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As filed with the Securities and Exchange Commission on December 19, 2000
Registration No. 333-50796
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GALAXY NUTRITIONAL FOODS, INC.
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(Name of Issuer as specified in its Charter)
Delaware 2022 25-1391475
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(State or other jurisdiction (Primary Standard (IRS Employer
of incorporation) Industrial Identification No.)
Classification Code
Number)
2441 Viscount Row, Orlando, Florida 32809
Telephone: (407) 855-5500
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(Address, including zip code, and telephone number, including area code,
of Registrant's Principal Executive Offices)
ANGELO S. MORINI, PRESIDENT
Galaxy Nutritional Foods, Inc.
2441 Viscount Row, Orlando, Florida 32809
Telephone: (407) 855-5500
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
KENNETH C. WRIGHT, ESQUIRE CHRISTOPHER B. NOYES, ESQUIRE
Baker & Hostetler LLP Godfrey & Kahn, S.C.
200 South Orange Avenue, Suite 2300 780 North Water Street
Orlando, Florida 32801 Milwaukee, WI 53202
Telephone: (407) 649-4001 Telephone: (414) 273-3500
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Approximate Date of Commencement of Proposed Sale to the Public: As
soon as practicable after the registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act 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 or until the registration statement shall become effective
on such date as the SEC, acting pursuant to said Section 8(a), may determine.
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PROSPECTUS
[INSERT LOGO]
Galaxy Nutritional Foods, Inc.
2441 Viscount Row, Orlando, Florida
(407) 855-5500
815,000 SHARES
COMMON STOCK
This prospectus is part of a registration statement that relates to a public
offering of up to 815,000 shares of our common stock that will be issued upon
the exercise of warrants held by FINOVA MEZZANINE CAPITAL INC. Our common stock
is traded on the American Stock Exchange under the symbol GXY. The average of
the high and low prices of the common shares as reported on the American Stock
Exchange on December 18, 2000 was $3.594 per common share.
Shares: FINOVA may offer and sell these shares of common stock from time to
time through public or private transactions, on or off the American
Stock Exchange, at prevailing market prices, or at privately
negotiated prices.
o FINOVA has retained Tucker Anthony Capital Markets as the
exclusive placement agent to offer the FINOVA shares.
o Tucker Anthony is not required to sell any specific number or
dollar amount of securities but will use its best efforts to
sell the securities offered.
o The shares may be offered and sold beginning on the date of
this prospectus and ending on March 31, 2001, unless
extended.
Proceeds: We will not receive any of the proceeds from the sale of these
shares. We will receive proceeds from the exercise of the warrants.
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Costs: We will pay the costs relating to the registration of the common
shares offered by this prospectus. FINOVA will pay any brokerage
commissions, discounts or other expenses relating to the sale of
the shares. We have agreed to reimburse FINOVA for these
commissions, discounts and expenses to the extent that the net
proceeds to FINOVA from the sale of shares under this prospectus
are less than $1.00 per share after the payment of the following:
o The exercise price payable to Galaxy upon exercise of the
warrants; and
o The brokerage commissions, discounts and other reasonable and
direct expenses of the sale of FINOVA's shares.
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YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 3 OF THIS
PROSPECTUS BEFORE PURCHASING ANY OF THE SHARES OFFERED BY THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS DECEMBER 18, 2000.
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TABLE OF CONTENTS
PAGE
Risk Factors.............................................. 3
The Company............................................... 7
Use of Proceeds........................................... 8
Determination of Offering Price........................... 8
Selling Stockholder....................................... 9
Plan of Distribution...................................... 9
Legal Matters............................................. 11
Experts................................................... 11
Where You Can Find More Information....................... 11
Forward-Looking Statements................................ 12
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YOU SHOULD RELY ONLY UPON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT. WE
HAVE NOT, AND THE SELLING SHAREHOLDER HAS NOT, AUTHORIZED ANY OTHER PERSON TO
PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT
OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT.
THE SHARES OF COMMON STOCK ARE NOT BEING OFFERED IN ANY JURISDICTION WHERE THE
OFFER IS NOT PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS
PROSPECTUS.
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RISK FACTORS
Before purchasing the shares offered by this prospectus, you should
carefully consider the risks described below, in addition to the other
information presented in this prospectus or incorporated by reference into this
prospectus. If any of the following risks actually occur, they could seriously
harm our business, financial condition, results of operations or cash flows.
This could cause the trading price of our common stock to decline and you could
lose all or part of your investment.
WE MAY NEED ADDITIONAL FINANCING AND SUCH FINANCING MAY NOT BE AVAILABLE.
We have incurred substantial debt in connection with the financing of
our business. The aggregate amount outstanding of our borrowing under our
various credit facilities is approximately $22,500,000 as of December 18, 2000.
