<PAGE>
PROSPECTUS SUPPLEMENT NO. 1 Filed Pursuant to Rules 424(b)(3) and 424(c)
(To Prospectus dated June 13, 1996) Registration Statement No. 333-3360
KOO KOO ROO, INC.
COMMON STOCK
(Par Value $.01 per Share)
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The following information supplements, and must be read in conjunction
with, the information contained in the Prospectus, dated June 13, 1996 (the
"Prospectus"), of Koo Koo Roo, Inc., a Delaware corporation (the "Company").
This Supplement must be delivered along with a copy of the Prospectus. All
capitalized terms not otherwise defined herein shall have the meanings given to
them in the Prospectus.
The information provided in the Prospectus in the second sentence of the
fifth paragraph under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources--
Capital Resources" is deleted and replaced with the following sentence:
The Company's joint venture in Canada will also require a modest investment in
1996 based on the Company's 40% ownership in that project.
The information provided in the Prospectus in the tenth sentence under the
caption "Business--Recent Developments--Acquisition of Color Me Mine, Inc." is
deleted and replaced with the following:
On June 25, 1996, Color Me Mine executed Area Development Agreements in
each of the states of California, New Jersey and Florida and collected $255,000
in area development fees. Each area developer has agreed to open 12 stores in
their respective territory within two years.
The caption "Business--Recent Developments--Canada Joint Venture Letter of
Intent" and the information provided thereunder contained in the Prospectus is
deleted and replaced in its entirety with the following:
CANADA JOINT VENTURE AGREEMENT. The Company has entered into definitive
agreements with a group of business leaders in Toronto, Canada, to form a
Canadian Limited Partnership, Koo Koo Roo Canada Holdings, which plans to
develop the Koo Koo Roo California Kitchen/TM/ restaurant and Arrosto Coffee
Company concepts in Canada. The partnership is 40.0% owned by 1170060 Ontario
Limited, a wholly-owned Canadian subsidiary of Koo Koo Roo, Inc. formed to
participate in the joint venture. The remaining 60.0% is owned by a group of
investors based in Toronto.
The information under the column headings below is added to the table under
the caption "Security Ownership of Certain Beneficial Holders and Management"
immediately following the name "Don Wohl" (column headings are included for
reference purposes only):
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER AMOUNT OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- --------------------------- ------------------------------ -----------------
<S> <C> <C>
Mel Harris 806,775/(12)/ 5.18%
</TABLE>
Footnote reference "(12)" in the table under the caption "Security
Ownership of Certain Beneficial Holders and Management" is renumbered to "(13)."
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The date of this Supplement is August 5, 1996
<PAGE>
The following information is added as new footnote 12 under the footnotes
to the table under the caption "Security Ownership of Certain Beneficial Holders
and Management":
(12) Based solely upon a review of a Schedule 13D filed by Mr. Harris.
Includes 806,775 shares of Common Stock issuable upon exercise of
options within 60 days of June 11, 1996.
The following paragraphs are added at the end of the information provided
in the Prospectus under the heading "Certain Relationships and Related
Transactions":
Mr. Mel Harris beneficially owns more than five percent of the Company's
Common Stock. The Company has recently terminated the Employment Agreement with
Mr. Harris pursuant to which Mr. Harris was hired as a franchise salesman
through August 19, 2000. In consideration for such services, the Company
granted Mr. Harris options to purchase 651,000 shares of the Company's Common
Stock at an exercise price of $4.50 per share, of which options exercisable for
150,000 shares of Common Stock were granted during the year ended December 31,
1995. See "Security Ownership of Certain Beneficial Holders and Management."
The Company and Restaurant Acquisition Corporation ("RAC") have entered
into an Area Development Agreement covering Florida and certain counties in
Southern Georgia (the "Florida/Southern Georgia Area Development Agreement").
Under this arrangement, the Company and RAC will jointly develop stores in
Florida as joint ventures through equal ownership in newly-formed partnerships.
Mr. Mel Harris is the Chairman of RAC and beneficially owns more than five
percent of the Company's Common Stock.
The Company has entered into a Business Development Agreement with
Restaurant Marketing Corp. ("RMC") to provide business development services. In
consideration for the agreement, the Company issued to RMC options to purchase
1.0 million shares of Common Stock with an exercise price of $8.00 per share.
The options will become exercisable ratably over a three-year period beginning
on the first anniversary of the date of issuance, so long as the Business
Development Agreement remains in place. The Business Development Agreement may
be cancelled with six months notice by the Company's CEO in his sole discretion.
The options also will vest upon a change in control (as defined in the Business
Development Agreement). Mr. Mel Harris is the Chairman of RMC and beneficially
owns more than five percent of the Company's Common Stock.
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<PAGE>
The information below provided in the Prospectus in the table under the
caption "Selling Stockholders" is deleted (column headings and footnotes are
included for reference purposes only):
<TABLE>
<CAPTION>
COMMON SHARES COMMON
BENEFICIALLY OWNED SHARES TO BE COMMON SHARES
PRIOR TO THE SOLD IN THE BENEFICIALLY OWNED
OFFERING/(1)/ OFFERING/(1)/ AFTER THE OFFERING
-------- -------- ------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT NUMBER NUMBER PERCENT
- --------------------------- ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Anvil Investment Partners, 83,908 * 83,908 0 0
L.P.
