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As filed with the Securities and Exchange Commission on April 8, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
TURBOCHEF, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 48-1100390
(State or other jurisdiction of incorporation) (I.R.S. employer
identification number)
10500 METRIC DRIVE, SUITE 128
DALLAS, TEXAS 75243
(214) 341-9471
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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PHILIP R. MCKEE
TURBOCHEF, INC.
10500 METRIC DRIVE, SUITE 128
DALLAS, TEXAS 75243
(214) 341-9471
(Address, including zip code, and telephone number, including area code, of
agent for service)
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Copies to:
WILLIAM W. MEIER, III, ESQ.
HENRY, MEIER, JONES & JOHNSON, L.L.P.
1700 PACIFIC AVENUE, SUITE 2700
DALLAS, TEXAS 75201
TELEPHONE: (214) 954-9700
FACSIMILE: (214) 954-9701
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO 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: [_]
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 registration statement for the same
offering: [_] _________________.
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SHARES AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED BE REGISTERED PER SHARE/(1)/ OFFERING PRICE/(1)/ FEE
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<S> <C> <C> <C> <C>
Common Stock,
par value $.01 per share.. 602,500 $14.875 $8,962,188 $3,090
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</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for the purposes of calculating
the registration fee based on the average of the high and low sale prices
of the Common Stock on April 2, 1997.
____________________________
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.
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 8, 1997
PROSPECTUS
602,500 SHARES
TURBOCHEF, INC.
COMMON STOCK
This Prospectus relates to the offer and sale of an aggregate of 602,500
shares (the "Shares") of the common stock, par value $.01 per share (the "Common
Stock") of TurboChef, Inc. (the "Company"), of which 340,000 shares will be
offered for the account of Whale Securities Co., L.P. ("Whale") and certain of
Whale's current and former employees and equity holders and of which 262,500
shares will be offered for the account of Acadia International Limited
("Acadia") (collectively, the "Selling Stockholders"). The Common Stock will be
acquired by the Selling Stockholders upon the exercise of (i) certain
underwriter's warrants (the "Warrants") which were issued to Whale and its
designees by the Company in connection with the Company's initial public
offering in April 1994 and a secondary public offering of Common Stock in June
1996 and, (ii) certain options (the "Options") which were granted to Acadia in
connection with converting a loan to the Company into equity in the Company.
The Selling Stockholders may from time to time sell all or a portion of the
Common Stock which may be offered by them hereby in routine brokerage
transactions in the over-the-counter market, at prices and terms prevailing at
the time of sale. The Selling Stockholders may also make private sales directly
or through brokers. The Selling Stockholders may pay customary brokerage fees,
commissions and expenses. The Company will pay all other expenses of the
offering. The Selling Stockholders and the brokers executing selling orders on
behalf of the Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act"), in
which event commissions received by such brokers may be deemed underwriting
commissions under the Act. See "Selling Stockholders and Plan of Distribution".
The Company will not receive any proceeds from the sale of the Common Stock
offered by the Selling Stockholders hereby.
The Common Stock is traded in the over-the-counter market and is quoted on
the Nasdaq SmallCap Market ("NASDAQ") under the symbol "TRBO." On April 2,
1997, the last sales price for the Common Stock as reported by NASDAQ was
$14.875 per share.
__________________
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK.
__________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is ________ ___, 1997.
<PAGE>
THE COMPANY
TurboChef, Inc. (the "Company") is a foodservice technology company engaged
in designing, developing and marketing high-speed commercial cooking systems and
in applying its proprietary technologies to other foodservice products,
processes and concepts for customers seeking a competitive advantage in the
foodservice market. These cooking systems incorporate specially designed
proprietary heat transfer hardware with a computerized programmable operating
system, which controls the cooking process, and is capable of accepting software
updates from a remote site via computer modem. Now that the Company's products
and technologies have been validated (through utilization and extensive testing
by both the Company and a variety of foodservice operators) and its research and
development capabilities have been proven, the Company intends to build upon its
technology base to expand its product offerings, while aggressively pursuing
joint venture, strategic alliance and/or licensing or other arrangements with
companies already engaged in the mass marketing and/or manufacture of
foodservice equipment and products in order to expand its market penetration.
The Company's cooking systems, which are marketed under the name TurboChef,
employ the Company's proprietary cooking technologies to quickly, efficiently
and evenly transfer, disperse and control the heat used in the cooking process
and the Company's proprietary computerized control platform to monitor that
process and automatically adjust cook settings during the cooking cycle. These
technologies provide foodservice operators the flexibility to "cook-to-order" a
variety of food items at speeds which the Company believes are faster than those
permitted by conventional commercial ovens and grills, microwave ovens, and
other currently available high-speed ovens. Among the various types of foods
which can be cooked in a TurboChef cooking system are an 8-ounce salmon filet
in less than 80 seconds, a 16-inch deluxe par-baked pizza in 90 seconds or less,
a "bone-in" quarter chicken in 2 minutes or less, and an 18-ounce beef
tenderloin in approximately 3 minutes. In addition, because of the TurboChef
cooking system's moisture retention, browning and crisping capabilities, the
Company believes that the characteristics of most food items cooked in a
TurboChef cooking system (including their flavor, texture and appearance) are
not only superior in quality to those achieved using other high-speed ovens, or
microwave ovens, but are also equal in quality, or, in the case of many food
items (such as rack of lamb, beef Wellington and most fish and seafood items)
superior in quality, to those achieved using conventional ovens and grills.
As a result of the foregoing, the Company believes that by using the
TurboChef cooking system, traditional full-service restaurants can offer the
convenience and speed of foodservice typically associated with fast food
restaurants (without sacrificing the "restaurant quality" of the food served)
and fast food restaurants can offer more varied menus and a food quality more
typically associated with full-service restaurants (without compromising their
"quick service" speeds). In addition, the Company's technologies provide both
full service and fast-food restaurant operators with the means of "upgrading"
their menu offerings, both in terms of food items offered and in terms of cooked
food quality and consistency and of enhancing their profitability, by reducing
certain costs associated with the cooking process. The current commercially
produced TurboChef cooking system model contains a cooking cavity capable of
holding a food product measuring up to 16 inches in diameter and 4 inches in
height and can be purchased for approximately $11,000, after considering volume
discounts.
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The Company has also developed a series of operations enhancement software
systems, each of which incorporates, and augments the benefits to be derived
from, the use of the TurboChef cooking system. These proprietary systems include
the TurboChef TurboComm(TM) system, a centralized cook setting system, which can
reprogram TurboChef cooking systems installed in various restaurant locations
from a single central site, thereby enabling foodservice operators to easily
modify their cook settings, and thus their menu selections, on a system-wide
basis; the TurboStage system, a food preparation management system, which can be
incorporated into a restaurant's existing electronic order processing system,
sort the items to be cooked by required cook times, and indicate, on a real-time
basis, when such food items are to be inserted into the TurboChef cooking
system; and the TurboTouch system, a cooking system operations management
system, which ties the restaurant's point-of-sale cash register directly to the
TurboChef cooking system so that exact cooking settings may be automatically
programmed into the cooking system when the food order is placed.
The Company's largest customer is Whitbread PLC ("Whitbread"), which
operates over 6,500 pub, convenience, restaurant, hotel and leisure locations
across the United Kingdom, including the Beefeater, Pizza Hut, TGI Friday's,
Marriott and Brewers Fayre brands, with annual revenues in excess of $4 billion.
