be outstanding
after this offering

Class A common stock........ 4,000,000 shares

Class B common stock........ 10,000,000 shares

Total.................... 14,000,000 shares

Voting rights

Class A common stock........ One vote per share

Class B common stock........ Three votes per share

Other common stock
provisions.................... With the exception of voting rights and
conversion rights, shares of Class A and Class
B common stock are identical. See "Description
of Capital Stock" beginning on page 53 for a
description of the material terms of our common
stock.

Use of proceeds............... We intend to use the net proceeds from this
offering to pay B/E Aerospace $15 million for
the purchase of intellectual property and
repayment of advances from B/E Aerospace made
to fund our operations since inception and the
remainder for working capital and general
corporate purposes, including funding any
acquisitions or other strategic transactions.

Proposed Nasdaq National
Market symbol................. ATSC

The number of shares of common stock to be outstanding after this offering
is based on the number of shares outstanding as of August 26, 2000, and does not
include the following:

-- 1,300,000 shares of Class A common stock issuable upon exercise of
outstanding stock options at a weighted average exercise price of
$6.75 per share; and

-- 900,000 additional shares of Class A common stock available for
future issuance under our stock option plan, employee stock purchase
plan and directors' plans.

Following this offering, B/E Aerospace will own all of our outstanding
Class B common stock and 88% of the voting power of our total outstanding common
stock. In addition, Amin J. Khoury, our chief executive officer and chairman of
our board of directors, is also the chairman of the board of B/E Aerospace.

Unless otherwise noted, all information in this prospectus assumes no
exercise of the underwriters' over-allotment option to purchase from B/E
Aerospace 600,000 shares of Class B common stock which will immediately convert
into 600,000 shares of Class A common stock upon exercise.

3
<PAGE> 8

SUMMARY FINANCIAL DATA
(IN THOUSANDS EXCEPT PER SHARE DATA)

We derived the summary financial information below for each of the years
ended February 28, 1998, February 27, 1999 and February 26, 2000 from our
audited financial statements included elsewhere in this prospectus. We derived
the summary financial information below as of August 26, 2000 and for the six
months ended August 28, 1999 and August 26, 2000 from our unaudited financial
statements included elsewhere in this prospectus, which financial information
reflects all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of results for such periods. The results for
the six months ended August 26, 2000 are not necessarily indicative of the
results to be expected for the entire year. You should read this data in
conjunction with our financial statements appearing elsewhere in this prospectus
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" beginning on page 20.

The pro forma as adjusted information reflects the sale of shares of our
Class A common stock offered hereby, at an assumed initial public offering price
of $10.00 per share, after deducting the estimated underwriting discounts and
offering expenses and a $15 million payment to B/E Aerospace for the purchase of
intellectual property and repayment of advances from B/E Aerospace made to fund
our operations since inception. The purchase of intellectual property from B/E
Aerospace will be treated as an increase to accumulated deficit because we and
B/E Aerospace are deemed to be under common control for financial reporting
purposes and B/E Aerospace's net book value of such intellectual property is
zero.

<TABLE>
<CAPTION>
AUGUST 26, 2000
---------------------------
PRO FORMA
ACTUAL AS ADJUSTED
------------ -----------
<S> <C> <C>
BALANCE SHEET DATA:
Cash........................................................ $ 1 $ 20,701
Working capital (deficit)................................... (3,587) 20,522
Total assets................................................ 5,146 25,846
Due to B/E Aerospace, Inc................................... 3,409 --
Total shareholder's equity (deficit)........................ $ (3,225) $ 20,884
</TABLE>

4
<PAGE> 9

RISK FACTORS

This offering and an investment in our Class A common stock involve a high
degree of risk. You should carefully consider the risks and uncertainties
described below and the other information in this prospectus before deciding
whether to invest in shares of our Class A common stock. If any of the following
risks actually occur, our business, financial condition or operating results
could suffer, which could cause the trading price of our Class A common stock to
decline and could cause you to lose part or all of your investment.

RISKS RELATED TO OUR BUSINESS

SUBSTANTIALLY ALL OF OUR SALES TO DATE HAVE BEEN TO APPLIED MATERIALS. ANY
DECREASE IN PURCHASES OF OUR TEMPERATURE CONTROL SYSTEMS BY APPLIED MATERIALS
WOULD SUBSTANTIALLY DECREASE OUR SALES.

Our temperature control systems have been sold to only a small number of
customers. Although our temperature control systems were installed in over 40
semiconductor manufacturing facilities as of August 2000, substantially all of
these systems have been sold by us to Applied Materials and included as a
component of the manufacturing equipment sold by Applied Materials to its
customers. Purchases of our temperature control systems by Applied Materials
represented 100% of our net sales for the 1999 fiscal year and 99% of our net
sales for the six months ended August 26, 2000. Currently, Applied Materials
uses our temperature control systems in three of its recently introduced tools.
Applied Materials purchases our temperature control systems by purchase order
and is not obligated to purchase any of our systems in the future. Any decrease
in purchases by Applied Materials would substantially decrease our sales. Until
we can expand the number of direct purchasers of our temperature control
systems, we will continue to depend heavily on sales of our systems to Applied
Materials.

WE WILL RELY ON HELIX TECHNOLOGY CORPORATION TO MARKET, SELL AND SUPPORT OUR
SYSTEMS AND ANY DISRUPTION OF THIS RELATIONSHIP COULD NEGATIVELY IMPACT OUR
ABILITY TO MARKET, SELL AND SUPPORT OUR SYSTEMS.

Our temperature control systems require sophisticated sales efforts. We
intend to rely on Helix to sell our systems worldwide. In addition, our
temperature control systems require highly trained customer service and support
personnel. We also intend to rely upon Helix to service and support our
installed base of temperature control systems. To the extent that Helix's sales
and support personnel do not devote a sufficient amount of effort to our
systems, or are not adequately trained, our sales, reputation and ability to
adequately service and support our systems would suffer. Further, because in the
past Helix has not sold or supported any equipment other than its own and
Helix's sales force has not had any experience selling our temperature control
systems, their sales efforts may not be successful. In addition, our agreement
with Helix provides that Helix may terminate its relationship with us upon 180
days notice. Any disruption of our relationship with Helix could negatively
impact our ability to market, sell and support our systems.

IF WE ARE UNABLE TO INCREASE OUR SALES AND SUPPORT ORGANIZATION IN THE FUTURE,
OUR SALES AND REPUTATION MAY SUFFER.

We plan to hire sales and support product specialists worldwide to work in
conjunction with Helix's sales force but might not be able to hire and train the
kind and number of personnel we need. Hiring and training personnel is difficult
in our industry due to the shortage of people that have the necessary technical
skills. If we are unable to expand our sales and support organization
adequately, we may not be able to respond to our customers' needs and our sales
and reputation may suffer.

OUR SALES WILL SUFFER IF WE FAIL TO ENHANCE OUR EXISTING TEMPERATURE CONTROL
SYSTEMS OR TO DEVELOP AND INTRODUCE NEW SYSTEMS THAT MEET CHANGING CUSTOMER
REQUIREMENTS AND TECHNOLOGICAL ADVANCES.

The semiconductor equipment market is characterized by rapid technological
advances, evolving industry standards, frequent product introductions and
changes in OEM and end user requirements. Our
5
<PAGE> 10

future success will depend on our ability to anticipate or adapt to these
changes and to offer temperature control systems that meet changing customer
demands and industry standards. We may not successfully and accurately
anticipate technological and market trends, or successfully manage product
development. We may also experience design, manufacturing, marketing and other
difficulties that could delay or prevent our development, introduction or
marketing of new systems and systems configurations. We are currently developing
new interfaces for the equipment of major OEMs. If we are not able to develop
these interfaces, or other new features or configurations, on a timely and
cost-effective basis, or if our new systems fail to achieve market acceptance,
our sales will suffer.

The introduction of new or enhanced systems also requires that we manage
the transition from older systems to these new or enhanced systems. For example,
we have developed a new platform-based system and will be transitioning our
manufacturing to this new system over the next several months, while
discontinuing our earlier products. If we fail to manage this or other
manufacturing transitions effectively and to supply an adequate number of these
or other new systems to meet customer delivery requirements, our reputation and
sales would suffer.

FUTURE DOWNTURNS IN THE HIGHLY CYCLICAL SEMICONDUCTOR INDUSTRY MAY SEVERELY
REDUCE DEMAND FOR OUR TEMPERATURE CONTROL SYSTEMS.

Our business depends upon capital expenditures by semiconductor
manufacturers. The semiconductor industry is highly cyclical and there have been
severe periodic downturns in the semiconductor equipment industry. When these
downturns occur, demand for our temperature control systems may be severely
reduced. The requirements for investments in engineering, research and
development and sales and support necessary to develop new systems and to grow
our business limit our ability to reduce expenses in proportion to declining
sales during downturns.

Many semiconductor manufacturers are located in Asia and any deterioration
in the health of Asian economies, especially Japan, Taiwan and Korea, could
reduce demand for our temperature control systems.

We expect that a significant portion of our new orders will depend upon
demand from the OEMs that supply semiconductor manufacturers. We also expect
that an increasing and substantial portion of our new orders will be made
directly by semiconductor manufacturers that are retrofitting or upgrading
existing facilities, or replacing our competitors' equipment with ours. If
existing fabrication facilities are not expanded or upgraded or new facilities
are not built as rapidly as anticipated, demand for our systems may decline and
we may be unable to generate significant new orders for our systems.

OUR OPERATING HISTORY HAS BEEN SHORT AND WE ONLY RECENTLY BEGAN SELLING OUR
TEMPERATURE CONTROL SYSTEMS. THEREFORE, AN EVALUATION OF OUR BUSINESS AND OUR
PROSPECTS IS DIFFICULT.

B/E Aerospace began to evaluate the application of refrigeration technology
to the semiconductor manufacturing industry in 1995 and formed Advanced Thermal
Sciences as a separate division on February 23, 1997. We were incorporated as a
wholly owned subsidiary of B/E Aerospace on December 12, 1997. We only began
volume shipments of our temperature control systems in February 1999. Our short
operating history and narrow customer base make it difficult to determine if our
temperature control systems will gain widespread market acceptance or if we will
be able to execute our business plan.

IF WE ARE UNABLE TO GENERATE SIGNIFICANT SALES IN THE END USER MARKET, OUR
GROWTH COULD BE SEVERELY IMPEDED AND OUR PROFITABILITY MAY SUFFER.

We intend to aggressively target the end user replacement and retrofit
market and believe that, based on the benefits of our systems, semiconductor
manufacturers will seek to substitute our systems for more traditional
temperature control systems. However, we cannot predict the purchasing patterns
of end users and we may be unable to generate significant sales in the end user
market. End users may prefer to purchase their manufacturing equipment and
related subsystems, and receive product support, directly from OEMs. They may
also choose to rebuild their existing temperature control systems rather than
purchase ours. In addition, they may not require or benefit from the operating
efficiencies or cost savings that our systems are designed to provide because of
the nature of their manufacturing processes. As a

6
<PAGE> 11

result, our strategy to target end users may not result in increased sales and
our growth could be severely impeded. To the extent we use significant resources
to target this market, our profitability may suffer.

WE MAY RECEIVE CANCELLATIONS OF LARGE PURCHASE ORDERS ON SHORT NOTICE THAT
RESULT IN OUR CARRYING EXCESS INVENTORY OR INCURRING ADDITIONAL COSTS OR
ADDITIONAL LARGE PURCHASE ORDERS THAT MAKE US UNABLE TO FILL ORDERS ON TIME,
WHICH COULD DAMAGE OUR REPUTATION AND OUR CUSTOMER BASE.

Our customers may cancel large purchase orders with little notice or may
place large purchase orders with short delivery schedules. As a result, we may
have large fluctuations in the volume of manufacturing required. If a customer
cancels or reschedules a large purchase order, we might have to carry excess
inventory, our gross margins could decline or we may have to modify systems we
have already produced in order to make them compatible with different OEMs'
manufacturing equipment. As a result, we may incur additional costs and our
operating results could suffer. Large new purchase orders may exceed our
production capacity and we may not be able to fill orders on time, which could
damage our reputation and our customer base.

WE HAVE A HISTORY OF LOSSES AND OUR RECENTLY ACHIEVED PROFITABILITY MAY NOT BE
SUSTAINABLE.

We have had substantial losses since our inception. Although we operated
profitably during the first half of this fiscal year, we incurred net losses of
$2.1 million in the 1998 fiscal year and $1.7 million in the 1999 fiscal year.
We also had an accumulated deficit of $3.2 million as of August 26, 2000. If our
revenue grows more slowly than we anticipate, or if our operating expenses
increase without a corresponding increase in our revenue, we may fail to remain
profitable and we may incur significant losses. Our future financial performance
will depend, in part, on growth of our revenue. Any growth in our revenue, in
turn, will depend primarily on the increased acceptance and use of our
temperature control systems. Our future financial performance will also be
contingent, in part, on our cost of revenue and on the growth of our operating
expenses. We expect our operating expenses to increase substantially as we
expand our number of systems, management, marketing personnel, production
capacity, research and development efforts and international activities. In
addition, we may have to spend more on research and development than we have
budgeted in order to develop temperature control systems that interoperate with
other semiconductor equipment manufacturers' systems.

OUR QUARTERLY RESULTS ARE UNPREDICTABLE AND ANY QUARTERLY FLUCTUATIONS IN OUR
RESULTS MAY CAUSE LARGE DECLINES IN THE PRICE OF OUR STOCK.

Our quarterly operating results are likely to fluctuate significantly in
the future due to a variety of factors, a significant number of which are
outside of our control. As a consequence, our operating results in one or more
future quarters may fall below the expectations of investors and, as a result,
the market price of our stock may fall. Some of the factors that could affect
our quarterly operating results include:

- swings in the inventories of our products held by our OEM customers;

- announcements, new product introductions and reductions in the price of
temperature control systems offered by our competitors;

- the amount and timing of our research and development expenses; and

- our ability to control costs.

Other factors listed in this "Risk Factors" section could also affect our
quarterly operating results.

We believe that quarter to quarter comparisons of our operating results are
not necessarily meaningful and that such comparisons may not be accurate
indicators of future performance. You should not rely on our results for one
quarter as any indication of our future performance.

7
<PAGE> 12

OUR BACKLOG MAY BE REDUCED BY CUSTOMER CANCELLATIONS, WHICH WOULD HAVE A
NEGATIVE EFFECT ON OUR FUTURE SALES.

As of August 26, 2000 our backlog was $11.4 million, all of which is
scheduled for delivery before December 2000. All orders are subject to
cancellation or rescheduling by customers with limited or no penalties. Due to
possible changes in delivery schedules, cancellations of orders and delays in
shipments, our backlog at any particular date is not necessarily indicative of
our actual sales for any succeeding period. Delays in delivery schedules during
any particular period could have a material adverse effect on our sales and
profitability for that period. Any cancellations would have a negative effect on
our future sales.

IF WE ARE UNABLE TO MANAGE OUR GROWTH BECAUSE OF THE SEVERE DEMANDS IT PLACES ON
MANAGEMENT, FINANCIAL AND OPERATIONAL RESOURCES, OUR OPERATING RESULTS AND
REPUTATION WOULD SUFFER.

We have expanded our operations rapidly since 1997. Our backlog has
increased from $942,000 at the end of our 1998 fiscal year to $1.2 million at
the end of our 1999 fiscal year. As of August 26, 2000, our backlog had
increased substantially to $11.4 million. In addition, our number of employees
increased from 11 in February 1998 to 69 in August 2000. We intend to continue
to expand in order to pursue existing and potential market opportunities and are
in the process of hiring additional sales, support, research and development,
manufacturing and other personnel. Our planned rapid growth places severe
demands on management and financial and operational resources.

In order to grow and achieve future success, we must:

-- expand manufacturing capacity;

-- hire, train, manage and retain qualified sales, support,
manufacturing, research and development and other personnel;

-- hire, integrate and retain qualified management personnel;

-- provide local service and support to our customers worldwide; and

-- effectively manage an increasing number of relationships with
customers, suppliers and other third parties and an increasing number
of complex contracts.

Although we intend to rely initially upon the extensive resources of B/E
Aerospace for various support systems, we also will be required to implement new
operational and financial systems, procedures and controls in order to
accommodate our anticipated growth and expansion. If we are not able to install
adequate systems, procedures and controls to support our future operations in an
efficient and timely manner, or if we are unable to otherwise manage our growth
effectively, our operating results and reputation would suffer.

OUR COMPETITIVE POSITION AND OUR OPERATING RESULTS COULD BE ADVERSELY AFFECTED
IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY AND PATENTED TECHNOLOGY FROM
INFRINGEMENT OR SUCCESSFULLY DEFEND AGAINST POSSIBLE INFRINGEMENT CLAIMS.

We depend on our ability to protect our proprietary technology, trade
secrets and know how. We rely on a combination of patents, copyright, trademark
and trade secret protections, employee and third-party non-disclosure agreements
and licensing arrangements to protect our intellectual property rights. Many of
the key components of our temperature control systems are based on proprietary
technology which we believe distinguishes us from our major competitors. Despite
our efforts to protect our proprietary rights, existing laws afford only limited
protection. Our pending patent applications may not result in the issuance of
patents. If one or more of these applications does not result in the issuance of
patents, our competitors may be able to copy key components of our temperature
control systems. As a result, our competitive position, particularly in the
United States, may be harmed.

Our existing or future patents might be invalidated or circumvented, or
might fail to provide us with any meaningful protection. Others may
independently develop substantially equivalent technology or gain access to our
trade secrets or intellectual property, or disclose our intellectual property or
trade secrets. In addition, the laws of many foreign jurisdictions do not
protect intellectual property to the same extent as
8
<PAGE> 13

the laws of the United States. In particular, we believe that the laws of Korea,
Malaysia, Singapore and Taiwan do not effectively protect intellectual property
and, as a result, we have decided not to file patent applications in any of
these countries. We have also decided not to file any patent applications in
Japan because of the length of the patent application process in that country.
To the extent that we are unable to protect our intellectual property, or to the
extent that our competitors are able to develop a temperature control system
with attributes similar to those of our systems, our competitive advantage may
be lost and our sales and results of operations may suffer.

We, our licensors, licensees, customers or suppliers may be subject to
litigation in the future to protect our intellectual property or as a result of
an alleged infringement of others' intellectual property. Claims for alleged
infringement and any resulting lawsuit, if successful, could subject us to
significant liability for damages and invalidation of our proprietary rights.
Any such lawsuits, regardless of their success, would likely be time consuming
and expensive to resolve and would divert management time and attention. Any
potential intellectual property litigation could also force us to do one or more
of the following:

-- stop selling our systems;

-- obtain a license from the owner of the infringed intellectual
property to sell or use the relevant technology, which license may
not be available on reasonable terms, or at all; or

-- redesign our systems to avoid using the relevant technology.

If we are forced to take any of the foregoing actions, our operating
results may suffer. For more information concerning our intellectual property
rights, see "Business -- Intellectual Property" beginning on page 36.

WE DEPEND ON SOLE SOURCE SUPPLIERS FOR SEVERAL OF OUR KEY COMPONENTS AND HAVE
LONG LEAD TIMES FOR OTHER KEY COMPONENTS. IF WE ARE UNABLE TO BUY KEY COMPONENTS
ON A TIMELY BASIS, WE WILL NOT BE ABLE TO MEET SCHEDULED DELIVERIES, WHICH WOULD
CAUSE OUR REPUTATION TO SUFFER AND OUR SALES TO DECLINE.

Several of our key components are obtained from single sources of supply.
We do not have guaranteed supply arrangements for these components and we may
not be able to obtain necessary supplies in a timely and cost-effective manner.
Qualifying additional or replacement suppliers is a time-consuming and expensive
process. In addition, lead times for some of our key components can be up to
several months. As a result, we may be required to pay higher than expected
costs for these components which could adversely impact our gross margin.
Financial or other difficulties faced by our suppliers or significant changes in
demand for components used by us could limit the availability of components we
require. Any interruption or delay in the supply of any of these components, or
the inability to obtain these components from alternate sources at acceptable
prices and within a reasonable amount of time, would impede our ability to meet
scheduled deliveries to our customers and cause our reputation to suffer and our
sales to decline.

WE FACE SIGNIFICANT COMPETITION WHICH COULD RESULT IN PRICE REDUCTIONS, REDUCED
MARGINS AND LOSS OF MARKET SHARE.

Our industry is highly competitive and characterized by a few large
competitors, including some large OEMs that manufacture their own temperature
control systems, and many small competitors. Most of our current direct
competitors have longer operating histories and a number have significantly
greater financial, technical, support, marketing and other resources and
customer bases than we do. These competitors are able to devote greater
resources to their businesses. In addition, many of our competitors have greater
name recognition in our industry, a more extensive customer base and broader
product offerings than we do, as well as relationships with many of our current
and potential customers. These competitors can leverage their customer
relationships and broader product offerings and may cut prices to defend or gain
market share. In order to protect our market share, we may be required to reduce
prices and, as a result,

9
<PAGE> 14

our margins would be reduced. For more information regarding competition in our
industry, see "Business -- Competition" beginning on page 37.

IF WE ARE UNABLE TO HIRE AND RETAIN SALES, SUPPORT AND MANUFACTURING PERSONNEL,
OUR ABILITY TO GROW OUR BUSINESS AND SIGNIFICANTLY INCREASE OUR REVENUE COULD
SUFFER.

We intend to continue to expand our organization, including in engineering,
marketing, manufacturing and other areas. Our ability to attract, hire,
assimilate and retain highly skilled personnel is critical to our future
success. Competition for such personnel is intense, and we expect it will be
difficult to hire a sufficient number of sales, support and manufacturing
personnel. We may fail to attract, hire, assimilate and retain the qualified
personnel necessary to fulfill our current or future needs and as a result our
ability to grow our business and significantly increase our revenue could
suffer.

IF MEMBERS OF OUR SENIOR MANAGEMENT AND OTHER KEY EMPLOYEES, UPON WHOM WE RELY
HEAVILY, LEAVE US, OUR ABILITY TO EFFECTIVELY MANAGE OUR BUSINESS WOULD BE
DISRUPTED.

Our future success depends on our senior management and other key employees
effectively working together and successfully integrating new members. The loss
of one or more of our executive officers, particularly the loss of Amin J.
Khoury, our chief executive officer, or R. Bruce Thayer, our president and chief
operating officer, or other key personnel could seriously harm our business and
operating results. Any of our officers or key personnel could resign at any
time. We do not maintain key life insurance for any of our key employees. If we
were to lose any of our senior management or other key personnel, our ability to
effectively manage our business would be disrupted.

WE HAVE NO SIGNIFICANT EXPERIENCE OPERATING IN INTERNATIONAL MARKETS AND IF WE
ARE NOT ABLE TO SUCCESSFULLY ESTABLISH AND MANAGE OUR INTERNATIONAL OPERATIONS,
OUR GROWTH WILL BE IMPEDED.

We intend to extend our operations internationally. This will require
management attention and financial resources. We have very limited experience in
marketing, distributing and supporting our systems internationally. If we fail
to establish and manage our international operations, or if our international
expansion is delayed, our growth will be impeded.

In addition, if we successfully establish international operations they
will be subject to inherent risks, including:

-- difficulties and costs of staffing and managing foreign operations;

-- longer sales cycles;

-- additional complexity of establishing and maintaining relationships
with international parties;

-- protectionist laws and business practices that favor local
competition;

-- reduced protection for intellectual property rights in some
countries;

-- difficulties associated with enforcing agreements through foreign
legal systems;

-- difficulty in collecting accounts receivable;

-- fluctuations in currency exchange rates;

-- difficulty in monitoring and complying with numerous and diverse
regulatory requirements;

-- the impact of recessions in economies outside the United States;

-- political and economic instability;

-- import or export licensing requirements; and

-- potentially adverse tax consequences.

10
<PAGE> 15

ANY ACQUISITIONS WE MAKE COULD DISRUPT OUR BUSINESS AND HARM OUR OPERATING
RESULTS.

Although we have no such current plans, we may in the future acquire or
make investments in complementary companies, products or technologies. In the
event of any such acquisitions or investments, we could:

-- issue stock that would dilute our current shareholders' percentage
ownership;

-- incur debt;

-- assume liabilities;

-- incur amortization expenses related to goodwill and other tangible
assets; or

-- incur large and immediate write offs.

Acquisitions or investments also involve numerous risks, including:

-- problems combining the purchased operations, technologies or products
with ours;

-- unanticipated costs;

-- diversion of management's attention from our core business;

-- adverse effects on existing business relationships with suppliers and
customers;

-- potential loss of key employees, particularly those of the acquired
organizations; and

-- reliance to our disadvantage on the judgment and decisions of third
parties and our lack of control over operations.

Any acquisition or investment may cause our operating results to suffer as a
result of these risks.

WE ARE VULNERABLE TO DISASTERS AND OTHER DISRUPTIVE EVENTS THAT COULD
TEMPORARILY DISRUPT OR EVEN SHUT DOWN OUR ASSEMBLY OPERATIONS BECAUSE ALL OF OUR
OPERATIONS ARE CONDUCTED IN ONE FACILITY IN ANAHEIM, CALIFORNIA.

We conduct all of our operations at our facility in Anaheim, California.
Significant damage or other impediments to the facility, whether as a result of
fire, weather, breakdowns of equipment, earthquakes or other natural disasters,
industrial accidents or other causes could disrupt or shut down our operations.
Although we maintain insurance, including business interruption insurance,
against some, but not all, of these events, our insurance may be inadequate to
cover any direct or indirect losses or liabilities resulting from such events.

11
<PAGE> 16

RISKS RELATED TO OUR RELATIONSHIP WITH B/E AEROSPACE

WHILE WE ARE CONTROLLED BY B/E AEROSPACE, OUR OTHER SHAREHOLDERS WILL BE UNABLE
TO AFFECT THE OUTCOME OF SHAREHOLDER VOTING. B/E AEROSPACE OWNS THE MAJORITY
VOTING INTEREST IN OUR CAPITAL STOCK, AND ITS VOTING CONTROL IS INCREASED BY ITS
OWNERSHIP OF SUPER VOTING STOCK.

