<PAGE 1>
As filed with the Securities and Exchange Commission
on May 7, 1996
Registration No. 33-___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form S-3
Registration Statement under The Securities Act of 1933
GALAXY FOODS COMPANY
(Name of Small Business Issuer in its Charter)
Delaware 2022 25-1391475
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification
incorporation) Code Number) No.)
2441 Viscount Row, Orlando, Florida 32809
Telephone: (407) 855-5500
(Address and Telephone Number of Principal Executive Offices)
ANGELO S. MORINI, PRESIDENT
Galaxy Foods Company
2441 Viscount Row, Orlando, Florida 32809
Telephone: (407) 855-5500
(Name, address and telephone number of agent for service)
COPIES TO:
KENNETH C. WRIGHT, ESQUIRE
Baker & Hostetler
200 South Orange Avenue, Suite 2300
Orlando, Florida 32801
Telephone: (407) 649-4001
Approximate Date of Proposed Sale to the Public: As soon
as practicable after the registration statement becomes
effective.
<PAGE 2>
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. __
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, check the following box:_X_
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
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 delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. __
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
Title of
Each Class Proposed Proposed
of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share(1) Price Fee
Common 8,240,568 $1.96875 $16,223,618.25 $5,594.35
Stock
$.01 par
value (2)
<PAGE 3>
Total
Registration $5,594.35
(1) Estimated solely for the purpose of calculating the
registration fee. Based upon the average of the closing bid
and ask prices for the Company's Common Stock as reported on
the National Association of Securities Dealers, Inc.
inter-dealer quotation system on April 29, 1996, of $1.9375
and $2.00, respectively.
(2) To be offered by Selling Stockholders.
<PAGE 4>
GALAXY FOODS COMPANY -- CROSS REFERENCE SHEET
Item of Form S-3 and Caption Caption in Prospectus
1. Front of Registration Front of Registration
Statement and Outside Front Statement; Outside Front
Cover of Prospectus Cover Page
2. Inside Front and Outside Back Inside Front and Outside
Cover Pages of Prospectus Back Cover
3. Summary Information and Risk Not Applicable; Risk Factors
Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Cover Page; Determination of
Price Offering Price; Plan of
Distribution
6. Dilution Not Applicable
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Cover Page; Plan of
Distribution
9. Description of Securities Description of Capital Stock
10. Interest of Named Experts Experts; Legal Matters
and Counsel
11. Material Changes Not Applicable
12. Incorporation of Certain Incorporation of Certain
Information by Reference Information by Reference
13. Disclosure of Commission Risk Factors; Plan of
Position on Indemnification Distribution--Manner of
for Securities Act Distribution; Indemnification
Liabilities of Management
<PAGE 5>
PROSPECTUS Subject to Completion
May 6, 1996
GALAXY FOODS COMPANY
8,240,568 Shares
Common Stock, $.01 par value
All of the shares covered by this Prospectus are being sold
for the account of certain existing stockholders of GALAXY FOODS
COMPANY, a Delaware corporation (the ``Company''), who are listed
and described on Appendix A hereto (the ``Selling
Stockholders''). The Company will realize no proceeds from the
sale of any of these shares. The Company intends to take all
necessary action to allow the distribution pursuant to this
Prospectus to continue for up to two years from the initial
effective date of this Prospectus.
The securities offered hereby involve a high degree of
risk, and should be considered only by persons who can afford the
loss of their entire investment. See ``Risk Factors'' beginning
on page 3.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriting Proceeds
Common Stock, Price to Discounts and to the
Par Value $.01 Public Commissions (2) Company (3)
Per Share....... Prevailing Not Not
Market Applicable Applicable
Value (1)
(1) The shares are quoted on the electronic inter-dealer
quotation system operated by Nasdaq, Inc., a subsidiary of
the National Association of Securities Dealers, Inc. (the
``NASDAQ System''), in the category of Small-Cap (SM)
Issues, under the symbol ``GALX.'' The distribution of the
shares by the Selling Stockholders may be effected in one or
more transactions that may take place in the over-the-
counter market, including ordinary broker's transactions,
<PAGE 6>
privately negotiated transactions, or through sales to one
or more dealers for the resale of such shares as principals,
at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated
prices. See ``Plan of Distribution.'' On April 29, 1996,
the closing bid and asked prices for a share of the
Company's Common Stock as quoted on the NASDAQ System was
$1.9375 and $2.00, respectively.
(2) There is no underwriter with respect to this offering and
each Selling Stockholder will determine the time of sales of
shares made pursuant hereto. The Selling Stockholders will
be responsible for any commissions for the sale of the
shares offered by this Prospectus. Usual and customary or
specifically negotiated brokerage commissions or fees may be
paid by the Selling Stockholders in connection with such
sales. There is no minimum required purchase and there
generally is no arrangement to have funds received by such
Selling Stockholders placed in an escrow, trust or similar
account or arrangement. See ``Plan of Distribution.''
(3) The Company will realize no proceeds from this offering.
The expenses of this offering are being paid by the Company
pursuant to its agreements with certain of the Selling
Stockholders. See ``Plan of Distribution.''
-----------------------------------
It is anticipated that the Selling Stockholders may from
time to time sell all or a part of the shares of Common Stock
covered by this Prospectus in ordinary brokerage or principal
transactions at prices prevailing at the time of sale or at
negotiated prices. Upon any sale of the shares of Common Stock
offered hereby, Selling Stockholders, brokers executing sales
orders on their behalf, and dealers to whom such persons or
entities may sell such shares may, under certain circumstances,
be deemed to be ``underwriters'' within the meaning of the
Securities Act of 1933, as amended (the ``33 Act'').
Broker-Dealers effecting sales of shares of Common Stock
pursuant to this Prospectus should carefully review the
restrictions on the use hereof as described in ``Plan of
Distribution--Restrictions on Use of Prospectus.''
The date of this Prospectus is _________, 1996.
<PAGE 7>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the ``34 Act''),
and in accordance therewith is required to file periodic reports,
proxy statements and other information with the Securities and
Exchange Commission (the ``SEC'') relating to its business,
financial statements and other matters. Additionally, the
Company has filed a certain Registration Statement on Form S-3
(SEC File No. 33-_____), relating to this offering by Selling
Stockholders. As permitted by the rules and regulations of the
SEC, this Prospectus omits certain information, exhibits, and
undertakings contained in the Registration Statement. Copies of
the Registration Statement and exhibits thereto, as well as such
periodic reports, proxy statements and other information may be
inspected and copied, at prescribed rates, at the public
reference facilities maintained by the SEC at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies also may be obtained at the Regional Offices of the SEC
located at (1) 75 Park Place, 14th Floor, New York, New York
10007; (2) John W. McCormack Post Office and Courthouse Building,
90 Devonshire Street, Suite 700, Boston, Massachusetts 02109; (3)
3475 Lennox Road, N.E., Suite 1000, Atlanta, Georgia 30326-1232;
(4) 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511; (5) 411 West Seventh Street, 8th Floor, Fort Worth,
Texas 76102; (6) 410 Seventeenth Street, Suite 700, Denver,
Colorado 80202; (7) 5757 Wilshire Boulevard, Suite 500 East, Los
Angeles, California 90036-3648; (8) 3040 Jackson Federal
Building, 915 Second Avenue, Seattle, Washington 98174; and (9)
Curtis Center, Independence Square West, 601 Walnut Street, Suite
1005E, Philadelphia, Pennsylvania 19106- 3322. Copies of such
material also can be obtained at prescribed rates through The
National Association of Securities Dealers Association at 1735 K
Street, N.W., Washington, D.C. 20006-1506.
Statements contained in this Prospectus relating to the
contents of any contract or other document are not necessarily
complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to, or
incorporated by reference in, the Registration Statement, each
such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company's Annual Report on Form 10-KSB for the year
ended March 31, 1995, Quarterly Report on Form 10-QSB for the
quarter ended June 30, 1995, Quarterly Report on Form 10-QSB/A
<PAGE 8>
for the quarter ended September 30, 1995, Quarterly Report on
Form 10-QSB/A for the quarter ended December 31, 1995, Current
Report on Form 8-K dated October 10, 1995, Current Report on Form
8-K dated May 26, 1995, and Current Report on Form 8-K dated
April 16, 1996, are incorporated by reference herein and made a
part hereof. The Company's Proxy Statements dated July 11, 1995,
and December 5, 1995, also are incorporated by reference herein
and made a part hereof. All documents filed by the Company with
the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 34
Act subsequent to the date of this Prospectus and prior to the
termination of the offering represented hereby shall be deemed to
be incorporated by reference and to be a part of this Prospectus
from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies
or supersedes such a statement. A statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person who
receives a Prospectus, upon written or oral request, a copy of
any and all of the information that has been incorporated by
reference in this Prospectus (not including exhibits to the
information that is incorporated by reference unless the exhibits
are themselves specifically incorporated by reference). Such a
request should be directed to Galaxy Foods Company, 2441 Viscount
Row, Orlando, Florida 32809, Attention: Investor Relations, or if
by telephone, (407) 855-5500.
<PAGE 9>
RISK FACTORS
An investment in the Shares offered hereby involves a high
degree of risk and should not be purchased by persons who cannot
afford the loss of their entire investment. In addition to the
factors set forth elsewhere in this Prospectus, the following
risk factors with respect to the Company should be carefully
considered:
Operating History. The Company reported net losses of
$1,954,713 for the nine-month period ended December 31, 1995
(unaudited) and $2,497,819 for the nine-month period ended
December 31, 1994 (unaudited), $5,013,578 for the fiscal year
ended March 31, 1995, and $3,811,226 for the fiscal year ended
March 31, 1994, or $.07, $.28, $.54, and $.69 per share,
respectively (based on the weighted average number of shares of
Common Stock outstanding during each period). Additionally, for
the nine-month periods ended December 31, 1995 and 1994
(unaudited), and for the fiscal years ended March 31, 1995 and
1994, the Company's operating loss was $1,994,659, $2,252,840,
$4,060,978, and $2,817,268, respectively. Further, until fiscal
1996, the Company operated since its inception with a negative
working capital position. As of December 31, 1995 (unaudited)
and March 31, 1995, the Company had $3,371,776 and $961,039,
respectively in current assets, and $913,370 and $3,886,666,
respectively, in current liabilities. The future success of the
Company will depend, among other factors, upon management's
ability to increase sales, restore and maintain profitable
operations, and obtain favorable financing arrangements. There
can be no assurance that the Company will be able to increase
sales, become profitable, attain improved operating results or
obtain favorable financing arrangements.