In addition to two term loan credit facilities that Galaxy has obtained, we
have obtained a revolving line of credit from FINOVA Capital Corporation in the
maximum principal amount of $13,000,000 through which we finance our day-to-day
working capital needs. The line of credit is secured in part by our accounts
receivable and inventory. The amounts that we can borrow under the line of
credit fluctuate based on our inventory and accounts receivable levels.
Generally, we borrow the maximum amount available to us under our line of
credit and under other credit facilities. At December 18, 2000, the maximum
amount we could borrow under our revolving credit line totaled approximately
$8,600,000. If we are unable to generate sufficient cash flow or borrow
additional amounts to fund our working capital needs and to pay our debts, we
will be required to seek additional financing in the near future. We do not
know if we can obtain additional financing or if the terms of any required
financing will be acceptable to us. If we are unable to fund our working
capital needs and additional growth through our existing credit facilities,
cash flow or additional financing, or if additional financing is not available
under acceptable terms to us, our business, prospects, results of operations,
cash flows and future growth will be negatively affected.
A DEFAULT UNDER OUR SECURED CREDIT ARRANGEMENTS COULD RESULT IN A FORECLOSURE
OF OUR ASSETS BY OUR CREDITORS.
Substantially all of our assets are pledged as collateral to secure
outstanding borrowings under the loan agreements with our primary commercial
lenders. Any default under the documents governing our indebtedness could
result in our indebtedness becoming immediately due and payable and result in a
foreclosure of our assets by our creditors which would have a significant
adverse effect on the market value of our common stock.
WE MAY ISSUE ADDITIONAL SECURITIES WITH RIGHTS SUPERIOR TO THOSE OF THE COMMON
STOCK, WHICH COULD MATERIALLY LIMIT THE OWNERSHIP RIGHTS OF EXISTING
SHAREHOLDERS.
We may offer additional debt or equity securities in private and/or
public offerings in order to raise working capital and to refinance our debt.
The board of directors has the right to determine the terms and rights of any
debt securities and preferred stock without obtaining the approval of the
shareholders. It is likely that any debt securities or preferred stock that we
sell would have terms and rights superior to those of the common stock and may
be convertible into common stock. Any sale of securities could adversely affect
the interests or voting rights of the holders of common stock, result in
substantial dilution to existing shareholders, or adversely affect the market
price of our common stock.
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THE CHIEF EXECUTIVE OFFICER OWNS A LARGE PERCENTAGE OF THE OUTSTANDING SHARES,
WHICH COULD MATERIALLY LIMIT THE OWNERSHIP RIGHTS OF EXISTING SHAREHOLDERS.
As of December 18, 2000, Angelo S. Morini, our founder, President and
Chief Executive Officer, owned approximately 37% of our common stock and held
options which, if exercised and assuming the exercise of no other outstanding
options or warrants, would give him a majority of our issued and outstanding
common stock. Investors who purchase common stock in this offering may be
unable to elect any members of the board of directors or exercise significant
control over Galaxy or our business as a result of Mr. Morini's ownership.
INVESTORS WILL INCUR IMMEDIATE DILUTION AND MAY EXPERIENCE FURTHER DILUTION.
The offering price of our common stock will be substantially higher
than the pro forma net tangible book value per share of the outstanding common
stock, immediately after the offering. If you purchase common stock in this
offering, you will incur immediate and substantial dilution in the pro forma
net tangible book value per share of the common stock from the price you pay
for common stock. Additionally, we have a substantial number of outstanding
options and warrants to acquire shares of common stock. A total of 2,638,714
shares have been reserved for issuance upon exercise of options and warrants
that have been or may be granted by Galaxy. A total of 2,332,642 of these
options and warrants are "in the money" and are currently exercisable. "In the
money" generally means that the current market price of the common stock is
above the exercise price of the shares subject to the warrant or option. The
issuance of common stock upon the exercise of these options and warrants could
adversely affect the market price of the common stock or result in substantial
dilution to our existing shareholders.
WE DO NOT ANTICIPATE PAYING DIVIDENDS ON THE COMMON STOCK.
Our current policy is to retain any future earnings to finance current
working capital needs and our growth and development. We do not expect to pay
dividends on common stock any time soon.
IF WE LOSE KEY FOREIGN SUPPLIERS ON WHOM WE DEPEND, WE MAY BE UNABLE TO OBTAIN
ADEQUATE SUPPLIES TO MANUFACTURE OUR PRODUCTS.
Currently, we purchase our major ingredient, a milk protein called
casein, from a limited number of foreign suppliers. We purchase casein from
foreign suppliers because they have lower prices than domestic suppliers.
However, their lower prices are generally the result of governmental export
supports or subsidies. We do not have any contractual arrangements with our
principal suppliers, except for short-term agreements for periods of less than
six months. Because we purchase casein from foreign suppliers, its availability
is subject to a variety of factors, including federal import regulations. If
the 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 in which our casein suppliers are located, our business and
results of operations would be negatively affected. Moreover, exchange rate
fluctuations or the imposition of import quotas or tariffs could have an
adverse effect on our business and our ability to compete with competitors that
do not rely on foreign suppliers. We cannot assure you that we could obtain
casein from U.S. sources if a foreign supply of casein were reduced or
terminated. Even if we could obtain casein from U.S. sources, our production
may be reduced during the period that it takes us to change suppliers and the
prices for the casein would likely be significantly higher than we are paying
now. Either event would negatively affect our business, results of operations
and cash flows.