W. Jeffrey Baxter & Melanie 6,992 * 6,992 0 0
Baxter Ttees, FBO Baxter
Living Trust Dated 8/21/92
The Copernicus Fund, L.P. 104,885 * 104,885 0 0
The Galileo Fund, L.P. 174,809 1.2% 174,809 0 0
Opus Capital Partners, L.P. 41,954 * 41,954 0 0
Seneca Capital L.P. 83,908 * 83,908 0 0
Seneca Capital International, 15,103 * 15,103 0 0
Ltd.
Palamundo LDC 11,747 * 11,747 0 0
ZPB Securities, LLC 12,307 * 12,307 0 0
DFG Corporation 16,782 * 16,782 0 0
Arbco Associates, L.P. 100,690 * 100,690 0 0
Offense Group Associates, 100,690 * 100,690 0 0
L.P.
Kayne Anderson Non- 218,162 1.5% 218,162 0 0
Traditional Investments, L.P.
</TABLE>
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* Represents less than 1% of the outstanding Common Stock.
/(1)/ Such beneficial ownership represents an estimate of the number of shares
of Common Stock issuable upon the conversion of shares of Convertible
Preferred Stock beneficially owned by such person (either directly or
through the exercise of Convertible Preferred Stock Warrants), assuming
the last reported sales price of $9.00 per share of Common Stock on June
10, 1996 was used to determine the number of shares of Common Stock
issuable as of the first date on which Convertible Preferred Stock may be
converted. The actual number of shares of Common Stock offered hereby is
subject to adjustment and could be materially less or more than the
estimated amount indicated depending upon factors which cannot be
predicted by the Company at this time, including, among others,
application of the conversion provisions based on market prices
prevailing at the actual date of conversion and whether or to what extent
dividends are paid in Common Stock. In order to calculate the number of
shares of Convertible Preferred Stock or Convertible Preferred Stock
Warrants to purchase such shares beneficially held, multiply the amount
included in the column captioned "Common Shares Beneficially Owned Prior
to the Offering," by 0.28603. This presentation is not intended to
constitute a prediction as to the future market price of the Common
Stock. The shares of Convertible Preferred Stock and the Convertible
Preferred Stock Warrants were issued in the 1996 Private Placements. See
"Risk Factors--Effect of Conversion of Convertible Preferred Stock;
Potential Common Stock Adjustment" and "Description of Capital Stock."
3
<PAGE>
The information below is added to the information provided in the
Prospectus in the table under the caption "Selling Stockholders" (column
headings and footnotes are included for reference purposes only):
<TABLE>
<CAPTION>
COMMON SHARES COMMON
BENEFICIALLY OWNED SHARES TO BE COMMON SHARES
PRIOR TO THE SOLD IN THE BENEFICIALLY OWNED
OFFERING/(1)/ OFFERING/(1)/ AFTER THE OFFERING
-------- -------- ------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT NUMBER NUMBER PERCENT
- --------------------------- ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Anvil Investment Partners, 125,862 * 125,862 0 0
L.P.
The Copernicus Fund, L.P. 69,923 * 69,923 0 0
Seneca Capital L.P. 176,907 1.2% 176,907 0 0
Seneca Capital International, 31,886 * 31,886 0 0
Ltd.
Palamundo LDC 19,089 * 19,089 0 0
ZPB Securities, LLC 24,893 * 24,893 0 0
DFG Corporation 33,913 * 33,913 0 0
Arbco Associates, L.P. 83,209 * 83,209 0 0
Offense Group Associates, 83,209 * 83,209 0 0
L.P.
Kayne Anderson Non- 183,199 1.2% 183,199 0 0
Traditional Investments, L.P.
Global Bermuda, L.P. 139,847 * 139,847 0 0
</TABLE>
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* Represents less than 1% of the outstanding Common Stock.
/(1)/ Such beneficial ownership represents an estimate of the number of shares
of Common Stock issuable upon the conversion of shares of Convertible
Preferred Stock beneficially owned by such person (either directly or
through the exercise of Convertible Preferred Stock Warrants), assuming
the last reported sales price of $9.00 per share of Common Stock on June
10, 1996 was used to determine the number of shares of Common Stock
issuable as of the first date on which Convertible Preferred Stock may be
converted. The actual number of shares of Common Stock offered hereby is
subject to adjustment and could be materially less or more than the
estimated amount indicated depending upon factors which cannot be
predicted by the Company at this time, including, among others,
application of the conversion provisions based on market prices
prevailing at the actual date of conversion and whether or to what extent
dividends are paid in Common Stock. In order to calculate the number of
shares of Convertible Preferred Stock or Convertible Preferred Stock
Warrants to purchase such shares beneficially held, multiply the amount
included in the column captioned "Common Shares Beneficially Owned Prior
to the Offering," by 0.28603. This presentation is not intended to
constitute a prediction as to the future market price of the Common
Stock. The shares of Convertible Preferred Stock and the Convertible
Preferred Stock Warrants were issued in the 1996 Private Placements. See
"Risk Factors--Effect of Conversion of Convertible Preferred Stock;
Potential Common Stock Adjustment" and "Description of Capital Stock."
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