Possible Need for Additional Financing. The Company will
not receive any proceeds from this offering. In the event that
the Company does not generate cash flow sufficient to satisfy
future cash requirements, the Company will be required to seek
additional financing in the near future. If additional financing
is required, there is no assurance that financing will be
available, or if available, that it can be obtained on terms
favorable to the Company. Additional financing may require the
Company to issue additional debt or equity securities which may
rank senior to the shares of Common Stock and which could dilute
any investment made in the Company. In addition, absent the
Company's ability to obtain additional funding, there could be a
material adverse effect on the Company's business and prospects.
<PAGE 10>
Lack of Dividends. It is the present policy of the Company
to retain any future earnings to finance growth and development.
Accordingly, it is unlikely that dividends will be paid by the
Company in the foreseeable future.
Extensive Shareholdings by Management. As of April 29,
1996, Angelo S. Morini, the Company's founder, President, and
Chief Executive Officer, owned approximately 44.4% of the issued
and outstanding shares of the Company's Common Stock, and held
certain rights and options to acquire an additional 141,500
shares of Common Stock. In the event Mr. Morini exercises his
rights and options, and acquires all of the 141,500 shares, and
assuming that no other options or warrants are exercised or
granted, Mr. Morini will own approximately 44.6% of the
outstanding Common Stock. In the event all unexercised rights,
options, and warrants become vested and are exercised (including
Mr. Morini's), as adjusted to reflect such issuance and assuming
no other options or warrants are granted, Mr. Morini will own
approximately 42.2% of the outstanding Common Stock. Since no
provision exists for cumulative voting, investors who purchase
Common Stock may be unable to elect any members of the Board of
Directors or exercise significant control over the Company or its
business. See ``Description of Capital Stock.''
Potential Sales and Issuances of Additional Stock. As of
April 29, 1996, there were outstanding options and warrants to
acquire up to 3,314,062 shares of Common Stock, including the
141,500 shares subject to options held by Mr. Morini, in addition
to the 54,759,372 shares of Common Stock of the Company issued
and outstanding as of that date. As of April 29, 1996, a total
of 30,240,628 shares are authorized but not yet issued and
outstanding, including 3,314,062 shares which have been reserved
for issuance upon exercise of options and warrants that have been
granted by the Company. A substantial portion of such options
and warrants are ``in the money'' and are currently exercisable.
``In the money'' generally means that the current market price is
above the purchase price of the shares subject to the warrant or
option. The issuance of additional Common Stock upon the
exercise of options and warrants will dilute the proportionate
ownership of the then current shareholders of the Company.
As of April 29, 1996, 4,000 shares of the Company's Series
A Convertible Preferred Stock, $.01 par value (the ``Series A
Preferred Stock''), were issued and outstanding. The terms of
the Series A Preferred Stock provide that the holder thereof
shall have the right to convert such shares into shares of Common
Stock at any time after June 30, 1996 at a conversion price (the
``Conversion Price'') equal to 71.5%, which percentage is subject
<PAGE 11>
to adjustment upon the occurrence of certain events (the
``Conversion Percentage''), multiplied by the Average Market
Price (as defined below) of the Common Stock for the five
consecutive trading days ending one trading day prior to the date
the notice of conversion is received from the holder by the
Company; provided, however, that in no case shall the holder be
permitted to hold, in the aggregate, such number of shares of
Common Stock which would exceed 4.9% of the aggregate outstanding
shares of Common Stock. The ``Average Market Price'' of the
Common Stock is the arithmetic average of the closing bid prices
for the Common Stock for each trading day as quoted on the NASDAQ
System or, if the NASDAQ System is not the principal trading
market for the Common Stock, on the principal trading market for
the Common Stock, or, if market value cannot be so calculated,
the average fair market value during such period as reasonably
determined in good faith by the Company's Board of Directors (all
as appropriately adjusted for any stock dividend, stock split, or
other similar transaction during such period or between the end
of such period and the date of conversion). The number of shares
of Common Stock issuable upon conversion of the Series A
Preferred Stock is determined by dividing the stated value of the
Series A Preferred Stock, which is equal to $1,000 (the ``Stated
Value''), by the Conversion Price then in effect. See
``Description of Capital Stock-Preferred Stock-Series A
Convertible Preferred Stock.'' The Company has estimated that
3,500,000 shares of Common Stock will be issuable to the holder
of the Series A Preferred Stock upon conversion and is
registering such number of shares pursuant to the Registration
Statement of which this Prospectus is a part. In the event that
the Series A Preferred Stock is convertible into a greater number
of shares of Common Stock, additional Common Stock will be
registered by the Company on behalf of the holder of the Series A
Preferred Stock.
Additionally, the Company may offer additional securities
in private and/or public offerings in order to raise working
capital and retire or refinance its indebtedness. Any such
issuance could adversely affect the market price of the Common
Stock or result in substantial dilution to existing holders of
Common Stock.
Broker-Dealer Sales of Company Common Stock. The Company's
Common Stock is covered by an SEC rule that imposes additional
sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and
accredited investors (generally, institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000
<PAGE 12>
jointly with their spouses). For transactions covered by this
rule, the broker-dealer must make a special suitability
determination for the purchaser and receive the purchaser's
written agreement to the transaction prior to the sale.
Consequently, the rule may affect the ability of broker-dealers
to sell the Company's securities, and also may affect the ability
of purchasers in this offering to sell their shares in the
secondary market.
Market Overhang. As of April 29, 1996, approximately
28,287,783 shares of the 54,759,372 shares of issued and
outstanding Common Stock of the Company were freely tradable
(unless acquired by an ``affiliate'' of the Company) under the 33
Act or issued without restrictive legend in a series of
transactions exempt from the registration requirements of the 33
Act in accordance with the requirements of Regulation S
promulgated thereunder. The Company has been advised by its
transfer agent that all of the 22,350,830 shares issued under
Regulation S have been transferred by the original purchasers and
have been put in the nominee names of United States' securities
brokerage firms, banks, and trust companies. The Company is
unaware of the circumstances of the transfers. Of the remaining
26,471,589 shares of Common Stock issued and outstanding, and
3,314,062 additional shares of Common Stock which the Company is
obligated to issue pursuant to outstanding options and warrants,
853,044 shares so issued or issuable are included for sale
pursuant to this Prospectus.
All of the shares which are not freely tradable are
``restricted securities'' within the meaning of Rule 144
promulgated by the SEC under the 33 Act (``Rule 144''), and may
be sold in open market transactions after the holding period
under Rule 144 with respect thereto has been met. As to shares
subject to outstanding options and warrants, the two-year holding
period generally will not begin until the shares underlying such
options or warrants actually have been acquired. After the
two-year holding period has been met, each holder generally may
sell, every three months in brokerage transactions, an amount
equal to the greater of one percent of the Company's outstanding
Common Stock or the amount of the average weekly trading volume
during the four weeks preceding the sale. After three years,
unless any such holder is an ``affiliate'' of the Company, such
sales can be made without restriction. See also, ``Plan of
Distribution--Manner of Distribution.''
As of April 29, 1996, 4,000 shares of the Company's Series
A Preferred Stock were issued and outstanding. The terms of the
Series A Preferred Stock provide that the holder thereof shall
<PAGE 13>
have the right to convert such shares into shares of Common Stock
at any time after June 30, 1996 at a Conversion Price equal to
the Conversion Percentage, which percentage is subject to
adjustment upon the occurrence of certain events, multiplied by
the Average Market Price of the Common Stock for the five
consecutive trading days ending one trading day prior to the date
the notice of conversion is received from the holder by the
Company. Under certain circumstances, the Company may require
the holder of the Series A Preferred Stock to convert some or all
of its shares of Series A Preferred Stock into Common Stock. In
no case, however, shall the holder be permitted to hold, in the
aggregate, such number of shares of Common Stock which would
exceed 4.9% of the aggregate outstanding shares of Common Stock.
The number of shares of Common Stock issuable upon conversion of
the Series A Preferred Stock is determined by dividing the Stated
Value of the Series A Preferred Stock by the Conversion Price
then in effect. See ``Description of Capital Stock-Preferred
Stock-Series A Convertible Preferred Stock.'' The Company has
estimated that 3,500,000 shares of Common Stock will be issuable
to the holder of the Series A Preferred Stock upon conversion and
is registering such number of shares pursuant to the Registration
Statement of which this Prospectus is a part. In the event that
the Series A Preferred Stock is convertible into a greater number
of shares of Common Stock, additional Common Stock will be
registered by the Company on behalf of the holder of the Series A
Preferred Stock. Upon registration, all such shares of Common
Stock shall be freely tradable. The Company has agreed with the
holder of the Series A Preferred Stock to maintain the
effectiveness of the registration of the Common Stock into which
the Series A Preferred Stock is convertible until the earlier of
(a) the date that all of such Common Stock may be sold pursuant
to Rule 144(k) under the 33 Act, or (b) the date on which (i) all
of such Common Stock have been sold and (ii) none of the Series A
Preferred Stock issued and outstanding as of the date hereof are
outstanding.
Because the sales pursuant to this Prospectus will not, and
the resale of any additional shares which may be attempted under
Rule 144 or Regulation S may not, be effected through an
underwriter pursuant to a firm commitment agreement, there will
be a substantial number of additional shares which may be
available for sale on the market at one time without any control
over the timing or volume of sales thereof by the Company or any
third party. The Company cannot foresee the impact of such
potential sales on the market, but it is possible that if a
significant percentage of such available shares are attempted to
be sold within a short period of time, the effect on the market
may be negative. It is also unclear as to whether or not the
<PAGE 14>
market for the Company's Common Stock could absorb a large number
of attempted sales in a short period of time, regardless of the
price at which the same might be offered. It is noted that even
if a substantial number of sales are not effected within a short
period of time, the mere existence of this ``market overhang''
could have a negative effect on the market for the Company's
Common Stock and the Company's ability to raise additional
capital or refinance its indebtedness.