B/E Aerospace owns all of the outstanding shares of our Class B common
stock. Each share of Class B common stock is entitled to three votes per share.
As a result, after the completion of this offering, B/E Aerospace will own 88%
of the voting power of our common stock. If the underwriters exercise their
over-allotment option in full, B/E Aerospace will own 87% of the voting power of
our common stock. For so long as B/E Aerospace owns 50.1% or more of the voting
power of our common stock, B/E Aerospace will control all matters affecting us,
including:

-- the composition of our board of directors and, through it, any
determination with respect to our business direction and policies,
including the appointment and removal of our executive officers;

-- the allocation of business opportunities that may be suitable for B/E
Aerospace and us;

-- any determinations with respect to mergers or other business
combinations involving us;

-- our acquisition or disposition of assets;

-- our debt or equity financing, including future issuance of our common
stock or other securities;

-- changes to the agreements governing our relationship with B/E
Aerospace;

-- amendments to our certificate of incorporation or bylaws; and

-- the payment of dividends on our common stock.

THE TRANSITIONAL SERVICES THAT B/E AEROSPACE WILL PROVIDE TO US MAY NOT BE
SUFFICIENT TO MEET OUR NEEDS, AND WE MAY NOT BE ABLE TO REPLACE THESE SERVICES
AFTER OUR AGREEMENTS WITH B/E AEROSPACE EXPIRE.

Historically, we have derived tangible and intangible benefits from being a
subsidiary of B/E Aerospace. To date, we have depended on B/E Aerospace for
various real estate, finance, tax, human resource, legal and other functions,
most of which are typically performed by in-house personnel of independent
companies.

B/E Aerospace has agreed to provide, for a fee, specified transitional
services to us until December 2003, including payroll processing and
administration, human resources administration, benefits, marketing support,
informational technology and telecommunications services, treasury management,
accounting and finance assistance, sales order entry administration and
corporate administrative services. These services may not be provided at the
same level as when we were part of B/E Aerospace and we may not be able to
obtain the same benefits. Furthermore, B/E Aerospace is not obligated to provide
any of these services to the extent that its facilities or personnel are not
reasonably available and for other reasons. We also sublease our current
corporate offices and manufacturing facility from B/E Aerospace pursuant to an
agreement that expires in July 2005.

We may not be able to replace these transitional services, or lease
adequate corporate and manufacturing facilities, in a timely manner or on terms
and conditions, including cost, as favorable as those we will receive from B/E
Aerospace.

The agreement for these transitional services was made in the context of a
parent-subsidiary relationship and may have terms and conditions that are less
favorable than agreements that are negotiated at arm's length. The prices
charged to us under these agreements may be higher or lower than the prices that
we may be required to pay third parties for similar services or the costs of
similar services if we undertake them ourselves. See "Relationships and
Transactions with Related Parties" beginning on page 48 for a more detailed
description of these agreements.

12
<PAGE> 17

SEVERAL OF OUR DIRECTORS AND EXECUTIVE OFFICERS MAY HAVE CONFLICTS OF INTEREST
BECAUSE OF THEIR OWNERSHIP OF B/E AEROSPACE COMMON STOCK OR THEIR MANAGEMENT
POSITIONS AT B/E AEROSPACE.

Several of our directors and executive officers own a substantial amount of
B/E Aerospace common stock and options to purchase B/E Aerospace common stock.
In addition, Amin J. Khoury, our chairman and chief executive officer, is also
the chairman of the board of B/E Aerospace. Ownership of B/E Aerospace common
stock by our directors and officers after the completion of this offering, or
management positions held by them at B/E Aerospace, could create, or appear to
create, potential conflicts of interest when directors and officers are faced
with decisions that could have different implications for B/E Aerospace and us.
For information regarding directors' and officers' management positions at B/E
Aerospace and their ownership of B/E Aerospace common stock, see "Management"
beginning on page 38 and "Principal Shareholders" beginning on page 51,
respectively.

WE MAY HAVE CONFLICTS OF INTEREST WITH B/E AEROSPACE WITH RESPECT TO OUR PAST
AND ONGOING RELATIONSHIP THAT COULD HARM OUR OPERATIONS.

Conflicts of interest may arise between B/E Aerospace and us relating to
our past and ongoing relationships, including:

-- business combinations involving us or B/E Aerospace, including our
acquisition by a third party;

-- our efforts to raise capital in debt or equity markets;

-- the terms and scope of our intellectual property agreements;

-- labor, tax, and employee benefit matters;

-- employee retention and recruiting;

-- sales or distributions by B/E Aerospace of all or any portion of its
ownership interest in us;

-- the nature, quality and pricing of transitional services B/E
Aerospace has agreed to provide us;

-- business opportunities that may be attractive to both B/E Aerospace
and us; and

-- determinations regarding the allocation of any tax liability.

We may not be able to resolve any potential conflicts and, even if we do,
the resolution may be less favorable than if we were dealing with an
unaffiliated party. The agreements we entered into with B/E Aerospace may be
amended if the parties agree. While we are controlled by B/E Aerospace, B/E
Aerospace may be able to require us to agree to amendments to these agreements
that may be less favorable to us than the original terms of any of these
agreements. For a further discussion of these agreements, see "Relationships and
Transactions with Related Parties" beginning on page 48.

IF WE NEED ADDITIONAL FINANCING TO MAINTAIN AND EXPAND OUR BUSINESS, B/E
AEROSPACE WILL BE UNDER NO OBLIGATION TO PROVIDE FINANCING AND OTHER FINANCING
MAY NOT BE AVAILABLE ON FAVORABLE TERMS.

In the past, our capital needs have been satisfied by B/E Aerospace.
However, following the completion of this offering, B/E Aerospace will no longer
have any obligation to provide funds to finance our working capital or other
cash requirements. We believe our capital requirements will vary significantly
from quarter to quarter, depending on a number of factors, including timing of
capital expenditures, fluctuations in our operating results and cash flows and
our financing activities. We believe that cash generated by our current
operations, along with the proceeds from this offering, will be sufficient to
satisfy our working capital, capital expenditure and research and development
requirements for the foreseeable future. However, we may require or choose to
obtain additional debt or equity financing in the future. We cannot assure you
that financing, if needed, will be available on favorable terms. If we are
unable to obtain financing on favorable terms, or at all, our ability to grow
our business will suffer.

13
<PAGE> 18

RISKS RELATED TO THIS OFFERING

THIS IS OUR INITIAL PUBLIC OFFERING AND OUR STOCK PRICE MAY BE VOLATILE.

Prior to this offering, there has been no public market for our Class A
common stock. The initial public offering price will be determined by
negotiations among the underwriters, B/E Aerospace and us and may not be
indicative of the market price for the Class A common stock after this offering.
We do not know the extent to which investor interest will lead to the
development of a public market. Recently, the stock market in general, and the
market for technology stocks in particular have experienced extreme volatility
that has often been unrelated to the operating performance of particular
companies. These broad market fluctuations may adversely affect the trading
price of our Class A common stock. You may not be able to resell the Class A
common stock at or above the initial public offering price.

THE PRICE OF OUR CLASS A COMMON STOCK COULD DECLINE AS A RESULT OF SALES OR
DISTRIBUTIONS OF SUBSTANTIAL AMOUNTS OF COMMON STOCK BY B/E AEROSPACE.

Following this offering, B/E Aerospace will own 10,000,000 shares of our
Class B common stock and may, from time to time, sell some or all of its
remaining shares, which will automatically convert to Class A common stock upon
transfer. A significant amount of our common stock held by B/E Aerospace would
be eligible for immediate resale in the public market following the expiration
of the lock-up period or earlier if the lock-up is waived by the underwriters.
After this offering B/E Aerospace will have rights with respect to registration
of its shares for sale to the public. If B/E Aerospace, by exercising its
registration rights, causes a large number of securities to be registered and
sold in the public market, such sales could have an adverse effect on the market
price for our common stock. We are unable to predict whether significant amounts
of our common stock will be sold in the open market by B/E Aerospace or others.
We are also unable to predict whether a sufficient number of buyers would be in
the market at that time. Sales by B/E Aerospace or others of substantial amounts
of our common stock in the public market, or the perception that such sales
might occur, could cause the price of our Class A common stock to decline. For a
more detailed discussion of possible sales of our common stock following the
completion of this offering, see "Shares Eligible for Future Sale" beginning on
page 56.

OUR CHARTER PROVISIONS AND DELAWARE LAW MAY DELAY OR PREVENT US FROM BEING
ACQUIRED, WHICH COULD DECREASE THE VALUE OF YOUR SHARES.

Our certificate of incorporation and bylaws and Delaware law contain
provisions that would make it harder for a third party to acquire us without the
consent of our board of directors, although these provisions have little
significance while we are controlled by B/E Aerospace. These provisions include
a classified board of directors, limitations on actions by our shareholders by
written consent, limitations on the ability to call a special meeting of
shareholders, limitations on the removal of directors and advance notice
requirements for nomination of directors and other matters to be brought before
a meeting of shareholders. Our board of directors will also have the right to
issue preferred stock without shareholder approval, which could be used to
dilute the stock ownership of a potential hostile acquiror. In addition, Section
203 of the Delaware General Corporation Law will apply to us and will impose
some restrictions on mergers and other business combinations between us and any
holder of 15% or more of our outstanding common stock. Although we believe these
provisions will provide for an opportunity to receive a higher bid by requiring
potential acquirors to negotiate with our board of directors, these provisions
apply even if the offer may be considered beneficial by some shareholders.

For more information regarding the anti-takeover effects of our charter and
bylaws and of Delaware Law, see "Description of Capital Stock -- Anti-takeover
Provisions of Delaware Law and our Charter Documents" beginning on page 54.

14
<PAGE> 19

INVESTORS IN THE OFFERING WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.

The initial public offering price will be substantially higher than the
book value per share of our outstanding common stock immediately after this
offering. Accordingly, if you purchase Class A common stock in this offering,
you will contribute 192% of our capital, at an assumed initial public offering
price of $10.00 per share, but will own only 29% of the shares outstanding. The
amount of this dilution in net tangible book value will be $8.51 per share. In
addition, B/E Aerospace will control 88% of the voting power of our common stock
after the offering as a result of its ownership of our Class B common stock,
which is entitled to three votes per share.

We have also issued options to acquire shares of Class A common stock at
prices below the initial public offering price and have additional shares
reserved under our various stock plans. To the extent these shares are
ultimately issued, there will be further dilution to investors in this offering.
See "Dilution" on page 18 for a more detailed description of how new
shareholders will incur dilution.

OUR MANAGEMENT MAY INVEST OR SPEND THE PROCEEDS OF THIS OFFERING IN WAYS WITH
WHICH YOU MAY NOT AGREE AND IN WAYS THAT MAY NOT YIELD A FAVORABLE RETURN.

Our management will retain broad discretion over the use of proceeds in
this offering. Our management may use the proceeds from this offering in ways
with which you may not agree. We cannot predict that the proceeds will be
invested to yield a favorable return. See "Use of Proceeds" on page 16 for how
we generally intend to use the proceeds from this offering.

IF WE ARE REQUIRED TO RAISE ADDITIONAL CAPITAL, OUR EXISTING SHAREHOLDERS MAY BE
HARMED.

We may raise additional capital through the issuance of stock, debt or a
combination of the two. If additional funds are raised through the issuance of
equity securities, the percentage ownership of our shareholders will be reduced.
In addition, these newly issued equity securities may have rights, preferences
or privileges senior to those of the existing holders of our common stock. If
additional funds are raised through the issuance of debt securities, these
securities would have the rights, preferences and privileges senior to those of
the existing holders of our common stock and the terms of such debt could impose
restrictions on our operations.

15
<PAGE> 20

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This prospectus contains forward looking statements. These forward looking
statements are not historical facts, but rather are based on current
expectations, estimates and projections about our industry, our beliefs and our
assumptions. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks" and "estimates," and variations of these words and similar
expressions, are intended to identify forward looking statements. These
statements are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control and
difficult to predict and could cause actual results to differ materially from
those expressed or forecasted in the forward looking statements. These risks and
uncertainties include those described in "Risk Factors" beginning on page 5 and
elsewhere in this prospectus. You are cautioned not to rely on these forward
looking statements, which reflect our management's opinions and beliefs only as
of the date of this prospectus. Except as required by law, we undertake no
obligation to update any forward looking statement, whether as a result of new
information, future events or otherwise.

USE OF PROCEEDS

The net proceeds to us from the sale of the shares being offered by us, at
an assumed public offering price of $10.00 per share, are estimated to be
$35,700,000 after deducting the underwriting discounts and estimated offering
expenses payable by us. We intend to use the net proceeds from this offering to
pay B/E Aerospace $15 million for the purchase of intellectual property and
repayment of advances from B/E Aerospace made to fund our operations since
inception and the remainder for working capital and general corporate purposes,
including funding any acquisitions or other strategic transactions. The purchase
of intellectual property from B/E Aerospace will be treated as an increase to
accumulated deficit because we and B/E Aerospace are deemed to be under common
control for financial reporting purposes and B/E Aerospace's net book value of
such intellectual property is zero. The advances from B/E Aerospace are recorded
as an intercompany obligation on our balance sheet and are non-interest bearing.
The $15 million payment to B/E Aerospace was determined on the basis of
cumulative advances of $3.4 million to us from B/E Aerospace, and the value of
the intellectual property being transferred, which was determined by discussions
and agreement between our management and B/E Aerospace. Pending use of the net
proceeds of this offering, we intend to invest the net proceeds in interest
bearing, investment grade securities.

DIVIDEND POLICY

We have never declared or paid cash dividends on our capital stock. We
currently intend to retain all available funds and any future income for use in
the operation and expansion of our business and do not anticipate paying any
cash dividends in the foreseeable future.

16
<PAGE> 21

CAPITALIZATION

The following table sets forth our capitalization as of August 26, 2000:

-- on an actual basis; and

-- on a pro forma as adjusted basis to give effect to the sale of shares
of our Class A common stock in this offering, at an assumed initial
public offering price of $10.00 per share, after deducting estimated
underwriting discounts and offering expenses and a $15 million
payment to B/E Aerospace for the purchase of intellectual property
and repayment of advances from B/E Aerospace to fund our operations
since inception. The purchase of intellectual property from B/E
Aerospace will be treated as an increase to accumulated deficit
because we and B/E Aerospace are deemed to be under common control
for financial reporting purposes and B/E Aerospace's net book value
of such intellectual property is zero.

<TABLE>
<CAPTION>
AUGUST 26, 2000
---------------------
PRO FORMA
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Due to B/E Aerospace, Inc................................... $ 3,409 $ --
Shareholder's equity (deficit):
Preferred stock, $0.01 par value per share, 1,000,000
shares authorized, no shares issued or outstanding..... -- --
Common stock (Class A), $.01 par value per share,
40,000,000 shares authorized, 0 shares issued and
outstanding, on an actual basis; 40,000,000 shares
authorized, 4,000,000 shares issued and outstanding on
a pro forma as adjusted basis.......................... -- 40
Common stock (Class B), $.01 par value per share,
10,000,000 shares authorized, 10,000,000 shares issued
and outstanding, on an actual and pro forma as adjusted
basis.................................................. -- --
Additional paid-in capital................................ 1 35,661
Accumulated deficit....................................... (3,226) (14,817)
------- --------
Total shareholder's equity (deficit).............. (3,225) 20,884
------- --------
Total capitalization.............................. $(3,225) $ 20,884
======= ========
</TABLE>

This table excludes the following shares:

-- 1,300,000 shares of Class A common stock issuable upon exercise of
outstanding stock options at a weighted average exercise price of
$6.75 per share; and

-- 900,000 additional shares of Class A common stock available for
future issuance under our stock option plan, employee stock purchase
plan and directors' plans.

The above table below should be read in conjunction with the sections of
this prospectus entitled "Selected Financial Information" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements included in this prospectus.

17
<PAGE> 22

DILUTION

Our net tangible book value as of August 26, 2000 was $(3.2) million, or
$(0.32) per share of common stock. Net tangible book value per share represents
the amount of our total tangible assets reduced by the amount of our total
liabilities and divided by the total number of shares of our common stock
outstanding. Dilution in net tangible book value per share represents the
difference between the amount per share paid by purchasers of shares of Class A
common stock in this offering and the net tangible book value per share of
common stock immediately after the completion of this offering. After giving
effect to the sale of shares of Class A common stock offered by us at an assumed
initial public offering price of $10.00 per share, after deducting the
underwriting discount and estimated offering expenses payable by us, a $15
million payment to B/E Aerospace for the purchase of intellectual property and
repayment of advances from B/E Aerospace to fund our operations since inception,
our pro forma as adjusted net tangible book value at August 26, 2000, would have
been $20,884,000 or approximately $1.49 per share of common stock. This
represents an immediate increase in net tangible book value of $1.81 per share
to our existing shareholder and an immediate dilution of $8.51 per share to new
investors purchasing shares of our Class A common stock in this offering. The
following table illustrates this dilution on a per share basis:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $ 10.00
Net tangible book value per share as of August 26, 2000... (0.32)
Pro forma as adjusted increase in net tangible book value
per share attributable to new investors................ 1.81
--------
Pro forma as adjusted net tangible book value per share
after the offering........................................ 1.49
--------
Dilution per share to new investors......................... $ 8.51
========
</TABLE>

The following table summarizes, on a pro forma as adjusted basis as of
August 26, 2000, the differences between the existing shareholder and new
investors with respect to the number of shares of common stock purchased from
us, the total consideration paid to us and the average price per share paid by
our existing shareholder and by new investors, before deducting underwriting
discounts and commissions and estimated offering expenses payable by us, at an
assumed initial public offering price of $10.00 per share.

<TABLE>
<CAPTION>
AS OF AUGUST 26, 2000
------------------------------------------------------------------
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- ------------------------ AVERAGE PRICE
NUMBER PERCENTAGE AMOUNT PERCENTAGE PER SHARE
---------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholder (Class B
common stock)................... 10,000,000 71% $ 1,000 --% $ --
New investors (Class A common
stock).......................... 4,000,000 29 40,000,000 100 $10.00
---------- --- ----------- ---
Totals............................ 14,000,000 100 $40,001,000 100
========== === =========== ===
</TABLE>

In addition, B/E Aerospace will control 88% of the voting power of our
common stock because it will continue to own all of our outstanding Class B
common stock, which is entitled to three votes per share. In the event that we
issue additional shares in the future, purchasers of Class A common stock in
this offering will experience further dilution. Currently there are 1,300,000
additional shares of Class A common stock available for issuance upon exercise
of outstanding stock options at a weighted average exercise price of $6.75 per
share. An additional 900,000 shares of Class A common stock are currently
reserved for issuance under our stock option plan, employee stock purchase plan
and directors' plans.

Assuming the exercise in full of all outstanding options, our pro forma as
adjusted net tangible book value as of August 26, 2000 would have been $1.94 per
share, representing an immediate increase in net tangible book value of $2.26
per share to our existing shareholder, and an immediate dilution in net tangible
book value of $8.06 per share to the new investors.

18
<PAGE> 23

SELECTED FINANCIAL INFORMATION

We derived the selected financial information below as of and for each of
the years ended February 28, 1998, February 27, 1999 and February 26, 2000 from
our audited financial statements included elsewhere in this prospectus. We
derived the financial information below as of August 26, 2000 and for the six
months ended August 28, 1999 and August 26, 2000 from our unaudited financial
statements included elsewhere in this prospectus, which reflects all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of results for such periods. The results for the six months ended
August 26, 2000, are not necessarily indicative of the results to be expected
for the entire year. The following selected financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" beginning on page 20 and the financial statements
included elsewhere in this prospectus. We commenced operations on February 23,
1997 and were incorporated on December 12, 1997.

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
-------------------------------------------- ------------------------
FEBRUARY 28, FEBRUARY 27, FEBRUARY 26, AUGUST 28, AUGUST 26,
1998 1999 2000 1999 2000
------------ ------------ ------------ ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Net sales......................... $ 28 $ 517 $ 6,801 $ 2,139 $10,078
Cost of sales..................... 14 391 5,531 1,978 6,000
------- ------- ------- -------- -------
Gross profit...................... 14 126 1,270 161 4,078
Selling, general and
administrative expenses......... 52 493 1,305 470 1,614
Research and development
expenses........................ 1,307 1,751 1,617 851 575
------- ------- ------- -------- -------
Total operating expenses.......... 1,359 2,244 2,922 1,321 2,189
------- ------- ------- -------- -------
Income (loss) from operations..... (1,345) (2,118) (1,652) (1,160) 1,889
Provision for income taxes........ -- -- -- -- --
------- ------- ------- -------- -------
Net income (loss)................. $(1,345) $(2,118) $(1,652) $ (1,160) $ 1,889
======= ======= ======= ======== =======
Per share amounts:
Net income (loss) per share (basic
and diluted).................... $ (0.13) $ (0.21) $ (0.17) $ (0.12) $ 0.19
======= ======= ======= ======== =======
Shares used to compute net income
(loss) per share (basic and
diluted)........................ 10,000 10,000 10,000 10,000 10,000
</TABLE>

<TABLE>
<CAPTION>
AS OF
----------------------------------------------------------
FEBRUARY 28, FEBRUARY 27, FEBRUARY 26, AUGUST 26,
1998 1999 2000 2000
------------ ------------ ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................... $ -- $ 0 $ 1 $ 1
Working capital deficiency.................. (1,490) (3,587) (5,423) (3,587)
Total assets................................ 251 643 3,300 5,146
Due to B/E Aerospace, Inc................... 1,416 3,408 5,714 3,409
Total shareholder's deficit................. (1,345) (3,462) (5,114) (3,225)
</TABLE>

19
<PAGE> 24

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion of our results of operations and
financial condition in conjunction with the financial statements and other
financial information included elsewhere in this prospectus. This discussion
contains forward-looking statements that involve risks and uncertainties. Our
actual results may be materially different from those anticipated in these
forward-looking statements resulting from a variety of factors, including, but
not limited to, those under "Risk Factors" and elsewhere in this prospectus.
When we refer to our 1997, 1998 and 1999 fiscal years, we are referring to the
years ended February 28, 1998, February 27, 1999 and February 26, 2000.

OVERVIEW

Our predecessor was formed in 1976 to manufacture refrigeration products
for the commercial aviation industry. In 1993, B/E Aerospace acquired our
predecessor, which continued to focus on the commercial aviation refrigeration
market and has achieved a worldwide market share in excess of 90%. In 1995, B/E
Aerospace began to evaluate the application of refrigeration technology to the
manufacture of semiconductor wafers. Advanced Thermal Sciences formally
commenced operations as a division of B/E Aerospace on February 23, 1997 and was
incorporated as a separate corporation on December 12, 1997 to pursue this
opportunity in the semiconductor manufacturing market. Over 20 years of
experience in aircraft refrigeration products has provided us with the
technology and expertise to develop and manufacture specialized key components
for demanding temperature control applications.

We first introduced our systems in 1998. A major semiconductor manufacturer
publicly recognized and endorsed the benefits provided by our systems and
negotiated with Applied Materials to have our systems included with their
shipment of one of Applied Materials' etching tools. Since that time, our
products have been selected for several of Applied Materials' recently
introduced tools. As a result of our relationship with Applied Materials, sales
of our systems have grown rapidly. We had net sales of $28,000, $517,000 and
$6.8 million, respectively during our 1997, 1998 and 1999 fiscal years. We had
net sales of $10.1 million during the first half of fiscal year 2000 as compared
with $2.1 million for the comparable period of the prior year.

Substantially all of our sales for all fiscal years and all interim periods
presented were to Applied Materials. 100% and 99% of our net sales for fiscal
1999 and for the six months ended August 26, 2000 were direct sales to Applied
Materials. We have shipped over 450 systems as of August 2000. Although
substantially all of our sales to date have been made in the United States to
Applied Materials, our systems have been included in Applied Materials tools
which have been installed in over 40 semiconductor manufacturing facilities
around the globe, including in the United States, Japan, Taiwan, Korea,
Singapore and in various countries in Europe.

Recently we have begun to address the end user market and, to date, have
shipped two systems to end user customers. We intend to aggressively target the
end user market. We believe that, as end users specify with OEMs that their new
equipment contain our temperature control systems, the adoption of our systems
by OEMs will be stimulated. We believe that the successful development and sale
of temperature control systems for the end user market will increase our total
sales and gross margins, diversify our sales to a greater number of customers
and lower our susceptibility to the cyclicality of the semiconductor industry.

We expect future demand for our products will be driven by both the OEMs,
such as Applied Materials, and by the end user retrofit and replacement market.
We expect that sales to OEMs will be affected by demand for the OEM tools for
which we supply our temperature control systems and

20
<PAGE> 25

our planned introduction of new system configurations for additional tools and
OEMs. We also expect that our sales to OEMs will fluctuate with the demand for
semiconductor equipment. We expect that sales to end users will increase as we
implement our strategic teaming agreement with Helix and establish our global
sales and product support organization.

Our temperature control systems require sophisticated sales and support
efforts. We intend to rely on Helix to sell, market and support our systems
worldwide. In addition, we plan to hire sales and support product specialists
worldwide to work in conjunction with Helix's sales force. We expect our
operating expenses to increase as a result of our increase in personnel and
commissions paid and, particularly, in connection with sales to end users.

We invest significantly in research and development and seek to maintain
close technical and commercial relationships with OEMs and end users to remain
responsive to their systems needs and changing requirements. Our research and
development efforts have led to a number of patented efficiency and performance
breakthroughs, including the development of our multi-channel system design, our
thermally isolated regenerative turbine pumping mechanism and our proportional
thermal expansion valve control. Our research and development expenses were $1.3
million, $1.8 million and $1.6 million, respectively, for fiscal 1997, 1998 and
1999. We have budgeted research and development expenditures of approximately
$1.7 million for this fiscal year. The budgeted increase in this fiscal year
primarily reflects development of systems to interface with and support a
broader range of wafer manufacturing equipment sold by Applied Materials and
other OEMs, primarily to address the retrofit and replacement market. We expect
that research and development expenditures will remain a substantial percentage
of net sales in future years.