Whitbread, has been working closely with the Company for approximately three
years adapting and applying TurboChef's foodservice technologies and concepts to
Whitbread's particular proposed applications. Whitbread has purchased
approximately 340 TurboChef cooking systems, which have been installed in all of
their 300 unit Beefeater chain of casual dining restaurants, as well as in
several of their other restaurants and resorts. In addition, they are testing an
entirely new foodservice concept based upon TurboChef technologies. The Company
announced in February 1997 that it has consummated another Purchase Contract
with Whitbread. This contract represents Whitbread's third commitment to
purchase TurboChef cooking systems, further advancing the relationship between
the two companies. This new contract will launch the next phase of expanded use
of TurboChef systems in various other Whitbread concepts. All of the cooking
systems provided to Whitbread under this new contract will be adapted to
accommodate Turbochef TurboComm(TM), TurboChef's communications technology which
enables, among other things, cook settings for an entire new menu to be
downloaded overnight to every TurboChef cooking system within a restaurant
chain. The Whitbread contract also grants the option for Whitbread to purchase
either the Company's current model D-2 cooking system or its new "CUB" model.
The CUB is an advanced design cooking system which utilizes the same TurboChef
proprietary technologies, with the same cooking speed and quality
characteristics as the D-2, but requires approximately 30% less counter space.
The CUB also incorporates design enhancements which will reduce certain system
operating costs. The Company developed the smaller CUB model as an alternative
product choice to accommodate those concepts where kitchen space is more
limited.
In December 1995, the Company was selected by Choice Hotels
International ("Choice Hotels"), an international hotel operator of over 3,500
hotels in 40 countries, as the sole commercial cooking system supplier for its
modular Choice Picks branded food court service system, which is being offered
(as an alternative to full-service restaurants) to operators of Choice Hotel's
Clarion, Quality, Comfort, Friendship, Sleep, Econolodge and Rodeway hotels
around the world. As the only commercial cooking system to be used in the Choice
Picks food courts, the TurboChef cooking system has been approved to cook
multiple food brands, including Nathan's Famous(R) and Pizzeria Uno(R).
The Company is also developing a unique application of its cooking system
specifically for convenience store use. This convenience store cooking system
will be designed to cook "on demand" popular fast foods such as breakfast
sandwiches in 20 seconds, hamburgers in 30 seconds and pizza in 40 seconds. As
a result, one TurboChef cooking system will enable a wide variety of competitive
fast food offerings from inside a convenience store.
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The Company was incorporated in Kansas on April 3, 1991 and was
reincorporated in Delaware on August 17, 1993. Unless otherwise noted,
references to the Company relate to TurboChef, Inc., a Delaware corporation, and
its predecessor. The Company's principal executive offices are located at 10500
Metric Drive, Suite 128, Dallas, Texas 75243 and its telephone number is
(214)341-9471.
RECENT DEVELOPMENTS
In June 1996, the Company announced the successful completion of a
prototype residential cooking system. By incorporating its proprietary
technologies and controls into a standard 28 inch residential oven enclosure,
the Company has created a residential cooking system prototype which uses a
"downsized" version of the same basic cooking technologies currently utilized by
the TurboChef commercial cooking systems. The Company is currently in discussion
with several world-wide appliance manufacturers to license its technologies with
respect to this product. The initial target market for the residential cooking
system will be the world-wide residential oven market (including the upper end
of the 4 million cooking ranges sold annually in the United States).
Also in June 1996, the Company expanded its Board of Directors from
three to four members with the appointment of Joseph F. Fogliano. Mr. Fogliano
is an experienced manufacturing executive with a long career at the General
Electric Company, Thomson Consumer Electronics and Maytag Corporation. Most
recently Mr. Fogliano served as President of Thomson Consumer Electronics and
subsequently President of Maytag's North American Appliance Group, where he was
responsible for the Maytag, Jenn-Aire, Magic Chef and Admiral brands of
appliances. Mr. Fogliano has been appointed the chairman of TurboChef's
Residential Cooking System Committee.
The Company recently added two new contract manufacturers to build
its cooking systems--Sylvester's Inc., based in Louisville, Mississippi, and
Techniform, Inc., based in Waterford, Ireland. In addition, the Company's
relationship with its previous contract manufacturer, Manufacturers Services
Corp., Inc. ("MSC"), was terminated. These decisions were made as a result of
the Company's need to increase production capacity in the U.S. and Europe, and
MSC's announcement that it had reached an agreement to sell the company to its
largest customer. The Company's management believed that a further shift in
MSC's emphasis to their largest customer's product lines would reduce MSC's
ability to satisfy the Company's manufacturing requirements. The Company
believes that the additions of Sylvester's and Techniform enhance TurboChef's
production capacity and technological support. In addition, Techniform's Ireland
location provides the Company with critical strategic and geographic positioning
within the European Community.
In December 1996, the Company received an initial purchase order from The
Southland Corporation for TurboChef cooking systems to be tested in their 7-
Eleven stores. The Southland purchase order calls for system deliveries in three
phases. Phases I and II require the delivery of a sufficient number of cooking
systems to develop and refine Southland's food and packaging requirements. Phase
III calls for the delivery of a sufficient number of cooking systems to expand
the test to a greater number of locations to determine the profitability of
Southland's program application. This purchase order does not grant Southland
exclusive buying rights, accordingly, TurboChef will be able to market this new
application of its cooking technologies throughout the convenience store
industry.
In January 1997, Steven R. Leipsner joined the Company as Vice
President and Chief Operating Officer. In his new position, Mr. Leipsner is
responsible for directing all of TurboChef's United States sales and marketing
initiatives, branding partnerships and food product development throughout the
foodservice industry including restaurants, convenience stores, grocery stores,
hotel/motel chains and non-traditional locations. Mr. Leipsner has over 30 years
of restaurant industry experience, with the majority spent in executive
management positions. His previous positions include Executive Vice President
within Marriott Corporation's
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restaurant divisions; President and Chief Executive Officer and Chairman of the
Board of Service America Corporation, a $1.2 billion food service management
contractor and Chairman of the Board, President and Chief Executive Officer of
S&A Restaurant Corp., owner of the 150 unit Steak & Ale Restaurant chain and the
220 Bennigan's Restaurants. Most recently, Mr. Leipsner served as President and
CEO of KRI, a franchisee of The Italian Oven concept located in Texas.
In February 1997, the Company announced that it had consummated a
third Purchase Contract with Whitbread, further developing the relationship
between these two companies. In connection with this new Purchase Contract,
Whitbread intends to launch the next phase of its utilization of TurboChef
cooking systems by introducing such systems into other Whitbread restaurant
concepts. All of the cooking systems provided to Whitbread under this contract
will be adapted to accommodate TurboChef TurboComm(TM), which will enable
Whitbread to electronically download cook settings for an entirely new menu to
every TurboChef cooking system within a restaurant chain overnight.
RISK FACTORS
The securities offered hereby are speculative and involve a high
degree of risk, including, but not necessarily limited to, the risk factors
described below. Each prospective investor should carefully consider the
following risk factors inherent in and affecting the business of the Company and
this offering before making an investment decision.
LIMITED OPERATING HISTORY AND REVENUES; SUBSTANTIAL OPERATING LOSSES;
ACCUMULATED DEFICIT. Although the Company was organized in April 1991, it was
not until March 1994 that it began the initial commercial roll-out of the Model
D-1 TurboChef cooking system, its first commercial product, and not until June
1995 that it entered into the first Whitbread contract, its first major
contract, and commenced shipment of its Model D-2 TurboChef cooking system.
Prior to such time, the Company was engaged primarily in research and
development, limited production operations and test marketing of prototype
cooking systems. Consequently, the Company has had a limited operating history
upon which an evaluation of the Company's prospects and performance can be made.