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BECAUSE WE ARE DEPENDENT UPON A SINGLE MANUFACTURING FACILITY, THE LOSS OF THE
FACILITY WOULD RESULT IN A WORK STOPPAGE WHICH WOULD NEGATIVELY IMPACT OUR
BUSINESS.
We manufacture all of our products at a single manufacturing facility
in Orlando, Florida, and our revenues are dependent upon the continued
operation of this facility. This facility is subject to a lease that expires in
November 2001, unless renewed pursuant to terms mutually agreeable to us and
our landlord. We do not have a backup facility or contractual arrangements with
any other manufacturers in the event of a casualty to or destruction of the
facility or if the facility ceases to be available to us for any other reason.
If we are required to rebuild or relocate our manufacturing facility, a
substantial investment in improvements and equipment would be necessary. Any
rebuilding or relocation also would likely result in a significant delay or
reduction in manufacturing and production capability which, in turn, could lead
to substantially reduced sales and loss of market share.
WE RELY ON THE EFFORTS OF OUR PRESIDENT AND CHIEF EXECUTIVE OFFICER, AND THE
LOSS OF HIS SERVICES COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS.
Our success will be largely dependent upon the personal efforts and
abilities of Angelo S. Morini, our President and Chief Executive Officer. If
Mr. Morini ends his relationship with Galaxy before a qualified replacement is
found, then our business, prospects and results of operations would be
materially adversely affected. Mr. Morini's employment agreement has a rolling
five year term but is terminable by Mr. Morini upon a change of control of
Galaxy. Although we are the beneficiary of a life insurance policy on Mr.
Morini, our insurance would likely not be sufficient to compensate us for the
loss of Mr. Morini's services in the event of his death until a suitable
replacement could be engaged.
COMPETITION IN OUR INDUSTRY IS INTENSE.
Competition in our segment of the food industry is intense. We believe
that as consumers become more interested in healthy food alternatives the
competition in our markets will increase substantially. In particular, we
compete 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 these companies has substantially greater name
recognition and greater research and development, marketing, financial and
human resources than Galaxy. These advantages have led to a substantially
greater market penetration and product acceptance than we have developed. In
addition, our competitors may succeed in developing new or enhanced products
which are better than our products. These companies may also prove to be more
successful than Galaxy in marketing and selling these products. We cannot
assure you that Galaxy will be able to compete successfully with any of these
companies or achieve a greater market share than it currently possesses.
Increased competition as to any of Galaxy's products or services could result
in price reductions, reduced margins, and loss of market share, which could
negatively affect our business, prospects, results of operations and financial
condition.
WE RELY ON THE PROTECTION OF OUR TRADEMARKS, AND THE LOSS OF A TRADEMARK WOULD
NEGATIVELY IMPACT THE PRODUCTS ASSOCIATED WITH THE TRADEMARK, WHICH COULD
MATERIALLY ADVERSELY AFFECT OUR BUSINESS.
We own several registered and unregistered trademarks which are used
in the marketing and sale of our products. We have invested a substantial
amount of money in promoting our trademarked brands. However, the degree of
protection that these trademarks afford Galaxy is unknown. Further, we may not
have the money necessary to engage in actions to prevent infringement of our
trademarks. A loss of a trademark would negatively impact the products
associated with it, and could negatively affect our business, prospects,
results of operations, financial condition and cash flows.
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WE DO NOT HAVE PATENT PROTECTION FOR OUR FORMULAS AND PROCESSES, AND A LOSS OF
OWNERSHIP OF ANY OF OUR FORMULAS AND PROCESSES WOULD NEGATIVELY IMPACT OUR
BUSINESS.
We believe that we own our formulas and processes. However, we have
not sought, and do not intend to seek, patent protection for our formulas and
processes. Instead, we rely on the complexity of our formulas and processes,
trade secrecy laws, and employee confidentiality agreements. However, we cannot
assure you that other companies will not acquire our confidential information
or trade secrets or will not independently develop equivalent or superior
products or technology and obtain patent or similar rights. Although we believe
that our formulas and processes have been independently developed and do not
infringe the patents or rights of others, a variety of components of our
processes could infringe existing or future patents, in which event we may be
required to modify our processes or obtain a license. We cannot assure you that
we 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 would negatively
affect our business, results of operations, financial condition and cash flows.
BECAUSE WE SELL FOOD PRODUCTS, WE FACE THE RISK OF EXPOSURE TO PRODUCT
LIABILITY CLAIMS.