Reliance Upon Key Personnel. The success of the Company
will be largely dependent upon the personal efforts and abilities
of Angelo S. Morini, its Chief Executive Officer. Should Mr.
Morini cease to be affiliated with the Company before a qualified
replacement is found, there could be a material adverse effect on
the Company's business and prospects. Mr. Morini entered into an
employment agreement with the Company on October 10, 1995. The
term of such employment agreement is five years but is terminable
by Mr. Morini in the event of a change of control. In the event
of a change in control, or in the event that Mr. Morini is
terminated for ``cause'' (as defined in the employment
agreement), Mr. Morini has agreed that, for a period of one year
following the date that his employment with the Company
terminates, he shall not engage himself, directly or indirectly,
in any business substantially similar or provide service or
products to the Company's customers. The Company currently is
the beneficiary of a key man life insurance policy on Mr.
Morini's life in the amount of $250,000, and a term life policy
in the amount of $750,000. This sum would likely not be
sufficient to compensate the Company for the loss of Mr. Morini's
services until a suitable replacement can be engaged.
Intense Competition. The food industry is highly
competitive. In particular, the Company competes with major
companies such as Kraft (which produces products under the Kraft
Free (R) label), Borden's, and ConAgra (which produces products
under the Healthy Choice (R) label), each of which has
substantially greater research and development, marketing,
financial and human resources than the Company. In addition,
competitors may succeed in developing new or enhanced products
which are better than any that may be sold or developed by the
Company, and such companies may also prove to be more successful
than the Company in marketing and selling such products. There
can be no assurance that the Company will be able to compete
successfully with any of these companies or achieve a greater
market share than it currently possesses.
Uncertainties Regarding Trademark Protection; No Patent
Protection. The Company owns the trademark formagg (R), which is
<PAGE 15>
registered in the United States, Australia, Canada, France,
Ireland, Israel and the United Kingdom, and the trademarks Lite
Bakery (R), Galaxy (R), Labella's (R), Soyco (R), and Soymage (R),
each of which is registered in the United States, and has applied
for registration of the trademarks formagg (TM) in Japan, and
Lite ``&'' Less (TM) and Pretzel Nuts (TM) in the United States.
The Company believes these trademarks are important means of
establishing consumer recognition of its products. However, there
can be no assurance as to the breadth or degree of protection that
these trademarks may afford the Company, or that the Company will
have the financial resources to engage in litigation against any
infringement of its trademarks, or as to the eventual outcome of
any litigation if brought. In addition, although the Company
owns the trademark for the name Galaxy (R), it has applied for but
has not yet received registration of its current design.
While the Company believes that its formulas, processes and
manufacturing equipment are proprietary, the Company has not
sought, and does not intend to seek, patent protection for such
technology. In not seeking patent protection, the Company is
instead relying on the complexity of its technology, on trade
secrecy laws, and employee confidentiality agreements. However,
there can be no assurance that other companies will not acquire
information which the Company considers to be proprietary or will
not independently develop equivalent or superior products or
technology and obtain patent or similar rights with respect
thereto. Although the Company believes that its technology has
been independently developed and does not infringe the patents of
others, certain components of the Company's manufacturing
equipment and processes could infringe existing or future
patents, in which event the Company may be required to modify its
equipment designs or processes or obtain a license. No assurance
can be given that the Company will be able to do so in a timely
manner or upon acceptable terms and conditions and the failure to
do either of the foregoing could have a material adverse effect
on the Company.
Uninsured Losses. The Company has acquired comprehensive
insurance for the Company's property, including liability, fire
and extended coverage, which is customary for similar property.
However, there are certain types of losses which are either
uninsurable or not economically insurable within the Company's
budget. Should an uninsured event occur with respect to its
property, the Company could suffer additional losses.
Reliance on Key Customers. For the nine-month periods
ended December 31, 1995 and 1994 (unaudited) and fiscal years
ended March 31, 1995 and 1994, the Company had net sales of
<PAGE 16>
$2,298,666, $4,305,174, $4,748,283, and $6,011,819, respectively.
Sysco Food Service and Texas Smokehouse Foods, Inc. each
represented more than 5% of the Company's gross sales for fiscal
1995, and Sysco Foods Service, Multi-Foods Corporation, Perry
County Foods, Ameriserv, and Stow Mills each represented more
than 5% of the Company's gross sales for the nine-month period
ended December 31, 1995 (unaudited). The Company does not have
any contractual arrangements with any of its customers which
require any minimum level of purchases. In the event any of
these customers were to cease to distribute or purchase the
Company's products, the Company would have to seek additional
distribution channels, and its business could be materially
adversely affected.
Reliance on Foreign/Key Suppliers. Due to the export
supports and subsidies provided by such countries as New Zealand
and members of the European Economic Community, suppliers from
such countries are often able to supply raw materials to the
Company at prices lower than domestic suppliers. Accordingly,
the Company purchases its major ingredient, casein (a milk
protein), from foreign suppliers. Although the Company believes
that it could obtain casein from domestic sources if a foreign
supply of casein were reduced or terminated, no assurance can be
given that it would be able to do so and, in any event, the
interruption in the Company's production could have an adverse
effect on the Company's business. Because casein is purchased by
the Company from foreign suppliers, its availability is subject
to a variety of factors, including federal import regulations.
In the event the relevant export supports or subsidies are
reduced or eliminated or the United States takes retaliatory
action or otherwise establishes trade barriers with any of the
countries which supplies casein to the Company, such an event
could have a material adverse affect on the Company and its
operations. Moreover, exchange rate fluctuations and/or the
imposition of import quotas or tariffs could, have an adverse
effect on the Company's business and its ability to compete with
conventional cheese companies that do not rely on foreign
suppliers.
For the nine-month periods ended December 31, 1995 and 1994
(unaudited) and for the fiscal years ended March 31, 1995 and
1994, the Company purchased $1,091,683, $1,646,683, $1,802,476,
and $2,177,958, respectively, of casein, canola and other oils,
and other ingredients, which are the principal raw materials used
to manufacture the Company's products. Principal suppliers of
the Company's raw materials are Besnier-Scerma U.S.A., Ashland
Chemical Company, Fugi Vegetable Oil, Inc., Wilsey Foods,
Industrial Commodities, Inc., Systems-Bio Industries, Inc., Food
<PAGE 17>
Ingredient Sales, Inc., and Grain Processing Corp. Generally,
the Company does not have any contractual arrangements with any
of these entities, except for short-term agreements for periods
of less than six months. If any of these entities were to cease
to supply casein, canola oil, enzymes, or chemicals to the
Company, the Company would have to seek additional sources of its
major raw materials, and its business could be materially
adversely affected.
Government Regulation. The Company is subject to extensive
regulation by federal, state, and local governmental authorities
regarding the quality, purity, manufacturing, distribution, and
labeling of food products. The Company's manufacturing facility
is subject to regulation and inspection by the United States
Department of Agriculture, the United States Food and Drug
Administration, the Florida Department of Agriculture and
Consumer Services, and the Orange County, Florida, Department of
Health. A finding of a failure to comply with one or more
regulatory requirements can result in the imposition of sanctions
including closing of all or a portion of a facility for a period
during which the manufacturer is permitted to attempt to remedy
the alleged violations. In addition to licensing requirements, a
regulatory agency could declare a product hazardous or limit its
use or require a recall of a product.
The Company believes that it is currently in substantial
compliance with all applicable governmental regulations regarding
its current products and has all material government permits,
licenses, qualifications, and approvals required for its
operations. However, there can be no assurance that the Company
will be able to continue to comply with such regulations, or
comply with future regulations, without inordinate cost or
interruption of the Company's operations.
Authorized Preferred Stock. Preferred Stock may be issued
from time to time in one or more series. The Board of Directors
is authorized to determine the rights, privileges, and
restrictions granted to and imposed upon any series of Preferred
Stock and to fix the number of shares of any series of Preferred
Stock and the designation of any such series. The Board of
Directors is thus authorized to permit the Company to issue one
or more series of Preferred Stock with voting and conversion
rights which could adversely affect the interests or voting
rights of the holders of Common Stock, without obtaining the
approval of the holders of Common Stock.
As of April 16, 1996, the Company authorized and thereafter
issued 4,000 shares of its Series A Preferred Stock. The terms
<PAGE 18>
of the Series A Preferred Stock provide that the holder thereof
shall have the right to convert such shares into shares of Common
Stock at any time after June 30, 1996 at the Conversion Price
equal to the Conversion Percentage, which percentage is subject
to adjustment upon the occurrence of certain events, multiplied
by the Average Market Price of the Common Stock for the five
consecutive trading days ending one trading day prior to the date
the notice of conversion is received from the holder by the
Company. Under certain circumstances, the Company may require
the holder of the Series A Preferred Stock to convert some or all
of its shares of Series A Preferred Stock into Common Stock. In
no case, however, shall the holder be permitted to hold, in the
aggregate, such number of shares of Common Stock which would
exceed 4.9% of the aggregate outstanding shares of Common Stock.
The number of shares of Common Stock issuable upon conversion of
the Series A Preferred Stock is determined by dividing the Stated
Value of the Series A Preferred Stock by the Conversion Price
then in effect.
The holders of the Series A Preferred Stock are not
entitled to receive any dividends with respect to the Series A
Preferred Stock. The holders of the Series A Preferred Stock are
entitled to a liquidation preference, prior to the payment of any
amounts payable to the holders of the Common Stock, equal to the
Stated Value per share of Series A Preferred Stock. Although the
Company may authorize and issue additional or other preferred
stock which is of equal or junior rank to the Series A Preferred
Stock with respect to the preferences as to distributions and
payments upon liquidation, dissolution or winding up of the
Company, the Company may not authorize or issue capital stock
which is senior in rank to the Series A Preferred Stock with
respect to such rights and preferences. The Company has the
right to redeem all or any part of the Series A Preferred Stock
at any time subsequent to 180 days after the effective date of
the Registration Statement at a redemption price of $1,398.60 per
share. See ``Description of Capital Stock- Preferred Stock.''
The Company has no present plans to issue any additional
shares of Preferred Stock.