We generally recognize revenue from equipment sales upon shipment. No
revenue is recognized on systems shipped on a trial basis until the trial period
is completed and the equipment is accepted by the customer. Our systems
generally carry a warranty of 12 to 36 months from the date of shipment or
installation. Estimated sales returns and warranty costs are accrued at the time
the related revenue is recognized. In future years, after the expiration of our
warranty period, customers may contract for support services over and beyond our
warranty period. Revenue from such support contracts and from extended warranty
contracts would be recognized ratably over the service period.

Prior to incorporation, our activities were conducted as part of another
operation within B/E Aerospace. We have had various transactions with B/E
Aerospace, including various expense allocations and reimbursements, which are
material in amount. Our operating expenses include allocations of general
corporate overhead expenses related to B/E Aerospace's corporate headquarters
and common support activities, including executive salaries, payroll
administration, worker's compensation and general liability insurance,
accounting and finance, legal, tax and human resources. These costs have been
allocated to us using methodologies based upon headcount, actual usage or total
assets, as applicable. Although we believe the allocations are reasonable, the
costs of these services to us may not be indicative of the costs that would have
been incurred if we had been a stand-alone entity. In July 2000 we entered into
a transition services agreement with B/E Aerospace whereby B/E Aerospace will
continue to provide a number of these services to us, determined on the same
cost allocation basis plus 10%. Had this arrangement been in place since our
inception, costs allocated to us would have increased by $5,000, $8,000 and
$15,000 for the 1997, 1998 and 1999 fiscal years and $8,000 and $9,000 for the
six months ended August 28, 1999 and August 26, 2000, respectively.

21
<PAGE> 26

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, our operating
results expressed as a percentage of net sales.

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
-------------------------------------------- ------------------------
FEBRUARY 28, FEBRUARY 27, FEBRUARY 26, AUGUST 28, AUGUST 26,
1998 1999 2000 1999 2000
------------ ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales........................ 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................... 50.0 75.6 81.3 92.5 59.5
-------- ------ ----- ----- -----
Gross profit..................... 50.0 24.4 18.7 7.5 40.5
Selling, general and
administrative expenses........ 185.7 95.4 19.2 22.0 16.0
Research and development
expenses....................... 4,667.9 338.7 23.8 39.8 5.7
-------- ------ ----- ----- -----
Total operating expenses......... 4,853.6 434.1 43.0 61.8 21.7
-------- ------ ----- ----- -----
Income (loss) from operations.... (4,803.6) (409.7) (24.3) (54.3) 18.8
Provision for income taxes....... -- -- -- -- --
-------- ------ ----- ----- -----
Net income (loss)................ (4,803.6)% (409.7)% (24.3)% (54.3)% 18.8%
======== ====== ===== ===== =====
</TABLE>

SIX MONTHS ENDED AUGUST 26, 2000 COMPARED WITH THE SIX MONTHS ENDED AUGUST 28,
1999

Net sales were $10.1 million for the six months ended August 26, 2000, an
increase of 371% from net sales of $2.1 million for the corresponding period in
the prior year. Demand for semiconductor manufacturing equipment increased
during the first half of this fiscal year, generating further demand for our
systems. This industry wide trend, coupled with our rollout of new system
configurations for three of Applied Materials' recently introduced tools in
volume for the first time, are the principal reasons for our revenue growth. All
of our revenue is associated with these products.

Gross profit was $4.1 million, or 40.5% of net sales, for the six months
ended August 26, 2000, as compared with $161,000, or 7.5% of net sales, for the
same period in the prior year. Our gross profit increase was a function of
increased revenues and a higher gross margin resulting from more efficient
manufacturing and higher selling prices for all three of our system
configurations.

Selling, general and administrative expenses, which consist primarily of
salaries, sales commissions and related expenses were $1.6 million, or 16.0% of
net sales, for the six months ended August 26, 2000; an increase of 243%
compared with $470,000, or 22.0% of net sales, in the comparable period in the
prior year. Approximately 75% of this increase in selling, general and
administrative expenses is related to increased sales commissions on higher
sales volume, with the remaining increase shared evenly between added personnel
and other related costs. We expect our selling, general and administrative
spending to continue to increase in the aggregate. The planned increase in
spending is necessary to pursue the end user market and expand our sales and
product support.

Research and development expenses were $575,000, or 5.7% of net sales, for
the six months ended August 26, 2000, a decrease of 32% from $851,000, or 39.8%
of net sales, for the six months ended August 28, 1999. The decrease is
attributable to the completed development of three systems for Applied Materials
in the current period. We expect that our research and development spending will
increase over the next several years as we develop new system configurations.

Income from operations was $1.9 million for the six months ended August 26,
2000, or $3.1 million greater than the loss from operations of $1.2 million in
the first half of last year. The improvement in profitability is the result of
higher sales at a better gross margin.

Since inception we have been included in the consolidated tax returns of
B/E Aerospace and B/E Aerospace has realized the tax benefits associated with a
portion of our losses through that date. For the six months ended August 26,
2000, we utilized our net operating loss and research and development credit

22
<PAGE> 27

carryforwards to offset taxable income through the reversal of associated
valuation allowances. As a result, no provision for income taxes was required.

The increase in sales volume, coupled with an improved gross margin and
lower operating expenses as a percentage of sales resulted in net income and net
income per share of $1.9 million and $0.19, respectively, for the six months
ended August 26, 2000 as compared with a net loss and net loss per share of
$1.2 million and $0.12 for the comparable period in the previous year.

YEAR ENDED FEBRUARY 26, 2000 (1999 FISCAL YEAR) COMPARED WITH THE YEAR ENDED
FEBRUARY 27, 1999 (1998 FISCAL YEAR)

Net sales were $6.8 million for the 1999 fiscal year, or $6.3 million
greater than net sales of $517,000 in the prior fiscal year. The increase in net
sales was primarily due to initial volume deliveries of two systems for two
newly introduced Applied Materials tools.

Gross profit was $1.3 million, or 18.7% of net sales, during the 1999
fiscal year as compared with $126,000 or 24.4% of net sales, in the 1998 fiscal
year. Our gross margin decreased during the 1999 fiscal year as we implemented
new manufacturing systems and experienced manufacturing inefficiencies. These
manufacturing inefficiencies were primarily associated with establishing lean
manufacturing methods, a manufacturing methodology which streamlined production
of our systems. These manufacturing inefficiencies included start-up costs of
developing our factory layout, training of personnel, and related product cost
adjustments.

Selling, general and administrative expenses, which consist primarily of
salaries, sales commissions and related expenses associated with the development
of our sales and marketing organization, for the 1999 fiscal year were $1.3
million, or 19.2% of net sales, an increase of 165% as compared with $493,000,
or 95.4% of net sales, in the prior fiscal year. This increase in selling,
general and administrative expenses was related substantially to increased sales
commissions on higher sales volume.

Research and development expense was $1.6 million, or 23.8% of net sales,
in the 1999 fiscal year, as compared with $1.8 million, or 338.7% of net sales,
in the prior fiscal year. The decrease in research and development expense was
due to the completed development of certain new products.

The higher gross profit during the 1999 fiscal year, offset by a $678,000
increase in operating expenses, resulted in a loss from operations of $1.7
million, or $466,000 less than the loss from operations of $2.1 million for the
1998 fiscal year.

YEAR ENDED FEBRUARY 27, 1999 (1998 FISCAL YEAR) COMPARED WITH THE YEAR ENDED
FEBRUARY 28, 1998 (1997 FISCAL YEAR)

We do not believe meaningful comparisons can be made between income
statement data for the 1997 and the 1998 fiscal year due to the start-up nature
of our business during the 1997 fiscal year. Our loss of $1.3 million for the
1997 fiscal year substantially resulted from research and development expenses
of $1.3 million.

23
<PAGE> 28

QUARTERLY RESULTS OF OPERATIONS

The following tables set forth our unaudited quarterly results of
operations data for the ten quarters ended August 26, 2000, and as percentages
of our net sales for the same periods. This information has been prepared on a
basis substantially consistent with the audited financial statements appearing
elsewhere in this prospectus and, in our opinion, contains all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of our quarterly results of operations set forth below. Results of
operations for any previous quarter are not necessarily indicative of future
results.
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------------
MAY 30, AUGUST 29, NOVEMBER 28, FEBRUARY 27, MAY 29, AUGUST 28, NOVEMBER 27,
1998 1998 1998 1999 1999 1999 1999
-------- ---------- ------------ ------------ ------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales.................. $ 28 $ -- $ 71 $ 418 $ 670 $1,469 $2,232
Cost of sales.............. 22 -- 45 324 602 1,376 1,869
-------- ------ ------ ------ ------ ------ ------
Gross profit............... 6 -- 26 94 68 93 363
Selling, general and
administrative expenses... 126 55 112 200 190 280 369
Research and development
expenses.................. 344 356 500 551 444 407 450
-------- ------ ------ ------ ------ ------ ------
Income (loss) from
operations................ (464) (411) (586) (657) (566) (594) (456)
-------- ------ ------ ------ ------ ------ ------
Net income (loss).......... $ (464) $ (411) $ (586) $ (657) $ (566) $ (594) $ (456)
======== ====== ====== ====== ====== ====== ======
Net income (loss) per share
(basic and diluted)....... $ (0.05) $(0.04) $(0.06) $(0.07) $(0.06) $(0.06) $(0.05)
======== ====== ====== ====== ====== ====== ======
Shares used to compute net
income (loss) per share
(basic and diluted)....... 10,000 10,000 10,000 10,000 10,000 10,000 10,000
======== ====== ====== ====== ====== ====== ======

<CAPTION>
QUARTER ENDED
-----------------------------------
FEBRUARY 26, MAY 27, AUGUST 26,
2000 2000 2000
------------ ------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales.................. $2,430 $4,249 $5,829
Cost of sales.............. 1,684 2,636 3,364
------ ------ ------
Gross profit............... 746 1,613 2,465
Selling, general and
administrative expenses... 466 649 965
Research and development
expenses.................. 316 250 325
------ ------ ------
Income (loss) from
operations................ (36) 714 1,175
------ ------ ------
Net income (loss).......... $ (36) $ 714 $1,175
====== ====== ======
Net income (loss) per share
(basic and diluted)....... $ -- $(0.07) $ 0.12
====== ====== ======
Shares used to compute net
income (loss) per share
(basic and diluted)....... 10,000 10,000 10,000
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------------
MAY 30, AUGUST 29, NOVEMBER 28, FEBRUARY 27, MAY 29, AUGUST 28, NOVEMBER 27,
1998 1998 1998 1999 1999 1999 1999
-------- ---------- ------------ ------------ ------- ---------- ------------
(PERCENTAGE OF NET SALES)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales.................. 100.0% $ -- 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.............. 78.6 -- 63.4 77.5 89.9 93.7 83.7
-------- ------ ------ ------ ------ ------ ------
Gross profit............... 21.4 -- 36.6 22.5 10.1 6.3 16.3
Selling, general and
administrative expenses... 450.0 -- 157.7 47.8 28.4 19.1 16.5
Research and development
expenses.................. 1,228.6 -- 704.2 131.8 66.3 27.7 20.2
-------- ------ ------ ------ ------ ------ ------
Income (loss) from
operations................ (1,657.1) -- (825.4) (157.2) (84.5) (40.5) (20.4)
-------- ------ ------ ------ ------ ------ ------
Net income (loss).......... (1,657.1)% $ -- (825.4)% (157.2)% (84.5)% (40.5)% (20.4)%
======== ====== ====== ====== ====== ====== ======

<CAPTION>
QUARTER ENDED
-----------------------------------
FEBRUARY 26, MAY 27, AUGUST 26,
2000 2000 2000
------------ ------- ----------
(PERCENTAGE OF NET SALES)
<S> <C> <C> <C>
Net sales.................. 100.0% 100.0% 100.0%
Cost of sales.............. 69.3 62.0 57.7
------ ------ ------
Gross profit............... 30.7 38.0 42.3
Selling, general and
administrative expenses... 19.2 15.3 16.5
Research and development
expenses.................. 13.0 5.9 5.6
------ ------ ------
Income (loss) from
operations................ (1.5) 16.8 20.2
------ ------ ------
Net income (loss).......... (1.5)% 16.8% 20.2%
====== ====== ======
</TABLE>

We began volume shipments in February 1999. In the fourth quarter ended
February 26, 2000 our gross margin increased due to more efficient
manufacturing, a favorable mix of products sold and higher selling prices. Our
operating results are likely to fluctuate significantly in the future. We
anticipate that factors affecting our future operating results will include the
amount and timing of orders for our temperature control systems; swings in
inventories of our products held by our OEM customers; the patterns of capital
spending by our end user customers; our ability to develop, manufacture,
introduce, ship and support new systems and system enhancements; announcements,
new product introductions and reductions in the price of temperature control
systems offered by our competitors; the amount and timing of our research and
development expenses; our ability to control costs; our ability to obtain
sufficient supplies of sole source components or products with long lead times;
changes in the prices of our components; costs relating to possible acquisitions
and integration of technologies or businesses; and semiconductor equipment
market conditions. We expect that a substantial portion of our annual future
sales will come from a relatively small number of customers.

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity requirements consist of working capital to fund our planned
revenue growth, and ongoing capital expenditures. To date, all of our working
capital requirements, which were not otherwise funded by our operating results,
have been provided by B/E Aerospace. Following completion of the offering, B/E
Aerospace will no longer have any obligation to provide our financing. We had a
working capital deficit of

24
<PAGE> 29

$3.6 million as of August 26, 2000, as compared with $5.4 million as of February
26, 2000. The increase in our working capital position during the six months
ended August 26, 2000 was primarily due to a decrease in amounts due to B/E
Aerospace.

Cash provided by operating activities for the six months ended August 26,
2000 was $2.4 million as compared with cash used in operating activities of $1.2
million for the six months ended August 28, 1999. The sources of cash during the
first half of this fiscal year were net income of $1.9 million, a decrease in
inventories of $515,000 due to an increase in unit shipments and the
implementation of more efficient manufacturing methods which reduced the level
of on-hand stock required, an increase in accounts payable of $1.3 million due
to increased unit shipments, non-cash charges for depreciation and amortization
of $39,000 and a decrease in other assets and liabilities of $205,000, offset by
an increase in accounts receivable of $1.6 million due to increased unit
shipments. Cash used in operating activities was $2.1 million in the 1999 fiscal
year. The primary uses of cash during that period were the net loss of $1.7
million and an increase in accounts receivable and inventories aggregating $2.5
million, offset by increases in accounts payable and other assets and
liabilities aggregating $2.1 million, all substantially due to increased unit
shipments.

We do not currently have a line of credit, although we expect to establish
a credit facility for cash management purposes in the near term. We believe the
proceeds from this offering, together with anticipated cash flows from
operations, will satisfy our projected working capital and capital expenditure
requirements for at least the next two years. To the extent that we grow more
rapidly than expected, we may need additional cash to finance our operations and
capital expenditures.

MARKET RISKS

We are not presently exposed to market risk from changes in interest rates
as we are not a party to any interest bearing debt instruments. We are not
exposed to market risk from fluctuations in foreign currency exchange rates
because our systems are sold in U.S. dollars and the major components used to
manufacture our products are purchased in U.S. dollars. Additionally, we are not
party to any derivative financial instruments.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities (as amended by SFAS
No. 137), which we are required to adopt effective in our 2001 fiscal year. SFAS
No. 133, as amended, will require us to record all derivatives on the balance
sheet at fair value. We do not currently engage in hedging activities and will
continue to evaluate the effect of adopting SFAS No. 133. We will adopt SFAS No.
133 in our 2001 fiscal year. We do not expect SFAS No. 133 to have a significant
effect on our results of operations or financial position.

In December 1999, the SEC staff issued Staff Accounting Bulletin (SAB) No.
101, Revenue Recognition in Financial Statements. SAB No. 101 summarizes the SEC
staff's views in applying generally accepted accounting principles to revenue
recognition in financial statements. We do not expect its implementation will
have an effect on our current revenue recognition policy.

In March 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44 of Accounting Principles Board Opinion No. 25, Accounting
for Certain Transactions Involving Stock Compensation, which, among other
things, addressed accounting consequences of a modification that reduces the
exercise price of a fixed stock option award (otherwise known as a repricing).
If the exercise price of a fixed stock option award is reduced, the award must
be accounted for as variable stock option plan from the date of the modification
to the date the award is exercised, is forfeited, or expires unexercised. The
exercise price of an option award has been reduced if the fair value of the
consideration required to be paid by the grantee upon exercise is less than or
potentially less than the fair value of the consideration that was required to
be paid pursuant to the award's original terms. The requirements about
modifications to fixed stock option awards that directly or indirectly reduce
the exercise price of an award apply to modifications made after December 15,
1998, and will be applied prospectively as of July 1, 2000. The adoption of this
interpretation did not impact our financial statements.

25
<PAGE> 30

BUSINESS

In this prospectus, we make estimates of the size of the market for
temperature control systems based on a combination of third party projections
and historical data regarding semiconductor equipment sales and our management's
knowledge of the number and cost of temperature control systems used in that
equipment. In addition, we make statements regarding the competitive position of
our systems based on our review of information published by our leading
competitors. Although we believe our basis for making these estimates and
statements is reasonable, neither we nor the underwriters have independently
verified these estimates and statements.

OVERVIEW

We design, manufacture and sell systems that precisely control the
temperature of processes used to manufacture semiconductors. Our temperature
control systems, which have both patented system design and patented key
components, provide major improvements in reliability, size, temperature change
speed, cooling or heating power and temperature range and precision relative to
leading competitive systems. Our multi-channel design enables a single
temperature control system, using a single compressor, to support multiple
coolant channels that have independently controlled temperatures, unlike leading
competitive systems which typically require separate systems for each coolant
channel. As a result, by using our systems, we believe a semiconductor
manufacturer is able to significantly increase wafer production through higher
production uptime and consistent performance over the life of the system. These
benefits result in an improvement in return on capital investment in
semiconductor equipment. In addition, we believe that our systems offer
substantially lower total cost of ownership of temperature control systems as
compared with leading competitive systems.

Our systems are included in several recently introduced Applied Materials
tools, including the Super e and e Max, two advanced dielectric etch tools, and
the Endura Electra, a cooper seed layer deposition tool. A deposition tool
deposits a thin film of material on the surface of a wafer while an etch tool
removes portions of a film in specific areas to create circuit features. In
addition, our systems are currently available to replace temperature control
systems in several types of equipment manufactured by Applied Materials and LAM
Research and installed in existing semiconductor manufacturing facilities.
Substantially all of our sales to date have been to Applied Materials and the
remainder to end users. We have shipped over 450 temperature control systems
and, as of August 26, 2000, had a backlog of $11.4 million, with deliveries
scheduled through December 2000. Through our sales to Applied Materials our
systems have been installed in over 40 major semiconductor manufacturing
facilities around the globe including in the United States, Japan, Taiwan,
Korea, Singapore and in various countries in Europe.

SEMICONDUCTOR INDUSTRY BACKGROUND

Growth of the semiconductor industry reflects rapidly growing applications
in telecommunications equipment, consumer electronics, wireless communication
devices, personal computers and many other products. Worldwide sales of
semiconductors are expected to be $195 billion in 2000, according to
Semiconductor Industry Association.

Advancing technology and increasing semiconductor demand have created a
fast-growing, technology-driven market for semiconductor manufacturing
equipment. The latest manufacturing equipment is generally used to build new
leading edge fabrication facilities and to expand existing facilities to upgrade
capabilities and increase efficiencies. The worldwide semiconductor
manufacturing equipment market is projected to be $30.3 billion in 2000,
according to Dataquest.

Development of technology to manufacture semiconductor chips with smaller
size circuit features (for example, 0.18 micron and below) enables semiconductor
manufacturers to produce higher performance chips and a greater number of chips
per wafer. However, these shrinking feature sizes cause manufacturing yields to
become increasingly sensitive to defects and small changes in process variables.
The reduction in feature sizes, combined with more complex multi-level circuitry
and increased chip performance have also led to the need for a new electrical
conducting material for interconnection of semiconductors on the chip.
26
<PAGE> 31

Copper is becoming a material of choice to replace aluminum alloy as the
conducting material for semiconductors, requiring semiconductor manufacturers to
purchase new specialized fabrication equipment.

The semiconductor industry is also beginning to migrate from 200 millimeter
to 300 millimeter wafers. Larger wafers lower the manufacturing cost per
semiconductor chip by increasing the number of chips per wafer. Processing
larger wafers requires the acquisition of a new generation of more expensive
equipment by semiconductor manufacturers. Equipment sales for 300 millimeter
wafer manufacturing are estimated to be $6.5 billion in 2001, according to
Dataquest. The premium on yields, production uptime and throughput is rising as
300 millimeter manufacturing is adopted.

Advanced semiconductor manufacturing facilities have become extremely
expensive and contain numerous highly sophisticated, very costly tools. The cost
of a new semiconductor manufacturing facility ranges from $700 million to $3
billion. Within a major semiconductor manufacturing facility, there generally
are over 100 main wafer processing tools, such as deposition and etch tools. The
prices for these wafer processing tools are increasing as the industry moves
from 200 millimeter to 300 millimeter wafers and technology advances to
manufacture semiconductors with smaller size circuit features.

Furthermore, the rapid pace of technology advance requires fast
depreciation of these costly tools and facilities. The high cost and rapid
depreciation of this equipment places an extremely high premium on yields,
production uptime and throughput. The importance of return on investment
increases as equipment cost and depreciation rise.

Numerous types of subsystems and utility equipment are essential to support
the functions of the main wafer processing tools. Some types of subsystems, such
as those that control temperature and pressure, are closely integrated with the
main wafer processing tools. The performance, precision and reliability of such
integrated subsystems directly impact the revenue generation and return on
investment of this costly equipment. Demands for increased performance,
precision and reliability of such subsystems have been escalating in response to
the increasing importance of yields, production uptime and throughput.

THE TEMPERATURE CONTROL SYSTEM INDUSTRY

Temperature control systems are one of the most ubiquitous types of
subsystems in a semiconductor manufacturing facility and are required to support
precise control of temperature for many key wafer processing tools, including
those involved in the following types of processes:

Deposition -- the process of depositing metal or other materials on the surface
of a wafer, including:

- physical vapor deposition -- deposition of metal or other materials using
a physical mechanism, principally sputtering and evaporation; and

- chemical vapor deposition -- deposition of materials that function as
insulators, conductors or semiconductors using a chemical reaction
mechanism in a gas.

Etch Processes -- processes in which materials are removed from specific areas
of a film layer to create circuit features, including:

- dielectric -- etching dielectric film, an electrically insulating
material;

- polysilicon -- etching polysilicon film, a semiconducting material;

- metal -- etching metal film, an electrical conductor; and

- photoresist -- etching photoresist, a light sensitive film used in
photolithography.

Thermal Processes -- a variety of types of processes that take place at elevated
temperatures to add, remove or temper materials in semiconductor manufacturing.

Ion Implantation -- processes that implant impurities, or dopants, on the
surface of a wafer using high velocity and high voltage ions.

Photolithography -- the process of transferring an image onto the surface of a
wafer in order to define areas selected for etching.

27
<PAGE> 32

Each specific wafer process typically has a precise temperature requirement.

New facility construction and expansions or upgrades in existing facilities
creates a market for temperature control systems for new wafer processing
equipment which we estimate to be over $300 million in 2000, based on data from
industry sources and on our own analysis and industry experience. In addition,
we believe a substantial replacement and retrofit market exists for a superior
temperature control solution. We estimate that the installed base of temperature
control systems in semiconductor manufacturing facilities constructed since 1993
is approximately 60,000 units, which had an aggregate purchase price in excess
of $1.5 billion, based on data from industry sources and on our own analysis and
industry experience.

Technical advances in the semiconductor industry leading to smaller size
circuit features and adoption of 300 millimeter wafers require semiconductor
equipment manufacturers and semiconductor manufacturers to substantially
increase the heating and cooling power, temperature range and precision of their
temperature control systems. The trend to 300 millimeter wafers requires that
temperature control systems deliver more than twice the cooling capacity than
for 200 millimeter wafers, because the heat that must be removed from a 300
millimeter process chamber is more than twice that which must be removed from a
200 millimeter process chamber. The trend to smaller feature sizes increases the
requirements for more selective, or critical, etch process steps to form deep
and narrow circuit features. The density of the process gases must be higher and
the wafer must be cooler for the etch process tool to achieve this increased
selectivity, thus substantially increasing the required heating and cooling
power of the temperature control systems. The trend to copper conducting
material requires more advanced deposition processes which require lower
temperatures than other deposition processes. Critical etch and advanced
deposition and other processes for smaller feature sizes require more precise
control of temperature in the process chamber. In many advanced processes,
temperature precision in the process chamber has a significant impact on
uniformity of process results and manufacturing yields.

Advanced processes, such as these, are creating new, more demanding
specifications for temperature control systems. A temperature range of
-40(degrees)C to +120(degrees)C is required to support a number of these
advanced wafer manufacturing processes. In addition, we believe a new
temperature precision specification of substantially better than +/-1(degrees)C
is emerging.

The amount of time that a temperature control system needs to change the
temperature in a wafer processing chamber can have a large impact on overall
process tool productivity. Temperature generally must change to accommodate
process changes in a given process chamber, chamber cleaning and other types of
maintenance. Frequent process changes occur in foundries where many different
semiconductor designs are being manufactured in the same facility as well as
during the testing and qualifying of manufacturing processes. In addition,
temperature changes are usually required in order to clean or maintain the
process chambers within a tool and then return them to operation. Cleaning
cycles may occur as often as every day. Each of these types of temperature
change requirements removes the tool from production while the temperature is
changing, and may also cause downtime for a number of other costly process tools
because of work flow scheduling throughout the facility.