We, like any other seller of food, face the risk of exposure to
product liability claims in the event that our quality control procedures fail
and the consumption of our products causes injury or illness. With respect to
product liability claims, our insurance may not continue to be available at a
reasonable cost, or, if available, may not be adequate to cover liabilities. We
generally seek contractual indemnification and insurance coverage from parties
supplying us products, but this indemnification or insurance coverage is
limited, as a practical matter, to the creditworthiness of the indemnifying
party, and their carriers, if any, as well as the insured limits of any
insurance provided by suppliers. If we do not have adequate insurance or
contractual indemnification available, product liability claims relating to
defective products could have a material adverse effect on our financial
condition, results of operations and cash flows.
GOVERNMENT REGULATION COULD INCREASE OUR COSTS OF PRODUCTION AND INCREASE OUR
LEGAL AND REGULATORY EXPENSES.
We are subject to extensive regulation by federal, state, and local
governmental authorities regarding the quality, purity, manufacturing,
distribution, and labeling of food products. We cannot assure that you that we
will be able to continue to comply with these regulations, or comply with
future regulations, without inordinate cost or interruption of our operations.
Failure to comply with applicable laws and regulations could subject us to
civil remedies, including fines, injunctions, recalls or seizures, as well as
possible criminal sanctions, which could have a material adverse effect on our
business.
THE LIQUIDITY OF OUR SHARES MAY BE NEGATIVELY IMPACTED BY THE LOW VOLUME OF
TRADING OF OUR SHARES.
Although our shares are publicly traded on the American Stock
Exchange, the trading market for our shares is limited. During the calendar
quarter prior to the date of this prospectus, the trading volume for our shares
averaged less than 12,000 shares per trading day. We do not anticipate any
material increase in the trading volume for our shares. The lack of an active
trading market for our shares could negatively impact shareholders' ability to
sell their shares when they desire and the price which could be obtained upon a
sale of shares.
RISING INTEREST RATES COULD NEGATIVELY AFFECT OUR RESULTS OF OPERATIONS.
The interest rates of our revolving line of credit and our term loan
in the amounts outstanding as of December 18, 2000 of $8,600,000 and
$10,000,000, fluctuate based upon changes in our lenders' prime rate. Increases
in the prime rate will result in an increase in our cost
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of funds, and could negatively affect our results of operations. We have not
entered into any derivative instruments such as interest rate swap or hedge
agreements to manage our exposure to rising interest rates.
THE MARKET PRICE OF OUR STOCK COULD BE SUBJECT TO FLUCTUATION.
The market price of our common stock could be subject to fluctuations
in response to factors such as the following, some of which are beyond our
control:
o quarterly variations in our operating results;
o operating results that vary from the expectations of securities
analysts and investors;
o changes in expectations as to our future financial performance,
including financial estimates by securities analysts and
investors;
o announcements by us or our competitors of major business
developments, such as new products, services or technologies or
significant contracts, acquisitions, strategic partnerships,
joint ventures or capital commitments;
o announcements by third parties of significant claims or
proceedings against us;
o future sales of our common stock; and
o general market conditions.
THE COMPANY
We were incorporated in Pennsylvania in 1980 under the name "Galaxy
Cheese Company." We reincorporated in Delaware in 1987. After relocating from
Pennsylvania to Orlando, Florida, in 1992, we changed our name from Galaxy
Cheese Company to Galaxy Foods Company. We have recently changed our name again
to Galaxy Nutritional Foods, Inc. We develop, manufacture and market a variety
of healthy cheese, cheese alternatives and dairy related products, including:
o a line of nutritious dairy alternative products made with soy
under our main label Veggie(R). All Veggie(R) products are low
in fat, low in calories and are cholesterol and lactose free;
o a line of dairy alternative products developed for health food
and specialty stores under the Soymage(R) label. These products
are completely dairy free, contain no animal fats and do not
contain a milk protein called casein;
o a line of cheese products made from soy under the Veggy(R)
label. These products are low fat and lactose and cholesterol
free;
o a line of processed cheese foods made from organic milk under
the Wholesome Valley(R) Organic trademark; and
o other branded soy-based, rice-based and non-dairy cheese
products, as well as generic and private label processed and
blended cheese products.
Our products are marketed to three principal markets: retail, food
service, and industrial. Retail sales account for approximately 90% of our
revenues. Our customers include:
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o supermarket chains;
o health food stores;
o industrial food manufacturers which use our products in the
production of food items such as frozen pizza;
o restaurant chains;
o food service distributors; and
o institutions such as hotels, hospitals and schools.
Our strategy is to continue to support our sales by increasing our
automated production capacity while reducing our manual labor requirements. We
anticipate accomplishing this through the acquisition, installation and
utilization of new equipment and improving our operating efficiencies. We also
will continue to direct the majority of our marketing efforts and resources to
expand our retail market in order to take advantage of what we perceive to be
an increased consumer emphasis on nutrition and the generally higher gross
margins that this market generates.
Our principal offices are located at 2441 Viscount Row, Orlando,
Florida. Our telephone number is (407) 855-5500.