THE COMPANY
The Company was first incorporated under the name ``Galaxy
Cheese Company'' under the laws of the Commonwealth of
Pennsylvania in 1980 and was merged into a wholly-owned
subsidiary of the same name organized under the laws of the State
of Delaware in 1987. In February 1992, the Company officially
<PAGE 19>
changed its name from Galaxy Cheese Company to Galaxy Foods
Company. The Company operates a comprehensive manufacturing
facility at its corporate offices located at 2441 Viscount Row,
Orlando, Florida.
The Company's products are marketed to retailers in three
principal markets: retail, food service, and industrial.
Customers ranging from supermarket chains and health food stores,
to industrial food manufacturers which utilize the Company's
products in the production of food items such as frozen pizza, to
restaurant chains, to food service distributors, and to
institutions such as hotels, hospitals and schools.
In June 1991, the Company suffered a complete loss, due to
fire, of its sole-existing manufacturing facility located in New
Castle, Pennsylvania. The fire was ruled an arson by the
Pennsylvania Fire Marshall of the Pennsylvania State Police, and
the investigation of the circumstances surrounding the fire is
still open according to that agency. After the fire, the Company
used the proceeds of its property and business interruption
insurance to refurbish and equip a comprehensive manufacturing
facility in Orlando, Florida. The Company has relocated its
entire operations from New Castle, Pennsylvania, to its new
facility in Orlando, Florida. In June 1992, the Company resumed
production and shipment of many of its products directly from its
Orlando plant to customers in each of the Company's three
principal markets--retail, food service and industrial. Since
that time, the Company has focused its efforts on increasing its
sales by introducing into the market new products and
re-introducing certain products that were originally introduced
prior to the fire, engaging nationwide distributors and brokers
in the marketing of its products, and concentrating its marketing
efforts on its nutritionally superior substitute cheese line of
products.
SELLING STOCKHOLDERS
See Appendix A for information regarding the identity of
the Selling Stockholders, their relationship with the Company, if
any, the shares of Common Stock presently owned by each of the
Selling Stockholders, and the number of such shares which are
offered by them for sale hereunder.
<PAGE 20>
PLAN OF DISTRIBUTION
The 8,240,568 shares of Common Stock of the Company offered
hereby are being registered for sale pursuant to the Registration
Statement for the accounts of the Selling Stockholders, and the
Company will receive none of the proceeds from the sale of any
such shares. The shares being offered hereby will not be sold
through underwriters. However, the Selling Stockholders or any
broker or dealer utilized by them in connection with any sales
hereunder may be considered ``underwriters'' as defined in the 33
Act. The Company is bearing all of the estimated $62,000 in
expenses associated with the Registration Statement.
Manner of Distribution
As of the date of this Prospectus, no Selling Stockholder
has informed the Company that the Selling Stockholder has any
agreement, arrangement, or understanding with any broker or
dealer concerning the distribution of shares of Common Stock
offered hereby. The distribution of the shares of Common Stock
by the Selling Stockholders may be effected from time to time in
one or more transactions (which may involve block transactions)
(i) in the over-the-counter market, (ii) in negotiated
transactions, (iii) pursuant to Rule 144, if available at the
time of sale, or (iv) a combination of such methods of sale, at
market prices prevailing at the time of sale or at negotiated
prices. As described below under ``Restrictions on Use of
Prospectus,'' in the case of the Selling Stockholders who elect
to effect such transactions by selling shares to or through
broker-dealers, such broker-dealers may receive compensation in
the form of usual and customary brokerage commissions only.
The Company has agreed to indemnify certain of the Selling
Stockholders and their ``controlling persons'' or
``underwriters'' (as such terms are defined in the 33 Act)
participating in the distribution of shares of the Common Stock
hereunder from certain liabilities, including those arising under
the securities laws. The Company has been informed that any such
indemnification for liabilities arising under the 33 Act is, in
the opinion of the SEC, against public policy and, therefore,
unenforceable.
Certain Selling Stockholders may be considered affiliates
of the Company.
<PAGE 21>
Sales by Broker-Dealers
The Company's Common Stock is covered by an SEC rule that
imposes additional sales practice requirements on broker-dealers
who sell such securities to persons other than established
customers and accredited investors (generally, institutions with
assets in excess of $5,000,000 or individuals with net worth in
excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse). For transactions covered by
this rule, the broker-dealer must make a special suitability
determination for the purchaser and receive the purchaser's
written agreement to the transaction prior to the sale.
Consequently, the rule may affect the ability of broker-dealers
to sell the Company's securities, and also may affect the ability
of purchasers in this offering to sell their shares in the
secondary market.
Restrictions on Use of Prospectus
This Prospectus may only be used in accordance with the
sales of Common Stock effected hereunder in compliance with the
following:
1. A Selling Stockholder may either sell directly to a
purchaser or place for sale any shares of Common Stock with
broker-dealers registered as such with the National Association
of Securities Dealers, Inc. (``NASD'') who are in good standing
with such organization. In connection with sales made directly
to a purchaser by a Selling Stockholder, the Selling Stockholder
must deliver a prospectus to the prospective purchaser and must
comply with applicable laws of the states in which the purchaser
lives. For sales made by NASD members, the Selling Stockholder
shall deliver to the broker all necessary information to allow
the broker to comply with the prospectus delivery and other
requirements of applicable law in connection with any such sale.
The agreement with the Selling Stockholder's selling agent must
contain all usual and customary provisions, including, without
limitation, the obligation to (i) comply with all applicable
rules of the NASD, (ii) provide no additional information and
make no representations other than those contained in the
Registration Statement, (iii) comply with all applicable rules of
the SEC and applicable state Blue Sky authorities, including
prospectus delivery requirements, and (iv) otherwise comply with
the requirements for the use of the Registration Statement and
the sale of Common Stock thereunder imposed hereby and by
applicable law.
<PAGE 22>
2. No information or offering materials other than the
Prospectus, as it may be amended or supplemented, may be used by
a Selling Stockholder or broker-dealer in effecting sales
hereunder.
3. As the Registration Statement will remain effective by
the Company, if practicable, for up to two years from the initial
effective date of the Registration Statement, it may be necessary
for the Company to supplement and amend the Registration
Statement from time to time. Upon notice from the Company that
any such supplement or amendment is necessary, a Selling
Stockholder shall cease any effort to sell any shares of Common
Stock offered for sale pursuant to the Registration Statement,
and shall cause any selling agent to cease all sales efforts, and
will not so sell any such shares of Common Stock until he has
received the supplemented or amended prospectus and delivered a
copy of the same to any prospective purchaser or broker effecting
any such sale, as required by law.
4. The Selling Stockholder will bear all commissions,
transfer taxes, fees and disbursements of its counsel, if any,
and all other expenses directly related to its sale of Common
Stock hereunder.
5. No broker-dealer selling shares of Common Stock
hereunder shall be compensated at other than usual and customary
broker rates.
6. From and after the time any shares of Common Stock are
deposited with a selling agent for sale hereunder and until the
agreement with such selling agent is terminated and all
certificates representing unsold shares of Common Stock are
returned to the Selling Stockholders, certain of the Selling
Stockholders may not sell, make any short sale of, loan, pledge,
grant any option for the purchase of or otherwise dispose of,
such shares, without the prior written consent of the selling
agent.
The Company has advised each of the Selling Stockholders of
its obligation to comply fully with applicable securities law
restrictions regarding the sale of Common Stock pursuant to this
Prospectus, including the above described requirements. In
addition, the Company has advised each Selling Stockholder of its
obligation to comply fully with the anti-manipulation provisions
of the 34 Act, including Rules 10b-5, 10b-6, and 10b-7
promulgated thereunder, namely not to buy shares of Common Stock,
not to solicit purchases of shares of Common Stock by others, and
not to engage in any stabilization transaction with respect to
<PAGE 23>
the price of the Common Stock to facilitate the Selling
Stockholder's distribution hereunder. Each Selling Stockholder
also has been advised to notify the Company when its distribution
is completed.
Other Offers
The Company may negotiate from time to time with creditors
or claimants to exchange shares of Common Stock in satisfaction
of indebtedness or obligations of the Company. Additionally, the
Company periodically negotiates with other parties for the
possible private placement or public offering of shares. Certain
of these negotiations may result in agreements with such parties.
The Company reserves the right, from time to time, to file
additional registration statements, which would provide for sale
or distribution in a manner similar to that described herein, for
the sale of shares of Common Stock or other securities on the
open market or otherwise.
USE OF PROCEEDS
The sale of shares of Common Stock of the Company pursuant
to this Prospectus will be solely for the account of the Selling
Stockholders, and the Company will receive none of the proceeds
from the sales of such shares, or any direct benefit, other than
its having complied with various agreements as described
elsewhere in this Prospectus.
DETERMINATION OF OFFERING PRICE
The price of the shares of Common Stock offered for sale by
the Selling Stockholders pursuant to the terms of the secondary
offering described in this Prospectus will be determined in arm's
length negotiations between each Selling Stockholder and certain
parties interested in purchasing the Common Stock or interested
in acting as brokers for the sale of the Common Stock. Factors
which are relevant to the determination of the offering price may
include but are not limited to the market price for the shares,
consideration of the amount of Common Stock offered for sale
relative to the total shares of Common Stock outstanding, the
trading history of the Company's outstanding securities, the
financial prospects of the Company, and the trading price of
other companies similar to the Company in terms of size,
operating characteristics, industry and other similar factors.
<PAGE 24>
DESCRIPTION OF CAPITAL STOCK
General
The Company is authorized to issue an aggregate of
85,000,000 shares of Common Stock, $.01 par value, and 1,000,000
shares of Preferred Stock, $.01 par value. As of April 29, 1996,
54,759,372 shares of Common Stock were issued and outstanding and
held of record by approximately 604 shareholders. Of the
approximately 604 shareholders of record at April 29, 1996, two
were nominees which held approximately 27,320,179 issued and
outstanding shares for their customers in so-called ``street
name.'' As of April 29, 1996, the Company had authorized and
issued 4,000 shares of Series A Convertible Preferred Stock. No
other shares of Preferred Stock have been authorized or issued.