To obtain consistent and high yields, many advanced processes are requiring
a new class of highly stable temperature control coolant that substantially
eliminates any coolant impact on the delivery of power to the process chamber.
These advanced, fluorine-based coolants, such as Galden(TM), are much more prone
to leak and to wear out pump mechanisms than a traditional water/ethylene glycol
coolant. Leading competitive temperature control systems cannot effectively
utilize Galden(TM) without specialized components and features.

Leading competitive temperature control systems used with wafer processing
tools have mainly incorporated components and engineering approaches common to
broader types of refrigeration and heating equipment, where the performance,
reliability and precision requirements are much less than in semiconductor
manufacturing. Key problems with leading competitive temperature control systems
are low reliability, large size, slow temperature response time and limited
heating and cooling power and performance, as described below. These factors
have a significant impact on the return on investment of
28
<PAGE> 33

the semiconductor manufacturing facility as well as the total cost of ownership
of the temperature control systems.

LIMITED RELIABILITY. The reliability of leading competitive temperature
control systems is generally limited by valve failures, pump leaks, pump wear
causing fluid flow rate degradation and other components and fittings that are
unreliable. Most leading competitive temperature control systems experience the
following reliability issues:

-- valve failures caused by the valve continually opening and closing in
order to control refrigerant flow;

-- pumps with external moving seals that are prone to leak coolant
fluids; and

-- pumps that operate with a significant amount of metal to metal or
other material contact within the pump that causes parts wear and
coolant flow rate degradation.

The reliability limitations of these pumps coupled with valve failure and
other component unreliability can require frequent preventive maintenance or
cause substantial out of service downtime of semiconductor equipment and
replacement or rebuilding of leading competitive temperature control systems. We
believe leading competitive temperature control systems require frequent
maintenance, often every 2,000 hours.

LARGE FOOTPRINT. Leading competitive temperature control systems range in
size from 2.3 to 15.6 square feet per coolant channel providing independent
temperature control. In addition, each of these systems requires a complete
refrigeration system per coolant channel. Therefore, in order to simultaneously
perform processes requiring different temperatures, a semiconductor manufacturer
must install multiple separate temperature control systems, each consuming
valuable space and multiplying operating cost.

LENGTHY TEMPERATURE RESPONSE TIMES. Leading competitive temperature
control systems rely on a high volume reservoir of coolant, typically seven to
eight gallons, to control temperature. This reservoir must be cooled or heated
to adjust the system temperature, thus substantially slowing the response to a
change of temperature and reducing overall process tool productivity.

HEATING AND COOLING POWER AND TEMPERATURE RANGE LIMITATIONS. Leading
competitive temperature control systems experience reduced cooling or heating
power because of heat transfer between the motor drive and the coolant fluid. In
addition, leading temperature control systems generally do not have the heating
and cooling power to both reach high temperatures, above +80(degrees)C, and very
low temperatures, below -20(degrees)C. As a result, semiconductor manufacturers
must use multiple types of systems within the same facility to control the
temperatures of their various processes.

TEMPERATURE PRECISION LIMITATIONS. Variations in coolant flow rates caused
by pump wear and temperature deviations related to valve control technology
reduce temperature precision of leading competitive temperature control systems.
We believe a new temperature precision specification of substantially better
than +/-1(degrees)C is emerging.

HIGH OPERATING COSTS. As a result of the limitations described above,
semiconductor manufacturers experience high operating costs with leading
competitive temperature control systems. System failures result in the need for
frequent and costly system maintenance and increased costs for parts
replacement. Semiconductor manufacturers also need to fill large volume coolant
reservoirs used to control temperatures. In addition, because advanced,
flourine-based coolants, such as Galden(TM), are very expensive, these large
reservoirs substantially increase operating costs. Most significant, however, is
the loss of the ability to manufacture semiconductors while a temperature
control system is being adjusted to the required temperature, repaired or
replaced.

We believe that leading OEMs and semiconductor manufacturers are seeking a
new generation of temperature control systems for new process tools or to
retrofit existing process tools in order to improve productivity and
performance. We believe that most OEMs and end users would prefer to standardize
their temperature control system vendor across their product lines and/or
processes. Therefore, we believe that a vendor whose equipment can be configured
to meet the performance and cost requirements of substantially

29
<PAGE> 34

all types of processes with a single modular platform may have an opportunity to
become the vendor of choice throughout the industry for new equipment and
upgraded equipment. Major penetration of the new and upgrade market by such
temperature control systems also would increase the benefits of retrofitting
such temperature control systems on existing process tools. These benefits,
derived from commonality of systems and components, include lower costs of
training and maintenance, reduced inventory requirements, cumulative learning
and enhanced supplier relationships.

OUR SOLUTION

We have designed a family of highly reliable, compact and efficient
temperature control systems for semiconductor manufacturing. Our technology
draws on over 20 years of experience in the aviation refrigeration products
business. By using our systems, we believe a semiconductor manufacturer is able
to increase wafer production through lower production downtime and consistent
performance over the life of the system.

The key benefits to semiconductor manufacturers of our systems include:

HIGH DEGREE OF SYSTEM RELIABILITY. Our systems eliminate key wearing parts
and, based on performance to date and our aerospace experience, should achieve
continuous operation of more than 30,000 hours without requiring repair or
replacement. Our patented regenerative turbine pumping mechanism is designed to
address a broad range of applications, including the most demanding applications
utilizing advanced, flourine-based coolant fluids, such as Galden(TM), while
substantially eliminating the wear and leakage associated with other typical
pumping mechanisms. This design substantially extends the life of the pumping
mechanism and produces a consistent coolant flow rate throughout the life of the
pump, significantly increasing temperature control precision. Our patented
proportional thermal expansion valve control is designed to eliminate high duty
cycle off and on valve switching to control temperature regulation, thereby
significantly reducing the frequency of failures and providing more precise and
reliable temperature control. More precise and reliable temperature control
increases yields of key semiconductor manufacturing processes.

COMPACT COST-EFFICIENT DESIGN. Each of our systems can control the
independent temperatures of multiple process chambers within a semiconductor
process tool as a result of our patented multi-channel design. For example,
based on the existing design of a typical etch cluster tool that contains six
process chambers, one of our systems is currently capable of replacing up to six
competitive systems, dramatically reducing capital cost and the use of facility
floor space. In addition, our systems are designed to operate without relying on
high volume reservoirs of coolant to control temperatures thereby reducing size
and expense.

FAST TEMPERATURE RESPONSE TIME. Our systems do not rely on heating and
cooling a large volume of coolant in order to maintain temperature control. As a
result our systems are capable of cooling in approximately three to five minutes
and heating in approximately 10 to 12 minutes, at least two times faster than
leading competitive temperature control systems. Therefore, semiconductor
manufacturers experience a significant increase in production uptime and
throughput.

PRECISE, HIGH CAPACITY, THERMAL PERFORMANCE. Our patented regenerative
turbine pumping mechanism provides thermal isolation technology that isolates
the motor drive from the fluid pump, significantly decreasing the transfer of
heat between the drive and the coolant fluid. In low temperature applications,
this isolation technology enables our systems to maximize cooling power provided
to the manufacturing process. In high temperature applications, this technology
protects our pump mechanism from being overheated by the system fluid. As a
result, our systems are able to consistently maintain temperatures ranging from
-40(degrees)C to +120(degrees)C, with a precision of substantially better than
+/-1(degrees)C, suitable for the most demanding semiconductor manufacturing
applications.

30
<PAGE> 35

LOW OPERATING COSTS. Our patented multi-channel system design coupled with
our patented, highly reliable pump technology reduces temperature control
systems' operating costs compared to traditional temperature control systems as
a result of the following:

-- the elimination of on and off valve control, dramatically reducing
valve failure, maintenance costs and replacement costs;

-- the elimination of the need for a large volume reservoir of coolant
and the associated high cost of coolant; and

-- substantially reduced cooling water, electrical power and
installation expenses.

PLUG AND PLAY RETROFIT CAPABILITY. Each of our systems is manufactured
based on a common system design using modular parts. Therefore, we can rapidly
develop and provide semiconductor manufacturers a plug and play alternative to
competitive temperature control systems.

OUR STRATEGY

Our objective is to be the leading provider of temperature control systems
in the semiconductor equipment industry. Key elements of our strategy include:

TARGET END USER MARKET. We believe that, as end users specify that their
new equipment contain our temperature control systems, the adoption of our
systems by OEMs will be stimulated. We also intend to aggressively target the
end user replacement and retrofit market by demonstrating the benefits of our
systems to end users.

EXPAND SYSTEM APPLICATIONS. We are currently developing and will continue
to develop additional systems to make our temperature control technology
available for use in a broader range of semiconductor manufacturing equipment.
To date we have sold systems for use in a number of Applied Materials' recently
introduced tools. We intend to develop systems that are compatible with
additional Applied Materials' tools and with other OEM manufacturers' tools.
These new systems will be based on our new modular platform-based system design.
Over the long term, we may also develop extensions of our technology for use in
other related industries. We believe that our modular system approach allows us
to quickly and cost-effectively develop new configurations and easily
accommodate these configurations into our manufacturing processes. We may
acquire or enter into strategic relationships with companies in similar or
related businesses in order to expand our product offerings.

BROADEN OEM CUSTOMER BASE. We intend to expand the number of our OEM
customers. We believe that our successful penetration of the end user
replacement market will result in end users increasingly specifying to OEMs that
our systems be included with their equipment. Our first order from Applied
Materials for use in manufacturing production at an end-user facility, for
example, was initiated based on an end user's endorsement of our systems and
negotiations by the end user with Applied Materials. We believe that we can
configure our existing, modular, system to interoperate with the equipment
manufactured by a number of OEMs by adapting and replacing a small number of
components.

PROVIDE GLOBAL CUSTOMER SERVICE AND SUPPORT. The market for our
temperature control systems is global. We believe that to penetrate the global
market for our systems aggressively, we must provide effective customer service
and support throughout the world. We intend to expand our sales and support
capabilities in conjunction with Helix's worldwide sales and support
infrastructure.

SYSTEMS AND TECHNOLOGIES

Our systems provide multiple, independently controlled, coolant channels
that are used for controlling temperatures within semiconductor manufacturing
equipment. Our systems regulate temperatures, within the range of -40(degrees)C
to +120(degrees)C, with a precision of substantially better than +/-1(degrees)C.
Our systems are comprised of a refrigeration system and heating elements, up to
three coolant channels that provide independent temperature control and
electronic controls in a rugged enclosure. Each system interfaces with the
semiconductor manufacturing tool and its process chambers through insulated
supply and return hoses and electrical controls.
31
<PAGE> 36

Our systems are currently being used to control temperatures in the
following wafer processing tools:

-- Applied Materials' Super e dielectric etch tool;

-- Applied Materials' e Max high density plasma dielectric etch tool;

-- Applied Materials' Endura Electra copper seed layer deposition tool;

-- Applied Materials' Centura dielectric etch tool; and

-- One of LAM Research's etch tools.

Our systems are designed with several key patented features, including a
multi-channel design, our unique pump mechanism and proportional thermal
expansion valve control.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
SYSTEM FEATURES KEY ATTRIBUTES BENEFITS
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Multi-channel design -- patented -- ability to control multiple
-- multiple coolant channels with process chambers
independent temperature -- uses less facility space
control using a single -- provides greater operating
refrigeration circuit efficiency
-- multiple subchannels per -- one system replaces up to six
coolant channel competitor systems in a multi-
-- configurable design chamber etch cluster tool
--------------------------------------------------------------------------------------------------------------------
Pump mechanism -- patented -- increases reliability
-- no metal-to-metal contact -- increases cooling and heating
-- thermal isolation between pump power
and motor -- increases temperature range
-- eliminates moving seals -- eliminates degradation of
exposed to atmosphere system performance over time
-- compatibility with all major -- eliminates frequent fluid
coolant types leakage during operation
--------------------------------------------------------------------------------------------------------------------
Proportional thermal expansion valve -- patented -- much faster cooling and
control -- continuous metering of cooling heating
capacity -- substantially increases
-- operates without a large reliability
volume reservoir of coolant -- broad temperature range from
-- eliminates high-duty-cycle on -40(degrees)C to
and off valve operation +120(degrees)C
-- temperature precision of
substantially better than
+/-1(degrees)C
-- improves system efficiency
--------------------------------------------------------------------------------------------------------------------
</TABLE>

All of our system configurations are tailored to requirements of the
specific processes using modular components. Many of our key components are
based on proprietary technology. Many of the components are common to each
configuration, including the thermal expansion valves and their controls, pump
mechanisms, receiver, compressor, evaporators, heaters, electrical system,
system controls and interlocks, piping, and frame and enclosure. Tailoring a
basic system to a particular end user or OEM generally requires selection and
incorporation of the mechanical and electrical interfaces to the wafer
manufacturing equipment and definition of components for the particular
temperature control requirements.

We are currently introducing advanced, modular platform-based systems which
facilitate simple reconfiguration for multiple applications. These new
platform-based systems will also improve manufacturing efficiency and provide
parts commonality across a broad range of applications. In addition, these new
platform-based systems provide fail safe features to prevent pump failure even
if the unit is mistakenly operated with no coolant fluid. System and parts
commonality should reduce our customers' training, parts inventory, repair
facility, and support management costs. We are also designing and prototype
testing system configurations for a number of additional OEM wafer processing
tools which we believe will be of particular interest to end users for potential
replacement of their existing temperature control systems.

SALES, MARKETING AND CUSTOMER SUPPORT

To date, we have sold our temperature control systems through our direct
sales personnel and third party representatives. Substantially all of our sales
have been to Applied Materials. In sales of our systems through Applied
Materials, we have been directly involved in a number of instances with the
ultimate end user to determine system requirements.
32
<PAGE> 37

We entered into a strategic teaming agreement with Helix on September 19,
2000 under which Helix markets, sells and supports our systems worldwide. The
agreement is effective for all regions outside North America and will become
effective for North America in November 2000. Helix is a leading global supplier
of vacuum components and subsystems for a broad range of electronic component
manufacturers, principally for the production of semiconductors, data storage
and flat panel displays. The Helix sales and services organization numbers 73 in
the United States and 81 internationally, including 21 third party
representatives.

We believe that maintaining ongoing relationships with both OEMs and with
the ultimate end users will be important to our success. We plan to hire sales
and support product specialists who will be located at Helix's offices worldwide
and will work in conjunction with Helix to promote our systems.

Under our agreement with Helix, Helix's services and support personnel
provide support services to all our OEM and end user customers. We provide
support and training to Helix in our facilities in Anaheim. We intend to offer
maintenance services, primarily through Helix, at the expiration of our warranty
terms to our customers.

We have agreed to pay Helix sales and product support commissions in
connection with each sale of our products that results from sales efforts by
Helix. The amount of the commission we are required to pay Helix depends on the
nature of the product sold and the type of customer. Our agreement with Helix
has a term of three years, but may be cancelled by either party upon 180 days
notice.

Our marketing team has used a variety of marketing initiatives and programs
to support the sale and distribution of our systems. The audience for these
activities included third party sales representatives, current and prospective
OEM and end user customers, the trade press and analysts. Marketing activities
include participation in technical and sales conferences, preparation of sales
tools and distributing marketing collateral, including brochures, CDs, system
bulletins, system presentations, operations manuals and engineering documents.
Our sales and support product specialists will work with Helix to develop
marketing materials and to continue our market efforts worldwide.

Our systems generally carry a warranty of 12 to 36 months from the date of
shipment or installation. In the past, Applied Materials has provided on site
support for all of our systems installed in its equipment as part of its
equipment sales, while our own engineers have provided support to Applied
Materials under the terms of our warranty.

CUSTOMERS

Substantially all of our sales to date have been to Applied Materials, the
leading semiconductor equipment manufacturer. 100% and 99% of our net sales for
fiscal 1999 and for the six months ended August 26, 2000 were direct sales to
Applied Materials. We have recently begun to pursue the end user replacement and
retrofit market and, to date, have shipped two systems to end user customers. We
intend to aggressively target the end user replacement and retrofit market by
demonstrating the benefits of our systems to end users. We believe that our
strategic alliance with Helix will substantially accelerate this process. We
believe that, as end users specify with OEMs that their new equipment contain
our temperature control systems, the adoption of our systems by OEMs will be
stimulated.

Through our sales to Applied Materials, our temperature control systems
have been installed in equipment in over 40 semiconductor manufacturing
facilities located in the United States, Japan, Taiwan, Korea, Singapore and
various countries in Europe, owned by the following semiconductor manufacturers:

UNITED STATES

-- Advanced Micro Devices, Inc.

-- Atmel Corporation

-- Conexant Systems, Inc.

-- Cypress Semiconductor Corporation

-- Dominion Semiconductor LLC

-- Hewlett-Packard Company

-- Hyundai Electronics Industries Co., Limited, formerly Hyundai
Semiconductor Group

33
<PAGE> 38

-- Integrated Device Technology, Inc.

-- International Business Machines Corporation

-- LSI Logic Corporation

-- Lucent Technologies Inc.

-- Micron Technology, Inc.

-- Motorola, Inc.

-- National Semiconductor Corporation

-- NEC Corporation

-- Philips Semiconductors, an affiliate of Royal Philips Electronics

-- Texas Instruments Incorporated

-- TriQuint Semiconductor, Inc.

-- VLSI Technology

-- WaferTech L.L.C.

-- White Oak Semiconductor, a wholly-owned company of Infineon
Technologies

TAIWAN

-- Macronix International Co., Ltd.

-- Nanya Technology Corp.

-- Silicon Integrated Systems

-- Taiwan Semiconductor Manufacturing Company

-- United Microelectronics Corporation

-- Worldwide Semiconductor Manufacturing Company, recently acquired by
Taiwan Semiconductor Manufacturing Company

SINGAPORE/MALAYSIA

-- 1st Silicon (Malaysia) Sdn. Bhd.

-- Chartered Semiconductor Manufacturing

-- Sanyo Semiconductor Manufacturing Philippines Corporation

-- TECH Singapore

JAPAN

-- Fujitsu Microelectronics, Inc.

-- NEC Corporation

-- Nippon Foundry Inc.

-- Rohm Hamamatsu Co., Ltd.

-- SANYO Semiconductor, a division of SANYO Co., Ltd.

-- Sharp Electronics Corporation

-- Toshiba Corporation

-- Texas Instruments Incorporated

KOREA

-- Hyundai Electronics Industries Co., Limited, formerly Hyundai
Semiconductor Group

-- Samsung Semiconductor, a subsidiary of Samsung Electronics Co., Ltd.

EUROPE

-- Advanced Micro Devices, Inc.

-- Atmel Corporation

-- Infineon Technologies AG

-- STMicroelectronics, formerly SGS-Thomson Microelectronics

RESEARCH AND DEVELOPMENT

Technology in the semiconductor equipment industry changes rapidly,
requiring us to continue to develop and introduce new system configurations. To
remain competitive, we believe we must develop new and enhanced system
configurations and introduce these systems on time and at competitive costs.

We invest significantly in research and development and seek to maintain
close technical and commercial relationships with OEMs and end users to remain
responsive to their system needs and changing requirements. We conduct our
research and development at our facilities in Anaheim, California where we
benefit from our access to B/E Aerospace's engineering, machining and
manufacturing resources located in the same facility. These resources contribute
to our rapid design and manufacture of specialized components and development of
prototype systems and improvements.
34
<PAGE> 39

Our research and development efforts have led to a number of patented
efficiency and performance breakthroughs, including the development of our
multi-channel system design, our thermally isolated regenerative turbine pumping
mechanism and our proportional thermal expansion valve control.

We are developing systems, based on our modular, platform-based system
architecture, which are configured to interface with a broader range of models
and types of semiconductor manufacturing equipment sold by Applied Materials and
other OEMs. In addition, we plan to develop systems to meet recent technological
developments in the semiconductor industry. Over the long term, we may also
develop extensions of our technology for use in temperature control systems in
other related industries, such as the manufacture and use of telecommunications
equipment, data processing and storage equipment, image displays and automated
testing equipment. We believe that our modular system approach allows us to
quickly and cost-effectively develop new configurations and easily accommodate
these configurations into our manufacturing processes.

Our research and development expenditures were $1.3 million, $1.8 million
and $1.6 million, respectively, for fiscal 1997, 1998 and 1999. We have budgeted
research and development expenditures of approximately $1.7 million for this
fiscal year. The budgeted increase in this fiscal year primarily reflects
development of systems to interface with and support a broader range of wafer
manufacturing equipment sold by Applied Materials and other OEMs, primarily to
address the retrofit and replacement market. We expect that research and
development expenditures will remain a substantial percentage of net sales in
future years.

MANUFACTURING

We currently manufacture all of our systems at our facilities in Anaheim,
California. Our manufacturing facility is established as an assembly plant, with
flexible, continuous flow work cells. Currently, all our systems are
manufactured on the same line with segregated inventories and work cells for
each system configuration. The production time per system is under two weeks.
Our manufacturing facilities employ lean manufacturing methods to speed and
simplify assembly time and improve employee productivity. We have tripled
manufacturing capacity in the past several months and intend to double capacity
again over the next 12 months.

The majority of our system components are stock items that are purchased
from numerous suppliers. A number of our key components are manufactured based
on our design specifications and instructions. We depend on the Anafaze division
of Watlow Electric Manufacturing and on ITT Standard for two of our key
components. We may use one source of supply for other components at any given
time. However, there are multiple sources available for these other components
and, although it may involve some cost to us, we believe we can obtain the
quantities for such components necessary in the foreseeable future.

We inspect and/or test our components and systems throughout the
manufacturing process. Our engineers and final testing department personnel
develop all test procedures and design and build all test equipment and test
stations required for the testing of our systems. We fully test all of our
systems for performance to specifications and run each system for 15 to 24 hours
to insure that any early component failures are detected prior to shipment.

BACKLOG

Our backlog was $11.4 million at August 26, 2000, versus $1.2 million at
February 28, 1999, and $942,000 at February 28, 1998. All of our current backlog
at August 26, 2000 was scheduled for delivery before December 2000. Our policy
is to include in backlog only those orders for which we have accepted purchase
orders. Our orders are subject to cancellation or rescheduling by customers with
limited or no penalties. Therefore, our backlog at any particular date is not
necessarily indicative of our actual sales for any succeeding period.

INTELLECTUAL PROPERTY

35
<PAGE> 40

B/E Aerospace will sell to us copyrights, trademarks and know how relating
to temperature control systems for the manufacture or use of the applications
listed below, and patents and pending patent applications, including the
following:

-- patents in the United States covering our multi-channel design,
refrigeration system design, pump mechanism and proportional thermal
expansion valve control;

-- a patent application pending under the Patent Cooperative Treaty in
the European Patent Office covering our pump mechanism; and

-- patent applications pending in the United States covering various
temperature control and capacity regulation processes.

These patents will expire at various dates ranging from November 2011
through September 2017. We are in the process of filing other patent
applications relating to our temperature control technology and plan to create
additional proprietary technologies in the future for which we will seek
intellectual property protection, in the form of patents or otherwise. Pending
patent applications may not result in the issuance of the patents. In addition,
our patents might be invalidated or circumvented, or fail to provide us with any
meaningful protection. In addition, the laws of many foreign jurisdictions do
not protect intellectual property to the same extent as the laws of the United
States. We cannot be certain that others will not independently develop
substantially equivalent technology or otherwise gain access to our trade
secrets or intellectual property, or disclose our intellectual property or trade
secrets.

We intend to enter into a cross-license agreement with B/E Aerospace under
which it will grant us a perpetual, royalty-free, exclusive license to most
future B/E Aerospace owned and licensed intellectual property, including
patented technology, copyrights, trade secrets and other know how, related to
temperature control systems for the manufacture or use of:

-- semiconductors or semiconductor manufacturing equipment;

-- telecommunications equipment;

-- data processing and storage equipment;

-- image displays; and

-- automated testing equipment.

We have agreements with third parties, mostly as licensor, that provide for
the licensing of patented or proprietary technology, none of which are material
to us. These agreements include royalty-bearing licenses and technology
cross-licenses.

We will have a license from B/E Aerospace to use the B/E Aerospace
trademark, trade name and logo for two years in connection with our sale of
semiconductor manufacturing equipment. See "Relationships and Transactions with
Related Parties" beginning on page 48 for a further description of this
agreement.

We, our licensors, licensees, customers or suppliers may be subject to
claims of patent infringement or claims to invalidate our patents from time to
time. Any such claim could be successful and require us to pay substantial
damages or eliminate features from our systems or both.

COMPETITION

Our industry is highly competitive and characterized by a few large
competitors, for which the manufacture of temperature control systems is one
part of their business, and many small competitors. In addition, some large OEMs
manufacture their own temperature control systems for incorporation into the
semiconductor manufacturing equipment they supply. We believe that these OEMs
would prefer to outsource cost effective and reliable temperature control
systems from a specialized supplier. Therefore we do not expect semiconductor
equipment manufacturers to compete directly with us in the foreseeable

36
<PAGE> 41

future. However, because of the rapid growth and change in the semiconductor
industry, OEMs or other possible competitors may compete in our industry in the
future.

Our principal direct competitors are Neslab Instruments, Inc., FTS Systems,
Inc. and Edwards, a division of British Oxygen Corporation. In addition, we
compete with Rasco Corporation, TAITEC Instruments USA, Inc., COSAM Inc and SMC
Corporation in international markets. Additional companies, in related
businesses or otherwise, may compete in our industry in the future.

The principal competitive factors in our industry are:

-- system reliability,

-- temperature change speed,

-- facility space usage,

-- temperature control capacity, range and precision,

-- cost of ownership and efficiency of operation,

-- performance consistency at high and low temperatures,

-- sales, distribution and support capabilities and

-- financial stability and management systems quality and controls.

We believe that we compete favorably on substantially all of the above factors.
We also intend to broaden our range of system configurations and, as a result,
anticipate facing increased competition in the future.