USE OF PROCEEDS
The selling shareholder will receive all of the proceeds from the sale
of its common stock offered by this prospectus. We will not receive any of the
proceeds from the sale of the shares of common stock by the selling
shareholder. We will, however, receive the exercise price of the warrants when
exercised by the selling shareholder, which may be paid out of the proceeds of
this offering. If the warrants covering 815,000 shares of common stock are
exercised, we estimate that our net proceeds will be $2,652,110, reduced to the
extent the selling shareholder's proceeds are less than $1.00 per share after
payment of the exercise price and the expenses of this offering. FINOVA has
agreed to loan us under our existing credit facility with FINOVA an amount
equal to the proceeds that would otherwise be payable to FINOVA upon the sale
of shares under this offering. Based upon the market price of the shares as of
December 18, 2000, in the event all of the FINOVA shares are sold, FINOVA would
loan us an additional $815,000.
We intend to use any proceeds from warrant exercises and the
additional loan from FINOVA to pay expenses of this offering and for working
capital and other corporate purposes.
DETERMINATION OF OFFERING PRICE
The price of the shares of common stock offered for sale by FINOVA
pursuant to the terms of the offering described in this prospectus will be at
prevailing market prices, or at privately negotiated prices. 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 number of shares of common
stock outstanding, the trading history of our outstanding securities,
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our financial prospects, and the trading price of other companies similar to
Galaxy in terms of size, operating characteristics, industry and other similar
factors.
SELLING STOCKHOLDER
FINOVA holds warrants issued by Galaxy on September 30, 1999, to
acquire 915,000 shares of common stock at an exercise price of $3.41 per share.
All of the warrants are currently exercisable. Assuming the exercise by FINOVA
of all of its warrants, but no other outstanding options or warrants by any
other holder, FINOVA would own approximately 10% of our issued and outstanding
common stock. The warrants were issued in consideration of a loan extended by
FINOVA to us in the principal amount of $4,000,000. The shares offered by this
prospectus constitute 815,000 of the 915,000 shares of common stock issuable by
Galaxy upon the exercise of FINOVA's warrants. FINOVA currently holds no shares
of common stock and, upon completion of the offering and sale of all shares
offered by this prospectus, FINOVA will still have beneficial ownership of
100,000 shares of our common stock.
FINOVA Capital Corporation, an affiliate of FINOVA, is our primary
lender. As of December 18, 2000, our revolving line of credit facility with
FINOVA Capital Corporation totals $13,000,000, with approximately $8,600,000
currently outstanding. FINOVA Capital Corporation maintains a security interest
in all of our accounts receivable and our inventory. FINOVA Capital Corporation
does not own any shares of common stock nor does it have any beneficial
ownership of common stock other than through the FINOVA warrants.
PLAN OF DISTRIBUTION
The common shares are being offered on behalf of FINOVA, as the
selling stockholder, which will own the common stock upon exercise of warrants
held by FINOVA. FINOVA, Galaxy and Tucker Anthony Incorporated will enter into
a Warrant Exercise and Placement Agent Agreement to provide for the exercise of
FINOVA's warrants and the appointment of Tucker Anthony as FINOVA's exclusive
placement agent for the sale of the shares. In offering the shares, Tucker
Anthony will act as FINOVA's agent and will use its best efforts to find buyers
for 815,000 of FINOVA's shares. Tucker Anthony will not underwrite this
offering by purchasing FINOVA's shares as principal and then reselling them,
regardless of whether Tucker Anthony does or does not successfully identify
others to purchase FINOVA's shares. Under the rules of the Securities and
Exchange Commission, however, it may be considered an underwriter as a result
of its actions as FINOVA's agent. Accordingly, it will have to comply with
applicable prospectus delivery requirements and Regulation M under the Exchange
Act. FINOVA, Tucker Anthony and any broker or dealer used in connection with
any sales in this offering may be considered "underwriters" under the
Securities Act.
Tucker Anthony is required to use only its best efforts to sell the
shares. The shares may be offered and sold during the period commencing on the
date of this prospectus and terminating at the close of business on March 31,
2001, except that FINOVA, Galaxy and Tucker Anthony may extend the termination
date until June 30, 2001.
The FINOVA shares may be offered and sold from time to time through
public or private transactions, through the American Stock Exchange or
otherwise at prevailing market prices or at privately negotiated prices. We
have agreed that if the price at which FINOVA's shares are sold in this
offering is less than $4.41 per share, we will pay FINOVA for each share sold
hereunder, the difference between $4.41 and the average gross sales price of
shares sold under this prospectus. We bear all of the expenses associated with
the
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registration of the shares offered under this prospectus. We will incur a
financing charge for the value of these payments over the term that the FINOVA
debt remains outstanding. The amount of the charge will vary depending on the
market conditions at the time FINOVA's shares are sold. Should the debt be paid
off prior to its contractual maturity date, we will be required to write off
any unamortized costs related to these payments. FINOVA will pay any brokerage
commissions, discounts or other expenses relating to the sale of the shares.