Common Stock
The holders of Common Stock are entitled to one vote for
each share held of record on all matters to be voted by
stockholders. All voting is on a noncumulative basis. The
holders of Common Stock are entitled to receive such dividends,
if any, as may be declared from time to time by the Board of
Directors in its discretion from funds legally available after
provision has been made for each class of stock, if any, having
preference over Common Stock as to dividends. Upon liquidation
or dissolution of the Company, the holders of Common Stock are
entitled to receive pro rata all assets remaining available for
distribution to them, after provision has been made for such
class of stock, if any, having preference over Common Stock to
liquidation. The Common Stock has no preemptive or other
subscription rights and is not subject to any future calls or
assessments. There are no conversion rights, redemption or
sinking fund provisions applicable to shares of Common Stock.
All of the outstanding shares of Common Stock are, including
shares of Common Stock issuable upon exercise of warrants (when
purchased in accordance with the terms thereof), will be, when
issued and delivered, fully paid and nonassessable.
Preferred Stock
Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is authorized to determine
the rights, privileges, and restrictions granted to and imposed
upon any series of Preferred Stock and to fix the number of
shares of any series of Preferred Stock and the designation of
any such series. The Board of Directors is thus authorized to
permit the Company to issue one or more series of Preferred Stock
<PAGE 25>
with voting and conversion rights which could adversely affect
the interests or voting rights of the holders of Common Stock,
without obtaining the approval of the holders of Common Stock.
The issuance of such stock could also have the effect of delaying
or preventing a change in control of the Company.
Series A Convertible Preferred Stock.
As of April 16, 1996, the Company authorized and issued
4,000 shares of Series A Preferred Stock. The terms of the
Series A Preferred Stock provide that the holders thereof shall
have the right to convert such shares into shares of Common Stock
at any time after June 30, 1996 at a Conversion Price equal to
the Conversion Percentage multiplied by the Average Market Price
of the Common Stock for the five consecutive trading days ending
one trading day prior to the date the notice of conversion is
received from the holder by the Company. Under certain
circumstances, the Company may require the holder of the Series A
Preferred Stock to convert some or all of its shares of Series A
Preferred Stock into Common Stock. In no case, however, shall
the holder be permitted to hold, in the aggregate, such number of
shares of Common Stock which would exceed 4.9% of the aggregate
outstanding shares of Common Stock. The number of shares of
Common Stock issuable upon conversion of the Series A Preferred
Stock is determined by dividing the Stated Value of the Series A
Preferred Stock, which is equal to $1,000, by the Conversion
Price then in effect.
In addition, pursuant to the terms of the Series A
Preferred Stock, in the event that a registration statement
registering the shares of Common Stock into which the Series A
Preferred Stock is convertible has not been declared effective as
of June 30, 1996, or if sales cannot be made pursuant to the
registration statement, or if the Common Stock is not listed on
the NASDAQ System, the New York Stock Exchange (``NYSE'') or the
American Stock Exchange (``AMEX''), the Conversion Percentage of
the Series A Preferred Stock is required to be reduced by such
number of percentage points equal to three times the sum of (i)
the number of months (prorated for partial months) by which the
effectiveness of the registration statement is delayed, (ii) the
number of months that sales cannot be made after the effective
date of the registration statement, and (iii) the number of
months that the Common Stock is not listed or included for
quotation on the NASDAQ System, NYSE or AMEX. 3,500,000 shares
of Common Stock into which the Series A Preferred Stock is
convertible are being registered pursuant to the Registration
Statement of which this Prospectus is a part.
<PAGE 26>
Furthermore, if a holder of Series A Preferred Stock
converts Series A Preferred Stock into Common Stock (the
``Conversion Stock''), and a subsequent event as described above
requires adjustment to the Conversion Percentage prior to the
sale by such holder of such Conversion Stock, the Company is
required to pay to such holder, within five days after receipt of
a notice of sale therefrom, an amount equal to the Average Market
Price of the Conversion Stock for the five trading days ending
one trading day prior to the date of conversion multiplied by
three-hundredths (0.03) times the number of months (prorated for
partial months) for which adjustment is required, as described
above. Such amount may be paid by the Company either in cash or,
at the Company's option, in Common Stock based on the Average
Market Price of the Conversion Stock for the period of five
consecutive trading days ending on the date of the sale of such
Conversion Stock, provided, that cash must be paid (i) in the
event that the Common Stock is not traded on NASDAQ System, NYSE,
or AMEX or (ii) with respect to such shares which would cause the
holder of such shares to own Common Stock in excess of 4.9% of
the outstanding shares of Common Stock of the Company.
The holders of the Series A Preferred Stock are not
entitled to receive any dividends with respect to the Series A
Preferred Stock. The holders of the Series A Preferred Stock are
entitled to a liquidation preference, prior to the payment of any
amounts payable to the holders of the Common Stock, equal to the
Stated Value per share of Series A Preferred Stock. Although the
Company may authorize and issue additional or other preferred
stock which is of equal or junior rank to the Series A Preferred
Stock with respect to the preferences as to distributions and
payments upon liquidation, dissolution or winding up of the
Company, the Company may not authorize or issue capital stock
which is senior in rank to the Series A Preferred Stock with
respect to such rights and preferences. The Company has the
right to redeem all or any part of the Series A Preferred Stock
at any time subsequent to 180 days after the effective date of
the registration statement referred to hereinabove at a
redemption price of $1,398.60 per share.
The Company has no present plans to issue any additional
shares of Preferred Stock.
LEGAL MATTERS
Baker & Hostetler, Orlando, Florida, has rendered an
opinion that the shares of Common Stock offered hereby are
<PAGE 27>
legally issued, fully paid and nonassessable. None of the
attorneys in such firm holds securities of the Company.
EXPERTS
The financial statements for the fiscal years ended
March 31, 1995, and March 31, 1994, that are incorporated in this
Prospectus and the Registration Statement by reference have been
audited by BDO Seidman, LLP, independent certified public
accountants, to the extent and for the period set forth in their
report incorporated herein by reference and are included in
reliance upon such reports given upon the authority of said firm
as experts in auditing and accounting.
<PAGE 28>
APPENDIX A
SELLING STOCKHOLDERS
Percentage
of Outstanding
Shares of
Number of Common Stock
Shares of to be
Number of Common Beneficially
Shares of Stock to Owned After
Number of Common Stock be Beneficially Completion
Shares Offered Owned Assuming of
Name and of Common for Sale Sale of All Distribution
Address of Stock Pursuant Shares Assuming Sale
Selling Beneficially to this Offered of all Shares
Stockholder Owned Prospectus Hereunder Offered
ALLENSTOWN
INVESTMENT
COMPANY
(1). . . . . 580,000 580,000 0 0%
706 Ocean Drive
Juno Beach, Florida 33408
LEE
CHIRA
2) . . . . . 75,000 75,000 0 0%
3300 S. Hiawassee Road, Suite 107
Orlando, Florida 32835-6331
DIRECTIONS
INTERNA-
TIONAL (3). . 50,000 50,000 0 0%
Attention James Wong
2329 Coit Road, Suite B
Plano, Texas 75075
FOUR HORSEMEN,
LTD. (4). . . 18,000 18,000 0 0%
Third Floor Murdoch House
South Quay, Douglas
Isle of Man IM1 5AS
DANIEL GALLERY
(5). . . . . .50,000 50,000 0 0%
3414 Prospect Drive
Castle Rock, Colorado 80104
<PAGE 29>
Percentage
of Outstanding
Shares of
Number of Common Stock
Shares of to be
Number of Common Beneficially
Shares of Stock to Owned After
Number of Common Stock be Beneficially Completion
Shares Offered Owned Assuming of
Name and of Common for Sale Sale of All Distribution
Address of Stock Pursuant Shares Assuming Sale
Sellng Beneficially to this Offered of all Shares
Stockholder Owned Prospectus Hereunder Offered
RICHARD
GENTILE
(6) . . . . 49,250 49,250 0 0%
6505 Market Street, 103
Boardman, Ohio 44512
GFL ADVANTAGE
FUND LTD.
(7) . . . .3,500,000 3,500,000 0 5.6%
c/o Genesee Advisors
Attention Neil T. Chau
11921 Freedom Drive, Suite 550
Reston, Virginia 22090
GFL
PERFORMANCE
FUND
LTD. (8). .1,337,524 1,337,524 0 2.1%
c/o Genesee Advisors
Attention Neil T. Chau
11921 Freedom Drive, Suite 550
Reston, Virginia 22090
MARK G.
HOLLO (9) . .676,644 676,644 0 1%
101 Park Avenue
New York, New York 10178
J&C RESOURCES,
INC. (10). . 300,000 300,000 0 0%
96 Walden Pond Drive
Nashua, New Hampshire 03060
<PAGE 30>
Percentage
of Outstanding
Shares of
Number of Common Stock
Shares of to be
Number of Common Beneficially
Shares of Stock to Owned After
Number of Common Stock be Beneficially Completion
Shares Offered Owned Assuming of
Name and of Common for Sale Sale of All Distribution
Address of Stock Pursuant Shares Assuming Sale
Sellng Beneficially to this Offered of all Shares
Stockholder Owned Prospectus Hereunder Offered
J.C. II
CORPORATION
(11) 300,000 300,000 0 *
415 Fullerton Parkway
Apt. 1204
Chicago, Illinois 60614
DENNIS JONES
REVOCABLE
TRUST
U/T/A
DATED
03/16/93
(12). . . . . 3,333 3,333 0 0%
Attention Dennis Jones, Trustee
262 Carlyle Lake Drive
St. Louis, Missouri 63141
KOI
COMMUNICATIONS
CORPORATION
(13) . . . . 40,000 40,000 0 0%
Attention Mr. Thomas Tedrow
1110 Palmer Avenue
Winter Park, Florida 32789
JACK
LAMPERT
(12) . . . 45,297 45,297 0 0%
1750 South Big Bend
St. Louis, Missouri 63117
<PAGE 31>
Percentage
of Outstanding
Shares of
Number of Common Stock
Shares of to be
Number of Common Beneficially
Shares of Stock to Owned After
Number of Common Stock be Beneficially Completion
Shares Offered Owned Assuming of
Name and of Common for Sale Sale of All Distribution
Address of Stock Pursuant Shares Assuming Sale
Sellng Beneficially to this Offered of all Shares
Stockholder Owned Prospectus Hereunder Offered
ARTHUR
LEVINE
(1) . . . 20,000 20,000 0 0%
Arthur Levine & Associates
30 Rowes Wharf
Boston, Massachusetts 02110
LONDON
SELECT
ENTERPRISES
(14). . . . 219,180 219,180 0 *
Post Office Box N-8199
Nassau, Bahamas
MARSHALL K.