Most of our current direct competitors have longer operating histories and
a number have significantly greater financial, technical, support, marketing and
other resources than we do. As a result, these competitors are able to devote
greater resources to the development, promotion, sale and support of their
products. In addition, many of our competitors have greater name recognition in
our industry, a more extensive customer base and broader product offerings than
we do, as well as relationships with many of our current and potential
customers. These competitors can leverage their customer relationships and
broader product offerings and may cut prices to defend or gain market share. In
addition, competitors with large market capitalization or cash reserves may be
better positioned than we are to acquire companies, including other competitors,
and thereby acquire a larger market share. Any such acquisition could harm our
competitive position.

EMPLOYEES

As of August 26, 2000, we had 50 full-time employees and 19 temporary
employees. None of our employees is represented by a labor union. We consider
our employee relations to be good.

FACILITIES

Our principal executive offices and manufacturing facilities are located in
Anaheim, California, where we sublease approximately 20,000 square feet under a
lease with B/E Aerospace that expires in July 2005.

LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

37
<PAGE> 42

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

Our executive officers and directors, their ages and the positions held by
them, as of August 26, 2000 are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- ---- -----------
<S> <C> <C>
Amin J. Khoury...................... 61 Chief Executive Officer and Chairman of the Board
R. Bruce Thayer..................... 50 President, Chief Operating Officer and Director
Cameron H. Adamson.................. 39 Vice President, Chief Financial Officer and
Treasurer
Gregory J. Mills.................... 45 Director of Sales and Marketing
Lloyd D. Golobay.................... 53 Operations Manager
Kenneth W. Cowans................... 67 Research and Development Manager
Roger D. Emerick.................... 60 Director
Robert J. Lepofsky.................. 55 Director
Amin C. Khoury...................... 34 Director
Robert J. Therrien.................. 65 Director
</TABLE>

AMIN J. KHOURY has served as our chief executive officer since July 2000.
Through his position as chairman of B/E Aerospace, however, he has had direct
supervision over our operations since December 1997. Mr. Khoury also serves as
chairman of our board of directors and was a founder of our company. Mr. Khoury
currently serves as chairman of the board of directors of B/E Aerospace, Inc.,
the world's leading supplier of aircraft cabin interior products, a position he
has held since July 1987 when he founded B/E Aerospace. Mr. Khoury served as
chief executive officer of B/E Aerospace from July 1987 to April 1996. Mr.
Khoury currently serves as chairman of the board of directors of Applied
Extrusion Technologies, Inc., a manufacturer of oriented polypropylene films
used in consumer products labeling and packaging applications, and is also a
director of Brooks Automation, Inc., a supplier of tool and factory hardware and
software automation solutions for the global semiconductor, data storage and
flat panel display manufacturing industries, and Synthes-Stratec, the world's
leading orthopedic trauma company. Mr. Khoury received his Masters in Business
Administration with distinction from Northeastern University.

R. BRUCE THAYER has served as our president and chief operating officer
since August 1997 and also serves as a member of our board of directors. From
1981 to July 1997, Mr. Thayer served in various management capacities, including
director of marketing of the semiconductor equipment business, with Varian
Associates, a developer and manufacturer of scientific instruments and
equipment, semiconductor processing equipment and medical equipment. Mr. Thayer
also served from 1974 to 1981 as the manufacturing manager for the analytical
instruments business of Ionic, Inc., a developer and manufacturer of water
treatment products, analytical instruments and chemical process control
equipment. Mr. Thayer received his Bachelors of Science in Chemical Engineering
from Rensselaer Polytechnic Institute.

CAMERON H. ADAMSON joined us in August 2000 as our vice president, chief
financial officer and treasurer. From September 1999 to August 2000, Mr. Adamson
served as the chief financial officer of APX Holdings, LLC, a holding company
for various logistics enterprises. From December 1995 to September 1999, Mr.
Adamson served as the vice president and chief financial officer of In-Flight
Entertainment, LLC, a former wholly owned subsidiary of B/E Aerospace that
develops and manufactures in-flight entertainment systems. From 1983 to 1995,
Mr. Adamson served in various capacities, including senior audit manager, with
Deloitte and Touche LLP. Mr. Adamson received his Bachelors of Science in
Accounting and his Masters in Business Administration from the University of
Southern California.

38
<PAGE> 43

GREGORY J. MILLS has served as our director of sales and marketing since
June 2000. From September 1999 to May 2000, Mr. Mills was a private sales and
marketing consultant to various semiconductor equipment manufacturers. From
August 1998 to August 1999, Mr. Mills served as vice president of sales and
service at Cybeq Nanotechnologies, a manufacturer of selected tools for
semiconductor manufacturers. From September 1994 to July 1998, Mr. Mills served
as director of product management (Track Division) and later as vice president
of marketing (Thermal Division) at the Silicon Valley Group, a provider of
semiconductor process equipment products and services. From 1989 to 1994, Mr.
Mills served as marketing manager at Varian-TEL Products, a joint venture by
Varian Associates and Tokyo Electron, semiconductor equipment manufacturers. Mr.
Mills received his Bachelors of Arts in Chemistry from Illinois College and his
Masters of Science in Engineering Management from Santa Clara University.

LLOYD D. GOLOBAY has served as our operations manager since December 1997.
From January 1997 to December 1997, Mr. Golobay served as director of
engineering at Techon Systems, Inc., a developer of systems for metering and
dispensing industrial fluids. From April 1996 to October 1996, Mr. Golobay
served as engineering manager with AdelWiggins, a leading global developer and
manufacturer of fluid connectors and vibration absorbing clamps for the
aerospace industry. From December 1991 to February 1996, Mr. Golobay served as
research and development design manager with Shurflo, a developer and
manufacturer of high performance pumps and fluid handling equipment for the
recreational vehicle market. Mr. Golobay received his Bachelors of Science in
Mathematics and Engineering from Portland State University.

KENNETH W. COWANS has served as our research and development manager since
September 1995. From November 1992 to September 1995, Mr. Cowans served as
engineering manager with the refrigeration products business of B/E Aerospace.
From 1973 to 1992, Mr. Cowans served as chief executive officer and chief
engineer with Kinergetics, Inc., a developer and manufacturer of precision
temperature control life support systems for the commercial diving industry. Mr.
Cowans received his Bachelors of Science in Mechanical Engineering with a minor
in Nuclear Reactor Physics from North Carolina State College.

ROGER D. EMERICK has served as a member of our board of directors since
July 2000. Mr. Emerick currently serves as chairman of the board of LAM
Research, a semiconductor equipment supplier. Mr. Emerick served as president of
LAM Research from 1982 to 1989 and as its chief executive officer from 1982 to
August 1997. Mr. Emerick is also a director of: Electroglas, Inc., a
manufacturer of automatic wafer probing equipment; Brooks Automation, Inc.;
IPEC, a semiconductor processing equipment manufacturer; and Semiconductor
Equipment and Materials International, a global trade association that
represents the semiconductor and flat panel display equipment and materials
industries.

ROBERT J. LEPOFSKY has served as a member of our board of directors since
July 2000. Mr. Lepofsky currently serves as president and chief executive
officer of Helix Technology Corporation, a provider of critical enabling vacuum
system technology to a broad range of electronic component manufacturers,
principally for the semiconductor, data storage and flat panel display
manufacturing industries. Mr. Lepofsky also serves as a director of Helix
Technology Corporation and has served that company in various management
positions since 1980.

AMIN C. KHOURY has served as a member of our board of directors since July
2000. Mr. Khoury currently serves as president of Nitro Leisure Products, LLC, a
developer and manufacturer of golf products. From July 1995 to November 1996 Mr.
Khoury served as president of Propertysoft, a supplier of multimedia and
creative digital video services. From January 1991 to June 1995 he served as
president of Boston Film and Interactive Group, also a supplier of multimedia
and creative digital video services. Mr. Khoury is the son of Amin J. Khoury,
our chairman and chief executive officer.

ROBERT J. THERRIEN has served as a member of our board of directors since
July 2000. Mr. Therrien has served as the president, chief executive officer and
a director of Brooks Automation since its incorporation in 1989 when he
initiated the acquisition of the Brooks Automation Division of Aeronca
Electronics, Inc. From 1983 to 1989, Mr. Therrien served as a consultant to
Brooks Automation and other
39
<PAGE> 44

firms in the semiconductor industry. From 1972 until its sale to Schlumberger
Industries in 1983, Mr. Therrien cofounded and served as chairman and president
of Accutest Corporation, a semiconductor automatic test equipment company. Mr.
Therrien is currently a director of MKS Instruments, Inc., an supplier of
measurement and control components for laboratory and industrial applications
throughout the microelectronics industry.

CLASSIFIED BOARD OF DIRECTORS

Our certificate of incorporation provides for a classified board of
directors consisting of from three to nine directors divided into three classes,
each serving staggered three-year terms. As a result, approximately one-third of
our board of directors will be elected each year. To implement the classified
structure, we recently elected one-third of our directors to one-year terms,
one-third to two-year terms and one-third to three-year terms. Hereafter, our
directors will be elected for three-year terms. Our board of directors currently
consists of six directors. R. Bruce Thayer and Robert J. Lepofsky have been
designated Class I directors whose terms expire at the 2001 annual meeting of
stockholders. Amin C. Khoury and Roger D. Emerick have been designated Class II
directors whose terms expire at the 2002 annual meeting of the stockholders.
Amin J. Khoury and Robert J. Therrien have been designated Class III directors
whose terms expire at the 2003 annual meeting of stockholders.

BOARD COMMITTEES

The board of directors has a stock option and compensation committee and an
audit committee.

STOCK OPTION AND COMPENSATION COMMITTEE. The stock option and compensation
committee of the board of directors reviews and makes recommendations to the
board regarding all forms of compensation provided to our executive officers and
directors, including stock compensation. In addition, the compensation committee
reviews and makes recommendations on bonus and stock compensation arrangements
for all of our employees. As part of the foregoing, the compensation committee
also administers our employee stock purchase plan and stock option plan. The
current members of the compensation committee are Messrs. Emerick and Lepofsky,
with Mr. Emerick serving as the chair of the committee.

AUDIT COMMITTEE. The audit committee of the board of directors reviews and
monitors our corporate financial reporting and our internal and external audits,
including, among other things, our internal audit and control functions, the
results and scope of the annual audit and other services provided by our
independent auditors and our compliance with legal matters that have a
significant impact on our financial reports. The audit committee also consults
with our management and our independent auditors prior to the presentation of
financial statements to shareholders and, as appropriate, initiates inquiries
into aspects of our financial affairs. In addition, the audit committee
recommends the appointment of, and reviews fee arrangements with, our
independent auditors. The current members of the audit committee are Messrs.
Therrien, Lepofsky and Emerick, with Mr. Therrien serving as the chair of the
committee.

The board of directors may establish other committees to facilitate the
management of Advanced Thermal Sciences.

DIRECTOR COMPENSATION

Directors who are also employees of Advanced Thermal Sciences receive no
additional compensation for serving on our board of directors. Directors who are
not employees of Advanced Thermal Sciences receive compensation of $5,000 per
calendar quarter, plus $5,000 per calendar year for each committee on which they
serve. Pursuant to our non-employee directors' stock and deferred compensation
plan, all non-employee directors may elect to (i) receive all or a portion of
their retainer in shares of our Class A common stock or (ii) defer all or a
portion of their retainer in cash or in stock units. An aggregate of 50,000
shares of our Class A common stock are available for issuance under this plan.
In addition, our non-employee directors are entitled to participate in our
directors' stock option plan, which became effective on July 14, 2000.

40
<PAGE> 45

Under the directors' stock option plan, each non-employee director is
awarded options to purchase 5,000 shares of our Class A common stock each
January 2 commencing on January 2, 2001. In addition, each non-employee director
is awarded options to purchase 25,000 shares of our Class A common stock as of
the date of his or her first election as a director. An aggregate of 300,000
shares of our Class A common stock has been reserved for issuance pursuant to
the directors' stock option plan.

The exercise price of all options granted under the directors' stock option
plan may not be less than 100% of the fair market value of our Class A common
stock on the date of grant. Options expire 10 years after the date of grant and
become exercisable with respect to 25% of the shares on each of the first
through fourth anniversaries of the date of grant. Upon a director's termination
of service for any reason other than death, all options held by the director
that have not vested will be terminated and the vested options will remain
exercisable for three months. Upon a change in control, all options held by our
directors will vest and become exercisable.

On July 17, 2000, each of the following directors was awarded an option to
purchase 25,000 shares of our Class A common stock at a price of $6.75: Roger D.
Emerick, Robert J. Lepofsky, Robert J. Therrien and Amin C. Khoury.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The compensation committee of our board of directors currently consists of
Messrs. Emerick and Lepofsky. No interlocking relationship exists between any
member of our board of directors or our compensation committee and any member of
the board of directors or compensation committee of any other company, and no
such interlocking relationship has existed in the past.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to compensation for
the 1999 fiscal year paid by us for services rendered by our chief executive
officer and our three other highest-paid executive officers whose total salary
and bonus exceeded $100,000 during the 1999 fiscal year. During 1999 fiscal
year, no other executive officer earned a combined base salary and bonus in
excess of $100,000. We collectively refer to these individuals as the named
executive officers.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- --------------------------
SECURITIES
SALARY BONUS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR ($) ($) OPTIONS(L) COMPENSATION
---------------------------- ---- -------- ------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Amin J. Khoury(2)
Chairman and Chief Executive
Officer.............................. 1999 -- -- -- $ --
R. Bruce Thayer
President and Chief Operating
Officer.............................. 1999 178,135 40,000 22,500 8,725(3)
Kenneth W. Cowans
Research and Development Manager..... 1999 118,414 17,000 5,000 5,416(3)
Lloyd D. Golobay
Operations Manager................... 1999 78,683 2,500 3,000 3,247(4)
</TABLE>

---------------
(1) This reflects options to acquire B/E Aerospace common stock. Under the
terms of the B/E Aerospace stock option plans, unvested options held by our
employees will be forfeited at any time that B/E Aerospace owns less than
50% of our voting power and vested options will generally remain
exercisable for three months.

(2) Mr. Amin J. Khoury became our chairman and chief executive officer on July
13, 2000. Prior to this time, Mr. Khoury was not an officer of Advanced
Thermal Sciences. Through his position as chairman of B/E Aerospace,
however, he has had direct supervision over our operations since

41
<PAGE> 46

December 1997. During the 1999 fiscal year, Mr. Khoury was employed by B/E
Aerospace and was paid $667,316 in cash compensation by B/E Aerospace for
his services as chairman of the board of B/E Aerospace. In addition, he was
granted options on 240,000 shares of B/E Aerospace common stock, and total
contributions of $48,539 were made to the B/E Aerospace 401(K) plan and B/E
Aerospace supplemental executive retirement plan for such services. Mr.
Khoury will continue to serve in such capacity.

(3) Represents contributions to the B/E Aerospace 401(K) plan and the B/E
Aerospace supplemental executive retirement plan.

(4) Represents contributions to B/E Aerospace's 401(K) plan.

Cameron H. Adamson joined us as our vice president, chief financial officer
and treasurer on August 14, 2000 and is not included in the tables relating to
summary compensation and option grants. Mr. Adamson receives an annual
compensation of $170,000 pursuant to an employment agreement described in detail
below.

Gregory J. Mills joined us as our director of sales and marketing on June
5, 2000 and is not included in the tables relating to summary compensation and
option grants. Mr. Mills receives an annual compensation of $104,000 pursuant to
an employment agreement described in detail below.

The following table sets forth information regarding stock options covering
B/E Aerospace common stock granted to the named executive officers during the
1999 fiscal year for services rendered to us. The dollar amounts under these
columns are the result of calculations at the 5% and 10% rates required by the
Securities and Exchange Commission for the option term and therefore are not
intended to and may not accurately forecast possible future appreciation, if
any, of B/E Aerospace's common stock price.

B/E AEROSPACE STOCK OPTION GRANTS IN FISCAL 1999

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED PRICE APPRECIATION
UNDERLYING TO EMPLOYEES FOR OPTION TERM(3)
OPTIONS IN FISCAL EXERCISE PRICE EXPIRATION ----------------------
NAME GRANTED(1)(#) YEAR (2) ($ PER SHARE) DATE 5%($) 10%($)
---- ------------- ------------ -------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
R. Bruce Thayer.............. 7,500 0.33 $ 17.75 8/10/09 $83,736 $212,201
15,000 0.65 8.4375 1/19/10 79,608 201,741
Kenneth W. Cowans............ 3,000 0.13 17.75 8/10/09 33,494 84,881
2,000 0.09 8.4375 1/19/10 10,614 26,899
Lloyd D. Golobay............. 3,000 0.13 12.125 9/27/09 22,880 57,982
Amin J. Khoury(4)............ -- -- -- -- --
</TABLE>

---------------
(1) This reflects options to acquire shares of B/E Aerospace common stock. All
of the above stock option awards are vested over a three-year period (25%
on the date of grant and 25% on the three succeeding grant annual
anniversary dates). The exercise prices were based on the fair market value
(as determined in accordance with the B/E Aerospace stock option plans) of
the shares of B/E Aerospace common stock at the time the options were
granted. Options terminate ten years after the date of grant or three
months following termination of the optionee's employment, whichever occurs
earlier. Unvested options held by our employees will be forfeited at any
time that B/E Aerospace owns less than 50% of our voting power and vested
options will generally remain exercisable for three months.

(2) During fiscal 1999, B/E Aerospace granted to its employees options covering
2,290,200 shares of B/E Aerospace common stock.

42
<PAGE> 47

(3) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission and
therefore are not intended to forecast possible future appreciation, if
any, of the stock price of B/E Aerospace. If B/E Aerospace's stock price
were in fact to appreciate at the assumed 5% or 10% annual rate for the ten
year term of these options, a $1,000 investment in B/E Aerospace common
stock would be worth $1,629 and $2,594 respectively, at the end of the
term.

(4) In consideration for his services as chairman of B/E Aerospace, Amin J.
Khoury was granted options to acquire 240,000 shares of B/E Aerospace
common stock, of which 140,000 were granted at an exercise price of $17.75
per share with an expiration date of May 27, 2009 and 100,000 were granted
at an exercise price of $8.4375 per share with an expiration date of
January 19, 2010. These options were granted to Mr. Khoury in accordance
with the terms set forth in footnote (1) above.

The following table sets forth information with respect to the named
executive officers concerning option exercises in the 1999 fiscal year and
unexercised stock options to purchase B/E Aerospace common stock held as of
February 26, 2000. The "value realized" figures are based on the fair market
value of B/E Aerospace stock at the exercise date, minus the per share exercise
price, multiplied by the number of shares exercised. The "value of unexercised
in-the-money options at February 26, 2000" figures in the right-hand column are
based on the market value of B/E Aerospace stock at February 26, 2000 of $9.00
per share, minus the per share exercise price, multiplied by the number of
shares issuable upon exercise of the option.

AGGREGATED B/E AEROSPACE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FEBRUARY 26, 2000 AT FEBRUARY 26, 2000($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Bruce Thayer.......... -- $-- 25,625 26,875 $2,109 $6,328
Kenneth W. Cowans........ -- -- 7,500 5,000 3,719 844
Lloyd D. Golobay......... -- -- 750 2,250 0 0
Amin J. Khoury(1)........ -- -- -- -- -- --
</TABLE>

---------------
(1) At February 26, 2000, Amin J. Khoury held options to acquire 600,000 shares
of B/E Aerospace common stock, of which 350,000 were exercisable and
250,000 were unexercisable and all of which were granted in consideration
of his services to B/E Aerospace. The value of his unexercised in-the-
money exercisable and unexercisable options were $14,063 and $42,188,
respectively.

TREATMENT OF OUTSTANDING STOCK OPTIONS

Pursuant to the terms of the B/E Aerospace 1989 and 1996 stock option
plans, following the consummation of this offering, our executive officers and
other employees will be entitled to retain their options to purchase B/E
Aerospace common stock. However, if at any point in the future, B/E Aerospace
ceases to own at least 50% percent of our voting power, then the options to
purchase B/E Aerospace common stock under the 1989 and 1996 stock option plans
that have not vested will be forfeited and the vested options will remain
exercisable for three months.

EMPLOYMENT AGREEMENTS

AMIN J. KHOURY. In July 2000, we entered into an employment agreement with
Mr. Khoury pursuant to which he agreed to serve as our chairman and chief
executive officer. The agreement has a five-year term ending on July 12, 2005
which is subject to automatic renewal for additional one-year terms unless
either party notifies the other that it intends to terminate the agreement.
Under the agreement,

43
<PAGE> 48

Mr. Khoury receives a base salary of $100,000 per year and a performance bonus
determined by our board of directors. In addition, Mr. Khoury will be entitled
to participate in all retirement, health, equity and fringe benefit plans
available to our executive officers as in place from time to time.

If we do not elect to renew Mr. Khoury's employment at the end of the term,
we will have the option to retain him as a consultant for up to one year. During
the consulting period, Mr. Khoury will receive a consulting fee equal to his
base salary and will be entitled to participate in all health, welfare and
retirement benefits to the extent permitted by law and under our plans. If we do
not elect to retain Mr. Khoury as a consultant, he will be entitled to
continuation of his salary and medical benefit for one-year following his
termination.

If Mr. Khoury dies during the term of the agreement, his estate will
receive a lump-sum payment equal to his base salary through the expiration of
his employment agreement. Similarly, upon the termination of Mr. Khoury's
employment due to his incapacity, he will be entitled to continuation of his
base salary and any health, welfare and retirement benefits through the
expiration of the agreement.

If, as a result of a change in control, Mr. Khoury's employment is
terminated for any reason, or Mr. Khoury resigns because of an adverse change in
his position, powers, duties, compensation or benefits, Mr. Khoury will be
entitled to a lump-sum severance amount equal to his base salary and salary and
benefit continuation (including bonuses and options) through the expiration date
of his employment agreement.

During his employment with us, Mr. Khoury is subject to a confidentiality
and assignment of inventions provision that lasts indefinitely and a
noncompetition and nonsolicitation of employees provision that lasts for one
year following his termination of employment.

R. BRUCE THAYER. In July 2000, we entered into an employment agreement
with Mr. Thayer pursuant to which he serves as our president and chief operating
officer with a base salary of $185,000 per year. The terms of Mr. Thayer's
agreement are substantially similar to Mr. Khoury's agreement, except that Mr.
Thayer receives a monthly automobile allowance of $800 in addition to his other
benefits.

KENNETH W. COWANS. In July 2000, we entered into an employment agreement
with Mr. Cowans pursuant to which he serves as our research and development
manager. The agreement has a three-year term which is subject to automatic
renewal for additional one-year terms unless either party notifies the other
that it intends to terminate the agreement. Under the agreement, Mr. Cowans
receives a base salary of $123,000 per year and a performance bonus of up to 40%
of his base salary, as determined by our president. In addition, Mr. Cowans will
be entitled to participate in all retirement, health, equity and fringe benefit
plans available to our employees as in effect from time to time.

Upon a termination for cause, we will have no further obligations to Mr.
Cowans under his agreement. If we do not elect to renew Mr. Cowans' employment
at the end of the term, we will have the option to retain him as a consultant
for up to two years. During the consulting period, Mr. Cowans will receive a
consulting fee equal to his base salary and will be entitled to participate in
all health, welfare and retirement benefits to the extent permitted by law and
under the plans. If we do not elect to retain Mr. Cowans as a consultant, he
will be entitled to continuation of his salary and medical benefits for one year
following his termination.

If Mr. Cowans dies during the term of the agreement, his estate will
receive a lump-sum payment equal to his base salary through the expiration of
his employment agreement. Similarly, upon the termination of Mr. Cowans'
employment due to his incapacity, he will be entitled to continuation of his
base salary and any health, welfare and retirement benefits through the
expiration of the agreement.

If, as a result of a change in control, Mr. Cowans' employment is
terminated for any reason, or he resigns because of an adverse change in his
position, powers, duties, compensation or benefits, Mr. Cowans will be entitled
to a lump-sum severance amount equal to his base salary and continuation of his
salary, bonus and benefits through the expiration date of his employment
agreement.

44
<PAGE> 49

During his employment with us, Mr. Cowans is subject to a confidentiality
and assignment of inventions provision that lasts indefinitely and a
noncompetition and nonsolicitation of employees provision that lasts for one
year following Mr. Cowans' termination of employment.

GREGORY J. MILLS, LLOYD D. GOLOBAY. In July 2000, we entered into
employment agreements with each of Messrs. Mills and Golobay with terms that are
substantially similar to those of Mr. Cowans. Mr. Mills serves as our director
of sales and marketing with a base salary of $104,000 per year and Mr. Golobay
is our operations manager with a base salary of $81,000 per year.

CAMERON H. ADAMSON. In August 2000, we entered into an employment
agreement with Mr. Adamson pursuant to which he serves as our vice president,
chief financial officer and treasurer at a base salary of $170,000. During the
first year of his employment, Mr. Adamson is entitled to a guaranteed
performance bonus of at least 50% of his base salary. Thereafter, he is entitled
to an annual performance bonus as determined by our president. Mr. Adamson is
also entitled to a monthly automobile allowance of $800. Mr. Adamson's
employment agreement contains a consulting agreement similar to Mr. Cowans'
agreement, however Mr. Adamson's consulting term is for one year rather than
two. In all other respects, the agreement contains terms substantially similar
to those in our contracts with Messrs. Cowans, Mills and Golobay.

401(K) PLAN. B/E Aerospace sponsors a tax-qualified employee savings and
retirement plan which covers our employees for so long as B/E Aerospace retains
at least a 50% ownership interest in us. Participants may make pre-tax
contributions to the 401(K) plan of up to 15% of their eligible compensation (or
12%, in the case of highly compensated employees), subject to a statutorily
prescribed annual limit, which is $10,500 in calendar year 2000. Each
participant is fully vested in his or her contributions and the investment
earnings thereon at all times. The 401(K) plan permits, but does not require,
matching contributions on behalf of participants. The 401(K) plan is intended to
qualify under Sections 401(a) and 401(K) of the Internal Revenue Code.
Contributions by the participants, B/E Aerospace or us to the 401(K) plan, and
the income earned on these contributions, are generally not taxable to the
participants until withdrawn. Contributions by B/E Aerospace and us, if any,
will be deductible when made by either party. 401(K) plan assets are held in
trust. The trustee of the 401(K) plan invests the assets of the 401(K) plan in
the various investment options as directed by the participants.