The Company's prospects must be considered in light of the risks, expenses,
difficulties and delays frequently encountered in connection with the early-
phase operations of a new business, the development and commercialization of new
products based on innovative technologies and the high level of competition in
the industry in which the Company operates. To date, the Company has generated
limited revenues and incurred substantial losses in each year of its operations
(including net losses of $2,941,413, $1,585,268 and $3,181,519 for the years
ended December 31, 1996, 1995 and 1994, respectively) resulting in an
accumulated deficit of $12,614,605 as of December 31, 1996. Moreover, in 1996,
approximately 75% of the Company's revenues were generated by a single customer,
Whitbread. The subsequent loss of this customer, in the absence of significant
additional customers or contracts, would have a material adverse effect on the
Company's financial condition and results of operations. The Company anticipates
that it will continue to incur significant operating expenses, including in
connection with the Company's ongoing development activities relating to new
product applications for its proprietary foodservice technologies, the training
and set-up of additional third-party manufacturing sources for the production of
the Company's
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cooking systems and the continued implementation of the Company's marketing
plans. The Company's future profitability will depend upon, among other things,
corresponding increases in revenues from operations to offset these
expenditures. There can be no assurance that the Company will be able to
successfully implement the next phase of its business strategy, that its rate of
revenue growth will continue in the future or that it will ever be able to
achieve profitable operations.
SIGNIFICANT CAPITAL REQUIREMENTS; POSSIBLE NEED FOR ADDITIONAL
FINANCING. The Company's capital requirements in connection with its product and
technology development and marketing efforts have been and will continue to be
significant. In addition, capital is required to operate and expand the
Company's operations. Since its inception, the Company has been substantially
dependent on loans and capital contributions from its principal stockholders
(including capital contributions and borrowings in the aggregate amounts of
$1,585,000 and $285,000 during the year ended December 31, 1995 and the three
months ended March 31, 1996, respectively, from Jeffrey B. Bogatin, the Chairman
of the Company's Board of Directors, and Philip R. McKee, the Company's
President and Chief Executive Officer, as well as private placements of the
Company' securities, the April 1994 IPO and a secondary offering of Common Stock
in June 1996 (the "June 1996 Offering"), to fund its activities. The Company is
dependent on other financing to expand its operations, including to continue its
product development activities and marketing efforts and to set-up additional
third-party production operations for the manufacture of the Company's cooking
systems. The Company anticipates, based on its currently proposed plans and
assumptions relating to its operations (including assumptions regarding its
ability to reduce cooking system production costs and the progress of its
research and development efforts) that its current cash and cash equivalent
balances and anticipated revenues from operations will be sufficient to fund the
Company's operations and satisfy its contemplated capital requirements for at
least 15-18 months following the date of this Prospectus. In the event that the
Company's plans change, or its assumptions change or prove to be incorrect, or
if the cash balances and anticipated revenues otherwise prove to be
insufficient, the Company could be required to seek additional financing prior
to the end of such period. In March 1996, Messrs. Bogatin and McKee made a
commitment to provide certain financial support (if and as required) to enable
the Company to meet its obligations through June 1997. This commitment was made
prior to the June 1996 Offering, when the Company had minimal cash reserves and
the timing and likelihood of success of such offering could not be guaranteed.
The Company has no other current arrangements with respect to, or sources of,
additional financing. There can be no assurance that additional financing will
be available to the Company, if and when needed, on commercially reasonable
terms, or at all. Any inability to obtain additional financing when needed could
have a material adverse effect on the Company, including possibly requiring the
Company to significantly curtail its operations. In addition, to the extent that
any future financings involve the sale of the Company's equity securities, the
Common Stock holdings of the Company's then existing stockholders could be
substantially diluted.
EMERGING INDUSTRY SEGMENT; UNCERTAINTY OF MARKET ACCEPTANCE;
LIMITED MARKETING CAPABILITIES; POTENTIAL DEPENDENCE UPON THIRD-PARTY MARKETING
ARRANGEMENTS. The high-speed, high-tech commercial oven segment of the
foodservice equipment industry is an emerging market, characterized by an
increasing number of market entrants. As is typical with new products based on
innovative technologies, demand for and market acceptance of the TurboChef
cooking systems and other foodservice products developed by the Company using
its innovative technological platform are subject to a high level of
uncertainty.
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To date, the Company has generated limited revenues from the sale of its
products, entered into only three major contracts for future sales of its
products and achieved market acceptance for its products from only a limited
number of customers. Achieving increased market acceptance for its products and
technological concepts will require substantial marketing efforts and the
expenditure of significant funds to increase the foodservice industry's
familiarity with the Company and to educate potential customers as to the
distinctive characteristics and perceived benefits of the TurboChef cooking
systems and the Company's technologies. There can be no assurance that the
Company will have available the funds necessary to achieve such acceptance. The
Company has conducted only limited marketing activities to date, and currently
has limited financial, personnel and other resources to undertake extensive
additional marketing and advertising activities. Moreover, the Company's future
performance will be subject to a number of business factors, including those
beyond the Company's control, such as economic downturns and evolving industry
needs and preferences. Consequently, there can be no assurance that the
Company's foodservice technologies and products will ever achieve widespread
market acceptance, or that the Company's marketing efforts and expenditures will
result in significant levels of revenues. In addition, although the Company
expects to continue to market directly to certain international and national
full-service and fast food restaurant chains and to expand its in-house
marketing capability, the Company intends to aggressively pursue the expansion
of its market penetration by seeking to establish joint ventures, strategic
alliances, and/or licensing or other arrangements with companies already engaged
in the mass marketing and/or manufacture of foodservice equipment and products
and to utilize certain independent distributors to assist the Company in the
marketing of its products to independent restaurants, cafeterias, public and
private institutions and non-traditional food service operators. While the
Company believes that any licensees and/or independent distributors with which
it enters into such arrangements will have an economic motivation to
commercialize the Company's products, the time and resources devoted to these
activities generally will be contributed and controlled by such entities and not
by the Company. A decline in the financial prospects of particular licensees or
distributors or of any of their customers could have an adverse effect on the
Company. Moreover, joint venture or similar arrangements may require financial
or other commitments by the Company. There can be no assurance that the Company
will be able, for financial or other reasons, to finalize any third-party
marketing or distribution arrangements or that such arrangements, if finalized,
will result in the successful commercialization of any of the Company's
products.
LENGTHY SALES CYCLE; POSSIBLE FLUCTUATIONS IN OPERATING
RESULTS. The Company's sales cycle, which generally commences at the time a
prospective customer demonstrates an interest in purchasing a TurboChef cooking
system and ends upon the execution of a purchase order with that customer, will
vary by customer and could extend for periods of nine months or more, depending
upon the time required by the customer to test and evaluate the TurboChef
cooking system. In addition, multi-cooking system sales to restaurant chains
generally take even longer as the Company's products and technologies represent
an entirely new method for the preparation and serving of food and often require
a restructuring of a customer's entire operational strategy. For instance, the
Company's first contract with Whitbread, its principal customer, was not
finalized until after more than a year of continuous testing, negotiating and
organizational planning had been completed. Moreover, as a result of the
Company's lengthy sales cycle, the sales process for the Company's products also
generally requires substantial time commitments, effort and expense, and there
can be no assurance that the Company, after
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expending such resources, will obtain a significant contract or order from such
efforts. In addition, the Company's manufacturing cycle, which is the period
from the execution of a purchase order until actual shipment of the product to
the customer, generally ranges from two to six weeks for small volume cooking
system sales and up to one or two months longer for initial shipments to
commence under large multi-cooking system purchase contracts. Accordingly, the
Company's operating results may vary significantly from quarter to quarter or
year to year due to the fluctuating lengths of its sales cycle and manufacturing
cycle, as well as from fluctuations in the purchasing patterns of potential
customers, the timing of introduction of new products and product enhancements
by the Company and its competitors, technological factors, variations in sales
by distribution channels, and generally non-recurring product sales.
Consequently, revenues as well as profits (if any) or losses may vary
significantly from quarter to quarter or year to year, and revenue or profits
(if any) in any period will not necessarily be indicative of results in
subsequent periods.