LUTHER (15) .65,000 65,000 0 0%
867 Sweetwater Island Circle
Longwood, Florida 32779
ANDREA
McWILLIAMS
(16). . . . . 480 480 0 0%
82 Kilburn Road
Garden City, New York 11530
ALBERT
MORINI
(17). . . . . 8,056 8,056 0 0%
1049 Connoquenessing Terrace
Ellwood City, Pennsylvania 16117
<PAGE 32>
Percentage
of Outstanding
Shares of
Number of Common Stock
Shares of to be
Number of Common Beneficially
Shares of Stock to Owned After
Number of Common Stock be Beneficially Completion
Shares Offered Owned Assuming of
Name and of Common for Sale Sale of All Distribution
Address of Stock Pursuant Shares Assuming Sale
Sellng Beneficially to this Offered of all Shares
Stockholder Owned Prospectus Hereunder Offered
MARCIA H.
MUSTO (18). .50,000 50,000 0 0%
c/o Fahnestock & Co., Inc.
Attention Teresa Collins
110 Wall Street
New York, New York 10005
JOHN
PERNER
(19). . . . 50,000 50,000 0 0%
310 Ledgemont Court
Atlanta, Georgia 30342
WILLIAM
RAWLINGS
(20) . . . 10,500 10,500 0 0%
11 Old Fort Avenue
Kennebunkport, Maine 04046
SANDS
BROTHERS
& CO.,
LTD. (21). .676,637 676,637 0 1%
101 Park Avenue
New York, New York 10178
THIRD
WORLD
INVESTMENTS
LTD (14). . 60,000 60,000 0 0%
Attention Gordon Mundy
Third Floor Murdoch House
South Quay, Douglas
Isle of Man IM1 5AS
<PAGE 33>
Percentage
of Outstanding
Shares of
Number of Common Stock
Shares of to be
Number of Common Beneficially
Shares of Stock to Owned After
Number of Common Stock be Beneficially Completion
Shares Offered Owned Assuming of
Name and of Common for Sale Sale of All Distribution
Address of Stock Pursuant Shares Assuming Sale
Sellng Beneficially to this Offered of all Shares
Stockholder Owned Prospectus Hereunder Offered
STANLEY
TURK
(22) . . . 19,000 19,000 0 0%
90 North Broadway
Irving-on-Hudson, New York 10533
EARL
TYREE
(23) . . . . 18,000 18,000 0 0%
240 N. Line Drive
Apopka, Florida 32703
DOUGLAS
WALSH
(24). . . . 18,667 18,667 0 0%
906 Tamiami Trail
Ruskin, Florida 33570
TOTAL NUMBER OF SHARES
REGISTERED. . . . . 8,240,568
__________________________
* Less than 1%.
<PAGE 34>
FOOTNOTES TO APPENDIX A
(1) On August 8, 1993, the Board of Directors approved the
issuance to Allenstown Investment Company (``Allenstown'')
of a warrant to acquire 600,000 shares of the Company's
Common Stock at a price of $0.90 per share. Allenstown
has exercised a portion of the warrant to the extent of
90,000 shares and has assigned a portion of the warrant
equal to 20,000 shares to Mr. Arthur Levine, a Selling
Stockholder.
(2) Lee Chira was issued 75,000 shares of the Company's Common
Stock in consideration of the performance of certain
consulting services provided by Mr. Chira to the Company
pursuant to an agreement dated March 15, 1995.
(3) Directions International holds warrants to acquire 50,000
shares of the Company's Common Stock with an exercise
price of $0.53 per share. Such warrants were granted in
consideration of the performance of certain consulting
services provided by Directions International to the
Company pursuant to an agreement dated December 29, 1995.
(4) The Four Horsemen, Ltd. (``Four Horsemen''), holds warrants
to acquire 18,000 shares of the Company's Common Stock at a
price of $0.988 per share, and intends to exercise the
warrants immediately preceding a sale. Four Horsemen was
granted the warrants in consideration for introducing to
the Company certain foreign investors who purchased shares
of the Company's Common Stock in offshore transactions
pursuant to Regulation S, promulgated under the 33 Act.
(5) Daniel Gallery holds warrants to acquire 50,000 shares of
the Company's Common Stock which were granted in
consideration of the performance of certain consulting
services provided by Daniel Gallery to the Company pursuant
to a consulting agreement dated November 6, 1995. The
exercise price of the warrants is $0.59 per share, the
closing bid price of the Common Stock on the NASDAQ System
on November 6, 1995.
(6) Dr. Gentile, a former member of the Board of Directors, was
granted an option on June 19, 1993, for an aggregate of
15,000 shares at an exercise price of $1.25 per share. The
closing bid price of the Company's Common Stock as quoted
on the NASDAQ System on June 18, 1993 was $1.25 per share.
Dr. Gentile's exercise price was increased to $2.00 per
share on January 31, 1994. The closing bid price of the
<PAGE 35>
Company's Common Stock as quoted on the NASDAQ System on
January 28, 1994 was $4.625 per share. Dr. Gentile
exercised his option as to all 15,000 shares on
February 14, 1994. On October 1, 1993, Dr. Gentile was
granted an option to acquire 250 shares at an exercise
price of $2.125 per share. The closing bid price of the
Company's Common Stock as quoted on the NASDAQ System on
September 30, 1993, was $2.00 per share. On January 31,
1994, the exercise price of this option was reduced to
$2.00 per share. The closing bid price of the Company's
Common Stock as quoted on the NASDAQ System on January 28,
1994 was $4.625 per share. This option expires on
October 1, 2003. On October 1, 1994, Dr. Gentile was
issued an option to purchase 1,000 shares at an exercise
price of $2.75. The closing bid price of the Company's
Common Stock as quoted on the NASDAQ system on
September 30, 1994, was $2.875 per share. This option
expires October 1, 2004. On October 1, 1995, Dr. Gentile
was granted an option to purchase 1,000 shares at an
exercise price of $0.59 per share. The closing bid price
of the Company's Common Stock as quoted on the NASDAQ
system on September 30, 1995, was $0.59375 per share. This
option expires on October 1, 2005. All of Dr. Gentile's
options currently are exercisable.
(7) GFL Advantage Fund Ltd. acquired 4,000 shares of the
Company's Series A Convertible Preferred Stock, $.01 par
value (the ``Series A Preferred Stock''), in accordance
with Regulation D, as promulgated under the 33 Act, and
pursuant to a certain Securities Purchase Agreement dated
as of April 16, 1996 at a purchase price of $1,000 per
share. The terms of the Series A Preferred Stock provide
that the holder thereof shall have the right to convert
such shares into shares of Common Stock at any time after
June 30, 1996 at a conversion price (the ``Conversion
Price'') equal to 71.5%, which percentage is subject to
adjustment upon the occurrence of certain events (the
``Conversion Percentage''), multiplied by the Average
Market Price (as defined below) of the Common Stock for the
five consecutive trading days ending one trading day prior
to the date the notice of conversion is received from the
holder by the Company. Under certain circumstances, the
Company may require the holder of the Series A Preferred
Stock to convert some or all of its shares of Series A
Preferred Stock into Common Stock. In no case, however,
shall the holder be permitted to hold, in the aggregate,
such number of shares of Common Stock which would exceed
4.9% of the aggregate outstanding shares of Common Stock.
<PAGE 36>
The ``Average Market Price'' of the Common Stock is the
arithmetic average of the closing bid prices for the Common
Stock for each trading day as quoted on the NASDAQ System
or, if the NASDAQ System is not the principal trading
market for the Common Stock, on the principal trading
market for the Common Stock, or, if market value cannot be
so calculated, the average fair market value during such
period as reasonably determined in good faith by the
Company's Board of Directors (all as appropriately adjusted
for any stock dividend, stock split, or other similar
transaction during such period or between the end of such
period and the date of conversion). The number of shares
of Common Stock issuable upon conversion of the Series A
Preferred Stock is determined by dividing the stated value
of the Series A Preferred Stock, which is equal to $1,000
(the ``Stated Value''), by the Conversion Price then in
effect. See ``Description of Capital Stock-Preferred
Stock-Series A Convertible Preferred Stock.'' The Company
has estimated that 3,500,000 shares of Common Stock will be
issuable to the holder of the Series A Preferred Stock upon
conversion and is registering such number of shares
pursuant to the Registration Statement of which this
Prospectus is a part. In the event that the Series A
Preferred Stock is convertible into a greater number of
shares of Common Stock, additional Common Stock will be
registered by the Company on behalf of the holder of the
Series A Preferred Stock.
(8) GFL Performance Fund Ltd. acquired 1,337,524 shares of the
Company's Common Stock in accordance with Regulation D, as
promulgated under the 33 Act, and pursuant to a certain
Securities Purchase Agreement dated as of April 16, 1996 at
a price of $1.4953 per share.
(9) Mark G. Hollo holds warrants to acquire 676,644 shares of
the Company's Common Stock at a price of $0.74 per share,
and intends to exercise the warrants immediately preceding
a sale. Mr. Hollo is the managing director of Sands
Brothers & Co., Ltd., the placement agent for an offering
of the Company's Common Stock conducted pursuant to
Regulation S, as promulgated under the 33 Act, in
consideration for services in connection with such
offering. Such warrants were granted pursuant to a certain
Selling Agreement dated February 6, 1995, as amended.
(10) J&C Resources, Inc. is the holder of 300,000 shares of
Common Stock which it acquired on August 2, 1994, by
exercising a warrant issued by the Company in consideration
<PAGE 37>
for certain loans made to the Company by J&C Resources,
Inc. The exercise price of such warrant was $1.375 per
share.
(11) Pursuant to an agreement dated February 27, 1995, J.C. II
Corporation has the right to acquire up to 300,000 shares
upon the achievement of certain sales quotas by J.C. II
Corporation with respect to the Company's products. The
shares may be acquired at a price of $0.68750 per share.