INCENTIVE PLANS

STOCK OPTION PLAN

Our board of directors adopted, and B/E Aerospace, our sole shareholder,
approved our stock option plan in July 2000. An aggregate of 1,700,000 shares of
our Class A common stock has been reserved for issuance under our stock option
plan, subject to adjustment upon changes in our capital stock.

Our stock option plan is administered by our compensation committee and
provides for the grant of incentive stock options and nonqualified stock options
to our employees, consultants or advisers and those of our majority-owned
subsidiaries. Directors who are also employees, consultants or advisers are also
eligible to participate in our stock option plan.

The exercise price of all options granted under our stock option plan may
not be less than 100% (110% in the case of incentive stock options granted to
individuals who own more than 10% of our Class A common stock) of the fair
market value of our Class A common stock on the date of grant. Options generally
vest as to 25% of the underlying shares on the date of grant and on each of the
first, second and third anniversaries of the date of grant. Options expire 10
years after the date of grant (5 years in the case of incentive stock options
granted to individuals who own more than 10% of our Class A common stock). Upon
an optionee's termination of employment for any reason other than death or
disability or for cause, vested options will remain exercisable for three months
and unvested options will be forfeited. In addition, upon a change in control,
all options will accelerate and become exercisable unless the surviving
corporation agrees to assume or replace the options. Our board of directors may
amend our stock option plan in any manner that does not require shareholder
approval or that adversely affects the rights of an optionee.
45
<PAGE> 50

U.S. FEDERAL INCOME TAX EFFECTS. Certain of the federal income tax
consequences to optionees and us of options granted under our stock option plan
should generally be as set forth in the following summary.

An optionee holding an incentive stock option which qualifies under Section
422 of the Internal Revenue Code will not recognize income at the time of grant
or exercise of the option. No federal income tax deduction will be allowable to
us upon the grant or exercise of the incentive stock option. However, upon the
exercise of an incentive stock option, any excess of the fair market price of
the common stock over the option price constitutes a tax preference item which
may have alternative minimum tax consequences for the optionee. If the optionee
sells such shares more than one year after the date of transfer of such shares
and more than two years after the date of grant of the incentive stock option,
the optionee will normally recognize a long-term capital gain or loss equal to
the difference, if any, between the sale prices of such shares and the option
price. If the optionee does not hold such shares for the required period, when
the optionee sells such shares, the optionee will recognize ordinary
compensation income and possibly capital gain or loss and we will generally be
entitled to a federal income tax deduction in the amount of such ordinary
compensation income.

An optionee holding a nonqualified stock option will not recognize income
at the time of grant of such option. When the optionee exercises the
nonqualified stock option, the optionee will recognize ordinary compensation
income equal to the difference, if any, between the option price paid and the
fair market value, as of the date of option exercise, of the shares the optionee
receives. The tax basis of such shares to the optionee will be equal to the
option price paid plus the amount includible in the optionee's gross income, and
the optionee's holding period for such shares will commence on the date on which
the optionee recognized taxable income in respect of such shares. We will
generally be entitled to a federal income tax deduction in respect of a
nonqualified stock option in an amount equal to the ordinary compensation income
recognized by the optionee.

GRANTS UNDER THE STOCK OPTION PLAN. On July 14, 2000, we made initial
grants of stock options to our executive officers under our stock option plan.
An aggregate of 1,200,000 shares of common stock are issuable upon the exercise
of the options granted at an exercise price of $6.75 per share. The following
table sets forth the number of shares of our common stock underlying options
that were granted under our stock option plan to (i) each of our named executive
officers, (ii) our executive officers as a group and (iii) all of our employees
and consultants as a group other than our executive officers.

<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION UNDERLYING OPTIONS
----------------- ------------------
<S> <C>
Amin J. Khoury
Chairman and Chief Executive Officer........................ 600,000
R. Bruce Thayer
President and Chief Operating Officer....................... 300,000
Kenneth W. Cowans
Manager, Research and Development........................... 100,000
Lloyd D. Golobay
Operations Manager.......................................... 60,000
Executive Officers as a Group............................... 1,160,000
Non-Executive Officers
Employees and Consultants as a Group........................ 40,000
</TABLE>

EMPLOYEE STOCK PURCHASE PLAN

Our board of directors adopted, and B/E Aerospace, our sole shareholder,
approved our employee stock purchase plan in July 2000. An aggregate of 150,000
shares of our Class A common stock has been reserved for issuance under our
employee stock purchase plan, subject to adjustment upon changes in our capital
stock.

46
<PAGE> 51

The employee stock purchase plan, which is intended to qualify as an
"employee stock purchase plan" within the meaning of Section 423 of the Internal
Revenue Code, provides our employees with an opportunity to purchase shares of
our Class A common stock through voluntary payroll deductions. Individuals who
have been employed by us (or any of our majority-owned subsidiaries) for at
least 90 days are generally eligible to participate in the plan if they are
customarily employed for at least 20 hours per week. The employee stock purchase
plan is administered by the compensation committee of our board of directors.

The employee stock purchase plan is implemented by consecutive 6-month
option periods, beginning on September 1 and March 1 of each year and ending on
the last day in February and August, respectively. Shares are issued on the last
day of each 6-month option period. The purchase price per share at which shares
are sold under the employee stock purchase plan is 85% of the fair market value
of our Class A common stock on (a) the date of commencement of the option period
or (b) the last day of the option period, whichever is lower. The purchase price
of the shares is accumulated by payroll deductions during the option period. The
deductions may not be less than 2% or more than 15% of a participant's
compensation.

Participants may not purchase more than $12,500 worth of Class A common
stock in any option period and $25,000 in any year. In addition, participants
will not be entitled to subscribe for shares in an option period if, upon
purchase of such shares, the participant would own 5% or more of our Class A
common stock (including stock that may be purchased under the employee stock
purchase plan or pursuant to any other options).

Our board of directors may amend or terminate the employee stock purchase
plan for any reason. However, if the board of directors elects to amend the plan
to increase the number of outstanding shares of Class A common stock available
for issuance, our shareholders must approve the amendment within twelve months.
The employee stock purchase plan will remain in effect until July 14, 2010,
unless terminated earlier by our board of directors.

47
<PAGE> 52

RELATIONSHIPS AND TRANSACTIONS WITH RELATED PARTIES

This section summarizes the key inter-company agreements that we have
entered into with B/E Aerospace which govern the relationship between us. You
should read the full text of these agreements, which are filed with the
Securities and Exchange Commission as exhibits to the registration statement of
which this prospectus is a part. This section also summarizes other transactions
between us and our directors and officers. This summary is of the material terms
of these agreements and transactions.

TRANSITION SERVICES AGREEMENT

We entered into a transition services agreement with B/E Aerospace in July
2000 under which B/E Aerospace will continue to provide us specified services,
including payroll processing and administration, human resources administration,
benefits, marketing support, informational technology and telecommunications
services, treasury management, accounting and finance assistance, sales order
entry administration and corporate administrative services. Through July 2000,
B/E Aerospace has allocated costs to us for payroll processing and
administration, human resources administration, benefits and information
technology services on a specific identification or usage basis. All other costs
have been allocated on the basis of the total assets (net of cash and cash
equivalents) of Advanced Thermal Sciences to the total assets (net of cash and
cash equivalents) of B/E Aerospace. From July 2000 through the term of the
transition services agreement, B/E Aerospace will allocate costs as determined
on the same cost allocation basis as described above plus 10%. Costs allocated
to us were $52,000, $84,000 and $151,000 for the 1997, 1998 and 1999 fiscal
years, and $80,000 and $94,000 for the six months ended August 28, 1999 and
August 26, 2000. At August 26, 2000, we owed B/E Aerospace $3.4 million for
prior cash advances, allocated costs and amounts due under the transition
services agreement. The agreement terminates on December 31, 2003. Either we or
B/E Aerospace may terminate the agreement at any time upon 180 days prior
written notice to the other party. In addition, B/E Aerospace is not obligated
to provide any of these services to the extent that its facilities or personnel
are not reasonably available or if to do so would materially interfere with the
conduct of its business or results in significant tax disadvantages. We cannot
assure you that we will be able to provide these services internally or find a
third party provider on acceptable terms, or at all.

INTELLECTUAL PROPERTY AGREEMENTS

ASSET PURCHASE AGREEMENT

We intend to enter into an asset purchase agreement with B/E Aerospace
prior to the completion of this offering under which we will reimburse B/E
Aerospace for funds advanced since our inception and purchase from B/E Aerospace
copyrights, trademarks and know how relating to temperature control systems for
the manufacture or use of the applications listed under "Cross-License
Agreement" below, as well as patents and pending patent applications, including
the following:

-- patents in the United States covering our multi-channel design,
refrigeration system design, pump mechanism and proportional thermal
expansion valve control;

-- a patent application pending under the Patent Cooperative Treaty in
the European Patent Office covering our pump mechanism; and

-- patent applications pending in the United States covering various
temperature control and capacity regulation processes.

Under this agreement, B/E Aerospace will also grant us a license to use the
B/E Aerospace trademark, trade name and logo for two years in connection with
our sale of systems. The total amount payable under this agreement is $15
million. The $15 million payment to B/E Aerospace was determined on the basis of
cumulative advances of approximately $3.4 million to us from B/E Aerospace, and
the value of the intellectual property being transferred, which was determined
by discussions and agreement between our management and B/E Aerospace. The
purchase of intellectual property from B/E Aerospace will be treated as an
increase to accumulated deficit because we and B/E Aerospace are deemed to be
under

48
<PAGE> 53

common control for financial reporting purposes and B/E Aerospace's net book
value of such intellectual property is zero.

CROSS-LICENSE AGREEMENT

We intend to enter into a cross-license agreement with B/E Aerospace prior
to the completion of this offering which will grant us a perpetual,
royalty-free, exclusive license to most future B/E Aerospace owned and licensed
intellectual property, including patented technology, copyrights, trade secrets
and other know how, related to temperature control systems for the manufacture
or use of:

-- semiconductors or semiconductor manufacturing equipment;

-- telecommunications equipment;

-- data processing and storage equipment;

-- image displays; and

-- automated testing equipment.

We will grant B/E Aerospace a perpetual, royalty-free, exclusive license to
similar future owned and licensed intellectual property of ours outside the
areas covered above. The cross-license agreement will terminate on the later of
August 1, 2017 and such time as all the patents issued before that date have
expired. We do not currently have plans to expand our business outside of the
above industries. The cross-license agreement will permit sublicensing of the
technology to subsidiaries. Any sublicense granted by us to a subsidiary shall
terminate if the sublicensee ceases to be a subsidiary. The agreement will
prohibit assignments without written consent except in the event of a merger,
consolidation, or sale or other transfer of all or substantially all assets.

TAX ALLOCATION AGREEMENT

We have historically been included in B/E Aerospace's consolidated group
for U.S. federal income tax purposes as well as B/E Aerospace's combined or
unitary group for various state, local and foreign tax purposes. After this
offering we will no longer be included in B/E Aerospace's U.S. federal
consolidated group, though we may continue to be included in certain of B/E
Aerospace's state, local and foreign combined or unitary groups. However, we
continue to be jointly and severally liable for the federal income tax liability
of each other member of the B/E Aerospace federal consolidated group that arose
during the period in which we were included in such group. See "Risk
Factors -- We may have conflicts of interest with B/E Aerospace with respect to
our past and ongoing relationship that could harm our operations." We and B/E
Aerospace have entered into a tax allocation agreement. Under this agreement,
for any periods in which we are included in any B/E Aerospace consolidated,
combined or unitary group returns, we are liable to B/E Aerospace for an amount
of tax equal to our hypothetical liability had we filed such returns on a
separate company basis. In addition, under the agreement, B/E Aerospace has
indemnified us for any taxes of other members of the B/E Aerospace group. The
agreement also sets forth our and B/E Aerospace's respective rights and
obligations with respect to any adjustments that result from audits and refund
claims for periods in which we are included in any B/E Aerospace consolidated,
combined or unitary group returns.

REGISTRATION RIGHTS AGREEMENT

We have granted B/E Aerospace registration rights that require us, for so
long as B/E Aerospace or its assigns own at least 1,200,000 shares of our common
stock, to use our best efforts to register under the applicable federal and
state securities laws shares of our common stock owned by B/E Aerospace or its
assigns for sale upon its request and in accordance with its intended method of
disposition. Each such registration will be limited to a minimum of 500,000
shares. B/E Aerospace and its assigns also have the right to include the shares
of our stock beneficially owned by them in other registrations of our stock that
we initiate under the Securities Act and state securities laws. The registration
rights agreement also contains indemnification and contribution provisions under
which we and B/E Aerospace or its assigns agree to indemnify the other party and
respective related parties for specified liabilities arising from
49
<PAGE> 54

registrations of our stock in which B/E Aerospace or its assigns participate or,
if such indemnity is unavailable, to contribute to the other party's liability.

SUBLEASE AGREEMENT

We currently sublease our principal executive offices and our manufacturing
facility from B/E Aerospace. Pursuant to the terms of a sublease agreement
entered into by us and B/E Aerospace, we are obligated to pay rent in the amount
of $25,000 per month to B/E Aerospace until the sublease agreement expires on
July 31, 2005.

OTHER RELATED PARTY TRANSACTIONS

We have entered into a strategic teaming agreement with Helix Technology
Corporation. Robert J. Lepofsky, a member of our board of directors, is the
president and chief executive officer of Helix. Under this agreement, Helix will
market, sell and provide product support our systems worldwide. We have agreed
to pay Helix sales and product support commissions ranging from 3% to 10% of
sales, depending on the nature of the product and the type of customer. The term
of the agreement is three years and may be cancelled by either party after one
year upon 180 days notice. See "Business -- Sales, Marketing and Customer
Support" beginning on page 33 for a more detailed description of this agreement.

Although we believe that the transactions set forth above were made on
terms no less favorable to us than could have been obtained from unaffiliated
third parties, the agreements between us and B/E Aerospace were made in the
context of a parent-subsidiary relationship and may have terms and conditions
that are less favorable to us than agreements that are negotiated at arm's
length. All future material transactions, including loans between us and our
officers, directors, principal shareholders and their affiliates will be
approved by a majority of the board of directors, which may include interested
directors.

50
<PAGE> 55

PRINCIPAL SHAREHOLDERS

All of our common stock is currently owned by B/E Aerospace, and thus none
of our officers or directors owns any of our outstanding common stock, although
some of our officers and directors have been granted options to purchase our
common stock. In addition, B/E Aerospace intends to grant options for up to
1,000,000 shares of our common stock held by it to several of its key employees.
These options are exercisable beginning five years after the date of grant,
subject to exceptions.

The following table sets forth, as of August 26, 2000 and as adjusted to
reflect the sale of the Class A common stock offered in this prospectus, the
beneficial ownership of:

-- each person who is known by us to beneficially own more than 5% of
our common stock;

-- each of our five most highly compensated executive officers;

-- each of our directors; and

-- all of our directors and executive officers as a group.

Except as otherwise indicated, we believe that the beneficial owners of the
common stock listed below, based on information furnished by such owners, have
sole voting and investment power with respect to such shares.

The percentage of beneficial ownership for the following table is based on
10,000,000 shares of common stock outstanding as of August 26, 2000 and
14,000,000 shares of common stock outstanding after the completion of this
offering, assuming no exercise of the underwriters' over-allotment option.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of common stock subject to options
exercisable within 60 days of August 26, 2000 are deemed outstanding for
purposes of computing the percentage ownership of the person holding such option
but are not deemed outstanding for purposes of computing the percentage
ownership of any other person. Except where indicated, and subject to community
property laws where applicable, the persons in the table above have sole voting
and investment power with respect to all common stock shown as beneficially
owned by them.

51
<PAGE> 56

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
BEFORE OFFERING AFTER OFFERING
------------------------------------ ------------------------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CLASS A CLASS B VOTING CLASS A CLASS B VOTING
NAME OF BENEFICIAL OWNER(2) SHARES(1) % SHARES % POWER SHARES(1) % SHARES % POWER
--------------------------- --------- --- ---------- ----- ------ --------- --- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
B/E Aerospace
Corporate Center Way
Wellington, Florida 33414.. -- 10,000,000 100.0% 100.0% -- 10,000,000 100.0% 88.2%
EXECUTIVE OFFICERS AND
DIRECTORS
Amin J. Khoury(3)........ 150,000 1.5% -- * 150,000 1.1% -- *
R. Bruce Thayer(4)....... 75,000 * -- * 75,000 * -- *
Cameron H. Adamson....... 12,500 * -- * 12,500 * -- *
Gregory J. Mills......... 12,500 * -- * 12,500 * -- *
Lloyd D. Golobay(5)...... 15,000 * -- * 15,000 * -- *
Kenneth W. Cowans(6)..... 25,000 * -- * 25,000 * -- *
Roger D. Emerick......... -- -- -- --
Robert J. Lepofsky....... -- -- -- --
Amin C. Khoury........... -- -- -- --
Robert J. Therrien....... -- -- -- --
All executive officers and
directors as a group (10
persons)(2)............ 297,500 3.0 -- 1.0 297,500 2.1 -- *
</TABLE>

------------
* Represents beneficial ownership or voting power of less than 1%.

(1) Consists solely of options to purchase shares of Class A common stock.

(2) Unless otherwise indicated, the address of each of the individuals listed
in the table is c/o Advanced Thermal Sciences Corporation, 3355 East La
Palma Avenue, Anaheim, CA 92806.

(3) Mr. Khoury also beneficially owned, as of August 26, 2000, 516,576 shares,
or 2.0%, of B/E Aerospace's common stock, including options to purchase
441,250 shares of B/E Aerospace's common stock.

(4) R. Bruce Thayer also beneficially owned, as of August 26, 2000, 41,740
shares, or less than 1%, of B/E Aerospace's common stock, including options
to purchase 35,000 shares of B/E Aerospace's common stock.

(5) Lloyd D. Golobay also beneficially owned, as of August 26, 2000, 3,017
shares, or less than 1%, of B/E Aerospace's common stock, including options
to purchase 2,000 shares of B/E Aerospace's common stock.

(6) Kenneth W. Cowans also beneficially owned, as of August 26, 2000, 9,678
shares, or less than 1%, of B/E Aerospace's common stock, including options
to purchase 9,500 shares of B/E Aerospace's common stock.

52
<PAGE> 57

DESCRIPTION OF CAPITAL STOCK

The following description of our capital stock is intended as a summary
only and is not complete. You should read the full text of our amended and
restated certificate of incorporation and our amended and restated bylaws, which
are filed with the registration statement of which this prospectus is a part.

GENERAL

We are authorized to issue 40,000,000 shares of Class A common stock, par
value $0.01 per share, 10,000,000 shares of Class B common stock, par value
$0.01 per share, and 1,000,000 shares of undesignated preferred stock, par value
$0.01 per share. After this offering, there will be 4,000,000 shares of our
Class A common stock and 10,000,000 shares of Class B common stock outstanding.

COMMON STOCK

Subject to preferences that may be applicable to any outstanding preferred
stock, holders of Class A common stock are entitled to receive, share for share
with holders of Class B common stock, such dividends, if any, as may be declared
from time to time by the board of directors out of funds legally available for
that purpose. See "Dividend Policy" beginning on page 16. In the event of the
liquidation, dissolution or winding up of Advanced Thermal Sciences, the holders
of Class A and Class B common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
any outstanding preferred stock.

Except as required by Delaware law or except as otherwise provided in our
certificate of incorporation, Class A common stock and Class B common stock will
vote together as a single class on all matters presented to a vote of
shareholders, including the election of directors. The holders of Class A common
stock are entitled to one vote per share on all matters to be voted upon by the
shareholders. The Class A common stock has no preemptive or conversion rights or
other subscription rights. There are no redemption or sinking fund provisions
applicable to the Class A common stock. All outstanding shares of Class A common
stock are fully paid and nonassessable, and the shares of Class A common stock
to be issued upon completion of this offering will be fully paid and
nonassessable. Additionally, our certificate of incorporation requires that we
reserve and keep available out of authorized but unissued Class A common stock,
solely for effecting conversion of Class B common stock, sufficient shares to
effect conversion of all outstanding shares of Class B common stock.

The Class B common stock is identical in all respects to Class A common
stock, except with respect to voting and conversion rights. Class A common stock
and Class B common stock will vote together as a single class on all matters
presented to a vote of shareholders, including the election of directors. Each
holder of Class B common stock is entitled to three votes for each share held of
record on the applicable record date for all of these matters. B/E Aerospace
will be the only initial holder of shares of Class B common stock.

Each share of Class B common stock will be automatically converted into one
share of Class A common stock upon the earlier of (1) December 31, 2005 and (2)
transfer of that share of Class B common stock, whether or not for value, by any
initial holder of that share, except transfers by that holder to:

-- a nominee of that holder, without any change in beneficial ownership,
within the meaning of Section 13(d) of the Securities Exchange Act of
1934;

-- another person who, at the time of the transfer, beneficially owns
shares of Class B common stock or a nominee (without any change in
beneficial ownership, within the meaning of Section 13(d) of the
Securities Exchange Act of 1934) of that person;

-- any controlled affiliate of that initial holder who remains a
controlled affiliate; or

-- a parent corporation or subsidiary of that initial holder or a
subsidiary of that parent unless and until the transferee ceases to
be a parent or subsidiary of the initial holder or a subsidiary of
any parent.

53
<PAGE> 58

Lastly, any bona fide pledge by an initial holder to a financial
institution in connection with a borrowing will not result in any conversion. In
addition, each share of Class B common stock may be converted at any time into
one share of Class A common stock at the option of the holder. The one-to-one
conversion ratio will be equitably preserved in the event of any stock dividend,
stock split or combination or merger, consolidation or other reorganization of
Advanced Thermal Sciences with another corporation.

PREFERRED STOCK

Upon the closing of this offering, the board of directors will have the
authority, without further vote or action by the shareholders, to issue up to
1,000,000 shares of preferred stock. The board of directors will also have the
authority to designate the rights, preferences, privileges and restrictions of
each series of preferred stock, including dividend rights, dividend rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any series or the
designation of such series, without further vote or action by the shareholders.

The issuance of preferred stock by us may have the effect of delaying,
deferring or preventing a change of control of Advanced Thermal Sciences without
further action by the shareholders. The issuance of preferred stock with voting
and conversion rights may also adversely affect the voting power of the holders
of common stock. In some circumstances, an issuance of preferred stock could
have the effect of decreasing the market price of our common stock. As of the
closing of this offering, no shares of preferred stock will be outstanding and
we currently have no plans to issue any shares of preferred stock.

ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW AND OUR CHARTER DOCUMENTS

Provisions of Delaware law and our charter documents could make the
acquisition of Advanced Thermal Sciences and the removal of incumbent officers
and directors more difficult. These provisions are expected to discourage
coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of our company to negotiate with us first.
However, these provisions could also have the effect of discouraging others from
making tender offers for our shares and, as a consequence, they may also inhibit
an increase in the market price of our shares that could result from actual or
rumored takeover attempts. Nonetheless, we believe that the benefits of
increased protection of our potential ability to negotiate with the proponent of
an unfriendly or unsolicited proposal to acquire or restructure Advanced Thermal
Sciences outweigh the disadvantages of discouraging such proposals because,
among other things, negotiation of such proposals could result in an improvement
of their terms.

Delaware Law. We are subject to the provisions of Section 203 of the
Delaware General Corporation Law. In general, the statute prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested shareholder" for a period of three years after the date that
the person became an interested shareholder unless, subject to exceptions, the
business combination or the transaction in which the person became an interested
shareholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the shareholder. Generally, an "interested
shareholder" is a person who, together with affiliates and associates, owns, or
within three years prior, did own, 15% or more of the corporation's voting
stock. These provisions may have the effect of delaying, deferring or preventing
a change of control of Advanced Thermal Sciences without further action by the
shareholders.

Certificate of Incorporation and Bylaws. A number of provisions of our
certificate of incorporation and bylaws could discourage potential acquisition
proposals and could delay or prevent a change in control of Advanced Thermal
Sciences. In particular, our amended and restated certificate of incorporation
and bylaws provide that:

-- our directors are part of a classified board of directors that
results in only approximately one-third of our directors within the
classified board being elected at each annual meeting of
shareholders;

-- all shareholder actions must be effected at a duly called meeting and
not by a consent in writing;

-- directors may only be removed for cause and only by a supermajority
vote;
54
<PAGE> 59

-- provisions of the certificate of incorporation and bylaws may only be
amended by a supermajority vote;

-- our board has the power to make, adopt, amend or repeal our bylaws,
including any bylaws adopted by our shareholders;

-- advance notice procedures apply with regard to the nomination, other
than by or at the direction of the board of directors, of candidates
for election as directors and with regard to business to be brought
before a meeting of shareholders; and

-- a special meeting of the shareholders may only be called by the chief
executive officer, the president, the chairman of the board of
directors or a majority of the board of directors.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS

Our certificate of incorporation provides that no director will be liable
to us or our shareholders for monetary damages for any breach of fiduciary duty
as a director, except to the extent otherwise required by the Delaware General
Corporation Law. The effect of this provision is to eliminate our rights and the
rights of our shareholders (through shareholders' derivative suits on our
behalf) to recover monetary damages against a director for breach of a fiduciary
duty of care as a director. This provision does not limit or eliminate our
rights or the rights of any shareholder to seek non-monetary relief, such as an
injunction or rescission in the event of a breach of a director's duty of care.
In addition, our certificate of incorporation provides that, if the Delaware
General Corporation Law is amended to authorize the further elimination or
limitation of the liability of a director, then the liability of the directors
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended. These provisions will not alter the
liability of directors under federal or state securities laws. Our certificate
of incorporation also includes provisions for the indemnification of our
directors and officers to the fullest extent permitted by Section 145 of the
Delaware General Corporation Law.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for our common stock is The Bank of New
York. The Bank of New York is located at One Wall Street, New York, New York
10286 and its telephone number is (800)524-4458.