However, we have agreed to reimburse FINOVA for these commissions, discounts
and expenses to the extent that the net proceeds to FINOVA from the sale of
shares under this prospectus are less than $1.00 per share after the payment of
the following:
o The exercise price payable upon exercise of the warrants; and
o The brokerage commissions, discounts and other expenses of the
sale of FINOVA's shares.
We estimate our offering expenses will be approximately $277,000. This
amount includes brokerage commissions, discounts and other amounts payable to
Tucker Anthony Incorporated which are estimated to be approximately $225,000.
The Registrant has agreed to reimburse FINOVA for these commissions, discounts
and other amounts to the extent that the net proceeds to FINOVA from the sale
of shares under the prospectus are less than $1.00 per share after the payment
of the following: (i) the exercise price payable to us upon exercise of the
warrants; and (ii) the brokerage commissions, discounts and other reasonable
and direct expenses of the sale of FINOVA's shares.
FINOVA has agreed to loan to us under our existing credit facility
with FINOVA an amount equal to the proceeds that would otherwise be payable to
FINOVA upon the sale of shares under this offering. Based upon the market price
of the shares as of December 18, 2000, in the event all of the FINOVA shares
are sold in this offering, FINOVA would loan us an additional $815,000.
Although this additional loan amount is subject to the same terms and
conditions under which the original loan was made, we must repay this portion
of the loan in full no later than one year after the additional amount is
advanced to us. The maturity date of the original portion of the loan will not
be changed from the original maturity date of September 30, 2004.
Tucker Anthony will receive a placement agent fee equal to 7% of the
gross proceeds from the sale of the FINOVA shares. In addition,, we will issue
to Tucker Anthony warrants exercisable for shares of common stock equal to 10%
of the total number of shares sold by FINOVA in this offering. The warrants
will be exercisable for five years at an exercise price of 120% of the sales
price of shares sold in this offering. The warrants to be acquired by Tucker
Anthony will be restricted from sale, transfer, assignment or hypothecation for
a period of two years from the effective date of the registration statement,
except to officers of Tucker Anthony. We have also previously granted Tucker
Anthony a right of first refusal until August 7, 2002 to provide investment
banking services to us. In addition, we have agreed to indemnify Tucker Anthony
against liabilities under the Securities Act. We have been informed that any
such indemnification for liabilities under the Securities Act is, in the
opinion of the Securities and Exchange Commission, against public policy and,
therefore, unenforceable.
Tucker Anthony may request other registered broker-dealers who are
members of the National Association of Securities Dealers, Inc., and who are
approved by us, to assist in the efforts to locate potential purchasers of the
shares. Tucker Anthony may pay a commission of up to 7% to other
broker-dealers. FINOVA, Tucker Anthony and any other broker-dealers or other
persons involved in the sale or resale of the common shares may be considered
"underwriters" within the meaning of the Section 2(a)(11) of the Securities
Act. In addition, the broker-dealers' or their affiliates' commissions,
discounts
10
<PAGE> 14
or concessions may be considered underwriters' compensation under the
Securities Act. If FINOVA is considered an "underwriter," it will be subject to
the prospectus delivery requirements of Section 5(b)(2) of the Securities Act.
We have agreed to indemnify FINOVA and its "controlling persons" or
"underwriters," as those terms are defined in the Securities Act, participating
in the distribution of shares of the common stock hereunder from certain
liabilities, including those arising under the securities laws. We have been
informed that any such indemnification for liabilities under the Securities Act
is, in the opinion of the Securities and Exchange Commission, against public
policy and, therefore, unenforceable.
FINOVA may be considered our affiliate.
Because it is possible that a significant number of common shares
could be sold at the same time under this prospectus, such sales, or the
possibility of sales, may have a significant depressive effect on the market
price of our common stock.
We anticipate that we and each of our executive officers and directors
will enter into an agreement with Tucker Anthony pursuant to which each will
agree not, without the prior written consent of Tucker Anthony, to offer, sell
or otherwise dispose (or announce any offer, sale or grant of any option to
purchase or other disposition) of any of their shares of our common stock or
securities convertible into, or exchangeable or exercisable for, shares of our
common stock for a period of 120 days following the last sale of shares in this
offering.
LEGAL MATTERS
Baker & Hostetler LLP, Orlando, Florida, has rendered an opinion that
the shares of common stock offered hereby are legally issued, fully paid and
nonassessable.
EXPERTS
The audited financial statements incorporated by reference in this
prospectus and the registration statement have been audited by BDO Seidman,
LLP, independent certified public accountants, to the extent and for the
periods set forth in their report incorporated herein by reference, and are
incorporated by reference in reliance upon such report given upon the authority
of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
o GOVERNMENT FILINGS. We file annual, quarterly and special reports and
other information with the SEC. You may read and copy any document
that we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York, and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms.