(12) On July 7, 1992, the Company completed a private placement
of certain units to Mr. Lampert and the Dennis Jones
Revocable Trust U/T/A Dated 3/16/93 (collectively, the
``1992 Subscribers''), which consisted of one share of
Common Stock and one warrant to purchase one share of
Common Stock (``Units''). The Company sold the Units for
$3.00 each. Under the terms of the warrants which
comprised part of each Unit, the 1992 Subscribers had the
right to acquire the number of shares of Common Stock equal
to the number of Units purchased at an exercise price of
$5.25 per share. On September 7, 1993, the Company granted
to the 1992 Subscribers a reduction in the exercise price
of the warrants from $5.25 per share to $1.25 per share,
provided the warrants were exercised on or before
September 16, 1993. The closing bid price of the Company's
Common Stock as quoted on the NASDAQ System on September 6,
1993 was $2.00 per share. In addition, the Company also
effectuated the placement of additional shares to the 1992
Subscribers at a per share price of $1.25.
Pursuant to a letter agreement entered into by the Company,
the Company agreed to register with the SEC all of the
shares acquired by the investors in July, 1992, and all of
the shares acquired pursuant to the exercise of the
warrants which comprised part of the Units sold. In the
event the registration of such shares was not completed
within 150-days from the exercise of the warrants, the
Company agreed to issue to the 1992 Subscribers additional
warrants, expiring two years from the expiration of the
150-day period, to purchase the Company's Common Stock at
an exercise price of 50% below the average trading price of
the Company's Common Stock during such 150-day period. The
150-day period during which this registration statement was
to be effective by the SEC expired on March 5, 1994. On
November 18, 1994, the 1992 Subscribers exercised such
warrants issued by the Company on March 5, 1994, at a price
of $0.85 per share in consideration of the Company's
agreement to file a registration statement in order to
<PAGE 38>
register such shares on or before December 12, 1994. The
Company failed to file such registration statement on or
before December 12, 1994 and, as a result, the Company has
agreed to issue to the 1992 Subscribers additional shares
at a purchase price of $0.85 per share. The Company has
agreed to register all of such shares.
The following table sets forth the name of each 1992
Subscriber, the number of shares acquired through the
purchase of Units in July, 1992, the number of shares
acquired in 1994 by the exercise of warrants issued in
July, 1992, the number of additional shares purchased in
1994, the number of penalty shares held, and the total
number of shares beneficially owned by each such person as
of November 30, 1994:
No. of No. of
No. of Shares/ Addi- No. of Contin- No. of
Shares/ Warrants tional Penalty gent Shares
In- Units Acquired/ Shares Shares Penalty Bene-
vestor Acquired Exercised Purchased Obtained Shares cially
Name 1992 (a) 1993 (b) 1993 (c) (d) (d) Owned
Dennis 3,333 3,333 6,666 9,999 9,999 33,330
Jones,
Trustee
Dennis
Jones
Revoca-
ble
Trust,
U/T/A
Dated
03/16/93
Jack 10,001 10,001 20,002 30,003 30,003 100,010
Lampert
TOTALS 13,334 13,334 26,668 40,002 40,002 133,341
(a) Purchased at a price of $3.00 per share.
(b) Purchased at an exercise price of $1.28125 per share.
(c) Purchased at a price of $1.28125 per share.
(d) Purchased at a price of $0.85 per share.
<PAGE 39>
Subsequent to July 15, 1994, Mr. Lampert and the Dennis
Jones Revocable Trust U/T/A Dated 3/16/93 sold certain
shares of Common Stock which they acquired in July, 1992,
pursuant to Rule 144 promulgated under the 33 Act and
pursuant to a registration statement previously filed by
the Company. The shares referenced in Appendix A above
with respect to each of the 1992 Subscribers represent the
remaining shares held by each such 1992 Subscriber.
(13) KOI Communications Corporation holds warrants to acquire
40,000 shares of the Company's Common Stock which were
granted in consideration of the performance of certain
consulting services provided by KOI Communications
Corporation to the Company pursuant to an agreement dated
October 12, 1995. The exercise price of the warrants is
$0.53 per share.
(14) London Select Enterprises (``London Select'') was issued
warrants to acquire 279,180 shares of the Company's Common
Stock at a price of $0.988 per share. London Select was
granted the warrants in consideration for introducing to
the Company certain foreign investors who purchased shares
of the Company's Common Stock in offshore transactions
pursuant to Regulation S, promulgated under the 33 Act. As
of April 29, 1996, London Select assigned warrants to
acquire 60,000 shares of Common Stock to Third World
Investments Ltd. which participated with London Select in
the Regulation S offshore transactions. London Select and
Third World Investments Ltd. each intends to exercise the
warrants immediately preceding a sale.
(15) Mr. Luther, a current member of the Company's Board of
Directors, holds warrants to acquire 50,000 shares of
Common Stock at a price of $0.6407 per share. These
warrants were granted as compensation for work per the
terms of Mr. Luther's agreement with the Company to serve
as Senior Vice President of Marketing for a term of one
year. In addition, Mr. Luther was granted options to
acquire 15,000 shares of the Company's Common Stock on
January 31, 1996, for an exercise price of $0.8125 per
share, which option expires on January 31, 2006. None of
these options have been exercised as of the date hereof.
(16) In consideration for consulting services provided to the
Company, the Company issued to Andrea McWilliams 480 shares
of Common Stock. The price used to determine the number of
shares to be issued to Ms. McWilliams was $5.625 per share.
<PAGE 40>
Ms. McWilliams also received $6,300 in cash compensation
and reimbursement for travel and living accommodations.
(17) On December 6, 1994, Albert Morini, a former employee of
the Company, acquired 21,121 shares of Common Stock for a
price of $1.625. The purchase price for the shares was
offset against certain obligations of the Company with
respect to the payment of severance pay to Mr. Morini. The
closing bid price of the Company's Common Stock as quoted
on the NASDAQ System on December 5, 1994 was $1.625 per
share.
(18) Marcia Musto was issued immediately exercisable warrants to
acquire 50,000 shares of the Company's Common Stock at a
price of $1.00 per share on February 20, 1994, in
consideration of the achievement of certain sales levels by
the Company. On March 15, 1996, Mrs. Musto exercised
warrants for all 50,000 shares of Common Stock.
(19) On January 25, 1995, the Company entered into an agreement
with John Perner pursuant to which Mr. Perner would be
granted certain warrants to acquire up to 50,000 shares of
Common Stock upon the Company distributing its products
through retail supermarket chains or other distributors
introduced by Mr. Perner. The warrants are exercisable at
a price of $0.53125 per share.
(20) William Rawlings, a former member of the Board of Directors
of the Company, held options to acquire an aggregate of
20,000 shares at an exercise price of $2.00 per share, and
exercised options as to 10,000 of these shares on March 7,
1994. Thereafter, Mr. Rawlings sold certain of the shares
obtained in connection with such exercise. Mr. Rawlings
still holds 500 shares and options to acquire 10,000
shares.
(21) Sands Brothers & Co., Ltd. (``Sands''), holds warrants to
acquire 676,637 shares of the Company's Common Stock at a
price of $0.74 per share, and intends to exercise the
warrants immediately preceding a sale. Sands was granted
the warrants, in addition to receiving selling commissions
and other compensation, in consideration for acting as
placement agent for an offering of Common Stock conducted
by the Company under a certain a certain Selling Agreement
dated February 6, 1995, as amended, pursuant to Regulation
S, as promulgated under the 33 Act.
<PAGE 41>
(22) Stanley Turk, a former member of the Board of Directors of
the Company, held options to acquire an aggregate of 19,000
shares of the Company's Common Stock at an exercise price
of $2.00 per share, of which 10,000 options were exercised
on March 31, 1994. Mr. Turk still holds all 10,000 shares
acquired on March 31, 1994 and options to acquire 9,000
additional shares.
(23) Mr. Tyree, a current member of the Board of Directors, was
granted an option to acquire 15,000 shares of Common Stock
on September 11, 1992 for an exercise price of $2.88 per
share. This option expires on September 11, 2002. The
closing bid price of the Company's Common Stock as quoted
on the NASDAQ System on September 10, 1992 was $2.875 per
share. Mr. Tyree was granted an additional option on
October 1, 1993 to acquire 1,000 shares of Common Stock at
an exercise price of $2.125 per share. This option expires
on October 1, 2003. The closing bid price of the Company's
Common Stock as quoted on the NASDAQ System on
September 30, 1993 was $2.00 per share. The exercise price
of all of Mr. Tyree's options was reduced to $2.00 per
share on January 31, 1994. The closing bid price of the
Company's Common Stock as quoted on the NASDAQ System on
January 28, 1994 was $4.625 per share. On October 1, 1994,
Mr. Tyree was granted an option to acquire 1,000 shares at
an exercise price of $2.875 per share. The closing bid
price of the Company's Common Stock as quoted on the NASDAQ
System on September 30, 1994, was $2.875 per share. This
option expires on October 1, 2004. On October 1, 1995, Mr.
Tyree was granted an option to acquire 1,000 shares at an
exercise price of $0.59 per share. The closing bid price
of the Company's Common Stock as quoted on the NASDAQ
System on September 29, 1995, was $0.59 per share. This
option expires on October 1, 2005. All of Mr. Tyree's
options currently are exercisable.
(24) Dr. Walsh, a current member of the Board of Directors, was
granted an option to acquire 15,000 shares of Common Stock
on January 31, 1992 for an exercise price of $3.00 per
share. This option expires on January 31, 2002. The
closing bid price of the Company's Common Stock as quoted
on the NASDAQ System on January 30, 1992 was $2.50 per
share. Dr. Walsh was granted an additional option on
October 1, 1992 to acquire 667 shares of Common Stock at an
exercise price of $2.875 per share. This option expires on
October 1, 2002. The closing bid price of the Company's
Common Stock as quoted on the NASDAQ System on
September 30, 1992 was $2.625 per share. On October 1,
<PAGE 42>
1993, Dr. Walsh was granted an option to acquire 1,000
shares at an exercise price of $2.125 per share. The
closing bid price of the Company's Common Stock as quoted
on the NASDAQ System on September 30, 1993 was $2.00 per
share. The exercise price of all of Dr. Walsh's options
was reduced to $2.00 per share on January 31, 1994. The
closing bid price of the Company's Common Stock as quoted
on the NASDAQ System on January 28, 1994 was $4.625 per
share. On October 1, 1994, Dr. Walsh was granted an option
to acquire 1,000 shares at an exercise price of $2.875 per
share. The closing bid price of the Company's Common Stock
as quoted on the NASDAQ System on September 30, 1994, was
$2.875 per share. This option expires on October 1, 2004.