NASDAQ STOCK MARKET LISTING

We have applied to qualify our Class A common stock for quotation on the
Nasdaq National Market under the symbol "ATSC."

55
<PAGE> 60

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, we will have outstanding 4,000,000 shares
of Class A common stock and 10,000,000 shares of Class B common stock. Of these
outstanding shares, 4,000,000 shares of Class A common stock, or 4,600,000
shares if the underwriters exercise their overallotment option in full, will be
freely tradable without restriction under the Securities Act, except for shares
purchased by our "affiliates," as that term is defined in Rule 144 under the
Securities Act. Any shares purchased by our affiliates generally may be sold in
compliance with Rule 144 as described below.

The shares of our common stock held by B/E Aerospace after this offering
are "restricted securities" within the meaning of Rule 144. The shares held by
B/E Aerospace will be subject to contractual restrictions on resale based on the
lock-up agreements described below. Further, since the shares held by B/E
Aerospace are restricted securities, B/E Aerospace may not sell them unless they
are registered under the Securities Act or an exemption from registration is
available.

We, B/E Aerospace and each of our officers and directors have entered into
lock-up agreements or other contractual restrictions generally providing that
the shareholder will not offer, sell, contract to sell or otherwise dispose of
any shares of our common stock for a period of 180 days, or 365 days in the case
of B/E Aerospace (other than in a permitted underwritten public offering),
without the prior written consent of Needham & Company, Inc. See "Underwriting"
for a more detailed description of these lock-up agreements. As a result of
these lock-up agreements and other contractual restrictions, notwithstanding
possible earlier eligibility for sale under the provisions of Rule 144, none of
these shares will be able to be sold until 181 days, or 366 days in the case of
shares held by B/E Aerospace (other than shares sold in a permitted underwritten
public offering), after the date of this prospectus. Needham & Company, Inc.
may, in its sole discretion and at any time without notice, release any portion
of the securities subject to lock-up agreements or other contractual
restrictions.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned restricted
shares for at least one year, including the holding period of any prior owner
except one of our affiliates, would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of:

-- 1% of the number of shares of our Class A common stock then
outstanding, which will equal approximately 40,000 shares immediately
after this offering; or

-- the average weekly trading volume of our Class A common stock during
the four calendar weeks preceding the filing of a Form 144 in
connection with the sale.

Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us. Under Rule 144(k), a person who is not deemed to have been an affiliate of
ours at any time during the three months preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner except an affiliate, is entitled
to sell such shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144.

Following the effectiveness of this offering, we will file a registration
statement on Form S-8 to register shares of our Class A common stock subject to
outstanding options or reserved for future issuance under our stock plans.
Currently there are options to purchase approximately 1,300,000 shares of our
Class A common stock outstanding and approximately 900,000 shares of our Class A
common stock are reserved for future issuance under our stock option plan,
employee stock purchase plan and directors' plans. The Class A common stock
issued upon exercise of outstanding vested options, other than Class A common
stock issued to our affiliates, will be available for immediate resale in the
open market.

B/E Aerospace will be entitled to registration rights for shares of common
stock owned by it after this offering. See "Relationships and Transactions with
Related Parties" on page 48 for more information on these rights. Registration
of such shares under the Securities Act would result in such shares becoming
freely tradable without restriction, except for shares purchased by affiliates,
upon the effectiveness of such registration.

56
<PAGE> 61

UNDERWRITING

We and B/E Aerospace have entered into an underwriting agreement with the
underwriters named below. Needham & Company, Inc., A.G. Edwards & Sons, Inc.,
and First Security Van Kasper are acting as representatives of the underwriters.
The underwriters' obligations are several, which means that each underwriter is
required to purchase a specific number of shares, but is not responsible for the
commitment of any other underwriter to purchase shares. Subject to the terms and
conditions of the underwriting agreement, each underwriter has severally agreed
to purchase from us the number of shares of Class A common stock set forth
opposite its name below.

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
Needham & Company, Inc. ....................................
A.G. Edwards & Sons, Inc. ..................................
First Security Van Kasper ..................................
Total.............................................
</TABLE>

The Underwriting Agreement provides that the obligations of the
underwriters are subject to specified conditions precedent and that the
underwriters will purchase all shares of common stock offered hereby if any of
those shares are purchased.

The representatives have advised us that the underwriters propose to offer
the shares of Class A common stock to the public at the public offering price
per share set forth on the cover page of this prospectus. The underwriters may
offer shares to securities dealers, who may include the underwriters, at that
public offering price less a concession of up to $ per share. The
underwriters may allow, and those dealers may reallow, a concession to other
securities dealers of up to $ per share. After the offering to the public,
the offering price and other selling terms may be changed by the
representatives.

B/E Aerospace has granted an option to the underwriters to purchase up to
600,000 additional shares of Class B common stock, which will automatically
convert to an equal number of shares of Class A common stock, at the public
offering price per share, less the underwriting discounts and commissions, set
forth on the cover page of this prospectus. This option is exercisable during
the 30-day period after the date of this prospectus. The underwriters may
exercise this option only to cover over-allotments made in connection with this
offering. If this option is exercised, each of the underwriters will purchase
approximately the same percentage of the additional shares as the number of
shares of Class A common stock to be purchased by that underwriter, as shown in
the table above, bears to the total shown.

The following table shows the per share and total underwriting discount to
be paid to the underwriters by us and B/E Aerospace. These amounts are shown
assuming both no exercise and full exercise of the underwriters' option to
purchase additional shares.

<TABLE>
<CAPTION>
TOTAL
-----------------------------------------
PER SHARE NO EXERCISE FULL EXERCISE
--------- ----------- -------------
<S> <C> <C> <C>
Paid by Advanced Thermal Sciences........................ $ $ $
Paid by B/E Aerospace....................................
</TABLE>

The total expenses of the offering payable by us and, if the underwriters
exercise the overallotment option, B/E Aerospace, excluding the underwriting
discounts and commissions, will be approximately $ .

At our request, the underwriters have reserved, at the initial public
offering price, up to 100,000 shares of common stock for sale to select
directors, officers, employees, and friends of Advanced Thermal Sciences. Any
reserved shares so purchased will not be subject to any form of lock-up
agreement unless purchased by our directors and officers. The number of shares
available for sale to the general public will be reduced to the extent these
persons purchase the reserved shares. Any reserved shares not so purchased will
be offered to the general public on the same basis as the other shares offered
hereby.

The underwriting agreement provides that we and B/E Aerospace will
indemnify the underwriters against liabilities under the Securities Act that may
be incurred in connection with this offering or contribute to payments that the
underwriters may be required to make in respect thereof.

57
<PAGE> 62

We have agreed not to offer, sell, contract to sell, grant options to
purchase, or otherwise dispose of any shares of our common stock or securities
exchangeable for a convertible into our common stock for a period of 180 days
after the date of this prospectus without the prior written consent of Needham &
Company, Inc. This agreement does not apply to:

-- any issuances of shares of Class A common stock upon the exercise of
outstanding options;

-- any grants under any existing employee benefit plans;

-- the exchange of shares of Class B common stock for shares of Class A
common stock under the terms of our certificate of incorporation; and

-- the issuance of common stock in connection with any acquisition of or
merger with another company or the acquisition of assets, provided
that each recipient of common stock agrees to the same lock-up
restrictions.

B/E Aerospace has agreed not to, directly or indirectly, sell, hedge, or
otherwise dispose of any shares of common stock, options to acquire shares of
common stock or securities exchangeable for or convertible into shares of common
stock, for a period of 365 days after the date of this prospectus without the
prior written consent of Needham & Company, Inc. This agreement does not apply
to:

-- an underwritten public offering after the period ending 180 days from
the date of this prospectus,

-- the exchange of shares of Class B common stock for shares of Class A
common stock;

-- the issuance of options to its employees to purchase an aggregate of
up to 1,000,000 shares of our common stock held by B/E Aerospace; or

-- transactions relating to shares of common stock or other securities
acquired in the open market after the completion of this offering.

Our directors and officers have agreed not to, directly or indirectly,
sell, hedge, or otherwise dispose of any shares of common stock, options to
acquire shares of common stock or securities exchangeable for or convertible
into shares of common stock, for a period of 180 days after the date of this
prospectus without the prior written consent of Needham & Company, Inc. This
agreement applies to any of the 100,000 reserved shares purchased by our
directors and officers. This agreement does not apply to transactions relating
to shares of common stock or other securities acquired in the open market after
the completion of this offering.

Needham & Company, Inc. may, in its sole discretion and at any time without
notice, release all or any portion of the securities subject to these lock-up
agreements. See "Shares Eligible for Future Sale" beginning on page 56.

The representatives have informed us that they do not expect sales by the
underwriters to discretionary accounts to exceed 5% of the number of shares
offered.

In connection with this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect our price of the Class
A common stock. Specifically, the underwriters may over-allot in connection with
this offering by selling more shares than are set forth on the cover page of
this prospectus. This creates a short position in our Class A common stock for
their own account. "Covered" short sales are sales made in an amount not greater
than the underwriters' option to purchase additional shares from us in the
offering. The underwriters may close out any covered short position by either
exercising their option to purchase additional shares or purchasing shares in
the open market. In determining the source of shares to close out the covered
short position, the underwriters will consider, among other things, the price of
shares available for purchase in the open market as compared with the price at
which they may purchase shares through the overallotment option. "Naked" short
sales are any sales in excess of such option. The underwriters must close out
any naked short position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the Class A common stock in the
open market after pricing that could adversely affect investors who purchase in
the offering. To stabilize the price of our Class A common

58
<PAGE> 63

stock, the underwriters may bid for, and purchase, our Class A common stock in
the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a
particular underwriter or dealer repays selling concessions allowed to it for
distributing our Class A common stock in this offering because the underwriters
repurchase that stock in stabilizing or short covering transactions.

Finally, the underwriters may bid for, and purchase, shares of our Class A
common stock in market making transactions.

These activities may stabilize or maintain the market price of our Class A
common stock at a price that is higher than the price that might otherwise exist
in the absence of these activities. The underwriters are not required to engage
in these activities, and may discontinue any of these activities at any time
without notice. These transactions may be effected on the Nasdaq National
Market, or otherwise.

Prior to this offering, there has been no public market for our Class A
common stock. Consequently, the initial public offering price will be determined
by negotiations among us and the representatives. Among the factors to be
considered in these negotiations are:

-- our history and prospects and the history and prospect of the
industry in which we compete;

-- an assessment of our management;

-- our past and present operations;

-- our past and present financial performance;

-- our prospects for future income;

-- our present state of development;

-- the general condition of the securities markets at the time of the
offering; and

-- the market prices of and demand for publicly traded common stock of
comparable companies in recent periods.

LEGAL MATTERS

The validity of the Class A common stock offered hereby will be passed upon
for us by Shearman & Sterling, New York, New York. Certain legal matters in
connection with this offering will be passed upon for the underwriters by Heller
Ehrman White & McAuliffe LLP, San Francisco, California.

EXPERTS

The financial statements as of February 26, 2000 and February 27, 1999 and
the related statements of operations, shareholder's deficit and cash flows for
each of the three fiscal years in the period ended February 26, 2000 included in
the prospectus and the related financial statement schedule included elsewhere
in this registration statement have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein and elsewhere
in this registration statement and are included in reliance upon such report
given upon their authority as experts in accounting and auditing.

59
<PAGE> 64

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the Class A
common stock offered in this offering. This prospectus does not contain all of
the information set forth in the registration statement and the exhibits and
schedule thereto. For further information with respect to Advanced Thermal
Sciences Corporation and the Class A common stock offered in this offering,
reference is made to the registration statement and to the attached exhibits and
schedules. Statements made in this prospectus concerning the contents of any
document referred to herein are not necessarily complete. With respect to each
such document filed as an exhibit to the registration statement, reference is
made to the exhibit for a more complete description of the matter involved. The
registration statement and the attached exhibits and schedules may be inspected
without charge at the public reference facilities maintained by the Securities
and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the regional offices of the Commission located at Seven World Trade Center,
13th Floor, New York, NY 10048, and the Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any part
of the registration statement may be obtained from the Securities and Exchange
Commission upon payment of prescribed fees. Reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission may also be inspected without charge at a website maintained
by the Securities and Exchange Commission at www.sec.gov.

60
<PAGE> 65

INDEX TO FINANCIAL STATEMENTS

<S> <C>
Independent Auditors' Report................................ F-2
Balance Sheets as of February 27, 1999 and February 26, 2000
and August 26, 2000 (unaudited)........................... F-3
Statements of Operations for the Fiscal Years Ended February
28, 1998, February 27, 1999 and February 26, 2000 and the
Six Months Ended August 28, 1999 (unaudited) and August
26, 2000 (unaudited)...................................... F-4
Statements of Shareholder's Deficit for the Fiscal Years
Ended February 28, 1998, February 27, 1999 and February
26, 2000 and the Six Months Ended August 26, 2000
(unaudited)............................................... F-5
Statements of Cash Flows for the Fiscal Years Ended February
28, 1998, February 27, 1999 and February 26, 2000 and the
Six Months Ended August 28, 1999 (unaudited) and August 26
2000 (unaudited).......................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>

F-1
<PAGE> 66

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholder of
Advanced Thermal Sciences Corporation:

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Advanced Thermal Sciences Corporation as of
February 26, 2000 and February 27, 1999, and the results of its operations and
its cash flows for each of the three fiscal years in the period ended February
26, 2000, in conformity with accounting principles generally accepted in the
United States of America.

DELOITTE & TOUCHE LLP

Costa Mesa, California
August 14, 2000, except Note 9
which is as of September 20, 2000

F-2
<PAGE> 67

ADVANCED THERMAL SCIENCES CORPORATION

BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
PRO FORMA
LIABILITIES
AND
SHAREHOLDER'S
DEFICIT AT
FEBRUARY 27, FEBRUARY 26, AUGUST 26, AUGUST 26,
1999 2000 2000 2000
------------ ------------ ------------ -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash........................................... $ -- $ 1 $ 1
Accounts receivable trade, less allowance for
doubtful accounts of $20 at February 26,
2000 and August 26, 2000, respectively...... 226 1,322 2,899
Inventories, net............................... 288 1,668 1,153
Other current assets........................... 4 -- 16
Deferred income taxes.......................... -- -- 708
------- ------- ------- -------
Total current assets................... 518 2,991 4,777
Property and equipment, net...................... 100 279 335
Intangibles and other assets, net................ 25 30 34
------- ------- ------- -------
Total assets........................... $ 643 $ 3,300 $ 5,146
======= ======= ======= =======
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Accounts payable............................... $ 390 $ 1,006 $ 2,351 $ 2,351
Other current liabilities, including accrued
warranty of $638 and $971 at February 26,
2000 and August 26, 2000 respectively....... 307 1,694 1,903 1,903
Income taxes payable........................... -- -- 701 701
Due to BE Aerospace, Inc. (Note 4)............. 3,408 5,714 3,409 --
------- ------- ------- -------
Total current liabilities.............. 4,105 8,414 8,364 4,955
------- ------- ------- -------
Deferred income taxes............................ 7 7
Commitments (Notes 4 and 8)
Shareholder's deficit:
Preferred stock, $.01 par value per share,
1,000,000 shares authorized, no shares issued
and outstanding................................ -- -- -- --
Common stock (Class A), $.01 par value per share,
40,000,000 shares authorized, no shares issued
and outstanding................................ -- -- -- --
Common stock (Class B), $.01 par value per share,
10,000,000 shares authorized, 10,000,000 shares
issued and outstanding......................... -- -- -- --
Additional paid-in capital..................... 1 1 1 1
Accumulated deficit............................ (3,463) (5,115) (3,226) (14,817)
------- ------- ------- -------
Total shareholder's deficit............ (3,462) (5,114) (3,225) (14,816)
------- ------- ------- -------
Total liabilities and shareholder's
deficit.............................. $ 643 $ 3,300 $ 5,146 $(9,854)
======= ======= ======= =======
</TABLE>

See accompanying notes to financial statements.
F-3
<PAGE> 68

ADVANCED THERMAL SCIENCES CORPORATION

STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
-------------------------------------------- ------------------------
FEBRUARY 28, FEBRUARY 27, FEBRUARY 26, AUGUST 28, AUGUST 26,
1998 1999 2000 1999 2000
------------ ------------ ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.......................... $ 28 $ 517 $ 6,801 $ 2,139 $10,078
Cost of sales...................... 14 391 5,531 1,978 6,000
------- ------- ------- ------- -------
Gross profit....................... 14 126 1,270 161 4,078
Operating expenses:
Selling, general and
administrative expenses....... 52 493 1,305 470 1,614
Research and development
expenses...................... 1,307 1,751 1,617 851 575
------- ------- ------- ------- -------
Total operating
expenses............... 1,359 2,244 2,922 1,321 2,189
------- ------- ------- ------- -------
Income (loss) before income
taxes............................ (1,345) (2,118) (1,652) (1,160) 1,889
Provision for income taxes......... -- -- -- -- --
------- ------- ------- ------- -------
Net income (loss).................. $(1,345) $(2,118) $(1,652) $(1,160) $ 1,889
======= ======= ======= ======= =======
Per share amounts:
Net income (loss) per share (basic
and diluted)..................... $ (0.13) $ (0.21) $ (0.17) $ (.12) $ .19
======= ======= ======= ======= =======
Shares used to compute net income
(loss) per share (basic and
diluted)......................... 10,000 10,000 10,000 10,000 10,000
======= ======= ======= ======= =======
</TABLE>

See accompanying notes to financial statements.
F-4
<PAGE> 69

ADVANCED THERMAL SCIENCES CORPORATION

STATEMENTS OF SHAREHOLDER'S DEFICIT
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK
(CLASS B)
--------------------
SHARES ADDITIONAL TOTAL
ISSUED AND PAID-IN ACCUMULATED SHAREHOLDER'S
OUTSTANDING AMOUNT CAPITAL DEFICIT DEFICIT
----------- ------ ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance at February 23, 1997
(inception)......................... -- $-- $-- $ -- $ --
Issuance of common stock.............. 10,000 -- 1 -- 1
Net loss.............................. (1,345) (1,345)
------ -- -- ------- -------
Balance at February 28, 1998.......... 10,000 -- 1 (1,345) (1,344)
Net loss.............................. (2,118) (2,118)
------ -- -- ------- -------
Balance at February 27, 1999.......... 10,000 -- 1 (3,463) (3,462)
Net loss.............................. (1,652) (1,652)
------ -- -- ------- -------
Balance at February 26, 2000.......... 10,000 -- 1 (5,115) (5,114)
Net income (unaudited)................ 1,889 1,889
------ -- -- ------- -------
Balance at August 26, 2000
(unaudited)......................... 10,000 $-- $1 $(3,226) $(3,225)
====== == == ======= =======
</TABLE>

See accompanying notes to financial statements.
F-5
<PAGE> 70

ADVANCED THERMAL SCIENCES CORPORATION

STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
YEARS ENDED SIX MONTHS ENDED
------------------------------------------ -----------------------
FEBRUARY 28, FEBRUARY 27, FEBRUARY 26, AUGUST 28, AUGUST 26,
1998 1999 2000 1999 2000
------------ ------------ ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................ $(1,345) $(2,118) $(1,652) $(1,160) $ 1,889
Adjustments to reconcile net income
(loss) to net cash provided by (used
in) operating activities:
Depreciation and amortization....... 27 116 55 23 39
Changes in operating assets and
liabilities:
Accounts receivable................. (226) (1,096) (596) (1,577)
Inventories......................... (106) (182) (1,380) (443) 515
Prepaid expenses and other current
assets............................ -- (4) 4 (8) (16)
Accounts payable.................... 96 294 616 596 1,345
Other assets and liabilities........ 83 199 1,382 346 205
------- ------- ------- ------- -------
Net cash flows provided by (used in)
operating activities................... (1,245) (1,921) (2,071) (1,242) 2,400
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.... (172) (71) (234) (31) (95)
------- ------- ------- ------- -------
Net cash used in investing activities.... (172) (71) (234) (31) (95)
------- ------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from (repayments to) B/E
Aerospace, Inc...................... 1,416 1,992 2,306 1,274 (2,305)
Initial capital contribution from B/E
Aerospace, Inc...................... 1 -- -- -- --
------- ------- ------- ------- -------
Net cash provided by (used in) financing
activities............................. 1,417 1,992 2,306 1,274 (2,305)
------- ------- ------- ------- -------
Net increase in cash..................... -- -- 1 1 --
Cash at beginning of period.............. -- -- -- -- 1
------- ------- ------- ------- -------
Cash at end of period.................... -- -- 1 1 1
------- ------- ------- ------- -------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid............................ $ -- $ -- $ -- $ -- $ --
Income taxes paid........................ -- -- -- -- --
</TABLE>

See accompanying notes to financial statements.
F-6
<PAGE> 71

ADVANCED THERMAL SCIENCES CORPORATION

NOTES TO FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 28, 1998, FEBRUARY 27, 1999 AND FEBRUARY 26, 2000
SIX MONTHS ENDED AUGUST 28, 1999 (UNAUDITED) AND AUGUST 26, 2000 (UNAUDITED)
(IN THOUSANDS EXCEPT SHARE DATA)

NOTE 1 -- NATURE OF THE BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

NATURE OF THE BUSINESS

Advanced Thermal Sciences Corporation (formerly Advanced Thermal
Technologies, Inc.)("Advanced Thermal Sciences"), a wholly owned subsidiary of
BE Aerospace, Inc. ("B/E Aerospace"), commenced operations on February 23, 1997
and was incorporated on December 12, 1997. Advanced Thermal Sciences designs,
develops, manufactures, sells and services highly reliable, compact temperature
control systems for use in semiconductor wafer manufacturing. Advanced Thermal
Sciences has adopted a year end which ends on the last Saturday in February.

BASIS OF PRESENTATION

The accompanying financial statements represent the accounts of Advanced
Thermal Sciences, a wholly owned subsidiary of B/E Aerospace, in accordance with
accounting principles generally accepted in the United States of America.
Operating expenses include allocations of general corporate overhead expenses
related to B/E Aerospace's corporate headquarters and common support activities,
including executive salaries, payroll administration, worker's compensation and
general liability insurance, accounting and finance, legal, tax and human
resources. These costs amounted to $52, $84, $151, $80 (unaudited) and $94
(unaudited) for the years ended February 28, 1998, February 27, 1999 and
February 26, 2000 and the six months ended August 28, 1999 and August 26, 2000,
respectively, and have been allocated to Advanced Thermal Sciences using
methodologies based upon headcount, actual usage or total assets, as applicable.
Although Advanced Thermal Sciences believes the allocations are reasonable, the
costs of these services to Advanced Thermal Sciences may not be indicative of
the costs that would have been incurred if Advanced Thermal Sciences had been a
stand-alone entity. Advanced Thermal Sciences has entered into a Transition
Services Agreement with B/E Aerospace, pursuant to which B/E Aerospace will
continue to provide certain services to Advanced Thermal Sciences through
December 31, 2003, unless sooner terminated by either party upon 180 days
advance notice, as determined on the same cost allocation basis plus 10%. Had
the Transition Services Agreement been in place since inception, costs allocated
to Advanced Thermal Sciences would have increased by $5, $8, $15, $8 and $9 for
the years ended February 28, 1998, February 27, 1999 and February 26, 2000 and
the six months ended August 28, 1999 and August 26, 2000, respectively. In
addition, B/E Aerospace has agreed to continue to fund the operations of
Advanced Thermal Sciences until consummation of Advanced Thermal Sciences'
initial public offering. See Note 4.

In July 2000 the Board of Directors authorized a number of changes to
Advanced Thermal Sciences' capital structure. These changes increased the number
of authorized common shares to 50,000,000 from 3,000, authorized 1,000,000
shares of $0.01 par value preferred stock and effected a 10,000-for-one stock
split of the common stock. The stock split has been given retroactive
recognition in all periods in the accompanying financial statements.

UNAUDITED INTERIM FINANCIAL INFORMATION

The balance sheet, statements of operations, shareholder's deficit and cash
flows and related footnote information as of August 26, 2000 and for the six
months ended August 28, 1999 and August 26, 2000 are unaudited.

In the opinion of management, all adjustments, consisting of only normal
recurring items, which are necessary for a fair presentation, have been included
in such unaudited interim financial information. The results for interim periods
are not necessarily indicative of results which may be expected for any other

F-7
<PAGE> 72
ADVANCED THERMAL SCIENCES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

interim period or for the full year and may not necessarily reflect the results
of Advanced Thermal Sciences in the future or what they would have been had
Advanced Thermal Sciences been a separate, stand-alone entity during the periods
presented.

PRO FORMA LIABILITIES AND STOCKHOLDER'S DEFICIT

As discussed in Note 6, Advanced Thermal Sciences is preparing for an
initial public offering of its common stock. Advanced Thermal Sciences intends
to enter into an asset purchase agreement with B/E Aerospace prior to the
completion of the initial public offering whereby Advanced Thermal Sciences will
pay B/E Aerospace an aggregate $15.0 million for the transfer of certain
intellectual property rights to Advanced Thermal Sciences and the repayment of
funds advanced to Advanced Thermal Sciences ($3,409 at August 26, 2000). The
accompanying pro forma information gives effect, as of August 26, 2000, to the
purchase of intellectual property and the repayment of amounts due B/E Aerospace
by Advanced Thermal Sciences. The amount allocated to the purchase of
intellectual property ($11,591 at August 26, 2000) is reflected as an increase
to accumulated deficit because Advanced Thermal Sciences and B/E Aerospace are
deemed to be under common control for financial reporting purposes and B/E
Aerospace's net book value of such intellectual property is zero.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES -- The preparation of the financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

REVENUE RECOGNITION -- Advanced Thermal Sciences generally recognizes
revenue from equipment sales upon shipment. No revenue is recognized on products
shipped on a trial basis until the trial period is completed and the equipment
is accepted by the customer. Advanced Thermal Sciences' products generally carry
a 12-36 month warranty from the date of shipment or installation. Estimated
sales returns and warranty costs are accrued at the time the related revenue is
recognized. Customers may contract for support services over and above that
provided by Advanced Thermal Sciences' warranty period. Revenue from such
contracts and from extended warranty contracts are recognized ratably over the
service period. Advanced Thermal Sciences is not responsible for the
installation of its products.