Our SEC filings are also available to you free of charge at the SEC's
web site at www.sec.gov. Most of our SEC filings are also available to
you free of charge at our web site at www.galaxyfoods.com.
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<PAGE> 15
o STOCK MARKET. Galaxy's shares are traded on the American Stock
Exchange under the symbol GXY. Materials filed by Galaxy can be
inspected at the offices of the American Stock Exchange, 86 Trinity
Place, New York, NY 10006, (212) 306-1000.
o INFORMATION INCORPORATED BY REFERENCe. The SEC allows us to
"incorporate by reference" the information we file with them, which
means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file
later with the SEC will automatically update and supersede previously
filed information, including information contained in this document.
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act until this offering has been completed:
o Galaxy's Annual Report on Form 10-K/A for the year ended March
31, 2000, as amended.
o Galaxy's Quarterly Reports on Form 10-Q for the quarters ended
June 30, 2000 and September 30, 2000.
o Galaxy's Proxy Statement dated November 1, 2000.
o The description of the common stock of Galaxy, which is
contained in the registration statement of Galaxy filed on Form
8-A, dated September 29, 1999.
You may request free copies of these filings by writing, telephoning
or contacting us at the following:
Investor Relations Department
Galaxy Nutritional Foods, Inc.
2901 Titan Row, Suite 136
Orlando, Florida 32809
(407) 855-5500
email: [email protected]
We will provide without charge to anyone 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 Nutritional Foods, Inc. 2901 Titan Row, Suite 136, Orlando,
Florida 32809, Attention: Investor Relations, or if by telephone, (407)
855-5500.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain forward-looking statements. These forward-looking statements
are based on our current expectations, estimates and projections about our
industry, management's beliefs and certain assumptions made by us. Words such
as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates" and variations of these words or similar expressions are intended
to identify forward-looking statements. These statements
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<PAGE> 16
are not guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict. Therefore, actual
results could differ materially from those expressed or forecasted in any
forward-looking statements as a result of a variety of factors, including those
set forth in "Risk Factors" above and elsewhere in, or incorporated by
reference into, this prospectus. We undertake no obligation to update publicly
any forward-looking statements for any reason, even if new information becomes
available or other events occur in the future.
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<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses relating to the registration, sale and distribution of
the shares, including sales commissions, are payable by the Registrant. All of
the amounts shown are estimated except the SEC registration fee.
<TABLE>
<S> <C>
SEC Registration Fee................................................................. $ 840.20
-----------
Legal Fees and Expenses (including Blue Sky)......................................... 35,000.00*
-----------
Accounting Fees and Expenses......................................................... 12,000.00*
-----------
Brokerage Commissions, Discounts and Other Placement Agent Expenses.................. 225,000.00*(1)
------------
Printing and Miscellaneous Fees and Expenses......................................... 4,159.80*
------------
Total....................................................................... $ 277,000.00*
============
</TABLE>
------------------
* Estimated
(1) The Registrant has agreed to reimburse FINOVA for these commissions,
discounts and other amounts to the extent that the net proceeds to FINOVA from
the sale of shares under the prospectus are less than $1.00 per share after the
payment of the following: (i) the exercise price payable to us upon exercise of
the warrants; and (ii) the brokerage commissions, discounts and other
reasonable and direct expenses of the sale of FINOVA's shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") makes
provision for the indemnification of officers and directors of corporations in
terms sufficiently broad to indemnify the officers and directors of the
Registrant under certain circumstances from liabilities (including
reimbursement of expenses incurred) arising under the Securities Act of 1933,
as amended (the "Act"). Section 102(b)(7) of the DGCL permits a corporation to
provide in its Certificate of Incorporation that a director of the corporation
shall not be personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases, or (iv) for any transaction from which the director derived an
improper personal benefit.
As permitted by the DGCL, the Registrant's Certificate of
Incorporation (the "Charter") provides that the personal liability of each
member of the Registrant's Board of Directors to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director is
eliminated. The effect of this provision in the Charter is to eliminate the
rights of the Registrant and its stockholders (through stockholders' derivative
suits on behalf of the Registrant) to recover monetary damages against a
director
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<PAGE> 18
for breach of fiduciary duty as a director thereof (including breaches
resulting from negligent or grossly negligent behavior) except in the
situations described in clauses (i)-(iv), inclusive, above. Insofar as
indemnification for liabilities arising under the Act may be permitted to
directors, officers, and controlling persons of the t 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
Act and is, therefore, unenforceable.
The Registrant's Bylaws (the "Bylaws") provide that the Registrant
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Registrant) by reason of the fact that he is or was a
director, officer, employee or agent of the Registrant, or is or was serving at
the request of the Registrant as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Registrant, and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his conduct was unlawful.
The Bylaws also provide that the Registrant shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Registrant to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Registrant, or is or was serving at
the request of the Registrant as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Registrant and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper.