DEPENDENCE ON THIRD-PARTY SUPPLIERS AND MANUFACTURERS. Until
October 1996, the Company had relied almost exclusively upon MSC, a contract
foodservice equipment manufacturer, for the manufacture of the Company's cooking
system. However in October, 1996, TurboChef terminated its relationship with MSC
and entered into agreements with two new contract manufacturers to build its
cooking systems. Sylvester's Inc, based in Louisville, Mississippi, and
Techniform, Inc., based in Waterford, Ireland, (the "Manufacturers"). The
Manufacturers have the current combined capacity to produce approximately 50
cooking systems per month, which is sufficient to meet the Company's delivery
requirements under the Whitbread and Southland contracts. The Company has not,
however, entered into a long-term contract with the Manufacturers, intending
instead to continue its practice of placing cooking system manufacturing orders
with the Manufacturers from time to time, in the ordinary course of business, as
its needs require. While the Company believes that the Manufacturers' combined
production quantities can, and will, be increased to as high as 250 cooking
systems per month, there can be no assurance of such production increase or that
any increased production would be sufficient. Moreover, while the Company
believes that alternative manufacturing sources are available, any new contract
manufacturing arrangements will require a substantial amount of the Company's
time and effort to set up and prepare the new manufacturers' operations, and
train their personnel, for the production of the Company's cooking systems.
Consequently, any inability of the Manufacturers to meet the Company's current
production requirements, in the absence of immediately available alternative
sources of supply, or any inability of the Company, as its needs expand, to
enter into, and timely develop, additional oven manufacturing sources, could
have a material adverse effect on the Company's operations. Additionally, the
Company has been and will continue to be dependent on third parties for the
supply and manufacture of all of its component and electronic parts, including
both standard components and specially-designed component parts, such as the
printed circuit computer boards and wiring harnesses used in the TurboChef
cooking systems. The Company generally does not maintain supply agreements with
such third parties but instead purchases components and electronic parts
pursuant to purchase orders in the ordinary course of business. The Company is
substantially dependent on the ability of its manufacturers and suppliers to,
among other things, meet the Company's design, performance and quality
specifications. Failure by the Company's manufacturers and suppliers to comply
with these and other requirements could have a material adverse effect on the
Company. Furthermore, there can be no assurance that the Company's manufacturers
and suppliers will continue to dedicate sufficient production capacity to
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meet the Company's scheduled delivery requirements or that the Company's
suppliers or manufacturers will have sufficient production capacity to satisfy
the Company's requirements during any period of sustained demand. Their failure
to supply, or delay in supplying, the Company with cooking systems or components
could adversely affect the Company's profit margin and the Company's ability to
meet its own delivery schedules on a timely and competitive basis. In addition,
although the Company owns the designs and dies for its specially-designed
components and believes that alternative sources of supply are available, the
Company currently purchases all of its specially-designed components from a
limited number of suppliers. Failure by such suppliers to continue to supply the
Company with these components, on commercially reasonable terms or at all, in
the absence of readily available alternative sources, would have a material
adverse effect on the Company.
DEPENDENCE ON A SIGNIFICANT CUSTOMER. For the years ended December 31,
1996 and 1995, approximately 75% and 69%, respectively, of the Company's
revenues were derived from sales to Whitbread. The subsequent loss of this
customer, in the absence of significant additional customers or contracts, or
the early termination, for any reason, of the existing Whitbread contract would
have a material adverse effect on the Company's financial condition and results
of operations.
UNCERTAINTY OF NEW PRODUCT DEVELOPMENT. The Company is
currently devoting considerable efforts to complete the development of new and
expanded commercial applications of its foodservice technologies.Such
development remains subject to all of the risks associated with the development
of new products based on innovative technologies, including unanticipated
technical or other problems and the possible insufficiency of the funds
allocated therefor, which could result in a substantial change in the design,
delay in the development, or abandonment of such development efforts.
Consequently, there can be no assurance that any new applications or products
will be successfully developed or that, if developed, they will meet current
price or performance objectives, be developed on a timely basis or prove to be
as effective as products based on other technologies. The inability to
successfully complete development of a product or application or a determination
by the Company, for financial, technical or other reasons, not to complete
development of any product or application, particularly in instances in which
the Company has made significant capital expenditures, could have a material
adverse effect on the Company.
RISKS ASSOCIATED WITH FUTURE GROWTH AND POSSIBLE ACQUISITIONS.
The Company is currently implementing the next phase of its business strategy in
an effort to expand its current level of operations and grow the Company's
business. Such expansion strategy is placing significant pressures on the
Company's management, operational and technical resources. The success of such
strategy will thus depend upon, among other things, the Company's ability to
hire and retain additional skilled management, marketing, technical and other
personnel; secure additional and adequate sources of supply and production on a
timely basis and on commercially reasonable terms; and successfully manage its
growth (which will also require it to develop and improve upon its operational,
management and financial systems and controls, in order to properly monitor its
expanded operations, control its costs and maintain effective quality controls).
The Company's
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<PAGE>
prospects and future growth will also be largely dependent upon the ability of
its products and technologies to achieve significant penetration in targeted
commercial markets and the ability of the Company to develop and commercialize
additional applications of its proprietary foodservice technologies. There can
be no assurance that the Company will be able to expand its operations, or, if
it is able to expand its operations, that it will be able to effectively manage
such expansion or anticipate and satisfy all of the changing demands and
requirements that growth will impose upon its operations. In addition, although
as of the date of this Prospectus, the Company has no agreements, understandings
or commitments, and is not engaged in any definitive negotiations, relating
thereto, the Company could also seek to expand its operations by entering into
strategic alliances with third-parties relating to the exploitation of the
Company's technologies and/or by acquiring other companies and businesses. Under
Delaware law, various forms of business combinations can be effected without
stockholder approval and, accordingly, investors in this offering will, in all
likelihood, neither receive nor otherwise have the opportunity to evaluate any
financial or other information which may be made available to the Company in
connection with any potential joint venture arrangement or business acquisition
and will be dependent upon the Company's management to select, structure and
consummate any such arrangements and/or acquisitions in a manner consistent with
the Company's business objectives. Although the Company will endeavor to
evaluate the risks inherent in a particular joint venture arrangement or
acquisition, there can be no assurance that the Company will properly ascertain
or assess all significant and pertinent risk factors prior to its consummation
of such a transaction. Moreover, to the extent the Company does effect a joint
venture or acquisition, there can be no assurance that the Company will be able
to successfully integrate into its operations any business which it may form or
acquire. Any inability to do so, particularly in instances in which the Company
has made significant capital investments, could have a material adverse effect
on the Company.
INDUSTRY COMPETITION; TECHNOLOGICAL OBSOLESCENCE. The cooking and
warming segment of the foodservice equipment market is characterized by intense
competition. The Company competes with numerous well-established manufacturers
and suppliers of commercial ovens, grills and fryers (including those which cook
through the use of conduction, convection, induction, air impingement, infrared,
and/or microwave heating methods). In addition, the Company is aware of others
who are developing, and in some cases have introduced, new ovens based on high-
speed heating methods and technologies. Although the Company is not aware of any
competitive products, either being marketed or under development, which it
believes are functionally equivalent to the TurboChef cooking systems (i.e. that
can produce the variety of food items, cooked to the same high quality
standards, at the same speeds), there can be no assurance that other companies
with the financial resources and expertise that would encourage them to attempt
to develop competitive products, do not have or are not currently developing
functionally equivalent products, or that functionally equivalent products will
not become available in the near future. Most of the Company's competitors
possess substantially greater financial, marketing, personnel and other
resources than the Company and have established reputations relating to product
design, development, manufacture, marketing and service of cooking equipment. In
addition, the market for the Company's products and technologies is
characterized by changing technology and evolving industry standards.