PROPERTY AND EQUIPMENT -- Purchased property and equipment is carried at
cost and depreciation is provided over the estimated useful lives (generally 5-7
years) of the related assets on the straight-line basis. Leasehold improvements
are depreciated over the lesser of the lease term or the estimated useful life
of the improvement.

LONG-LIVED ASSETS -- Advanced Thermal Sciences accounts for the impairment
and disposition of long-lived assets in accordance with SFAS No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of. In accordance with SFAS No. 121, long-lived assets are reviewed for events
or changes in circumstances that indicate that their carrying value may not be
recoverable. At February 26, 2000 and August 26, 2000, management determined
that no such impairment existed.

DUE TO B/E AEROSPACE, INC. -- Due to B/E Aerospace, Inc. includes amounts
payable to B/E Aerospace primarily for operations and working capital
requirements, offset by cash collected by Advanced Thermal Sciences and remitted
to B/E Aerospace. As more fully described herein and in Note 4, other
transactions reflected in the payable balance include administrative expenses
incurred by B/E Aerospace on behalf of Advanced Thermal Sciences. Such amounts
payable do not have specific repayment terms.

F-8
<PAGE> 73
ADVANCED THERMAL SCIENCES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

RESEARCH AND DEVELOPMENT -- Research and development costs, other than
software development costs, are expensed as incurred. Software development costs
are capitalized following attainment of technological feasibility, however no
development costs which qualify for capitalization were incurred during any of
the periods presented.

STOCK-BASED COMPENSATION -- Compensation expense associated with awards of
stock options to employees is measured using the intrinsic value method
described in Accounting Principles Board Opinion No. 25.

INCOME TAXES -- Historically, Advanced Thermal Sciences' results have been
included in B/E Aerospace's consolidated federal and state income tax returns.
The income tax provision is calculated as if Advanced Thermal Sciences had filed
separate tax returns as an independent company. In accordance with Statements of
Financial Accounting Standard No. 109, "Accounting for Income Taxes" (SFAS 109),
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that are expected to be in effect when the
differences are expected to reverse. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized.

COMPREHENSIVE INCOME -- There was no difference between Advanced Thermal
Sciences' net income/ (loss) and its total comprehensive income/(loss) for any
of the periods presented.

EARNINGS/(LOSS) PER SHARE -- Basic income (loss) per common share is
determined by dividing income (loss) available to common shareholders by the
weighted average number of shares of common stock outstanding. Diluted income
(loss) per share is determined by dividing income (loss) available to common
shareholders by the weighted average number of common shares and dilutive common
stock equivalents outstanding. There were no dilutive securities for the six
month period ended August 26, 2000.

SEGMENT INFORMATION -- Advanced Thermal Sciences currently operates in one
business segment: designing, developing and marketing temperature control
systems for the semiconductor, electronics and related industries.

CONCENTRATION OF RISK -- To date, Advanced Thermal Sciences' activities
have been conducted primarily in the United States of America. Advanced Thermal
Sciences performs ongoing credit evaluations of its customers and generally
requires no collateral. At February 26, 2000 and August 26, 2000, the entire
receivable balance was due from one customer. Additionally, substantially all of
Advanced Thermal Sciences' sales for all fiscal years and all interim periods
presented were to one customer. The loss of this customer would have a material
adverse effect on Advanced Thermal Sciences' financial condition and results of
operations.

Advanced Thermal Sciences relies on single source suppliers for several of
its components. As a result, should these suppliers not produce and deliver
inventory needed for Advanced Thermal Sciences to produce its products on a
timely basis, operating results could be adversely impacted.

NEW ACCOUNTING PRONOUNCEMENT -- In June 1998, the Financial Accounting
Standards Board issued SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities (as amended by SFAS No. 137), which Advanced Thermal Sciences
is required to adopt effective in its fiscal year 2001. SFAS No. 133, as
amended, will require Advanced Thermal Sciences to record all derivatives on the
balance sheet at fair value. Advanced Thermal Sciences does not currently engage
in hedging activities and will continue to evaluate the effect of adopting SFAS
No. 133. Advanced Thermal Sciences will adopt SFAS No. 133 in its fiscal year
2001.

In December 1999, the SEC staff issued Staff Accounting Bulletin (SAB) No.
101, Revenue Recognition in Financial Statements. SAB No. 101 summarizes the SEC
staff's views in applying generally

F-9
<PAGE> 74
ADVANCED THERMAL SCIENCES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

accepted accounting principles to revenue recognition in financial statements.
Advanced Thermal Sciences does not expect its implementation will have an effect
on its revenue recognition policy.

In March 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44 of Accounting Principles Board Opinion No. 25 Accounting
for Certain Transactions Involving Stock Compensation, which, among other
things, addressed accounting consequences of a modification that reduces the
exercise price of a fixed stock option award (otherwise known as repricing). If
the exercise price of a fixed stock option award is reduced, the award must be
accounted for as variable stock option plan from the date of the modification to
the date the award is exercised, is forfeited, or expires unexercised. The
exercise price of an option award has been reduced if the fair value of the
consideration required to be paid by the grantee upon exercise is less than or
potentially less than the fair value of the consideration that was required to
be paid pursuant to the award's original terms. The requirements about
modifications to fixed stock option awards that directly or indirectly reduce
the exercise price of an award apply to modifications made after December 15,
1998, and will be applied prospectively as of July 1, 2000. The adoption of this
interpretation did not impact Advanced Thermal Sciences' financial statements.

NOTE 2 -- INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined
using the weighted average cost method. Finished goods and work-in-progress
include material, labor and manufacturing costs. Net inventories consist of the
following:

<TABLE>
<CAPTION>
FEBRUARY 27, FEBRUARY 26, AUGUST 26,
1999 2000 2000
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials................................... $227 $1,500 $ 609
Work in process................................. 61 105 497
Finished goods.................................. -- 63 47
---- ------ ------
$288 $1,668 $1,153
==== ====== ======
</TABLE>

NOTE 3 -- PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
FEBRUARY 27, FEBRUARY 26, AUGUST 26,
1999 2000 2000
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Building improvements........................... $ 122 $ 15 $ 49
Machinery....................................... 42 234 261
Tooling......................................... 27 27 27
Computer equipment and software................. 34 34 57
Furniture and equipment......................... $ 19 $ 44 53
----- ---- ----
244 354 447
Less: accumulated depreciation and
amortization.................................. (144) (75) (112)
----- ---- ----
$ 100 $279 $335
===== ==== ====
</TABLE>

Depreciation expense for the years ended February 28, 1998, February 27,
1999 and February 26, 2000 and the six months ended August 28, 1999 and August
26, 2000 was $27, $116, $55, $23 (unaudited) and $39 (unaudited), respectively.

F-10
<PAGE> 75
ADVANCED THERMAL SCIENCES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4 -- RELATED PARTY TRANSACTIONS

Since inception, Advanced Thermal Sciences' operations have been funded
through net advances from/to B/E Aerospace of $1,416, $1,992 and $2,306, for the
fiscal years ended February 28, 1998, February 27, 1999 and February 26, 2000,
respectively. For the six months ended August 26, 2000, Advanced Thermal
Sciences repaid B/E Aerospace $2,305 on a net basis.

The following is a summary of cash advances, repayments and expense
allocations:

The amounts due to B/E Aerospace do not bear interest and while no formal
repayment terms have been established Advanced Thermal Sciences intends to repay
the outstanding balance to B/E Aerospace upon the successful completion of the
initial public offering described in Notes 1 and 6.

On August 1, 2000, Advanced Thermal Sciences entered into a lease for its
office and manufacturing facility and certain equipment under a noncancelable
operating lease with B/E Aerospace. Future minimum lease payments as of February
26, 2000 under the lease are $175 for fiscal 2001, $300 during fiscal 2002
through 2004, and $125 during fiscal 2005.

During July 2000, Advanced Thermal Sciences and B/E entered into a
Transition Services Agreement (the "Agreement") which outlines certain services
that will continue to be performed on behalf of Advanced Thermal Sciences by B/E
Aerospace through December 31, 2003, unless sooner terminated by either party
with 180 days advance notice. The services called for in the Agreement include
payroll processing and administration, human resources administration, benefits,
marketing support, informational technology and telecommunications services,
treasury management, accounting and finance assistance, sales order entry
administration and corporate administrative services. Through July 2000, B/E
Aerospace has allocated costs to Advanced Thermal Sciences for payroll
processing and administration, human resources administration, benefits and
information technology services on a specific identification or usage basis. All
other costs have been allocated on the basis of the total assets (net of cash
and cash equivalents) of Advanced Thermal Sciences to the total assets (net of
cash and cash equivalents) of B/E Aerospace. From July 2000 through the term of
the Agreement, B/E Aerospace will allocate costs as determined on the same cost
allocation basis as described above plus 10%. Had this arrangement been in place
since Advanced Thermal Sciences' inception, costs allocated to Advanced Thermal
Sciences would have increased by $5, $8 and $15 for the years ended February 28,
1998, February 27, 1999 and February 26, 2000, and $8 and $9 for the six months
ended August 28, 1999 and August 26, 2000.

Rent expense, which was allocated to Advanced Thermal Sciences based on
square footage for all operating leases for the years ended February 28, 1998,
February 27, 1999 and February 26, 2000 and the six months ended August 28, 1999
and August 26, 2000, was $41, $75, $151, $37 (unaudited) and $149 (unaudited),
respectively.

F-11
<PAGE> 76
ADVANCED THERMAL SCIENCES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Advanced Thermal Sciences employees participate in B/E Aerospace's 401(K)
Plan, and are allocated matching contribution on a specific identification
basis. Advanced Thermal Sciences recognized expenses of $14, $27, $33, $18
(unaudited) and $22 (unaudited) related to the 401(K) Plan for the years ended
February 28, 1998, February 27, 1999 and February 26, 2000 and six months ended
August 28, 1999 and August 26, 2000, respectively.

NOTE 5 -- INCOME TAXES

Income tax expense (benefit) consists of the following:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
------------------------------------------ -----------
FEBRUARY 28, FEBRUARY 27, FEBRUARY 26, AUGUST 26,
1998 1999 2000 2000
------------ ------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Current:
Federal........................... $ -- $ -- $ -- $ 512
State............................. -- -- -- 189
Foreign........................... -- -- -- --
----- ----- ----- -----
-- -- -- 701
Deferred:
Federal........................... (53) (116) (460) 69
State............................. (15) (16) (84) (26)
Foreign........................... -- -- -- --
----- ----- ----- -----
(68) (132) (544) 744
Change in valuation allowance.......... 68 132 544 (744)
----- ----- ----- -----
$ -- $ -- $ -- $ --
===== ===== ===== =====
</TABLE>

As discussed in Note 1, historically Advanced Thermal Sciences' results
have been included in B/E Aerospace's consolidated federal and state income tax
returns. Consequently, a portion of Advanced Thermal Sciences' historical losses
have been utilized by B/E Aerospace. Such historical losses are reflected as
operating loss without tax benefit. The difference between income tax expense
(benefit) and the amount computed by applying the statutory U.S. federal income
tax rate (35%) to the pretax earnings consists of the following:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
------------------------------------------ -----------
FEBRUARY 28, FEBRUARY 27, FEBRUARY 26, AUGUST 26,
1998 1999 2000 2000
------------ ------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Statutory U.S. federal income tax
expense (benefit).................... $(471) $(741) $(578) $ 661
State tax.............................. (15) (16) (95) 112
Operating loss without tax benefit..... 420 636 157 --
Research and development credits....... (15) (32) (45) (10)
Benefit of lower tax brackets.......... 13 21 17 (19)
Valuation allowance.................... 68 132 544 (744)
----- ----- ----- -----
$ -- $ -- $ -- $ --
===== ===== ===== =====
</TABLE>

F-12
<PAGE> 77
ADVANCED THERMAL SCIENCES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The tax effects of temporary differences and carryforwards that give rise
to Advanced Thermal Sciences' deferred income tax assets and liabilities consist
of the following:

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
------------------------------------------ ----------
FEBRUARY 28, FEBRUARY 27, FEBRUARY 26, AUGUST 26,
1998 1999 2000 2000
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
Fixed assets........................... $ 8 $ 47 $ 9 $ (7)
Warranty reserve....................... -- 15 295 416
Accrued liabilities.................... 22 72 34 138
Net operating loss carryforward........ 23 15 250 --
Research credit carryforward........... 15 48 92 --
Inventory reserve...................... -- 3 64 154
----- ----- ----- -----
Net deferred income tax assets......... 68 200 744 701
Valuation allowance.................... (68) (200) (744) --
----- ----- ----- -----
Net deferred tax assets
(liabilities)........................ $ -- $ -- $ -- $ 701
===== ===== ===== =====
</TABLE>

For the six months ended August 26, 2000 Advanced Thermal Sciences' income
tax expense was offset by the full reversal of the valuation allowance due to
management's determination that it is more likely than not that the related
deferred tax assets would be realized. At August 26, 2000, no net operating loss
or research and development credit carryforwards are available to offset future
taxable income.

NOTE 6 -- STOCKHOLDERS' DEFICIT

Pursuant to an amendment to Advanced Thermal Sciences' Certificate of
Incorporation effective July 14, 2000, Advanced Thermal Sciences is authorized
to issue 40,000,000 shares of Class A common stock, 10,000,000 shares of Class B
common stock and 1,000,000 shares of undesignated preferred stock. The Board of
Directors effected a 10,000-for-one stock split in July 2000. At August 26,
2000, 10,000,000 shares of Class B common stock were outstanding.

The Class B common stock is identical in all respects to Class A common
stock, except with respect to voting and conversion rights. Each share of Class
A and B common stock are entitled to one and three, respectively, votes per
share on matters presented to a vote of shareholders. Each share of Class B
common stock will be automatically converted into one share of Class A common
stock upon the earlier of December 31, 2005 or upon the occurrence of certain
events, primarily relating to the transfer of any shares of Class B common stock
by the initial holder (B/E Aerospace) to a third party, as defined in the
Amended and Restated Certificate of Incorporation.

On August 14, 2000, Advanced Thermal Sciences' Board of Directors approved
the filing of a registration statement with the Securities and Exchange
Commission to sell 4,000,000 shares of its common stock in an initial public
offering.

NOTE 7 -- STOCK OPTION AND EMPLOYEE BENEFIT PLANS (UNAUDITED)

On July 14, 2000, Advanced Thermal Sciences' Board of Directors adopted a
stock option plan and a directors' stock option plan (the "2000 Stock Plans"),
which allow Advanced Thermal Sciences to grant both incentive stock options and
non-qualified options to key employees and outside directors. The 2000 Stock
Plans allow for the granting of options to purchase Advanced Thermal Sciences'
common stock at fair market value. The stock options are generally granted with
vesting periods of three to four years and have an expiration date of ten years
from the date of grant. Under the 2000 Stock Plans, an aggregate 2,000,000
shares have been initially reserved for issuance, of which 1,700,000 shares are
reserved under the stock option plan and 300,000 shares are reserved under the
directors' option plan.

F-13
<PAGE> 78
ADVANCED THERMAL SCIENCES CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Initial grants under the 2000 Stock Plans are summarized as follows:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE
SHARES PRICE
--------- --------
<S> <C> <C>
Granted, July 14, 2000...................................... 1,300,000 $6.75
</TABLE>

The estimated fair value of options granted during the six month period
ended August 26, 2000 was $3.49 per share. Advanced Thermal Sciences applies
Accounting Principles Board Opinion No. 25 and related interpretations in
accounting for its stock option and purchase plans. Accordingly, no compensation
cost has been recognized for its stock option plans and stock purchase plan. Had
compensation cost for Advanced Thermal Sciences' stock option plans and stock
purchase plan been determined consistent with SFAS No. 123, Advanced Thermal
Sciences' net income and net income per share basic and diluted for the six
months ended August 26, 2000 would have been $1,323 and $.13 per share,
respectively.

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions used for options granted during the six months ended August 26,
2000: risk-free interest rate of 6.18%; expected dividend yield of 0.0%;
expected life of 4 years; and expected volatility of 60%, respectively. Advanced
Thermal Sciences' calculations are based on a single-option approach and
forfeitures are recognized as they occur.

In July 2000, Advanced Thermal Sciences established a non-employee
directors' stock and deferred compensation plan, all non-employee directors may
elect to (i) receive all or a portion of their retainer in shares of the
Company's Class A common stock or (ii) defer all or a portion of their retainer
in cash or in stock units. An aggregate of 50,000 shares of the Company's Class
A common stock are available for issuance under this plan. No shares have been
issued under this plan as of August 26, 2000. In addition, the Company's
non-employee directors are entitled to participate in the Company's directors'
stock option plan.

On July 14, 2000, Advanced Thermal Sciences established a qualified
Employee Stock Purchase Plan, the terms of which allow for qualified employees
(as defined) to participate in the purchase of up to a total of 150,000 shares
of Advanced Thermal Sciences' common stock at a price equal to the lower of 85%
of the closing price at the beginning or end of each semi-annual stock purchase
period. No shares have been issued in accordance with the plans as of August 26,
2000.

NOTE 8 -- COMMITMENTS

During July and August of 2000, Advanced Thermal Sciences entered into
employment agreements with various corporate officers which specify minimum
annual aggregate payments of $867 in each of the next three fiscal years,
respectively.

NOTE 9 -- SUBSEQUENT EVENTS

On September 19, 2000 the Company entered into a strategic teaming
agreement with Helix Technology Corporation under which Helix will market, sell
and support Advanced Thermal Sciences' systems worldwide. Terms of this
agreement provide for Helix to receive commissions ranging from 3-10% of sales
for its sales, warranty labor and product support efforts. The agreement is
effective for all regions outside North America and will become effective for
North America on November 16, 2000. The agreement is effective through November
15, 2003, although it may be cancelled by either Advanced Thermal Sciences or
Helix upon six months advance notice following the first anniversary of the
agreement, or in the event of a change of control.

F-14
<PAGE> 79

[INSIDE BACK COVER]

[World map indicating locations

in which our temperature control systems are installed.]

<PAGE> 80

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates except the SEC
registration fee and the NASD filing fee and the Nasdaq National Market listing
fee.

<TABLE>
<CAPTION>
AMOUNT TO BE
PAID BY
ADVANCED
THERMAL
SCIENCES
------------
<S> <C>
SEC registration fee........................................ $ 13,359
NASD filing fee............................................. 5,560
Nasdaq National Market listing fee.......................... 60,000
Printing and engraving expenses............................. 300,000
Legal fees and expenses..................................... 600,000
Accounting fees and expenses................................ 300,000
Blue Sky qualification fees and expenses.................... 3,500
Transfer Agent and Registrar fees........................... 20,000
Miscellaneous fees and expenses............................. 197,581
----------
Totals............................................ $1,500,000
==========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. Article VIII of our Amended
and Restated Certificate of Incorporation (Exhibit 3.1 hereto) and Article 8.1
of our Amended and Restated Bylaws (Exhibit 3.2 hereto) provide for
indemnification of our directors, officers, employees and other agents to the
maximum extent permitted by Delaware law. The Underwriting Agreement (Exhibit
1.1 hereto) also provides for cross-indemnification among Advanced Thermal
Sciences and B/E Aerospace, on the one hand, and the underwriters, on the other
hand, with respect to matters arising under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In connection with our incorporation in December 1997, we issued 1,000
shares of our common stock to B/E Aerospace, our parent company, in
consideration for cash consideration of $1,000. The share amount issued to B/E
Aerospace does not reflect the ten thousand-for-one split of our common stock
effected in July 2000. The issuance of these securities was deemed to be exempt
from registration under the Securities Act of 1933 in reliance upon Section 4(2)
of the Act as a transaction by an issuer not involving any public offering. On
July 14, 2000 we issued options to purchase 1,200,000 shares of our common stock
at an exercise price of $6.75 per share to eight of our employees and options to
purchase 100,000 shares of our common stock at an exercise price of $6.75 per
share to four of our non-employee directors. The issuance of these securities
was deemed to be exempt from registration under the Securities Act in reliance
upon Rule 701 promulgated under Section 3(b) of the Securities Act for
transactions pursuant to compensation benefit plans and contracts relating to
compensation. The recipients of securities in each of these transactions
represented their intentions to acquire the securities for investment only and
not with a view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the share certificates issued in these
transactions. All recipients had adequate access, through their relationships
with us, to information about us.

II-1
<PAGE> 81

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS.

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1** Amended and Restated Certificate of Incorporation of the
Registrant.
3.2** Amended and Restated Bylaws of the Registrant.
4.1 Specimen Stock Certificate.
5.1* Opinion of Shearman & Sterling.
10.1** Form of Cross-License Agreement between BE Aerospace, Inc.
and the Registrant.
10.2** Form of Asset Purchase Agreement between BE Aerospace, Inc.
and the Registrant.
10.3** Transition Services Agreement dated as of July 31, 2000
between BE Aerospace, Inc. and the Registrant.
10.4** Tax Allocation Agreement dated as of July 31, 2000 between
BE Aerospace, Inc. and the Registrant.
10.5** Advanced Thermal Sciences Corporation Stock Option Plan.
10.6** Advanced Thermal Sciences Corporation Employee Stock
Purchase Plan.
10.7** Advanced Thermal Sciences Corporation Directors' Stock
Option Plan.
10.8* Advanced Thermal Sciences Corporation Non-Employee
Directors' Stock and Deferred Compensation Plan.
10.9** Sublease Agreement dated August 1, 2000 between B/E
Aerospace and Registrant.
10.10**+ Strategic Teaming Agreement between Helix Technology
Corporation and the Registrant.
10.11** Registration Rights Agreement dated as of July 31, 2000
between BE Aerospace, Inc. and the Registrant.
10.12** Employment Agreement with Amin J. Khoury.
10.13** Employment Agreement with R. Bruce Thayer.
10.14** Employment Agreement with Kenneth W. Cowans.
10.15** Employment Agreement with Gregory J. Mills.
10.16** Employment Agreement with Lloyd D. Golobay.
10.17** Employment Agreement with Cameron H. Adamson.
23.1 Consent of Deloitte & Touche LLP.
23.2** Consent of Shearman & Sterling (see Exhibit 5.1).
24.1** Power of Attorney (see page II-4).
27.1** Financial Data Schedule.
</TABLE>

---------------
* To be supplied by amendment.

** Previously filed.

+ The Registrant has applied for confidential treatment of portions of this
Exhibit. Accordingly, portions thereof have been omitted and were filed
separately.

II-2
<PAGE> 82

(B) FINANCIAL STATEMENT SCHEDULE.

INDEPENDENT AUDITORS' REPORT ON SCHEDULE

To the Board of Directors and Shareholder of
Advanced Thermal Sciences Corporation

We have audited the accompanying balance sheets of Advanced Thermal
Sciences Corporation (formerly Advanced Thermal Technologies, Inc.) (a wholly
owned subsidiary of BE Aerospace, Inc.) (the "Company") as of February 26, 2000
and February 27, 1999, and the related statements of operations, shareholder's
deficit and cash flows for each of the three fiscal years in the period ended
February 26, 2000 and have issued our report thereon dated August 14, 2000
(except Note 9 which is as of September 20, 2000) included elsewhere in this
Registration Statement. Our audits also included the financial statement
schedule listed in Item 16 of this Registration Statement. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

DELOITTE & TOUCHE LLP
Costa Mesa, California
August 14, 2000

II-3
<PAGE> 83

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

<TABLE>
<CAPTION>
BALANCE BALANCE
AT BEGINNING AT END
OF PERIOD EXPENSES OTHER DEDUCTIONS OF PERIOD
------------ -------- ----- ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
Six months ended August 26, 2000 (unaudited).... $ 20 $ -- $-- $-- $ 20
Year ended February 26, 2000.................... -- 20 -- -- 20
Reserve for obsolete inventories:
Six months ended August 26, 2000 (unaudited).... $150 $209 $-- $-- $359
Year ended February 26, 2000.................... -- 150 -- -- 150
Reserve for warranty:
Six months ended August 26, 2000 (unaudited).... $688 $381 $-- $98 $971
Year ended February 26, 2000.................... 66 650 -- 28 688
Year ended February 27, 1999.................... -- 66 -- -- 66
</TABLE>

II-4
<PAGE> 84

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 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 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.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, 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 that
time shall be deemed to be the initial bona fide offering thereof.

II-5
<PAGE> 85

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Anaheim, State of
California on October 18, 2000.

ADVANCED THERMAL SCIENCES CORPORATION

By: /s/ AMIN J. KHOURY
-------------------------------------
Amin J. Khoury
Chairman and 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:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chief Executive Officer and Chairman of October 18, 2000
------------------------------------ the Board (Principal Executive
Amin J. Khoury Officer)

* President, Chief Operating Officer and October 18, 2000
------------------------------------ Director
R. Bruce Thayer

* Vice President, Chief Financial Officer October 18, 2000
------------------------------------ and Treasurer (Principal Financial and
Cameron H. Adamson Accounting Officer)

* Director October 18, 2000
------------------------------------
Roger D. Emerick

* Director October 18, 2000
------------------------------------
Robert J. Lepofsky

* Director October 18, 2000
------------------------------------
Amin C. Khoury

* Director October 18, 2000
------------------------------------
Robert J. Therrien

*By: /s/ AMIN J. KHOURY
------------------------------------
Amin J. Khoury
Attorney-in-fact
</TABLE>

II-6
<PAGE> 86

EXHIBIT INDEX

---------------
* To be supplied by amendment.

** Previously filed.

+ The Registrant has applied for confidential treatment of portions of this
Exhibit. Accordingly, portions thereof have been omitted and were filed
separately.

II-7