To the extent that any person described in the preceding two
paragraphs is successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in such paragraphs, or in defense of any claim,
issue or matter therein, the Registrant shall indemnify him against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith. The Registrant may pay expenses of a person incurred in
defending a civil or criminal action, suit or proceeding in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of a person to repay such amount if it shall
ultimately be determined that he is not entitled to indemnification by the
Registrant.
The Bylaws further provide that the indemnification and advancement of
expenses provided for in the Bylaws shall not be deemed exclusive of any other
rights to the indemnified party under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and that the Board of Directors may authorize the Registrant to
purchase and maintain insurance on behalf of any such person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Registrant would have the
power to indemnify him against such liability. The Registrant provides
indemnity insurance pursuant to which officers and directors are indemnified or
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<PAGE> 19
insured against liability or loss under certain circumstances, which may
include liability or related loss under the Act and the Exchange Act.
ITEM 16. EXHIBITS.
The following Exhibits are filed as part of this Registration
Statement.
Exhibit No. Exhibit Description
----------- -------------------
1.1 Form of Warrant Exercise and Placement Agent Agreement (Filed
herewith.)
1.2 Form of Placement Agent Warrant (Filed herewith.)
3.1 Amendment to Certificate of Incorporation of the Company, filed on
November 16, 2000, effective November 17, 2000 (Filed as Exhibit
3.1 to Registration Statement on Form S-3 filed November 28, 2000.)
4.1 Stock Purchase Warrant issued to FINOVA Mezzanine Capital Inc.,
dated September 30, 1999 (Filed as Exhibit 4.1 to Registration
Statement on Form S-3 filed November 28, 2000.)
5 Opinion of Baker & Hostetler, dated November 28, 2000, regarding
legality of shares being offered (Filed as Exhibit 5 to
Registration Statement on Form S-3 filed November 28, 2000)
23.1 Consent of Baker & Hostetler (Contained in its opinion filed as
Exhibit 5.)
23.2 Consent of BDO Seidman, LLP, dated November 24, 2000 (Filed as
Exhibit 23.2 to Registration Statement on Form S-3 filed November
28, 2000)
23.3 Consent of BDO Seidman, LLP (Filed herewith.)
24.1 Powers of Attorney (Filed on Signature Page of Registration
Statement on Form S-3 filed November 28, 2000.)
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in
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<PAGE> 20
the aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume 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) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement or
any material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be 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) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the
Registrant in the successful defense of any 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 Securities Act and will be
governed by the final adjudication of such issue.
(d) The Registrant hereby undertakes that (1) for purposes of determining
any liability under the Securities Act of 1933, the information omitted from
the form of prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933
shall be deemed to be part of this registration statement as of the time it was
declared effective, and (2) for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
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<PAGE> 21
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 Amendment No. 1 to 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 19th day of December, 2000.
GALAXY NUTRITIONAL FOODS, INC.
By:
-----------------------------------
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
-------------------------------------- Chairman of the Board of Directors, December 19, 2000
ANGELO S. MORINI President, Chief Executive Officer
(Principal Executive Officer) and
Director Chief Financial Officer
(Principal December 19, 2000
-------------------------------------- Financial Officer and Principal December 19, 2000
KEITH A. EWING Accounting Officer)
</TABLE>
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<PAGE> 22
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
-------------------------------------- Director December 19, 2000
MARSHALL K. LUTHER, by
Angelo S. Morini, as attorney-in-fact
Director December 19, 2000
JOSEPH JULIANO, by
Angelo S. Morini, as attorney-in-fact
-------------------------------------- Director December 19, 2000
DOUGLAS A. WALSH, by
Angelo S. Morini, as attorney-in-fact
</TABLE>
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<PAGE> 23
EXHIBITS INDEX
Exhibit No.
-----------
1.1 Form of Warrant Exercise and Placement Agent Agreement (Filed
herewith.)
1.2 Form of Placement Agent Warrant (Filed herewith.)
3.1 Amendment to Certificate of Incorporation of the Company,
filed on November 16, 2000, effective November 17, 2000
(Filed as Exhibit 3.1 to Registration Statement on Form S-3
filed November 28, 2000.)
4.1 Stock Purchase Warrant issued to FINOVA Mezzanine Capital
Inc., dated September 30, 1999 (Filed as Exhibit 4.1 to
Registration Statement on Form S-3 filed November 28, 2000.)
5 Opinion of Baker & Hostetler, dated November 28, 2000,
regarding legality of shares being offered (Filed as Exhibit
5 to Registration Statement on Form S-3 filed November 28,
2000)
23.1 Consent of Baker & Hostetler (Contained in its opinion filed
as Exhibit 5.)
23.2 Consent of BDO Seidman, LLP, dated November 24, 2000 (Filed
as Exhibit 23.2 to Registration Statement on Form S-3 filed
November 28, 2000)
23.3 Consent of BDO Seidman, LLP (Filed herewith.)
24.1 Powers of Attorney (Filed on Signature Page of Registration
Statement on Form S-3 filed November 28, 2000.)
20