Accordingly, the Company's ability to compete successfully will depend, in large
part, on its ability to continually enhance and improve its existing products,
complete development and introduce to the marketplace
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<PAGE>
in a timely manner its proposed products, successfully develop and market new
products, and continue to improve operating efficiencies and lower manufacturing
costs. There can be no assurance that the Company will be able to compete
successfully, that competitors will not develop technologies or products that
render the Company's products obsolete or less marketable or that the Company
will be able to successfully enhance or adapt its products, develop new products
or lower its costs.
POTENTIAL PRODUCTS LIABILITY; SUPPORT AND MAINTENANCE REQUIREMENTS;
WARRANTY EXPENSE. The Company is engaged in a business which could expose it to
possible liability claims from others, including from foodservice operators and
their staffs, as well as from consumers, for personal injury or property damage
due to alleged design or manufacturing defects in the Company's products or
otherwise. The Company maintains a general liability insurance policy (which
includes products liability coverage) that is subject to a $1,000,000 per
occurrence limit with a $2,000,000 aggregate limit and a $3,000,000 umbrella
liability insurance policy to cover claims in excess of the limits of its
liability insurance. In addition, the Company believes that its third party
manufacturers currently maintain similar levels of liability insurance. There
can be no assurance, however, that either the Company's insurance or that of any
third-party manufacturer will be sufficient to cover potential claims or that an
adequate level of coverage will be available in the future at reasonable cost. A
partially insured or a completely uninsured successful claim against the Company
could have a material adverse effect on the Company. In addition, if the Company
is successful in its efforts to obtain significant additional orders for
TurboChef cooking systems, the Company may be required to install and service,
on a timely basis, large numbers of TurboChef cooking systems at its customers'
locations. Although the Company intends to establish an expanded parts and
service network for its customers and their TurboChef cooking systems, there can
be no assurance that the Company will be able to provide such services, when
required, on acceptable terms or conditions, or at all. Furthermore, the Company
generally warrants its products to be free from defects in workmanship and
materials for one year. There can be no assurance that future warranty expenses
will not have an adverse effect on the Company.
PATENTS AND PROPRIETARY RIGHTS. The Company holds three United States
patents which cover certain fundamental aspects of the Company's high-speed
cooking technologies and has pending patent applications or patents
corresponding to one or more of these United States patents filed in 7 countries
(including the 16 or 17 countries of the European Patent Convention as a single
country). The Company has also applied for one United States patent relating to
the Company's "par-baked" pizza dough setting technology, which application has
been allowed. The Company also holds a United States trademark registration for
the TurboChef(R) name and a servicemark registration for its slogan "Changing
the Way Good Food is Served(R)". There can be no assurance as to the breadth or
degree of protection which existing or future patents, if any, may afford the
Company, that any patent applications will result in issued patents, that the
Company's patents, pending patents, or registered marks will be upheld if
challenged or that competitors will not develop similar or superior methods or
products outside the protection of any patents issued to the Company. Although
the Company believes that none of its patents, technologies, products or
registered marks infringe upon the patents, marks, or violate the proprietary
rights, of others, it is possible that its existing patent, trademark or
servicemark rights may not be valid or that infringement of existing
-10-
<PAGE>
or future patents, marks or proprietary rights may occur. In the event the
Company's products are deemed to infringe upon the patents, or proprietary
rights of others, the Company could be required to modify the design of its
products, change the name of its products or obtain a license for the use of
certain technologies incorporated in its products. There can be no assurance
that the Company would be able to do any of the foregoing in a timely manner,
upon acceptable terms and conditions, or at all, and the failure to do so could
have a material adverse effect upon the Company. In addition, there can be no
assurance that the Company will have the financial or other resources necessary
to enforce or defend a patent infringement or proprietary rights violation
action, and, if the Company's products are deemed to infringe upon the patents,
marks or proprietary rights of others, the Company could, under certain
circumstances, become liable for damages, which could also have a material
adverse effect on the Company.
In addition to patent protection, the Company also relies on trade secrets
and proprietary know-how, and typically enters into confidentiality and non-
competition agreements with its employees and appropriate suppliers and
manufacturers, to protect the concepts, ideas and documentation relating to its
proprietary technologies. However, as with its patents, such methods may not
afford the Company complete protection. There can be no assurance that others
will not obtain access to the Company's trade secrets and know-how or
independently develop products or technologies similar to those of the Company.
REGULATION AND ACCREDITATION. The Company is subject to regulations
administered by various federal, state and local authorities (including those
limiting radiated emissions from oven products) which impose significant
compliance burdens on the Company. Failure to comply with these regulatory
requirements may subject the Company to civil and criminal sanctions and
penalties. While the Company believes that it, as well as the Model D-2
TurboChef cooking system, are in compliance in all material respects with all
laws and regulations applicable to the Company and such products, including
those administered by the United States Food and Drug Administration (the
"FDA"), the Federal Communications Commission (the "FCC") and the European
Community Council, there can be no assurance of such compliance. Moreover, new
legislation and regulations, as well as revisions to existing laws and
regulations (at the federal, state and/or local levels, in the United States
and/or in foreign markets), affecting the foodservice equipment industry may be
proposed in the future. Such proposals could affect the Company's operations,
result in material capital expenditures, affect the marketability of the
Company's existing products and technologies and/or limit opportunities for the
Company with respect to modifications of its existing products or with respect
to its new or proposed products or technologies. In addition, expansion of the
Company's operations into additional foreign markets may require the Company to
comply with additional regulatory requirements. There can be no assurance that
the Company will be able to comply with additional applicable laws and
regulations without excessive cost or business interruption, and failure to
comply could have a material adverse effect on the Company.
The Company has received certification from Underwriters Laboratories, Inc.
("UL(R)") as to compliance of the Company's Model D-2 TurboChef cooking system
with applicable UL(R) requirements relating to product safety accreditation
standards and, the applicable requirements of the National Sanitation Federation
("NSF") relating
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<PAGE>
to cleanability and sanitation accreditation standards. Such certifications,
which require periodic renewal, only represent compliance with established
standards and are not legally required. However, failure by the Company to
comply with these accreditation standards in the future could have a material
adverse effect on the Company's marketing efforts. In addition, the Company has
met the requirements necessary to apply the "CE" mark (which indicates
compliance with the European Community Council directive relating to
electromagnetic compatibility and low voltage) to its Model D-2 TurboChef
cooking systems. As an equipment manufacturer, the Company is allowed to "self-
certify" compliance with this directive and have a third party attest to the
results. The Company is required by law to meet this European Community Council
directive in order to apply the "CE" mark and thereby sell its cooking systems
in the European Union. Any failure to meet the requirements of an applicable
directive could not only prevent the Company's sale of its products in the
European Union, but if it were found to be out of compliance with a directive,
in connection with products sold after the establishment of that directive,
severe penalties to the Company could ensue.
RISKS RELATING TO FOREIGN SALES. For the years ended December 31, 1996
and 1995, sales of the Company's products into foreign markets accounted for
approximately 84% and 70%, respectively, of the Company's revenues. Based on its
requirements under the new Whitbread contract, the Company anticipates that the
majority of its revenues will continue to be derived from sales of its products
in foreign markets for at least the near future. A substantial portion of the
Company's revenues will thus continue to be subject to the risks associated with
foreign sales, including economic or political instability, shipping delays,
fluctuations in foreign currency exchange rates and various trade restrictions,
as well as to the burdens of complying with a wide variety of foreign laws and
regulatory requirements, all of which could have a significant impact on the
Company's ability to deliver products on a competitive and timely basis. Future
imposition of, or significant increases in, the level of customs duties, export
quotas or trade restrictions could also have an adverse effect on the Company.