On October 1, 1995, Dr. Walsh was granted an option to
acquire 1,000 shares at an exercise price of $0.59 per
share. The closing bid price of the Company's Common Stock
as quoted on the NASDAQ System on September 30, 1995, was
$0.59 per share. This option expires on October 1, 2005.
All of Dr. Walsh's options currently are exercisable.
<PAGE 43>
[THIS PAGE INTENTIONALLY LEFT
BLANK AND UNNUMBERED]
<PAGE 44>
__________________________________ _________________________
No dealer, salesman, or other
person has been authorized to give
any information or to make any
representations other than those
contained in this Prospectus, and,
if given or made, such information
or representations must not be
relied upon as having been so
authorized. This Prospectus
does not constitute an offer to GALAXY
sell or a solicitation of an FOODS COMPANY
offer to buy such securities in
any jurisdiction to any person 8,240,568 Shares
to whom it is unlawful to make
such an offer or solicitation
in such jurisdiction. Neither Common Stock
the deliver of this Prospectus
nor any sale hereunder shall,
under any circumstances, create
any implication that there has
been no change in the affairs of
the Company since the date
hereof or that the information
contained herein is correct as ___________________
of any time subsequent to its
date. PROSPECTUS
___________________
TABLE OF CONTENTS
Page
Available Information . . . . 7
Incorporation of Certain
Information by Reference. . . 7
Risk Factors. . . . . . . . . 9
The Company . . . . . . . . . 18
Selling Stockholders. . . . . 19
Plan of Distribution. . . . . 20
Use of Proceeds . . . . . . . 23
Determination of Offering
Price . . . . . . . . . . . 23
Description of Capital
Stock . . . . . . . . . . . 24
Legal Matters . . . . . . . . 26
Experts . . . . . . . . . . . 27
Appendix A--Selling
Stockholders. . . . . . . . . 28
<PAGE 45>
Until [_________, 1996] (90
days after the date of this
Prospectus), all dealers effecting
transactions in the registered
securities, whether or not
participating in this distribution,
may be required to deliver a
Prospectus. This is in addition
to the obligation of dealers to
deliver a Prospectus when acting
as underwriters and with respect
to their unsold allotments or
subscriptions.
[May ___, 1996]
______________________________ ______________________________
<PAGE 46>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses payable
by the Registrant in connection with the sale and distribution of
the securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are
estimated except the SEC registration fee.
SEC Registration Fee. . . . . . . . . . . . . $ 5,594.35
NASD Filing Fee . . . . . . . . . . . . . . . 2,122.36
Blue Sky Fees and Expenses. . . . . . . . . . 10,000.00*
Printing Expenses . . . . . . . . . . . . . . 10,000.00*
Legal Fees and Expenses . . . . . . . . . . . 20,000.00*
Accounting Fees and Expenses. . . . . . . . . 12,000.00*
Transfer Agent Fees . . . . . . . . . . . . . 1,500.00*
Miscellaneous . . . . . . . . . . . . . . . . 783.29*
Total . . . . . . . . . . . . . . . . . $ 62,000.00*
__________________
* Estimated
Item 15. Indemnification of Directors and Officers.
The Certificate of Incorporation of Galaxy Foods Company
(the ``Registrant'') and the statutes of the State of Delaware
provide for broad indemnification of the officers and directors
of the Registrant for liabilities arising from actions taken by
them on behalf of the Registrant. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 (the
``33 Act'') may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission (the
``SEC'') such indemnification is against public policy as
expressed in the 33 Act and is, therefore, unenforceable.
Item 16. Exhibits.
The following Exhibits are filed as part of this
Registration Statement.
<PAGE 47>
Exhibit No. Exhibit Description
5 Opinion of Baker & Hostetler, dated May 2, 1996,
regarding legality of shares being offered
(Filed herewith.)
23.1 Consent of Baker & Hostetler, dated May 2, 1996
(Contained in its opinion filed as Exhibit 5.)
23.2 Consent of BDO Seidman, LLP, dated May 2, 1996 (Filed
herewith.)
27 Financial Data Schedule (Filed herewith.)
<PAGE 48>
Item 17. Undertakings.
The Registrant undertakes to:
(a) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a fundamental change
in the information in the registration statement; and
notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the ``Calculation
of Registration Fee'' table in this Registration Statement;
(iii) Include any additional or changed material
information on the plan of distribution;
Provided, however, that paragraphs (a)(i) and (a)(ii) do
not apply if the Registration Statement is on Form S-3 or Form
S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13
or Section 15(d) of the 34 Act that are incorporated by
referenced in the Registration Statement.
(b) For the purpose of determining any liability under
the 33 Act, as amended, each such post-effective amendment may be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under
the 33 Act may be permitted to directors, officers, and
<PAGE 49>
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the SEC such indemnification is against public
policy as expressed in the 33 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 such 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 33 Act and will be governed by the
final adjudication of such issue.
The Registrant undertakes that (a) for purposes of
determining any liability under the 33 Act, 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 33 Act shall be deemed to be
part of this registration statement as of the time it was
declared effective, and (b) for the purpose of determining any
liability under the 33 Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
<PAGE 50>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements of filing on Form
S-3 and authorized this Registration Statement to be signed on
its behalf by the undersigned, in the City of Orlando, State of
Florida this 6th day of May, 1996.
GALAXY FOODS COMPANY
By: /s/ Angelo S. Morini
ANGELO S. MORINI,
President
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Angelo S. Morini Chairman of the Board of May 6, 1996
ANGELO S. MORINI Directors, President, Chief
Executive Officer (Principal
Executive Officer) and
Director
/s/ LeAnn H. Davis Chief Financial Officer May 6, 1996
LEANN H. DAVIS (Principal Financial Officer
and Principal Accounting
Officer)
/s/ Marshall K. Luther Director May 6, 1996
MARSHALL K. LUTHER
/s/ Earl G. Tyree Director May 6, 1996
EARL G. TYREE
___________________ Director May 6, 1996
DOUGLAS A. WALSH
<PAGE 51>
EXHIBITS
<PAGE 52>
EXHIBITS INDEX
Page
Exhibit No. Exhibit Description No.
5 Opinion of Baker & Hostetler, dated May 2,
1996, regarding legality of shares being
offered (Filed herewith.)
23.1 Consent of Baker & Hostetler, dated May 2,
1996 (Contained in its opinion filed as
Exhibit 5.)
23.2 Consent of BDO Seidman, LLP, dated May 2,
1996 (Filed herewith.)
27 Financial Data Schedule (Filed herewith.)
<PAGE 53>
EXHIBIT 5
Opinion of Baker & Hostetler, dated May 2, 1996,
regarding legality of shares being offered
<PAGE 54>
May 2, 1996
Galaxy Foods Company
2441 Viscount Row
Orlando, Florida 32809
Gentlemen:
We have acted as counsel for Galaxy Foods Company, a
Delaware corporation (the "Company"), in connection with the
registration of shares of common stock of the Company, par value
$.01 per share (the "Shares"), pursuant to the Registration
Statement of Form S-3 filed by the Company under the Securities
Act of 1933, as amended (the "Registration Statement"), and the
proposed sale of the Shares by those individuals identified on
Appendix A of the Prospectus which forms part of the Registration
Statement (the "Selling Stockholders") in accordance with the
Registration Statement.
Based upon an examination and review of such documents as
we have deemed necessary, relevant, or appropriate, we are of the
opinion that (i) those Shares currently owned by the Selling
Stockholders and indicated on such Appendix A as being offered
for sale under the Registration Statement have been validly
issued, are fully paid and nonassessable; and (ii) the Company
has the power to issue Shares to the Selling Stockholders
indicated in such Appendix A as being issuable upon exercise of
options or warrants, upon such Selling Stockholders' exercise of
stock options and/or warrants and upon issuance, such Shares will
be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the use of our name
under the caption "Legal Matters" in the Prospectus which
constitutes a part of the Registration Statement.
Very truly yours,
BAKER & HOSTETLER
<PAGE 55>
EXHIBIT 23.1
Consent of Baker & Hostetler, dated May 2, 1996
(Contained in its Opinion filed as Exhibit 5.)
<PAGE 56>
EXHIBIT 23.2
Consent of BDO Seidman, LLP, dated
May 2, 1996
<PAGE 57>
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Galaxy Foods Company
Orlando, Florida
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-3 of our report dated May 19,
1995, except for Note 12, which is as of June 5, 1995, relating
to the financial statements of Galaxy Foods Company appearing in
the Company's Annual Report on Form 10-KSB for the year ended
March 31, 1995.
BDO Seidman, LLP
Orlando, Florida
May 2, 1996
<PAGE 58>
EXHIBIT 27
Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> MAR-31-1996 MAR-31-1996
<PERIOD-END> DEC-31-1995 DEC-31-1995
<CASH> 1,465,647 1,465,647
<SECURITIES> 0 0
<RECEIVABLES> 561,357 561,357
<ALLOWANCES> 105,018 105,018
<INVENTORY> 1,081,356 1,081,356
<CURRENT-ASSETS> 3,371,776 3,371,776
<PP&E> 6,445,626 6,445,626
<DEPRECIATION> 1,057,154 1,057,154
<TOTAL-ASSETS> 8,869,364 8,869,364
<CURRENT-LIABILITIES> 913,370 913,370
<BONDS> 0 0
<COMMON> 531,443 531,443
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 8,869,364 8,869,364
<SALES> 1,029,786 2,298,666
<TOTAL-REVENUES> 1,029,786 2,298,666
<CGS> 1,042,090 2,433,200
<TOTAL-COSTS> 1,042,090 2,433,200
<OTHER-EXPENSES> 695,058 1,749,357
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 44,500 70,822
<INCOME-PRETAX> (751,862) (1,954,713)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (751,862) (1,954,713)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (751,862) (1,954,713)
<EPS-PRIMARY> (.02) (.07)
<EPS-DILUTED> (.02) (.07)
</TABLE>