CONTROL BY CURRENT MANAGEMENT. Jeffrey B. Bogatin, the Company's
Chairman of the Board, and Philip R. McKee, the Company's President and Chief
Executive Officer, beneficially own an aggregate of approximately 55.7% of the
Company's outstanding Common Stock. As a result, Messrs. Bogatin and McKee are
able to control the Company, elect all of the Company's directors and generally
direct the affairs of the Company. Accordingly, it is likely that investors in
this offering will have little, or no, effective voice in the direction of the
Company's operations. Additionally, pursuant to the Shareholders and
Registration Rights Agreement, dated May 15, 1993, as amended (the "Shareholders
Agreement"), between the Company and Messrs. Bogatin and McKee, each of Messrs.
Bogatin and McKee has agreed to vote for the other to serve as a member of the
Board of Directors, and, as members of the Board, each has agreed to vote for
the election of the other as an officer of the Company.
DEPENDENCE ON KEY PERSONNEL. The success of the Company will be largely
dependent on the continued personal efforts of Mr. McKee, as well as on those of
other key personnel. Any incapacity or inability of Mr. McKee or certain other
key employees to perform their services could have a material adverse effect on
the Company's business and prospects. Moreover, other than "key-man" life
insurance on the life of Mr. McKee in the amount of $3,000,000 and an employment
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<PAGE>
agreement with Mr. McKee which expires in March 1999, the Company does not
generally intend to obtain key-man life insurance on the lives of, or generally
enter into employment agreements with, any of its officers or employees. The
success of the Company will also be dependent upon its ability to hire and
retain additional qualified management, marketing, technical, financial and
other personnel. There can be no assurance that the Company will be able to hire
or retain such necessary personnel, as and when needed, and any inability to do
so could have a material adverse effect on the Company.
POSSIBLE VOLATILITY OF STOCK PRICE. The trading price of the Common Stock
has been highly volatile and has been subject to dramatic fluctuations since its
initial listing on NASDAQ in connection with the April 1994 IPO, and may
continue to be highly volatile following the consummation of this offering.
Factors such as the Company's financial results, introduction of new products by
the Company or its competitors and various industry factors generally may have a
significant impact on the market price of the Company's securities.
Additionally, in recent years, the stock market itself has experienced a high
level of price and volume volatility and, accordingly, the market prices for
many companies, particularly small capitalization companies, the common stock of
which trades in the over-the-counter market, have experienced wide price
fluctuations not necessarily related to the operating performance of such
companies.
NO DIVIDENDS. To date, the Company has not paid any cash dividends on its
Common Stock and does not expect to declare or pay any cash dividends in the
foreseeable future.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS. Upon the consummation
of this offering, the Company will have 14,463,911 shares of Common Stock
outstanding, of which, 5,404,587 shares, will be freely tradeable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"). The remaining 9,059,324 shares are unregistered and
deemed to be "restricted securities" (as that term is defined under Rule 144
promulgated under the Securities Act), and, as such, may in the future only be
sold pursuant to a registration statement under the Securities Act, in
compliance with the exemption provisions of Rule 144 under the Securities Act or
pursuant to another exemption under the Securities Act. Of the 9,059,324
restricted shares, an aggregate of 8,419,005 shares are already eligible for
sale under Rule 144, subject to certain volume limitations prescribed by such
rule, and an aggregate of 7,674,752 shares are the subject of piggyback
registration rights granted to Messrs. Bogatin and McKee and Donald J. Gogel,
another director of the Company. In addition, in the event that all of the
340,000 shares of Common Stock being offered for sale on behalf of Whale and
certain of Whale's current and former employees and equity holders pursuant to
this Prospectus are not sold, such shares will continue to be subject to certain
demand and/or piggyback registration rights. Moreover, none of the Company's
officers, directors, or other stockholders are contractually restricted from
selling or otherwise disposing of any of their shares of Common Stock. No
prediction can be made as to the effect, if any, that sales of shares of Common
Stock or even the availability of such shares for sale will have on the market
prices prevailing from time to time. Nonetheless, even the possibility that
substantial additional amounts of Common Stock may be sold in the public market
in the future may adversely affect prevailing market prices for the Common Stock
and could impair the Company's ability to raise capital through the sale of its
equity securities.
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<PAGE>
POSSIBLE DELISTING OF SECURITIES FROM NASDAQ; RISKS RELATING TO LOW-PRICED
STOCKS. The Company's Common Stock is currently listed on NASDAQ. In order to
continue to be listed on NASDAQ, however, the Company must continue to maintain
at least (i) $2,000,000 in total assets, (ii) a public float with a $200,000
market value, and (iii) $1,000,000 in total capital and surplus. In addition,
continued inclusion requires two market-makers and a minimum bid price of $1.00
per share; provided, however, that if the Company falls below such minimum bid
price, it will remain eligible for continued inclusion in NASDAQ if the market
value of the public float is at least $1,000,000 and the Company has $2,000,000
in capital and surplus. The failure to meet these maintenance criteria in the
future may result in the delisting of the Common Stock from NASDAQ, and trading,
if any, in the Common Stock would thereafter be conducted in the non-NASDAQ
over-the-counter market. As a result of such delisting, an investor could find
it more difficult to dispose of, or to obtain accurate quotations as to the
market value of, the Common Stock.
In addition, if the Common Stock was to become delisted from trading on
NASDAQ and the trading price of the Common Stock was to fall below $5.00 per
share, trading in the Common Stock would also be subject to the requirements of
certain rules promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") which require additional disclosure by broker-dealers in
connection with any trades involving a stock defined as a penny stock
(generally, and non-NASDAQ equity security that has a market price of less than
$5.00 per share, subject to certain exceptions). Such rules require the
delivery, prior to any penny stock transaction, of a disclosure statement
explaining the penny stock market and the risks associated therewith, and impose
various sales practice requirements on broker-dealers who sell penny stocks to
persons other than established customers and accredited investors (generally
institutions). For these types of transactions, the broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. The additional
burdens imposed upon broker-dealers by such requirements may discourage broker-
dealers from effecting transactions in the Common Stock, which could severely
limit the market liquidity of the Common Stock and the ability of purchasers in
this offering to sell the Common Stock in the secondary market.
Due to continued operating losses, the Company had less than $2,000,000 in
total assets and less than $1,000,000 in total capital and surplus as of March
31, 1995. In order to maintain the eligibility of the Company's Common Stock for
listing on NASDAQ, Messrs. Bogatin and McKee contributed an aggregate of
$1,000,000 in cash to the Company in June 1995 in exchange for certain shares of
Common Stock. In March 1996, the Company again had less than $2,000,000 in total
assets and, in order to maintain the eligibility of the Company's Common Stock
for listing on NASDAQ, Messrs. Bogatin and McKee loaned an aggregate of $285,000
to the Company on March 30, 1996. Although the Company is currently well above
the minimum NASDAQ maintenance requirements, there can be no assurance that, if
the Company were once again to fail to meet NASDAQ's maintenance requirements,
any person, including any of the Company's executive officers, would contribute
cash to the Company in order to prevent the delisting of the Company Stock from
NASDAQ.
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<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
offered by the Selling Stockholders hereunder. However, the shares to be sold by
the Selling Stockholders will be purchased by the Selling Stockholders upon
exercise of (i) the Warrants at an exercise price of $3.25 per share with
respect to 260,000 shares, or an aggregate amount of $845,000, (ii) the Warrants
at an exercise price of $24.00 per share with respect to 80,000 shares, or an
aggregate amount of $1,920,000, and (iii) the exercise of the Options at an
exercise price of $2.50 per share, or an aggregate amount of $656,250. All such
proceeds will be added to the Company's working capital at the time the Warrants
and/or Options are exercised.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
All shares of Common Stock offered hereby are owned by the Selling
Stockholders, who will purchase such shares upon exercise of (i) the Warrants to
acquire an aggregate of 340,000 shares of Common Stock, and (ii) the Options to
acquire an aggregate of 262,500 shares of Common Stock.
The Warrants were sold to Whale and its designees by the Company at a
purchase price of $0.001 per share (i) in April 1994 in connection with Whale's
acting as the underwriter of the Company's initial public offering; and (ii) in
June 1996 in connection with Whale's acting as the underwriter of the Company's
secondary public offering of Common Stock. The Warrants for 260,000 shares of
Common Stock that were sold in connection with the Company's initial public
offering of Common Stock in April 1994 may be exercised, in whole or in part, by
Whale and its designees immediately and at any time until April 7, 1999. The
Warrants for 80,000 shares of Common Stock that were sold in connection with the
Company's secondary public offering of Common Stock in June 1996 are exercisable
by Whale and its designees at any time and from time to time, in whole or in
part, during the four year period commencing on June 12, 1997.
The Options were granted to Acadia effective in March 1995 in connection
with conversion of a loan from Acadia to the Company into equity in the Company.
The Options may be exercised by Acadia at any time and from time to time, in
whole or in part (provided that a partial exercise may not be less than 50,000
shares), until March 31, 2002.
<TABLE>
<CAPTION>
Shares Owned Prior Shares Owned Percent of
Selling Stockholder to Offering After Offering Class
- ------------------- ------------------ -------------- ----------
<S> <C> <C> <C>
Whale Securities Co., L.P./1/ 162,602 --
William G. Walters/2/ 127,434 2,000 *
Elliot J. Smith 35,642 --
Estate of Howard Harlow/3/ 13,190 --
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Nicholas Anari 1,406 --
Cynthia Buckwalter 592 200 *
James D. Whitten 1,334 --
Acadia International Limited 495,834 233,334 1.6%
</TABLE>
- -----------------------------------
* Less than 1%
/1/ Represents shares of Common Stock issuable upon the exercise of Warrants
held in the name of Whale for the account of certain equity owners and
former equity owners of Whale. Does not include an indeterminate number of
shares of Common Stock held in Whale's trading account.
/2/ Includes 2,000 shares of Common Stock held by Mr. Walters' spouse.
/3/ Does not include 2,000 shares of Common Stock held by the widow of Mr.
Harlow, 1,000 shares of Common Stock held by her IRA or 1,000 shares of
Common Stock held by the daughter of Mr. Harlow.
The Selling Stockholders may sell all or a portion of the shares of Common
Stock offered hereby from time to time in brokerage transactions in the over-
the-counter market or otherwise at prices and terms prevailing at the times of
such sales or at negotiated prices. The Shares may be sold by one or more of the
following methods, without limitation: (i) a block trade in which a broker or
dealer will attempt to sell the Shares as agent, but may position and resell a
portion of the block as principal to facilitate the transaction; (ii) purchases
by a broker or dealer as principal and resale by such broker or dealer pursuant
to this Prospectus; (iii) ordinary brokerage transactions and transactions in
which the broker solicits purchases; and (iv) face-to-face transactions between
sellers and purchasers without a broker/dealer. In effecting sales, brokers or
dealers engaged by the Selling Stockholders (including Whale) may arrange for
other brokers or dealers to participate. The Selling Stockholders may also make
private sales directly or through brokers. The Selling Stockholders may
individually pay customary brokerage commissions and expenses. In connection
with any sales, the Selling Stockholders and any brokers participating in such
sales may be deemed to be underwriters within the meaning of the Securities Act,
in which event commissions received by such brokers may be deemed underwriting
commissions under such Act. From time to time, one or more of the Selling
Stockholders may pledge, hypothecate or grant a security interest in some or all
of the Shares owned by them, and the pledgees, secured parties or persons to
whom such securities have been hypothecated shall, upon foreclosure in the event
of a default, be deemed to be Selling Stockholders for purposes hereof.
Under the Exchange Act and the regulations thereunder, any person engaged
in a distribution of the shares of Common Stock of the Company offered by this
Prospectus may not simultaneously engage in market making activities with
respect to the shares of Common Stock of the Company
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<PAGE>
during the applicable "cooling off" periods prior to the commencement of such
distribution. In addition, and without limiting the foregoing, the Selling
Stockholders will need to comply with applicable provisions of the Exchange Act
and the rules and regulations thereunder including, without limitation,
Regulation M, which provisions may limit the timing of purchases and sales of
shares of Common Stock by the Selling Stockholders.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for the
Company by Henry, Meier, Jones & Johnson, L.L.P., Dallas, Texas.
EXPERTS
The financial statements of the Company as of December 31, 1996 and 1995
and for each of the years in the three year period ended December 31, 1996,
have been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
FORWARD-LOOKING INFORMATION
This Prospectus (including the documents, incorporated herein by reference)
contains certain forward-looking statements and information relating to the
Company that are based on the beliefs of the Company's management as well as
assumptions made by and information currently available to the Company's
management. When used in the Prospectus, words such as "anticipate," "believe",
"estimate", "expect", "intend" and similar expressions, as they relate to the
Company or the Company's management, identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions, relating
to the operations and results of operations of the Company, competition from
other foodservice companies, shifts in customer demand, economic cycles,
availability of financing, as well as the other factors described in this
Prospectus. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results or outcomes may
vary materially from those described herein as anticipated, believed, estimated,
expected or intended.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the public reference facilities maintained by the
Commission at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and at 7 World Trade Center, Suite 1300, New York,
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New York 10048. Copies of such materials can also be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission and that is located at
http://www./sec.gov. Documents filed by the Company also can be inspected at the
offices of the NASDAQ National Market, Report Section, 1735 K Street, N.W.,
Washington, D.C. 20006, on which exchange the Common Stock is listed.
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act, with respect to the
registration of the shares of Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits thereto filed by the Company, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission. Statements
contained in this Prospectus or in any document incorporated by reference as to
the contents of any contract or other documents referred to herein or therein
are not necessarily complete and, in each instance, reference is made to the
copy of such documents filed as an exhibit to the Registration Statement or such
other documents, which may be obtained form the Commission as indicated above
upon payment of the fees prescribed by the Commission. Each such statement is
qualified in its entirety by such reference. The Registration Statement and
exhibits thereto may be inspected without charge at the offices of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies may be obtained at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Prospectus (i) the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996; and (ii) the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A (Registration No. 0-23478), filed
on February 25, 1994.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the offering
made hereby, shall be deemed incorporated by reference in this Prospectus and to
be a part of this Prospectus from the date of the filing of such reports.
Any statement contained herein or 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 statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
-18-
<PAGE>
Any person receiving a copy of this Prospectus may obtain, without charge,
upon written or oral request, a copy of any of the documents incorporated by
reference herein, except for the exhibits to such documents (other than the
exhibits expressly incorporated in such documents by reference). Requests should
be directed to TurboChef, Inc., 10500 Metric Drive, Suite 128, Dallas, Texas
75243, Attention: Dennis J. Jameson, Executive Vice President-Chief Financial
Officer (Telephone: (214) 341-9471 and facsimile (214) 340-8477).
<PAGE>
================================================================================
No dealer, salesperson or any other person has been authorized to give
information or make any representation in connection with this offering other
than as contained in this Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized by the Company
or any Selling Stockholder. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, any security other than the
securities offered by this Prospectus, or an offer to sell, or a solicitation of
an offer to buy, any securities by any person in any jurisdiction in which such
offer or solicitation is not authorized or would be unlawful. Neither the
delivery of this Prospectus nor any sale hereunder shall, under any
circumstances, create any implication that the information herein is correct as
of any time subsequent to the date of this Prospectus.
TABLE OF CONTENTS
Page
----
The Company............................................. 1
Recent Developments..................................... 3
Risk Factors............................................ 4
Use of Proceeds......................................... 15
Selling Stockholders and Plan
of Distribution........................................ 15
Legal Matters........................................... 17
Experts................................................. 17
Forward Looking Information............................. 17
Available Information................................... 17
Incorporation of Certain
Documents by Reference................................ 18
================================================================================
602,500 SHARES
TURBOCHEF, INC.
Common Stock
------------
PROSPECTUS
------------
_________, 1997
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses to be incurred in connection with the offering
and sale of the Common Stock covered by this Registration Statement, all of
which have been or will be paid by the Company, are as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee..................................... $ 3,090
Printing and engraving expenses.......................... *
Legal fees and expenses.................................. *
Accounting fees and expenses............................. *
Miscellaneous............................................ *
-----------
TOTAL $ *
===========
</TABLE>
- ------------------
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a provision in the certificate of incorporation of each corporation
organized thereunder eliminating or limiting, with certain exceptions, the
personal liability of a director to the corporation or its stockholders for
monetary damages for certain breaches of fiduciary duty as a director. The
Restated Certificate of Incorporation of the Registrant eliminates the personal
liability of directors to the fullest extent permitted by the DGCL.
Section 145 of the DGCL ("Section 145"), in summary, empowers a
Delaware corporation, within certain limitations, to indemnify its officers,
directors, employees and agents against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by them in connection with any nonderivative suit or proceeding, if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to a
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful.
With respect to derivative actions, Section 145 permits a corporation
to indemnify its officers, directors, employees and agents against expenses
(including attorneys' fees) actually and
II-1
<PAGE>
reasonably incurred in connection with the defense or settlement of such action
or suit, provided such person meets the standard of conduct described in the
preceding paragraph, except that no indemnification is permitted in respect of
any claim where such person has been found liable to the corporation, unless the
Court of Chancery or the court in which such action or suit was brought approves
such indemnification and determines that such person is fairly and reasonably
entitled to be indemnified.
Reference is made to Article Tenth of the Restated Certificate of
Incorporation, and Article IX of the Restated By-Laws, of the Registrant for the
provisions which the Registrant has adopted relating to indemnification of
officers, directors, employees and agents.
That certain Stock Purchase Agreement dated April 17, 1993 as amended
as of December 31, 1993 by and between the Registrant and Mr. Donald J. Gogel, a
director of the Registrant, contains certain provisions entitling Mr. Gogel to
indemnification for losses incurred under certain circumstances.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
In addition, the Registrant has obtained a policy of liability
insurance to insure its officers and directors against losses resulting from
wrongful acts committed by them in their capacities as officers and directors of
the Registrant, including liabilities arising under applicable securities laws.
ITEM 16. EXHIBITS
Exhibit
Number Description
- ------ -----------
4.1 Restated Certificate of Incorporation of Registrant (previously
filed with Registrant's Registration Statement on Form SB-2
(Registration No. 33-75008) and incorporated herein by reference).
4.2 Restated Bylaws of Registrant (previously filed with Registrant's
Registration Statement on Form SB-2 (Registration No. 33-75008)
and incorporated herein by reference).
5.1 Opinion of Henry, Meier, Jones & Johnson, L.L.P.
23.1 Consent of KPMG Peat Marwick LLP.
II-2
<PAGE>
23.2 Consent of Henry, Meier, Jones & Johnson, L.L.P.
(included in Exhibit 5.1).
24.1 Power of attorney (included on signature page of
this Registration Statement on Form S-3).
- -----------------------------
ITEM 17. UNDERTAKINGS.
A. The Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act, each filing of Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in
this Registration Statement 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;
(2) To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report, to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3
under the Exchange Act; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the prospectus, to
deliver, or cause to be delivered to each person to whom the prospectus is sent
or given the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information;
(3) For purposes of determining any liability under the Securities
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 Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and
(4) For the purpose of determining any liability under the Securities
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 therof.
II-3
<PAGE>
B. Insofar as indemnification for liabilities arising under the
Securities 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 Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
In accordance with 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 has authorized this Registration
Statement to be signed on its behalf by the undersigned in the City of Dallas,
Texas on April 8, 1997.
TURBOCHEF, INC.
By: /s/ Philip R. McKee
----------------------------------
Philip R. McKee
President, Chief Executive Officer
and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jeffrey B. Bogatin and Philip R. McKee,
and each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments, including
post-effective amendments, to this Registration Statement, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
that all said attorneys- in-fact and agents, or any of them, or his or their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
II-5
<PAGE>
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed below by the following
persons in the capacities and on the dates indicated:
Name Title Date
---- ----- ----
/s/ Jeffrey B. Bogatin Chairman of the Board and April 8, 1997
- ---------------------- Director
Jeffrey B. Bogatin
/s/ Philip R. McKee President, Chief Executive Officer April 8, 1997
- ---------------------- and Director (Principal Executive
Philip R. McKee Officer)
/s/ Dennis J. Jameson Executive Vice President-Chief April 8, 1997
- ---------------------- Financial Officer (Principal
Dennis J. Jameson Financial Officer)
/s/ Donald J. Gogel Director April 8, 1997
- ----------------------
Donald J. Gogel
/s/ Joseph F. Fogliano Director April 8, 1997
- ----------------------
Joseph F. Fogliano
II-6
<PAGE>
EXHIBIT 5.1
(214) 954-9703
___________, 1997
TurboChef, Inc.
10500 Metric Drive, Suite 128
Dallas, Texas 75243
Ladies and Gentlemen:
In our capacity as counsel for TurboChef, Inc., a Delaware corporation (the
"Company"), we have participated in and reviewed the corporate proceedings in
connection with the proposed issuance and sale by the Company of an aggregate of
602,500 shares of the Company's common stock $.01 par value (the "Common Stock")
issuable upon exercise of (i) certain Common Stock purchase warrants (the
"Warrants") granted to Whale Securities Co., L.P. and its assigns, and (ii)
certain options to acquire Common Stock (the "Options") granted to Acadia
International Limited, (collectively, the "Selling Stockholders"), described in
and offered on behalf of the Selling Stockholders pursuant to the Company's
Registration Statement on Form S-3 (Registration No. 333-____) filed by the
Company with the Securities and Exchange Commission (as amended, herein referred
to as the "Registration Statement").
As the basis for the opinions hereinafter expressed, we have examined
copies of (i) the Company's Restated Certificate of Incorporation, (ii) its
Restated Bylaws, (iii) minutes of meetings of the Company's Board of Directors,
(iv) the form of certificates evidencing shares of the Common Stock, (v) the two
Warrant Agreements between the Company and Whale Securities Co., L.P. pursuant
to which the Warrants were granted, (vi) the Option Agreement between the
Company and Acadia International Limited pursuant to which the Options were
granted, and (vii) such other corporate records and documents, certificates of
corporate and public officials and statutes as we have deemed necessary for the
purposes of this opinion. We have assumed the genuineness and authenticity of
all signatures on all original documents, the authenticity of all documents
submitted to us as originals, the conformity to originals of all documents
submitted to us as copies and the due authorization, execution, delivery or
recordation of all documents where due authorization, execution or recordation
are prerequisite to the effectiveness thereof.
On the basis of the foregoing, and having regard for such legal
considerations we deem relevant, we are of the opinion that:
(a) the Company is a corporation organized, validly existing and in
good standing under the laws of the State of Delaware; and
<PAGE>
(b) the 602,500 shares of Common Stock issuable upon exercise of the
Warrants and the Options, proposed to be sold by the Selling Stockholders
pursuant to the Registration Statement will, upon issuance and delivery against
proper payment therefor, be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
statements made regarding our Firm and to the use of our name under the heading
"Legal Matters" in the Prospectus constituting a part of the Registration
Statement.
Very truly yours,
HENRY, MEIER, JONES & JOHNSON, L.L.P.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
TurboChef, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
Dallas, Texas
April 8, 1997
